A review of business and employment laws that you must follow as your practice grows.
When well planned and executed, ophthalmic practice expansion is certainly beneficial. But there's a downside to expansion that you may not realize: legal landmines.
First things first
The purpose of expansion is to help your business grow. Practices usually add providers to see more patients, offer a greater range of services, bring previous referrals in-house and win more (hopefully favorable) managed care contracts.
But business law problems can accompany practice expansion. What good is it to build your share in the marketplace only to lose ground in the courtroom?
Typically, as your practice adds providers -- and new money comes in -- you need more clinical, clerical and administrative staff members to keep the business running.
At some point, your growing practice may cross a numerical threshold and, at least technically, be in violation of laws that didn't apply previously. Some laws affecting growing practices (a.k.a. legal landmines) carry significant penalties.
Take precautions
To avoid legal landmines, take the following precautions:
- Know the laws that apply to your practice today and that may apply tomorrow.
- Take note of the numeric thresholds established for each law and check your legal obligations every time you add staff members, whether they're providers or not.
- Develop appropriate larger-practice policies before you need them.
- Know the laws that apply to interpersonal relationships.
- Establish the necessary rules and expectations.
- Make sure all practice members read, understand and agree to obey your policies.
- Tolerate no significant deviation or interpretation.
- Deal with problems immediately, firmly and without exception.
To put it succinctly: Be prepared.
Changing times and attitudes
You should focus on laws that reflect changing times and attitudes. Make sure you have:
- a sexual harassment policy
- an e-mail and Internet policy
- a dress code
- a comprehensive policy for preventing employment discrimination.
Also, use formal job descriptions, bias-free interviewing protocols/tools, an established employee evaluation process and merit-based compensation (e.g., salary, bonuses, raises, benefits, etc.). All should be standardized.
Document everything
Keep personnel files for each employee. Include evaluations, which consist of any violations of your code of conduct or other disciplinary problems experienced and actions taken. Save all leave-of-absence request forms and records pertaining to employee work hours and absences.
Document all of your practice policies in your practice personnel policy manual. Update it regularly and ad hoc. Explain it, if necessary. Make sure every practice member receives a copy of your policies and signs a form acknowledging that he or she has received them, understands them and agrees to abide by them.
And if an employee quits or is fired, pull out his personnel file and take detailed notes. This is especially important during the exit interview.
Laws affecting growing practices
Many federal, state and local laws affect employers. Generally, federal laws apply to employers of relatively large numbers of employees. But the applicable state and local laws can make employers of even relatively few employees subject to laws similar to the federal laws described in the chart on the next page. Far too many state and local laws exist to summarize here. Therefore, you need to determine the employee thresholds that may apply to your state or local area.
The chart on the following page provides essential information about the federal laws affecting growing practices.
Federal Laws Affecting Growing Practices
|
LAW |
FLSA |
ADEA |
COBRA |
ADA |
FMLA |
|
Fair Labor Standards Act of 1938 |
Age Discrimination in Employment Act of 1967 |
Consolidated Omnibus Reconciliation Act of 1985 a |
Americans with Disabilities Act of 1990 |
Family and Medical Leave Act of 1993 |
|
|
Purpose: |
Requires employers engaged in interstate commerce to pay their non-exempt employees a minimum wage and to pay overtime for hours worked in excess of 40 per week at a rate of one-and-one-half times the regular rate of pay. |
Prohibits covered employers from discriminating against any individual 40 years of age or older on the basis of age. |
To provide health plan coverage to qualified beneficiaries after employment termination; employer must provide identical coverage, but may offer alternative coverage. |
To prohibit discrimination against qualified disabled individuals by requiring employers to remove obstacles (unless this causes undue hardship on the employer) so that qualified disabled individuals can have access to employment opportunities. |
To establish a federally protected right for eligible employees to take as much as 12 weeks of unpaid leave per year for a serious health condition. Applicable to an employee or a member of his immediate family, or for the birth/placement of a child. |
|
Qualified or Covered Employer: |
Any employer engaged in interstate commerce, producing goods for interstate commerce, or handling, selling or working on goods moved in interstate commerce. (You should be aware that certain state and local governments have enacted their own laws that apply to workers not covered by the FLSA.) |
Twenty or more employees. |
Twenty or more employees on more than 50% of the working days during the previous calendar year. |
Fifteen or more employees. |
Fifty or more employees in the private sector. Employer must have 50 or more employees each working day during 20 or more calendar weeks in the current or preceding calendar year. |
|
Qualified or Covered Employee: |
Any individual employed by an employer. |
Any employee age 40 or over. |
Qualified Beneficiary (QB): employee, employee's spouse or dependent covered the day before the qualifying event. |
Applies equally to qualified job applicants and current employees with disabilities. |
To be covered, the employee must have worked for a covered employer for at least 12 months and have worked at least 1,250 hours during the 12 months preceding the leaving date. |
|
Definitions: |
Workweek : Seven consecutive days; employer may determine the workweek. The employer's workweek doesn't have to coincide with the calendar week; e.g., employer's workweek begins on Wednesday and ends on Tuesday.
Regular pay rate : Holiday, vacation and sick time are not included in calculating the employee's regular pay rate.Exempt employees : "White collar" employees: those employed in a bona fide executive, administrative or professional capacity. |
Covered employment practices : Any practice involving employment advertising, pre-employment inquiries, hiring, disciplinary action and termination.
Exception : Individuals who are bona fide executives or are in high policy-making positions, at least 65 years of age, held their position for at least two years and entitled to $44,000 in retirement income. |
Qualifying events : Listed below is how long COBRA covers a QB after the specified qualifying event.18 months: Includes voluntary or involuntary termination of employment for any reason except gross misconduct.29 months: Involves employees who must leave the job due to disability.36 months: Extends coverage for spouses and dependents. Qualifying events include if the employee dies or if he divorces/separates from his spouse.
Benefits subject to COBRA : Any health plan (e.g., medical insurance, dental insurance, prescription drug plan, vision plan, etc.) maintained by the employer.Payment rate: May not exceed 102% of the cost of coverage for similarly situated active employees/ beneficiaries; QB must be allowed to make monthly payments; 30-day grace period each month.Coverage termination : If QB fails to make timely payment; if QB becomes enrolled in Medicare; if employer terminates coverage for active employees.
Notification Requirements : Must provide written notice at the beginning of the plan coverage; must notify QB of COBRA rights within 14 days of qualifying event. |
Disability : Physical or mental impairment -- such as epilepsy, hearing loss, speech impairment, cerebral palsy, HIV infection, cancer or heart disease -- that substantially limits a major life activity.
Major life activities : Basic activities the average person can perform with little or no difficulty.Reasonable accommodation : Making modifications or adjustments to a job application process; making facilities readily accessible; and job restructuring.
Undue hardship : An action requiring significant difficulty or expense. Factors to be considered include the nature and cost of the accommodation needed and the facility/employer's overall financial resources. |
Serious health condition : Illness, injury, impairment or physical/mental conditions involving either inpatient care in a hospital, hospice, or residential medical care facility. Also includes any subsequent treatment or continuing treatment by a health care provider involving a period of incapacity of more than three consecutive calendar days.
Job restoration : An employee returning from FMLA leave must be restored to his original job or its equivalent, with equivalent pay, benefits and other employment terms/conditions.Key employee exception : Where restoration would cause substantial and grievous economic injury to the employer's operations.
Key employees : Those among the highest paid 10% of all the employer's personnel employed within a 75-mile radius of the employer's work site. |
Expand without exploding
Don't be blindsided by business and employment laws that may not apply to your practice now, but may in the future. Be particularly cautious if your practice is adding or even considering adding provider and/or non-provider staff members.
The only surefire way for you to avoid the aforementioned legal landmines is to know the federal, state and local laws. Review the thresholds. Stay abreast of changes in these laws. If you have a problem -- or even suspect that you may have one -- seek the advice of a knowledgeable attorney.
Mark E. Kropiewnicki, J.D., LL.M., a principal consultant with The Health Care Group, Inc., is a principal in and the president of Health Care Law Associates, P.C., based in Plymouth Meeting, Pa. When not advising physicians and practices on their business law obligations, he writes and lectures on a variety of practice management and health law topics. He can be reached at (800) 473-0032
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