Qualified Retirement Plans: Welcome Relief for Employers that Hire Employees by March 31, 2021

401(k) and other qualified retirement plans require that, when a plan terminates or experiences a “partial termination,” the benefits of all affected participants must be fully vested. The law provides that whether a partial termination has occurred is determined based on all of the facts and circumstances, but IRS has established that a 20% or greater turnover rate among employees participating in the plan establishes a presumption that the plan did partially terminate and the full vesting rule will apply. The Consolidated Appropriations Act, 2021 (the “CAA”) provides relief from this vesting rule where the number of active participants covered by a partially terminated plan on March 31, 2021 is at least 80% of the number of active participants covered by the plan on March 13, 2020. If you reduced your workforce significantly after March 13, 2020 and are planning to increase your employment rolls, have your plan’s TPA run the numbers for you to see if you can take advantage of this rule, and call us if you need help.

Updated FCRA Forms for Background Checks

If you are having a third party agency perform background checks on potential new hires, that process generally is subject to the Federal Fair Credit Reporting Act (FCRA), even if the check does not involve the applicant’s credit. The process involves a number of required forms, one of which is “A Summary of Your Rights Under the Fair Credit Reporting Act.” The Bureau of Consumer Financial Protection has released a new version of that form. If you are having a third party agency perform backgrounds checks and need a copy of the new form, we would be happy to forward it to you.

Form 5500 and Other Tax Relief for Hurricane Michael Victims

Businesses whose principal place of business is located in a covered disaster area (see listing below) have until February 28, 2019 to file Forms 5500 that otherwise would have been due after October 7, 2018 and before February 28, 2019. Many calendar-year pension and health plan filings that use an automatic extension (filed on Form 5558) would have to file by October 15, 2018 without this relief. Further, this relief also may apply when records needed to complete the filings are located in the disaster-relief area.
As of October 14, 2018, the covered area includes Bay, Calhoun, Franklin, Gadsden, Gulf, Hamilton, Holmes, Jackson, Jefferson, Leon, Liberty, Madison, Suwannee, Taylor, Wakulla and Washington counties.
IRS’s announcement also describes relief for affected individuals, businesses, and non-profits with respect to filing returns, estimated income tax payments, and quarterly payroll and excise tax returns (these require payment by October 22, 2018), and a waiver of fees for Forms 4506 and 4506-T.
IRS’s news release can be found here.

Revised Workplace Posters Effective August 1, 2016

Effective August 1, 2016, the United States Department of Labor (USDOL) has issued revised versions of its “Fair Labor Standards Act (FLSA) Minimum Wage” and “Employee Polygraph Protection Act (EPPA)” workplace posters.  Employers required to make the postings should replace the now outdated versions with these new copies immediately.  The EPPA applies to all employers.  The FLSA generally applies to an employer doing business in interstate commerce who (i) has annual gross volume of sales made or business done is at least $500,000; (ii) is engaged in the operation of a hospital, an institution primarily engaged in the care of the sick, the aged, or the mentally ill who reside on the premises; a school for mentally or physically disabled or gifted children; a preschool, an elementary or secondary school, or an institution of higher education (whether operated for profit or not for profit); or (iii) is a public agency.  The USDOL generally reads the interstate commerce requirement broadly, applying the FLSA to the very large majority of employers.  Copies of the new posters are located here (FLSA) and here (EPPA).

OSHA Announces New Electronic Reporting and Employer Policy Requirements

On May 12, 2016, the United States Department of Labor, Occupational Safety and Health Administration (OSHA) released final regulations providing for electronic reporting of worksite injuries and illnesses by certain employers beginning in 2017.  The electronic reporting is required of workplaces that had 250 or more employees at any point during the prior calendar year, as well as those that had between 20 and 249 employees and conduct business in certain “high-hazard” industries designated in the regulations.

The electronic reporting will be phased in.  The electronic report for calendar year 2016 must be filed by July 1, 2017, and concerns certain information from OSHA Form 300A.  The electronic report for calendar year 2017 must be filed by July 1, 2018, and concerns certain information from OSHA Forms 300A, 300, and 301.  For each subsequent calendar year, the broader filing is due March 2 of the following year.  The referenced OSHA forms can be found here.  The regulations specify which information from the forms is and is not required to be filed electronically.  It is OSHA’s intention to create a website portal to permit the electronic filing.

In the meantime, the regulations contain more immediate requirements, which initially were effective as of August 10, 2016, but have been postponed until November 1, 2016.  Specifically, each employer subject to OSHA’s recordkeeping requirements (generally, those that had more than 10 employees at any point in the prior calendar year) must have a procedure for employees to utilize to report work-related injuries and illnesses, and the procedure must include certain language, specified in the regulations, regarding the prohibition on retaliation for making such reports.  The final regulations prohibit such retaliation, and the preamble to the regulations clarifies that actions or policies of an employer that, whether or not by design, may have the effect of chilling the reporting of worksite injuries and illnesses will be deemed unlawful.  As one example of a policy that is popular with many employers but now will be problematic, OSHA specifically indicates that, as a general matter, a blanket policy of drug testing an employee following a workplace injury or illness is prohibited.

Defend Trade Secrets Act Provides New Remedies – With a Few Catches

On May 11, 2016, the Defend Trade Secrets Act (the “DTSA”) was signed by President Obama and became effective immediately.  The new Federal law provides for a civil action in the United States District Courts, with remedies that include compensatory damages and, in certain “extraordinary circumstances,” seizure of misappropriated trade secrets.  Where a trade secret is “willfully and maliciously misappropriated,” the DTSA permits exemplary damages in an amount up to twice the compensatory damages awarded, as well as reimbursement of attorneys’ fees.  The DTSA does not preempt additional claims or rights available under State law.

There are limitations worth noting.  First, the DTSA does not permit an injunction preventing an individual from entering into an employment relationship.  Any injunction that would place conditions on employment must be based on “evidence of threatened misappropriation and not merely on the information the person knows.”  Further, crucially, an injunction under the DTSA may not “conflict with applicable State law prohibiting restraints on the practice of a lawful profession, trade, or business.”

Moreover, an employer cannot recover exemplary damages or attorneys’ fees if, in an agreement entered into with an employee that governs the use of a trade secret or confidential information, the employer fails to include notice of certain whistleblower provisions contained in the DTSA.  An employer may comply with the notice requirement by a cross-reference to a policy document provided to the employee that sets forth the employer’s reporting policy for a suspected violation of law.  The notice requirement applies to agreements entered into on or after the effective date of the DTSA.

IRS Extends Deadlines for 2015 Health Plan Coverage Reporting

At the end of December 2015, IRS announced extended due dates for 2015 Affordable Care Act reporting.

(1) Form 1095-B, Health Coverage
(2) Form 1095-C, Employer Provided Health Insurance Offer and Coverage.

Deadline for filing forms with IRS changed from February 29, 2016, to May 31, 2016, if not filing electronically, and from March 31, 2016, to June 30, 2016 if filing electronically:
(3) Form 1094-B, Transmittal of Health Coverage Information Returns
(4) Form 1095-B, Health Coverage
(5) Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns
(6) Form 1095-C, Employer-Provided Health Insurance Offer and Coverage.

Affordable Care Act Transition Rules for 2015 Provide Relief for Some Large Employers

For 2015 plan years, “large employers” with fewer than 100 full-time employees can qualify for a waiver of the employer mandate penalties by filing a certification of eligibility for the waiver with IRS.  This means that, if you have between 50 and 99 full-time employees (as defined under the Affordable Care Act), you will not owe penalties for failure to provide essential minimum coverage to your full-time employees during the 2015 plan year.If you have between 50 and 99 employees and wish to qualify for the 2015 waiver, you must meet other conditions.  These include maintaining coverage you offered as of February 9, 2014, and not having reduced your workforce or aggregate work hours for purposes of qualifying for this waiver.  Further, in order to qualify, an employer must not exceed specified limitations on reducing employer contributions toward the cost of coverage. Beginning in 2016, all large employers are susceptible to the penalties.