Pending Bills and Regulations for the Workplace – What’s Possible?
While the media focuses on the economic doldrums and the stimulus efforts, Congress and the Obama Administration have proposed more legal changes to the workplace than at any time since the New Deal. The ongoing debate over a “planned economy” tends to overshadow an equally viable transfer of workplace power to the federal government. Many of the proposed workplace laws expand worker rights and private enforcement remedies; almost all of the federal workplace initiatives enlarge the workplace police powers of the federal government. This article lists pending federal workplace initiatives and identifies those with a real chance of passage.
2009 Legislation/Regulations Already Implemented
Many forget the number of workplace initiatives already enacted or implemented in 2009. So far, new workplace laws and regulations include:
• Americans with Disabilities Act Amendments – January 1, 2009 amendments to the Americans with Disabilities Act significantly broaden the meaning of “disability”;
• COBRA Subsidy – Part of the February 17, 2009 American Recovery and Reinvestment Act of 2009 (“ARRA”) allows qualified individuals to receive for up to 9 months a 65 percent government subsidy of COBRA premiums. Employers must offer and pay for the subsidy to otherwise eligible employees involuntarily terminated between September 1, 2008, and December 31, 2009. Employers may recover the subsidies through reductions in tax withholding paid to the federal government;
• Lilly Ledbetter Fair Pay Act – Effective January 29, 2009, the FPA introduces a new term, “discrimination in compensation” and declares that every payment of compensation should be treated as a distinct act entitling a covered employee to a new statute of limitations within which to file a claim for discrimination in compensation;
• FMLA Regulatory Revisions – Effective January 16, 2009, the DOL’s regulatory overhaul of the FMLA clarifies and mandates many leave rights available for eligible employees working in companies with 50 or more employees.
• Davis-Bacon Wage Rate Requirements under ARRA – Section 1606 of the ARRA requires federal contractors and subcontractors to pay to all laborers and mechanics the Davis-Bacon “prevailing wage” rates. The Davis-Bacon Act defines a system for determining the locally prevailing wages and fringe benefits. Under Davis-Bacon, federal contracts involving construction, alteration, maintenance or repair exceeding $2,000 requires payment of prevailing wages and fringe benefits.
• Enhanced Whistleblower Protections under ARRA – The ARRA provides new whistleblowing rights to employees of all contractors and subcontractors receiving stimulus funds. Protected conduct extends to a complaint of any employee who reasonably believes that the use of stimulus funds involves gross mismanagement, a gross waste of the funds, a substantial and specific danger to public health or safety, an abuse of authority, or a violation of law, rule, or regulation. Protected complaints may be made to a long list of governmental entities (an inspector general ("IG"), a member of Congress, a court, grand jury and others) or to the employee’s supervisor or employer's internal compliance personnel. An employer may not fire, demote or otherwise discriminate against an employee "disclosing covered information." Complaints of retaliation are filed with the IG of the agency that awarded the contract, and must be dismissed or fully investigated within 180 days. Under certain circumstances, an employee may file a separate de novo action in US District Court. The employer, employee or any other person affected by an agency’s decision may appeal to a federal appellate court. Covered employers must post notices covering the whistleblower rights, procedures, and remedies
• Executive Compensation related to Stimulus Funds – On June 10, 2009, the Treasury Department issued new “Guidance” on enhanced executive compensation relating to stimulus funds received under Troubled Asset Relief Program (“TARP”) pursuant to the Emergency Economic Stabilization Act of 2008 (“EESA”), and subsequently modified by ARRA. As part of the regulatory framework for executive compensation, the Treasury Guidance established the Office of the Special Master for TARP Executive Compensation, aka “Pay Czar.”
Administration’s FY10 Workplace Agency Budget
The Administration’s proposed budget for FY10 includes a major increase for strategic DOL agencies. The DOL’s $104.5 billion budget would enable the agency to hire 1000 additional employees, including 670 investigators, and restore DOL staffing to the FY 2001 levels. The Wage and Hour Division would receive an additional $35 million to hire 200 new investigators to police wages and working conditions of low-wage industries, especially the employment of young and immigrant workers. The EEOC would receive $367 million, an increase of almost $40 million over the current budget. The additional funding would be directed towards EEOC enforcement of the newest discrimination laws, e.g., the ADA Amendments Act and the Lilly Ledbetter Fair Pay Act. OSHA funding would grow to $56 million, an increase of $5.1 million (10%) over the agency’s current levels. With the increase, OSHA would add 213 full-time employees with a concentration in bilingual inspectors. The Administration’s FY10 budget also includes a 33% increase for the Office of Federal Contract Compliance Programs to fund a case management system and bolster litigation enforcement efforts. Finally, the Administration proposes a $32 million (~13%) increase in funding for the National Labor Relations Board.
Proposed Workplace Legislation/Regulations
The following workplace bills and proposed regulations have been introduced or are being considered by the Administration or the 111th Congress. The bolded proposals possess more political momentum than the other legislative and regulatory possibilities. Of course, the political stars could always shift and result in a second- or third-choice bill or regulation becoming a compromise law.
Civil Rights
-Paycheck Fairness Act (H.R.12 and S.182), passed by the House on January 9, 2009, would significantly alter to the Equal Pay Act (offered as a companion to the Lilly Ledbetter Act.) The Act would limit the wage differential defense of a “factor other than sex” to bona fide factors, such as education, training, or experience. Furthermore, the bona fide factor defense would apply only if: (1) the factor is not based on a sex-based differential in compensation, is job-related to the position in question, and is consistent with business necessity; and (2) other alternative practices serving the intended business purpose but without the wage differential do not exist. The Act also extends anti-retaliation protection to questions, discussions, or disclosures concerning employee compensation as well as the usual opposition/participation conduct. The range of remedies for EPA violations would include compensatory and punitive damages. Employers would be required to provide the EEOC with pay information data regarding the sex, race, and national origin of employees.
-Fair Pay Act of 2009 (S. 904, H.R. 2151) would amend the FLSA to prohibit discrimination in the payment of wages on account of sex, race, or national origin. The Act prohibits employers from paying lower wages in jobs dominated by women or minorities than paid for jobs dominated by men, if the jobs are equivalent. "Equivalent jobs" defined as "jobs that may be dissimilar, but whose requirements are equivalent, when viewed as a composite of skills, effort, responsibility, and working conditions." The Act bars retaliation against discussion of employee wages. Remedies may include compensatory or punitive damages. Proposed Act also requires employer reports to the EEOC disclosing wage rates paid to employees in each classification, position, or job title, including information with respect to the sex, race, and national origin of employees at each wage rate in each classification, position, or job title.
-Common Sense English Act (H.R. 1588) would amend Title VII and prohibit English only workplace policies.
-Arbitration Fairness Act of 2009 (H. R. 1020, S. 931) would make unenforceable a pre-dispute arbitration provision relating to employment, consumer, franchise or civil rights disputes. The Senate and House versions differ slightly in the treatment of pre-dispute arbitration in collective bargaining agreements.
-Employee Free Choice Act (H.R. 1409, S. 560) would significantly modify the National Labor Relations Act by:
• Requiring certification of a union as the exclusive bargaining representative of all employees if a simple majority of employees sign authorization cards;
• Requiring bargaining for a first contract within 10 days after the employer receives a written request for collective bargaining from a newly certified labor organization. If unable to reach agreement on a first contract within 90 days, either party may request mediation by the Federal Mediation and Conciliation Services. If the parties fail to create a contract within 30 days following mediation, the dispute is referred to binding arbitration, where federal arbitrators may impose terms of a binding, two-year contract that includes wages, benefits, hours, work rules and all other terms of employment.
• Increasing penalties against employers: up to $20,000 for a willful or repeat violation of employee rights in an organizational campaign or first contract negotiation; three times back pay for wrongful discharge or discrimination during an organizing campaign or first contract negotiation.
• Requiring the Board to pursue injunctive relief when reasonable cause exists to believe a company has engaged in a wrongful discharge or discrimination. (While passage of an unaltered EFCA seems unlikely, Democrats have indicated in intent to pass some version of EFCA.)
-Re-Empowerment of Skilled and Professional Employees and Construction Tradeworkers (RESPECT)) would remove from the definition of "supervisor" the duties of assigning and responsibly directing other employees. Under the Act, a supervisor must "hire, transfer, suspend, lay off, recall, promote, discharge, reward, or discipline other employees" for a majority of the work time. (Introduced by Rep. Andrews, (D-NJ) and Sen Dodd (D-CT) in the 110th Congress ((H.R. 1644, S. 969), but yet to be introduced in the 111th Congress.)
-Equal Remedies Act would eliminate statutory caps on compensatory and punitive damage awards under Title VII and the ADA. (Introduced in by Rep. John Lewis, Sen. Kennedy and Pres. Obama in 110th Congress (H.R. 5129, S. 2554), but yet to be introduced in 111th Congress.)
-Employment Non-Discrimination Act (ENDA) would amend Title VII to make actual or perceived sexual orientation discrimination unlawful under federal law and would protect workers based on the concept of gender identity. (Introduced in 110th Congress (H.R. 3685) and passed House, but yet to be introduced in 111th Congress.)
-Genetic Information Nondiscrimination Act of 2008 (“GINA”) Regulations would clarify GINA’s general ban on the use of genetic information as a basis for hiring, firing, or any other condition or privilege of employment. GINA also bars intentional acquisition of genetic information, requires employers to preserve the confidentiality of possessed genetic information, and prohibits retaliation. GINA raises a number of questions regarding the meaning of genetic information, the “water-cooler” receipt of genetic information, the law’s interplay with workplace laws that permit the acquisition of medical information to explain employee health or conduct, and the role of accommodation. (GINA requires two sets of regulations, one from the EEOC, the other from agencies governing insurance. EEOC’s comment period on proposed rules closed May 1, 2009.)
Worker Status
-Independent Contractor Proper Classification Act of 2007 (ICPCA) would amend the Revenue Act of 1978 to require that employers treat workers misclassified as independent contractors as employees for employment tax purposes. This would eliminate the defense of industry practice as a justification for misclassifying workers as independent contractors. (Introduced by Sen. Obama in 110th Congress (S. 2044), but yet to be introduced in 111th Congress.)
Hiring, Separation
-E-Verify is a proposed amendment to the Federal Acquisition Regulation (FAR), issued in June of 2008, that would require certain federal contractors to participate in the E-Verify electronic employment eligibility verification program. Department of Homeland Security recently pushed back the effective date to September 8, 2009. The regulation would require federal contracting officials to include a clause in certain federal contracts and solicitations obligating contractors to verify via the E-Verify program not only the employment eligibility of new hires, but the eligibility of existing employees scheduled to work under the contract. The E-Verify requirement would apply to federal contracts with a performance period longer than 120 days and a value over $100,000. Service or construction subcontracts of a covered contract would also be required to include the E-Verify clause, if the value of the subcontract is over $3,000. Contracts for items that are commercially available "off the shelf" or that require only minor modifications would be exempt, as would federal contracts for food and agricultural products shipped as bulk cargo and contracts for work performed outside the United States.
-New Employee Verification Act (NEVA) (H.R. 2028), introduced on April 22, 2009, would replace the E-Verify process and the I-9 form, and require all employers sign up for either the Electronic Employment Verification System (EEVS) or the Secure Employment Eligibility Verification System (SEEVS). EEVS is a program based on the new-hire system used in each state to enforce child support payments. Information for recently hired employees would be checked against Social Security and Department of Homeland Security databases to determine work eligibility. SEEVS is a network of government-certified private sector companies that would authenticate a workers’ identity through a biometric identifier like a thumbprint. NEVA would prohibit certain discriminatory practices based on the misuse of NEVA and its proposed process. The proposed Act would allow communication of mismatched social security information to DHS.
-Alert Laid off Employees in a Reasonable Time Act (ALERT Act) (H.R. 2077) would amend the WARN by (1) expanding the definition of "mass layoff' to include employment loss at more than one of the employer's worksites, and (2) increase the penalty for WARN violations.
-FOREWARN Act would expand the WARN Act’s coverage to all employers with at least 50 employees, require 90 days’ notice before a triggering event, enlarge a “mass layoff” to include an employment loss of 25 employees, require employers to notify the U.S. Secretary of Labor within 60 days of a mass layoff or closing, and increase penalties for employers failing to comply with notification requirements by making employers liable for double back pay. (Introduced in 110th Congress (H.R. 3662, S. 1792), but yet to be introduced in the 111th Congress.)
Compensation
-Excessive Pay Shareholder Approval Act (S. 1006) would require a supermajority shareholder vote to approve excessive compensation of any employee of a publicly traded company. Sixty percent of shareholders would have to approve any employee’s pay that exceeds more than 100 times the average pay of all company employees. Proxy materials for shareholder votes must include the pay of the lowest-paid employee, the pay of the highest-paid employee, the average pay for all employees, the number of employees paid more than 100 times the average employee pay, and the total amount paid to employees who received more than 100 times the average employee pay.
-Excessive Pay Capped Deduction Act of 2009 (S. 1007) would remove tax deductions for excessive compensation defined as compensation more than 100 times the average pay for all employees for the taxable year. Employers providing excessive compensation must report the pay of the lowest-paid employee, the highest-paid employee, the average pay for all employees, the number of employees receiving excessive compensation, and the amount of excessive compensation.
-Executive Compensation Initiatives of the Administration, as announced by Treasury Secretary Geithner on June 10, 2009, involve a concerted effort by the Administration, Congress and the SEC to develop comprehensive, regulatory “standards that reward innovation and prudent risk-taking, without creating misaligned incentives.” The initiative declares that:
· Compensation plans should properly measure and reward performance.
· Compensation should be structured to account for the time horizon of risks.
· Compensation practices should be aligned with sound risk management.
· Golden parachutes and supplemental retirement packages should be reexamined to determine whether they align the interests of executive and shareholders.
· Transparency and accountability should be promoted in the process of setting compensation.
In his address, Secretary Geithner referred to Congress’s on ongoing efforts to pass “say-on-pay” legislation, to heighten the independence requirements of compensation committee members, and to provide the compensation committee with the authority to engage outside consultants and counsel.
Pension
-401 (k) Fair Disclosure for Retirement Security Act of 2009 (H.R. 1984) would amend ERISA to prohibit an administrator of an individual account plan from contracting for services exceeding $5000 per plan year (including the offering of any investment option) unless the administrator has received, at least 10 business days in advance, a written statement that describes the proposed services and expected annual service charges, and discloses the impact of share classes as well as financial relationships with the service providers. The Act would require any individual account plan administrator who allows a participant or beneficiary to exercise control over account assets to give the participant or beneficiary notice regarding investment options 10 business days before the initial investment or any material change in the investment options. A plan fiduciary retains immunity from liability for losses resulting from a participant or beneficiary's exercise of control over the plan's assets, but only if the plan includes at least one investment option which: (1) is an unmanaged or passively managed mutual fund with a portfolio of securities designed to substantially match the performance of the entire U.S. equity market or the entire U.S. bond market, or a combination of them; (2) offers a combination of historical returns, risk, and charges likely to meet retirement income needs at adequate levels of contribution; and (3) is described in plan terms without any endorsement of the government or the plan sponsor.
Healthcare
-Healthy Workforce Act of 2009 (S. 803, H.R. 1897) would provide an annual tax credit ($200 per employee for first 200, $100 for each additional employee) for employers that sponsor qualified wellness programs. A qualifying program must contain three of the following four components: 1) health awareness; 2) employee engagement (e.g. committee to engage employees in worksite wellness programs and the tracking of employee participation; 3) behavioral change (e.g. program that encourages healthy living; or 4) supportive environment (e.g. on-site policies that support a healthy lifestyle, incentives for participation in health screenings or behavioral changes, and employee input).
-American Health Choices Act, a bill being prepared by House and Senate Democrats, would establish a health insurance exchange, define the minimum coverage employers must offer, and require all individuals to purchase health coverage. Senator Kennedy (Chairman of the Senate Health, Education, Labor and Pensions Committee) has taken a lead in drafting the legislation. (Senator Baucus is preparing a second bill that provides more detail in financing the proposed health plan.)
The Act contains a “declaration of rights” designed, in part, to assure opponents that the law should not lead to a national health care system. The bill provides that “health professionals should judge what is best for their patients.”
An insurance exchange, the American Health Benefit Gateway, within each state would direct individuals and employers in purchasing health insurance coverage. Health plans in the Gateway could not deny coverage based on pre-existing conditions. The Gateway would guarantee the availability of health insurance coverage in the individual and group markets, removing the current lifetime or annual limits on health coverage.
The proposed bill does not detail minimum coverage. Employers that do not contribute to the health coverage of employees will have to make a monthly payment to the federal government for each employee not offered health insurance. To minimize the Act’s impact, small employers (27 or fewer full-time employees) would receive federal credits.
-Tax Equity for Health Plan Beneficiaries Act of 2009 (H.R. 2625 and S. 1153) would remedy the tax differences incurred by employees who receive certain benefits for a domestic partner or other non-dependent, non-spouse beneficiary (“domestic partner”). Currently, the Internal Revenue Code excludes from income the value of employer-provided benefits received by employees for coverage of a spouse and dependents. For such domestic partner relationships, the Act would:
· exclude employer-provided health insurance from taxation;
· make self-employed health premiums deductible;
· create pre-tax cafeteria plan elections;
· ensure voluntary employees’ beneficiary associations (VEBAs)’s tax exempt status;
· extend benefits of health-related savings accounts (health reimbursement arrangement (“HRA”), health flexible spending arrangement (“Health FSA”), or a health savings account (“HSA"); and
· exclude the value of employer-provided health coverage from the employee’s wages when calculating FICA and FUTA payroll tax obligations.
Safety
-Protecting America's Workers Act (PAWA) (H.R. 2067) would extend OSHA coverage to governmental workers and the railroad and airline industries. PAWA also would expand OSHA’s whistleblower protection to any employee who refuses to work based on a reasonable fear that performance would result in injury. The Bill would alter procedural processes for filing a complaint, increase penalties for a repeat and willful violation, require OSHA to investigate all cases of death and serious injuries, and allow workers and their families to challenge reductions of fines and other penalties.
Leave
-FMLA Regulatory Revisions (H.R. 2161) would modify many of the regulations that became effective on January 16, 2009. These include:
· Preventing an employer from forcing an employee to use more incremental FMLA leave than is medically necessary;
· Restoring rights to attendance bonuses despite FMLA leave;
· Barring the waiver of FMLA rights without review and approval by the DOL or the courts;
· Allowing otherwise eligible FLMA leave despite compliance or non-compliance with employer leave request policies;
· Barring an employer from directly contacting an employee's medical provider;
· Restore previous "fitness-for-duty" certification rules for employees who take intermittent leave;
-Family and Medical Leave Inclusion Act (H.R. 2132) would expand FMLA leave to include care for a domestic partner, child of a domestic partner, same-sex spouse, parent-in-law, adult child, sibling, or grandparent suffering from a "serious health condition."
-Family Leave Insurance Act of 2009 (FLIA) (H.R. 1723) would supplement the existing Family and Medical Leave Act (FMLA) by providing up to 12 weeks of annual paid leave. Under the Act, employers and employees would each pay premiums into a fund equivalent to 0.2 percent of each worker's earnings. Those employers with fewer than 20 workers would pay a 0.1 percent premium, and would then have the option of participating in the fund. Employees who pay into the fund for six consecutive months and accumulate at least 625 work hours during the prior six-month period would be eligible for benefits. FLIA would give employees a private cause of action for "interference, discrimination, or retaliation" concerning employees' exercise of their rights under the Act. The Secretary of Labor would have concurrent investigative authority and would be authorized to bring an administrative or civil action. The bill also provides criminal penalties for knowingly submitting false certification in order to fraudulently collect benefits.
-Family and Medical Leave Enhancement Act of 2009 (H.R. 824) would amend the FMLA to allow employees to take, as additional leave, parental involvement leave to participate in or attend their children's and grandchildren's educational and extracurricular activities, and to clarify that leave may be taken for routine family medical needs and to assist elderly relatives, and for other purposes.
-Healthy Families Act (HFA) (H.R. 2460) would provide paid sick leave by guaranteeing that workers get seven days of paid sick leave per year in workforces with at least 15 employees. For every 30 hours worked, a covered employee would earn, at least, 1 hour of paid sick time and capped at 56 hours of paid sick time per year. Accrued sick time may be carried over from year to year. Sick time may be used for health and family care including victims of domestic violence, sexual assault, and stalking. As with FMLA leave, an employer may require certification as a condition for paid sick leave. The Act assumes that most employees exempt from the overtime requirements work 40 hours in each workweek.
-Working Families Flexibility Act (WFFA) (H. R. 1274) authorizes an employee to request from an employer a change in the terms or conditions of the employee's employment if the request relates to: (1) the number of hours the employee is required to work; (2) the times when the employee is required to work; or (3) where the employee is required to work. In response, an employer must meet with the employee and justify in writing any denial of a request. The Act prohibits any employer interference with the proposed rights and establishes a complaint procedure through the DOL.
Hybrid
-Patriot Employers Act (S. 829, H.R. 989) would amend the Internal Revenue Code to provide a tax credit for employers determined to be Patriot Employers. A Patriot Employer is defined as one who: (1) maintains its headquarters in the United States; (2) pays at least 60% of each employee's health care premiums; (3) has a policy requiring neutrality in employee organizing drives; (4) maintains or increases the number of full-time workers in the United States as compared to the number employed outside the United States; (5) pays each employee a salary equal to at least the federal poverty level; (6) provides a defined benefit plan or defined contribution plan that fully matches at least 5% of worker contributions for every employee; and (7) provides full differential salary and insurance benefits for all National Guard and Reserve employees who are called for active duty. Slightly different requirements apply to employers with fewer than 50 employees.
-Patriot Corporations of America Act of 2009 (H.R. 1874) would provide preferential government contract selection and favorable tax treatment to a Patriot Corporation that: (1) produces at least 90% of its goods and services in the United States; (2) does not provide compensation to any management personnel at a level that exceeds 10,000% of the level of compensation of the company's lowest paid full-time employee; (3) conducts at least 50% of its research and development in the United States; (4) has contributed at least 5% of the wages paid during the year to a portable pension fund for the benefit of its employees; (5) has paid at least 70% of the cost of a health insurance plan for its employees; (6) has maintained neutrality in employee organizing drives and has a policy to that effect; (7) provides full differential salary and insurance benefits for all National Guard and Reserve employees who are called to active duty; (8) has not been (at any time during the taxable year) in violation of Federal regulations, including those related to the environment, workplace safety, labor relations and consumer protection; and (9) has not been in violation of any other regulations specified by the Secretary.
June 2009
E. Ray Stanford, Jr.,
rstaford@taylorenglish.com
www.taylorenglish.com
Taylor English Duma LLP |
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