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Election Brings Clarity to HR Agenda

With the re-election of President Barack Obama, employers now have a better sense of the regulatory and legislative challenges that await them.

Wednesday, November 7, 2012
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For 59 million Americans, Tuesday's presidential election brought happiness. For 57 million others, it brought disappointment. For employers, President Obama's victory hopefully brought clarity in several key areas, especially issues surrounding healthcare reform and workplace issues involving National Labor Relations Board, Equal Employment Opportunity Commission and Americans with Disabilities Act regulations, among others.

HR and employment law experts cite specific areas where employers need to pay close attention as the Obama administration continues to roll out its workplace-related initiatives and guidances over the next four years. And at least one expert also believes that the Beltway gridlock occurring in the president's first term and the dragged-out election season needs to be undone.

"Now that the election results are final, it's time for our elected leaders to focus on governing," says Cara Woodson Welch, vice president of public policy and public affairs at WorldatWork, the nonprofit HR association for professionals and organizations focused on compensation, benefits, work/life effectiveness and total rewards. "There are numerous issues pending that will impact HR and total-rewards professionals. Early on, employers should expect most new policy affecting human resource professionals to be generated on the regulatory side through federal agencies."

Woodson adds that employers/HR professionals should pay close attention to the various agencies to see if regulations are issued on healthcare, executive compensation and possibly the Fair Labor Standards Act and the Family and Medical Leave Act.

"All of these regulations could be issued and finalized within the next six months," she says.

"With President Obama winning, near-term priorities likely will include aggressive enforcement actions related to healthcare reform; broader workplace requirements for employers, including increased oversight of EEO/hiring practices; and more union-friendly initiatives," says Michael Lotito, a shareholder in Littler Mendelson's San Francisco office.

The Affordable Care Act arguably represents one of the most critical workplace-related fronts for a second Obama term, now that GOP promises of repealing or defanging the law have been rendered wishful thinking.

Jay Krupin, National Labor and Employment Practice team leader for industry sectors at Baker Hostetler, a global law firm based in New York, says that, in terms of the ongoing rollout of healthcare reform, employers should be ready for action.

"Employers must be prepared for the wide range of healthcare changes that will be put into place and will certainly impact their workforce," he says.

According to Steve Wojcik, vice president of public policy at the National Business Group on Health, a Washington-based nonprofit organization that represents large employers on national health-policy issues, the remaining ACA provisions -- especially the major ones in 2014 such as the individual mandate, Medicaid expansion, etc. -- will be fully implemented, even if the rollout schedule is amended.

"Our membership has been very committed to implementing the ACA. From the start, they viewed it as the law of the land," Wojcik says. "But uncertainties remain. NBGH members have been going forward with whatever comes online, but there was a slowdown by the administration and [as a result of the law's complexity] now upcoming regulations need to be detailed.

"Time is getting short and employers need to plan," he says. "There are lots of unanswered questions.  The Obama administration is way behind on specifics about some regulations."

In fact, a pre-election HR Policy Association bulletin points out that a number of ACA deadlines are looming. One is the requirement that, on March 1, 2013, employers notify employees of the availability of state and federal health exchanges, which are required to be ready for open enrollment on Oct. 1, 2013.  However, the Washington-based group adds, it's highly unlikely these highly complex systems will be in place by that deadline, given the slow progress being made at both the federal level and among the 50 states.

Also, according to a WorldatWork bulletin released prior to the election, the employer disclosure -- under which employers must provide the annual cost of their group health-insurance coverage to employees on their W-2 forms -- would take effect as part of the ACA in 2013. So would a reduction in the amount employees can contribute to health flexible-spending accounts from $5,000 annually to $2,500.

Finally, among the major changes set for 2014 is the requirement that employers with more than 50 people provide health insurance or pay a tax penalty.

"The good news is that the Affordable Care Act set change in motion and that momentum is not going away," says Tracy Watts, healthcare reform leader at Mercer in Washington, adding that healthcare reform has been the impetus for employers to make bold changes and Mercer is seeing slower cost increases as a result.

"Employers will continue aiming to improve employee health, lower costs and give consumers a better experience," she says. "But employers are anxiously awaiting guidance -- they want to know what the rules are for 2014."

Outside of healthcare, Baker Hostetler's Krupin says, there are several other key issues employers need to consider now that President Obama is returning to the White House -- from potential changes to the NLRB and EEOC to wage-and-hour issues and pension reform.

Regarding the future of the NLRB, Krupin says, unions haven't forgotten the promises President Obama made to them in his first campaign. And, while the president has had to focus on the pressing issues concerning the economy, it's likely he would turn his attention back to unions in his second term.

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"That would involve continuation of the NLRB and their more pro-union stance," Krupin says. "This is likely to include revisiting the Employee Free Choice Act, [and the] time periods for union elections and employee notifications."

Krupin also expects new action from the EEOC, explaining that one of the first expected changes from the EEOC is the addition of sexual orientation as a protected category.

"Remember, President Obama demonstrated his commitment to equal pay by signing the Lilly Ledbetter Fair Pay Act into law as his first bill as president," he says.

Under the current administration, Krupin says, employers also should expect to see greater enforcement of wage-and-hour issues.

"The Obama administration will take on a more aggressive approach with employers in order to maximize the return for employees," he says. "We can also expect to see more enforcement and promulgation from the Department of Labor."

Finally, on the pension and retirement front, Krupin says, the challenges of our aging population would have been an issue for either candidate.

"This means addressing unfunded, rehabilitating and critical-status pension plans," he says.

"Employers should expect modification of pension laws across the board."

Scottsdale, Ariz.-based WorldatWork, as part of its pre-election comparison, believes that the Obama administration, pointing to success in increasing employee-participation rates for employers' 401(k) plans, will undoubtedly support similar automatic enrollment provisions for individual-retirement accounts. The enrollment would apply to employees at companies that do not offer 401(k) plans, and employees would have the ability to opt out of the enrollment.

Alan Glickstein, senior retirement consultant at Towers Watson in Dallas, believes that no matter who captured the presidency, with the "so-called "fiscal cliff" looming, there will be a search for revenues, and pension-plan sponsors must pay attention.

Ironically, Glickstein says, plan sponsors might actually be better off under an Obama administration, which will no doubt seek some of those added revenues through raising taxes. With Mitt Romney's pledge to reduce taxes across the board, the search for added revenues could have made retirement plans an "attractive" target through added fees and other revenue-extracting strategies.

Glickstein says that the Obama win should mean tax revenue plus budget cuts, while a Romney win would have meant no added tax revenue (actually a tax cut) and even deeper budget cuts. As a result, the latter scenario would have been tougher on plan sponsors.

"Pension-plan sponsors still have to be concerned with any search for revenue, but, with an Obama administration, that search will not be quite as frantic because there will be tax revenues," he says.

 

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