State Law Project Report - February 14, 2020

State Law Project Report
February 14, 2020



Council Testifies Before Washington, D.C., D.C. Committee on Paid Leave Proposal

Ilyse Schuman, the American Benefits Council’s senior vice president, health policy, testified on January 30 before the Committee on Labor and Workforce Development (LWD) of the Council of District of Columbia, providing the employer perspective on proposed paid leave rules that would apply to private-sector employers.

The Universal Paid Leave Amendment Act of 2016 requires private-sector employers of any size in Washington, D.C. to provide full- and part-time employees with eight weeks of paid parental leave, six weeks of paid leave to care for sick relatives and two weeks of paid personal sick leave. Employers began paying into the fund on July 1, 2019, but the funds will not be available to employees until July 1, 2020. The District of Columbia Office of Paid Family Leave has launched a website to educate employers and employees on the new benefit.

On January 30, the LWD Committee held a public oversight roundtable to review the regulations implementing the benefits portion of the program. Representing the Council, Schuman outlined the challenges faced by employers in implementing the law and offered a number of recommendations to improve the regulations:

  • Employers should be notified about the approved weekly benefits. The Department of Employment Services (DOES) should not need the employee’s approval to disclose the amount of D.C. Universal Paid Leave (UPL) pay they will receive. Employers have a right and a need to know this information. 
  • Employers need clarification to ensure that eligible employees will not receive more than 100% of regular base wages from a combination of D.C. UPL and short-term, employer-provided paid-leave benefits. 
  • Employers need clarification on the interplay between D.C. UPL and paid sick leave benefits, since certain absences under the D.C. UPL law would both be covered absences under D.C.’s paid sick leave ordinance, the Accrued Sick and Safe Leave Act. 
  • Limitations are needed on “Intermittent Leave” (leave taken in increments of no less than one day, rather than for one continuous period of time). The Final Rule should be amended to restrict intermittent absences for bonding incidents unless both the employee and employer consent to such intermittent leave. 
  • Individuals should need to be currently employed to receive UPL benefits.
  • Clarity should be provided on how to administer benefits to employees working in both Washington, D.C. and elsewhere 

The regulations will be deemed approved on March 26, 2020, unless the D.C. Council takes other action. 

The Council is ramping up its coverage of paid family and medical leave initiatives as this appears to be a growing area of focus for states and localities. For more information, contact Ilyse Schuman, senior vice president, health policy, at (202) 289-6700.



State Charts Updated: Retirement ‘Secure Choice’ Retirement Plans, Fiduciary Rules 

The American Benefits Council continues to pay close attention to efforts at the state level to expand retirement coverage in ways that would burden existing employer-sponsored plans or impose alternative rules on retirement plans. 

The Council’s state plan comparison chart, prepared by Davis & Harman LLP and featured on the Council’s Center on State Initiatives website, was recently updated to incorporate new information. Two charts now featured on the Council’s Center on State Initiatives website have recently been updated with new information.

State Retirement Coverage Initiatives

Mississippi has joined the list of states considering retirement programs for the private sector.  H.B. 216 was introduced on January 27 and would establish an automatic enrollment payroll deduction Roth IRA program that requires participation by employers with 25 or more employees in the state, and that have been in existence for two or more years, unless the employer offers a qualified retirement plan. 

The bill also includes a provision that would give the state’s Department of Revenue the authority to require employers to report “information relevant to their compliance” with the act on an existing tax return, with the failure to provide the requested information causing the employer’s tax return to be treated as unprocessable. (it is unclear whether persons and entities that offer a qualified retirement plan would be bound by the reporting requirement.)  

With respect to retirement plans as well as paid leave laws and health plan requirements, the Council believes that federal preemption is a straightforward solution to state laws that would cause an entire nationwide plan to be modified because one city adopted a new rule, only to be affected by many other modifications as other states or cities adopt slightly different rules.

As we advance that concept, the Council continues to advocate for all employers to receive complete exemption from state-based mandatory auto-enrollment payroll-deduction IRA programs (based on the listing of their employer identification number (EIN) on the plan’s Form 5500 filing)  and for the elimination of any reporting or exemption application requirements for all exempt employers.

State Fiduciary Rules

As we have previously reported, With legal challenges having invalidated the Obama-era fiduciary “conflict of interest” rule for providers of investment advice, a number of individual states (along with other entities) have sought to regulate fiduciary conduct with potential implications for ERISA retirement plans and plan participants. An updated chart, provided courtesy of Davis & Harman LLP, describes these efforts in greater detail.

The newly updated chart reflects revisions to fiduciary proposals in Massachusetts (on which the Council testified and submitted comments in January) and New Jersey (on which the Council submitted comments in June 2019 and testified in July 2019). The revised chart also includes updates on the National Association of Insurance Commissioners’ “Suitability in Annuity Transactions” model regulation, as well as other minor changes.

For more information, contact Jan Jacobson, senior counsel, retirement policy, or Lynn Dudley, senior vice president, global retirement and compensation policy, at (202) 289-6700.

The State Law Project is a multi-pronged initiative to ensure that state and local laws and regulations do not interfere with the federal preemption structure of ERISA which is vital for national employers with plan participants located across the United States.
Companies and firms interested in partnering with the Council to have a positive impact on state/local legislation and regulations are encouraged to contact Diann Howland, vice president, legislative affairs.
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The American Benefits Council is a Washington D.C.-based employee benefits public policy organization. The Council advocates for employers dedicated to the achievement of best-in-class solutions that protect and encourage the health and financial well-being of their workers, retirees and families. Council members include over 220 of the world's largest corporations and collectively either directly sponsor or support sponsors of health and retirement benefits for virtually all Americans covered by employer-provided plans. 
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