An increasing number of jurisdictions around the country, including parts of California, New York and Washington, DC, are mandating that employers provide commuter benefit programs that allow employees to pay for commuting costs on a pre-tax basis. While the requirements are similar across most jurisdictions, there are specific rules for which employees are covered under the different laws and other key distinctions. When budgeting and developing these programs, employers should be mindful of the different conditions under state and local law to ensure that commuter benefits meet all applicable requirements.

 

City/County/State Citation Covered Employers Covered Employees Reimbursement Limit
Berkeley, CA Berkeley Commuter Benefit Program Ordinance B.M.C. 9.88 (TRACCC) Berkeley employers with 10 or more employees, including those who work outside the geographic boundaries of Berkeley Any person who has performed an average of at least 10 hours of work per week for compensation within the geographic boundaries of Berkeley for the same employer within the previous 12 months and qualifies as an employee entitled to minimum wage payments under the California minimum wage law Same as IRS (“up to the maximum level allowed by federal tax law”)
Richmond, CA Richmond Commuter Benefits Ordinance Ord. No. 22-09 N.S. s. 1, 7-21-09 Richmond employers for which an average of 10 or more persons per week perform work for compensation, including those who perform work outside the geographic boundaries of Richmond Any person who performs an average of at least 10 hours of work per week for compensation over a 90-day period within the geographic boundaries of Richmond for the same employer and qualifies as an employee entitled to minimum wage payments under the California minimum wage law. Same as IRS (“up to the maximum level allowed by federal tax law”)
San Francisco, CA San Francisco Environment Code Sec. 421 (Commuter Benefits Program) San Francisco employers for which an average of 20 or more persons per week perform work for compensation (full-time, part-time and temporary employees are counted, as are employees who work outside the geographic boundaries of San Francisco) Any person who performs an average of at least 10 hours of work per week for compensation within the geographic boundaries of San Francisco for the same employer within the previous calendar month and qualifies as an employee entitled to minimum wage payments under the California minimum wage law Same as IRS (“up to maximum level allowed by federal tax law”)
San Francisco Bay Area (Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, southwestern Solano and southern Sonoma Counties) Government Code Section 65081 (Bay Area Commuter Benefits Program) Any employers for which an average of 50 or more full-time employees per week perform work for compensation within the geographic area covered by the ordinance An employee who has performed at least an average of 20 hours per week within the previous calendar month within the geographic area covered by the ordinance Same as IRS (“up to the maximum amount allowed by federal tax law”)
New Jersey P.L. 2019, Chapter 38 (NJ Transit Benefits Law) Every employer in New Jersey that employs at least 20 employees All employees not covered by a collective bargaining agreement Same as IRS (“at the maximum benefit levels” allowable under federal law)
Seattle (not effective until January 1, 2020; enforcement begins January 1, 2021) Seattle Municipal Code Title 14 Chapter 14.30 (Commuter Benefit) Employers who employ 20 or more employees (including full-time, part-time, and temporary employees, and those who work outside of Seattle) Employees who work an average of 10 hours or more per week in Seattle in the previous calendar month Same as IRS (“up to the maximum level allowed by federal law”)
Washington, DC D.C. Act 20-385 (Sustainable DC Omnibus Amendment Act of 2014) Employers located in Washington, DC, with 20 or more employees Full-time and part-time employees who (a) perform 50% of their work in Washington, DC, or (b) whose employment is based in DC, and a substantial amount of their work is performed in DC with less than 50% of their work performed in any other state Same as IRS (“the maximum amount that may be deducted . . . pursuant to section 132(f)(2) of the Internal Revenue Code”)

 

Healthcare providers and insurers are still making tons of rookie mistakes on patient privacy, turning themselves into easy enforcement targets, according to Roger Severino, director of the US Department of Health and Human Services.

Severino made headlines in 2017 for expressing interest in punishing a “big, juicy, egregious” privacy breach, and seemingly followed through with a $16 million settlement stemming from Anthem Inc.’s megabreach involving 79 million patients. But, an emphasis on smaller violations makes sense in light of the OCR’s recent acknowledgement of limits on its penalty powers, said Edward G. Zacharias, a McDermott partner.

Access the full article.

Originally posted on Law360, February 2020

For 2020, legislation enacted in December of 2019 dramatically increases penalties imposed by the Internal Revenue Code (the Code) for late filing of certain employee benefit plan notices and reports. In addition, a final rule published by the Department of Labor (DOL) makes inflation adjustments to a wide range of penalties. Learn the penalty amounts that apply beginning in 2020.

Access the full article.

Certain employers might prefer to avoid hiring nicotine users: smokers, dippers and vapers alike. U-Haul International Inc. is doing so, with a policy that went into effect on February 1. Thus, this is an opportune moment to examine why employers might consider doing likewise, the legal ramifications of such policies and the alternatives for encouraging healthier workforces.

McDermott’s Jacob M. Mattinson, Aaron Sayers and Erin Steele contribute to a Law360 article exploring the practical and legal considerations related to a workplace nicotine ban, the impact on healthcare costs, whether employers can use health plan information to fire nicotine users once hired, and how other employers are addressing the costs of nicotine usage in their workforces.

Access the full article.

Originally published on Law360, January 2020

The United Kingdom is no longer a member of the European Union and has entered into a transition period until December 31 2020, unless an extension of 1 or 2 years is agreed by July 1 2020 (the Brexit Long Stop Date).

During this transition period, the UK will continue to trade with the EU in much the same way as it did before its exit. Negotiations will take place throughout this year to determine the future permanent relationship between the UK and the EU.

The UK’s Prime Minister, Boris Johnson, has repeatedly stated that the transition period will not be extended beyond the end of this year. This is an ambitious deadline to reach a comprehensive agreement with the EU and the possibility of a “no deal” Brexit remains an event for which companies should prepare.

Against this backdrop, this update summarises the current status of the UK’s relationship with the EU and sets out some of the key legal implications associated with a “no deal” scenario for certain areas—one of which being employment, which we examine here.

Continue Reading Brexit Update: Effects on Employment

There are requirements for a qualified domestic relations order (QDRO) that apply whether the QDRO is for splitting up defined contribution (DC) plan assets or defined benefit (DB) plan assets, notes McDermott’s Lisa K. Loesel.

However, the mechanics of setting up QDROs vary between DC and DB plans. Read on to discover the different paths for getting the right benefits to the right people when a plan participant divorces.

Access the full article.

Originally published on PLANSPONSOR, January 2020

The most significant issues in any employment or severance agreement are going to be personal to that situation, and will be driven in part by special issues and circumstances. For instance, succession planning issues may be incredibly important to the organization when the CEO is 65 years old and there is no clear successor, and may be far less important when the CEO is 45 and there are very able executives ready to assume the CEO role if necessary. With that said, there are certain considerations to keep in mind for all who are drafting these contracts.

McDermott’s Ralph E. DeJong contributes to an article in The Practical Lawyer that identifies and describes what frequently are the most important considerations in an employment or severance agreement between an exempt organization and its CEOs.

Access the full article.

Originally published in The Practical Lawyer, December 2019

Public companies would have a harder time evading a stricter limit on deductions for compensation paid to top executives under an IRS proposal. The proposed regulations (REG-122180-18) implement a 2017 tax law provision that expanded the scope of tax code Section 162(m), which prevents public companies from getting a tax deduction for executive compensation exceeding $1 million. The rules target a workaround under which corporations could potentially skirt the limit by paying certain top executives part of their compensation through a partnership.

McDermott’s Andrew C. Liazos contributes to a Bloomberg Law article that takes a look at how the IRS is working to curb the workaround of the limit on executive pay tax break.

Access the full article.

Originally published on Bloomberg Law, December 2019

2020 is shaping up to be a banner year for benefits law, with three ERISA cases already on the US Supreme Court’s docket and a number of other high-profile lawsuits at the circuit court level that could attract the justices’ attention.

While waiting on the high court’s ERISA decisions, lawyers are watching litigation trends develop in the lower courts and waiting to see if the high court picks up another two ERISA cases.

McDermott’s Richard J. Pearl contributes to a Law360 article that look at what 2020 may hold for benefits litigation.

Access the full article.

Originally published on Law360, January 2020

Student loan debt skyrocketed in the past decade, topping $1.5 trillion among millions of Americans. The crisis has prompted US employers to address it in their benefits programs.

McDermott’s Jeffrey M. Holdvogt contributes to a Plan Sponsor article that provides a review of how employers can help employees break free from the bind student loan debt has on financial wellbeing and retirement savings.

Access the full article.

Originally published on Plan Sponsor, December 2019