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Affecting the HR Profession in Ohio

Presented by Tony Fiore Director, Government Affairs

2015 Ohio SHRM Employment Law + Legislative Conference

June 3, 2015

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Workers’ Compensation

Unemployment Compensation

Employment/Labor Law

Minimum Wage

Health Care

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Workers’ Compensation

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BURNING QUESTIONWhy don’t we privatize

Ohio’s workers’ compensation system?

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BWC State Insurance Fund (SIF) Surplus

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What was your cut? Another Billion Back

+ Provides a one-time rebate of $1 billion for private employers and public-taxing districts.

+ Increases BWC’s commitment to safety by up to $35 million over the next two years.

+ Creates several new safety initiatives that leverage BWC’s occupational health and safety expertise to create innovative solutions for improving the safety, health and wellness of Ohio’s workforce.

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Recent Employer Cost SavingsPrivate Employers

+Reduced private employer average base rates, bringing combined collections over the last four years down by $409 million

+ Jan 22 – BWC proposed another 10.8% reduction (21.4% overall reduction since 1/1/2011)

Public Employers+Reduced average rates for public employers to their lowest

level in more than 30 years.

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Prospective BillingA switch to a prospective billing system will provide the following benefits to Ohio employers:

+ Overall base rate reduction of 2 percent for private employers and 4 percent for public employers

+ Opportunities for more flexible payment options (up to 12 installments)

+ Better opportunities for BWC to provide quotes online or via the phone

+ Increased ability for BWC to detect employer non-compliance and fraud

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Important Dates

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F CUSEmployers’

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LEGISLATION2015

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Workers’ Compensation Legislation+ HB51: IC Budget

+ HB52: BWC Budget

+ HB205: Self-Insurance/Privatization

+ HB206: IC – Keep Hearing Statistics

+ HB207: Third Party Tortfeaser Subrogation Fund

+ SB5: PTSD Compensable Fire, Police, EMT

+ SB27: Firefighter – presumed to incur cancer while on duty

+ SB149: PD + PTD eligibility – brain or spinal cord injuries w/loss of use

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WHAT’S NEXT

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Unemployment Compensation

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What is happening nationally?

The U.S. Map above depicts the status of state trust fund solvency as of April 30, 2015.RED states are those that were borrowing as of April 30, 2015 (including the Virgin Islands).BROWN states are those that are currently using employer financed bonds to repay Title XII loans.YELLOW states are those with positive balances of less than six months of benefits in the state trust fund. GREEN states are those with more than six months of benefits in the state trust fund (including Puerto Rico).

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Federal Law Regarding Taxes + Borrowing

+UI benefits must be paid without regard to the state TF balance

+Insolvent states must borrow from Federal Unemployment Account (FUA)

+No established repayment schedule…But+After 2 years of borrowing without repayment employers begin to lose FUTA offset credit

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Background on Federal +State UI Taxes

+Federal Unemployment Tax Act (FUTA)+Employers pay 6% annual tax on first $7,000 earned by each covered employee

+Federal government gives 5.4% tax credit (effective FUTA tax rate is .6% or $42/EE)

+However, credit is automatically reduced by .3% (or $21/EE) each year after first two years states carries loan balance

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State Unemployment Tax Act (SUTA)

+SUTA taxes are paid by Ohio employers+Currently 221,000 active employers and another 5,000 reimbursing employers (typically public employers)

+71% of Ohio employers have 20 or fewer employees+Only 2% of Ohio employers have more than 200 employees – these employers collectively employ 56% of the total employees in covered employment

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SUTA Taxes in OhioOhio Employer Contribution Rates 2008 2009 2010 2011 2012 2013 2014

Lowest Experience Rate 0.5% 0.7% 0.5% 0.7% 0.7% 0.3% 0.3%

Highest Experience Rate 9.2% 9.4% 9.4% 9.6% 9.1% 8.4% 8.5%

Mutualized Rate 0.2% 0.4% 0.2% 0.4% 0.4% 0.0% 0.0%

New Employer Rate (except construction)

2.7% 2.7% 2.7% 2.7% 2.7% 2.7% 2.7%

*Construction Industry 5.8% 5.8% 6.0% 6.4% 7.0% 7.7% 7.2%

Delinquency Rate 11.5% 11.8% 11.8% 12.0% 11.4% 10.5% 10.6%

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Average Tax Per Employee

$198 $207 $243 $243 $252 $270 $288 $342 $315

$270 $270 $270 $270 $270 $270 $270 $270

$56 $56 $56 $56 $56 $56 $56

$74 $84

$105 $126 $147 $168 $189 $210 $231 $252

$0

$100

$200

$300

$400

$500

$600

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* 2016* 2017* 2018* 2019* 2020*

Avg SUTA per Employee Avg FUTA per Employee Total per Employee

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Solvency of Ohio’s UI Trust Fund

-$3,000,000,000

-$2,000,000,000

-$1,000,000,000

$0

$1,000,000,000

$2,000,000,000

$3,000,000,000

Ohio UI Trust Fund Balance - 1980 to 2027 (est.)

Minimum Safe Level

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How do we return to the lowest FUTA tax?

+Repay Federal loan balance+Don’t borrow in the future+Rebuild state UI Trust Fund+Comprehensive UI Reform

+ Revenue (Taxes)+ Expenses (Benefits)+ Integrity (Fraud, Waste, Abuse, Misclassification, Overpayments)+ Reemployment (connections with the workforce)+ Job creation (more people working = more tax revenue without

raising existing taxes on employers)

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Potential LegislationWorkforce development/UI (HB 3 -H56/S3)

Soft skill certification

Penalty for not responding to employers’ call

More Comprehensive Reform Package Needed

HB105 – UI eligibility for military spouse voluntarily quitting work when reassigned to different base

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Employment/Labor Law

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Employment Law+Manager/Supervisor Liability+Statute of Limitations+Caps on Non-economic and Punitive Damages+Exhaustion of Administrative Remedies+Employer Affirmative Defense for Reporting Violations+Sexual Orientation Discrimination

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Employment Legislation+SB70: social media+SB65: credit history discrimination+SB87: domestic workers+HB180 + SB152: prohibit local hiring quotas+HB56: public employer “ban the box”+SB79: private/public employer “ban the box”+HB170: no need for vaccine+HB172: mug shot extortion

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All Firearm-Related Legislation+ HB16: imitation firearms+ HB20: concealed handgun – school safety zones+ HB35: firearms – prohibit seizure/registry+ HB48: concealed carry – affirmative defenses – carry in “vulnerable” areas+ HB59: firearms – increase mandatory prison term+ HB 75: firearms – residential storage – prevent access by minors+ HB78: firearms – regulate transfers+ HB79: hunting license – issuance to felons+ HB147: concealed handguns – revise licensing+ SB103: home rule townships – regulate discharge of firearms

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Minimum Wage

zMinimum Wage

Source: U.S. Department of Labor

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Ohio vs. Federal Minimum Wage

$4.25

$5.15

$6.85 $7.00 $7.30 $7.30 $7.40

$7.70 $7.85 $7.95 $8.10

$5.15 $5.15

$5.85

$6.55

$7.25 $7.25 $7.25 $7.25 $7.25 $7.25 $7.25

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

1/1/2006 6/1/2006 1/1/2007 1/1/2008 1/1/2009 1/1/2010 1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015

Ohio Minimum Wage Federal Minimum Wage

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Minimum Wage Legislation+SB25: Would raise minimum wage to $10.10 per hour beginning January 1, 2016

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Health Care

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Health Care+State addressed dependent age issue from 28 to 26+State mandates for health plans+State budget – HB 64

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Health Care+SB68: cover contraceptives/employee reproductive health+There are 88 healthcare-related bills

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Thank You!Tony Fiore, Of CounselKegler Brown Hill + Ritterafiore@keglerbrown.comkeglerbrown.com/fiore614.462.5428

@anthoniofiore

Director, Government AffairsOhio State Council of SHRM