California’s New FSA Notice Requirement Leaves Employers Asking Questions

Employers that have employees residing in California are now required by AB 1554 to provide notification in two different forms to employees about deadlines for withdrawing funds from flexible spending accounts (“FSAs”).  One of the forms of notification may be electronic.  Examples of permissible notification forms include: e-mail, telephone, text message, mail, or in-person.  The notice requirement purports to apply to all FSAs, including dependent care FSAs, health care FSAs, and adoption assistance FSAs.  Virtually all other aspects of implementing the law are left open to interpretation.

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Extension of the UK Coronavirus Job Retention Scheme

On Saturday 31 October, the UK Government announced a new national lockdown and confirmed the extension of the existing Coronavirus Job Retention Scheme, more commonly referred to as the “furlough” scheme.

In this alert, we set out what the UK Government has announced and what this means in terms of the support available to employers, including the status of the Job Support Scheme (the “JSS”), which was originally due to replace the furlough scheme from yesterday.

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IRS Updates Guidance on Qualified Plan Distributions to State Unclaimed Property Funds

The IRS recently published new guidance on the tax withholding and reporting consequences associated with qualified retirement plan distributions to state unclaimed property funds.  In Revenue Ruling 2020-24, the IRS clarified that distributions from qualified retirement plans to state unclaimed property funds are subject to both federal income tax withholding and 1099-R reporting requirements.  In a companion revenue procedure, Rev. Proc. 2020-46, the IRS permitted taxpayers to self-certify for a waiver of the 60-day deadline for rolling over funds between qualified plans when the funds had been distributed to a state unclaimed property fund.

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California to Require Annual Pay Data Reporting to DFEH

In an effort to close gender and racial pay gaps, California Governor Gavin Newsom recently signed Senate Bill (SB) 973 to require certain California employers to submit an annual pay data report to the Department of Fair Employment and Housing (DFEH) starting next year. The new law largely mirrors the EEO-1 “Component 2” pay data reporting requirement, which was imposed by the Obama administration and has been suspended by the Trump administration.

Under SB 973, private employers that have 100 or more employees and are required to file an annual Employer Information Report (EEO-1) must submit a pay data report to the DFEH covering the prior calendar year. The report must include: (1) the number of employees by race, ethnicity, and sex in each of ten job categories (the same job categories used in the EEO-1); (2) the number of employees by race, ethnicity, and sex whose annual earnings fall within each of the pay bands used by the United States Bureau of Labor Statistics; and (3) the total number of hours worked by each employee counted in each pay band. Employers with multiple establishments in California must submit a report for each establishment and a consolidated report that includes all employees. Employees include all individuals on payroll, whether full- or part-time, for whom the employer must withhold federal social security taxes and include in an EEO-1 Report.

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New York Employees May Begin Using New Paid Sick Leave Benefits on January 1, 2021

New York State’s new paid sick leave law (“NYSSL”) took effect on September 30, 2020, requiring employers to allow employees to begin accruing paid sick leave benefits immediately.  Employees may use their accrued leave under the NYSSL starting January 1, 2021.  In response to its state law counterpart, New York City Mayor Bill de Blasio has signed into law certain amendments to the existing NYC Paid Safe and Sick Leave Law (“NYCPSL”), also known as the Earned Sick and Safe Time Act, to align the NYCPSL with the NYSSL.

As discussed below, the NYSSL and NYCPSL impose similar paid sick leave requirements on employers, though the amendments to the NYCPSL expand employers’ obligations and strengthen New York City’s enforcement mechanisms.

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New California COVID-19 Workers’ Comp Bill Creates Disputable Presumption and New Reporting Requirements

California Governor Gavin Newsom recently signed Senate Bill (SB) 1159, which adds COVID-19-related illness or death to the list of injuries covered under the state’s workers’ compensation program and creates new employer reporting responsibilities. The law codifies and extends Executive Order N-62-20, which was issued on May 6, 2020 and created a rebuttable presumption that employees with a COVID-19-related illness on or before July 5, 2020 contracted the virus at work and were eligible for workers’ compensation. The new law is retroactive to July 6, 2020 and expires on January 1, 2023.

Disputable Presumption for COVID-19 Cases During Workplace “Outbreaks”

Workers’ compensation generally provides benefits for employees who are injured or become ill in the course of their employment. Given the wide reach of COVID-19, however, it may be difficult to identify where the employee was exposed to the coronavirus for the purposes of showing that their exposure was caused by and arose out of their employment. In California, however, SB 1159 creates a “disputable presumption” that a COVID-19-related illness arose out of and in the course of employment, and is thus compensable, for employees who test positive during a COVID-19 “outbreak” at the employee’s “specific place of employment,” and whose employer has five or more employees. The new law specifies that workers’ compensation awarded for COVID-19 claims includes “full hospital, surgical, medical treatment, disability indemnity, and death benefits.”

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New Law Expands California Family Rights Act

Governor Newsom has signed Senate Bill (SB) 1383 to significantly expand the California Family Rights Act (CFRA).  The CFRA is California’s counterpart to the federal Family and Medical Leave Act (FMLA) and provides unpaid family and medical leave of up to 12 weeks for eligible employees.  The new law’s key revisions are summarized below and take effect on January 1, 2021.

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California Mandates COVID-19 Supplemental Sick Leave for Larger Employers

California Governor Gavin Newsom has signed Assembly Bill (AB) 1867, to create COVID-19 supplemental paid sick leave (CPSL) requirements for employers with 500 or more employees, filling a gap left by the federal Families First Coronavirus Response Act (FFCRA) which applies only to employers with under 500 employees.  The new law also codifies existing supplemental paid sick leave requirements for certain food-sector workers that were implemented in April under California Executive Order E.O. N-51-20.

AB 1867 took effect on September 19, 2020.  It will expire on December 31, 2020, although if Congress extends the emergency sick leave provisions of the FFCRA, the provisions of AB 1867 would automatically be extended for the same period.

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DOL Revises FFCRA Regulations in Response to Federal Court Decision Invalidating Parts of the FFCRA

On September 11, 2020, the U.S. Department of Labor (“DOL”) issued revised regulations to clarify certain rights and employer responsibilities under the paid sick leave and expanded family and medical leave provisions of the Families First Coronavirus Response Act (“FFCRA”).  The revisions were made in response to a recent decision of the U.S. District Court for the Southern District of New York (“SDNY”), which invalidated certain provisions of the FFCRA regulations.

The FFCRA, which we discussed here, requires employers with fewer than 500 employees to provide emergency paid sick leave (“EPSL”) and emergency Family and Medical Leave Act leave (“EFMLA”) to employees who meet certain COVID-19-related conditions.  DOL issued regulations implementing the FFCRA on April 1, 2020.

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Federal District Court Strikes Down DOL Joint Employer Rule

A New York federal district court judge has struck down significant portions of the U.S. Department of Labor’s (“DOL”) joint employer rule, which went into effect earlier this year.  As a result of this ruling, certain companies may be more likely to be deemed joint employers and exposed to liability for wage and hour violations under the Fair Labor Standards Act (“FLSA”).

As we described here, in March 2020, a final rule issued by DOL went into effect implementing a four-factor test for determining whether more than one entity may be considered an individual’s employer under the FLSA.  The new test shifted the existing rule’s focus on the “economic realities” of the alleged employer/employee relationship to a narrower inquiry regarding whether the alleged employer actually exercised control over the alleged employment relationship.

The District Court for the Southern District of New York has now held that DOL’s final joint employer rule violated the Administrative Procedures Act for two reasons.  First, the court found that the rule contradicted the text of the FLSA because it ignored relevant concepts defined in the statute, such as the definitions of “employ” and “employee,” and that DOL had erroneously applied different standards for “primary” and “joint” employment when no such distinction exists in the FLSA itself.  Second, the court found that DOL’s reasoning for the rule change was arbitrary, capricious, and not supported by adequate evidence.

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