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December 2015

Congress races to "finish" line as new deadlines approach...

Both chambers of Congress returned from their Thanksgiving recess facing tight deadlines for key spending bills and additional pressure to produce major legislation free of controversial provisions from both the right and left.

In a change from their recent tendency to kick the can down the road with temporary extensions and interim measures, lawmakers from both parties appear ready to make the best of the current political situation. If they can avoid it, no one wants to confront controversial legislative battles toward the end of 2016 as they face presidential and congressional election battles.

So, they are moving toward a five-year extension of federal highway programs, and there’s even talk of permanently enacting the so-called “tax extenders,” a package of 52 tax provisions—including the research and development (R&D) tax credit, deductions for teachers' out-of-pocket expenses, and the deduction for state and local sales taxes—whose temporary nature has required them to be renewed numerous times over the years.

The toughest deadline comes on December 11 when Congress must pass spending authority for the federal government—or at least for the agencies whose appropriation bills haven’t yet been approved by Congress.  Normally, the House and Senate would simply agree on a so-called Continuing Resolution to continue funding government departments at current levels until a date sometime in the future—even to the end of the fiscal year next October.

But, nothing is “normal” these days on Capitol Hill.  Congressional leaders must balance the need to avoid a government shut-down against the demands of conservative Republicans to include provisions on controversial subjects. These include a broad range of proposals to kill key provisions of Obamacare, to block funding for air and water quality regulations at the Environmental Protection Agency (EPA), funding for Planned Parenthood, oversight of non-profit groups by the Internal Revenue Service (IRS) and rules for vetting Syrian refugees coming to the United States.

Focusing on these issues is mostly for show since President Obama is expected to veto any of these measures should they reach his desk.  Since they will likely lack the votes to override a presidential veto in the Senate, the choice for Republicans will be to force a government shut-down or back away from these controversial stands—at least until next year.

One solution currently being considered is a massive omnibus bill that combines continuing spending resolutions, the tax extenders and any other must-pass legislation into a hopefully veto-proof package that everyone can accept.

House Republican leaders are seeking to avoid a showdown over the spending bill by including a popular, bipartisan plan making it tougher for some foreigners to travel to the U.S. without a visa. Overhauling and tightening the current visa waiver program, including the plan in the spending bill, would make it harder for President Obama to veto the measure.

NLRB "ambush" election rules show mixed results...

The new rules issued by the National Labor Relations Board (NLRB) to speed union representation elections have achieved one expected result:  The average time from an election petition to the actual election has been reduced by nearly 40%, from 38 days under the old rules to only 23 days with the new rule.

But, statistics for the first six months the rules have been in place show another, surprising result: The win rate for unions seeking to organize workers increased only 1.6%, from 64% to 65%.

While the new rules appear to make it faster, cheaper and easier for unions to reach a representation election, they’ve won only a few more of those battles than in the past.

Labor experts say this is probably because most workers already have decided long before the question of an organizing vote ever comes up so that the time between the announcement of a vote and the vote itself makes little difference in the outcome.  It could also mean that management officials at many companies are on heightened alert and are better prepared to convince their employees that they don’t want a union.

In either case, the impact of the “ambush” rules appears to be a faster decision for both sides with a (so far) negligible impact on the results.

Workplace safety fines will increase for the first time in 25 years…

Hidden in the 1,600-page Bipartisan Budget Act signed into law by President Obama last month was a provision dramatically increasing the fines that the federal Occupational Safety and Health Administration (OSHA) can levy against employers found to violate workplace safety rules.

It’s the first increase in these fines since 1990, and will mean the penalties for “Willful” and “Repeat” violations can be as high as $126,000 per incident—an increase of $55,000. The penalty for other violations, such as “Failure to Abate” and “Serious” violations, will be approximately $12,500, up from $7,000.

The fines will go up because the budget law permitted them to be adjusted for inflation over the past 25 years.  The inflation adjustments will be based on the Consumer Price Index ("CPI"), which increased by 78.24% between October 1990 and September 2015.

The precise amounts of the new fines will be set by OSHA through a rule-making no later than August 1 of next year.  After that, the fines will be adjusted for inflation each year based on the CPI.

Some question the cost of Obama's proposed overtime pay rules…

President Obama’s plan to “shore up the middle class” by more than doubling the salary at which employees become exempt from overtime pay will cost far more than the promised $2 billion a year, according to some experts.

In fact, a top Florida official says the president’s plan will cost almost $2 billion in that state alone.

“Our calculations suggest that the administration is overestimating the number of workers who will benefit from the mandate while vastly underestimating its costs,” said Jesse Panuccio, executive director of the Florida Department of Economic Opportunity.
The Obama plan calls for raising the top salary of workers eligible for overtime pay from $23,660 to $50,440, which the Labor Department says will add 4.7 million employees to overtime payrolls at a total cost to employers of $2 billion.

Further, Panuccio says the administration’s estimate that the new rules would add 370,000 Florida workers to overtime rolls is way off. He says state labor officials estimate the number at only 195,000 workers.  If the administration is that far off in Florida, then its national figures are suspect as well.

Florida officials also estimate that despite far fewer workers being impacted, the cost to employers in the state will be $1.7 billion next year—more than 80% of the Labor Department’s estimate of $2 billion in cost for the entire country.

Others have questioned the Obama administration’s estimates as well.  Some experts have noted that given the Labor Department’s estimates of total costs and total workers impacted, the average worker would receive a bit over $6.00 more each week.  This is why many are questioning the calculations that went into the plan and the estimates of its costs.

In a related development, the U.S. Department of Labor says it will issue a request for information (RFI) regarding overtime rules for employees who use computers, tablets and smart phones to work from home.  The RFI will be issued in February and could impact overtime rules for thousands of companies.

Employee handbooks can't create enforceable obligations on workers...

Employers cannot necessarily rely on provisions in an employee handbook to create enforceable obligations on their employees.

That’s the ruling of a federal appeals court, which held last month that an arbitration requirement contained in an employee handbook was not enforceable.  The Fourth Circuit Court of Appeals rules that an employee was not required to take her wage and hours claim to arbitration—as the employee handbook specified—but was free to pursue her claims in court.

The appeals court said the arbitration provision was not enforceable because the handbook stated that it was not intended to create an employment contract or binding promises on the part of the employer or employee.  Most employee handbooks contain a similar, non-binding provision in order to give the employer flexibility to change its policies.
Legal experts warn that employers who want to create a binding obligation on employees should use separate agreements for that purpose.

Appeals court affirms holding that conflict minerals violates free speech…

The full U.S. Court of Appeals for the District of Columbia has now refused to rehear a decision by one of its three-judge panels, which held that the conflict minerals regulation requiring companies to publicly report on whether their products contain conflict minerals violates their First Amendment rights. 

Citing issues of “exceptional importance,” the Securities and Exchange Commission (SEC) and Amnesty International had asked the full appellate court to review and reverse the three-judge panel.  The court’s refusal to review the case means that the SEC and others supporting the conflict minerals rule will have to ask the Supreme Court if they want the lower court reversed.

Legal experts say a Supreme Court review is possible because the case potentially reaches well beyond the conflict minerals regulation and could be applied to many other disclosure rules imposed on public companies by the SEC.

The SEC rules requires disclosure of where companies obtain the four “conflict minerals”—tantalum, tin, tungsten and gold—under the Dodd-Frank financial reform legislation.  The law was enacted after the State Department determined that these minerals were financing conflict in the Democratic Republic of the Congo (DRC) or adjoining countries.

Congress considers reforms to popular foreign worker programs…

Two key senators last month introduced legislation aimed at fraud and abuse in the H-1B and L-1 visa program used by U.S. companies to temporarily hire highly skilled foreign workers in this country.

Sens. Chuck Grassley, R-IA, who chairs the Senate Judiciary Committee, and Dick Durbin, D-IL, the ranking Democrat on the committee, said large outsourcing companies have been abusing the system and that American workers are being asked to train their own replacements.

The two senators have been trying to reform the H-1B program for eight years with legislation that would give priority to American workers and regulate employers who may be depriving qualified Americans of high-skill jobs.  Their proposal would:

  • Require employers seeking to hire a H-1B worker to first make a strong effort to recruit American workers and prohibit the replacement of American workers by visa holders.
  • Prioritize the annual allocation of H-1B visas: Currently, many large IT services companies receive more than half of the annual visa allotment.
  • Prohibit large companies from hiring H-1B workers if more than 50% of their employees are on H-1B or L-1 visas.
  • Give the Department of Labor enhanced authority to review, investigate and audit employer compliance as well as to penalize fraudulent or abusive conduct.


TSCA reform will wait until next year…

A traffic jam of must-pass legislation and a roadblock erected by two senators appears to have kept a long stalled update of the federal Toxic Substances Control Act (TSCA) from congressional approval this year.

Despite House passage earlier this year and 60 Senate co-sponsors from both parties, there is not enough time left before Congress adjourns for the holidays to bring the TSCA reform plan to the Senate floor.

As noted here earlier, two senators have effectively kept the Senate from voting on TSCA unless the Senate first reauthorizes the federal Land and Water Conservation Fund (LWCF), which has nothing to do with regulating toxic substances. Sens. Richard Burr, R-NC, and Kelly Ayotte, R-NH, have refused to allow limits on amendments to the TSCA legislation. Without an agreement to limit amendments, opponents of the TSCA reform bill could tie it up with amendments when there is precious little time left for floor debate.
Consequently, Senate leaders are waiting until January, when they will be able to bring the bill to the floor under rules that permit amendments.

Senate backers, led by chief co-sponsors David Vitter, R-LA, and Tom Udall, D-NM, are confident that the TSCA measure approved by the Senate Environment and Public Works Committee four months ago can quickly pass the Senate once it is brought to floor.

The LWCF, which was defunded this year, was created in 1965 to provide funds for the acquisition of land, water and easements to create parks, national forests and recreation areas.  It is funded by oil and gas fees for offshore drilling.  While not overly controversial, House conservatives who advocate selling off federal lands could tie up a TSCA bill that contains the LWCF measure.