Legal/Compliance Roundup - April 2023

What Obligations Do Employers Owe Job Applicants?

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The Consumer Financial Protection Bureau has issued a new rule and made some updates to their summary of rights, which have some direct implications for employers in terms of the obligations they owe to job applicants.

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For example, the new version of this rights summary (which replaces the now outdated version from 2018) requires that employers who reject a job applicant on grounds related to a credit report then provide that applicant with information regarding the credit rating agency from which the report was obtained - including, name of the rating agency as well as their address and phone number.

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While the new rule became effective April 19, 2023, compliance does not become mandatory until March 20, 2024. 

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You can find that new CFPB rule here.

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US Equal Employment Opportunity Commission Requires New Form Submissions For Companies Who Meet These Criteria

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The US EEOC has tentatively targeted mid-July of this year to begin requiring certain companies to submit EEO1 reports. 

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This requirement applies to any company that meets at least 1 of the following criteria:

• Has at least 100 employees
• Is connected through affiliated ownership or management to a company with at least 100 employees.
• Has a contract or contracts with the federal government worth at least $50,000 in total
• Has any contract or contracts with the federal government and has at least 50 employees
• Is a federal contractor that serves as a depository of any amount of federal funds
• Is a financial institution that serves as an agent for US Savings Bonds or Savings Notes

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You can learn more about the new requirements here.

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What Does The End of the Public Health Emergency Mean for Employee Benefits Plans?

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A recent piece in Lexology reminds businesses that the pandemic’s National Health Emergency status in the US has finally come to a close as of April 10, 2023, after just under 1,200 days. 

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Considering that much has changed in the employee benefit space since the emergency was first declared, and of course taking into account all the additional compliance and policy leniencies and limited-time-only aspects that the emergency status afforded, now is the ideal time to review your health-related benefits packages and processes to make sure everything is working as intended.

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For example, while the public health emergency enabled some employees, including part-time workers to qualify for standalone telehealth services, for example, that may no longer be the case now that the emergency has been formally concluded.

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Rules exceptions surrounding EAPs and retirement plans have reverted, as well, with more information to come from the Department of Labor regarding employer-first dollar coverage for High-deductible plans. 

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You can find that piece here.

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Who’s Watching The AI Watchmen in The Insurance Industry?

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The myriad ways that artificial intelligence has been shaping the world, and more specifically the insurance and broker space, have been well documented in these pages and beyond - from underwriting to claims processing and customer service, which PricewaterhouseCoopers found to be the most effective utilization in the insurance game as of their 2021 survey, at least.

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But as these technologies continue to evolve and presumably fill an ever greater role in a growing list of business functions assuming current trends hold, the potential for the entire insurance industry to rely too heavily on imperfect software with no accountability could feasibly have the potential to get out of control.

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This is where the National Association of Insurance Commissioners (NAIC) comes into play. 

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In 2019, the NAIC’s technology task force established a working group that deals specifically with big data and artificial intelligence issues as they arise for brokers, providers, and benefits managers, etc. in the insurance industry

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For the last couple years, this group has been conducting surveys, collecting data, and is currently in the process of producing recommendations and guidelines that will impact technology and AI usage in the insurance context for the decades to come, so we’ll be monitoring these developments closely.

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You can read more about the NAIC and their efforts here. 

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How Technology Has Increased Companies Exposure to Fiduciary Liability

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Any company that offers employee benefits faces exposure to risk as a result of their role as fiduciary, which most companies appear to recognize. In fact, almost 3 out of 4 companies claim their intention to purchase fiduciary insurance, despite that only about 1 in 4 companies actually do.

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What most companies don’t seem to recognize, however, is how much additional exposure they face as a result of the many technological platforms involved in the process of managing accounts today.

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While there are many advantages to be gained in terms of efficiency, etc. the very act of selecting a potential platform through which employees can access and monitor their accounts opens the door to potential liability for the company and even the principal fiduciary personally if those platforms make an error, are hacked, or in some other way reflect negligently on the choice.

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Further, even digital communication platforms, while certainly convenient, can lead to misunderstandings and communication failures that can negatively impact employee expectations and outcomes in a way that exposes the company and fiduciary to potential legal liability.

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You can read more about this topic and why fiduciary insurance is worth exploring for both businesses and the insurance brokers who serve them here. Looking for more exclusive content? Check out what’s new on the Mployer Advisor blog, and be sure to check out Mployer Advisor’s new podcast “This Week in Benefits.”

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