Washington D.C. Employment Law Update : Washington D.C. Employment Lawyer & Attorney : Littler Mendelson Law Firm : Virginia, Tyson's Corner

By Ilyse Schuman and Sherron McClain

On May 8, 2013, The Equal Employment Opportunity Commission (EEOC) held a public meeting that addressed the interaction between employer-sponsored wellness programs and federal equal employment opportunity statutes enforced by the EEOC. Commissioners Constance Barker, Victoria Lipnic, Chai Feldblum, and Commission Chair Jacqueline Berrien were present and joined by seven panelists representing business, advocacy groups and providers. Opening statements by Commissioners Barker, Lipnic, and Feldblum all noted the increased attention that that the nation’s collective health and employer-sponsored wellness programs have received in recent years. Commissioner Barker further noted that the Commission’s focus is on ensuring that groups protected by federal employment laws receive equal access to wellness programs and are permitted to enjoy the rewards offered for choosing those programs.

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The Equal Employment Opportunity Commission (EEOC) intends to hold a public meeting next week to address the interplay between employee wellness programs and various federal equal employment opportunity laws. Several panelists will discuss how implementing wellness programs could raise issues under the Americans with Disabilities Act (ADA), the Genetic Information Nondiscrimination Act (GINA), and other EEOC-enforced statutes.

The meeting will take place on Wednesday, May 8, 2013, at 9:00 a.m., Eastern Time, in the Commission Meeting Room on the First Floor of the EEOC Office Building, 131 "M" Street, NE, Washington, D.C. 20507. Individuals wishing to attend the public meeting should arrive at least 30 minutes in advance due to seating limitations.

Photo credit: Skynesher

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New bipartisan legislation would enable parents, children and spouses of military service members to take up to two weeks of leave in connection with the service member’s deployment, even if the family members work part-time or for a small employer and are therefore ineligible to take existing military family leave. Introduced by Rep. Matt Cartwright (D-PA) and cosponsored by 25 others, the Military Family Leave Act of 2013 (H.R. 1333) would entitled eligible employees to take up to two workweeks of leave in any 12-month period if the uniformed service family member: (a) is notified of an impending call or order to active duty in support of a contingency operation; or (b) is deployed in connection with a contingency operation. A “contingency operation” is a military operation that involves or may involve military actions, operations, or hostilities against an opposing military force, or one that results in a call to active duty during a war or national emergency. These provisions would apply to both full and part-time employees in any size company.

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By Susan Hoffman

On Wednesday the U.S. Supreme Court heard arguments in United States v. Windsor, the case in which the Second Circuit Court of Appeals declared the Defense of Marriage Act (DOMA) unconstitutional. The issue under consideration is whether Section 3 of DOMA – which defines the term “marriage” for all purposes under federal law, including the provision of federal benefits, as “only a legal union between one man and one woman as husband and wife,” and “spouse” as “a person of the opposite sex who is a husband or a wife” – violates the Fifth Amendment’s guarantee of equal protection of the laws as applied to persons of the same sex who are legally married under the laws of their state. As previously discussed, should the Court ultimately affirm the Second Circuit’s position and nullify DOMA, employers will need to reevaluate their provision of benefits, as married same-sex couples could be entitled to a host of federal benefits and protections that currently exist for heterosexual married couples. Continue reading this entry at Littler's Employee Benefits Counsel.

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By Susan Hoffman

On Tuesday the Supreme Court heard oral arguments in Hollingsworth v. Perry, the case addressing whether California’s Proposition 8 can constitutionally outlaw same-sex marriages once the state has already authorized them. On Wednesday, the Court will hear arguments in United States v. Windsor to consider the constitutionality of the Federal Defense of Marriage Act (DOMA), which defines “marriage” as a legal union between a man and a woman. Depending on how the Court ultimately rules on these issues, married same-sex couples could be entitled to a host of federal benefits and protections, including the ability to file joint federal tax returns, receive spousal benefits through Social Security, obtain employer-sponsored medical benefits tax-free, and receive protection under the spousal provisions of ERISA relating to qualified retirement plans. The following summarizes the first day of arguments on this pivotal issue. Continue reading this entry at Littler's Employee Benefits Counsel.

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By Michael Lotito and Ilyse Schuman

A bill that would require employers to provide paid sick leave to employees was reintroduced in both the House and Senate on March 20, 2013 by Rep. Rosa DeLauro (D-CT) and Sen. Tom Harkin (D-IA). The Healthy Families Act (H.R. 1286, S. 631) would allow employees to earn one hour of paid sick time for every 30 hours worked, up to a maximum of 56 hours (seven days) annually. Employees could take this leave to attend to their own or a family member’s illness, or use the paid time off for preventative care such as medical appointments. In addition, the bill provides leave for employees who are the victims of domestic violence, stalking or sexual assault. Employers with 15 or more employees would be covered by the law.

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By Philip L. Gordon

At approximately one-half the length of War and Peace, the recently published Omnibus Final Rule, (pdf) which modifies the HIPAA Privacy, Security and Enforcement Rules and implements the HIPAA Breach Notification Rule, can overwhelm in-house employment, benefits, and privacy counsel as well as human resources and benefits professionals trying to discern the Rule’s practical implications for employers who sponsor HIPAA-covered plans, which are “covered entities” under HIPAA. Like most HIPAA-related guidance, the Omnibus Final Rule tends to focus on health care providers, with only a small portion of the ample regulatory commentary aimed at the employer community. Moreover, a detailed reading of the Omnibus Final Rule reveals dozens of technical changes with little or no practical impact on employers and numerous granular modifications that may be relevant to employers, if at all, only with limited frequency. Continue reading this entry at Littler's Workplace Privacy Counsel.

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The Department of Health and Human Services (HHS) on Thursday issued its much-anticipated final omnibus rule (pdf) governing privacy for health information. This extensive rule spanning more than 500 pages comprises four final privacy-related regulations. Among other significant changes, the rule modifies the privacy, security, and enforcement regulations implementing the Health Insurance Portability and Accountability Act (HIPAA) to incorporate amendments made by the Health Information Technology for Economic and Clinical Health (HITECH) Act that provided increased protections for an individual’s health information. The new rule also amends HIPAA to address new privacy protections granted under Title I of the Genetic Information Nondiscrimination Act of 2008 (GINA), which prohibits most health plans from using or disclosing genetic information for underwriting purposes. In addition, the rule modifies the HIPAA Enforcement Rule to include the increased and tiered civil money penalty structure provided by the HITECH Act, and establishes final regulations for the HITECH Act’s Breach Notification for Unsecured Protected Health Information rule.

Littler will be providing an in-depth analysis of the new rule and how it will impact both employer sponsors of group health plans and health care providers.

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The eleventh hour agreement to avoid the precipitous tax hikes and spending cuts widely known as the “fiscal cliff” will still require employers to make some changes to their current practices, and leaves many questions unanswered. Notably, the deal delays – but does not resolve – the matter regarding the “sequestration” of federal funds, which could trigger mass layoffs or furloughs of federal contract employees. The final deal arrived at on January 1, 2013 – the American Taxpayer Relief Act of 2012 (H.R. 8) (pdf) – postpones this possibility an additional two months. The bill does, however, extend certain tax relief measures, while letting others expire. Highlights of the fiscal cliff deal are as follows:

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During a hearing conducted by the House Subcommittee on Health, Employment, Labor, and Pensions to discuss challenges facing multiemployer pension plans, Pension Benefit Guaranty Corporation (PBGC) Director Joshua Gotbaum urged Congress to develop legislation to improve the long-term viability of such plans. Multiemployer plans, which are created by collective bargaining agreements and jointly administered by a board of trustees comprising union and employer representatives, are becoming increasingly more reliant on the PBGC for financial assistance when in distress. Opening the hearing, Subcommittee Chairman Phil Roe (R-TN) stated that factors such as the aging workforce, weak economy, and fewer contributing employers are threatening the long-term sustainability of the multiemployer pension plan system. As for the PBGC’s ability to provide assistance to plans in distress, Roe claimed that unless additional measures are taken, there is a 30% chance that the agency will be insolvent in less than 20 years. Continue reading this entry at Littler's Employee Benefits Counsel.

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The U.S. Supreme Court announced (pdf) on Friday that it will decide the constitutionality of both the Federal Defense of Marriage Act (DOMA), which defines “marriage” as a legal union between a man and a woman, and California’s Proposition 8 (“Prop 8”), a 2008 state voter initiative banning gay marriage. While on their face these cases do not involve employment issues, their impact on employee benefits could be profound.

The two cases the Court agreed to hear are Windsor v. United States, in which the Second Circuit Court of Appeals declared DOMA unconstitutional, and Hollingsworth v. Perry, in which the Ninth Circuit held that Prop 8 was illegal in California. The specific issues to be decided by the Court include:

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To further assist employees affected by Hurricane Sandy, the Internal Revenue Service (IRS) has announced that it is easing procedural and administrative rules to allow 401(k)s and similar employer-sponsored retirement plans to more readily make loans and hardship distributions to employees and their family members who live or work in a designated disaster area. Ordinarily, laws regarding qualified employer plans impose a number of restrictions on providing loans and distributions from those plans. For example, a pension plan hardship distribution is generally included in an employee’s gross income and subject to a 10% early withdrawal tax. As more fully discussed in IRS Announcement 2012-44, (pdf) the agency is relaxing these rules in order to make emergency funds more accessible to storm victims. Continue reading this entry at Littler's Employee Benefits Counsel.

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The Pension Benefit Guaranty Corporation (PBGC) has launched an enforcement pilot program under ERISA § 4062(e) that will ease financial guaranty obligations for small and financially stable businesses. Under this financial assurance section, in the event a company stops operating at a facility which results in layoffs, the company must take certain steps to ensure that the employees’ pension plans remain financially stable. Specifically, § 4062(e) requires that companies faced with this situation notify the PBGC and make additional monetary contributions to the plan or other financial assurances, such as a letter of credit guaranteeing future plan contributions.

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On Thursday the Senate Committee on Health, Education, Labor and Pensions (HELP) conducted a roundtable discussion on the problems facing pension plans and ways to improve pension plan structure and administration. HELP Committee Chairman Tom Harkin (D-IA) deemed the current decline of participation in defined benefit plans an “underreported crises.” To this end, the Committee posed a number of questions to a panel of pension experts, including what should an ideal pension system look like, and how could pension plans be redesigned to make them easier and more attractive for businesses. Continue reading this entry at Littler's Employee Benefits Counsel.

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By Sean Brown

On July 30, 2012, the U.S. Department of Labor (DOL) issued Field Assistance Bulletin (FAB) 2012-02R, which contains several revised FAQs providing guidance on issues related to final regulations for participant-level retirement plan fee disclosure, superseding an earlier set of FAQs released in FAB 2012-02 on May 7, 2012.

The original FAB provided that investment alternatives available through a brokerage window, self-directed brokerage account, or similar arrangement could be designated investment alternatives for purposes of the participant-level fee disclosure rules if a significant number of participants invested in the alternative. This would have required plans to monitor the investment selections of each individual participating in the brokerage window to determine whether the selections met the significant number threshold. Continue reading this entry at Littler's Employee Benefits Counsel.

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As expected, on July 11, the House of Representatives approved by a vote of 244-185 the Repeal of Obamacare Act (H.R. 6079), legislation introduced by House Majority Leader Eric Cantor (R-VA) in response to the recent Supreme Court decision upholding the constitutionality of the Affordable Care Act. Five Democrats jointed the Republicans to pass the bill, which would rescind the healthcare provisions in the Patient Protection and Affordable Care Act and the accompanying Health Care and Education Reconciliation Act of 2010 (ACA). Wednesday’s House vote was largely symbolic, as it is unlikely to be considered or approved by the Democratically-controlled Senate, and would face a certain presidential veto if it were to advance that far. In January 2011 the House passed a similar bill that would repeal the ACA in its entirety. That bill (H.R. 2) was never considered by the Senate, although an unsuccessful attempt was made in February 2011 to include its text as an amendment to a Federal Aviation Administration reauthorization bill. The Repeal of Obamacare Act is also not expected to advance in this Congress.

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On June 25, 2012, the U.S. Supreme Court agreed to review the decision of the Third Circuit Court of Appeals in U.S. Airways v. McCutchen. The case concerns the U.S. Airways ERISA welfare benefit plan’s efforts to enforce the plan’s reimbursement provisions, which require plan participants or beneficiaries to reimburse the plan for benefits the plan pays due to injuries caused by third parties out of any settlement fund recovered from a third party or other insurance. Continue reading this entry at Littler's Employee Benefits Counsel.

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Update: On July 6, 2012, President Obama signed this bill into law.

On Friday, the House and Senate approved a conference report (pdf) to the Surface Transportation Extension Act of 2012 (H.R. 4348) that includes several provisions establishing pension funding relief in addition to sections addressing motor vehicle carrier safety and operation.

Pension Funding

The conference report includes a number of provisions that seek to ease pension funding requirements. Among other changes, the conference report would amend the Internal Revenue Code (IRC) and the Employee Retirement Income Security Act (ERISA) by adding measures designed to stabilize the interest rates used to calculate plan liabilities for pension funding purposes. The measure would also require additional information to be included in the defined benefit plan annual funding notice.

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Today, the U.S. Supreme Court narrowly held that the individual mandate to purchase health insurance or pay a penalty under the Patient Protection and Affordable Care Act (as amended by the Health Care and Education Reconciliation Act of 2010) (ACA) is constitutional. Chief Justice Roberts cast the crucial fifth vote in the 5-4 decision (pdf) upholding the mandate on the grounds that the penalty for refusing to purchase insurance constitutes a tax that Congress can legitimately impose under its taxing power. Continue reading this entry at Littler's Employee Benefits Counsel.

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Update:  On June 7, 2012, the House of Representatives approved H.R. 436, H.R. 5842, and H.R. 1004 as a single bill, the Health Care Cost Reduction Act of 2012. (pdf) A section-by-section summary of this measure can be found here. (pdf)

On May 31, the House Committee on Ways and Means approved two bills that would repeal provisions included in the Affordable Care Act, and two others that would ease restrictions on the use of Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs). Approval of these measures came the same day a House subcommittee heard testimony on the increasing popularity of HSAs and other account-based health plans (ABHPs) and the need to ease the limitations the new health reform law imposes on such plans.

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Recently, the Department of Labor issued Field Assistance Bulletin 2012-02 (FAB 2012-02), which provides additional guidance in the form of frequently asked questions (FAQs) on the new retirement plan participant fee disclosure regulations. The initial disclosure of plan and investment- related information under the participant fee disclosure rules must generally be made by August 30, 2012. The first quarterly statement under the new rules must generally be provided to participants by November 14, 2012. Continue reading this entry at Littler's Employee Benefits Counsel.

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Recently, the Internal Revenue Service (IRS) published Revised Audit Guidelines for use by IRS auditors in examining group health plans for COBRA compliance. The revised Guidelines incorporate changes to account for laws that have affected COBRA since the previous guidelines were developed, such as the Health Insurance Portability and Accountability Act (HIPAA) and the Family and Medical Leave Act (FMLA). The Guidelines appear to herald a new COBRA compliance audit effort by the IRS. Continue reading this entry at Littler's Employee Benefits Counsel. 

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On March 29, 2012 Sen. Tom Harkin (D-IA) introduced a bill that seeks to make substantial changes to the workplace. Like the expansive American Jobs Act Sen. Majority Leader Harry Reid (D-NV) introduced in the fall of 2011, the Rebuild America Act (S. 2252) incorporates a whole host of employment-related provisions into a single piece of legislation. While a large portion of the bill focuses on increased infrastructure, manufacturing, and educational investment, other portions address minimum wage, worker misclassification, pension protection, and paid sick leave. Key provisions of this legislation include the following:

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On March 14 the Senate overwhelmingly approved a transportation funding bill that includes an amendment (S. Amdt. 1830) that would ease pension funding rules. Specifically, the provision included in the Moving Ahead for Progress in the 21st Century (MAP-21) Act (S. 1813) would amend section 430(h)(2) of the Internal Revenue Code (IRC) and section 303(h)(2) of the Employee Retirement Income Security Act (ERISA) by adding provisions designed to stabilize the interest rates used to calculate plan liabilities for pension funding purposes. Continue reading this entry at Littler's Employee Benefits Counsel.

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On Thursday March 1 the Senate narrowly defeated an amendment to a highway transportation bill that would have allowed insurers and employers to refrain from offering health coverage of any service or item if doing so would be against their moral or religious beliefs. The so-called “conscience” amendment (S. Amdt. 1520) offered by Sen. Roy Blunt (R-MO) to the Moving Ahead for Progress in the 21st Century (MAP-21) Act (S. 1813) was tabled by a vote of 51-48. Continue reading this entry at Littler's Employee Benefits Counsel.

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Updated: February 23, 2012

As expected, both chambers of Congress approved the conference report to the Middle Class Tax Relief and Job Creation Act of 2012 (H.R. 3630) before adjourning for the Presidents’ Day recess. The measure extends the 2% payroll tax cut and emergency unemployment insurance benefits through December 2012, and delays the planned cut of Medicare reimbursement rates to doctors, commonly known as the “doc fix” provision. The conference report reconciled the differences between the House and Senate versions of the legislation. The House approved the changes made by the conference report in a 293-132 vote. The Senate approved the measure 60-36 shortly thereafter.

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On February 3, 2012, the Department of Labor (“DOL”) published final regulations setting out the fee disclosure rules for persons or entities providing services to retirement plans governed by ERISA. See Treas. Reg. §2550.408-2; 77 Fed. Reg. 023 (Feb. 3, 2012) pgs. 5632-5659. These regulations detail the disclosures that a covered service provider must furnish to a covered plan fiduciary before that fiduciary may enter into or extend contracts for services to the plan under a new prohibited transaction class exemption. The exemption was previously issued by the DOL in tandem with the regulation when issued in proposed form. Under this exemption, if the requirements of the fee disclosure regulation are not satisfied, the expenses associated with the contract or service arrangement will not be treated as exempt from ERISA’s prohibited transaction rules and may be subject to excise taxes.  Continue reading this entry at Littler's Employee Benefits Counsel. 

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Ending a political stalemate, both the House and Senate on Friday approved a measure that provides a two-month extension of the payroll tax cut, emergency unemployment insurance benefits, and delay in the planned cut of Medicare reimbursement rates to doctors, commonly known as “doc fix” provisions. President Obama signed the Temporary Payroll Tax Cut Continuation Act of 2011 (H.R. 3765) into law hours later. This bill is similar to legislation (H.R. 3630) the Senate approved last Saturday, but includes provisions allowing businesses to use their current accounting structure to process the temporary payroll tax break, and will require the House and Senate to work together to draft a bill that would extend these provisions for all of 2012.

In a press release, bill sponsor Rep. David Camp (R-MI) said that the amended bill “fixes a critical flaw in the hastily passed Senate bill, which failed to provide employers with a workable mechanism with which to implement a partial-year payroll tax holiday.”

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On Thursday the House Subcommittee on Capital Markets and Government Sponsored Enterprises voted 19-14 in favor of advancing a bill that seeks to amend the whistleblower incentive provisions created by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). The Subcommittee approved the bill on a party-line vote, with Republicans voting in favor of the legislation. Generally, the Whistleblower Improvement Act of 2011 (H.R. 2483) would require employees to first report potential misconduct through the company’s internal reporting system before relaying the information to the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC). Under the whistleblower incentive and protection program established by the Dodd-Frank Act, employees who contribute original information that leads the SEC or CFTC to recover monetary sanctions of $1,000,000 or more in criminal and civil proceedings are entitled to receive between 10% and 30% of any monetary sanctions that are imposed. In May of this year, the SEC issued a final rule governing these whistleblower protections. The CFTC followed suit in August.

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Less than two weeks after the Senate failed to advance two competing payroll tax cut bills, the House of Representatives on Tuesday passed its own measure. Approved by a vote of 234-193, the Middle Class Tax Relief and Job Creation Act of 2011 (H.R. 3630) seeks to extend by one year both the payroll tax cut and emergency unemployment insurance benefits, but also includes a number of sticking points that likely will prevent passage of this House bill in the Senate.

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Multiple Employer Welfare Arrangements (MEWAs) are typically utilized by smaller employers as an alternative to other traditional forms of health insurance. In 2010, the Affordable Care Act amended ERISA to address certain perceived regulatory issues with respect to MEWAs. On Monday, December 5, 2011, the Department of Labor published proposed rules and regulations that clarify these changes to ERISA. The changes concern (1) the Secretary of Labor’s ability to issue “cease and desist” and “summary seizure” orders, and (2) the reporting and disclosure requirements for MEWAs.

Employers participating in MEWAs may wish to provide comments to the Department of Labor, as they may be impacted by these regulatory changes.  Continue reading this entry at Littler's Employee Benefits Counsel.

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We are pleased to announce a new addition to Littler’s blogroll:

Employee Benefits Counsel 

Brought to you by Littler's Employee Benefits, ERISA and Benefit Plan Litigation, and Executive Compensation practice groups, this blog covers:

• Legislative and regulatory developments in the employee benefits arena, including the topics of health care reform; plan design and administration; employee benefits litigation; and
• Executive compensation, providing insight and analysis on legal developments that warrant discussion.

During this time of significant governmental change and shifts in the strategy and style of benefits litigation, Littler's depth of experience in employee benefits, litigation, and executive compensation matters gives our attorneys a distinctly broad perspective with which to provide insight and useful analysis of the latest developments. To subscribe to receive email alerts of new blog posts, please enter your email address in the Subscribe box on the right side of the Employee Benefits Counsel blog homepage. 

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The Department of Labor’s Employee Benefits Security Administration (EBSA) has launched a Consumer Assistance Web Page to answer questions for retirement and health benefit plan participants and beneficiaries, and enable them to submit electronically any complaints regarding their plans. The site includes a link whereby a viewer can request assistance from a benefits advisor. This feature will automatically direct such requests to the appropriate EBSA regional office based on the user’s ZIP code. While aimed primarily at benefit plan consumers, the site does link to various resources and tools such as fact sheets, frequently asked questions (FAQs), and other materials that may be helpful for employers and plan sponsors.

In a press release, EBSA Assistant Secretary Phyllis C. Borzi said: “Helping retirement and health plan participants find answers to questions about their benefits and providing assistance when they believe their benefits have been improperly denied is one of our most important responsibilities,” adding: “The new consumer assistance Web page and electronic inquiry/complaint process will provide quick answers to the most frequently asked questions and connect workers to experienced benefits advisers if assistance is needed.”

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On Thursday the Senate voted 95-0 in favor of legislation that would provide employers with tax credits for hiring long-term unemployed and wounded veterans. These benefits were approved as an amendment (S. Amdt. 927) (pdf) to the 3% Withholding Repeal and Job Creation Act (H.R. 674) that the House of Representatives cleared in October.  Introduced by Sen. Jon Tester (D-MT), the VOW to Hire Heroes Act of 2011 amendment would provide employers with a “Returning Heroes” tax credit of up to $5,600 for hiring veterans who have been unemployed for at least six months, a $2,400 credit for hiring veterans who have been unemployed for more than four weeks, but less than six months, and a credit of up to $9,600 that would increase the existing Wounded Warriors Tax Credit for employers that hire veterans with service-connected disabilities who have been unemployed for at least six months. These credits were initially included in President Obama’s more comprehensive job stimulus bill, the American Jobs Act (S. 1660), which stalled in the Senate last month. The Senate agreed to include the VOW to Hire Heroes amendment to H.R. 674 by a vote of 94-1 before passing the entire measure.

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By Steve Friedman and Sean Brown

The Department of Labor’s Employee Benefits Security Administration (“EBSA”) recently issued final investment advice regulations (pdf) that are intended to make fiduciary investment advice more accessible for Americans who participate in 401(k)s and/or individual retirement arrangements (IRAs). When it comes to employer-sponsored plans, this new rule provides employers with the option of providing plan participants with access to investment advisors who may be current purveyors of the employer plan’s investment options.

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By Adam J. Peters

The Department of Labor’s Employee Benefits Security Administration (EBSA) issued a final rule on October 27, 2011, governing the process for filing requests for administrative exemptions from the prohibited transaction provisions under the Employee Retirement Income Security Act (ERISA). ERISA’s design includes numerous safeguards to prevent employee benefit plan fiduciaries from self-dealing or otherwise threatening the integrity of such plans. Specifically, ERISA Section 406 generally prohibits the fiduciary of an ERISA-covered benefit plan from engaging in any transaction that involves the exchange of property, goods, services, or credit between the plan and a “party in interest.” ERISA Section 408(a), however, authorizes the DOL to grant administrative exemptions for “any fiduciary or transaction, or class of fiduciaries or transactions.” Employers who are interested in applying for such exemptions will welcome new procedures designed to streamline and clarify the process. 

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The Internal Revenue Service has released a detailed list of pension plan and other retirement-related contribution limitations for the Tax Year 2012 that were triggered by an increase in the cost-of-living index. According to the IRS announcement of the 2012 pension plan limitations, the main changes for 2012 include the following:

• The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $16,500 to $17,000.
• The catch-up contribution limit for those aged 50 and over remains unchanged at $5,500.
• The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $58,000 and $68,000, up from $56,000 and $66,000 in 2011. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $92,000 to $112,000, up from $90,000 to $110,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $173,000 and $183,000, up from $169,000 and $179,000.
• The AGI phase-out range for taxpayers making contributions to a Roth IRA is $173,000 to $183,000 for married couples filing jointly, up from $169,000 to $179,000 in 2011. For singles and heads of household, the income phase-out range is $110,000 to $125,000, up from $107,000 to $122,000. For a married individual filing a separate return who is covered by a retirement plan at work, the phase-out range remains $0 to $10,000.
• The AGI limit for the saver’s credit (also known as the retirement savings contributions credit) for low-and moderate-income workers is $57,500 for married couples filing jointly, up from $56,500 in 2011; $43,125 for heads of household, up from $42,375; and $28,750 for married individuals filing separately and for singles, up from $28,250.

Full descriptions of the changed and unchanged adjusted limitations are set forth in the IRS announcement.  See also Littler's ASAP:  IRS Announces Pension Plan Limitations for Tax Year 2012.

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Updated:  October 21, 2011

On October 12 the House by a 307-122 margin approved a measure that temporarily and retroactively extends the Trade Adjustment Assistance (TAA) program that was enacted as part of the 2009 stimulus package and expired in February 2011. The TAA is a federal, state-administered program created to provide benefits and services to individuals who become unemployed as a result of international trade. Such benefits include trade readjustment allowance, training, assistance with healthcare premium costs, alternative trade adjustment assistance, and job search and relocation allowances. The bill that has been approved by both houses of Congress – H.R. 2832 – extends the authorization of appropriations for the TAA through December 31, 2013.

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As expected, proponents of the American Jobs Act (S. 1660)  failed to garner the 60 Senate votes needed to proceed with further consideration of the jobs legislation. Democratic senators Ben Nelson (D-NE) and Jon Tester (D-MT) joined 46 Republican senators in voting against further consideration of the measure Tuesday evening. Fifty Democratic senators voted in favor of proceeding, ten votes shy of the number needed to prevent a filibuster.

Among other provisions affecting employers, the American Jobs Act would prohibit unemployment discrimination; temporarily ease payroll taxes for employers; provide incentives for hiring veterans and long-term unemployed workers; encourage employers to develop temporary work sharing positions in lieu of layoffs; extend emergency unemployment compensation; extend 100 percent business expensing of investments in certain business assets through 2012; mandate that all laborers and mechanics employed by contractors and subcontractors on projects funded directly by the bill be paid the prevailing wage rate; provide additional funding for transportation infrastructure projects; and require that all projects funded by the bill use American-produced iron, steel, and manufactured goods. The bill would be financed by a $5.6 surtax on millionaires, a change from the initial bill aimed at increasing Democratic support.

Even if this bill had been allowed to progress in the Senate, it would have faced tough opposition in the Republican-controlled House of Representatives. The Obama Administration has stated that it would be amenable to splitting the measure into smaller bills that would have a greater likelihood of passage. At this point, it is uncertain which provisions of the bill, if any, would receive support as standalone legislation.

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Senators John Kerry (D-MA) and Jeff Bingaman (D-NM) have reintroduced legislation that would establish an automatic individual retirement account (IRA) enrollment program for employees at firms with more than 10 employees that do not already offer retirement plans. The Automatic IRA Act of 2011 (S. 1557) would enable employees to contribute to these IRAs on a voluntary basis through automatic payroll deductions. Employers would be provided a $250 tax credit for each of the first two years of the program’s operation to offset costs associated with its establishment.

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The Department of Labor’s Employee Benefits Security Administration (EBSA) has decided to re-propose a rule that would more broadly define who constitutes a “fiduciary” for the purposes of rendering investment advice under the Employee Retirement Income Security Act (ERISA). The initial proposed rule released in October 2010 has generated a substantial amount of controversy regarding its potential impact on the relationship between retirement savers and plan sponsors. In an attempt to explain the proposal, the EBSA conducted a series of public meetings and issued fact sheets on the proposed changes. After these actions failed to stem criticism of the proposal, lawmakers held a hearing in July 2011 to discuss its implications. During that hearing, witnesses criticized the agency for failing to properly consider the possible costs and fees associated with the rule and its potential impact on the IRA market, while others claimed that the rule would increase risks associated with providing advice. Still others raised the possibility that long-standing business practices in the financial services industry would suddenly be considered prohibited transactions under the rule, and that the DOL’s exemptions approach to address this problem is insufficient. A number of hearing panelists urged the EBSA to re-propose the rule.

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The Department of Labor’s Employee Benefits Security Administration (EBSA) has issued an interim policy (Technical Release 2011-03) (pdf) setting forth the conditions that a plan administrator must meet in order to provide electronic disclosures of information required under the EBSA’s final participant-level fee disclosure rule. Generally, this rule requires retirement plan sponsors and fiduciaries to disclose certain plan and investment-related information, including that related to fees and expenses, to participants and beneficiaries in participant-directed individual account plans, such as 401(k)s. The rule allows for the electronic disclosures – including the use of continuous access websites – under certain circumstances. According to the Technical Release, plan administrators will not be subject to an enforcement action based on their electronic disclosures if they comply with the conditions established by the interim policy.

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By William Weissman

On September 14, 2011, the IRS issued updated guidance (pdf) on the tax treatment of employer-provided cell phones, effectively treating both business and personal use of such phones as exempt from an employee’s wages.

The Small Business Jobs Act removed cell phones from the definition of “listed property” beginning January 1, 2010, meaning they no longer required heightened levels of substantiation to qualify as a business expense. However, Congress had not altered the use of an employer-provided cell phone as a fringe benefit. As a result, the value of employer-provided cell phones was still subject to inclusion in an employee’s wages unless a specific exclusion applied.

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President Obama has formally released a draft of his jobs bill to Congress for consideration. As discussed during his address to a joint session of Congress last Thursday, several provisions of the American Jobs Act (pdf) are aimed at easing payroll taxes for employers, promoting hiring of the unemployed and veterans, and prohibiting discrimination against the unemployed. Generally, the Act pieces together a number of bills that have already been introduced in some form within the past year or two.

Unemployment Discrimination

Subtitle D of the American Jobs Act – Prohibition of Discrimination in Employment on the Basis of an Individual's Status as Unemployed – incorporates a previously-introduced bill that would make it unlawful for an employer or employment agency to discriminate against individuals based on their unemployment status or history of unemployment. The Fair Employment Opportunity Act of 2011 would, among other things, prevent employers and employment agencies from refusing to consider or offer a job to an unemployed individual; prohibit the publication in any medium of an advertisement or announcement for a job that includes language indicating the unemployed need not apply; and entitle those discriminated against to bring a civil action against the employer or employment agency for actual, compensatory and punitive damages. These terms would apply to employers with 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year. A person would be considered to have a “status as unemployed” if the individual, “at the time of application for employment or at the time of action alleged to violate this Act, does not have a job, is available for work and is searching for work.”

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The DOL’s Employee Benefits Security Administration (EBSA) has announced that it will conduct a webcast next Wednesday on its Voluntary Fiduciary Correction Program to advise plan sponsors and service providers about the agency’s enforcement program and how to prepare for a possible investigation. The program is designed to enable plan sponsors to identify and correct certain transactions such as prohibited purchases, sales and exchanges, improper loans, delinquent participant contributions, improper plan expenses, and other possible violations of Title I of the Employee Retirement Income Security Act (ERISA). As discussed in a fact sheet, the program includes 19 specific transactions and their acceptable means of correction, eligibility requirements, and application procedures. Successful correction of applicable transactions through the program will result in a “no action” letter from the EBSA.

The text only webcast will be held on Wednesday August 24, 2011 from 2 p.m. to 3:30 p.m. EDT. Those interested in registering can click here.

Photo credit: doram

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Rep. Carolyn Maloney (D-NY) and Senator Jeff Merkley (D-OR) have introduced legislation that would afford civil rights protections to breastfeeding employees and expand existing rights to more employees. Specifically, the Breastfeeding Promotion Act of 2011 (H.R. 2758; S. 1463) would amend both the Fair Labor Standards Act (FLSA) and Title VII of the Civil Rights Act to prohibit employers from terminating or otherwise discriminating against an employee who nurses or expresses milk during lunch or break times and entitle many salaried employees to the same benefits given to their non-exempt counterparts under the Patient Protection and Affordable Care Act.

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In an informal discussion letter, (pdf) the Equal Employment Opportunity Commission’s Office of Legal Counsel reiterates the position that an employer-provided wellness program that offers financial inducements to provide genetic information as part of a wellness program runs afoul of Title II of the Genetic Information Nondiscrimination Act (GINA). Among other restrictions, GINA limits the ability of health insurers and employers to collect genetic information, which includes family medical history. Whether and to what extent employer-provided wellness programs and health surveys that solicit information about family medical history violate GINA and other statutes and regulations is a rising concern for employers.

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The House Subcommittee on Health, Employment, Labor, and Pensions conducted a hearing on Tuesday to discuss the Department of Labor’s proposed rule that would redefine who constitutes a “fiduciary” under the Employee Retirement Income Security Act (ERISA). By November 2011, the DOL’s Employee Benefits Security Administration (EBSA) plans to issue a final rule that more broadly defines who constitutes a retirement plan fiduciary for the purposes of rendering investment advice under ERISA. The proposed fiduciary rule was issued in October 2010. During a recent web chat to discuss the agency’s regulatory agenda, EBSA Assistant Secretary Phyllis Borzi said that this fiduciary rule:

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A bipartisan measure introduced in the Senate last week by Sens. Ben Cardin (D-MD) and Mike Enzi (R-WY) would change the tax treatment of employer-provided medical flexible spending arrangements (FSAs). Specifically, the Medical FSA Improvement Act (S. 1404) would effectively eliminate the “use it or lose it” rule applied to such plans and instead allow employees to pay taxes on and withdraw any remaining funds in their FSAs at the end of the year. FSAs enable participating employees to allocate a portion of their income tax-free to pay for out-of-pocket medical expenses, such as co-payments for doctor visits and prescription drugs, medical supplies, and equipment. According to a press release, at the end of the year the average FSA maintains an unused balance of $100, amounting to nearly $400 million in unused funds per year. Said Cardin: “It’s time we stopped penalizing participants for being efficient in the use of their health care dollars and allow for a sensible cash-out option at the end of each program year. It is both fair and sound health policy.”

A companion bill (H.R. 1004) was introduced in the House of Representatives earlier this year, but has not yet advanced. If enacted, the provisions of either bill would apply to plan years beginning after December 31, 2012.

Photo credit: Kaupang

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During a web chat to discuss the Employee Benefits Security Administration’s (EBSA) extensive regulatory agenda, EBSA Assistant Secretary Phyllis Borzi fielded a number of questions about the agency’s plan to broaden the definition of “fiduciary,” and issue a final rule on fiduciary-level fee disclosures under section 408(b)(2) of ERISA, among other topics.

The first rule – which Borzi said will be published by the end of the year or shortly thereafter – would more broadly define who constitutes a plan “fiduciary” for the purposes of rendering investment advice. According to Borzi:

This initiative is intended to assure retirement security for workers in all jobs regardless of income level by ensuring that financial advisers and similar persons are required to meet ERISA’s standards of fiduciary responsibility when providing investment advice. Taking into account significant changes in both the financial industry and the expectations of plan officials and participants who receive investment advice, the proposed amendments would change a thirty-five year old rule that we believe inappropriately limits the types of investment advice relationships that give rise to fiduciary duties.

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The DOL’s Employee Benefits Security Administration (EBSA) has issued a final rule (pdf) that extends the compliance dates for two of its rules related to retirement plan fee disclosures. Specifically, the final rule pushes back the applicability date of the fiduciary-level fee disclosure rule issued on July 16, 2010 until April 1, 2012. This rule sets forth enhanced disclosures that certain pension plan service providers must give to plan fiduciaries as part of a “reasonable” contract or arrangement for services under section 408(b)(2) of ERISA.

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Legislation that would amend the Family and Medical Leave Act (FMLA) to permit eligible employees to take up to twelve weeks of unpaid leave to care for a same-sex spouse, domestic partner, grandparent, grandchild, parent-in-law, son- or daughter-in-law, child of a domestic partner, or adult child or sibling who has a serious health condition has been reintroduced in both chambers. The Family and Medical Leave Inclusion Act (H.R. 2364, S. 1283) would not change the terms of the FMLA, but rather expand its coverage to the aforementioned additional family members.

In a statement, the bill’s chief Senate sponsor Dick Durbin (D-IL) said: “Regardless of the make-up of one’s family, all employees should be given the same rights to care for a sick loved one in a time of need,” adding, “For 20 years, we have had a law that provides unpaid leave for families in crisis. As families change, so should the laws designed to help them.”

Photo credit: Stratesigns, Inc.

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Last week Rep. Jackie Speier (D-CA) reintroduced the Equal Access to COBRA Act of 2011 (H.R. 2310), legislation cosponsored by 47 others that would extend COBRA continuation health coverage to covered employees’ same-sex spouses or domestic partners and their dependent children. Under existing law, up to 36 months of continuing health care coverage under COBRA is available to employees, their spouses and dependent children after the employees’ job loss. The Equal Access to COBRA Act would amend the Employee Retirement Income Security Act (ERISA), the Internal Revenue Code, and the Public Health Service Act to extend these entitlements to all individuals who are covered by an employer’s health plan. Generally, this bill would apply to businesses that already offer health coverage to domestic partners and their children. Identical legislation (H.R. 1028, S. 563) was introduced earlier this year in the House by former New York Rep. Anthony Weiner and in the Senate by Barbara Boxer (D-CA).

In a statement, Rep. Speier said: “The recession didn’t discriminate on the basis of sexual orientation and gender identity and neither should our safety net policy,” adding: “This legislation would ensure that eligible LGBT employees and their families have the same access to health care benefits as every other American.”

If signed into law, this bill would apply to plan years beginning 180 days after the enactment date. For collectively bargained health plans, the amendments made by this bill would apply after the plan terminates, or three years after enactment, whichever date is earlier.

Photo credit: MBPHOTO, INC.

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The Department of Labor’s Office of Inspector General (OIG) has issued its Semiannual Report to Congress, (pdf) outlining its significant accomplishments made during the six-month period ending March 31, 2011, and making a number of legislative recommendations. The OIG conducts audits and evaluations to review the effectiveness, efficiency, economy, and integrity of all DOL programs and operations, including those performed by its contractors and grantees. The office is also responsible for conducting criminal investigations regarding labor union racketeering and organized crime. According to the report, the OIG’s investigative work resulted in 207 indictments, 133 convictions, and $155 million in investigative recoveries, cost-efficiencies, restitutions, fines and penalties, forfeitures, and civil monetary action.

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The DOL’s Employee Benefits Security Administration (EBSA) has issued a notice (pdf) of its proposal to extend the applicability date of two fee disclosure rules in order to ensure that plan sponsors have enough time to comply with the rule requirements. Specifically, the EBSA is proposing to push back the applicability dates of the fiduciary-level fee disclosure rule issued on July 16, 2010 and the transition rule included in the participant-level fee disclosure regulation  issued on October 20, 2010.

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A bill that would require employers to provide paid sick leave to employees was reintroduced in both the House and Senate on May 12, 2011 by Rep. Rosa DeLauro (D-CT) and Sen. Tom Harkin (D-IA). The Healthy Families Act (H.R. 1876, S. 984) would allow employees to earn one hour of paid sick time for every 30 hours worked, up to a maximum of 56 hours (seven days) annually. Employees could take this leave to attend to their own or a family member’s illness, or use the paid time off for preventative care such as medical appointments. In addition, the bill provides leave for employees who are the victims of domestic violence, stalking or sexual assault. Employers with 15 or more employees would be covered by the law.

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By Susan Hoffman

The Supreme Court has issued a decision in CIGNA Corp. v. Amara, (pdf) holding unanimously that section 502(a)(1)(B) of the Employee Retirement Income Security Act (the section allowing a participant to sue for benefits under an ERISA plan) did not permit the district court to rewrite the terms of the benefit plan to reflect employee expectations arising from a summary plan description (SPD) because the SPD is not the “plan.” The Court also reasoned that because the plan can be amended only by the employer acting as settlor, and the SPD must be written and distributed by the plan administrator, it would be anomalous for the plan administrator to be able to modify the terms of the plan by erroneously describing its terms, even if – as in the instant case – the employer is also the plan administrator. Six of the Justices found, however, that another section (502(a)(3)) of ERISA might allow the lower court to reform the company’s pension plan provisions or to provide the requested benefits in the form of damages, and sent the case back for reconsideration. The two concurring Justices agreed with the remand but would not have expanded on the potential recovery that might be available under section 502(a)(3).

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The Department of Labor’s Employee Benefits Security Administration (EBSA) is considering whether and how to modify its current standards governing the electronic distribution of employee benefit plan disclosures, such as quarterly account statements, to plan participants and beneficiaries as required under the Employee Retirement Income Security Act (ERISA). Current standards mandate that plan administrators use delivery methods that are reasonably calculated to ensure actual receipt of such information. Under certain circumstances, the electronic transmission of plan documents is permissible. According to the EBSA, research suggests that public access and use of electronic media has increased substantially since the 2002 regulations allowing electronic distribution of plan disclosures were implemented. Therefore, the agency is issuing a request for information (RFI) (pdf) “to solicit views, suggestions and comments from plan participants and beneficiaries, employers and other plan sponsors, plan administrators, plan service providers, health insurance issuers, and members of the financial community, as well as the general public on whether, and possibly how, to expand or modify” the EBSA’s current electronic disclosure practices.

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The EBSA has posted on its website a fact sheet on the definition of “fiduciary” under the Employee Retirement Income Security Act (ERISA). The agency defines a plan fiduciary “to include anyone who gives investment advice for a fee or other compensation with respect to any moneys or other property of a plan, or has any authority or responsibility to do so.” ERISA imposes certain disclosure requirements and standards of conduct on those considered retirement plan fiduciaries. The fact sheet includes background on the term, developments to retirement plans that have caused the agency to reevaluate its definition of fiduciary, and an overview of its proposed rule to revise this definition. Specifically, the EBSA is in the process of drafting a final rule on proposed changes to the definition of fiduciary that would result in a broader range of individuals who provide investment advice to be deemed a fiduciary under ERISA.

Additionally, the EBSA has released complete transcripts from the public hearings the agency held to address when a person is deemed a fiduciary by reason of giving investment advice for a fee under ERISA. Comments on the March 1, 2011 (pdf) and March 2, 2011 hearings (pdf) can be submitted electronically to e-ORI@dol.gov with subject line: Public Hearing on Definition of Fiduciary, or in written form to: EBSA's Office of Regulations and Interpretations, Attn: Public Hearing on Definition of Fiduciary, Room N-5655, U.S. Department of Labor, 200 Constitution Ave. NW, Washington, DC, 20210. All comments on the information presented at the hearings must be submitted on or before April 12, 2011.

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The DOL’s Employee Benefits Security Administration (EBSA) has announced that it will conduct a two-part webcast for employers on their fiduciary responsibilities when operating a retirement plan. The program – Getting It Right - Know Your Fiduciary Responsibilities  – will be held on March 23 and 24, 2011, and will cover topics such as understanding retirement plans and the employer’s responsibilities in administering them; carefully selecting and monitoring service providers; making contributions on time; avoiding prohibited transactions; and making appropriate disclosures to plan participants and timely filing annual reports to the government. The March 23 session will focus on basic fiduciary responsibilities and prohibited transactions and exemptions under the Employee Retirement Income Security Act (ERISA). The following day, the EBSA will present information on ERISA’s reporting and disclosure provisions and the DOL’s voluntary correction program.

The EBSA is in the process of drafting a final rule on proposed changes to the definition of “fiduciary” that would result in a broader range of individuals who provide investment advice to be deemed a fiduciary under ERISA.

Registration for the webinars is required, and can be made here.

Photo credit: Kameleon007

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On March 10, legislation that would extend COBRA continuing health coverage to many same-sex spouses and domestic partners was reintroduced in the House and Senate. The Equal Access to COBRA Act (H.R. 1028, S. 563) would change federal law to allow same-sex spouses or domestic partners and their dependents the same access to COBRA coverage as enjoyed by other individuals who are covered by an employer’s health plan in the event the covered employee losses his or her job. The measure, which was reintroduced by Sen. Barbara Boxer (D-CA) and Rep. Anthony Weiner (D-NY), would apply to domestic partners as they are defined by the employer’s benefits plan. Under current law, COBRA continuation coverage does not apply to domestic partners or same-sex spouses, even if the employee who was let go worked at a company that offered health coverage to domestic partners. The provisions of this legislation would apply only to companies that already offer health coverage to domestic partners and their children. According to a statement issued by Sen. Boxer’s office, more than half of Fortune 500 companies cover domestic partners in their health plans.

If signed into law, this bill would apply to plan years beginning 180 days after the enactment date. For collectively bargained health plans, the amendments made by this bill would apply after the plan terminates, or three years after enactment, whichever date is earlier.

Photo credit: Stratesigns, Inc.

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The DOL’s Employee Benefits Security Administration (EBSA) has announced that it is pushing back the applicability date of the new benefit plan disclosure rule from July 16, 2011 to January 1, 2012. First published on July 16, 2010, the interim rule requires certain service providers to employee pension benefit plans to disclose information that would enable plan fiduciaries to better assess the reasonableness of the fees being charged for plan services and to target potential conflicts of interest. The requirements now apply to plan contracts or arrangements for services in existence on or after January 1, 2012. According to the DOL’s press release, the purpose of the change is to give plans and their service providers sufficient time to comply with a final rule, which has yet to be issued. The EBSA’s Assistant Secretary Phyllis C. Borzi states that:

The department intended to have final rules in place sufficiently in advance of the July 16 applicability date to avoid compliance problems for both plans and their service providers.  Given the need to ensure a careful review of all the valuable input we received on the interim final rule, including suggestions for a summary document to further assist plan fiduciaries in their review of furnished information, we now believe plans and plan service providers would benefit from an extension of the rules applicability date.

Photo credit: Kameleon007

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Less than one month into the new session, the 112th Congress continues to introduce labor and employment-related bills at a rapid pace. While a substantial portion of new legislation targets health care, a number of bills have focused on employment-related reforms. The following measures were offered during the past week alone:

Immigration

On January 24, Rep. Jeff Flake (R-AZ) re-introduced the Stopping Trained in America Ph.D.s From Leaving the Economy (STAPLE) Act of 2011 (H.R. 399), a bill that would exempt foreign students who have earned a Ph.D. degree in science, technology, engineering, or mathematics from a U.S. university and have a job offer in the U.S. from visa quotas. In a statement, Flake said: “At a time when there’s a lot of focus on keeping the U.S. competitive globally, if we don’t keep these highly-skilled workers in the U.S. after they’ve graduated, we’re going to see the next round of high tech companies created overseas rather than here in the United States.”

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During the DOL’s Employee Benefits Security Administration’s (EBSA) live web chat held on Tuesday, EBSA Assistant Secretary Phyllis Borzi responded to questions aimed at the pension and welfare benefit initiatives contained in the DOL’s Semiannual Regulatory Agenda, as well as the interim final regulations outlining the procedures for internal and external review of adverse health benefit claims decisions.  Borzi noted that in the coming months the EBSA will focus on completing its work in pension and welfare plan transparency initiatives.  In particular, the agency plans to finalize the interim final rule relating to reasonable contracts and arrangements under section 408(b)(2) of ERISA. The EBSA will also consider whether and to what extent similar fee and compensation disclosure requirements will be applied to service relationships in the welfare plan context.

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On Friday, President Obama is expected to sign into law compromise legislation that would extend expiring tax cuts. The $858 billion tax deal will also extend emergency unemployment benefits an additional 13 months, and cut Social Security payroll taxes by 2 percent for one year on income up to $106,800. The House of Representatives approved the measure (H.R. 4853) by a 277-148 margin late Thursday night. An almost equal number of Democrats (139) and Republicans (138) voted in its favor. On Wednesday, the Senate overwhelmingly approved the bill by a vote of 81-19.

Photo credit: MBPHOTO, INC.

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As expected, the contentious tax compromise bill (H.R. 4853) cleared a procedural hurdle on Monday when the Senate secured enough votes to invoke cloture and move the measure closer to a final vote. Among other things, the bill would extend expanded unemployment insurance benefits through 2011, and cut payroll taxes by 2 percentage points to 4.2 percent. By a margin of 83-15, the Senate voted in favor of the measure, enough to thwart a potential filibuster. A final Senate vote is expected to occur on Tuesday. If approved as anticipated, the legislation would then move to the House of Representatives, where it will face a tougher reception.

Update:  On Wednesday, the Senate approved the measure by a vote of 81-19.

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The Department of Labor’s Office of Inspector General (OIG) has issued its Semiannual Report to Congress, (pdf) outlining its significant accomplishments made during the six-month period ending September 30, 2010 and making a number of legislative recommendations.  The OIG conducts audits and evaluations to review the effectiveness, efficiency, economy, and integrity of all DOL programs and operations, including those performed by its contractors and grantees. In addition, the OIG is responsible for conducting criminal investigations regarding labor union racketeering and organized crime. According to the report, during the six-month period, the OIG’s investigations resulted in 175 indictments, 158 convictions, 190 cases referred for prosecution, 83 cases referred for administrative/civil action, and $85 million in investigative recoveries, cost-efficiencies, restitutions, fines and penalties, forfeitures, and civil monetary actions.

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The Department of Labor’s Employee Benefits Security Administration (EBSA) has issued a proposed rule that creates additional retirement plan disclosure requirements related to target date retirement funds (TDFs) and other similar investments offered in 401(k)-type pension plans. As discussed in an EBSA fact sheet, while TDFs are designed to be convenient vehicles for individuals to save for retirement, they are “not managed according to uniform strategies,” and are therefore subject to varying degrees of risk and investment results over time. The proposed rule seeks to provide individuals participants with more information about TDFs so that they can better evaluate them and assess their investment plans. Specifically, the proposal would amend two existing regulations – the qualified default investment alternative regulation and the participant-level disclosure regulation – to require plan fiduciaries to provide the following, among other information, to all participants and beneficiaries in participant-directed individual account plans:

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The Employee Benefits Security Administration (EBSA) will publish a proposed rule (pdf) that implements the annual funding notice requirement for all defined benefit plans. The Pension Protection Act of 2006 (PPA) amended the Employee Retirement Income Security Act (ERISA) to require that administrators of all defined benefit plans, not just multiemployer plans, provide an annual funding notice to the Pension Benefit Guaranty Corporation (PBGC), plan participants and beneficiaries, labor organization representing participants or beneficiaries, and, in the case of a multiemployer plan, each employer that has an obligation to contribute to the plan. This funding notice must include the plan’s funding target attainment percentage, a statement of the value of the plan’s assets and liabilities and a description of how the plan’s assets are invested as of specific dates, a description of the benefits under the plan that are eligible to be guaranteed by the PBGC, and other information relevant to the plan’s funded status. The proposed regulation outlines the scope of an administrator’s obligations in providing this notice and details the content requirements of the notice itself. In addition, the proposed rule’s appendix contains two model notices (one for single employer plans and one for multiemployer plans) for plan administrators to use. According to a summary to be published in the Federal Register, this proposed rule will affect plan administrators, participants and beneficiaries of defined benefit pension plans; labor organizations representing participants and beneficiaries; and contributing employers of multiemployer plans.

Comments on this proposal are due within 60 days of publication, which is scheduled for November 18, 2010. All comments must contain the regulatory identification number: RIN 1210–AB18, and may be submitted via the federal eRulemaking portal or by email: e-ORI@dol.gov (include RIN 1210-AB18 in the subject line of the message). Alternatively, written comments may be sent to: Office of Regulations and Interpretations, Employee Benefits Security Administration, Room N-5655, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, DC 20210, Attention: Annual Funding Notice for Defined Benefit Plans.

Photo credit: Kirby Hamilton

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The Department of Labor’s Employee Benefits Security Administration (EBSA) has issued a proposed rule that would change the definition of “fiduciary” under the Employee Retirement Income Security Act (ERISA) to include a broader range of individuals who provide investment advice. According to a summary of the proposed rule published in the October 22, 2010 edition of the Federal Register, the proposed rule “amends a thirty-five year old rule that may inappropriately limit the types of investment advice relationships that give rise to fiduciary duties on the part of the investment advisor.” The rule is designed to limit conflicts of interest and self-dealing “by giving a broader and clearer understanding of when persons providing such advice are subject to ERISA’s fiduciary standards.” The definition change would impact sponsors, fiduciaries, participants, and beneficiaries of pension plans and individual retirement accounts, as well as providers of investment and investment advice related services to such plans and accounts.

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The Department of Labor’s Employee Benefits Security Administration (EBSA) has issued guidance in the form of Frequently Asked Questions (FAQs) that explains how the Genetic Information Nondiscrimination Act (GINA) impacts employer-provided group health plans and insurance providers. Among other things, Title I of GINA prohibits group health plans and health insurance issuers from discriminating based on genetic information, and prohibits the collection of such information, including family medical history, prior to or in connection with plan enrollment or for insurance underwriting purposes. As explained in the FAQs, unlike the provisions of Title I of the Health Insurance Portability and Accountability Act (HIPAA) that exempt very small health plans with less than two participants who are current employees, the nondiscrimination provisions of GINA apply to all group health plans.  Continue reading this entry at Littler’s Healthcare Employment Counsel.

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The Department of Labor’s Employee Benefits Security Administration (EBSA) has issued a final rule (pdf) that requires retirement plan sponsors and fiduciaries to disclose certain plan and investment-related information, including that related to fees and expenses, to participants and beneficiaries in participant-directed individual account plans, such as 401(k)s. As explained in a news release, the rule is intended to “ensure that all workers who direct their plan investments have access to the information they need to make informed decisions regarding the investment of their retirement savings, including fee and expense information. Under the rule, workers will receive this information in a format that enables them to meaningfully compare the investment options under their plans.” This rule will impact plan sponsors, fiduciaries, participants and beneficiaries of participant-directed individual account plans, as well as providers of services to such plans.

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On Monday, President Obama signed into law the Small Business Jobs Act (H.R. 5297), (pdf) legislation that contains provisions allowing individuals to roll over certain retirement accounts into Roth accounts. Specifically, according to a summary (pdf) of the new law, the retirement provisions will do the following:

• Allow Rollovers from Elective Deferral Plans to Roth Designated Accounts. The bill will allow 401(k), 403(b), and governmental 457(b) plans to permit participants to roll their pre-tax account balances into a Roth account. The amount of any pre-tax rollover will be considered taxable income. If the rollover is made in 2010, the participant can elect to pay the tax in 2011 and 2012. Plans will be able to allow these rollovers immediately upon enactment.

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The Department of Labor’s Employee Benefits Security Administration (EBSA) has published a proposed rule (pdf) that would update the filing and processing procedures related to the prohibited transaction exemption under the Employee Retirement Income Security Act (ERISA). ERISA contains a number of statutory safeguards to prevent benefit plan fiduciaries from self-dealing or engaging in other types of conduct that would threaten the integrity of the employee benefit plans. It also sets forth certain exemptions to these rules to accommodate customary business practices. As stated in a press release, the proposed rule streamlines the existing procedures related to the exemption process, clarifies the types of information and documentation required to submit a complete filing, expands the methods for transmitting filings to include electronic submissions, and makes the exemptions more understandable for participants and other interested parties.

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A bill introduced in both the House and Senate would establish an automatic individual retirement account (IRA) enrollment program for employees at firms with more than 10 employees that do not already maintain a qualified retirement plan. According to a press release, the Automatic IRA Act of 2010 (H.R. 6099, S. 3760) is based on a proposal in the President’s FY 2011 budget, and builds upon the success of the 401(k) auto enrollment program promoted by the Pension Protection Act of 2006. Under the terms of the proposed legislation, contributions would be voluntary, and employers would be entitled to a tax credit of up to $250 for each of the first two years of the program’s operation to cover any expenses incurred in setting up the automatic enrollment (“Auto IRA”) accounts. Other key provisions affecting employers include the following:

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The Pension Benefit Guaranty Corporation (PBGC) will issue a proposed rule (pdf) that seeks to provide guidance on the applicability and enforcement of section 4062(e) of the Employee Retirement Income Security Act (ERISA). This section contains special rules that apply when “an employer ceases operations at a facility in any location and, as a result of such cessation of operations, more than 20 percent of the total number of his employees who are participants under a plan established and maintained by him are separated from employment.” In this event, the employer that maintains the single-employer pension plan is subject to certain reporting requirements and liability. The PBGC seeks to amend its regulations to provide guidance as to what constitutes a section 4062(e) event in the first instance, revise the reporting requirements of such an event to the PBGC, and explain the determination and satisfaction of liability as a result of such an event.

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The Internal Revenue Service (IRS) has issued two notices explaining that sponsors of single- and multi-employer defined pension plans can still elect funding relief provided by the newly-enacted Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act (“PRA 2010”) (P.L. 111-192) even if they have already filed Form 5500 to satisfy their annual reporting requirements. This Act, which was signed into law on June 25, includes single-employer pension plan funding relief measures such as an extended period for single employer defined benefit plans to amortize certain shortfall amortization bases; application of an extended amortization period to plans subject to prior law funding rules; a lookback for certain benefit restrictions; and a lookback for the credit balance rule for plans maintained by charities. Multi-employer plan funding relief measures included in the PRA 2010 include adjustments to funding standard account rules, such as expanded “smoothing” periods for losses incurred during the period of economic decline; and modification of certain amortization extensions under prior law, among other provisions.

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The Department of Labor has withdrawn its proposed rule defining “welfare benefit plan” under the Employee Retirement Income Security Act (ERISA). The rule, which intended to address the impact of state health care plans on ERISA-covered welfare plans, had been proposed before the Patient Protection and Affordable Care Act (“Affordable Care Act”) was signed into law on March 23, 2010. In light of the Affordable Care Act’s enactment, the DOL intends to review “whether and to what extent further regulation in this area is necessary or appropriate in light of a national health care reform program.”

Photo credit: borisyankov

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On Wednesday, the House of Representatives approved a bill that will extend unemployment insurance benefits through November, and make such benefits retroactive to June 2. The Senate similarly approved this bill on Tuesday by a 59-39 margin. The version of the American Jobs and Closing Tax Loopholes Act (H.R. 4213) (pdf) that cleared both chambers is a significantly scaled-back draft that did not contain a number of extensions to other tax benefit programs. The limited bill that will likely be signed into law today will do the following:

• Extend the Emergency Unemployment Compensation (EUC) program through November 2010, and apply its benefits retroactively to June 2. Depending on a state’s unemployment rate, the program provides up to 53 weeks of extended benefits.
• Continue the Extended Benefits (EB) program through November 2010. This program, which expired in May, provides up to an additional 13 weeks of benefits in states with unemployment rates at or exceeding 6.5 %, and up to 20 weeks of benefits in states with unemployment rates at or above 8 %.
• Eliminate the penalty for part-time employment in the EUC program. The bill would coordinate EUC benefits with regular benefits by providing states with a number of options to allow EUC claimants to remain eligible for the EUC program when they become newly entitled to state unemployment compensation, if switching to state benefits would reduce their weekly UI check by at least $100 or  25 %.

Photo credit:  MBPHOTO, INC.

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On Tuesday, the Senate voted 60-40 to move forward with the Unemployment Compensation Extension Act of 2010 (H.R. 4213), (pdf) legislation that would, among other things, extend federal unemployment insurance benefits through November 2010, and retroactively reinstate the unemployment benefits program that expired in May. Senator Carte Goodwin (D-WV), who was sworn in as the interim replacement for the late Senator Robert Byrd (D-WV), provided the additional vote necessary to advance the bill. These measures were initially included in a much more expansive tax extender bill that failed to gain sufficient support in the Senate. According to a summary, (pdf) the significantly pared-down version of H.R. 4213 would do the following:

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On Friday, President Obama signed into law the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act (H.R. 3962), (pdf) legislation commonly known as the “doc fix” bill. This measure reverses a 21 percent payment cut for doctors in Medicare and TRICARE, updates the physician payment formula through November 30, 2010, and provides temporary, targeted funding relief for single employer and multiemployer pension plans that suffered significant losses in asset value due to the 2008 financial downturn. On Thursday, the House of Representatives overwhelmingly approved this measure by a 417-1 vote. The Senate cleared this bill last week after the larger tax extender bill failed to gain sufficient support.

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The Senate on Thursday failed to advance the American Jobs and Closing Tax Loopholes Act (H.R. 4213) (pdf), the “tax extender” bill that would have provided for additional months of emergency unemployment benefits and continued various tax relief programs, among other things. The 57-41 vote fell three votes short of limiting debate and scheduling final floor action on the measure. The latest version of the bill offered by Sen. Max Baucus (D-MT) was introduced on Wednesday in an effort to trim costs and gain enough support to pass it. Previous Senate-passed tax extender legislation would have extended the COBRA premium subsidy and various unemployment programs through the end of the year. In May, the House approved this legislation once COBRA premium subsidy extensions were dropped. Earlier this month, the Senate introduced a substitute version of the bill that lacked certain defined contribution pension plan fee disclosure provisions. After it became evident that he did not have enough votes to limit debate on the bill, Baucus introduced a scaled back version that ultimately – like the latest edited version – failed to gain sufficient approval. At this point, Senate passage of the bill in any form appears unlikely.

Photo credit:  MBPHOTO, INC.

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On Friday, the Senate unanimously approved the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act, (pdf) a bill that reverses a 21 percent payment cut for doctors in Medicare and TRICARE, updates the physician payment formula through November 30, 2010, and provides temporary funding relief for single- and multi-employer pension plans that suffered significant losses in 2008. With respect to the pension relief provisions, according to a summary, (pdf) employers that elect the relief would be required to make additional contributions to the plan if they pay compensation to any employee in excess of $1 million, pay extraordinary dividends, or engage in extraordinary stock buybacks during the first part of the relief period. Additional relief would be available to certain plans sponsored by charitable organizations. The legislation now needs approval by the House.

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The Employee Benefits Security Administration (EBSA) has issued a final rule clarifying certain issues relating to the timing and order of domestic relations orders under section 206(d)(3) of the Employee Retirement Income Security Act of 1974 (ERISA). According to a summary published in the Federal Register, the rule provides guidance to plan administrators, service providers, participants, and alternate payees on the qualified domestic relations order (QDRO) requirements under ERISA. The rule is being issued in response to a specific statutory directive contained in the Pension Protection Act of 2006 (PPA).

In essence, the rule clarifies that a plan administrator cannot disqualify a domestic relations order (DRO) that otherwise meets ERISA’s QDRO standards solely because the order is issued after, or revises, another domestic relations order or QDRO. Similarly, a DRO that otherwise meets ERISA’s requirements to be a QDRO will not be disqualified because of the time at which it is issued, such as after the parties divorce, or after the death of the participant. Moreover, the rule stipulates that these DROs are subject to the same requirements and protections that apply to all QDROs under section 206(d)(3) of ERISA.

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On Tuesday, the Senate resumed consideration of the American Jobs and Closing Tax Loopholes Act (H.R. 4213) (pdf), also known as the “tax extender” or “jobs bill” that would extend emergency unemployment compensation and other tax break programs, as well as provide temporary pension funding relief. Although the Senate passed a tax extender bill in March, the House of Representatives on May 28 narrowly cleared a scaled-back version of this legislation that omitted a number of the original provisions, including an extension of the premium COBRA subsidy. The revised Senate bill unveiled this week, which has been offered in the form of a substitute amendment, does not contain the defined contribution plan fee disclosure provisions that would have required the creation of rules relating to fees incurred in connection with defined contribution plans (such as 401(k) plans) for plan administrators and plan participants. A COBRA subsidy extension was not among the changes included in the Senate substitute either. A summary of all of the changes made by the Senate amendment can be found here. (pdf)

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The Department of Labor (DOL) has announced plans to conduct web chats this month on issues involving workplace safety and benefit plan responsibilities. The Occupational Safety and Health Administration (OSHA) will host a web chat on workplace hazards associated with combustible dust on June 28, 2010. According to a notice (pdf) to be published in Monday’s edition of the Federal Register, the information gathered in response to the web chat will be used in the development of a proposed standard for combustible dust. The chat will focus on major issues related to a proposed rule such as scope, balance between performance and specification-based requirements, economic impacts, and definitions.

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On Friday the House of Representatives narrowly approved (215-204) a scaled-back version of the American Jobs and Closing Tax Loopholes Act (H.R. 4213), a bill that would extend a number of benefit programs, including emergency unemployment payments, and provide for pension funding relief and fee disclosures. Details of this joint legislation were first unveiled last week.  Due to the measure’s escalating cost estimate, however, members of Congress agreed to trim a number of benefit extensions to ensure enough votes for passage, including a last-minute decision to omit the COBRA premium subsidy extension entirely. Other provisions, such as the one providing for an extension of the emergency unemployment benefits program, was reduced by one month. Specifically, as outlined in a summary (pdf) of the revised bill, certain provisions would do the following:

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On Thursday, the Senate Health, Education, Labor and Pensions (HELP) Committee held a hearing to discuss the financial crisis facing many multiemployer pension plans, collectively bargained plans that are maintained by labor unions and more than one employer. Several witnesses, including Phyllis C. Borzi, Assistant Secretary of Labor of the Employee Benefits Security Administration (EBSA) and Representative to the Board of the Pension Benefit Guaranty Corporation (PBGC), testified about the need to support such plans to ensure their viability for current and future retirees.

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The U.S. Supreme Court on Monday issued two decisions that impact employers. One decision will make employers more vulnerable to charges of disparate impact discrimination claims; the other makes it easier for fee claimants in ERISA actions to seek attorneys’ fees. In the first case, Lewis v. City of Chicago, (pdf) the Court held that a disparate impact employment discrimination charge filed with the Equal Employment Opportunity Commission (EEOC) within 300 days of a discriminatory practice’s application – not merely the announcement of its adoption – will be deemed timely. The practical effect of this decision is that employers will now be subject to disparate impact lawsuits years after initially unchallenged policies are implemented.

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On Thursday, House Ways and Means Committee Chairman Sander Levin (D-MI) and Senate Finance Committee Chairman Max Baucus (D-MT) introduced a summary of the American Jobs and Closing Tax Loopholes Act, (pdf) joint legislation that, among other things, extends emergency unemployment benefits and COBRA credits through the end of 2010, and provides pension funding relief for single- and multi-employer pension plans. The legislation will be introduced as a House Amendment to the American Workers, State, and Business Relief Act of 2010 (H.R. 4213), which the Senate passed in March as an amendment to the original Tax Extenders Act of 2009 that cleared the House in December.

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The Internal Revenue Service (IRS) has published in the Federal Register final regulations (pdf) relating to diversification requirements for certain defined contribution plans holding publicly traded employer securities. According to the IRS, these regulations “will affect administrators of, employers maintaining, participants in, and beneficiaries of defined contribution plans that are invested in employer securities."  Specifically, the regulations implement section 401(a)(35) of the Internal Revenue Code, which was added by section 901 of the Pension Protection Act of 2006 (P.L. 109-280). This section requires certain defined contribution plans to provide participants, alternate payees and beneficiaries the right to divest employer securities held in their pension plan accounts and to direct the reinvestment of these amounts among at least three alternative investment options. The final regulations include a summary of comments it received from the proposed regulations issued in January 2008, and an explanation of revisions the agency deems most significant. These final regulations apply for plan years beginning on or after January 1, 2011, and are effective as of May 19, 2010.

Photo credit:  Kirby Hamilton

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The Department of Labor has issued interim final regulations (pdf) implementing the dependent coverage provisions of the Patient Protection and Affordable Care Act, as amended by the Healthcare and Education Reconciliation Act (PPACA) (the dependent coverage provisions are contained in ERISA section 715).

The new regulations provide that effective for plan years beginning on or after September 23, 2010 (effective date), any group health plan or group health insurance issuer (plan), which provides coverage to dependent children must make coverage available to dependent children until they have attained the age of 26. The regulation confirms that the last required coverage date is the day before the child's 26th birthday.  Continue reading this entry at Littler's Healthcare Employment Counsel blog.

Photo credit:  MBPHOTO, INC.

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The Employee Benefits Security Administration (EBSA) is set to publish a notice (pdf) in the Federal Register announcing the availability of model COBRA notices that group health plans and other entities are required to provide to individuals eligible for the premium reductions and additional health care coverage election periods provided by the American Recovery and Reinvestment Act (ARRA), and extended for the third time by the Continuing Extension Act (CEA) of 2010. The CEA extends through May 31, 2010, the 65 % premium COBRA subsidy for eligible individuals who are involuntarily terminated from employment. In addition, the CEA provides retroactive eligibility for individuals who lost their jobs after the prior COBRA subsidy expired on March 31, 2010.

The EBSA has created a webpage that contains links to an updated Model Updated General Notice, Model Notice of New Election Period, Model Supplemental Information Notice, Model Notice of Extended Election Period, and a Model Updated Alternative Notice, in addition to instructions on which notice to provide and to whom.

Longer COBRA extensions are included in the American Workers, State, and Business Relief Act of 2010 (H.R. 4213), which the Senate passed in March. House and Senate negotiators are working to resolve differences so that both Chambers can approve final legislation before Memorial Day.

Photo credit:  MBPHOTO

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The newly enacted Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively known as “PPACA”), has set in motion significant changes to this country’s health care system. Many of these changes have and will impose new responsibilities on employers, insurers, benefits administrators, and the health professional community in general. Navigating the legislation and understanding the obligations the new health care law has created is made more difficult by the fact that many of these requirements are to be phased in over the next eight years.

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The IRS has published notice 2010-38, providing guidance as to the application of the new rules permitting favorable tax treatment of health benefits provided to children of covered employees. The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, signed into law on March 23 and 30, 2010 (the "PPACA") requires that group health plans and health insurance issuers provide coverage for children of covered until the child reaches age 26. The coverage requirement of the PPACA is effective for the first plan year beginning on or after September 23, 2010, but the new law effectively permits plans and issuers to provide coverage under the new rules, by providing for favorable tax treatment of coverage and health reimbursements for children under age 27, effective as of March 30, 2010.  Continue reading about this development at Littler's Healthcare Employment Counsel blog.

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Update: This entry has been updated to reflect that the bill was signed into law.

Late Thursday night, President Obama signed into law legislation that provides another temporary extension of emergency unemployment insurance (UI) benefits and the 65% premium COBRA subsidy, both of which lapsed over the recent legislative recess.  Hours earlier, the Senate voted 59-38 to pass the Continuing Extension Act of 2010 (H.R. 4851) with an amendment (S. Amt. 3721) (pdf) in the nature of a substitute bill introduced by Sen. Max Baucus (D-MT), which will extend UI benefits through June 2, 2010, and premium COBRA assistance through May 31, 2010. The original bill – which cleared the House by voice vote on March 17 but stalled in the Senate over how the measure would be paid for – provided for extensions of these benefit programs through May 5 and April 30, respectively.  Shortly after Thursday's Senate vote, the House approved the bill by a 289-112 margin. 

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After a two-week legislative recess, the Senate voted 60-34 on Monday to limit debate on the Continuing Extension Act of 2010 (H.R. 4851), a bill that would temporarily extend the 65 percent premium COBRA subsidy until April 30, 2010, and emergency unemployment insurance benefits until May 5, 2010. This measure cleared the House of Representatives by voice vote on March 17, but hit a stumbling block in the Senate when Sen. Tom Coburn (R-OK) objected to the fact that the cost of the bill was not fully offset. The Senate therefore failed to approve this emergency measure before the recess, allowing the UI and premium COBRA benefits to expire during the break. A final vote is not expected until later this week.

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Last week, Sen. Barbara Boxer (D-CA) introduced legislation that would permit many same-sex spouses or domestic partners to take advantage of COBRA continuation health coverage if their partner loses a job. The Equal Access to COBRA Act of 2010 (S. 3182) would change federal law to allow equal access to COBRA coverage for all individuals who are covered by an employer’s health plan, and would apply to domestic partners as they are defined by that plan. As COBRA law currently stands, continuation coverage does not apply to domestic partners or same-sex spouses, even if the employee who was let go worked at a company that offered health coverage to domestic partners. The provisions of this bill would apply only to companies that already offer health coverage to domestic partners and their children. Domestic partners would also be able to take advantage of the premium COBRA subsidies provided by the American Recovery and Reinvestment Act of 2009.

This bill has been referred to the Senate Committee on Health, Education, Labor and Pensions. 

Photo credit:  Ryerson Clark

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On Wednesday, the House of Representatives overwhelmingly approved by a vote of 416-1 the National Guard Employment Protection Act of 2010 (H.R. 1879), legislation that would extend certain employment and reemployment rights to members of the National Guard who are ordered to report for full-time duty. The bill amends section 4312 of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), which exempts certain military members from the requirement that their absence from the job due to military service be no longer than 5 years in order to take advantage of the bill’s reemployment rights. The National Guard Employment Protection Act would include in this exemption National Guard members who are called to full-time service to support critical homeland defense missions or other activities deemed critical by the Secretary of Defense.

Photo Credit: soldiersmediacenter

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The new health care reform legislation has dramatic implications for all employers. For employers with existing collective bargaining agreements, there are unique considerations, both in the short and long-term. While full implementation of the law is still years away, employers should begin evaluating and preparing for its impact on collective bargaining agreements today.

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Despite last-ditch efforts, the Senate failed to approve the Continuing Extension Act of 2010 (H.R. 4851) before the two-week legislative recess. This bill would have extended the 65 percent premium COBRA subsidy another month, until April 30, 2010, and emergency unemployment insurance benefits until May 5, 2010. Both measures – which were already given one-month extensions by means of the Temporary Extension Act of 2010 (H.R. 4691), are set to expire while Congress is out of session. On March 17, the House cleared the measure by voice vote. The bill stalled in the Senate after Sen. Tom Coburn (R-OK) objected to the fact that the cost of the bill was not fully offset. It is expected that when the Senate reconvenes on April 12, consideration of the temporary extension bill will be the first order of business, and that the provisions of the bill, if approved, would be retroactive.

Photo credit:  Maravic

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On Tuesday morning, President Obama signed into law the Patient Protection and Affordable Care Act (H.R. 3590), the health care overhaul bill that cleared the House of Representatives by a slim margin on Sunday. The Senate will now begin consideration of the Health Care and Education Affordability Reconciliation Act of 2010 (H.R. 4872), the bill that contains “fixes” to the Patient Protection and Affordable Care Act. Both measures will face intense scrutiny in the coming days.

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In a historic series of votes held on Sunday, the House of Representatives passed both the Senate-approved Patient Protection and Affordable Care Act (H.R. 3590), (pdf) and the Health Care and Education Affordability Reconciliation Act of 2010 (H.R. 4872), (pdf) otherwise known as the reconciliation package of “fixes” to the Senate bill. The legislation, which is expected to provide health insurance to an additional 32 million people, would create state-based health insurance exchanges through which eligible individuals and businesses can purchase health insurance. The legislation would also provide federal government subsidies to help lower-income individuals purchase insurance.

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On Monday, the Employee Benefits Security Administration (EBSA) will publish in the Federal Register an announcement (pdf) that updated model COBRA notices that group health plans and other entities are required to provide to individuals eligible for the premium reductions and additional health care coverage election periods provided by the recently-enacted Temporary Extension Act (TEA) of 2010 are available at the EBSA’s COBRA website. TEA extended until March 31, 2010 the eligibility period for the 65 percent COBRA premium reduction provided by the American Recovery and Reinvestment Act (ARRA). ARRA, as revised, mandates that certain health plan providers send assistance eligible individuals notices about their ability to take advantage of the continued health coverage. The EBSA provides links to a Model Updated General Notice, Model Notice of New Election Period, Model Supplemental Information Notice, Model Notice of Extended Election Period, and a Model Updated Alternative Notice, in addition to instructions on which notice to provide and to whom.

This week, the House passed a bill extending the COBRA subsidy an additional month until April 30, 2010. Congress is also considering longer-term extensions of the program. 

Photo credit: MBPHOTO

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On March 17, the House of Representatives passed by voice vote the Continuing Extension Act of 2010 (H.R. 4851), legislation that would extend the 65 percent premium COBRA subsidy another month until April 30, 2010, and the emergency unemployment insurance benefits until May 5, 2010. On March 2, President Obama signed into law the Temporary Extension Act of 2010 (H.R. 4691), a bill that extended the COBRA subsidy until March 31, 2010, and emergency unemployment insurance benefits until April 5, 2010. The Senate has already passed the American Workers, State, and Business Relief Act of 2010 (H.R. 4213), a more comprehensive bill that includes provisions continuing both benefits programs through the end of this year. Although it is expected the House will ultimately pass this measure, a vote may not come until after these programs have expired, thus creating the need for another extender bill.

The Senate is expected to take up this measure shortly.

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On Wednesday, the Senate passed by a 62 to 36 margin the Tax Extender Act of 2009 (H.R. 4213), legislation that would extend until Dec. 31, 2010 the 65% premium COBRA subsidies and emergency unemployment insurance benefits, both programs that are set to expire in the coming weeks. The bill also extends several other tax credit initiatives, and includes pension funding relief measures. On Tuesday, the Senate voted 66-34 to limit debate on this bill, which was introduced by Sen. Max Baucus (D-MT) as an amendment (S. Amdt. 3336) in the nature of a substitute to the tax extender bill the House of Representatives passed in December.

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On Tuesday, the Senate voted to end debate on a $150 billion bill that would extend premium COBRA subsidies and emergency unemployment insurance benefits through December 31, 2010, as well as continue certain programs aimed at providing pension-funding relief. Sen. Max Baucus (D-MT) introduced the American Workers, State and Business Relief Act of 2010 (pdf) as an amendment (S. Amt. 3336) in the nature of a substitute to the Tax Extender Act of 2009 (H.R. 4213).  The tax extender bill has been serving as the vehicle to provide extensions to these and other expiring tax credit programs. The premium COBRA subsidy and emergency unemployment benefits were recently given one-month extensions through the Temporary Extension Act of 2010, signed into law on March 2.

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On Tuesday, President Obama signed the Temporary Extension Act of 2010 (H.R. 4691), a bill that will extend the 65 percent premium COBRA subsidy through March 31, 2010, and unemployment assistance benefits through April 5, 2010. The Senate passed this bill by a vote of 78-19 after Sen. Jim Bunning (R-KY) – who objected to how the measure would be funded – abandoned his efforts to block it. The House of Representatives approved this emergency spending measure by voice vote last Thursday.  Both benefits had expired on February 28.

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On Tuesday, the Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) will publish in the Federal Register a final (pdf) and a proposed rule (pdf) providing for greater worker investment and retirement account protections. Both final and proposed rules were drafted in response to the Pension Protection Act of 2006 (PPA), which amended portions of the Employee Retirement Income Security Act (ERISA) dealing with investment advice and retirement plan transparency. The announcement of these rules was made at a White House forum hosted by Vice President Joe Biden on Friday. According to the DOL, these two new rules are “designed to enhance retirement security and transparency for the millions of workers covered by 401(k), pension and other retirement arrangements.”

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Senator Dick Durbin (D-IL) and Representative John Conyers (D-MI) have introduced legislation that would strengthen the ability of employees to recover wages and benefits and restrict the awarding of bonuses in the event of their employer’s bankruptcy. According to a press release, the Protecting Employees and Retirees in Business Bankruptcies Act (S. 3033, H.R. 4677) would, among other things, “ensure that back pay awarded through [the Worker Adjustment and Retraining Notification (WARN) Act] damages would be given priority in the bankruptcy claims process.” Specifically, as stated in the release, the bill would do the following:

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On Thursday evening, the House of Representatives approved by voice vote the Temporary Extension Act of 2010 (H.R. 4691), legislation that provides brief extensions of unemployment insurance benefits and premium health insurance subsidies under the Consolidated Omnibus Budget Reconciliation Act (COBRA), among other programs. This stopgap measure would extend the 65 percent premium COBRA subsidy through March 31, 2010, and unemployment assistance benefits through April 5, 2010. Both measures are set to expire on February 28.

It is unclear how the Senate will act upon the expiring benefit programs. The Senate has thus far been unable to pass a short-term extension by unanimous consent, and Sen. Majority Leader Harry Reid (D-NV) is expected to introduce legislation that would extend these measures even longer.

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In tomorrow’s edition of the Federal Register, the Employee Benefits Security Administration (EBSA) will publish a final rule (pdf) that outlines procedures relating to the assessment of civil penalties against sponsors of multiemployer pension plans for certain violations of section 305 of the Employee Retirement Income Security Act (ERISA). The Pension Protection Act of 2006 (PPA) added section 305 to ERISA, which sets forth additional rules for multiemployer defined benefit pension plans that are in endangered or critical status. The PPA gave the Secretary of Labor authority to assess civil penalties not exceeding $1,100 per day against any plan sponsor of a multiemployer plan that fails to follow these additional rules and procedures. According to the EBSA, the final rule sets forth how the maximum penalty amounts are computed, identifies the circumstances under which a penalty may be assessed, outlines certain procedural rules for the Department of Labor (DOL) and filing by a plan sponsor, and provides a plan sponsor with a means to contest an assessment by the DOL.

The rule takes effect on March 29, 2010.

Photo credit:  MBPHOTO, INC.
 

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The Internal Revenue Service (IRS) will begin mailing questionnaires to 401(k) plan sponsors to gather information about compliance with applicable tax rules. The questionnaire will focus on 401(k) plan operations, including eligibility, employee deferral rates, compensation definitions and nondiscrimination testing. The IRS is expected to mail several thousand questionnaires to 401(k) plan sponsors around the country to help make certain it reaches a representative sample.

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A draft of the 362-page Senate jobs bill (pdf) has been circulating among members of Congress this week. Although still a work in progress, the draft bill includes provisions providing for, among other things, unemployment benefits and COBRA health insurance premium extensions, tax incentives to promote hiring, spending programs on transportation initiatives, pension funding relief, and a tax proposal designed to raise revenue from foreign-held assets and trusts.

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On Tuesday, the Employee Benefits Security Administration (EBSA), Internal Revenue Service (IRS) and the Department of Health and Human Services (HHS) will publish in the Federal Register interim final rules (pdf) under the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (“the Act” or “MHPAEA”). These interim final regulations replace prior regulations, and make conforming changes to reflect modifications the MHPAEA made to the original Mental Health Parity Act (MHPA) of 1996 definitions and provisions regarding parity in aggregate lifetime and annual dollar limits, and incorporate new parity standards. The interim final regulations are effective as of April 5, 2010, and generally apply to group health plans and group health insurance issuers for plan years beginning on or after July 1, 2010.

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A reported deal has been reached between the White House and union leaders regarding the proposed 40 percent excise tax on high cost (“Cadillac”) healthcare plans for inclusion in the final healthcare overhaul bill. This tax – first appearing in the Senate version of the legislation – is favored by President Obama, but has been heavily criticized by both House Democrats and organized labor.

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Rep. Joe Sestak (D-Pa.) has introduced a bill (H.R. 4421) that would extend the waiver of required minimum distribution rules for certain retirement plans and accounts through 2010. On December 23, 2008, former President Bush signed into law the Worker, Retiree and Employer Recovery Act of 2008 which, among other things, waived the minimum distribution requirement for 2009 from most employer-sponsored plans. H.R. 4421 would amend sections 401 and 402 of the Internal Revenue Code to extend this waiver an additional year.

This bill has been referred to the House committee on Ways and Means.

Photo credit: Kirby Hamilton

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The DOL’s Employee Benefits Security Administration (EBSA) has created model notices that employers can use to notify current and former health plan participants and beneficiaries of the COBRA premium reduction provided by the American Recovery and Reinvestment Act (ARRA), and extended by the 2010 Department of Defense Appropriations Act (2010 DOD Act). In general, the 2010 DOD Act extends the COBRA premium reduction eligibility period for two months until February 28, 2010, and increases the maximum period for receiving the subsidy for an additional six months (from nine to 15 months). The EBSA’s Fact Sheet explains who is now eligible for the premium reduction, the new period of coverage, and notice requirements plan administrators must provide in light of the extension. The agency has also issued a set of frequently asked questions (FAQs) on the new COBRA premium reduction extension provisions that explain the revised notice obligations. The three model notices – Updated General Notice, Premium Assistance Extension Notice, and the Updated Alternative Notice – are specifically designed for different categories of qualified beneficiaries, and contain information that helps satisfy the notice requirements of both ARRA and the 2010 DOD Act.

Photo credit:  MBPHOTO

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The IRS has issued new guidance (Notice 2010-6) that provides valuable assistance in dealing with nonqualified deferred compensation plans under Section 409A of the Internal Revenue Code (the “Code”). Prior to this guidance, there was no means to correct an incorrectly drafted nonqualified deferred compensation plan (as the documentary compliance “transition period” ended December 31, 2008). This was in contrast to certain “operational errors” for which corrective guidance had been issued by IRS in Notice 2008-113.

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The Employee Benefits Security Administration (EBSA) has issued a final rule, (pdf) to be published in tomorrow’s edition of the Federal Register, that establishes a safe harbor period during which funds received or withheld from employee paychecks as contributions to certain benefit plans will not be considered “plan assets” for ERISA or IRS purposes. An employer is required to deposit these funds into the benefit plans on the earliest date on which the contributions can reasonably be segregated from the employer’s general assets. According to the EBSA, many employers and their advisers are uncertain as to how soon they must forward employee contributions to the benefit plans in order to avoid the requirements associated with holding plan assets. To this end, the final rule creates a safe harbor to “provide a higher degree of compliance certainty with respect to when an employer has made timely deposits of participant contributions to employee benefit plans with fewer than 100 participants.” Under this rule, employers with pension or welfare benefit plans with fewer than 100 participants will be considered to have made a timely deposit to the plan if the participant contributions are deposited within 7 business days. The contributions will be considered deposited when placed in an account of the plan regardless of whether the amounts have been allocated to specific participants or participant investments.

Photo credit: Kameleon007
 

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Staff members of the three House committees (Ways and Means, Education and Labor, and Energy and Commerce) involved in crafting the healthcare overhaul bill have put together an 11-page document (pdf) highlighting the similarities and differences between the House and Senate bills. The Senate’s Patient Protection and Affordable Care Act (H.R. 3590) and the House of Representative’s Affordable Health Care for America Act (H.R. 3962) contain some crucial differences that are currently being ironed out in informal talks as opposed to formal conference committee. Resolving the differences this way avoids any anticipated procedural delays in the Senate.

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The American Benefits Council (“the Council”), an advocacy organization for voluntary private employer-sponsored benefit programs, has released a document outlining its recommendations to Congress for crafting the final healthcare bill. Lawmakers are in the process of merging the provisions of the Senate’s Patient Protection and Affordable Care Act (H.R. 3590) and the House of Representative’s Affordable Health Care for America Act (H.R. 3962) to create a unified bill. The bills contain many crucial differences, especially with respect to the provisions regulating employer-sponsored coverage and responsibilities. The Council’s recommendations document – Priority Employer Issues for Consideration of House and Senate Health Care Reform Legislation (pdf) – sets forth a number of suggestions related to health coverage and tax issues that would be affected by both versions of healthcare overhaul legislation.

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The Department of Labor’s Employee Benefits Security Administration (EBSA) has released a fact sheet explaining how the Defense Department’s 2010 appropriations bill (“2010 DOD Act”) extends the Consolidated Omnibus Budget Reconciliation Act (COBRA) premium reduction provided by the American Recovery and Reinvestment Act (“ARRA” or “Economic Stimulus”). In general, the 2010 DOD Act extended the COBRA premium reduction eligibility period for two months until February 28, 2010 and increased the maximum period for receiving the subsidy for an additional six months (from nine to 15 months).  Among other things, the fact sheet outlines who is now eligible for the premium reduction, the new period of coverage, and notice requirements plan administrators must provide in light of the extension. The fact sheet explains that plan administrators are now required to provide notice about the changes made to the COBRA premium reduction provisions to individuals who have already been provided a COBRA election notice, unless the election notice included the updated premium reduction information. These notices must be given to assistance eligible individuals by February 17, 2010. Individuals who have been terminated on or after October 31, 2009 and will lose health coverage must be provided this notice “within the normal timeframes for providing continuation coverage notices.” Those who had reached the end of the reduced premium period before the legislation extended it to15 months must be provided this notice within 60 days of the last day they were eligible to receive COBRA premium assistance under the old rules.

Photo credit:  Andriy Solovyov

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On December 21, 2009, the President signed a Law that amends the COBRA Subsidy provision of the American Recovery and Reinvestment Act (ARRA). The Law extends the time that certain former employees may receive and may qualify for subsidized COBRA continuation coverage.

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On Saturday, the Senate approved by a vote of 88 to 10 the final version of the FY 2010 Defense Appropriations Bill (H.R. 3326). Embedded in this $636 billion spending measure is the contentious amendment submitted by Sen. Al Franken (D-Minn.) that restricts federal contractors and subcontractors working on large defense projects funded by the appropriations bill from requiring their employees and independent contractors to sign, as a condition of employment, agreements to arbitrate certain employment-related claims. The Senate first agreed to include a limit on arbitration in the appropriations bill in October. The House passed the amended spending bill last Wednesday.

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The Internal Revenue Service (IRS) has granted a one-year extension for amending certain defined benefit and contribution plans that are subject to minimum funding requirements to comply with the additional funding mandates provided by the Pension Protection Act of 2006 (PPA 06) and modified by the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA). The deadline will be extended to the last day of the first plan year beginning on or after January 1, 2010. According to the IRS Notice 2009-97 (pdf), to be published in the December 28 Internal Revenue Bulletin, this extension applies to the deadline for amending the following:

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The House of Representatives voted 217 - 212 to approve the Jobs for Main Street Act of 2010 (pdf), legislation that, among other things, would extend COBRA health continuation coverage and unemployment insurance benefits. The bill would divert $75 billion from the Troubled Asset Relief Program (TARP) to fund infrastructure programs, job stabilization efforts, and emergency relief measures.

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The House of Representatives approved a defense spending bill by a vote of 395 to 34 that extends jobless benefits as well as prevents most defense contractors and subcontractors from forcing their employees or independent contractors to sign, as a condition of employment, agreements to arbitrate certain employment-related claims. The Senate approved this provision – introduced by Sen. Al Franken (D-Minn.) as an amendment to the Fiscal Year 2010 Department of Defense Appropriations Act (pdf) (H.R. 3326) – in October.

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The DOL’s Employee Benefits Security Administration (EBSA) has posted on its website new guidance regarding the COBRA health insurance premium subsidy granted by the American Recovery and Reinvestment Act of 2009 (“ARRA” or “Economic Stimulus”). Under ARRA’s COBRA provisions, the government provides certain qualifying unemployed workers with a 65 percent subsidy of their health insurance premiums for up to nine months. Those individuals who first became eligible to receive this subsidy will begin to lose their coverage starting this month.

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The Congressional Budget Office (CBO) yesterday released a report: An Analysis of Health Insurance Premiums Under the Patient Protection and Affordable Care Act (pdf) that focuses on the impact the Senate healthcare bill would have on health insurance premiums. Specifically, the analysis examined the average effects of the Patient Protection and Affordable Care Act (H.R. 3590), as proposed by Senator Reid (D-Nev.), on premiums in 2016 for coverage purchased individually, coverage purchased by small employers, and coverage provided by large employers.

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On Monday, the Pension Benefit Guaranty Corporation (PBGC) issued a proposed rule that would, among other things, conform the agency’s reportable events regulation under the Employee Retirement Income Security Act (ERISA) and other PBGC regulations to the changes made by the Pension Protection Act of 2006 (PPA 2006). According to the PBGC’s overview of the proposed rule published in the Federal Register, the new regulations would do the following:

• amend the PBGC’s reportable events regulation to make the advance reporting threshold test consistent with the PPA 2006 funding rules and PBGC’s new variable rate premium rules;
• eliminate most automatic waivers and filing extensions currently available under the reportable events regulation;

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Last week, Rep. Lloyd Doggett (D-Tex.) introduced a bill that aims to close tax loopholes that enable companies to provide highly compensated employees with generous retirement benefits at the expense of lower- and middle-income workers. The Retirement Fairness Act of 2009 (H.R. 4126) adds two sections to the Internal Revenue Code (IRC) to modify the rules relating to the nondiscrimination requirements in qualified pension plans and to include part-time employees in determining the minimum coverage requirements for these plans. The net effect of these changes would be to limit the use of Qualified Supplemental Executive Retirement Plans (Q-SERPs), which permit certain highly paid executives from paying themselves additional retirement benefits funded through their workers’ pension plans.

This bill has been referred to the House Committee on Ways and Means.

Photo credit:  Kameleon007

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As anticipated, the Department of Labor’s the Employee Benefits Security Administration (EBSA) has withdrawn its final rule (pdf) published on January 21, 2009 regarding the provision of investment advice to participants and beneficiaries in individual account plans such as 401(k)s and beneficiaries of individual retirement accounts (IRAs) and related plans. Last week, the EBSA issued a final rule extending the applicability and effective dates of the investment advice rule, which would have taken effect on November 18.

The withdrawn rule would have implemented a statutory prohibited transaction exemption under the Employee Retirement Income Security Act (ERISA) and parallel provisions in the Internal Revenue Code made by the Pension Protection Act (PPA), and provided an additional administrative class exemption. According to the EBSA, the agency received a number of comments that raised concerns about the potential for investment adviser self-dealing as a result of these provisions. Commenters claimed that the rule does not contain strong enough safeguards to protect the interests of plan participants and beneficiaries from potential conflicts of interest. The EBSA concluded that given these and other legal and policy concerns raised, the Department is justified in withdrawing its final rule, and intends to propose new regulations on the statutory prohibited transaction exemption under ERISA shortly.

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As promised, Sen. Chris Dodd (D-Conn.) and Rep. Rosa DeLauro (D-Conn.) have introduced in both chambers of Congress emergency legislation that would provide most employees with up to seven paid sick days to care for themselves or a family member with a contagious illness, including the H1N1 influenza virus. The Pandemic Protection for Workers, Families, and Businesses Act (S. 2790, H.R. 4092) would allow employees to use these sick days to tend to their own flu-like symptoms, obtain a medical diagnosis or preventive treatment, care for a sick child, or care for a child whose school or child care facility has been closed due to the spread of a contagious illness. Part-time employees would also be entitled to paid leave on a pro-rated basis. Employees would have the discretion to decide whether they need to take leave, although the Department of Labor (DOL) could issue a regulation requiring medical certification. In addition, the bill would make it unlawful for an employer to take an adverse action or otherwise discriminate against employees that avail themselves of these leave benefits. If enacted, the terms of this bill would take effect within 15 days, and sunset after two years. Employers that already provide up to seven days of annual paid sick leave would not be required to provide additional benefits.

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Both the Department of Labor’s Employee Benefits Security Administration (EBSA) and the Pension Benefit Guaranty Corporation (PBGC) have issued final rules published in today’s Federal Register that affect employer-provided pension plans. The EBSA’s final rule (pdf) delays until May 17, 2010 the effective and applicability dates of final rules under the Employee Retirement Income Security Act (ERISA) and parallel provisions in the Internal Revenue Code (IRC) dealing with the provision of investment advice to participants and beneficiaries in individual account plans such as 401(k)s and individual retirement accounts (IRAs). The rules, which were issued during the final days of the Bush administration, would have permitted advisers affiliated with mutual funds, brokerage firms and other companies that sell investments to provide investment advice to 401(k) and IRA participants. EBSA’s Assistant Secretary Phyllis C. Borzi has already announced that the agency plans to withdraw and rework this rule, which would have gone into effect on November 18. On January 20, 2009, Chief of Staff Rahm Emanuel directed agency heads to consider delaying any rule that had not yet taken effect to give the new administration a chance to review the law and policy involved.

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Last week Sens. Sherrod Brown (D-Ohio) and Robert Casey (D-Pa.) introduced the COBRA Subsidy Extension and Enhancement Act of 2009 (S. 2730), a bill that would enhance the COBRA continuation health coverage subsidy program created by the American Recovery and Reinvestment Act of 2009 (“ARRA” or “Economic Stimulus”). Under the current program, the government provides certain qualifying unemployed workers with a 65 percent subsidy of their health insurance premiums for up to nine months. Individuals who first became eligible to take advantage of this temporary COBRA assistance in March 2009 will lose their coverage beginning in December 2009. The COBRA Subsidy Extension and Enhancement Act would extend this deadline, as well as increase the amount of the subsidy and the number of individuals who would be able to take advantage of this program.

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During a November 10 Senate subcommittee hearing on the H1N1 influenza virus (“swine flu”) and paid sick leave, Senator Chris Dodd (D-Conn.) announced that he plans to introduce a bill that would entitle most employees to take up to 7 days of paid sick leave to deal with the H1N1 or seasonal flu. According to a press release, under the terms of this bill workers would be entitled to the paid leave for their own flu-like symptoms, medical diagnosis or preventive care, to care for a sick child, or to care for a child whose school or child care facility has been closed due to the spread of flu. The decision to take this leave would be left to the employee’s discretion, although the Department of Labor could issue regulations requiring medical certification. If signed into law, the provisions of this bill would take effect 15 days after enactment, and sunset after 2 years.

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This morning, President Obama signed the Worker, Homeownership, and Business Assistance Act of 2009 (H.R. 3548) into law.  Originally titled the Unemployment Compensation Extension Act of 2009, this Act will extend by 14 weeks unemployment benefits in all 50 states. Those states with high, sustained rates of unemployment – averaging at least 8.5 % over a three-month period – will receive up to 20 additional weeks of benefits.

The Senate approved this measure by a vote of 98-0 on November 4. Although the House had approved a less expansive version of this bill in September, it voted 403-12 to pass the Senate’s amended version on November 5. Despite Congress’s overwhelming approval of this legislation, final passage was delayed several weeks when a number of senators sought to include amendments that were unrelated to unemployment.  The amendments the Senate eventually agreed to incorporate in the final bill extend through April 30, 2010 the $8,000 first-time homebuyer tax credit, and allow businesses to apply their 2008 or 2009 operating losses to any five years prior to 2008, enabling them to receive tax refunds for those years. Those businesses that accepted funds through the Troubled Asset Relief Program (TARP) would be ineligible for this tax relief. In addition, the Act contains provisions updating the Unemployment Insurance Modernization provision in the American Recovery and Reinvestment Act to allow victims of sexual assault who have left their job to be eligible for benefits under the “compelling family reasons” clause. This measure is funded by extending the employer-paid Federal Unemployment Tax Act (FUTA) surtax until June 30, 2011.

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Rep. George Miller (D-Calif.), chairman of the House Education and Labor Committee, and Rep. Lynn Woolsey (D-Calif.), chair of the Workforce Protections Subcommittee, have introduced a bill that would provide up to five paid days of sick leave per year to employees who are told to miss work on account of a contagious illness. The stated purpose of the Emergency Influenza Containment Act (H.R. 3991) – which applies to employers with 15 or more employees – is to “ensure that American workers are able to follow, without financial harm, the recommendations of their employer and public health authorities to stay home when they have symptoms of a contagious disease that may put co-workers, customers, or the public at risk.” Under the terms of this legislation, which covers both full- and part-time workers, employees would be entitled to this paid leave only if they are sent home or advised to stay home by their employers. Employees who decide to stay home on their own claiming to be sick would not have access to this leave.

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Rep. Joe Sestak (D-Pa.) has introduced a bill that would extend by six months the maximum COBRA continuation coverage period for individuals who were involuntarily terminated between April 1, 2009 and December 31, 2009, and amend the American Reinvestment and Recovery Act of 2009 (ARRA or “Economic Stimulus”) by extending the eligibility and maximum assistance periods for the 65 percent COBRA premium assistance available under ARRA. According to a press release, the Extended COBRA Continuation Protection Act of 2009 (H.R. 3930) would extend COBRA benefits in three ways. First, the bill would extend from 9 to 15 months the total allowable time an unemployed worker can receive COBRA premium assistance. Second, the bill extends this assistance to individuals who are involuntarily terminated between January 1 and June 30, 2010. Third, it would extend eligibility for traditional COBRA coverage an additional 6 months, from 18 to 24 months, for individuals terminated at the beginning of the economic recession in 2008. No extended COBRA premium assistance or extended COBRA benefits would extend beyond December 31, 2010.

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The Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) has issued new guidance in the form of 25 frequently asked questions (FAQs) to help plan administrators and service providers of group health and other welfare benefit plans comply with the expanded requirements for reporting service provider fees and other compensation on Schedule C of the 2009 Form 5500 Annual Return/Report of Employee Benefit Plan. The EBSA implemented these requirements – which are effective for plan years beginning on or after January 1, 2010 – as part of a final rule published on November 16, 2007.

According to an EBSA press release, issues covered by the FAQs include the reporting of gifts, entertainment and other non-monetary compensation; compensation to hedge fund investment managers; “look-through” investment funds; mutual fund redemption fees; and ERISA fee recapture accounts.

Earlier guidance on these reporting requirements was released in July 2008.

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The Senate on Tuesday voted 87-13 to proceed with consideration of the Unemployment Compensation Extension Act of 2009 (H.R. 3548), a bill that would, among other things, provide up to 14 additional weeks of unemployment benefits to individuals in all 50 states, and up to 20 additional weeks in states with rates of high, sustained unemployment. This legislation, which cleared the House of Representatives in September, has run into snags in the Senate. Democrats have accused Republicans of stalling passage by drafting amendments to the bill that have nothing to do with unemployment. Tuesday’s cloture vote effectively limits debate on the bill, and thus the consideration of the various amendments that have been proposed.

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It appears that hope for easy passage of an amended unemployment insurance benefits extension bill introduced earlier this month has faded. The Unemployment Compensation Extension Act of 2009 (H.R. 3548), which would extend UI benefits in all 50 states, has run into opposition from Senate Republicans who have either introduced or plan to introduce a number of amendments in an alleged attempt to stall the legislative process.

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On Thursday, the Senate voted 68 to 29 to approve the conference report (pdf) to the National Defense Authorization Act for Fiscal Year 2010 (H.R. 2647), which contains provisions expanding Family and Medical Leave Act (FMLA) military family leave entitlements that were enacted as part of the Fiscal Year 2008 National Defense Authorization Act. These FMLA amendments allow eligible employees to take up to 12 weeks of job-protected leave in a 12-month period for any “qualifying exigency” arising out of the active duty or call to active duty status of a spouse, son, daughter or parent. In addition, eligible employees are permitted to take up to 26 weeks of job-protected leave in a “single 12-month period” to care for a covered servicemember with a serious injury or illness. The 2010 National Defense Authorization bill would allow family of active duty members in regular service to take advantage of exigency leave provided for by these FMLA amendments, as well as extend military caregiver leave to veterans. Current Department of Labor (DOL) regulations limit access to exigency leave to family of Reserve and National Guard members only, and do not permit family members to take leave to care for servicemembers once they have left the military, even though certain injuries and illnesses (such as traumatic brain injury and post traumatic stress disorder) may not manifest themselves until months or years after the injury occurs.

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Last Thursday, Rep. Nathan Deal (R-GA) introduced two healthcare-related bills applicable to employers. The Improved Employee Access to Health Insurance Act of 2009 (H.R. 3821) would prevent states from enacting any law that prevents an employer from instituting an auto-enrollment process for employee health insurance coverage, so long as the participant or beneficiary has the option to decline coverage.

The second bill introduced by Rep. Deal (H.R. 3822) would allow employers that do not offer health benefits to provide tax-free defined contributions and administrative assistance to employees who opt to buy health insurance coverage on their own. The offer of assistance and tax-free contributions would not be considered a group health plan for Employee Retirement Income Security Act (ERISA) or the Public Health Service Act purposes.

The Improved Employee Access to Health Insurance Act has been referred to the House Committee on Education and Labor. H.R. 3822 has also been referred to this committee, as well as to the House Committees on Energy and Commerce and Ways and Means.
 

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Sen. Claire McCaskill (D-MO) has introduced legislation that would expand whistleblower protections to non-federal employees who disclose information about the misuse of federal funds. The Non-Federal Employee Whistleblower Protection Act of 2009 (S. 1745) would shield employees of companies that receive funding from any government agency (in the form of either grants or contracts) from retaliation for making protected disclosures involving waste or fraud. The bill also expands the scope of covered actions, outlines the burden of proof in whistleblower cases, and prevents employers from forcing employees to waive their whistleblower rights.

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Senators Harry Reid (D-Nev.), Max Baucus (D-Mont.), Jack Reed (D-R.I.) and Jeanne Shaheen (D-N.H.) have introduced a new bill, the Emergency Unemployment Compensation Extension Act of 2009 (S.A. 2668 to H.R. 3548), that would extend unemployment insurance benefits for individuals in all 50 states. Under the terms of this legislation, unemployed workers would receive up to 14 weeks of additional benefits. Those in states with unemployment rates above 8.5 % would be entitled to an additional 6 weeks of benefits. The measure would be funded by extending through June 30, 2011, the Federal Unemployment Tax assessed on employers.

According to a press release issued from Sen. Reid’s office, the bill would also update the Unemployment Insurance Modernization provision in the American Recovery and Reinvestment Act ( “ARRA” or the “Economic Stimulus Package”) to allow victims of sexual assault who have left their job to be eligible for benefits under the “compelling family reasons” clause. Additionally, the legislation specifies that railroad workers facing expiring unemployment benefits would be eligible for additional weeks.

This measure is intended as a substitute for the Unemployment Compensation Extension Act of 2009 (H.R. 3548), which would have extended unemployment benefits for 13 weeks only in states with high persistent unemployment (8.5% on a rolling three-month average). The original bill passed the House of Representatives last month, but stalled in the Senate when lawmakers from states with unemployment rates that did not exceed the requisite threshold cried foul. Sen. Shaheen – who led the chorus of disenchantment by writing a letter to the Senate urging that benefits be extended in all 50 states – co-authored the new bill.

Given the current state of the economy and mounting unemployment rates, this measure is expected to receive widespread support in both houses of Congress.

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In an informal opinion letter released October 6, 2009, the Equal Employment Opportunity Commission (EEOC) determined that requiring employees to complete a health risk assessment as a precondition to receiving payment from an employer-funded health reimbursement arrangement can violate the Americans with Disabilities Act (ADA) in certain circumstances.

The letter, written by EEOC Assistant Legal Counsel Peggy Mastroianni, was in response to an employer that asked whether requiring employees to answer more than 100 questions in several categories, including “Personal Health,” “Health Choices-Alcohol and Tobacco,” “Health Changes,” and “Family Health History,” as a prerequisite to receiving health expense reimbursement under an employer-funded health reimbursement plan would violate the ADA. Mastroianni explained that the ADA permits employers to make disability-related inquiries and obtain medical information from employees in certain circumstances, such as if the inquiry is job-related and consistent with business necessity, is part of a follow-up to a request for a reasonable accommodation, or is part of a voluntary wellness program. A program is considered “voluntary” if the employees are neither required to participate nor penalized for non participation.

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The Department of Labor (DOL), Internal Revenue Service (IRS), and the Centers for Medicare and Medicaid (CMS) have published in the Federal Register interim final rules (pdf) governing Sections 101 through 103 of Title I of the Genetic Information Nondiscrimination Act of 2008 (GINA). Title I of GINA amended the Employee Retirement Income Security Act of 1974 (ERISA), the Public Health Service Act (PHS Act), the Internal Revenue Code of 1986 (Code), and the Social Security Act (SSA) to prohibit discrimination in health coverage based on genetic information. Sections 101-103 contain provisions banning discrimination based on genetic information in health insurance coverage and group health plans. The EEOC has not yet issued final rules interpreting Title II of GINA, which prohibits discrimination in employment based on genetic information, and limits the acquisition and disclosure by employers and other entities of such information.

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A bill that would temporarily provide an additional 13 weeks of unemployment insurance benefits to states with high and sustained unemployment has lost momentum in the Senate. The Unemployment Compensation Extension Act of 2009 (H.R. 3548) sailed through the House of Representatives on September 22 by a vote of 331 to 83.  Obstacles to this measure arose in the Senate, however, where some lawmakers have expressed concern that this bill would be unfair to those states that have not exceeded 8.5% unemployment (for a rolling three-month average), as required by the bill to qualify for additional benefits.

Leading the criticism is Sen. Jeanne Shaheen (D-NH), who argued that the UI benefits extension should apply to all 50 states. In a statement and letter to the Senate signed by 14 fellow Democratic Senators and two Independents, Shaheen said that “unemployed workers face equally severe challenges no matter what state they live in, and they should be given the support they need.”

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The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) (P.L. 110-343) (pdf) and Michelle’s Law (P.L. 110-381) (pdf), two laws that impact employer-sponsored group health plans, will take effect for plan years beginning on or after October 3, 2009 and October 9, 2009, respectively.  Calendar year plans have until January 1, 2010 to comply with both laws. 

The MHPAEA requires private group health benefit plans that provide mental health and/or substance use disorder benefits to offer them on a basis equivalent to the medical and surgical benefits provided.  In order to ensure coverage parity, the act imposes several plan design requirements upon group health benefit plans that offer mental health and/or substance use disorder benefits. The bill exempts certain small group health benefit plans and those that would incur a particular level of increased costs for all benefits due to compliance with the parity rule. These exemptions are specific and narrow.

Michelle’s Law similarly imposes certain coverage requirements on group health benefit plans. In essence, this law extends the health plan benefits coverage to a dependent child who is over the age of 18 and enrolled in college and would otherwise lose coverage in the event a medically necessary leave of absence would cause the child to lose full-time student status.

For more information on these laws, see Littler’s ASAPs: Equal Mental Health and Substance Use Benefits Realized by Russell D. Chapman and Andrea Jackson; and Michelle's Law Extends Group Health Benefit Plan Eligibility for Dependent Students on a Medically Necessary Leave of Absence by Steven J. Friedman and Andrea Jackson.

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The House of Representatives approved by a vote of 331 to 83 the Unemployment Compensation Extension Act of 2009 (H.R. 3548), a bill that would extend unemployment benefits for 13 weeks in states with high persistent unemployment (8.5% on a rolling three-month average). To pay for this measure, the bill extends for one year a federal unemployment tax (FUTA surtax) that is set to expire at the end of 2009, and has been in place for more than 30 years. This tax requires businesses to pay an annual tax of $14 per worker. The bill would also require that current reporting on newly hired employees include the date work begins to reduce overpayment of UI benefits. In July, Rep. Jim McDermott (D-Wash.), who introduced this legislation, introduced a more comprehensive unemployment insurance bill (H.R. 3404) that included the 13-week benefits extension. The shorter bill was introduced on September 10 as an emergency measure to address continuing high unemployment due to the economic downturn.

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Rep. Lynn Woolsey (D-CA) and Sen. Chris Dodd (D-CT) have introduced a bill in both chambers of Congress that would enhance family and medical leave benefits for family members of veterans. The Supporting Military Families Act of 2009 (H.R. 3403, S. 1543) would amend the Family and Medical Leave Act’s (FMLA) military family provisions that were enacted as part of the Fiscal Year 2008 National Defense Authorization Act that entitle family or primary caregivers of military members to take up to 26 weeks of unpaid leave to care for the wounded service member. The new bill would extend the time in which the family member could take such leave, and expand the scope of those who would be covered by these medical exigency leave provisions.

According to a press release issued by Rep. Woolsey’s office, this bill would:

• Extend the twenty-six weeks of leave to family members of veterans for up to five years after a veteran leaves service, if he or she develops a service-related injury or illness that was incurred, or, in the case of an existing injury, was aggravated while on active duty.
• Extend exigency leave to covered active duty members in regular military service. Current Department of Labor (DOL) regulations limit access to exigency leave to Reserve and National Guard members only.
• Extend exigency leave eligibility to those service members deployed to a foreign country. The current law limits availability of exigency leave to those deployed “in support of a contingency operation.”

The House version of this bill has been referred to House Committee on House Administration. The Senate companion bill has been referred to the Senate Committee on Health, Education, Labor and Pensions.

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Senator Roland Burris (D-IL) has introduced a bill that would extend temporarily the 18-month period of healthcare continuation coverage required by the Consolidated Omnibus Budget Reconciliation Act (COBRA). The COBRA Coverage Extension Act of 2009 (S. 1488) would provide up to 24 months of continuation coverage under group health plans required under COBRA, the law that amended the Employee Retirement Income Security Act (ERISA), the Internal Revenue Code and the Public Health Service Act to provide continuation of group health coverage for certain qualifying former employees, retirees, spouses, former spouses and dependent children. Specifically, S. 1488 would entitle any individual who is eligible for and has elected continuation coverage under COBRA as of the date of this bill’s enactment, and whose coverage would end before 12 calendar months had elapsed from the date of enactment due to an 18-month continuation limitation, to continue coverage until a full 12 months had passed after the date of enactment, or 24 months after the date of the qualifying COBRA event, whichever is earlier. This bill has been referred to the Senate Committee on Health, Education, Labor, and Pensions.

This bill joins another recent measure aimed at extending COBRA continuation coverage. The House’s much-publicized healthcare bill, America's Affordable Health Choices Act of 2009 (H.R. 3200), includes an amendment that would extend COBRA coverage until the individual becomes covered under another employer’s group health plan or under a health insurance exchange plan, the latter of which would be created under the bill itself. The extension would not apply to certain medical flexible spending arrangements. Offered by Rep. Susan Davis (D-CA), this amendment was approved by voice vote by the House Committee on Education and Labor on July 17. Given the development of the health insurance exchange system would not be established until the year 2013 at the earliest, it is conceivable that if this bill were to pass, COBRA continuation coverage could be extended for years. This healthcare bill has been approved by both the House Committees on Education and Labor, and Ways and Means.

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Rep. Lynn Woolsey (D-CA) has introduced the Balancing Act of 2009 (H.R. 3047), a bill aimed at working families that combines a number of provisions from previously-introduced family and medical leave legislation. In addition to addressing issues such as childcare and medical need assistance, this bill would, among other things, amend the Family and Medical Leave Act (FMLA) to provide for paid time off to care for a new baby or sick family member, provide paid sick leave, and allow employees to take time off to attend their children’s school or extracurricular activities, attend to the needs of elderly family members, receive routine medical care, as well as address issues related to domestic violence or sexual assault. The bill also includes a business child care incentive grant program in addition to a section promoting teleworking.

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Last week Senator Ron Wyden (D-Ore.) introduced the Military Family Leave Act of 2009 (S. 1441), a bill that would grant military family members temporary annual leave for the member's deployment. Specifically, the legislation would allow the spouse, child or parent of a member of the uniformed services to take up to two weeks of annual leave from his or her job if the service member receives notice of an impending call or order to active duty in support of a contingency operation, or is deployed in connection with a contingency operation. This leave could be taken intermittently or on a reduced leave schedule. The employee would be entitled to two workweeks of leave for each military family member called to active duty. The employee could elect – but the employer could not insist upon – the substitution of accrued paid time off for the leave provided for under this legislation. An employer may require, however, that certification to support the family member’s military situation be provided in a timely manner.

This bill also prevents an employer from terminating or otherwise discriminating against an employee who takes such military family leave, and compels the reinstatement of the employee to his or her position (or an equivalent one) without loss of benefits upon returning to work.

This bill, which adds a new chapter to Part III of title 38 of the U.S. Code, has been referred to the Senate Committee on Health, Education, Labor and Pensions.

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Rep. Paul Hodes (D-NH) this week introduced the Small Business Health Care Affordability Act of 2009 (H.R. 3115), a bill that would provide small businesses and their employees with tax credits for health insurance coverage. According to the terms of this legislation, employers with 50 or fewer employees would be entitled to a an annual tax credit of up to $1,000 per employee for providing individual health insurance coverage, and up to $2,250 annually for providing family coverage. The plan would also provide healthcare premium assistance for small business employees and their dependents.

This legislation has been referred to the House Committee on Ways and Means. If enacted, the provisions of this bill would apply to taxable years beginning after December 31, 2009.

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By a vote of 29 to 17, the House Committee on Education and Labor on June 24 approved a bill that would mandate certain 401(k) fee disclosure requirements, and require that investment advice provided to employees regarding employer-sponsored retirement plans be independent and free of any conflict of interest. The 401(k) Fair Disclosure and Pension Security Act of 2009 (H.R. 2989) combines provisions of two other bills that were approved by the House Education and Labor’s Subcommittee on Health, Employment, Pensions and Labor on June 17 by votes of 13 to 8 along party lines. Those two bills are the 401(k) Fair Disclosure for Retirement Security Act (H.R. 1984) sponsored by Rep. George Miller (D-CA) and the Conflicted Advice Prohibition Act (H.R. 1988) sponsored by Rep. Robert Andrews (D-NJ).

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Senator Russ Feingold (D-Wisc.) has reintroduced the Promoting Health Care Purchasing Cooperatives Act (S. 1165), a bill that would authorize the Secretary of Health and Human Services (HHS) to award grants to certain groups of employers to develop health care purchasing cooperatives. The legislation includes a grant application process for both self-insured and small businesses.

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During a press conference held this morning, Rep. Alan Grayson (D-Fla.) – whose district includes popular tourist spots in Orlando – introduced the Paid Vacation Act of 2009, a bill that would mandate paid vacation leave for most employees.  According to a press release, the measure would require employers with 100 or more employees to provide a week of paid vacation. After three years, businesses with a minimum of 50 employees would have to meet the same requirement, while those with 100 or more employees would be required to provide employees with two weeks of paid vacation leave. To be entitled to take such paid leave, employees would have to work for at least one year. Part-time employees would need to work a minimum of 25 hours per week and 1,250 hours per year to be eligible.

An article at Roll Call notes that the response to this proposal has been somewhat lukewarm. Critics of the measure have emphasized that a blanket federally-mandated vacation policy will not work in all organizations, would impose additional burdens on businesses in an already weak economy, and could affect hiring decisions for some employers.  

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A bill that would require employers to provide paid sick leave to employees was reintroduced in the House of Representatives on Monday by Rep. Rosa DeLauro (D-Conn.), and co-sponsored by 101 others. The Healthy Families Act (H.R. 2460) would allow employees to earn one hour of paid sick time for every 30 hours worked up to a maximum of 56 hours (seven days) annually. Employees could take this leave to attend to their own or a family member’s illness, or use the paid time off for preventative care such as doctor’s appointments. In addition, the bill provides leave for employees who are the victims of domestic violence, stalking or sexual assault. Employers with 15 or more employees would be covered by this legislation.

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Last week the Small Business Health Options Program (SHOP Act) (H.R. 2360) was reintroduced by Rep. Ron Kind (D-WI). This bill has bipartisan support, with 25 co-sponsors. In essence, this legislation would amend the Public Health Service Act to create state or nationwide health insurance purchasing pools for small businesses and the self-employed. A small business for purposes of this bill would be one with fewer than 100 employees who work an average of at least 35 hours per week. Self-employed individuals covered by this act must earn at least $5,000 in net earnings or not less than $15,000 in gross earnings from self-employment in the preceding taxable year.

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The U.S. Supreme Court has held that an employer does not necessarily violate the Pregnancy Discrimination Act (PDA) when it pays pension benefits calculated in part under an accrual rule – applied prior to the PDA’s enactment – that gave less retirement credit for pregnancy than for medical leave generally. The Court in AT&T v. Hulteen (pdf) further held that the benefit calculation rule used by the employer in this case was part of a bona fide seniority system that insulated it from a Title VII challenge.

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A number of federal agencies including the Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) are requesting information in advance of a future rulemaking on group health plans. Specifically, the EBSA’s Request for Information (RFI) seeks input on questions related to the mental health parity provisions made by the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). The RFI was published in the April 28, 2009 edition of the Federal Register.

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Legislation providing employers with various incentives for promoting employee health may receive serious consideration now that Congress is contemplating major healthcare reform. A recent article published in The New York Times claims that proposals such as the Healthy Workforce Act (H.R. 1897, S. 803), which would provide employers with a tax credit for 50 percent of the costs incurred in implementing “effective and comprehensive” employee wellness programs, could be incorporated into broader healthcare reform. The article also claims Congress may loosen legal restrictions to enable employers to use monetary rewards or penalties to encourage healthy lifestyles.

While many employers currently offer some form of wellness plan or benefits, doing so must be done with care. As the NYT article emphasizes, employers need to be mindful of tax, labor, and insurance laws when implementing such incentive programs. Paid gym memberships, for example, may count as an employee’s taxable income. Moreover, employers must take care not to discriminate on the basis of an employee’s health status or medical history. Critics also argue that the carrot and stick approach to promoting employee wellness may constitute a form of lifestyle discrimination, and could amount to an invasion of privacy. The proposals floating around Congress seek to remove some of these legal landmines to make it easier for employers to establish wellness programs. Given that one of President Obama’s eight principles for health legislation is that it must “invest in prevention and wellness,” such proposals are likely to receive attention in the coming months.  For additional employment law issues associated with wellness initiatives, see Littler’s Report Employer Mandated Wellness Initiatives: The Continuum from Voluntary to Mandatory Plans.

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Legislation that would amend the Employee Retirement Income Security Act (ERISA) which would prohibit certain entities that have some relationship with a retirement plan involving a plan's investments from providing investment advice for participants and beneficiaries under individual account plans was introduced this week. The Conflicted Investment Advice Prohibition Act of 2009 (H.R. 1988) would add a paragraph to ERISA defining and outlining specific qualifications and requirements for an “independent investment advisor” with respect to an individual account plan. If this bill becomes law, it is possible that a huge number of existing relationships between plans and investment providers would need to be abrogated.

According to Rep. Robert Andrews (D-NJ) who introduced the bill, the purpose of this legislation is to “restore ERISA’s prohibition on self-interested investment advisers providing advice to employer-sponsored retirement accounts, thereby safeguarding the retirement savings of millions of hardworking Americans.”

This bill has been referred to the House Committee on Education and Labor.

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The Internal Revenue Service (IRS) has issued Notice 2009-27, which provides guidance on the COBRA premium subsidy that was created under the American Recovery and Reinvestment Act of 2009 (ARRA), or stimulus package. ARRA, among other things, includes a provision that authorizes a 65 percent federal subsidy for continuing health care coverage under COBRA for employees who qualify as “assistance eligible.”

The IRS guidance provides 27 pages of detailed questions and answers on issues including who qualifies as an assistance eligible individual, what constitutes an involuntary termination for purposes of the definition of an assistance eligible individual, how to calculate a premium reduction, and which types of coverage are suitable for premium reductions, among other topics.

For more information on the IRS guidance, see Littler’s ASAP: IRS Clarifies Key Provisions of the New COBRA Subsidy by: Nancy L. Ober.

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The Department of Labor (DOL) has posted on its website expanded employer guidance on the premium Consolidated Omnibus Budget Reconciliation Act (COBRA) subsidies provided for by the American Recovery and Reinvestment Act of 2009 (ARRA), or stimulus plan. A significant portion of this Q & A guidance, FAQs For Employers About COBRA Premium Reduction Under ARRA, clarifies the new COBRA notice requirements under ARRA. ARRA requires employers and plan sponsors to notify certain current and former plan participants and their beneficiaries about the reduction in health premium costs. Earlier this month, the DOL posted on its website model notices that an employer can provide to current and former employees to comply with the ARRA notice provisions.

The expanded guidance provides a number of examples to help employers determine who should receive the full version of the general, abbreviated general and alternative notices, and who should receive the notice in connection with extended election periods. Other portions of the Q & A address more general topics concerning the COBRA subsidy, such as which plans are subject to the premium reduction provisions, and who is eligible to receive this benefit.

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A bill that would provide a tax credit to companies offering “effective and comprehensive wellness programs” was introduced in both the House and Senate yesterday. The Healthy Workforce Act (H.R. 1897, S. 803) would amend the Internal Revenue Code (IRC) to provide a credit for 50 percent of the costs employers would incur in implementing such wellness programs for their employees. The bill was introduced by Senators Tom Harkin (D-IA) and John Cornyn (R-TX) and Representatives Earl Blumenauer (D-OR) and Mary Bono Mack (R-CA). Similar legislation was introduced and debated in 2007 but died in committee.

According to information provided by Sen. Harkin, to be eligible for this credit, businesses would need to provide programs that include, among other elements, “health risk assessments, health awareness and behavior change programs, meaningful incentives for program participation and an employee committee that tailors programs to meet workforce needs.” While the current bill has not yet been published, it is likely the same if not substantially similar to the bill introduced in 2007. That bill capped the credit amount at $200 per employee for businesses with fewer than 200 employees, and $100 per employee for those with more than 200 employees.

The House bill has been referred to the House Committee on Ways and Means, and the Senate version to the Senate Committee on Finance.

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The following summarizes some federal agency happenings this week:

Phyllis Borzi is Tapped to Serve as Assistant Secretary of DOL’s EBSA

President Obama has nominated Phyllis C. Borzi to serve as the Assistant Secretary of Labor for the Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA). The EBSA is the organization within the DOL whose mission it is to educate and assist the 150 million Americans covered by more than 679,000 private retirement plans, 2.5 million health plans, and similar numbers of other welfare benefit plans; as well as plan sponsors and members of the employee benefits community.

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A bill introduced last week would amend the Internal Revenue Code (IRC) to provide a tax credit for qualified donations of employee services. The Incentive to Serve Tax Act (H.R. 1644) would provide employers with a qualified employee service donation credit equal to 25 percent of the qualified wages paid to the employee performing the services.

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Legislation introduced by Rep. Thaddeus McCotter (R- MI) would amend the Internal Revenue Code to provide employers with a tax credit for hiring veterans. The Veterans’ Employment Transition Support Act of 2009 (VETS Act of 2009) (H.R. 1647) would grant a one-time tax credit to employers, and apply to the employment of any veteran certified as such by the designated local agency.

Employers would be granted credit in the amount of 40 percent of the employee’s first-year wages. A greater tax credit is available for the hiring of disabled veterans. The Act creates a sliding percentage tax benefit scale based on the degree of the employee’s disability. The amendments made by this Act would apply to veterans who begin work after the date of enactment.

This bill has been referred to the House Committees on Energy and Commerce, Education and Labor, and Ways and Means.

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The Department of Labor (DOL) has released on its website model Consolidated Omnibus Budget Reconciliation Act (COBRA) notices employers can provide to current and former employees as a means of complying with the notification mandates set forth in the American Recovery and Reinvestment Act of 2009 (ARRA), otherwise referred to as the stimulus package. ARRA, among other things, includes a provision that authorizes a 65 percent federal subsidy for continuing health care coverage under COBRA for employees who were involuntarily terminated between September 1, 2008 and December 31, 2009. Additionally, ARRA requires employers and plan sponsors to notify certain current and former plan participants and their beneficiaries about this reduction in health premium costs.

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Bills introduced in both chambers of Congress would amend the Employee Retirement Income Security Act (ERISA), the Public Health Service Act, and the Internal Revenue Code to prohibit preexisting condition exclusions in health plans. The Preexisting Condition Patient Protection Act of 2009 (H.R. 1558, S. 623) would preclude exclusions in group health plans as well as health insurance coverage in the group and individual markets.

The legislation also orders the Secretary of Health and Human Services (HHS) to provide Congress with a report within two years of the law’s enactment on the Act’s impact on health benefits coverage. Pursuant to this report, the HHS is authorized to request data from group health plans and health insurance issuers, including the number, nature, and dollar amount of claims made by enrollees, changes in the demographic composition of enrollees, and other information the Secretary deems appropriate.

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As previously discussed, the stimulus provisions regarding changes to the Consolidated Omnibus Budget Reconciliation Act (COBRA) are complex and confusing. Below, we address some common misconceptions about these provisions.

Misconception 1: The notices about the COBRA subsidy need to be distributed only to those employees who are involuntarily terminated.

Clarification: The COBRA subsidy provision requires that notices about the Federal COBRA subsidy are distributed to all employees who had or has a qualifying event from September 1, 2008 to December 31, 2009. Even if the employer believes that the employee will not qualify for the subsidy (e.g., the employee voluntarily terminated employment), that employee must receive the notice about the subsidy.

Example: Employee's hours are reduced and employee is reassigned, and employee resigns in response. Employee is entitled to the normal COBRA notice of rights and opportunity to elect continuation coverage, and in addition, the notice of the COBRA subsidy.

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During the White House Forum on Health Reform last week, President Obama expressed his desire for an overhaul of the nation’s health care system. But he would leave the details of this overhaul, however, up to the legislature. Therefore, it can be expected that a variety of health care reform bills will flood the docket in the coming months. While the majority of these bills will inevitably die in committee, aspects of these various proposals could be incorporated into a more comprehensive bill that would be expected to receive serious consideration. Democratic leaders have said that they hope to move comprehensive legislation to the House floor before the August recess.

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On February 26, President Obama unveiled his proposed $3 trillion budget. A detailed summary can be found on the White House website. (pdf)  As expected, the budget includes increased funding for various agencies tasked with oversight of employers.

Of interest to employers, highlights of this proposal include the following:

• Funding of $110 million to continue expansion of the E-Verify program.
• Projected DOL discretionary funding increases of $12.7 billion for 2009, and $13.3 billion for 2010.
• Increased funding for the Occupational Safety and Health Administration (OSHA), “enabling it to vigorously enforce workplace safety laws and whistleblower protections, and ensure the safety and health of American workers.”
• Increased enforcement resources of the Wage and Hour Division “to ensure that workers are paid the wages that are due them.”
• Increased funding for the Office of Federal Contract Compliance Programs.
• The establishment of automatic workplace pensions. Under this plan, a system of automatic workplace pensions would operate alongside Social Security.  Employees would be automatically enrolled in workplace pension plans.  Employers that do not currently offer a retirement plan would be required to enroll their employees in a direct-deposit IRA account that is compatible with exiting direct-deposit payroll systems. Employees would be given the ability to opt out of this program.
• The provision of $145 million to the Justice Department’s Civil Rights Division to strengthen civil rights enforcement against racial, ethnic, sexual preference, religious and gender discrimination.
   

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On February 24, the Internal Revenue Service (IRS) published in the Federal Register its final rule regarding automatic contributions to 401(k) plans and similar types of defined contribution plans. Such automatic enrollment features were established by the Pension Protection Act (Pub. L. No. 109-280), which amended the tax code to facilitate automatic enrollment for 401(k) plans, Section 403(b) tax-deferred annuity plans, Section 457(b) governmental plans, and similar arrangements. These regulations affect administrators of, employers maintaining, participants in, and beneficiaries of section 401(k) plans and other eligible plans that include an automatic contribution setup. Among other things, the regulations clarify minimum percentage requirements for qualified automatic contribution arrangements (QACA), expand uniformity requirements, and establish a notice timing requirement.

The final regulations relating to qualified automatic contribution arrangements apply to plan years beginning on or after January 1, 2008. The regulations relating to eligible automatic contribution arrangements apply for plan years beginning on or after January 1, 2010.

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Immigration-related bills are being introduced at a rapid pace. While many of these bills are destined to languish in committee, the sheer volume of immigration legislation introduced by both parties barely two months into the new Congress increases the chance that at least one bill will eventually receive real consideration. The latest bill – Electronic Employment Eligibility Verification and Illegal Immigration Control Act (H.R. 1096) – would amend the Immigration and Nationality Act to create an electronic employment eligibility verification system and a detailed employment verification process, expand the verification system to apply to previously hired individuals, and increase employer penalties for violations, among other things. If passed, this bill would amend the Immigration and Nationality Act to require E-Verify for all employers. The E-Verify system is currently voluntary, unless mandated by applicable state law.

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As economic conditions decline, scrutiny over executive compensation increases. On February 17, President Obama signed into law the massive stimulus package (Pub. L. No. 111-5) containing a number of provisions limiting executive compensation for entities receiving funds under the Troubled Asset Relief Program (TARP). A new bill introduced last week would augment these provisions by creating additional government oversight for companies receiving TARP assistance.

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The stimulus legislation signed into law as the American Recovery and Reinvestment Act of 2009 (ARRA) by President Obama contains sweeping revisions to the group health plan continuation coverage provisions contained in the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). The ARRA also impacts other areas of employment law. For an in-depth analysis of these changes, see Littler's ASAPs: Stimulus Package: An In-Depth Look at the New COBRA Subsidy in the ARRA by: Steven J. Friedman, Susan K. Hoffman, and J. René Toadvine, and Besides COBRA: What Does the Stimulus Package Have for Employers by: Ellen N. Sueda, GJ Stillson MacDonnell, Patricia A. Haim, and Chadwick M. Graham.

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The massive $787.2 billion economic recovery package signed into law as the American Recovery and Reinvestment Act of 2009 (ARRA) by President Obama on Tuesday will impact employers in several ways. Embedded in this stimulus package are provisions relating to COBRA, business tax credits, executive compensation, and H-1B visas, among others areas.

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The nation’s economic troubles have inspired a number of new employment-related bills. One immigration bill seeks to promote hiring Americans by limiting the incentives for illegal aliens to move to the United States to live and work, while another bill would facilitate the hiring of foreign workers under the H-2B guest worker program. A third bill would provide employers with a tax credit for hiring unemployed veterans.

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Lawmakers in the 111th Congress continue to introduce employment-related legislation. The following bills appeared on the docket within the past week:

Family and Medical Leave

A bill passed by the House on February 9 by voice vote would close a Family and Medical Leave Act (FMLA) loophole for airline pilots and flight attendants. The Airline Flight Crew Family and Medical Leave Act (H.R. 912) would change the hours of service requirement to enable more airline industry employees to take such leave.

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A couple of recently-introduced bills would amend the Employee Retirement Income Security Act (ERISA). The Pension Security Act of 2009 (H.R. 712) would amend title I of ERISA to require that the annual report of a defined benefits pension plan disclose any hedge fund investments.

If enacted, the disclosures would need to be included in the annual reports for plan years beginning on or after the date of enactment. The Secretary of Labor – in consultation with the Securities and Exchange Commission – would be charged with issuing initial regulations within one year.

This bill has been referred to the Committee on Education and Labor.

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On February 4, 2009, President Obama signed into law the State Children’s Health Insurance Program (SCHIP). This expansion of children’s health insurance includes provisions amending the Employee Retirement Income Security Act (ERISA) by adding new clauses to the end of Section 701(f). In essence, group health plans and insurers are required to allow employees and their dependents who are eligible for coverage—but are not enrolled in the group plan—to enroll if they become ineligible for Medicaid or a state child health plan, or if they become eligible for financial assistance from Medicaid or a state child health plan. The employee or dependent must exercise this option within 60 days. This law also imposes new notice requirements regarding an employee’s options for financial assistance to pay for their employer-sponsored health coverage. Plan administrators must also be prepared to provide to the state, if requested, detailed information about the benefits available under the group health plan.

The Secretary of Labor and the Secretary of Health and Human Services will develop the initial model notices and provide them to employers no later than February 4, 2010. Each employer must give these initial annual notices to employees beginning with the first plan year that begins after the date on which the notices are first issued.
 

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Both the House and Senate versions of the 2009 Stimulus Bill include sweeping revisions to ERISA’s continuation of coverage provisions (commonly known as “COBRA”). While the exact form that these provisions may take in the final package is unknown, it is almost certain that some version of the current drafts will be included. The new provisions will impose additional burdens and hidden costs on employer-sponsors of group health plans.

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Pursuant to the January 20, 2009 memo by Chief of Staff Rahm Emanuel directing all federal agency heads to consider extending the effective dates of regulations that had been published in the Federal Register but had not yet taken effect, the Department of Labor’s Employee Benefits Security Administration (EBSA) has issued a notice. The notice proposes an extension of the effective and applicability dates of final regulations on investment advice provided to participants and beneficiaries of 401(k) plans and IRAs. The regulations, which apply to transactions occurring on or after March 23, 2009, would be extended 60 days until May 22, 2009.

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The U.S. House of Representatives will begin consideration this week of Senate amendments to the Children’s Health Insurance Program Reauthorization Act of 2009 (H.R. 2), which has already cleared both houses of Congress. This bill, which expands the State Children’s Health Insurance Program (SCHIP), contains provisions in both the House and Senate versions that would amend the Employee Income Retirement Security Act (ERISA).

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A few new labor and employment-related bills focusing on health care and wage requirements for highway construction projects were introduced this week.

Health Care

Bills extending COBRA coverage seem very popular this session. In addition to the recent House Stimulus Bill (H.R. 1)  and the Coverage Continuity Act of 2009 (S. 29) which included provisions extending such health care coverage, the COBRA Coverage Extension Act of 2009 (H.R. 694) introduced by Rep. Joe Sestak (D-PA) would temporarily extend the basic 18-month period of COBRA continuation coverage to 24 months. This bill was referred to the House Ways and Means Committee.

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Not even a full month into the year, the new Congress keeps flooding the docket with employment-related bills. Despite organized labor’s push to introduce union-friendly legislation early in President Obama’s term, and the many civil rights and work/family balance bills expected to be introduced, instead, the recent employment-related bills reflect the current financial crisis and rising unemployment. Providing health care and other assistance to the unemployed appears to have taken precedence over the drive for increased union membership and providing for enhanced employee rights and benefits, at least for now.

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A new bill introduced in the Senate would enable certain qualified individuals enrolled in COBRA to extend their health care coverage for an additional 12 months. The Coverage Continuity Act of 2009 (S. 29) provides that qualified beneficiaries whose COBRA eligibility ends between January 1, 2009 and December 31, 2009 can elect 12 additional months of coverage provided that they are continuously enrolled under COBRA. The purpose of this bill is to provide continued health care and tax credits for those who are unemployed.

In addition to the COBRA extension, this bill amends the Internal Revenue Code of 1986 to increase the tax credit for health insurance costs of eligible individuals and provides this tax relief to those covered under COBRA.
 

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On January 2, 2009, the Department of Labor (DOL) published a final regulation in the Federal Register that outlines the procedures for assessing civil penalties up to $1,000 per day against employee benefit administrators or sponsors who fail to disclose certain documents to participants, beneficiaries, employee representatives, and other employees as required by the Employee Retirement Income Security Act (ERISA), as amended by the Pension Protection Act of 2006 (PPA).

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As anticipated, President Bush signed two bills that had swiftly cleared Congress in the waning days of his administration. The Worker, Retiree and Employer Recovery Act of 2008 (Pub. L. No. 110-458) was designed to ease the effects of the financial crisis for seniors and businesses by, among other things, modifying pension funding and distribution requirements. For example, the Act waives the 2009 minimum distribution requirement for participants and beneficiaries of defined contribution employer-sponsored qualified retirement plans, and allows employers maintaining single-employer plans to spread the value of pension plan assets over a two-year period. Additionally, the legislation makes technical corrections to the Pension Protection Act of 2006.

Bush also signed a bill that makes technical corrections to the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (Pub. L. No. 110-460). The legislation changes the effective date of provisions affecting collectively bargained health plans from January 1, 2009 to January 1, 2010. The initial start date was deemed a drafting error. The mental health parity law amends current requirements under ERISA, the Public Health Service Act and the Internal Revenue Code for parity in mental health benefits offered under a private group health benefit plan. For more information on the MHPA, see Littler’s ASAP: Equal Mental Health and Substance Use Benefits Realized by Russell D. Chapman and Andrea Jackson.

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The Joint Committee on Taxation has released the Technical Explanation of the Worker, Retiree, and Employer Recovery Act of 2008 (H.R. 7237).  This piece of legislation makes technical corrections to the Pension Protection Act of 2006 (PPA), and provides for additional amendments to the PPA, the Internal Revenue Code, the Employee Retirement Income Security Act of 1974 and the Age Discrimination in Employment Act.  Congress approved this pension relief measure on December 11.  The President is expected to sign this bill before the end of his term.

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On Dec. 11, the Senate approved a bipartisan bill that is designed to ease the financial crisis for certain employees and businesses by, among other things, modifying pension distribution requirements. The Worker, Retiree, and Employer Recovery Act of 2008 (H.R. 7327), introduced in and passed by the House of Representatives on December 10th, also makes technical corrections to the Pension Protection Act of 2006 (PPA).  The President is expected to sign the bill.

In essence, the bill would temporarily ease funding and distribution rules governing single and multi-employer pension plans and modify asset depreciation requirements, ostensibly to free up cash for payroll and other business expenses in light of the faltering economy. Some of the key bill provisions include:

• For single-employer pension plans:
  • Permits temporary adjustment to contribution, distribution, and projected earnings provisions of the PPA;
  • Gives these plans three years to phase in PPA pension funding target percentages.
• For multi-employer pension plans:
  • Permits a freeze of plan funding status to provide time for economic recovery before declaration of critical or endangered status;
  • Allows the election of a three-year extension of current amortization rules to help offset this year’s asset losses.
• For taxpayers:
  • Eliminates minimum distributions for 2009 to provide time for IRAs and other benefit accounts to recover asset losses.

Although it is generally unusual for Congress to introduce new legislation so close to the end of a session, the current financial catastrophe has changed the rules of the game. Business interests have been actively lobbying Congress in recent weeks to pass some type of pension relief measure. Although these may be welcome changes, they will have little impact on economic recovery, and merely delay recognition of the impact of the severe investment losses suffered by retirement plans, particularly for the millions of participants in 401(k) plans and IRAs who have seen substantial erosion in their expected retirement assets. Regardless, defined benefit plan sponsors are still required to fund their defined benefit plans and are liable for any shortfall on plan termination and the Pension Benefit Guaranty Corporation still must provide back-up termination insurance to these plans.
 

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