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The Age of Ambiguity

A new Littler survey finds employers and HR faced with growing uncertainty as they attempt to make sense of a "tangled web of federal, state and local laws."

Thursday, June 22, 2017
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There's a lot for employers to be unsure about at the moment.

A primary source of their uncertainty is Washington, D.C. It's on Capitol Hill, for example, that the American Health Care Act sits awaiting a Senate vote. If passed, the contentious bill could eliminate the Affordable Care Act's requirement – controversial in its own right -- that employers provide health insurance to employees.

Experts say that the pending Senate vote might wind up mattering little to employers, however, and predict that many companies will continue to offer health insurance to their people regardless of whether the AHCA becomes the law of the land. But there's more going on in D.C. that's playing on employers' minds.

By just about any standard, the first few months of the Trump presidency have been unusual, at the very least. But there are certain areas of interest for employers any time there's a transition within the White House: how the incoming administration will affect healthcare, immigration policies, Supreme Court nominations and the composition of the National Labor Relations Board and the Department of Labor, for example.

Global employment and labor law firm Littler's Annual Employer Survey 2017 reflects these concerns, with 1,229 in-house counsel, HR professionals and C-suite executives weighing in on the factors they see shaping the workplace in the months ahead.

Unsurprisingly, 89 percent of respondents said they expect the Trump administration to continue prioritizing healthcare and employee benefits law in 2017. Eighty-three percent said they anticipate the Affordable Care Act will affect their organization in the next year.

Turning to the regulatory realm, 76 percent anticipate that enforcement efforts by the Equal Employment Opportunity Commission will have an impact on their workplace in 2017. Eighty-one percent and 55 percent responded the same way with regard to the actions of the DOL and the NLRB, respectively.

These numbers, however, are almost identical to those found in Littler's 2016 annual employer survey. If anything, employers seem slightly less worried that these issues will disrupt their organizations this year. In 2016, for example, 85 percent of those surveyed felt the ACA would likely affect their companies over the next year. Seventy-eight percent of employers said the same about the EEOC in 2016, while 82 percent and 56 percent expressed similar feelings about the DOL and NLRB, respectively.

In a written statement by Littler highlighting some of this year's findings, the law firm points out that the "general climate of uncertainty and delays in appointments to government agencies" translates to employers feeling that it might be a while before they begin to really see how the president's agenda is carried out, and what that will mean for the workplace.

In the meantime, employers find themselves occupied with what Littler describes as "a dizzying array" of state and municipal rules and regulations being introduced to fill the federal vacuum.

Nearly 80 percent of respondents, for instance, said that new or amended state and local labor and employment requirements are creating compliance challenges for their organizations.

Changes concerning paid leave mandates, cited by 59 percent of participants, are having the biggest effect on employers, followed by background-check restrictions (48 percent) and minimum-wage increases (47 percent).

"You put all of this together and employers are saying, 'Please help me,' " says Michael Lotito, a San Francisco-based shareholder at Littler and co-chair of the firm's Workplace Policy Institute. "And there doesn't appear to be any end in sight."

The Trump administration has voiced a desire to drastically cut federal regulations, which means that employers should expect to see more movement at the state and municipal levels in the days ahead, he says.

The Littler survey sees many employers already reacting to new or proposed state and local employment mandates. In an effort to maintain compliance, 85 percent of respondents report that they've begun updating policies, handbooks and HR procedures. Another 54 percent indicate that they're providing additional employee training, with 50 percent saying that they're conducting internal audits.

"Organizations and their HR functions are trying to remove as many would-be pitfalls as possible," says Lotito. "Some are actively auditing for wage and hour compliance, and maybe even creating incentives for compliance by making that part of the evaluation process for their managers and supervisors."

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As they wait to see what type of imprint the Trump administration will ultimately have on the workplace, employers and HR leaders will indeed "be monitoring closely what happens next in Washington," says Steve Wojcik, vice president of public policy at the Washington-based National Business Group on Health.

On the healthcare-reform front, however, whatever does or doesn't occur in the near future isn't likely to affect the health benefits employers offer in the coming years, says Wojcik.

"The biggest impact," he says, "will be either a delay or total elimination of the flawed 40-percent tax on health benefits, assuming that it will be in a final bill and the bill passes."

The removal of this tax would "alleviate a lot of concern, since most plans would hit the tax in relatively short order if it is allowed to take effect," says Wojcik, adding that enhancements to health savings accounts would "significantly increase the contribution limits and also ease the rules to use them to pay for out-of-pocket expenses."

While some organizations might opt to adjust eligibility and benefits for part-time and even full-time employees in the event the employer mandate penalties are repealed, "benefits and eligibility will not change much, if at all" for most employers and their workers," he says.

Steven Friedman, a New York-based shareholder and co-chair of Littler's employee-benefits practice group, takes a similar view. In fact, he urges employers to take a cautious approach in the interim. 

"Until we have greater certainty as to what type of legislation will become law, I don't see employers making many changes" to their employee benefits plans," says Friedman.  

"There is a prevailing skepticism among employers that any particular piece of [healthcare-related] legislation will become law, because of the fate of the first bill. And that creates greater caution than what otherwise might have been expected with respect to the potential repeal of the Affordable Care Act.

"We really wouldn't recommend that employers do much right now" with regard to employee benefits, he adds. "Just watch and wait."

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