NLRB Quickie/Ambush/Speedy Election Rule Overturned

Posted on May 14, 2012 by Keith A. Ashmus

The United States District Court for the District of Columbia ruled that the NLRB's new rules on extremely fast union elections had not been properly issued, due to lack of a quorum. While Member Brian Hayes participated in earlier portions of the rulemaking process, he did not participate in the final deliberations or vote upon the rule itself.  With only two other members of the Board in office at the time, that meant only two members acted.  Since a quorum for the Board to conduct business is three members, U.S. District Judge James Boasberg found the rule invalid.  He did not reach the other arguments raised by the plaintiffs in the case (the U. S. Chamber of Commerce and the Coalition for a Democratic Workplace).  In light of the nature of the ruling, the Board can elect to appeal, or it can take action upon the rulemaking record with a quorum, which it now can muster (at least assuming that the recess appointments made by President Obama are found to be valid.)  The order of Judge Boasberg is below.

 

Interesting background piece on savings options for health costs

Posted on April 30, 2012 by Keith A. Ashmus

Dr. John Goodman, of the Health Alert blog, has written an excellent blog post on the various options for covering health costs, besides conventional third-party insurance (FSA's, HSA's, HRA's, Roth HSA's and even 401k's).  The current system is clearly haphazard, and could be improved without legislation.  Individual savings options will become more important in the coming years, whether the Affordable Care Act is upheld, overturned or partially preserved.  It would be a good use of resources to make the current savings options for paying health expenses more effective and more coordinated.

EEOC Issues Guidelines on Criminal Background Checks

Posted on April 26, 2012 by Keith A. Ashmus

The U.S. Equal Employment Opportunity Commission (EEOC) has just issued new Guidelines on employers' use of criminal records to make employment decisions.  Despite the opposition of employer groups, its guidelines represent a significant restriction upon what the EEOC thinks employers can do, and how employers can justify to the EEOC their use of criminal convictions in filling job openings.  The EEOC's assumptions that criminal convictions represent, without individualized analysis by the employer, non-job-related criteria and that different conviction rates among different ethnic groups create disparate impacts in the job market are unsupported by logic or by empirical studies of the justice system.  A criminal conviction is not an immutable characteristic, nor is it a protected category under Title VII.  Every state has collateral sanctions attendant to criminal convictions, which are given short-shrift by these Guidelines.  Ohio, for example, has over 600 civil consequences for criminal convictions in areas of employment, civic participation, public benefits and so on.  The new Guidelines give deference only to Federal collateral sanctions. This kind of expansionist activity by a government agency only serves to reduce the level of respect accorded to it, and diverts it from its core mission.  Fortunately for employers, most of them can continue to do what they have been doing, and consider criminal convictions of job applicants in light of their own needs and the jobs in question, without engaging in expensive and superfluous analysis.  If the EEOC chooses to bring an action, this is one area where the right to a jury trial will put the advantage in the employer's corner.

Immigration Enforcement Continues to Vex Employers

Posted on April 20, 2012 by Keith A. Ashmus

As was illustrated by a House Judiciary Committee Hearing on April 18, immigration enforcement is nowhere near consensus.  A bill introduced by Rep. Lamar Smith (R-Texas), HR 2885, would make use of E-Verify mandatory for all employers.  Rep. Smith regards the bill as a measure to stop identity theft, especially including theft of children's identities by unauthorized workers. Such theft is often not uncovered for many years, by which time the futures of the children may be seriously impacted.  On the other hand, Rep. Zoe Lofgren (D-Cal) contended that the new law, if passed, would aggravate the problem while costing taxpayers billions.  Her position is that E-Verify cannot uncover identity theft, since it only matches social security numbers with names.  She noted that the real problem is with immigration.  Even Rep. Smith conceded that the underground market for false identity papers grew after the passage of the Immigration Reform and Control Act, which required employers to obtain documentation of identity and work eligibility for all new hires.  Other issues for E-Verify requirements include fair and efficient ways to deal with incorrect responses from the system.  With millions of people being hired at new jobs each year, even a low percentage of false replies on work eligibility means that thousands of eligible workers would be denied jobs for as long as it takes the government to correct the mistake.  The National Small Business Association (NSBA) has noted this problem as a major concern with mandatory E-Verify.  Members of both parties have spent enough time on this issue (the April 18th hearing was the sixth hearing in this Congress just on E-Verify) to know that comprehensive immigration reform is necessary.  E-Verify is just a tool, and doesn't approach being a solution to the underlying problem.  Unless coupled with sensible changes in immigration policy, using it (and especially making it mandatory) is likely to do more harm than good.

New CBO JCT Analysis of Affordable Care Act's Impact on Employer Provided Health Insurance

Posted on March 20, 2012 by Keith A. Ashmus

As indicated in our previous post, the Congressional Budget Office and the Joint Committee on Taxation have been examining the impact of the Patient Protection and Affordable Care Act ("Affordable Care Act" or "Obamacare") on employer-provided health insurance, and the impact of that upon the costs of the Act.  They have now released a summary of their study, which finds that the more employers dump their employees into the Exchanges, the less costly the Act will be in terms of adding to the federal deficit.  The reason is that the study assumed that all the employers who stop providing insurance would add the equivalent amount to employee pay.  Therefore, the employers would pay more payroll tax and the employees would pay more payroll tax and more income tax, thus overcoming the increase in subsidies provided through the exchange.

The report summary states the key conclusions as follows:

CBO and JCT's Key Findings

  • CBO and JCT continue to expect that the ACA will lead to a small reduction in employment-based health insurance. That projection arises from the agencies' modeling of the many changes in opportunities and incentives facing employers and employees under the ACA, and it is consistent with the findings of other analysts who have carefully modeled the nation’s health insurance system.
  • Significant changes in some of the key assumptions underlying the estimates lead to somewhat higher or lower projections of the change in employment-based health insurance and the budgetary impact of the ACA. However, differences in the projected change in employment-based health insurance tend to have limited effects on the projected budgetary impact of the law because changes in the availability and take-up of such insurance affect the federal budget through several channels that are partly offsetting. Indeed, one scenario examined here shows that larger reductions in employment-based health insurance than expected by CBO and JCT might lower rather than raise the cost of the insurance coverage provisions of the ACA.
  • In CBO and JCT's judgment, a sharp decline in employment-based health insurance as a result of the ACA is unlikely and, if it occurred, would not dramatically increase the cost of the ACA.

The "small reduction" in employees provided with employer-based coverage is 3 to 5 million.  In some scenarios modeled, the reduction was a total loss of employer-based coverage of 20 million people.  Again, the assumptions in the study were that the lost benefit costs would be replaced by salaries and wages: 

If a firm chose not to
offer insurance coverage under the ACA, some of its workers and their families might enroll in Medicaid or CHIP or be eligible to receive subsidies through the insurance exchanges; as a result, the cost of those programs would increase. At
the same time, the reduction in that firm’s compensation to workers that was
provided in the form of health benefits would generally be offset by an increase in
the compensation it provided in the form of wages and salaries. Because health benefits are generally not taxed but wages and salaries are, that shift in the
composition of compensation would raise federal revenues. In addition, the federal government would generally receive penalty payments from the employer and from any employees who ended up without health insurance.

It is also worth noting that the issue for this study is the effect upon the deficit, not the cost of the provision of coverage.  It is arguable that there could be deficit offsets in the form of increased taxes, but there can be no dispute that having billions of premium dollars of coverage no longer paid by employers and then provided through the exchanges, with subsidies, will affect the cost of the Affordable Care Act.  Even as to the deficit, if employers (especially small employers not subject to employer penalties) simply get out of the health care business without increasing their pay rates the anticipated offsets for higher income and payroll taxes simply will not occur and the deficit will increase.

CBO Issues New Cost Estimate for ObamaCare--$1.762 Trillion over 10 years

Posted on March 14, 2012 by Keith A. Ashmus

The CBO has issued a new estimate for the costs of the Patient Protection and Affordable Care Act ("PPACA"). Compared with the original projected total cost of approximately $900 billion over a ten year timeframe, the new estimate is nearly double.  At the same time, the impact on the deficit is more positive than in prior estimates, due, in part, to the inability or unwillingness of small businesses to take advantage of the tax incentives provided in the law  for small employers who provide coverage for their employees. Since the time-frame of the estimate is from the present until ten years in the future (2012-2021), it covers an additional year of full implementation of the law, compared with the 2011-2020 estimate.  The entire report is worth examining, since it demonstrates the changes in the many moving parts of the cost estimation process--from changes in implementation schedules, to changes in economic outlook, to changes in real-world experience compared with initial assumptions, to changes in laws and regulations.  It is also worth noting that CBO has noted the concern of many third parties as to the "rosy" estimates of the number of employers who will continue to offer health insurance to their employees after implementation of PPACA and has promised to issue an analysis "shortly":

Some observers have expressed surprise that CBO and JCT’s previous estimates did not show a much larger reduction in the number of people receiving employment-based health insurance. CBO and JCT’s estimates take account of the expanded eligibility for Medicaid and the subsidies to be provided through the insurance exchanges, but they also recognize that the legislation leaves in place substantial financial incentives for firms to offer health insurance coverage and also creates new financial incentives for firms to offer such coverage and for many people to obtain it through their employers. Shortly, CBO will release an extensive analysis conducted with JCT of the incentives for firms to offer or not offer health insurance under the ACA, as well as a range of estimates of sources of coverage and federal budgetary outcomes that would result from the ACA under alternative assumptions about employers’ behavior.

HHS Health Insurance Exchange Regulations Made Public

Posted on March 12, 2012 by Keith A. Ashmus

HHS has made its final (in some cases "interim final") Exchange regulations under the Patient Protection and Affordable Care Act ("PPACA") public.  They are to be formally published in the Federal Register on March 27.  The 644 pages of the HHS Regulations Final Rule on Health Plan Exchanges 032712.pdf cover standards for states to follow in setting up exchanges for individuals and small businesses to obtain insurance coverage.  More information will be forthcoming as the regulations are more closely examined, but a couple of key points are 1. that states must apparently have both individual and Small Employer Health Care Option Plans ("SHOP") exchanges; 2. that multi-employer welfare ("MEWA") plan products and church-based mutual-aid type health plans will not necessarily be entitled to be offered on exchanges (which in turn means that those who purchase such plans would be ineligible for subsidies); and 3. that the January 2013 date for approval of state exchanges by HHS will not be changed.  HHS believes that meeting the October 2013 date for open enrollment requires that the plans be approved or rejected by January of that year. 

NLRB Posting Rule Partially Blocked

Posted on March 02, 2012 by Keith A. Ashmus

The rule recently promulgated by the National Labor Relations Board requiring employers to post on bulletin boards and on their websites notices of employee rights partially survived a court challenge.  The U.S. District Court in Washington, DC permitted the Board to require the posters, but vacated the portions of the rule creating a new unfair labor practice of failure to post the notice and providing that the statute of limitations for filing unfair labor practice charges is extended if the employer did not properly post the notice.NLRB-Notice-Posting-Decision 03-02-2012.pdf  In the words of Judge Amy Berman Jackson:

The Court holds that the NLRA granted the Board broad rulemaking authority to implement the provisions of the Act, and that the Board did not exceed its statutory authority in promulgating Subpart A of the challenged rule – the notice posting provision. But it also holds that the provision of Subpart B that deems a failure to post to be an unfair labor practice, and the provision that tolls the statute of limitations in unfair labor practice actions against employers who have failed to post, do violate the NLRA and are invalid as a matter of law.

The decision is subject to appeal, of course, and the likelihood is that both sides will appeal certain aspects of the decision.  At this point, it does appear that employers will be required to comply with the basic posting requirement as of April 30, 2012.  It is not clear that there will be any effective penalty for failing to do so, however.

More NLRB Protection for Badmouthing Your Employer on FaceBook

Posted on February 01, 2012 by Rebecca J. Bennett

The Office of the General Counsel for the NLRB has recently updated its memo summarizing recent social media decisions.  The memo provides a reference for employers regarding the limitations on disciplining or terminating employees based on comments they make on FaceBook and other social media sites.

The first case summary in the memo is telling.  The Board held that a collections agency violated the National Labor Relations Act when it terminated an employee for an expletive-filled FaceBook rant disparaging the company and its decisions.  The Board reasoned that the termination was unlawful, along with the company’s policy, which prohibited:

"[m]aking disparaging comments about the company through any media, including online blogs, other electronic media or through the media.”

The Board noted that the company’s written policy did not provide an exception for engaging in Section 7 rights (the rights of employees to engage in protected, concerted activity).

Of course, it remains to be seen how courts would regard a similar set of facts. Nonetheless, the memo serves as yet another reminder of the Board’s take:  An employee may have a federally-protected right to badmouth her employer.   Here, a key factor was that several of the employee’s co-worker FaceBook friends joined in the rant.  Hence, the exchange amounted to concerted activity according to the Board.

Health Savings Accounts Growing More Popular

Posted on January 31, 2012 by Keith A. Ashmus

A new report issued by the Employee Benefit Research Institute shows that Health Savings Accounts (HSA's) and Health Reimbursement Arrangements (HRA's) grew in popularity in 2011. Paul Fronstin, “Health Savings Accounts and Health Reimbursement Arrangements: Assets,
Account Balances, and Rollovers, 2006–2011,” EBRI Issue Brief, no. 367, January 2012.  The report shows that the number of accounts increased from 5.4 million to 8.4 million from 2010 to 2011, a 58% jump.  In 2006, there were only 1.3 million accounts.  The average account in 2011 had just over $1400 in it, also an increase from 2010, resulting in the total held in both HRA's and HSA's combined increasing from $7.3 Billion to $12.4 Billion in just one year.  The increasing popularity of these accounts, which give individuals more more control over their health care purchasing, may run into a barrier with the Affordable Care Act.  The Act limits the degree to which employers can utilize HRA and HSA benefits, and the Administration has already placed limits on the types of health expenditures for which HSA and HRA funds can be used. The first took effect in 2011, when the Affordable Care Act eliminated over-the-counter drug purchases as qualified expenditures. (In a perverse twist, given the professed goal of encouraging the use of less expensive alternatives, the IRS will allow reimbursement of non-prescription drugs if the patient actually goes to a doctor and has the doctor write a prescription for the non-prescription medicine.)  In any case, with HSA's and HRA's skyrocketing in popularity, the Affordable Care Act's inhospitability to those accounts may well create issues for employers who would like to use those accounts as a significant part of their overall health and wellness program for their workforce.