HR PUBLIC POLICY / WASHINGTON OUTLOOK 113TH CONGRESS & OBAMA ADMINISTRATION

Transcription

1 113TH CONGRESS & OBAMA ADMINISTRATION D Leading People. Leading Organizations. Lisa K. Horn Director, Congressional Affairs HR Florida Day on the Hill April 2,

2 2 Environment Americans Rate Economy as Top Problems Other High-Priority Issues Include Dissatisfaction with Government, Healthcare Policy

3 3 Americans Are Worried About Different Things Environment

4 4 The Presidency 4

5 5 The President s Second-Term Jinx Obama s Approval Rating Slightly Below Average of Predecessors The Presidency Second-term presidential approval ratings President Approval Rating Date Clinton 66% Feb Reagan 64% Jan Eisenhower 54% Feb Johnson 49% Jan Obama 42% Feb. 23 Mar. 2, 2014 G. W. Bush 42% Feb Nixon 28% Feb Source: Gallup Presidential Approval 5 Center.

6 6 Congress 6

7 7 Congress Congress Job Approval Persists at 15% in March 15% Approval Rating is lowest March Score in Modern Midterm Years

8 8 House Republicans Can Be Considered in Six Factions Six Factions of the Republican Party (Based on Republican Votes on Key Legislation* in 2013) Congress Coalition of the Willing The Deciders Coalition of the Unwilling Voted YES 5 of 5 times Voted YES 4 of 5 times Voted YES 3 of 5 times Voted NO 3 of 5 times Voted NO 4 of 5 times Voted NO 5 of 5 times Analysis There is almost no issue on which House Speaker Boehner (R-Ohio) will get the support of all 218 Republicans, or even a majority of the majority, due to ideological divisions among House Republicans While 63 members of the Coalition of the Unwilling will rarely or never side with Boehner on tough votes, 61members of the Coalition of the Willing give Boehner the flexibility he needs to pass bipartisan legislation * Breakdown based on the following five pieces of bipartisan legislation: H.R. 152 (Aid following Hurricane Sandy); S. 47 (Reauthorization of Violence Against Women Act); H.R (The Farm Bill, failed 6/20/13); H.R (Shutdown Deal/Continuing Resolution); H.J. Res 59 (Budget Deal) Note: This chart only includes members who cast votes at least three times for or against these bipartisan measures. As such, due to abstentions, vacancies, 8 and/or alternate voting combinations not listed above, the total number of members listed here does not add up to the current total of Republicans in the House. Source: Cook Political Report, 2014.

9 Public Policy Agenda Tax and Benefits Issues Federal Budget Process Federal Government funded through September 30, 2014 with a $1.012 trillion dollar budget. Congress has already agreed through the budget resolution passed in December, to a $1.014 trillion dollar budget for President Obama released his $1.1T budget on March 4. Deal may be near on extending expired UI benefits. Federal debt still looms large Better than anticipated deficit outlook in 2013 and 2014 but current federal deficit is $17 trillion dollars. December budget resolution staves off $45 billion of sequestration cuts in 2014 and $20 billion in 2015 in both discretionary and mandatory spending. Debt ceiling extended through March 2015.

10 10 Tax and Benefits Issues 2014 Public Policy Agenda Tax Reform Chairman of the House Ways and Means Committee Dave Camp (R- MI) introduces tax reform proposal but unlikely to move forward in Significant changes to employer sponsored benefits. Momentum on tax reform likely after elections and with new congress.

11 11 Tax and Benefits Issues

12 12 Tax and Benefits Issues

13 13 Budget Primer: Spending Tax and Benefits Issues

14 14 Tax Reform Act of 2014 (H.R.1772) Tax and Benefits Issues Released by House Ways and Means Chairman, David Camp (R-MI), the bill is aimed at reforming the U.S. Tax Code. The bill would make changes to both personal and corporate tax rates and would have broad implications for the workplace. Key provisions of interest to HR professionals and the workplace include: Repealing Section 127, Employer Provided Education Assistance. Repealing Section 117, Tuition Reduction Agreements for education institutions. Repealing fringe benefit exemptions, including adoption, housing and moving expenses. Modifying retirement plans, including lowering the tax deferred amount allowed to (401(k) 403(b) and 457(b)) retirement accounts from $17,500 to $8,750 per year.

15 15 Tax and Benefits Issues Eliminating income limits for Roth 401(k) and 403(b) plans and allow plan participants to contribute up to $17,500 on an after tax basis. Requiring employer sponsored plans to offer a Roth 401(k) and 403(b) plans if they offer a traditional tax deferred plan. Freezing inflation indexing on all retirement plans for 10 years, effectively reducing amounts that can be contributed to retirement accounts. Repealing the employer-provided child care credit. Repealing the credit for employee health insurance expenses for small employers. Repealing the Work Opportunity Tax Credit. Modifying executive compensation provisions. Chairman Camp plans to hold hearings and possibly move the bill through the Committee later this session.

16 16 Exclusions from Taxable Income Account for Most Tax Expenditures Capital gains on assets Total $461B $33B $43B Pension contributions and earnings $137B Social Security and other benefits FY 2013 Cost of Major Tax Breaks Tax and Benefits Issues Employersponsored health insurance $248B Charitable contributions Total $186B $39B Mortgage interest $70B State and local taxes $77B Total $161B $161B Total $118B Child tax credit $57B Earned income tax credit $61B Exclusions from Taxable Income Tax Deductions Preferential Rates on Capital Gains and Dividends Analysis The top 10 most expensive tax expenditures will cost the federal government roughly $900B in FY 2013 Both Republicans and Democrats have recently considered eliminating or limiting these tax breaks as a way to generate revenue Tax Credits

17 17 Immigration Reform Issues 2014 Public Policy Agenda Immigration Reform One of President Obama s top priorities is comprehensive reform and it was a focus during the State of the Union on January 28. SHRM/Council are focusing our advocacy efforts on three major areas: Increase system efficiency through, among other improvements, creating a Trusted Employer system; Provide access to highly educated and skilled talent by leaving intact green card provisions and further improving H-1B and L-1 visa provisions to ensure the temporary high-skilled visa system works for employers and; Give employers certainty in hiring through enabling a single, federal, entirely electronic employment verification system that protects against identity theft through knowledge-based authentication.

18 18 Timeline of Important Immigration Actions in the 113th Congress The Senate passes the Border Security, Economic Opportunity, Immigration Modernization Act (S. 744). House Speaker Boehner will not take up S. 744, but will take a step-by-step approach and address a series of bills. The President agrees to support a step-by-step approach. The President indicates in his SOTU that immigration reform is a top 2014 priority. Republicans immigration reform standards are released in the House. Any final bill will need Democratic support to pass. House Speaker Boehner says immigration reform will be difficult to move forward in House Democrats discuss a discharge petition option. June 27 July November 20 January 28 January 30 February 6 February

19 19 Immigration Reform Issues Source: SHRM Employment Verification Survey

20 20 Two important immigration bills in the House: ❶ The Legal Workforce Act (H.R. 1772): A bill that focuses on employment verification, makes E-Verify mandatory within six months to two years of enactment, preempts state laws, and while it takes steps toward modernizing the current E-Verify system, further changes are needed to combat identity theft in the verification process. (Passed in Committee June 2013) ❷ The SKILLS Visa Act (H.R. 2131): A bill that takes steps to improve the employment-based immigration system. While it provides a Trusted Employer program to allow for a predictable application process to better access talent and save resources, it does not provide enough green cards to meet future needs or clear existing backlogs. (Passed in Committee June 2013) *Legislation will have a significant impact on HR & immigration professionals business practices. 20

21 21 ❶ Ensure Employers have the Tools to Hire Legal Workforce. E-Verify must use state-of-the-art technology, such as knowledge based authentication, to accurately authenticate a job applicant s identity to combat against identity theft. 21

22 22 ❷ Provide Employers with Access to World Talent. America s employment-based immigration system requires changes to allow more highly educated and skilled foreign born professionals to contribute to our global competitiveness, economic growth and U.S. based job creation. Greater access to green cards and nonimmigrant visas and a Trusted Employer program to improve efficiency of work related visa applications are critical components. 22

23 Public Policy Agenda Labor and Employment Labor-Management/Civil Rights Issues President Obama and Congressional Democrats have initiated national conversation on income equity, advocating for increasing the minimum wage and passing the Paycheck Fairness Act. Major labor and civil rights legislation unlikely to become law: Employment Non-Discrimination Act. The Paycheck Fairness Act. Working Families Flexibility Act. However, agency developments and Executive Orders will ensure active 2014: Proposed 541 Regulation. Executive Order on Minimum Wage Increase for Federal Contractors. Final action on Proposed Persuader Regulation??? Review of use of Social Media in Employment.

24 Public Policy Agenda Labor and Employment Labor-Management/Civil Rights Issues Full NLRB Board will mean increased regulatory activity: Revised Ambush Election Rule / Specialty Health Care / D.R. Horton. Workplace Flexibility White House Summit on Working Families to be held June 23. Advocates continue to push expansion of FMLA/paid sick leave at state and local level but enactment at federal level impossible. Successful efforts on comp time in the House unlikely to translate to the Senate.

25 25 February 2014 NLRB Issues Revised Ambush Election Rule Labor-Management/Civil Rights Issues National Labor Relations Board (NLRB) issued a proposal that would change long-standing policies governing union elections. The Board s proposed rule would significantly shorten the time between the filing of a petition for a union election and the election date by: Giving workers as few as 10 days to consider all the consequences of joining a union before they have to vote in the election. Providing employers just seven days to find counsel and prepare their case to be presented at a pre-election hearing convened by an NLRB election officer. Delaying answers to important questions such as voter eligibility until after workers have cast their ballot. 25

26 26 NLRB Ambush Rule Legislation Labor-Management/Civil Rights Issues On Thursday, March 27 th the Senate and House introduced legislation, the Workforce Democracy and Fairness Act to protect the rights of workers and employers in response to the NLRB Ambush Rule. Ranking Member of the Senate HELP Committee, Senator Lamar Alexander (R-TN) introduced the Workforce Democracy and Fairness Act in the Senate (S. 2178). Chairman of the House Education and Workforce Committee, Congressman John Kline (R-MN) introduced the Workforce Democracy and Fairness Act in the House (H.R. 4320). Also in the House, Congressman Phil Roe (R-TN) introduced the Employee Privacy Protection Act (H.R. 4321) which would give workers greater control over the disclosure of their personal information and help modernize an outdated union election process. *This bill is incorporated into the Senate bill. 26

27 27 Labor-Management/Civil Rights Issues The Workforce Democracy and Fairness Act (S. 2178; H.R. 4320/H.R. 4321): Guarantees workers have time to gather all the facts to make a fully informed decision in a union election. No union election will be held in less than 35 days. Ensures employers are able to participate in a fair union election process. The bill provides employers at least 14 days to prepare their case to present before a NLRB election officer. Reasserts the board s responsibility to address critical issues before a union is allowed to represent workers (including deciding the appropriate group of employees to include in the union before the union is certified). Empowers workers to control the disclosure of their personal information. Employers would have seven days to provide a list of employee names and one additional piece of contact information chosen by each individual employee. Legislative movement in House likely in April/May. 27

28 28 Working Families Flexibility Act (S & H.R. 1406) Labor-Management/Civil Rights Issues Legislation introduced in the House by Representative Martha Roby (R-AL) and in the Senate by Mitch McConnell (R-KY) that amends 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 requires an employee to have worked a minimum of 1,000 hours within the last 12 months to be eligible for comp time. The legislation allows 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 are 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.

29 29 Employers are 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 are required to cash-out unused comp time at the higher of the regular rate at which time was earned or the final regular rate. The Senate bill also establishes a Flexible Credit Hour Program that allows an employee to work excess hours (any hours worked beyond the number of hours an employee is required to work within a specified timeframe) in his/her schedule in order to accrue hours to be taken off at a later time. Employees could accrue up to 50 flexible credit hours. SHRM is leading the effort on the Working Families Flexibility Act. Labor-Management/Civil Rights Issues The House bill was approved by the House of Representatives by a vote of 223 to 204 on May 8. The Senate bill has been referred to the Senate Health, Education, Labor, and Pension Committee.

30 30 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 Index 36 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. Likely to be considered in the Senate this session.

31 31 Department of Labor Proposed Rule to Amend 541 Overtime Regulations Labor-Management/Civil Rights Issues President Obama sent a presidential memorandum to the Department of Labor (DOL) on March 13, directing the Agency to modernize and simplify the Section 541 rules. Under the FLSA 541 Regulations, an employee qualifies as exempt from overtime if he or she satisfies a duties test (under the Executive, Administrative, Professional, Computer and Outside Sales regulations) and the employee is paid on a Salary Basis. Although we have not seen a proposal, we understand the changes may include doubling the Salary Basis amount from $455 dollars a week ($23,660 annually) to $910 dollars a week ($47,320 annually).

32 32 Labor-Management/Civil Rights Issues Proposal will also modify the duties test making changes to definitions and possibly changing key terms and elements, particularly in the primary duty area. DOL will be holding a series of listening events in the months leading up to the announcement.

33 Public Policy Agenda Health Care Reform Health Care Reform Issues Fall-out over PPACA implementation challenges continues. Many PPACA requirements have been delayed including effective dates and coverage requirements. Congressional oversight and regulatory guidance continues. Tax-deferred status of health care benefits could become a target in tax reform. While repeal of PPACA is off the table, modest changes will be considered. 33

34 34 Number of Americans that Say ACA has Hurt them Increases Health Care Reform Issues Gallup, February 28-March 2, 2014

35 35 Delays Continue to Disrupt Full ACA Implementation Health Care Reform Issues Delayed ACA Provisions and Expected Dates of Implementation Original start date New start date Potential extension Employer Mandate Requires employers with 50 or more employees to provide health insurance Delay Announced: July 2013 Pre-ACA Coverage Allows individuals to keep or buy pre-aca plans if their state insurance regulators permit Delay Announced: November 2013 Small Business Health Options Program Allows small businesses to enroll employees in health exchanges Delay Announced: November 2013 Employer Mandate Requires companies with employees to provide employees health insurance Delay Announced: February 2014 Pre-ACA Coverage Allows individuals and small businesses to buy pre-aca coverage for an additional year, if state insurance regulators permit Delay Announced: March 2014 c c c Businesses with more than 100 employees must comply with employer mandate by providing coverage to 70% of full-time employees or pay a penalty Analysis Originally, the Affordable Care Act opened health insurance exchanges in Oct and enacted most provisions in 2014, but delays have plagued the law s rollout In addition to the delays listed above, the administration extended the exchanges open enrollment period for those who wanted coverage to begin in Jan for nine days in December after repairing the faulty HealthCare.gov Although the administration does not foresee further ACA delays or extensions, Republicans have seized on delays to suggest the law does not work 35 c c Holders of pre-aca plans received cancellation notices, compromising the administration s previous promise to allow individuals to keep pre-aca plans Small businesses may enroll employees in health exchanges via paper, but must wait one year to enroll employees online Cancellation notices will arrive in Oct. 2016, but plans that offer early renewals could be extended into 2017

36 36 CBO Triples Projected Loss of Workers Under ACA Health Care Reform Issues Projected Loss in Full-Time Employees (FTE) Under the Affordable Care Act* 800, Reasons for Projected Loss of Full-Time Employees Design of Policy Under the Affordable Care Act, work is not a prerequisite for health insurance, which may disincentivize full-time employment Employers May Cut Hours Employers may cut working hours to reduce the number of full-time employees required to receive insurance Employers May Hire Fewer Workers Employers may hire fewer workers to avoid employer-mandate penalty In 2010, the CBO forecast a loss of 800,000 household employees in the labor force by Employers May Lower Wages Employers may lower wages to avoid or compensate for employer-mandate penalty Analysis In 2010, CBO projected that implementing the Affordable Care Act would reduce the labor force by 800,000 FTE by 2021; in February 2014, the CBO predicted the ACA would contribute to a reduction of 2.3 million FTE by 2021, about triple the original projection Before the ACA, most Americans relied on employers for health insurance; with the ACA in effect and exchange enrollment expected to rise in the next few years, employment is no longer a prerequisite for health insurance, and this may disincentivize full-time employment Employers may also contribute to the decrease in FTEs by reducing work hours, hiring fewer workers, and lowering wages to avoid employer-mandate penalties under the ACA * CBO s recent projections take into account additional studies published since 2010 and the impact of the employer mandate penalty on wage reduction and labor supply; CBO s 2014 estimate of decreased working hours translates to a decrease in full-time equivalent employment

37 37 40 Hours is Full Time Act (S. 1188) & (H.R. 1188) Save American Workers Act (H.R. 2575) Health Care Reform Issues Bipartisan legislation introduced in the Senate by Susan Collins (R-ME) and Joe Donnelly (D-IN) and in the House by Todd Young (R-IN), the legislation would amend the Internal Revenue Code to: Modify the definition of full time for the hours worked requirement for health care coverage under the Patient Protection and Affordable Care Act from 30 hours a week to 40 hours. Clarify that the number of hours counted toward a "full-time equivalent" employee to be 174 hours per month as opposed to 120 hours per month under current law. House likely to consider H.R.2575 in the next few weeks. 37

38 38 Lisa K. Horn Director, Congressional Affairs SHRM Duke Street Alexandria, VA