Election's Impact on HR


Experts look at the presidential hopefuls' positions on employment-related issues and weigh in on what a win by either candidate could mean for employers and HR in the next four years.


Monday, November 5, 2012
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"Reform" has been a watchword for employers as the 2012 presidential election season has unfolded: Healthcare reform. Immigration reform. Retirement reform.

With promised change coming from both sides, what should human resource leaders be bracing for given either of the general-election scenarios -- a win for re-election by President Barack Obama or a win by Gov. Mitt Romney?

A second term for Obama, for example, would certainly increase the odds of the Patient Protection and Affordable Care Act remaining in one piece. Part of the Obama-backed ACA's aim is to provide coverage for Americans without health insurance, with some of the cost coming from employers' pockets. For HR, this would mean continuing to prepare for the law's full implementation in 2014, deciding whether to stay status quo on benefits, maintain some coverage without employer subsidies or drop coverage completely, taking the penalty and sending employees to healthcare exchanges and/or Medicaid.

But, don't expect Republican resistance to ACA to completely subside should the President win a second term, says Geoff Manville, head of the government-relations group with New York-based Mercer.

"Efforts to pick off unpopular parts of the law" may regain momentum, he says, citing the 1099 tax-reporting requirement, free-choice voucher provision and independent Medicare review boards as components of the law that could "get put in the crosshairs," especially if Republicans pick up a significant number of Senate seats, as many pundits predict they will.

A Romney win could very well lead to significant portions of the healthcare law being dismantled, which would force employers to decide "if they want to unwind some of the law's provisions they've put in place," says Steve Wojcik, vice president of public policy at the Washington-based National Business Group on Health.

"The easy call is to look at those that have added costs without clear benefit to anyone -- and to get rid of them," he says. "Then, the next step becomes to look at changes that remain, and decide if it's worth taking away certain benefits."

If the White House and Senate indeed come under Republican control, expect a proposal to change healthcare-tax responsibilities as well, Manville adds.

"We haven't gotten specifics from Romney, but he has said he wants to level the healthcare tax playing field for employers by giving some version of the current employee tax break for employer-provided coverage to everyone."

In any case, a Republican administration would be more likely to adjust health-savings account rules to facilitate more consumer-directed strategies, he says. Some changes suggested by Republicans would increase maximum contributions limits, provide tax credits for contributions by low-income savers, allow account holders to make "catch-up" contributions, and let early retirees use health-savings account funds to buy coverage through their former employers' group plan.

Speaking of retirement, a key question should Obama win is whether he can follow through on retirement proposals made during his first term. Among them is the Automatic IRA Act of 2012, which would expand personal-savings and retirement-savings coverage by enabling employees not covered by qualifying retirement plans to save for retirement through automatic IRA arrangements. Introduced in February, the act requires certain employers that do not maintain qualifying retirement plans to make available to eligible employees a payroll-deposit individual-retirement-account arrangement.

A universal automatic savings plan figures to generate interest as well, says Manville, noting that Sen. Tom Harkin (D-Iowa), chairman of the Senate Health, Education, Labor and Pensions Committee, outlined a proposal in July of this year that would create a system he calls Universal, Secure and Adaptable Retirement Funds.

Designed to augment existing employer-provided defined-benefit and defined-contribution plans, the proposed plan includes features that would let employers enroll employees in a fund and process contributions from employers and employees; create an independent board of trustees for selecting or managing funds, which would shift fiduciary responsibility from employees; and allow benefits to be paid as an annuity, based on the fund's investment returns at the time of retirement.

Still, there's neither a specific legislative proposal ready to introduce in Congress or figures showing the potential financial impact to employers, employees or the government, all of which may keep significant retirement plan reform stalled, regardless of who wins.

A Romney victory, however, could turn the focus to entitlement program cuts, says Manville.

"To the extent that Medicare and Medicaid benefits get cut back, this could represent a cost shift to employers," says Manville, noting that President Obama and House Speaker John Boehner have discussed upping the Medicare eligibility age to 67 from 65, in an effort to contain costs. While public backlash would make such a move tough to implement, "something's going to have to give on Medicare, regardless of who's in office."

President Obama's legislative agenda, which includes a long-term extension of a payroll-tax holiday, looks fairly light as his first term winds down, says Mark Spring, a Sacramento, Calif.-based partner in the employment law firm of Carothers DiSante and Freudenberger.

If Obama wins re-election, Spring says, "the [National Labor Relations Board] will continue to be very active in attempting to use the National Labor Relations Act to regulate non-union employers, and make it easier for employees to unionize."

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If Obama were to gain congressional support, for example, "I would expect that he would try to enact legislation making it much more difficult to implement mandatory binding arbitration in the nonunion workplace, and would likely expand [Family and Medical Leave Act] rights to include a provision allowing workers to care for aging parents and grandparents," he says.

A Romney win could signal more significant change on the labor front, says Spring.

"He's not friendly to unions, and believes they make it difficult for American businesses to compete globally. I expect that he would likely overhaul the NLRB and get more pro-business NLRB members, as well as attempt to amend the NLRA to make the playing field even more challenging for unions."

Regarding immigration reform, both candidates have acknowledged a broken system in need of repair, says Jorge Lopez, the Miami-based co-chair of Littler Mendelson's global mobility and immigration practice group.

However, the men embrace different approaches to immigration reform.

For example, Romney wants to provide opportunities for citizenship to those who have served in the military. President Obama envisions, through the DREAM Act, a path to citizenship for service members as well as young people brought to the United States as children. In June, the Obama administration announced it would stop deporting and grant work permits to some younger illegal immigrants.

Romney supports the existing E-Verify system that requires employers to check prospective employees' legal status before hiring them, and has advocated procedures that encourage illegal aliens to return home voluntarily. Obama has described E-Verify as a viable tool, but one that needs improvement to ensure its effectiveness.

Some of the sectors hit particularly hard by the recession -- manufacturing, construction and real-estate development, for instance -- have begun to "see the light at the end of the tunnel" in terms of creating more jobs, Lopez says. The problem, he adds, is a shortage of skilled U.S. workers to fill these positions, a problem that both candidates recognize and could work to rectify.

"Immigration policy hasn't caught up with the realities of the world. And both candidates realize this," says Lopez, noting that Romney has proposed increasing the number of available H-1B visas for holders of advanced degrees in math, science and engineering who have U.S. job offers. The Obama administration has shown interest in taking similar measures, he adds.

"Both sides really want to see something like that work," says Lopez. "But it's going to be an uphill climb."





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