Some Provisions Take Effect on Governor's Signature

The Colorado Healthy Families and Workplaces Act (Act), passed by the legislature, requires Colorado employers to provide employees with paid sick leave in different circumstances:

• COVID-19-related Leave: Effective upon the governor’s signature, this provision expands paid sick leave under the federal Families First Coronavirus Response Act to all employers and employees exempt from coverage under that law.
   
• Paid Sick Leave: Effective Jan. 1, 2021, for employers with at least 16 employees, and Jan. 1, 2022, for all employers, employees are entitled to paid sick leave for specified reasons having to do with their own or a family member’s health or status as a domestic violence victim, or the closure of the employee’s workplace or child’s school or place of care due to a public health emergency.
  
  Employees earn one hour of leave for every 30 hours worked, capped at 48 hours annually. Front-loading, carryover, and employer and employee notice provisions apply. Employees begin accruing leave at the start of work and may use the leave as it accrues.
   
• Supplemental Public Health Emergency Leave: The Act requires an employer to provide its employees additional paid sick leave for certain purposes during a public health emergency, in an amount based on the number of hours the employee works, up to a maximum of 80 hours.

The Act prohibits retaliatory action by employers and contains enforcement provisions and penalties.

Employees Won’t be Taxed on Donated Leave

Employee leave donated to COVID-19 charities through employer-based programs will not be taxed as income of the donor employees, according to recent guidance by the IRS.
 
In Notice 2020-46, the IRS said that cash payments an employer makes in exchange for vacation, sick or personal leave that its employees elect to forgo will not be treated as employee wages or compensation, or otherwise included in employees' gross income, if the payments are: 

• Made to a Section 170(c) organization for the relief of victims of the COVID-19 pandemic in affected geographic areas; and
• Paid to a Section 170(c) organization before Jan. 1, 2021.

“Affected geographic areas” are each of the 50 states, the District of Columbia, and five U.S. territories, which have all been declared major disaster areas by President Donald Trump in response to the COVID-19 pandemic.

Rules Would Apply to Deductions Eliminated in 2017

The IRS has issued proposed regulations that provide guidance for employers determining the amount of nondeductible qualified fringe transportation expenses. The proposed rules also provide guidance for applying exceptions, and include definitions, special rules and methodologies.
 
The 2017 Tax Cuts and Jobs Act changed Section 274 of the IRS Code to disallow employer deductions for qualified transportation fringe expenses, including for van pooling, transit passes, qualified parking and qualified bicycle commuting.
 
The deadline for comments and requests for a public hearing on the proposed regulations is Aug. 24, 2020. The IRS strongly encourages commenters to submit public comments electronically at www.regulations.gov.

Investigators Will Consider Evidence of a Plan for the Child to Attend Program

The U.S. Department of Labor (DOL) has issued Field Assistance Bulletin 2020-4, clarifying when employees may take paid leave under the Families First Coronavirus Response Act (FFCRA) for the COVID-19-related closure of a summer camp, summer enrichment program or other summer program. The bulletin was issued June 26, 2020.

The FFCRA allows eligible employees to take leave from work when child care is unavailable for the employee’s child for COVID-19 reasons. This includes closure of summer camps and enrichment programs. During a DOL Wage and Hour Division investigation, in evaluating whether an employer improperly denied FFCRA leave, the bulletin directs DOL personnel to consider whether there is evidence of a plan for the child to attend the camp or program, or whether it is more likely than not that the child would have attended the camp or program had it not closed.

The bulletin says the “multitude of possible circumstances” precludes a one-size-fits-all rule. However, the bulletin mentions as indicators of a plan for a child to attend a summer camp or program the child's current enrollment in, recent prior attendance at, or acceptance on the waitlist of, the program.
 
For more information, please contact the DOL Wage and Hour Division.

Similar Tool for Employers Expected Soon

The U.S. Department of Labor (DOL) has created an online tool to help workers determine whether they qualify for paid leave under the Families First Coronavirus Response Act (FFCRA). The tool poses questions to help employees assess whether their employers are subject to the paid leave provisions of the FFCRA. Then, for employees whose employers are covered by the law, the tool helps determine whether the workers qualify for FFCRA paid sick leave or expanded family and medical leave.
 
The DOL is developing a similar tool for employers.

New FAQs Address a Variety of Health Coverage Issues Related to the COVID-19 Outbreak

The Departments of Labor, Health and Human Services and the Treasury have provided answers to a second set of FAQs (FAQs Part 43) about health coverage issues related to COVID-19. The FAQs address a variety of topics, including coverage for COVID-19 diagnostic testing, notice requirements, mental health parity compliance and wellness plans. For example, the FAQs: 

• Provide that COVID-19 testing for surveillance or employment purposes is not required to be covered by health plans without cost sharing. 
• Confirm that balance billing for COVID-19 diagnostic testing is generally prohibited;
• Allow health plans to revoke the temporary COVID-19-related coverage changes without satisfying certain notice deadlines, provided participants are notified within a reasonable time frame in advance of the reversal of the changes; and 
• Allow large employers to offer coverage for telehealth and other remote care services to employees who are not eligible for any other group health plan offered by the employer during the public health emergency.

The New Letters Clarify Compliance Issues With the FLSA

Outside Sales Exemption

 FLSA2020-6 answers the question whether salespeople who travel to different locations to sell products using their employer’s mobile assets qualify for the exemption. 

FLSA2020-8 addresses whether salespeople who set up displays and perform demonstrations at various retail locations not owned, operated or controlled by their employer to sell the employer’s products qualify for the exemption.

Wage Payment Requirements

FLSA2020-7 is specific to the automobile industry and addresses whether a manufacturer’s direct payments to a dealership employee for work done on behalf of the dealership may count toward the employee’s minimum wage. 

FLSA2020-10 addresses the application of the retail or service commission sales exemption, where less than half of an employee’s compensation in the relevant representative period consists of commissions.

Administrative Employee Exemption

Finally, and relevant during the current pandemic, FLSA2020-9 addresses whether emergency-management coordinators employed by a county government qualify for the administrative exemption.

The Order Is Effective Between June 24 and December 31

On June 22, 2020, President Trump suspended the entry to the United States of certain foreign nationals holding specific nonimmigrant work visas. The order becomes effective June 24, 2020 and will remain in force through Dec. 31, 2020, but may be continued as necessary.

The order cites the economic downturn caused by the COVID-19 pandemic as the main reason to curb the admittance of foreign workers. Specifically, the order states that under the “current extraordinary environment of high domestic unemployment and depressed demand for labor” it would be detrimental to the national economy to enable foreigners to fill employment opportunities at the expense of displaced American workers. 

The order also explains that extending these restrictions through the end of the year is necessary because “the economy will likely require several months to return to pre-contraction economic output… [and] restore stable labor demand.”

Scope of Suspension

The order affects foreign nationals (and any individual accompanying or following them) with H-1B or H-2B visas, J visas (to the extent the visa holder is participating in an intern, trainee, teacher, camp counselor, au pair or summer work travel program) and L visas. The order will apply only to foreigners who: 

• Are outside the United States on June 24, 2020;
• Do not have nonimmigrant visas that are valid on June 24, 2020; and
• Do not have official travel documents other than a visa that is valid on June 24, 2020, or issued on any date thereafter that permits traveling to the United States and seeking entry or admission.

The order does not apply to: 

• Lawful permanent residents;
• The spouse or child of a U. S. citizen;
• Foreigners seeking to enter to provide temporary labor or services essential to the food supply chain;
• Any individual whose entry would be in the national interest; or
• Individuals seeking asylum, refugee or similar protective status under the law.

OSHA's Publication Includes Charts and Examples Help Implement Safety Principles

On June 18, 2020, the Occupational Safety and Health Administration (OSHA) released guidance to help employers plan how to reopen nonessential businesses. The guidance also addresses issues employers should consider as they ask their employees return to work during the COVID-19 pandemic. 

OSHA’s guidelines for reopening nonessential businesses provide general principles for updating restrictions that were originally put in place to slow the spread of the coronavirus. Specifically, this new guidance covers: 

• How to plan a reopening
• OSHA standards and required protections in the workplace
• Available OSHA assistance programs
• Answers to employer frequently asked questions 

OSHA has stated that this new guidance is meant to supplement the White House's Guidelines for Opening Up America Again and the Guidance on Preparing Workplaces for COVID-19 developed by the U.S. Departments of Labor and Health and Human Services. A as a result, businesses should follow local timelines and phased reopening plans as they implement OSHA’s guidance. 

Employers should also continue to monitor federal, state and local updates about community disinfection, best practices and transmission mitigation measures. For example, employers can visit OSHA's coronavirus webpage and the Centers for Disease Control and Prevention website for updates. 

New FAQ Addresses Tests for COVID-19 Antibodies 

On June 17, 2020, the U.S. Equal Employment Opportunity Commission (EEOC) issued an additional answer to frequently asked questions (FAQs) about how employers should comply with the Americans with Disabilities Act (ADA) during the COVID-19 pandemic. The new FAQ indicates that the ADA prohibits employers from requiring employees to take COVID-19 antibody tests. Existing FAQs address how employers may handle workplace issues for employees who are considered to be at high risk of serious illness from COVID-19 and several other ADA issues. 

Ruling Extends Protections Beyond Traditional Notions of Gender

On June 15, 2020, the U.S. Supreme Court issued a decision holding that discrimination based on homosexuality or transgender status necessarily involves intentionally treating individuals differently because of their sex, and that it is therefore prohibited under Title VII of the federal Civil Rights Act.
 
Although the decision, in Bostock v. Clayton County, reverses federal court rulings that had previously limited the term “sex” to biological distinctions between male and female, employers should be aware that the opinion aligns with the Equal Employment Opportunity Commission (EEOC)’s current Title VII enforcement policies. In addition, many state and local laws specifically prohibit employment discrimination based on sexual orientation and gender identity.

Office of Paid Family Leave Will Administer Benefits

On July 1, 2020, the District of Columbia will begin administering paid family leave to eligible employees. The program provides up to:

• Eight weeks to bond with a new child
• Six weeks to care for a family member with a serious health condition
• Two weeks for the employee to care for his or her own serious health condition

Eligible employees may file a claim for paid leave benefits with the district’s Office of Paid Family Leave following a qualifying parental, family or medical event. Individuals must be currently employed by a covered employer to be eligible to file a claim. Paid family leave benefit payments will be issued to eligible individuals directly from the district’s Department of Employment Services.

Private-sector employers in the district began paying a .62% tax July 1, 2019, to fund the paid leave benefit. The paid family leave tax is 100% employer-funded and may not be deducted from a worker's paycheck.
 
An employer notice requirement went into effect Jan. 1, 2020, requiring employers to post this notice in a conspicuous place at their worksites, and to provide it to employees. Employer reporting and recordkeeping requirements also apply.

For more information, contact the district’s Office of Paid Family Leave.

New FAQs Address How an Employee’s Age, National Origin, Pregnancy or Caregiver Roles May Affect an Employer’s Obligations Related to COVID-19

On June 11, 2020, U.S. Equal Employment Opportunity Commission (EEOC) issued additional answers to frequently asked questions (FAQs) about how employers should comply with the Americans with Disabilities Act (ADA) during the coronavirus / COVID-19 pandemic. The additional FAQs, which address how employers may handle workplace issues for employees who are considered to be at high risk of serious illness from COVID-19 and other ADA issues, were added to guidance that the EEOC originally issued on March 18, 2020, and updated on April 9, 17, 23, and May 7, 2020. The existing guidance also addresses workplace accommodations, medical exams and other ADA-related issues.  

OSHA Recommends that Employers Encourage Workers to Wear Face Coverings at Work

The Amendments Were Signed into Law on Friday, June 5, 2020.

 Since being established as part of the Coronavirus Aid, Relief and Economic Security Act (CARES Act) in March 2020, the Paycheck Protection Program (PPP) has been the subject of additional stimulus bills, legal guidance and interim final rules. In the latest development, Congress passed the Paycheck Protection Program Flexibility Act of 2020, which is a bill that provides borrowers with greater flexibility in spending PPP funds without compromising forgiveness eligibility. 

The bill, which passed with a bipartisan vote, makes the following amendments to the PPP to provide relief to borrowers: 

• Loan repayment terms—The bill extends the minimum loan term for unforgiven PPP loans from two years to five years.
• Payroll costs vs. nonpayroll costs— For forgiveness eligibility, the bill reduces the portion of PPP funds that must be spent on payroll costs from 75% to 60%, and raises the nonpayroll cost limitation from 25% to 40%. 
• Covered period extension—The bill extends the covered period during which borrowers must spend the PPP funds to be eligible for forgiveness from eight weeks to 24 weeks from the date of origination of the loan. 
• Payroll tax deferment—The bill permits borrowers to defer payroll taxes without being penalized while still remaining eligible for loan forgiveness.
• Extension of rehiring safe harbor—The bill extends the rehiring safe harbor by six months to provide borrowers with additional time to restore payroll levels or rehire employees without facing a reduction in the amount of forgiveness for which they are eligible. The original date was June 30, 2020, and the new date is Dec. 31, 2020. 

In addition to the provisions above, the bill provides loan forgiveness eligibility exemptions for borrowers that are not able to rehire an employee or a replacement. There are also exemptions for loan forgiveness eligibility for borrowers that are not able to return to the same level of business due to complying with COVID-19-related orders or circumstances.

What’s next?

Borrowers should review the bill carefully and speak to their lender should they have any questions. In addition, borrowers should direct any questions regarding their PPP loan to their lender. 

Safe Harbor Will Encourage Resolution of Claims Before Lawsuits are Filed 

West Virginia has enacted a new law that regulates the payment of liquidated damages and attorney’s fees for lawsuits related to unpaid or underpaid wage claims. Beginning June 4, 2020, the new law will allow individuals to seek liquidated damages and attorney’s fees only after they submit a written demand (including email) for unpaid wages to their former employer. 

However, this safe harbor for employers is conditional on new notification requirements. The new law requires employers to provide individuals with a notice that contains the contact information for an authorized representative. The employer must submit this information in writing upon separation of employment or with the final paycheck. 

Finally, the new law also requires employers to settle unpaid wage demands within seven calendar days of when they receive the demand. Employees can seek liquidated damages and attorney’s fees if their wage demands are not settled within seven days or if the employer failed to provide the notice as required. 

Final Rule Does Not Apply to Group Health Plans

On May 21, 2020, the U.S. Department of Labor (DOL) published a final rule that will allow plan administrators to post retirement plan disclosures online or deliver them to employees by e-mail, as a default, to comply with their statutory duty to furnish documents under ERISA.

This new safe harbor permits the following two optional methods for electronic delivery:

• Website posting—Plan administrators may post covered documents on a website, if appropriate notification of internet availability is furnished to the electronic addresses of covered individuals.
• E-mail delivery—Alternatively, plan administrators may send covered documents directly to the electronic addresses of covered individuals, with the documents either in the body of the e-mail or as an attachment.

The final rule is limited to retirement plan disclosures, such as summary annual reports or pension benefit statements, but does not include documents that must be furnished only upon request. The final rule does not apply to employee welfare benefit plans, such as group health plans.

If using the new safe harbor, plan administrators should ensure compliance with the various protections for plan participants included in the final rule, such as initial paper notification and website retention requirements. More information about these requirements can be found in the DOL’s Fact Sheet.

Inflation-Adjusted Contribution Limits and HDHP Amounts to Increase

The IRS has announced the 2021 inflation-adjusted amounts for Health Savings Accounts (HSAs) as determined under the Internal Revenue Code.

Annual Contribution Limits
For calendar year 2021, the annual limit on HSA contributions for an individual with self-only coverage under a high deductible health plan (HDHP) is $3,600 (up from $3,550 for 2020). The annual limit on HSA contributions for an individual with family coverage under an HDHP is $7,200 (up from $7,100 for 2020).

HDHP Amounts
For plan years beginning in 2021, an HDHP is defined as a health plan with an annual deductible that is not less than $1,400 for self-only coverage or $2,800 for family coverage, and annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) that do not exceed $7,000 for self-only coverage or $14,000 for family coverage.

Click here to read the IRS announcement.

Guidance Applies to Employer-Sponsored Health Coverage, Health FSAs and DCAPs

On May 12, 2020, the IRS released Notice 2020-29, which provides temporary flexibility for mid-year election changes under a Section 125 cafeteria plan during calendar year 2020. The changes are designed to allow employers to respond to changes in employee needs as a result of the COVID-19 pandemic.

A plan may permit any of the election changes described in the notice, regardless of whether they satisfy existing mid-year election change rules. For employer-sponsored health coverage, a Section 125 cafeteria plan may permit an employee to prospectively:

• Make a new election if the employee previously declined coverage;
• Revoke an existing election and enroll in different health coverage sponsored by the employer; or
• Revoke an existing election, if the employee is or will be enrolled in other health coverage.

Employees may also prospectively revoke an election, make a new election or decrease or increase an existing election for a health flexible spending account (health FSA) or dependent care assistance program (DCAP).

An employer using this relief may determine the extent to which such changes are permitted and applied. If these changes are permitted, the employer must adopt a plan amendment by Dec. 31, 2021, and inform employees of the change. The amendment may be retroactive to Jan. 1, 2020.

Options Include an Extended Period for Incurring Expenses and Increased Health FSA Carryover Limit

On May 12, 2020, the IRS announced more options with respect to unused amounts in health flexible spending accounts (FSAs) and dependent care assistance programs (DCAPs). These options allow employers to permit: 

• An extended period for incurring health FSA or DCAP expenses; and
• Health FSA carryovers of up to $550. 

Due to the COVID-19 outbreak, employees may be more likely to have unused amounts in their health FSAs or DCAPs. IRS Notice 2020-29 allows employers to permit employees to apply unused amounts remaining in a health FSA or a DCAP at the end of a plan year ending in 2020 (or a grace period ending in 2020) to pay or reimburse expenses incurred through Dec. 31, 2020. 

IRS Notice 2020-33 increases the health FSA carryover limit for unused funds remaining at the end of a plan year from $500 to $550 to reflect indexing for inflation. This change is effective for plan years beginning in 2020 (and reflects the maximum amount that may be carried over to the immediately following plan year beginning in 2021).