Three New Laws for 2023 That HR Should Know
January 6, 2023
By Anthony Kaylin, courtesy SBAM Approved Partner ASE
Although a number of new laws started January 1, there are three that stand out for HR professionals outside of all the pay transparency laws. These three laws were encompassed in the FY 2023 Omnibus Spending Bill, and all had bipartisan support.
Pregnant Workers Fairness Act
The Pregnant Workers Fairness Act was originally introduced in 2012. This law would stop employers from terminating pregnant workers or denying reasonable accommodations so they can maintain healthy pregnancies while they continue working. The law codifies the Young v. UPS Supreme Court case in which UPS was found to have discriminated against its pregnant employees because it had a light-duty-for-injury policy for numerous “other persons,” but not for pregnant workers.
Under this law, the following are considered unlawful employment practices:
- Failure to make reasonable accommodations to known limitations of certain employees unless the accommodation would impose an undue hardship on an entity’s business operation;
- Requiring an employee affected by such limitations to accept an accommodation other than any reasonable accommodation arrived at through an interactive process;
- Denying employment opportunities based on the need of the entity to make such reasonable accommodations to a qualified employee;
- Requiring such employees to take paid or unpaid leave if another reasonable accommodation can be provided; or
- Taking adverse action in terms, conditions, or privileges of employment against a qualified employee requesting or using such reasonable accommodations.
Providing Urgent Maternal Protections for Nursing Mothers (PUMP) Act
The PUMP Act expands the rights of employees who were not included in the previous law amending the Fair Labor Standards Act (FLSA). Enacted in 2010, the break time for nursing mothers provision under the Fair Labor Standards Act of 1938 require employers to provide (1) reasonable break time to express milk for one year after a child’s birth and (2) a non-bathroom space free from view and intrusion for nursing employees to express breastmilk while at work. The new law
- Extends break time and space protections to workers who are currently excluded from overtime protections, including agricultural workers, transportation workers, airline workers, and teachers;
- Ensures workers can recover appropriate forms of relief in court for violations, including reinstatement or back pay;
- Extends break time and space protections to workers up to two years after the employee gives birth or begins nursing a child;
- Ensures workers are covered by break time and space protections when they begin nursing a child, including an adopted child, or when they give birth, even if the infant is stillborn or the worker does not retain custody of the infant; and
- Clarifies that if a worker is not completely relieved of duty during breaks, such break time is considered hours worked and thus compensable.
With these two new laws, HR needs to review their accommodation practice and harmonize what they have done in the past with the current requirements and update their handbooks.
As previously written about in EPTW, this law has strong bipartisan support. The law impacts employees who otherwise would not have access to employer retirement plans or who need to save for emergencies. The law:
- Will allow an employer that does not sponsor a retirement plan to offer a new starter 401(k) plan (or 403(b) plan). The changes generally will require that all employees be default enrolled in the plan at a 3% to 15% deferral rate. The limit on annual deferrals will be $6,000 with an additional $1,000 in catch-up contributions beginning at age 50. This section is effective for plan years beginning after 2023;
- Requires new 401(k) and 403(b) plans to automatically enroll participants in the respective plans upon becoming eligible (employees may opt out of participation). The initial automatic enrollment amount must be at least 3% but not more than 10%. Thereafter, the amount is increased by 1% each year until it reaches at least 10%, but not more than 15%. There is an exception for small businesses with 10 or fewer employees, new businesses (i.e., those that have been in business for less than three years), church plans, and governmental plans. This provision will be effective for plan years beginning after Dec. 31, 2024;
- Provides a three-year small business startup credit increased from the existing credit of 50% of administrative costs, up to an annual cap of $5,000, to 100% for employers with up to 50 employees;
- Allows 403(b) plans to participate in multiple employer plans (MEPs) and pooled employer plans (PEPs). These changes will be effective for plan years beginning after 2022; and
- Allows employees that are unable to save, or to save as much as they might, for retirement because they are instead repaying their student loans to receive matching contributions under a 401(k) plan, 403(b) plan, or SIMPLE IRA with respect to “qualified student loan payments;”
- Reduces the three-year requirement for part-time worker participation under the 2019 SECURE Act to two years; and
- Provides employers the option to offer to their non-highly compensated employees pension-linked emergency savings accounts. Employers may automatically opt employees into these accounts at no more than 3% of their salary, and the portion of an account attributable to the employee’s contribution is capped at $2,500 (or lower as set by the employer). Once the cap is reached, the additional contributions can be directed to the employee’s Roth defined contribution plan (if they have one) or stopped until the balance attributable to contributions falls below the cap.
Given the timing of these provisions, HR should work with their 401 or 403 provider to ensure their plans meet the requirements of this law.