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

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 Thursday, the House of Representatives voted 217 to 201 in favor of the Hiring Incentives to Restore Employment (HIRE) Act, the $15 billion jobs bill introduced by Sen. Majority Leader Harry Reid (D-NV) as an amendment (S. Amt. 3310) (pdf) to H.R. 2847, the more expansive jobs bill the House previously passed in December. The Senate cleared this scaled-down jobs bill last Wednesday by a 70-28 margin. Because the House intends to change the effective date of a tax provision in order to offset its cost, the Senate will once again need to approve the amended bill before it can be signed by the President.

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On Wednesday, the Senate voted 70-28 in favor of the Hiring Incentives to Restore Employment (HIRE) Act, the $15 billion jobs bill introduced by Sen. Majority Leader Harry Reid (D-NV) as an amendment (S. Amt. 3310) (pdf) to H.R. 2847, the more expansive jobs bill that cleared the House of Representatives three months ago. On Monday, the Senate voted 62-30 on a cloture motion to allow the slimmed-down bill to proceed. The HIRE Act, among other things, would exempt any employer that hires a worker who has been without full-time work for at least 60 days from paying the employer’s share of Social Security taxes on that worker for 2010, and extend a business tax deduction for certain capital investments.

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On Monday, the Senate voted 62-30 on a cloture motion to advance the scaled-back jobs bill introduced by Sen. Majority Leader Harry Reid (D-NV). Reid’s bill, the Hiring Incentives to Restore Employment (HIRE) Act, has been introduced as an amendment (S. Amt. 3310) in the nature of a substitute to H.R. 2847, known as the Jobs for Main Street Act, which cleared the House of Representatives in December. In a move that surprised even some Senate Democrats, Reid decided that the Senate would consider smaller, separate jobs bills instead of the $85 billion bipartisan bill (pdf) unveiled by Sens. Max Baucus (D-MT) and Charles Grassley (R-IA) on February 11. This decision was allegedly instigated after Senate Democrats complained to Reid that too many concessions had been made in order to garner Republican support of the bill. Reid has stated that introducing smaller bills will force the Senate to focus on job creation.

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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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With the Obama administration’s renewed emphasis on job creation, a number of lawmakers have introduced bills that focus on employer incentives. On Wednesday, Senators Chuck Schumer (D-NY) and Orrin Hatch (R-Utah) released details about the Hire Now Tax Cut Act of 2010 (S. 2983), legislation that would exempt any employer that hires a worker who has been without full-time work for at least 60 days from paying the employer’s share of Social Security taxes on that worker for 2010. According to its sponsors, the advantage of structuring a tax incentive in this fashion is that it would provide businesses with an immediate benefit, instead of rewarding them with a tax credit in 2011. Additionally, the benefits to an employer would increase the longer it retains and the more it pays the employee, up to the maximum Social Security wage of $106,800.

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Today President Obama outlined his plan to promote the growth of small businesses as a way to stimulate the economy and reduce unemployment. During his State of the Union Address, Obama proposed using $30 billion repaid funds that financial institutions received through the Troubled Asset Relief Program (TARP) to increase the ability of small businesses to obtain loans. In addition, he called for tax incentives for businesses to invest in new plants and equipment, and the elimination of capital gains taxes on small business investment. 

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In keeping with a key theme of President Obama’s State of the Union Address, lawmakers introduced a number of bills this week that seek to increase hiring. Sen. Al Franken’s (D-Minn.) bill, the Strengthening Our Economy Through Employment and Development (“SEED” or “Cash For Jobs”) Act (S. 2952), would take $10 billion in existing funds from the Troubled Asset Relief Program (TARP) and re-allocate it to creating jobs in the private and public sectors. This measure would use half of this amount to provide wage subsidies to encourage private sector hiring. Specifically, according to a press release:

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Two bills introduced yesterday would amend the Internal Revenue Code to provide employer tax credits for hiring. Rep. Bob Etheridge’s (D-NC) bill, the Hiring Incentives to Reinvest and Incentivize New Growth (HIRING) Act of 2010 (H.R. 4437), is designed to promote employment in general. According to a summary of the bill, the HIRING Act would provide a refundable tax credit to any business that expands its payroll by at least 3 percent in 2010 or by at least 5 percent in 2011. Additionally, the bill would provide a credit of 15 percent of additions to payroll in 2010 and 10 percent in 2011. The credit would be based on payroll and businesses would be rewarded for hiring new employees, increasing employee hours, or restoring employee pay. If enacted, the provisions of this bill would apply to taxable years beginning after December 31, 2009. This bill has been referred to the House Committee on Ways and Means.

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