Governmental Affairs

Governmental Affairs

As Human Resource Professionals, we are often called upon to not only follow employment laws, but interpret them and apply them to our workplaces. More than that, we are often called upon to respond to and give opinions of upcoming laws that will affect the ways that we do our jobs. We do that through letter writing campaigns, contacting our elected officials, and even attending legislative conferences in Austin and Washington, D.C.

SHRM's 2010 Governmental Affairs Goals

In coordination with the SHRM Government Affairs Team (GAT), develop and implement a chapter outreach program to establish/enhance relationships with state and federal elected officials. Chapters are strongly encouraged to coordinate such efforts with the GAT’s Member Advocacy Specialist, ensuring consistency of SHRM’s messaging on current HR public policy matters.
- Create a “Day Inside the District” Program, where members within your chapter can meet with their state or federal public policy-makers within the district. This includes inviting a state or federal public policymaker to speak at a chapter meeting.
- Create a “Day Inside the Beltway” Program, where members within your chapter can meet with their federally elected officials in Washington, D.C.
Develop and implement (or maintain) an information sharing campaign to engage your members in the legislative process which include tactics such as:
- Presenting, at least quarterly, a legislative update at chapter meetings
- Providing, at least quarterly, a legislative update in the chapter newsletter (either online or print)
- A chapter representative attends the SHRM Employment Law & Legislative Conference and participates in the Capitol Hill Advocacy Day:
  - Reporting back to the chapter on the conference and the Capitol Hill Advocacy Day is a great way to include the members in the experience.
  - Share what you learned on your Hill visit through your update column in the newsletter or in your update at the chapter meeting.

To learn more about SHRM Governmental Affairs Advocacy, please click here.

What is the HIRE (Hiring Incentives to Restore Employment) Act?

H.R.2847: A package of tax incentives and infrastructure spending to stimulate new job creation.

The HIRE Act has two components:

First Level Credit: This is the Forgiveness of 6.2% Employer Social Security taxes (FICA) for qualified new employees.
Second Level Credit: Job Tax Credits for employees retained over 52 weeks.

There are different rules and conditions for the two credits.

Social Security Tax Credit

Applies to “qualified individuals” who:

Must begin work for the employer after 2/3/10 and before 1/1/11.
Must certify on a “signed affidavit” that they have not worked more than 40 hours during the 60 days prior to the date of new employment. No proof will be required from the employee - just a signature. The employer will not be held responsible if the employee lies.
Must not replace an existing employee unless that employee left voluntarily or for cause. The law specifically prohibits the firing of employees to make room for HIRE Act hires. An employer can’t claim the new tax breaks for hiring family members.

Employer Requirements:

Employers must be in a “trade or business”
A tax exempt organization in furtherance of its exempt purposes
Governmental entities are excluded with the exception of public universities
Employer may not elect to take the FICA credit

Nature of the Employer Social Security Tax Credit

Employer’s portion of Social Security taxes (6.2% of the first $106,800 in wages) is forgiven from the day after the date of enactment (March 19, 2010) through the end of 2010. The incentive is not biased towards either low-wage or high-wage workers. Under the measure, a business saves 6.2% on both a $40,000 worker and a $90,000 worker.
Congress will replace revenues lost to Social Security trust fund by other means
Applies in all U.S. jurisdictions where FICA applies: States, District of Columbia, and U.S. territories including Puerto Rico and the U.S. Virgin Islands
Interaction with the Work Opportunity Tax Credits (WOTC). For workers that would otherwise be eligible for the “Work Opportunity Tax Credit,” the employer must select one benefit or the other for 2010—no double dipping.

Job Tax Credit

In addition to the Employer Social Security tax credit
Applies to employees:
- Who qualified for the Employer Social Security tax credit
- Who remain on the payroll for 52 consecutive weeks
- Whose wages for the last 26 of these weeks were at least equal to 80% of their wages for the first 26 weeks

Nature of the Job Tax Credit

The lesser of $1,000 or 6,2% of the wages paid to the retained employee during the 52-week period.
The credit must be applied toward the employer’s 2011 income tax.
May not be carried back to years prior to the date of enactment of HIRE Act
Interaction with employers who choose WOTC
Special rules for application of the job tax credit in U.S. territories including Puerto Rico and the U.S. Virgin Islands

The IRS recently released the forms necessary for employers to claim the special payroll tax exemption provided by the Act. The forms released include a new Form W-11, HIRE Act Employee Affidavit, and a revised Form 941, Employer’s Quarterly Federal Tax Return. The Form 941 is currently in draft form with the final form and instructions expected next month.

As the weeks unfold and real-life practical questions come up, we are all going to learn more about how this law will impact our payroll filing, hiring and tax returns.

Governmental Affairs Alert - 03/25/10

Federal Legislative Action Alert

On Tuesday, President Obama signed into law H.R. 3590, the Patient Protection and Affordable Care Act. This sweeping reform law includes many provisions that will impact both employers and employees.

Employer Requirement – Penalties would be assessed on employers with 50 or more employees who fail to offer coverage to employees. The penalty would be assessed if even one employee receives a subsidy to purchase coverage through a health insurance exchange. Employers would also incur penalties if the coverage they offer is considered “unaffordable” to the employee or if the health plan has an actuarial value of less than 60 percent or pays less than 60 percent of covered health care expenses.
Individual Requirement – The new law requires individuals to purchase health insurance coverage or pay a tax penalty beginning in 2014. The penalty, which is phased in, starts at $95 or 0.5% of income per individual in 2014 and increases to $750 or 2% of income in 2016. The penalties for families would be capped at $2,250. Religious and hardship exemptions are available.
Excise Tax on High-Value Health Plans (“Cadillac” tax) – Employers offering health plans that exceed a certain cost (the total employee and employer cost) would be subject to an excise tax on the amount above that value. For individual coverage, the threshold would be $8,500; for family coverage, the threshold would be $23,000. These thresholds would be indexed at Consumer Price Index plus one percentage point. Certain high-risk provisions would have a higher cost threshold.
Insurance Market Reforms – The new law requires insurance plans to provide coverage to any individual who requests insurance. It also includes a prohibition on pre-existing condition restrictions in the individual and small group health care market. Health insurance premiums would be allowed to vary based only on tobacco use, age, family composition, and geographic location. Large employers that purchase coverage through a health care exchange would be eligible for the above insurance protections. Both self-insured and fully-insured plans are required to provide dependent coverage for children up to age 26. Health plans are also prohibited from establishing annual and lifetime dollar limits on coverage.
Wellness Programs – Employers can offer increased incentives or rewards to employees for participation in a wellness program or for meeting certain health status targets beginning in 2014. Rewards or premium reductions up to 30 percent of the cost of coverage are now permissible.
Free Choice Vouchers – Employers offering coverage are required to provide “free choice vouchers” to qualified employees to purchase insurance through the exchanges. To be eligible for a voucher, an employee’s contribution under the employer’s plan would be between 8 percent and 9.8 percent of income, and the employee’s income would be at or below 400 percent of the Federal Poverty Level.
Flexible Spending Accounts (FSAs) – Contributions to health FSAs would be capped at $2,500 beginning in 2011 and over-the-counter medicines would only qualify for reimbursement with a doctor’s prescription.
Medicare Hospital Insurance Tax – Beginning in 2013, an additional Medicare tax of 0.9 percent is imposed on individuals with income in excess of $250,000 for joint filers or $200,000 for single filers.

More Changes Pending

While the new health care legislation was signed into law just this week, some additional changes are expected to be made in the coming days as part of what is called budget reconciliation. These changes, which include several of the effective dates and requirements outlined above, are being made as part of the agreement negotiated between the House and Senate to approve the overall health care reform package.

To review a side-by-side chart of the new health care law and the anticipated changes to it contained in the budget reconciliation bill, click HERE.

SHRM is committed to helping you understand this new law and implement it now and as it continues to evolve. A number of resources are available to SHRM members immediately to help you navigate this complex issue – and more will be announced soon.

SHRM's Health Care Resource Page is the go-to place for all the latest offerings in the health care realm.
Click HERE to listen to a free pre-recorded overview of the final health care reform package by Mike Aitken and Lisa Horn of SHRM’s Government Affairs department.
Click HERE to sign-up for an in-depth webcast titled “Health Care Reform: Leading Your Organization’s Response” on April 7. This special SHRM session will be conducted by Frank McArdle, Principal and Manager, Hewitt and Associates.

Government Affairs Update - 10/30/09

Federal Legislative Alert!

Yesterday, President Obama signed into law the Fiscal Year 2010 National Defense Authorization Act (H.R. 2647). The new law includes an expansion of the recently-enacted exigency and caregiver leave provisions for military families under the Family and Medical Leave Act of 1993 (FMLA).

In January 2008, Congress amended the FMLA to provide:
Exigency leave - up to 12 weeks of leave for urgent needs related to a reservist family member’s (spouse, son, daughter, or parent) call to active service.

H.R. 2647 expands the exigency leave benefits to include family members of active duty service members. Under current law, only family members of National Guard and Reservists are eligible for “exigency leave.

Caregiver leave - up to 26 weeks of unpaid leave to an employee to care for a family member (spouse, son, daughter, parent, or next of kin) who is injured while serving on active military duty.

H.R. 2647 expands the caregiver leave provision to include veterans who are undergoing medical treatment, recuperation or therapy for serious injury or illness that occurred any time during the five years preceding the date of treatment.

These previsions are effective upon enactment.

In addition to providing leave for military families, the FMLA provides unpaid leave for the birth, adoption or foster care placement of an employee’s child, as well as for the “serious health condition” of a spouse, son, daughter, or parent, or for the employee’s own medical condition. To be eligible for the leave, employees must work in organizations of 50 or more employees and work at least 1,250 hours in a 12-month period.

Government Affairs Update - 09/22/09

Fall is upon us and we’re beginning another quarter with much ado about everything concerning health care. Regardless of your political persuasion, age, ethnicity, or virtually any other classification we’d like to mention, this issue has galvanized those for and those against, into armies of zealots like no other issue within recent memory. Yet, like any good magician, our “representatives” in Washington have other tricks up their sleeves that may pop out at any time. It’s one of these legislative slights-of-hand that this article addresses; namely, the Healthy Families Act.

The Healthy Families Act in a nutshell:

Who does it affect?
Employers with fifteen (15) or more Employees

What does it require of Employers?
Seven (7) days of PAID sick leave for Employees to care for personal or family health care needs

How is it applied?
These seven (7) PAID days must be granted over and above any vacation, personal, or sick leave, currently offered by the Employer or any PTO structure currently in place. Reduction of current benefits is strictly prohibited.

What does this mean to your Employer?
That’s a question only you can answer by doing the math. Let’s take an employer with 50 employees whose average wage is $15 per hour.

50 employees X $15 = $750
$ 750 X 8 hours = $6,000
$6,000 X 7 Days = $42,000

$42,000! And this doesn’t include the cost of temporary employees who may be needed to fill in or the other costs to business due to failure to meet deadlines or other requirements.

With the recent passing of Senator Edward Kennedy, (author of this bill), the probability of the sympathy vote for passage is high. Therefore, although Healthy Families Act is not in the spotlight at the moment, we must be vigilant in addressing it. Each of us must do the research within our own companies. Crunch the numbers and find out the true cost of the Healthy Families Act on our businesses. Then sit down with our CEOs and let them know of this looming threat.

Although both of our Senators have expressed their opposition to this bill, our Representative in the House, Sylvester Reyes, is a co-sponsor. He has given no indication he will stray from party dictate when the time comes to push this legislation through. Let’s take a moment before the month is out to write a letter of thank you to our Senators, Kay Bailey Hutchison and John Cornyn. Thank them for their service and encourage them to stand firmly in opposition. Let’s also inform Rep. Reyes of the devastating effects on our businesses if this irresponsible bill is enacted. If those whom we employ in Washington receive enough feedback from the Presidents and CEOs of businesses, we may stand a chance of removing this rabbit from the magic act now going on in our nation’s capital.