Small Business Owner Green Road Sign and Clouds
Small Business Owner Green Road Sign and Clouds

Within the many pages of the 21st Century Cures Act, just passed by Congress and awaiting signature by President Obama, is the Small Business Healthcare Relief Act. This creates a new health benefit plan for small employers called Qualified Small Employer Health Reimbursement Arrangements (“QSEHRA’s”). It allows employers to provide pretax reimbursement to employees who obtain health insurance for themselves, such as through Affordable Care Act exchanges. If an employee has either individual or group health coverage (such as through a spouse’s employer’s plan) that meets the ACA’s definition of Minimum Essential Coverage, it also provides for reimbursement of eligible unreimbursed medical expenses. Prior to this taking effect, the Internal Revenue Service had specifically outlawed this benefit, and provided devastating penalties for employers who tried to help out their employees in this way.

There are a few points to keep in mind. First, the employer must be a small one, defined as under the fifty employee threshold. Second, the employer can’t be offering group coverage to any of its employees. Third, only the employer can contribute, and must do so on a non-discriminatory basis. The maximum annual support is $4,950 for single coverage and $10,000 for family coverage, prorated by months of coverage. The QSEHRA premium reimbursement is only for the purchase of individual, not group coverage, and is tax free for unreimbursed medical expenses if the employee is enrolled in a plan that meets the minimum essential coverage requirements under the Affordable Care Act. Finally, QSEHRA reimbursements will not count towards the Cadillac Tax if that ever goes into effect.

This could be a welcome opportunity for small businesses to provide a significant health care benefit to their employees without the hassle of purchasing group coverage. For employees, subject to the minimum essential benefit requirements, they can purchase coverage most suitable to their own situations, rather than what is best for the employer’s entire workforce.

For a more detailed explanation of QSEHRA programs, see this White Paper.

family-getty-crop-600x338As the results of the November 2016 election confirmed, there is a growing push throughout the country to require employers to provide certain types of paid leave to their employees. To date, we have witnessed the imposition of paid leave requirements through ballot initiatives, legislation, and executive orders. The most popular forms of paid leave currently being discussed include paid sick leave and paid parental leave. Some of the recent paid leave initiatives also cover things such as time off for child care under certain circumstances and domestic violence or other similar situations.

In terms of paid sick leave, voters in two states—Arizona and Washington—approved ballot initiatives last month requiring employers to provide paid sick leave to employees who work within those states. Arizona and Washington now join five other states (California, Connecticut, Massachusetts, Oregon, and Vermont) and the District of Columbia, all of which currently require or soon will require employers to provide some type of paid sick leave to their employees. Several counties and municipalities throughout the country have also imposed such requirements on employers.

With respect to paid parental leave, as we previously noted, President-Elect Donald J. Trump has offered a proposal whereby employers will be required to provide their female employees with paid maternity leave. Male employees are not included in President-Elect Trump’s proposal. Should President-Elect Trump follow through on his proposal, it will be the first paid maternity leave mandated at the federal level for private employers. It will also follow similar requirements imposed, or promised to be imposed, in a handful of states (California, New Jersey, New York, Rhode Island, and Washington), the District of Columbia, and a few other major cities in the country (e.g., New York and San Francisco).

Notably, and consistent with the trends discussed above, Democrats introduced a bill in the Ohio legislature earlier this year that would have required employers to provide twelve weeks of paid family leave to Ohio employees. Although the bill did not garner much support in the Republican-dominated Ohio legislature, should Republicans at the federal level suddenly support President-Elect Trump’s paid leave proposal, or other similar proposals, there may be renewed interest amongst Republicans for similar legislation at the state level.

In summary, this year’s election should remind employers that paid leave requirements will likely be imposed upon them in the near future, if they are not already required to provide certain forms of paid leave to their employees now. With both political parties expressing support for paid leave requirements, future changes in this regard are highly probable.

BlockedIn a much-welcomed eleventh-hour ruling yesterday, the United States District Court in the Eastern Division of Texas issued a preliminary injunction enjoining the United States Department of Labor (“DOL”) from implementing changes to overtime rules under the Fair Labor Standards Act (“FLSA”) (the “Final Rule”). The Final Rule, which nearly doubles the salary threshold for the overtime exemption, was scheduled to take effect on December 1, 2016. The injunction blocks the Rule, for now. For more information on what the Final Rule would mean for you or your company, click here.

In his Memorandum Opinion and Order, Judge Mazzant found that the Final Rule’s salary increase has the effect of excluding from the exemption some 4.2 million workers who are performing exempt-type work, and that this exclusion conflicts with the FLSA.

The Court imposed the injunction nationwide, not just within its jurisdiction. Thus, the injunction blocks (or at least delays) the Final Rule for all employers.

This is not the end. The judge’s ruling is only temporary, and could be overturned later by the same court or a higher one (including the United States Supreme Court). What is certain, however, is that the Final Rule will not go into effect on December 1, 2016 as previously expected.

So what should employers do now?

If you have already changed your compensation structure to conform to the new rule, it might be unpopular to reverse those changes, although you may have the right to do so-at least temporarily. Conversely, if you were waiting until December 1 to make any changes, you may now wait until the courts (or Congress) render a final decision. It will definitely be worth watching to see what action the new administration takes with regard to defending or disowning the Final Rule, since the litigation is certainly not going to be completed before January 20, 2017.

Marijuana w Black BackgroundPresident-elect Donald Trump has nominated Senator Jeff Sessions from Alabama as the new Attorney General. Senator Sessions has previously expressed his opposition to the legalization of marijuana. Therefore, it seems that the Cole Memo may be revisited. The Cole Memo is a major reason why marijuana continues to be legal medically and/or recreationally in 29 states, but still illegal under federal law.

On August 29, 2013, Deputy Attorney General James M. Cole published Guidance Regarding Marijuana Enforcement (the “Cole Memo”). In light of the legalization of medical and recreational marijuana occurring in many states, the Cole Memo sought to clarify the Department of Justice’s (“DOJ”) enforcement priorities. Some of the most important DOJ enforcement priorities with respect to marijuana are the prevention of:

  • Distribution to minors
  • Interstate movement
  • Use of firearms in connection with marijuana
  • Drugged driving
  • Organized crime

Outside of the above enforcement priorities, the DOJ relies on state and local law enforcement to address marijuana activities.

However, under the incoming Attorney General, the Cole Memo might be revisited. Senator Sessions has been on record as saying there is a need to foster “knowledge that this drug is dangerous, you cannot play with it, it is not funny, it’s not something to laugh about… and to send that message with clarity that good people don’t smoke marijuana.” Further, he has also been critical of President Barack Obama even mentioning marijuana:  “You can’t have the President of the United States of America talking about marijuana…You are sending a message to young people that there is no danger in this process. It is false that marijuana use doesn’t lead people to more drug use. It is already causing a disturbance in the States that have made it legal.”

One potential way to steer clear of Senator Sessions’s statements that marijuana is dangerous and addictive might be to focus on cannabidiol (“CBD”), and not tetrahydrocannabinol (“THC”). THC is the main psychoactive component of marijuana, and one of the reasons it might be labelled “dangerous.” However, CBD has no psychoactive effects and is used for relief from seizures, anxiety, and inflammations.

In the end, because marijuana is now legal medically and/or recreationally in 29 states, it is possible incoming Attorney General Jeff Sessions will be hesitant to abrogate the Cole Memo and undo all of the progress in this arena, and shutter nascent small businesses with the resultant employment loss and loss of tax revenue. However, based on his prior statements and stances, we are in uncertain times.

Before predicting the long-term effects of the 2016 Presidential Election, it is worth spending time on issues to be addressed before the end of President Obama’s term. The next two and a half months will be critical as the 114th Congress addresses important issues before turning over the reins.

In the upcoming weeks, Congress will be faced with a decision regarding the current continuing resolution funding the government, which expires on December 9, 2016. Back on September 26, 2016, President Obama signed the continuing resolution to keep the federal government running through the election. However, at the expiration of this resolution, Congress must decide whether to pass another short‑term resolution or pass legislation to carry the government through fiscal year 2017. While a long-term solution would provide federal employees and businesses with more security, it is likely that the 114th Congress will only be able to pass a short-term resolution and leave a long‑term solution for the 115th Congress. The continuing resolution process does allow for the possibility of riders to block funding for certain programs – such as EPA regulations and overtime changes. In this writer’s view, when push comes to shove, Republicans in Congress likely will not succeed in defunding Obama Administration initiatives.

Internationally, the 114th Congress is in the position to push through the Trans-Pacific Partnership (TPP) trade deal. The TPP is a trade deal between 12 Trans-Pacific countries aiming to strengthen their economic ties, cut tariffs, and encourage trade between the countries. During the election season, all the major party candidates spoke against the TPP and argued that it would harm American workers, despite President Obama’s strong support for the TPP. Based on President-elect Trump’s transition road map, he is likely to drop out of the TPP. Thus, pro-trade Republicans and Democrats in the 114th Congress are incentivized to ratify the TPP prior to the change in administration. We project that Congress will decline to ratify the TPP in this short session.

In recent months, the House and Senate have been working together to pass a comprehensive energy bill. The Senate passed the Energy Policy and Modernization Act of 2015 (S. 2012) while the House passed a similar bill, the North American Energy Security and Infrastructure Act of 2015 (H.R. 8). Specifically, the House bill includes natural resource and energy research and development provisions that are not included in the Senate bill. If the House and Senate can agree on and pass a reconciled bill, this would be the first comprehensive energy bill to pass Congress since 2007. In an effort to be seen as accomplishing something, it is likely that a reconciled bill will pass and be signed by President Obama before the end of the term.

It is unlikely that the 114th Congress will succeed in doing much more. Specifically, it probably won’t finish working on defense bills, approving judicial nominations, or creating financial reform. On January 3, 2017, the 115th Congress will begin, still under the leadership of Paul Ryan and Mitch McConnell. On January 6, 2017, it meets in a Joint Session to count the electoral votes of the 2016 Presidential Election, and a new chapter in American government will begin.


On November 8, 2016, voters in Youngstown, Ohio approved a measure to amend their city charter and provide a “Part-Time Workers’ Bill of Rights,” which will impose significant added requirements on employers of part-time workers throughout the city. City council in Cleveland, Ohio refused to add a similar measure to its ballot. Both “get out the vote” efforts were spearheaded by Grand Rapids, Michigan business owner Robert Goodrich. Passage in Youngstown may prove to be a testing ground for future measures elsewhere in the country.

The amendment will create a Part-Time Workers’ Rights Commission to be comprised of five individuals who will serve two-year, uncompensated terms. Two members shall be representatives of employers, two shall be representatives of part-time employees, and one member shall represent the general public, all of whom will be appointed by Youngstown City Council. The Commission shall have the power, authority, and duty to do such things as advise and consult with City Council on workplace policies and conditions, recommend additional legislation to affect part-time workers, employ a staff to carry out its duties, and receive complaints regarding violations of the Bill of Rights provisions and enforce its workplace requirements.

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Marijuana PlantMarijuana ballot initiatives passed in seven out of nine states on November 8, 2016. California, Massachusetts, and Nevada, states where medical marijuana is already legal, passed ballot initiatives to legalize recreational marijuana. A similar initiative in Arizona failed. Maine’s effort to expand beyond medicinal to legalize recreational marijuana is still too close to call. Arkansas, Florida, and North Dakota all voted to legalize medical marijuana. Montana voted to loosen restrictions on the existing medical marijuana laws.

The results were as follows:


  • Arizona – 52% No, 48% Yes
  • California – 56% Yes, 44% No
  • Maine – 50% Yes, 50% No (local outlets are declaring victory for legalization, but it is still too close to call)
  • Massachusetts – 54% Yes, 46% No
  • Nevada – 54% Yes, 46% No


  • Arkansas – 53% Yes, 47% No
  • Florida – 71% Yes, 29% No
  • North Dakota – 64% Yes, 36% No

Loosened Restrictions on Medical Marijuana Laws

  • Montana – 57% Yes, 43% No

Medical marijuana is now legal in 29 states and the District of Columbia. In seven of those states and the District of Columbia, with Maine pending, recreational marijuana is also legal.

On October 28, 2016, the Supreme Court of the United States said that it would decide whether the Obama Administration’s interpretation of Title IX as requiring schools to allow students to utilize restrooms that correspond to their gender identities is proper. The case of Gloucester County School Board v. GG, involves the claims of a biologically female high school student, who identifies as a transgender boy, seeking access to the boys’ bathroom at school. While the school board initially allowed the student to use the boys’ bathroom, it later adopted a policy requiring students to use bathrooms that correspond to their biological sex or a separate single-stall restroom.

Although the Gloucester County case relates to students, the Supreme Court’s decision should also have a significant impact on employers. Recently, both the EEOC and OSHA have taken new positions with regard to LGBT rights, including restroom access. The EEOC has taken the position that Title VII’s prohibition of sex discrimination protects lesbian, gay, bisexual and transgender applicants and employees against employment bias. The EEOC has aggressively enforced its new position. Recently, the EEOC announced that it had entered into a settlement with a West Virginia hospital requiring the hospital to make same-sex spouses eligible for employer-sponsored benefits. Similarly, both the EEOC and OSHA have issued guidance indicating that all employees, including transgender employees, should have access to restrooms that correspond to their gender identity.

Presumably, the Supreme Court’s decision in the Gloucester County case will provide clarity as to whether the courts will show deference to these agencies’ interpretations of the law. Employers seeking guidance regarding LGBT issues in their own workplace should contact any of the attorneys in the Frantz Ward Labor and Employment Practice Group.

Texas courts continue to be the focus of anti-regulation filings as the next election approaches. In August, a U.S. District Court for the Northern District of Texas issued a nationwide injunction barring the enforcement of Department of Education guidance requiring schools to allow transgender students to use bathroom and changing facilities consistent with their gender identity. In September, 21 states and the U.S. Chamber of Commerce filed two lawsuits in the U.S. District Court for the Eastern District of Texas to enjoin the implementation of the new Department of Labor rules on overtime compensation and classification practices under the Fair Labor Standards Act.

Keeping pace in October, hours before the Fair Pay and Safe Workplaces rule was set to take effect last week, the Eastern District issued a preliminary injunction halting its enforcement. The rule, promulgated through a 2014 Executive Order, would require government contractors and subcontractors to disclose mere allegations of labor law violations, including alleged violations before the NLRB, EEOC, OSHA and the OFCCP, when bidding for contracts over certain dollar amounts, with a goal toward disqualifying contractors or requiring that they enter into premature labor compliance agreements in order to obtain or retain federal contracts.

The nationwide injunction—issued by Judge Marcia A. Crone—resulted from a complaint and emergency motion for a temporary restraining order and preliminary injunction filed by three national and local trade associations representing construction industry employers. Judge Crone found that the Executive Branch exceeded its rule making authority in enacting the rule, focusing primarily on the potential disqualification of federal contractors for alleged (rather than proven) violations of federal labor laws. To that issue, Judge Crone wrote:

In a majority of the labor laws cited in the Executive Order (specifically NLRA, FLSA, OSHA, Title VII, ADEA, and ADA), Congress spelled out in precise detail what agency or court would be empowered to find a violation, how such a finding would be determined, and what the penalty or remedy would be. None of these laws provides for debarment or disqualification of contractors for violations of their provisions; none of them provides for such determinations to be made by unqualified agency contracting officers (or ALCAs); and certainly none of these laws provides for any such action to occur based on non-final, unadjudicated, “administrative merits determinations.”

Judge Crone also found merit in the trade associations’ argument that the disclosure requirements will cause contract bidders to “suffer an infringement of their First Amendment rights in the form of ‘compelled speech.’”

While Judge Crone’s decision provides the beginning of what may become a reprieve for federal contractors, an appeal to the Fifth Circuit Court of Appeals is certain. In addition, the injunction does not relieve federal contractors from the requirement to provide wage statements and notice of independent contractor status, a portion of the rule that is now scheduled to go into effect on January 1, 2017.