Under Revenue Procedure 2019-20, sponsors of individually designed statutory hybrid plans, including cash balance plans, have a short window of opportunity to file determination letter applications with the IRS by August 31, 2020. In addition, sponsors of merged plans have an ongoing opportunity to file determination letter applications within certain periods of time after the corporate transaction and plan merger. Plan sponsors should strongly consider taking advantage of these opportunities, since other opportunities for filing determination letter applications are limited. This post discusses key highlights of the expansion of the determination letter application program under this Revenue Procedure.
In a positive development for businesses, the National Labor Relations Board (NLRB) has published a final rule setting a new, stricter standard for determining joint employer status under the National Labor Relations Act (NLRA). The new rule, which takes effect on April 27, 2020, comes on the heels of a recent rule published by the Department of Labor narrowing the scope of joint employment under the Fair Labor Standards Act.
The new NLRB rule specifies that a business will be deemed a joint employer of another entity’s employees only if the business has “substantial direct and immediate control” over one or more essential terms of employment. Essential terms of employment are wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.
Businesses are rapidly developing strategies to continue functioning and protect their workforces in the face of the growing Coronavirus COVID-19 outbreak. For obvious reasons, businesses may want to deploy health screening, testing, and professional medical advice services—including telemedicine—to their employees and dependents. It is critical that employers’ health plans support these efforts and not get in the way of them. For example, businesses may not want coverage, co-pay, and deductible issues to discourage employees from taking advantage of the services businesses are deploying. Making sure this is the case raises a number of technical issues for businesses to consider:
- Can health plan deductibles and employee co-insurance obligations be waived for screenings and treatment of the coronavirus, including, among others, in a high deductible health plan with a health savings account?
- Are health plans required to cover screenings and treatment of the coronavirus?
- How much of the costs for screening and treating the coronavirus are health plans required to pay?
- If a location needs to close or temporarily lay off employees:
- Must the employer continue to offer health coverage to affected employees?
- How do affected employees pay health insurance premiums while on unpaid leave?
- What assistance can employers offer to affected employees?
- What information do privacy laws permit employers and health plans to share about an employee’s coronavirus diagnosis?
The U.S. Department of Labor (“DOL”) has published a final rule, which takes effect on March 16, 2020, outlining the new four-factor approach DOL will use to determine whether, under the Fair Labor Standards Act (“FLSA”), a business is a “joint employer” of another company’s employees and thus jointly and severally liable for wage and hour obligations. The new rule comes as good news for employers because it establishes a concrete and narrow standard for determining joint employer status and is expected to provide clearer guidance to federal courts making joint employer determinations.
The final rule represents the first time in 60 years that DOL has issued a joint employer rule, although over the decades it has issued guidance both expanding and contracting the scope of the definition and potential liability. Furthermore, the rule is consistent with a series of actions that DOL, under the Trump administration, has taken to rescind the previously broader definition of “joint employer” under the Obama administration (including its June 7, 2017 withdrawal of employee-friendly Administrator’s Interpretation guidance documents from 2015 and 2016).
We recently wrote about Rev. Proc. 2019-39, which provides for remedial amendment periods for 403(b) plans and establishes deadlines for 403(b) plans to adopt discretionary amendments and amendments that correct form defects. Rev. Proc. 2019-39 also announced the IRS’s intent to include changes to § 403(b) requirements on its annual Required Amendments List (the “List”). The List is issued annually and includes statutory and regulatory changes that become effective during the year in which it is published, or which became effective after publication of the previous year’s List.
The Service has kept its promise, issuing IRS Notice 2019-64 on December 4, 2019. Notice 2019-64 contains the 2019 Required Amendments List, which applies to 403(b) plans as well as qualified plans, and is the first Required Amendments List to include changes to § 403(b) requirements. Only one change affecting 403(b) plans (as well as qualified defined contribution plans) is included on the 2019 List: sponsors must amend 403(b) plan documents to comply with two of the provisions of the final hardship distribution regulations. (The List also covers certain amendments to cash balance and other hybrid defined benefit plans.)
California employers are ringing in the new year with a host of new workplace laws. Here is an overview of new employment-related laws, along with recommendations for compliance. All of the laws, unless otherwise specified, went into effect on January 1, 2020.
Earlier this week, the IRS issued long-awaited proposed regulations under Section 162(m) of the Internal Revenue Code. Our colleagues at Covington’s Tax Reporting & Withholding Blog published a comprehensive summary and analysis of the proposed regulations. As you will see, the proposed regulations fell short of proposing workable solutions for public companies wrestling with the changes brought about by the Tax Cuts and Jobs Act, and would pull in new categories of companies that were not previously subject to the Section 162(m) limitation on deductible executive compensation. Please visit the Tax Reporting & Withholding Blog for more information.
In October, the U.S. Department of Labor released a proposed rule that would increase plan administrators’ ability to make certain required ERISA pension disclosures through electronic, rather than paper, delivery. Below is a summary of the proposed rule with some highlights on aspects of the proposal that have been questioned by interested parties and might be changed.
The Departments of Health and Human Services, Labor and Treasury released a new “Transparency in Coverage” proposed rule that requires most group health plans and issuers to publicly disclose negotiated rates with in-network providers and historical data showing amounts paid for covered items or services furnished by out-of-network providers. In addition, group health plans and issuers would be required to create a self-service website through which participants could obtain estimates of out-of-pocket costs for covered items or services. The proposed rule implements provisions of the Affordable Care Act and is intended to help consumers shop for medical services from lower-cost, higher-value providers.
Many lawsuits against employer group health plans hinge on the enforceability of the plan’s anti-assignment provision. ERISA does not give providers the right to sue for plan benefits. A provider’s lawsuit must be derived from the participant’s right to plan benefits. In other words, the participant must assign his or her right to the provider. Even with such an assignment, a provider will lack standing to bring a lawsuit if the ERISA plan has a valid and enforceable anti-assignment clause. (ERISA itself generally prohibits assignment of retirement plan benefits, but the ERISA prohibition on assignment does not apply to health and welfare plans.)
While courts have generally held that anti-assignment provisions are enforceable, states have begun weighing in on the side of providers in an attempt to keep these lawsuits alive. But can a state law invalidate anti-assignment clauses in plans subject to ERISA and mandate that benefits be assignable to a healthcare provider? The Fifth Circuit, in Dialysis Newco, Inc. v. Community Health Systems Group Health Plan, 938 F.3d 246 (5th Cir. 2019), recently invalidated a Tennessee law that sought to do just that.