HR Alerts
New Year, New Laws
With the start of the new year, a number of new employment laws have gone into effect. California has the most—among them Equal Pay and additional protections against discrimination. Oregon has its new Paid Sick Leave law. And, of course, minimum wages have increased in 14 states. Be sure to check out the News Desk section of the Support Center for all relevant law updates!
Employer Mandate Reporting Requirements
Employer Mandate reporting for the 2015 tax year has begun. In this article, we will briefly explain the responsibilities of employers of different sizes and in different situations.
Reporting is mandatory for large employers with 50 or more full-time equivalent employees. It’s also mandatory for those small employers with less than 50 full-time equivalents that have a self-funded plan.
The specific tax forms you need to file depend on the size of your group and what type of health plan you offer.
Large employers that have a fully-funded health plan, are self-insured, or have no health plan are responsible for filing the 1094-C. This is a tax form that tells the IRS whether the employer provided minimum essential health insurance coverage to its full-time employees.
Large employers with a fully-funded health plan or no health plan must also distribute the 1095-C Parts I-II to each employee working 130+ hours per month and file them with the IRS. Large employers that are self-insured must file and distribute the 1095-C Parts I-III to each employee. The 1095-C tells the IRS and each employee what employer-provide coverage they had or didn’t have throughout the year.
For small groups with less than 50 full-time equivalent employees, there are no employer mandate reporting requirements under Section 6056 of the Internal Revenue Code. However, small employers offering a self-insured health plan do have reporting requirements under Section 6055 of the Internal Revenue Code. In that case, the employer should file a 1094-B with the IRS and the 1095-Bs should be filed and distributed to employees.
The insurance carrier is responsible for filing and distributing the 1094-B and 1095-Bs for small groups that are fully-funded. For small groups that are self-insured, the employer must complete the Form 1094-B and file and distribute a Form 1095-B for each enrolled employee. The insurance carrier maintains responsibility for filing the 1094-B for large groups that are fully-funded and the carrier will also provide a 1095-B to each enrolled employee. For large groups that are self-insured, the employer should complete the 1094-C and the 1095-Cs Parts I, II, and III.
After considering feedback from private sector businesses and insurers, the IRS has extended the deadlines for reporting 2015 information under the Affordable Care Act.
Employers now have until March 31 (previously before February 1) to provide employees with their Form 1095-C or Form 1095-B.
Additionally, the deadlines for employers to report offers of health coverage to the IRS (Forms 1094-B, 1094-C, 1095-B, and 1095-C) have been extended by three months: The deadline for paper filing (available only to employers submitting fewer than 250 1095-Cs) is now May 31. The deadline for electronic filing (available to all employers) is now June 30.
Again, the deadline extensions apply only to this year. The IRS will still begin accepting reporting in January.
Question & Answer
Q: We’ve had some complaints about pungent leftovers. Can we tell employees not to heat up stinky foods in the office breakroom microwave?
A: Great question! There are no legal guidelines you have to follow, but I would recommend sensitivity when addressing this issue. You definitely want to avoid making comments about certain types of food that could be interpreted as being directed at any ethnic populations in your workplace. Here are a few ideas you might consider:
Ask employees to refrain from microwaving pungent foods—in policies of this sort, we typically see mention of foods like fish and microwave popcorn.
Place the microwave in a space away from the break room and working areas.
Create an alternative break area for those who are sensitive to smell.
Ultimately, employees should be cognizant of the fact that they share a workspace with others who may have different food preferences. Not all food aromas can be eliminated, but some common courtesy from all parties can go a long way. It’s not unheard of for employers to remove the microwave from their workplace because of the issue you’ve described, but I would not recommend this step unless you have exhausted other alternatives.
Five Hot HR Topics in 2016
The new year tends to bring new HR trends and topics to the forefront. In this article, we’ll look at five topics we expect to dominate HR-related conversations in 2016: health care reform, marijuana in the workplace, proposed changes to the Fair Labor Standards Act, minimum wage increases, and paid sick leave trends.
Health Care Reform
Reporting for the Employer Mandate begins this year. All mid-sized and large employers are required to perform Section 6056 reporting. Generally, just like W-2s, copies of the forms must be provided to employees before February 1st and filed with the IRS before February 29th (paper) or by March 31st (electronic). This year, however, the IRS has granted an extension of two months for the distribution to employees and an extension of three months for the filing with the IRS.
The other big health care reform news: much of the transitional relief that softened the blow of the Employer Mandate ends in 2016. This means the employer mandate penalties will now apply to employers with 50-99 full-time equivalent employees. It also increases the percentage of full-time employees to whom covered employers must offer coverage—from 70% to 95%—and decreases the number of full-time employees that can be subtracted from the penalty calculation—from 80 to 30. Finally, employers must now use an average of the number of employees calculated from all 12 months of 2015 (rather than any six consecutive months as allowed under transitional relief) when determining whether they qualify as an applicable large employer.
And that’s not all! Legislative attempts to repeal or delay the “Cadillac Tax” will no doubt keep health care reform in the news for some time to come. This unpopular excise tax on high-cost employer-sponsored health coverage was just delayed until 2020. We can expect the efforts to repeal it to continue.
Marijuana and the Workplace
While 23 states and the District of Columbia have decriminalized marijuana for medicinal use—with four states and DC legalizing recreational use—the sale and use of the drug remains illegal at the federal level. Understandably, the discrepancies between state and federal law have raised questions for employers. In most states, an employer can terminate employment for on-duty and off-duty use even if the employee has a medical marijuana card. Because the drug is still illegal at the federal level, employers are not required to make accommodations for use under the Americans with Disabilities Act. Some states, however, have anti-discrimination language written into their medical marijuana statues that may require employers to accommodate the presence of some amount of marijuana in an employee’s system while that employee is on duty.In most states, an employer can terminate employment for on-duty and off-duty use even if the employee has a medical marijuana card. Because the drug is still illegal at the federal level, employers are not required to make accommodations for use under the Americans with Disabilities Act. Some states, however, have anti-discrimination language written into their medical marijuana statues that may require employers to accommodate the presence of some amount of marijuana in an employee’s system while that employee is on duty.
In most states, an employer can terminate employment for on-duty and off-duty use even if the employee has a medical marijuana card. Because the drug is still illegal at the federal level, employers are not required to make accommodations for use under the Americans with Disabilities Act. Some states, however, have anti-discrimination language written into their medical marijuana statues that may require employers to accommodate the presence of some amount of marijuana in an employee’s system while that employee is on duty.
Complicating the matter further are the differing needs and preferences of employers. Some employers want to prohibit and test for marijuana because use of the drug could disrupt operations, because they have safety-sensitive jobs, or because they are legally required to do so. Other employers want to allow off-duty use and avoid testing altogether—or as much as possible.
There’s no one-size-fits-all solution, but employers who want a more lenient policy should focus on detecting signs of impairment on the job. Instead of testing, which doesn’t distinguish between on-duty and off-duty use, companies should keep an eye out for poor performance and discipline accordingly.
We expect this subject, and how employers decide to address it, will continue to evolve as the number of states taking a more lenient stance increases.
Proposed Changes to the Fair Labor Standards Act
The proposed changes to the white collar exemptions of the Fair Labor Standards Act (FLSA) are expected to be finalized sometime in 2016. If the final rules mirror the proposed rules, the salary level of $50,440 will more than double the salary threshold for workers otherwise eligible for a white collar exemption from minimum wage and overtime requirements under the FLSA. Beyond the initial large jump, the rules also propose an automatic annual adjustment to both the white collar salary level and the highly compensated employee compensation rate. These would be tied either to a cost of living index or to a set percentile of earnings across all salaried workers.
The Department of Labor (DOL) is required to review the quarter of a million comments made in response to the proposed rules. It remains to be seen whether the DOL will respond to the comments or make changes to the proposed rules in response to them. The timing is also an unknown at this point. The effective date could be early summer 2016, late 2016, or even sometime in 2017.
Minimum Wage Increases
January 1st saw the minimum wage increase in 14 states: Alaska, Arkansas, California, Colorado, Connecticut, Hawaii, Massachusetts, Michigan, Nebraska, New York, Rhode Island, South Dakota, Vermont, and West Virginia. This summer will see minimum wage increases in D.C., Maryland, and Minnesota. Several municipal rates are set to increase during 2016, including Berkley, Emeryville, Richmond, San Francisco, Louisville, Seattle, and Tacoma.
The push for $15 minimum wage has been in the news. While it has been getting a lot of press, almost all the action here has been on the municipal level and almost every proposal and planned increase the move to a $15 minimum wage is an incremental process spanning several years.
Cities with a planned $15 minimum wage include D.C. (by 2020), Los Angeles (by 2020), San Francisco (by 2018), and Seattle (by 2017 for businesses with at least 500 U.S. employees and by 2021 for others). In New York City, fast food workers at chains with at least 30 locations will receive a minimum wage of $15 (by 2018) and the state of New York will have its own $15 minimum wage for fast food workers (by 2021).
Paid Sick Leave Trends
At the start of 2016, Oregon joined Connecticut, California, and Massachusetts in implementing paid sick leave laws on a state level. Additionally, the number of municipalities with local sick leave laws continues to grow.
Across these states and municipalities, the details of the laws differ. For example, the amount of time for sick leave varies—24 hours or three days in California to 40 hours in Massachusetts and Oregon to 72 hours in several municipalities in California. In Massachusetts and Oregon, smaller employers can offer unpaid leave instead of paid time, while in California, employers of any size must offer paid leave.
Legislation has been introduced in many other states. We’ll have to wait and see whether any of these efforts result in new paid sick leave laws, but we can expect the effort will be made in many states and municipalities.
Conclusion
No doubt other topics and day-to-day demands will require the attention of employers in 2016. But, we believe that these five areas are worth keeping on your radar. As the year progresses, we’ll keep you up-to-speed on the newest HR trends—as well as the laws and best practices you need to know.
Tool of the Month:
Code Descriptions for Form 1095-C
This guide explains the codes employers must use when completing Form 1095-C for employer mandate reporting. It’s located in the Guides section under the Documents tab.
