Lancaster Law Blog : Lancaster PA Lawyer & Attorney : Russell Krafft & Gruber Law Firm : Pennsylvania : Lancaster's Legal Link

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Last week I had the opportunity to get out of the office and enjoy an afternoon playing golf. I was invited to play in the Lampeter-Strasburg Football Booster Club Golf Tournament at Meadia Heights and it was a great event that supported a worthy cause. During the dinner that followed the tournament, an interesting conversation arose regarding the hole sponsors and the prizes offered for things such as a hole in one. In this event, as in many golf tournaments, a car was offered as a prize for a hole in one on the par 3, 18th hole. The owner of the dealership who offered the prize was seated at our table and commented on the importance of removing the car and the signs offering the prize from the course immediately following the tournament. This caused some to look at me and ask why. 

In fact, Pennsylvania Courts have addressed this issue a number of times and the Court has taken the position that if a prize (cash or a car) is offered in exchange for the performance of an act (hole in one), then a valid contract exists and when the hole in one is made, the prize must be awarded. This is true even where the person who makes a hole in one is not part of the original tournament in which the car was offered. If it cannot be determined from the sign offering the prize that it is limited to a specific time or a specific tournament, then anyone who performs the act of making a hole in one is eligible to claim the prize.

Not all of the judges who heard this case, however, were in agreement that the car should be awarded for the hole in one. In fact, Judge Zoran Popovich wrote a dissenting opinion in the case mentioned above and it was his opinion that the act of hitting a hole in one is such a chance event in which skill is an almost irrelevant factor, that when you combine the chance or luck event of hitting a hole in one with the entry fee of the tournament and the prize of giving away a car for a hole in one, that you have all the necessary elements of gambling, which is illegal in this fashion in the State of Pennsylvania. I am sure those who have had a hole in one take issue with Judge Popovich's opinion that little or no skill is involved. 

Fortunately, or unfortunately, depending on your perspective, this issue was not of concern at this tournament as no one hit a hole in one at Meadia on Monday. Thanks again to the Lampeter-Strasburg Football Booster Club, the tournament organizers and the L-S football players and cheerleaders. It was a great community event.

For all of our readers who are golfers, check out this interesting video of a shot made by Vijay Singh during a practice round on the 16th hole at Augusta National. Is it skill or luck – I’ll let you be the judge.

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Yesterday Craig Russell and I attended the ribbon cutting ceremony for the opening of the Lancaster County Convention Center and Penn Square Marriott. We have served as solicitors for the Lancaster County Convention Center Authority since July 2007, and it has been an interesting and challenging assignment. We appreciate the opportunity to work with dedicated and capable Authority employees Kevin Molloy, Mary Ellen Davis and Lynette Colon, as well as Board Chairman Art Morris and other Board members, who volunteer their time and have provided talent, judgment and commitment to the project.

As you can imagine, everyone at yesterday's ceremony was excited and in a great mood. The contributions of politicians and community leaders, contractors and construction managers, architects, and owners were acknowledged.   For us, who reviewed countless two dimensional plans and documents referring to various spaces, it was great to see the real building, not a concept, computer model or something on paper. We discussed that one of the most gratifying things about doing real estate development work is the opportunity to see a tangible and enduring end result. That is surely the case with the Lancaster County Convention Center, and we appreciate the opportunity to be part of the project.

P.S. We had dinner at the Penn Square Grille, which is located on street level facing King Street, where Appel & Weber used to be. Let me recommend it - beautiful, gracious service and fantastic menu and food.

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On Tuesday, June 2, 2009, I served as a faculty member for "Landlord & Tenant Law: Beyond the Basics". The seminar was offered by Sterling Education Services, Inc., and approximately twenty-five people from varying backgrounds attended. Although there were lawyers in attendance, the majority of the participants were property managers and landlords who deal with ongoing and troubling tenant issues on a daily basis. Some of our clients attended and as part of our discussions, shared some of the challenges they face in managing the landlord/tenant relationship.

 My presentation focused on problem tenants, landlords' rights and options when a tenant is in default of his or her lease, and handling an eviction hearing before the Magisterial District Judge. Several topics sparked discussion among and questions from the participants, including the treatment and/or handling of illegal immigrants in a rental situation, and how and when to dispose of personal items left behind by a tenant who has vacated the leased premises. The varied levels of experience among the participants gave each audience member an opportunity to hear about different ways in which to proceed with a difficult tenant situation, which they may have never considered.

 Regardless of whether we were talking about a tenant's failure to pay rent, failure to abide by the rules and regulations, or failure to notify the landlord of problems with the leased property, our discussions always came back to the lease provisions. This seminar reinforced for everyone in attendance the importance of having a written lease that clearly sets forth a tenant's obligations. From time to time, as new tenants are coming into a residential or commercial property you may own, consider revising an outdated lease. 

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One of the questions I am frequently asked by nearly every client who seeks assistance with the ARD Program following a DUI arrest is, “Will my completion of the ARD Program count as a conviction?” The answer . . . it depends.

With respect to job applications submitted to potential employers, many employers ask on a job application whether or not the applicant has been convicted of a felony or misdemeanor in their lifetime, or within a certain number of years from the date of application. In this context, if a person has successfully completed the ARD Program, they may answer, “no” to this question. ARD in Pennsylvania is not considered a conviction, but is, rather, an alternative means of disposition for a first DUI offense. It is offered as an opportunity for first time offenders to avoid serving a jail sentence and avoid having a conviction. 

A person who has successfully completed the ARD program is eligible to have the charge expunged from his or her record, which would guarantee that a typical employer running a background check would have no information pertaining to the charge. This is not to say that you should not be open and honest with a potential employer, but when asked if you have been convicted of a crime, you can confidently say no.   

So how does your ARD count as a conviction? Successful completion of the ARD Program does count as a conviction for purposes of subsequent DUI offenses. PennDOT and other state and local police departments retain information with regard to persons who successfully complete the ARD Program. This information is retained because, while an ARD may not be a conviction, it does count as a first offense for sentencing purposes if a person is arrested for a subsequent DUI offense within a period of ten (10) years after the first “conviction.” For an additional explanation on the DUI penalties, click here.

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East Lampeter Township lost its appeal to the Pennsylvania Commonwealth Court in the case of In Re: Agricultural Security Area in East Lampeter Township.  The case is an ongoing battle between the township and a group of Amish farmers who wish to create an Agricultural Security Area (ASA) for their properties in East Lampeter Township, Lancaster County.  In 2007, the farmers petitioned the Township to establish an ASA as permitted by the Agricultural Area Security Law. The farmers wanted the Township to designate an area encompassing 13 farms as an ASA.  After the petition was filed, the Township Planning Commission recommended that all but one of the properties be included in an ASA. However, after two public hearings were held, the Board of Supervisors concluded that the ASA was not necessary. Specifically, the board determined that the Township had adopted planning tools that would prevent inappropriate development of agricultural lands.

The farmers appealed to the Lancaster County Court of Common Pleas and a two-judge panel reversed the Board's decision, giving the farmers their first victory. On appeal to the Commonwealth Court, the Township argued that it had the discretion under the Agricultural Area Security Law to decide whether to create the ASA. The Pennsylvania State Association of Township Supervisors (PSATS) also weighed in on the appeal, contending that the General Assembly intended to give substantial discretion to the governing body of a municipality with respect to the creation of an ASA. The Commonwealth Court, indicating that the Lancaster County judicial panel adequately considered the issues, disagreed and affirmed the decision, giving the farmers another victory. Some additional details about the case are outlined in a June 2 article in the Lancaster New Era.

The Township could seek review by the Pennsylvania Supreme Court. However, appeals to the Commonwealth's highest court are discretionary and the court refuses the majority of requests for review. Only cases presenting novel questions or questions of first impression are accepted for review.

This case could set a precedent for agricultural landowners across Pennsylvania. If a governing body rejects a petition for an ASA and does so for reasons not enunciated specifically in the statute, the decision could be challenged.

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Lately, everywhere you look you can find news about “Jon and Kate Plus 8” from Berks County. It is one of the top stories on WGAL’s website today and the Sunday News featured a story on the front page about their former home in Lancaster County. While I tend to tire of the inundation of celebrity news these days, I did find the issue of PA Child Labor Laws somewhat interesting. I will not add to the debate with a long commentary about the Gosselin’s personal lives or the show’s ratings, however, because of the local interest I did take a moment to pull up Pennsylvania’s Child Labor Laws. The PA Department of Labor and Industry (L&I) is reportedly investigating a complaint and many mainstream and tabloid news organizations anxiously await its conclusion. In Pennsylvania, the minimum age for employment in theater, modeling and television is seven. Minors and infants may be in the cast of a motion picture if a special permit is obtained. Reality TV was nonexistent when our child labor laws were adopted so it will be interesting to see if they conclude that the Gosselin’s home is a “set” and the children are “performers”. Section 7.1 of the PA Child Labor Law Act is rather limited even for more traditional media productions. Contrast the California Child Labor Law which has a lengthy Entertainment Section with specific guidelines for children of different ages. With the current popularity of Reality TV, states may need to update or clarify Child Labor Laws to specifically include or exempt these types of productions.

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The Central Penn Business Journal recently posted an interesting article regarding non-compete agreements - Recession Intensifies Non-Compete Enforcement:

The recession is deepening employers' interest in non-compete agreements, which curb employees from bolting to a rival company or starting their own, according to local attorneys.

The agreements have become increasingly common over the last few years, even as Pennsylvania courts have made them tougher to enforce, attorneys said.

A good non-compete agreement may be even more important during an economic downturn when the loss of a key employee could potentially impact your business beyond recession related losses.  However, a non-compete that is not enforceable will provide a false sense of security.  Last year I posted a popular article on our employment law blog that outlined some things to consider - Non-Competes: Pigs Get Fed, But Hogs Get Slaughtered.

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In his post on May 20, Matthew Grosh addressed the effect of the referendum lifting the alcohol sales ban in West Lampeter Township.  Yesterday morning an article in the Intelligencer Journal addressed some of the same issues. As there is a significant amount of local interest in this issue, I would like to provide some additional clarification regarding the process of obtaining a liquor license.

There are several types of liquor licenses available in Pennsylvania, including retail, specialty and hotel licenses. Many establishments that serve alcohol hold retail licenses, which are subject to Pennsylvania Liquor Code quota requirements. The Liquor Code limits the number of retail licenses to one per each 3,000 residents of a county. This quota often requires entities seeking to obtain a license to purchase an existing license and subsequently transfer it from the current owner. If the license is owned by an establishment in a different municipality, approval by the municipal governing body is required prior to approval by the PLCB. An inter-municipal transfer adds time and expense to the process of obtaining a liquor license.

Hotel liquor licenses are not subject to quota requirements. In order to obtain a hotel license, the licensee must meet criteria specific to hotels, including maintaining a certain number of guest rooms based on the population of the municipality. Representatives from Willow Valley have indicated that the resort will apply for a hotel liquor license. This allows Willow Valley to apply directly to the PLCB for the license, rather than having to purchase an existing license and request approval from the Township Board of Supervisors for the transfer of the license from a neighboring municipality. 

If Willow Valley begins the application process in the near future, it is very possible that it will be serving alcoholic beverages by this fall.

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On May 19, 2009, voters in West Lampeter Township overturned a ban on alcohol sales that had been in effect for 74 years. While the referendum had primarily been sought by the owners of the Willow Valley Resort, alcohol sales will now be allowed in the entire Township. Does this mean that bars and beer distributors will start popping up all over the Township? Based on our experience in representing restaurants and other liquor license holders, we do not believe such a result will occur.

In Pennsylvania, in order for anyone to open a business that sells alcohol, they must obtain a liquor license from the Pennsylvania Liquor Control Board (PA LCB). The process involves a detailed analysis of not only the owners and managers of the business in question, but also of the property in which sales are to take place. If those persons or premises do not meet the PA LCB standards, the license will not be approved.

Additionally, section 4-461 of the Pennsylvania Liquor Code generally puts a cap on the number of licenses issued in a particular county that is based on population, although there are exceptions for golf courses, bona fide hotels and other public venues. Because Lancaster County is usually at or near its cap, licenses will likely have to be purchased from another license holder, usually for a significant price. The license will then have to be transferred into the Township, which will be subject to the PA LCB's approval and the Township's zoning ordinances.

There are also protections for people who live near a proposed location for alcohol sales. For example, certain eligible individuals and institutions within a certain proximity to the location of the intended bar or restaurant can file a protest with the PA LCB. 

Realistically, it is likely that a limited number of restaurants, either existing or new, will be able to meet the standards and afford the costs described above and obtain licenses. There may even be a new beer distributor or two. However, for the reasons discussed above, a flood of bars is unlikely.

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Julie Miller will be on the faculty for the Sterling Education seminar, Landlord & Tenant Law: Beyond the Basics on June 2, 2009. This seminar is an opportunity for property managers, developers, building owners, leasing agents, landlords & tenants and other real estate professionals to continue their education.

Program Summary

"This landlord-tenant law seminar covers the rights and responsibilities of both parties in rental agreements. Our presenters, experts in the successful management of rental property, will share their experience and judgment on handling the more difficult legal and practical aspects of landlord-tenant law and provide workable answers to your questions. You will benefit from this seminar if you are involved in any aspect of property rentals."

If you are interested in attending you can register at the Sterling Education website.

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In a previous post, I described the new Pennsylvania Home Improvement Consumer Protection Act (the "Act"), which takes effect on July 1, 2009, and identified which types of contractors are required to register. If the Act applies to you, it is important that the contracts you enter into for home improvement work conform with the Act's requirements. A failure to do so will generally prevent you from being able to enforce the contract if your client fails to pay.

In order to comply with the Act, contracts must:

• be legibly written and contain the registration number of the contractor along with the Bureau of Consumer Protection's toll free number, which currently is (888) 520-6680;
• be signed by the contractor and the homeowner or their respective agents;
• lay out the entire agreement related to the work to be performed and include copies of all required notices and special clauses;
• include the date the contract is entered into and the approximate starting and completion dates;
• contain the name, address (no PO boxes) and telephone number of the contractor and any subcontractors known at the date of signing the contract;
• describe the work to be performed, the materials to be used, and provide specifications that cannot be changed without a written change order signed by the parties;
• include the total sales price due under the contract, along with any down payments and amounts advanced for the purchase of special order materials;
•  identify the current amount of insurance coverage maintained by contractor with minimum amounts of $50,000 each for personal injury liability and property damage; and
• provide owner with a "right of rescission" which allows the homeowner to rescind the contract within three business days of signing without penalty.

However, even if all of the above conditions are met, a contract will be generally voidable under the Act if it contains any of the following clauses:

• hold contractor or subcontractors harmless in matters of liability;
• waivers of government health, life, safety or building code requirements;
• confession of judgment;
•  waiver of right to jury trial or any rights under the Act by homeowner;
•  an assignment of or order for the payment of wages or other compensation for services;
•  any clause prohibiting homeowners from asserting any claim or defense they would otherwise have under the contracts;
• any award of attorney fees or legal costs to contractor;
• any provisions relieving contractor of liability connected to contractor's collection of payments or repossession of goods;

Also, a contract cannot contain an automatic or recurring renewal provision unless the contract clearly and conspicuously states a procedure through which a homeowner can cancel the renewal through written notice to contractor via first class mail that is postmarked at least three business days before the renewal is to occur. In addition, the contractor must notify, via mail, the homeowner of such right to cancel the renewal no earlier than 20 days nor late than 10 days before the renewal.

Further, an arbitration clause may be attached as an addendum, but it must strictly adhere to the form required under the Act. Finally, a fully executed copy of the contract must be provided to the homeowner on the day of signing. Please let us know if we can help if you have any questions regarding your contracts or the Act in general. Also, for more information, please see the PA Attorney General's list of related FAQs or the Building Industry Association of Lancaster County's information page.

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I recently received a question from a reader that may be of interest to others. Following is a portion of the question and my response:

I read your article on COBRA it was very informative, Could you please tell me where I can get an answer to this question. I was laid off from my job in February. I am getting COBRA under the ARRA where my former employer pays 65% of my health benefits. I also am collecting unemployment.

My former company wants me to work a few weekend for them, will I loose my COBRA benefits if I do this.

The American Recovery and Reinvestment Act (ARRA) premium assistance subsidy ends not when you become employed but only when you become eligible for Medicare or another group health plan (such as a plan sponsored by a new employer or a spouse's employer). In fact the law imposes a duty on the recipient to notify the plan if they become eligible for coverage under another group health plan or Medicare, and failure to do so can result in a tax penalty. The subsidy will also end 9 months after the first day of the first month to which the subsidy applies or when COBRA benefits are no longer available to you. 

Generally, COBRA coverage is available for 18 months after termination of employment and may end earlier if: 

• Premiums are not paid on a timely basis

• The employer ceases to maintain any group health plan

• After the COBRA election, coverage is obtained with another employer group health plan that does not contain any exclusion or limitation with respect to any pre-existing condition of such beneficiary. However, if other group health coverage is obtained prior to the COBRA election, COBRA coverage may not be discontinued, even if the other coverage continues after the COBRA election.

• After the COBRA election, a beneficiary becomes entitled to Medicare benefits. However, if Medicare is obtained prior to COBRA election, COBRA coverage may not be discontinued, even if the other coverage continues after the COBRA election.

The COBRA statute provides that eligibility for coverage ends on the date that the individual first becomes covered under any other group health plan (as an employee or otherwise) which does not contain any exclusion or limitation with respect to any preexisting condition of such beneficiary. However, this year's ARRA provides that eligibility for subsidy ends the first date that the individual is eligible for coverage under any other group plan, coverage under a flexible spending arrangement or coverage of treatment furnished by the employer, without mention of any exclusion or limitation with respect to any pre-existing condition.

I hope this answers your question, which we thought was an interesting one.

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A few years ago, Dateline NBC ran a piece with several horror stories from victims of unlicensed and unscrupulous home contractors. In some cases, unwary consumers shelled out more than $100,000 and faced foreclosure without work being performed. Because the contractors in question were typically not licensed, their victims could not track them down and obtain refunds. 

Such news is not just disconcerting to consumers. The majority of contractors who run their businesses in a conscientious and professional manner can be just as frustrated with such reports because it reflects poorly on them. 

The Pennsylvania Legislature has recently addressed this issue in enacting the new Pennsylvania Home Improvement Consumer Protection Act (the "Act"), which takes effect July 1, 2009. The Act requires home improvement contractors to register with the Attorney General and provide detailed information on the identities of their principals and the location of their offices. Such information in intended to be used to keep track of consumer complaints against individual contractors and to help consumers locate contractors to properly enforce contractual agreements.

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Keeping accurate and updated records are essential for the health of your business. The following questions are provided as guidance when assessing the health of your business entity:

• Have initial filings been made?

Fictitious Name Registration, Articles of Incorporation, EIN/TIN Application, LLP Registration, LLC Certificate of Organization, Subchapter “S” Election

• Are all required filings up-to-date?

Fictitious Name Registration, Decennial Filing, Amendments to Articles of Incorporation, Annual LLP Registration, Change of Registered Address

• Do you have / do you need to update:

Fictitious Name Registration, Bylaws, Corporate/Shareholder Buy-Sell Agreements, Partnership Agreements, LLC Operating Agreements  

•  Are corporate records up-to-date?

Annual Shareholder Meeting Minutes, Directors Meeting Minutes

• Are your record keeping procedures accurate and adequate?         

Corporate Records, Business Records, Tax Records

• When was your last Shareholders meeting? Directors meeting?

• Are your legal and financial advisors aware of personal matters that could affect business concerns or visa versa?

• Are your bookkeeping procedures and records accurate, complete, consistent and reviewed?

• Do you have a Business Succession Plan? If yes, is it up to date?

• Are your Estate Planning Documents up-to-date? Adequate for your business and personal needs?

Remember an ounce of prevention is worth a pound of cure. Make sure your business is in good health.

Download: Business Wellness Checklist

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One advantage of falling real estate values may be the opportunity for property owners to obtain a lower assessment which results in lower property taxes. Property assessments are based on fair market value. When a factor known as the common level ratio is applied to the assessment amount, the resulting dollar amount should be the fair market value. 

In Lancaster County, the common level ratio for the period July 1, 2008 to July 1, 2009 is 1.36. Accordingly, an assessment of $100,000 means that the fair market value of the property should be $136,000. If the property has a fair market value of less than the assessment with the common level ratio applied, the property owner may petition the County Assessment Office for a reduction in assessment. Generally, it is necessary to have an appraisal or some documentation in support of the fair market value. 

Last summer my husband and I bought a home for a price that was approximately $20,000 less than the value calculated by applying the common level ratio to the assessed value. We were able to get our appeal in before the August 1, 2008 deadline, and in November, our assessment was reduced by $20,000 based on our purchase price. In the world of property assessment and taxes, this is not earth shattering, but it will save us close to $500 a year in taxes. 

Assessment appeals must be filed on August 1 of the year preceding the tax year on appeal. If the fair market value of your property is significantly less than your assessed value with the common level ratio applied, and you can establish your fair market value in some way, it may be worthwhile to file an appeal with the Assessment Office. We would be happy to help you with that process, and you should contact our real estate paralegal, Sharon Friesen, or me. 

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In tough economic times, businesses tend to focus on larger issues such as their bottom lines, falling profit projections, and the streamlining of production. However a key component in the health of a business is often overlooked – the effects that economically stressed employees can have on their employers. Such effects include personal bankruptcies, wage attachments, theft and a decline in productivity caused by the psychological stress. Thus it is essential for employers to understand the key factors at play and implement sound policies to minimize damage.

• Stress and Loss of Productivity   Like many other types of psychological stress, anxiety caused by economic problems prevents employees from focusing on their work. Simply put, employers are getting less production per dollar of wages or salary paid. While identifying those in need of psychological counseling will help, many businesses have had success providing economic counseling and education as well to make their employees more financially literate. Please click here for more detailed information from the Partnership for Workplace Mental Health on combating the effects of such stress.

Other issues that will arise more frequently in the coming months include:

• Garnishment/Attachment of Wages
• Employee Bankruptcy
• Worries about Temptation for Theft

We addressed these issues in a blog post in April 2008, when we still referred to the condition of our economy as only an “economic downturn” but the general principles still apply. Please review this post to learn more about legal limitations placed on employer actions with regard to an employee’s financial problems. 

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At tax time, many people consider their financial status. Many of us are looking at broker statements for the first time because we have been unwilling to face the bad news. Regardless of how difficult the year has been financially, however, this is an appropriate time to consider looking at your estate planning documents to see whether those documents are up-to-date. For example, are the persons that you have appointed as your executors or trustees still the best choices for those jobs?

The fact that your estate may be less than it was last year at this time does not make the proper choice of persons any less important. Indeed, shrinkage in estates makes it all the more important to select the right people for these important positions of trust and responsibility, so called fiduciary positions, who will be careful and able to adapt to changing market conditions.

Do you have a current power of attorney? Stockbrokers, banks and transfer agents are becoming more insistent that these documents be current. Are the persons you have appointed as your agents or powers of attorney still the ones who are best suited for those positions to manage your assets if you became incapacitated? 

Are the persons that you have appointed as agents on your living wills or health care powers of attorneys able to cope with what can be difficult medical decisions, especially in light of insurance carriers that can be unwilling to pay for unnecessary tests and procedures. Are these the people who would act as your advocates in the face of an insurance carrier that would want to save money at the expense of your health care.

If you have a family business, you may want to provide for the succession of management because any disruption in a smooth transition of the operation of the business could be disastrous in an era of tight margins and challenging business conditions.

Perhaps most important, if somewhat elementary, can you locate your documents in the event of an emergency? The best drafted documents are of little use if they cannot be located.  Our office provides clients an Estate Planning Document Checklist which can be invaluable to an agent or executor who may need to locate documents and contact brokers, bankers, insurance agents, etc.   

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The American Recovery and Reinvestment Act (ARRA) provides a COBRA subsidy for Employees who lost or will lose health insurance coverage under an employer-sponsored plan due to an involuntary termination of employment between September 1, 2008 and December 31, 2009. Many employers have no doubt that they are subject to these changes and are currently in the process of implementing updates. However, with the recent news about changes to COBRA, some small employers are asking themselves, do my employees qualify and am I required to provide COBRA continuation coverage? The good news is that the ARRA has not expanded the type of employer-provided plans subject to the Act, so if employers were not required to provide COBRA continuation coverage prior to the ARRA, they would not be required to do so now. 

COBRA continuation coverage applies to all private sector group health plans which are maintained by employers that have at least 20 employees on more than 50% of its typical business days in the previous calendar year. In determining the total number of employees, full and part-time employees are counted. However, each part-time employee counts as a fraction of a full-time employee. The fraction for a part-time employee equals the number of hours the part-time employee worked, divided by the hours an employee must work to be considered full-time. Therefore, if a private sector employer is offering a group health plan with at least 20 employees as calculated above, the employer must provide COBRA continuation coverage and will be required to abide by the new provisions in ARRA. COBRA continuation coverage also applies to state and local government-sponsored plans, but does not apply to plans sponsored by the federal government or by churches and church-related organizations. 

If you are not currently providing COBRA coverage but you think you may be nearing the threshold described above, it is imperative that you carefully review your 2008 employee census to determine if you are required to provide continuation coverage under COBRA.

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Many employers and third party administrators have been waiting for guidance from the DOL before issuing the new COBRA notices required under the American Recovery and Reinvestment Act (ARRA). The wait is over. The Department of Labor has finally updated its FAQs For Employers About COBRA Premium Reduction Under ARRA.  It now includes the much anticipated  model notices. The DOL website gives the following guidance for notice requirements and deadlines:

• A general notice to all qualified beneficiaries, whether they are currently enrolled in COBRA coverage or not, who have a qualifying event during the period from September 1, 2008 through December 31, 2009. This notice may be provided separately or with the COBRA election notice following a COBRA qualifying event.
• A notice of the extended COBRA election period to any Assistance Eligible Individual (or any individual who would be an Assistance Eligible Individual if a COBRA continuation coverage election were in effect); who had a qualifying event at any time from September 1, 2008 through February 16, 2009; and who either did not elect COBRA continuation coverage or who elected but subsequently discontinued COBRA. This notice must be provided within 60 days following February 17, 2009.

The DOL’s COBRA Continuation Coverage Assistance Under The American Recovery And Reinvestment Act Of 2009 page continues to be updated with additional resources. You can download Job Loss Posters and Flyers and review Frequently Asked Questions for employers and employees.

In addition the DOL site also provides a link to the page the IRS has dedicated to COBRA Health Insurance Continuation Premium Subsidy. This page includes the updated Form 941 and Instructions and information on the phase out of the subsidy:

• This subsidy phases out for individuals whose modified adjusted gross income exceeds $125,000, or $250,000 for those filing joint returns. Taxpayers with modified adjusted gross income exceeding $145,000, or $290,000 for those filing joint returns, do not qualify for the subsidy.