Quick Hits - July 28, 2021 - American Society of Employers - ASE Staff

Quick Hits - July 28, 2021

Pay raises coming back in 2022:  According to a Willis Towers Watson survey, raises are coming back. The 2021 General Industry Salary Budget Survey found only 3% of companies are not planning to boost salaries next year, a drop from 8% that didn’t give raises this year. Notably, raises are returning to pre-pandemic levels. According to the survey, the average salary increase for executives, management, professional employees, and support staff is projected to be 3.0% in 2022. This is up from the average 2.7% increases companies granted this year. Production and manual labor employees are in line to receive average increases of 2.8% next year, higher than the average 2.5% increases this year. Salary increases hovered around 3.0% for the past decade until the pandemic forced companies to trim budgets. The larger raises coincide with a surge in demand for labor and a shortage of supply of hourly workers and specific professional roles with premium skills.   Among the major industry groups, high-tech and pharmaceutical companies project the largest increases (3.1%) followed by health care, media, and financial services companies (3.0%). Oil and gas industry companies, as well as leisure and hospitality industry companies, are budgeting significantly lower salary increases for employees (2.4%). Retail industry companies are projecting average raises of 2.9% next year.  Source:  CCH 7/22/21

Is Juneteenth a holiday for payroll tax compliance purposes?  On June 16, 2021, President Biden signed the Juneteenth National Independence Day Act establishing June 19 as a federal holiday [Pub. L. No. 117-17; 5 U.S.C. §6103]. The holiday commemorates the emancipation of the last enslaved African Americans two years after President Lincoln’s Emancipation Proclamation, when, on June 19, 1865, Union soldiers led by General Gordon Granger arrived in Galveston, Texas, to deliver an order officially ending slavery in the state. The tax law provides that when the last day for filing a return (e.g., Form 941), paying taxes, or doing any other required act such as depositing payroll taxes, falls on a Saturday, Sunday, or legal holiday, it will be treated as timely if done on the next day which is not a Saturday, Sunday, or legal holiday. The answer is technically “No.” Although the majority of states celebrate or commemorate Juneteenth, payroll professionals should check state law to determine if the day qualifies as a statewide legal holiday. Caution: Statewide legal holidays do not extend the deadlines for payroll tax deposits unless the state holidays are also federal holidays.  Source:  CCH 7/5/21

EEOC rule on conciliation overturned by Congress:  The conciliation rule promulgated earlier this year, required the EEOC to substantially increase the amount of information it provides employers during this pre-suit conciliation process.  However, Under the Congressional Review Act, Congress has the ability to overturn executive branch regulations within 60 legislative days of when they were issued and blocks future administrations from enacting substantially similar regulations to the discarded ones unless lawmakers provide explicit authorization to the agency to do so. Under this authority, on May 19, 2021, the Senate voted to rescind the Final Rule, approving Senate Joint Resolution 13 by a vote of 50-48. The House then passed its own version of the resolution – House Joint Resolution 33 – by a vote of 219-210 on June 24, 2021, before it moved to President Biden's desk. On June 30, 2021, President Biden signed the resolution. As a practical matter, barring a complete failure by the EEOC to offer the opportunity to conciliation, there is, once again, little practical purpose to challenging the adequacy of pre-suit conciliation. Source: Squire Patton Boggs LLP 7/5/21

An ADA accommodation is not allowed if it violates law: Confirming perhaps an obvious point, the U.S. Court of Appeals for the Second Circuit held that “a binding federal regulation presents a complete defense to an ADA [American with Disabilities Act] failure-to-accommodate claim.” In Bey v. City of New York, Black firefighters with a skin condition that causes pain and scarring with shaving sought an accommodation to the employer’s grooming policy, requiring firefighters to be clean-shaven in areas where a respirator “seals” against the skin. The employer refused the accommodation request, citing a binding Occupational Safety and Health Act regulation prohibiting any facial hair between the sealing surface of the mask and the face in order to ensure the proper seal. The employees sued for failure to accommodate under the ADA.  The Second Circuit observed that “[a]t the heart of this appeal is a question about the interplay between federal safety regulations and the ADA’s requirement that employers must offer reasonable accommodations to employees with disabilities.” The Second Circuit found the regulation to be unambiguous.  Thus, according to the Second Circuit, “An accommodation is not reasonable within the meaning of the ADA if it is specifically prohibited by a binding safety regulation promulgated by a federal agency.”   Source:  Shawe Rosenthal LLP 6/30/21

Association ADA claim fails when employee is related to COVID infected employee:  The employee and her brother worked at the same facility. After her brother tested positive for COVID-19, the employee was sent home by her supervisor — who determined that the employee had an in-person conversation with her brother prior to his diagnosis — and was told to quarantine for 14 days. Days later, the employer's HR director "accused [the employee] of dishonesty" because she failed to disclose the conversation with her brother when the HR director asked if she had contact with him at the time that he was symptomatic. She was terminated the following day.  The employee sued, alleging that Mannington Mills violated the Americans with Disabilities Act, but the district court held that the employee failed to show that the employer regarded her brother as "disabled" as defined under the law (Champion v. Mannington Mills, No. 5:21-cv-00012 (M.D. Ga. May 10, 2021).  Source: HR Dive 7/7/21

Most employers provide 401K matches:  While employers often provide matching contributions to their traditional 401k plan, they typically delay fully vesting their employees in those matching funds, according to XpertHR’s 2021 Employee Benefits Survey of 452 U.S. employers.   The survey covered over 10 types of retirement plans and found that traditional 401k plans are the most popular, with 60% of responding organizations offering this type of plan to all or most of their workforce, followed by Roth 401k plans at 43% (respondents could choose more than one type of plan.)  Among the 271 surveyed employers that offer a traditional 401k plan, 82% match at least some portion of employee contributions to the plan.  Vesting periods vary.  28% fully vest their employees in these funds immediately, while most require a waiting period.  These waiting periods vary widely, and respondents noted several timeframes: up to one year (13%), up to two years (7%), up to three years (14%), up to four years (6%), up to five years (17%), up to six years (10%), and more than six years (1%). 5% were not sure. It should be noted that the IRS requires matching funds to 401ks to be fully vested at least by six years of service.  Source: 401K Specialist 6/18/21 

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