Simco Blog

On April 23, 2024, the U.S. Department of Labor (DOL) announced a final rule to amend current requirements employees in white-collar occupations must satisfy to qualify for an overtime exemption under the Fair Labor Standards Act (FLSA). The final rule will take effect on July 1, 2024. Increased Salary Level The FLSA white-collar exemptions apply to individuals in executive, administrative, professional, and some outside sales and computer-related occupations. Some highly compensated employees may also qualify for the FLSA white-collar overtime exemption. To qualify for this exemption, white-collar employees must satisfy the standard salary level test, among other criteria. This salary level is a wage threshold that white-collar employees must receive to qualify for the exemption. Starting July 1, 2024, the DOL’s final rule increases the standard salary level from: $684 to $844 per week ($35,568 to $43,888 per year); and $107,432 to $132,964 per year for highly compensated employees. On Jan. 1, 2025, the standard salary level will then increase from: $844 to $1,128 per week ($43,888 to $58,656 per year); and $132,964 to $151,164 per year for highly compensated employees. Automatic Updates The DOL’s final rule also includes mechanisms allowing the agency to automatically update the white-collar salary level thresholds without having to rely on the rulemaking process. Effective July 1, 2027, and every three years thereafter, the DOL will increase the standard salary level. The agency will apply up-to-date wage data to determine new salary levels. Impact on Employers The first salary level increase in July is expected to impact nearly 1 million workers, while the second increase in January is expected to affect approximately 3 million workers. Employers should become familiar with the final rule and evaluate what changes they may need to adopt to comply with the rule’s requirements. Legal challenges to the rule are anticipated, which may delay the final rule’s implementation.

The recently enacted New York budget for fiscal year 2024-25 includes provisions mandating paid prenatal leave for the state’s workers, beginning Jan. 1, 2025, and repealing the New York COVID-19 sick leave law, effective July 31, 2025. Paid Prenatal Personal Leave The budget amends the state sick leave law by adding what is being touted as a first-in-the-nation requirement that all employers provide their employees with 20 hours of paid prenatal personal leave per 52-week period, starting Jan. 1, 2025. The amendment does not require employees to accrue the new leave, nor does it impose a waiting period before employees may use the leave; the full 20 hours must be made available on Jan. 1, 2025. Employees on leave must be paid their regular rate of pay or minimum wage if the applicable minimum wage is higher; however, employers are not required to pay out unused prenatal personal leave when an employee separates from employment. Permitted Uses of Prenatal Personal Leave Prenatal personal leave may be taken for health care services received by an employee during their pregnancy or related to the pregnancy, including physical examinations, medical procedures, monitoring and testing, and discussions with a health care provider related to the pregnancy. The new provisions do not require advance notification or documentation after the fact for using leave. Interaction With Paid Sick Leave and FMLA Leave The new requirement is in addition to the annual sick leave the law already mandates, which ranges from 40-56 hours and may be paid or unpaid, depending on the employer’s size and income. The amendment does not indicate that the leave runs concurrently with any federal Family and Medical Leave Act (FMLA) leave taken for prenatal care, meaning the state prenatal personal leave would be in addition to any FMLA leave taken for this purpose. Sunset Date for COVID-19 Leave The budget also establishes July 31, 2025, as the expiration date for New York’s COVID-19 employee sick leave law . The law took effect at the beginning of the COVID-19 pandemic, on March 18, 2020, and requires leave of up to 14 days, depending on the size and income of the employer. As with the regular sick leave law, whether leave must be paid also depends on the size and income of the employer. The sunsetting of the law comes in the wake of expired states of emergency and changed recommendations for isolation and quarantine. Steps for Employers New York employers should prepare for the start of paid prenatal personal leave in January 2025 and watch for any agency regulations and guidance implementing the new leave entitlement. Employers should also train managers and supervisors about the new requirements and make sure employee policies and handbooks are up to date. Employers should continue to allow COVID-19 sick leave when it applies and keep in mind that other leave requirements, such as paid sick leave, may allow employees to take time off from work for illness, including COVID-19.

On April 23, 2024, the Federal Trade Commission (FTC) voted to issue a final rule that would ban noncompete agreements in virtually all employment relationships. The final rule has not yet been filed in the Federal Register, but is scheduled to take effect 120 days after such filing. Final Rule The final rule defines a noncompete clause as a term or condition of employment that prohibits a worker from, penalizes a worker for or functions to prevent a worker from: (i) Seeking or accepting work in the United States with a different person where such work would begin after the conclusion of the employment that includes the term or condition; or (ii) Operating a business in the United States after the conclusion of the employment that includes the term or condition. Such terms or conditions include employee contracts or workplace policies, whether written or oral. Subject to very limited exceptions, the final rule provides that: The use of noncompete clauses will be banned as of the effective date; Any existing noncompete clauses (other than those entered into with senior executives) will be invalidated; Employers must notify all employees (other than senior executives whose existing noncompete agreements will remain enforceable) that their existing noncompete agreements will not be enforced. Currently, the enforceability of noncompete clauses is determined by state and local legislatures and courts. The FTC rule would instead govern the enforceability of noncompete clauses at the federal level and supersede any less restrictive state laws or judicial interpretations. Legal Challenges On April 24, 2024, the U.S. Chamber of Commerce sued the FTC, seeking to block the final rule. The complaint was filed in the U.S. District Court for the Eastern District of Texas and argues that the FTC lacks the authority to issue rules that define unfair methods of competition. Additional legal challenges are likely, so employers should monitor for updates and anticipate potential uncertainty in the coming months. Next Steps for Employers Employers may consider reviewing existing employee agreements or form agreements (such as new hire paperwork) to determine whether any contain noncompete clauses that would be invalidated under the rule. Employers may also begin preparing revisions to such agreements and consider whether to use alternatives to noncompete clauses (e.g., nondisclosure clauses) to protect competitive business information.

Highlights The final rule’s changes are intended to help consumers differentiate between comprehensive health coverage and certain types of coverage that are not subject to the ACA’s consumer protections. These changes: Amend the federal definition of STLDI to reduce the initial contract period to no more than three months; Prohibit a practice known as “stacking” that allows issuers to evade the duration limits for STLDI; and Expand a consumer notice requirement to apply to fixed indemnity excepted benefits coverage sold in the group market. On March 28, 2024, the U.S. Departments of Labor, Health and Human Services, and the Treasury (Departments) released a final rule on certain types of health coverage that are not subject to the Affordable Care Act’s (ACA) consumer protections, namely short-term, limited-duration insurance (STLDI) and fixed indemnity coverage. This rule finalizes some of the changes included in a proposed rule from July 2023. The Departments are making changes to STLDI and fixed indemnity coverage to help consumers distinguish them from comprehensive health coverage and increase consumer awareness of coverage options that include the ACA’s consumer protections. These protections include, for example, the prohibition of discrimination based on health status, the prohibition of preexisting condition exclusions, and the prohibition of lifetime and annual dollar limits on essential health benefits. STLDI STLDI is a type of health insurance coverage designed to fill temporary gaps in coverage when an individual transitions from one plan or coverage to another. STLDI is specifically exempt from the definition of “individual health insurance coverage” and, therefore, is not subject to the ACA’s requirements for comprehensive coverage. Currently, STLDI is defined as coverage with an initial contract period of less than 12 months and a maximum total duration of up to 36 months, which includes renewals and extensions. Effective for coverage periods beginning on or after Sept. 1, 2024 , the final rule limits the length of the initial contract period to no more than three months and the maximum coverage period to no more than four months , taking into account any renewals or extensions. In addition, the final rule: Prohibits a practice known as “stacking,” where the same insurer issues multiple STLDI policies to the same policyholder within a 12-month period; and Amends the consumer notice requirement to further clarify the differences between STLDI and comprehensive coverage and identify options for consumers to obtain comprehensive coverage. The notice must be prominently displayed on the first page of the policy, certificate or contract of insurance—including for renewals and extensions—and included in any marketing, application and enrollment (or reenrollment) materials. The final rule also includes a reminder that coverage sold to individuals through a group trust or association, other than in connection with a group health plan, is not group coverage for purposes of federal law and must meet the federal definition of STLDI or it is subject to the federal consumer protections and requirements for comprehensive individual health insurance coverage. Fixed Indemnity Excepted Benefits Coverage Certain categories of coverage—called “excepted benefits”—are not subject to certain federal consumer protections, including the ACA’s requirement for comprehensive coverage. Fixed indemnity coverage is exempt from these protections because it is designed to provide a source of income replacement rather than full medical coverage. Effective for plan years beginning on or after Jan. 1, 2025 , the final rule requires a consumer notice to be provided when offering fixed indemnity excepted benefits coverage in the group market to ensure that consumers can distinguish between this coverage and comprehensive medical coverage. Health plans and issuers must prominently display the notice in marketing, application and enrollment (and reenrollment) materials. In the July 2023 proposed rule, the Departments proposed new standards regarding the payment standards and noncoordination requirement for fixed indemnity excepted benefits. The Departments are not finalizing these proposed standards at this time , but they intend to address the issues in future rulemaking after additional study and consideration. Tax Treatment of Fixed Indemnity Health Coverage In the July 2023 proposed rule, the Departments proposed to clarify that payments from employer-provided fixed indemnity health insurance plans are not excluded from a taxpayer’s gross income if the amounts are paid without regard to the actual amount of any incurred medical expenses and where the premiums or contributions for the coverage are paid on a pre-tax basis. This rule also proposed to clarify that the taxpayer must meet substantiation requirements for reimbursements for qualified medical expenses from any employer-provided accident and health plan to be excluded from the taxpayer’s gross income. To provide more time to study the issues and concerns raised by commenters, the Departments are not finalizing these proposed changes at this time.

New York law requires written contracts and timely payment for freelance workers.  On Nov. 22, 2023, the state of New York enacted the Freelance Isn’t Free Act (the Act) to strengthen protections for freelance workers by requiring written contracts, timely payment and non-retaliation. The Act takes effect on May 20, 2024 , and generally mirrors the New York City Freelance Isn’t Free Act (the NYC Act) that took effect in 2017. Freelance Workers Defined A “freelance worker” includes any natural person or single-person organization that is hired or retained as an independent contractor by a nongovernmental hiring party to provide services in exchange for compensation of at least $800 or $800 in the aggregate during the preceding 120 days. The definition of “freelance worker” does not include sales representatives, attorneys, licensed medical professionals, construction contractors or any workers hired as employees. Written Contract Requirements The Act requires the hiring party and freelance worker to enter into a written contract for services, a copy of which must be provided to the freelance worker. The hiring party must also retain a copy of the contract for six years. At a minimum, the contract must include the name and mailing address of each party, an itemization of services to be provided, the value of such services, the rate and method of compensation, the date of payment (or mechanism by which such date will be determined), and the date by which the freelance worker must submit a list of services rendered to ensure timely payment. The New York Department of Labor (NYDOL) will provide model contracts on its website for use by the general public at no cost. Timely Payment The hiring party must pay freelance workers no later than the date specified in the contract or, if a date is not specified, no later than 30 days after the completion of services. Once a freelance worker begins to render services, the hiring party may not require that the freelance worker accept less than the agreed-upon compensation as a condition of timely payment. Non-Retaliation The hiring party may not threaten, intimidate, discipline, harass, deny a work opportunity, discriminate against or take any other action to retaliate against freelance workers for or deter them from exercising their rights under the Act. Penalties and Other Remedies Freelance workers may file a complaint with the NYDOL alleging violations of the Act, and the NYDOL may award civil or criminal penalties. Freelance workers may also file a civil action for damages, including double damages, injunctive relief and attorneys’ fees (for nonpayment or underpayment), statutory damages equal to the contract price (for retaliation), or statutory damages equal to $250 (for failure to enter into a written contract). If there is reasonable cause to believe that a hiring party has a pattern or practice of violations, the New York attorney general may bring a civil action on behalf of the state and seek fines of up to $25,000 and other appropriate relief. Hiring Party Considerations The Act does not apply to contracts entered into before May 20, 2024. However, hiring parties should review their existing contracts and payment practices now and make any necessary changes to ensure compliance by this date. Moreover, the Act does not provide a determination about the legal classification of any freelance worker as an employee or independent contractor, so hiring parties should ensure that such workers are properly classified.

On Dec. 20, 2023, the IRS issued Notice 2024-2 , providing guidance in the form of questions and answers with respect to various provisions of the legislation known as the “SECURE 2.0” Act. Background The Consolidated Appropriations Act of 2023 was signed on Dec. 29, 2022, which is an omnibus bill that includes the SECURE 2.0 legislation, referred to as such because it builds on the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. The legislation is intended to increase employees’ retirement savings and makes numerous important changes that employers should be aware of. A section-by-section summary of the legislation can be found here . Plan Amendments Under Section 501 of SECURE 2.0, the plan amendment deadline for SECURE Act and SECURE 2.0 Act provisions is the last day of the first plan year beginning or after Jan. 1, 2025 (or Jan. 1, 2027, in the case of certain collectively bargained or governmental plans). The new guidance extends the plan amendment deadlines under Section 501 . Section Summary In addition to extending plan amendment deadlines under Section 501, Notice 2024-2 addresses issues under the following sections of the SECURE 2.0 Act: Section 101 (expanding automatic enrollment in retirement plans); Section 102 (modification of credit for small employer pension plan startup costs); Section 112 (military spouse retirement plan eligibility credit for small employers); Section 113 (small immediate financial incentives for contributing to a plan); Section 117 (contribution limit for SIMPLE plans); Section 326 (exception to the additional tax on early distributions from qualified plans for individuals with a terminal illness); Section 332 (employers allowed to replace SIMPLE retirement accounts with safe harbor 401(k) plans during a year); Section 348 (cash balance); Section 350 (safe harbor for correction of employee elective deferral failures); Section 601 (SIMPLE and SEP Roth IRAs); and Section 604 (optional treatment of employer contributions or nonelective contributions as Roth contributions). The Treasury Department and the IRS invite comments and suggestions on the guidance, which should be submitted on or before Feb. 20, 2024 .

On Dec. 11, 2023, the U.S. House of Representatives passed landmark bipartisan legislation to lower the cost of health care and increase pay transparency for patients. The Lower Costs, More Transparency Act, which passed by a vote of 320-71, takes an initial step toward curbing Americans’ skyrocketing health care spending. However, this bill will likely face strong opposition from hospitals and other industry groups. The bill would have to pass the Senate and be signed by the president before becoming law. “By requiring nearly every corner of our health system to publicly disclose their prices, the Lower Costs, More Transparency Act will empower patients and create incentives to lower prices across the board. “ - House Ways and Means Committee Chair Jason Smith If enacted into law as written, this act could help patients in the following ways: Increase price transparency to reveal the cost of prescription drugs by empowering patients and employers to make informed health care decisions, making price information available publicly, and requiring health insurers and pharmacy benefit managers to disclose negotiated drug rebates and discounts. Address the cost of prescription drugs by lowering out-of-pocket costs for seniors who receive medication at hospital-owned outpatient facilities, expanding access to affordable generic drugs and equipping employer health plans with the information they need to make informed decisions about drug prices. Support patients, health care workers, community health centers and hospitals by fully paying for expiring health care programs that support community health centers, supporting training programs for new doctors in communities, preserving Medicaid for hospitals that care for uninsured and low-income patients, and extending funding for research to improve treatments and cures for diabetes. Next Steps Heightened health care costs are likely to continue impacting employers and employees for the foreseeable future. To combat rising costs, employers are focusing on improving employee health outcomes, reducing unnecessary services, and prioritizing prevention and primary care. Additionally, employers may benefit from improving benefits education and employee communication to help workers understand their benefits and the best ways to utilize and maximize them. Employers should continue to monitor the progress of this bill, as it could significantly impact health care costs. We’ll keep you appraised of any notable updates.

On Dec. 14, 2023, the IRS announced the 2024 optional standard mileage rates, which are used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. The 2024 standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be: 67 cents per mile driven for business use, up 1 ½ cents from the rate for 2023; 21 cents per mile driven for medical purposes or for moving purposes for qualified active duty members of the Armed Forces, down one cent from the rate for 2023; and 14 cents per mile driven in service of charitable organizations. The rate is set by statute and remains unchanged from 2023. Under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station. Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. Taxpayers can use the standard mileage rate, but they must opt to use it in the first year the car is available for business use. Then, in later years, they can choose either the standard mileage rate or actual expenses. Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is chosen.  Important Dates Dec. 14, 2023: IRS announced the standard mileage rates for use in 2024. Jan. 1, 2024: New standard mileage rates go into effect.

On Nov. 15, 2023, the Centers for Medicare and Medicaid Services (CMS) released the maximum limits on cost sharing for 2025 under the Affordable Care Act (ACA). For 2025, the maximum annual limitation on cost sharing is $9,200 for self-only coverage and $18,400 for family coverage . This represents an approximately 2.6% decrease from the 2024 limits of $9,450 for self-only coverage and $18,900 for family coverage. Out-of-Pocket Maximum The ACA requires most health plans to comply with annual limits on total enrollee cost sharing for essential health benefits (EHBs). These cost-sharing limits are commonly referred to as an out-of-pocket maximum. Once the out-of-pocket maximum is reached for the year, the enrollee cannot be responsible for additional cost sharing for EHBs for the remainder of the year. Under the ACA, EHBs must reflect the scope of benefits covered by a typical employer plan and must include items and services in ten general categories, including emergency services, hospitalization, prescription drugs, pediatric services, outpatient care and maternity and newborn care. CMS annually adjusts the ACA’s out-of-pocket maximum for inflation and publishes the limits by January of the year preceding the applicable benefit year. The ACA’s cost-sharing limits apply to all non-grandfathered health plans, including self-insured health plans, level-funded health plans and fully insured health plans of any size. Any out-of-pocket expenses required by or on behalf of an enrollee with respect to EHBs must count toward the cost-sharing limit. This includes deductibles, copayments, coinsurance and similar charges but excludes premiums and spending for noncovered services. Health plans that use provider networks are not required to count an enrollee’s expenses for out-of-network benefits toward the cost-sharing limit. Also, the ACA requires health plans to apply an embedded out-of-pocket limit for everyone enrolled in coverage. Each enrollee must have an individual out-of-pocket limit on EHBs that is not higher than the ACA’s out-of-pocket maximum for self-only coverage. Limits for 2024 and 2025 For plan years beginning in 2024, the out-of-pocket maximum is $9,450 for self-only coverage and $18,900 for family coverage. For plan years beginning in 2025, the limits are $9,200 and $18,400, respectively. Employers should review the plan designs each year to ensure they comply with the ACA’s cost-sharing limits.

The Internal Revenue Service (IRS) has released Notice 2023-75 , containing cost-of-living adjustments for 2024 that affect amounts employees can contribute to 401(k) plans and individual retirement accounts (IRAs). 2024 Increases The employee contribution limit for 401(k) plans in 2024 has increased to 23,000 , up from $22,500 for 2023. Other key limit increases include the following: The employee contribution limit for IRAs is increased to $7,000 , up from $6,500. The IRA catch‑up contribution limit for individuals aged 50 and over remains unchanged at $1,000 for 2024 (despite this limit now including an annual cost‑of‑living adjustment because of legislation enacted at the end of 2022, referred to as “SECURE 2.0”). The employee contribution limit for SIMPLE IRAs and SIMPLE 401(k) plans is increased to $16,000 , up from $15,500. The limits used to define a “highly compensated employee” and a “key employee” are increased to $155,000 (up from $150,000) and $220,000 (up from $215,000), respectively. The annual limit for defined contribution plans (for example, 401(k) plans, profit-sharing plans and money purchase plans) is increased to $69,000 , up from $66,000. The annual compensation limit (applicable to many retirement plans) is increased to $345,000 , up from $330,000. The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan remains unchanged at $7,500 . Therefore, participants in these plans who are 50 and older can contribute up to $30,500 , starting in 2024. The income ranges for determining eligibility to make deductible contributions to traditional IRAs, contribute to Roth IRAs and claim the Saver’s Credit (also known as the Retirement Savings Contributions Credit) also increased for 2024. More Information The IRS’s news release contains more details on the cost-of-living adjustments for 2024.

On Oct. 26, 2023, the National Labor Relations Board (NLRB) announced a final rule that establishes new criteria to determine joint-employer status. Joint employment situations can happen when two or more employers share personnel hiring, supervision and management practices. When a joint employment status exists, joint employers are equally responsible for compliance with applicable laws and regulations. Update as of Nov. 20, 2023: On Nov. 16, 2023, the National Labor Relations Board (NLRB) announced it would push the effective date of the new joint-employer rule to Feb. 26, 2024. The final rule was initially set to become effective on Dec. 26, 2023. However, the agency has delayed the effective date by two months to facilitate the resolution of legal challenges regarding the new rule. Notice of the extension will be published in the Federal Register. Joint Employment Whether joint employment is by design or unintentional, joint employers are equally: Liable for unfair labor practices committed by other joint employers; Required to bargain with the union that represents jointly employed workers; and Subject to union picketing or other economic pressure if there is a labor dispute. To determine whether a joint-employer relationship exists, employers must evaluate the degree of control they exert over “essential terms and conditions of employment.” Essential terms and conditions of employment include wages, benefits, hours of work and employee hirings, discharges, discipline, supervision and direction. 2020 Joint-Employer Standard The NRLB adopted the current joint-employer standard on April 27, 2020. This standard applies to labor issues related to the National Labor Relations Act . The current standard considers the “substantial direct and immediate control” employers have over essential terms and conditions of employment for individuals who are employed by another organization. Specifically, the 2020 joint-employer standard indicates that a business is a joint employer of another employer’s employees only if the degree of joint control is of sufficient magnitude to lead to the conclusion that the joint employer meaningfully affects matters relating to the employment relationship. In addition, under the 2020 rule, other evidence may suggest (but not prove) the existence of joint-employer status, particularly when the evidence points to indirect control or the right to exert control through contract or agreement (especially when control is never exercised). Overview of the 2023 Rule The new rule rescinds the 2020 joint-employer standard and: Clarifies the definition of “essential terms and conditions of employment,” Identifies the types of control that are necessary to establish joint-employer status and the types that are irrelevant to the joint-employer inquiry; and Describes the bargaining obligations of joint employers. Employers should pay particular attention to the fact that the 2023 rule was drafted to be more inclusive than the 2020 rule. This means it will become easier for employers to be classified as joint employers. The 2023 rule created this more inclusive standard for determining joint-employer status by removing the requirement that joint employers must “possess and exercise … substantial direct and immediate control” over essential terms and conditions of employment. In addition, the new standard more faithfully grounds the joint-employer rule in established common-law agency principles. Specifically, the rule considers the alleged joint employers’ authority to control essential terms and conditions of employment, regardless of whether such control is exercised. Finally, the NLRB has also stated that “the new rule also provides extensive guidance to parties regarding their rights and responsibilities in situations where joint-employer status has been established.” Terms and Conditions of Employment The final rule limits terms and conditions of employment to: Wages, benefits and other compensation; Hours of work and scheduling; The assignment of duties to be performed; The supervision of the performance of duties; Work rules and directions governing the manner, means and methods of the performance of duties and the grounds for discipline; The tenure of employment, including hiring and discharge; and Working conditions related to the safety and health of employees. Impact on Employers Employers, particularly contractors and subcontractors, should become familiar with the new rule and determine whether a more inclusive joint-employer standard would reclassify them as joint employers in their operations by the rule’s effective date. Employers affected by the new standard should also take precautionary steps to ensure other joint employers comply with regulations regarding labor and employment laws for joint employees.

The IRS has released final 2023 forms and instructions for reporting under Internal Revenue Code Sections 6055 and 6056: 2023 Forms 1094-B and 1095-B (and instructions ) will be used by providers of minimum essential coverage, including self-insured plan sponsors that are not applicable large employers (ALEs), to report under Section 6055. 2023 Forms 1094-C and 1095-C (and instructions ) will be used by ALEs to report under Section 6056 as well as for combined Section 6055 and 6056 reporting by ALEs who sponsor self-insured plans. Draft versions of these forms were released in July, and draft instructions were released in September. No major substantive changes were made to the final forms and instructions for 2023 reporting. Final Instructions Address New Electronic Filing Threshold The 2023 instructions include information on the new electronic filing threshold for information returns required to be filed on or after Jan. 1, 2024, which has been decreased to 10 or more returns (originally, the threshold was 250 or more returns). Specifically, the instructions provide the following clarifications and reminders: The 10-or-more requirement applies in the aggregate to certain information returns. Accordingly, a reporting entity may be required to file fewer than 10 of the applicable Form 1094 and 1095, but still have an electronic filing obligation based on other kinds of information returns filed (e.g., Forms W-2 and 1099). The electronic filing requirement does not apply to those reporting entities that request and receive a hardship waiver; however, the IRS encourages electronic filing even if a reporting entity is filing fewer than 10 returns. The formatting directions in the instructions are for the preparation of paper returns. When filing forms electronically, the formatting set forth in the “XML Schemas” and “Business Rules” published on IRS.gov must be followed rather than the formatting directions in the instructions. For more information regarding electronic filing, see IRS Publications 5164 and 5165 . Action Steps Employers should become familiar with these forms and instructions for 2023 calendar year reporting and begin to explore options for filing ACA reporting returns electronically (e.g., they may be able to work with a third-party vendor to complete the electronic filing). Reporting entities that may be in a position to perform their own electronic reporting can review the IRS’ ACA Information Returns (AIR) Program webpage .

On Aug. 1, 2023, the U.S. Citizenship and Immigration Services (USCIS) published a new version of its Employment Eligibility Verification form, also known as Form I-9. Employers are required to use the new form exclusively beginning on Nov. 1, 2023. The Form I-9 instructions also clarify procedures for employers that are eligible to utilize remote examination as an alternative to physical examination of employees’ documentation. Employers enrolled and participating in E-Verify may choose to examine documents remotely. Dates of Use The previous version of this form expired on Oct. 31, 2022, but USCIS instructed employers to continue using this expired form until the new version was published. USCIS has indicated that employers may begin using the new form immediately and that use of the expired form (dated “10/19/2019”) will be allowed through Oct. 31, 2023. Employers can find the publication date of Form I-9 in the lower left corner of the form. Beginning Nov. 1, 2023, employers will need to use the newest version of the form. Employers that use previous versions of the form after this date will not be in compliance with federal employment eligibility verification requirements. Use of the revised Spanish version of the form is available for use in Puerto Rico only. As outlined below, employers enrolled and participating in E-Verify may choose to examine documents remotely. However, employers that were not enrolled in E-Verify during the COVID-19 flexibilities must complete an in-person physical examination by Aug. 30, 2023. Form I-9 Updates USCIS has published a complete list of Form I-9 updates . Some of the most notable changes include: Sections 1 and 2 have been reduced to a single sheet; all previous fields remain, but some fields have been merged The preparer/translator certification area has been moved to a standalone supplement that employers can use as necessary for initial verification or recertification Section 3 (Reverification and Rehire sections) has been moved to a standalone supplement that employers can use as necessary The list of acceptable documents now includes some acceptable receipts, guidance and links to information on automatic extensions of employment authorization documentation. The new Form I-9 includes updated instructions. These instructions have been condensed from 15 to eight pages and include additional definitions, streamlined processes, and an explanation of how to use the new check boxes to indicate when Form I-9 documents were examined remotely. Remote Document Verification Under current requirements, employers must physically inspect I-9 acceptable documents to certify their employees are authorized to work in the United States. However, the new form includes alternative remote verification procedures employers enrolled in E-Verify can use to comply with their Form I-9 obligations. USCIS has published instructions for remote document verification , as outlined in the following sections. E-Verify Participation Required Employers must participate in E-Verify and be in good standing if they want to examine employee documents remotely. New E-Verify enrollees and users must complete an E-Verify tutorial that includes fraudulent document awareness training. Existing employers already enrolled in E-Verify have access to this tutorial and may retake it at any time. E-Verify employers are in good standing if they: Are enrolled in E-Verify with respect to all hiring sites that use the alternative procedure to examine documents remotely Use E-Verify to confirm the employment eligibility of newly hired employees in the United States Comply with all other requirements of the E-Verify program. Remote Examination of Documents Procedures To comply with procedures for the remote examination of documents, employers must: Examine copies (front and back, if the document is two-sided) of Form I-9 documents or an acceptable receipt to ensure that the documentation presented reasonably appears to be genuine and relates to the employee Conduct a live video interaction with the individual presenting the document(s) to ensure that the documentation reasonably appears genuine and relates to the individual. The employee must first transmit a copy of the document(s) to the employer and then present the same document(s) during the live video interaction Retain a clear and legible copy of the documentation (front and back if the documentation is two-sided). In addition, employers must indicate that they used an alternative procedure on Form I-9 by: Checking the box on the Form I-9 dated “08/01/2023”; the box indicates that they used an alternative procedure in the Additional Information field in Section 2; or Annotating the Form I-9 dated “10/21/2019,” with “Alternative Procedure” in the Additional Information field in Section 2. Employers using the remote verification option should also review the instructions for rehire, recertification and the retention of documents.

The U.S. Department of Labor (DOL) has released Summary Annual Report (SAR) model forms for plan years beginning in 2023 and later. The SAR is a narrative summary of the information in Form 5500 and must be provided annually by administrators of plans subject to the Form 5500 annual reporting requirements. Model Forms The latest model forms can be found on the DOL’s Reporting and Filing webpage under the “General Reporting and Filing Compliance Assistance” tab. There are two models for plan years beginning in 2023 and later: Form for SAR relating to pension plans for plan years beginning in 2023 and later Form for SAR relating to welfare plans for plan years beginning in 2023 and later . Forms for plan years beginning in 2022 and earlier are also available. No substantive changes were made to the 2023 forms. Providing the SAR The SAR requirement only applies to plans that must file Form 5500. If a plan is exempt from the Form 5500 requirement, it is also exempt from the SAR requirement. Employers with large fully insured welfare plans (100 or more participants) must provide participants with a SAR each year. Large unfunded welfare plans (100 or more covered participants) are exempt from the requirement to provide a SAR, even though they are subject to the Form 5500 requirement. Employers with self-insured, unfunded plans are not subject to the SAR requirement, regardless of plan size. Distribution Methods SARs may be distributed by any method that is permissible for summary plan descriptions. These methods include: Hand delivery to employees at their worksite U.S. mail Electronic delivery (if certain requirements are satisfied). Rules for Electronic Delivery DOL regulations include a safe harbor for employers to use electronic media to distribute the SAR to (1) employees with work-related computer access; and (2) other plan participants and beneficiaries who consent to receive disclosures electronically. In addition, to satisfy the safe harbor, employers must notify plan participants each time the disclosure is provided electronically, and they must take steps to ensure that the electronic delivery results in actual receipt.

On Aug. 7, 2023, the Equal Employment Opportunity Commission (EEOC) issued a proposed rule to implement the Pregnant Workers Fairness Act (PWFA). The PWFA went into effect on June 27, 2023, and requires covered employers to provide reasonable accommodations (absent undue hardship) to a qualified individual’s known limitations related to pregnancy, childbirth, or related medical conditions. The PWFA builds upon existing protections against pregnancy discrimination under Title VII of the Civil Rights Act and access to reasonable accommodations under the Americans with Disabilities Act (ADA). Key Highlights The rule explains how the EEOC proposes to interpret the PWFA and certain terms in the law, such as the following: The PWFA allows an employee or applicant to be “qualified” even if they cannot perform one or more essential functions of the job, if the inability to perform the essential function(s) is “temporary,” the worker could perform the essential function(s) “in the near future,” and the inability to perform the essential function(s) can be reasonably accommodated. The proposed rule defines the term “temporary” as lasting for a limited time, not permanent and may extend beyond “in the near future.” The proposed rule defines “in the near future” as generally 40 weeks, though the actual length of the temporary suspension of the essential function(s) will depend upon what the employee requires. The proposed rule uses the same definition of “essential function” as the ADA. In general terms, it means the fundamental duties of the job. The proposed rule also provides numerous examples of possible reasonable accommodations and seeks input on whether there should be more examples, and for what additional situations. In addition, the EEOC solicits information and comment on particular issues, including existing data quantifying the proportion of pregnant workers who need workplace accommodations and existing data on the average cost of pregnancy-related accommodations. EEOC Resources An EEOC summary of key provisions of the proposed rule is available, in addition to previously released educational resources contained in the “ What You Should Know ” guidance series. EEOC FAQs are also available, called “What You Should Know About the Pregnant Workers Fairness Act.”

The U.S. Department of Labor (DOL) recently launched its Mental Health at Work initiative, including a new website providing a variety of resources and tools to help improve overall mental health in the workplace. Mental Health Crisis Mental health issues are increasingly prevalent in the workplace. According to the DOL’s research, approximately 1 in 5 Americans experience mental illness every year. More than 46 million people in the country experienced a substance use disorder in the previous year. Suicide is a leading cause of death in the United States. Also, almost half of workers said their work is suffering because of poor mental health. Despite its prevalence, there can be significant stigma around mental illness, including in the workplace. Employer Compliance Requirements Employers play a critical role in creating environments where workers are as comfortable seeking support for treating mental health conditions as they are with other types of illnesses. Employers are required to comply with the following federal laws to support workers’ mental health: · Mental Health Parity and Addiction Equity Act (MHPAEA): Under MHPAEA, health plans that cover mental health or substance use benefits cannot impose more restrictions on those benefits than what generally applies to comparable medical or surgical benefits. · Family and Medical Leave Act (FMLA): Under the FMLA, covered employers must provide up to 12 weeks of job-protected leave to eligible employees. · Americans with Disabilities Act (ADA): Under the ADA, workers with mental health conditions may be protected against workplace discrimination and harassment related to their condition, have workplace confidentiality rights, and have a legal right to reasonable accommodations that can help them perform and keep their job. Mental Health Resources The DOL’s new website includes summaries for employers on the workplace legal requirements regarding mental health, including a fact sheet on MHPAEA , frequently asked questions about when employees can take FMLA leave for a mental health condition, and examples of reasonable accommodations that may help employees with mental health conditions to perform their jobs more effectively. To help create a supportive workplace, the DOL’s website has links to various posters, checklists, toolkits and other resources. The website also provides resources for workers to get help with their mental health needs and learn about their rights. Source: U.S. Department of Labor

On May 4, 2023, the U.S. Department of Homeland Security (DHS) and U.S. Immigration and Customs Enforcement (ICE) announced that the COVID-19 flexibilities for the Employment Eligibility Verification form (Form I-9) will expire on July 31, 2023. The announcement also clarifies that employers will have until Aug. 30, 2023, to complete all required physical inspections of identity and employment eligibility documents.

In April 2023, the U.S. Department of Labor (DOL) released an updated version of the federal Fair Labor Standards Act (FLSA) minimum wage poster. The DOL has indicated on its website that the previous version of the FLSA poster “no longer fulfills the posting requirement and should be replaced.”

On Feb. 22, 2023, the New York State Department of Labor (NYDOL) published amendments to the state’s overtime regulations for farm workers. These amendments incorporate the Farm Labor Wage Board recommendation to reduce the overtime threshold for farm workers from 60 to 40 hours per week.

On March 9, 2023, the IRS released updated penalty amounts for 2024 related to the employer shared responsibility (pay or play) rules under the Affordable Care Act (ACA). For calendar year 2024, the adjusted $2,000 penalty amount is $2,970 and the adjusted $3,000 penalty amount is $4,460.

On Feb. 9, 2023, the U.S. Department of Labor (DOL) published a Field Assistance Bulletin (FAB) No. 2023-1 that includes guidance on how to apply eligibility rules under the Family and Medical Leave Act (FMLA) when employees telework or work away from an employer’s facility. FABs provide guidance to DOL Wage and Hour Division (WHD) field staff. The FMLA requires covered employers to provide eligible employees with up to 12 weeks of unpaid, job-protected leave for specific reasons related to the health and well-being of themselves and their families. Generally, employers are covered if they have at least 50 employees. Employees are eligible for FMLA benefits if they have the qualifications mentioned here.

Employees who take short-term military leaves may be entitled to compensation from their employers during those leaves, according to a decision by the U.S. Court of Appeals for the 9th Circuit. The Feb. 1, 2023, opinion in Clarkson v. Alaska Airlines Inc. held that the Uniformed Services Employee and Reemployment Rights Act (USERRA) requires employers to provide paid military leave to the same extent they provide paid leave for other comparable absences.

If the FTC’s proposed rule becomes final, employers would no longer be able to require employees to agree to noncompete clauses, and existing noncompete agreements would no longer be considered valid. Banning noncompete agreements could considerably impact employee wages, working conditions and benefits since employees would have the freedom to change jobs, seek higher wages and search for better working conditions and benefits.

Two new laws that were included in the federal omnibus spending bill, enacted on Dec. 29, 2022, expand workplace rights for employees affected by pregnancy, childbirth or related conditions starting in 2023.

On Dec. 29, 2022, the IRS announced the 2023 optional standard mileage rates, which are used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

On Jan. 13, 2022, the Supreme Court of the United States (SCOTUS) ruled to stay the Occupational Safety and Health Administration’s (OSHA) vaccination and testing emergency temporary standard (ETS). The ETS was developed to establish a mandatory vaccination policy requirement for private employers with 100 or more employees.