Federal Compliance Update

Supreme Court Reaffirms Qualifications for FLSA Overtime Exemptions

On Feb. 22, 2023, the U.S. Supreme Court held in Helix Energy Solutions Group Inc. v. Hewitt (Helix) that employees must be compensated on a salary basis to qualify for the highly compensated employee overtime exemption under the Fair Labor Standards Act (FLSA).

FLSA Overtime Exemptions

To qualify for an overtime exemption under the FLSA, employees must satisfy certain specified criteria for that exemption. The most common types of FLSA overtime exemptions apply to so-called “white collar” employees. One of these white collar exemptions applies to highly compensated employees and requires these employees to:

• Earn a total annual compensation of $107,432 or more, including at least$684 per week paid on a salary or fee basis;
• Perform office or nonmanual work as their primary duty; and
• Customarily and regularly perform at least one of the exempt duties or responsibilities of an exempt executive, administrative or professional employee.

Supreme Court Decision

In Helix, the employer claimed that an employee (Hewitt), who made more than$200,000 per year but was paid on a daily basis, qualified for the highly compensated employee overtime exemption. Its argument was that paying a minimum amount per day could count as a salary.

The Court disagreed, ruling that the FLSA plainly requires highly compensated employees to receive a salary. The Court also held that this requirement is not met “when an employer pays an employee by the day, as Helix paid Hewitt. ”With this decision, the Court reasoned that the salary basis test “typically refers to the unit or method for calculating pay, not the frequency of its distribution.”

Impact on Employers

It is unlikely that many employers will have to change their payroll policies and procedures for highly compensated employees. However, this decision is a clear signal that courts may require strict compliance with FLSA overtime exemptions. As a result, employers should review their exempt employee classification process to make sure they meet not only duty qualification but also salary requirements.

FLSA Highlights

• The FLSA requires overtime pay for all hours worked over 40 hours per week unless an exemption applies (state regulations may differ from the federal requirements).
  
• Overtime pay is 1.5 times an employee’s regular wage rate.
• The FLSA white collar exemptions usually require employees to satisfy a salary basis test, a salary level test, and a duties test.
• Under the salary basis test, employees must receive a fixed salary that is not based on quality or quality of performance.
• The salary level test is the minimum amount of wages employees must earn to qualify for the exemption.
• The duties test defines the principal job responsibilities an employee must perform.

Federal: DOL Releases Guidance Covering Telework, FLSA (including Lactation), and FMLA

On February 9, 2023, the U.S. Department of Labor (DOL) issued Field Assistance Bulletin (FAB) No.  2023-1, addressing the following topics for employers and their teleworking employees:

• The Fair Labor Standards Act (FLSA), ensuring teleworking employees are paid correctly, and how to apply FLSA-mandated break time for nursing employees to express milk while teleworking.
• The Family and Medical Leave Act (FMLA) and determining eligibility when employees telework or work away from an employer’s workplace.

Employees who work from home, telework, or work away from their employer-controlled workplace continue to be covered by FLSA and FMLA protections. Under the FLSA, employees (including those who telework) must be paid for all hours worked and short rest breaks. For breaks to express breast  milk, the FLSA doesn't require employers to compensate nursing employees for breaks taken to express milk; but when an employer provides compensated breaks, an employee (to include those who telework) who uses that break time to express milk must be compensated for the break. In addition, consistent with the FLSA’s general requirement, if an employee is not completely relieved from duty during these breaks, the time must be compensated as work time. If a remote employee chooses to attend a video meeting or conference call, even if off camera, generally the employee in that case is not relieved from duty and, therefore, must be paid for that time. Protections under the FLSA apply equally to employees who telework as they do to employees working at an office, factory, construction site, retail outlet, or any other worksite location.

Under the FMLA, all the hours an employee works are counted to determine their FMLA eligibility. This includes when they telework from home, consistently or in combination with working at other worksites. The FMLA also requires that they work at a location where the employer has at least 50 employees within 75 miles where the employee works; however, under the FMLA, the employee’s personal residence is not a worksite. So, for a teleworker, this worksite threshold is fact-specific to them and based on certain elements of their job. For instance, where does the teleworker report for work? Where is the office where they get their assignments? Either of these locations could be established as their workplace and then the threshold is applied (are there at least 50 employees within 75 miles of that location?).

The DOL provides the following example: “Beatrice works in data processing for an advertising company headquartered in a large city and teleworks from her home more than 75 miles away. Many of the employees in Beatrice’s department telework from different cities and states. All teleworking employees are assigned projects for data analysis by the manager who works at the company headquarters. Beatrice’s worksite, for FMLA eligibility determination, is the company’s headquarters.

The company’s headquarters is also, under the FMLA, the worksite for the data processors in Beatrice’s department who telework from different cities and states but report to and receive assignments from their manager at headquarters. There are 300 total employees who work at or within 75 miles of the company’s headquarters. Thus, Beatrice is considered to be employed at a worksite where 50 or more employees are employed by the employer within 75 miles of that worksite even though she herself does not work within 75 miles of the company headquarters.”

Federal OSHA Form 300A Posting Begins February 1: Compliance Reminder

Employers that had 11 or more employees at any point in 2022 are required to post Occupational Safety and Health Administration (OSHA) Form 300A from February 1 through April 30 unless they qualify as an exempt low-risk industry. The employee count is based on the number of employees in the entire company, not per establishment. A full list of exempt low-risk industries, ordered by North American Industry Classification System (NAICS) codes, can be found here.

All covered employers are required to post Form 300A even if they didn’t have any recordable incidents in 2022. (Recordable incidents are required to be maintained on the OSHA Form 300 Log of Work- Related Injuries and Illnesses.) OSHA Form 300A must be certified by a company executive and posted in a conspicuous location where notices to employees are customarily posted.

You can find additional information on the OSHA Recordkeeping and Reporting Requirements law page on the platform.

Form 300A Electronic Submission Required for Certain Employers by March 2

Employers must submit their 2022 Form 300A data to OSHA if they have 250 or more employees or have 20–249 employees and are in certain high-risk industries. Employers must send this data electronically, using OSHA’s online Injury Tracking Application (ITA). The deadline to submit the report is March 2, 2023.

The electronic reporting requirements are based on the size of the establishment (how many employees are at the physical location), not how many employees are in the entire company.

Employers that are covered by a State Plan that has not yet adopted its own state rule must also use the ITA to send their data electronically. Employers that meet any of the following criteria DO NOT have to send their Form 300A information to OSHA:

• Employers that are exempt from OSHA’s routine recordkeeping requirements, as mentioned above.
• Employers that never had 20 or more employees during the previous calendar year, regardless of industry.
• Employers that had between 20 and 249 employees at some point during the previous calendar year but are NOT on this list of high-risk industries.

Additional information, FAQs, and the Injury Tracking Application can be found on OSHA’s ITA page.

How the End of the COVID-19 Emergency Periods Will Impact Health Plans

The Biden Administration has announced its plan to end the COVID-19 national emergency and public health emergency (PHE)on May 11, 2023. Employer-sponsored health plans have been required to comply with certain coverage requirements during the COVID-19 emergency periods, including the following:

• Health plans must cover COVID-19 diagnostic tests and related services without imposing any cost sharing (such as deductibles, copayments, or coinsurance) during the PHE; and
• Non-grandfathered health plans must cover certain preventive services, including recommended COVID-19 vaccines and boosters, without cost sharing. During the PHE, this coverage mandate applies to COVID-19 immunizations provided by all providers, regardless of whether they are in- network or out-of-network.
  

In addition, during the COVID-19 outbreak period (which is tied to the national emergency), certain health plan deadlines are extended, including the deadlines to request special enrollment under HIPAA, elect COBRA continuation coverage and comply with the plan’s claims and appeals procedures.

Impact on Health Plans

When the PHE ends, health plans will no longer be required to cover COVID-19 diagnostic tests and related services without cost sharing. Health plans will still be required to cover recommended preventive services, including COVID-19 immunizations, without cost sharing, but this coverage requirement will be limited to in-network providers. In addition, once the COVID-19outbreak period ends, health plans can go back to their nonextended deadlines for purposes of HIPAA special enrollment, COBRA continuation coverage, and claims and appeals procedures. se enforced.

PUBLIC HEALTH EMERGENCY

Background

HHS first declared that a PHE exists due to the COVID-19 pandemic on Jan. 31, 2020. A PHE declaration lasts for 90 days unless it is terminated early by HHS. At the end of the 90-day period, HHS can extend the PHE or let it expire. HHS has repeatedly extended the COVID-19 PHE since it began in early 2020. Most recently, HHS renewed the PHE on Jan. 11, 2023. HHS has promised to provide at least 60 days’ notice to the public before the PHE’s end date.

On Jan. 30, 2023, the Biden Administration announced its plan to end the PHE on May 11, 2023. The Biden Administration noted that it opposes proposed legislation that would immediately end the COVID- 19 emergency periods, stating that this would create chaos and uncertainty for the U.S. health care system.

Health Plan Changes

When the PHE ends, the following health plan coverage rules related to the COVID-19 pandemic will no longer apply:

• COVID-19 Diagnostic Testing Without Cost Sharing—During the PHE, health plans and health insurance issuers must cover COVID-19 tests and related services without imposing any cost sharing or prior authorization or other medical management requirements. As of Jan. 15, 2022, this coverage requirement extends to at-home COVID-19 diagnostic tests. Health plans and issuers will no longer be required to provide this first-dollar coverage when the PHE ends.
• COVID-19 Vaccines—Out-of-Network Providers—Non-grandfathered group health plans and health insurance issuers must cover coronavirus preventive services, including recommended COVID-19 immunizations, without cost sharing requirements. During the PHE, covered services may be provided by in-network or out-of-network providers. Once the PHE ends, health plans and issuers must continue to cover recommended COVID-19 immunizations without cost sharing but can limit this coverage to in-network providers.
• Standalone Telehealth Benefits—For plan years beginning during the PHE, a large employer (more than 50 employees) may offer standalone telehealth benefits and other remote care services to individuals who are not eligible for coverage under any other group health plan offered by the employer without violating the Affordable Care Act’s market reforms. These types of standalone arrangements will not be permitted after the PHE ends.

NATIONAL EMERGENCY – OUTBREAK PERIOD

Background

Various deadlines related to employer-sponsored group health plans are extended during the COVID- 19 outbreak period. The outbreak period began in March 2020, when former President Donald Trump declared a national emergency due to theCOVID-19 pandemic, and it will continue until 60 days after

the end of the COVID-19 national emergency (or such other date as announced by the federal government). Under this timeline, the outbreak period will end on July 10, 2023. 

Deadline Extensions

During the outbreak period, some key deadlines for employee benefit plans and participants are

extended. Deadline extensions that apply during the outbreak period include the following:

• HIPAA Special Enrollment—The 30-day period (or 60-day period, if applicable) to request special enrollment.
• COBRA Notice and Premium Payment Deadlines—The 60-day period to elect COBRA coverage; the date for making COBRA premium payments (generally at least 45 days after the day of the initial COBRA election, with a grace period of at least 30 days for subsequent premium payments); and the date for individuals to notify the plan of a qualifying event or disability determination (generally 60 days from the date of the event, loss of coverage or disability determination).
• Claims and Appeals Deadlines—The deadlines to file a benefit claim, file an appeal of an adverse benefit determination or request an external review of a claim under the plan’s claims and appeals procedures.

Under the relief, these deadline extensions end when the outbreak period is over or, if earlier, after an individual has been eligible for a specific deadline extension for one year.

PRE-DEDUCTIBLE TELEHEALTH COVERAGE

In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security (CARES)  Act allowed high deductible health plans (HDHPs) compatible with health savings accounts (HSAs) to provide benefits for telehealth or other remote care services before plan deductibles were met. This relief was not linked to the PHE or outbreak period; rather, it applied for plan years beginning before Jan. 1, 2022. A spending bill extended this relief to telehealth services provided in months beginning after March 31, 2022, and before Jan. 1, 2023.

The Consolidated Appropriations Act, 2023 (CAA), which was signed into law on Dec. 29, 2022, extends the ability of HDHPs to provide benefits for telehealth or other remote care services before plan deductibles have been met without jeopardizing HAS eligibility. This extension applies for plan years beginning after Dec. 31, 2022, and before Jan. 1, 2025. Thus, regardless of when the COVID-19 emergency periods end, HDHPs may be designed to waive the deductible for any telehealth services for plan years beginning in 2023 and 2024 without causing participants to lose HSA eligibility.

Federal: COBRA Model Notices Updated

On January 31, 2023, the U.S. Department of Labor updated the Consolidated Omnibus Budget Reconciliation Act (COBRA) model general and model election notices. These notices contain a new expiration date of January 31, 2026.

Updated COBRA Notices

• Model general notice (English) (Spanish)
• Model election notice (English) (Spanish)
  

State Compliance Update

All is quiet this month.

Compliance Calendar

March

3/2 – Deadline to Distribute Forms 1095-B and 1095-C 3/2 – Deadline to Submit Form 300A Data to OSHA

3/2 – Medicare Part D Creditable Coverage Disclosure Deadline for Calendar Year Plans 3/31 – Forms 1094-B, 1095-B, 1094-C, and 1095-C Filing Deadline for Electronic Filers

April

4/29 – Remove OSHA Form 300A 04/30 – Form 941 Filing Deadline (Q1)

May

Nothing this month