Author: jfortenberry@fortenberrylaw.com

Our family wouldn’t fare too well with this one: A tax based upon how many miles you drive. Read about it here: “Car use tax worth eyeing, official says.” Then read “What’s Scary About a Car Usage Tax in Massachusetts?” from the Carpundit and “Taxman in the Sky: Using GPS to Track Drivers’ Auto Use” from Jalopnik (a car blog sponsored entirely by Audi).

I guess blogging could become a profession for some, as discussed here in this article–“Why Would Companies Buy Bloggers?” Excerpt:

So, why hire a blogger instead of just some writer off of eLance or Guru.com? The short answer is that you don’t just want a writer. The blogging consultant you hire should know how to write, know how to communicate (which is an entirely different matter) and know the business and marketing drivers which are likely to cause success or failure in this new venture.

Much like when you are starting a new software project you need more than just software developers, when you are starting a new blog you need more than just a writer: you need someone who (at least for now) is a leader in the blogging industry, who can walk you through the process and who can be a continuing resource to you and your company as the project evolves.

On November 23, 2004, Governor Rendell of Pennsylvania signed into law a bill abolishing common law marriage. According to the legislation, “[n]o common law marriage, contracted after January 1, 2005 shall be valid.” The legislation also states that “[n]othing in this part shall be deemed to render any common law marriage, otherwise lawful and contracted on or before January 1, 2005, invalid.”

Now all of this is slightly confusing since there was also a Pennsylvania Commonwealth Court decision issued on September 17, 2003 (PNC Bank Corp. v. W.C.A. B., 831 A.2d 1269 (Pa. Cmwlth. 2003) which had purported to abolish common law marriage as well. You can read about that decision here and here. Neither party appealed the decision.

It would seem that it is pretty safe to say that common law marriages validly entered into prior to September 17, 2003 are still valid (since the decision in PNC was only applied prospectively), and that any common law marriages claimed to have been entered into after January 1, 2005 will be invalid. But what about those purportedly entered into between September 17, 2003 and January 2, 2005? The answer depends upon whether or not the Commonwealth Court decision is recognized. A dissent in the PNC case written by Judge Smith-Ribner (Judge Pellegrini joined in the opinion) argued that the Commonwealth Court did not have the power or authority to overturn common law marriage:

I respectfully dissent from the majority opinion because of my strong disagreement with a determination by an intermediate court of this Commonwealth that the right granted at common law to individuals to enter into common law marriage henceforth shall no longer exist. The majority usurps the function of the legislature and casts upon the people of this Commonwealth a change in common law that the majority has no authority or power to impose. When the people desire to abolish common law marriages, they should do so through their elected representatives in the legislature. The Supreme Court thought so in a situation involving the court’s power to change the common law duty of a parent for the support of a minor child. The court felt that a “more prudent course” of action was to await guidance from the legislature rather than to create duties or obligations by judicial fiat. Blue v. Blue, 532 Pa. 521, 616 A.2d 628 (1992). . . If the Pennsylvania legislature determines in its wisdom, as have the legislatures in New Jersey or in Florida, see N.J.S. §37:1-10, Fla. S. §741.211, and many other jurisdictions, to take up the issue of abolishing common law marriage then at that time it may well consider and debate many of the policy considerations expressed by the majority here for doing what it has no authority or power to do.

Also noteworthy is the fact that there have been two Pennsylvania Superior Court cases in which the Superior Court refused to be bound by the Commonwealth Court decision abolishing common law marriage, citing the fact that the Supreme Court of Pennsylvania in the cases of Staudenmayer v. Staudenmayer, 552 Pa. 253, 714 A.2d 1016 (Pa. 1998 and Interest of Miller, 301 Pa. Super. 511, 448 A.2d 25 (Pa. Super. 1982) had “declined the invitation to abolish common law marriage, deferring such action to the legislature.”

All of this means that employers who have employees in Pennsylvania will have to be on the alert for issues relating to common law marriage, probably for years to come. The issue could have serious repercussions for employers that fail to assess the important implications of the development. For instance, if an employee truly has a “common law spouse” under Pennsylvania law, that spouse could be entitled to certain spousal benefits under ERISA. The issue could arise where a retirement plan pays a participant-employee his or her benefits under a plan, without obtaining the necessary spousal waiver from the common law spouse, so that the plan could end up being liable to the spouse if the spouse later made a claim for such benefits. On the other hand, if a plan incorrectly pays out spousal benefits to a non-spouse beneficiary (an individual who is not considered to be married under Pennsylvania law), the plan could technically face a disqualification issue (if the plan is a “qualified” employee benefit plan under the Internal Revenue Code) and in addition, be liable for paying the benefits again to the correct beneficiary. There are numerous other issues under FMLA, COBRA, flexible spending accounts, health insurance plans, and other benefit plans which provide spousal benefits, which could be impacted as well.

Here are some initial steps for human resource professionals to take in response to this legislation (if they have not already taken action due to the previous PNC court decision):

(1) Alert employees about this development and notify them that they may want to seek the advice of an attorney if they believe they are in a Pennsylvania common law marriage.

(2) Develop plan procedures and processes for verifying the marriage status of employees. Those employers who utilize affidavits should make sure that their Summary Plan Descriptions and Employee Handbooks mention this procedural requirement since a Second Circuit case–Burke v. Kodak Ret. Income Plan–held that a surviving spouse could prevail in a claim for spousal benefits where a Summary Plan Description failed to mention a plan’s procedural requirement that a domestic partnership affidavit be submitted to the plan administrator to qualify for such spousal benefits. Also, there should be language in the affidavit advising participants to seek legal advice before executing the affidavit since it could have far-reaching implications for the participant outside the benefits arena (i.e. as in the PNC case.)

And if the employer is unfortunate enough to receive an affidavit from a participant claiming to have entered into a common law marriage between the dates of September 17, 2003 and January 2, 2005, the employer should seek the advice of a qualified attorney.

Today’s Wall Street Journal provides a good article discussing the challenges individuals face in adopting and implementing the new health savings accounts (“HSAs”) which are growing in popularity: “Savings Accounts for Health Care Cause Confusion.” The article makes the point that “early adopters” of the accounts may encounter glitches, as “consumers, banks and insurers are still figuring out the details on just how these new accounts are supposed to work.” One such glitch mentioned in the article is “figuring out just what the patient is expected to pay”:

Though consumers must pay for their own care until they meet their policy’s deductible, they’re still supposed to be able to take advantage of any discounted price that their insurer has negotiated, from doctor rates to drug costs. But already some patients and doctors are confusing HSAs with direct, full-price payments consumers make when they don’t have insurance.

Generally, payment with HSAs should work the same way payments generally work for patients with insurance. The doctor informs the insurer of the charges, the insurer sends the patient a statement explaining how much the patient owes, and the patient then has to pay the doctor that amount. Patients using HSAs should wait to pay until the doctor submits the information to their insurer, says Mr. Engel of Mellon Financial. . .

Some insurers, like UnitedHealthcare, are already working to minimize this hassle, for example, by allowing consumers to authorize the insurer to deduct directly from their HSAs to pay medical bills.

Obviously, if consumers are not allowed to take advantage of discounted prices, this will put a damper on the use of HSAs. The issue is not really even mentioned in this recent article from Forbes.com–“Saving for Your Health“–which makes the statement that “[f]or the right customer an HSA can save thousands of dollars a year.” However, according to the article in Forbes, those who can afford it, shouldn’t even use their HSA accounts to pay for medical bills now, but should use their “HSAs to compound tax-free as de facto IRAs”:

If the money is ultimately used decades later to pay postretirement medical bills, so much the better: The account is better than an IRA because the funds are untaxed.

A 40-year-old person putting $5,150 a year into an HSA returning 5% and making no use of the account would end up at age 65 with $268,000. The best interest currently being offered by HSA vendors is only 4.15%, but that will surely improve as balances get bigger and competition heats up.

The Forbes article provides a very helpful chart of the different HSA providers and the interest that can be earned on such accounts as well as whether the accounts allow investments in securities.

There are confusing state law implications as well, as mentioned in this article from SFGate.com–“State rules complicate health savings accounts“:

As if the new health savings accounts weren’t complicated enough, employers and individuals who open one in California should arm themselves with a big bottle of aspirin.

. . . California has not conformed to the federal tax law that created the accounts. That means they provide fewer tax benefits and more record-keeping headaches for Californians than for residents of states that automatically conform to federal tax legislation.

But for an interesting sideline on the use of HSAs, don’t miss this additional article from Forbes.com: “Doctor Your Tax Return.”

(You can read previous posts on the topic of HSAs here.)

The Department of Labor is soliciting comments about their website. You can give them your thoughts and suggestions for improvement here.

I enjoyed this article on how blogs are beginning to wield their influence in China: “A blogger’s tale: The Stainless Steel Mouse.” According to the article, weblogs are referred to in Chinese as “bo ke“, which is phonetically similar to the word “blog”, but also has a literal meaning of rich or abundant traveler.

Many are wondering how best to address the problem of the Pension Benefit Guaranty Corporation’s ballooning deficit (now $23.3 billion, up from $11.2 billion in 2003) and the further strain to the system of recent airline bankruptcies. Steven A. Kandarian, Douglas M. Steenland and Duane E. Woerth offer their proposal for a solution in a commentary published in today’s Wall Street Journal entitled “Chapter 11 Doesn’t Fly“:

We believe that the airlines, airline unions and the administration should work together to propose to the Congress a new alternative to the “lose-lose-lose” Chapter 11 approach. This would present an airline and unions with the following new choice: First, management and a union would need to agree collectively to freeze an existing defined-benefit pension plan. Importantly for the PBGC, its liability as guarantor of the plan would be capped as of the freeze date and would decrease over time. Second, the unfunded liability of the frozen plan then would be amortized over a specified time period that would be longer than what current law allows. Here’s where compromise is needed — the PBGC will want a shorter period for the unfunded pension liability to be paid; the airlines will want longer. One thing is clear: The existing pension funding law, particularly the so-called deficit-reduction contribution provisions, so accelerate the funding of significantly underfunded pension plans as to make the freeze option unrealistic absent a longer time period to satisfy the unfunded liabilities. Finally, management and labor would negotiate and agree upon a new, replacement defined-contribution pension plan.

The commentary goes on to note that the proposal would serve the interests of “all stakeholders” in that the airlines would “get to continue their transformation without filing for Chapter 11”, employees would “get the chance to keep hard-earned pension benefits” and the PBGC would be “spared having to step in as guarantor of a terminated pension plan.”

(Mr. Kandarian is the former executive director of the PBGC. Mr. Steenland is president and CEO of Northwest Airlines. Capt. Woerth is president of the Air Line Pilots Association, International.)

No posts here this week due to some traveling and activities. There are many things to be thankful for, the greatest of which is not really the focus of this blog. However, I just wanted to express to you how thankful I am for the many readers and colleagues who have linked to this site, emailed me, sent me great material now and then to comment on, or generally just supported this site through their readership. Many blessings to you and hope you have a great week with family and friends!

And for all of you who happen to be cooking the feast this week, you might find this useful: Thanksgiving Recipe Central with over 1,500 Thanksgiving recipes and a cook’s checklist and timeline for the week of Thanksgiving.

Finally, here is George Washington’s Thanksgiving Proclamation, 1789 (via the American Family Association).