Legal/Compliance Roundup - January 2024

‍Each month, Mployer Advisor collects and presents some of the most relevant and most pressing recent changes in law, compliance, and policy in areas related to employee benefits, health care, and human resources. 

Employee vs. Independent Contractor Classification

Beginning on March 11, 2024, the Department of Labor will effectively revert back to ‘the economic reality’ test for determining whether a given worker should be classified as an employee or as an independent contractor.

‍

The economic reality test will take into account the following 6 factors when evaluating a workers employment status and classification:

• Whether it is possible for the worker to either profit or lose money as a result of the arrangement;
• What investments have the employer and worker each made toward completing the work;
• Is the work relationship a more permanent arrangement or more temporary;
• How much control does the employer exert over the worker’s process;
• How crucial is the worker’s output to the employer’s business; and
• The levels of skill and initiative possessed by the worker.

You can find more information from the DOL on determining employee and contractor status here.

Employers Rejecting Job Applicants Due to Credit Reports Must Provide Credit Rating Agency Info 

Beginning March 20, 2024 enforcement begins for Consumer Protection Bureau’s rule requiring Employers that reject job applicants due to information obtained through a credit report to provide the rejected applicant with information about the credit reporting agency from which the report was obtained, including name, address, and telephone number.

‍

This rule, which went into effect in April of 2023, is an update to 2018’s Summary of Your Rights Under The Fair Credit Reporting Act.

‍

You can read more about the new rule, its impact, and enforcement here. 

New Safety Reporting Regulations

There are a number of changes to Federal Law including updated mileage reimbursement rates and workplace safety standards that took effect when the new year began, January 1st, 2024. 

• IRS Mileage Reimbursement Rate Increase: The Internal Revenue Service raised the rate at which miles driven for business purposes are reimbursed up to $0.67 per mile for 2024, which is an increase of 1 and a half cents per mile over the 2023 mileage reimbursement rate of $0.65. As a reminder, this reimbursement rate is a recommendation and sets a generalized standard but is not required or enforceable.
• OSHA Electronic Submission Reporting Requirements: In addition to submitting form 300A, firms that have at least 100 employees and operate in industries that have been designated as hazardous must electronically submit data from their injury and illness logs. According to the general submission timeline, submissions regarding incidents that occurred during the calendar year of 2023 will be due on March 2, 2024.
• Minimum Wage Increase for Federal Contractors: For federal contracts that fall under Executive Order 13658, which were entered into on or after January 1, 2015, employees must now be paid a minimum of $12.90 per hour for wage workers and $9.05 per hour for tipped workers. Minimum wage for employees servicing contracts that fall under Executive Order 14026, which were entered into on or after January 30, 2022, is now set at $17.20 per hour for all employees, and contractors are no longer permitted to pay a lower rate to tipped workers under contracts governed by this Order. You can click here for an additional resource from the Department of Labor to help differentiate and distinguish between federal contracts that fall under Executive Order 13658 and Executive Order 14026.

‍

You can find additional information about the new IRS mileage reimbursement rate changes, OSHA electronic submission requirements, and minimum wage increases for federal contractors, including frequently asked questions about Executive Order 13658 and Executive Order 14026, in the embedded links.

‍

Secure Act 2.0 Takes Effect January 1, 2024

The Secure Act 2.0, which was signed into law in the closing days of 2022 and will take effect at the beginning of the new year, ushers in some sweeping changes to retirement planning and savings administration in the US, including: 

• Mandatory 401k Enrollment: Most companies with more than 10 employees that have been in operation for at least 3 years will be required to automatically enroll employees into their 401k plan with between 3% and 10% automatic contributions. There’s also a tax credit available for many companies to cover the additional administrative burden of automatic enrollment.
• Starter 401ks With No Employer Match Requirement: The expense of matching employee contributions has deprived many employees over the years of the benefits of having a 401k account even in the absence of matching employer contributions, which should no longer be an issue under the new law. 
• Increased Catch-up Contributions: The amount of annual contributions that employees can begin putting into their 401ks at age 50 is being increased by 50% from $6,500 to $10,000, and that limit is now indexed to inflation to ensure it keeps up with the cost of living.
• Increased Emergency Savings Account Flexibility: Despite more than 4 in 10 US workers expressing a desire to be automatically enrolled in an emergency savings account program through their employer, only about 1 in 10 employers offered such an opportunity as of 2022. The Secure Act increases the flexibility and ease with which employers can now offer such account via withholding as much as 3% of opting-in employees’ paychecks up to $2,500 to be placed into said emergency savings accounts, from which employees can then withdraw their money untaxed up to four times a year with no penalties whatsoever. 

‍