On December 20, 2019, President Trump signed into law, as part of the 2020 Appropriations Bill, the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. This is the first major legislation affecting retirement plans since the Pension Protection Act of 2006.

The Act contains provisions to encourage the growth of 401(k) plans. Perhaps the most significant change is the increased ability of unrelated employers to join a multiple employer plan, referred to as a “Pooled Employer Plan”. Previously, an employer was not permitted to participate in a multiple employer plan unless the employer had a “commonality of interest” (e.g., the same industry or geographic area) with the other employers. The Act eliminates the commonality of interest requirement. The Act requires the appointment of a “Pooled Plan Provider” to be the administrator and fiduciary under ERISA, and requires registration of the Pooled Plan Provider with the Internal Revenue Service and the Department of Labor.  A Pooled Employer Plan facilitates economies of scale that can result in lower administrative costs thereby making it easier for employers to offer retirement plans for their employees. The Pooled Employer Plan provisions are effective for plan years beginning in 2021.

A partial list of other changes includes:

  • Increase in Automatic Enrollment Limit. Under current law, 401(k) plans are permitted to enroll participants automatically, with a limit of 10%. The limit is increased to 15% for plan years beginning in 2020.
  • Small Employer (under 100 employees) Tax Credit for Starting a Plan. The credit, limited to 50% of qualified costs, is increased. The credit is available for 3 taxable years beginning with 2020 plan years.
  • Increase in Required Beginning Date. The new law increases the age of the required beginning date for IRAs and qualified plans from 70½ to 72. This is effective for distributions required to be made after December 31, 2019 for employees and IRA owners who attain age 70½ after December 31, 2019.
  • Long Term Part-Time Employees Permitted to Participate in 401(k) Plans. A 401(k) plan must permit an employee to make elective deferrals if the employee has worked at least 500 hours per year for at least 3 consecutive years and is age 21 by the end of the 3-year period. This rule does not require participation in matching or employer contributions unless the employee otherwise satisfies the conditions for such participation. This provision applies to plan years beginning in 2021 with respect to service beginning in that year.
  • Lifetime Income Disclosure. ERISA is amended to require a defined contribution plan benefit statement to include an estimate of the monthly lifetime retirement income at least once in a 12-month period. This new rule will not apply until 12 months after regulations and a model notice are issued.
  • 5500 Penalties. Penalties are increased for failing to file a Form 5500 from $25 per day to $250 per day, not to exceed $150,000. This increase applies to 5500s required to be filed after December 31, 2019.
  • Plan Amendments are not required until the end of the 2022 plan year.

The law includes changes that not only affect employer-sponsored retirement plans, but also impact individual retirement estate planning, due to changes regarding the commencement and distribution of post death distributions. These changes generally eliminate “stretch” payments to beneficiaries, other than “eligible designated beneficiaries,” such as a spouse.

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 18, 2019, a federal appeals court ruled that the Affordable Care Act’s (ACA) individual mandate is unconstitutional, since the mandate tax penalty had been reduced to zero. The individual mandate, the requirement that everyone have health insurance coverage, was previously challenged as unconstitutional. In 2012, the Supreme Court ruled that the individual mandate was valid as a tax, noting that it would not be valid under the Commerce Clause power.

The 2017 Tax Cut and Jobs Act repealed the individual mandate penalty on individuals without insurance, effective in 2019. Although the penalty was nullified, the individual mandate remained in the statute. Texas and other states filed suit challenging the constitutionality of the mandate claiming that since it no longer raised revenue for the government, it could not be upheld as a tax.

In December 2018, a federal district court agreed with Texas, finding that the individual mandate penalty was unconstitutional since it no longer functioned as a tax. In addition, the court stated that since the individual mandate was essential to the Affordable Care Act, the entire Act was unconstitutional.

On December 18, 2019, the Fifth Circuit appeals court held that the Texas district court was partially correct, in that the individual mandate, without a penalty, was unconstitutional. However, the appeals court did not uphold the portion of the decision to strike down the entire ACA.  The court remanded that aspect of the case back to the federal district court to determine whether the mandate can be severed from the rest of the ACA. The appeals court also instructed the federal district court to analyze the individual mandate’s interplay with other ACA provisions.

On January 3, certain Democratic states’ attorneys general and the U.S. House of Representatives, defending the ACA, filed petitions requesting that the Supreme Court immediately weigh in on the constitutionality of the mandate, as well as the viability of remainder of the ACA.

Employers should continue to comply with ACA, including the requirement for large employers (over 50 full-time employees) to provide affordable insurance to its full-time employees and report such coverage to the IRS (Form 1095-C). Note that all other ACA provisions, such as guaranteed issue, no annual or lifetime limits, age 26 coverage for adult children, etc., remain in effect.

Stay tuned!

Connecticut law now requires nearly every employer to provide sexual harassment prevention training for all employees, including supervisors and non-supervisory employees. For more information on the new law, click here.

In response to numerous client requests, Carmody will be offering separate two-hour seminars: one geared toward supervisors and the other geared toward non-supervisory employees. Our training complies with Connecticut’s training requirements, and we will provide written confirmation to your attendees upon completion of the session. Our schedule for seminars is set forth below.

The supervisor program will be presented from our Waterbury office, but individuals may also participate by video conference in our New Haven and Stamford offices. Registration starts at 8:15 a.m. and the program begins at 8:30 a.m. The fee is $75 per person and includes a continental breakfast.

Now offering webinars! For those unable to attend in-person, we will now offer the scheduled programs by webinar at the same time. The fee is $50 per person and begins at 8:30 a.m.. The non-supervisory program will be presented by webinar only.

Seminar Schedule: 

Supervisor Harassment Prevention Training
March 13, 2020, June 12, 2020, September 11, 2020, and November 13, 2020

Employee Harassment Prevention Training
January 17, 2020, May 8, 2020, August 14, 2020, and October 9, 2020

On-Site Training: Carmody also provides customized on-site training for supervisors and/or employees. In many cases, this can be done on a fixed-fee basis, making it a cost-effective option for employers that need to train groups of employees and/or supervisors. Please contact Romania Jawahir or a member of our Labor & Employment group if you are interested.

Click here to register!

The holiday season is here and many employers have scheduled holiday parties to celebrate the year, thank employees for their service, and build employee morale. These parties are a long-standing tradition that employees look forward to attending.

Every year, however, holiday parties result in claims of harassment and discrimination based on various acts of misconduct. An employer can be held vicariously liable for incidents that occur at its party because it is generally considered an extension of the workplace. This is not necessarily a good reason to avoid having holiday parties, but it is a good reason to carefully plan so that the risk is minimized.

Monitor Alcohol Consumption and Provide Transportation
Alcohol is the greatest risk factor.  If not properly monitored, alcohol consumption can cause employees to engage in inappropriate, unwelcome or injurious conduct.  Consider the following:

  • limit alcohol consumption by providing “drink tickets”,
  • limit the period when alcohol is served,
  • stop serving alcohol at least one hour before the party ends,
  • only serve beer and wine, and
  • offer food and non-alcoholic options to counteract the effects of alcohol consumption.

Employers should strongly consider hosting the party at a restaurant, hotel or other venue that is licensed to serve alcohol. If the party is catered, a professional bartender should be hired to serve alcohol.

Employers should also consider providing transportation to and from the party or have a plan for carpooling with a designated driver. Employers should never allow an employee to drive home if there is suspicion that the employee is under the influence of alcohol.

Set an Appropriate Time
Consider hosting the party during the day or end the party earlier in the evening.  Regardless, make sure there is a strict end time and employees do not hang around after the party. Employers also should not sponsor or organize “after-party” events, and management employees should not attend the “after-party.”

Remind Employees of Expectations
Remind employees of the relevant personnel policies in advance (e.g. anti-harassment, drugs and alcohol, dress code, and the code of conduct.). Management employees should also be reminded that they must lead by example, intervene where appropriate, and hold employees accountable. Employers must promptly investigate any complaints of inappropriate behavior.

Avoid Wage and Hour Issues
Time spent performing duties for the benefit of the employer is considered compensable work time.  Therefore, Employers employers should clearly establish that attendance at the party is voluntary and should not ask nonexempt employees to perform any duties unless they are paid.

Address Social Media Issues
With virtually everyone carrying a camera on their smartphone, it is easy to post an embarrassing picture or video on social media. This can be damaging to the employee(s) affected and the employer. To minimize this risk, employers can instruct employees not to take pictures or video record employees without their consent.

Holiday parties can be rife with potential liability if employers are not careful.  Following these tips can help ensure that employees are able to celebrate the close of another business year while reducing the risk of liability.

Happy holidays!

Don’t miss the last session of the 2019 Human Resources Roundtable Breakfast Series on December 4th!

Topic: Wellness Programs: We will review trends in wellness programs and other initiatives that employers are taking to control health insurance costs. We will also highlight the different categories of wellness programs and the basic requirements applicable to each category.

For more information and to register, please click here.

A common pitfall for employers is the misclassification of employees as exempt from overtime pay and the misclassification of workers as independent contractors. These misclassifications often occur because an employer is taking an aggressive legal position or does not, understandably, know all the legal requirements and nuances. Misclassifications can also occur because an employer mistakenly assumes that the classification is proper because the individual has consented to it or even requested it.

An individual’s consent or desire to be classified as an independent contractor or an exempt employee does not make it legal. So, an employer should avoid this temptation if there is not a solid legal basis for the classification. An “agreement” with an employee that seems to have no immediate practical consequence could easily become an issue down the road if the individual files a complaint with the DOL, files for unemployment compensation benefits (for individuals classified as independent contractors), or there is DOL audit.

Given the federal DOL’s recent announcement that effective January 1, 2020, the minimum weekly salary level for exempt status will increase from $455 to $684, now is a good time for employers to review their exempt/non-exempt classifications and independent contractor classifications. Employers should also review and address other common wage and hour compliance issues, such as:

  • Improper deductions from the salary of exempt employees;
  • Time-keeping practices that do not accurately record hours of work and meal breaks;
  • Allowing non-exempt employee to work “off the clock” without compensation;
  • Failing to pay non-exempt employees for compensable travel time, training time, and on-call time;
  • Failing to include bonuses, shift-differential pay, and other compensation in calculating a non-exempt employee’s regular rate of pay on which overtime is paid;
  • Deducting, without DOL authorization, an employee’s wages upon separation of employment for various reasons, such as the overuse of paid time off and/or the damage or theft of company property;
  • Providing non-exempt employees compensatory time off instead of overtime pay; and
  • Not having a clear bonus and/or commission pay plan.

While not always easy, being proactive in addressing these issues is much better than trying to address them after a complaint has been filed or the DOL comes knocking!

The Internal Revenue Service (IRS) has increased the amount employees may contribute to their 401(k) and 403(b) plans next year from $19,000 to $19,500. The IRS announced this week its inflation adjustments for 2020, including:

• Overall contribution limit for defined contribution plans increases from $56,000 to $57,000.

• Total compensation that may be considered under a qualified plan increases from $280,000 to $285,000.

• Limitation for defining a highly compensated employee increases from $125,000 to $130,000.

• Catch-up contributions for 401(k) or 403(b) plans for individuals aged 50 or over increases from $6000 to $6500.

• Employee contributions to a flexible spending account increases from $2,700 to $2,750.

Be in touch with any questions and stay tuned!

On October 18, 2019, the firm hosted its 31st Annual Labor and Employment Seminar at the Aqua Turf Club in Southington, Connecticut. Our annual seminar is a complimentary offering for our clients, which is eligible for SHRM, HRCI and Connecticut CLE credits. The event began with breakfast and an opportunity to mingle before the seminar.

Following breakfast, our practice group attorneys covered significant developments including:

• Changes to Connecticut’s Harassment and Discrimination Laws
• #MeToo, Pay Equity and Transgender Legal Issues
• Immigration and No Match Letters
• Employee Benefits Updates
• Connecticut’s New Paid FMLA law
• Wage and Hour Changes
• Developments at the NLRB
• Connecticut Legislative Developments

After the seminar, clients enjoyed lunch and had another opportunity to mingle and ask questions. If you are interested in attending our seminar in the future, please join our mailing list by clicking here or e-mail rjawahir@carmodylaw.com.

Below are pictures from the event. We look forward to seeing you next year.

Enjoy!

                  

                 

In 2018, website accessibility lawsuits increased by 177%. Website accessibility lawsuits can arise when people with disabilities cannot use a company’s website because it does not use current technology. Businesses are required by federal law, the Americans with Disabilities Act of 1990 (“ADA”), to accommodate people with disabilities. In 2018, Domino’s Pizza argued that it did not have to update its website to work for a blind customer as digital accessibility is not specified in the ADA. Domino’s lost its case and last week the U.S. Supreme Court denied its appeal.

The decision confirms that websites and apps are within the ADA’s definition of “places of public accommodation.” Any place that opens its doors to the public must accommodate people with disabilities. Recent courts have found that a website is just another type of door to the public, and thus, it also must be accessible.

The ADA, however, lacks specifications for what makes a website accessible. Such uncertainty can lead to lawsuits, which may result in businesses reducing their online presence. Federal legislation or a Supreme Court ruling could establish clear guidelines for ADA compliance. In the meantime, employers should take reasonable steps to make their Internet websites and apps accessible—third-party service providers are available to assist.

Stay tuned!