IN THIS ISSUE

Employee Retention Credit Update: Opportunities for Withdrawal and Disclosure  •  Upcoming Federal Changes to Employee Classification and Potential Impacts on Community Action Agencies  •  A New Joint Employer Rule Could Lead to Greater Involvement by CAAs in Union-Related Activities, If It Survives

Employee Retention Credit Update: Opportunities for Withdrawal and Disclosure

The Internal Revenue Service (IRS) recently created opportunities for voluntary withdrawal and disclosure of Employee Retention Credits (the “ERC”). Since the enactment of the ERC, the IRS has expressed concerns regarding fraud and wariness around third parties pushing employers to claim the ERC when they do not qualify. Due to those concerns, the IRS issued a moratorium (IR-2023-169) which is still in effect on processing new ERC claims filed on or after September 14, 2023. The Voluntary Withdrawal Program (IR-2023-193) and the Voluntary Disclosure Program (A-2024-3) are intended for organizations that filed ERC claims and now wish to withdraw the claim or return ERC funds. This article explores a CAA’s ability to take advantage of these programs, if needed.  

Upcoming Federal Changes to Employee Classification and Potential Impacts on Community Action Agencies 

On March 11, 2024, a revision to the Fair Labor Standards Act (FLSA) rule, 29 C.F.R. § 795.110, takes effect and changes the way employers, including community action agencies (CAAs), classify workers as either employees or independent contractors. The Final Rule adopts a new “Economic Realities” test that emphasizes an individual’s overall economic dependence on an employer for employee classification purposes. Application of the new test may result in shifts in worker classifications that could lead to both financial and administrative challenges for CAAs.

A New Joint Employer Rule Could Lead to Greater Involvement by CAAs in Union-Related Activities, If It Survives  

A new federal rule on joint employment is causing confusion about an organization’s responsibilities when employees of external partners seek to engage in union-related activities. Adding to the confusion, legal challenges to the rule have made it difficult to predict when it will go into effect, if at all.  

If and when it does, the new Standard for Determining Joint Employer Status (the “new rule”) will establish a broader standard for determining if two entities are “joint employers” of particular employees for purposes of compliance with the National Labor Relations Act (NLRA).

This legal update was developed by Community Action Program Legal Services, Inc. (“CAPLAW”) in the performance of an award from the U.S. Department of Health and Human Services (HHS), Administration for Children and Families (ACF), Office of Community Services (OCS), Award Number 90ET0505-01. Any opinion, findings, and conclusions, or recommendations expressed in these materials are those of the author(s) and do not necessarily reflect the views of, nor the endorsement by, OCS/ACF/HHS or the U.S. Government. For more information, please visit the ACF website, Administrative and National Policy Requirements.
 
The contents of this resource are intended to convey general information only and do not constitute legal advice. Any communication through this resource or through CAPLAW’s website does not constitute or create an attorney-client relationship. If you need legal advice, please contact CAPLAW or another attorney directly.