Federal Employment Law Update – November 2016
WHD Issues Administrator’s Interpretation on State Laws Prohibiting the Payment of Subminimum Wages to Workers with Disabilities
On November 17, 2016, the U.S. Department of Labor’s Wage and Hour Division (WHD) issued Administrator’s Interpretation 2016-2: Effect of state laws prohibiting the payment of subminimum wages to workers with disabilities on the enforcement of section 14(c) of the Fair Labor Standards Act (FLSA).
The Administrator’s Interpretation (AI) states that the FLSA does not pre-empt a state law that limits or prohibits the payment of wages lower than the state’s minimum wage and that section 14(c) certificate holders must comply with both federal and state laws. The AI notes that the Wage and Hour Division reviews 14(c) certificate applications on a case-by-case basis. The AI identifies that in states that limit or prohibit payment of subminimum wages, there may be circumstances in which a 14(c) certificate holder may pay commensurate wage rates to workers with disabilities under the certificate and comply with state law (e.g., if the certificate holder has a contract with the federal government that is covered by the Service Contract Act).
Read AI No. 2016-2
USCIS Releases New Form I-9
On November 14, 2016, U.S. Citizenship and Immigration Services (USCIS) released a revised version of Form I-9, Employment Eligibility Verification (version 11/14/2016). Employers may continue using Form I-9 with a revision date of 03/08/2013 through January 21, 2017. Beginning January 22, 2017, employers must use the revised form. Employers should continue to follow existing storage and retention rules for all of their previously completed Forms I-9.
Among the changes in the new version, Section 1 asks for “other last names used” rather than “other names used,” and streamlines certification for certain foreign nationals.
Other changes include:
- The addition of prompts to ensure information is entered correctly.
- The ability to enter multiple preparers and translators.
- A dedicated area for including additional information rather than having to add it in the margins.
- A supplemental page for the preparer/translator.
The instructions have been separated from the form, in line with other USCIS forms, and include specific instructions for completing each field.
The revised Form I-9 is also easier to complete on a computer. Enhancements include drop-down lists and calendars for filling in dates, on-screen instructions for each field, easy access to the full instructions, and an option to clear the form and start over. When the employer prints the completed form, a quick response (QR) code is automatically generated, which can be read by most QR readers.
Form I-9 requirements were established in November 1986 when Congress passed the Immigration Reform and Control Act (IRCA). IRCA prohibits employers from hiring people, including U.S. citizens, for employment in the United States without verifying their identity and employment authorization on Form I-9.
Download the New Form I-9
EBSA, IRS, PBGC Issue Advance Information Copies of 2016 Form 5500 Series
On November 9, 2016, the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA), the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC) released advance informational copies of the 2016 Form 5500 annual return/report and related instructions. The “Changes to Note” section of the 2016 instructions highlights important modifications to the Form 5500 and Form 5500-SF and their schedules and instructions:
- IRS Compliance Questions: Although they appear on the 2016 Form 5500, Form 5500-SF, Schedules H, I, and R, the IRS has decided that filers should not enter the “Preparer’s Information” at the bottom of the first page of Form 5500 for the 2016 plan year; and should not answer the IRS questions at Lines 4o and 6a through 6d of Schedules H and I and the “Part VII – IRS Compliance Questions” of the Schedule R. Similarly, filers who are using the Form 5500-SF to satisfy their annual reporting requirement should not complete the “Preparer’s Information” at the bottom of the first page, “Part VIII-Trust Information,” and “Part IX-IRS Compliance Questions” on the Form 5500-SF. Filers should skip these questions when completing the forms.
- Administrative Penalties: The instructions have been updated to reflect an increase in the maximum civil penalty amount assessable under the Employee Retirement Income Security Act section 502(c)(2) required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. Department regulations published on July 1, 2016 increased the maximum penalty to $2,063 a day for a plan administrator who fails or refuses to file a complete or accurate Form 5500 report. The increased penalty under section 502(c)(2) is applicable for civil penalties assessed after August 1, 2016 whose associated violation(s) occurred after November 2, 2015 — the date of enactment of the 2015 Inflation Adjustment Act.
- Schedules H and I: Line 5c is modified to add a new question. The existing Line 5c question asks, if a plan is a defined benefit plan, whether it is covered by the PBGC insurance program. The new question asks filers that answered “Yes,” to enter the My PAA-generated confirmation number for the PBGC premium filing for the plan year.
- Schedule SB. The instructions for Cooperative and Small Employer Pension (CSEC) plans, reported in Line 27, Code 1, have been updated to reflect guidance on certain issues relating to the application of the Cooperative and Small Employer Charity Pension Flexibility Act.
The advance copies of the 2016 Form 5500 are for informational purposes only and cannot be used to file a 2016 Form 5500 annual return/report. Pension and welfare benefit plans that are required to file an annual return/report regarding their financial conditions, investments, and operations each year generally satisfy that requirement by filing electronically the Form 5500 or Form 5500-SF and any required attachments under the all-electronic EFAST2 system for submission, receipt, and processing of the Form 5500 and Form 5500-SF.
EEOC Posts Webinar on New EEO-1 Report
On November 3, 2016, the Equal Employment Opportunity Commission (EEOC) announced that it has posted online a recording of its October 26, 2016 webinar for employers about the new EEO-1 report. The webinar gives an overview of the EEO-1 report, describes the process of reporting and submitting summary pay and hours worked data, and gives examples of how to enter the data on the new form. The EEOC has also made additional information available on a webpage dedicated to its 2017 EEO-1 Survey, including the webinar presentation slides, the new form, a Fact Sheet for Small Business, and a questions and answers (Q&A) document.
Beginning March 2018, the EEO-1 report will collect summary pay and hours worked data, in addition to demographic information, from certain employers. The EEOC says that the new information will improve investigations of possible pay discrimination, which remains a contributing factor to persistent wage gaps.
EEOC Posts Webinar on Wellness Program Rules
On November 3, 2016, the Equal Employment Opportunity Commission (EEOC) announced that it has posted online its October 19, 2016 webinar about its May 2016 final rules on employer wellness programs under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). The rules address how the ADA and GINA apply to employer-sponsored wellness programs that request health information from employees and their family members. The rules permit limited incentives for employees and spouses to participate in these programs, but also include important privacy protections.
In the October 19 webinar, EEOC attorneys provided information aimed at helping employers and wellness programs comply with the rules, including an overview of both rules and answers to frequently asked questions directed to the commission since the rules were published. A guest speaker from the Labor Department’s Employee Benefits Security Administration also discussed the interaction between the EEOC’s final rules and certain provisions of GINA and the Affordable Care Act applicable to employment-based group health plan coverage. The webinar is targeted to HR professionals, benefits attorneys, and wellness program vendors.
View the Webinar