Skip to main content

What We’re Watching: Employer Compliance Across Benefits, HR, and Retirement

Staying updated on employer compliance can be a challenge. This monthly update is designed to highlight the latest developments impacting Employee Benefits, HR, and Retirement to keep your business running smoothly and minimize your compliance risk.

March, 2023:
Considerations for Adding ESG Investment Options to ERISA Retirement Plans

While the DOL recently issued a rule that purportedly permits plan fiduciaries to consider extraneous considerations, including Environmental, Social, Governance (ESG) factors, when making investment decisions, the rule specifically prohibits fiduciaries from sacrificing investment performance or adding investment risk through reliance on such considerations.

Therefore, before implementing an ESG or similar fund, plan fiduciaries must document the fact they first evaluated the expected investment performance of competing funds and determined the ESG fund is expected to offer investment returns and risks that will be comparable (or superior) to non-ESG alternatives. Fiduciaries should also consider the fact Congress voted to block implementation of the rule – based upon the contention it violates ERISA’s “exclusive purpose” standard – although President Biden is expected to veto that legislation.

COVID-19 Public Health and National Emergency Ending Soon

On January 30, 2023, the Biden Administration announced its intention to end both the COVID-19 National Emergency and Public Health Emergency on May 11, 2023. The end of these emergencies will trigger the end of certain temporary relief impacting group health plan coverage and plan administration.

The COVID-19 Outbreak Period will expire 60-days after the declared end of the National Emergency. As of July 10, 2023, various pre-COVID deadlines (HIPAA special enrollment, COBRA elections, claims submissions) will resume their normal timeframe. The end of the Public Health Emergency means, starting May 12, 2023, plans will no longer be required to cover COVID-19 testing and treatment.

Additionally, cost-sharing may apply to COVID-19 vaccines received out-of-network. Finally, large employers will no longer be able to offer standalone telehealth services to employees who are not eligible for any other employer-sponsored group health plan. Carriers and third-party administrators (TPA) have started sending notices to employers summarizing the changes that will take place when the emergencies end. Depending on the carrier, TPA, and plan design, employers may have the option of delaying some changes at least until the end of the year. Please work with your carrier and/or TPA and your OneDigital team to communicate any coverage changes to your plan participants.

RxDC Prescription Drug Transparency Reporting – Round 2

The purpose of the Prescription Drug Data Collection (RxDC) report is to provide transparency in health care costs through the collection and analysis of paid claims data. Most health plans, including all sized employer groups both insured and self-insured, are required to file data reports online to CMS.

The first RxDC report was due by 12/27/2022 (extended to 1/31/2023 with good faith effort) for 2020 and 2021 calendar year data. Going forward, the reporting is due by June 1, for the prior calendar year data. The 2022 calendar year data reporting is due 6/1/2023. Carriers, TPAs, and/or PBMs may now be asking the employer for premium information by a certain deadline so that it can include the average premiums in its filings.

Note that not all carriers, TPAs, and PBMs are filing directly to the CMS, which means the employer may have its own filing responsibility.

NLRB Blocks Broad Severance Provisions

On February 21, 2023, the National Labor Relations Board (NLRB) returned to longstanding precedent in ruling that employers who merely offer employees severance agreements requiring a broad waiver of rights under the National Labor Relations Act (NLRA), including broad non-disparagement and confidentiality provisions, is a violation of the NLRA itself. Employers should narrowly tailor these provisions and include a disclaimer against violating Section 7 rights under the NLRA.

Keep in mind that Section 7 rights do not apply to all employees, such as managers, most supervisors, public sector employees, and some agricultural workers. This ruling is expected to be followed up with clarifying advisory memos from the NLRB. Employers should have severance agreements reviewed by legal counsel for compliance.

Day Rate Pay Does Not Meet Salary Basis Test for Overtime Exemptions

On February 22, 2023, in Helix Energy Solutions Group, Inc. v. Hewitt, the U.S. Supreme Court said that payment of a “day rate” does not meet the salary basis test for the white-collar exemption for overtime under the Fair Labor Standards Act (FLSA). The Court reasoned that day rate employees are not paid on a salary basis because the amount of pay fluctuates based on the number of days worked in a week and that date rate pay is provided for each day worked.

The Court provided two methods in which day rate pay arrangements could be brought into compliance with the FLSA salary basis test. Employers could add a weekly guaranteed payment regardless of the time worked per week that meets the minimum weekly required amount under the salary basis test and has a reasonable relationship between the guaranteed amount and the actual amount earned.

Alternatively, employers could convert the day rate to a weekly salary for time spent working. Employers who have day rate employees should review the arrangement and make sure it is compliant with the methods offered by the Court.

Article provided by OneDigital

SCHEDULED MAINTENANCE: Digital Banking may be unavailable on Sunday, July 28, between 12:00am–4:00am for routine system maintenance. Please submit any transactions before or after this timeframe. Thank you!