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robintek

Feb 01
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PREVENT WORKPLACE DISCRIMINATION THAT CAN LEAD TO EMPLOYEE LAWSUITS

By Business Protection Bulletin

Employers in today’s marketplace face many formidable competitive and legal pressures. In addition to holding onto market share, they must comply with environmental, safety and trade practice regulations. Increasingly, they must also worry about legal challenges from their own employees. The job security that employers offered for decades has given way to a dynamic and sometimes unsettling work environment. Rising job insecurity has brought with it more frequent lawsuits from employees sensitive to perceived discrimination. Several trends in the workplace indicate that this will continue.

The baby boomer generation is reaching retirement age in rapidly increasing numbers; the youngest boomers are now in their mid-forties. The sheer size of this aging portion of the workforce, coupled with increased corporate downsizing, is producing accelerating numbers of age discrimination claims. The Equal Employment Opportunity Commission reported that the number of age discrimination complaints increased 15% in 2007. Employers that focus on hiring and promoting young people to keep themselves innovative could become targets for discrimination lawsuits from older workers.

The U.S. economy lost 1.2 million jobs in the first 10 months of 2008, and economists expect the job market to remain weak for the foreseeable future. The end of a recession does not necessarily mean a return to a strong job market; job losses continued for almost two years after the 2001 recession ended. Mass layoffs invariably produce lawsuits from workers who feel they were treated unfairly. A sustained period of falling employment should increase the number of such actions.

Computer technology and Internet applications have had major positive effects on firms’ productivity. They have also created new ways for employees to suffer harassment (sexual and otherwise), privacy invasions, discrimination, and hostile work environments. Uncontrolled Internet access can allow workers to download offensive material that’s then used to harass colleagues. Vulnerable computer networks can permit unauthorized access to private employee information. Modern software and equipment can allow employers to monitor virtually every move employees make. As a result, more workers will take legal action against their employers when they feel their privacy has been invaded or when they believe that technology was used to discriminate against them.

In recent years, gay and lesbian workers have sought increased protections against workplace discrimination. Newly enacted state and federal laws and local ordinances have made it easier for these workers to pursue claims against employers. At least 17 states have statutes or court precedents that prohibit discrimination in private workplaces on the basis of sexual orientation. Continuing success in the legislatures and the courts will encourage more discrimination suits.

In 2007, the EEOC issued guidance on how federal laws apply to workers with caregiving responsibilities. Working parents might be subject to a variety of unfair treatments, including assumptions about pregnant employees; discrimination against working fathers and mothers; and sex-based stereotyping about working mothers. The agency and courts expect employers to make reasonable accommodations for working parents. Perceived failures to do so or perceived discrimination in hiring and promotions might cause affected employees to take legal action.

To reduce the likelihood of employee lawsuits, employers must implement policies and enforced procedures to prevent unfair discrimination. Another essential component is Employment Practices Liability insurance (EPLI) from a financially sound insurance company. Employers face enormous challenges to survival and prosperity in the modern economy. With careful attention to their employment practices and the right insurance products, you can make those challenges a little more manageable. Contact us for a thorough review of your specific EPLI needs.

Feb 01
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COMPANIES NEED TO RESPOND TO REPORTS OF SEXUAL HARASSMENT

By Business Protection Bulletin

Sexual harassment is a serious issue for all organizations. It demeans and humiliates the targets, lowers workplace morale, and reduces productivity as employees spend energy worrying about the latest offense rather than furthering the business. It can also inspire employee lawsuits, bad publicity for the organization, and criminal charges. Even the best of organizations might face incidents of sexual harassment at some point. If it happens, how the organization responds is of the utmost importance.

The organization must take every report of harassment seriously. Brushing off a worker complaint as frivolous could be the basis for future legal action. The person receiving the complaint must judge it by two standards. First, would a reasonable person be offended by the alleged conduct? Second, did the person making the complaint actually take offense at the alleged conduct? If the answer to both questions is yes, the organization should conduct a more in-depth investigation.

Harassment complaints fall into three general categories. In full-fledged complaints, the complainer firmly believes they have been harassed, wants it stopped, and is willing to provide details as to what happened. “For your information” complaints involve employees who don’t necessarily want the employer to do anything, and are unwilling to provide details. Anonymous complaints might provide great detail or none, might be legitimate or complete fiction, and might or might not be from employees. Regardless of the type of complaint, the organization should take it seriously and investigate thoroughly.

Once it has determined that harassment occurred, the nature of the organization’s response depends on the seriousness of the offense. Less serious offenses include jokes, teasing, off-color comments, cartoons and photos, and profanity. The offender might not have intended harm toward anyone. Unless they have habitually done these things despite warnings, a reprimand could be in order. More serious offenses are uninvited and unwelcome physical contacts (hugs, kisses, pats on the butt, etc.), acts directed at a particular person or group of people (repeated comments about a woman’s clothing), and intentionally harmful actions or words (insults about a person’s sexual preference). Some of these actions might require disciplinary action at the first offense (touching a woman’s breast), while others might deserve a reprimand unless repeated (insults).

The most serious offenses involve deliberate physical, mean-spirited, and possibly criminal acts. Grabbing, forcible kissing, lewd exposure, and attempted rape are all examples of this kind of conduct. These might warrant immediate disciplinary action and might require involvement from law enforcement officials.

The organization should assign the investigator based on the seriousness of the alleged offense. A supervisor might be sufficient for less serious offenses, such as e-mailed jokes or suggestive calendars. Acts such as sexual insults, unwelcome advances, and demands for sexual favors call for the involvement of upper management. The most serious offenses could require hiring an outside investigator or attorney. Alleged criminal conduct will necessitate getting the police involved. In addition, the worker making the complaint might prefer speaking to someone of the same sex, of a certain age, or who shares the worker’s background. Organizations might want to have a group of people prepared to investigate claims so they can deal with such requests. However, all investigators must remain objective and free from bias toward either party.

A response appropriate to the situation is vital to an organization’s reputation, future employee relations, and vulnerability to lawsuits. The organization’s advance preparation will make this easier and may make it more attractive to insurance companies that provide employment practices liability insurance. Ultimately, the seriousness with which an organization treats the possibility of sexual harassment should discourage it from happening in the first place.

Feb 01
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BE PROACTIVE TO CONTROL WORKERS COMP COSTS

By Business Protection Bulletin

Most businesses are required by law to provide Workers Compensation insurance. It protects employees, providing income and medical care if they’re injured on the job. It also protects employers. The liability portion provides coverage for lawsuits filed as a result of a work-related injury.

As an employer, the amount you pay for Workers Compensation coverage varies according to your industry and claim history. Workers Compensation insurance for companies that engage in office-based work is generally much less expensive than insurance for industries such as construction or trucking.

Regardless of your industry, there are proactive steps you can take to keep Workers Compensation costs under control. Here are some tips:

  • Thoroughly train new employees: Surveys show that nearly a third of Workers Compensation claims result from accidents involving newly hired employees. Take a look at your orientation program and see if you can improve overall safety by beefing up new employee training.
  • Make safety a top priority: The best way to keep costs down is to not incur claims in the first place. Create a safety culture throughout the company, and engage employees directly in the effort. For example, you could establish safety councils and solicit ideas from employees on how to create a safer workplace.
  • Pre-screen employees: Another preventive action you can take is to make sure you hire the right employees in the first place. Statistics show that workers who are substance abusers are far more likely to have an on-the-job accident. An investment in pre-employment drug screening can save a significant amount in claims down the road.
  • Manage claims proactively: When an employee is injured, make sure you keep tabs on the worker’s condition and plan for their return to work as quickly as possible. In some cases, injured employees can rejoin your workforce on light duty, which can reduce the amount of the claim.
  • Make sure employees are classified properly: There are hundreds of classification codes used to determine the appropriate level of Workers Compensation coverage. If employees are misclassified, you might not have the coverage you need, and misclassifications can result in fines.

Workers Compensation is essential to protect your employees’ and your company. To sharpen your company’s competitive edge, it’s important to control costs. Contact one of our specialists today to take a fresh look at your company’s approach to safety, hiring, classification, and claims management. We could help you to find new ways to keep costs under control.

Feb 01
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PREPARATION AND REVIEW ARE KEYS TO SUCCESSFUL PREMIUM AUDIT

By Construction Insurance Bulletin

Premium audits are just as important for you as they are for your insurance carrier. That’s because when your policy was originally issued, your carrier calculated your premium based on the estimated payroll or sales figures you provided. Now that there are actual numbers, the audit determines what the correct premium should be based on your actual experience.

Your carrier can audit you using one of the following methods:

  • Physical Audit — This is typically conducted on-site or at another appropriate location, such as your accountant’s office.
  • Phone Audit — A representative of an independent audit company hired by your insurer contacts you by phone to conduct the audit.
  • Mail Audit — An audit form with instructions is mailed to you; the completed form is returned to your carrier.

Your insurer usually chooses the type of premium audit based on the size of your policy and/or the nature of your operations. The audit itself might include an inspection of accounting records including payroll journals, disbursements journals, general ledgers, Social Security reports, state unemployment forms or other tax reports. Since an audit can encompass such a vast array of data, you should follow these tips to help make the experience run smoothly:

Preparing for the Audit:

  • Decide which staff member is best able to work with the auditor. This should be someone familiar with the work done by all departments and employees and is knowledgeable about the records needed to complete the audit.
  • Review prior years’ audit billing statements and auditor’s work sheets to familiarize yourself with what the auditor will be reviewing.
  • Gather all pertinent accounting records.
  • Review payroll documents to make sure that they include breakdowns of wages by employee, department, and class code.
  • Verify that you have certificates of insurance on file for any subcontractors you might have used. Be sure that the documents show that the contractors have their own Workers Compensation and General Liability insurance.

On the Day of the Audit:

  • Request that the audit take place on site so that all pertinent records are easily accessible.
  • Ask questions during the audit to clarify anything you do not understand.
  • Ask for a hard copy of the auditor’s specific findings.

After the Audit Has Been Completed:

  • Review the audit billing statement carefully and compare to the original policy.
  • Make a list of all changes and discuss any questionable areas with the auditor before agreeing to pay any additional premiums.
Feb 01
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BALANCING BUSINESS NEEDS WITH EMPLOYEES’ PRIVACY RIGHTS

By Construction Insurance Bulletin

Employers frequently require their workers to drive on company business. For some firms, driving can be the major part of employees’ jobs. Other companies might need salespeople or inspectors to drive as an incidental but necessary part of their jobs. Even companies that perform most of their work in an office will need employees to drive at least occasionally to projects, conferences, or job sites. Employers who require their employees to do driving at all take the risk that their workers will become involved in automobile accidents. These incidents subject employers to medical bills, the costs of repairing or replacing damaged vehicles and property, and potential lawsuits from third parties.

Employers can get a fair picture of how employees drive by obtaining copies of their employees’ motor vehicle records (MVR). Employers who decide to obtain their employees’ MVRs need to be aware of the boundaries set by federal and state laws.

Congress enacted the Driver’s Privacy Protection Act (DPPA) of 1994 to restrict access to personal information that might appear on an individual’s driving record. Personal information is anything that can identify a person, such as a name, photograph, Social Security number, phone number, address, or similar information. The law allows a motor vehicle bureau to release the record, including personal information, to anyone who has a permissible use. There are 14 permissible uses; three are relevant to employers. A bureau may disclose information for use in the normal course of business to verify the accuracy of personal information a person provided to the business and, if the information is inaccurate, to obtain accurate information to prevent fraud. Also, an employer may obtain information relating to the holder of a commercial driver’s license. Any person may obtain another’s MVR if he can show a written consent by the other party for its release.

The federal Fair Credit Reporting Act (FCRA) is more restrictive. This law governs the release of consumer reports, a term that includes driving records, credit reports, credit scores, and others. It provides that a consumer reporting agency (such as Equifax) may not release a consumer record to an employer for employment purposes unless the consumer has given written permission. Therefore, a messenger service that wants to look at prospective employee Bob’s driving record before hiring him must get Bob’s written permission first. The consumer reporting agency must give Bob a Summary of Consumer Rights. If the employer takes an adverse action against Bob (doesn’t hire him, declines to promote him, etc.) at least in part because of the information in his report, it must give him a Notice of Adverse Action, advising him of the information that affected the decision and the name of the reporting agency.

Some employers ask their insurance agents to obtain employees’ driving records. The DPPA permits agents to order these records for insurance purposes and allows a person with a permissible use to share information with another person with a permissible use. The FCRA, however, imposes on the agent the same obligations that a consumer reporting agency would have. In addition, some vendors forbid agents from sharing the records.

Businesses have a legitimate need for some information about how their employees drive. Employees have an equally legitimate concern about who will see their information and how it will be used. These laws attempt to balance business needs and employee privacy rights. All employers should familiarize themselves with these laws and state laws that might restrict their access to personal information.

Feb 01
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DON’T COUNT ON INSURANCE TO COVER SHODDY WORKMANSHIP

By Construction Insurance Bulletin

Construction accidents often result in damaged property. Fires from faulty wiring scorch walls, paint sprays onto cars, and collisions dent earth-moving equipment. When something goes wrong, contractors will look to their Commercial General Liability (CGL) policy to pay the costs of repair or replacement. However, although this policy covers many types of property damage claims, it will not cover every situation.

Before the CGL policy will provide any coverage for claims such as these, three things must be true:

  1. The contractor must be “legally obligated” to pay damages. Liability insurance covers the contractor’s tort liability; that is, liability for negligent acts. Is the injured party claiming that the contractor was negligent in performing the work? If the answer is yes, then the CGL policy may provide coverage. If the claim is for failing to complete the work, however, there is no coverage.
  2. The damage must arise out of an “occurrence,” as the policy defines that term. The standard CGL form defines occurrence as, “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Therefore, for coverage to apply, the damage must be accidental. If the insurance company determines that there was no accident, it will not provide coverage. For example, the company would not cover a component that simply fails to work after installation.
  3. The accident must result in property damage. The policy defines property damage as “physical injury to tangible property, including its loss of use, and the loss of use of tangible property that is not physically injured.” Damage to a third party’s building, for example, is property damage. Loss of that party’s computer data is not, however, because the data is not tangible property.

If property damage arose out of an occurrence and the contractor is legally liable, the policy might still not cover the claim if it falls within the category of faulty workmanship. The policy does not cover a contractor’s liability for property damage to “that particular part” of real property on which the contractor or one of his subcontractors is working if the damage resulted from that work. For example, assume a contractor is repairing the wiring to a chandelier in a banquet hall. During the installation, the chandelier falls and damages the hall’s hardwood floor. The policy will not cover the damage to the chandelier because it was “that particular part” of real property on which the contractor was working. However, it will cover the damage to the floor.

The definition of “that particular part” can be unclear. The insurance company might argue that there is no coverage for a roofing contractor who accidentally starts a fire and burns most of the roof. Is the entire roof “that particular part,” or is it just the one section of the roof where operations were taking place? The policy’s language does not resolve the question.

Another policy provision is much clearer. It states that there is no coverage for damage to “that particular part” of any property that must be restored, repaired, or replaced because the contractor performed his work on it incorrectly. This provision applies to both real and personal property. Therefore, the policy will not cover replacement of the chandelier if it does not work after the contractor repairs it.

Be sure to address questions about your insurance coverage with one of our insurance specialists. An Inland Marine insurance policy can cover some types of property damage losses not covered by Liability insurance. Other types of losses will have to be paid out of the contractor’s pocket. Be sure you know what you can expect from your insurance coverage in all situations on the job site.

Feb 01
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STEPS TO PROTECT EMPLOYEES WORKING IN CONFINED SPACES

By Workplace Safety

Far too many employees die needlessly while working in confined spaces. Many of these fatalities occur because employers lack information about the potential dangers their employees might encounter. However, understanding the safety issues particular to these workers can help reduce this risk.

OSHA defines a confined working space as one that “hinder[s] the activities of the employees who must enter, work in and exit them. A confined space has limited means for entry or exit, and is not designed for continuous employee occupation.”

OSHA also distinguishes a ‘permit-required confined space’ as one that has the following elements:

  • Contains or has the potential to contain a hazardous atmosphere,
  • Contains a material that has the potential for engulfing the entrant,
  • Has an internal configuration that might cause an entrant to become trapped or asphyxiated by inwardly converging walls or by a floor that slopes downward and tapers to a smaller cross section, and/or
  • Contains any other recognized serious safety or health hazard such as unguarded machinery, exposed live wires or heat stress.

Obvious types of confined spaces include but are not restricted to manholes, storage bins, tanks, underground vaults, pits, silos, process vessels and pipelines. A confined space can also be considered something normally deemed as benign but that can also be as deadly, such as an attic or crawlspace.

Before assigning a worker to a job in a confined space, employers should consider whether the employee might be exposed to the following potential hazards:

  • High pressure fluids and gases, especially inert gases
  • Chance of falling, being crushed or buried
  • Biological hazards such as mold, spores, viral agents, or decay of organic materials
  • Exposure to the generation of harmful or flammable fumes when welding
  • Air contamination or oxygen deficiency caused by corrosion of metal or other chemical reaction
  • Potential leaks, spills or release of hazardous materials
  • Possibility of drowning

Employers should always familiarize themselves with the layout of a confined space and any potential hazard employees might encounter. Likewise, work crews should be thoroughly trained how to properly access these potential hazards before beginning work in any confined space.

Some workers will need specialized training and appropriate safety equipment. The situation might require frequent monitoring and supervision. More extreme situations will necessitate that you have a back up rescue plan, trained personnel who understand the risk issues involved for each individual location and appropriate and/or readily available safety equipment.

As crews gain experience with their work locale, they can also fine tune the procedures to suit the individual circumstances of each confined space situation.

By following these simple steps, employers can ensure the protection of their workers and, in the process, minimize the number of confined space injuries and fatalities.

Feb 01
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FOLLOW SAFETY GUIDELINES WITH MOTOR VEHICLES ON THE JOBSITE

By Workplace Safety

It’s no secret that a construction jobsite can be an extremely hazardous place. However, when you add motor vehicles to the mix, the area can become an all-out danger zone.

Whether you’re working with dump trucks, flatbeds, pickups or any type of vehicle, it’s important to follow the proper safety guidelines so every worker makes it through the day unharmed. When workers are operating these vehicles on the highway, they must adhere to all Department of Transportation (DOT) rules as well as state and local traffic laws. Once the worker enters the jobsite in a construction vehicle, they must follow DOT and Occupational Safety & Health Administration (OSHA) rules.

Here are some of the key motor vehicles rules as stated by OSHA:

  • All vehicles must have a service, emergency, and parking brake system in good working condition.
  • All vehicles in use must be equipped with at least two operational headlights and two tail lights, which should be used in dark or low-visibility areas.
  • All vehicles must have operable brake lights and a horn at the operator’s station.
  • No driver can operate a motor vehicle with an obstructed view to the rear — unless the vehicle is equipped with a reverse signal alarm or an observer is present who can tell the driver when it is safe to back up.
  • All vehicles with cabs must have windshields and wipers. Cracked or broken glass must be replaced.
  • Seat belts must be installed in all motor vehicles.
  • Operating levers controlling hoisting/dumping devices must be equipped with a latch or other device which will prevent accidental starting or tripping of the mechanism.
  • Dump truck tailgate trip handles must be arranged so that the operator will be in the clear during dumping.
  • Employees must be qualified by training or experience to operate any equipment or machinery.
  • Never use any machinery, tools, or equipment that is not in compliance with OSHA standards and the manufacturer’s operations manual. Broken equipment must be identified as unsafe and be tagged, locked or physically removed from the jobsite.
  • At the beginning of each shift, you must check each vehicle you intend to operate for damage to the brake systems, tires, horn, steering mechanism, coupling devices, seat belts, operating controls and all safety devices as well as any lights, reflectors, windshield wipers, defrosters and fire extinguishers when necessary for operation.

If you want to keep your workers safe and sound, make sure that every person who operates a motor vehicle is fully aware of these rules. It’s important to constantly enforce these safety guidelines on the jobsite. For more information, visit the OSHA Web site at www.osha.gov.

Feb 01
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CONSTRUCTION SAFETY COUNCIL OFFERS GUIDELINES REGARDING UNDERGROUND UTILITIES

By Workplace Safety

Lost time and money aren’t the only considerations when an excavation accidentally hits an underground utility line; the safety of all of your workers is at stake, too. A ruptured natural gas line can cause a fire or explosion. The voltage from a severed electric line can be deadly.

The problem with locating these lines stems from the fact that electric, telephone, gas, and water lines might be buried almost anywhere under a construction site. Separate utility companies own them and install them at different times. According to the Construction Safety Council, a non-for-profit organization dedicated to the advancement of safety and health interests in the field of construction, there are several other factors that further complicate locating underground utilities:

  • Utility lines are made of a variety of materials: Steel, cast iron and ductile iron pipes, clay, polyethylene, polyvinyl chloride, and fiberglass reinforced plastic.
  • Cable might be made of copper or fiber optics.
  • Conduits have different shapes, compositions, densities, and diameters, and their depths might be as little as 0 to 0.5 meter or in excess of 50 meters.
  • Some lines (usually local telephone, electric and gas lines) might be stacked vertically in a common trench. Multiple lines might be grouped in a single conduit or duct bank. Multiple utilities might be grouped in common utility tunnels often called utilidors.
  • T-Connections and looped service lines are usually overlooked if they are placed near utility boxes.

To help you keep your workers safe, the Council has established the following guidelines:

  • Locate all underground installations by notifying the one-call system in your state, and follow all local policies and procedures for locating utility lines. You can find your state’s call center here: http://www.rmis.com/lib/safety/digsafecontacts.php.
  • Become familiar with locating technologies and all their uses and limitations.
  • Mark the proposed site that is to be excavated, and then have utilities mark the location of all underground installations.
  • Pothole along the trench path to visually expose all utilities.
  • Establish a zone around the excavation and allow only essential equipment near the edge. The size and area of the zone is based on soil type and anticipated surcharge loads. Be sure your employees observe this limited access throughout the course of the excavation.
  • Dig carefully by hand if you suspect a utility was overlooked after the locations of buried utilities have been determined. Many cables are buried side by side.
  • Allow only a qualified person to operate any equipment with the potential to make contact with an underground installation.
  • Protect, support, or remove underground utilities as necessary to safeguard employees.
  • Document the time of the call to the state system and keep proof at the job site.
Feb 01
Love0

UNDERSTANDING MID-YEAR ELECTION CHANGES TO CAFETERIA PLANS

By Employment Resources

Employees’ cafeteria plan elections — whether for a flexible spending account, premium-only plan, or choice of benefits — are required to be irrevocable and generally may not be changed during the plan year. However, IRS regulations for cafeteria plans recognize that changes in an individual’s circumstances sometimes do occur, and therefore permit cafeteria plans to allow mid-year election changes based on certain changes in status.

Since the idea of making an irrevocable choice can seem daunting to employees, most employers permit election changes based on the IRS-approved changes in status. Cafeteria plan regulations require employers that permit such changes to incorporate the status change rules into their written plan document.

So, under what circumstances may an employee revoke his or her cafeteria plan election and make a new one? IRS regulations provide for these change-in-status events:

  • A change in legal marital status, resulting from marriage, death of a spouse, divorce, legal separation or annulment.
  • A change in the number of dependents, resulting from birth, death, adoption or placement for adoption.
  • A change in the employment status of the employee or of the employee’s spouse or dependent, resulting from commencing or terminating employment, being on strike or lockout, beginning or returning from an unpaid leave of absence, or changing worksites. Also, if the employee (or spouse or dependent) has a change in employment status affecting plan eligibility (such as moving from salaried to hourly when there are separate plans for each group), a mid-year election change is allowed.
  • A dependent satisfying or ceasing to satisfy eligibility requirements (such as a child reaching the maximum age for dependent children under the plan).
  • A change in the residence of the employee, spouse or dependent (potentially important for HMO coverage areas).

Even if an employee has had one of these change-in-status events, an election change is permitted only if it satisfies a consistency rule. This rule requires that the change be on account of and correspond with the change in status that has affected eligibility for coverage under the plan. So, for example, if the status change were the employee’s divorce, the only election change that would satisfy this consistency rule would be to cancel coverage for the ex-spouse; changes with respect to the employee or other covered dependents would not be allowed. However, if a court order required the ex-spouse to provide coverage for dependent children, a separate provision in the regulations would allow the employee to cancel dependent coverage.

In the case of an employee or other dependents newly gaining eligibility mid-year under the plan of a family member, such as if the employee marries and is eligible for coverage under the new spouse’s plan, the consistency rule would permit the employee to cancel coverage only if he or she actually became covered under the new spouse’s plan.

In addition to changing elections on account of a family status change, employees are permitted to revoke existing elections and make new ones that correspond to the employee’s special enrollment rights under HIPAA. An employee also can make an election change when the employee, or a spouse or dependent, becomes enrolled in Medicare or Medicaid.

All permitted election changes can only be made prospectively.

The election change limitations do not apply to health savings account (HSA) and 401(k) contributions. If HSA contributions are made through salary reduction under a cafeteria plan, employees may prospectively elect, revoke or change their salary reduction elections for the HSA at any time, so long as it is with respect to salary that was not currently available at the time of the election. 401(k) contributions, if part of a cafeteria plan, are subject to the 401(k) regulations, and not those for cafeteria plans.

It has been several years since the IRS finalized guidance on when employees can make mid-year changes to their cafeteria plan elections. However, these rules can sometimes be difficult to apply, given the array of circumstances that life can sometimes throw our way. The IRS guidance does include many examples on how to apply the rules. Also, cafeteria and spending account administrators, or your benefits professional, can be useful sources of information in understanding the election change rules.

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