In 2022, sponsors and administrators of 401(k) plans should be aware of a newly effective lifetime income disclosure statement, as well as written plan amendments that must be adopted by calendar year plans by the end of 2022.

Enacted in 2019, the SECURE Act made a number of important changes to 401(k) plans. A few of those changes are noted below:

  • The required beginning date for distributions is now age 72. Keep in mind that most plans do not require a distribution until the later of age 72 or retirement. Five percent (5%) owners must continue to commence distributions at the required beginning date, even if still employed. This change is already in effect for any participant turning 70 ½ after December 31, 2019. Plans that have not already been amended or restated to provide for this later required beginning date will need to be amended or restated by the end of their 2022 plan year.
  • Long-term, part-time employees must be allowed to participate in salary deferrals if they work 500 hours or more in three consecutive years. This new rule is in addition to the eligibility requirement of 1,000 hours of service in a year. The need to track part-time employee hours for this purpose began with the 2021 plan year, so entry into the plan for salary deferrals could begin in 2024 if an employee has attained age 21. Note that your plan may still require 1,000 hours of service in a single year to qualify for employer matching or profit sharing contributions. Plans that have not already been amended or restated to provide for this change will need to be amended or restated by the end of their 2022 plan year.
  • Qualified birth or adoption distributions is an optional feature which may be added to your plan at any time. Distributions of $5,000 made within a year of a qualified birth or adoption are exempt from the 10% penalty normally imposed on distributions made to employees under age 59 ½. Such distributions may also be recontributed to the Plan.
  • Lifetime income disclosure information will need to be added to your 401(k) participant statements at least once per year with one of the statements issued (typically quarterly) after September 18, 2021. The DOL has issued FAQs clarifying the effective date. Since the effective date was September 18, 2021, and the disclosure statement must be provided within one year of the effective date, the first lifetime income illustration can be provided as late as with the second quarter statement for the quarter ending June 30, 2022. The statements will have to show the lifetime annuity which the account balance could provide at age 67. The DOL has issued a model statement that may be used as a template for this purpose.

If you have questions about any of these changes to 401(k) plans, please contact us for more information.

This information is for educational purposes only to provide general information and a general understanding of the law. It does not constitute legal advice and does not establish any attorney-client relationship.

The “Great Resignation” reached a peak in November 2021 as the United States Bureau of Labor Statistics (BLS) reported that a record-breaking 4.5 million workers voluntarily resigned from their employment. This represented an increase of almost 9% from October 2021 and was the largest number of resignations in more than 20 years.

In what Industries are people resigning? According to the BLS, the top fields most affected by the resignations are: leisure and hospitality; trade, transportation and utilities; professional and business services; and education and health services. The resignation rate is highest among lower paid employees.

Why are employees resigning? The resignations are attributed to a variety of factors, including ongoing health concerns. That is, some workers are worried about the pandemic and are hesitant to return to a workplace that is not 100% vaccinated. Parents also are still struggling with childcare needs. In addition, employees generally want to reduce stress and expenses where possible and seek flexible work arrangements that allow them to work from home partially or completely. Some workers have resigned to seek better compensation and benefits from employers who are desperate to fill positions. And some workers are simply looking for better work-life balance, recognition for their work, better company culture and values that align with theirs.

What can employers do to improve retention? While the benefits employers offer depends on the demographics of their workplace, there are several non-economic and, of course, economic benefits to consider. The two most popular ones are:

Flexible work options: The most demanded work benefit today is the ability to work from home. Research shows that employees desire flexibility in where and when they work. Many individuals are looking for entirely remote jobs that allow them to work from any location. Hybrid arrangements that allow workers to work from home a couple of days each week are popular in businesses where entirely remote choices are not viable. Flexible work hours, such as allowing employees to work during non-traditional hours or compressed workweeks, may be an option for positions that cannot be done remotely.

Career development: Employees are more engaged when they believe their employer is invested in their professional development. To foster this, employers can: (1) emphasize several career paths within their organization, allowing employees to see what possibilities are available; and (2) employers can provide development tools like mentoring and coaching to help employees achieve their objectives.

In addition to flexibility and career development, attractive compensation and health-care benefits are amongst the most common motivations of retention. However, in today’s job market, that may not be sufficient. The following are some other benefits that may entice employees to stay or get onboard:

  • Generous paid time off (beyond the traditional vacation and sick time);
  • Home office support if remote work is available;
  • Onsite offerings like childcare centers, and free and/or healthy food options;
  • Wellness support that include sabbatical leave, coaching, workstation accommodations;
  • Inclusive workplaces;
  • Educational assistance (i.e., tuition reimbursement or student loan repayment assistance); and
  • Other non-traditional benefits, such as pet-friendly perks.
  • Other recommendations for establishing or strengthening employee retention efforts include addressing employee concerns, communicating effectively and frequently, offering accommodations, being accessible to employees, educating managers on employee relations and providing support when feasible.

If you have questions about what you can do to improve your employee retention, contact a member of Carmody’s Labor & Employment team.

This information is for educational purposes only to provide general information and a general understanding of the law. It does not constitute legal advice and does not establish any attorney-client relationship.

Earlier this afternoon, the U.S. Supreme Court issued a stay blocking the Occupational Health and Safety Administration (“OSHA”) from enforcing its “vaccine or test” mandate previously imposed on businesses with 100 or more employees.  This case will return to the Sixth Circuit Court of Appeals for the underlying merits to be litigated.

The stay means that employers are not required to comply with the “vaccine or test” mandate at this time.  This could change, however, as the underlying merits are litigated.

The Supreme Court’s ruling does not impact an employer’s or a state’s ability to impose safety rules and regulations relating to COVID-19, including requiring employees be vaccinated (with sufficient religious and medical exemptions) or to be tested weekly.

The Supreme Court did rule, however, that similar requirements under the Centers for Medicare and Medicaid Services’ (CMS) vaccine rule for certain healthcare employers with medical facilities that take Medicare or Medicaid payments were permitted.

Background on the ETS litigation.

On November 5, 2021, OSHA published an Emergency Temporary Standard (“ETS”) mandating that employers with 100 or more employees either require employees be vaccinated or submit to weekly COVID-19 testing, among other things.  Shortly thereafter, the Fifth Circuit Court of Appeals stayed the ETS.

As lawsuits were filed in a multitude of states, the various cases were consolidated and heard by the Sixth Circuit, which was selected by lottery.  On December 17, 2021, the Sixth Circuit ruled that the Fifth Circuit’s stay was not justified and dissolved the stay. Following the dissolution, OSHA set new compliance dates for the ETS mandate (February 9, 2022 for vaccine or testing requirements and January 10, 2022 for all other components), while opponents of the Sixth Circuit’s decision appealed to the Supreme Court.

What happened at the Supreme Court?

On January 7, 2022, the Supreme Court heard arguments on whether or not a stay of the ETS mandate should be reinstated.  This afternoon, the Supreme Court found that the Sixth Circuit improperly dissolved the stay and overturned its decision.

As a result, OSHA is again blocked from enforcing its “vaccine or test” mandate pending resolution on the underlying legal issue – i.e., whether OSHA had the legal authority to impose such a mandate.

What happens now?

This fight isn’t over yet.  The argument on whether OSHA had the authority to implement the ETS still needs to be resolved.  This will likely happen at the Sixth Circuit or possibly at the Supreme Court.

This information is for educational purposes only to provide general information and a general understanding of the law. It does not constitute legal advice and does not establish any attorney-client relationship.

Effective January 15, 2022, group health plans and insurers are required to cover the cost of over-the counter (OTC), at home, COVID-19 tests. The U.S. Departments of Labor, Health and Human Services and the Treasury have issued FAQs guidance regarding the requirement for health plans and insurers to provide reimbursement of the cost of OTC COVID-19 tests.

Employers should communicate with their insurer as the insurer has the option to either provide reimbursement to the participant or provide the tests directly through pharmacies, with no upfront costs by the Participant. Below is a summary of some of the highlights of the new guidance.

  • Plans and issuers must cover the costs of OTC COVID-19 tests, including tests obtained without the involvement of a health care provider. However, plans and issuers are not required to cover the costs of a test that is for employment purposes. It is not clear at this time how a plan would know whether a test is for employment purposes.
  • Plans and issuers are ‘strongly encouraged’ to meet the coverage requirement through ‘direct coverage’ so plan participants do not have to provide upfront payment and seek reimbursement. Under this option, plans may provide for direct coverage through its preferred pharmacy network and a direct-to-consumer shipping program. In doing so, plans are still required to reimburse the purchase of OTC tests purchased outside the network at the lesser of the actual cost or $12 per test. If a plan or insurer does not use the direct coverage option, and uses a reimbursement process, they are required to reimburse the full cost of a test, even if it exceeds $12 per test.
  • Plans and issuers may limit coverage to eight tests per 30-day period or per calendar month. This means a covered family of four can get 32 tests per month for free. There is no limit on the number of COVID-19 tests that must be covered when ordered or administered by a health care provider.
  • Plans and issuers may have reasonable procedures to ensure that an OTC COVID-19 test is for personal use. For example, a plan could require an attestation that the test is for personal use, is not for resale, has not been reimbursed by another source and is not for employment purposes. However, any such requirement that unduly delays reimbursement or access is not reasonable.
  • Education of plan participants is encouraged, including information on how to obtain OTC COVID-19 tests directly from the plan or issuer, how to submit a claim for reimbursement, and information about the differences between OTC COVID- 19 tests and tests performed or ordered by a health care provider.

Additional FAQs designed for employees were released by CMS. Question 7 of these FAQs addresses how the uninsured will be able to obtain free OTC COVID-19 tests, indicating that a website will be established where a request for at home delivery of tests can be submitted.

Carmody’s Labor & Employment team will continue to review and update clients on any new developments.

This information is for educational purposes only to provide general information and a general understanding of the law. It does not constitute legal advice and does not establish any attorney-client relationship.

On December 15, 2021, U.S. Immigration and Customs Enforcement announced a 120-day extension of the flexibilities in rules related to Form I-9 compliance that was initially granted on March 20, 2020. The temporary policy allowing employers to inspect Form I-9 documents remotely is extended until April 30, 2022.

The extension continues to apply the guidance previously issued for employees who were hired on or after April 1, 2021 and work exclusively in a remote setting due to COVID-19-related precautions. The extension temporarily exempts those employees from the physical inspection requirements associated with Form I-9 until they undertake non-remote employment on a regular, consistent, or predictable basis, or the extension of the flexibilities related to such requirements is terminated, whichever is earlier.

It is unclear whether the policy will be extended beyond the April 30, 2022 date. However, the Department of Homeland Security (“DHS”) has published a Request for Public Input in the Federal Register seeking employer feedback on the effects of remote document examinations conducted during the COVID-19 pandemic in order to better understand the potential costs and benefits of offering a permanent option for remote examination of Form I-9 identity and employment eligibility documents. Employers are encouraged to submit written comments through the Federal eRulemaking Portal: http://www.regulations.gov by December 27, 2021. All comments must include the Request for Public Input’s docket number: USCIS 2021–0022.

The Society for Human Resource Management has also been advocating for the agency to implement a permanent policy permitting remote I-9 inspection.

Carmody’s Labor & Employment team is available to discuss any questions regarding Form I-9, the temporary policy or any other questions employers may have.

This information is for educational purposes only to provide general information and a general understanding of the law. It does not constitute legal advice and does not establish any attorney-client relationship.

01.13.22 UPDATE: The U.S. Supreme Court issued a stay blocking Biden administration’s vaccine and testing mandate for large employers, while allowing a separate vaccination mandate for employees of healthcare facilities that receive Medicare and Medicaid funding. Read more here.

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On December 17, 2021, the 6th Circuit Court of Appeals lifted the stay on OSHA’s COVID-19 Emergency Temporary Standard (“ETS”).  This allows OSHA to enforce the ETS, including the requirement that large employers (100 or more employees) implement vaccination or weekly testing protocols.

OSHA announced that employers “exercising reasonable, good faith efforts to come into compliance…” will have until January 10, 2022 to issue compliant policies and until February 9, 2022 to be fully compliant with testing protocols.

The 6th Circuit’s decision is unlikely to be the final word on the issue, as opponents have already appealed to the Supreme Court.

Who is covered?

OSHA’s ETS generally covers private sector employers with 100 or more employees, including part-time, remote, temporary and seasonal employees.

What must employers do by January 10, 2022?

Among other requirements, employers will be required to:

  • Implement and distribute a written vaccination or testing policy;
  • Determine the vaccination status of all employees, including collecting proof of vaccination; and
  • Require employees who are not fully vaccinated to wear masks.

The ETS mandate does not apply to employees who are fully remote (no in-person contact with other employees or customers) or those employees who work exclusively outdoors.  Employees with legally recognized medical and religious exemptions may be excused from vaccination but are subject to the weekly testing and masking requirements.

What must employers do by February 9, 2022?

Employers must ensure that all non-fully vaccinated employees are tested weekly.  Employers must refuse non-complaint employees access to the workplace.

Learn More:

Carmody’s Labor and Employment team will continue to update clients and monitor the enactment of the ETS and is available to discuss any questions regarding requirements and implementation of the ETS.  More detail on the ETS can be found HERE.

This information is for educational purposes only to provide general information and a general understanding of the law. It does not constitute legal advice and does not establish any attorney-client relationship.

Ultimate Kronos Group, a human resources management business, announced that it has suffered a ransomware attack that has hindered its clients’ ability to process payroll, manage time sheets, and operate their businesses. Scheduling software created for healthcare organizations, financial institutions, and public safety professionals were among the products hacked.

Employers that utilize Kronos may be unable to use the system to clock in and out of work – at least for the next few weeks.  These employers are left scrambling to find other record retention and payment methods, including issuing physical checks for the first time in years.

Employers should be aware that even if their timekeeping or payroll services become unavailable, the employer will still be required to maintain compliance with Connecticut and federal laws, including those regarding record keeping and timely wage payment.

To minimize cyber risks, consider incorporating these practical measures in your organization’s operations:

  • Enable 2-factor authentication for all remote network logins
  • Staff awareness and training with anti-phishing campaigns
  • Develop and test Incident Response & Disaster Recovery Plans
  • Vet the security provisions of vendor/cloud service provider contracts
  • Get cybersecurity coverage

Employers in every industry can be targets of cyber-crime. Reach out to Sherwin Yoder for counsel on ransomware prevention, response, and recovery. Carmody’s Labor & Employment team is available to discuss any questions regarding record keeping compliance, or other questions employers may have.

This information is for educational purposes only to provide general information and a general understanding of the law. It does not constitute legal advice and does not establish any attorney-client relationship.

The IRS has now proposed regulations for delivering Affordable Care Act (ACA) 1095-C reporting forms to employees at the start of 2022 and future years. Here are a few insights from the proposed regulations:

30-Day Extension for Furnishing Forms 1095-C. For calendar years beginning after December 31, 2020, the proposed regulations grant an automatic 30-day extension to the annual January 31 deadline to furnish Form 1095-C statements. Under these regulations, the 1095-C due date for furnishing the forms is Wednesday, March 2, 2022 and will be due each year on March 2 (March 1 in a leap year or the next business day if March 1 or 2 falls on a weekend/holiday).

No More Good Faith Relief. However, the Preamble to the proposed regulations states that 2020 was the last year that good faith transitional relief would be provided. Relief from the penalties for filing and furnishing the statements are not available for reporting for tax year 2021 and subsequent years. The preamble does note that the reasonable cause exception in the Code provides adequate relief from penalties.

Alternative Method of Reporting for Self-Insured Plans for Part Time Employees. There is also an option for employers who have a self-insured plan, to not provide a statement to former employees and non-full -time employees who are enrolled in the Plan. The conditions for allowing this alternative method of reporting require a clear and conspicuous notice on its website stating that individuals may receive a copy of their statement upon request. Note this alternative manner of reporting does not apply to full -time employees who must continue to receive a 1095-C.

Electronic Filing Requirements Remain the Same. The filing requirements for the 1095-C statements remain February 28 if filing on paper and March 31 if filing electronically. Employers that file 250 or more returns must file electronically.

As required by the Affordable Care Act (ACA), employers with over 50 full time employees or full-time equivalents and their service providers should make sure that they are prepared to provide health care reporting forms to employees and file these forms with the IRS in the first quarter of 2022. Please contact a member of Carmody’s Labor & Employment group if you have questions about ACA reporting or the forms.

This information is for educational purposes only to provide general information and a general understanding of the law. It does not constitute legal advice and does not establish any attorney-client relationship.

The IRS, in Notice 2021-61 has announced increased 401(k) plan limits for 2022. Here is what you need to know:

  • 401(k) Deferral Limit is increased to $20,500 from $19,500. Note this increase applies to 403(b) plans as well.
  • The Compensation which can be considered under a qualified plan is increased to $305,000 from $290,000.
  • The limit for Highly Compensated Employees is increased to $135,000 from $130,000.
  • The total contribution limit for a defined contribution plan is increased to $61,000 from $58,000.
  • The Catch-up contribution limit for individuals age 50 or over remains at $6,500.

Additionally, the IRS announced limits related to Health Flexible Spending Accounts:

  • The Health Flexible Spending Account contribution limit is now increased to $2,850 from $2,750.
  • The Health Flexible Spending Account Carry over limit is $570 for the 2022 Plan Year.
  • The Taxable Wage Base for Social Security Tax is increased to $147,000 from $142,800.

If you have questions about 401(k) plan limits or FSA, please contact a member of Carmody’s Labor & Employment group.

This information is for educational purposes only to provide general information and a general understanding of the law. It does not constitute legal advice and does not establish any attorney-client relationship.

On Monday, November 8, 2021, President Biden issued a proclamation entitled, “Advancing the Safe Resumption of Global Travel” (the “Proclamation”). The Proclamation revokes prior presidential proclamations that suspended and restricted the entry of noncitizen nonimmigrants from China, Iran, the Schengen Area, the United Kingdom, the Republic of Ireland, Brazil, the Republic of South Africa, and India in response to the COVID-19 outbreak. This is welcome news for businesses as these previous proclamations prevented many employers from hiring or retaining foreign talent unless the prospective employee qualified for a national interest exception. The new Proclamation adopts a less restrictive policy by suspending and restricting noncitizen nonimmigrants who are not vaccinated against COVID-19 from entering the United States by air, except in limited circumstances.

Noncitizen nonimmigrants excepted from the vaccination requirement include: (1) children under the age of 18; (2) individuals with medical contraindications to an accepted COVID-19 vaccine (e.g., a demonstrated anaphylactic reaction); and (3) individuals with a nonimmigrant visa (excluding a B-1 or B-2 visa) and who are citizens of a foreign country where less than 10 percent of the country’s total population has been fully vaccinated with any available COVID-19 vaccine. Individuals granted an exception must provide proof of a negative COVID-19 viral test taken no more than one day before boarding a flight to the United States and must wear a mask over their nose and mouth during air travel and while indoors at United States transportation hubs. Further, some categories of exempted individuals must agree and arrange to be vaccinated within 60 days of arriving in the United States, or as soon as is medically appropriate as determined by the Centers for Disease Control and Prevention, if they intend to remain in the United States for more than 60 days. Notably, objections to vaccination based on religious or moral convictions do not qualify under any exception.

Fully vaccinated noncitizen nonimmigrants entering the United States by air travel must provide proof of a negative COVID-19 viral test taken no more than three days prior to boarding a flight to the United States. Alternatively, if an individual has recently recovered from COVID-19, he or she may travel with documentation of recovery from COVID-19, i.e., a positive COVID-19 viral test result on a sample taken no more than 90 days before the flight’s departure from a foreign country and a letter from a licensed healthcare provider or a public health official clearing travel.

This information is for educational purposes only to provide general information and a general understanding of the law. It does not constitute legal advice and does not establish any attorney-client relationship.