The Office of Management and Budget (OMB) informed the Equal Employment Opportunity Commission (EEOC) on August 29th that it was “initiating a review and immediate stay of the effectiveness of the pay data collection aspects” of the previously approved EEO-1 form requiring pay data be reported.

For many years, employers with 100 or more employees and certain other employers have been required to file EEO-1 reports annually that show their number of employees by job category and then for each category, the number of employees by gender, ethnicity, and race. Starting with the 2017 EEO-1 report, the report would have required summary pay data by gender, ethnicity, and race within each job category. The pay data requirement was highly controversial. Many questioned the validity of the data that would have been provided for purposes of identifying pay discrimination. In addition, many expressed concerns about the significant administrative challenges the new form created. Because of the new pay data requirement, EEOC also moved the filing deadline from September 30, 2017, to March 31, 2018.

Given the suspension, EEOC says that employers should use the previously approved EEO-1 form to report the data on race, ethnicity, and gender by job category (i.e., the data reporting requirements that will remain in effect). In addition, employers should file their reports by the previously set filing deadline of March 31, 2018.

On August 1, 2017, Gov. Baker signed into law $200 million in new fees and fines on Massachusetts employers to help pay for employees who receive health insurance coverage through MassHealth or subsidized coverage through the Massachusetts Health Connector.

The new law, effective for a two-year period starting January 1, 2018, applies to employers with more than five employees. For every employee who has coverage through MassHealth or subsidized coverage through the Massachusetts Health Connector instead of coverage through the employer’s plan, the employer must pay a fine equal to five percent of the employee’s “wages” up to $750. Wages are defined as the “unemployment insurance taxable wage base,” which is $15,000 for 2017. Thus, the maximum fine is $750 ($15,000 times five percent equals $750).

The Department of Unemployment Insurance (DUI), in consultation with the Division of Medical Assistance and Health Insurance Connector Authority, is responsible for providing regulations for implementing the new law and once provided, employers must pay the fines in accordance with the regulations. Among many details the regulations will address are the number of days an individual must have MassHealth or subsidized coverage to trigger a fine.

The DUI will notify employers of any fines they must pay. Once notified, an employer may request a hearing provided the request is made within 10 days of receiving the notice.

Unfortunately, there is not much time between now and January 2018 for employers to plan for the new law and its potential impact on their budgets. Employers such as retail, hospitality, human services, and other industries employing a significant number of lower wage workers are likely to be most impacted.

The PS&A team will inform you when the regulations are published. Also, feel free to contact us with any questions or help needed.

Governor Baker signed the Massachusetts Pregnant Workers Fairness Act into law on July 27, 2017.  The new law, effective April 1, 2018, expands the Massachusetts’ nondiscrimination law covering private employers with six or more employees to prohibit discrimination based on pregnancy or based on a condition related to pregnancy such as lactation.

For an overview of the new law, be sure to read Issue 4, HR Insights by clicking here.

The United States Citizenship and Immigration Services (USCIS) published a new revised Form I-9 on July 17, 2017 (revision date of 7/17/17 N) that employers must start using no later than September 18, 2017.  The Form was last revised November 14, 2016, which all employers had to start using no later than January 22 of this year.

The changes, which are not extensive, primarily impact the list of acceptable documents for verifying identity and authorization to work in the U.S.  They include the following:

  • USCIS added the Consular Report of Birth Abroad (Form FS-240) to List C of Acceptable Documents.
  • USCIS combined all the certifications of report of birth issued by the Department of State (Form FS-545, Form DS-1350, and Form FS-240) into List C.
  • USCIS renumbered all List C documents except the Social Security card.

These changes are also reflected in the instructions for completing Form I-9 as well as in the Handbook for Employers: Guidance for Completing Form I-9 (M-274) available at https://www.uscis.gov/i-9-central/handbook-employers-m-274.  To view the revised Form I-9 and instructions, visit our Resource Page, Legislation, Regulations, and Other Government Issued Materials.  

The IRS has issued the 2018 inflation adjusted amounts for Health Savings Accounts (HSAs) and High Deductible Health Plans (HDHPs).

The table below compares the limits to the current 2017 limits. As shown in the table, the maximum that can be contributed to an HSA in 2018 for individual coverage will increase by $50, and for family coverage, by $150. The minimum annual deductible for high deductible health plans (HDHPs) will increase by $50 for single coverage, and for family coverage, by $100. The maximum annual out of pocket expenses (i.e., deductibles, copays, and other amounts except for premiums) for HDHPs will increase by $100 for individual coverage, and by $200 for family coverage.

*Important Note: According to the final Health and Human Services (HHS) Notice of Benefit and Payment Parameters for 2018 Fact Sheet, the maximum annual out of pocket expenses are $7,350 for individual coverage and $14,700 for family coverage for Affordable Care Act compliance purposes.

The United States Citizenship and Immigration Services (USCIS) has issued a new Form I-9 (the 11/14/2016 edition) that employers must start using no later than January 22, 2017.

All U.S. employers must use Form I-9 to verify and document an employee’s identity and authorization to work in the United States. The form is completed by both the employer and the employee and the employee must present acceptable documents to prove his or her identity and authorization to work in the U.S.

Among other changes, the new Form I-9 was enhanced to make it easier to complete on a computer. The enhancements include drop-down lists and calendars for filling in dates, on-screen instructions for each field, easy access to the full instructions, and an option to clear the form and start over.

For a copy of the new I-9 Form, go to our Resources page, and select the Legislation, Regulations, and Other Government Issued Materials category.

The Department of Labor (DOL) recently revised both the FLSA (Fair Labor Standards Act) and EPPA (Employee Polygraph Protection Act) posters. Employers subject to these laws must post the revised posters as of August 1, 2016. Read more

EEOC has issued a sample notice and FAQs to help employers who have wellness programs comply with the recently issued Americans and Disabilities Act (ADA) rules. For a copy of the notice and the FAQs, go to our Resources page.

Employers offering wellness programs must provide the ADA notice the first day of the plan year beginning on or after January 1, 2017 (i.e., the first day of the plan year of the plan offering wellness incentives). However, the FAQs state that if employees already receive the HIPAA (Health Insurance Portability and Accountability Act) required notice that describes what information will be collected, who will receive it, how it will be used, and how it will be kept confidential, it is not necessary to provide the separate ADA notice unless the HIPAA notice does not include all of the ADA required information or unless the HIPAA notice is not easily understood.

Under the ADA rules, if a wellness program asks employees about their medical conditions or asks them to take a medical exam such as a test for high blood pressure, high cholesterol, or diabetes, an employer must ensure that:

  • The program is reasonably designed to promote health and prevent disease
  • The program is voluntary
  • Any medical information about the employee will be kept confidential

A wellness program may include limited financial and other incentives to encourage employees to participate in a wellness program. However, an employer cannot:

  • Require employees to participate in the program
  • Retaliate against or interfere with an employee who does not want to participate in the program
  • Coerce, threaten, intimidate, or harass an employee to participate in the program

For more details, refer to the Notice and the FAQs on our Resources page.

Pamela-Sande-DOLThe Department of Labor (DOL) has issued the long awaited final FLSA rules on the white collar exemptions from overtime. After hearing many comments from employers, professional associations such as the Society for Human Resources Management (SHRM), and others regarding the impact of the proposed rules on businesses, the final rules provide some relief as follows:

  • Minimum Salary Threshold: The final rules lower the minimum salary threshold from the proposed $970/week ($50,440/year) to $913/week ($47,476/year). Although the threshold is lower in the final rules, the new threshold is nevertheless a significant increase over the current threshold of $455/week ($23,660/year).
  • Automatic Salary Threshold Increases: Under the proposed rules, the minimum salary threshold would have increased annually. Under the final rules, the threshold will increase every three years. The automatic increases to the thresholds will start on January 1, 2020. The threshold will be set at a level equal to the 40th percentile of full-time salaried workers in the lowest-wage census region.
  • Effective Date: The final rules are effective December 1, 2016. Typically, the standard implementation timeframe is 60 days so the December effective date is good news in that it gives businesses more time to prepare for changes that may be required.

In addition, under the final rules, the highly compensated employee (HCE) exemption level is now $134,004 per year.  This level is higher than expected.  The HCE exemption level will be set at the 90th percentile of full-time salaried workers nationally. Are you ready for the FLSA changes?

Have you determined how the changes may impact your business? To prepare for the changes:

  • Identify which of your current salaried employees will not meet the new minimum salary threshold.
  • Determine whether you will increase salaries to the new minimum salary threshold or not increase them and reclassify the individuals and pay overtime.
  • And, very important – you’ll need to think through your strategy for talking with employees impacted by the changes.  For example, if you decide to reclassify employees to nonexempt, the employees must report their time like any other hourly paid employee.  This may be perceived by some employees as not being treated as a professional.  On the other hand, if you decide to increase employees’ salary to satisfy the minimum salary threshold, it will be important to explain the increase to the employee.

If you need assistance with determining financial impact, alternatives to consider, and your employee communication strategy, please contact Pamela Sande at 774-205-4018.

To view the final FLSA rules, see our Resources page.

numbers-time-watch-white (2)A little over a year ago, President Obama signed a Presidential Memorandum directing the Department of Labor (DOL) to update the Fair Labor Standards Act (FLSA) regulations that define the conditions under which white collar workers are exempt from having to be paid overtime. The DOL published the proposed rules on July 6, 2015. It was expected that the DOL would publish the final rules in July 2016, but we have been hearing that they may be published earlier than July.

The proposed rules would increase the minimum salary thresholds required for white collar workers to be treated as exempt from overtime requirements. The table below compares the current thresholds to the new proposed thresholds.

Threshold DescriptionCurrent ThresholdProposed Threshold
Standard salary level required for a white collar worker to be treated as exempt$455 per week ($23,660 a year)Level equal to 40th percentile of weekly earnings for full-time workers ($970 per week or $50,440 a year for 2016)
Total annual compensation required to treat highly compensated employees (HCEs) as exempt$100,000Level equal to annualized value of the 90th percentile of weekly earnings of full-time salaried workers ($122,148)

The proposed salary threshold required for a white collar worker to be treated as exempt represents a significant increase in the current threshold. In addition, the proposed rules provide for annual automatic increases in the threshold levels. The proposed threshold and annual automatic increases in the threshold is of significant concern to many businesses.

In the meantime, a new bill was introduced in the Senate on March 17th that would not allow the DOL to enforce the proposed rules (or final rules if published before the new law is passed) unless the DOL meets certain conditions, including:

  • Conducting a full and complete economic analysis with improved economic data on small businesses, nonprofits, and all other employers
  • Minimizing the impact on employers before publishing any similar rules
  • Providing a rule of construction regarding the salary threshold exemption under the FLSA and for other purposes

The bill, however, does not prevent the DOL from moving forward with final rules, and the process for passing a new law can take time.

Is your business ready for the potential changes? Have you determined the impact of the potential changes on your business? Here are some steps you can take to help determine the impact on your business:

  • Compile a report listing all positions and employees paid on a salaried basis below $50,400
  • For positions paid less than $50,400, determine if they would be correctly classified as exempt if the salary was increased to meet the threshold requirement
  • For positions that pass as exempt if the salary was increased, determine what the cost of increasing the salary to the minimum threshold would be versus making the position nonexempt and eligible for overtime
  • Be sure to look at whether you have employees in the same jobs with some paid less than the proposed threshold and some paid more and determine the potential impact
  • When modeling the financial impact, factor in automatic increases in minimum salary thresholds (Examples: Determine the cost impact for three year period, determine cost impact for increases required because of compression issues, etc.)
  • Based on your financial analysis, develop a strategy for addressing the impact of potential changes
  • Based on your strategy, determine if any system and process changes will be required and the timing and resources that will be required to do the work involved

To view the FLSA proposed rules and the new bill introduced in the Senate, see our Resources page. We will also post the DOL final regulations on our Resources page as soon as they are available.