Compliance Corner [March 2025]
Here is what is new in
March 2025
2025 Updates on Beneficial Ownership Information (BOI)
Trump’s Executive Order 14173 rescinds Affirmative Action Plans
Medicare Part D Disclosure was due to CMS by March 1
Connecticut Paid Sick Leave Law Coverage Expanding
A List of States with Pay Transparency Requirements
Maryland Paid Family and Medical Leave (FAMLI) May Not Be Effective Until 2027
Harassment is Alive and Unwell
Tax Information for State-Mandated Paid Family Leave Programs
EEOC Violations and Settlements in January
DOL Violations and Settlements in January
Michigan’s New State Paid Sick Time Law
2025 Retirement Plan Contribution Limits per IRS
BOI Lives Again
The national injunction against having to report Beneficial Ownership Information (BOI) has been lifted, and the reporting mandate is once again in effect. This report, mandated by the Financial Crimes Enforcement Network (FinCEN) under the Corporate Transparency Act. Each employer’s BOI report is due no later than March 21, 2025. Fines for failure to report are VERY steep: $500 per day for failure to report, and up to $10,000 (or 2 years in prison) if criminal intent is found. A full, detailed explanation can be found on the FinCEN website at https://www.fincen.gov/boi.
Executive Order 11246 Rescinded; Investigations or Enforcement Actions Terminated
In one of his first actions, President Trump issued Executive Order (EO) 14173, which rescinded one of the significant compliance hurdles for government contractors, EO 11246, enacted during the LBJ administration. That order required the preparation of AAPs and the setting of targets for hiring based on race and gender. Beyond the original noble intent, that EO led to the formation of an enormous new organization in the federal government, one whose “mission creep” has led to difficulties for employers. Under the new order, contractors are no longer required to prepare Affirmative Action Plans, but that does not remove the obligation to avoid discrimination on any bases beyond legitimate qualifications for hiring and performance criteria for ongoing employment. More guidance will be coming from both the Federal Government and the courts, no doubt. In the meantime, a number of states have also enacted their own versions of affirmative action requirements, with which employers are still required to comply.
The new executive order also prohibits all DEI programs, and contractors are required (1) to certify that they are not operating any DEI programs, and (2) to agree that compliance with federal anti-discrimination laws is material to the federal government’s payment decisions. Contractors have a “grace period” until April 20, 2025, during which they may still observe existing affirmative action and DEI programs while they update their policies.
Medicare Part D Disclosure was due to CMS by March 1
The following requirement was posted on the Medicare website in February and applies to calendar-year plans. Non-calendar-year plans must report no later than 60 days from their plan year beginning.
In addition to the annual requirement to provide all Medicare-eligible plan participants with notices of creditable and non-creditable coverage, welfare plan sponsors must also complete the Online Disclosure to CMS Form to report the creditable coverage status of their prescription drug plan.
Online reporting is the only acceptable method; you can visit the site here.
Connecticut Paid Sick Leave Law Coverage Expanding
Effective January 1, 2025, coverage under the Paid Sick Leave (PSL) Law in Connecticut is extended to virtually all employers with 25 or more employees. Previous exemptions for certain industries and non-profits are cancelled. The accrual rate has also been increased to 1 hour of PSL for every 30 worked, up to a maximum of 40 in a given year, with almost no exceptions. The definition of “family member” is expanded from immediate to extended family members. Another change is that PSL records are now to be retained for 3 years (there was no prior requirement). Notices of the new requirements must be posted in English and Spanish in “a conspicuous, accessible space.” Effective January 1, 2026, employers with 11 or more employees will be covered; and all employers with 1 or more employee will be covered effective January 1, 2027.
FYI: A List of States with Pay Transparency Requirements
Current: California, Colorado, Connecticut, Hawaii, Maryland, Nevada, New York (+NYC, Ithaca & Westchester County), Ohio (Cincinnati & Toledo only), Rhode Island, Washington State, Washington, DC.
Bills Pending (new or additional provisions): Connecticut, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, Pennsylvania, Vermont
Maryland Paid Family and Medical Leave (FAMLI) May Not Be Effective Until 2027
Maryland family & medical leave insurance (FAMLI) is a state mandated program that provides that all eligible Maryland workers can take up to 12 weeks away from work to care for themselves or a family member and be paid up to $1,000 per week. Employers and workers make contributions into a fund administered by the state. (Employers with less than 15 employees may not need to make contributions.)
The original law stated that there would be important employer obligations starting as early as the spring of 2025.
The NEW proposed schedule has payroll deductions beginning January 1, 2027, with benefits available starting January 1, 2028. It is anticipated this proposal will be accepted.
Once the regulations are finalized by the state of Maryland, the following steps are to be taken by employers.
NOTE: The original timetable is provided below so employers can have an idea of the steps that will be required in the revised schedule when it is finalized:
Early 2025: Employer website registration (required for all qualified employers)
May 1, 2025 to May 31, 2025: Employer may submit an application to the state to obtain authorization to use a private plan
July 1,2025: Employee payroll deductions begin (if choosing the state plan)
October 1, 2025: Employers first payment and reporting due to the state
January 1, 2026: Employers must notify workers of FAMLI program
July 1, 2026: FAMLI program go live date for employees to submit claims
The revised/recommended schedule will be as follows:
Payroll deductions would begin | January 1, 2027
Benefits would become available | January 1, 2028
Under this schedule, employers will have to choose between FAMLI and a private plan until 2026.
For employers with over 15 employees, choosing a private plan in lieu of the state program could help save you money, simplify administration and provide a better experience for employers and employees (according to the state publication).
For more information about MD FAMLI please visit: MD FAMLI website.
Harassment is Alive and Unwell
According to a survey of more than 2000 US employees regarding the status of harassment in the workplace, the following statistics show there is room for improvement:
46% of employees have witnessed harassment at work, and 24% have been direct targets.
51% of employees would only report harassment if anonymity were guaranteed.
32% of women are dissatisfied with how harassment reports were handled, highlighting potential legal and reputational risks.
According to the report, key steps for employers to follow to combat harassment are the following:
Develop and enforce clear anti-harassment policies.
Provide mandatory, legally-compliant training to all employees, including leadership.
Enhance reporting mechanisms with anonymous options and ensure transparent investigations.
Tax Information for State-Mandated Paid Family Leave Programs
For employees receiving mandated State Paid Family and Medical Leave benefits wherein both the employee and the employer are required to pay the premium costs, the following tax provisions apply, per IRS Release 2025-4 (per ADP):
If the employer pays the premiums for the employee:
Employee required SPFML premium amounts paid by an employer are considered taxable income to the employee for federal income tax and employment tax (e.g., Social Security) regardless of state income tax treatment.
The employee required premium amounts voluntarily paid by the employer must be included on the employee's Form W-2 in Boxes 1, 3 and 5.
Employer required premium amounts are considered state taxes. Such amounts are not taxable income to the employee.
The employer has no federal information reporting requirements with respect to employer mandatory SPFML contributions.
Regarding state Medical Leave benefits paid to the employee:
Amounts paid to the employee under the medical leave provisions of the SPFML are to be included in the employee's federal gross income UNLESS "time off from work is necessary because of the individual's own serious health condition, and the medical leave benefits that are paid…are, in fact paid as a result of the employee's own serious health condition."
Amounts paid for the employee's own serious health condition are treated as amounts received through accident or health insurance. The taxation of such benefits is dependent on the percent of the premium paid by the employer and employee.
Employees must include in their federal gross income, any amount received attributable to the employer state-mandated premium percentage. For example, if an employer is required to pay 40 percent of the premium, then 40 percent of the amount received by the employee is subject to federal income, as well as employment taxes.
Amounts received by the employee attributable to employee contribution percentage in addition to any percentage of employee contribution, as well as any voluntary payment by the employer of the employee contribution required by the employee, are excluded from the employee's federal gross income. For example, the state mandates the employer pays 40 percent of the SPFML premium and the employee portion is 60 percent. However, the employer voluntarily pays half of the employee's portion totaling 30 percent. The employee would still only be taxed on the state employer premium mandated amount of 40 percent.
EEOC Violations and Settlements in January
Lawsuits: Going after the “big boys”: Sued Sam’s Club in Georgia and FedEx in New York, both for disability discrimination. Sam’s Club denied accommodation to a worker because she was injured outside of work. FedEx failed to engage dispatchers who had various disabilities, refusing to allow them to work remotely – even though they had done so previously …. for about 3 years.
Settlements: 11 separate settlements in 10 different states for amounts ranging from $50,000 to $1,500,000, for offenses including discrimination based on age, sex, disability and other factors; plus sexual harassment and retaliation.
DOL Violations and Settlements in January
FLSA
12 settlements and 1 lawsuit in 11 states for charges including child labor (2 of the settlements), pay and overtime violations and worker misclassification. Settlements ranged from $26,000 to $7,400,000.
OSHA
7 violations in 4 states for failure to properly protect workers before, during and after a hazardous chemical release (in PA), failure to ensure machine safety (1 fatality resulted), unsafe working conditions (2 more fatalities).
FMLA
1 violation for firing of a worker who was on federally-protected leave.
H-2A Visas
2 violations in 2 states:
Father & daughter providing farm laborers in NC fined $166,000 & debarred for 3 years;
Over 600 workers awarded $132,000 from large produce grower in SC.
ERISA
Owner of Oregon company required to restore “at least $20.6M in assets to pension plan [and] unwind $15.4M in illegal real estate investments.” In a separate case in W. Va: Judgement was ordered against a contractor for failure to pay medical claims.
Michigan’s New State Paid Sick Time Law
The state of Michigan has joined with those states with a paid sick time act. Cleverly called the Michigan Earned Sick Time Act, the new law was supposed to take effect on February 21, but as of February 18, “significant” differences between the Michigan House and Senate versions had not been resolved, and the governor was suggesting that implementation be moved back to July 1. Regardless, all employers with 10 or more employees will be required to accrue up to 72 hours of sick time for ALL employees. Employers with fewer than 10 employees must accrue up to 40 hours of paid leave for everyone, and then allow up to 32 hours of unpaid time if that is needed. NOTE: There is no cap on accrual from year to year; unused leave must be carried over into the next plan year. “Front-loading” is permitted, but it cannot be less than the employee would otherwise have accrued, and it apparently does not negate carryover (removing the advantage of front-loading). The provisions of this act apply to all employees physically in Michigan, regardless of the employer’s location. Current bargaining agreements are excepted, but the provisions of the act apply upon renewal or extension of any agreement. Federal employees and employees covered by the Railway Pension are also excluded.
Miscellaneous Compliance Items:
California employers with 100 or more employees and/or workers hired through labor contractors must file an annual pay data report with the California State Civil Rights Department – even if only ONE of the above employees works in California. The deadline is May 14, 2025.
California has also updated their FMLA and pregnancy disability leave poster.
New York state is about to enact a very strict health privacy law.
New York has also enacted a new, stricter version of its data breach notification law, containing a 30-day maximum delay for notification of affected individuals after a breach has been detected.
2025 Retirement Plan Contribution Limits per the IRS (per ERI)
* If age 50 by end of year.
The IRS has also announced that the 401(k) limit has been increased to $23,500,
while the limit for IRAs remains at $7000.