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COVID-19: Employers

Plan Administration – A SECURE and CARES Act Reminder

The SECURE and CARES Acts provide a broad spectrum of required and optional changes that employers must evaluate with respect to retirement plan administration.  One impending change is the SECURE Act’s broader eligibility requirement for part-time employees in 401(k) plans, which becomes effective on January 1, 2021.  In addition, employers may be surprised to learn that some CARES Act distribution options were added to their plans automatically by their record keepers through a “default” process.   Thus, employers should review their plan’s administrative procedures to determine if (and how) changes under the SECURE Act and CARES Act were (and are being) implemented to ensure administrative compliance with the plan document.

 

Colorado’s Paid Sick Leave Law

On July 14, 2020, Governor Jared Polis signed the “Healthy Families and Workplaces Act” (“HFWA”). Last month, we discussed the emergency COVID-19 provisions here. The emergency provisions are effective from July 15 to December 31, 2020. In this Part 2, we will discuss the paid sick leave provisions of HFWA that go into effect January 1, 2021.

DOL-WHD Releases FLSA, FMLA, and FFCRA Guidance Relating to COVID-19 and Work From Home Issues

During the week of July 20th, the Wage and Hour Division of the Department of Labor published new guidance for employers, focusing on compliance under the Fair Labor Standards Act (“FLSA”) and the Family and Medical Leave Act (“FMLA”) in the midst of the pandemic (See FLSA Q&A, FMLA Q&A, and FFCRA Q&A).

Colorado Passes Paid Sick Leave and Whistleblower Laws

On July 14, 2020, Governor Jared Polis signed the “Healthy Families and Workplaces Act” (“HFWA”).  Several provisions of this law are effective immediately (July 15, 2020), and require paid sick leave specifically for COVID-19 related issues.  Starting January 1, 2021, the HFWA will require that most employers provide their employees with up to 48 hours of paid sick leave per year.  This article is Part 1 of a two-part series, and focuses on the immediately effective laws relating to COVID-19. We will discuss the details of the general paid sick leave in Part 2.  Governor Polis also recently signed the Public Health Emergency Whistleblower Law (“PHEW”), effective July 11, 2020, which we will discuss briefly below.

IRS Creates New “Window” to Suspend 401(k) Safe-Harbor Contributions for 2020

The IRS has granted additional, albeit temporary, COVID-19-related relief for sponsors of “safe-harbor” 401(k) and 403(b) plans (i.e., plans that are exempt from one or both of the ADP and ACP nondiscrimination tests).  Notice 2020-52, which was issued on June 29, 2020, provides temporary relief from the current requirements for mid-year amendments to such plans, and provides additional clarification regarding mid-year amendments to safe-harbor plans that only affect highly compensated employees.   This guidance is welcome relief for plan sponsors who feel the financial need to reduce or suspend employer contributions under these plans, but who may not be able to satisfy the current regulatory requirements for mid-year amendments.

IRS Provides More COVID-19 Relief: This Time for Cafeteria Plans

As part of its ongoing response to the coronavirus (COVID-19) outbreak, the IRS has released new guidance (Notice 2020-29) providing increased flexibility with respect to mid-year election changes under Section 125 cafeteria plans during the 2020 calendar year. The Notice also provides increased flexibility with respect to grace periods that will allow participants with unused amounts in their health or dependent care flexible spending accounts (FSAs) to apply those amounts to expenses incurred through December 31, 2020. Generally, employers may adopt the changes immediately (in some cases retroactive to January 1, 2020), so long as the plan is amended by December 31, 2021.

Extended Group Health Plan Deadlines Create Risks for Employers

Deadline relief afforded by a new DOL and IRS Joint Notice during the COVID-19 national emergency significantly changes the administration of both self-funded and fully insured group health plans. Some of the extended deadlines are already causing confusion and increasing compliance risks for employers.

IRS Posts Initial Guidance Re: Coronavirus-Related Loans and Distributions under the CARES Act

On May 4, 2020, the IRS posted 14 Questions and Answers (Q&As) on its website regarding the special retirement plan distribution options and loan provisions made available to certain qualified participants under the Coronavirus Aid, Relief, and Economic Security Act (hereinafter, the “CARES Act”).  These Q&As answer many, but not all, of the questions that plan sponsors and third-party administrators have been grappling with since the CARES Act was enacted on March 27, 2020.  Perhaps most importantly, the Q&As confirm that each of the distribution and loan provisions are optional for employers to adopt (or not adopt).  They also indicate that the IRS intends to issue formal guidance regarding the CARES Act distribution and loan provisions in the near future, and that it anticipates that the guidance will generally apply the principles set forth in its prior guidance (Notice 2005-92) regarding the Katrina Emergency Tax Relief Act of 2005 (“KETRA”).

CARES Act Offers New Options for Cafeteria Plan Sponsors

A frequently overlooked portion of the CARES Act offers employers the ability to give their employees some immediate – and cost-free – financial assistance.  The Act opens the door for employees to use pre-tax dollars to purchase over-the-counter drugs and menstrual care products.  Employers will need to modify health FSAs, HSAs, and HRAs to take advantage of this relief.

DOL Disaster Relief Notice Extends Deadlines, Enables COBRA Gamesmanship

The Department of Labor’s Employee Benefits Security Administration issued guidance on April 28, 2020, providing temporary, coronavirus-related relief from many deadlines and requirements under ERISA.  Notably, the guidance relaxes the standards for employers to provide notices electronically, and affords significant latitude to COBRA qualified beneficiaries for electing, and paying for, COBRA continuation coverage.

OSHA Sends Mixed Signals on Enforcement Related to COVID-19 and Employer Obligations

Over the past week, OSHA has issued three separate enforcement-related guidance memos to its regional offices and field staff regarding how and when to bring enforcement actions against employers for failing to protect worker health and safety amidst the COVID-19 pandemic. The first guidance covers workplace reporting and recording of injury and illnesses associated with exposure to COVID-19, while the other two OSHA guidance documents provide a roadmap to employers on how the agency will enforce violations of the OSH Act.

Summary of Recent Agency Activity on Employment-Related COVID-19 Issues

Last week (April 4-12), several federal agencies issued updated guidance for employers on issues relating to COVID-19, including:

EEOC Updates COVID-19 Guidance

On April 9, the Equal Employment Opportunity Commission (“EEOC”) updated its guidance for employers entitled “What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws,” found here. Previously issued guidance explained that employers may, under pandemic conditions, ask employees about whether they are experiencing certain symptoms. The EEOC further stated that employers may also implement other measures to protect against spread of COVID-19 due to the novel coronavirus in the workplace. The guidance further noted that if employers do receive health information from employees, the information must be maintained confidentially, and consistent with other requirements under the Americans with Disabilities Act (the “ADA”).

Employee Benefits in the Age of COVID-19: Brief Answers to Some Common Health Plan Questions

As we are all now intimately aware, the coronavirus pandemic has changed the nature of the workplace, and all of the benefits, rights, and responsibilities arising out of employment.  We are operating under a new set of rules, and those rules are changing daily.  Employers’ efforts to manage their workforce in order to maintain fiscal viability while protecting the health of employees also affect benefits.  The cascading effect of these factors raises many thorny benefits questions.  We will summarize – and attempt to answer – a few of those questions here (based on the legal landscape as of March 31, 2020).

“CARES” Act and Defined Benefit Plans

The CARES Act signed by President Trump on March 27, 2020, includes relief for defined contribution plans, but defined benefit plans also received some relief.  In addition, the IRS issued guidance that includes an extension for employers to adopt a pre-approved defined benefit plan.  And, employers should remember their option to decrease the age at which employees may request an in-service withdrawal from defined benefit plans.

COVID-19 Emergency Paid Sick Leave and Family Medical Leave: Updated Department of Labor FAQs

The Department of Labor (the “DOL”) issued FAQs regarding the Families First Coronavirus Response Act (the “FFCRA”) and has updated its FAQs multiple times by adding questions to the same document.  The FAQs can be found here. The most recent update occurred on March 28, 2020 and addressed many of employers’ questions that were initially left unanswered in the FFCRA and the initial FAQs.

“CARES” Act Requires Immediate Decisions by Retirement Plan Sponsors

A third round of relief from the coronavirus pandemic has made its way through the Senate and House and has been signed by President Trump. The Coronavirus Aid, Relief and Economic Security (or “CARES”) Act provides over $2 trillion in relief for businesses and individuals. It also offers new avenues for defined contribution retirement plan participants to withdraw funds from their accounts in order to pay COVID-19-related expenses, if their employer elects to open those avenues. Some of the largest 401(k) and 403(b) plan record keepers are forcing employers to make that choice on just a few days’ notice.

COVID-19 Emergency Paid Sick Leave and Family Medical Leave: An updated notice and more from Department of Labor

As of Friday, March 27, the Department of Labor has issued an updated notice on its website, as well as responses to additional questions about the Families First Coronavirus Response Act (the “Act”). The new notice can be found here: FFCRA Poster.[1]  The updated notice clarifies that employees may have a total of up to 12 weeks of leave, paid at 2/3 of pay, to care for a child whose school or place of care is closed (or child care provider is unavailable) due to COVID-19 related reasons.

Investment Adviser COVID-19 Reporting and Filing Exemption

In recognition of the challenges that SEC-registered investment advisers are facing as a result of COVID-19, the Securities and Exchange Commission issued an Order on March 25, 2020, that provides temporary exemptions from certain reporting and disclosure requirements under the Investment Advisers Act of 1940.  The relief applies to filing and delivery obligations due on or after March 13, 2020, through June 30, 2020.

COVID-19 Emergency Paid Sick Leave and Family Medical Leave: Updates from Department of Labor

On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (the “Act”). We outlined the key provisions of this law here. Since the publication of our original article, the Department of Labor Wage and Hour Division, which will enforce the new law, has published updated guidance about the new law. The Department has now clarified that the law will officially take effect on April 1, 2020, and applies to leave taken between April 1, 2020 and December 31, 2020.  The new law also requires that employers post notice regarding the new law, and a model notice has been published. It can be found here.

COVID-19 Emergency Paid Sick Leave and Family Medical Leave: Key Provisions

On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act, which goes into effect no later than April 2, 2020.  The new law imposes sweeping new emergency paid leave and expanded family medical leave requirements for employers nationwide.  Here is a summary of the key provisions affecting employers:

ERISA Fiduciaries Must Monitor Market Turbulence

The recent turmoil in the financial markets, while troubling for individual investors, also has potentially significant implications for ERISA fiduciaries. Individuals and committees who have investment authority over plan assets should reevaluate their portfolios in light of these developments.  Circumstances may not require a change in investment strategy, but ERISA’s prudence requirement requires fiduciaries to give immediate, thoughtful consideration to how those circumstances have changed.

Coronavirus is a Recordable Illness According to OSHA

According to recent OSHA guidance, COVID-19 (i.e., the coronavirus) is subject to the agency’s Injury and Illness Recordkeeping and Reporting Requirements at 29 CFR 1904.  This means that employers who are subject to the OSHA recordkeeping and reporting rules must include and log employee illnesses related to the coronavirus when an employee is infected on the job.  So while the common cold and Flu are exempt from work-related exposures, the coronavirus is not.