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Employer Reporting Responsibilities and Employee Rights

Any employer with 11 or more employees is required to maintain records of work-related injuries. An injury is considered work related if:

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· it occurred on the employer’s premises

· it occurred as a result of work-related activities

· the employee was required to be there by the employer

· the employee was traveling to work or to a place as required by the employer

The records must contain the following information:

· incident date

· category of illness, if applicable

· description of incident

· identification of affected employee

· extent of injury or illness

· if incident was an illness, whether the employee was transferred or terminated

This information must be posted for all employees to see each year from February 1 to March 1.

Within six days of any incident, a report must be filed with OSHA. Any incident involving five or more employees, or any fatality, must be reported within 48 hours. Employers in some relatively low-risk industries are not required to report.

According to the act, employees have the right to request and participate in inspections, receive notice of an employer’s violations or citations, be given access to monitoring procedures and results, and be given access to medical information.

Employer defenses to charges of violating the general duty clause include:

· reckless behavior—when the employee is willfully reckless, notwithstanding the employer’s efforts to train and educate workers about the dangers and hazards. The employer will be held liable for only the foreseeable, plausible, and therefore, preventable acts of employees.

· physical or economic impossibility of compliance—when an employer has no choice and employees refuse completely to comply with a safety standard, the employer can apply for a variance, meaning this particular employer is free from compliance based on the specific situation.

· employee reduction of risk—when an employer cannot on its own make a workplace safe, but through acts of the employees the workplace can be made safe, the employer is allowed to require those acts for anyone who chooses to work there.

· greater hazard defense—employers may assert that compliance with a health and safety standard would subject the employees to a greater hazard than that which would be prevented by the compliance.

Ask Yourself

Review Questions

Review Questions

1. True or false: Baker was an employer with an exemplary safety record for nearly ten years when an accident took the life of an employee. In the ensuing investigation to determine OSHA liability, Baker cannot assert as evidence his outstanding safety record.

2. Briefly describe the two duties imposed on employers by section 5(a) of the Occupational Safety and Health Act.

3. Under what circumstances is an employer protected against employee action for refusing to work in a particular area or perform a particular task?

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Topic 4.7: Employee Retirement Income Security Act

Congress passed the Employee Retirement Income Security Act (ERISA) in 1974 in response to growing concern for the protection of worker pension plans. At that time, it was increasingly evident that employers did not have sufficient funds available to meet their pension obligations. The purpose of ERISA is to encourage cautious and careful management of retirement funds by employers.

ERISA applies to all employee benefit plans, defined as “any plan, fund, or program established or maintained for the purpose of providing medical, surgical, or hospital care or benefits in the event of sickness, accident, death or unemployment or vacation benefits.” ERISA does not protect welfare benefits.

ERISA protects two types of plans—defined benefits and defined contributions. Defined contribution plans are those in which the amount of the contribution by each employee is set and the employee merely receives whatever amount (principal and interest) is in the account at the time of retirement. Defined benefit plans are those in which the amount the employee is to receive at retirement is set at the time the employee enters the plan. It is similar to an annuity.

Eligibility and Vesting Rules

ERISA requires that all individuals age 21 or over who have completed one year of work must be covered by their employer’s pension plan. An employee’s right to his or her interest in a plan is considered vested (acquiring rights) after 3 years and must be 100 percent and nonforfeitable by 7 years. However, the employee may not have access to the money until retirement.

Fiduciary Duties, Reporting, and Disclosure Requirements

ERISA establishes specific requirements (or fiduciary duties) that each plan coordinator (or fiduciary) must follow. Fiduciaries are held to a high standard of loyalty to the fund participants and are obligated to act first and foremost in the best interests of the fund.

Fiduciaries are directed to manage the fund “with the care, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.” In other words, they are to act with reasonable care.

In 1985, Congress created the Consolidated Omnibus Budget Reconciliation Act (COBRA) that set the standards for retrieval (withdrawal) of funds by pension managers. Before an employer can terminate a plan, the employer must purchase a fully funded annuity for the plan beneficiaries who have already retired and create a new plan with adequate funds to meet the existing obligations for current employees.

If the employee is legally terminated or otherwise loses the right to benefits, COBRA requires the employer to extend employee health insurance coverage for up to 18 months at the rates originally charged.

ERISA also specifies:

· diversification of fund portfolios

· a prohibition on conflicts of interest

· employee access to information concerning the plan

Employers must fund the normal costs of the plan each year and amortize their employees’ liabilities from previous service over no more than 40 years, and from the formation of new plans over 30 years. They must also purchase insurance from the Pension Benefits Guarantee Corporation (PBGC) to cover potential losses if a plan terminates. Pensions for retired workers must be insured at 100 percent while those of current workers must be insured at the level vested at the time of termination.

The Department of Labor enforces ERISA issues related to disclosure requirements. The Internal Revenue Service enforces issues related to vesting and funding requirements.

An individual may file an action under ERISA. In addition, there is an antiretaliation clause. Employers have the right to reduce or modify employee benefits as long as similarly situated participants are treated alike.

Ask Yourself

Review Questions

1. True or false: ERISA does not protect retirement plans against misfeasance by plan trustees.

2. If the amount an employee puts into a pension plan is specified, but the amount paid out in benefits is not, the employee is:

a. enrolled in a defined benefit plan.

b. enrolled in a defined welfare plan.

c. eligible for PBGC protection.

d. enrolled in a defined contribution plan.

3. Distinguish between pension benefits and welfare benefits.

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Topic 4.8: Workers’ Compensation

Before workers’ compensation statutes were common, employees injured on the job had very little recourse to recover damages for their injuries. They could sue their employer. That was not likely because the injured employee generally had very few financial resources to support a lawsuit. But if the employee did prevail in a suit against an employer, the employee could be awarded substantial money, creating an uncertain financial exposure for employers.

Workers’ compensation laws were designed as a trade-off for both the employee and the employer. In exchange for giving up the right to sue, the employee receives a relatively easy and quick compensation for the work-related disability. The employer is relieved of the financial risk of paying a large damage award to an employee for a workplace accident.

The purpose of workers’ compensation laws is to make the workplace operate more efficiently by lowering the number of accidents, lost time, and lower production. Workers’ compensation statutes are remedial in nature, meaning that they are to be broadly construed to permit recovery when possible.

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