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Leading People. Leading Organizations.

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HR REGULATORY & JUDICIAL OUTLOOK

Nancy Hammer, SHRM Government AffairsPennsylvania Legislative & Legal Conference

April 19, 2013

Leading People. Leading Organizations.22


• Health Care Implementation (IRS/HHS)• Office of Federal Contract Compliance

Programs (OFCCP)• Department of Labor (DOL)• Equal Employment Opportunity Commission

(EEOC)• US Citizenship & Immigration Services

(USCIS)

2013 HR Regulatory Agenda


• Expansion of Medicaid coverage

Source: The Henry J. Kaiser Family Foundation; HealthCare.gov; Deloitte.

Jan. 2013 Jan. 2014

April 2013

July 2013

Oct. 2013

July 2014

Oct. 2014

• Phase-out of Medicare drug coverage gap

• Increase in Medicaid coverage of preventive services

• Increase in Medicaid payments for primary care

• Elimination of tax-deduction for employer retiree coverage subsidy

• Cap on flexible spending accounts

• Increase in Medicare Part A (hospital insurance) tax rate

• Establishment of pilot Medicare bundled payment program

• Creation of 2.3% excise tax on medical devices

• Requirement to disclose financial relationships between health entities and manufacturers/ distributors

Implementation Timeline for Major ACA Provisions

• Creation of Consumer Operated and Oriented Plan (CO-OP) for member-run health insurance companies

• Reduction in Medicare and Medicaid Disproportionate Share Hospital (DSH) allotments

• Guarantee of insurance availability regardless of health status

• Enforcement of employer insurance requirements

• Requirement of minimum 85% medical loss ratio for Medicare Advantage plans

• Prohibition of annual limits on coverage

• Provision of health insurance premium and cost sharing subsidies

• Requirement of health insurance (individual mandate)

• Creation of essential health benefits package

Medicare/Medicaid Insurance Finance/Taxes

• Imposition of fees on health insurance sector

• Implementation of health insurance exchanges

• Establishment of wellness programs participation incentives

• Reduction in Medicare payments to hospitals for hospital-acquired conditions by 1%

March 5, 2013Most ACA Reforms Implemented 2013-2014


Jan. 2013

April 2013

July 2013

Oct. 2013

• Phase-out of Medicare drug coverage gap

• Increase in Medicaid coverage of preventive services

• Increase in Medicaid payments for primary care

• Elimination of tax-deduction for employer retiree coverage subsidy

• Cap on flexible spending accounts

• Increase in Medicare Part A (hospital insurance) tax rate

• Establishment of pilot Medicare bundled payment program

• Creation of 2.3% excise tax on medical devices

• Requirement to disclose financial relationships between health entities and manufacturers/ distributors

• Creation of Consumer Operated and Oriented Plan (CO-OP) for member-run health insurance companies

• Reduction in Medicare Disproportionate Share Hospital (DSH) allotments

March 5, 2013

Establishes national pilot program to make bundled payments for health services

Increases Medicare Part A (hospital insurance) tax rate on wages by 0.9% on higher earners

Eliminates tax-deduction for employers receiving Medicare Part D retiree drug subsidy payments

Increases Medicaid payments for primary care to 100% of the Medicare payment rate for 2013 and 2014

Increases federal matching payments for preventive services in Medicaid for states eliminating cost-sharing

Phases-in subsidies for brand-name prescriptions filled in Medicare Part D coverage gap

Reduces Medicare DSH payments by 75%, then increases payments based on uninsured population and care provided

• Reduction in Medicaid Disproportionate Share Hospital (DSH) allotments

Reduces states’ Medicaid DSH allotments; Secretary determines how to distribute reductions

Medicare/Medicaid Insurance Finance/TaxesKey Provisions Implemented in 2013

Focus on Medicare and Medicaid Reform in 2013

Source: The Henry J. Kaiser Family Foundation;HealthCare.gov; Deloitte.


• Expansion of Medicaid coverage

Jan. 2014

July 2014

Oct. 2014

• Guarantee of insurance availability regardless of health status

• Enforcement of employer insurance requirements

• Requirement of minimum 85% medical loss ratio for Medicare Advantage plans

• Prohibition of annual limits on coverage

• Provision of health insurance premium and cost sharing subsidies

• Requirement of health insurance (individual mandate)

• Creation of essential health benefits package

Medicare/Medicaid Insurance

• Imposition of fees on health insurance sector

• Implementation of health insurance exchanges

• Establishment of wellness programs participation incentives

• Reduction in Medicare payments to hospitals for hospital-acquired conditions by 1%

March 5, 2013

Key Provisions Implemented in 2014

Dollar limit on coverage prohibited

Insurance companies prohibited from refusing coverage or charging more due to individual’s gender or health status

Certain larger employers must pay fee if they don’t provide affordable coverage to employees

• Individuals and small businesses can compare and shop for insurance plans in competitive marketplace

• Small business tax credit increased to 50% of employer’s contribution for insurance to employees

Individuals with incomes 100-400% of federal poverty level (FPL) eligible for tax credits to buy insurance through exchanges; cost-sharing subsidies available to those with incomes up to 250% of FPL

Individuals with incomes up to 133% of FPL are eligible for Medicaid if states opt in to Medicaid expansion

Individuals are required to have basic health insurance or pay a fee, with certain exemptions

Focus on Health Insurance Expansion in 2014

Source: The Henry J. Kaiser Family Foundation; HealthCare.gov; Deloitte.

Leading People. Leading Organizations.Source: The Henry J. Kaiser Family Foundation; HealthCare.gov; Deloitte.

Jan. 2015

Jan. 2016

Jan 2018

• Physician Quality Reporting System

• Increase federal match for Children’s Health Insurance Program (CHIP)

• Health Care Choice Compacts

Implementation Timeline for Major ACA Provisions, 2015-2018

• Tax on high-cost insurance

Medicare/Medicaid Insurance

March 5, 2013

Increase in CHIP match rate up to a cap of 100%

Reduces Medicare payments to providers for not successfully reporting measures

Permits states to form health care choice compacts and allows insurers to sell policies in any state participating

Imposes excise tax on employer-sponsored coverage that costs over $10,200 for individuals and $27,500 for families

Final ACA Provisions Implemented Through 2018

• Basic Health Plan Operational

States have option to create Basic Health Plan for individuals with incomes 133-200% of FPL


Half of States Opted for Federal Exchanges in 2012State Exchange Second Most Popular Option

Source: Center for Budget and Policy Priorities March 29, 2013


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 IssuesEmployer Shared Responsibility


HHs issued proposed rule on January 14, 2013. Comments were due March 15, 2013.

Exchanges must verify whether applicants seeking tax credits to buy coverage on an exchange are enrolled or eligible for an employer-sponsored plan.

Proposed rule defines how regulators will do that; how employers will be notified; and process for appealing determination.

Key for employers because penalties are measured on a “per employee” basis.

Health Care Reform IssuesVerification on Employer Sponsored Coverage


• 90-day waiting period health plan mandate• Navigators for exchanges• $500,000 deductible for high value plans

Health Care Reform IssuesRegulations Open for Comment


• DOL’s Employee Benefits Security Administration: http://www.dol.gov/ebsa/consumer_info_health.html

• US Department of Health and Human Services: http://www.healthcare.gov/

• SHRM’s health care implementation timeline: http://www2.shrm.org/revised_timeline/timeline.html

Online Health Care Resources

http://www.dol.gov/ebsa/consumer_info_health.html

http://www.dol.gov/ebsa/consumer_info_health.html

http://www.healthcare.gov/

http://www2.shrm.org/revised_timeline/timeline.html

http://www2.shrm.org/revised_timeline/timeline.html


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.

Labor-Management / Civil Rights IssuesOffice of Federal Contract Compliance Programs (OFCCP) Policy Directive 307 on Pay Discrimination

http://www.google.com/url?sa=i&source=images&cd=&cad=rja&docid=-GXWU7fO2lVCrM&tbnid=_XjKmYy_pPIerM:&ved=0CAgQjRwwAA&url=http://commons.wikimedia.org/wiki/File:US-OFCCP-logo.jpg&ei=9Q9jUf6EManq0wH9q4GwDw&psig=AFQjCNG9G2Zt7gSD1aEt-nLZcc7Hz2N1Xw&ust=1365533045831531


OFCCP issued a proposed rule on nondiscrimination and affirmative action requirements for individuals with disabilities on December 9,1012

Proposed rule places numerous data collection and record-keeping requirements on federal contractors without showing that these requirements will help employers increase their disability hiring.

Key HR concerns with these proposed regulations include: Encouraging employees to self-identify as disabled during pre- and

post offer and annual survey; Requiring employers to have a goal of 7% for each job group

composed of individuals with disabilities;

Labor-Management / Civil Rights IssuesOffice of Federal Contract Compliance Programs (OFCCP) Affirmative Action & Nondiscrimination – Disability (section 503 of Rehab Act)


Requiring annual staff training that must include information on the benefits of employing individuals with disabilities, appropriate sensitivity, and legal responsibilities including reasonable accommodation;

Requiring an annual review of all physical and mental job qualifications including providing a written explanation as to why each requirement is related to the job and;

Creating personnel logs to track reasons for rejecting individuals with disabilities for vacancies and training programs, and a description of considered accommodations.

SHRM submitted comments on February 7, 2012; stakeholder letter to Secretary Solis.

Labor-Management / Civil Rights IssuesOffice of Federal Contract Compliance Programs (OFCCP) Affirmative Action & Nondiscrimination – Disability (section 503 of Rehab Act)


Labor-Management / Civil Rights IssuesOffice of Federal Contract Compliance Programs (OFCCP) Affirmative Action & Nondiscrimination – Protected Veterans (VEVRAA)

OFCCP issued a proposed rule on nondiscrimination and affirmative action requirements for protected veterans on April 26, 2011.

Proposed rule details mandatory actions by contractors in the areas of recruitment, employee training, recordkeeping, and the dissemination of their affirmative action policies.

Key HR concerns include employer requirements to: collect and maintain several measurements and comparisons related to

protected veterans; establish annual hiring benchmarks; and engage in a minimum of three specified types of outreach and

recruitment efforts.


Labor-Management / Civil Rights Issues Family & Medical Leave Act

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 “Persuader” proposed rule

Proposed rule published June 21, 2011 and comments submitted Sept. 21.

For more than 50 years, DOL has distinguished between “direct” and “indirect” contact with employees, requiring direct contacts to be reported but NOT requiring the following types of advice to be reported: Providing draft speeches to an employer; training supervisors, drafting policies, etc.

DOL states that “the current interpretation of "advice" has resulted in significant underreporting of employer and consultant persuader agreements.

HR concern: Expanded definition is too broad and may drive consultants and law firms from the marketplace.


Labor-Management / Civil Rights Issues Wage and Hour Division Misclassification Survey

Proposed rule published January 11, 2013 and comments submitted March 12.

DOL proposes to collect data on whether employees understand their classification (employee vs. independent contractor) and whether they understand what that classification means for pay and benefits.

Survey designed, administered and results analyzed over a 30 month period ending March 2014.

Part of larger ‘Right to Know’


Jacqueline Berrien, Chair (D) Constance Barker (R) Chai Feldblum (D) Victoria Lipnic (R) Jenny Yang (D)—nominated January 22, 2013– Referred to Senate Health, Education, Labor &

Pensions Committee;– Was key lawyer representing 1.5 million women in

Wal-Mart Stores Inc. v. Dukes sex discrimination class action.

Current Commission Members:Labor-Management / 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 Issues

Equal Employment Opportunity Commission (EEOC)Criminal Background Checks in the Employment Process

Agency issued guidance on the use of criminal background checks in the employment process on April 25, 2012.

Guidance reiterates current requirements and adds new requirements, suggested “best practices” and information about state law: Best Practice to exclude from job applications questions about convictions; Best Practice to conduct an individualized assessment of an individual when

considering criminal record; Develop a narrowly tailored written policy and procedure for screening

applicants and employees for criminal conduct; and State law provisions.

.


Immigration Issues


June 15 – President Obama announced policy to permit qualified young people brought to the U.S. illegally as children to remain in the country – and work – for two years until June 2014

August 15 – U.S. Citizenship and Immigration Services began accepting requests for consideration of deferred action for childhood arrivals

Individual must: be under age 31 have arrived in U.S. before 16th birthday be currently in school, graduated or obtained GED, or

honorably discharged veteran of the U.S. Armed Forces

Immigration IssuesDeferred Action for Childhood Arrivals (DACA)


Immigration IssuesRevised Form I-9 The new Form I-9 is now available at www.uscis.gov/i-9; As of May 7, 2013, no previous versions of I-9 may be used;

The new form is 3 pages including the list of acceptable documents. With instructions, full document is now 9 pages;

You may still print the form on one piece of paper, front and back, for the file. The list of acceptable documents does not need to be attached to each I-9 kept by the employer for inspection;

Additional data fields include the employee’s foreign passport information (if applicable) and telephone and e-mail addresses;

http://www.uscis.gov/i-9


Key Supreme Court HR-Related Cases

U.S. Airways, Inc. v. McCutchen (11-1285)-Appeal from Third Circuit-Subrogation and use of equitable remedies under ERISA-HR: ERISA preemption results in certainty for employers

Vance v Ball State University (11-556)-Appeal from Seventh Circuit-Scope of Title VII Supervisor Liability-HR: Will affect training; liability exposure


Genesis Healthcare Corp. v Symczyk (11-1059)-Appeal from Third Circuit

-Whether FLSA settlement moots underlying case-HR: Reliance on legal settlements; exposure to class actions



Sandifer v. United States Steel (12-417)-Appeal from 7th circuit-Whether union workers can be compensated for the time it takes to change in and out of safety gear even if not covered by Collective Bargaining Agreement-HR: Affects whether courts will defer to the collective bargaining process.



United States v. Windsor (12-307)-Appeal from 2nd circuit-Whether DOMA violates the Fifth Amendment’s

guarantee of equal protection-HR: DOMA defines marriage under federal law

and, therefore, affects employee benefits under ERISA, Internal Revenue Code, and other federal laws that impact employee benefit plans.



Nancy HammerSenior Government Affairs Policy CounselGovernment Affairs

[email protected]

703-535-6030

“It’s a baby. Federal regulations prohibit our mentioning its race, age or gender.”

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excise tax

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