Minimum Wage for Federal Contractors Increases
The minimum wage for federal contractors will increase to $10.15 per hour as of January 1, 2016.
The wage requirement applies to new and replacement contracts (solicited on or after January 1, 2015) with employers covered by the Service Contract Act or any employer who handles concessions and services in connection with Federal property or lands.
We recommend that employers review the pay rates of their employees and plan any changes necessary to comply with the rate increase.
Employer Mandate Reporting In Full Swing; Due Dates Extended
Reporting for the Employer Mandate begins this year. Reporting is mandatory for large employers with 50 or more full-time equivalent employees. It’s also mandatory for those small employers with less than 50 full-time equivalents that have a self-funded plan.
The specific tax forms you need to file depend on the size of your group and what type of health plan you offer.
Large employers that have a fully-funded health plan, are self-insured, or have no health plan are responsible for filing the 1094-C. This is a tax form that tells the IRS whether the employer provided minimum essential health insurance coverage to its full-time employees.
Large employers with a fully-funded health plan or no health plan must also distribute the 1095-C Parts I-II to each employee working 130+ hours per month and file them with the IRS. Large employers that are self-insured must file and distribute the 1095-C Parts I-III to each employee. The 1095-C tells the IRS and each employee what employer-provide coverage they had or didn’t have throughout the year.
For small groups with less than 50 full-time equivalent employees, there are no employer mandate reporting requirements under Section 6056 of the Internal Revenue Code. However, small employers offering a self-insured health plan do have reporting requirements under Section 6055 of the Internal Revenue Code. In that case, the employer should file a 1094-B with the IRS and the 1095-Bs should be filed and distributed to employees.
The insurance carrier is responsible for filing and distributing the 1094-B and 1095-Bs for small groups that are fully-funded. For small groups that are self-insured, the employer must complete the Form 1094-B and file and distribute a Form 1095-B for each enrolled employee. The insurance carrier maintains responsibility for filing the 1094-B for large groups that are fully-funded and the carrier will also provide a 1095-B to each enrolled employee. For large groups that are self-insured, the employer should complete the 1094-C and the 1095-Cs Parts I, II, and III.
Important!: After considering feedback from private sector businesses and insurers, the IRS has extended the deadlines for reporting 2015 information under the Affordable Care Act:
- Employers now have until March 31 (previously before February 1) to provide employees with their Form 1095-C or Form 1095-B.
- Additionally, the deadlines for employers to report offers of health coverage to the IRS (Forms 1094-B, 1094-C, 1095-B, and 1095-C) have been extended by three months:
- The deadline for paper filing (available only to employers submitting fewer than 250 1095-Cs) is now May 31. The deadline for electronic filing (available to all employers) is now June 30.
The deadline extensions apply only to this year. No extensions will be available after the extended due dates. For employers and insurers that can’t meet the extended due dates, the IRS will take all facts and circumstances into account in determining whether to assess penalties.
The other big health care reform news:
Much of the transitional relief that softened the blow of the Employer Mandate ends in 2016. This means the employer mandate penalties will now apply to employers with 50-99 full-time equivalent employees. It also increases the percentage of full-time employees to whom covered employers must offer coverage—from 70% to 95%—and decreases the number of full-time employees that can be subtracted from the penalty calculation—from 80 to 30. Finally, employers must now use an average of the number of employees calculated from all 12 months of 2015 (rather than any six consecutive months as allowed under transitional relief) when determining whether they qualify as an applicable large employer.
Update: Proposed Changes to the Fair Labor Standards Act
The proposed changes to the white collar exemptions of the Fair Labor Standards Act (FLSA) are expected to be finalized sometime in 2016. If the final rules mirror the proposed rules, the salary level of $50,440 will more than double the salary threshold for workers otherwise eligible for a white collar exemption from minimum wage and overtime requirements under the FLSA.
Beyond the initial large jump, the rules also propose an automatic annual adjustment to both the white collar salary level and the highly compensated employee compensation rate. These would be tied either to a cost of living index or to a set percentile of earnings across all salaried workers.
The Department of Labor (DOL) is required to review the quarter of a million comments made in response to the proposed rules. It remains to be seen whether the DOL will respond to the comments or make changes to the proposed rules in response to them. The timing is also an unknown at this point. The effective date could be early summer 2016, late 2016, or even sometime in 2017.
New Rule for Federal Contractors
Starting this January, employers with federal contracts entered into or modified after January 11, 2016 and totaling more than $10,000 may not discharge or in any other manner discriminate against any employee or applicant because the employee or applicant has disclosed their own compensation or inquired about, discussed, or disclosed the compensation (pay and benefits) of others.
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