Government Affairs Update - PowerPoint Presentation

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Government Affairs UpdateWisconsin ChapterJune 21, 2017

Neil Reichenberg

Executive Director

IPMA-HRSlide2

OverviewRepublicans control the executive/legislative branches of the federal government but are short of the 60 vote majority needed in the US Senate to end filibusters 33 states have Republican governors

During the last 8 years, Democrats lost more than 1,000 seats at the state and national levelSlide3

OverviewHow is the Administration and Republican Congress doing?37% approval rating for President

Trump/58%

disapprove

Average approval is 62% at this point in a presidency

20% approval rating for the Congress/74% disapprove

Approval of Congress by Republicans is down 22% since FebruarySlide4

OverviewHealthcare & dissatisfaction with government/poor leadership are now seen as the most important problems facing the country9% increase in the number citing healthcare

Immigration/illegal aliens, the economy in general, and unemployment/jobs are the next most important problemsSlide5

OverviewGrowing pessimism in the country:Only 31% of Americans are satisfied with the way things are going in the countryEconomic confidence index is at a post-election lowSlide6

OverviewCongress passed a bill funding the federal government for the balance of this fiscal year Debt ceiling suspension ended in March and Congress needs to take action by the end of summer to either raise the national debt or suspend it Slide7

OverviewThe budget proposal by the Trump Administration for the next fiscal year starting October 1st would increase defense spending by $54 billion while reducing domestic spending by the same amount

Largest cuts are to EPA, State/Agriculture/Labor Departments

A number of departments and programs would have their budgets reduced significantly and some programs would be eliminated

Congress is likely to make changes to the budget proposalSlide8

Paid Parental LeaveThe proposed budget would provide employees with up to 6 weeks of paid parental leave by the year 2020The paid parental leave would be fully offset by a package of reforms to the state unemployment insurance system

6 weeks of paid family leave would be provided to new parents including those who adopt

States would have broad latitude to design and finance the programSlide9

Paid Parental LeavePaid leave would be financed by:Improving unemployment insurance program by forcing states to clamp down on the improper payment of benefits

Establishing a tax credit system rewarding those states that have adequately funded their unemployment insurance systems

Providing mandatory funding to states permitting them to provide

reemployment

services and eligibility assessments

Offsetting overlapping unemployment and disability payments that currently allows individuals to receive unemployment and disability benefits for the same period of joblessnessSlide10

Paid Family LeaveBills (S 337/HR947) have been introduced that would provide paid family and medical leave insurance benefit for up to 60 daysBill has a formula for determining a monthly benefit as well as minimum/maximum amounts

Bill would establish the Federal Family & Medical Leave Insurance Trust Fund that would be funded through a tax on individuals and employersSlide11

JobsIn May, the economy added 138,000 jobs and the unemployment rate is 4.3%80 consecutive months of job growthOver the last 3 months, job increases have averaged 121,000/month as compared to 187,000/month in 2016

Government jobs decreased in

May

by 9,000 - so far this year have increased by 18,000

Labor underutilization rate is 8.4%Slide12

American Health Care ActThe House passed the American Health Care Act (HR 1682) by a vote of 217 – 213No Democrats voted for the bill

Budget reconciliation process was used, which only requires majority vote, but is limited to revenue/deficit provisionsSlide13

American Health Care ActCongressional Budget Office estimated the bill would result in 14 million more uninsured next year and a total of 23 million people losing their insurance over the next decade

Insurance costs in many states could soar for those who are sick or have pre-existing conditions, while premiums would fall for those who are healthySlide14

American Health Care ActAccording to NBC News/Wall Street Journal Poll:48% believe the House bill is a bad idea including 43% who strongly believe that

Only 23% say it is a good idea including 18% who strongly believe that

The ACA is more popular than it has ever beenSlide15

American Health Care ActMajor provisions:Replaces income-based subsidies with a refundable tax credit that is tiered by age and ranges from $2,000/year to $4,000/year (family could receive up to $14,000/year) – credits not available to individuals eligible for a group health plan

Eliminates the individual mandate by making the penalty $0 as of 2016 – imposes 30% surcharge on premiums for individuals who go more than 2 months without coverageSlide16

American Health Care ActMajor provisions:Eliminates the employer mandate by making the penalty $0 as of 2016Waivers available for states to establish their own essential health benefit requirements

Retains the wellness program structure contained in the Affordable Care Act

Suspends the excise or “Cadillac” tax until 2026 – repeals other taxes contained in the ACASlide17

American Health Care ActMajor provisions:

Regarding preexisting conditions the bill would allow states to apply for waivers that allow health status underwriting for those who don’t maintain continuous coverage

Increases the age rating ratio to allow insurers to charge elderly customers up to 5 times what they charge young adults

Discontinues the Medicaid expansion in 2020 and restructures

Medicaid

federal financing into a per capita modelSlide18

American Health Care ActPotential impact on employer-provided plans:The ACA banned insurers from imposing annual or lifetime limits on the amount of care they would cover and required plans to cap annual out-of-pocket spending with respect to care that is considered essential health benefits

States could waive the essential health benefit standards in the ACA which would narrow the scope of these requirementsSlide19

American Health Care ActThe bill will now being considered by the Senate, which indicated that it would write its own bill

Bill is being drafted in secret and will use the reconciliation process, which Senator McConnell (R-KY) criticized when the ACA was passed as a “partisan route” and “legislative sleight-of-hand”Slide20

American Health Care ActSenate is expected to change the bill by:Slowing down the phase-out of the Medicaid expansion

Increasing the tax credits for lower income and older Americans

Keeping some of the ACA taxes

More funding for the opioid crisis

More funding for preexisting conditionsSlide21

American Health Care ActSenator McConnell wants to schedule a vote before the July 4th

recess

With a 52-48 majority, Republicans can only lose the votes of 2 Senators

Senate parliamentarian will determine what can be considered under reconciliationSlide22

Cost Sharing ReductionsOne key to insurers selling plans in the individual markets are the cost-sharing reductions that reduce out-of-pocket expenses for low income enrolleesHouse Republicans sued the Obama Administration claiming the Congress did not appropriate the funds for the cost-sharing reductions - District Court agreed with the House Republicans & the case was appealed by the Obama Administration

The House Republicans and the Department of Justice were recently granted another extension until August 22

nd

to file a status report as to how they plan to handle the appealSlide23

Cost Sharing ReductionsGroup of Democratic attorney generals from 15 states and Washington, DC filed a motion to intervene in the case arguing that the Trump administration was not appropriately defending the lawHouse Republicans opposed the motion claiming that the delay is designed to allow the parties to seek a negotiated resolution with the Administration and ongoing legislative efforts

House Republicans contend the motion to intervene is prematureSlide24

ACA Cadillac TaxBill (H.R. 173) introduced by Representative Courtney (D-CT) & Representative Kelly (R-PA) and would repeal the excise tax on employer-sponsored health care plans80 cosponsors

Tax scheduled to go into effect in 2020

IPMA-HR supports this legislationSlide25

FLSA Overtime Regulations LitigationDistrict Court issued preliminary injunction preventing implementation of the revised overtime regulations on 12/1Case appealed to the 5

th

Circuit by the Obama Administration – Labor Department granted its second extension until June 30

th

to decide whether it wants to proceed with the appealSlide26

FLSA Overtime Regulations LitigationCase brought by 21 statesCourt concluded that “significant increase to the salary level creates essentially a de facto salary-only test” which was not the intent of Congress and only Congress can decide that the salary requirement should supplant the duties test

Court rejected a request that the

Garcia

case be overturned so that the FLSA would not be applicable to state/local governmentsSlide27

FLSA Overtime RegulationsAlexander Acosta, Labor Secretary expressed support for possible increase in the salary basis threshold saying it was unfortunate that such a threshold could go unchanged since 2004

He was critical of the proposed doubling of the threshold proposed by the Obama Administration and declined to commit to defending the rule in the appeal pending before the 5

th

Circuit

Labor Department expected in the next

few weeks to

issue a request for information from the public on the regulationsSlide28

FLSA Regular Rate9th Circuit ruled in City of San Gabriel v. Flores

that unspent dollars paid to employees as part of a bona fide flexible benefit program should be included in the regular rate calculation for determining FLSA overtime

City provided a flat dollar amount every month to be used towards the purchase of medical, dental, & vision insurance

Any unspent dollars were returned to the employee as taxable incomeSlide29

FLSA Regular Rate9th Circuit stated that since about 40-50% of the monthly amount is cashed out to employees, that the plan was not a bona fide plan resulting in the entire amount having to be included in the regular rate

IPMA-HR joined an amicus brief in support of the city’s petition for Supreme Court review

Supreme Court denied review of the caseSlide30

Independent Contractor/Joint Employment GuidanceOn June 7th

, the Labor Department announced that it was withdrawing informal guidance issued by the Obama Administration concerning joint employment and independent contractors

No indication whether further guidance will be issued on these issuesSlide31

Independent Contractor/Joint Employment GuidanceThe misclassification of employees as independent contractors was a major priority of the Labor Department under President ObamaThe guidance letter cited an economic realities test arguing that if workers were dependent on an employer as a matter of economic reality, they should be classified as employeesSlide32

Independent Contractor/Joint Employment GuidanceJoint employment guidance stated:Where

a joint employment relationship is found, all joint employers of a worker are liable for compliance with FLSA requirements

Vertical

joint employment applies when workers have an employment relationship with one employer & the economic realities show that they are economically dependent on & thus employed by another entity involved in the workSlide33

Does Title VII Prohibit Sexual Orientation Discrimination?In April, the 7th Circuit in the case of

Hively v. Ivy Tech Community College

became the 1

st

appellate court to rule that Title VII prohibits discrimination on the basis of sexual orientation

Court concluded that “Supreme Court decisions, as well as the common-sense reality that it is actually impossible to discriminate on the basis of sexual orientation without discriminating on the basis of sex, persuade us that the time has come to overrule our previous cases…”Slide34

Does Title VII Prohibit Sexual Orientation Discrimination?The Second Circuit in the case of Christiansen v. Omincron Group and the Eleventh Circuit in

Evans v. Georgia Regional Hospital

ruled recently that sexual orientation discrimination is not covered by Title VII

2

nd

Circuit granted a review by the full court and asked for the views of the EEOC on this issue

Supreme Court may decide to rule on this issue

24 states have laws prohibiting sexual orientation discriminationSlide35

Equality ActCongressional Democrats introduced legislation (HR 2282/S 1006) that would add sexual orientation and gender identity to other protected classes covered by Title VII of the Civil Rights Act46 Senate cosponsors/195 House cosponsors – only 1 House Republican cosponsorSlide36

EEOC Wellness Regulations LitigationAARP sued the EEOC seeking an injunction to prevent the implementation of the wellness regulationsAARP argued that the 30% wellness program participation incentives would render the program involuntarySlide37

EEOC Wellness Regulations LitigationDistrict Court for the District of Columbia denied the request since an injunction is “an extraordinary and drastic remedy”Judge believed that nothing in the ADA or GINA foreclosed the EEOC’s interpretationSlide38

EEOC Wellness Regulations LitigationRules were finalized in May 2016, but EEOC lawsuit wasn’t filed until OctoberCourt stated that “enjoining the rules now will cause uncertainty for employers as to the lawfulness of their wellness programs – and uncertainty for employees as to the terms and cost of their health insurance”

In a brief filed in March, the EEOC argued the AARP has no legal standing to sue on behalf of its members and that it has failed to prove its members will be harmed by the new rulesSlide39

Wellness LegislationHouse Committee on Education and the Workforce passed a bill (HR 1313) that would overturn EEOC’s wellness regulationsIncluded in the bill is a provision that would allow employers to collect genetic information if done as part of an employer sponsored wellness program

Employees who did not comply could lose the health insurance discount for wellness program participationSlide40

Municipal Bond Tax ExemptionIPMA-HR joined with almost 30 organizations urging Congress to continue the federal tax exemption for municipal bondsTax-exempt municipal bonds have financed more than $2 trillion in new infrastructure investments in the last 10 years

156 members of the House of Representatives have signed a letter expressing support for tax-exempt municipal bondsSlide41

Additional InformationFor additional information, please contact:Neil ReichenbergExecutive Director

IPMA-HR

nreichenberg@ipma-hr.org