UPDATE ON RECENT AND PENDING HR LEGISLATION AND REGULATION

1. UPDATE ON RECENT AND PENDING HR LEGISLATION AND REGULATION Texas Higher EducationHuman Resources Association January 25, 2011 Presented by Lon R. Williams, Jr. Bracewell & Giuliani LLP 1445 Ross Avenue, Suite 3800 Dallas, Texas 75202 214.758.1086 817.886.6750

2. Pending Federal HRRelated Legislation

3. New Congress – Stay Tuned The following legislation was pending in the prior Congress and may or may not be introduced in the current Congress: • Employee Free Choice Act • Employment Non-Discrimination Act ("ENDA") (H.R. 3017, S. 1584) • OSHA Legislation Protecting America's Workers Act of 2009 (H.R. 2067, S. 1580) Also, Mine Safety Act (H.R. 5663, S. 3671) • Comprehensive Immigration Reform for America's Security and Prosperity Act (H.R. 4321) • Family-Friendly Workplace Act (H.R. 933) • Family Fairness Act (H.R. 389) • Emergency Influenza Containment Act (H.R. 3991) • Fair Pay Act (H.R. 2151, S. 904)

4. New Congress, continued • Paid Vacation Act (H.R. 2564) • Working Families Flexibility Act (H.R. 1274) • Alert Laid Off Employees in Reasonable Time Act ("ALERT") (H.R. 2077) • COBRA Premium Assistance Extension (S.3549) • Taxpayer Responsibility, Accountability and Consistency Act of 2009 (S. 2882, H.R. 3408) • Employee Misclassification Prevention Act (S. 3254, H.R. 5107) • Protecting Older Workers Against Discrimination Act (H.R. 3721, S. 1756) • Direct Care Workforce Empowerment Act (HR 5902; S. 3696) • The Arbitration Fairness Act (H.R. 1020, S. 931) • Balancing Act of 2009 (H.R. 3047)

5. DREAM Act Defeated in Senate • On December 18th a 55-41 Senate vote fell five votes short of the 60 needed to begin debate on the proposed Development, Relief, and Education of Alien Minors Act (S. 3992), which would provide a path to citizenship for many younger immigrants

6. Balancing Act of 2009 (H.R. 3047) • Would consolidate proposed changes to the FMLA into one proposal, incorporating provisions from the Domestic Violence Leave Act (H.R. 2515), Family and Medical Leave Enhancement Act (H.R. 824), Family and Medical Leave Insurance Act (H.R. 1723) and Healthy Families Act (H.R. 2460)

7. Balancing Act of 2000, cont. • Would provide 12 weeks of paid FMLA leave • Would create a Family and Medical Leave Insurance Fund funded by new tax on employers and employees • Would require up to 7 days of paid sick leave per year

8. Employee Free Choice Act ("EFCA")(H.R. 1409, S. 560) • Would amend the National Labor Relations Act to make it easier for employees to gain union representation by a majority signing union authorization cards in lieu of a majority vote in an election • 50% +1 employees in Bargaining Unit sign cards then union would be certified to represent employees

9. Paycheck Fairness Act • In December the Paycheck Fairness Act was defeated by 2 votes in the Senate.

10. Paycheck Fairness Act (H.R. 12, S. 182) • Originally part of Lilly Ledbetter Fair Pay Act, passed in 2009 • Would increase penalties under Equal Pay Act ("EPA") • Would allow compensatory and punitive damages under EPA • Would limit affirmative defense available to employers: • Currently, EPA provides that employers may justify pay differential between female and male employees showing disparity is based on “any factor other than sex • Bill would require that the “other factor” must be a “bona fide factor,” such as education, training or experience • Employer would have to demonstrate that the factor is not based on a sex-based differential, is job-related and is consistent with business necessity

11. Paycheck Fairness Act, cont. • Would expand prohibition on retaliation against workers who discuss or disclose compensation of co-workers when employees respond to complaint or charge regarding pay discrimination • Would make it easier for plaintiffs to organize a class action • Bill uses “opt out” method and eliminates "opt-in" currently under EPA

12. Arbitration Fairness ActHR 1020 – S.931 • Would have prohibited mandatory arbitration in employment relationships

13. Equal Employment for All Act (H.R. 32) • Reintroduced in House to amend the Fair Credit Reporting Act • Would prohibit use of consumer credit checks against prospective and current employees for purpose of making adverse employment decisions (including hiring, promotions, transfers and terminations) • Would prohibit use of consumer credit reports, even if worker consented • Would allow use only if job at issue required among other reasons, for national security or Federal Deposit Insurance Corporation clearance, was for state or local government agency or a supervisory, managerial, professional, or executive position at financial institution

14. Protecting America's Workers Act (H.R. 190) • OSHA overhaul legislation reintroduced on January 5th • Higher civil and criminal penalties for violation of OSHA; enhanced whistleblower protections; covers public employees; and broader rights for family members of injured workers to participate in settlement negotiations

15. Recently Passed FederalHR Legislation

16. Health Care Reform:Patient Protection & Affordable Care Act (as amended by Reconciliation Act) • On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act into law ("PPACA") • Shortly thereafter, on March 30, 2010, a modified version of the House's Reconciliation Bill was signed into law, making changes to the broader heath care reform law enacted on March 23

17. Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 • The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, enacted December 17, 2010, included many extensions to tax credits and exclusions that affect employers and employees. • Included a two-year extension of a tax break for employer-provided tuition assistance

18. Temporary Extension of Unemployment Insurance and Related Matters - Postponed the termination of the program until June 9, 2012.

19. Telework Enhancement Act • More than 1 million federal employees could be eligible to telecommute after President Barack Obama signed the Telework Enhancement Act (H.R. 1722) into law on December 9, 2010

20. Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") • "Say-on-Pay" • President signed into law July 21, 2010 • Gives shareholders right to vote on executive compensation including golden parachutes in publicly traded companies and financial institutions. • Includes pay of CEO, CFO and the three other highest paid officers • Shareholders may vote at least every 3 years • Completely advisory • Takes effect for shareholder meetings in 2011

21. Cont'd – Dodd-Frank • Dodd-Frank also requires that every federal financial services agency establish an Office of Minority and Women Inclusion by January 20, 2011 • Agencies (i.e., FDIC and NCUA) required to develop standards for "increased participation of minority-owned and women-owned businesses in the programs and contracts of the agency" and standards for "assessing the diversity policies and practices of entities regulated by the agency" • Will force federal contractors to deal with 2 sets of regulations and guidelines – those enforced by OFCCP and those promulgated by new diversity and inclusion offices

22. Cont'd - Dodd-Frank • Expands whistleblower protections to wide range of financial services industry employees and allows employees proceeding under Sarbanes-Oxley Act ("SOX") to sue in federal court, bypassing administrative process • Protects such employees from retaliation for disclosing information about fraud or unlawful conduct related to consumer financial products, and covers employees that extend credit, service loans, provide real estate settlement services, and provide financial advice – including credit counseling to consumers • Claims are exempt from mandatory arbitration agreements that protected activity was a contributing factor in an adverse employment action • Clarifies that SOX whistleblower protections apply to employees of subsidiaries or publicly traded companies • Statute of limitations for actions alleging fraud against the government is 3 years

23. Mental Health Parity Act • Group health plans that provide medical and surgical benefits and mental health or substance use disorder benefits must apply same financial requirements and treatment limitations to both coverage areas • Law does not apply to employers with < 50 employees or to group health plans that experience a 1% or more increase in costs because of mental health parity provisions • Law does not force employers to provide mental health coverage

24. Franken Amendment • Generally, the Franken Amendment prohibits covered contractors and subcontractors from requiring employees to arbitrate certain employment claims • "Covered Contractor" = Any Department of Defense contractor with a contract over $1 Million • Specifically, Franken Amendment prohibits a covered contractor from requiring its employees or independent contractors to arbitrate: • (i) claims arising under Title VII; or • (ii) any tort related to or arising out of sexual assault or harassment • Covered contractors also prohibited from enforcing any provision of an existing agreement which requires such claims to be arbitrated, and are required to get certifications from any entities with subcontracts in excess of $1 Million on a covered contract that the subcontractor is in compliance with Franken Amendment

25. Recent Federal HR Regulations

26. Employee Rights Poster Required by Federal Contractors • Mandated as of June 20 a poster advising employee's right to join or not join a union and describing union and employer misconduct • Federal contractors and subcontractors are required to post this employee rights notice in their workplaces • Under DOL's final rule, employees may file complaints with the Labor Department about contractors that do not post the notice, and contractors who violate the regulation could have their federal contracts suspended or canceled

27. Mental Health Parity Act • Mental Health Parity Regulations Effective Dates: • Regulations effective April 5, 2010, for plan years beginning on or after July 1, 2010 • Calendar-year plans must comply with the new regulations beginning with the 2011 plan year

28. Mental Health Parity ActFAQ's on Website • Guidance posted July 1st on Department of Labor's Employee Benefits Security Administration website http://dol.gov/ebsa/faqs

29. GINA Title II Regulations • EEOC issued final regulations on November 9, to implement Title II of the Genetic Information Nondiscrimination Act (GINA) • These final regulations became effective on January 10, 2011! • Among other provisions, the regulations include model safe harbor language that employers are strongly encouraged to use when lawfully requesting medical information from an employee, physician or other third party • Regulations do not restrict an employer from receiving genetic information inadvertently after it requests health-related information if the employer warns employees not to provide genetic information.

30. Dodd – Frank Say-on-Pay Rules • On November 18, 2010, comment period ended for employers to comment on proposed regulations implementing the Dodd-Frank Act Section 951 say-on-pay requirements

31. Health Care Reform:PPACA • July 14, 2010, HHS issued regulations under the PPACA requiring new (i.e., "non-grandfathered") health plans to cover listed preventative services and eliminate cost-sharing requirements for such services • Must cover such services without charge to patients • Applies to those who enroll in non-grandfathered health plans after September 23, 2010 • Grandfathered plans are exempt from the requirement • Healthcare services covered are: • Preventive services • Vaccines • Pediatric care • Prevention for women

32. Electronic I-9 Forms • On July 22 final rule published by Homeland Security which amended I-9 regulations • Took effect August 21st • Regulations clarify: • I-9 Form must be completed within 3 business days of the date hired • The use of paper, electronic systems or a combination of paper and electronic systems is acceptable • Employers may but are not required to copy verification documents

33. ADA Amendments Act (ADAAA) • On September 23, 2009, the EEOC published its proposed regulations implementing and interpreting the ADAAA: • Public comment period expired on November 23, 2009 • Proposed regulations would require employers to revise policies, train or re-train HR personnel and supervisors in dealing with disability issue, and focus on reasonable accommodation issues and the interactive process between the employer and the disabled employee

34. EEOC Approved Regulations for ADA Amendments Act • EEOC approved a final set of regulations for ADAAA at the end of December 2010 • Five Commissioners voted privately and unanimously to approve the long-awaited regulations • ADAAA final regulations were released to the Office of Management and Budget (OMB) and other federal agencies for review and comment • Once OMB approves the regulations, they will be published in the Federal Register • Review by OMB could take several months

35. Breast Feeding Regulations • The DOL on December 21, 2010, announced that it is seeking comments on provisions of the Fair Labor Standards Act (FLSA) that require employers to provide nursing mothers with reasonable break time and a private space for expressing breast milk while at work

36. Nursing Mothers Entitled Reasonable Breaks - Fact Sheet #73 • Fact sheet issued by DOL - Wage and Hour Division explains employers' obligations under the PPACA • Employers must provide reasonable unpaid break time and a private place for breast-feeding employees, titled "Break Time for Nursing Mothers under the FLSA" • Applies only to non-exempt employees • Federal law does not require employers to compensate nursing mothers for the breaks while nursing • Employer with less than 50 employees at all work sites exempt if undue hardship

37. Comment Deadline for Proposed NLRA Rights Poster • The NLRB has published a Notice of Proposed Rulemaking that would require many employers to notify employees of their rights under the National Labor Relations Act (NLRA) by posting a notice • The proposed rule would apply to private-sector employers subject to the NLRA, excluding agricultural, railroad and airline employers • Public can submit comments on the proposal until February 22, 2011

38. CIS Extends Comment Period on E-Verify Self-Check proposal • Homeland Security's Citizenship and Immigration Services published a notice in the December 14 Federal Register extending the comment period regarding a new self-check service that would allow U.S. workers to enter data into the E-Verify system to ensure that information related to their work eligibility is accurate.

39. DOD Final Rule Bars Mandatory Arbitration • The Defense Department is barring certain defense contractors and subcontractors from requiring employees or independent contractors to arbitrate claims under Title VII of the 1964 Civil Rights Act or torts arising out of sexual assault or harassment, according to a final rule published in the December 8 Federal Register

40. DOT Proposes Commercial Driver Cell Phone Bans • Interstate commercial truck and bus drivers would be prohibited from reaching for, holding, or dialing their cell phones while driving, and employers that allowed their drivers to use cell phones while driving would be subject to a penalty of up to $11,000, under a Federal Motor Carrier Safety Administration proposed rule published in the December 21 Federal Register

41. HR Related Administrative Action

42. DOL FY 2011-2016 Strategic Plan • Wage and Hour Division and Department of Treasury joint initiative regarding misclassification of employees as independent contractors is Strategic Goal No. 1

43. Health Care Reform:PPACA • IRS on December 2 provided final guidance on the small employer tax credit included in health care reform legislation under tax code Section 45R

44. Health Care Reform:PPACA • The Obama Administration is continuing to grant businesses waivers from the Patient Protection and Affordable Care Act's minimum annual limits

45. Health Care Reform:PPACA • On September 20, 2010, the DOL, Health and Human Services (HHS) and the Treasury issued new frequently asked questions on the Patient Protection and Affordable Care Act and grandfathered health plans, internal appeals and external review, coverage of children, out-of-network emergency services and highly compensated employees

46. DOL Posts Enforcement Data Online: • The DOL has made an online searchable database available of enforcement data collected from the W&H Division, OFCCP, EBSA, OSHA, and MSHA • Previously, only OSHA and MSHA made their enforcement data available online • Database will include detailed information (to be updated quarterly) regarding closed investigations, such as: • Number of FLSA violations per employer; • Amount of back wages an employer has "agreed to pay;" • Number of employees an employer has "agreed to pay;" • Type of violation; and • Amount of civil penalties assessed • Database will likely be tracked by plaintiffs' employment lawyers interested in potential litigation – something employers should keep in mind when considering to voluntarily resolve a DOL investigation

47. Bridge to Justice Program • DOL to refer work to Plaintiffs' Bar • Effective December 13, 2010, DOL launched its "Bridge to Justice" alliance with the American Bar Association • DOL hopes to bring together employees with private counsel to pursue claims under FLSA or FMLA • Complaining employees may be provided a toll-free telephone number to ABA's attorney referral program • Under Program, individual and counsel entitled to an "expedited disclosure" outside FOIA

48. 2011 Tax Withholding Tables Implementation Deadline • The IRS has released instructions to help employers implement the 2011 cut in payroll taxes, along with new income-tax withholding tables that employers will use during 2011 • Employees’ Social Security tax withholding rate is reduced from 6.2 percent to 4.2 percent of wages paid. • Employers must start using the new withholding tables no later than January 31, 2011

49. New Emphasis on Enforcement of Federal Labor Statutes • The DOL is committed to tougher enforcement of labor laws to reverse a culture of noncompliance that has developed over the past 10 years, Labor Solicitor M. Patricia Smith said October 21st.

50. OFCCP Agenda • The Obama Administration is attempting to overhaul the Labor Department's OFCCP.