On June 24, 2022, in Dobbs v. Jackson Women’s Health Org., 2022 WL 2276808 (June 24, 2022), the U.S. Supreme Court overruled Roe v. Wade 410 U.S. 113 (1973) and Planned Parenthood of Southeastern Pennsylvania v. Casey 505 U.S. 833 (1992) and held that (i) the U.S. Constitution does not confer a right to abortion and (ii) the authority to regulate abortion is held by the states. The statute at issue in Dobbs was Mississippi’s Gestational Age Act, which banned abortion after 15 weeks except in a medical emergency or in the case of severe fetal abnormality. Employers across the nation must now determine how to evaluate and respond to the far-reaching implications of this decision.
In connection with Mental Health Awareness Month, the United States Department of Labor (USDOL) has sought to assist employers in better understanding how to comply with the Family Medical Leave Act (FMLA) as it relates to mental health conditions. Accordingly, on May 25, 2022, the USDOL issued new guidance (Guidance) and frequently asked questions (FAQs) on providing FMLA leave to employees to address their own mental health conditions or to care for a covered family member with a mental health condition.
On Nov. 1, 2021, Governor Kathy Hochul signed a bill into law amending the definition of family member for purposes of the New York Paid Family Leave Benefits Law (PFL) to include biological or adopted siblings, half-siblings and step-siblings. This amendment takes effect on Jan. 1, 2023. Currently, family members for purposes of PFL include a child, parent, grandparent, grandchild, spouse and domestic partner.
Our previous information memo discussed several issues that employers should be aware of when considering whether to provide an incentive to employees to encourage them to receive the COVID-19 vaccine. On May 28, 2021, the Equal Employment Opportunity Commission (EEOC) issued updated guidance to employers on workplace COVID-19 vaccination policies, including guidance on employer-offered COVID-19 vaccine incentives.
Many employers are grappling with the decision of whether to provide an incentive (e.g., a cash payment, other form of financial incentive or increased time off) to employees to encourage them to receive the COVID-19 vaccine. Employers wishing to implement a COVID-19 vaccine incentive program should be aware that such a program will likely be considered a “wellness program” which implicates a myriad of legal issues, including issues under the Americans with Disabilities Act (ADA), Genetic Information Nondiscrimination Act (GINA), and Health Insurance Portability and Accountability Act (HIPAA).
The long-awaited stimulus relief bill has officially been enacted. On Dec. 21, 2020, Congress passed the Consolidated Appropriations Act, 2021 (Bill), several months after aid had lapsed for many individuals and businesses from the first stimulus bill passed early-on in the COVID-19 pandemic. Congress came together to push through a 5,593 page, $900 billion stimulus package intended to help those individuals and businesses who continue to struggle economically as a result of the ongoing pandemic. After expressing bipartisan criticism of its contents, President Trump finally signed the Bill on Dec. 27, 2020.
If you are a municipal employer in New York State struggling to find the answer to that question, you are not alone. In the absence of express language in your collective bargaining agreement, a definitive response is elusive. So elusive that the Second Circuit Court of Appeals has reached out to New York’s Court of Appeals for guidance. Whatever answer the Court of Appeals returns, if any, the value of a carefully negotiated and precisely drafted collective bargaining agreement cannot be overstated.
Administrators of qualified retirement plans have always had to deal with the problem of “missing participants” – that is, terminated vested participants for whom the administrator does not have a current mailing address or other contact information, and participants who refuse to respond to communications from the administrator. This problem frequently comes to light when a terminated participant nears retirement age or otherwise becomes entitled to receive a plan distribution, because at that time the administrator must contact the participant about distribution options, beneficiary designations, and other matters. And when a terminated participant approaches age 70½, the necessity of locating him or her becomes more urgent, because plan distributions generally must begin shortly after that age is reached.
Besides being an administrative problem, the inability to locate terminated participants can represent legal risks. The U.S. Department of Labor (DOL) has asserted that a plan’s inability to locate terminated participants can constitute a breach of duty on the part of the plan’s fiduciaries, in violation of ERISA. Lost or missing participants can also lead to plan disqualification risks; for example, if “required minimum distributions,” mandated under the Internal Revenue Code, cannot be made.
The "Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for the fiscal year 2018" a.k.a. the Tax Cuts and Jobs Act of 2017 (the "Tax Act") will, among other things, likely make negotiations in connection with sexual harassment or sexual abuse claims more difficult, and settlements for such claims more expensive for employers.
In response to disasters such as hurricanes and earthquakes, the general community comes together to assist those in need — donating our blood, time, money, and belongings. We respond similarly when one of our co-workers experiences an illness, death, accident, fire, or other severe financial hardship. Employers often ask us: “What can we do?”
Helping your employees and co-workers can be as easy as 1-2-3, once you crack the Code. The Internal Revenue Code, that is. If you know where to look, you can find some real win-win options.
Tax-Free Employer Payments: Employers may make direct payments (i.e., “qualified disaster relief payments”) that are tax-free to employees AND deductible by employers.
Employer-Sponsored Public Charities: Another more flexible (and perpetual) option is to form a public charity in as little as a single day. An emergency assistance fund backed up by an employer-sponsored public charity can boost workplace morale and enhance an employer’s familial culture. The employer and employees may make tax-deductible donations which are provided (directly and tax-free) to other employees/former employees affected by disasters and other hardships.
Leave-Based Donation Programs: Employers can adopt leave-based donation programs whereby employees donate leave time to be paid by the employers to a charity. The employees will not be taxed on the donated leave, nor will they be able to claim a charitable deduction on their individual tax returns. Employers may take a deduction for the employees’ contributions without regard to the normal limitations on corporate charitable donations.
In addition to the above, the IRS, DOL, and PBGC have granted multiple forms of relief to taxpayers impacted by the hurricanes and other disasters, and President Trump recently signed the “Disaster Tax Relief and Airport and Airway Extension Act of 2017,” which, among other things, provides emergency tax relief for individuals and employers.
Watch for an upcoming Bond Client Alert providing more detail on all of these relief programs.
We want to send our best wishes to the entire Bond family (all of our friends, colleagues, and clients) already affected by the recent storms and those currently in the path of Hurricane Nate. Our thoughts are with you and we are ready to help.
Author’s Note: Many thanks to first-year Bond associate Stephanie Fedorka for her assistance with this blog article. Her research time does not constitute a charitable donation to anyone other than the author.
It seems as though we hear about new cybersecurity issues every day -- from traditional hacking incidents to the increasingly sophisticated phishing, malicious apps and websites, social engineering, and ransomware attacks. Employee benefit plan sponsors likely have a fiduciary duty to ensure participant information and plan assets are protected from the growing number of cyber threats (to the extent possible, given the ever-changing cybersecurity landscape), AND, perhaps more importantly, that there is a plan in place to respond to a data breach and mitigate any associated damages.
For many years now, health plan sponsors have been subject to a variety of privacy and security rules under the Health Insurance Portability and Accountability Act of 1996, as amended (“HIPAA”). Health plan sponsors are (among other things) required to enter into contracts with TPAs and other service providers called “business associate agreements” that spell out the parties’ obligations under HIPAA in connection with the plan’s HIPAA-protected information or “PHI.”
Notwithstanding HIPAA’s broad scope, it is important to note that HIPAA only establishes the floor (i.e., the bare minimum requirements) when it comes to privacy and security of PHI. Health plan sponsors also should consider including references to state data breach notification laws and cyber liability insurance in business associate agreements (or related services agreements) in addition to the HIPAA minimums.
Although HIPAA does not extend to retirement plans, and retirement plan sponsors are not required to enter into specific agreements with TPAs governing the privacy and security of participants’ personally identifiable information or “PII,” ERISA’s fiduciary duties nonetheless likely apply. Although the DOL has yet to weigh in on fiduciary duties raised by cybersecurity issues, retirement plan sponsors should consider including both “HIPAA-like” and expanded cybersecurity provisions in contracts with TPAs that govern the privacy and security of participants’ PII and plan assets. Examples include, but are not limited to, provisions that: (1) address the TPA’s data security policies and procedures; (2) restrict the use of and access to PII; (3) explain the TPA’s obligations in the event of a data breach or security incident (i.e., investigation, notification of the plan sponsor and participants, mitigation, remediation, etc.); (4) specify liability for cybersecurity incidents, including the requirement to maintain adequate cyber liability insurance; and (5) provide for the ability to terminate the applicable services agreement, without additional or early termination fees, in the event of a data breach or other security incident, at the discretion of the plan sponsor.
Finally, in recognition of the fact that participant information also needs to be protected while in the hands of the plan sponsors (including from their employees as well as external cyber threats), plan sponsors should include any plan-related PHI or PII in their organizational cybersecurity efforts.
Human resource officers and managers are often asked to chair or sit on a retirement plan committee responsible for administrative tasks. In this role, a committee member takes on fiduciary responsibilities to plan participants and beneficiaries, and can be held personally liable for fiduciary breaches under Federal law. As legal counsel, we endeavor to manage this risk for our clients through guidance on good governance, indemnification protection, and the adoption of effective policies. Effective management of employee benefit plans will meet this fiduciary duty to participants while at the same time improving results for employees and minimizing potential liability exposure of plan managers.
We are sometimes asked to review a proposed investment policy statement or IPS related to a 401(k) or 403(b) retirement plan. Although these plans are not required to have an IPS, we recommend having one as a guide for prudent plan administration. Most plan service providers and record keepers will have a standard form or model available for use by the employer adopting the plan. Models can be useful, but any model should not be adopted without discussion and agreement with its terms. Because an IPS is a policy of the employer in its role as plan administrator, and not one of the outside record-keeper or financial consultant, it’s important for a plan committee to discuss and “own” its policies. Furthermore, a carefully-designed policy will not create additional responsibilities for a plan committee or officer beyond those imposed by law.
An effective IPS will describe the roles and duties of a plan committee, other responsible officers, or plan service providers. It provides a framework and process for investment decisions as well as indemnification for employees who are charged with fiduciary duties. In many cases, there may be a financial advisor or consultant who is engaged to carry out the policy in some capacity. Once a policy has been discussed and adopted, it is an aid in running efficient committee meetings and in working effectively with outside service providers. Adopting a well-crafted IPS is an important element of prudent plan administration.
An IPS should not dictate how many investment choices will be available for participants or the asset categories to be covered by plan options. Using factors described in the policy, a plan committee can handle the tasks of monitoring current options, assessing their potential for future performance, and making changes in a plan’s fund options. By creating and following a disciplined investment policy, a plan committee greatly reduces its risk of fiduciary liability when investment markets become volatile.
There is a downside in adopting an IPS and then ignoring it. Our experience has been, however, that once discussed and adopted, an IPS brings better focus and engagement by committee members, more efficient meetings, and a higher level of fiduciary performance on behalf of plan participants. We have developed model policies that, together with proposals from plan service providers, can form the basis for your own policy.