Legislative Outlook for 2015 - Xerox · Legislative Outlook for 2015 Drew Crouch, JD, LLM and Nancy Vary, JD Knowledge Resource Center January 29, 2015 Slides 1 and 2 must stay together

Legislative Outlook for 2015

Drew Crouch, JD, LLM and Nancy Vary, JD Knowledge Resource Center January 29, 2015

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Agenda

I. Introduction of our speakers

II. Overview of the year ahead

• Health plans and the Affordable Care Act

• Employment and Labor

• Tax Reform

• Retirement Plans

III. Comments on retirement policy by

Preston Rutledge

IV. Q&A

January 29, 2015 Proprietary 3

Speakers


Tami Simon, JD

Managing Director

Knowledge Resource Center and Career Practice

Drew Crouch, JD, LLM

Director of Government Affairs

Knowledge Resource Center

Nancy Vary, JD

Director, Labor and Employment


Preston Rutledge, JD, LLM

Tax and Benefits Counsel

Senate Finance Committee

Overview of the Year Ahead for Health Plans and the Affordable Care Act, Employment and Labor, Tax Reform, and Retirement Plans

The Year Ahead for Employer-Sponsored Health Plans and the ACA

• The Affordable Care Act will continue to dominate the Congressional

agenda

• Three types of legislation and a significant court case lie ahead

− Full ACA repeal attempts

− Technical modifications/targeted repeal

− Reconciliation

− King v. Burwell


Full ACA Repeal Attempts

• Full repeal of the ACA will pass the House

of Representatives

• Full repeal legislation is likely to be

filibustered in the Senate

• Even if the Senate could pass repeal

legislation, the president would veto


Technical Modifications/Targeted Repeal

• A number of technical modifications and targeted repeal attempts are

likely in 2015, such as:

− Changing the definition of full-time employee from 30 hours per week to 40

− And repeal of the follow provisions

• Individual mandate and employer shared responsibility requirement

• Insurance company risk stabilization programs, including the transitional

reinsurance fee

• PCORI fee

• Medical device excise tax

• Health insurance industry fee

• Chances for enactment as stand-alone bills are slim; chances improve

if included in must-pass legislation


Reconciliation

• Congress may attempt to repeal the

ACA through budget reconciliation

− Advantage of such legislation is no

filibustering in the Senate

− Disadvantage is that full repeal is not

possible

• Measure is likely to be vetoed, but it will

be noteworthy because:

− Could provide a guide to the Republican

replacement plan for the ACA

− Would likely be the basis for ACA repeal

if a Republican wins the White House in

2016


King Decision

The Supreme Court is likely to issue a

decision in King v. Burwell in June

• Case challenges the availability of tax

credits for the purchase of health

coverage in the 34 federal marketplace

states

• A decision disallowing the credits

would likely disrupt the individual

markets in those states

• Congress and the White House would

probably try to reach a legislative

solution – although if a solution is not

reached by the end of 2015, the

decision and its consequences would

probably become part of the 2016

presidential election


Labor and Employment Issues Before Congress in 2015

• Expect more agency oversight

− DOL

− Wage & Hour Division (WHD)

− NLRB

− EEOC

− OFCCP

• Increased scrutiny and pushback against regulatory initiatives and Executive Orders

− Overtime regulations

− FMLA regulations

− Federal contractors

• Minimum wage increase (EO 13658)

• Fair Pay and Safe Workplaces (EO 13673)

• Non-retaliation for disclosing compensation

• Paid sick leave

− Immigration


Labor and Employment Issues Before Congress in 2015 (cont.)

• Much of the activity in 2015 will be at the committee level

− Education and the Workforce Committee in the House of Representatives –

Chairman John Kline (R-MN)

− Senate Health, Education, Labor & Pensions Committee – Chairman Lamar

Alexander (R-TN)

• Several key labor and employment issues are likely to attract

Congressional attention

− EEOC litigation practices

− Pregnancy discrimination/accommodation requirements

− NLRB governance and the rules that apply to representation elections

− FLSA/wage & hour concerns

− Employment-based immigration

− Medical marijuana


EEOC Guidance and Enforcement

• EEOC overreach is likely to be the subject of Congressional activity in

the year ahead

− Increasing transparency on the cases brought by EEOC

− Requiring the agency to engage in good faith conciliation efforts before filing

suit

− Requiring commission level approval of suits involving multiple plaintiffs or

allegations of systemic discrimination

− Providing a safe harbor for the use of criminal background checks by

employers

• EEOC is expected to focus much of its energy on wellness plans and

the ADA

• Stand-alone bills on these issues are not likely to be enacted; however,

inclusion of some measures in must-pass legislation – such as

appropriations riders – might result in enactment


NLRB issues likely to be front and center

• Labor issues that are likely to be the subject of Congressional activity in the year ahead

− Reversing (or defunding) expedited election rules

− Reforming the NLRA’s representation election procedures – such as requiring secret

balloting and new elections if a bargaining unit’s composition significantly changes

− Limiting splintered bargaining units

− Hiring strike replacements

− Requiring employees to join union as a condition of employment

− Arbitration and class action waivers

− Expanded definitions of employer and employee

• Joint employer standard including franchises

• Unionization of student-athletes

− Employer email systems

− Social media and concerted activity

− Composition of the NLRB

• Stand-alone bills on these issues are not likely to be enacted; however, inclusion in must-

pass legislation – such as appropriations riders – might result in enactment


FLSA Issues to Watch

Several key wage & hour matters are

likely to be of interest to Congress in

the year ahead

• Increased enforcement activity by the

DOL’s Wage and Hour Division

• WHD fissured industry initiative

• Revised overtime rules

• Compensatory time off in lieu of

overtime pay for private-sector

employees

• Pay gaps and wage transparency

• Minimum wage


Prospects for Tax Reform in 2015

Tax reform is unlikely to pass the finish

line this year

• Both sides are looking for common ground

for a policy victory

• Neither, however, is likely to agree to the

other’s general goals for tax reform

• Tax reform is still important to watch:

legislation is iterative; and individual

provisions that raise money may be

recycled for other legislation


The Need for Revenue in Tax Reform

Even revenue neutral tax reform

will require raising revenue to pay

for rate reductions and other

reforms, for example:

• Repeal of the AMT for individuals

costs $1.4 trillion

• Moving to a three tier rate

structure with a top rate of 35%

costs $544 billion


Employee Benefits in Tax Reform

Favorable tax rules for employee benefits are likely to be viewed as a

source for revenue

• The tax exclusions for employer provided retirement and health coverage are

among the largest tax expenditures according to CBO and JCT

• Retired Chairman Dave Camp (R-MI) released a tax reform plan in 2014 that

gives an example of the types of changes for employee benefits

− Roth treatment of 401k contributions in excess of half of the contribution limit - $144

billion

− Freezing retirement plan contribution and benefit limit COLAs for ten years - $63

billion

− Stricter rules on when nonqualified deferred compensation is recognized as income

and restrictions on deductions for top executive pay - $25 billion


Process for Tax Reform

Much of the activity in 2015 will be at the

committee level

• Committee on Ways and Means in the

House of Representatives – Chairman Paul

Ryan (R-WI)

• Senate Finance Committee – Chairman

Orrin Hatch (R-UT)


The Year Ahead for Retirement Plans

Four key areas to watch in Congress

in 2015 for retirement plans

1. Multiemployer pension plan legislation

2. PBGC premium hikes

3. Revenue needs

4. Senator Orrin Hatch’s reform proposal


Multiemployer Pension Plan Legislation

Congress enacted the Multiemployer Pension Reform Act of 2014 in

December

• Among the changes made by the Act are rules permitting certain critical status

plans to suspend benefits

• Less than a week elapsed between the unveiling of the legislation and its

passage by Congress

• Technical modifications to the Act are possible in the year ahead to ensure that

the rules work as intended


PBGC Premium Hikes

2015 may provide a respite from PBGC

premium hikes

• In its 2014 Annual Report, the PBGC

recorded a historic deficit—due to a

significant decline in its insurance program

for multiemployer plans

• Premiums for multiemployer plans were hiked

as part of the Multiemployer Pension Reform

Act of 2014

• PBGC is required to provide a report to

Congress by June 1, 2016 on whether

current premium levels are sufficient to avoid

insolvency in the multiemployer insurance

program


Revenue Needs and Retirement Plan Legislation

• Congress has repeatedly turned to pensions in the last several years to

pay for additional government spending or to reduce federal deficits

− July 2012 – MAP-21 – PBGC premium hikes for single and multiemployer plans;

interest rate smoothing – paid for transportation and education spending

− January 2013 – American Taxpayer Relief Act of 2012 – in service Roth

conversions – paid for several month delay of federal budget sequestration for

FY 2013

− December 2013 – Bipartisan Budget Act of 2013 - PBGC premium hike for

single plans – replaced federal budget sequestration savings for FY 2014 and

FY 2015

− August 2014 – Highway and Transportation Funding Act of 2014 - extension of

pension interest rate smoothing – paid for transportation spending

• Spending needs in 2015

− Highway trust fund will be nearing depletion by May or June

− Sequestration cuts for FY 2016


Senator Orrin Hatch’s Retirement Plan Reform Proposal

• Senator Hatch introduced S. 1270 – the

SAFE Retirement Act – in the last

Congress

• The bill makes reforms in five areas

1. Creation of a new type of pension plan for

governmental employers

2. Reforms intended to expand private sector

retirement plan coverage

3. Simplification of existing rules for retirement

plans

4. Reforms to enhance longevity protections

5. Modifications to ERISA’s disclosure rules

• Chairman Hatch plans to introduce the

legislation again in 2015


Comments on Retirement Policy by Preston Rutledge

Retirement Policy

Preston Rutledge, JD, LLM

Tax and Benefits Counsel (Majority Tax Staff)

Finance Committee, U.S. Senate

Mr. Rutledge’s statements and opinions are

his own and are not to be attributed to any

member of Congress



Questions?

Contact Information


The information contained in this presentation and any accompanying documents does not constitute legal advice; consult with your legal

and tax advisors before applying this information to your specific situation.

Tami Simon, JD

Managing Director, Career Practice &


Buck Consultants, a Xerox Company

1800 M Street NW, Suite 700 North

Washington, DC 20036

202.776.1004

[email protected]

Drew Crouch, JD, LLM

Director, Government Affairs



1800 M Street NW, Suite 700 North

Washington, DC 20036

202.776.1039

[email protected]

Nancy Vary, JD

Director, Labor and Employment



485 Lexington Avenue, 10th Floor

New York, NY 10017

212.330.1317

[email protected]

mailto:[email protected]



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Legislative Outlook for 2015 - Xerox · Legislative Outlook for 2015 Drew Crouch, JD, LLM and Nancy Vary, JD Knowledge Resource Center January 29, 2015 Slides 1 and 2 must stay together