Legislative Update: Employment Law on the Back Burner? Uncertainty after Midterm Elections
There has been much activity in Congress since our last update, but the vast majority of that activity has not directly impacted employment law. Before the late summer recess we saw the confirmation of Elena Kagan to the United States Supreme Court and the appointment of Carte Goodwin to the Senate seat vacated by late Democratic Senator Robert C. Byrd of West Virginia. In the abbreviated pre-election session, very little of note occurred. Of course, the big news is the outcome of the November mid-term elections, after which Republicans gained control of the House, and Democrats held their majority in the Senate, but barely. One interesting fact is that Republican Mark Kirk will take over for Democratic Senator Roland Burris from Illinois.
Since Congress has been back in session, Charlie Rangel’s ethics trial has occupied the spotlight. There is some doubt as to whether significant legislative progress can be made during the current post-election lame duck session, and it is unlikely that legislation affecting employers will be front and center, with Congressional members focusing their attention on extensions of the Bush tax cuts and unemployment benefits. This continues the theme of 2010, where most employment-related initiatives have played second fiddle to healthcare, economic reform, and unemployment benefits. To set the stage for the lame duck session and the upcoming 112th Congress, below is an update of the progress of bills we have previously discussed, as well as new employment legislation.
HIRE Now Tax Cut Extension Act of 2010 (H.R. 6105, S. 3623)
Current Status of Law: The HIRE Act of 2009 provides two tax incentives for private employers who hire unemployed workers, including an exemption from paying FICA (social security) taxes on the wages of those workers and a business tax credit for retaining the workers for at least 52 consecutive weeks. These incentives only apply to individuals hired before January 1, 2011, and the FICA tax “holiday” only applies to employment through December 31, 2010. For more information on the HIRE Act in its current form, read the article entitled “Are You Taking Advantage of the HIRE Act?” in the Summer 2010 edition of the Troutman Sanders Employment & The Law newsletter, available online at http://www.troutman.com/lesummer2010-09.
What Would Change: Simple. The HIRE Now Tax Cut Extension Act of 2010 (the “Extension Act”) extends these incentives into 2011. First, the Extension Act amends the applicable hire date of the previously unemployed worker to extend through July 1, 2011. Second, the Extension Act extends the FICA tax holiday through June 30, 2011, but only for workers hired after July 22, 2010.
Why You Care: You can give a little less to the IRS. If you have already taken advantage of the HIRE Act, you may be entitled to additional incentives if you hired an eligible worker after July 22, 2010. If you haven’t taken advantage of the HIRE Act because you haven’t been able to justify hiring an eligible worker, this legislation would give you some extra time.
Likelihood of Becoming a Law: Introduced in the House in August, this bill has a long way to go before it becomes law. In the bill’s favor, however, is that it is a mere timing extension of the HIRE Act, which garnered bipartisan support, possibly because it took the form of a tax credit rather than a spending initiative. However, the clock is ticking – this legislation does not appear to be on anyone’s radar. Another possible fate for this extension is that it may be enacted in slightly different form if the Americans Want to Work Act (discussed below) garners more bipartisan support, though that is unlikely.
The Americans Want to Work Act (S. 3706)
Current Status of Law: This law would affect both unemployment insurance and the HIRE Act tax incentives discussed above. Normally, unemployment benefits last for 26 weeks and are primarily paid by the states. In periods of high unemployment, the federal government has traditionally stepped in with emergency measures to provide extra weeks of benefits. The Emergency Unemployment Compensation program, created in June 2008, currently structures these efforts with up to four new “tiers” of benefits. In July, legislation that provided an extension of these extended unemployment benefits through November was signed by the President. The extension restored unemployment benefits to the 2.3 million unemployed Americans who had run out of basic unemployment benefits, but did not include a Tier 5 unemployment extension that would provide additional weeks of unemployment benefits for those unemployed workers who have exhausted all basic and extended unemployment benefits.
What Would Change: This bill goes much further than the Extension Act. It amends the applicable hire date of the previously unemployed worker to extend through January 1, 2012 (six months longer than the Extension Act). Second, the Act extends the FICA tax holiday through December 31, 2011, but only for workers hired after August 4, 2010 (again, six extra months). The bill also doubles the tax credit from $1,000 to $2,000 if businesses hire workers who have totally exhausted their unemployment benefits. With respect to unemployment benefits, this bill would also provide extra weeks of benefits to people who have reached the end of their unemployment insurance lifelines (also known as Tier 5) in states with over 7.5% unemployment. The measure would provide 20 extra weeks of unemployment benefits.
Why You Care: You can give even less to the IRS. This legislation would give employers even more time to take advantage of the available incentives. The increase in the tax credit for those who have exhausted their unemployment benefits is yet another potential boon for any employer looking to hire. And you don’t have to pay more in unemployment taxes.
Likelihood of Becoming a Law: Introduced August 4, 2010, this bill is trying to do an awful lot. The problem is that the advantageous tax initiatives for employers are tied to yet another unemployment benefits extension. This bill has a hefty price tag that could be unappealing to many in Congress. While it is possible this bill will be revisited in the lame duck session, it is unlikely.
Direct Care Workforce Empowerment Act (S. 3696, H.R. 5902)
Current Status of Law: Workers employed “on a casual basis in domestic service,” such as babysitters, companions, and in-home caregivers are currently exempt from the minimum wage and overtime provisions of the Fair Labor Standards Act (FLSA). A 2007 Supreme Court ruling clarified that this FLSA exemption also applies to direct care workers employed in clients’ homes by third parties, such as employment agencies, in accordance with a corresponding Department of Labor (DOL) regulation.
What Would Change: This bill would revise the FLSA to redefine “casual basis.” The definition would specify that “employment is not on a casual basis, whether performed for one or more family or household employers, if such employment for all such employers exceeds twenty hours per week in the aggregate.” Consequently, many casual domestic workers would become entitled to minimum wage, which is currently $7.25 nationally, and overtime pay for hours worked in excess of forty per week. This bill would also direct the Department of Health and Human Services (HHS) to establish a direct care workforce monitoring program to facilitate data collection about the direct care workforce, and would allocate $25 million to the HHS Secretary to provide grants to states to expand their direct care worker training programs, create or improve systems for monitoring and collecting data about the direct care workforce, and establish or expand recruitment and retention programs.
Why You Care: This is not about your daughter’s babysitting gig. This bill will affect many direct care occupations, including employees working as nurses’ aides, home health aides, personal care aides, and home care aides. If you are in the healthcare industry or direct care industry, or if your business places individuals for work in these industries, this may affect you.
Likelihood of Becoming a Law: Eventually, highly likely. This bill was just introduced, so it has a long way to go, and so far its current vocal supporters are exclusively members of the Democratic Party. Nonetheless, the House bill’s sponsor, Representative Linda Sanchez from California, is pursuing a parallel means of changing the FLSA by taking the issue up with the DOL. The DOL is scheduled to release a notice of proposed rulemaking by the end of October 2011.
Miner Safety and Health Act of 2010 (H.R. 5663) (update)
Current Status of Law: Both mining safety law and general workplace safety law are implicated. The Occupational Safety and Heath Act (OSH Act) mandates safe and healthful working conditions by authorizing enforcement of workplace standards developed under the OSH Act. The Mine Safety and Health Act (MSHA) regulates and enforces safety specifically within the mining industry. Both legislative schemes provide for oversight and enforcement and have a schedule of penalties for violations.
What Would Change: This legislation’s proposed changes to the OSH Act are relevant to most employers. Akin to the Protecting America’s Workers Act discussed in last edition’s Legislative Update (H.R. 2067, S. 1580), this bill revises the OSH Act to increase whistleblower protections and augment criminal and civil penalties on employers and managerial employees. The legislation would also require employers to fix serious hazards during the contest period, instead of waiting until the employer’s appeal is exhausted. Employees and their family members would have greater rights during investigations and enforcement actions. The Occupational Safety and Heath Administration (OSHA) would be able to assert concurrent enforcement jurisdiction in states with the OSH Act state plans if the state is failing to maintain protections on par with the OSH Act. The bill raises employer penalties from $7,000 to $12,000 for serious violations and from $70,000 to $120,000 for willful and repeat violations. The Congressional Budget Office estimates that the OSH Act portion of this bill could bring in an additional $80 million in fines over the next 10 years.
Why You Care: This legislation could upend decades of policies and practices upon which employers and employees have come to rely. The increased penalties and liability for managerial employees are costly for business operations, and the augmented whistleblower protections could cause costly litigation in an already challenging economic environment.
Likelihood of Becoming a Law: It is possible, but not probable. This bill has reported out of committee and could be brought to vote on the House floor later this year. However, there is significant opposition to this legislation from Republicans and industry groups. Passage in the House and Senate would have to be prioritized during the lame duck session, which is unlikely, and when the starkly different 112th Congress is seated, the outlook for the bill becomes increasingly grim.
Paycheck Fairness Act (S. 3772, H.R. 12, S.182) (update)
Current Status of Law: The Equal Pay Act (EPA), enacted in 1963, prohibits discrimination on account of sex in the payment of wages by employers. Class members must affirmatively give written consent to opt in to any action. Employers have an affirmative defense to an EPA action if a discrepancy in pay is due to “any factor other than sex.”
What Would Change: The Paycheck Fairness Act would amend the EPA by narrowing the employer’s affirmative defense from discrepancies due to “any factor other than sex” to discrepancies that are “not based upon or derived from a sex-based differential in compensation,” are “job-related with respect to the position in question,” and are “consistent with business necessity.” The bill would also allow for previously unattainable compensatory and punitive damages, as well as opt-out (rather than opt-in) class actions.
Why You Care: If passed, the Paycheck Fairness Act would make gender-based pay discrimination claims more prevalent, more difficult to defend, and more costly.
Likelihood of Becoming a Law: Zilch. The Paycheck Fairness Act breezed through the House alongside the Lilly Ledbetter Fair Pay Act (which became law in January 2009), but stagnated in the Senate as Senate Bill 182. Senate Majority Leader Harry Reid reintroduced the bill as Senate Bill 3772 in mid-September, but was unable to bring it to a vote before mid-term elections. On November 17, 2010, the bill failed a cloture motion in the Senate by roll call vote, receiving only 58 of the 60 votes necessary, preventing consideration of the bill.
Work-Life Balance Award Act (H.R. 4855) (update)
Current Status of Law: There are currently no laws governing this area.
What Would Change: Nothing. The bill would simply reward companies for being particularly innovative or proficient in developing policies that foster a work-life balance for their employees. The Work-Life Balance Award Act would establish an award within the DOL to recognize companies that help employees balance the demands of their professional and personal lives.
Why You Care: What employer wouldn’t want to be on the good side of the DOL?
Likelihood of Becoming a Law: Nil. While we thought passage was fairly likely (thinking that few would oppose the bill), on June 15, 2010, it failed to pass the House by roll call vote. The vote was held under a suspension of the rules to cut debate short, which would have allowed the bill to pass with a two-thirds majority, which happens often enough for uncontroversial legislation. But this bill wasn’t uncontroversial enough, it seems. Still, you may see the bill again next Congress. In the meantime, don’t expect a plaque from the DOL.