December 2019-January 2020 Government Affairs Update

Federal FY2020 Budget Adopted

The U.S. government is funded through Sept. 20, 2020. Legislation signed in late December authorizes nearly $1.4 trillion in spending. Included in the package is a pay raise of 3.1 percent for civilian federal employees, with the increase being broken down as a 2.6 percent across-the-board raise and a 0.5 percent locality adjustment.

 

Paid Family Leave Approved for Federal Workers

Included in the budget package was a bill that grants up to 12 weeks of paid leave for giving birth, adopting or fostering a child to nearly all civilian federal employees. The new benefit is scheduled to become available on or after Oct. 1, 2020.

 

Congress Finally Kills ACA’s ‘Cadillac Tax’ on High-Value Health Plans

The FY2020 budget also fully repeals the 40 percent tax that had been deferred multiple times already. Repealing this proposed source of revenue under the Affordable Care Act is projected to add $200 billion to the federal deficit over the next decade.

 

Revised FLSA Regular Rate Rule Took Effect Jan. 15, 2020

In its first revision to this rule in more than 60 years, the U.S. Department of Labor clarified that employers may exclude the following when calculating an employee’s regular rate of pay:

  • The cost of providing certain parking benefits, wellness programs, onsite specialist treatment, gym access and fitness classes, employee discounts on retail goods and services, certain tuition benefits, and adoption assistance;
  • Payments for unused paid leave, including paid sick leave or paid time off;
  • Payments of certain penalties required under state and local scheduling laws;
  • Reimbursed expenses including cellphone plans, credentialing exam fees, organization membership dues, and travel, even if not incurred solely for the employer’s benefit;
  • Certain sign-on bonuses and certain longevity bonuses;
  • The cost of office beverages and snacks to employees; and
  • Contributions to benefit plans for accident, unemployment, legal services, or other events that could cause future financial hardship or expense.

The revised rule further provides that

  • Where employees who are entitled to holiday pay receive additional pay for working on a holiday or vacation pay, the amount of holiday or vacation pay is excluded from the regular rate.
  • Occasional payments for forgoing the use of leave are treated the same regardless of the type of leave.
  • Payments for forgoing the use of leave are excludable from the regular rate regardless of whether they are paid during the same pay period in which the leave is forgone or during a subsequent pay period as a lump sum.
  • The pay for forgoing leave needs to be approximately equivalent to the normal earnings of the employee.

On callback pay, the revised rule removes the requirement that to be excludable, the callbacks must be “infrequent and sporadic.” The payments must be made without prearrangement in order to be excludable from the regular rate.

IPMA-HR joined several other organizations in submitting comments on the draft of the revised rule.

The Labor Department estimates that the only costs attributable to implementing the revised rule will come from regulatory familiarization amounting to 15 minutes per employer. The department also believes the projected total cost of about $30.5 million for implementation could be offset by potential cost savings from less litigation and an increase in the number of employers offering wellness programs that benefit both employers and employees.

 

New Federal Joint Employment Rule Takes Effect March 16, 2020

DOL is prescribing the use of a four-factor balancing test to determine joint employer status where an employee performs work for one employer that simultaneously benefits another person. The test examines whether the potential joint employer:

  1. Hires or fires the employee;
  2. Supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
  3. Determines the employee’s rate and method of payment; and
  4. Maintains the employee’s employment record.

The rule provides that an employee’s economic dependence on a potential joint employer does not determine whether it is a joint employer.

 

U.S. House OKs Amendments to the ADEA

The Protecting Older Workers Against Discrimination Act (H.R. 1230) would amend the Age Discrimination in Employment Act of 1967 and other employee rights laws to allow “mixed motive” claims. Currently, an employee or job applicant can only succeed with an ADEA claim when they show that their age or participation in investigations, proceedings or litigation related to an ADEA case was the motivating factor for an unlawful employment practice. The new law would permit age discrimination claims even if other factors also motivated the unlawful practice.

Specific provisions of the bill going to the Senate

  • Permit a complaining party to rely on any type or form of admissible evidence, which need only be sufficient for a reasonable trier of fact to find that an unlawful practice occurred; and
  • Declares that a complaining party shall not be required to demonstrate that age or retaliation was the sole cause of the employment practice.

That second provision overturn the U.S. Supreme Court’s decision in Gross v. FBL Financial Services, Inc. That 2009 ruling set the precedent that the complainant in an ADEA case must prove that age was the "but-for" cause for the employer's decision.

In addition to updating the ADEA, the Protecting Older Workers Against Discrimination Act would change the standard of proof for cases brought under the Civil Rights Act of 1964, the Americans with Disability Act and the Rehabilitation Act of 1973.

 

Pregnant Workers Fairness Act Passes Out of U.S. House Committee

The House Committee on Education and Labor voted to send H.R. 2694 to the full chamber. If enacted, the bill would ensure that pregnant employees are provided with reasonable accommodations unless the accommodation would impose an undue hardship on the employer.

Following the regulatory framework for the Americans with Disabilities Act, a reasonable accommodations would need to be arrived at through the interactive process, employers would not be allowed to require employees to take leave if another reasonable accommodation could be provided, and employers also could not take any adverse actions against employees who request reasonable accommodations.

The law would be administered by the Equal Employment Opportunity Commission, which would be required to issue regulations within 2 years after enactment. To guide employers and employees, those regulations would need to provide examples of reasonable accommodations addressing known limitations related to pregnancy, childbirth or related medical conditions.

 

U.S. Court of Appeals send Case on ACA Constitutionality Back to the Lower Court

The U.S. Court of Appeals for the Fifth Circuit concurred with part of a district court judge’s ruling that the entirety of the Affordable Care Act was unconstitutional and void. The appellate court, however, returned to the case to the district level, thereby leaving the ACA in effect for an indefinite period.

Plaintiffs in Texas v. USA argue that Congress’ vote to zero out the tax penalty on individuals for not carrying health insurance makes the law unenforceable and different from the law upheld by the U.S. Supreme Court on the grounds that Congress has the power to impose taxes. The lower court is being asked to reconsider whether the tax issue can be severed from the rest of the ACA.

The states that defended the ACA and Democrats in the U.S. House of Representatives failed to convince the U.S. Supreme Court to conduct an expedited review of the case. The U.S. Department of Justice and the states that brought the litigation opposed that petition, largely because they are worried about how killing the ACA before elections in November will affect voters’ decisions.

 

For additional information, please contact IPMA-HR Executive Director Neil Reichenberg at nreichenberg@ipma-hr.org.

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