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HR Regulations You Need to Know Starting January 2021

Emily Hartman /

Every month we cover timely legislative and regulatory employment updates, but this time we’ve rounded up all the federal regulations and rules you need to know for the start of 2021.

Read through what you need to know and gain some compliance tips to help you stay on top of HR the right way.

EEOC Releases New Employee Data Query Tool

Minimum Wage Increases for Federal Contractors

IRS Extends Deadline for Forms 1095-B and 1095-C

IRS Announces Maximum Contributions to FSAs and HSAs

IRS Releases Retirement Account Contribution Maximums for 2021

Social Security Administration Announces Wage Cap and Benefits Increase for OASDI in 2021

U.S. District Court Rules Against Trump Administration’s Recently Issued H-1B Rules

EEOC Releases New Employee Data Query Tool

Who: All employers

When: Effective December 2, 2020

What: The Equal Employment Opportunity Commission (EEOC) launched Explore, a new interactive data query tool that allows users to search U.S. 2017 and 2018 employee data by job category, sex, race/ethnicity, location, and industry. Underlying data comes from EEO-1 reports made by private employers with 100 or more employees or federal contractors with 50 or more employees. For 2018, the data represented approximately 56.1 million employees of 73,000 employers.

EEOC Explore was developed in collaboration with the University of Chicago as part of the EEOC’s Data and Analytics Modernization Program. The tool makes it easier for employers and the general public to analyze employment trends, specifically with regard to women and minorities.

How:

  • If you have 100 or more employees (or are a federal contractor with 50 or more employees), watch for updated information about when to file your 2019 EEO-1 form.

Additional Resources:

EEOC Explore

EEOC Explore Frequently Asked Questions (FAQs)

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Minimum Wage Increases for Federal Contractors

Who: All employers with covered federal contracts

When: Effective January 1, 2021

What: The U.S. Department of Labor published a notification that the minimum wage for workers performing work on or in connection with federal contracts covered by Executive Order 13658 will increase to $10.95 per hour as of January 1, 2021. The minimum cash wage paid for tipped employees will increase to $7.65 per hour. The wage is adjusted in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers.

Employers must post the required employee notification by January 1, 2021. The official updated notification poster will be released by the end of December 2020.

How:

  • Post the employee notification poster by January 1, 2021.
  • If you have covered employees who will be earning less than $10.95 per hour as of the first of the year, plan to increase their rate of pay starting January 1, 2021. Determine if affected contracts are eligible for a price adjustment and submit the related request to the Contracting Officer as applicable.
  • Factor the increased minimum wage into pricing for new contracts.

Additional Resources:

Notification of Increase in Minimum Wage for Contractors

Federal Minimum Wage for Contractors Poster (will be updated by the end of 2020)

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IRS Extends Deadline for Forms 1095-B and 1095-C

Who: All employers

When: Extended deadline is March 2, 2021

What: The Internal Revenue Service issued Notice 2020-76, which extends the deadline for Form 1095-B and Form 1095-C reporting from January 31, 2021, to March 2, 2021. Under the Affordable Care Act, health insurance issuers, self-insuring employers, government agencies, and other providers of minimum essential coverage must provide these information returns and statements about the health insurance coverage they provide to employees to the covered individuals and the IRS.

A penalty of $280 applies to each form not timely submitted to a covered individual or the IRS, for a potential total fine of $560 per form not timely submitted. This is the last year the IRS intends to extend the deadline for these forms.

How:

  • Provide Forms 1095-B and 1095-C to covered individuals and the IRS by March 2, 2021.

Additional Resources:

IRS Notice 2020-76

IRS Form 1095-B

IRS Form 1095-C

About Form 1095-B, Health Coverage

About Form 1095-C, Employer-Provided Health Insurance Offer and Coverage

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IRS Announces Maximum Contributions to FSAs and HSAs

Who: All employers

When: Effective January 1, 2021

What: The Internal Revenue Service announced new maximum contributions employees can make to health savings accounts (HSAs) and flexible spending arrangements (FSAs) through pre-tax salary reductions in 2021. Under a high-deductible plan, the contribution limit for individuals with self-only coverage is $3,600. For individuals with family coverage, it’s $7,200. The maximum contributions to a flexible spending arrangement stayed the same at $2,750.

How:

  • Communicate the new annual contribution limits to your employees.

Additional Resources:

IRS Revenue Procedure 2020-45

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IRS Releases Retirement Account Contribution Maximums for 2021

Who: All employers

When: Effective January 1, 2021

What: The Internal Revenue Code sets forth the dollar limitation on contributions and benefits related to qualified retirement plans. These limits are adjusted annually in accordance with cost-of-living allowances. For the most part, contribution limits remained the same.

In 2021, the overall contribution limit for 401(k) and similar plans increased from $57,000 to $58,000 in 2021. That $1,000 increase can be any combination of employer and employee contributions. The minimum compensation for simplified employee pensions (SEPs) increases from $600 to $650. In addition, the Saver’s Credit (or Retirement Savings Contribution Credit) increased for low- and moderate-income workers. The limit increased by $1,000 to $66,000 for married couples filing jointly; by $750 to $49,500 for heads of household; and by $500 to $33,000 for singles and married individuals filing separately.

How:

  • Consider communicating the details about contribution limits to your employees.
  • Determine whether you will increase contributions to your employees’ retirement accounts based on the new $58,000 maximum.

Additional Resources:

Income Ranges for Determining IRA Eligibility in 2021

IRS Notice 2020-79

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Social Security Administration Announces Wage Cap and Benefits Increase for OASDI in 2021

Who: All employers

When: Effective January 1, 2021

What: Beginning January 1, 2021, an employee’s earnings subject to the Old-Age, Survivors, and Disability Insurance (OASDI) tax increases to $142,800 from $137,700 in 2020—an increase of 3.7%. The taxable amount—called the contribution and benefit base—changes each year in accordance with the national average wage index.

The Social Security Administration also announced an increase in benefits of 1.3% to all retired workers starting in 2021. The 1.3% is a cost-of-living adjustment based on an increase in the Consumer Price Index from third quarter 2019 through third quarter 2020.

How:

  • Work with your payroll personnel or third-party payroll administrator to ensure proper withholding of OASDI tax based on the new wage cap.

Additional Resources:

Social Security Contribution and Benefit Base

Social Security Fact Sheet for Changes in 2021

SSA Press Release for 2021 Changes

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U.S. District Court Rules Against Trump Administration’s Recently Issued H-1B Rules

Who: All employers

When: Ruling issued December 1, 2020

What: The U.S. Chamber of Commerce was granted an order for partial summary judgment in a lawsuit against the U.S. Department of Labor (DOL) and the U.S. Department of Homeland Security (DHS). The suit challenged the DHS and DOL interim final regulations recently issued to change the H-1B program. The rules significantly changed wages to be paid to certain foreign workers and made it harder to qualify for an H-1B visa. The end result would have been to make it much more difficult for U.S. employers to hire certain highly skilled foreign workers.

Both rules were set aside under the Administrative Procedure Act. The court determined that the logic used to forego the APA’s good cause exception and implement the new rules on an emergency basis was flawed.

How: If you were affected by the new H-1B rules that went into effect in December, watch for news about when wages will revert to normal and whether wage determinations issued with a higher will be reissued.

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