Article contributed by Mark Adams
2023 promises to be a busy year from a legislative and regulatory front. Below are three laws that we wanted to be sure were on your radar to prepare for as the year progresses:
Secure Act 2.0:
Comprising over 90 different reforms to retirement plans, “Secure Act 2.0” is designed to provide greater flexibility and access to retirement plans in hopes to further entice individuals to save for retirement.
Some of the initiatives are required (such as an automatic enrollment mandate on new 401(k) and 403(b) plans established after the law’s enactment and applicable for those plans with plan years beginning after December 31, 2024, to automatically enroll participants at a contribution rate between 3% and 10% of a participant’s compensation). Additionally, the Required Minimum Distribution (RMD) age has increased to 73 effective January 1, 2023, with the RMD age rising to 75 effective January 1, 2033.
Others however are optional (such as allowing for matching contributions on student loan payments based on the employee’s certification that the loan payment has been made) which would allow for new and existing plans beginning with plan years that commence after December 31, 2023.
Other options also available include:
- In-service emergency savings withdrawal plan options (to withdraw up to $1,000 per year without penalty provided it is repaid within three years).
- Plan-linked Emergency Savings Account allowing for contributions up to $2,500 into such an account (which can be subject to an employer match) and allow for distributions without early withdrawal penalties.
- Long-Term Care Contract Withdrawals allowing for distribution of up to $2,500 per year for payment of Long-Term Care contract premiums without penalty.
The Act also provides for increases in catch-up contribution limits with 401(k), 403(b) and 457(b) limits increasing from $7,500 to $10,000 (or if greater, 150% of the catch-up contribution limit that is otherwise in effect in 2024 for plan participants between the ages of 60-63. Catch-up contributions are also increasing for SIMPLE plans, rising from $3,500 to $5,000 (or if greater, 150% of the catch-up contribution limit in effect in 2024 for plan participants between the ages of 60-63).
While employers will inevitably need to adjust their plan documents to account for changes (be they required or optional), many plan administrators are still working through these details and are awaiting further governmental guidance on the Act’s implementation. But the Act does provide time for these plan document adjustments with the deadline being that they must be made no later than the last day of the first plan year beginning on or after January 1, 2025. Nonetheless, employers are still advised to work with their administrators to assess how to follow the Act’s provisions in a good faith manner.
Pregnant Workers Fairness Act:
Taking effect on June 27, 2023 (180 days after its enactment), the federal Pregnant Workers Fairness Act applies to employers with 15 or more employees and requires covered employers to make reasonable accommodations for known limitations related to pregnancy, childbirth, or related conditions (even if those limitations do not meet the definition of a disability).
Thus, employees who would be entitled to reasonable accommodations under this law would include those that cannot perform the essential functions of their position for a temporary period of time due to their pregnancy, childbirth or related conditions but could perform them in the near future.
The Act requires employers to engage in an interactive process with employees when they are facing the need for assistance.
Unlike some states that have notice or poster requirements associated with their own pregnancy accommodation laws (such as Massachusetts and Rhode Island), this new federal law does not have an express notice requirement.
PUMP for Nursing Mothers Act:
Building upon requirements established under the Affordable Care Act to provide reasonable break time for non-exempt employees to express breast milk for their nursing child for up to one year after the child’s birth, the Providing Urgent Maternal Protections (PUMP) for Nursing Mothers Act extends these lactation accommodation protections to exempt employees as well.
The Act further requires that the employer provide a place, other than a bathroom, that is shielded from view and free from intrusion from co-workers and the public, which an employee may use to express breast milk. While breaks taken under this Act would be unpaid unless federal, state, or local law provides otherwise, the practical reality due to the salary requirements of FLSA (and state law) is that exempt employees who are working some or all their workday should be paid their full weekly salary nonetheless (regardless of whether they are taking such breaks or not). For non-exempt employees, the Act further clarifies that the time to express milk would be considered “hours worked” if the employee is not completely relieved of duty during the entirety of their break.
While the Act provides for exemptions for employers with fewer than 50 employees as well as certain industries (such as airline, rail carrier, train crew, motorcoach, etc.), if breaks pose an undue hardship, the Act does not pre-empt state or local laws that provide greater protections.
While employee rights under the Act are now in effect, the remedy provisions do not take effect until April 28, 2023 (120 days after the law’s passage).
Employers need to be prepared to provide facility and staffing adjustments as necessary to ensure that the space that is provided to meet these obligations is shielded from view and free from intrusion from others.
More changes on the horizon:
These won’t be the last legislative developments for sure. After all, the Federal Trade Commission has already proposed a rule to ban non-compete agreements in most cases and proposed Fair Labor Standards Act changes are slated to be released by the Department of Labor in the spring. What will these changes look like when all is said and done? What other laws will employers encounter? Stay tuned.