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Pay Matters: Fall 2021

Posted by Malka Trump, CPA | September 20, 2021

Welcome to our Fall 2021 edition of Pay Matters, our roundup of all the payroll and compliance news that you must know. Stay informed and in compliance with our alerts and insights. US DOL Rescinds 2020 Joint-Employer Rule Effective September 28, 2021, the U.S. Department of Labor is rescinding the joint-employer final rule that was originally published on January 16, 2020. Under the 2020 final rule, the DOL had established that joint employment exists when an employee performs work for an employer and that work also benefits another entity that is acting, directly or indirectly, in the employer’s interest with regard to the employee. The rule had further clarified that an employee’s “economic dependence” on a potential joint employer is not taken into consideration when determining a joint-employer relationship nor are certain contracts or business practices. Instead, the rule had outlined a 4-factor test to weigh the joint-employer status of the “other entity,” checking if it:

1. Hires or fires employees;
2. Supervises and substantially controls work schedules and employment conditions;
3. Determines workers’ wage payment rates and methods; and
4. Maintains employment records.

In March 2021, the U.S. DOL finalized the recission of the above final rule in response to court findings that the rule was inconsistent with the Federal Fair Labor Standards Act (FLSA). In addition, parts of the rule were in conflict with prior court analyses. For the text of the recission published in the July 30, 2021, Federal Register, click here. Form I-9 Flexibility Extended The Department of Homeland Security (DHS) announced that the temporary flexibility granted to employers in complying with I-9 requirements will not expire on August 31, 2021, as originally announced but is instead extended to December 31, 2021. Under the guidance, employees hired on or after April 1, 2021, who work exclusively in a remote setting due to COVID-19 are temporality exempt from the physical document inspection requirements of Form I-9. However, once employees begin non-remote employment on a regular basis, the requirement for physical document verification is reinstated. For more information, click here. Congress Intensifies Work on Mandatory Paid Family Leave Bill The House Ways and Means Committee is working intensively on a bill which would mandate up to 12 weeks of paid family and medical leave for employees and independent contractors effective July 2023. Paid leave amounts would range from 85% of the regular weekly wage for the lowest earners to only 5% for the highest earners. Allowable leave reasons would be to care for a new child, to tend to the employee’s own chronic illness, to care for a sick family member, or for reasons related to military service. The program would be run by the Department of the Treasury, not the Department of Labor. Viventium will continue to monitor the progress of this proposal. NYC Mandates Retirement Plans for All Workers Employers with five or more employees in New York City who don’t yet offer employees a retirement savings plan will soon be required to. The recently enacted NYC Retirement Security for All Act will require private employers to enroll employees in either their own retirement plan or in a city- managed plan. Under the Act, employers must:

1. Automatically enroll eligible employees in IRAs;
2. Deposit employee funds into the IRAs; and
3. Retain records confirming compliance with this mandate for at least 3 years.

The default employee contribution rate is 5%, capped at $6,000 for employees under age 50 and $7,000 for employees over age 50 (the annual IRA maximums). Employees may opt out of the program or adjust their contribution rates. Though the law took effect on August 9, 2021, the Retirement Savings Board has up to two years to implement the program and set a commencement date. Therefore, no immediate action is needed by employers. Click here for a copy of Bill 888-A and Bill 901-A. New York Wage Theft Loophole is Closed Effective August 19, New York closed a legal loophole in an attempt to ensure that employees are paid what they are owed with no exception. In recent cases, several courts dismissed employee claims seeking unpaid wages based on labor provisions prohibiting unauthorized deductions. The courts ruled that nonpayment of all wages is not technically a wage deduction. Assembly Bill A1893 effectively closes this loophole and clarifies that nonpayment of wages is also considered an unauthorized deduction that employees are entitled to recover in court. California Premium Pay Must be Paid at “Regular Rate of Pay” On July 15, 2021, the California Supreme Court ruled that premium pay required for missed meal, rest, and recovery periods must be calculated at the employee’s “regular rate of pay” and that retroactive adjustments must be made accordingly. As a background, California employees must be granted an uninterrupted 30-minute meal period if their workday exceeds 6 hours. A second uninterrupted 30-minute meal period must be provided if an employee works more than 10 hours in a day. The employee must be relieved of all duties during this period. In addition, non-exempt employees are due a 10-minute rest period every 4 hours, and employees who work outdoors must be allowed a 5-minute recovery period as needed. Employers who fail to provide these breaks must pay the employee one additional hour of pay at their regular rate of pay for each day the break isn’t provided. The regular rate includes nondiscretionary bonuses, shift differentials, commissions, and other types of compensation. California employers are advised to review compliance with California meal, rest, and recovery requirements. Always consult legal counsel before making any changes to your pay structure. For more information, click here. New Hampshire Voluntary Paid Leave Plan New Hampshire has enacted a voluntary paid leave program in which both employers and employees may opt into a paid leave plan. Those who elect to enroll may utilize the plan to take paid leave for the birth or adoption of a child or to care for their own or a family member’s serious health condition, as well as to care for a member of the armed forces. Employers who opt into the program must participate in payroll deductions to purchase insurance to cover the paid leave. Coverage under the plan must be provided by January 1, 2023. Covered employees will receive 60% wage replacement for up to 6 weeks annually, capped at 60% of the Social Security wage base. The effective date of the law is July 1, 2021, requiring the Request for Proposal process to begin no later than March 31, 2022. More details will be forthcoming in the coming months. Oregon Paid Family and Medical Leave (PFML) Delayed Oregon workers will wait a bit longer for paid family and medical leave, while employers will have more time to comply with PFML regulations. Under the original Oregon House Bill 2005, benefits for covered employees were slated to begin January 1, 2023, with the employer and employee contributions beginning January 1, 2022. Eligible Oregon workers will be entitled to 12 weeks of paid leave for the birth of a child, to care for themselves or a family member due to a serious illness, or to deal with issues relates to domestic violence and harassment. However, implementation of the PFML program was delayed under House Bill 3398. Contributions will now begin January 1, 2023, and benefits for covered employees will begin September 3, 2023. Virginia Releases New Overtime Law FAQ On July 1, 2021, Virginia’s new overtime law went into effect. Prior to this, Virginia did not have its own overtime law and followed overtime regulations under the FLSA. Virginia’s new overtime law is very similar to the FLSA, requiring time-and-a-half for hours worked in excess of 40 in a week. However, the law does differ in the calculation of the regular rate. Under the FLSA, an employee’s regular rate of pay is the sum of all renumeration (wages, shift differentials, bonuses, etc.) divided by the total hours worked in the workweek. Virginia’s regular rate of pay calculation differs depending on whether an employee is hourly or salaried. For hourly employees, the regular rate of pay is the hourly rate plus any other non-overtime compensation divided by the totals hours worked in the week. For salaried employees, the regular rate of pay is one-fortieth of all includible wages in the workweek. Virginia has released FAQs to assist employers in complying with its new overtime law. For a copy of the law, click here.

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Pay Matters: Fall 2021

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