Two federal courts—the U.S. Supreme Court and the 9th Circuit Court of Appeals—recently ruled on cases involving wage claims by employees. These decisions set limits on wage claims in California.
IRS Proposes Change to Family Coverage Affordability Rules
Coverage would be affordable for family members if the employee’s required contribution for family coverage does not exceed 9.5% of household income.
The proposed rule addresses eligibility for the premium tax credit, which is available for Exchange health coverage.
The rule would provide that affordability of employer-sponsored coverage for family members is determined based on the cost of family coverage.
This rule is in proposed form and will not take effect unless and until it is finalized.
On April 5, 2022, the IRS released a proposed rule that would change the existing rules for eligibility for the premium tax credit (PTC). The PTC is available to eligible individuals who purchase health insurance coverage through the Exchange. Individuals who have access to affordable, minimum value employer-sponsored coverage are not eligible for the PTC.
Overview of the Proposed Change
Currently, whether employer-sponsored coverage is considered affordable for family members is determined based on the lowest-cost self-only coverage available to the employee. The cost of family coverage is not currently taken into account. These rules apply for determining an individual’s eligibility for the PTC, and have also been specifically incorporated for use in determining affordability for purposes of the employer shared responsibility rules.
The proposed rule would provide that an employer-sponsored plan is affordable for family members if the portion of the annual premium the employee must pay for family coverage (the employee’s required contribution) does not exceed 9.5% (as adjusted annually) of household income. For this purpose, family coverage means all employer plans that cover any related individual other than the employee. The proposed rule would also add a minimum value rule for family members based on the benefits provided to the family members.
Impact of the Proposed Rule
If this rule is finalized, the change would likely mean that more individuals will be newly eligible for a premium tax credit for coverage purchased through the Exchange. The proposal would not affect affordability for employees. Employees would continue to have an offer of affordable employer coverage if the employee's required contribution for self-only coverage does not exceed 9.5% (as adjusted) of household income. Therefore, an employee’s family member may have an offer of employer coverage that is unaffordable even though the employee has an affordable offer of self-only coverage.
House Passes "SECURE 2.0" Bill
On March 29, 2022, the U.S. House of Representatives passed the Securing a Strong Retirement Act of 2022 with a bipartisan vote of 414-5. The act is often referred to as “SECURE 2.0” because it builds on the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019.
Key SECURE 2.0 proposals include:
Expanding automatic enrollment in 401(k) and 403(b) retirement plans (for plan years beginning after Dec. 31, 2023);
Increasing the age for required minimum distributions (the SECURE Act increased this to age 72, while SECURE 2.0 would raise the age further to 73 starting on Jan. 1, 2023, to age 74 on Jan. 1, 2030, and to age 75 on Jan. 1, 2033);
Improving coverage for part-time workers in 401(k) plans by reducing the years of service requirements for long-term, part-time workers to participate (for plan years beginning after Dec. 31, 2022);
Increasing catch-up contributions for people aged 50 and over (for taxable years beginning after Dec. 31, 2023);
Allowing SIMPLE IRAs to accept Roth contributions (for tax years beginning after Dec. 31, 2022);
Treating student loan payments as elective deferrals for purposes of matching contributions (for plan years beginning after Dec. 31, 2022);
Modifying the credit for small employer pension plan startup costs (for taxable years beginning after Dec. 31, 2022); and
Establishing a national, online Retirement Savings Lost & Found Database for workers and retirees to find their lost retirement accounts (no later than two years after the date of enactment).
Although there is broad bipartisan support, slight modifications to the bill may occur as it moves through the legislative process.
A one-page summary of the legislation is available here.
A section-by-section summary of the legislation is available here.
The U.S. Department of Labor has created a SECURE Act webpage for more information on the 2019 law.
California Employment Laws Effective January 1st, 2022
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In general, once approved by both the state legislature and the state governor, a new bill in California becomes effective on Jan. 1 of the following year (some exceptions are possible for emergency measures and when the bills specifically appoint a different effective date).
This Compliance Bulletin provides an overview of labor and employment laws California adopted throughout 2021. Specific labor and employment updates include the following topics:
• Anti-harassment protections
• Electronic posters and notifications • Employee leave
• Employee wage payment
• Independent contractor classification
• Personal information protections
• Prohibited Discrimination
• Warehousing quotas
• Workplace safety
Important Updates
Electronic Posters and Notices
Employers required to physically post notices may also distribute that information to employees by email with the document or documents attached.
Wage Payment Enforcement
The intentional theft of wages, including gratuities, in an amount greater than $950 from any one employee, or $2,350 in the aggregate from two or more employees, by an employer in any consecutive 12-month period is punishable as grand theft.
Warehousing Quotas
Specified employers are required to provide to each employee defined as a nonexempt employee who works at a warehouse distribution center upon hire or within 30 days of the effective date of these provisions with a written description of each quota to which the employee is subject.
Action Steps
Employers should review these laws and update their employment policies, practices and procedures to remain in compliance. Employers should seek the advice of a knowledgeable legal professional for specific situations and counsel on how to implement required changes. Employers should also continue to monitor California’s Department of Industrial Relations communications for updates on these and additional labor and employment topics.
Please contact Coffman Benefits for more information on these updates and other labor and employment issues at info@coffmanbenefits.com or (949) 409-4411
EEOC Issues New Guidance on COVID-19 and ADA Disability
On Dec. 14, 2021, the Equal Employment Opportunity Commission (EEOC) issued 14 new answers to frequently asked questions (FAQs) about what employers may or may not do to comply with federal fair employment laws during the COVID-19 pandemic. The new FAQs specifically address the definition of “disability” and how to determine whether an individual with COVID-19 meets it under the Americans with Disabilities Act (ADA).
ADA and COVID-19 Background
Under the ADA, employers with 15 or more employees may face liability if they take certain adverse employment actions against individuals who have been diagnosed with or are believed to have COVID-19. The ADA also requires these employers to provide reasonable accommodations for individuals with disabilities, including any related to COVID-19. Smaller employers may be subject to similar rules under applicable state or local law.
Three-Part Definition
The EEOC’s new FAQs clarify that COVID-19 may qualify an individual for ADA protection based on “actual” disability, a “record of” disability or being “regarded as” having a disability. Employers must perform an individualized assessment to determine whether a specific employee’s COVID-19 meets any of these definitions.
Disability Types
COVID-19 is an actual disability if it is a physical or mental impairment that “substantially limits one or more major life activities.” The FAQs provide examples of situations in which an individual with COVID-19 would (and would not) meet this definition.
The FAQs also explain and provide examples illustrating how certain adverse employment actions may violate the ADA even if an individual only had COVID-19 in the past (“record of” disability)or is mistakenly believed to have COVID-19 (“regarded as” having a disability).
Highlights
COVID-19 as a Disability
Determining whether COVID-19 is a disability is determined on a case-by-case basis and always requires an individualized assessment.
Actual Disability
COVID-19 is an actual disability if it substantially limits one or more major life activities.
Substantial Limitations
Limitations from COVID-19 do not have to last any length of time or be long-term to be substantially limiting.
Major Life Activities
Major life activities include major bodily functions, such as respiratory, lung or heart function, and most daily activities, such as walking or concentrating.