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Friday, July 27, 2012

Lessons Learned from the Penn State Scandal

By: Tommy Eden Attorney, Capell & Howard, P.C.

The Penn State child molestation scandal should be a wake-up call for every organization that provides organized activities for children. If there is one thing that our society will not forgive, it is the institutional failure to protect children. Children 18 and under are considered minors in the State of Alabama.

Those in leadership positions should ask themselves, “have we done all we can to protect the children under our care from sexual abuse?” The following seven questions are a good risk reduction audit:

 1. Are we acting like our organization is immune to child sexual abuse? No organization is immune, not the church, not a prestigious university and not a youth sports program. Complacency is the greatest ally of the pedophile.

2. Have we considered what would happen if a child is abused in our care? You need look no further than the latest headlines and trial testimony, to see the lasting emotional scars sexual abuse leaves not only with the children, but on the organization. For years to come people will drive by pointing out, “there is the place that the children were abused.” That stigma can last for decades.

3. Do we understand the benefits of having a program to prevent child sexual abuse? A preventative program begins with a legally defensible written policy and education on Alabama’s mandatory and permissive child abuse reporting requirements when child abuse is suspected. The most successful way to protect both children and to protect workers from false allegations is the two adult rule (an that is two unrelated adults). In my church law practice, I cannot recall a single verified incident of child sexual abuse when the two adult rule was followed. The second most important rule is the use of view windows and open doors.

 4. How should we screen our workers? The first step to worker screening is the use of a written application where they also consent to background checks. Then the level of background checks depends on whether the worker is paid or volunteer. Many organizations will require workers to obtain a criminal background check from the local sheriff and utilize the free DHR background check service. The highest level of background check should be conducted on paid staff as that is typically where 99% of these claims arise.

 5. How should we supervise our youth workers? Hallway monitors, camera surveillance, unexpected drop-in and a variety of other ways can be utilized to supervise youth workers. That also includes spend the night parties and other off-campus activities. The same vigilance should be followed.

 6. How should we identify and report incidents of child sexual abuse? The level of reporting will many times depend on whether they are mandatory or permissive reports to DHR under Alabama law. The organization's policies should identify to whom reports are made, who will speak for the organization and have available forms and checklists. Building a paper trail of compliance for the organization is extremely important to prove that it acted timely and appropriately.

7. How should we respond to incidents of sexual abuse? Timely and completely. Never cover-up child sexual abuse! It can be a crime as much as the abuse itself and a multitude of additional lives can be ruined if a timely report is not made.

Tommy Eden is an attorney with Capell & Howard, P.C. and has presented on Child Protection Programs to numerous organizations throughout the south. He can be contacted at, 334-501-1540 or Alabama Immigration updates at

Friday, July 20, 2012

Sovereign Immunity Trumps FLSA

By: Tommy Eden

Natalie Versiglio was employed as an administrative assistant for the Board of Dental Examiners of Alabama. During the majority of her employment she was paid an hourly wage, but during the last few months of her employment she was paid a salary for each week of work. However, Natalie was not paid for overtime, mostly related to attendance at Board meetings, but rather was told she was being compensated in "comp time." She accumulated a significant amount of "comp time,” but when Natalie's employment ended with the Board in 2009 she was not compensated for this accumulated "comp time" of over $10,000.

Natalie then sued in federal court in Birmingham alleging violations of the Fair Labor Standards Act (FLSA) seeking unpaid wages, overtime, liquidated damages, together with a reasonable attorney fee and costs. The FLSA mandates that covered employers pay nonexempt employees overtime for all hours worked in excess of 40 hours in each work week. The FLSA does not contain language authorizing the payment of overtime in the form of "comp time" other than in limited situations involving firefighters and some other public employees.

In response, the Board filed a Motion to Dismiss claiming sovereign immunity from suits under the FLSA based upon the 11th Amendment to the Constitution of the United States. Federal District Judge Acker denied the Motion to Dismiss citing 37 different boards or agencies created by the Alabama Legislature that would fall within the same category as the Board of Dental Examiners. His Order was appealed to the 11th Circuit Court of Appeals which initially ruled that there was not sufficient evidence to find that the Board enjoyed the State of Alabama's sovereign immunity.

Subsequently, the Alabama Supreme Court, on May 25, 2012, issued a decision in Wilkinson v. Bd. of Dental Exam'rs of Ala, holding that "that the Board is 'an arm of the state' rather than a mere 'franchisee licensed for some beneficial purpose,' and therefore entitled to immunity from suits in Alabama state courts.”

On July 13th, granting deference to the Alabama Supreme Court decision, the 11th Circuit held in Natalie Versiglio v. Board of Dental Examiners of Alabama, that “it is well-settled that 11th Amendment immunity bars suits brought in federal court when the State itself is sued and when an 'arm of the State' is sued," and ruled that the Board enjoyed sovereign immunity from suit.

Common Sense Counsel: This is a significant decision to all of the boards and agencies created by the Alabama Legislature. This case is also a valuable lesson for all employers that jurisdictional grounds involving federal statutes can trump federal claims.

Tommy Eden is a Lee County native, an attorney with the local office of Capell & Howard, P.C., a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-501-1540 or Alabama Immigration updates at

Friday, July 13, 2012

Employers Face Various PPACA Deadlines

By: Tommy Eden


The June 28th U.S. Supreme Court's decision upholding key provisions of the Patient Protection and Affordable Care Act (PPACA), nicknamed “ObamaCare” should serve as a wake-up call to those employers that have taken no action to comply with the Act's requirements. The ruling impacts employers, health care providers, tax professionals, insurance companies and individual taxpayers.

The PPACA will have a profound impact on employer-sponsored group health plans, particularly the employer shared responsibility requirement and W-2 reporting. Beginning in 2014, employers with at least 50 full-time employees must make available affordable coverage to their workers or face exposure to tax penalties. Also, for the first time, fully insured plans will be subject to nondiscrimination requirements. The law also affects waiting periods and for larger plans, mandates automatic enrollment.

Below is a summary of the major deadlines for employer-sponsored group health plans: 

Patient Protection and Affordable Care Act Deadlines
2012 Form W-2
Include, for informational purposes, the cost of employer-sponsored health insurance coverage. If no exception applies under interim guidance, employers should begin or continue putting procedures in place to track, calculate, and provide the information required.
Medical Loss Ratio Rebates
Aug. 1, 2012
Procedures in place to handle any rebates received from the insurer in accordance with the rules for distribution, including the rules requiring ERISA plans to determine the extent to which rebates are plan assets. Rebates need to be apportioned if premiums are paid with both employer and employee contributions.
Preventive Health Services  for
Aug. 1, 2012
Non-grandfathered group health plans provide recommended preventive health services without cost-sharing and adjust services covered in accordance with changes to recommended preventive services guidelines.
Summary of Benefits & Coverage
Sept. 23, 2012
Self-insured plans and insurance issuers (or the insured plans to which they provide coverage) supply a summary of benefits and coverage (SBC) explanation to participants and beneficiaries in addition to summary plan description. Plans need to be sure that compliance procedures are in place sufficiently in advance of the open enrollment deadline.
Quality of Care Reporting
After guidance
is issued
After agencies develop reporting requirements for non-grandfathered plans to disclose information regarding plan or coverage benefits and health care provider reimbursement structures, plans make the annual report available to enrollees during each open enrollment period. If agency guidance is issued soon, plans might need to report during their fall 2012 open enrollment period for 2013.
Nondiscrimination Rules
After guidance
is issued
Expect agency guidance regarding the prohibition against non-grandfathered insured plans discriminating in favor of highly compensated individuals. Plans will have to comply for “plan years beginning a specified period after issuance” of the guidance.
Annual Limits
Dec. 31, 2012
Plans that choose to extend waivers of restricted annual limits, resubmit application information by this date.
Flexible Spending Arrangements
Jan. 1, 2013
Cafeteria plans must be amended to provide that employees may elect no more than $2,500 (adjusted for inflation for 2013) in salary reduction contributions to a health FSA.
Retiree Prescription Drug
Jan. 1, 2013
Employers cannot take a deduction for the subsidized portion of expenses.
Jan. 1, 2013
Systems must be modified to provide for increase in HI portion of FICA by 0.9% for employees with wages in excess of $200,000 ($250,000 for a joint return).
Notice of Exchange Option
March 1, 2013
In accord with agency guidance to be issued, employers will have to provide notice to employees of the existence of state exchanges and options and implications of obtaining health care through an exchange.
Comparative Clinical Effectiveness Research Fees
July 31, 2013
First temporary fees imposed on self-insured health plan sponsors (tax code Section 4376) and insurers for insured plans (Section 4375) paid by this date (pursuant to proposed regulations).
Plan Communications With Providers
Dec. 31, 2013
By this date, plans must certify and document compliance with HHS rules for electronic transactions between providers and health plans.
Employer Shared Responsibility Excise Tax
Employers with 50 or more full-time employees must provide health insurance that meets affordability and value requirements or pay a penalty of the lesser of $2,000 per employee (minus 30 employees) or $3,000 per exchange-certified employee. Employers should make a cost/benefit analysis of their current plan and possible alternatives, but no meaningful decisions should be made until IRS and HHS issue guidance containing definitions, calculations, and safe harbors.
High-Cost Health (“Cadillac”) Plans
Sponsors will have to pay an excise tax calculated on the excess value of coverage.
Other Requirements

Employers must comply with other health plan-related requirements for which implementing guidance has not yet been issued: (1) notices regarding whether the health coverage offered qualifies as minimum essential coverage; (2) automatic enrollment required for employers with more than 200 full-time employees; (3) restricted annual limits on essential health benefits do not apply beginning in 2014; (4) cafeteria plans of employers with 100 or fewer employees may offer coverage of full-time employees through an exchange; (5) pre-existing condition exclusions for adult enrollees and other discrimination based on health status not permitted; (6) wellness program restrictions not permitted; (7) waiting periods greater than 90 days not permitted.

Common Sense Counsel: See full chart which includes a detailed description of each issue and administration considerations to help employers, tax practitioners and their clients at Then brace your employer for change.

Tommy Eden is a Lee County native, an attorney with the local office of Capell & Howard, P.C., a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-501-1540. Alabama Immigration updates can be found at

Friday, July 6, 2012

Wage Hour investigations finds multiple violations in Alabama

By: Tommy Eden

In Montgomery, Alabama, the U.S. Department of Labor's Wage and Hour Division (DOL) found violations of the Fair Labor Standards Act's overtime, minimum wage and record-keeping provisions at the Raceway 700 gas station on Mobile Highway. Jaymahesh LLC, doing business as Raceway 700, has agreed to pay six cashiers $13,618 in back wages plus an equal amount in liquidated damages totaling $27,236.

An investigation found that the Raceway 700 had made a verbal agreement with nonexempt hourly employees that violated the FLSA because it did not require the payment of overtime wages when the employees worked more than 40 hours per week. They had also made deductions during some workweeks from employees' pay to make up for register shortages, which caused employees’ pay to fall below the federally mandated minimum wage of $7.25 per hour. In addition, the employer failed to maintain accurate records of employees' hourly rates and wages paid.

In Winfield, Alabama, the DOL recovered $62,836 in back wages and benefits for 31 truck drivers employed by Winfield-based R.L. Box Inc. following an investigation that found violations of the prevailing wage rate and fringe benefit requirements of the McNamara-O’Hara Service Contract Act as well as the record-keeping provisions of the Fair Labor Standards Act. The Act requires that contractors and subcontractors performing services on covered federal contracts in excess of $2,500 must pay their service workers no less than the wages and fringe benefits prevailing in the locality, or rates contained in a preceding contractor’s collective bargaining agreement.

In lieu of providing the actual fringe benefits, R.L. Box had wrongly elected to pay for those benefits as part of employees’ hourly rates. Investigators also determined that R.L. Box had failed to count all hours worked and pay the required prevailing wage rate, because most drivers were not paid for pre-trip inspections of their vehicles or the training time required to learn mail routes. Holiday pay was not properly provided to drivers until they had worked with the contractor for at least a year, the health and welfare rate was not paid on holiday hours for part-time or intermittent workers and vacation pay was not provided to part-time or intermittent workers.

Common Sense Counsel: Wage Hour compliance is one of the most difficult and costly problems for employers. Have your Wage Hour Audit done on these issues before a government compliance investigator knocks:

• classification of exempt, nonexempt, and independent contract workers;

• commissions, bonuses, incentive payments, and other compensation programs;

• federal contractor compliance;

• overtime pay calculations;

• family and medical leave; and

• recordkeeping requirements.

Tommy Eden is a Lee County native, an attorney with the local office of Capell & Howard, P.C., a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-501-1540 or Alabama Immigration updates at