In addition to $600 checks for most Americans, the year-end COVID-19 stimulus package signed by the President on December 27, 2020, includes a new round of changes that employers will need to track for their employee benefit plans. The Consolidated Appropriations Act, 2021 (H.R. 133) (the “Act”) is the fourth major legislative attempt to provide relief to businesses and individuals facing economic hardship due to the COVID-19 pandemic. Although lacking a catchy acronym (like the “CARES” and “SECURE” Acts), this legislation makes the most significant changes to health plans since the Affordable Care Act, offers employers and employees additional flexibility for cafeteria plan benefits, and provides additional retirement plan relief.
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On December 15, 2020, the Department of Labor finalized its new guidelines for fiduciary investment advice. Prohibited Transaction Exemption 2020-02 both clarifies the circumstances under which financial institutions and investment professionals are considered “fiduciaries” under ERISA and the Internal Revenue Code, and also establishes a new framework under which such fiduciaries may provide services and receive compensation.
The preamble to the final Exemption provides the Department’s long-awaited final interpretation of when investment advice – such as a recommendation to roll over retirement plan assets to an IRA (or between IRAs) – creates a fiduciary relationship under ERISA or the Code. The substantive terms of the Exemption allow investment advisers who are fiduciaries to receive compensation and engage in principal transactions that would otherwise violate prohibited transaction rules.
The Exemption applies to SEC- and state-registered investment advisers, broker-dealers, banks, insurance companies, and their employees, agents and representatives that are investment advice fiduciaries under the newly interpreted “five-part” test of fiduciary status. It imposes certain conditions to protect the interests of retirement plans, participants, beneficiaries, and IRA owners. The Exemption is set to become effective February 16, 2021, absent a delay by the Biden Administration. Thus, employers will need to be aware of the Exemption and its conditions in their engagement of (and interactions with) plan service providers.
On Monday, December 21, the stimulus bill from Congress was released. The bill contains individual relief, as well as an extension of federal unemployment assistance benefits. The bill did not, however, contain an extension of the mandatory paid leave benefits provided under the Families First Coronavirus Response Act (“FFCRA”). The stimulus does contain an extension through the end of March, 2021 of the tax credits provided for under the FFCRA leave. As a result, the mandate for FFCRA leave will formally sunset on December 31, 2020, but employers who voluntarily provide leave under the original provisions of the law may be able to qualify for tax credits through the end of March, 2021.
Setting up the potential for the U.S. Supreme Court to confirm and strengthen its 2016 opinion in Spokeo v. Robins, the United States Court of Appeals for the Seventh Circuit issued a raft of five rulings this week that clarify Article III standing issues related to claims under the Fair Debt Collection Practices Act (FDCPA). Through these five opinions, the Seventh Circuit has unequivocally aligned itself with the Eleventh and D.C. Circuits in requiring a plaintiff to plead and provide “competent proof” of a concrete injury in fact to establish Article III standing. What follows is a brief analysis of each opinion as it relates to a plaintiff’s burden to survive a motion to dismiss for lack of standing.
No Pay Discrimination for Substantially Similar Work, and New Job Posting Rules
On January 1, 2021, the Equal Pay for Equal Work Act (“EPEWA” or “the Act”) becomes effective in Colorado. C.R.S. § 8-5-101 et seq. The Act applies to virtually all employers in the state, regardless of size, and is intended to “close the pay gap” between men and women and “ensure that employees with similar job duties are paid the same wage rate regardless of sex,” which it defines broadly as “gender identity.” The Act has two major parts: (1) Part 1 amends Colorado’s previous equal pay statute by broadening the prohibition against wage discrimination to include paying employees of different sexes less for “substantially similar work”; and (2) Part 2 provides for “transparency in pay and opportunities for promotion and advancement” by requiring employers to announce opportunities for promotion and to disclose wage and benefit information in all job postings.
The first COVID-19 vaccines have been released, with more to come in the near future. This landmark development raises important questions – can employers require their employees to get the COVID-19 vaccine as a term and condition of continued employment when it becomes available to them? And if an employer implements such a mandate, would it be lawful?
EIGHTH CIRCUIT BANKRUPTCY MONITOR
In In re Thurmon, the Bankruptcy Court for the Western District of Missouri (Judge Norton) held that debtors who had ceased operation of their business and sold its assets pre-petition were not “engaged in commercial or business activities,” and therefore could not proceed under new subchapter V of chapter 11. Despite its order, the Court nonetheless signaled its willingness to confirm the debtors’ subchapter V plan with a modification, although the debtor had never sought approval of or distributed a disclosure statement as required for non-subchapter V chapter 11 debtors.
Originally published Dec. 9, 2020, on Law360.
With the COVID-19 pandemic depriving bankruptcy practitioners of our usual opportunities to meet in court and at conferences to discuss recent developments in the law, I spent time tracking developments in bankruptcy law within the U.S. Court of Appeals for the Eighth Circuit.
How is Colorado Dealing with “Gap” Waters?
The scope of federal jurisdiction under the Clean Water Act remains perplexing, particularly now that Colorado is the only state in the nation where the Navigable Water Protection Rule did not take effect June 22, 2020. In the context of a lengthy “stakeholder” process, on November 20, 2020, the Colorado Department of Public Health and Environment (CDPHE) issued a White Paper addressing its regulatory options in light of the new federal WOTUS rule. Construction companies, developers, and other businesses seeking to permit activities around wetlands, ephemeral waters, and intermittent streams in Colorado would benefit from reviewing this comprehensive discussion of the multitude of dilemmas Colorado and others states face in light of the new rule.
Chevron, Auer, and Now Voight Deference?
On November 20, 2020, the Eighth Circuit Court of Appeals jumped headlong into the Chevron, and Auer deference realm. The issue: can a Clean Air Act permittee rely on a state agency’s prevention of significant deterioration (PSD) determination? And should a Court “defer” to the state agency’s determination to assist in the interpretation of an “ambiguous” environmental program requirement? Voight v. Coyote Creek Mining Company (No. 18-2705, 8th Circuit Court of Appeals).