Legislative Updates

South Dakota is ending its transfer of the federal government's pandemic-related unemployment assistance programs ($300) effective the week ending June 26, citing a recovering economy.

Health savings account (HSA) contribution limits for 2022 are going up $50 for self-only coverage and $100 for family coverage, the IRS announced May 10, giving employers that sponsor high-deductible health plans (HDHPs) plenty of time to prepare for open enrollment season later this year.

In Revenue Procedure 2021-25, the IRS confirmed HSA contribution limits effective for calendar year 2022, along with minimum deductible and maximum out-of-pocket expenses for the HDHPs with which HSAs are paired.

Additionallly, on April 30, HHS released the Notice of Benefit and Payment Parameters final rule for 2022, published in the May 5 Federal Register. According to an HHS press release, the annual payment notice makes regulatory changes in the individual and small-group health insurance markets, and outlines parameters and requirements issuers need to design plans and set rates for the upcoming plan year.

The HHS's annual out-of-pocket limits are higher than those set by the IRS, but to qualify as an HSA-compatible HDHP, a plan must not exceed the IRS's lower out-of-pocket maximums.

The U.S. Department of Labor today announced the withdrawal – effective May 6 – of the “Independent Contractor Rule,” to maintain workers’ rights to the minimum wage and overtime compensation protections of the Fair Labor Standards Act.

Read more here. 

President Joe Biden's imminent executive order requiring federal contractors to pay a $15 hourly minimum wage could put pressure on private sector employers to raise low-income workers' pay.

According to a White House statement, the executive order hiking the wages of hundreds of thousands of employees who are working on federal contracts "will have impacts beyond federal contracting, as competitors in the same labor markets as federal contractors may increase wages, too, as they seek to compete for workers."

The White House added, "Employers may seek to raise wages for workers earning above $15 as they try to recruit and retain talent."

The executive order will require all federal agencies to incorporate a $15 minimum wage into new contract solicitations by January 2022 and into newly signed contracts by March 2022, the White House announced. The minimum hourly rate will then rise annually to keep pace with inflation.

This order "will build on the Obama-Biden Executive Order 13658, issued in February 2014, requiring federal contractors to pay employees working on federal contracts $10.10 per hour, subsequently indexed to inflation," according to the White House statement.

The ARPA requires group health plans to provide, by May 31, notices to AEIs who are losing their health care coverage and are eligible for COBRA premium assistance. This notice may be provided separately or by using a revised COBRA election notice, such as the new model general notice (see link below). Employers can begin using the new notices immediately.

The ARPA also requires that plans and issuers provide AEIs with a Notice of Expiration of Premium Assistance that explains the subsidy will expire soon for them—either because their COBRA eligibility has reached its maximum time limit or because the subsidy period is ending as of Sept. 30, the date of the expiration and that the individual may be eligible for coverage without any premium assistance.

Download the model notices here.

The Tip Regulations Under the Fair Labor Standards Act (FLSA) final rule (2020 Tip final rule) was published on December 30, 2020, with an effective date of March 1, 2021; however:

• On February 26, 2021, the DOL issued a final rule delaying the effective date until April 30, 2021; and
• On March 23, 2021, the Department announced two Notices of Proposed Rulemaking (NPRMs) for tipped workers as the effective date of the 2020 Tip final rule nears:
• • Tip Regulations Under the Fair Labor Standards Act (FLSA); Delay of Effective Date, which proposes to further extend, until December 31, 2021, the effective date of two portions of the 2020 Tip final rule related to the assessment of civil money penalties (CMPs) under the FLSA, and the portion addressing the FLSA tip credit’s application to tipped employees who perform tipped and non-tipped duties. The Department invites public comments on this NPRM for twenty (20) days following publication of the NPRM in the Federal Register (from March 25, 2021 through April 14, 2021).
  • Tip Regulations under the Fair Labor Standards Act (FLSA); Partial Withdrawal, which proposes to withdraw and re-propose the two portions of the 2020 Tip final rule addressing CMP assessments. This NPRM also seeks comments on whether to revise one other portion of the 2020 Tip final rule (addressing managers and supervisors who cannot keep employee’s tips) and asks how it might improve the recordkeeping requirements in the 2020 Tip final rule in a future rulemaking. The Department invites public comments on this NPRM for sixty (60) days following publication of the NPRM in the Federal Register (from March 25, 2021 through May 24, 2021).

However, the following portions of the final rule will continue to take effect on April 30, 2021:

• Employers that do not take a tip credit may implement mandatory “nontraditional” tip pools, which are tip pools that include employees who do not customarily and regularly receive tips;
• New recordkeeping requirement for employers that do not take a tip credit but collect employees’ tips to operate a mandatory tip pool; and
• Employers, regardless of whether they take a tip credit, are prohibited from keeping employees’ tips for any reason, which includes prohibiting managers and supervisors from keeping tips received by employees.

Read more about the final rule on the DOL’s website.

On April 15, the U.S. House of Representatives passed the Paycheck Fairness Act (H.R. 7) by a 217-210 vote. The legislation, if enacted, would require employers to prove that pay disparities between men and women are job-related, among other provisions. 

Rep. Rosa DeLauro, D-Conn., reintroduced the bill in January. It has been reintroduced many times since 1997 but has failed to pass both chambers of Congress. The bill would, among other provisions:

• Require employers to show that pay disparities between men and women are job-related and consistent with business necessity.
• Make it easier for plaintiffs to participate in class-action lawsuits that challenge systemic pay discrimination.
  
• Strengthen the Equal Pay Act of 1963 (EPA) and provide greater remedies for prevailing plaintiffs.
• Prohibit employers from asking job applicants about their salary history or relying on salary history to set compensation. But an employer could use a prospective employee's wage history if the employer makes a job offer and the applicant reveals his or her salary is more than the proposed salary. The employer could then increase the salary offer.
• Prohibit employers from retaliating against workers who discuss their pay with co-workers. The National Labor Relations Act already gives employees the right to discuss their pay.

On April 14, 2021, the U.S. Department of Labor (DOL) announced the following new guidance for plan sponsors, plan fiduciaries, recordkeepers and plan participants on best practices for maintaining cybersecurity:

• Tips for Hiring a Service Provider
• Cybersecurity Program Best Practices
• Online Security Tips

This is the first time the DOL’s Employee Benefits Security Administration has issued cybersecurity guidance and it is designed for use by plan sponsors and fiduciaries regulated by the Employee Retirement Income Security Act, plan participants, and beneficiaries.

On April 7, 2021, the U.S. Department of Labor’s (DOL), Employee Benefits Security Administration (EBSA) released frequently asked questions (FAQs) addressing how certain provisions of the American Rescue Plan Act of 2021 (ARP) apply to the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). The FAQs provide answers to general questions, inquiries about premiums, notices, and more.

More information is provided on the COBRA Premium Subsidy website and EBSA also released the following model notices:

• General Notice and Election Notice
• Notice in Connection with Extended Election Period
• Alternative Notice
• Notice of Expiration of Premium Assistance
• Summary of the COBRA Premium Assistance Provisions​

COBRA continuation coverage provides certain group health plan continuation coverage rights for participants and beneficiaries covered by a group health plan. In general, under COBRA, an individual who was covered by a group health plan on the day before the occurrence of a qualifying event (such as getting fired or a reduction in hours that causes loss of coverage under the plan) may be able to elect COBRA continuation coverage when that qualifying event occurs. These individuals are referred to as qualified beneficiaries. Under COBRA, group health plans must provide covered employees and their families with certain notices explaining their COBRA rights.

Section 9501 of the ARP provides for COBRA premium assistance to help assistance eligible individuals continue their health benefits. The premium assistance is also available for continuation coverage under certain state laws. Assistance eligible individuals are not required to pay their COBRA continuation coverage premiums. The premium assistance applies to periods of health coverage on or after April 1, 2021 through September 30, 2021. An employer or plan to whom COBRA premiums are payable is entitled to a tax credit for the amount of the premium assistance.

Effective March 31, 2021, the U.S. Citizenship and Immigration Services (USCIS) announced another extension of the flexibility in complying with requirements related to Form I-9, Employment Eligibility Verification, due to COVID-19. This temporary guidance was set to expire March 31 but because of ongoing COVID-19-related precautions the Form I-9 flexibility policy was extended until May 31, 2021. Of note, the flexibility policy only applies to employers and workplaces that are operating remotely. 

The original March 23, 2020 news release has information about how to obtain, remotely inspect, and retain copies of the identity and employment eligibility documents to complete Section 2 of Form I-9. Read here and here for more guidance and clarification.