Executive order forces DOL to enact final rule on paid sick leave
Interesting read about the new DOL final rule from Employee Benefit Adviser, by Leanne Mehrman
The U.S. Department of Labor acted on President Obama’s Executive Order 13706 (EO) and released a final rule implementing the requirements for federal contractors and subcontractors to provide employees with paid sick leave. Specifically, contractors must provide one hour of paid sick leave for every 30 hours worked on or in connection with a covered contract, for at least 56 hours per year, and subject to certain limitations. The requirements will take effect for covered contracts entered into on or after January 1, 2017.
An employee may use the leave for his or her own physical or mental illness, injury, medical condition, treatment or diagnosis as well as that of any person with whom the employee has a significant personal bond that is or is like a family relationship, regardless of biological or legal relationship. This includes such relationships as grandparent and grandchild, brother- and sister-in-law, fiancé and fiancée, cousin, aunt, and uncle. It could also include others with whom the employee has a family-like relationship such as a foster child or foster parent, a friend of a family, or even an elderly neighbor in certain circumstances.
An employee may also use the leave for absences from work resulting from domestic violence, sexual assault, or stalking, if the leave is for the reasons described above or to obtain additional counseling, seek relocation, seek assistance from a victim services organization or to take related legal action. The leave for domestic violence, sexual assault or stalking is available for the employee and for the employee to assist a related individual as described above.
Covered contracts: The EO and Final Rule apply to contracts and contract-like instruments (which will be defined in DOL regulations) if the contract is:
- a procurement contract for services or construction;
- a contract for services covered by the Service Contract Act (SCA);
- a contract for concessions, including any concessions contract excluded by DOL regulations at 29 CFR 4.133(b); or
- a contract or contract-like instrument entered into with the federal government in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public; and
The wages of employees under these contracts are covered by the Davis Bacon Act (DBA), the SCA or the Fair Labor Standards Act (FLSA), including employees who are exempt from the FLSA's minimum wage and overtime provisions.
For contracts covered by the SCA or DBA, the EO and Final Rule apply only to contracts at the thresholds specified by those statutes. For procurement contracts in which employees' wages are covered by the FLSA, the EO and Final Rule apply only to contracts that exceed the micro-purchase threshold as defined in 41 U.S.C. 1902(a), unless expressly made subject to this order pursuant to DOL regulations.
Highlights of the final rule requirements include:
- Accrued sick leave must be carried over from year to year;
- Contractors must reinstate accrued sick leave for employees rehired by a covered contractor within 12 months after job separation;
- Contractors are not required to pay a separating employee for unused sick leave upon separation;
- Contractors must inform an employee, in writing, of the amount of paid sick leave accrued but not used no less than once each pay period or each month, whichever is shorter;
- Contractors cannot require the employee to find a replacement worker as a condition for using the paid sick leave;
- Contractors covered by the SCA or DBA will not receive credit toward their prevailing wage or fringe benefit obligations under these acts by providing the paid sick leave required by the EO;
- A contractor's existing paid sick leave policy provided in addition to the fulfillment of the SCA or DBA requirements, which is made available to all employees, fulfills the requirements of the EO and Final Rule if it permits employees to take at least the same amount of leave as provided by the EO for the same reasons;
- Employees must provide written or verbal notice of the need for leave at least seven days in advance if the leave is foreseeable and as soon as practicable when the need for the leave is not foreseeable;
- A contractor may only require certification of the need for the leave for absences of three or more consecutive days, but only if the employee received notice of the requirement to provide certification or documentation before returning to work;
- A contractor’s existing PTO policy can fulfill the paid sick leave requirements of the EO as long as it provides employees with at least the same rights and benefits that the Final Rule requires if the employee chooses to use that PTO for the purposes covered by the EO;
- Contractors may not interfere with or retaliate against employees taking or attempting to take leave or otherwise asserting rights under the EO;
- Contractors must still comply with federal, state or local laws or collective bargaining agreement provisions that require greater paid sick leave than required by the EO.
SCA health and welfare benefit rate to be adjusted: The DOL’s Wage and Hour Division (WHD) will be announcing an SCA health and welfare benefit rate specifically for federal contractors whose employees receive paid leave pursuant to the EO and Final Rule. This rate is expected to be lower than it would be without consideration of the provision of this paid sick leave.
Recordkeeping requirements: Contractors will be required to make and maintain records for purposes of the EO and Final Rule, including:
- Copies of notifications to employees of the amount of paid sick leave accrued;
- Denials of employees’ requests to use paid sick leave;
- Dates and amounts of paid sick leave employees use; and
- Other records showing the tracking of employees’ accrual and use of paid sick leave.
As with other leave laws, federal contractors must also keep employees’ medical records, as well as records relating to domestic violence, sexual assault, and stalking, separate from other records and confidential.
Employers’ bottom line
Federal contractors who anticipate entering into contracts that will be subject to Executive Order 13706 should do the following: First, review any current PTO/sick leave policy to determine if any revisions may be needed to bring it into compliance with the EO and Final Rule. Second, review the current payroll system to ensure that it has the capabilities to track the amount of paid time off accrued and taken, and timely advise employees. And finally, become familiar with the specific and detailed requirements contained in the Final Rule to ensure compliance upon entry into the first covered contract.
See the original article Here.
Source:
Mehrman, L. (2016 October 6). Executive order forces DOL to enact final rule on paid sick leave. [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/opinion/executive-order-forces-dol-to-enact-final-rule-on-paid-sick-leave
Current Form I-9 Valid Until Jan. 21, 2017
Original Article From SHRM.org
By: Roy Maurer
The newest version of the Form I-9 will be made available by Nov. 22, 2016, U.S. Citizenship and Immigration Services (USCIS) announced.
Employers may continue using the current version of Form I-9 with a revision date of 03/08/2013 until Jan. 21, 2017. After Jan. 21, all previous versions of the Form I-9 will be invalid.
The White House Office of Management and Budget approved the latest revisions to the Form I-9 on Aug. 25, 2016, clearing the way for the form to be released.
"Ever since the current version of the I-9 expired on March 31, 2016, employers have been anxiously awaiting the release of the new form, which will now include some 'smart' error-checking features," said John Fay, vice president and general counsel at LawLogix, a Phoenix-based software company specializing in cloud-based immigration and compliance services. "The newly revised I-9 also features several new structural changes and instructions which will be important for all employers to know and learn."
The new Form I-9 will have an expiration date of Aug. 31, 2019.
Fay said that the Jan. 21 extension to transfer to the new form is "great news for employers, many of whom struggle to stay up-to-date with the latest I-9 changes and requirements."
In 2013, USCIS provided employers with only two months to start using the current version of the form, "hardly enough time for HR to update all of the policy documents, training materials, and procedures which go along with the I-9," Fay said.
Changes to the Form I-9
The new form is designed to address "frequent points of confusion that arise for both employees and employers," Fay said. The proposed changes specifically aim to help employers reduce technical errors for which they may be fined, and include:
- Validations on certain fields to ensure information is entered correctly. The form will validate the correct number of digits for a Social Security number or an expiration date on an identity document, for example.
- Drop-down lists and calendars.
- Embedded instructions for completing each field.
- Buttons that will allow users to access the instructions electronically, print the form and clear the form to start over.
- Additional spaces to enter multiple preparers and translators. If the employee does not use a preparer or translator to assist in completing section 1, he or she must indicate so on a new check box labeled, "I did not use a preparer or translator."
- The requirement that workers provide only other last names used in Section 1, rather than all other names used. This is to avoid possible discrimination issues and to protect the privacy of transgender and other individuals who have changed their first names, Fay said.
- The removal of the requirement that immigrants authorized to work provide both their Form I-94 number and foreign passport information in Section 1.
- A new "Citizenship/Immigration Status" field at the top of section 2.
- A dedicated area to enter additional information that employers are currently required to notate in the margins of the form, such as Temporary Protected Status and Optional Practical Training extensions.
- A quick-response matrix barcode, or QR code, that generates once the form is printed that can be used to streamline enforcement audits.
- Separate instructions from the form. Employers are still required to present the instructions to the employee completing the form, however.
"It's important to remember that this new smart I-9 form is not an electronic I-9 as defined in the regulations," Fay said. "Employers filling out the new form I-9 using Adobe Reader will still need to print the form, obtain handwritten signatures, store in a safe place, monitor reverifications and updates with a calendaring system, and retype information into E-Verify as required."
See the original article here.
3 things NAHU told the IRS about ACA premium tax credits
The National Association of Health Underwriters has tried to show Affordable Care Act program managers that it can take a practical, apolitical approach to thinking about ACA issues.
Some of the Washington-based agent group's members strongly supported passage of the Patient Protection and Affordable Care Act of 2010 and its sister, the Health Care and Education Reconciliation Act of 2010. Many loathe the ACA package.
But NAHU itself has tried to focus mainly on efforts to improve how the ACA, ACA regulations and ACA programs work for consumers, employer plan sponsors and agents. In Washington, for example, NAHU has helped the District of Columbia reach out to local agents. NAHU also offers an exchange agent certification course for HealthCare.gov agents.
Now NAHU is investing some of the credit it has earned for ACA fairness in an effort to shape draft eligibility screening regulations proposed this summer by the Internal Revenue Service, an arm of the U.S. Treasury Department.
Janet Stokes Trautwein, NAHU's executive vice president and chief executive officer, says she and colleagues at NAHU talked to many agents and brokers about the draft regulations.
For a look at just a little of what she wrote in her comment letter, read on:
1. Exchanges have to communicate better
The IRS included many ideas in the draft regulations about ways to keep consumers honest when they apply for Affordable Care Act exchange premium tax credit subsidies.
ACA drafters wanted people to be able to use the subsidies to reduce out-of-pocket coverage costs as the year went on, to reduce those costs to about what the employee's share of the payments for solid group health coverage might be.
To do that, the drafters and implementers at the U.S. Department of Health and Human Services and the IRS came up with a system that requires consumers to predict in advance what their incoming will be in the coming year.
Consumers who predict their income will be too low and get too much tax credit money are supposed to true up with the IRS when the file their taxes the following spring. The IRS has an easy time getting the money when consumers are supposed to get refunds. It can then deduct the payments from the refunds. When consumers are not getting refunds, or simply fail to file tax returns, the IRS has no easy way to get the cash back.
The exchanges and the IRS also face the problem that some people earn too little to qualify for tax credits but too much to qualify for Medicaid. Those people have an incentive to lie and say their income will be higher than it is likely to be.
Trautwein writes in her letter that the ACA exchange system could help by doing more to educate consumers when the consumers are applying for exchange coverage.
"The health insurance exchange marketplaces [should] be required to clearly notify consumers of the consequences of potential income-based eligibility fraud at the time of application, in order to help discourage it from ever happening," Trautwein writes.
2. Federal health and tax systems have to work smoothly together
Trautwein notes in her letter that the ACA exchange system has an exchange eligibility determination process, and that the IRS has another set of standards for determining, based on a consumer's access, or lack of access, to employer-sponsored health coverage, who is eligible for premium tax credit subsidies.
NAHU is worried about the possibility that a lack of coordination between the IRS and the HHS could lead to incorrect decisions about whether exchange applicants have access to the kind of affordable employer-sponsored coverage with a minimum value required by the ACA laws and regulations, Trautwein writes.
"We believe that it is fairly easy for consumers to mistakenly apply for and then receive advanced payments of a premium tax credit for which they are not eligible" based on wrong ideas about affordability, she says.
Consumers could easily end up owing thousands of dollars in credit repayments because of those kinds of errors, she says.
In the long run, employers should be reporting on the coverage they expect to offer in the coming year, rather than trying to figure out what kind of coverage they offered in the past year, Trautwein says.
In the meantime, the IRS and HHS have to work together to improve the employer verification process, she says.
3. Employees do not and cannot speak ACA
Trautwein says NAHU members also worry about exchange efforts to depend on information from workers to verify what kind of coverage the workers had.
"Based on our membership's extensive work with employee participants in employer-sponsored group benefit plans, we can say with confidence that the vast majority of employees do not readily understand the various ACA-related labeling nuances of their employer-sponsored health insurance coverage offerings," she says.
"Terms that are now commonplace to health policy professionals, like minimum essential coverage and excepted benefits, are meaningless to mainstream consumers," she says.
NAHU does not see how an exchange will know what kind of coverage a worker really had access to until after employer reporting is reconciled with information from the exchanges and from individual tax returns, which might not happen until more than a year after the consumer received the tax credit subsidies, Trautwein says.
"This weakness on the part of the exchanges could leave consumers potentially liable for thousands of dollars of tax credit repayments, all because of confusing terms and requirements and inadequate eligibility verification mechanisms," she says.
See the Original Article Here.
Source:
Bell, A. (2016, September 30). 3 things NAHA told the IRS about ACA premium tax credits [Web log post]. Retreived from https://www.lifehealthpro.com/2016/09/30/3-things-nahu-told-the-irs-about-aca-premium-tax-c?page_all=1
5 Steps that can bring you closer to ACA compliance
Vic Saliterman shares 5 steps to help advisers and organizations focus on ACA compliance efforts as the heathcare market system continues to morph.
Original Article Posted on EmployeBenefitAdviser.com
Posted: September 27, 2016
1) Validate the ACA status of employees every month. Identifying who is eligible to be offered coverage under ACA rules is a core ingredient of attaining compliance and can be challenging and complex. In the 2016 plan year, the number of full-time employees who must be offered healthcare coverage increased to 95% from 70% in 2015 — a much higher threshold. Validating each month is far easier and far less stressful than doing so all at once at the end of the year.
a. Categorizing your employees incorrectly can lead to negative consequences such as unanticipated penalties. Keep in mind that any Employer Shared Responsibility assessments are determined independently for each month, even though reporting and IRS notices will be annual. So you should assess monthly to make sure you’re hitting the 95% mark. It also pays to know the difference between “HR full-time” and “ACA full-time” definitions.
2) Gather the correct data now — especially benefits data. According to an ADP study, many organizations have said that it was extremely challenging to gather benefits and payroll data for the annual reporting task of completing Forms 1094-C/1095-C for 2015. HR and finance leaders underestimated the time and effort needed to obtain the correct data from the necessary systems, such as benefits, payroll, time and labor management, and HR. In addition, source data may have resided in non-integrated systems or was inconsistent with ACA definitions, resulting in a time-consuming task of analyzing and adjusting it manually. Employers anticipate that the accuracy of forms, annual reporting, and affordability measures will be their top ACA challenges in 2016. So, begin to gather the correct employee data now.
3) Address Marketplace Notices sooner rather than later. Receiving a Marketplace Notice is like an early warning system. It can alert you that there may be a problem before a fine occurs. Understanding the implications of receiving a notice can help you prepare to manage the situation in the most efficient and cost-effective way possible. Acting now may save your business the expense of penalties later.
a. A Marketplace Notice is generated by an individual state’s Marketplace or the U.S. Department of Health and Human Services whenever an employee receives a premium tax credit to help them pay for healthcare coverage from state or federal marketplaces. The notice gives the employer a chance to appeal the premium tax credit eligibility if they did offer the employee affordable healthcare coverage.
b. An ADP study found that among large employers, those with 1,000 or more employees, 23% said that “responding to Exchange Notices” is their top ACA compliance concern for 2016. For large employers handling compliance on their own, the percentage rose to 27%. One thing to keep in mind is that the notice will be sent to the address provided by the employee, which means it may not go where you expect. So, it may be important to educate and alert local work locations that may receive these notices.
c. In fact, receiving a Marketplace Notice for an employee is an opportunity to look at the coverage offered and verify that your business complies. If appropriate coverage is not being offered, the notice gives you time to make an offer and potentially limit any penalty that may be assessed by the IRS.
4) Pay attention to the “little” things. Did you know that there were nearly 170 IRS error codes for 2015 that could have applied to Form 1094-C/1095-C transmissions? Some errors were technical in nature (format, schema, etc.) whereas others were based on data provided. The point is simple mistakes can lead to rejected IRS forms or accuracy penalties.
a. Many of these errors were the result of inaccurate Social Security numbers, Tax Identification Numbers (TINs), Federal Employer Identification Numbers (FEINs) and, believe it or not, incorrectly listing a company’s legal name. It may help to become familiar with the TIN solicitation rules. In 2015 reporting, the IRS said it will not impose penalties on a filer for reporting incorrect or incomplete information if the filer can show that he or she made a good-faith effort to comply with the information reporting requirements for 2015. But that won’t be the case moving forward.
b. And there are other potential penalties. At some point — likely December 2016 or early 2017 for 2015 filings — you may receive an Employer Shared Responsibility assessment notice from the IRS. The only way you can avoid paying those penalty assessments is by showing the IRS that you, in fact, complied. You’ll need to be able to show who was a full-time employee for each month, who was offered coverage, and whether that coverage met affordability standards. Make sure that several years of employee data is available because you may need that employee history to respond to an IRS inquiry.
5) Look ahead. ACA compliance will continue to be an evolving activity as laws and requirements change. For instance, annual reporting and Form 1095-C will have some new codes, such as “plan start month” (optional for 2015 and 2016) and two new Line 14 codes to identify conditional offers to spouses. Most 2015 transition relief codes will remain for any 2015 plan-year months in 2016. And that’s not all. The IRS also has issued a proposed rule on expatriates and expatriate plans. Begin to familiarize yourself with these planned and proposed changes today, so your overall compliance process becomes more routine.
Managing the requirements of the ACA as a part of day-to-day HR and finance activities doesn’t have to be overwhelming, but you do need to get started.
By engaging a knowledgeable, trusted partner and applying a little diligence and forethought, adhering to ACA rules can begin to integrate into your ongoing operating model.
See the Original Article Here.
Source:
Saliterman, V. (2016, September 27). 5 steps that can bring you closer to ACA compliance [Web log post]. Retrieved from https://www.employeebenefitadviser.com/opinion/5-steps-that-can-bring-you-closer-to-aca-compliance
Congress moves to push back effective date of new OT rules
Interesting article from HRMorning.com, by Tim Gould. It states that the effective date for new overtime rules could be pushed back from December 2017 to June 2017. This is significant for employers and employees alike, as they might be able to wait essentially another year for the law to pass. It will be beneficial for employers for the law to go into effect in June rather than December.
The efforts to push back the deadline for the new OT rules gained some more momentum this week, as Congress moved to enact a new law to extend the effective date to early next summer.
The House of Representatives passed the Regulatory Relief for Small Businesses, Schools and Nonprofits Act (H.R. 6094) on Sept. 27. The law would move the effective date of the new OT rules from Dec. 1 to June 1, 2017.
A similar measure was introduced in the Senate by Sen. James Lankford (R-OK).
Lankford and Rep. Tim Walberg (R-MI), lead sponsor of the House bill, are hoping the legislation will encourage the administration to delay the rule on its own, according to TheHill.com.
The legislative moves come on the heels of two lawsuits filed earlier in the week.
Twenty-one states joined in a federal lawsuit that charges the Obama administration with overstepping its authority in rewriting the rules, which raise the overtime salary threshold from $23, 600 to $47,500 per year. The suit claims the change will place an undue burden on state budgets.
Just hours after the states’ suit was filed, a similar suit was filed by the U.S. Chamber of Commerce and other business groups. Both lawsuits were filed in the U.S. District Court for the Eastern District of Texas.
There’s no telling what might happen in the two Texas cases, but it’s highly unlikely the Congressional proposal will pass. President Obama has promised to veto the legislation.
See the original article Here.
Source:
Gould, T. (2016 September 30) Congress moves to push back effective date of new OT rules. [Web blog post]. Retrieved from address https://www.hrmorning.com/congress-moves-to-push-back-effective-date-of-new-ot-rules/
HIPAA Privacy, Security, and Breach Notification Audit Program
Phase 1 of the HIPPA audits are complete and Phase 2 will begin shortly. The U.S. Departmetn of Helath & Human Services gives some background on Phase 1:
Background on the OCR Pilot Privacy, Security, and Breach Notification Audit Program
Phase1: The use of health information technology continues to expand in health care. Although these new technologies provide many opportunities and benefits for consumers, they also pose new risks to consumer privacy. Because of these increased risks, the Health Insurance Portability and Accountability Act (HIPAA) and the Health Information Technology for Economic and Clinical Health Act (HITECH) include national standards for the privacy of protected health information, the security of electronic protected health information, and breach notification to consumers. HITECH also requires HHS to perform periodic audits of covered entity and business associate compliance with the HIPAA Privacy, Security, and Breach Notification Rules. HHS Office for Civil Rights (OCR) enforces these rules, and in 2011, OCR established a pilot audit program to assess the controls and processes covered entities have implemented to comply with them. Through this program, OCR developed a protocol, or set of instructions, it then used to measure the efforts of 115 covered entities. As part of OCR’s continued commitment to protect health information, the office instituted a formal evaluation of the effectiveness of the pilot audit program.
Learn more about the Pilot Audit Program.
Learn more about the Audit Evaluation Program.
Learn more about the Audit Program Protocol.
See the Original Article from the U.S. Departmetn of Health and Human Services Here.
Proposed regulations clarify TIN responsibilities, create new questions
Ryan Moulder gives a little clarity on the new TIN regulations in the article below.
On Aug. 2, 2016 the IRS published in the Federal Register proposed regulations which among other things attempt to clarify the confusion regarding Taxpayer Identification Number solicitations. This is the government’s third attempt to clarify the TIN issue since the creation of IRC section 6055. The first attempt was made in the preamble to the final regulations for section 6055. In an attempt to bring greater clarity and to gather further comments on the issue, the government issued Notice 2015-68. Notice 2015-68 states an employer will not be subject to the penalties for the failure to report a TIN if the entity follows the regulations set forth at section 301.6724-1(e) with the additional modifications:
- The initial solicitation is made at an individual’s first enrollment or, if already enrolled on September 17, 2015, the next open enrollment;
- The second solicitation is made at a reasonable time thereafter, and
- The third solicitation is made by December 31 of the year following the initial solicitation.
The Notice is not a model for clarity and this issue has only been exasperated by the number of AIRTN500 error messages employers received when submitting the Form 1095-C. With that as a backdrop, the government is once again trying to clarify an employer’s solicitation obligation through proposed regulations. The proposed regulations only apply to the Form 1095-B and to Part III of the Form 1095-C (the Part that is used for employers that sponsor a self-insured plan). The proposed regulations do not affect Parts I or II of the Form 1095-C. This article focuses on the proposed regulations as they relate to Part III of the Form 1095-C. However, most of the concerns discussed in this article could be applied to the Form 1095-B.
As a refresher to what we have written about in previous publications, an employer submitting a Form 1095-C is subject to the penalty provisions of section 6721 and section 6722 for failure to timely file a correct information return or failure to timely furnish a correct statement to the individual. The penalties under both section 6721 and section 6722 may be waived if the failure to timely file (or furnish) a correct information return (or statement) was due to reasonable cause and not due to willful neglect. An employer may meet this standard by showing it acted in a responsible manner and that the failure was the result of events beyond the employer’s control or there were mitigating factors. An employer in danger of violating section 6721 and section 6722 as the result of a missing TIN or an incorrect TIN can follow the procedures laid out in specific sections of the regulations to fulfill the standard discussed in the preceding sentences.
The proposed regulations did a good job distinguishing between missing TINs (discussed at section 301.6724-1(e)) and incorrect TINs (discussed at section 301.6724-1(f)). Treasury and the IRS agreed with commenters that some modifications needed to be made to the solicitation process for missing TINs. However, the proposed regulations leave unchanged the regulations set out for incorrect TINs.
One of the problems commenters complained about with regard to missing TINs is it did not adequately define the term “opened” which was relevant to determine when the initial solicitation needed to be made to satisfy the regulations. An initial solicitation for a missing TIN must be made at the time an account is “opened.” Prior to the existence of the Form 1095-C, missing TIN solicitations were typically performed for financial accounts. These accounts are generally considered “opened” on the first day the account is available for use by the owner. However, this understanding of the term “opened” does not translate well to health coverage.
To rectify this problem, the proposed regulations provide that for the purposes of the Form 1095-C an account is considered “opened” on the date the filer receives a substantially complete application for new coverage or to add an individual to existing coverage. The proposed regulations indicate the initial solicitation for a missing TIN can be satisfied by requesting the enrolling individual’s TIN as part of the application process.
If the initial solicitation for a missing TIN does not produce a TIN, the first annual solicitation under the proposed regulations must be made no later than 75 days after the date on which the account was “opened” or, if the coverage is retroactive, no later than 75 days after the determination of retroactive coverage is made. The second annual solicitation for a missing TIN remains unchanged from the current regulations and must be made by December 31 of the year following the year the account is opened. It is important to note an employer may continue to rely on the rules discussed in Notice 2015-68 or may follow the proposed regulations until the final regulations are published.
Additional relief is provided by the proposed regulations for a missing TIN. For any individual enrolled in coverage on any day before July 29, 2016, the account will considered to be opened on July 29, 2016. An employer will have satisfied its initial solicitation obligation with respect to an individual who is already enrolled so long as the employer requested the enrolled individual’s TIN as part of the application process for coverage or in any other appropriate fashion before July 29, 2016.
Consistent with Notice 2015-68, the first annual solicitation would need to be made within a reasonable time after July 29, 2016 if the initial solicitation did not produce a TIN. An employer who performs the first annual solicitation within 75 days (before Oct. 11, 2016) will be treated as having made the first annual solicitation within a reasonable time. In this situation, if the first two solicitations (the initial solicitation and the first annual solicitation) do not produce a TIN, the second annual solicitation would need to be made by December 31, 2017.
The proposed regulations do not change the solicitation process for incorrect TINs. Therefore, for an incorrect TIN, the first annual solicitation must be made on or before December 31 of the year in which the employer was notified of the incorrect TIN unless the employer was notified of the incorrect TIN in December in which case the employer’s solicitation must be made by January 31 of the following year (see section 301.6724-1(f)(1)(ii)). Similarly, the rules for the second annual solicitation for an incorrect TIN remain unchanged. Therefore, if the employer is notified in any following year after the first annual solicitation that an employee’s (or other dependents’) TIN is incorrect, a second annual solicitation must be made on or before December 31 of the year in which the employer was notified of the incorrect TIN unless the employer was notified of the incorrect TIN in December in which case the employer’s solicitation must be made by January 31 of the following year (see section 301.6724-1(f)(1)(iii)).
The current regulations state that an employer may be notified of an incorrect TIN by the IRS or by a penalty notice issued by the IRS under section 6721 (see section 301.6724-1(f)(1)(ii)). Employers are being notified of an incorrect TIN on Part III of the Form 1095-C with an AIRTN500 error message. We were under the assumption that this would trigger the TIN solicitation obligation. However, footnote 2 of the proposed regulations appears to call this into question. Footnote 2 states:
A filer of the information return required under section 1.6055-1 may receive an error message from the IRS indicating that a TIN and name provided on the return do not match IRS records. An error message is neither a Notice 972CG, Notice of Proposed Civil Penalty, nor a requirement that the filer must solicit a TIN in response to the error message.
This footnote could be interpreted several ways. One possible reading would result in an employer having no solicitation obligation despite the fact an employee’s Form 1095-C triggered an AIRTN500 error message. Alternatively, this footnote could be read to mean an employer who received an AIRTN500 error message would not in all cases be required to make a solicitation. This would be the case if the employer had already fulfilled an initial solicitation as well as two additional annual solicitations at a prior time
However, we think the instructions to the Form 1095-C require an employer receiving an AIRTN500 error message to make some sort of effort to identify a correct TIN for a covered individual. Among other items, an employer is responsible for filing a corrected Form 1095-C if there was an error in the TIN in Part I or Part III related to covered individuals. The source of the error identification may be an IRS error message when submitting the Form 1095-C. The AIRTN500 error message is telling an employer there is an error in a TIN in either Part I or Part III of the Form 1095-C.
However, and to murky the water even further, the instructions for the Form 1094-C/1095-C state “Regulations section 301.6724-1 (relating to information return penalties) does not require you to file corrected returns for missing or incorrect TINs if you meet the reasonable cause criteria.” The confusion with this statement begins with the statement appearing to be at odds with the Form 1094-C/1095-C instructions requirement that a corrected return be filed for an incorrect TIN in Part I or Part III. However, this could conceivably be reconciled with the current regulations. The current regulations require an employer to include the updated TIN with any information return that has an original due date which is after the date that the employer receives the updated TIN (see section 301.6724-1(f)(1)(iv)). Therefore, these statements could be reconciled by viewing the current regulations standard of only updating forms after the correct TIN has been received (as stated in section 301.6724-1(f)(1)(iv)) as trumping the Form 1094-C/1095-C instructions need to correct a return for an incorrect TIN in Part I or Part III.
What is more difficult to reconcile is footnote 2 and the statement in the Form 1094-C/1095-C instructions. As discussed above, footnote 2 could be read to mean no solicitation effort is needed in the event of an AINTN500 error message. Seemingly to the contrary, the Form 1094-C/1095-C instructions state an employer does not need to file a corrected return for a missing or incorrect TIN if the employer meets the reasonable cause criteria of section 301.6724-1. This is inconsistent because, to meet the reasonable cause criteria of section 301.6724-1, an employer must follow the solicitation procedures for missing and incorrect TINs discussed in section 301.6724-1(e) and section 301.6724-1(f) respectively.
One possible reading of all of these statements would give employers two potential paths. If the footnote 2 path is followed, no formal solicitation would need to be made. However, if the footnote 2 path is followed and an informal solicitation produces a correct TIN, the employer would need to file a corrected Form 1095-C and typically would need to furnish the employee a corrected statement. This path is unsatisfying to a conservative legal mind. Alternatively, the second path would not require a corrected return but the formal solicitation procedures discussed in section 301.6724-1 would need to be followed. The uncomfortable aspect of this option is no corrected return would be filed after the employer is made aware that either a TIN in Part I or Part III of the Form 1095-C is incorrect. Again, this path is unsatisfying to a conservative legal mind.
Given the uncertainty created by footnote 2 and the statement in the Form 1094-C/1095-C instructions, we still view the formal solicitation as the best practice if an informal inquiry does not solve the TIN issue. Additionally, we view filing a corrected return as the safest practice. It is important to note that correcting errors is a requirement to use the good faith efforts standard to file accurate and complete information returns in 2015. Therefore, an employer must at least make some sort of effort to figure out what is causing the AIRTN500 error message.
Ideally, the IRS would release a simple overriding statement. The statement would begin “In the event one of your Form 1095-Cs triggers an AIRTN500 error message…” This would be followed by a simple statement or two as to what type of solicitation needs to be performed and whether a corrected Form 1095-C needs to be completed. We urge the IRS to take such action as the AIRTN500 error message was received for millions, if not tens of millions, of Form 1095-Cs.
We understand that the AIRTN500 error message has been the source of immense frustration for many employers. The proposed regulations appear to be another small step in the right direction towards an amicable solution. However, footnote 2 and the Form 1094-C/1095-C instructions cast uncertainty as to when the formal solicitation procedures need to be followed. Employers need to continue to monitor the government’s guidance on this important issue. And, until we get official word from the IRS, we view the formal solicitation procedures along with a corrected return when the solicitation is successful as the safest way to ensure compliance.
See the original article posted on EmployeeBenefitAdvisor.com on August 11, 2016 Here.
Source:
Moulder, R. (2016, August 11). Proposed regulations clarify TIN responsibilities, create new questions. Retrieved from https://www.employeebenefitadviser.com/opinion/proposed-regulations-clarify-tin-responsibilities-create-new-questions
Report highlights employers’ biggest concerns: ACA, new bias claims and OT regs
What are your top concerns as an employer? See what others had to say in the article by Tim Gould.
What’s keeping C-level execs up at night? Just a few small concerns like the new overtime rules, a likely increase in bias claims based on sexual orientation, the Affordable Care Act and the threat of workplace violence.
Those are the takeaways from the 2016 Executive Employer Survey from Littler, the giant employment law firm. The fifth annual survey, completed by 844 in-house counsel, human resources professionals and C-suite executives from some of America’s largest companies, examines the key legal, economic and social issues impacting employers as the 2016 presidential election approaches.
Those pesky OT rules
As you well know, the Department of Labor (DOL) has advanced several regulatory initiatives that have brought the agency’s enforcement of federal employment laws to the forefront for employers. This concern is no doubt driven in large part by the recently finalized Fair Labor Standard Act overtime regs, which will dramatically increase the number of Americans who can qualify for overtime pay. Although respondents completed the survey in the weeks prior to the release of the final rule, 65% had already conducted audits to identify affected employees.
“Employers are clearly feeling the impact of the DOL’s increasingly aggressive regulatory agenda, most notably the new overtime regulations,” Littler attorneys Tammy McCutchen and Lee Schreter said in a joint statement.
They added a sobering note: “While it is encouraging that the majority of respondents started to prepare before the rule was finalized, more than a quarter (28%) said they had taken no action given delays in the rulemaking process. Given that the reclassification process can take up to six months and the rule is unlikely to be blocked from going into effect on December 1, 2016, employers should move quickly to ensure compliance.”
And participants are pretty sure the DOL’s going to be aggressive about making the new rules stick: The vast majority of respondents to this year’s survey (82%) expect DOL enforcement to have an impact on their workplace over the next 12 months, with 31% anticipating a significant impact (up from 18% in the 2015 survey).
Where are the presidential candidates likely to land on employment policies? The majority of respondents (75%) said income inequality (e.g., overtime rules, state equal pay, minimum wage laws, etc.) would be a significant priority of the Democratic candidate. Only 4% felt income inequality would be a significant priority of the Republican candidate.
Top regulatory and legislative issues
With the National Labor Relations Board’s recent expansion of the definition of a “joint employer,” 70% of respondents to the Littler survey expect a rise in claims over the next year based on actions of subcontractors, staffing agencies and franchisees. Approximately half of respondents predicted higher costs (53%) and increased caution in entering into arrangements that might constitute joint employment (49%).
As was the case in the 2015 survey, 85% of employers said the Affordable Care Act (ACA) would have an impact on their workplace in the next 12 months. While two-thirds said they do not expect a repeal of the ACA if a Republican is elected president this fall, respondents saw a greater likelihood of changes to individual provisions. Fifty-three percent said a Republican administration could lead to a repeal of or changes to the Cadillac excise tax and 48% saw a likelihood for changes to the play-or-pay mandate.
Social issues come to the forefront
Today’s companies are increasingly experiencing the incursion of social issues into the workplace, the survey indicated.
In the largest year-over-year change in Littler’s survey results, 74% of respondents expect more discrimination claims over the next year related to the rights of LGBT workers (up from 31% in 2015) and 61% expect more claims based on equal pay (up from 34% in 2015).
This change is driven by LGBT discrimination and equal pay ranking among the top enforcement priorities for the Equal Employment Opportunity Commission (EEOC), but it also mirrors key focus areas for the Obama administration, government efforts at the state and federal levels, and increased public awareness.
Preventing workplace violence
In response to tragic mass shootings across the nation, companies are taking a range of actions to keep their employees safe, including updating or implementing a zero-tolerance workplace policy (52%), conducting pre-employment screenings (40%) and holding training programs (38%). Only 11% of respondents said they had not taken any action because violence is not a concern for their company.
“Putting policies in place to increase awareness of workplace violence and ensure that employees understand how to report threats in the workplace are steps that all employers would be advised to take,” said Littler’s Terri Solomon, who has extensive experience counseling employers on workplace violence prevention. “Unfortunately, even though workplace violence – and particularly active shooter instances – are statistically rare, no employer is truly immune.”
See the original article from HRMorning.com Here.
Source:
Gould, T. (2016, July 13). Report highlights employers' biggest concerns: ACA, new bias claims and OT regs [Web log post]. Retrieved from https://www.hrmorning.com/report-highlights-employers-biggest-concerns-aca-new-bias-claims-and-ot-regs/
Form 5500 changes could increase obligations for plan sponsors
With proposed changes to Form 5500, small business may need to be prepared to stay in compliance as exemption statuses may change. See the article by Joseph K. Urwitz, Srarh Engle and Megan Mard fro Employee Benefit Adviser.
Historically, Form 5500 has served primarily as an information return used by plan administrators and employers to satisfy their reporting obligations under the Employee Retirement Income Security Act and the Internal Revenue Code. However, the DOL and IRS are increasingly relying on information reported on Form 5500 as a key component of their compliance and enforcement initiatives.
As a result, the proposed revisions to Form 5500 would add a number of new reporting requirements designed to aid the DOL and IRS in assessing whether an employer-sponsored health and welfare plan is being operated and maintained in compliance with the Internal Revenue Code, ERISA and the Affordable Care Act. Most notably, the revisions would limit the reporting exemption for small health and welfare plans, and require employers to disclose significantly more information about their plans in a new Schedule J (Group Health Plan Information) to the Form 5500.
Proposed changes limit exemption for small health and welfare plan reporting
Under the existing reporting regulations, employer-sponsored group health plans with fewer than 100 participants that are fully-insured, self-insured or a combination of insured and self-insured, are not required to file a Form 5500. The proposed changes would eliminate this small plan exception and would require all employer-sponsored group health plans that are subject to ERISA (including grandfathered and retiree plans) to file a Form 5500, regardless of a plan’s size or funding.
The DOL’s executive summary on the proposed regulations states that this change will improve the DOL’s effective development and enforcement of health and welfare plan regulations, as well as the DOL’s ability to educate plan administrators regarding compliance. The new reporting rules will also provide the DOL with data needed for congressionally-mandated reports on group health plans. Under the proposed rules, the existing financial reporting exemptions for health and welfare plans on Schedule C (Service Provider Information), G (Financial Transaction Schedules) and H (Financial Information) will continue to apply. Small, fully-insured plans would have a new limited exemption and would only be required to complete basic participation, coverage, insurance company and benefit information.
Changes to form 5500-SF eligibility
Currently, a welfare plan with fewer than 100 participants, including a plan that provides group health benefits, may file the Form 5500-SF if it is not exempt from the reporting requirements and otherwise eligible. Under the proposed regulations, welfare plans that provide group health benefits and have fewer than 100 participants would no longer be permitted to use the Form 5500-SF. For example, under the proposed rules, a plan funded through a trust with fewer than 100 participants would be required to complete the Form 5500 and Schedule H and Schedule C, if applicable. Welfare plans that do not provide group health benefits, have fewer than 100 participants, and are not otherwise exempt from the reporting requirements would still be able to use the Form 5500-SF.
Proposed changes require disclosure of significantly more plan information
The proposed revisions would also add a new Schedule J (Group Health Plan Information) to the Form 5500. Schedule J would require group health plans to report detailed information about plan operations and compliance with both ERISA and the ACA. For example, plans would be required to disclose, among other things:
- The number of participants and beneficiaries covered under the plan at the end of the plan year.
- The number of individuals offered and receiving Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage.
- Whether the plan offers coverage for employees, spouses, children, and/or retirees.
- The type of group health benefits offered under the plan, i.e., medical/surgical, pharmacy, prescription drug, mental health/substance use disorder, wellness program, preventive care, vision, dental, etc.
- The nature of the plan’s funding and benefit arrangement, and information regarding participant and/or employer contributions.
- Whether any benefit packages offered under the plan are claiming grandfathered status, and whether the plan includes a high deductible health plan, a health flexible spending account, or a health reimbursement arrangement.
- Information regarding rebates, refunds or reimbursements from service providers.
- Stop-loss coverage premiums, information on the attachment points of coverage, individual and/or aggregate claims limits.
- Whether the plan’s summary plan description (SPD), summaries of material modifications (SMM) and summaries of benefits and coverage (SBC) comply with applicable content requirements.
- Information regarding the plan’s compliance with applicable Federal laws, including, for example, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the Genetic Information Nondiscrimination Act of 2008 (GINA), the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) and ACA.
- Detailed claims payment data, including information regarding how many benefit claims were submitted, appealed, approved and denied during the plan year, as well as the total dollar amount of claims paid during the plan year.
The DOL has generally requested comments on the new proposed reporting requirements for group health plans and has specifically requested comments on several of the proposed disclosures listed above, including the costs and feasibility of collecting COBRA coverage information and the methodology and reasonableness of collecting information on denied claims.
Next steps
The proposed revisions to Form 5500 are complex and will likely be subject to a number of changes in response to comments received by the DOL. It is clear, however, that future Form 5500 reporting obligations will require more data, more resources and be subject to increased scrutiny by Federal agencies. Employer sponsors of group health plans should begin to evaluate plan documentation and the potential new disclosures required by Schedule J to ensure that each plan sponsor will be in a position to access such information and adequately communicate the new reporting requirements.
See the original Article Posted on EmployeeBenefitAdvisor.com here.
Source:
Urwitz, J.K., Engle, S., Mardy, M. (2016, August 04). Form 5500 changes could increase obligations for plan sponsors [Web log post]. Retrieved from https://www.employeebenefitadviser.com/opinion/form-5500-changes-could-increase-obligations-for-plan-sponsors
Ninth Circuit Holds that Cash Payments Made in Lieu of Health Benefits Must Be Included in Regular Rate for Overtime Purposes Under FLSA
A ruling from the Ninth Circuit Court may impact your cash benefit offerings. See the article below for more insight.
Original Post from ThinkHR.com on July 7, 2016
On June 2, 2016, the Ninth Circuit Court of Appeals, in Flores v. City of San Gabriel, held that the City of San Gabriel willfully violated the Fair Labor Standards Act (FLSA) by failing to include cash payments to police officers for unused medical benefits allowances when calculating their regular rate of pay, which ultimately resulted in a lower overtime rate and an underpayment of overtime.
In Flores, the City provided a flexible benefits plan to its employees under which the City furnished a designated monetary amount to each employee to be used for purchasing medical, vision, and dental benefits. While employees were required to use a portion of these funds to purchase vision and dental insurance, employees with access to alternative medical coverage (for example, through a spouse) could decline to use the remaining benefits and opt for a cash payment instead. The cash payment would then be added to the employee’s regular paycheck. The City did not consider the value of that cash payment when calculating the employees’ regular rate of pay and resulting overtime rate. A group of current and former officers sued, claiming they were underpaid for overtime hours worked because the cash provided to employees in lieu of benefits should have been used in calculating their overtime rate.
The primary issue was whether the City’s cash-in-lieu payments were properly excluded from the employees’ regular rate of pay. The Ninth Circuit held that cash payments made to employees in lieu of health benefits must be included in the hourly “regular rate” used to compensate employees for overtime hours worked. The City argued that the cash-in-lieu payments were not payments made as compensation for hours of employment and were not tied to the amount of work performed for the employer, and therefore were excludable under 29 U.S.C. § 207(e)(2) from the regular rate of pay as are payments for leave, travel expenses, and other reimbursable expenses. The Ninth Circuit disagreed, finding the payments were “compensation for work” even if the payments were not specifically tied to time worked for the employer.
The Ninth Circuit also rejected the City’s argument that its cash in lieu of benefit payments were properly excluded pursuant to § 207(e)(4) because the payments were paid directly to employees. Section 207(e)(4) excludes from the regular rate of pay “contributions irrevocably made by an employer to a trustee or third person pursuant to a bona fide plan for providing old age, retirement, life, accident, or health insurance or similar benefits for employees.”
Note: This decision only affects those employers located in the Ninth Circuit. The Ninth Circuit includes Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, Washington, and Guam.
See Original Article Here.
Source:
Unknown (2016, July 7). Ninth Circuit Holds that Cash Payments Made in Lieu of Health Benefits Must Be Included in Regular Rate for Overtime Purposes Under FLSA [Web log post]. Retrieved from https://www.thinkhr.com/blog/hr/ninth-circuit-holds-that-cash-payments-made-in-lieu-of-health-benefits-must-be-included-in-regular-rate-for-overtime-purposes-under-flsa/