A:
Employers are generally not required to provide any health benefits. Only the state of Hawaii requires employers in the private sector to cover employees who work over 20 hours per week. Union contracts may include provisions for insurance as part of the agreement. However, health care and other benefits such as life or disability insurance are generally offered by employer as a means of attracting and keeping their workforce.
If an employer provides health coverage, federal law under the Consolidated Omnibus Reconciliation Act ("COBRA") provides an employee who loses his or her job for any reason outside of gross misconduct the opportunity to maintain coverage for up to 18 months at his or her own expense. This applies to companies with 20 or more employees. Some states also have laws with similar protections for employees who work for companies with less than 20 employees.
Generally, it's not illegal to provide health benefits only to some classes of employees (for example, only to full time employees but not to part time employees). But once the eligible classes are established, an employer cannot withhold insurance from some members of the class while offering it to others. The employer can require employees to follow the rules of the plan, which may require an employee to fulfill a waiting period or wait for an open enrollment period before joining.
An employer can usually change, or even eliminate, a health plan, but must follow the rules and guidelines of the Employee Retirement Income Security Act ("ERISA").
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Q:
Does an employer have to offer a retirement program?
A:
Not usually. But retirement programs, including pension plans, are established by companies as one of the incentives to work for them, and to help employees with retirement needs. If a retirement program is offered, it will usually be a "qualified" plan with favorable tax benefits for the employer. In these cases, the employer must follow complicated rules set out in the Employee Retirement Income Security Act ("ERISA"). ERISA covers the information that must be included in the plan, how the plan will be administered, penalties for failure to follow the act and other certain minimum standards.
There are two basic forms of retirement programs:
- Defined benefit plans provide retirement benefits with the employer promising to pay retirees a pension in a specific amount, with the monthly benefit set by a formula of years of service times final average salary times a percentage figure
- Defined contribution plans provide that the employer will contribute an amount into the plan on behalf of an employee, with the employee typically required to also contribute to his or her own individual account
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Q:
What is a "401K" program?
A:
A 401K program is a type of defined contribution plan where a portion of an employee's salary is contributed into the pension plan. The employer sometimes matches the employee's contributions. Some plans allow participants to designate how the funds are invested, but the employer directs investments in some plans.
"Vesting" is the term used to define when the funds in your plan become yours to take, either upon termination or retirement from the company. ERISA requires 100% vesting of employer-contributed funds and sets out the various time frames under which this it done. "Shelf-vesting" generally occurs after five years of employment. A percentage of vesting can be spread out over a number of years, with complete vesting generally completed in seven years. Funds you contribute to a 401K are generally immediately vested.
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Q:
Is an employer required by law to offer paid vacations or time off for holidays?
A:
No. Providing paid time off for vacations or holidays in private employment is a benefit that an employer has the option whether to offer. If offered to a particular class of employee, vacations must be applied equally to everyone in the employment class. Generally, offering vacations is more a matter of custom than law, in order to recruit and maintain a skilled workforce or union contract.
State law will determine if unused vacation must be paid on termination. Some states require it and some states do not. If an employer is not required to pay unused vacation, but has established a policy of doing so, the policy must be applied equally to all departing employees. To find out the regulations affecting your company, call your state's Department of Labor.
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Q:
Can I fire an employee on disability?
A:
In some circumstances, depending on how long the employee has been off work and how much longer it will be before the employee can return to work. But you can't fire an employee simply because he or she went on disability.
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Q:
What does the Family Medical Leave Act cover?
A:
In order to be "eligible" for the Family Medical Leave Act ("FMLA") leave, an employee must:
- Be employed by a covered employer
- Work at a worksite within 75 miles of which that employer employs at least 50 employees
- Have worked at least 12 months (which don't have to be consecutive) for the employer
- Have worked at least 1,250 hours during the 12 months immediately before starting FMLA leave
Public employers are covered by FMLA regardless of whether they meet the 50-employee requirement.
An employee may use vacation or personal leave instead of FLMA. An employee may also substitute accrued paid sick or family leave for FLMA leave, but only if the reasons for the leave are covered by the plan. An employer may also have the right to decide whether to apply FMLA time, as long as the employer is provided with proper notice.
Under the Family Medical Leave Act, an employer may return an employee to the same job or one that's substantially equivalent as long as you return within 12 weeks. If you're going to be out slightly longer than 12 weeks, the employer MAY have to hold your job slightly longer pursuant to Americans With Disabilities Act ("ADA") protections. But the employer is not required to hold it indefinitely.
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Q:
Is an employer required to do whatever a doctor says about a disabled employee?
A:
Within reason. But if an employee has a disability that qualifies for ADA protection, his or her employer is not required to:
- Override a valid and already-in-place seniority system
- Create a new job
- Lower standards for the position
- Eliminate essential functions of the position
However, the employer is required to enter into a dialogue with the employee to try to find a reasonable accommodation that won't place an undue hardship on the company and, at the same time, will allow the employee to perform the essential functions of the position.
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