The Washington Report
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January 13, 2021
Note to subscribers: Due to the current environment, information is changing at a rapid rate. While we do our best to provide timely updates, it is possible that the information shared in the newsletter may change or be revised after our publication deadline. Stay healthy and safe! ~The Washington Report team
Health
HHS Releases Final Rule Securing Updated and Necessary Statutory Evaluations as Part of RFA
On January 8, 2021, the Department of Health and Human Services (HHS) issued a final rule amending its regulations to set expiration dates for HHS’s regulations (subject to certain exceptions), unless HHS periodically assesses the regulations to determine if they are subject to the Regulatory Flexibility Act (RFA) and if they are, performs a review that satisfies the criteria in the RFA. Specifically, the Securing Updated and Necessary Statutory Evaluations Timely rule requires HHS to assess its regulations every 10 years to determine whether they are subject to review under the RFA. If a given regulation is subject to the RFA, HHS must review the regulation every 10 years to determine whether the regulation is still needed and whether it is having appropriate impacts. Regulations will expire if HHS does not assess and, if required, review them in a timely manner.
Under the final rule, any regulation issued by HHS, with certain exceptions, “will cease to be effective ten years after it is issued, unless HHS performs an assessment of the regulation and a more detailed review of those regulations that have a significant economic impact upon a substantial number of small entities.”
The final rule is effective 60 days after publication in the Federal Register (date unknown). Please refer to the final rule and news release for specific information.
The news release is available here.
The final rule is temporarily available here.
(Disclaimer: This HHS-approved document has been submitted to the Office of the Federal Register (OFR) for publication and has not yet been placed on public display or published in the Federal Register. The document may vary slightly from the published document if minor editorial changes are made during the OFR review process. The document published in the Federal Register is the official HHS-approved document.)
EEOC Announces Proposed Wellness Rules Under ADA and GINA
On January 7, 2021, the Equal Employment Opportunity Commission (EEOC) forwarded to the Federal Register its Notices of Proposed Rulemakings (NPRM) on wellness programs under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). The NPRMs have been cleared by the Office of Management and Budget and sent to the Federal Register for publication. Once they are published the public will have 60 days to provide comments on the NPRMs.
Previously approved by the Commission, the proposed rules address what level of incentives employers may lawfully offer to encourage employee participation in wellness programs that require disclosure of medical information, without violating the ADA or GINA. The NPRMs respond to a decision by the U.S. District Court for the District of Columbia that vacated a portion of EEOC’s previous ADA and GINA regulations. Although HIPAA, as amended by the Affordable Care Act, allows employers to offer incentives up to 30% of the total cost of health insurance to encourage participation in certain types of wellness programs, the ADA requires that employee participation in a wellness program that includes medical questions and exams be “voluntary.” Because the ADA and GINA do not define “voluntary,” the NPRMs propose that, in order to comply with the ADA and GINA, employers may offer no more than a de minimis incentive to encourage participation in wellness programs, with the exception of certain wellness programs that would be permitted to offer the maximum allowed incentive under the 2013 HIPAA regulations.
For more information, please see the Aon bulletin EEOC Proposes New Wellness Regulations Under the ADA and GINA in the Publications section of this newsletter.
The news release is available here.
The NPRM on wellness programs under the ADA is temporarily available here.
Comments regarding this proposed rule must be received 60 days from publication in the Federal Register (date unknown).
The NPRM on wellness programs under GINA is temporarily available here.
Comments regarding this proposed rule must be received 60 days from publication in the Federal Register (date unknown).
(EEOC Disclaimer: The official versions of these documents are the documents published in the Federal Register. These documents have been sent to the OFR but have not yet been scheduled for publication (date unknown)).
Retirement
PBGC Publishes Final Rule on Methods for Computing Withdrawal Liability, Multiemployer Pension Reform Act of 2014
On January 7, 2021, the Pension Benefit Guaranty Corporation (PBGC) published a final rule amending its regulations on Allocating Unfunded Vested Benefits to Withdrawing Employers and Notice, Collection, and Redetermination of Withdrawal Liability. The amendments implement statutory provisions affecting the determination of a withdrawing employer’s liability under a multiemployer plan and annual withdrawal liability payment amount when the plan has had benefit reductions, benefit suspensions, surcharges, or contribution increases that must be disregarded. The amendments also provide simplified withdrawal liability calculation methods. The final rule becomes effective on February 8, 2021. This rule applies to employer withdrawals from multiemployer plans that occur in plan years beginning on or after February 8, 2021.
The final rule is available here.
DOL/EBSA Announce New Exemption for Investment Advice Fiduciaries
On December 15, 2020, the Department of Labor (DOL) announced a new prohibited transactions exemption (PTE), applying to investment advice fiduciaries as a class of providers to individuals and retirement plans. The exemption notice also indicates that rollover advice could be subject to ERISA’s standards, if related to an ongoing relationship.
Generally, this PTE intends to address the potential for self-dealing by investment advisors, and implements “best interest” standards. While an investment advisor acting as a fiduciary is subject to ERISA’s standards, the PTE allows a variety of investment advice services, provided the investment advisor fiduciary complies with the Impartial Conduct Standards. These include an investor’s best interest standard, a reasonable advisor compensation standard, and “a requirement to make no materially misleading statements about recommended investment transactions and other relevant matters.”
The Securities and Exchange Commission (SEC) issued its own advice standards in the recent past; the DOL’s exemption now aligns the DOL and SEC standards. This alignment may be instrumental in minimizing tensions between industry groups formerly firmly encamped in either the DOL’s or SEC’s position on how conflicts of interest should be avoided with respect to investment advice.
The exemption becomes effective on February 16, 2021. The temporary enforcement policy stated in Field Assistance Bulletin 2018-02 will remain in place for one year after the final exemption is published in the Federal Register (December 18, 2021).
The news release is available here.
A Fact Sheet is available here.
The class exemption is available here.
Field Assistance Bulletin 2018-02 is available here.
Other HR/Employment
EEOC Announces New Website Concerning Systemic Enforcement
On January 8, 2021, the Equal Employment Opportunity Commission (EEOC) announced a new website (Systemic Enforcement at the EEOC) explaining the use of administrative and litigation tools used to identify and pursue systemic discriminatory practices. The EEOC defines systemic cases as “pattern or practice, policy and/or class cases where the discrimination has a broad impact on an industry, profession, company or geographic location. As part of its enforcement, the EEOC uses administrative and litigation mechanisms to identify and pursue discriminatory policies and practices that the EEOC identifies as ‘systemic.’”
The purpose of the new website is to provide transparency about how the EEOC approaches systemic discrimination enforcement efforts. The website provides background on how the EEOC determined that systemic enforcement is effective, explains how the EEOC determines what is systemic discrimination, and details the process of initiating and conducting a systemic case.
The news release is available here.
The “Systemic Enforcement at the EEOC” website is available here.
DOL Announces Final Rule Clarifying Independent Contractor Status Under the FLSA
On January 6, 2021, the Department of Labor (DOL) announced a final rule clarifying the standard for employee versus independent contractor status under the Fair Labor Standards Act (FLSA). The final rule includes the following clarifications:
- Reaffirms an “economic reality” test to determine whether an individual is in business for him or herself (independent contractor) or is economically dependent on a potential employer for work (FLSA employee).
- Identifies and explains two “core factors” that are most probative to the question of whether a worker is economically dependent on someone else’s business or is in business for him or herself:
- The nature and degree of control over the work.
- The worker’s opportunity for profit or loss based on initiative and/or investment.
- Identifies three other factors that may serve as additional guideposts in the analysis, particularly when the two core factors do not point to the same classification. The factors are:
- The amount of skill required for the work.
- The degree of permanence of the working relationship between the worker and the potential employer.
- Whether the work is part of an integrated unit of production.
- The actual practice of the worker and the potential employer is more relevant than what may be contractually or theoretically possible.
- Provides six fact-specific examples applying the factors.
The final rule becomes effective on March 8, 2021.
The news release is available here.
The final rule is available here.
IRS Releases 2020 Annual Report
On January 5, 2021, the Internal Revenue Service (IRS) released its 2020 annual report (Internal Revenue Service Progress Update/Fiscal Year 2020 – Putting Taxpayers First) describing the “agency’s work delivering taxpayer service and compliance efforts during COVID-19 while spotlighting actions taken by IRS employees to help people during the challenging year.” Among other items, the 44-page report also highlights accomplishments around the agency’s six strategic goals and identifies ongoing modernization efforts. This year’s edition also discusses work related to implementing the Taxpayers First Act.
The IRS 2020 Annual Report Internal Revenue Service Progress Update/Fiscal Year 2020 – Putting Taxpayers First, is available here.
Aon Publications
EEOC Proposes New Wellness Regulations Under the ADA and GINA
The U.S. Equal Employment Opportunity Commission (EEOC) has proposed new rules on how employers must design workplace wellness programs to comply with the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).
The Aon bulletin, which discusses what employers need to know under the proposed regulations, is available here.