DOL Wage Office Nets Record $322 Million For Underpaid Workers
The U.S. Department of Labor's Wage and Hour Division (WHD) releases an annual report highlighting its work in the previous fiscal year, specifically how much it recovered for underpaid workers. Last week it reported that in 2019 it collected a record $322 million for workers shorted on overtime, minimum wages and other compensation.
According to WHD, that's an average of $883,000 collected in back wages for workers per day, or enough to feed more than 900 families for a month. To put it on an individual basis, WHD investigations in fiscal year 2019 found, on average, $1,025 for each employee due back wages. For retail cashiers, that means more than three times what they would earn in a typical workweek. Here’s how much $1,025 can mean to a worker.
Underpayment or non-payment of wages owed to workers is illegal and is technically considered “wage theft.” It most often occurs with low-income workers. Many states have laws that require employers to pay employees for all hours worked and to pay employees at regular intervals, such as biweekly or semimonthly. These laws may impose penalties on employers that do not comply with the law and may even provide for criminal prosecution. Employers, especially those with lower income employees, should make sure they familiarize themselves with both state and federal wage laws. For assistance with the new overtime rule, download our HR Toolkit.
DOL Proposes New Method for Electronic Delivery of Retirement Plan Disclosures
On Oct. 23, 2019, the U.S. Department of Labor (DOL) published a proposed rule that would allow plan administrators to make retirement plan disclosures available on a website.
The safe harbor would be permitted for employee pension benefit plan disclosures, such as summary annual reports or pension benefit statements, but not for any document that must be furnished upon request. The proposal would not apply to employee welfare benefit plans, such as group health plans or plans providing disability benefits.
If the proposal is adopted, plan administrators may continue to use the existing safe harbor for electronic delivery or to furnish paper documents by hand-delivery or mail.
The proposal would provide a new, optional method where plan administrators who satisfy specified conditions may furnish documents electronically, unless participants affirmatively opt out. Unfortunately, the proposal does not extend to health and welfare plans at this time, though the DOL has requested that employers submit their thoughts on how this new method may work in the welfare plan space by submitting comments on the proposed rule.
California Enacts Employer Notice Requirement for FSAs
Beginning in 2020, a new California law requires employers that sponsor flexible spending accounts (FSAs) to notify employees of any deadline for withdrawing FSA funds before the end of the plan year. This requirement applies to dependent care, health care and adoption assistance FSAs.
The new law appears to apply to employees who terminate employment (or otherwise lose FSA eligibility) during the plan year. As a general rule, employees who do not withdraw FSA funds by the plan’s deadline forfeit any unused amounts.
Employers must provide this notice by two different forms, one of which may be electronic. Permissible methods of communication include email, text message, postal mail and in-person communication.
Although the law does not include a specific penalty for failing to provide the notice, it is possible that affected employees may pursue a refund of their unspent FSA funds. Additionally, ERISA may preempt this notice requirement for health care FSAs, but there has been no official guidance on this point that would currently permit an exemption.
Employers with FSAs should review their deadlines for withdrawing funds prior to the end of the plan year and prepare to start providing this notice in 2020. If they are using a TPA to administer their FSA, they should verify if that TPA will handle this notice requirement for them. As a courtesy, Higginbotham’s FSA administration platform already has this feature built-in, and all account holders with balances are reminded to use their funds prior to the end of the year.
New FSA and 401(k) Limits Announced
This week the Internal Revenue Service (IRS) announced the tax year 2020 annual inflation adjustments for more than 60 tax provisions, including flexible spending accounts (FSAs), qualified transportation and parking fringe benefits and 401(k) retirement plans. The new limits are:
- In 2020, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements is $2,750, up $50 from the limit for 2019;
- In 2020, the monthly limitation for the qualified transportation fringe benefit is $270, as is the monthly limitation for qualified parking, up from $265 for tax year 2019; and
- In 2020, the contribution limit for employees who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan is increased from $19,000 to $19,500, the catch-up contribution limit for employees aged 50 and over who participate in these plans is increased from $6,000 to $6,500 and the limitation regarding SIMPLE retirement accounts for 2020 is increased to $13,500, up from $13,000 for 2019.
Employers wanting to increase these limits for their employees in 2020 will need to update their benefit enrollment materials and plan documents.
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