What We’re Watching: Employer Compliance Across Benefits, HR, and Retirement

Staying updated on employer compliance can be a challenge. This monthly update is designed to highlight the latest developments impacting Employee Benefits, HR, and Retirement to keep your business running smoothly and minimize your compliance risk.

May, 2023:

Increased Penalty for EEO Poster Violations

Effective March 23, 2023, the Equal Employment Opportunity Commission has increased the penalty for failing to post required EEO notices in the workplace from $612 to $659. The new $659 penalty is assessed for each offense, so employers with multiple worksites and/or locations where notices to applicants and employees are customarily posted may be subject to additional penalties. Federal law requires employers to post details of employees’ statutory rights in a conspicuous, accessible location in the workplace. The EEOC’s Know Your Rights: Workplace Discrimination is Illegal Poster generally satisfies these requirements and is made available in multiple languages.

USCIS Gender Changes on Forms

On March 31, 2023, United States Citizenship and Immigration Services (USCIS) announced that it is no longer necessary to provide supporting documentation to change or update a prior gender selection on immigration forms, with limited exceptions. The website explains how to request a gender change on current documents.

Additionally, revised forms going forward will include an “X” marker for gender. This change is consistent with state self-certification policies for gender marker designations on driver’s licenses and identification cards.

PCORI Fee Deadline Just Around the Corner

The Affordable Care Act (ACA) imposes a fee on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the Patient-Centered Outcomes Research Institute (PCORI). The fee is calculated based on the average number of lives covered under the policy or plan. PCORI fees are reported and paid annually using IRS Form 720 (Quarterly Federal Excise Tax Return). As a reminder, all self-insured health plans, including level-funded plans and HRAs, must submit the PCORI fee to the IRS by July 31, 2023.

Agency Guidance on ACA Preventive Health Services

The DOL, HHS, and IRS jointly issued FAQs following a ruling from a federal judge in Texas on the latest legal challenge, Braidwood Mgmt. Inc. v. Becerra (Braidwood), to the Affordable Care Act’s requirement to cover certain preventive services without cost-sharing. Although the decision in Braidwood prevents the agencies from implementing and enforcing coverage requirements for items and services recommended with an “A” or “B” rating by the USPSTF on or after March 23, 2010, the decision does not prevent plans and insurers from continuing to provide the full extent of such coverage.

The guidance also clarified that Braidwood does not affect items and services recommended with an “A” or “B” rating by the USPSTF before March 23, 2010, or recommendations by the ACIP and HRSA. Additionally, the guidance states that Braidwood only impacts federal law and not state-law requirements.

Visit OneDigital’s Compliance Confidence blog regularly for up-to-date information on what’s happening in Employee Benefits, HR, and Retirement compliance.

April, 2023:

End to COVID-19 National Emergency and Public Health Emergency

Legislation signed by President Biden on April 10, ends the COVID-19 National Emergency immediately; one month earlier than the anticipated. The end of the National Emergency ends many temporary rules and compliance responsibilities for plan sponsors, insurance carriers, and others that were put into place at the beginning of the COVID-19 pandemic. The Department of Labor (DOL) has informally announced that despite the statutory end of the Nation Emergency being 30 days earlier than expected, to avoid potential confusion and changes to administrative processes already in progress, the deadline of July 10, 2023 will remain the relevant date for the end of the COVID Outbreak Period. FAQs released on March 29, 2023 by the DOL, Treasury, and HHS provided the Outbreak Period generally continues until 60 days after the announced end of the COVID National Emergency or another date announced by the DOL, Treasury Department, and the IRS.

The legislation does not impact the Public Health Emergency, which is set to end on May 11, 2023. The end of the Public Health Emergency will end COVID relief legislation that required group health plans and insurers to cover COVID-19 diagnostic testing without cost-sharing, prior authorization, or other medical management requirements during the Public Health Emergency. Non-grandfathered plans were also required to cover COVID-19 vaccines without cost-sharing and on an expedited basis.

Challenges to the ACA Preventive Service Requirements

A federal judge in the U.S. District Court in the Northern District of Texas issued a ruling finding that non-grandfathered group health plans and insurers are no longer required to cover certain preventive services without cost sharing on a nationwide basis (Braidwood Mgmt. Inc. v. Becerra (Braidwood)). Following this ruling, the DOL issued FAQs clarifying that plans and issuers must continue to cover items and services with an “A” or “B” rating recommended or updated by USPSTF prior to March 23, 2010, without cost sharing.

While the Braidwood decision is in effect, items and services with an “A” or “B” rating on or after March 23, 2010, no longer have to be covered without cost sharing. Note, some state laws may require coverage similar to the provisions vacated by Braidwood. The federal government is currently appealing the Braidwood decision. As a reminder, even if the decision is upheld on appeal, plan sponsors can still choose to cover these preventative services.

Redesigned Green Cards and Employment Authorization Documents

Personnel who inspect work authorization documents should note that the U.S. Citizenship and Immigration Services (USCIS) have announced new designs to Permanent Resident Cards (Green Cards) and Employment Authorization Documents (EADs). The changes are meant to improve the security of the documents and are part of the routine update process. USCIS started issuing the new cards on January 30, 2023. Appropriate personnel should review samples of the redesigns to familiarize themselves with the new design of the documents.

Updated FCRA Summary of Consumer Rights

The Consumer Financial Protection Bureau (CFPB) released a new version of the Summary of Your Rights Under the Fair Credit Reporting Act on March 17, 2023. Employers must use the updated document by March 20, 2024. Employers must include the Summary with pre-adverse action notices in addition to providing it to applicants and employees to comply with the Fair Credit Reporting Act. The updates to the Summary are largely non-substantive and are technical corrections.

March, 2023:

Considerations for Adding ESG Investment Options to ERISA Retirement Plans

While the DOL recently issued a rule that purportedly permits plan fiduciaries to consider extraneous considerations, including Environmental, Social, Governance (ESG) factors, when making investment decisions, the rule specifically prohibits fiduciaries from sacrificing investment performance or adding investment risk through reliance on such considerations.

Therefore, before implementing an ESG or similar fund, plan fiduciaries must document the fact they first evaluated the expected investment performance of competing funds and determined the ESG fund is expected to offer investment returns and risks that will be comparable (or superior) to non-ESG alternatives. Fiduciaries should also consider the fact Congress voted to block implementation of the rule – based upon the contention it violates ERISA’s “exclusive purpose” standard - although President Biden is expected to veto that legislation.

COVID-19 Public Health and National Emergency Ending Soon

On January 30, 2023, the Biden Administration announced its intention to end both the COVID-19 National Emergency and Public Health Emergency on May 11, 2023. The end of these emergencies will trigger the end of certain temporary relief impacting group health plan coverage and plan administration.

The COVID-19 Outbreak Period will expire 60-days after the declared end of the National Emergency. As of July 10, 2023, various pre-COVID deadlines (HIPAA special enrollment, COBRA elections, claims submissions) will resume their normal timeframe. The end of the Public Health Emergency means, starting May 12, 2023, plans will no longer be required to cover COVID-19 testing and treatment.

Additionally, cost-sharing may apply to COVID-19 vaccines received out-of-network. Finally, large employers will no longer be able to offer standalone telehealth services to employees who are not eligible for any other employer-sponsored group health plan. Carriers and third-party administrators (TPA) have started sending notices to employers summarizing the changes that will take place when the emergencies end. Depending on the carrier, TPA, and plan design, employers may have the option of delaying some changes at least until the end of the year. Please work with your carrier and/or TPA and your OneDigital team to communicate any coverage changes to your plan participants.

RxDC Prescription Drug Transparency Reporting – Round 2

The purpose of the Prescription Drug Data Collection (RxDC) report is to provide transparency in health care costs through the collection and analysis of paid claims data. Most health plans, including all sized employer groups both insured and self-insured, are required to file data reports online to CMS.

The first RxDC report was due by 12/27/2022 (extended to 1/31/2023 with good faith effort) for 2020 and 2021 calendar year data. Going forward, the reporting is due by June 1, for the prior calendar year data. The 2022 calendar year data reporting is due 6/1/2023. Carriers, TPAs, and/or PBMs may now be asking the employer for premium information by a certain deadline so that it can include the average premiums in its filings.

Note that not all carriers, TPAs, and PBMs are filing directly to the CMS, which means the employer may have its own filing responsibility.

NLRB Blocks Broad Severance Provisions

On February 21, 2023, the National Labor Relations Board (NLRB) returned to longstanding precedent in ruling that employers who merely offer employees severance agreements requiring a broad waiver of rights under the National Labor Relations Act (NLRA), including broad non-disparagement and confidentiality provisions, is a violation of the NLRA itself. Employers should narrowly tailor these provisions and include a disclaimer against violating Section 7 rights under the NLRA.

Keep in mind that Section 7 rights do not apply to all employees, such as managers, most supervisors, public sector employees, and some agricultural workers. This ruling is expected to be followed up with clarifying advisory memos from the NLRB. Employers should have severance agreements reviewed by legal counsel for compliance.

Day Rate Pay Does Not Meet Salary Basis Test for Overtime Exemptions

On February 22, 2023, in Helix Energy Solutions Group, Inc. v. Hewitt, the U.S. Supreme Court said that payment of a “day rate” does not meet the salary basis test for the white-collar exemption for overtime under the Fair Labor Standards Act (FLSA). The Court reasoned that day rate employees are not paid on a salary basis because the amount of pay fluctuates based on the number of days worked in a week and that date rate pay is provided for each day worked.

The Court provided two methods in which day rate pay arrangements could be brought into compliance with the FLSA salary basis test. Employers could add a weekly guaranteed payment regardless of the time worked per week that meets the minimum weekly required amount under the salary basis test and has a reasonable relationship between the guaranteed amount and the actual amount earned.

Alternatively, employers could convert the day rate to a weekly salary for time spent working. Employers who have day rate employees should review the arrangement and make sure it is compliant with the methods offered by the Court.