CUPA-HR eNews

Public Policy News You Can Use - February 18
February 18, 2009

New COBRA Requirements Part of Stimulus

On February 17, President Obama signed the American Recovery and Reinvestment Act of 2009. Among the bill's many provisions is a section creating a nine-month federal funded subsidy for COBRA premiums. The subsidy is 65 percent of premium cost and will be made available to individuals involuntarily terminated between September 1, 2008, and December 31, 2009. Plans will need to notify participants and beneficiaries that had or have a qualifying event from September 1, 2008, to December 31, 2009, of the new provisions. The government will providing model notices.

CUPA-HR is hosting a Webinar on February 26 outlining the new COBRA requirements.

Ledbetter Fair Pay Act Becomes Law

On January 29, 2009, President Obama signed into law the Lilly Ledbetter Fair Pay Act of 2009 — the first bill he signed in office. The new law is purportedly designed to overturn the U.S. Supreme Court ruling in Ledbetter v. Goodyear Tire & Rubber Co., dealing with pay discrimination. The Ledbetter Act reverses the decision by amending Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act and the Rehabilitation Act so that the statute of limitations is renewed each time the employee receives compensation affected by the employer's past discriminatory acts.

Legislators moved quickly in the 111th Congress to pass the Ledbetter Act, which President Obama had actively supported on the campaign trail. On January 9, the House voted in favor of the Act by a vote of 247 to 171. It then combined the bill with the Paycheck Fairness Act before sending the legislation to the Senate. Rather than taking up the combination bill, the Senate passed the Ledbetter Act by itself by a vote of 61 to 36. The House promptly approved the stand-alone Senate bill 250 to 177 and President Obama held his first official signing ceremony two days later at the White House.

The Senate majority leader reportedly plans to move forward with the Paycheck Fairness Act at some point this summer. The bill would allow for unlimited compensatory and punitive damages under the Equal Pay Act, permit class action lawsuits to be filed where claimants must opt out of the lawsuit rather than opt in, and make it harder for employers to defend legitimate practices that could have caused pay disparity. CUPA-HR will continue to monitor any action on the bill and notify members with any updates.

CUPA-HR recently conducted a just-in-time Webinar entitled, "Ledbetter Fair Pay Act: What It Is and What To Do About It." Click here to purchase the archived version of the program.

White House Memo Delays Pending Regulations

Several regulations of importance to employers have been delayed after the White House issued a January 20 memorandum to the heads of executive departments. The memo advised extending the effective dates by 60 days for all the regulations that have been published in the Federal Register but not yet taken effect, in order to give the Obama administration a chance to review them.

The Department of Homeland Security (DHS) cooperated with a 60-day delay of its final rule on "Documents Acceptable for Employment Eligibility Verification," addressing the list of documents presented during the I-9 verification process, published in the February 3 Federal Register. This moves the effective date to April 3, 2009. The comment period has also been extended until March 4, 2009.

The Department of Labor (DOL) delayed by 60 days the final regulations that would allow employers to provide investment advice to 401(k) and other individual account plan participants without violation of the fiduciary rules of ERISA and reopened the regulations for comments until February 18. The final regulations, originally slotted to take effect on March 22, will be implemented May 22, at the earliest. The change was published in the February 4 Federal Register.

Implementation of the Federal Acquisition Regulation (FAR) Council's federal contractor E-Verify regulation has also been delayed. The rule requires that most federal contractors and subcontractors use DHS's electronic employment verification system, E-Verify, within 30 days of the contract award and begin confirming employment eligibility within 90 days of enrollment. Several employer groups filed a lawsuit challenging the rule. In light of the memorandum, parties to the litigation asked the Office of Management and Budget (OMB) to delay the effective date of the rule 60 days from February 20 to May 21. The change was published in the January 30 Federal Register.

Finally, DHS also delayed its supplemental final rule on no-match letters. The rule sets forth the safe harbor procedures for employers who receive no-match letters from the Social Security Administration (SSA) if the Social Security number the employer provides does not match SSA's records for that employee. In October 2008, DHS issued the supplemental rule in response to a court order enjoining the agency from proceeding with its original no-match rule, which was published in August 2007. However, business groups that challenged the original rule also challenged the supplemental rule and, in light of the White House memorandum, asked opposing counsel to agree to stay the proceedings 60 days and OMB to take 60 days to review the final rule. The government agreed and filed a motion to extend the litigation schedule by 60 days, which the court granted. The government's brief is now due on April 10.

Obama Issues Union-Friendly Executive Orders

President Obama issued four executive orders imposing new labor requirements on government contractors. The White House issued the first three on January 30 and the fourth a week later on February 6. Details on the orders are set forth below.

EO 13496 requires federal contractors to (1) post notices informing employees of their rights under federal labor laws and (2) comply with the content of the notice. Under the order, the Secretary of Labor is responsible for creating the notice and ensuring compliance. The Secretary may cancel contracts or debar (blacklist) companies that violate the order, providing the Secretary with new and unprecedented authority. EO 13496 also repeals Executive Order 13201 (known as the Beck order), which required contractors to inform employees of the fact that they are not compelled to pay union dues earmarked for non-collective bargaining activities, including politics and lobbying. The Secretary has 120 days to initiate a rulemaking process to "prescribe the size, form and content of the Notice."

EO 13494 prohibits federal contractors from seeking reimbursement for costs associated with educating employees about unionization. The order lists the following examples of activities for which reimbursement is prohibited: preparing and distributing materials; hiring or consulting legal counsel or consultants; holding meetings (including paying the salaries of the attendees at meetings held for this purpose); and planning or conducting activities by managers, supervisors or union representatives during work hours. The Federal Acquisition Regulatory Council is tasked with promulgating rules within 150 days to carry out the order.

EO 13495 requires contractors to offer workers employed under a predecessor contract the right of first refusal of employment in positions for which they are qualified. Managerial and supervisory employees are excluded as are some types of contracts. The Secretary of Labor must issue regulations within 180 days.

The last Executive Order, which was issued February 6 and has not yet been assigned a number, encourages federal agencies to use project labor agreements (PLAs) "in awarding any contract in connection with a large-scale construction project or obligating funds pursuant to such a contract." The order defines "large-scale construction projects" as those that cost $25 million or more. PLAs require contractors and subcontractors to sign collective bargaining agreements with specific labor organizations set forth in the PLA. The Federal Acquisition Regulatory Council must promulgate implementing rules within 120 days of the order.

The business community has objected to several of the orders and legal challenges are expected.

EFCA Introduction Looms

The Employee Free Choice Act (EFCA), or card-check bill, that became a major issue in the 2008 elections may be re-introduced for the 111th Congress sometime in the next few weeks. Under the card-check bill, an employer would be required to recognize a union if the union produced cards signed by a majority of workers in the proposed bargaining unit. The bill would also allow government-appointed arbitrators to set the terms of an initial contract if the union and employer did not come to agreement within 120 days.

EFCA stalled in the Senate last Congress, but now that Democrats have even larger majorities in the House and Senate, union leaders and the chairman of the House Education and Labor Committee, George Miller (D-CA), are poised to begin the fight again in the new Congress. The bill was expected to be re-introduced in conjunction with a rally of union leaders on February 4, but Miller has reportedly not gathered as many co-sponsors as he did last Congress and has delayed the introduction until he can get additional co-sponsors.

CUPA-HR will continue to monitor activities around EFCA and notify members when it is re-introduced.

Obama's Labor Appointment Slowly Proceeds

On February 11, 2009, the Senate Committee on Health, Education, Labor and Pensions (HELP) approved the nomination of Rep. Hilda Solis (D-CA) to be President Obama's Labor Secretary. After Solis' January 9 HELP Committee confirmation hearing, her nomination was stalled for close to a month due to Republican Committee member concerns over her support for card-check legislation and her role on the board of a pro-union advocacy group. Reports of Solis' husband paying $6,400 in the last two weeks to settle tax liens against his small business caused an additional delay and a cancellation of a Committee meeting to vote on her nomination.

The Labor Secretary appointment will now be sent to the Senate floor for a vote. The Senate majority leader would reportedly like to hold the vote as soon as possible; however, two Republican Committee members' "no" votes in Committee will prevent the nomination from being considered under unanimous consent, likely putting the vote off until after the President's Day recess. President Obama has appointed Edward C. Hugler, a senior Department of Labor official, to serve as acting Secretary until Rep. Solis is confirmed.

In other labor appointment news, President Obama has designated the top positions at the Equal Employment Opportunity Commission (EEOC) and the National Labor Relations Board (NLRB). Stuart J. Ishimaru has been designated by President Obama as the acting chair for the EEOC. He is serving his second term on the Commission, which will expire July 1, 2012. Ishimaru is expected to re-evaluate many commission policies, such as employer requirements to collect and report ethnic information of employees. At the NLRB, Wilma Liebman was designated as chair. Liebman is serving her third term on the board, which will expire August 27, 2011. She is expected to revert many of the board policies back to those of the Clinton board.