D HR PUBLIC POLICY / WASHINGTON OUTLOOK 112TH CONGRESS &OBAMA ADMINISTRATION Leading People. Leading Organizations. Michael P. Aitken, Vice President, SHRM Government Affairs SHRM-Texas State Council Legislative HR Round Up April 4, 2013
Environment Gov't Budget, Healthcare Join Economy as Top U.S. Concerns Concern about energy prices/supplies falls from last year's high February 14, 2013
Environment Total Federal Deficits or Surpluses Congressional Budget Office
Environment Projected Growth in Major Federal Spending Categories Congressional Budget Office
Presidency President Obama’s Job Approval
Congress Congress’ Approval Stagnant at Low Level Republicans, Independents and Democrats share low ratings of Congress March 11, 2013
Congress 113th Congress –House of Representatives • Republicans control the House with234 Republicans to Democrats 201. • House has also become more “polarized” along ideological lines. • Tenure in House is also decreasing with majority of Members serving less than 5 years. • Why control of the House is important: • All tax legislation must originate in the House; • Party in control of House tightly controls policy and; • Need 2/3 of House to override a presidential veto.
Congress Tenure of the 113th Congress – House of Representatives Members of the House by Tenure 113th Congress Members of the House by Tenure 112th Congress 18+ Years 18+ Years 0-5 Years 0-5 Years 12-17 Years 12-17 Years Tenure for the 112th Congress is computed considering tenure up to the present. Tenure for the 113th Congress is computed considering tenure as of January 2013. 6-11 Years 6-11 Years Average: 8.9 years Average: 8.1 years Source: National Journal, 2012; GovTrack.us, 2012; Congressional Research Service, 2012.
Congress 113th Congress – Senate • There are currently 53 Democrats to 45 Republicans, with 2 Independents caucusing with the Democrats. • Senate has also become more “polarized” along ideological lines. • Tenure in Senate is also decreasing with majority of Members serving less than 5 years. • Why control of the Senate is important: • Confirms presidential appointments and judges; • Approves treaties and; • Magic number for control in the Senate is 60, not 51. Need 60 votes to ensure agenda moves forward.
Congress Tenure in the 113th Congress – Senate Senators by Tenure 113th Congress Senators by Tenure 112th Congress 18+ Years 0-5 Years 0-5 Years 19% 47% 12% 24% 12-17 Years 12-17 Years Average: 12.4 years Average: 10.4 years 6-11 Years 6-11 Years
Overview 2013 Public Policy Agenda • Tax and Benefits: • Fiscal Environment: • 2013 Federal Budget enacted. • Debt limit reached – July/August. • Statutory spending caps – 2012-2019. • Sequester – In effect on March 1, 2013. • Labor and Employment: • Pay attention to regulatory initiatives at DOL, EEOC and NLRB. • Most pending regulations will wait until end of first quarter 2013. • Efforts to increase the minimum wage and enact pay equity law expected in the Senate.
Overview 2013 Public Policy Agenda • Immigration Reform: • President named “Comprehensive Immigration Reform” as one of his top five priorities. • Bipartisan groups working on reform in both the House and the Senate. • Health Care Reform: • Election did not change outlook on the Patient Protection and Affordable Care Act (PPACA). • Efforts to “repeal, replace or defund” may continue but it is unlikely Congress will consider meaningful legislative efforts on PPACA in 2013. • Regulatory oversight and guidance continues. • Significant regulations expected in 2013.
Overview 2013 Public Policy Agenda • Workplace Flexibility: • Advocates continue to push expansion of FMLA/paid sick leave at state and local level but enactment at federal level impossible. • Obama Administration’s focus on workflex will continue. • Efforts on “comp time” legislation expected in the House this spring.
Tax and Benefit Issues • Bipartisan tax deal, The American Taxpayer Relief Act (P.L. 112-240), was passed by Congress on January 1 and signed into law by President Obama on January 2, 2013. • The new law revises tax rates on income for married couples filing jointly at $450,000 and $400,000 for single filers of taxable income, modifies the estate tax, and extends the Bush-Era tax cuts. The deal did not address: • Tax Reform • Debt limit • 2013 federal budget • Current U.S. debt limit is $16.4 trillion but Congress passed and President Obama signed into law a suspension of the enforcement of the debt limit until May 18. • U.S. Treasury Department is expected to be able to avoid federal default until late July or August.
Tax and Benefit Issues • The federal sequester went into effect on March 1. The sequestration will trigger $984 billion worth of cuts over the next nine years in both discretionary and mandatory spending. • The 2013 sequester applies equally between defense ($42.7 billion) and non-defense ($42.7 billion) programs for a total of $85.4 billion. The $42.7 billion in non-defense cuts will come from both mandatory (entitlement) and discretionary (non-entitlement) programs. • President Obama signed into law the 2013 federal budget on BLANK.
Jan. 31, 2013 Tax and Benefit Issues 2012 Debt Limit Crisis Could Lead to Default July – Aug. 2013 May 18, 2013 Debt Limit Reached U.S. hits $16.4T debt limit; U.S. Treasury Secretary takes “extraordinary measures” to avoid default U.S. Faces Threat of Default If no action is taken to suspend or raise the debt ceiling and Congress fails to reach a debt reduction deal, the U.S. could default on its debt obligations, throwing financial markets into a tailspin Congress Passes Bill to Suspend Debt Ceiling Congress passes legislation to suspend the debt ceiling until May 18, 2013; President signed the measure into law Congress Passes American Taxpayer Relief Act Sequester delayed by two months; Congress postpones debt reduction deal and negotiations to raise the debt ceiling U.S. Debt Ceiling Reinstated The debt ceiling is suspended until May 18, at which point the Treasury will take “extraordinary measures” to keep the government running Source: “The Emergency Debt Plan That Would Put U.S. Citizens Second,” Niraj Chokshi,; “Senate Dems Pass Bill to Suspend Debt Limit While House Republicans Push for Budget Plan,” National Journal.
Tax and Benefit Issues Budget Primer: Spending
Tax and Benefit Issues Cumulative Budgetary Effect of Major Income Tax Expenditures 2010 to 2014
Tax and Benefit Issues The American Taxpayer Relief Act of 2012 (P.L.112-240) • Signed into law by President Obama on January 2, the comprehensive tax legislation extended the Bush-era tax cuts that expired at the end of 2012. Many of the provisions discussed below will begin to phase out for individuals making over $250,000, $275,000 for heads of households and $300,000 for taxpayers married and filing jointly. • The law permanently extends Internal Revenue Code Section 127, which allows an employer to provide up to $5,250 per year tax-free in tuition, fees, and books to employees for courses on the undergraduate and graduate levels. • Also permanently extends the provision that provides employers a tax credit of up to $150,000 for acquiring, constructing, rehabilitating or expanding property used for a child care facility. SHRM supported this extension.
Tax and Benefit Issues • Permanently extends the exclusion from income for up to $10,000 in adoption expenses paid through an employer-assistance program. • The Act extends through December 31, 2013 the increase in the monthly exclusion for employer-provided transit and vanpool benefits from $125 to $240. • Extends the Work Opportunity Tax Credit (WOTC) through December 31, 2013. The WOTC allows employers to claim a credit equal to 40 percent of the first $6,000 of wages for one of eight targeted groups (families receiving benefits under the Temporary Assistance to Needy Families program, qualified ex-felons, designated community residents, vocational rehabilitation referrals, qualified summer youth employees, qualified food and nutrition recipients, qualified SSI recipients, and long-term family assistance recipients).
Tax and Benefit Issues • Extends the Returning Heroes and Wounded Warriors Work Opportunity Tax Credits until December 31, 2013. Currently businesses are allowed to claim a credit for hiring: Veterans in a family receiving supplemental nutrition assistance: $2,400; Short-term unemployed veterans: $2,400; Service-related disabled veterans discharged from active duty within a year: $4,800; Long-term unemployed veterans: $5,600 and Long-term unemployed service-related disabled veterans: $9,600. • Extends emergency unemployment benefits for one year to December 31, 2013. • Legislation did not extend the 2.0 percent FICA Payroll Tax cut. • The Act repealed the CLASS Act.
Labor-Management / Civil Rights Issues • Major labor-management legislation unlikely to move in early stages of 113th Congress. • President Obama and Congressional Democrats have also advocated for increasing the minimum wage and passing the Paycheck Fairness Act. • However, keep focus on the Agencies particularly EEOC and DOL. Regulatory activity possible early in 2013 includes: • Proposed Affirmative Action Regulations – 503 • Proposed Affirmative Action Regulations – Veterans • DOL proposed a survey on worker misclassification • NLRB regulatory activity at board level has decreased with court setbacks but several major decisions are being advanced by the agency: • Specialty Health Care • D.R. Horton
Labor-Management / Civil Rights Issues State of the Unions Changing U.S. Workforce (Industry Employment as Share of Workforce) 2012 2000 Source: Bureau of Labor Statistics
Labor-Management / Civil Rights Issues Source: Bureau of Labor Statistics
The Alfred P. Sloan Award for Excellence in Workplace Effectiveness and Flexibility recognizes exemplary employers for making work “work” with workplace flexibility. Apply to assess how your organization stacks up against competitors via a free benchmarking report. Please visit http://whenworkworks.org for more information and to apply. Labor-Management / Civil Rights Issues2013 Sloan Awards Open Through April 5!
Labor-Management / Civil Rights Issues • Comp Time Legislation • Legislation will be introduced in the House by Representative Martha Roby (R-AL) that would amend the Fair Labor Standards Act to allow private-sector employers to provide comp time, giving these employers the option of offering their hourly employees the choice of compensatory time off or pay for overtime hours worked. • The act will require an employee to have worked a minimum of 1,000 hours within the last 12 months to be eligible for comp time. • The legislation will allow employees to accrue up to 160 hours of compensatory time a year and to “cash out” unused comp time within specified periods of time. • Employees would be permitted to use the accrued comp time within a reasonable time after request as long as use of the comp time does not unduly disrupt the operations of the employer. Civil Rights Issues
Civil Rights Issues • Labor-Management / Civil Rights Issues • Employers will be permitted to offer a comp time program only if it is part of a collective bargaining agreement or the employer and employee voluntarily agree in writing to the program prior to the performance of work. • Employers would be required to cash-out unused comp time at the higher of the regular rate at which time was earned or the final regular rate. • SHRM is leading the effort on the comp time legislation.
Labor-Management / Civil Rights Issues • The Fair Minimum Wage Act (S. 460 & H.R. 1010) • Introduced in the Senate by Tom Harkin (D-IA) and in the House by George Miller (D-CA), the legislation would amend the Fair Labor Standards Act (FLSA) to raise the hourly minimum wage by $2.85 an hour in three increments: • $8.20 an hour 90 days after enactment, • $9.15 an hour 12 months after enactment and, • $10.10 an hour 24 months after enactment • The minimum wage would be indexed annually to inflation based on the Consumer Price Index36 months after enactment. • The legislation would also increase the minimum wage for tipped employees as well to $3.00 an hour 90 days after enactment, with incremental increases raising it eventually to 70 percent of the regular minimum wage. Civil Rights Issues
Labor-Management / Civil Rights Issues • Equal Employment Opportunity Commission (EEOC) • Strategic Enforcement Plan (SEP) • On December 28, 2012, EEOC approved its SEP that highlighted six high priority areas: • Eliminating Barriers in Recruitment and Hiring • Protecting Immigrant, Migrant and Other Vulnerable Workers • Addressing Emerging and Developing Issues • Enforcing Equal Pay Laws • Preserving Access to the Legal System • Preventing Harassment Through Systemic Enforcement and Targeted Outreach • SEP is aimed at having a common enforcement and litigation strategy throughout EEOC.
Labor-Management / Civil Rights IssuesDepartment of Labor Office of Federal Contract Compliance Programs (OFCCP) Policy Directive 307 on Pay Discrimination • In February, the OFCCP rescinded both the Standards for Systemic Compensation Discrimination and the Voluntary Guidelines for Self-Evaluation of Compensation Practices that have been in place since 2006. • Under this new directive effective February 28, federal contractors can no longer rely on the standard analytical criteria laid out in the Compensation Standards. • Instead, the new directive provides that the analytical method to be used is case-specific and includes the use of a range of investigative and analytical tools. • OFCCP indicated it will investigate possible systemic, small group and individual compensation discrimination.
Proposed rule published February 15, 2012 and final rule issued February 5, 2013. Primarily covers statutorily-required clarifications of military leave created in the National Defense Authorization Act for FY 2010 and flight crew provisions enacted in the Airline Flight Crew Technical Corrections Act. The final rule emphasizes that DOL is not returning to a system requiring employers to track FMLA leave in smallest increment allowed by payroll. Instead, rule specifically mentions that employers were “universally opposed” to eliminating varying increments and, therefore, DOL retained the current system. SHRM, the National Coalition to Protect Family Leave, and hundreds of SHRM members submitted comments. Final rule notes that approximately 90% of comments received were from SHRM members. Labor-Management / Civil Rights Issues Family & Medical Leave Act
Immigration Reform Issues • President Obama stated during the campaign that comprehensive reform was one of his five top priorities if re-elected and outlined his “vision” for comprehensive reform during the State of the Union on February 12. • Senate “Gang of Eight” meeting regularly to find common ground as well as a group of bipartisan group Representatives in the House. • Current timeline is a legislative “push” in late Spring/early Summer. • The SHRM/ACIP partnership is part of the dialogue and advocacy effort.
Immigration Reform Issues Americans More Positive About Immigration
Immigration Reform Issues Data source: www.uscis.gov/e-verify, “Statistics and Reports.”
Immigration Reform Issues SHRM/ACIP Principles for Immigration Reform
Health Care Reform Issues • 2012 general election did not change legislative dynamic of the Patient Protection and Affordable Care Act (PPACA). • Efforts to “repeal, replace and defund” may continue but it is unlikely Congress will consider meaningful repeal of the PPACA in 2013. • Regulatory oversight and significant regulations expected in 2013. • Tax-deferred status of health care benefits could become a target in tax reform. • Next steps for employers: • Employers and group health care plans continue implementation efforts. • Await and focus on additional guidance from federal agencies. • Review not just 2013 requirements but 2014 and beyond.
Health Care Reform Issues Fewer Americans Getting Health Insurance from Employer Medicare, Medicaid, & Military or Veterans' Insurance Inching Higher
Health Care Reform Issues Half of States Opted for Federal Exchanges in 2012 State Exchange Second Most Popular Option
Health Care Reform IssuesHealth Care: Employer Shared Responsibility • IRS issued proposed rule on January 2, 2013. Comments were due March 18, 2013. • Applies to large employers (50+ ees) subject to penalty if (1) fails to offer FTEs minimum essential coverage or (2) employer offers coverage but one or more FTEs qualifies for tax credit to buy insurance on the exchange. • SHRM comments include suggestions on: • Safe harbor for new employers setting up benefit package. • How FTEs are measured including exempting certain types of employees from the count (i.e. minor dependents, employees covered under policy of another family member).
Health Care Reform Issues • Next steps for employers in 2014 • Employers mandate. • Individual mandate. • Automatic enrollment for new employees. • State health insurance exchanges must be operational. • Insurance reform requirements for grandfathered plans.
Mike Aitken Vice President, Government Affairs email@example.com +1-703-535-6027 1800 Duke Street Alexandria, VA 22314