Human Resource Consulting From The Business Viewpoint |
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Human Resource Update | February 2021 |
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Federal Minimum Wage Act Delayed Again |
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On January 26, 2021, Senate and House leaders introduced Raise the Wage Act of 2021. This new proposed law aims to raise the federal minimum wage to $15 an hour over the next four years. Then beginning in 2026, the federal minimum wage would go up in line with median hourly wage growth.
The Raise the Wage Act of 2021 would also raise the minimum wage of tipped workers, allow teenagers to receive the full federal minimum wage and end the subminimum federal wage for disabled workers.
A senate official ruled yesterday, February 25, that the Democrats cannot include this act in their $1.9 trillion coronavirus relief package. The decision means the Senate will likely pass a different version of the bill than the House, and representatives will have to approve the plan a second time.
According to the latest CNBC SurveyMonkey Small Business Survey, one-third of small businesses anticipate laying off workers if Congress increases the federal minimum wage to $15 an hour. A recent Congressional Budget Office analysis forecasts that a $15 minimum wage would lift 900,000 Americans out of poverty but result in 1.4 million fewer jobs.
If you feel this increase would hurt your company, we encourage you to reach out to your Senators and Representatives and let them know how this proposed increase would affect your business.
As always, if we can help in any way, please reach out.
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Michael F. Yates
President
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If you find value in this newsletter please let us know. Feel free to call me with a comment and/or ask a question at any time (908-689-4200) or send me an email (myates@mfyco.com). We offer this timely information as another benefit of your relationship with our company. If you feel a friend or colleague would benefit from receiving our newsletter, please feel free to forward a copy.
You can view all of our newsletters by clicking the 'newsletter archives' link at our company website www.mfyco.com.
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EEOC Announces 2021 Schedule for EEO Data Collection |
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The Equal Employment Opportunity Commission (EEOC) recently announced the upcoming opening of four EEO data collection projects. The agency collects workplace data from public and private employers meeting certain thresholds annually but had previously delayed collection of the 2019 and 2020 data because of the pandemic.
The 2021 data collections are scheduled to open in the following months:
April - The EEOC will open the 2019 and 2020 EEO-1 data collection for private-sector employers.
July - The agency will open the 2020 EEO-5 data collection for public elementary and secondary school districts.
August - The agency will open the 2020 EE0-3 data collection for local referral unions.
October - The agency will open the 2021 EEO-4 data collection for state and local governments.
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If your work life just started, do you wonder what the United States will look like demographically by the time you retire? If so, take a look at the Projected Trends in World and U.S. Demographics. This website has many informative branches that show the demographic changes over time that are projected for various countries.
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Here are a few tips to keep working smart whether it is from home or the office:
1. Evaluate Meeting Requests – ask: what is the meeting about, why was I invited, does the request include an agenda, if not, request one. Agendas help keep meetings on track and you can decide your purpose for attending: are you representing, a subject expert, or learning new subject matter, if none of these, there is a possible opportunity to decline.
If you belong to a team, ask them to do the same about recurring meetings (every Tuesday at 10am). Are they still pertinent?
2. Be Flexible with Deadlines and Check-Ins – Be willing to negotiate to complete your tasks. This also helps management think about the broader picture of what needs to be done. If assigning deadlines employees should be comfortable discussing and asking for help prioritizing their work if plate is quickly filling up or asking for a delayed meeting start time to “wrap up a task.”
3. Review To-Do-List – Use the Stop, Start, Continue method to reprioritize tasks. Look at your task list and identify the items to stop doing. These tasks either do not support the attainment of your team or company's strategic goal, don't drive customer service, or they don't support the job. As you are going through your list, you will identify tasks to Start and you will Continue on with the ones that are currently aligned to a goal that supports and drives revenue.
4. Express “clearly” tasks and projects that are on the table and what needs to be done to accomplish the end result. Paint a clear picture of what success looks like and make sure it is clear to your team. Ambiguity begets extra non-productive work and possible failure to meet deadlines. When crystal clear employees will know what meaning and purpose looks like for them in their jobs.
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Partial Plan Termination Update |
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The Consolidated Appropriations Act, 2021 (CAA 2021), a bill that contains a nearly $900 billion coronavirus aid package was passed by Congress on December 21, 2020 and signed into law on December 27, 2020. The emergency coronavirus relief package aims to bolster the economy, provide relief to small businesses and the unemployed, deliver checks to individuals and provide funding for COVID-19 testing and the administration of vaccines. There is a lot to unpack in this recently passed COVID relief legislation, but the most significant element for plan sponsors impacted by the COVID-19 pandemic may well be the “temporary rule preventing partial plan termination.” Here’s what that portion of the CAA 2021 means for plan sponsors.
What is a partial plan termination?
The determination of whether a partial plan termination has occurred is based on facts and circumstances, but as a general rule the IRS has said that a more than 20% reduction in the number of covered participants during a plan year is considered a partial plan termination.
Why does that matter?
In the case of a partial plan termination, impacted participants (those who lose their jobs) are immediately 100% vested in their accounts.
Can you give me an example?
Employer ABC, a restaurant, has a calendar year 401(k) plan with 20 participants as of Jan. 1, 2020. Due to the pandemic, the workforce as of Dec. 31, 2020, was reduced to just five participants who assist with to-go orders. ABC expects to rehire those individuals once the restaurant is allowed to open to full capacity.
Under rules before the enactment of the new law, a partial plan termination has occurred because of the reduction in the workforce and therefore, those participants who were laid-off must be fully vested in the part of their accounts attributable to employer contributions (including earnings on those contributions).
What’s changed?
With so many businesses suffering economic loss as a result of the COVID-19 pandemic, the CAA 2021, includes a temporary rule preventing certain partial plan terminations (Division EE – Taxpayer and Certainty Disaster Tax Relief Act of 2020, Title II, Section 209) which states:
A plan shall not be treated as having a partial termination (within the meaning of 411(d)(3) of the Internal Revenue Code of 1986) during any plan year which includes the period beginning on March 13, 2020, and ending on March 31, 2021, if the number of active participants covered by the plan on March 31, 2021 is at least 80 percent of the number of active participants covered by the plan on March 13, 2020.
What does this mean?
The legislation was designed to acknowledge that an employer might need to layoff a significant percentage of its staff for a brief period, but plan to rehire/restore that staffing once the economic crisis passed. Because of the new legislation, there would be no partial plan termination if the active participant count as of March 31, 2021, is at least 80% of the active participant count on March 13, 2020 (the date the national emergency was declared).
Is this relief available only for calendar year plans?
No. The relief applies for “any plan year which includes” the covered period. The intention of the provision is to provide relief for the 2020 plan year by allowing an employer to wait until March 31, 2021, to determine whether there has been a partial plan termination for 2020.
An example: Assume the same facts as above (ABC had 20 participants as of January 1, 2020, and it was reduced to 5 as of December 31, 2020). ABC’s business picks back up and ABC rehires 12 of the previously laid-off employees before March 31, 2021. ABC now has 17 participants on March 31, 2021 (85% of the amount on March 13, 2020), and therefore there would be no partial plan termination for 2020 based on the relief in the CAA 2021.
Does the employer have to rehire the same individuals that were laid off?
No. The percentage is based on the total number of participants, thus the 80% does not have to be comprised of the same participants that were initially terminated. However, the terms of the plan matter.
The new relief is based on 80% of the “active participants.” If the 12 employees mentioned above are new hires, not rehires (e.g., the laid-off employees had already found other jobs), the answer would depend on the eligibility conditions of the plan. If there are no eligibility conditions and the new employees enter the plan on their date of hire, then there would be no partial termination in 2020 because the 80% threshold is satisfied, even though the participants are different. However, if the plan has eligibility conditions (such as a 30-day service requirement), then it depends on whether a sufficient percentage of the new hires have actually become participants (not just employees) on or before March 31, 2021.
What about changes to employment status outside of the specified time period(s)?
It is not yet clear whether the new provision applies to employment changes that are outside of the covered period (March 13, 2020 – March 31, 2021). However, the relief was intended to be pandemic relief so it would be reasonable to assume the relief does not apply to events that occur outside of the timeframe.
What if a partial plan termination has been determined, but then is found not to apply under the terms of the relief?
In view of the continued economic uncertainty, it is possible that a determination of a partial plan termination could be made, benefits may or may not have already been distributed based on that initial determination, and subsequently it is determined that, under the relief, there is no partial termination.
Here a couple of the potential issues that the American Retirement Association (ARA) has already identified (and the questions that arise) and on which the ARA will be seeking guidance from the Treasury and IRS.
Possible Scenario #1: Employer EFG laid-off more than 20% of its workforce during 2020. EFG’s plan permits distributions on termination of employment and many employees elected to receive a distribution. EFG determined there was a partial plan termination, and thus paid the laid-off workers their fully vested accounts.
However, as of March 31, 2021, EFG rehires enough employees to avoid a partial plan termination for 2020. This means there was an overpayment to those who elected to receive a distribution, and likely communications to those who did not elect a distribution that they became fully vested.
Possible Scenario #2: Employer LMN laid-off more than 20% of its workforce during 2020. LMN’s calendar year plan permits distributions within a reasonable period after the end of the plan year in which employment was terminated. Many employees who terminated employment earlier in the year are waiting to receive their distributions.
Question(s): Once 2020 has ended, can LMN wait until after March 31, 2021, to pay benefits in order to determine if there has been a partial termination? What someone considers to be a “reasonable” period of time after the end of the plan would be a subjective determination.
As these examples illustrate, implementation of the new partial plan termination rule may generate some challenges. Nevertheless, the temporary relief will likely be welcome news to many plan sponsors who might otherwise have a partial plan termination.
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2021 Standard Mileage Rate |
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Effective January 1, 2021, the standard mileage rate for the business use of cars, vans, pickup or panel trucks will be 56 cents per mile, down 1.5 cents from 2020.
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From The Department Of Labor (DOL) |
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The DOL’s Employee Benefits Security Administration (EBSA) has confirmed that the “Improving Investment Advice for Worker & Retirees” Prohibited Transaction Exemption for investment advice fiduciaries will go into effect as scheduled on February 16, 2021.
The DOL adds that “in the coming days” it will publish related guidance for retirement investors, employee benefit plans and investment advice providers.
“This exemption allows for important investor protections, including a stringent ‘best interest’ standard of care for fiduciary recommendations of rollovers from ERISA-protected retirement accounts,” said Deputy Assistant Secretary of Labor for the EBSA Ali Khawar in a press release. He added, “We recognize that investment advice providers have been preparing for the exemption, and this step will allow them to implement important system changes. That said, we will continue our stakeholder outreach to determine how we might improve this exemption, the rule defining who is an investment advice fiduciary, and related exemptions to build on this approach.”
Summary of Prohibited Transaction Exemption 2020-02
This document contains a class exemption from certain prohibited transaction restrictions of the Employee Retirement Income Security Act of 1974, as amended (the Act). Title I of the Act codified a prohibited transaction provision in title 29 of the U.S. Code (referred to in this document as Title I). Title II of the Act codified a parallel provision now found in the Internal Revenue Code of 1986, as amended (the Code). These prohibited transaction provisions of Title I and the Code generally prohibit fiduciaries with respect to “plans,” including workplace retirement plans (Plans) and individual retirement accounts and annuities (IRAs), from engaging in self-dealing and receiving compensation from third parties in connection with transactions involving the Plans and IRAs. The provisions also prohibit purchasing and selling investments with the Plans and IRAs when the fiduciaries are acting on behalf of their own accounts (principal transactions). This exemption allows investment advice fiduciaries to plans under both Title I and the Code to receive compensation, including as a result of advice to roll over assets from a Plan to an IRA, and to engage in principal transactions, that would otherwise violate the prohibited transaction provisions of Title I and the Code. The exemption applies to Securities and Exchange Commission—and state-registered investment advisers, broker-dealers, banks, insurance companies, and their employees, agents, and representatives that are investment advice fiduciaries. The exemption includes protective conditions designed to safeguard the interests of Plans, participants and beneficiaries, and IRA owners. The class exemption affects participants and beneficiaries of Plans, IRA owners, and fiduciaries with respect to such Plans and IRAs. This notice also sets forth the Department's final interpretation of when advice to roll over Plan assets to an IRA will be considered fiduciary investment advice under Title I and the Code.
The exemption is effective as of February 16, 2021.
For Further Information Contact:
Susan Wilker, telephone (202) 693-8557, or Erin Hesse, telephone (202) 693-8546, Office of Exemption Determinations, EBSA, U.S. Department of Labor (these are not toll-free numbers).
Temporary Enforcement Policy
The DOL adds that the temporary enforcement policy stated in Field Assistance Bulletin 2018-02 will remain in place until Dec. 20, 2021. In that FAB, the DOL extended until further notice its temporary enforcement policy relating to its rule defining who a fiduciary is and the associated prohibited transaction exemptions. It advised that, based on questions regarding fiduciary obligations in the aftermath of the March 15, 2018 ruling by the U.S. Court of Appeals for the 5th Circuit, it has concluded that financial institutions should be permitted to continue relying on its temporary enforcement policy, pending the issuance of additional guidance.
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What Would You Like To See In A Future Issue? |
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2020 W-2s May Need to Be Corrected Due to the FFCRA |
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Some employers have been surprised by the new requirement to report wages paid for leave taken under the Families First Coronavirus Response Act (FFCRA) on employees' W-2 forms. But W-2s, which must have been provided to employees by January 31, can be corrected if items were incorrectly reported or omitted on the W-2 as issued.
The reporting instructions were contained in IRS Notice 2020-54, issued last July, but not detailed in the Form W-2 instructions.
The IRS has issued specific guidance on how employers are expected to report wages paid for emergency paid sick leave and emergency paid Family and Medical Leave Act time off under the FFCRA. Pay for either type of FFCRA wages should be reported separately from regular wages, on Box 14 of the W-2, or on a separate statement provided concurrently with the regular W-2, according to this guidance.
Qualified sick-leave wages: Qualified sick-leave wages must be reported in boxes 1, 3 (up to the Social Security wage base of $137,700 for 2020) and 5 of Form W-2. Those wages must also be separately reported, either in Box 14 or on a separate statement, and labeled "sick-leave wages subject to the $511 per day limit" or similar language. Sick leave used to care for another individual must be similarly reported and labeled "sick leave to $200 per day limit" or similar language.
Qualified family-leave wages: Qualified family-leave wages must be reported in boxes 1, 3 (up to the Social Security wage base of $137,700 for 2020) and 5 of Form W-2. Family leave must also be separately reported, either in Box 14 or on a separate statement. The employer must label this amount "emergency family leave wages" or use similar language.
If the reporting is in a separate statement, it must be included with the W-2 sent to the employee and provided in the same format.
If W-2s have been sent out without FFCRA wages reflected on them accurately, employers should act quickly to correct the data in their system and issue amended W-2s.
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Protecting Workers:
Guidance on Mitigating and Preventing the Spread of COVID-19 in the Workplace
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On January 29, 2021, the US Department of Labor’s Occupational Safety and Health Administration (OSHA) issued updated Guidance on Mitigating and Preventing the Spread of COVID-19 in the Workplace. The guidance is intended to inform employers and workers in most workplace settings outside of healthcare to help them identify risks of being exposed to and/or contracting COVID-19 at work and to help them determine appropriate control measures to implement. This guidance contains recommendations as well as descriptions of mandatory safety and health standards. The recommendations are advisory in nature, informational in content, and are intended to assist employers in providing a safe and healthful workplace.
Pursuant to the Occupational Safety and Health Act ("the OSH Act" or "the Act"), employers must comply with safety and health standards and regulations issued and enforced either by OSHA or by an OSHA-approved state plan. In addition, the Act's General Duty Clause, Section 5(a)(1), requires employers to provide their workers with a workplace free from recognized hazards that are causing or likely to cause death or serious physical harm.
The following topics are provided in the Guidance:
- About COVID-19
- What Workers Need to Know about COVID-19 Protections in the Workplace
- The Roles of Employers and Workers in Responding to COVID-19
- Additional Detail on Key Measures for Limiting the Spread
For your convenience, listed below are the 16 numerations under the Role of Employers and Workers in Responding to COVID-19 on implementing the most effective workplace COVID-19 prevention program to mitigate the spread of COVID-19 at work. See Guidance for detail.
1. Assignment of a workplace coordinator.
2. Identification of where and how workers might be exposed to COVID-19 at work.
3. Identification of a combination of measures that will limit the spread of COVID-19 in the workplace, in line with the principles of the hierarchy of controls. Consideration of protections for workers at higher risk for severe illness through supportive policies and practices.
5. Establishment of a system for communicating effectively with workers and in a language they understand. A best practice is to create and test two-way communication systems that workers can use to self-report if they are sick or have been exposed, and that employers can use to notify workers of exposures and closures, respectively.
6. Educate and train workers on your COVID-19 policies and procedures using accessible formats and in a language they understand. Ensure supervisors are familiar with workplace flexibilities and other human resources policies and procedures.
7. Instruct workers who are infected or potentially infected to stay home and isolate or quarantine.
8. Minimize the negative impact of quarantine and isolation on workers.
9. Isolating workers who show symptoms at work.
10. Performing enhanced cleaning and disinfection after people with suspected or confirmed COVID-19 have been in the facility.
11. Providing guidance on screening and testing.
12. Recording and reporting COVID-19 infections and deaths on Form 300 logs.
13. Implementing protections from retaliation and setting up an anonymous process for workers to voice concerns about COVID-19-related hazards.
14. Making a COVID-19 vaccine or vaccination series available at no cost to all eligible employees.
15. Not distinguishing between workers who are vaccinated and those who are not.
16. Other applicable OSHA Standards: All of OSHA's standards that apply to protecting workers from infection remain in place. These standards include: requirements for PPE (29 CFR 1910, Subpart I (e.g., 1910.132 and 133)), respiratory protection (29 CFR 1910.134), sanitation (29 CFR 1910.141), protection from bloodborne pathogens: (29 CFR 1910.1030), and OSHA's requirements for employee access to medical and exposure records (29 CFR 1910.1020). There is no OSHA standard specific to COVID-19; however, employers still are required under the General Duty Clause, Section 5(a)(1) of the OSH Act, to provide a safe and healthful workplace that is free from recognized hazards that can cause serious physical harm or death.
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2021 Retirement Plan Limits |
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All limits are based on the calendar year. |
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If you have not received our business card with these numbers printed on it and would like one, please let us know! We would be happy to mail you one (or a few to share!) |
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Michael F. Yates & Company, Inc. can help you with a variety of services ranging from retirement plans to providing results-oriented survey instruments, training and development programs for your employees. Our products and services are intended to help you maximize the effectiveness of your Human Resources function.
- These products and services incorporate our years of experience so that you receive rapid results and exceptional value. From onsite consulting, to strategic business integration, to Web enablement, we understand how Human Resources can be applied to solve your problems and achieve your goals. As a result, we can help you get the most out of your investment and turn your most precious resource into a competitive advantage.
- We offer Consulting, Retirement Planning, Pension and 401(K) both qualified and non qualified Plans, Welfare Plans, Communications, Computer Systems, Executive Plans, Compensation, Mergers, Acquisitions, Divestitures and Other Services.
- We offer a true and honest, Client Partnership.
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Our staff and firm are proud members of the following professional organizations:
Society of Actuaries
American Society of Pension Professionals & Actuaries
Society for Human Resource Management
(Sussex-Warren NJ Chapter)
GAPS (Global Association Pension Services)
WorldatWork
American Management Association
National Federation of Independent Business
Better Business Bureau
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101 Belvidere Avenue
P.O. Box 7
Washington, NJ 07882-0007
908-689-4200
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Terms of Use
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As always, any statements regarding federal tax law contained herein are not intended or written to be used, and cannot be used, for the purposes of avoiding penalties that may be imposed under federal tax law or to market any entity, investment plan or arrangement.
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