Retirement Plan Changes and Workplace Protections for Pregnant Workers Included in Fiscal Year 2023 Omnibus Bill

On December 29, 2022, President Biden signed the $1.7 trillion Consolidated Appropriations Act of 2023 (omnibus bill) to fund the federal government through fiscal year 2023 (FY 2023). Given the “must-pass” nature of the bill, the omnibus bill also served as a vehicle for policy unrelated to government funding that was unlikely to pass as a standalone bill in Congress. Below outlines some of the highlights that will impact higher education generally and human resources specifically.

SECURE 2.0

Notably, the new law includes changes to the access and use of individual retirement funds. Provisions from a package of retirement-related bills, referred to as SECURE 2.0, were ultimately included in the final omnibus package. Specifically, the new law included the following provisions, in addition to others not listed here:

• Automatic 401(k) and 403(b) plan enrollment: The new law requires employers to automatically enroll employees into newly created 401(k) and 403(b) retirement plans at a rate between 3 to 10 percent of eligible wages. Employees will then have the option to opt out of the enrollment. Employers with 10 or fewer employees and companies in business for less than three years are excluded from this requirement.
• Expanded eligibility for part-time employees: The law requires employers to provide the option to participate in employer retirement plans for part-time employees who work between 500 and 999 hours for at least two consecutive years (lowered from three consecutive years previously required).
• Emergency expenses and savings accounts: Employees would be allowed to withdraw up to $1,000 from retirement accounts for qualified emergency expenses without facing early withdrawal penalties if the worker is under 59.5 years old. Additionally, the law allows employers to offer employees an emergency savings account through payroll deductions for amounts up to $2,500.
• Matching employer contributions for student loan payments: Employers will be allowed to make contributions to their company retirement plan on behalf of employees who are paying student loans and are not contributing to a retirement account as a result.
• Roth treatment of employer contributions: The new law grants employers the option to amend their retirement plans and allow employees to choose their employer’s matching and non-elective contributions to be made as Roth contributions.
• Multiple Employer and Pooled Employer Plans for 403(b) plans: The new law allows employers to participate in Multiple Employer Plans (MEPs) and Pooled Employer Plans (PEPs) for 403(b) plans.

The final law also included several changes to individual activity with respect to their retirement plans, including an increase to the “catch-up” contribution limits of up to $10,000 for older retirement savers and an increase to the age an individual is required to begin taking minimum distributions from their retirement accounts, which is now effective at age 73 and effective at age 75 effective in 2033.

Workplace Protections for Pregnant Workers

Additionally, Congress was able to agree on the inclusion of the Pregnant Workers Fairness Act (PWFA) and the Providing Urgent Maternal Protections (PUMP) for Nursing Mothers in the omnibus bill.

Pregnant Workers Fairness Act

Passed by the House in May 2021, the PWFA specifically declares that it is an unlawful employment practice for employers with 15 or more employees to do any of the following:

• fail to make reasonable accommodations to known limitations of such employees unless the accommodation would impose an undue hardship on an entity’s business operation;
• require a qualified employee affected by such condition to accept an accommodation other than any reasonable accommodation arrived at through an interactive process;
• deny employment opportunities based on the need of the entity to make such reasonable accommodations to a qualified employee;
• require such employees to take paid or unpaid leave if another reasonable accommodation can be provided; or
• take adverse action in terms, conditions or privileges of employment against a qualified employee requesting or using such reasonable accommodations.

Though the bill enjoyed bipartisan support in both the House and Senate, Republicans opposed bringing the bill to a Senate vote without the inclusion of a religious exemption for employers. Such exemptions were provided in the omnibus bill’s version of the PWFA, ultimately helping lead to its passage.

PUMP for Nursing Mothers Act

The PUMP for Nursing Mothers Act passed the House of Representatives in October 2021 with bipartisan support. The bill aims to amend the Fair Labor Standards Act (FLSA) to expand access to breastfeeding accommodations in the workplace for lactating employees and builds upon existing protections in the 2010 Breaktime for Nursing Mothers Act by broadening breastfeeding accommodations and workplace protections. In the new law, the PUMP for Nursing Mothers Act is expanded to include salaried employees exempt from overtime pay requirements under the FLSA as well as other categories of employees currently exempt from such protections, such as teachers, nurses and farmworkers. It also clarifies that break time provided under this bill is considered compensable hours worked so long as the worker is not completely relieved of duty during such breaks, and it ensures remedies for nursing mothers for employer violations of the bill.

Similar to the PWFA, the PUMP for Nursing Mothers Act did not reach a Senate floor vote, leaving the omnibus bills as one of the last options for passage before the 117^th Congress’s term expired.

Immigration Provisions

Due to the situation at the southern border, the new law excluded any major immigration overhauls, such as the Equal Access to Green cards for Legal Employment (EAGLE) Act, which would have addressed the immigration visa backlog and made changes to the H-1B visa program. Additionally, protections for the Deferred Action for Childhood Arrivals (DACA) program and Dreamers that have been threatened by recent court decisions were not included in the final bill enacted into law.

Despite the exclusion of important reforms, the new law reauthorized several expiring immigration programs that are already utilized by institutions of higher education, including additional funds for the E-Verify program.

Higher Education Funding

Several provisions were included in the omnibus package that will increase funding for a variety of higher education programs. Notably, the bill includes a $500 increase to the maximum Pell Grant a recipient can receive, raising the total to $7,395 for the 2023-24 award year. Additionally, the bill included funding increases for Federal Work-Study grants, Title III and V programs, Postsecondary Student Success Grants, and the TRIO and GEAR UP programs.

CUPA-HR will continue to analyze the provisions included in the FY 2023 funding bill and will keep members apprised of any additional noteworthy provisions included in the law.