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COVID-19: U.S. Employee Benefit Considerations

March 27, 2020

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COVID-19: U.S. Employee Benefit Considerations

March 27, 2020

Authored by: benefitsbclp

As the Coronavirus continues to spread and businesses face financial challenges, U.S. employers may look to the impact that a temporary reduction in their business has on their existing U.S. employee benefit programs, adjust those benefits to meet the needs of both employers and employees and consider the impact of the newly created obligations under recently enacted and pending federal legislation.  Many employers are grappling with significant reductions in force, the furloughing of employees and/or reducing hours and compensation for employees as a result of this crisis.  All of these consequences significantly impact employee benefit plans and policies.  In addition, employers may need to make temporary or permanent changes to these employee benefit plans and policies.  It is important for employers to review all of their employee benefit plans and policies and service provider contracts to assess the impact these actions may have on employee benefit programs.

With this in mind, we prepared an Alert which includes a summary of issues related to the following areas for you to consider during these uncertain times:

  • Service provider contracts;
  • Emergency paid sick leave, family leave and related tax credits;
  • Health and welfare plans;
  • Qualified retirement plans; and
  • Incentive compensation and non-qualified deferred compensation plans.

Please click here to read the full Alert.

COVID-19 Update – Employee Assistance Through Interest-Free Loans

March 23, 2020

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As we explore ways to manage through these difficult economic times, employers who are looking for ways to assist employees who have seen their compensation reduced or former employees whose jobs have been temporarily eliminated due to the impact of the coronavirus quarantine may want to consider making interest-free loans available to those employees as a way to assist them economically during this difficult period.

Click here to read the Alert from our tax colleagues in full.

Families First Coronavirus Response Act: Emergency Family and Medical Leave Provisions (Part 2 of 2)

The following blog post was authored by our colleagues, Lily Kurland and Christy Phanthavong, and published on the BCLP At Work blog, where there have been ongoing labor and employment updates in response to the COVID-19 pandemic.

On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (the “FFCRA or Act”).  The FFCRA provides for two types of leave for employees:  Paid Sick Leave (up to 80 hours) and Emergency Family and Medical Leave (up to 12 weeks of combined paid and unpaid leave).  This post is part 2 of 2 summarizing the requirements of the FFCRA and focuses on Emergency Family and Medical Leave.

  • Scope: Unlike the paid sick leave provisions of the FFCRA, the emergency family and medical leave provisions are not standalone law.  Rather, these provisions amend the Family and Medical Leave Act (“FMLA”), thus providing for “Emergency FMLA” leave.  However, the amendments (such as the changed definition of Covered Employer and Eligible Employee) apply only to Emergency FMLA provisions and do not amend the pre-existing provisions of the FMLA.
  • Effective Dates: The Act will become effective no later than April 2, 2020 and expire on December 31, 2020.
  • Covered Employer: Anyone who has fewer than 500 employees[1] and otherwise satisfies the elements of the definition of “Employer” under the FMLA.[2]
    • EXCEPTIONS:
      • DOL may issue guidance excluding employers with fewer than 50 employees

Families First Coronavirus Response Act: Paid Sick Leave Provisions (Part 1 of 2)

The following blog post was authored by our colleagues, Lily Kurland and Christy Phanthavong, and published on the BCLP At Work blog, where there have been ongoing labor and employment updates in response to the COVID-19 pandemic.

On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (the “FFCRA or Act”).  The FFCRA provides for two types of leave for employees:  Paid Sick Leave (up to 80 hours) and Emergency Family and Medical Leave (up to 12 weeks with a combination of paid and unpaid leave).  This post is part 1 of 2 summarizing the requirements of the FFCRA and focuses on Paid Sick Leave. 

  • Effective Dates: The Act will become effective no later than April 2, 2020 and expire on December 31, 2020.
  • Department of Labor (“DOL”) Obligations: Must issue a “Model Notice” for employers to post within 7 days of enactment and guidance within 15 days of enactment.
  • Covered Employer – Anyone engaged in commerce with fewer than 500 employees,[1] as defined under the Fair Labor Standards Act (“FLSA”).
    • EXCEPTION – The DOL may issue guidance excluding employers with fewer than 50 employees from the paid leave requirements of the Act if the paid sick leave would “jeopardize the viability of the business as a going concern.”
  • Eligible Employees – All employees (as defined under the FLSA), regardless of length of employment, and regardless of

Revised VCP Fees – Simple Isn’t Always Better

Revised VCP Fees – Simple Isn’t Always Better

January 18, 2018

Authored by: benefitsbclp

The Internal Revenue Service (“IRS”) has described its recent changes to its Voluntary Correction Program (“VCP”) user fees as “simplification.”  This simplification is achieved by significantly changing the way user fees are determined and by eliminating alternative and reduced fees that were previously available.   At first blush, this simplification appears to result in a general reduction in user fees, however, in certain circumstances, the changes will actually result in significantly higher fees.   If you are the person responsible for issuing or requesting checks for your plan’s VCP application(s), it is important to note the differences from the past fee structure so that you will know what your plan is in for (good or bad) the next time a VCP application is necessary.

In case you are not familiar with the VCP, the IRS created the program under its Employee Plans Compliance Resolution System, to allow tax-favored retirement plans not currently under examination to correct certain failures that would otherwise result in the loss of tax-favored status.  If a plan sponsor elects to submit an application under the program, the fee that must be paid with each application is called a “user fee.”  This user fee has always been subject to change, but never before has the user fee structure undergone such an extreme makeover from one year to another.

On the surface, the biggest change to the VCP user fee structure is that for applications submitted prior to January 2, 2018, the user fee was based on the number

“Who” May Object to the Contraceptive Coverage Mandate, and why?

New rules issued by the Trump administration, including both interim final and temporary regulations effective October 6, 2017, significantly expand “who” may object to the Patient Protection and Affordable Coverage Act’s (PPACA) contraceptive coverage mandate and why those entities or individuals may object.

Background:

Under the PPACA, the Health Resources and Services Administration (HRSA), a division of the United States Department of Health and Human Services (HHS), has the authority to require that certain preventive care and screenings for women be covered by specific group health plans and health insurance issuers.  HRSA has used that discretion to require, among other things, contraceptive coverage.  HHS, the Department of Labor, and the Department of the Treasury, the agencies tasked with enforcing that requirement, have permitted certain health insurance issuers and group health plans with religious objections, such as non-profit organization and church plans, to receive an exemption or accommodation from this requirement.  As a result of the Hobby Lobby litigation, closely held for-profit organizations with religious objections to contraceptive coverage were added to the list of entities which could request an accommodation; however, accommodations are intended to shift the cost of providing these services and supplies to third-party administrators and health insurance issuers rather than permitting a group health plan to truly not offer the services or supplies.

The new world order:

The first interim final rule and associated temporary regulations provide that all non-governmental plan sponsors and health insurance issuers that object to contraceptive coverage based on sincerely held

Help for Hurricane Harvey…and Irma and Maria, Too

September 14, 2017

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Help for Hurricane Harvey…and Irma and Maria, Too

September 14, 2017

Authored by: benefitsbclp

Employers seeking ways to help employees and their family members affected by Hurricanes Harvey, Irma, or Maria should consider the various relief made available by the Internal Revenue Service under Announcements 2017-11 and 2017-13 and Notice 2017-48.

Under Notice 2017-48, employers who maintain a leave-based donation program (there is still time to adopt one) can afford employees the opportunity to forgo their vacation, sick or personal leave in exchange for cash contributions made by the employer, before Jan. 1, 2019, to charitable organizations assisting those impacted by Hurricane Harvey.  The donated leave will be excluded from the donor employees’ income and wages and the employer will be able to deduct such contributions to a qualifying charitable organization as a business expense.  As always, the Notice includes specific guidelines that must be followed in order for employers and employees to take advantage of this relief.  Note that currently this relief is approved only for Hurricane Harvey assistance.

Announcements 2017-11 and 2017-13 permit employers who sponsor a “qualified employer plan” to offer hardship distributions and/or plan loans to participants for reasons (including to obtain food and shelter) relating to Hurricanes Harvey and Irma even if the plan doesn’t currently permit hardship distributions or loans.  For purposes of this relief, participants may obtain a hardship distribution and/or plan loan not just for their own needs but also to help certain affected family members.  In addition, certain other restrictions (e.g., automatic six-month suspension of elective deferrals following

Open Enrollment: SBC, HIPAA, GINA, WHCRA, NMHPA, CHIPRA, EOB, OOPM, HSA, HCFSA, DCFSA…

Are you gearing up for open enrollment’s alphabet soup? Anyone who works in human resources/employee benefits and has survived even one open enrollment season knows just how busy that alphabet soup will make your next few months.

Before open enrollment is in full swing and things get too crazy, you should spend some time reviewing the disclosures you will use. Even if you have a TPA who generally takes responsibility for open enrollment, the ultimate responsibility for legal compliance belongs to the plan administrator.

In particular, this year there have been some major changes to the Summary of Benefits and Coverage (“SBC”). The new SBC requirements apply to all group health plans for plan years beginning on or after April 1, 2017. You should confirm that your SBC has been updated to satisfy the new requirements. Among other changes, you’ll notice that a new introductory paragraph has been added; certain questions have been eliminated, added (e.g., are there services covered before you meet your deductible?), or rephrased; and, a third coverage example has been added. Because the changes to the SBC are quite extensive this year, we recommend that you undertake a wholesale review of your SBC.

Here are a few quick tips to help you review your SBC:

  1. Compare your SBC to the DOL’s template SBC: There’s a template available for your use at https://www.dol.gov/sites/default/files/ebsa/laws-and-regulations/laws/affordable-care-act/for-employers-and-advisers/sbc-template-final.pdf. We recommend using this template if you provide SBCs electronically because there are imbedded hyperlinks for each defined term that take participants

DOL FAQs Guide Compliance Efforts during Fiduciary Rule Transition Period

June 6, 2017

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The Department of Labor has issued guidance in the form of Frequently Asked Questions to help firms and their advisers impacted by the Fiduciary Rule know what is expected on and after June 9, 2017, on and after January 1, 2018, and during the period between (the “Transition Period”).  We’ve outlined a few of the highlights below:

As of June 9, 2017, firms and their advisers must comply with the “Best Interest Contract Exemption” and the “Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs”.  However, fewer conditions must be met to comply with these exemptions during the Transition Period.

As described fully in the Fiduciary Rule, the “impartial conduct standards” generally require fiduciaries to make recommendations that are prudent, loyal, and free from material misrepresentation and to receive only reasonable compensation for such recommendations.  The impartial conduct standards do not apply to PTE 84-24 until January 1, 2018 but apply to PTEs 75-1, 77-4, 80-83, 83-1, and 86-128 on and after June 9, 2017.

The DOL reassured firms implementing new compensation systems which will not be in place by June 9, 2017, that their advisers may still satisfy the impartial conduct standards – by, for example, disclosing that a certain recommended investment benefits the adviser more than another investment.

Of specific interest to plan sponsors is Question 12.  There, the DOL outlines three types of communications a plan (including its representatives and an interactive tool) has with a participant

Worried About the Fiduciary Rule? Don’t Be…Yet!

March 21, 2017

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Worried About the Fiduciary Rule? Don’t Be…Yet!

March 21, 2017

Authored by: benefitsbclp

Pen Marking Days on a CalendarThe Department of Labor (DOL) released Field Assistance Bulletin 2017-01 on March 10, 2017, which outlines a temporary enforcement policy related to its final fiduciary rule.

Background

On February 3, 2017, President Trump directed the DOL to re-examine the final rule’s impact. As a result, on March 2, 2017, the DOL opened a 15-day comment period (which ended last Friday) on a proposed 60-day delay of the rule’s effective date, from April 10, 2017 to June 9, 2017.

Simultaneously, the DOL opened a 45-day comment period on the substance of the actual rule. This second comment period affords the DOL with an opportunity to review comments before June 9, 2017 (the proposed delayed effective date). At such point, the DOL could allow the final rule to take effect, propose an additional extension in order make amendments to the rule based on the comments received or withdraw the rule.

With the final rule’s current effective date quickly approaching and no indication on whether a delay would occur, there was growing uncertainty among members of the retirement services industry about how to proceed. For example, if the DOL doesn’t announce its decision to delay implementation of the rule until after April 10, 2017, a “gap” would exist between April 10, 2017 and the date the DOL actually issues the final rule delaying the implementation.  The other issue is that

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