COVID-19

FFCRA

In March 2020, the Families First Coronavirus Response Act was released. Applicable to employers with fewer than 500 employees, FFCRA provides up to 10 days or 80 hours of paid leave for employees impacted by COVID-19 personally, or caring for an ill family member. FFCRA also contains a 12 week, ⅔ salary, paid leave provision for employees needing to care for a child whose school or daycare is closed because of the pandemic. The DOL has updated numerous FAQs on how the FFCRA and child care leave apply to various situations, including the return to school for many children in fall 2020. Leave paid under the FFCRA is tax deductible by the employer, and reportable on employees’ W-2. It is only available for up to 80 hours, and not for any time off needed beyond this threshold or for a second recurrence of illness under present guidance.

New York Emergency Sick Leave for Quarantine

Employers’ paid leave requirements vary by size under the New York state law. For employers with 100 or more employees, 14 calendar days of paid leave is required for employees with a local board of health order of quarantine. Guidance indicates a doctors note may suffice to initiate this leave as long as the employee can later produce a board/government order. Unlike FFCRA leave, leave under NYS law is available more than once in the case of healthcare workers* who have multiple positive COVID-19 test results.

The Affordable Care Act (ACA)

Section 1557 

The Affordable Care Act ‘prohibits discrimination on the basis of race, color, national origin, sex, age, or disability in certain health programs or activities’ via Section 1557. HHS released a new final rule 1557 in June, 2020. The current version of the rule is narrower in scope than the 2016 rule, and defines discrimination ‘on the basis of sex’ to refer to gender assignment at birth. It also generally does not apply to employer health plans, as the rule defines ‘covered entity’ to mean “group health plans and employers that accept federal funding from the HHS or are principally engaged in the business of providing healthcare“.

On August 17, the US District Court for the Eastern District of New York blocked the HHS 1557 final rule, on the grounds that HHS acted in an arbitrary manner, and finding the rule goes against the Supreme Court recent decision in Bostock v Clayton (discussed below). The Court’s ruling may be appealed so the current status of the 1557 final rule is now in limbo. There are several other cases challenging the constitutionality of the new rule 1557, which are currently pending.

The Employer Mandate

The penalties for noncompliance with the employer mandate will increase in 2021. Failure to offer coverage to ‘all’ full time employees under 4980H(a) will result in a penalty of $2,700 for each full time employee (minus 30). The penalty under 4980h(b) for failure to offer ‘affordable’ coverage, or coverage meeting the ACA’s minimum value criteria, will be $4,060 for each employee that receives a subsidy in the Marketplace. The affordability threshold will increase from 9.78% in 2020, to 9.83% in 2021.

Carrier Updates

Many carriers issued premium credits directly on July employer invoice statements. These credits are partial plan assets, when the premium is paid by both employers and employees. As such, the Medical Loss Ratio (MLR) rules apply to the distribution of these carrier credits. The credit received must be shared with enrolled employees in the same percentage as their premium share. For example, if employers pay 50% of the total premium and employees pay the other 50%, then 50% of the premium credit received will be returned to employees (via future month premium offset for example).

Department Guidance

DOL

The DOL, along with the IRS, issued a joint rule in April 2020 extending several benefits related deadlines until some period of time after the current outbreak period is declared over by the Government. Notably for employers, this applies to COBRA election period deadlines, initial payment due dates, as well as ongoing premium payments. Once the outbreak is declared to have ended, communication with any impacted employees and terminated individuals will be required to inform them the ‘clock’ has begun, and remind them when they must elect and pay these overdue premiums.

Updated COBRA model and general rights notices issued in May contain new information about the interaction of COBRA for the employer group health plan and Medicare. While it is not a requirement that employers use the DOL model notices, it is a best practice to do so. 

IRS

Notice 2020-29

Notice 2020-29 released in May provided optional relief for employees wishing to make mid-year changes to existing 2020 medical plan, as well as FSA and DCA elections. Employers had to decide by the end of their 2020 plan year to allow such changes, and update plan documents accordingly.

Notice 2020-54 

Notice 2020-54 was released in early July, directing employers on requirements to report the amount of sick leave wages and family leave wages paid to employees impacted by COVID-19, under the FFCRA. Employers will report these amounts in box 14 on the annual W-2. Employers may also use a ‘separate statement’ to report these wages to employees, which would need to be included with the W-2 when distributed to the employee.

PCORI

The PCORI Fee was extended for an additional 10 years by the budget bill at the end of 2019. In July 2021, most non-calendar year plans will pay $2.54 per enrolled member for their 2019-2020 plan years, while the fee is not yet determined for calendar year plans and those beginning 11/1/19 and 12/1/19.

SCOTUS

Bostock

On June 15, the Court rendered a 6-3 decision in three consolidated cases**. The common challenge across the cases was raised by employees citing their terminations as being ‘on the basis of’ their sexual orientation or gender identity. The Court found in favor of the plaintiffs, ruling that termination of employment because of sexual orientation or gender identity is wrongful termination within the meaning of Title VII. While half the states already have state law prohibiting employment discrimination on the basis of sexual orientation and gender identity, it is now federal law applicable to all 50 states.

Little Sisters of the Poor

On July 8th, the Court rendered its decision in Little Sisters of the Poor v Pennsylvania*** and agreed with HHS’s 2016 rule, which expands the religious exception to the ACA’s mandate that employer health plans cover the costs of birth control and related items without cost share.  As of the time of this writing, employers that object to covering contraceptives on ‘moral grounds’ may ‘opt out’ of providing the coverage that would otherwise be required by the Affordable Care Act, and will not face any penalty for doing so.  The full opinion is here.

Appointment of a New Justice

The passing of Ruth Bader Ginsberg on September 18 created a vacancy on the Court. After some controversy on the timing of the hearings, Justice Amy Coney Barrett was confirmed in late October.

California v Texas****

On November 10, SCOTUS heard oral argument on whether the ACA can survive as a whole, absent the individual mandate penalty (which was removed by the 2017 Tax Cuts and Jobs Act, effective in 2019). In 2018, several states sued the federal government arguing the entire ACA is unconstitutional because the individual mandate (without a financial tax associated with it) is an unconstitutional exercise of Congressional power. The Court’s decision is expected in the Summer of 2021.

EEOC Activity

Workplace COVID-19 Testing

In March, the EEOC made it clear that employers are permitted to take measures aimed at preventing the spread of COVID-19 in the workplace by implementing protocols such as temperature taking and mandatory viral testing, without running afoul of the ADA. Because the virus is deemed an immediate threat, and as long as these measures are applied uniformly to all employees, such actions are not in violation of the ADA’s protections.

Wellness Rule

On June 11, the EEOC voted at a public meeting to put forth a proposed rule on employer wellness programs (to replace the 2015 rule on wellness, which had been withdrawn). The unofficial proposed rule, according to Health Affairs, would generally retain the requirement that any reward be ‘de minimis’ in order for a wellness program to be considered voluntary. Additionally, wellness programs tied to underlying group health plans would be permitted to impose penalties up to 30% of premiums for employees that do not meet the wellness program ‘goal’ such as body mass index. At this time it is unclear if the ADA’s safe harbor exception will be interpreted to include health contingent wellness programs or not.

State Guidance- Paid Leave

New York

New York paid sick leave (PSL) goes into effect January 1, 2021 (those using the accrual method began tracking in September 2020). Employers of all sizes must offer some amount of paid leave, with those over 100 needing to offer 56 hours annually. The New York City Earned Safe and Sick Leave (ESSL) will also increase from 40 hours to 56 hours, to align with the statewide leave.  Existing PTO policies that offer at least 56 hours, and front load those upon hire (or prorate for new hires throughout the year) are generally compliant without any additional time off specifically required by this law. Alternatively, employers may allow accrual at a rate of 1 hour of paid leave per each 30 hours worked, which would have begun on September 30.

NY Paid Family Leave (NY PFL) will increase in duration from 10 to 12 weeks for leaves beginning on or after January 1, 2021. The maximum benefit payment will also increase to 67% of the employees weekly wage (capped at 67% of the average statewide weekly wage, which results in a maximum weekly benefit payment of $971.61 in 2021). Employee PFL premium payments will be equal to .511% of gross wages (increased from the 2019 contribution rate of 0.27% of wages), to a maximum annual contribution of $385.34.

New Jersey

As of July 2020, NJ Paid Family and Safe Leave increased  to 12 weeks in duration, and is paid up to 85% of employee average weekly wage, with a maximum of $859 in payable benefits per week of leave. Leave is available for birth of a child of the employee, the adoption or placement of a child in foster care, or the care of a family member with a serious health condition. This leave, like that in NY, is not for an employee’s own health condition. 

California

Employers with more than 500 employees who are not subject to the FFCRA are now subject to Supplemental Paid Sick Leave under state law, which aligns to many FFCRA provisions. One difference is that for leave under the new supplemental paid sick leave for COVID-19, employees may only receive paid time off for their own illness or quarantine, if they are required to report to work, not to care for an ill family (that might be available under regular CA PFL or FMLA).

In 2021, CA Family Rights Act (CFA) now applies to employers with 5 or more employees (rather than 50 or more). There is no requirement that an employee work at a site with 50 employees (within a 75 mile radius). Employees may take leave under CA CFA beginning in 2021 to care for a broader list of ‘family members’, including grandparents, grandchildren, siblings, spouses, domestic partners, and a domestic partner’s children.

Under CA Paid Family leave (CA PFL), employees will also be able to take leave for a ‘qualifying exigency’ related to military duty of an employee’s family member. The leave duration was increased to 8 weeks as of July 1, 2020.

Connecticut

Passed in 2019, Connecticut’s paid family leave will offer 12 weeks paid leave to eligible employees, or 14 weeks paid to employees suffering complications from childbirth. Payroll withholding to fund the new leave will begin January 1, 2021 for CT residents with leave available in 2022. CT FMLA will also expand in 2022, to include leave to care for a spouse, sibling, grandparents, grandchildren, and anyone else related “by blood or affinity whose close association is the equivalent of those family relationships.” FMLA in CT will be available to anyone employed for 3 months, and apply to employers with even just 1 employee.

*NYS quarantine leave defines health care worker broadly as “a person employed at a doctor’s office, hospital, long-term care facility, outpatient clinic, nursing home, end stage renal disease facility, post-secondary educational institution offering health care instruction, medical school, local health department or agency, assisted living residence, adult care facility, residence for people with developmental disabilities, home health provider, emergency medical services agency, any facility that performs laboratory or medical testing, pharmacy, or any similar institution, including any permanent or temporary institution, facility, location, or site where medical services are provided that are similar to such institutions.”

**The consolidated cases are Bostock v Clayton County, Georgia, Altitude Express Inc v Zarda , and Harris Funeral Homes, Inc v EEOC

***The consolidated cases are Little Sisters of the Poor Saint Peter and Paul Home v Pennsylvania et al, and President of the United States et al v Pennsylvania

****This case is known as Texas v US in the lower courts, and Texas v Azar in earlier cases.