My Safe Florida Condo Pilot Program: Frequently Asked Questions

Governor DeSantis Launches My Safe Florida Condo Pilot Program

On April 24, 2024, Florida Governor Ron DeSantis signed House Bill 1029 into law, marking a pivotal moment in bolstering condominium resilience against hurricane damage. This significant milestone is important for Florida’s condominium owners’ associations to recognize in furtherance of efforts to protect Florida’s infrastructure.

House Bill 1029, also known as the My Safe Florida Condominium Pilot Program, aims to provide condominium associations with a mechanism similar to the My Safe Florida Home Program that was previously made available to single family homes. This initiative establishes the My Safe Florida Condominium Pilot Program, enabling eligible condominiums to apply for various grants to fortify their buildings and minimize the impact of hurricanes.

Who is eligible?

Condominium associations that meet specified criteria can apply for mitigation grants under the program.

What are the voting requirements for Condominium Associations?

Associations must obtain approval through a majority vote of the board of directors or a majority vote of the total voting interests of the association to apply for an inspection. After an inspection has been conducted and the association has been found eligible to receive funds under the Program, a second affirmative vote of a majority of the board of directors or of the total voting interests of the association and the unanimous vote of all unit owners within the structure or building subject to the grant is required prior to apply for a grant.

What information needs to be disclosed?

Prior to conducting the vote of unit owners, associations are required to provide clear disclosure of the program using a form that will be created by the Florida Department of Financial Services. The president and treasurer of the board of directors must sign the disclosure form, which will be kept as part of the association’s official records.

Do Condominium Associations need to provide notice?

Yes, condominium associations are required to provide written notice within 14 days of an affirmative vote to participate in the Program to all unit owners, in accordance with the statutory requirements of Section 718.112(2)(d), Florida Statutes.

How much can a Condominium Association apply for in grants?

The grant is capped at $175,000 per condominium association and can be utilized for various improvements, including opening protection, reinforcing roof-to-wall connections, enhancing roof-deck attachments, and implementing secondary water resistance for the roof.

Can individual units participate?

Mitigation grants are awarded to condominium associations collectively, and individual unit owners may not participate in the Program.

House Bill 1029 creates Section 215.5587, Florida Statutes, further solidifying its significance in the state’s efforts to bolster the tens of thousands of condominiums throughout the state. These legislative enhancements are anticipated to enhance community associations in safeguarding their properties and residents against natural disasters.

Varnum is closing monitoring other important pieces of legislation that may be signed by Governor DeSantis. Stay tuned for additional updates so your association can be prepared to comply with any new legal requirements for associations. Contact your Varnum Attorney if you have additional questions.

A Deep Dive Into the FTC Ban on Non-Compete Agreements

Comprehensive Analysis: The FTC's Ban on Non-Compete Agreements

On April 23, 2024, following a 90-day public comment period generating more than 26,000 comments, the Federal Trade Commission (FTC) voted to adopt a final rule banning non-compete agreements for most workers in the United States. The final rule, set to take effect 120 days from the date it is published in the Federal Register, will have broad implications on businesses and an estimated 30 million U.S. employees and independent contractors alike.

The final rule provides that it is an unfair method of competition, and therefore a violation of Section 5 of the Federal Trade Commission Act (the “Act”), for employers to enter into non-compete agreements with workers and to enforce existing non-compete agreements with most workers. The rule requires that employers rescind most existing non-compete agreements and restrictions on workers, and it prohibits businesses from entering into non-compete agreements with workers in the future.

In the wake of the FTC’s announcement, countless questions arise for those businesses struggling to better understand the implications of the new rule. The deep dive summary below follows a comprehensive review of the FTC’s 570-page release accompanying the final rule.

What the New FTC Ban Requires

Upon the effective date of the rule, businesses generally will no longer be able to do the following:

  • Enter into or attempt to enter into non-compete agreements or clauses;
  • Enforce or attempt to enforce existing non-compete agreements or clauses (except as to a very narrow group of “senior executives” as defined in more detail below.); or
  • Represent to a worker that the worker is subject to a non-compete agreement (except as to “senior executives”).

Employers are required to notify any workers and former workers with existing non-compete agreements that the agreements are no longer valid under the new rule and that the non-compete provision has been rescinded. Notice must be delivered in writing via letter, email, or text message no later than the rule’s effective date. The FTC rule provides a model notice that can be used for this purpose.

The effective date of the new rule is 120 days after it is officially published in the Federal Register.  It is anticipated that the rule will be published in the Federal Register sometime within the next 30 days or so. The FTC currently expects the rule to take effect in early September 2024.

Covered Workers

The FTC takes the position that non-competes are largely exploitative and coercive and has banned almost all non-compete agreements and clauses between employers and workers. The rule clarifies that the term “worker” broadly includes any employee, independent contractor, extern, intern, volunteer, apprentice, or sole proprietor, whether the individual presently works for or previously worked for the business and whether the individual was paid or unpaid.

However, the FTC created an exception from the rule for existing non-compete agreements with “senior executives.” Existing non-compete agreements with such personnel are enforceable, to the extent they are enforceable under applicable state law. To qualify as a “senior executive,” a worker must pass both an earnings test and a job duties test. Specifically, the worker must earn total annual compensation of at least $151,164 and be in a “policy-making position.” A “policy-making position” includes a president, CEO, or someone else with authority to make policy decisions for the entire company. A worker must pass both tests to qualify for the exception for “senior executives” — one alone will not suffice.

Jurisdictional Limitations for Certain Non-Profits

Congress empowered the FTC to “prevent persons, partnerships, or corporations” from engaging in unfair methods of competition. To qualify as a “corporation” under the Act, an entity must be “organized to carry on business for its own profit or that of its members.” Through FTC precedent and judicial decisions, this language has been consistently interpreted to mean that while the FTC has jurisdiction over for-profit entities in nearly all industries (other than some businesses expressly outside the FTC’s jurisdiction such as most financial institutions, common carriers, and air carriers), the FTC lacks jurisdiction to regulate Section 5 violations by a corporation not organized to carry on business for its own profit. Thus, in addition to certain for-profit entities as noted above, the FTC ban on non-compete agreements does not apply to non-profit entities, as defined by the FTC.

However, not all entities claiming tax-exempt status as non-profits fall outside the FTC’s jurisdiction. To qualify as a non-profit entity for purposes of application of the Act, the FTC looks to both “the source of the income, i.e., to whether the corporation is organized for and actually engaged in business for only charitable purposes, and to the destination of the income, i.e., to whether either the corporation or its members derive a profit.” A non-profit that passes this two-part test is considered outside the FTC’s jurisdiction and will not be impacted by the new rule banning non-compete agreements.

Because some non-profit healthcare organizations may fall outside the FTC’s jurisdiction under this two-part test, and thus would escape the FTC’s ban on non-competes, while other healthcare organizations would remain within the FTC’s jurisdiction and therefore would remain subject to the ban, the FTC considered whether to exempt all healthcare organizations, or at least a broader class of healthcare organizations, from the ban. Ultimately, however, the FTC concluded that it “is not persuaded that the healthcare industry is uniquely situated in a way that justifies an exemption from the final rule.” Despite arguments from commentators relating to the equal treatment of nonprofit and for-profit healthcare organizations, patient hardship, increased costs for employers, and decreased incentive for employee training, the FTC steadfastly declined to exempt the healthcare industry from the rule. The FTC clarified that healthcare entities claiming tax-exempt status will be met with the same level of scrutiny as other organizations under its adopted two-part test for non-profit entity status if challenged in administrative or judicial proceedings. Learn more about the affects to the health care industry in our advisory, Healthcare Implications of the FTC’s Non-Compete Ban.

Other Forms of Restrictive Covenants May be Permissible

While non-compete language is strictly prohibited, the final rule does not categorically prohibit other types of employment agreements that contain restrictive covenants, such as non-disclosure or confidentiality agreements, training repayment agreement provisions, and non-solicitation agreements. The FTC noted that these types of agreements do not by their terms ordinarily prohibit a worker from or penalize a worker for seeking or accepting other employment or starting their own business after they leave their current position, and thus are permissible.

However, if an employer adopts a term or condition that is so broad in scope that it has the same functional effect as a term or condition prohibiting or penalizing a worker from seeking or accepting other work, or from starting a business after they leave a position, such a term will be viewed as an impermissible non-compete clause. Thus, other restrictive covenants such as non-disclosure and non-solicitation agreements must be carefully drafted to ensure that they do not run afoul of the FTC’s ban on non-competes.

Limited Exceptions

As noted above, the FTC’s ban on non-compete agreements does not apply to existing non-compete agreements with “senior executives.”  In addition, the final rule carves out three other specific scenarios where the ban does not apply:

  • First, the rule does not apply to non-competes entered into by a person pursuant to a bona fide sale of a business entity. The FTC considers a bona fide sale to be one that is made between two independent parties at arm’s length, in which the seller has a reasonable opportunity to negotiate the terms of the sale. The FTC noted that, pursuant to this “bona fide” condition, any “springing” non-compete (in which a worker must agree when hired to a non-compete in the event of a future sale) and repurchase rights, mandatory stock redemption programs, or similar stock-transfer schemes are prohibited by the rule. Additionally, the FTC clarified that, while a seller can agree to a noncompete individually, this sale-of-business exception does not extend to the business entity’s workers who are not sellers. Moreover, because the rule requires the sale of a business entity, including by way of asset sale, this exception does not apply to the sale of a sole proprietorship or assets of a business that has not been incorporated.
  • Second, the rule does not apply where a cause of action related to a non-compete agreement or clause accrued prior to the rule’s effective date. According to the FTC, this means that employers may still enforce a claim that a noncompete was breached before the effective date.
  • Lastly, the rule provides that it is not an unfair method of competition to enforce or attempt to enforce a non-compete or to make representations about a non-compete where a person has a good-faith basis to believe that the FTC’s rule banning non-competes is inapplicable to the situation.

Litigation to Block the FTC’s New Rule

Legal challenges to the FTC’s new rule banning almost all non-compete agreements have already been filed. On April 23, 2024 — the same day the rule was issued — an initial challenge was filed in the U.S. District Court for the Northern District of Texas.  The next day, on April 24, 2024, the U.S. Chamber of Commerce filed a complaint in the U.S. District Court for the Eastern District of Texas. Both cases argue that the FTC lacks the constitutional and statutory authority to advance this sweeping regulation and seek to block implementation of the rule. These cases are likely just the beginning of the flood of litigation that will arise in response to the FTC’s new rule.

Conclusion

Businesses and professionals are encouraged to consult with legal counsel to discuss their options and strategies for addressing the FTC’s final rule, including possible revisions to existing restrictive covenant agreements, the required notices under the rule, and updates on the status of the pending litigation. Varnum’s Labor and Employment Practice Team and Business and Corporate Practice Team stand ready to assist businesses with any questions or concerns they may have.

FTC Bans Non-Compete Agreements: Health Care Industry Implications

Healthcare Implications of the FTC’s Non-Compete Ban

Following a 90-day public comment period generating more than 26,000 comments, the Federal Trade Commission (FTC) voted Tuesday, April 23, 2024, to adopt a final rule banning non-compete agreements for most American workers. The rule is set to take effect 120 days from the date it is published in the Federal Register and could have sweeping implications in the health care industry. Legal challenges to the rule are mounting, with business groups led by the U.S. Chamber of Commerce filing a complaint April 24, 2024, in the Federal District Court for the Northern District of Texas challenging the FTC’s rule and seeking to block its implementation.

Non-compete agreements are particularly common in the health care industry, with a considerable portion of the health care work force bound by non-compete provisions. The rule could change the health care playing field, allowing for greater employment mobility for health care professionals. The FTC argues that the rule will reduce healthcare costs and allow health care professionals to switch employers without leaving their communities. Many trade groups—including the American Hospital Association—disagree, arguing that non-compete agreements are necessary for workforce recruitment and retention.

The final rule will forbid most forfeiture-for-competition clauses, which are a common feature of deferred compensation plans for executives and physicians. These clauses may not be express non-compete clauses, but the rule forbids arrangements that have the effect of a non-compete by prohibiting workers from seeking or accepting employment with a person or operating a business after the conclusion of the worker’s employment. New deferred compensation plans for executives may not contain forfeiture-for-competition clauses, and existing forfeiture-for-competition clauses in arrangements with non-executives must be rescinded. For those professionals who qualify as “executives” under the final rule, forfeiture-for-competition clauses in force prior to the rule’s effective date may remain in force.

The FTC has also reserved the right to evaluate whether entities claiming non-profit status for tax purposes are sufficiently non-profit for purposes of the rule. In effect, while the FTC does not have jurisdiction over non-profit entities, it argues that many entities that claim non-profit status for tax purposes may actually fall under its jurisdiction, to the extent that it can determine that such entities are in fact profit-making enterprises. To determine whether an entity claiming tax-exempt non-profit status is a profit-making enterprise, the FTC will consider both the source of an entity’s income, determining whether the entity is actually engaged in business for charitable purposes, and whether the entity’s profits flow to recognized public, rather than private, interests. Considering the FTC’s position, businesses organized as non-profits for tax purposes should consult with legal counsel to determine whether they might be impacted by the new rule.

Notably, the rule’s ban on non-compete agreements does not apply to agreements entered into by a person pursuant to a bona fide sale of a business entity. As an example, for physicians who have sold or are planning to sell their incorporated practices, non-compete agreements concerning the sold practice likely remain enforceable under federal law. However, because the rule requires the sale of a business entity, including by way of asset sale, this exception does not apply to the sale of a sole proprietorship or assets of a business that has not been incorporated.

While legal challenges may result in changes to the rule, long delays to the rule’s effective date, or the rule’s implementation being blocked completely, states remain free to introduce similar non-compete restrictions. Currently, four states ban all non-compete agreements, and twelve states prohibit non-compete agreements for physicians. Given the increased pressure and discourse surrounding non-compete agreements, it is likely that states will continue to implement new restrictions, and it remains possible that Congress will enact legislation banning non-compete agreements nationwide.

Health care businesses and professionals are encouraged to consult with legal counsel to discuss their options and strategies for addressing the new rule and creative retention strategies, including practice structuring options, physician and executive contracting, and possible incentive options. Varnum’s Health Care Practice Team stands ready to assist businesses with any questions or concerns they may have. Varnum will continue to monitor the ongoing and impending legal challenges to the new rule.

For additional information, please see our advisory New FTC Rule Bans Most Non-Compete Agreements.

Effective July 1, DOL Increases the Salary Threshold Required for Most White-Collar Exemptions

U.S. Department of Labor Raises Salary Threshold for Exempt Employees

The U.S. Department of Labor (DOL) has issued a final rule that significantly raises the required salary threshold for many salaried exempt employees starting July 1, 2024. Under this final rule, issued on April 23, 2024, the guaranteed salary that most employees must receive to qualify as exempt from the overtime rules will increase dramatically over the next nine months. Effective July 1, it will jump from $35,568 per year to $43,888 per year; and then just six short months later, on January 1, 2025, it will jump to $58,656 per year.

Under the Fair Labor Standards Act, employees who work in executive, administrative, professional, and certain computer positions must generally meet both the salary basis test and the job duty requirements to be classified as exempt from the overtime rules. In addition to being paid on a salary basis (which means there can be no deductions from salary, subject to certain limited exceptions), the threshold salary is currently $684 a week, amounting to $35,568 annually. The final rule raises the threshold for salaried employees significantly, according to the following schedule:

  • Effective July 1, 2024: $844 per week (equivalent to $43,888 per year)
  • Effective January 1, 2025: $1,128 per week (equivalent to $58,656 per year)
  • Effective July 1, 2027, and every three years thereafter: To be determined based on available earnings data

In addition, the new rule increases the total annual compensation threshold for highly compensated employees from $107,432 per year to $132,964 per year effective July 1, followed by yet another increase to $151,164 per year effective January 1, 2025. This will result in an increase of nearly $44,000 per year to the salary threshold necessary to qualify for the highly compensated employee exemption.

It is widely expected that various business and industry groups may file suit to attempt to block these changes from taking effect. Many employers may remember that a similar scenario occurred in 2016, when the DOL under the Obama Administration proposed a large increase in the salary threshold for these white collar exemptions, before that increase was blocked by court action. If the final rule issued by the DOL is not blocked through court action, it will mean significant changes for employers in compensation structure, as more employees nationwide will qualify for overtime pay unless their salaries are increased over the new threshold.

Employers should immediately review their workforces to determine what changes, if any, may be necessary if the final rule takes effect. Possible considerations include:

  • Raising the annual salary of employees who meet the duties test to at least $43,888 as of July 1, and $58,656 as of January 1, 2025, to retain their exempt status;
  • Converting employees to non-exempt status and paying the overtime premium of one-and-one half times the employees’ regular rate of pay for all overtime hours worked; or
  • Converting employees to non-exempt status and eliminating or reducing the amount of overtime hours worked by such employees.

Similar considerations should be undertaken with highly compensated employees. While it is wise to review pay practices proactively and identify potential changes that may become necessary, employers may wish to continue to monitor legal developments prior to actually implementing such changes. As employers will recall from 2016, significant changes can occur between the announcement of a final rule and the date on which it is scheduled to become effective.

Employers are encouraged to consult with legal counsel to discuss their options and strategies for implementing these changes, if necessary. Varnum’s Labor and Employment Practice Team stands ready to assist employers with any questions or concerns they may have about this new rule.

New FTC Rule Bans Most Non-Compete Agreements

FTC Bans Noncompete Agreements

Update April 26, 2024: Please see our advisory A Deep Dive Into the FTC Ban on Non-Compete Agreements for more information on this rule.

Update April 24, 2024: A complaint has been filed in the Federal District Court for the Northern District of Texas challenging the FTC’s new Final Rule and seeking to block implementation.

In a major development, the Federal Trade Commission (FTC) voted today, April 23, 2024, to implement a new rule that will ban non-compete agreements for most American workers. This rule, set to take effect 120 days from the date it is published in the Federal Register, could impact as many as 30 million U.S. workers — both employees and independent contractors — who are subject to non-compete restrictions. The rule requires that businesses rescind most existing non-compete agreements and restrictions on workers, and it prohibits businesses from entering into non-compete agreements with workers in the future.

The U.S. Chamber of Commerce has already announced plans to sue the FTC over this new rule. Litigation to block the rule could be filed as soon as Wednesday, April 24.

Key features of the rule are as follows:

  • Businesses will no longer be able to enter into or attempt to enter into non-compete agreements or clauses, to maintain existing non-compete agreements or clauses, or to represent to a worker that the worker is subject to a non-compete agreement, subject to a few very limited exceptions.
  • Workers covered by the rule include employees, independent contractors, interns, volunteers, apprentices, and sole proprietors, whether the person presently works for or previously worked for the business.
  • Non-disclosure/confidentiality agreements and non-solicitation agreements may be permissible, unless they are so broad in scope that they essentially function as a non-compete agreement.
  • For those workers with existing non-compete agreements that are no longer valid under the new rule, businesses must notify them that the non-compete provision has been rescinded. Notices must be delivered in writing via letter, email, or text message, no later than the rule’s effective date. The FTC rule provides a model notice that can be used for this purpose. 
  • Existing non-compete agreements with “senior executives” remain in effect and will be enforceable to the extent they are currently enforceable under applicable state law. The term “senior executive” is defined to mean persons who are in policy-making positions (such as president, CEO, or similar officer) and have total annual compensation of at least $151,164 per year. Businesses may not enter into new non-compete agreements with existing or future “senior executives,” regardless of whether they make policy decisions or how much they are paid.
  • The ban on non-compete agreements does not apply to a non-compete that is entered into by a person pursuant to the bona fide sale of a business entity or such person’s ownership interest in a business entity, regardless of the percentage interest of such person in the business entity. However, this exception does not apply to the sale of a sole proprietorship or assets of a business that has not been incorporated.

The new rule is scheduled to take effect within 120 days of its publication in the Federal Register.

Varnum will be following up this brief advisory with a more in-depth look at the FTC’s new rule in the coming days, and will continue to monitor legal developments. In the meantime, businesses are encouraged to consult with legal counsel to discuss their options and strategies for addressing this new rule. Varnum’s Corporate and Labor and Employment Practice Teams stand ready to assist businesses with any questions or concerns they may have.

U.S. EPA Designates PFAS Chemicals as CERCLA Hazardous Substances

U.S. EPA Designates PFAS Chemicals as Hazardous Substances

On April 19, the United States Environmental Protection Agency (EPA) issued final regulations designating perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS) as Hazardous Substances pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA a/k/a “Superfund”). PFOA and PFOS are part of the per- and polyfluoroalkyl substances (PFAS) family of chemicals that are often referred to as “forever chemicals” because they do not readily break down in the environment. PFOA and PFOS were present in water-proofing materials, fire-fighting foam and any number of other industrial chemicals that may have been released at industrial sites or deposited at landfill or other disposal sites.

The designation of PFOA and PFOS as CERCLA Hazardous Substances will have far-reaching impacts on environmental investigations and cleanup across the country. Most notably the new regulations will:

  • allow the U.S. EPA and other state agencies to require investigation and response activities at sites where PFOA or PFOS have been released;
  • allow environmental agencies to seek recovery of environmental response costs relating to PFOA or PFOS contamination;
  • allow property owners and other third parties to bring CERCLA cost recovery or contribution actions to recover response costs attributable to PFOA or PFOS contamination;
  • require entities that release one pound or more of PFOA or PFOS in any 24-hour period (which is a very small reportable quantity compared to most CERCLA Hazardous Substances) to provide notice of release; and
  • allow environmental agencies to reopen closed or dormant CERCLA clean-up sites (e.g., landfills) and require Potentially Responsible Parties (PRPs) to undertake additional environmental response activities.

The designation of PFOA and PFOS is only the most recent example of increased scrutiny and regulation of PFAS chemicals. Earlier this month, EPA finalized a new rule setting legally enforceable standards for PFAS present in drinking water. Last fall, EPA also promulgated regulations imposing new reporting and recordkeeping requirements for PFAS under the Toxic Substances Control Act (TSCA). We anticipate the trend of continuing and increased regulation of PFAS chemicals by EPA and state environmental agencies.

Contact Matt Eugster, Kyle Konwinski, or your Varnum environmental attorney today to learn more about the requirements of these new PFAS regulations and how they may impact your business or organization.

Student Loans and Educational Benefits

Navigating Student Loans and Educational Benefits in 2024

What Employers Should Think About in 2024

Some employers have found that providing educational assistance benefits can be a cost-effective way to attract, retain and motivate employees. Recent legal changes have expanded the scope of employer-provided tax-advantaged educational assistance benefits to cover student loan repayment. This advisory outlines some of the newest options and provides a refresher on how existing benefits are used.

Retirement Plans

If your 401(k) plan provides matching contributions, you can leverage one of the biggest changes: allowing some common student loan repayments to count as contributions for matching purposes. Once the plan is amended, employees can receive 401(k) matching contributions based on their eligible student loan repayments, as if they had contributed the student loan payments as elective deferrals to the plan. An employer who wants to provide this option should work with legal counsel and other service providers to ensure the benefit is properly implemented and administered.

Tax-Favored Student Loan Repayments

Another newer and increasingly popular choice is offering employees tax-favored repayment of qualified student loans. Up to $5,250 can be provided to each employee tax-free for repayment of eligible student loans. The benefit can be limited to those who make payments (effectively matching repayments) and can be made subject to repayment for employees who leaves. As a tax-advantaged benefit, student loan repayment assistance must be properly documented in a written plan and must be offered to a nondiscriminatory class of employees. If the company wants to provide more than $5,250 in benefits each year, the amount over $5,250 will be subject to ordinary income taxes.

Other Student Loan Repayment Benefits

Tax-Favored benefits are valuable, but legal and tax-based restrictions can dampen a bespoke approach to student loan repayments which many companies prefer. An increasing number of companies have also established taxable student loan repayment policies as an executive benefit. Although less tax-efficient, this type of benefit can be used to attract and retain talent in key, high demand positions and departments, and is often subject to repayment if the employee leaves. While not a tax code requirement, careful documentation provides valuable protection for the company and can help avoid potential claims and controversies that arise when cash payments are promised or paid. Unlike the tax-favored benefits, this option can be used to provide benefits to more senior employees who may have children with student loans.

Educational Benefits

Employers may provide tax-favored payments to cover employees’ tuition, fees, school supplies, and similar payments. This is limited to the same $5,250 threshold for student loans. This is not a new benefit. However, the rise of tax-favored student loan repayment has brought these benefits back into focus. They should be generally available to all employees, although companies can require the education to meet certain standards (if they are clearly explained) and can require repayment if certain conditions are not met, such as leaving employment or not completing the course. There are limits on what can be paid and these restrictions must be described in the required documentation. Fortunately, the $5,250 limit often means that the restrictions are not problematic in practice. Educational benefits can help keep highly motivated employees from leaving, help create critical leadership development and promote a positive culture.

A new and careful look at student loan and educational benefits is overdue at many companies. If you have questions, need your documentation updated or want more information, contact a member of our benefits team.

EPA PFAS Rule Imposes New Requirements on Public Water Systems

New EPA Rule Sets Standards for PFAS in Drinking Water

The United States Environmental Protection Agency (EPA) recently finalized a new rule setting legally enforceable standards for PFAS (per- and polyfluroalkyl substances and related chemicals) present in drinking water. The rule, promulgated under the Safe Drinking Water Act, sets Maximum Contaminant Levels (MCLs) for six separate PFAS (including PFOA, PFOS, PFHxS, PFNA and HFPO-DA) and hexafluoropropylene oxide (HFPO). Two of the most common PFAS, PFOA and PFOS, now have an enforceable level of four parts per trillion (ppt), which is only marginally higher than the applicable detection limits for each chemical. Three other PFAS, PFHxS, PFNA, and HFPO-DA chemicals – commonly referred to as GenX – now have MCLs of 10 ppt. Additionally, the MCL for any mixtures containing two or more substances including PFHxS, PFNA, HFPO-DA, and PFBS will be determined using a novel approach that EPA dubs a “hazard index,” which is a measurement of risk dependent on how many PFAS are present in the mixture and how concentrated they are relative to levels that impact human health.  

Although states will need to adopt their own MCLs at or below the federal standard to retain regulatory authority under the Safe Drinking Water Act, the rule imposes several new requirements on all public water systems. The rule applies to any public water system that serves at least 15 service connections used by year-round residents, any system that regularly serves over 25 year-round residents, and any system that regularly serves at least 25 of the same persons for more than six months of the year. Regulated public water providers must complete initial monitoring for these six PFAS chemicals by 2027, with ongoing compliance monitoring thereafter and reporting requirements thereafter. Depending on the results of the monitoring, public water systems will have until 2029 to reduce any PFAS exceeding the new MCLs. At that time, water systems with PFAS in violation of the MCLs will need to provide public notice of their exceedances.

Compliance with this rule is anticipated to be costly – tens of millions of dollars and upward for larger systems. Conventional water filtration technologies are not designed to effectively capture relatively miniscule PFAS molecules.  As a result, new technologies necessary to meet the standard (including granulated activated carbon and high-pressure membrane filtration technologies) are likely to result in high compliance costs.

Although it will likely be difficult for many public water suppliers to fund monitoring and improvements necessary to comply with the new PFAS standards, there are options to consider. Earlier this year, EPA announced over $3.2 billion in funding through the Drinking Water State Revolving Loan Fund to assist in funding for drinking water projects, including upgrades to water treatment plants (and PFAs treatment systems). This most recent announcement is in addition to previous funding of over $12 billion for water infrastructure improvements under the Bipartisan Infrastructure Law. Public water suppliers may also have valid claims against parties that have contaminated public water supplies that may allow for recovery of some or all of the costs of addressing that contamination.

Contact Matt Eugster, C.J. Biggs or your Varnum environmental attorney today to learn more about the requirements of these new PFAS MCLs and how they may impact your business or organization.