A group of states have filed a lawsuit asking a US District Court to invalidate the rule issued by the Equal Employment Opportunity Commission implementing the Pregnant Workers Fairness Act. The Department of Labor has issued a final retirement security rule that updates the definition of an investment fiduciary under federal law. The Internal Revenue Service (IRS) has announced increased limitations on the amount that can be contributed to health savings accounts in 2025. The Department of Labor has developed guiding principles for employers and those who develop artificial intelligence systems.
States Challenge Pregnant Worker Fairness Act Rule – Seventeen states led by the State of Tennessee have filed a lawsuit in the United States District Court for the Eastern District of Arkansas seeking to invalidate the rule implementing the Pregnant Workers Fairness Act that was finalized by the Equal Employment Opportunity Commission (EEOC). The states that filed the lawsuit asked the court to stay the June 18th effective date of the final rule pending judicial review and to both preliminarily and permanently enjoin the “abortion accommodation mandate” that they contend results from the inclusion of abortion in the definition of pregnancy, childbirth, or related medical conditions. According to the plaintiffs, “EEOC’s final rule includes a mandate that employers-including States where abortion is generally prohibited provide abortion accommodations to their workers.”
Retirement Security Rule Finalized – The Department of Labor released a final retirement security rule, which will become effective on September 23rd. The rule updates the definition of an investment fiduciary under the Employment Retirement Income Security Act (ERISA) and the Internal Revenue Code. According to Acting Secretary of Labor Julie Su, “This rule protects the retirement investors from improper investment recommendations and harmful conflicts of interest. Retirement investors can now trust that their investment advice provider is working in their best interest and helping to make unbiased decisions.”
According to the Department of Labor, the final rule requires “trusted investment advice providers to give prudent, loyal, honest advice free from overcharges.” Fiduciaries will need to follow “high standards of care and loyalty when they recommend investments and avoid recommendations that favor the investment advice providers’ interests.” Additionally, fiduciaries will have to charge reasonable fees for their services and provide information about any conflicts of interest. Financial institutions that oversee those who provide investment advice will need to have policies and procedures designed to manage conflicts of interest and to ensure compliance with the rule.
The rule updates the definition of when a financial services provider will be an investment advice fiduciary under federal law, which had not been revised since its issuance in 1975. The new definition states that an investment advice fiduciary is someone who makes an investment recommendation to a retirement investor for a fee or other compensation and states it is acting as a fiduciary under federal law or makes the recommendation in a way that would indicate to a reasonable investor that it is acting as a trusted advisor making individualized recommendations based on the best interests of the retirement investor.
Congressional Review Act resolutions (S.J. Res 79, H.J. Res 143) designed to block the retirement security rule have been introduced. According to Senator Bill Cassidy (R-LA), ranking Republican on the Senate Committee on Health, Education, Labor, and Pensions and a sponsor of the resolution, the new rule “drastically increases the cost of compliance for financial advisors and restricts access to retirement investment savings for the majority of low-income Americans.” The resolutions have been referred to the Senate Committee on Health, Education, Labor, and Pensions and the House Committee on Education and the Workforce.
A lawsuit, Federation of Americans for Consumer Choice v. U.S. Department of Labor challenging the rule was filed in the U.S. District Court for the Eastern District of Texas. The complaint contends that this rule is inconsistent with the intent of Congress and the DOL has exceeded its authority and acted arbitrarily and capriciously in issuing the rule. In 2016, the U.S. Court of Appeals for the Fifth Circuit ruled against the Department of Labor and vacated a similar rule since it significantly expanded and conflicted with the definition of fiduciary in federal law and as a result, the DOL lacked the authority to issue the rule.
IRS Increases 2025 HSA Contribution Limits – The Internal Revenue Service (IRS) has issued Revenue Procedure 2024-25 that increases the health savings account (HSA) contribution maximums for 2025 to $4,300 for an individual with self-only coverage under a high deductible plan and to $8,550 for an individual with family coverage. The 2024 limits are $4,150 for self-only coverage and $8,300 for family coverage. The IRS defines a high deductible health plan as one with an annual deductible that is not less than $1,650 for self-only coverage or $3,300 for family coverage and for which the annual out-of-pocket expenses other than premiums do not exceed $8,300 for self-only coverage or $16,600 for family coverage.
DOL Issues AI Principles – The Department of Labor (DOL) has issued principles for employers and those who develop artificial intelligence (AI) systems. President Biden issued an Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence that directed the DOL to develop these AI principles that include the following:
Neil Reichenberg is the former executive director of the International Public Management Association for Human Resources. He is an attorney, a frequent writer and speaker on public policy and human resource issues and was an adjunct faculty member at George Mason University. For questions or additional information, contact Reichenberg at neilreichenberg@yahoo.com.