Colorado Compliance Connection - February 25

Federal Compliance Update

Federal Court Partially Blocks Trump DEI Executive Orders

On Feb. 21, 2025, the U.S. District Court for the District of Maryland issued a nationwide preliminary injunction, temporarily blocking certain provisions of Executive Order (EO) 14151 and Executive Order (EO) 14173 issued by President Donald Trump on Jan. 20, 2025, and Jan. 21, 2025, respectively. The EOs aim to combat “illegal diversity, equity and inclusion (DEI) programs” in the federal and private sectors.

Background

EOs 14151 and 14173 seek to terminate all illegal DEI mandates, policies, programs, preferences and activities in the federal and private sectors. The following orders are among those included in the EOs:

• EO 14151 directs executive agencies to terminate “equity-related” grants or contracts (“Termination Provision”).
• EO 14173 directs executive agencies to include in every contract or grant award a certification that the contractor or grantee does not operate any programs promoting DEI that violate applicable federal antidiscrimination laws (“Certification Provision”) and the U.S. attorney general to take appropriate measures to end illegal DEI in the private sector, deter such programs or principles, and identify potential civil compliance investigations (including a requirement that the U.S. attorney general submits a report recommending measures to combat illegal private-sector DEI initiatives) (“Enforcement Threat Provision”).

Court Ruling

In the National Association of Diversity Officers in Higher Education v. Trump, the plaintiffs argue that the above provisions are unconstitutional and should be vacated. In its ruling, the District Court of Maryland temporarily blocked the Termination and Certification Provisions and part of the Enforcement Threat Provision. In its opinion, the court reasoned that:

• The Termination and Enforcement Threat Provisions are likely unconstitutionally vague because they fail to define key terms, including “equity-related” and “illegal DEI,” and, therefore, do not provide fair notice of what is required under the EOs; and
• The Certification and Enforcement Threat Provisions likely violate the First Amendment right to freedom of speech by seeking to deter DEI-related speech with which the government disagrees.

However, the court declined to enjoin the portion of EO 14173 that directs the U.S. attorney general to submit a report recommending measures to combat illegal private-sector DEI initiatives.

Employer Takeaways

While the preliminary injunction provides temporary relief from certain enforcement activity under the EOs, including the Termination and Certification Provisions for government contractors, employers should prepare for uncertainty since the injunction is only temporary and is likely to be appealed by the Trump administration.

Moreover, neither the initial EOs nor the preliminary injunction alter employers’ legal obligations, as employers are still prohibited from considering an individual’s protected trait (e.g., race, color, sex, religion, age or national origin) in employment decisions. Therefore, employers may consider reviewing existing DEI practices to ensure they do not discriminate based on a federally protected trait.

IRS Issues ACA Reporting Guidance on Providing Statements Upon Request

The IRS has issued Notice 2025-15 providing guidance on the alternative manner of furnishing statements to covered individuals and full-time employees, using Forms 1095-B and 1095-C, in accordance with the Affordable Care Act’s (ACA) reporting requirements.

Background

The Paperwork Burden Reduction Act, enacted at the end of 2024 and applicable to 2025 reporting deadlines, provides that reporting entities are no longer required to send Forms 1095-B and 1095-C to covered individuals and full-time employees unless a form is requested. The legislation codified an existing alternative manner of furnishing Forms 1095-B established by a 2022 final rule and extended it to Forms 1095-C.

Alternative Manner of Furnishing

The legislation provides that reporting entities must notify individuals of their right to request a copy of the statement “at such time and in such manner as the [IRS] may provide” to take advantage of the alternative furnishing method. These requirements are now set forth in IRS Notice 2025-15, which also applies to 2024 calendar year reporting due in early 2025.

In addition, any request must be fulfilled by Jan. 31 of the year following the calendar year to which the return relates or 30 days after the date of the request, whichever is later.

Timely Notice to Individuals

For 2024 statements required to be furnished in 2025, reporting entities will be able to provide Forms 1095-B and 1095-C upon request if they:

• Post a clear and conspicuous notice on its website by March 3, 2025, stating that covered individuals and full-time employees may receive a copy of their statement upon request. The notice must include:
  
  • An email address;
  •  A physical address to which a request may be sent; and
  • A telephone number to contact the reporting entity.

Retain the notice in the same location on its website through Oct. 15, 2025.

Action Steps

Reporting entities wishing to take advantage of the alternative manner of furnishing Forms 1095-B and 1095-C should take steps to post the appropriate notice on their websites by March 3, 2025, and ensure it is retained through Oct. 15, 2025. Otherwise, reporting entities must provide Forms 1095 to each covered individual and full- time employee (as applicable) by March 3, 2025.

In addition, reporting entities must continue to comply with applicable state reporting requirements. The alternative furnishing method set forth in IRS Notice 2025-15 applies to federal reporting requirements.

Colorado Compliance Update

Nothing new for this month…
 

News Section! Compliance Rewind

Periodically, we will provide a quick look back at laws and regulations that may have faded from the forefront but still impact businesses today. If you would like to see a review of a particular employment law or regulation, feel free to email me at kelly@lhrs.net.

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Americans with Disabilities Act (ADA) and the Pregnant Workers Fairness Act (PFWA)

In general, both the ADA and the PWFA require employers to reasonably accommodate certain known limitations related to disability and pregnancy, childbirth or related medical conditions, respectively. While these laws impose similar obligations on employers, they differ in several significant ways, and the PWFA generally imposes greater requirements on employers than the ADA does. To avoid potentially costly and time-consuming legal challenges, it is crucial for employers to understand their obligations under both laws.

The following provides a high-level overview of some of the key differences between ADA and the PWFA reasonable accommodation requirements. In most cases, the PWFA imposes greater requirements on employers.

Qualified Individual

• ADA: Qualified individuals include employees and applicants who meet legitimate skill, experience, education, or other requirements of an employment position that they seek and are able to perform the essential functions of the job with or without reasonable accommodation.
• PFWA: Qualified individuals include employees and applicants who are able to perform the essential functions of the job, with or without reasonable accommodation or cannot perform an essential function of the job but such inability is temporary, the essential function could be performed in the “near future”, and such inability to perform an essential function can be reasonably accommodated. Under the PWFA, “temporary” means lasting for a limited time, not permanent, and may not extend beyond the near future. In the case of pregnancy, “near future” generally means 40 weeks from the start of the interruption of an essential job function but is not defined for childbirth or related medical conditions.

Known Limitations Covered Under the Law

• ADA: Requires employers to reasonably accommodate a qualified individual’s known limitation related to disability, which includes any of the following: Having a physical or mental impairment that substantially limits one or more major life activities of an individual, having a record of such impairment, or being regarded as having such an impairment.
• PFWA: Requires employers to reasonably accommodate an individual’s known limitation related to, affected by, or arising out of pregnancy (including uncomplicated pregnancies), childbirth, and related medical conditions (including but not limited to miscarriage, postpartum depression, edema, placenta previa and lactation). “Related medical conditions” also include not only new physical and mental conditions originating in pregnancy but also preexisting conditions exacerbated by pregnancy or childbirth (e.g., diabetes or high blood pressure).

Required Severity of the Limitations

• ADA: To qualify for accommodation, an individual’s impairment must substantially limit one or more major life activities. The impairment may be episodic or in remission but must reach the required level of severity when active.
• PWFA: The limitation need not rise to any level of severity to qualify for accommodation (e.g., pregnancy in and of itself is a known limitation) and maybe modest, minor and/or episodic. The individual’s known limitation does not need to meet the definition of a disability under the ADA in order to be covered.

Requiring Leave as Accommodation

• ADA: Leave (either paid or unpaid) is a form of reasonable accommodation under the ADA, and the law generally does not restrict an employer’s ability to grant leave as reasonable accommodation.
• PFWA: While leave can be a reasonable accommodation under the PWFA, an employer cannot require that an employee take leave if another reasonable accommodation would enable the employee to continue working.

Keep in mind there are other elements of each law that are not expressly discussed in this comparison.

Compliance Calendar

March

3/2 – Deadline to Submit Form 300A Data to OSHA

3/3 – Medicare Part D Creditable Coverage Disclosure Deadline (Calendar Year Plans Only) 3/31 – Forms 1094-B, 1095-B, 1094-C and 1095-C Filing Deadline (electronic filers)

April

4/30 – Form 941 Filing Deadline 4/30 – Remove OSHA Form 300A

May

Nothing so far…