Our colleague , a Member of the Firm at Epstein Becker Green, has a post on the Technology Employment Law blog that will be of interest to many of our readers in the financial services industry: “Get Ready to Respond to IRS Letter 226J: Employer Shared Responsibility Payment Assessments.”

Following is an excerpt:

In a recent update to the IRS’ Questions and Answers on Employer Shared Responsibility Provisions under the Affordable Care Act, the IRS has advised that it plans to issue Letter 226J informing applicable large employers (ALEs) of their potential liability for an employer shared responsibility payment for the 2015 calendar year, if any, sometime in late 2017.  The IRS plans to issue Letter 226J to an ALE if it determines that, for at least one month in the year, one or more of the ALE’s full-time employees was enrolled in a qualified health plan for which a premium tax credit (PTC) was allowed (and the ALE did not qualify for an affordability safe harbor or other relief for the employee). The IRS will determine whether an employer may be liable for an employer shared responsibility payment, and the amount of the potential payment, based on information reported to the IRS on Forms 1094-C and 1095-C and information about the ALEs full-time employees that were allowed the premium tax credit. …

Read the full post here.

Our colleagues , at Epstein Becker Green, have a post on the Retail Labor and Employment Law blog that will be of interest to many of our readers in the financial services industry: “New Jersey’s Appellate Division Finds Part C of the “ABC” Independent Contractor Test Does Not Require an Independent Business

Following is an excerpt:

In a potentially significant decision following the New Jersey Supreme Court’s ruling in Hargrove v. Sleepy’s, LLC, 220 N.J. 289 (2015), a New Jersey appellate panel held, in Garden State Fireworks, Inc. v. New Jersey Department of Labor and Workforce Development (“Sleepy’s”), Docket No. A-1581-15T2, 2017 N.J. Super. Unpub. LEXIS 2468 (App. Div. Sept. 29, 2017), that part C of the “ABC” test does not require an individual to operate an independent business engaged in the same services as that provided to the putative employer to be considered an independent contractor.  Rather, the key inquiry for part C of the “ABC” test is whether the worker will “join the ranks of the unemployed” when the business relationship ends. …

Read the full post here.

For the second time in as many years, California Governor Jerry Brown has vetoed “wage shaming” legislation that would have required employers with 500 or more employees to report gender-related pay gap statistics to the California Secretary of State on an annual basis beginning in 2019 for publication on a public website. Assembly Bill 1209 (“AB 1209”), which we discussed at length in last month’s Act Now advisory, passed the Legislature despite widespread criticism from employers and commerce groups.  This criticism included concerns that publication of statistical differences in the mean and median salaries of male and female employees without accounting for legitimate factors such as seniority, education, experience, and productivity could give a misleading impression that an employer had violated the law.  Opponents also decried the burden the bill would place on employers to do data collection and warned that it would lead to additional litigation.  In vetoing the measure, Governor Brown noted the “ambiguous wording” of the bill and stated he was “worried that this ambiguity could be exploited to encourage more litigation than pay equity.”

However, the same pen that vetoed AB 1209 signed another pay-equity law last week: Assembly Bill 168 (“AB 168”).  AB 168 precludes California employers from asking prospective employees about their salary history information.  “Salary history information” includes both compensation and benefits.  Like similar laws passed recently in several other states and cities, the policy underlying the inquiry ban is that reliance upon prior compensation perpetuates historic pay differentials.  Opponents have argued that such a ban will make it more difficult for employers to match job offers to market rates.  Go to our Act Now Advisory on AB 168 for a comprehensive review of this new law.

It is highly likely that the National Association of Insurance Commissioners (“NAIC”) will adopt a model data cyber security law premised largely on the New York State Department of Financial Services (“NYSDFS”) cyber security regulations.  Recently, we discussed the NYSDFS’ proposed extension of its cyber security regulations to credit reporting agencies in the wake of the Equifax breach.  New York Governor Andrew Cuomo has announced, “The Equifax breach was a wakeup call and with this action New York is raising the bar for consumer protections that we hope will be replicated across the nation.”  Upon adoption by the NAIC, the NYSDFS regulations requiring that NYS financial organizations have in place a written and implemented cyber security program will gain further traction toward setting a nationwide standard for cyber security and breach notification.  Indeed, although there are differences, the NAIC drafters emphasized that any Licensee in compliance with the NYSDFS “Cybersecurity Requirements for Financial Services Companies” will also be in compliance with the model law.

The NAIC Working Committee expressed a preference for a uniform nationwide standard: “This new model, the Insurance Data Security Model Law, will establish standards for data security and investigation and notification of a breach of data security that will apply to insurance companies, producers and other persons licensed or required to be licensed under state law. This model, specific to the insurance industry, is intended to supersede state and federal laws of general applicability that address data security and data breach notification. Regulated entities need clarity on what they are expected to do to protect sensitive data and what is expected if there is a data breach.  This can be accomplished by establishing a national standard and uniform application across the nation.”  Other than small licensees, the only exemption is for Licensees certifying that they have in place an information security program that meets the requirements of the Health Insurance Portability and Accountability Act.  According to the Committee, following adoption, it is likely that state legislatures throughout the nation will move to adopt the model law.

The model law is intended to protect against both data loss negatively impacting individual insureds, policy holders and other consumers, as well as loss that would cause a material adverse impact to the business, operations or security of the Licensee (e.g., trade secrets).  Each Licensee is required to develop, implement and maintain a comprehensive written information security program based on a risk assessment and containing administrative, technical and physical safeguards for the protection of non-public information and the Licensee’s information system.  The formalized risk assessment must identify both internal threats from employees and other trusted insiders, as well as external hacking threats.  Significantly, the model law recognizes the increasing trend toward cloud based services by requiring that the program address the security of non-public information held by the Licensee’s third-party service providers.  The model law permits a scalable approach that may include best practices of access controls, encryption, multi-factor authentication, monitoring, penetration testing, employee training and audit trails.

In the event of unauthorized access to, disruption or misuse of the Licensee’s electronic information system or non-public information stored on such system, notice must be provided to the Licensee’s home State within 72 hours.  Other impacted States must be notified where the non-public information involves at least 250 consumers and there is a reasonable likelihood of material harm.  The notice must specifically and transparently describe, among other items, the event date, the description of the information breached, how the event was discovered, the period during which the information system was compromised, and remediation efforts.  Applicable data breach notification laws requiring notice to the affected individuals must also be complied with.

The IRS recently released the Tax Exempt and Government Entities FY 2018 Work Plan (the “2018 Work Plan”) which provides helpful information for sponsors of tax-qualified retirement plans about the focus of the IRS’ 2018 compliance efforts for employee benefit plan.  While the 2018 Work Plan is a high-level summary, it does address IRS compliance strategies for 2018 and should assist plan sponsors in administering their retirement plans.

The Work Plan provides that for fiscal year 2018, the IRS compliance strategies include examination of plans that:

  1. Have transferred their assets or liabilities to another plan as a result of a merger or acquisition;
  2. Failed to comply with a non-discrimination test (such as the gateway test, actual deferral percentage test or actual contribution percentage test) or failed to comply with the safe harbor contribution rules for 401(k) plans;
  3. Failed to satisfy the minimum age and/or service requirements or met statutory requirements in form but failed eligibility in operation;
  4. Failed to make required minimum distributions or distributions in accordance with plan terms;
  5. Failed to satisfy the accrual rules under Section 411(b) of the Internal Revenue Code of 1986, as amended (the “Code”);
  6. Used an incorrect definition of compensation, resulting in incorrect contributions or forfeitures;
  7. Failed to make matching contributions in accordance with plan terms;
  8. Failed to withhold elective deferrals in accordance with plan terms (collectively, with items 1-7 above, the “Compliance Matters”).

The Work Plan also notes that the IRS will continue to pursue referrals from sources within and outside of the IRS alleging possible non-compliance by a plan.

With respect to the Compliance Matter noted in item 1 above, the IRS can easily identify a plan that experienced an asset transfer by referring to the plan’s Form 5500 and the related schedules (“Form 5500”).  Item 2(l) of Part II on Schedule H to Form 5500 requires the plan sponsor if to identify the amount of assets transferred during the year to the plan and from the plan.  Additionally, Items 4(k) and 5(b) of Part IV on Schedule H and Item 4(j) of Part II on Schedule I ask if any assets were transferred to another plan. If Form 5500 does indicate a transfer of assets to or from the plan, the IRS may consider other factors before determining whether to conduct a compliance examination of the plan.  Such factors may include:  the number of participants, as compared to prior years and the amount of the asset transfer relative to the total assets of the plan as the IRS may want to examine the plan to determine if a partial termination has occurred.

It may be more difficult for the IRS to identify plans impacted by the other Compliance Matters.  Except as noted above regarding  item 1, it is not clear if information on the other Compliance Matters will be available on Form 5500.  Part VII on Schedule R does consist of six questions on various Compliance Matters ranging from nondiscrimination in a 401(k) plan, to compliance with the coverage requirements under Section 410(b) of the Code, and the date of the plan’s most recent favorable determination letter.  Items 15-17 of Part IX on Form 5500-SF contain similar questions on the Compliance Matters.  Yet, this information will not be provided to the IRS for the 2016 plan year because the 2016 Instructions for Form 5500 and for Form 5500-SF state that the IRS has decided not to require plan sponsors to respond to these questions for the 2016 plan year.

At this time, it is not known if plan sponsors will be required to respond to these questions for the 2017 plan year or a later plan year.  If responses are required, then the IRS will have additional information relating to the Compliance Matters that the IRS can use to determine if a compliance examination of the plan is appropriate.

In any event, the IRS may also receive information on a plan relating to the Compliance Matters from referral sources that could cause the IRS to undertake a compliance examination.  For example, the IRS could receive a referral from one of the benefit advisers at the Employee Benefits Security Administration who was contacted by a plan participant about a Compliance Matter or a related matter.  Or, the source of a referral could be the IRS team that reviews Form 5500 submissions.  For example, a Form 5500 that is significantly different from the prior year Form 5500 could cause a referral to the IRS employee plans team.

Suggested Actions for Plan Sponsors

While there is little that plan sponsors can do to prevent a compliance examination, they can take steps designed to mitigate the impact of an IRS examination.   For example, if a plan is involved in a transfer of assets, sponsors should consider the potential consequences of the transfer, including whether the transfer will result in a partial plan termination or whether the transfer requires protection of certain forms with its terms, and then take steps to ensure compliance with IRS requirements relating to those consequences. If a plan sponsor is aware of plan operational failures, the sponsor should consider correcting the operational failures under the IRS Employee Plans Correction Resolution System, which generally provides protection to the plan in the event of an IRS examination.  Finally, plan sponsors should check Form 5500 before filing for inadvertent errors and for responses that are significantly different from the responses on the prior year’s Form 5500 to ensure that the current year responses are correct.

Our colleagues , at Epstein Becker Green, have a post on the Retail Labor and Employment Law blog that will be of interest to many of our readers in the financial services industry: “New York Paid Family Leave Regulations Finalized: How Do They Compare to Prior Versions?

Following is an excerpt:

On July 19, 2017, the New York State Workers’ Compensation Board (“WCB” or the “Board”) issued its final regulations (“Final Regulations”) for the New York State Paid Family Leave Benefits Law (“PFLBL” or the “Law”). The WCB first published regulations to the PFLBL in February 2017, and then updated those regulations in May (collectively, the “Prior Regulations”).

While the Final Regulations did clarify some outstanding questions, many questions remain, particularly pertaining to the practical logistics of implementing the Law, such as the tax treatment of deductions and benefits, paystub requirements, certain differences between requirements that pertain to self-funding employers and those employers intending to obtain an insurance policy, and what forms and procedures will apply. …

Read the full post here.

When:  Thursday, September 14, 2017    8:00 a.m. – 4:30 p.m.

Where:  New York Hilton Midtown, 1335 Avenue of the Americas, New York, NY 10019

Epstein Becker Green’s Annual Workforce Management Briefing will focus on the latest developments in labor and employment law, including:

  • Immigration
  • Global Executive Compensation
  • Artificial Intelligence
  • Internal Cyber Threats
  • Pay Equity
  • People Analytics in Hiring
  • Gig Economy
  • Wage and Hour
  • Paid and Unpaid Leave
  • Trade Secret Misappropriation
  • Ethics

We will start the day with two morning Plenary Sessions. The first session is kicked off with Philip A. Miscimarra, Chairman of the National Labor Relations Board (NLRB).

We are thrilled to welcome back speakers from the U.S. Chamber of Commerce.  Marc Freedman and Katie Mahoney will speak on the latest policy developments in Washington, D.C., that impact employers nationwide during the second plenary session.

Morning and afternoon breakout workshop sessions are being led by attorneys at Epstein Becker Green – including some contributors to this blog! Commissioner of the Equal Employment Opportunity Commission, Chai R. Feldblum, will be making remarks in the afternoon before attendees break into their afternoon workshops. We are also looking forward to hearing from our keynote speaker, Bret Baier, Chief Political Anchor of FOX News Channel and Anchor of Special Report with Bret Baier

View the full briefing agenda and workshop descriptions here.

Visit the briefing website for more information and to register, and contact Sylwia Faszczewska or Elizabeth Gannon with questions.  Seating is limited.

Our colleague Joshua A. Stein, a Member of the Firm at Epstein Becker Green, has a post on the Retail Labor and Employment Law blog that will be of interest to many of our readers in the financial services industry: “Start Spreading the News – EDNY Denies Motion to Dismiss Website Accessibility Complaint.”

Following is an excerpt:

While the ADA finished celebrating its 27th anniversary at the end of July, for plaintiffs looking to bring website accessibility complaints in New York the party is still ongoing.  Following on the heels of last month’s decision of the U.S. District Court for the Southern District of New York in Five Guys, Judge Jack B. Weinstein of the U.S. District Court for the Eastern District of New York, in Andrews vs. Blick Art Materials, LLC, recently denied a motion to dismiss a website accessibility action, holding that Title III of the ADA (“Title III”), the NYS Human Rights Law and the New York City Human Rights Law all apply to websites – not only those with a nexus to brick and mortar places of public accommodation but also to cyber-only websites offering goods and services for sale to the public. …

Read the full post here.

On June 14, 2017, Delaware Governor John Carney signed into law a bill that amends Delaware’s Code relating to unlawful employment practices to prohibit employers from (i) engaging in salary-based screening of prospective employees where prior compensation must satisfy certain minimum or maximum criteria or (ii) seeking the compensation history of a prospective employee from the prospective employee or a current or former employer (the “Law”). Under the Law, “compensation” is defined broadly to include wages, benefits, or other compensation.

Similar to the New York City salary history ban, employers are not prohibited from discussing and negotiating salary expectations, so long as employers avoid asking for a prospective employee’s compensation history. Additionally, after an employment offer has been made and accepted, and compensation terms have been extended and accepted, the Law allows for the confirmation of a prospective employee’s compensation history. Any such compensation confirmation must be authorized by the employee in writing.

The Law adds to a growing wave of bans on compensation history inquiries. Similar restrictions have been enacted in Massachusetts (eff. July 1, 2018), Oregon (eff. October 9, 2017) and Puerto Rico (eff. March 8, 2018), as well as in New York City (eff. October 31, 2017), Philadelphia, and most recently, San Francisco (eff. July 1, 2018). Philadelphia’s pay history ban was supposed to take effect May 23, 2017, but the City delayed its enforcement in light of a legal challenge by the Chamber of Commerce for Greater Philadelphia. The law is not yet being enforced by the City.

Our colleague Joshua A. Stein, a Member of the Firm at Epstein Becker Green, has a post on the Retail Labor and Employment Law blog that will be of interest to many of our readers in the financial services industry: “Latest Website Accessibility Decision Further Marginalizes the Viability of Due Process and Primary Jurisdiction Defenses.”

Following is an excerpt:

In the latest of an increasing number of recent website accessibility decisions, in Gorecki v. Hobby Lobby Stores, Inc. (Case No.: 2:17-cv-01131-JFW-SK), the U.S. District Court for the Central District of California denied Hobby Lobby’s motion to dismiss a website accessibility lawsuit on due process and primary jurisdiction grounds.  In doing so, the Hobby Lobby decision further calls into question the precedential value of the Central District of California’s recent outlier holding in Robles v. Dominos Pizza LLC (Case No.: 2:16-cv-06599-SJO-FFM) which provided businesses with hope that the tide of recent decisions might turn in their favor. …

Read the full post here.