This article was originally posted on Kelley Drye’s Labor Days Blog.

As employers look for creative ways to help employees manage their student loan debt, the IRS recently ruled that employer nonelective contributions to a 401(k) plan for employees who make student loan repayments would not violate the Internal Revenue Code’s contingent benefit rule. That rule prohibits an employer from making any benefit (other than matching contributions) contingent, directly or indirectly, on an employee’s making, or not making, elective deferrals under the 401(k) plan.

The guidance came in the form of a Private Letter Ruling (“PLR”), which may only be relied on by the employer who requested the ruling. Nonetheless, the PLR is instructive for other employers wishing to provide similar tax-favored benefits for employees who may not otherwise be in a position to contribute to their retirement savings.

In the PLR, the employer’s 401(k) plan provided a 5% match on eligible compensation for each pay period in which the employee made an elective deferral of at least 2% of eligible compensation. The employer proposed amending the plan to allow employees to opt out of the 5% match and, in lieu thereof, receive nonelective contributions to the plan equal to 5% of their eligible compensation for each pay period in which they make student loan repayments of at least 2% of their eligible compensation. Employees participating in the student loan repayment program would be eligible for a true-up matching contribution for any pay period in which they made elective deferrals to the plan but failed to make the 2% student loan repayment necessary to receive the nonelective contribution for such pay period. These nonelective and true-up matching contributions would be subject to the same vesting schedule as regular matching contributions and would be deposited in an employee’s account as soon as practicable after the end of the plan year if he/she were employed on the last day of the play year (except in the case of death or disability). The nonelective contributions would be subject to all plan qualification requirements and would not be treated as a match for 401(m) discrimination testing purposes (but any true-up matching contribution would be). All employees eligible to participate in the 401(k) plan would be eligible to participate in the program and could opt out prospectively at any time and resume eligibility for regular matching contributions. The employer represented that it had no intention of extending student loans to any employee eligible for the program.

To read the full advisory on the Kelley Drye website, click here.

This post was written by Barbara E. Hoey and Steven R. Nevolis and originally posted on Kelley Drye’s Labor Days Blog.

As the summer reaches its peak, New York employers may be more concerned with juggling employee vacation schedules than drafting new policies. But with New York’s recent anti-sexual harassment legislation coming into effect this October, and continuing into the spring for New York City, employers need to begin rolling out new policies and ensuring that training is in place to meet these new standards. This alert provides a brief summary of the new requirements so that employers aren’t left without guidance during the dog days of summer.

New York State
On April 12, 2018, Governor Cuomo signed into law New York State’s newest anti-sexual harassment requirements, which will come into effect on October 9, 2018. For the first time, the state is mandating both a written policy and annual training for all employers.

New York City
For employers operating within the five boroughs with 15 or more employees, effective April 1, 2019, these employers will have to comply with Mayor de Blasio’s Stop Sexual Harassment in New York City Act. Like the New York State legislation, this law requires employers to complete annual employee training on sexual harassment. There is no requirement in this law regarding a written policy.

To read the advisory on the Kelley Drye website, click here.

This post was written by Barbara E. Hoey and Alyssa Smilowitz and originally posted on Kelley Drye’s Labor Days Blog.

Last week the EEOC released its annual report breaking down charges received during the fiscal year. In fiscal year 2017, the agency received 84,254 charges and took in $398 million between voluntary resolutions and litigation.

What’s striking is the number of retaliation charges – with 41,097 charges it is an overwhelming 48.8% of total charges filed in 2017. In second place was race with 28,528 charges, followed closely by disability in third place with 26,838. Charges based on sex were not far off with 25,605 charges in the year. The EEOC received 6,696 sexual harassment charges, which is a slight drop from fiscal year 2016’s 6,758 charges.

As employers face more internal complaints of harassment – this retaliation number further highlights the critical importance of a robust and well-honed investigation process. Employers need to handle investigations very carefully, and be mindful that the complainant (and the witnesses) may also be the source of your next retaliation complaint. Investigators and managers must be carefully trained to avoid situations which can lead to complaints or retaliation.

Overall, the EEOC resolved close to 100,000 charges in fiscal year 2017 (99,109), reducing the charge workload to the agency’s lowest inventory in a decade.

This post was originally posted on Kelley Drye’s Labor Days Blog.

At the end of 2017, President Trump signed into law The Tax Cuts and Jobs Act (the “Act”) that includes significant changes in the employee benefits area, most of which became effective on January 1, 2018. The following is a brief description of some of the notable changes, and we expect additional guidance on many of the Act’s provisions.

Executive Compensation

IRC §162(m) Changes for Public Companies. The Act repeals the performance-based compensation exception to the $1 million pay cap under IRC §162(m) and expands the definition of “covered employee” to include anyone who holds the CEO or CFO position at any time during the tax year plus the three highest paid executive officers for the year. Under the new rules, once a covered employee, always a covered employee with respect to compensation paid in future years – including compensation that becomes payable following retirement (e.g., severance and deferred compensation) and amounts payable to beneficiaries. Under a transition rule, compensation payable pursuant to a written binding contract in effect on November 2, 2017 that is not materially modified thereafter is exempt from the new requirements.

Qualified Retirement Plans

Loan-Offset Rollovers. Previously, a terminated participant who defaulted on a plan loan was deemed to have taken a taxable distribution for the outstanding loan balance unless that amount was contributed to another qualified plan or IRA within 60 days of termination. The Act extends the 60-day period to the due date (including extensions) for filing the participant’s tax return for the year the loan default occurs.

2016 Disaster Relief. Much like the relief provided by the Disaster Tax Relief and Airport and Airway Extension Act of 2017 (see our previous Client Advisory), the Act provides individuals impacted by major disasters in 2016, including Hurricane Matthew, with penalty-free access to retirement funds through qualified distributions of up to $100,000, allows the amount distributed to be repaid over 3 years, and allows taxpayers who cannot repay the distribution to spread out any income inclusion over 3 years. Plan amendments implementing these provisions must be adopted on or before December 31, 2018 (for calendar year plans).

Hardship Withdrawals. Defined contributions plans that allow for safe-harbor hardship withdrawals should examine the extent to which hardship withdrawals may be permitted due to casualty losses as the Act restricts what may be classified as a casualty loss.

To read the full advisory, click here.

This post was written by Matthew C. Luzadder and Jeffrey Hunter and originally posted on Kelley Drye’s Labor Days Blog.

Take action now to meet the new policy, training, and certification requirements.

Beginning January 1, 2018, Illinois lobbyists and their employers must comply with new sexual harassment compliance rules. Governor Bruce Rauner signed into law Public Act 100-0554 (the Act) to combat sexual harassment in the state legislature. The Act imposes sweeping new requirements on lobbyists even if they are the victims. Press reports detail a number of allegations involving legislators, including some made by lobbyists and activists. One allegation forced the Senate majority leader to step-down from his post. In addition, hundreds of women signed an open letter to bring attention to this pattern of abuse in the state capitol. It appears that discussion of sexual harassment will continue into 2018.

Before the Act, only the Legislative Inspector General could investigate allegations of legislators’ sexual misconduct. That position, however, has been vacant since 2014. Notably, more than two dozen allegations sat uninvestigated on an empty desk. Now, state law authorizes the Secretary of State Inspector General to investigate allegations and the State Executive Ethics Commission to enforce the rules. The legislature, in policing itself, requires lobbyist employers to follow much the same requirements as state agencies in combatting sexual harassment.

Kelley Drye has followed this issue closely and is advising clients on proactive steps they can take to prevent sexual harassment. Stopping the “Harveys in our midst” before they can harm our colleagues or our businesses is more important than ever before. Relying on a generic HR sexual harassment policy is not enough. Employers—not just their registered lobbyists—face new requirements with only weeks to comply. Continue Reading New Sexual Harassment Requirements for Illinois Lobbyists

It may come as no surprise, but employees working in private industry are less likely to suffer an injury or illness than those in state and local government. The Bureau of Labor Statistics’ (“BLS”) recently released Injuries, Illness, and Fatalities data reports that the private industry injury and illness rate declined from 3.2 recordable cases per 100 full-time equivalent workers in 2014 down to 3.0 in 2015.[1] On the other hand, state and local government’s numbers increased slightly. BLS compiles these rates through confidential reports that include information similar to the data that the Occupational Safety and Health Administration requires many employers to maintain on injuries and illnesses requiring medical treatment beyond first aid.

Need specifics? We’ve got the numbers:

Private Sector—2015 (2014 in parentheses):

  • Transportation, warehousing: 4.5 (4.8)
  • Manufacturing: 3.8 (4.0)
  • Natural Resources, Mining: 3.7 (3.8)
  • Construction: 3.5 (3.6)
  • Wholesale Trade: 3.1 (2.9)
  • Utilities: 2.2 (2.4)
  • Educational Services: 2.1 (2.1)
  • Health Care, Social Assistance: 4.3 (4.5)
  • Leisure, Hospitality: 4.1 (3.6)
  • Retail Trade: 3.5 (3.6)
  • Information/Media: 1.3 (1.4)
  • Financial Activities: 1.1 (1.2)
  • Professional/ Business Services: 1.4 (1.5)

Public Sector—2015 (2014 in parentheses):

  •  Local Government Heavy, Civil Engineering Construction : 8.0 (8.6)
  • Local Government Transportation, Warehousing: 7.6 (7.5)
  • Local Government Utilities: 6.2 (5.4)
  • Local Justice, Safety Activities: 9.5 (9.5)
  • State-run Nursing, Residential Care Facilities: 12.6 (12.6)
  • State-run Hospitals: 8.1 (8.7)

 

 

[1] See Injuries, Illnesses, and Fatalities, United States Department of Labor Bureau of Labor Statistics, http://www.bls.gov/iif/oshsum.htm.

The team at NSFW is honored to work alongside a number of distinguished veterans, and we are proud of the veterans in our families as well (Thanks Pop!). In honor of Veterans Day, the veterans in our lives, and all the men and women who served, NSFW recommends veterans and employers visit https://www.va.gov/jobs/. Giving a veteran a job is not a bad way to say thanks.

Thanks Vets!