LABOR AND EMPLOYMENT LEGISLATION AFFECTING EMPLOYERS

Employers currently find themselves in a challenging environment both economically and politically. The economic downturn has affected employers in all industries forcing many to make difficult decisions to cut benefits and layoff employees. In addition to the economic crisis, employers are now faced with a different political climate. The lay of the land changed dramatically with the 2008 elections: the United States is now ruled by a democratic White House and Congress. President Obama has announced a new labor and employment law agenda, some of which has already been passed into law, and there will undoubtedly be significant additional changes on the horizon for employers. Much of the proposed legislation is intended to extend or broaden existing laws for the benefit of employees. In addition, Congress is currently focused on health insurance reform legislation that will directly impact the responsibility of employers for providing health insurance benefits to their employees and the costs of those benefits. With that in mind, employers need to be aware of recent changes to the law, as well as proposed legislation and regulatory changes that could significantly impact employers in the future.

There were two important employment laws passed during the first sixty days of President Obama’s administration, both of which provide significant benefits to employees:

Ledbetter Fair Pay Act (“LFPA”): Signed into law in January 2009, the LFPA significantly expands the deadline for an employee to bring a wage discrimination claim. The claimant must file a claim within 180 days of an occurrence of an unlawful employment practice, which now includes the issuance of each paycheck.

American Recovery and Reinvestment Act of 2009 (“ARRA”): Under the ARRA, signed into law by President Obama on February 17, 2009, the federal government will now temporarily subsidize up to sixty-five percent (65%) of COBRA premiums for an eligible employee and/or qualified beneficiary who loses coverage under a group health plan as a result of an involuntary termination during the period from September 1, 2008 through December 31, 2009.

In addition to the above changes to the law that have already taken effect, employers need to be aware of and understand legislation that may be coming. Following is proposed labor and employment legislation that could have a significant impact on employers:

Employee Free Choice Act: This proposed legislation would dramatically change the National Labor Relations Act (“NLRA”) by: (1) allowing for card check authorization in lieu of secret ballot elections if a majority of employees sign union authorization cards; (2) limiting the time for negotiating a collective bargaining agreement; (3) requiring mandatory mediation and binding arbitration with respect to the collective bargaining agreement; and (4) increasing penalties against employers who violate the NLRA.

Re-Empowerment of Skilled and Professional Employees and Construction Trade Workers Act (“RESPECT Act”): This proposed legislation would change the NLRA to: (1) significantly limit the number of employees that an employer can classify as a “supervisor”; (2) allow unionization of the employees newly classified as non-supervisory; and (3) provide a large new pool of potential union members.

Patriot Employers Act: This proposed legislation would offer a tax credit for employers who: (1) maintain or increase their workforce in the United States; (2) maintain their corporate headquarters in the United States; (3) provide their employees with health care and retirement benefits; (4) adopt a neutral stance towards union activity; and (5) provide pay and benefits to employees on active duty in the military.

Family and Medical Leave Expansion Act: This proposed legislation would expand the coverage of the FMLA to: (1) provide incentives for states to adopt paid leave laws; (2) apply to smaller employers than currently covered; (3) provide a leave category for addressing domestic violence issues; and (4) provide 24 hours of leave per year for parents to participate in academic activities of a child.

The Family Leave Insurance Act of 2007: This proposed legislation would enhance the current coverage of the FMLA to: (1) provide paid leave to employees; (2) apply to employers with 2 or more employees (including part-time); and (3) make employees eligible for paid leave after 6 months.

Healthy Families Act: This proposed legislation would require employers with 15 or more employees to provide paid sick leave that could be carried over from year to year.

Working Families Flexibility Act: This proposed legislation would require employers to engage in the interactive process with an employee who requests flexible work options and would require an explanation if the employer denies the request. The Act would also allow employees to file a complaint with the Department of Labor, penalties to be imposed against the employer, and federal court review.

FOREWARN Act: This proposed legislation would change the WARN Act to: (1) cover smaller employers; (2) decrease the number of employees laid off to trigger the notice requirements; (3) provide for a longer notice period; and (4) double penalties against an employer for a violation.

In addition to the foregoing proposed legislation that is aimed directly at expanding employee benefits, President Obama and Congress are currently focused on federal health care reform which will also have an impact on employers. All three leading proposals for health care reform legislation require employers to contribute to the cost of health care for their employees in varying degrees. For example, the Senate Health, Education, Labor and Pensions (“HELP”) Committee’s Affordable Health Choices Act would require an employer with more than 25 employees to either provide health care coverage which the employer pays at least 60% of the premium, or pay a tax of $750 per year for each full-time employee ($375 per year for each part-time employee). The House “Tri-Committee” Affordable Health Choices Act would require employers with more than a threshold payroll amount to either provide health insurance coverage which the employer contributes at least 65% of the premium, or pay a percentage of payroll to the Health Insurance Exchange Trust Fund. Finally, America’s Healthy Future Act, proposed by the Senate Finance Committee Chairman, Max Bacus, would require employers with 50 or more employees who do not offer health insurance coverage to pay an assessment for each full-time employee enrolled in a state or federal insurance exchange. The assessment would be based upon tax credits and would be capped at $400 per employee.

While it is uncertain if any of the proposed health reform bills will be passed or what provisions the new law would include, it is probable that any health care reform law will include some requirement for employers to provide health insurance coverage and/or contribute to some degree in the cost of such benefits. Employers need to be aware of the proposed legislation, review their existing health insurance plans or investigate health benefits that are available, and plan for the added expense that may be imposed upon employers.

From the two employment laws that have already been passed, the labor and employment legislation agenda revealed by the new administration, and the various health care reform bills that have been proposed, it is clear that employee rights and benefits are front and center. The new agenda seeks to expand existing benefits for employees and to create additional protections. Employers need to be aware of the recent changes in the law to ensure compliance and understand proposed legislation to prepare for the changes that are coming.