New DOL Rules Could Change Plan Classes

It is impossible to predict how these new rules will affect all employers. That is why it is important for insurance advisors to take a close look at their clients employee benefits plans to identify whether the number of employees who are eligible for coverage or are entitled to a particular type or amount of benefit might increase or decrease because of the changes.

By alerting clients of the need to look beyond the overtime issue and consider how the new regulations could affect employee benefits plans, insurance advisors might be able to help companies limit their exposure to lawsuits, control their insurance costs and address employee-retention issues that arise because of changes to benefits.

All employers, big or small, want to avoid being sued. The new DOL regulations will likely result in a flurry of FLSA-related lawsuits as courts are called on to interpret the rules. It will be important for insurance advisors to help companies learn how they can adjust their employee benefits plans to minimize their risk of a lawsuit.

Another key factor for employers will be the effect of the new regulations on their cost of insurance. Employee benefits plans that offer different types or levels of coverage for different classes of workers typically provide richer coverage for exempt employees. In cases where a number of higher risk employees become eligible for coverage, employers could see their premiums rise. Insurance advisors can help their clients understand the impact on their benefits plans and work with them to keep costs to a minimum.

A more intangible potential side effect of changes to employees benefits is employee retention. If a number of employees who had been eligible previously for coverage suddenly become ineligible, they may leave for jobs that offer benefits. If that happens, the employer might have to acquire and train several employees in a short period of time. Insurance advisors can take this opportunity to help their clients avoid the expense and headaches of hiring and training by providing benefits solutions to help them retain experienced, productive employees.

The issue of how to determine which employees are exempt from the overtime requirement is a politically charged one. It is still unclear exactly how the new DOL guidelines will be applied. That uncertainty makes it imperative that insurance advisors stay up-to-date on changes to how employees are classified and work with their clients to find the best solutions for their changing insurance needs.

is an assistant counsel in the employee benefits law department at Standard Insurance Company, Portland, Ore. He can be reached at [email protected].

Reproduced from National Underwriter Edition, January 6, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.