As regulatory updates come into effect, it’s essential for businesses to stay informed and compliant. With recent regulation changes, business owners and HR teams can address specific updates in health care coverage, wage regulations, mental health parity, and employee safety standards. Maintaining compliance with these regulations can be time-consuming, but it’s crucial for reducing legal risks and supporting employee well-being. Fortunately, Tilson is here to simplify compliance, allowing you to focus on growing your business while we handle the regulatory details.
Here are recent federal compliance developments to help your organization stay on top of new requirements and minimize compliance risks.
ACA’s Pay-or-Play Affordability Percentage Will Increase for 2025
On Sept. 6, 2024, the IRS released the affordability percentage threshold for 2025 plan years under the Affordable Care Act’s (ACA) pay-or-play rules. These rules require applicable large employers (ALEs) to offer affordable, minimum-value health coverage to their full-time employees or risk paying penalties. For plan years beginning in 2025, employer-sponsored coverage will be considered affordable under the ACA’s pay-or-play rules if the employee’s required contribution for self-only coverage does not exceed 9.02% of their household income for the year. This is an increase from the affordability percentage for 2024 plan years (8.39%). Due to this increase, ALEs may have more flexibility when setting employee contribution levels for the 2025 plan year.
5th Circuit Upholds DOL’s Authority to Set Minimum Salary Requirements under FLSA
On Sept. 11, 2024, the U.S. Court of Appeals for the 5th Circuit held that the U.S. Department of Labor’s (DOL) authority to define and delimit the terms of the executive, administrative and professional (EAP) exemptions includes the power to set a minimum salary for exemption under the Fair Labor Standards Act (FLSA). The 5th Circuit’s ruling is significant, as it provides support for the DOL’s authority to implement its 2024 final rule that amended current requirements employees in white-collar occupations must satisfy to qualify for an overtime exemption under the FLSA.
The 2024 final rule took effect on July 1, 2024, increasing the standard salary level from $684 to $844 per week ($35,568 to $43,888 per year) for EAP employees and from $107,432 to $132,964 per year for highly compensated employees (HCEs). On Jan. 1, 2025, the salary level will again increase from $844 to $1,128 per week ($43,888 to $58,656 per year) for EAP employees and from $132,964 to $151,164 per year for HCEs. Impacted employers should continue to monitor this situation, as other legal challenges may impact the DOL’s 2024 final rule.
Final Rule Strengthens Mental Health Parity Law
On Sept. 9, 2024, the DOL and the Departments of Health and Human Services and the Treasury released a final rule to strengthen the requirements of the Mental Health Parity and Addiction Equity Act. The final rule is designed to ensure that individuals do not face greater restrictions to obtaining mental health and substance use disorder benefits than they would face for medical and surgical benefits. The final rule adds protections against more restrictive non-quantitative treatment limitations (e.g., preauthorization requirements, network composition standards and other medical management techniques). Employer-sponsored health plans must comply with the new requirements for plan years beginning on or after Jan. 1, 2025, although the effective date for certain key requirements is delayed until plan years beginning on or after Jan. 1, 2026.
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OSHA Proposes Heat Injury and Illness Prevention Standard
On Aug. 30, 2024, the DOL’s OSHA published a proposed rule to protect workers from heat injury and illness. The new standard would apply to all employers conducting indoor and outdoor work in all general industry, construction, maritime and agricultural sectors where OSHA has jurisdiction, subject to limited exceptions. If finalized, the new standard would require employers to create a plan to evaluate and control heat hazards in their workplaces.
DOL Confirms Cybersecurity Guidance Applies to Health and Welfare Plans
The DOL has confirmed that its cybersecurity guidance applies to all employee benefit plans, including health and welfare plans. Plan fiduciaries of ERISA-covered plans have an obligation to ensure proper mitigation of cybersecurity risks. Because employers often rely on service providers to maintain employee benefit plan records and keep participant data confidential and secure, they should ensure they use service providers that follow strong cybersecurity practices. The DOL’s cybersecurity guidance includes tips for hiring plan service providers, cybersecurity program best practices and online security tips.
Federal District Court Blocks the FTC’s Noncompete Ban
On Aug. 20, 2024, the U.S. District Court for the Northern District of Texas issued an order blocking the Federal Trade Commission’s (FTC) noncompete ban, which had a scheduled effective date of Sept. 4, 2024. The enforceability of noncompete clauses is generally determined by state and local legislatures and courts. The FTC rule would have instead governed the enforceability of noncompete clauses at the federal level and superseded any less restrictive state laws or judicial interpretations. The District Court’s ruling blocked the ban for all employers and prevented the ban from taking effect.
NLRB Voluntarily Withdraws Joint-employer Rule Appeal
On July 19, 2024, the National Labor Relations Board (NLRB) voluntarily dismissed its appeal of the U.S. District Court for the Eastern District of Texas decision vacating the NLRB’s 2023 joint-employer rule. As a result, the decision of the Eastern District of Texas will be final. The rule, which had been set to take effect on March 11, 2024, would have expanded the types of control over job terms and conditions that trigger joint employment. As a result of the Eastern District of Texas’ ruling and the NLRB’s decision to withdraw its appeal, the former President Donald Trump-era 2020 joint-employer rule remains in effect and calls into question the future status of the 2023 rule.
The Importance of Staying Updated with State Regulations
In addition to federal regulations, which set the foundational guidelines for many employment practices, it’s important to stay informed about evolving state-level compliance. State requirements may vary significantly, with recent updates in California, New York, and Illinois impacting family leave, worker safety, pay transparency, and discrimination protections. By keeping up with both federal and state changes, businesses can better manage risks, avoid costly mistakes, and demonstrate a commitment to their employees’ rights and safety.
At Tilson, we understand the complexities of multi-state compliance and are dedicated to supporting businesses through each regulatory shift. Our team offers expert guidance and practical resources to ensure you’re always up to date with state and federal requirements. From HR support to regulatory insights, Tilson simplifies compliance management so you can focus on growing your business with confidence. Reach out today to learn how we can help keep your business compliant.
