Monday morning musings for workplace watchers.
Upcoming Regs | Retirement Saving
Rebecca Rainey: The US Labor Department is likely to have a busy fall, with plans to release a highly anticipated proposed update to overtime regulations and finalize changes to prevailing wage rules before the end of the year.
The overtime proposal will be issued in October and the final rule to update how the DOL calculates prevailing wages under the Davis-Bacon Act will be out by December, according to the Biden administration’s latest regulatory agenda released last week.
The administration is also taking steps to implement President Joe Biden’s February executive order requiring project labor agreements on federally funded projects above $35 million. The administration plans to release a proposed rule in June to amend the Federal Acquisition Regulation—which sets rules for federal agencies when seeking contracts—to require those pre-hire agreements on future federal projects.
Notably absent from the spring agenda, however, is a rulemaking to define independent contractor status. The agency’s wage division has scheduled several meetings throughout June with businesses, labor unions, and other groups to gather feedback about a new worker classification regulation following a Texas court’s reinstatement of a Trump-era standard that made it easier for workers to be classified as contractors and therefore aren’t covered by federal wage and labor laws.
Despite being left off the schedule, the DOL told PI it intends to wrap up a proposal on independent contractor status “this summer.”
“We anticipate submitting a draft proposed rule to the Office of Management and Budget’s OIRA for interagency review this summer. The Wage and Hour Division is complying with the court decision,” a DOL spokesperson said.
But don’t hold your breath. We should note that the regulatory agenda is an estimated schedule and agencies often miss the deadlines listed.
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Austin R. Ramsey: All the pieces are finally in place for Congress to pass landmark retirement access legislation later this year, but a few lingering questions remain about how far lawmakers are prepared to go to encourage businesses to set up new workplace 401(k)s.
The Senate Finance and the Health, Education, Labor and Pensions committees rubber-stamped a pair of bills this month that complement legislation the House passed 114-5 in March. The two committee proposals in the Senate are expected to be combined to become the Senate’s formal response to the House’s SECURE Act 2.0 bill.
But a chief tenet of the House-passed legislation—a provision that would automatically enroll new workers into their employer-sponsored plans—is missing from the Senate bills. Before lawmakers can build on the bipartisan success they achieved under the original SECURE Act in 2019, they’ll have to decide on a carrot or stick approach for new retirement savers.
“This legislation offers some modest measures to help more people save, but, ultimately, we should reform what is an upside-down system that benefits the wealthy more than hardworking Americans,” said Sen.
Millions of US workers aren’t saving at all or aren’t saving enough for retirement. Auto-enrollment is broadly considered the most effective way to ensure workers start and continue to save toward retirement. It’s a set-it-and-forget-it approach to retirement savings that relies on the principle idea that workers won’t bother to stop saving once they’ve started. The earlier they get in the system, the more time they’ll have to let their savings grow.
“Auto-enrollment and expanded coverage are what we need if we really want to address the retirement gap,” said David Certner, legislative counsel and policy director at AARP.
Under the House’s SECURE Act 2.0 legislation, all new retirement plans would be required to have a provision that automatically enrolls new workers and increases their contributions year after year. Workers would have to manually opt out of their workplace retirement plans if they didn’t want to save.
It’s a critically important step toward improving the “woefully inadequate” US retirement savings system, said Susan Lubow, a partner at Baker & Hostetler LLP in Columbus, Ohio.
Retirement has always been a voluntary workplace benefit in the US, and Congress has been wary of being too specific about ideal plan designs. Forcing employers that offer retirement plans to automatically enroll their workers may be too heavy-handed an approach for business-friendly Republicans.
SECURE Act 2.0 and the SECURE Act before it have been celebrated as notably bipartisan solutions to the US retirement savings gap. Both the House and Senate measures are expected to cost about $40 billion, offset by changes to the way new retirement contributions would be taxed.
But while Republicans agreed to hike the price tag on the Senate proposals, according to Sen.
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