LEGAL UPDATE MARCH 2021

FUTURE COMPLIANCE DATES

March 31, 2021: Electronic ACA Filing Deadline  

Applicable Large Employers and employers who offer self-funded/level-funded plans must submit Forms 1095 and 1094 to the IRS by March 31, 2021 if filing electronically. Any Applicable Large Employer (“ALE”) filing 250 forms or more must file electronically.

APRIL 1, 2021: Provisions of ARPA Take Effect

Beginning April 1 through Sept. 30, 2021, the federal government will pay 100% of COBRA insurance premiums for laid-off workers and covered relatives under the American Rescue Plan Act (“ARPA”). In addition, ARPA’s voluntary extension of the Families First Coronavirus Response Act paid leave and the corresponding available tax credits take effect on April 1 through September 30, 2021.

Additional details are provided in the FEDERAL COMPLIANCE UPDATES section below. We will continue to provide resources and updates about ARPA as more information is made available.

APRIL 19 – 23 / April 21, 2021: Administrative Professionals’ Week / Day

April 19 – 23, 2021 is designated as Administrative Professionals’ Week, and Administrative Professionals’ Day is April 21. Administrative Professionals’ Week/Day is an opportunity for employers to recognize and celebrate the contributions of these key front-line employer representatives.

April 22, 2021: Take Our Daughters and Sons to Work Day — Virtually

April 22, 2021 is designated as “Take Our Daughters and Sons to Work” day. The Take Our Daughters and Sons to Work Foundation will be hosting a virtual event designed to be well-suited for parents and teachers to attend with their kids and students from home. For additional details, go to Take Our Daughters and Sons to Work Foundation. 

April 30, 2021: Form 941 Due

The employer’s quarterly tax return, form 941, is due April 30 for first quarter 2021. Credit for qualified paid sick leave wages and qualified paid family and medical leave wages previously granted under the optional extension of FFCRA, as well as the Employee Retention Tax Credit, can be requested on this form.

APRIL 30, 2021 for new health plans on a calendar plan year: Summary Plan Description

Employers who offer a health insurance plan must provide a Summary Plan Description (“SPD”) to all participants within 120 days after a new plan is adopted. SPDs must also be provided to new participants no later than 90 days after the person first becomes covered under the plan.

For assistance or information about our SPD Wrap service, contact HR Service at: (855) 447-3375. 

MAY 13, 2021: Download Historic E-Verify Records

E-Verify employers have until May 13, 2021 to download case information dated on or before Dec. 31, 2010 from the “Historic Records Report” if they want to retain E-Verify information that will be purged on May 14, 2021.

FEDERAL COMPLIANCE UPDATES

Summary of the American Rescue Plan Act (“ARPA”)

The new American Rescue Plan Act (“ARPA”) was signed into law on March 11, 2021. ARPA is a 628-page document that impacts a number of different industries, sectors, and entities. Below is a summary of the provisions that most directly impact our readership.

FFCRA Leave and Tax Credits Extended and Expanded, No Longer Mandated

While the mandated requirement for employers with fewer than 500 employees to provide paid leave for eligible reasons under the Families First Coronavirus Response Act (“FFCRA”) expired on December 31, 2020, ARPA extends tax credit incentives for employers with fewer than 500 employees to voluntarily continue to offer the paid leave through September 30, 2021. The Consolidated Appropriations Act, 2021 had previously extended the tax credits through March 31, 2021 for voluntarily providing COVID-related qualified leave.

ARPA also resets the amount of Paid Sick Leave (“PSL”) and Expanded Family and Medical Leave (“EFML”) effective April 1, 2021. There is no carryover of unused FFCRA time; employees who used all their time or none of the time prior to March 31, 2021, are now returned to full availability of time if the employer opts to offer it. It also increases the amount of Expanded Family and Medical Leave (“EFML”) to 12 weeks from the previous 10-week limit. Even employees who previously used FFCRA paid leave before March 31, 2021 can be eligible for PSL and EFML under ARPA between April 1, 2021 and September 30, 2021. Self-employed persons are eligible for up to 60 days, up from 50 under the original law.

Covered employers who choose to offer the leave are entitled to 100% tax credits for all qualified paid leave wages paid between April 1, 2021 and September 30, 2021.  However, tax credits cannot be applied if the wages paid were also claimed under a PPP loan.

In addition, ARPA expands the qualifying reasons for PSL and EFML. In addition to the original six reasons (listed in the Table below), employees can also be eligible for paid leave if:

• The employee is obtaining immunization related to COVID-19;
• The employee is recovering from any injury, disability, illness or condition related to such immunization; or
• The employee is seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19 or their employer has requested a COVID-19 test or diagnosis.

Both types of leave are now available for all the reasons listed above. This is a significant change from FFCRA, which only allowed EFML for reason 5.

PSL granted to an employee for reasons 1-3 in the Table above or the new qualifying reasons must replace 100% of the employee’s wages up to a maximum benefit of $511 per day (up to $5,110 in total). PSL granted to an employee to care for others (reasons 4-6 in the Table) must replace at least two-thirds of the employee’s wages up to a maximum benefit of $200 per day (up to $2,000 in total). EMFL leave granted for all reasons must replace at least two-thirds of the employee’s wages up to a maximum benefit of $200 per day, or up to $12,000 in total.

ARPA includes non-discrimination provisions that prohibit employers from favoring highly-compensated employees, full-time employees, or employees with more tenure when granting paid leave.

The DOL is expected to release updated guidance in the coming weeks. Until additional information is provided, it is presumed that exemptions for health care workers, first responders, and employers under 50 remain in place. Updates will be shared as they become available. 

COBRA Premium Subsidy

Effective April 1, 2021 through September 30, 2021, the federal government will pay 100% of COBRA premiums for Assistance Eligible Individuals (“AEI”) – including their covered family members — who lost benefits coverage due to a reduction in hours or involuntary termination other than for gross misconduct.

Employers with more than 20 employees or those who have self-insured plans will be responsible to pay the COBRA premiums between April 1 and September 30, 2021 for AEIs who have elected coverage, then receive 100% reimbursement through payroll tax credits. For employers with fewer than 20 employees who have fully-insured plans subject to a state continuation laws, the insurer will be responsible to pay the premiums and claim the credit.

COBRA-eligible individuals may elect COBRA coverage up to 60 days after April 1, 2021, even if they previously waived or discontinued COBRA. The election does not have to be retroactive to the beginning of COBRA eligibility to be eligible for the premium subsidy. However, ARPA does not extend the COBRA coverage period.

An AEI may be allowed by the employer to enroll in any plan offered, but the subsidy cannot exceed premium for previously-enrolled coverage.

An AEI loses eligibility for a subsidy once he or she becomes eligible for other group health plan coverage or Medicare. Coverage by an excepted benefit such as non-health coverage, limited health benefits, specific disease or illness coverage, or supplemental health benefits does not impact eligibility.

• Employers must send notices to all AEIs who are eligible for premium subsidies as well as to any AEI whose eligibility for COBRA is ending before September 30, 2021. Model notices and expected guidance from the DOL and IRS will be shared as soon as they are available.

 Dependent Care FSA Expansions

ARPA increased the annual election maximums for Dependent Care Flexible Spending Accounts (“FSA”) for 2021, retroactive to January 1, 2021. The limit for filers who are married filing jointly increased from $5,000 to $10,500. The limit for individuals who are single or married but filing separately increased from $2,500 to $5,250.

The limit increases are optional for employers. Employers need to determine the impact that doubling the deferral limit might have on their plans, including any imbalanced benefit to highly-compensated workers.

• Applicable employers (those that offer an FSA) will need to decide if they will allow expanded provisions. If so, they will need to notify employees before April 1, 2021 and submit a Plan Amendment by the last day of the plan year. 

ACA Subsidies          

ARPA increased the amount of the Affordable Care Act (“ACA”) subsidies and capped the cost of premiums at 8.50% of an individual’s household income. This subsidy is retroactive to January 1, 2021. Persons who are currently enrolled in an Exchange Plan are able to claim an extra subsidy immediately.

Extension and Expansion of Employee Retention Tax Credit

The Employee Retention Tax Credit (“ERTC”) allows qualifying employers to claim a credit for wages paid to workers they retained on their payroll during the pandemic if they were fully or partially shut down by government order or had a drop in gross receipts of more than 20% from the same quarter in 2019.

ARPA expands the Employee Retention Tax Credit to 70% of qualified wages for each employee for each calendar quarter. Wages are limited to $7,000 per employee per quarter, for a maximum total tax credit of up to $28,000 per employee for the year. ARPA also extends the covered period to December 31, 2021.        

Unemployment Benefits Extended

ARPA extended the $300 / week increase under the federal Pandemic Unemployment Assistance (“PUA”) and Pandemic Emergency Unemployment Compensation (“PEUC”) programs as well as the $100 / week increase under the Federal Pandemic Unemployment Compensation / Mixed Earners Unemployment Compensation (“MEUC”) program through September 6, 2021.

For workers who received unemployment compensation in 2020, the first $10,200 is now tax-free for households with less than $150,000 in income. Anyone who received unemployment in 2020 and who has already filed their 2020 tax returns should file an amended return.

Please note that each state administers its own unemployment insurance program, so individual state websites are the best source for updated information.  Some states require separate applications to be made for Federal programs in addition to State programs.  For a master link to all 50 states go to: Unemployment Benefits Finder. 

PPP Modifications

ARPA only made slight changes to the PPP Loan program, which had already been significantly modified by the Consolidated Appropriations Act (“CAA”) passed on December 27, 2020.  ARPA provides for an additional $7.25 billion available for loans and expands loan eligibility to certain non-profits, Internet news publishers, labor organizations, social and recreational clubs, and fraternal benefits societies.

Restaurant Revitalization Fund

A fund of $28.6 billion has been established for grants to be administered by the SBA.  This will include restaurants, food stands, food trucks, food carts, caterers, bars, brewpubs, etc. Eligibility for the grants is primarily based on the size of the restaurant. Restaurants with more than 20 common-ownership locations, as well as publicly-traded companies and government-operated businesses, are ineligible. Priority is given to applicable businesses owned by women, veterans, or socially and economically disadvantaged individuals.

These grants may be used to cover all types of business-related expenses, including payroll, rent, maintenance, supplies and other crucial costs. Any grants received from the Restaurant Revitalization Fund will not be treated as taxable income.

Shuttered Venue Operators Program

ARPA amended the Shuttered Venue Operators Grant (“SVOG”) program, which now includes over $16 billion in grants to shuttered venues. SVOGs are administered by the SBA’s Office of Disaster Assistance. Eligible applicants may qualify for grants equal to 45% of their gross earned revenue, with the maximum amount available for a single grant award of $10 million. For additional information, go to SVOG Portal.

Economic Injury Disaster Loans

ARPA provides an additional $15 billion for Economic Injury Disaster Loans for small businesses, small agricultural co-ops, and most private non-profit organization. The SBA provides priority funding for employers with fewer than 10 employees. For additional information, go to EIDL Portal.

Pension Plan Relief

ARPA provides substantial financial support for underfunded pension plans, with eased funding rules for single-employer defined benefit pension plans and additional federal funds for troubled union-managed multiemployer pension plans with no repayment obligations. 

OUTBREAK PERIOD EXTENDED IN REGARDS TO BENEFIT TIMEFRAMES

In mid-2020, the Department of Labor and IRS issued a regulation extending certain timeframes for COBRA, Special Enrollment Periods, and filing and/or appeal of benefit claims for participants, beneficiaries, and plan administrators of employee benefit plans.  Under the original regulation, the extension of these timeframes could be no more than one year, which would limit the extension to February 28, 2021.

On February 26, 2021, the DOL issued EBSA Disaster Relief Notice 2021-01, which clarified that the COBRA, HIPAA Special Enrollment, claims and appeals timeframes, and other applicable deadlines that were previously extended indefinitely are now subject to a deadline that ends as of the earlier of (1) one year from the date they were first eligible for relief, or (2) 60 days after the announced end of the Outbreak Period. The maximum 12-month period of suspension will to be calculated on an individual-by-individual basis, and for each individual, on an action-by-action, basis. 

The disregarded period is used in determining the following periods and dates:

• 30-day period (or 60-day period, if applicable) to request special enrollment for employee, spouse or child during a plan or policy years
• 60-day election period to elect COBRA continuation coverage
• the date for making COBRA premium payments
• the date for individuals to notify the plan of a qualifying event or determination of disability
• the date within which individuals may file a benefit claim under the plan’s claims procedure
• the date within which claimants may file an appeal of an adverse benefit determination under the plan’s claims procedure
• the date within which claimants may file a request for an external review after receipt of a final internal adverse benefit determination
• the date within which a claimant may file information to perfect a request for external review upon a finding that the request was not complete pursuant to applicable appeal rules 

DELAYED EFFECTIVE DATE OF INDEPENDENT CONTRACTOR FINAL RULE

On March 2, 2021, the DOL formally delayed the effective date of the Independent Contractor Final Rule from March 8, 2021 to May 7, 2021. The pending Final Rule stated that “an individual is an independent contractor, as distinguished from an ‘employee’ under the Act, if the individual is, as a matter of economic reality, in business for him or herself.” The “economic dependence” designation focuses on five, non-exclusive factors. Two of the factors are considered primary:

• the nature and degree of the worker’s control over the work
• the worker’s opportunity for profit or loss

If the two primary factors are inconclusive, three additional factors should be considered:

• the amount of skill required,
• the “degree of permanence” of the parties’ work relationship,
• whether the putative employee’s work is “part of an integrated unit of production.” The actual practices of the working relationship, and not what the parties’ contract may theoretically allow, is emphasized. 

TIP CREDIT RULES AMENDMENTS EFFECTIVE DATE DELAYED

Effective April 30, 2021, amendments to the Fair Labor Standards Act (“FLSA”) tip credit regulations address who may share tips and the circumstances under which employers may use a tip credit. The amendments were previously set to take effect March 1, 2021, but were delayed after a request in a memorandum issued by the Assistant to the President and Chief of Staff.

The new Final Rule will include the following changes:

• Incorporates the 2018 FLSA amendment that prohibits an employer from keeping tips received by its employees for any purpose and establishes a new recordkeeping requirement;
• Removes the portions of existing regulations prohibiting employers that pay their tipped employees a direct cash wage of at least the full federal minimum wage and do not take a tip credit against their minimum wage obligations from including employees who do not customarily and regularly receive tips, such as cooks and dishwashers, in mandatory tip-pooling arrangements;
• Reflects guidance explaining that an employer may take a tip credit for any amount of time that an employee in a tipped occupation performs related, non-tipped duties contemporaneously with their tipped duties, or for a reasonable time immediately before or after performing the tipped duties, and addresses which non-tipped duties are related to a tip-producing occupation;
• Incorporates the statutory civil money penalties provision into the regulations;
• Reaffirms that employers may reduce the tips paid to employees by the amount of the transactional fees associated with credit card payments; and
• Clarifies that managers or supervisors may keep tips that they directly receive from a customer and for which they were the only ones who provided the service.

For additional details, see the full text of the Final Rule here: Tip Credit Final Rule.

DUE DATE FOR 2020 TAX RETURNS EXTENDED AND TAX PAYMENTS EXTENDED

The IRS announced that it has extended the due date for 2020 individual tax returns and tax payments until May 17, 2021. Payments made by May 17, 2021 will not be subject to any interest or penalties. The extension does not apply to the April 15, 2021 due date for estimated tax payments, which are made on income that is not subject to withholding such as earnings from self-employment, interest, dividends, rents, and alimony.

This extension applies only to individual returns and payments, not business tax returns.

These extensions also do not necessarily apply to state tax filing and payment deadlines, so individuals should check with their applicable state tax deadlines.

STATE COMPLIANCE UPDATES

CALIFORNIA

“Hero Pay” for Grocery and Other Essential Workers Mandated in More Areas

BERKELEY

Grocery stores with at least 300 employees in the state are mandated to pay an extra $5.00 per hour to their workers.

Coachella

Effective February 12, 2021, an emergency ordinance mandates certain grocery stores, retail pharmacies, restaurants, and agricultural operations to pay an extra $4 an hour to their workers in Coachella for four months. The mandate applies to employers with at least 300 workers nationally and at least six employees in the city. 

IRVINE

Applicable retail establishments including grocery stores, drug stores, and certain large retail stores with 20 or more employees at a single location and 500 or more nationally are required to pay workers premium pay of an additional $4.00 per hour worked. The ordinance is expected to remain in effect for 120 days from enactment, unless extended by the city council or blocked by legal injunctions. The California Grocers Association has filed a lawsuit challenging the ordinance.

LONG BEACH

Grocery stores with more than 300 grocery workers nationally and more than 15 employees per grocery store within the City of Long Beach are required to pay workers premium pay of an additional $4.00 per hour worked. 

COUNTY OF LOS ANGELES (unincorporated areas only)
Grocery stores with 300 or more employees nationwide and more than 10 employees at that location are required to pay an additional $5.00 per hour.

MONTEBELLO

Grocery and drug stores that are publicly traded or have at least 300 employees nationwide and more than 15 employees per store in the city are required to pay workers premium pay of an additional $4.00 per hour worked.

OAKLAND

Grocery stores more than 15,000 square feet in size and with 500 or more employees nationwide are required to pay workers premium pay of an additional $5.00 per hour worked.

SAN JOSE

Grocery stores with 300 or more employees nationwide are required to pay workers premium pay of an additional $3.00 per hour worked.

SAN LEADRO

Retail food establishments with 300 or more employees nationwide are required to pay workers premium pay of an additional $5.00 per hour worked.

COUNTY OF SANTA CLARA (unincorporated areas only)

Grocery stores and drug stores with 300 or more employees nationwide and 15 or more employees in the unincorporated areas of the county, as well as a franchise that is associated with a franchisor with more than 300 employees nationwide and at least 10 locations in California are required to pay workers premium pay of an additional $5.00 per hour worked.

SANTA MONICA

On February 13, 2021, the Santa Monica City Council unanimously approved a “Hero Pay” ordinance that requires certain grocery and drug stores to pay workers premium pay of an additional $5.00 per hour worked.

SOUTH SAN FRANCISCO

Grocery stores and drug stores with 500 or more employees must pay workers premium pay of $5.00 per hour. This requirement is retroactive.

WEST HOLLYWOOD

Grocery stores with 300 or more employees nationwide and at 15 or more employees per location in the city must pay workers premium pay of $5.00 per hour.

Other California municipalities are currently considering similar ordinances and/or are wading through injunctions and lawsuits regarding the ordinances. Check with your local jurisdiction for updates.

COLORADO

Paid Sick Leave Requirements for 2021 Clarified

Effective April 14, 2021, revisions to the Healthy Families and Workplaces Act (“HFWA”) clarify that the 2020 requirement to provide 80 hours of public health emergency leave (“PHEL”) continues into 2021 for all Colorado employers.

The revisions also clarify that the amount of PHEL that part-time employees are entitled to leave is “the greater of the number of hours the employee is (a) scheduled for work or paid leave in the 14-day period after the leave request or (b) actually worked in the 14-day period prior to the declaration of the public health emergency or the leave request, whichever is later.”

Further, the revisions clarify that employees who are hired during a public health emergency are entitled to PHEL.

MASSACHUSETTS

Paid Leave for Memorial Day Activities

Under the “HOME Act,” an Act relative to Housing, Operations, Military Service, and Enrichment, employers in Massachusetts with 50 or more employees are required to grant a paid leave to qualifying veterans to participate in a Memorial Day exercise, parade, or service as long as reasonable notice is provided. Previous legislation requires all employers to provide paid or unpaid leave to qualified veterans to participate in Veterans Day and Memorial Day exercises, parades, or services.

NEW YORK

Paid Leave Mandated for Workers Getting Coronavirus Vaccine

Effective March 12, 2021 through December 31, 2021, private and public employees in New York are entitled to up to eight hours of paid leave to receive COVID-19 vaccinations. The language of the law states that all New York employees must receive a paid leave for “a sufficient period of time” not to exceed four hours per vaccine injection. Employers cannot require employees to use other available leave before providing this leave.

The law also prohibits discrimination or retaliation against any employee who exercises their rights under the law.

OHIO

Employment Discrimination Law Reformed

Effective April 15, 2021, the Employment Law Uniformity Act (H.B. 352) significantly amends the state’s employment discrimination law.

The most substantial provisions of the new law include:

• Before suing under Chapter 4112, an employee must first file a charge with the Ohio Civil Rights Commission (“OCRC”), within two years of the claimed action.

• The period for an employee to sue under Chapter 4112 is reduced from the previous six-year limitations period to two years, but this two-year statute of limitations is tolled while the employee’s claim is pending with the OCRC.

• Caps damages for compensatory and punitive damages in “tort actions.”
• An employee may not sue managers and supervisors for damages under Chapter 4112 unless that person is the employer (e.g., sole proprietorship) or has acted outside the scope of employment.
• Choice of remedies for age discrimination claims are reduced and simplified, and all age discrimination claims now have the same statute of limitations and administrative exhaustion requirement as other discrimination claims.
• Employers are now shielded from liability from hostile environment harassment claims where the employer exercised reasonable care to prevent and/or promptly correct harassment, and the employee failed to take advantage of those corrective opportunities.

UTAH

Remote-Service Contractor Definition Established

On March 16, 2021, Governor Cox signed Employee Status Amendments (SB32), which establishes that a remote-service contractor is not an employee of a marketplace company if the following conditions are met:

• all or substantially all of the work the remote-service contractor performs under the agreement is on a per-job or per-transaction basis;
• the remote-service contractor receives payment for work on an hourly, per-job, or per-transaction basis;
• the marketplace company does not:
  • prescribe specific hours during which the remote-service contractor must be available to accept a request for remote service;
  • prescribe a specific location where the remote-service contractor must be available to perform a remote service;
  • restrict the remote-service contractor from engaging in another occupation or business;
• except for the use of the marketplace company’s digital application, the remote-service contractor is responsible for providing the necessary tools, materials, and equipment to perform a remote service a person requests through the marketplace company’s digital application. 

VIRGINIA

Minimum Wage Increase to Take Effect May 1, 2021

Effective May 1, 2021, the minimum wage in Virginia will increase to $9.50 per hour. Future additional increases are scheduled to go into effect, to $11.00 on January 1, 2022 and to $12.00 on January 1, 2023.

The increase to $9.50 was scheduled to go into effect on January 1, 2021, but was delayed by Governor Northam to provide employers additional time to recover from the economic impact of the COVID-19 pandemic.