The Washington Report
June 24, 2020
Note to subscribers: Due to the current environment, information is changing at a rapid rate. While we do our best to provide timely updates, it is possible that the information shared in the newsletter may change or be revised after our publication deadline. Stay healthy and safe! ~The Washington Report team
DOL Issues Proposed 2020 Self-Compliance Tool to Further Mental Health and Substance Use Disorder Parity Compliance; Requests Public Comments
On June 19, 2020, the Department of Labor’s (DOL) Employee Benefits Security Administration released a proposed Self-Compliance Tool intended to help improve compliance with the Mental Health Parity and Addiction Equity Act (MHPAEA) and additional related requirements under ERISA. According to the DOL, the tool will enable group health plans, plan sponsors, plan administrators, health insurance issuers, and other parties determine whether a group health plan or a health insurance issuer complies with the provisions in both laws. The DOL is requesting public comments on the MHPAEA’s Self-Compliance Tool proposed revisions by July 24, 2020. After considering all feedback, the DOL will issue a Final 2020 MHPAEA Self-Compliance Tool with any necessary clarifications. (The DOL last issued the MHPAEA Self-Compliance Tool in 2018.)
The news release is available here.
The “Proposed Updates to 2020 MHPAEA Self-Compliance Tool: Request for Comments” is available here.
IRS Publishes Guidance for Coronavirus-Related Distributions and Loans From Retirement Plans Under the CARES Act
On June 19, 2020, the Internal Revenue Service (IRS) released Notice 2020-50, to help retirement plan participants affected by COVID-19 take advantage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act provisions providing enhanced access to plan distributions and plan loans. This includes expanding the categories of individuals eligible for these types of distributions and loans (referred to as "qualified individuals") and providing guidance and examples on how qualified individuals will reflect the tax treatment of these distributions and loans on their federal income tax filings.
The CARES Act provides that qualified individuals may treat as coronavirus-related distributions up to $100,000 in distributions made from their eligible retirement plans (including Individual Retirement Accounts (IRAs)) from January 1 to December 30, 2020. A coronavirus-related distribution is not subject to the 10% additional tax that otherwise generally applies to distributions made before an individual reaches age 59½. In addition, a coronavirus-related distribution can be included in income in equal installments over a three-year period, and an individual has three years to repay a coronavirus-related distribution to a plan or IRA and undo the tax consequences of the distribution.
In addition, the CARES Act provides that plans may implement certain relaxed rules for qualified individuals relating to plan loan amounts and repayment terms. In particular, plans may suspend loan repayments that are due from March 27 through December 31, 2020, and the dollar limit on loans made between March 27 and September 22, 2020, is raised from $50,000 to $100,000.
As authorized under the CARES Act, Notice 2020-50 expands the definition of who is a qualified individual to take into account additional factors such as reductions in pay, rescissions of job offers, and delayed start dates with respect to an individual, as well as adverse financial consequences to an individual arising from the impact of the coronavirus on the individual's spouse or household member. (Please refer to the Notice regarding the specifics as to who is considered a qualified individual.)
Notice 2020-50 clarifies that employers can choose whether to implement these coronavirus-related distribution and loan rules, and notes that qualified individuals can claim the tax benefits of coronavirus-related distribution rules even if plan provisions aren't changed. The guidance clarifies that administrators can rely on an individual's certification that the individual is a qualified individual (and provides a sample certification), but also notes that an individual must actually be a qualified individual in order to obtain favorable tax treatment. Further, Notice 2020-50 provides employers a safe harbor procedure for implementing the suspension of loan repayments otherwise due through the end of 2020, but notes that there may be other reasonable ways to administer these rules.
The news release is available here.
IRS Notice 2020-50 is available here.
Tax relief and other information related to the effects of COVID-19 on federal income tax (“Coronavirus Tax Relief and Economic Impact Payments”) is available here.
IRS Issues Proposed Regulations on the Elimination of the Deduction of Qualified Transportation Fringe Benefit Expenses
On June 19, 2020, the Internal Revenue Service (IRS) issued proposed regulations that provide guidance for the deduction of qualified transportation fringe and commuting expenses. The Tax Cuts and Jobs Act (TCJA) does not allow deductions for qualified transportation fringe (QTF) expenses and does not allow deductions for certain expenses of transportation and commuting between an employee’s residence and place of employment. The law also provides that a tax-exempt organization’s unrelated business taxable income is increased by the amount of the QTF expense that is nondeductible. However, on December 20, 2019, this was repealed as part of the Further Consolidated Appropriations Act of 2020. This repeal was retroactive to the original date of enactment by the TCJA.
The proposed regulations specifically address the elimination of the deduction for expenses related to QTFs provided to an employee of the taxpayer. The proposed regulations also provide guidance and methodologies to determine the amount of QTF parking expense that is nondeductible. The guidance also includes definitions and special rules to clarify and simplify the calculations underlying the methodologies. Comments on the proposed regulations are due by August 24, 2020.
The news release is available here.
The proposed regulations are available here.
OSHA Issues Guidance as Non-Essential Businesses Reopen and Employees Return to Workplace
On June 18, 2020, the Department of Labor’s Occupational Safety and Health Administration (OSHA) issued guidance (OSHA Guidance on Returning to Work) to assist employers reopening non-essential businesses and their employees returning to work during the evolving coronavirus pandemic. The guidance supplements the Department of Labor's and Department of Health and Human Services’ previously developed Guidance on Preparing Workplaces for COVID-19 and the White House’s Guidelines for Opening up America Again. The guidelines provide general principles for updating restrictions originally put in place to slow the spread of the coronavirus. OSHA states in the press release that “during each phase of the reopening process, employers should continue to focus on strategies for basic hygiene, social distancing, identification and isolation of sick employees, workplace controls and flexibilities, and employee training.”
The news release is available here.
The OSHA Guidance on Returning to Work is available here.
OSHA’s COVID-19 website is available here.
EEOC Updates COVID-19 Technical Assistance Bulletin; Addresses Antibody Testing
On June 17, 2020, the Equal Employment Opportunity Commission (EEOC) posted an updated and expanded technical assistance publication addressing questions arising under the federal Equal Employment Opportunity (EEO) laws related to the COVID-19 pandemic. The new question added to the publication, What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws explains that in light of current Center for Disease Control Interim Guidelines, the Americans with Disabilities Act (ADA) at this time does not allow employers to require antibody testing before allowing employees to re-enter the workplace. (This information is provided in Q&A A.7.)
The EEOC notes that an antibody test is different from a test to determine if someone has an active case of COVID-19 (i.e., a viral test). The EEOC has already stated that COVID-19 viral tests may be permissible under the ADA. In response to inquiries from the public, the EEOC has provided resources on its website (“Coronavirus and COVID-19”) related to the pandemic in an employment context.
For additional information, please see the Aon bulletin titled EEOC Nixes Antibody Tests Under the ADA in the Publications section of this newsletter.
The updated What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws is available here.
The EEOC “Coronavirus and COVID-19” resource page is available here.
EEOC Nixes Antibody Tests Under the ADA
On June 17, 2020, the Equal Employment Opportunity Commission (EEOC) issued new guidance that COVID-19 antibody tests are an impermissible medical examination under the Americans with Disabilities Act (ADA) and cannot be required of employees before they are permitted to re-enter the workplace.
The Aon bulletin on the EEOC guidance is available here.
SCOTUS Extends Employment Protections of ’64 Civil Rights Act to Gay, Lesbian, and Transgender Employees; HHS’s Final 1557 Rule Narrows ACA Nondiscrimination Protections
On June 15, 2020, the United States Supreme Court (SCOTUS) held in Bostock v. Clayton County that the employment protections of Title VII of the Civil Rights Act of 1964 prohibit employers from discriminating against gay, lesbian, and transgender employees. In a 6–3 decision written by Justice Neil Gorsuch, the Court’s majority reasoned that, in the case at issue, firing an employee for being gay or transgender constituted discrimination against that employee because of the employee’s sex. Such an action, the Court held, violated Title VII, which prohibits an employer from “failing or refusing to hire or to discharge any individual, or otherwise discriminate against any individual, because of the individual’s race, color, religion, sex, or national origin.”
While the Court’s decision specifically addressed firing employees, the Court’s decision will likely have broader implications for employer health and welfare plans. While Bostock does not address employer-sponsored benefits, the EEOC has taken the position that discrimination in benefits on the basis of sexual orientation or gender identity violates Title VII’s prohibition against discrimination because of sex.
The Aon bulletin, which provides a brief overview of the Supreme Court opinion and the final Section 1557 nondiscrimination rule, (issued separately by the Department of Health and Human Services (HHS)), is available here.
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