By Brian R. Carnie, David M. Whitaker, Robert C. Schmidt, and Angela W. Adolph

The IRS is starting to notify employers of their potential liability under Obamacare’s employer mandate for the 2015 calendar year.  According to the IRS, the determinations are based on the employer’s 1094-C/1095-C informational returns filed for the 2015 tax year as well as individual tax information filed by the employer’s employees.

The IRS will notify an employer of potential liability for the employer shared responsibility payments (“ESRP”) via Letter 226J, which will set forth the preliminary calculation of the penalties owed and will provide detailed instructions for either paying or contesting all or part of the same.  Employers will have just 30 days from the date the notice was mailed to respond before the IRS will issue a notice and demand (i.e, a bill) for payment.  Failure to timely respond will result in waiver of your defenses to payment.

Given the timing of these initial notices, many employers will receive these during the holidays when offices are short-staffed or perhaps even closed.  The notices may or may not be directed to the appropriate contact person previously identified on the 1094/1095-C forms.

Employers would be wise to take the following immediate steps:

  1. Notify your administrative staff that any letters from the IRS should be forwarded immediately to a designated person for review. Have someone monitor the incoming mail if you will be closed for any significant period of time.
  2. Gather copies of your company’s 2015 ACA reports so that you can quickly compare your entries to that in any penalty notice you may receive.
  3. Make sure you have access to the data necessary to review any purported assessments that are indicated for one or more employees for 2015. If you relied on a third party vendor for reporting purposes, contact the vendor to see if and how they may be able to help and/or for access to their backup data.

The 2015 reports were confusing and there likely will be discrepancies and/or inaccuracies that need to be corrected, especially with the mandated use of indicator codes and the numerous transition relief rules/exceptions that applied in 2015.  You should also expect that one or more employees may have submitted false or inaccurate information when they filed their individual returns or applied for a subsidy on the exchange.  Don’t wait for receipt of the IRS penalty notice before taking the above steps.  You will have very limited time to review and gather lots of information.  We recommend that you get your lawyer or accountant involved at the outset to fully protect your rights and IRS appeal options.

Kean Miller stands ready to help.

By David M. Whitaker, Brian R. Carnie, and Robert C. Schmidt

As employers are well-aware, the Affordable Care Act (ACA or “Obamacare”) imposes certain minimum employee health insurance coverage requirements for employers that employ 50 or more fulltime employees (aka “applicable large employers”).  Employers who do not meet the employee coverage mandate face statutory penalties for non-compliance.  In the face of these additional costs, some employers have contemplated taking steps to evade these requirements, either by reducing employee work hours to bring them below fulltime status (30 hours per week for ACA purposes) or by eliminating employee headcount.  But the results in a recent case illustrate that such tactics may create significant employer exposure.

In Marin v. Dave and Busters, Inc., United States District Court for the Southern District of New York (Civil Action No. 15-cv-3608), the plaintiff alleged that in order to avoid significant costs associated with ACA compliance, the employer engaged in a concerted effort to cut employee work hours and headcount.  The plaintiff claimed that her work hours were drastically reduced, and as a result she no longer qualified to participate in the company’s group health insurance plan.  The lawsuit asserted that these employer actions against the plaintiff and other employees violated the Employee Retirement Income Security Act (“ERISA”).  Specifically, Section 510 of ERISA makes it unlawful for an employer to discriminate against employees for exercising their rights under a covered employee benefit plan, or for the purpose of interfering with their attainment of rights under a covered employee benefit plan (such as an employee group health benefit plan).

Marin was the only named plaintiff in the lawsuit, but she sought to certify a class action on behalf of some 1,200 employees nationwide.  In support of the claim, the plaintiff cited statements allegedly made by management to employees during meetings as well as statements made by the company to the media suggesting that changes to employee work hours and head count were motivated by avoidance of ACA-mandated health insurance costs.

The federal district court denied the employer’s motion to dismiss in early 2016, finding the plaintiff had pleaded an actionable interference claim if the facts alleged were proven to be true.  After several months of additional litigation, the employer and the plaintiff recently agreed to a settlement (on a class-wide basis) in the amount of $7.4 million, inclusive of attorney’s fees to be awarded by the court (of up to 33% of the settlement fund amount).  The settlement is pending approval by the court.

The Marin case is one of the first cases in the nation to assert an ACA avoidance claim against an employer under Section 510 of ERISA, so it remains to be seen whether this is the beginning of a larger trend targeting employers on this basis.  But the availability of attorney’s fees under the ERISA statute and the opportunity to seek class action certification creates a potential for these kinds of claims to proliferate.

The Marin case provides a clear reminder that employers must proceed with caution when terminating employees or reducing their work hours in situations where those changes can be portrayed as motivated by a desire to prevent employees’ from participating in an ERISA-covered benefit plan, whether in response to concerns about mounting costs imposed by the ACA or otherwise (such as for the purpose of excluding employees with high claims history under a group health plan from continuing to participate in the plan).

By David M. Whitaker

OSHA’s regulation at 29 CFR § 1904 requires employers with more than 10 employees in most industries to keep records of occupational injuries and illnesses at their business establishments. The regulation was first issued in 1971. Covered employers must record each recordable employee injury and illness on an OSHA Form 300, known as the “Log of Work-Related Injuries and Illnesses.” Recordable injuries and illnesses include those that involve death, loss of consciousness, days away from work, restriction of work, transfer to another job, medical treatment other than first aid, or diagnosis of a significant injury or illness by a physician or other licensed health care professional.

Employers must also prepare a supplemental OSHA Form 301 “Injury and Illness Incident Report” that provides details about each case recorded on the OSHA 300 Log. At the end of each year, covered employers must prepare a summary report of all injuries and illnesses recorded on the OSHA300 Log, known as the “Summary of Work-Related Injuries and Illnesses,” and are required to post this form in the workplace in a conspicuous location. Failure to meet these injury and illness recording and posting requirements can result in OSHA citations and penalties.

Until recently, employers were not required to submit their illness and injury reports to OSHA unless they were requested by the Agency (often during an OSHA site inspection). During the waning days of the Obama Administration, OSHA published a new rule which requires certain employers to electronically submit their OSHA-mandated employee injury reports (with employee name field information deleted) to OSHA, which in turn will publish the information on its public website.

The final rule imposed the following new requirements:

  1. § 1904.41(a)(1)—Establishments with 250 or more employees that are required to keep part 1904 records must electronically submit the required information from the three recordkeeping forms that they keep under part 1904 (OSHA Form 300A Summary of Work-Related Injuries and Illnesses, OSHA Form 300 Log of Work-Related Injuries and Illnesses, and OSHA Form 301 Injury and Illness Incident Report)
  2. § 1904.41(a)(2)—Establishments with 20-249 employees that are classified in a designated industry listed in appendix A to subpart E of part 1904 (so-called high hazard industries) must electronically submit the required information from the OSHA Form 300A annually.
  3. The final rule requires other employers to electronically submit information from part 1904 recordkeeping forms to OSHA upon request.

It is important to note that the electronic reporting requirement is based on the size of an “establishment,” not the employer’s total number of employees company-wide. An establishment is defined as a single physical location where business is conducted or where services or industrial operations are performed. An employer may be comprised of one or more establishments, and the number of establishments may vary from year to year. An employer is required to maintain employee injury reports (and electronically submit them, if covered by the new requirements) for each of its covered establishments.

The electronic reporting requirement became effective on January 1, 2017, with a two-year phase in period. Employers were originally required to submit their 2016 OSHA Forms by July 1, 2017 and their 2017 OSHA Forms by July 1, 2018.  Beginning in 2019 and for every year thereafter, all annual OSHA Forms will be due by March 2 of the following year.

Earlier this year OSHA announced that it would postpone the 2016 submittal deadline from July 1st to December 1, 2017 to allow the Trump Administration additional time to further study these requirements. On November 22, 2017, OSHA announced that it will again extend the date by which employers with covered establishments must submit the data from the 2016 Form 300A to OSHA’s electronic database.  The new deadline is December 15, 2017, which OSHA explained is necessary to “allow affected employers additional time to become familiar with a new electronic reporting system launched on August 1, 2017.”

The OSHA Injury Tracking Application (ITA) website where employers will be required to make their electronic records submissions can be found here.

The electronic data submission is controversial because of its public nature, and many in industry have criticized the new requirement as part of the Obama Administration’s tactics of publicly shaming employers as a compliance technique.  OSHA has justified the new rule on its belief that the electronic data collection and public disclosure of employers’ workplace injuries is necessary to “identify and mitigate workplace hazards and thereby prevent worker injuries and illness,” and its view that “behavioral economics” through publication of the collected information will “nudge” employers to improve compliance efforts.

Recent comments by Secretary of Labor Alex Acosta suggest that the Trump Administration may be considering further tweaks to these requirements, or at least how the reported information may be published by the Agency.  During a hearing before the House Education and the Workforce Committee on November 15, Secretary Acosta indicated that OSHA is continuing to examine the rule.

“We are balancing the issues of privacy – because it was asking for some information that was very detailed and that identified individuals – with the needs [sic] to get information so that we can engage in appropriate and targeted enforcement.”

Given these developments, it does not appear that the Trump Administration will do away with the electronic submission requirement altogether, so affected employers should continue preparations for compliance with the electronic reporting requirements by the new December 15th deadline.  But given that some changes to alleviate employer concerns may be yet to come, affected employers may wish to consider delaying their 2016 electronic reporting as long as possible to be in position to take advantage of any late-breaking developments in the Agency’s application of this rule.  And it is also possible that OSHA could extend the deadline a third time to account for additional changes to the reporting requirements.

By David M. Whitaker

Companies that anticipate filing petitions for new H-1B visas to employ foreign guest workers in a “specialty occupation” should begin working now with their immigration counsel to ready their petitions for filing with the United States Citizenship and Immigration Service (USCIS).  Specialty occupations eligible for employment in H-1B status are those for which a four-year bachelor’s degree or higher is a minimum entry level requirement.  Examples of H-1B eligible occupations include engineers, accountants, physicians, architects and attorneys.  Spouses and children (under the age of 21) are eligible to accompany the alien guest worker in H-4 dependent status.  An employer may employ the alien guest worker for up to 6 consecutive years in the United States in H-1B status, and further extensions of status may be possible in the event the employer elects to sponsor the guest worker for an employment-based green card (also known as permanent residence status).  Initial H-1B petitions are typically approved for a three-year period that the employer can extend through subsequent extension petitions.

USCIS begins accepting petitions for new H-1B visas on April 1st of each year (in 2018, it will be April 2, as April 1 falls on a Sunday), with an effective employment start date of October 1 if the petition is approved. Each year there is a cap on the maximum number of H-1B visas that will be issued – a 65,000 base cap plus an additional 20,000 for beneficiaries who hold a U.S. master’s degree or higher.  In recent years the number of new H-1B petitions filed has greatly exceeded the number of available H-1B visas, which has resulted in the USCIS implementing a “lottery,” with only those randomly selected employer petitions being processed. USCIS is reported to have received 199,000 H-1B petitions last April – more than 3 times the number of H-1B visas available.  Next April year employers can likely expect a similar lottery scenario.

President Trump was outspoken during the 2016 presidential campaign about the need to reform the H-1B visa program.  On April 17, 2017 he signed an executive order that directed federal agencies to implement a “Buy American, Hire American” strategy, which included a section geared at immigration reform. The order directed federal agencies (including the Secretary of Labor) to suggest reforms to ensure H-1B visas are given to the “most-skilled or highest paid” beneficiaries.  The order also requested the agencies propose new rules for preventing fraud and abuse of work visas. “Right now, H-1B visas are awarded in a totally random lottery — and that’s wrong,” he said indicating disagreement with the current USCIS lottery system at the time he signed the order.  So far the executive order has not resulted in any regulatory reforms to the H-1B visa application process.  There have been some legislative proposals targeting the H-1B visa program, including increases to minimum salary required to be paid by employers and prohibitions against employers hiring H-1B guest workers to displace U.S. citizen employee. But the prospect for passage of this legislation is very uncertain.

While there have been no legislative or regulatory reforms to the H-1B visa program to this point, there are signs that the USCIS is subjecting these visa applications to a higher level of scrutiny through the Agency’s increased used of the “request for evidence” process– in which the petitioning employer is requested to submit additional evidence to support key elements of the petition, such as the existence of a bona fide employment relationship, or whether the job that is the subject of the petition meets the definition of a “specialty occupation.”  Requests for evidence also have the effect of producing substantial delay in the processing of the work visa petition.  Accordingly, employers should carefully explain the guest worker’s eligibility for H-1B status in the employer support letter and submit ample evidence to support each required element given the increased scrutiny by USCIS in processing H-1B work visa petitions.

Employers who utilize the USCIS work visa program should also take note of a recent change that affects how the Agency will process petitions seeking extension of work visa status for their current work visa holders.  In the past, USCIS had exercised deference in determining eligibility when processing employer petitions for extensions of for work visas previously approved by the Agency.  In a memorandum issued on October 23, 2017 the USCIS discontinued this practice, and made clear that petition examiners are required to thoroughly examine extension petitions for eligibility without regard to the fact that the Agency previously approved the employer’s original petition to employ the alien beneficiary.  As a consequence, employers who anticipate filing petitions for extension of H-1B (and other types of work visas) should take care to support their extension petitions with the same level of evidence as they would in filing an original work visa petition on behalf of the beneficiary.

By A. Edward Hardin, Jr., Scott D. Huffstetler, Erin L. Kilgore, David M. Whitaker, Terry D. McCay, Brian R. Carnie, and Michael D. Lowe,

From New York to Hollywood and now New Orleans, well-publicized allegations of sexual harassment have dominated the news.  Click here for a recent CNN article on a recent issue.  Sexual harassment is unlawful and can lead to much bigger issues than bad press.   Click here for information on sex-based discrimination from the U.S. Equal Employment Opportunity Commission.  These stories highlight the need for employers to communicate their stances against sexual harassment, to promulgate clear policies barring sexual harassment, to enforce those policies, and to train employees, supervisors, managers, and even executives.  Training on policies is an essential component of an effective policy.  Simply stating a position on an issue like sexual harassment may not be enough to ensure a work environment free from unlawful harassment.   Now is the time to work with your internal human resources groups and outside counsel to evaluate your HR legal compliance on issues from harassment to wage and hour compliance.  Now is the time to train employees on sexual harassment and to implement a robust training program so that your policies are not just words on a page.  Now is the opportunity to prevent becoming the next headline.

By Jessica Engler

  • This article originally appeared in the Fall 2017 edition of DRI’s In-House Defense Quarterly

On March 11th of this year, the Defend Trade Secrets Act (DTSA) celebrated the one-year anniversary of its enactment.  The DTSA, 18 U.S.C. Section 1831, et seq. expanded the federal legal protection for holders of trade secrets presently offered to holders of copyrights, trademarks, and patents.  As of April, 2017, approximately 129 DTSA cases have been filed in federal court since the DTSA’s enactment.

Read the entire article here:  Defend Trade Secrets Year One


By Daniel Stanton

On September 28, 2017, President Trump granted a ten day waiver of the Jones Act for the island of Puerto Rico, a U.S. territory, in an effort to facilitate the island’s recovery from Hurricanes Irma and Maria.  The waiver went into effect immediately and alleviates the Jones Act’s restriction against the transport of passengers and cargo between U.S. ports, which includes Puerto Rico, by foreign flagged, foreign owned, or foreign crewed vessels.   A similar waiver was issued for the states of Texas and Florida in response to Hurricanes Harvey and Irma.

The Merchant Marine Act of 1920, commonly known as the Jones Act, was developed to afford protections to the then fledgling U.S. maritime industry.  In an effort to foster U.S. shipbuilding, shipping, and seafaring, the Jones Act required vessels transporting passengers and goods between U.S. ports to be built in the U.S., to be owned by U.S. individuals or entities, and to be U.S. flagged.  The Jones Act also required all licensed crewmembers serving aboard vessels engaged in trade between U.S. ports to be U.S. citizens.  The Jones Act also established a system of legal rights, remedies, compensation benefits, and procedural requirements for injured American seaman, much like state and federal workers’ compensation schemes.

By Michael J. O’Brien

Yesterday, the U.S. Fifth Circuit Court of Appeals released its decision in USA v. Don Moss, et al., 2017 WL 4273427 (5th Cir. 2017) affirming the Eastern District’s ruling that oilfield contractors cannot be held liable for criminal violations of the Outer Continental Shelf’s Lands Act (OCSLA), 43 U.S.C.§ 1331, et seq.  This is an important decision for all offshore contractors who were concerned about the Government’s intended criminalization of offshore accidents.

Moss stemmed from the November 16, 2012, explosion aboard the West Delta 32 Oil Production Platform located in the Gulf of Mexico. On November 16, 2012, independent contractors of the platform owner were performing repairs and modifications to the platform when the fatal explosion occurred. Three contractors were killed, several others were injured and oil was discharged into the Gulf.

Three years after the explosion, the USA issued criminal indictments against the owner/operator of the platform and the owner’s independent contractors that were working aboard the platform. In addition to charges related to the Clean Water Act, the contractors were also charged with multiple counts of knowing and willfully violating OCSLA’s regulations. At the district court level, the contractor defendants moved to dismiss the OCSLA charges on the grounds that the OCSLA regulations do not apply to oilfield contractors. The District Court agreed and dismissed the OCSLA charges against the contractors. The DOJ filed a timely appeal.

Central to the analysis of the District Court was OCSLA’s definition of the term “You” under the “BSEE Regulations” within the Code of Federal Regulations. 30 CFR §250.105 defines “You” as a “lessee, the owner or holder of operating rights, a designated operator or agent of the lessee(s), pipeline right-a-way holder, or a state lessee granted a right of use easement.” The District Court held that the definition of “You” “does not include oilfield contractors, subcontractors, or service providers.”

The Fifth Circuit agreed with the District Court’s analysis of the definition of “You.” Finding that the definition of “You” is unambiguous and limited in scope, the Moss Court held that the definition excludes contractors. Thus, the relevant OCSLA statues place criminal exposure squarely on the lessees and permitees not only for their own misfeasance, but also for that of the contractors and subcontractors they hire. The Fifth Circuit also noted that when the OCSLA regulations were first proposed, the intent was to hold operators responsible for their contractors’ actions and not to expand regulatory liability to contractors.

The Fifth Circuit was also influenced by the fact that for over a sixty (60) year period, the USA had only sought to enforce civil penalties against owner/operators, and it had never successfully criminally prosecuted a contractor under OCSLA. Indeed, the Federal Government did not regulate or prosecute oil field contractors as opposed to lessees, permitees, or well operators under OCSLA. Significantly, in March 2011, BSEE conducted a public workshop for oil and gas companies and advised in “bold fully capitalized underlined text” that the definition of “You” does not include a contractor. BSEE had also gone on record in 2010 that it “does not regulate contractors; we regulate operators.”

It was only until 2012, after the Deepwater Horizon Spill and a few months before the West Delta 32 explosion, that BSEE issued an “Interim Policy Document” opining that contractors may be liable for civil penalties under OCSLA. This change in policy was not entirely surprising given the view of the offshore industry by the administration at that time. However, the document made no mention of holding contractors criminally liable. As such, the Fifth Circuit determined that the consistency of over sixty (60) years of prior administrative practice in eschewing direct regulatory control over contractors, subcontractors, and individual employees supported the District Court’s conclusion that OCSLA regulations neither apply to, nor do they potentially criminalize, contractor conduct.  The “virtually non-existent past enforcement” of OCSLA regulations against contractors confirms that the regulations were never intended to apply to contractors. Ultimately, the Fifth Circuit held that while it was “novel” for the government to indict contractors for OCSLA violations, no judicial decision has supported such an indictment which was “at odds with a half  century of agency policy.”

Interestingly, the Fifth Circuit also commented on the pending appeal in the matter of Island Operating, Co. v. Jewell, 2016 WL 7436665 (W.D. La. 2016) where the District Court held that contractors could not be subject to a regulatory penalty or fine under OCSLA for Incidents of Non-Compliance (INC). In Moss, the Fifth Circuit indicated that it would not defer to the USA’s new policy position that contractors can be liable for civil and criminal penalties citing the 2011 “about face” that “flatly contradicts” the USA’s earlier interpretation of OCSLA’s regulations. The Fifth Circuit’s decision can easily be read to predict how the court will come down in Island Operating. So, while it is settled within the U.S. Fifth Circuit that the Federal Government (through BSEE) cannot criminalize a violation of Part 250 of the CFR’s (the BSEE Regs), this should not be read to expand that prohibition of criminal enforcement against contractors should other federal statutes, such as the Clean Water Act, be violated.

By Carrie R. Tournillon

The Louisiana Public Service Commission (“LPSC”) voted at its meeting on September 20, 2017, to reconsider and approve adoption of proposed rules that provide guidelines for certification of motor carriers of waste and create a rebuttal presumption that granting a certificate is in the public interest if the applicant has met the application requirements.  Under the new rules, applicants are still required to prove “public convenience and necessity” (“PC&N”), including having third-party shippers provide affidavits in support of the need for the certificate.

The new rules set forth, separately for applicants for contract carrier permits and common carrier certificates, the application minimum requirements, the applicant’s burden of proof, and the process for LPSC Staff review of the application and docketing of the matter.  Once an application is reviewed by Staff, a Staff Report will be issued recommending approval, conditional approval or denial of the requested authority.  The matter will then be docketed and published in the LPSC Official Bulletin for possible intervention, discovery, and assignment to an Administrative Law Judge, if contested, for setting a hearing on the merits.

As Kean Miller previously reported, earlier this year the Louisiana Legislature passed Act 278, which eliminated the requirement to prove PC&N as an entry requirement to obtaining authority from the LPSC to become an approved “common carrier” of waste within the state. In prior meetings, the LPSC has discussed whether the new legislation is an unconstitutional infringement on the jurisdiction of the LPSC over common carriers and directed its Staff to file suit challenging Act 278 and to take all action necessary to protect the LPSC’s jurisdiction.


As we learned during the flooding in South Louisiana in August of 2016, the help of our neighbors and friends in Texas and around the country strengthened us, and allowed our communities to rebuild and flourish. That’s part of the reason Kean Miller donated a total of $25,000 this week to the Greater Houston Community Foundation, the United Way of Greater Houston, and the American Red Cross in lieu of our fall client event originally scheduled for today, September 16th.

Our thoughts and prayers are with our friends, colleagues and peers in Houston and Southeast Texas today, and in the weeks and months ahead.

People First.