The federal government has taken major steps to boost insurers’ coverage of mental health and substance abuse treatment in recent years, and with the confirmation of former California Attorney General Xavier Becerra to lead the U.S. Department of Health and Human Services, that trend will likely continue.
The US Department of Labor’s decision last month to table Trump-era regulations limiting socially conscious investments by retirement plans signals that the Biden administration is considering an embrace of so-called ESG funds, which attempt to advance environmental, social and corporate governance goals.
Tabling these regulations brings “the Department of Labor into alignment with the desire of not just plan fiduciaries, but more notably, the actual plan participants to use their retirement assets in a socially conscious manner,” McDermott partner Erin Turley said in an article for Law360.
Two days before the one-year anniversary of the official start of the COVID-19 outbreak, the US Department of Labor (DOL) issued a last-minute notice clarifying its prior guidance that relaxed the deadlines for the Employee Retirement Income Security Act-governed group health and welfare plans (ERISA) related to the Consolidated Omnibus Budget Reconciliation Act (COBRA) and various special enrollment and claims procedures.
Employers grappling with independent-contractor classification had a busy 2020—and should expect a flurry of additional activity this year. Few areas in employment law are changing as rapidly. Last year, many concerned about the future of contractor-classification laws paid careful attention to California and AB 5, which went into effect on Jan. 1, 2020, and codified the California Supreme Court’s landmark decision in Dynamex Operations West Inc. v. Superior Court of Los Angeles.
In a recent article for Law360, McDermott partners Ellen Bronchetti and Ron Holland consider the impacts of the California law on the gig economy, employer classification tests and organized labor in the United States.
The Department of Labor (DOL) made inflation adjustments to a wide range of penalties for Employee Retirement Income Security Act (ERISA) violations by employee benefit plans and plan sponsors. The new penalty amounts that apply in 2021 are included herein.
Hurry Up and Wait: Department of Labor Delays Implementation of New Worker Classification Regulations
Businesses strive to draw the line correctly on who is an employee versus who is an independent contractor. New regulations issued by the Department of Labor (DOL) in early January promised to help. See, 29 CFR §§795.100. But by late January, those regulations under the Fair Labor Standards Act (FLSA) were frozen.
Unlike laws passed by Congress, administrative regulations are far more easily altered when a new president takes office. The regulations published by President Trump’s DOL in January had an effective date of March 8, 2021. Now, President Biden’s DOL will have an additional 60 days beyond that effective date to announce what will happen next.
Those new regulations provided a much simpler test for classifying workers. While including five factors, the results turned on two of those factors: (1) the nature and degree of the worker’s control over the work and (2) the worker’s opportunity for profit/loss based on personal initiative or investment. Most significantly, those regulations focused on the actual practices, rather than what may be possible.
This same issue may also arise under other federal statutes as well as state laws, including those governing on whom unemployment insurance taxes must be paid. With multiple statutes (each with its own distinctive test), drawing the line between independent contractors and employees correctly turns not only on meeting whatever the ultimate FLSA test turns out to be.
The most difficult is the so-called ABC test:
- The worker is free from the control and direction of the hiring entity in connection with the work’s performance, both under the contract for the performance of the work and in fact.
- The worker performs work that is outside the usual course of the hiring entity’s business.
- The worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed.
That is the test that is embedded in proposed federal legislation: the Protecting the Right to Organize (PRO) Act. That is also now the official test for most jobs under most California laws.
The Department of Labor provided interim guidance on the new required annual lifetime income disclosures to participants in defined contribution plans, including plans covered under section 401(k) or 403(b) of the Internal Revenue Code, profit-sharing plans and employee stock ownership plans (ESOPs). The Lifetime Income Disclosure Rule is currently scheduled to go into effect on September 18, 2021. Given this timeframe, sponsors of defined contribution plans should start planning for these new disclosure requirements now.
On January 7, 2021, the Equal Employment Opportunity Commission (EEOC) issued proposed guidance regarding employer-sponsored wellness programs and the level of incentives employers may offer employees who participate in these programs in the form of two proposed rules. On January 20, 2021, the Biden administration ordered agencies to immediately withdraw most unpublished rules, including the EEOC proposed rules. Agencies may not issue any new regulations until they can be reviewed and approved by agency or department heads appointed or designated by President Biden.
The Consolidated Appropriations Act (the Act) was signed into law by the president on December 27, 2020, and includes significant health and welfare benefits provisions that affect group health plans and health insurance issuers. The Act is the most comprehensive single piece of legislation to impact group health plans since the Affordable Care Act.
Joe Biden’s ascendance to the presidency not only spells doom for many of the Trump administration’s business-friendly employment policies; it also may place established tenets of federal labor law on the chopping block. Biden may bring with him to the White House an ambitious pro-labor platform aimed at giving workers and unions a leg up after four years in which the Trump administration moved the legal needle sharply in employers’ direction.
A recent article in Law360, featuring McDermott partner Ron Holland, outlines four areas that labor and employment lawyers should watch after the Biden transition.