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

The petitions in the following cases were granted review: National Federation of Independent Business v. Sebelius, et. al. (pdf) (11-393); Department of Health and Human Services, et al., v. Florida, et al. (pdf) (11-398); and Florida, et al., v. Department of Health and Human Services, et al. (pdf) (11-400).

Notably, the Court did not agree to take up the two 4th Circuit decisions that rejected lawsuits challenging the Affordable Care Act’s constitutionally on technical grounds – including a finding that the action was barred by the AIA – and the decision by the 6th Circuit upholding the Affordable Care Act’s constitutionality.

In addition, the Court has not agreed to specifically address whether the Affordable Care Act’s employer mandate is legitimate. As of 2014, the law’s shared responsibility provisions – also known as the “pay or play” mandate – will require employers with 50 or more employees to provide affordable minimal essential health coverage to their full-time employees or pay a penalty. Instead, the Court will focus on the law’s individual responsibility provisions.

While more than 20 cases have been filed nationwide to challenge the law’s validity, most have boiled down to the same argument and analysis: whether Congress has the power under the Constitution’s Commerce Clause, or associated Necessary and Proper Clause, to compel an individual to purchase insurance or pay a penalty. Those finding that the law is constitutional have argued that the individual mandate does, indeed, regulate economic activity. This camp has reasoned that all individuals at one point or another avail themselves of medical treatment. Therefore, the failure to purchase health coverage would disrupt the insurance market, and have a substantial effect on interstate commerce. Thus, the argument follows, Congress had a rational basis to believe that the individual mandate is essential to its larger economic plan to reform the healthcare and health insurance markets.

Those opposed to the mandate have contended that the law’s individual mandate seeks to regulate economic inactivity – i.e., the failure to maintain insurance – which is the not the type of economic activity that can be Congressionally monitored and controlled pursuant to the Commerce Clause. Moreover, those opposed to the provision maintain that the mandate is extremely overreaching. As stated in the Florida, et al., v. HHS opinion, Congress cannot “mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die.”

As for the AIA issue, this law provides that “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person.” The Court asked the parties in Department of Health and Human Services, et al., v. Florida to brief whether the AIA bars the suit brought by respondents challenging the minimum coverage provision. The crux of this argument will be whether the assessment of a penalty constitutes a tax triggering AIA coverage. If the Court finds that the AIA does, indeed, bar these lawsuits, then the Court could delay consideration of the law until 2014 when such taxes are assessed.

Finally, another argument against the Affordable Care Act is that it unconstitutionally expands and alters the Medicaid program to such an extent that the states cannot afford the newly-imposed costs and burdens.

Oral arguments on these issues will likely occur early in 2012. It is expected that the Court will issue its opinions in the cases by July 2012, during the heat of the upcoming Presidential and Congressional campaigns.

Photo credit: Feverpitch Photography

Douglas Holtz-Eakin, president of the policy think-tank American Action Forum, discussed several issues that he claimed have negatively impacted the economy. For example, he said that certain provisions of the Affordable Care Act “are inconsistent with strong, pro-growth policies.” Earlier in the day, Holtz-Eakin appeared before the House Committee on Ways and Means to testify about the health care law’s impact on employment and the economy. Specifically, he testified about the ways in which he believes the costs of the employer mandate, administrative burdens, and tax increases impede economic growth and job creation.

Like McDonnell, Holtz-Eakin also found fault with the up-tick in regulatory activity. According to his testimony, the Federal Register published 82,590 pages in 2010, an 18.5 percent increase from 2009. These pages contained 2,401 proposed and 3,562 final rules, of which 673 were considered significant. Moreover, he cites information from the Office of Information and Regulatory Affairs (OIRA) stating that are 136 major rulemakings (averaging at least $100 million) currently under review.

Testifying on behalf of the National Association of Manufacturers (NAM), Dyke Messinger, president of Power Curbers, Inc., similarly criticized the increase in regulatory activity in addition to increased taxes which, he claims, puts U.S. manufacturers at a competitive disadvantage. He advocates a tax system that “promote[s] fair rules for taxing active foreign income of U.S. based businesses. Congress must reduce the corporate tax rate to 25 percent or lower without imposing offsetting tax increases.” In addition, Messinger argued that the “continuing expansion of federal mandates and labor regulations undermines employer flexibility.”

Specifically, Messinger testified that “[t]o encourage competitiveness, the United States should reject new federal regulations that dictate rigid work rules, wages and benefits and that introduce conflict into employer-employee relations.”

Messinger also expressed concern that the Occupational Safety and Health Administration is veering away from its cooperative programs with employers that promote voluntary compliance with the agency’s many safety regulations: “Through a series of both proposed regulations and sub-regulatory administrative actions, OSHA is in the process of gutting key components of compliance assistance programs that have been proven to help employers make their workplaces safer while allowing the agency to focus its resources more effectively.” Instead, Messigner advocates greater support for initiatives at OSHA as well as at other agencies that “encourage employers and employees to join in cooperative efforts for safer working environments.” He also promoted employers’ “voluntary efforts to meet the needs of individual employees through flexible work schedules and benefit arrangements need to be recognized and promoted.”

Heather Boushey, Senior Economist with the Center for American Progress, claimed that the sluggish employment recovery is instead due to insufficient aggregate demand in the overall economy. To remedy the situation, she urged policymakers to “continue to ensure that financial markets are focused on making funds available to promote investment in America, not just speculation and dividends for those in the financial services industry.”

A complete list of the panelists and links to their testimony can be found here.

The amendment (S. Amt. 4596) offered by Sen. Mike Johanns (R-NE) sought to repeal the tax provision entirely, while that offered by Sen. Bill Nelson (D-FL) (S. Amt. 4595) would have reduced the burden of the reporting requirement by limiting it to cumulative purchases of more than $5,000 per year, and exempting business with fewer than 25 employees from this requirement. Sen. Johanns’ measure failed by a vote of 46-52, 14 votes shy of the 60 needed to be included as an amendment. Sen. Nelson’s amendment failed by a 56-42 margin. Earlier this year, Sen. Johanns introduced the Small Business Paperwork Mandate Elimination Act (S. 3578) which would have similarly repealed this provision.

As reported by Politico, the Obama Administration supported efforts to scale back the tax measure. In a letter to Sen. Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY), Treasury Secretary Timothy Geithner and Health and Human Services Secretary Kathleen Sebelius wrote: “We are committed to reducing the gap between taxes legally owed and taxes paid,” adding: “[h]owever, the administration believes that the burden created on businesses by the new information reporting requirement on purchases of goods that exceed $600, as included in Section 6041 of the Internal Revenue Code as modified by Section 9006 of the Affordable Care Act, is too great.” Some Democrats, while in favor of limiting or repealing the provision, have been hesitant to support efforts seen as chipping away at portions of the health care bill.

Photo credit:  Bartek Szewczyk

As discussed in the fact sheet, the frequency of breaks and duration of these breaks will likely vary, and must take place in a space other than a bathroom (even if the employer’s bathrooms are private). Spaces temporarily created or converted into a lactation area or made available when needed by the nursing mother is sufficient “provided that the space is shielded from view, and free from any intrusion from co-workers and the public.”

With respect to coverage and compensation, the WHD explains that only employees who are not exempt from the FLSA’s overtime pay requirements are entitled to these lactation breaks, and that employers with fewer than 50 employees total (all employees are counted for purposes of applicability regardless of where they work) are not required to comply with these break requirements if doing so would impose an undue hardship. Whether this requirement would impose an undue hardship is determined by considering the difficulty or expense of compliance for a specific employer in relation to the size, financial resources, nature and structure of the employer’s business. The new requirements do not, however, preempt state laws providing more generous lactation break benefits.

Finally, the DOL clarifies that employers are generally not required to compensate employees while they are on lactation breaks, but would be required to do so if they already provide paid break time and the nursing employee uses such time to express milk.

For more information on this new requirement, see Littler’s ASAP: FLSA Amended to Require Breaks and Space to Express Breast Milk for Nursing Mothers by Julie A. Dunne and Mendy Mattingly.

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Some obligations and benefits, such as certain small business tax credits and required break times for nursing mothers, were effective when PPACA was signed on March 23, 2010. Other provisions, such as those establishing the early retiree reinsurance program and requiring temporary high risk pools, take effect in June, 2010. Other significant changes and mandates that affect insurance plans and employers start taking effect months or years from now. For example, the establishment of health insurance exchanges and penalties impacting employers that do not provide adequate health coverage to their full-time employees begin in 2014, while the 40 percent excise tax on high cost “Cadillac” insurance policies does not take effect until 2018.

For more detailed information on these health care implementation target dates that affect the workplace, see Littler’s Insight: Health Care Reform: Are You Prepared? A Timeline for Employers to Follow by Ilyse W. Schuman, Steven J. Friedman, and David M. Sawyer.

Photo credit: JLGutierrez