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Federal Regulations in Limbo: Status of the Overtime Rule, Pay Disclosure Requirements and the ACA Replacement

Tuesday March 14th 2017

Business_WaitingThe fate of several federal regulations remain in limbo as the Trump Administration and Congress aim to scale back or repeal regulations implemented under the former administration.

On Jan. 20, all pending regulations across federal agencies were frozen—a common occurrence when there is a change in White House administrations. While there are a number of regulations affected by this freeze, such as the persuader rule and contractor pay disclosure requirements, there are some regulations with a greater amount of uncertainty, including the overtime rule, EEOC pay disclosure requirements and the Affordable Care Act.

EEOC Pay Disclosure Rules

The EEOC’s pay disclosure rule (an executive order under the Obama administration) was to take effect in 2017, with reporting requirements set for 2018.

The rule requires private-sector employers and federal contractors with at least 100 employees to submit data on sex, race and ethnicity by job category as well as pay data starting this year, while federal contractors with 50 to 99 employees would have to submit data only on sex, race and ethnicity by job category. Employers would provide pay data indicated on employee W-2 forms and data on hours worked using Form EEO-1, Employer Information Report.

Victoria Lipnic, the EEOC’s new acting chairwoman, said that “a re-evaluation of the costs and benefits of employers submitting workers’ pay data to the [EEOC] is needed” but it should be done in way that is not burdensome to employers.

President Trump is to nominate two new EEOC commissioners as well as a new agency general counsel this year, all of which require Senate confirmation. Once these appointments are made, it’s expected the agency will get rid of the rule as it was drafted by the Obama Administration.

ACA

Another action taken by the new administration on Jan. 20 was the signing of an executive order that allowed federal agencies to waive, offer exemptions from, or delay provisions of the Affordable Care Act. The order does not specifically mention employers, but likely covers them, since they may purchase health-care insurance.

On March 6, Congressional Republicans released their ACA-replacement bill, the American Health Care Act. While the bill will most likely be debated and amended, the proposed bill contains several measures that affect payroll departments.

First, the bill proposes to eliminate the additional Medicare tax of 0.9 percent on employees’ annual wages of more than $200,000, effective Jan. 1, 2018.

Second, the bill eliminates the penalties for applicable large employers that do not offer sufficient health coverage to full-time employees and dependents. This also means employers would no longer need to calculate whether they have at least 50 full-time equivalent employees in a year.

Third, the annual limit on nontaxable contributions to employees’ health flexible spending accounts would be eliminated, while annual limits on nontaxable contributions to health savings accounts connected to high-deductible health plans would increase. In 2018, HSA limits for self-only coverage would increase to $6,550 (up from $3,400 for 2017) and the limit for family coverage would increase to $13,100 (up from $6,750 for 2017).

Finally, the excise of 40 percent on employer-sponsored benefits from high-cost health plans—known as the “Cadillac” tax—would be delayed to Jan. 1, 2025.

As the AHCA is not yet law and these are proposed changes, employers must continue to comply with the ACA provisions that remain in place.

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