What is an EAP?

September 06 - Posted at 10:00 AM
During this episode of Myra’s Minutes, we will explain what an Employee Assistance Program (EAP) is and well as the valuable free tools available to employees to help deal with problems they encounter both at work and home.

Did you know that 70% of employees who use an EAP service report that their stress levels improve?

You can view this short video here. 

IRS Releases ACA Shared Responsibility Affordability Percentage for 2024

September 05 - Posted at 10:00 AM Tagged: , , , ,

The IRS recently issued Revenue Procedure 2023-29, which significantly decreases the affordability threshold for ACA employer mandate purposes to 8.39% for plan years beginning in 2024. The new 8.39% level marks by far the lowest affordability percentage to date.

The affordability percentages apply for plan years beginning in the listed year. A calendar plan year will therefore have the 8.39% affordability threshold for the plan year beginning January 1, 2024.

The ACA employer mandate rules apply to employers that are “Applicable Large Employers,” or “ALEs.” In general, an employer is an ALE if it (along with any members in its controlled group) employed an average of at least 50 full-time employees, including full-time equivalent employees, on business days during the preceding calendar year.

There are two potential ACA employer mandate penalties that can impact ALEs:

a) IRC §4980H(a)—The “A Penalty”

The first is the §4980H(a) penalty—frequently referred to as the “A Penalty” or the “Sledge Hammer Penalty.” This penalty applies where the ALE fails to offer minimum essential coverage to at least 95% of its full-time employees in any given calendar month.

The 2024 A Penalty is $2,970 annualized multiplied by all full-time employees (reduced by the first 30). It is triggered by at least one full-time employee who was not offered minimum essential coverage enrolling in subsidized coverage on the Exchange.

The “A Penalty” liability is focused on whether the employer offered a major medical plan to a sufficient percentage of full-time employees—not whether that offer was affordable (or provided minimum value).

b) IRC §4980H(b)—The “B Penalty”

The second is the §4980H(b) penalty—frequently referred to as the “B Penalty or the “Tack Hammer Penalty.” This penalty applies where the ALE is not subject to the A Penalty (i.e., the ALE offers coverage to at least 95% of full-time employees).

The B Penalty applies for each full-time employee who was:

  1. not offered minimum essential coverage,
  2. offered unaffordable coverage, or
  3. offered coverage that did not provide minimum value.

Only those full-time employees who enroll in subsidized coverage on the Exchange will trigger the B Penalty. Unlike the A Penalty, the B Penalty is not multiplied by all full-time employees.

In other words, an ALE who offers minimum essential coverage to a full-time employee will be subject to the B Penalty if:

  1. the coverage does not provide minimum value or is not affordable (more below); and
  2. the full-time employee declines the offer of coverage and instead enrolls in subsidized coverage on the Exchange.

The 2024 B Penalty is $4,460 annualized per full-time employee receiving subsidized coverage on the Exchange.

Handbooks Need Revision Following NLRB Ruling

August 07 - Posted at 12:57 PM Tagged: , , ,

Many employer handbooks and policies likely should be reviewed and revised following a landmark Aug. 2 ruling by the National Labor Relations Board (NLRB), Stericycle.

“This ruling, in a word, is huge,” said David Pryzbylski, an attorney with Barnes & Thornburg in Indianapolis. “This decision may invalidate countless workplace rules maintained by private-sector employers—whether they are unionized or not. It applies to all companies covered by the National Labor Relations Act [NLRA], which is the vast majority of employers in America.”

The NLRA does not apply to federal or state governmental units, railroads or airlines.

Employers need to create documentary evidence of the justification for their work rules before an unfair labor practice charge is filed, recommended Harry Johnson III, an attorney with Morgan Lewis in Los Angeles and former NLRB member.

New Standard

In Stericycle, an administrative law judge found that the employer violated the NLRA by maintaining certain rules for its employees that addressed personal conduct, conflicts of interest and confidentiality of harassment complaints. The NLRB announced a new standard for whether work rules violate the NLRA and sent the case back to the judge to consider the ruling in light of the new standard.

Under that standard, if an employee could reasonably interpret the work rule to have a coercive meaning, the NLRB general counsel would have met her burden to prove that the rule has a reasonable tendency to chill employees from exercising their NLRA rights. The general counsel, currently Jennifer Abruzzo, is independent from the board and responsible for the investigation and prosecution of unfair labor practice cases under the NLRA.

The employer’s intent in maintaining a work rule is immaterial, the NLRB wrote. The board instead clarified it will interpret the rule from the perspective of an employee who is subject to the policy, economically dependent on the employer and contemplates engaging in protected concerted activity.

Concerted activity includes talking with one or more co-workers about wages and benefits or other working conditions, circulating a petition asking for better hours, participating in a concerted refusal to work in unsafe conditions, openly talking about pay and benefits, and joining with co-workers to talk directly to the employer, an agency or the media about problems in the workplace, according to the NLRB.

It’s hard to imagine the general counsel won’t be able to prove that a rule has a reasonable tendency to chill employees from exercising their NLRA rights, said Phil Wilson, president and general counsel with the Labor Relations Institute, a labor and employee relations consulting firm in Broken Arrow, Okla.

If the general counsel provides such proof, the rule is presumptively unlawful. However, the employer may counter the presumption by proving that the rule advances a legitimate and substantial business interest and that the employer can’t advance that interest with a more narrowly tailored rule. If the employer proves this, the work rule will be found lawful.

However, “with little actual guidance about the meaning of the phrases above, needless to say, it is an incredibly uphill battle if an employer finds itself trying to rebut the presumption,” said Jason Reisman, an attorney with Blank Rome in Philadelphia.

In addition, the Stericycle opinion discarded previous NLRB decisions holding that certain types of policies were inherently lawful, regardless of the precise language in which the policy is expressed, in favor of evaluation of each challenged policy on a case-by-case basis, said Peter Spanos, an attorney with Taylor English Duma in Atlanta. Policies that are no longer deemed by the board always lawful to maintain are investigative-confidentiality rules, nondisparagement rules and rules prohibiting outside employment.   

“Employee handbooks and policies that were adopted or revised based on prior guidance from the NLRB may now be subject to challenge,” he said.

The decision probably will be appealed. The appellate process can take many months or even years, Pryzbylski added. “In the meantime, the board will be enforcing this new standard, so employers face the risk of having their policies invalidated if they do not revisit them to ensure they are drafted in a compliant manner,” he said. “To the extent they are found to have unlawful rules, it could result in backpay awards in the event an employee is terminated pursuant to such a rule, have negative effects on a union election outcome, as well as other penalties.”

Plus, in most cases, the NLRB does not follow a federal appeals court ruling outside of that court’s jurisdiction until the Supreme Court weighs in, if it does. “So, that may favor companies taking a fresh look at their policies sooner rather than later,” Pryzbylski said.

Employer Policy Implications

Examples of policies that likely need to be reviewed and rewritten to be aligned with the new board standard, according to Spanos, include work rules:

  • Restricting employees’ use of social media.
  • Restricting criticism, negative comments, and disparagement of the company’s management, products, or services.
  • Promoting civility.
  • Prohibiting insubordination.
  • Requiring confidentiality of investigations and complaints.
  • Restricting behaviors such as using cameras or recording devices in the workplace.
  • Outlining rules for safety complaints.
  • Restricting the use of company communication resources, such as email or Slack.
  • Limiting the recording of meetings or the use of smartphones or other devices.
  • Restricting meetings with co-workers or the circulation of petitions.
  • Limiting comments to the media or government agencies.

All HR professionals should work with their labor counsel to audit current employment policies for compliance with the new standard and to keep up-to-date on board decisions that will apply the Stericycle standard in coming months.

The bottom line is that many policies will be under new and intense scrutiny by the NLRB, and employers should be aware of the new standard and review and update their policies accordingly.

Changes to I-9 Form Requirements as of Aug 1st

July 24 - Posted at 11:19 AM Tagged: , ,

On August 1, 2023, U.S. Citizenship and Immigration Services (“USCIS”) will release a new version of Form I-9, Employment Eligibility Verification. Effective that same day, the Department of Homeland Security (“DHS”) has authorized a permanent optional alternative procedure to allow qualified employers to virtually inspect and verify identification documents to complete Section 2 of Form I-9. Virtual inspection that has been allowed for remote employees since 2020 had been set to expire July 31, 2023.

While DHS previously stated that remotely-verified forms would need to be reverified no later than August 30, 2023, the agency announced that employers do not need to complete the new Form I-9 (Rev. 08/01/23) for current employees who already have a properly completed Form I-9 on file, unless reverification applies after October 31, 2023. Additional details and clarification of “properly completed” will be provided when they become available.

According to the DHS, the alternative remote verification procedure will only be available at this time to qualified employers who are enrolled and participate in good standing in E-Verify. Employers who are already enrolled in E-Verify are not required to reenroll in E-Verify to use the alternative procedure. Also according to DHS, E-Verify has the capacity to support an increased number of employers who may choose to newly enroll in E-Verify to use the alternative procedure. Employers who do not qualify may continue to use authorized representatives where in-person inspection is not feasible.

Qualified employers who choose to remotely verify identification documents after August 1, 2023 must follow the below procedure:

  1. The employee must first transmit a copy of the document(s) to the employer.
  2. The employer must examine copies (front and back, if the document is two-sided) of the documents to ensure that the documentation presented reasonably appears to be genuine.
  3. The employee must then present the same documents during a live video interaction with the employer.
  4. The employer must check the corresponding box on the Form I-9 (Rev. 08/01/23) that an alternative procedure was used to examine documentation to complete Section 2 or for reverification, as applicable.
  5. The employer must retain a clear and legible copy – either paper or electronic versions — of the documentation (front and back, if the documentation is two-sided), of all documents examined for as long as the employee works for the employer and for a specified period after employment has ended.

 

Starting on August 1, 2023, employers may download the new Form I-9 (Rev. 08/01/23) from the USCIS website. The prior version of Form I-9 (Rev. 10/21/19) will no longer be valid after October 31, 2023.

 

According to the USCIS, the forthcoming new version of Form I-9 will have significant changes to the form and its instructions, including a checkbox to indicate that an employee’s Form I-9 documentation was examined virtually. Other updates to Form I-9 include:

  • Reduced Sections 1 and 2 to a single-sided sheet. No previous fields were removed. Rather, multiple fields were merged into fewer fields when possible.
  • Moved the Section 1 Preparer/Translator Certification area to a separate, standalone supplement (Supplement A) that employers can provide to employees when necessary.
  • Moved the Section 3 Reverification and Rehire area to a separate, standalone supplement (Supplement B) that employers can print if or when rehire occurs or reverification is required.
  • Removed use of “alien authorized to work” in Section 1 and replaced it with “noncitizen authorized to work” as well as clarified the difference between “noncitizen national” and “noncitizen authorized to work.”
  • Ensured the form can be filled out on tablets and mobile devices.
  • Removed certain features to ensure the form can be downloaded easily. This also removes the requirement to enter N/A in certain fields.
  • Updated the notice at the top of the Form I-9 that explains how to avoid discrimination in the Form I-9 process.
  • Revised the Lists of Acceptable Documents page to include some acceptable receipts as well as guidance and links to information on automatic extensions of employment authorization documentation.

 

Updates to the Form I-9 instructions include:

  • Reduced length of instructions from 15 pages to 8 pages.
  • Added definitions of key actors in the Form I-9 process.
  • Streamlined the steps each actor takes to complete their section of the form.
  • Added instructions for use of the new checkbox for employers who choose to examine Form I-9 documentation under an alternative procedure.
  • Removed the abbreviations charts and relocated them to the M-274, Handbook for Employers: Guidance for Completing Form I-9. An updated M-274 will likely be released along with the revised Form I-9, but it is not yet available.

Reminder: Update Your EEOC Poster and Start Complying with the Pregnant Workers Fairness Act

June 23 - Posted at 9:16 AM Tagged: , ,
The Pregnant Workers Fairness Act (PWFA) goes into effect on June 27, 2023. The PWFA requires employers to post a notice describing the various protections under the new law.  On June 27th, employers should remove their old EEOC “Know Your Rights” posters and replace them with the updated version. Please let us know if you need a copy of the updated English or Spanish posting to comply with the PWFA.

The 10 Things All Employers Must Include in Any Workplace AI Policy

June 19 - Posted at 9:32 AM Tagged: , , ,

Whether your organization has deployed a generative AI tool for your employees or hasn’t (yet) hopped on the bandwagon, the time is now for you to create a workplace policy governing the use of the technology. Many organizations are exploring ways their workforces can harness the revolutionary advances in productivity, efficiency, and creativity that generative AI (GenAI) products like ChatGPT, Google’s Bard, or Microsoft’s Bing can bring. And, even if you aren’t doing the same, your employees almost certainly are. But how can you do so in a responsible way? A first step is developing a workplace GenAI policy. Read on for the 10 things you should include.

First Things First: What is GenAI?

Recent advances in GenAI, kicked off most prolifically by the release of ChatGPT and soon thereafter joined by Bard and the reformulated Bing, have captured the attention of a broad audience. Almost immediately, employees and employers alike began thinking about the ways the technology can be used in the workplace, seemingly limited only by our imaginations. How is this different, however, than other forms of AI which have been around for years?

You’ve probably been living and working with some form of AI for some time now. Does your company have any sort of chatbot providing answers to simple questions about where to find a resource? No doubt you have an auto-complete feature when you type into your email platform. Those are all examples of artificial intelligence – just in rudimentary form.

Unlike this prior technology, GenAI is able to generate original human-like output and expressions in addition to describing or interpreting existing information. In other words, it appears to “think” and respond like a human. However, GenAI is limited by the data upon which it was trained, and will not have the judgment, strategic thinking, or contextual knowledge that a human does. These and other technological limitations and risks are why having a sound GenAI policy is so important.

The 10 Components Your GenAI Policy Should Include

While each company should customize a GenAI policy to suit its own needs and priorities, there are 10 topics to consider at a bare minimum. 

  1. Outline the Policy’s Purpose and Scope. The first thing your policy should include is a description of its purpose and scope.
    • Generally, the purpose of the policy would be to provide guidelines for the organization’s development, implementation, use, and monitoring of GenAI in the workplace.
    • The scope should clearly tell your employees which areas are covered – and here’s where you need to be very clear. If your organization does not provide any GenAI products for your employees, you still need to make clear that the policy covers the use of any third-party or publicly available GenAI tool, such as ChatGPT, Bard, Bing, DALL-E, Midjourney, and other similar applications that mimic human intelligence to generate answers, work product, or perform certain tasks. And, if you do supply your workers with a GenAI product, you should make sure your policy covers appropriate usage with specific circumstances kept in mind.
  2. Maintain Data Privacy and Security. Data privacy and security is a critical component of any GenAI policy, particularly given the strict data privacy laws that exist and are developing across the country (and internationally). Your policy should create safeguards to protect the data inputted into any GenAI technology, addressing data collection, storage, and sharing. At a minimum, you should prohibit your employees from entering private or personal information into any GenAI platform.
  3. Uphold Company Confidentiality. You will also want to ensure that your company’s most important data – trade secrets, private information, PII of your employees and other third parties, confidential data, sensitive matters, etc. – are kept far away from GenAI. This will not only help you avoid embarrassing or damaging situations, but could help you uphold and defend the confidential nature of this information if you ever find yourself in trade secrets litigation.
  4. Ensure Your Commitment to Diversity is Not Compromised. GenAI has the capacity to provide information that violates not only your company’s strong diversity goals but also legal anti-discrimination standards. For this reason, you should plainly state that information received from GenAI needs to be double-checked using reasoned human judgment to ensure it does not run afoul of your company’s commitment to diversity.
  5. Prohibit Employment-Based Decisions Aided by GenAI. Related to the previous point, you should clearly state that GenAI tools should not be used to make or help you make employment decisions about applicants or employees. This includes recruitment, hiring, retention, promotions, transfers, performance monitoring, discipline, demotion, terminations, or other decisions. Of course, if you have deployed a GenAI tool to help you navigate human resources activity, you can allow such use – so long as you are confident that your policies surrounding the use of that specific tool uphold legal principles (including any relevant state laws) and your highest company standards.
  6. Prevent Copyright or Other Theft Concerns. The danger always exists that information provided from GenAI platforms (including image generators like DALL-E 2 and Midjourney) could include details from copyrighted or other protected sources. If your employees use a GenAI tool to generate content for company use that happens to include information from a protected source, you could find yourself in legal hot water. Make sure your employees know not to pass off any information or content received from GenAI as their own without double-checking sources. They should use GenAI as an idea generator, not as a replacement for content creation.
  7. Outline Best Practices. The inherent limitations related to GenAI in its current form should lead you to outline best practices that should be followed whenever your employees use the technology to aid their work. Some examples:
    • Because GenAI is prone to providing hallucinations and outdated answers, you should require your workers to confirm any information received before relying on it in any capacity.
    • There is always risk of a data breach involving any GenAI provider. While your workers might think they can input any question into the system with complete anonymity, they should be warned to treat any information provided into any GenAI platform as if it will go viral on the Internet –with their name and your company’s identity along with it.
    • Your company’s supervisors should want to know when – and to what extent – GenAI was used to help complete a task. For that reason, you might recommend that employees disclose when they are using the technology and the extent it aided the creation of any content they develop.
  8. Be Clear About Consequences. As with any company policy, you should inform your employees that they could face repercussions should they violate any of its tenets. Let them know they could face disciplinary action – up to and including immediate termination, and possibly legal action – should they violate the policy. The policy should also direct employees to report potential violations they learn about to their supervisor or to HR.
  9. Include a Disclaimer. Due to the broad reach of the National Labor Relations Act – even over companies that don’t have a unionized workforce – you need to make sure that you offer protections for behavior that has been upheld as protected by the NLRB and courts. Work with your legal counsel to create a disclaimer that clearly states your policy is not intended to interfere with, restrain, or prevent employee communications regarding the rights protected by federal labor law.
  10. Input From Across the Spectrum. Finally, make sure you include multi-disciplinary input from stakeholders across the organization to ensure your policy is comprehensive, effective, and realistic. Obvious stakeholders include members of your regulatory, compliance, IT, DEI, and legal departments.

What’s Next?

Once you publish your GenAI policy, your work is not over – it’s just beginning. Besides the all-important work of training your workforce on the policy parameters and ensuring continued and consistent enforcement, you should use the creation of a policy as the right time to establish a framework for GenAI governance and oversight.

Please let us know if you would like a copy of a complimentary GenAI policy provided courtesy of Fisher Phillips LLP.

PCORI Filing Due to IRS by July 31st

June 16 - Posted at 2:59 PM Tagged: , , , , , , , ,

An “old faithful” reporting requirement deadline is right around the corner: the Patient-Centered Outcomes Research Institute (PCORI) filing and fee. The Affordable Care Act imposes this annual per-enrollee fee on insurers and sponsors of self-funded medical plans to fund research into the comparative effectiveness of various medical treatment options.

The due date for the filing and payment of PCORI fee is July 31 for required policy and plan years that ended during the 2022 calendar year. For plan years that ended Jan. 1, 2022 – Sept. 30, 2022, the fee is $2.79 per covered life. For plan years that ended Oct. 1, 2022 – Dec. 31, 2022 (including calendar year plans that ended Dec. 31, 2022), the fee is calculated at $3.00 per covered life.

Insurers report on and pay the fee for fully insured group medical plans. For self-funded plans, the employer or plan sponsor submits the fee and accompanying paperwork to the IRS. Third-party reporting and payment of the fee (for example, by the self-insured plan sponsor’s third-party claim payor) is not permitted.

An employer that sponsors a self-insured health reimbursement arrangement (HRA) along with a fully insured medical plan must pay PCORI fees based on the number of employees (dependents are not included in this count) participating in the HRA, while the insurer pays the PCORI fee on the individuals (including dependents) covered under the insured plan. Where an employer maintains an HRA along with a self-funded medical plan and both have the same plan year, the employer pays a single PCORI fee based on the number of covered lives in the self-funded medical plan and the HRA is disregarded.

PCORI fee reporting and payment

The IRS collects the fee from the insurer or, in the case of self-funded plans, the plan sponsor in the same way many other excise taxes are collected. Although the PCORI fee is paid annually, it is reported (and paid) with the Form 720 filing for the second calendar quarter (the quarter ending June 30). Again, the filing and payment is due by July 31 of the year following the last day of the plan year to which the payment relates (i.e. filling for the 2022 PCORI fee is due by July 31, 2023)

Calculating the PCORI fee

IRS regulations provide three options for determining the average number of covered lives: actual count, snapshot and Form 5500 method. 

Actual count: The average daily number of covered lives during the plan year. The plan sponsor takes the sum of covered lives on each day of the plan year and divides the number by the days in the plan year.

Snapshot: The sum of the number of covered lives on a single day (or multiple days, at the plan sponsor’s election) within each quarter of the plan year, divided by the number of snapshot days for the year. Here, the sponsor may calculate the actual number of covered lives, or it may take the sum of (i) individuals with self-only coverage, and (ii) the number of enrollees with coverage other than self-only (employee-plus one, employee-plus family, etc.), and multiply by 2.35. Further, final rules allow the dates used in the second, third and fourth calendar quarters to fall within three days of the date used for the first quarter (in order to account for weekends and holidays). The 30th and 31st days of the month are both treated as the last day of the month when determining the corresponding snapshot day in a month that has fewer than 31 days.

Form 5500: If the plan offers family coverage, the sponsor simply reports and pays the fee on the sum of the participants as of the first and last days of the year (recall that dependents are not reflected in the participant count on the Form 5500). There is no averaging. In short, the sponsor is multiplying its participant count by two, to roughly account for covered dependents.

The U.S. Department of Labor says the PCORI fee cannot be paid from ERISA plan assets, except in the case of union-affiliated multiemployer plans. In other words, the PCORI fee must be paid by the plan sponsor; it cannot be paid in whole or part by participant contributions or from a trust holding ERISA plan assets. The PCORI expense should not be included in the plan’s cost when computing the plan’s COBRA premium. The IRS has indicated the fee is, however, a tax-deductible business expense for sponsors of self-funded plans.

Although the DOL’s position relates to ERISA plans, please note the PCORI fee applies to non-ERISA plans as well and to plans to which the ACA’s market reform rules don’t apply, like retiree-only plans.

How to file IRS Form 720

The filing and remittance process to the IRS is straightforward and unchanged from last year. On Page 2 of Form 720, under Part II, the employer designates the average number of covered lives under its “applicable self-insured plan.” As described above, the number of covered lives is multiplied by the applicable per-covered-life rate (depending on when in 2021 the plan year ended) to determine the total fee owed to the IRS.

The Payment Voucher (720-V) should indicate the tax period for the fee is “2nd Quarter.”

Failure to properly designate “2nd Quarter” on the voucher will result in the IRS’ software generating a tardy filing notice, with all the incumbent aggravation on the employer to correct the matter with IRS.

You missed a past PCORI payment. Now what?

An employer that overlooks reporting and payment of the PCORI fee by its due date should immediately, upon realizing the oversight, file Form 720 and pay the fee (or file a corrected Form 720 to report and pay the fee, if the employer timely filed the form for other reasons but neglected to report and pay the PCORI fee). Remember to use the Form 720 for the appropriate tax year to ensure that the appropriate fee per covered life is noted.

The IRS might levy interest and penalties for a late filing and payment, but it has the authority to waive penalties for good cause. The IRS’s penalties for failure to file or pay are described here.

The IRS has specifically audited employers for PCORI fee payment and filing obligations. Be sure, if you are filing with respect to a self-funded program, to retain documentation establishing how you determined the amount payable and how you calculated the participant count for the applicable plan year.

EEOC’s Latest AI Guidance Sends Warning to Employers

May 23 - Posted at 9:00 AM Tagged: , , ,

Employers using or thinking about using artificial intelligence (AI) to aid with workplace tasks received another reminder from the federal government that their actions will be closely scrutinized by the EEOC for possible employment discrimination violations. The federal agency released a technical assistance document on Thursday warning employers deploying AI to assist with hiring or employment-related actions that it will apply long-standing legal principles to today’s evolving environment in an effort to find possible Title VII violations. What are the five things you need to know about this latest development?

1. EEOC Confirms That Employers’ Use of AI Could Violate Workplace Law

The EEOC started by confirming its crystal-clear position in its technical assistance document: an improper application of AI could violate Title VII, the federal anti-discrimination law, when used for recruitment, hiring, retention, promotion, transfer, performance monitoring, demotion, or dismissal. The EEOC outlined four instances where the use of AI during the hiring process – and one example during an employment relationship – could trigger Title VII violations:

  • resume scanners that prioritize applications using certain keywords;
  • “virtual assistants” or “chatbots” that ask job candidates about their qualifications and reject those who do not meet pre-defined requirements;
  • video interviewing software that evaluates candidates based on their facial expressions and speech patterns;
  • testing software that provides “job fit” scores for applicants or employees regarding their personalities, aptitudes, cognitive skills, or perceived “cultural fit” based on their performance on a game or on a more traditional test; and
  • employee monitoring software that rates employees on the basis of their keystrokes or other factors.

The agency didn’t say that these are the only types of workplace-related AI methods that could come under fire – or that these types of tools are inherently improper or unlawful. It did say, however, that preexisting agency regulations (the Uniform Guidelines on Employee Selection Procedures) that have been around for over four decades can apply to situations where employers use AI-fueled selection procedures in employment settings.

The agency said this is especially true in “disparate impact” situations – where employers may not intend to discriminate against anyone but deploy any sort of facially neutral process that ends up having a statistically significant negative impact on a certain protected class of workers.   

2. “Four-Fifths Rule” Can Be Applied to AI Selections

The EEOC pointed out that employers can use the “four-fifths” rule as a general guideline to help determine whether an AI selection process has violated disparate impact standards (and we apologize in advance for the impending use of math). The test checks to see if a selection process is having a disparate impact on a certain group by comparing the selection rate of that group with the most “successful” selection rate. If it’s less than four-fifths of that selection rate, then you might be subject to a disparate impact challenge. If that sounds confusing to you, here is the example provided by the EEOC.

Assume your company is using an algorithm to grade a personality test to determine which applicants make it past a job screening process.  

  • 80 White applicants and 40 Black applicants take the personality test.
  • 48 of the White applicants advance to the next round (equivalent to 60%).
  • 12 of the Black applicants advance to the next round (equivalent to 30%).
  • The ratio of the two rates is thus 30/60 (or 50%).
  • Because 30/60 (or 50%) is lower than 4/5 (or 80%), the four-fifths rule says that the selection rate for Black applicants is substantially different than the selection rate for White applicants – which could be evidence of discrimination against Black applicants.

Note, however, that the EEOC said that this kind of analysis is merely a rule of thumb. It’s a rudimentary way to draw an initial inference about the selection processes. If you end up finding problematic numbers, it should prompt you to acquire additional information about the procedure in question, according to the EEOC, and isn’t necessarily indicative of a definitive Title VII violation. Similarly, just because your numbers clear the four-fifths hurdle doesn’t mean that the particular selection procedure is definitely lawful under Title VII. It can still be challenged by the agency or a plaintiff in a charge of discrimination.

3. EEOC Encourages Proactive Self-Audits

In a statement accompanying the release of the technical assistance document, EEOC Chair Charlotte Burrows said that employers should test all employment-related AI tools early and often to make sure they aren’t causing legal harm. This doesn’t mean just using the four-fifths rule, but also using a thorough auditing process involving a variety of potential examination methods on all AI functions. “I encourage employers to conduct an ongoing self-analysis to determine whether they are using technology in a way that could result in discrimination,” she said.  

But not mentioned by the EEOC: a reminder that you should approach any self-audit with the help of legal counsel. Not only can experienced legal counsel help guide you about the best methodologies to use and assist in interpreting the results of any audit, but using counsel can help cloak your actions under attorney-client privilege, potentially shielding certain results from discovery. This can be especially beneficial if you identify changes that need to be made to improve your process to minimize any unintentional impacts.

4. You’re On the Hook For Problems Caused by Your AI Vendors

The agency also noted quite clearly that you can’t duck your responsibilities by using a third party to deploy AI methods and then blaming them for any resulting discriminatory results. It said that you may still be responsible if the AI procedure discriminates on a basis prohibited by Title VII even if the decision-making tool was developed by an outside vendor.

“In addition,” said the EEOC, “employers may be held responsible for the actions of their agents, which may include entities such as software vendors, if the employer has given them authority to act on the employer’s behalf.” This may include situations where you rely on the results of a selection procedure that an agent administers on your behalf.

The EEOC recommends that you may want to specifically ask any vendor you are considering to develop or administer an algorithmic decision-making tool whether steps have been taken to evaluate whether that tool might cause an adverse disparate impact. And it also recommends asking the vendor whether it relied on the four-fifths rule of thumb or whether it relied on a standard such as statistical significance that is often used by courts when examining employer actions for potential Title VII violations.

5. EEOC’s Guidance is Part of Bigger Trend

This technical assistance document is part of a bigger trend we’re seeing from federal agencies that are increasingly interested in the ways that AI may lead to employment law violations. Just last month, in fact, EEOC Chair Burrows teamed up with leaders from the Department of Justice, the Federal Trade Commission and the Consumer Financial Protection Bureau to announce that they would be scrutinizing potential employment-related biases that can arise from using AI and algorithms in the workplace.

And within the past year, the EEOC teamed up with the DOJ to release a pair of guidance documents warning that relying on AI to make staffing decisions might unintentionally lead to discriminatory employment practices, including disability bias, followed by the White House releasing its “Blueprint for an AI Bill of Rights” that aims to protect civil rights in the building, deployment, and governance of automated systems.

While none of these guidance documents create new legal standards or can be relied upon with the force of law like a statute or regulation, they do carry weight, may signal where the agencies are focusing their enforcement efforts, and can be cited to by agencies and plaintiffs’ attorneys as best practices that employers should follow.  And states have gotten into the action too, with New York City’s law set to take effect in July, and a new bill advancing towards the Governor in California. And for that reason, you should take this guidance seriously and adapt your employment practices as necessary to stay up to speed with the pace of change that is rapidly unfolding before our eyes.

 

DOL Pumps It Up With New Guidance on PUMP Act Enforcement

May 19 - Posted at 2:49 PM Tagged: , , , ,

The U.S. Department of Labor Wage and Hour Division (WHD) published Field Assistance Bulletin No. 2023-02 providing guidance to agency officials responsible for enforcement of the “pump at work” provisions of the Fair Labor Standards Act (FLSA)  including those recently enacted under the 2022 PUMP Act.

The PUMP Act was adopted along with the Pregnant Workers Fairness Act when President Biden signed the Consolidated Appropriations Act, 2023 in December 2022.

This guidance provides employers a glimpse into how the WHD understands and will enforce the rights now available to most employees under the Fair Labor Standards Act for reasonable break time and a place to express breast milk at work for a year after a child’s birth.

Here are a few highlights from the WHD’s bulletin.

  • Frequency and Duration of Breaks. The WHD emphasizes that employees are entitled to breaks every time they need to pump and the length and frequency of breaks will vary by employee. Employers and employees may agree to a certain schedule based on the employee’s need to pump, but the WHD advises that employers cannot require employees to comply with a fixed schedule. The WHD also reminds employers that an employee’s needs and break schedule may need to be adjusted over time.
  • Compensation. Time for pump breaks may be unpaid unless otherwise required by federal, state, or local law. Employers should pay careful attention to the FLSA’s standard requirements for counting and compensating hours worked. Employees must be paid for any time spent pumping when they are not fully relieved from duty or when pumping during an otherwise paid break.
  • Privacy Requirements. The FLSA requires that employees have access to a place to pump at work that is (1) shielded from view; (2) free from intrusion from coworkers and the public; (3) available each time it is needed by the employee; and (4) not a bathroom. To ensure privacy, the WHD advises that an employer could display a sign when the space is in use or a lock on the door. Teleworking employees must also be free from observation from a computer camera or other similar device while pumping.
  • Functional Space Requirements. The WHD advises that the location must be “functional” for pumping: “A space must contain a place for the nursing employee to sit, and a flat surface, other than the floor, on which to place the pump. Employees must be able to safely store milk while at work, such as in an insulated food container, personal cooler, or refrigerator. Ideally, spaces to pump breast milk should also include access to electricity, allowing a nursing employee to plug in an electric pump rather than use a pump with battery power, which may require more time for pumping. Access to sinks near to the space provided to pump so that an employee can wash their hands and clean pump attachments also improves the functionality of the space and may reduce the amount of time needed by nursing employees to pump breast milk at work.”
  • Small Employer Exemption. In limited circumstances, employers with less than 50 employees nationwide may be exempt from the pump time requirements if they can demonstrate that compliance with the pump at work provisions for a particular employee would cause an undue hardship. The burden of proving this hardship is on the employer. “To assert the exemption, an employer must be able to demonstrate that the employee’s specific needs for pumping at work is an undue hardship due to the difficulty or expense of compliance in light of the size, financial resources, nature, and structure of the employer’s business.”
  • Anti-Retaliation Provisions. Like most employment laws, the FLSA prohibits retaliation against anyone who has engaged in protected activity, including requesting break time or space to pump or requesting payment of wages. As an example, the WHD states that employers cannot hold time the employee took for pump breaks against them for quotas or require employees to work additional hours to make up for the time missed due to pump breaks.
  • Poster. Employers should post the WHD’s updated FLSA poster.

The WHD also provides additional resources for employers on its Pump At Work webpage.

IRS Increases HSA & HDHP Limits in 2024

May 17 - Posted at 9:37 AM Tagged: , , , ,

Thanks in part to persistent high inflation, employees will be able to sock away a lot more money in their health savings accounts (HSAs) next year.

Annual health savings account contribution limits for 2024 are increasing in one of the biggest jumps in recent years, the IRS announced May 16: The annual limit on HSA contributions for self-only coverage will be $4,150 in 2023, a 7.8 percent increase from the $3,850 limit in 2023. For family coverage, the HSA contribution limit jumps to $8,300 in 2023, up 7.1 percent from $7,750 in 2023.

Participants 55 and older can still contribute an extra $1,000 to their HSAs.

Meanwhile, for 2024, a high-deductible health plan (HDHP) must have a deductible of at least $1,600 for self-only coverage, up from $1,500 in 2023, or $3,200 for family coverage, up from $3,000, the IRS noted. Annual out-of-pocket expense maximums (deductibles, co-payments and other amounts, but not premiums) cannot exceed $8,050 for self-only coverage in 2024, up from $7,500 in 2023, or $16,100 for family coverage, up from $15,000.

The increases are detailed in IRS Revenue Procedure 2023-23 and take effect in January 2024.

While expected, the increase in 2024 HSA limits is significant for passing certain symbolic financial thresholds. For the first time, including catch-up contributions for those age 55 and older, a couple on family coverage can now contribute more than $10,000, and a single person on self-only coverage can now contribute more than $5,000. 

Many industry experts tout health savings accounts as a smart way for employees to save for medical expenses, even in retirement, citing their triple tax benefits: Contributions are made pretax, the money in the accounts grows tax free and withdrawals for qualified medical expenses are tax free. This is very good news to help more Americans understand and use HSAs as a powerful tool in their healthcare spending and long-term savings.

HSA enrollment continues to grow, and more employers also are offering contributions to employees’ accounts. At the end of 2022, Americans held $104 billion in 35.5 million health savings accounts, according to HSA advisory firm Devenir.

Despite the benefits, most holders aren’t taking full advantage of their accounts and are missing out on substantial rewards, according to the Employee Benefit Research Institute. The average account holder has a modest balance, contributes far less than the maximum and does not invest their HSA, recent EBRI data found.

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