On March 10, 2009, Representative George Miller introduced the Employee Free Choice Act of 2009 (H.R. 1409) The Bill has 222 cosponsors from the House of Representatives comprised of 435 members. The Bill has been referred to the House Committee on Education and Labor. You can keep track of its progress through an RSS Feed.

H.R 1409 is identical to H.R. 800 which passed in the House of Representatives by roll call vote last year. Last year’s vote totals were 241 Ayes, 185 Nays, 8 Present/Not Voting. Last year H.R. 800 failed a cloture motion, preventing consideration of the bill, in the Senate by roll call vote. The totals were 51 Ayes, 48 Nays, 1 Present/Not Voting. Obviously, the political composition of Congress has dramatically changed since last year’s votes.

The Text of the Bill is relatively brief but its impact is great. The Bill has three sections, streamlining union certification, facilitating initial collective bargaining agreements, and strengthening enforcement. Read the Bill so you can discuss it intelligently. Observe that there is no effective date for the legislation included in the Bill once it is passed by Congress.  However, well before the time it is enacted, employers should already have implemented a responsive strategy.

Business downsizing, a poor job market, and increased government enforcement will dramatically increase employment discrimination lawsuits for the foreseeable future. We got a glimpse of this trend with the Equal Employment Opportunity Commission (EEOC) release of 2009 charge statistics noting a record number of discrimination claims filed last year. The EEOC report shows that 95,000 charges were filed, up 15%. The agency also reports financial recoveries of $376 million for victims of discrimination.

Charge activity for 2009 should rise exponentially. The economy shed 2.4 million jobs in the last 4 months mostly due to permanent layoffs. Job prospects are bleak with current unemployment at 8.1 %, the highest level in 25 years. The Obama Administration’s budget increases spending on Department of Labor enforcement activities.

Employees have up to 300 days to bring a discrimination charge with the EEOC so many of the potential claims from recent layoffs haven’t yet been filed. An employee’s proclivity to sue an employer for discrimination is related in part to economics. In a good economy, employees find new jobs quickly and don’t look back. While unemployed, economic and emotional factors may motivate employees to pursue litigation. Recent news reports describe the plight of many workers facing job loss and financial ruin.

Executive Order 13502 is the first step to funneling a significant portion of the $787 billion in Stimulus Bill money to union workers. Executive Order 13502 promotes the use of Project Labor Agreements in large scale construction projects where the total cost to the federal government exceeds $25 million. Bush Administration Executive Orders prohibiting the use of project labor agreements have been revoked under the Obama Executive Order.

The term "project labor agreement" as used in this order means a pre-hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project and is an agreement described in 29 U.S.C. 158(f).   Project Labor Agreements require all contractors, whether they are unionized or not, to subject themselves and their employees to unionization in order to work on a government-funded construction project. The terms of the union collective bargaining agreement are part of the public construction project’s bid specifications.  In order to receive a contract, a contractor must sign the agreement and subject its employees union dues and work rules on the construction project.

E.O 13502 is currently discretionary allowing the executive agency to mandate the use of PLAs if it determines that a PLA will "advance the Federal Government’s interest in achieving economy and efficiency in Federal procurement, producing labor-management stability, and ensuring compliance with laws and regulations governing safety and health, equal employment opportunity, labor and employment standards, and other matters." However, E.O. 13502 requires the Department of Labor and OMB to make a recommendation about whether broader use of project labor agreements would help to promote the economical, efficient, and timely completion of such projects. The recommendation is due by early August, 2009 and is to cover both Federal construction projects those receiving Federal financial assistance.

The likely result of the DOL/OMB study will be the expanded requirements for project labor agreements to all federal and federally assisted construction contracts. Given the enormity of government spending on public works project under the current and future stimulus bills, project labor agreements are a huge boon for unions. Similar union preferences may also find their way in other aspects of federal contracting affecting trillions of dollars in government spending.

Nonunion employers, already facing enhanced unionization risks, must further prepare to impact of project labor agreements. Strategies in this area may include business restructuring through double breasting, training managers and adopting defensive policies and practices.

The Employee Free Choice Act will reportedly be introduced in Congress on Monday, March 9, 2009 according to the National Association of Manufacturers blog called The ShopFloor.   Unions are mobilizing their membership for passage by targeting legislators with messages like the following one appearing on the Los Angeles County Federation of Labor, AFL-CIO:

On Monday, March 9th Congressman George Miller and Senator Ted Kennedy are expected to introduce the Employee Free Choice Act into the House of Representatives. 

This is the first step in the long fight to make the Employee Free Choice Act the law in this country. We have a lot of work to do, including convincing Senator Feinstein that the Employee Free Choice Act is good for workers, our communities and critical to rebuilding our economy because it opens the door for us to earn better wages, health care and retirement benefits by signing a card to join a union.

Meanwhile, President Obama reportedly told AFL-CIO leaders that EFCA will pass giving his backing to the bill according to a Wall Street Journal report.  One labor scholar has begun an EFCA Countdown, while acknowledging EFCA’s passage may be a bloody fight.

The Genetic Information Nondiscrimination Act of 2008 (GINA) was enacted to curtail the use of genetic history in employment-related areas. GINA includes two titles. Title I, which amends portions of the Employee Retirement Income Security Act (ERISA), the Public Health Service Act, and the Internal Revenue Code, addresses the use of genetic information in health insurance. Title II prohibits the use of genetic information in employment, prohibits the intentional acquisition of genetic information about applicants and employees, and imposes strict confidentiality requirements.

The law is effective November 21, 2009. The EEOC has begun its regulatory and information process with the issuance of EEOC’s Questions & Answers on GINA and Proposed Regulations.

Andy Stern, President of the Service Employees International Union (SEIU), was recently interviewed by USA Today where he predicted the passage of the Employee Free Choice Act (EFCA) by August. 

Unions have substantial political clout and this prediction should be respected. According to Department of Labor filings, the SEIU has almost 1.7 million members and spent $32.9 million on political activities and lobbying in 2007. The SEIU’s 2008 report will likely show an increase in its political spending on the Presidential Election. Mr. Stern has also expressed his sentiments on organized labor’s role in the election and its expectations in a Wall Street Journal Interview as follows:

"We just won an election. It’s no secret." By "we," Andy Stern means "American workers." He also means Big Labor. Speaking on behalf of the fastest growing trade group in America, the Service Employees International Union — and as one of labor’s most powerful figures today — Mr. Stern sets this simple bar for the Obama presidency: "I expect nothing less than what he said he was going to do, and we should hold him accountable."

Labor has its sights on EFCA and this pending legislation has enormous potential consequences for employers. Currently, employers cannot make significant workplace policy or other changes once a union files a petition for election. Under EFCA, there may not be an election, only a card check.  Employers may not be aware of organizing efforts or have insufficient time to react. Employers should be putting into place union avoidance programs before EFCA becomes law. Developing an action plan should include the following items:

  • Assessing union eligibility of working supervisors under RESPECT Act.
  • Educating supervisors on authorization cards and the Nuts and Bolts of EFCA.
  • Adopting union-free policies on solicitation, bulletin boards, and use of e-mail.
  • Initiating engagement surveys.

More information is contained in our prior posts as follows:

Nuts and Bolts of the Employee Free Choice Act (EFCA) and RESPECT

Bosses do not Deserve RESPECT

Why not Educate Employees on the Significance of Union Authorization Cards?

Employee Engagement Surveys may be Critical to Combating Union Organizing Efforts

NOW is the Time for Employers to Gear up for the Employee Free Choice Act (Unions Are)

On February 26, 2009, the Internal Revenue Service released detailed information that will help employers claim credit for the COBRA medical premiums they pay for their former employees.

Under the new law, eligible former employees, enrolled in their employer’s health plan at the time they lost their jobs, are required to pay only 35 percent of the cost of COBRA coverage.  Employers must treat the 35 percent payment by eligible former employees as full payment, but the employers are entitled to a credit for the other 65 percent of the COBRA cost on their payroll tax return.

  • Employers must maintain supporting documentation for the credit claimed. This includes:
  • Documentation of receipt of the employee’s 35 percent share of the premium.
  • In the case of insured plans: A copy of invoice or other supporting statement from the insurance carrier and proof of timely payment of the full premium to the insurance carrier.
  • Declaration of the former employee’s involuntary termination.

The informational Release is IR-2009-15, includes an amended Form 941 and the Instructions,  together with a Q&A for Employers.  The Q&A makes the following notes on implementing and claiming the subsidy:

  • The Employer may provide the subsidy (65%) and take the take the credit on its employment tax return only after it has received the 35% premium payment from then intdividual.
  • The law became effective on the date of enactment, Feb. 17, 2009. However, under a transition rule, the regular premium amount may continue to be paid for up to two months after enactment (e.g., for March and April), and the subsidy can be provided retroactively.
  • An employer can reduce its tax deposits or claim the credit on its quarterly return.
  • An assistance-eligible individual can be any COBRA qualified beneficiary associated with the related covered employee, such as a dependent child of an employee, who is covered immediately prior to the qualifying event. The qualifying event for purposes of eligibility for the subsidy is involuntary termination of the covered employee’s employment that occurs during the period beginning Sept. 1, 2008, and ending Dec. 31, 2009. The individual must also be eligible for COBRA coverage, or similar state coverage, during this period.
  • Model notices implementing the law will be issued shortly apparently by the Department of Labor.
     

 

The Associated Press reports that "California Rep. Hilda Solis won confirmation Tuesday as President Barack Obama’s labor secretary, giving the agency a decidedly pro-worker tilt after years of business-friendly leadership under the Bush administration…. The 80-17 vote ended more than a month of delays prompted by GOP concerns over Democrat Solis’ work for a pro-union organization, and later, revelations about her husband’s unpaid taxes."

Ms. Solis is a union proponent as described by John Phillips of The Word on Employment Law in his post Hilda Solis, Secretary of Labor Nominee — Say, “Union Yes”.  At her confirmation hearing, Secretary Solis avoided being drawn into a fight over matters such as the Employee Free Choice Act a/k/a the ‘card check’ bill, which she co-sponsored in the House. She received campaign contributions from several unions in her 2006 bid for Congress.  The new Secretary of Labor’s Biography appears on the Department of Labor website.

On February 21, 2009, the Internal Revenue Service released new withholding tables implementing the new Making Work Pay credit, one of the key tax provisions included in the American Recovery and Reinvestment Act of 2009.

The new withholding tables, along with other instructions related to the new tax law, will be incorporated in new Publication 15-T. This publication will be posted to this Web site next week and mailed to more than 9 million employers in mid-March. The IRS states that employers start using these new tables as soon as possible but not later than April 1.

Eligible workers will get the benefit of this change without any action on their part.  Workers don’t need to fill out a new W-4 withholding form to get the Making Work Pay credit reflected in their take-home pay.

Available for tax years 2009 and 2010, the Making Work Pay credit is 6.2 percent of a taxpayer’s earned income with a maximum credit of $800 for a married couple filing a joint return and $400 for other taxpayers.  Most workers will qualify for the maximum credit.  The Making Work Pay credit is phased out for a married couple filing a joint return whose modified adjusted gross income (AGI) is between $150,000 and $190,000 and other taxpayers whose modified AGI is between $75,000 and $95,000

The American Recovery and Reinvestment Act has passed both the House and Senate and awaits the President’s signature. The substance of the Act as it relates to COBRA continuation subsidies is as follows:

COBRA Subsidy: Eligible Employees who are involuntarily separated from employment can receive a 65% subsidy toward COBRA premiums for up to 9 months. The Eligible Employee or a third party must pay the remaining 35% of the COBRA premium. Employers cannot pay this amount. Severance agreements that offer employer-paid health continuation should be drafted to take advantage of the subsidy.

Employee Eligibility: Individuals who have been involuntarily terminated between September 1, 2008 and December 31, 2009 with annual incomes less than $125,000 (individual) or $250,000 (joint) are eligible for the COBRA premium assistance. The amount of the subsidy covers both employee and family coverage. The premium assistance is not considered income to the Eligible Employee. 

Employer/Health Plan Payroll Tax Credit: Employers or health plans (if they administer COBRA benefits) must front the COBRA subsidy amount and in exchange receive a credit against payroll taxes for the cost of the subsidy. 

Duration of Subsidy: The subsidy terminates upon offer of any new employer-sponsored health care coverage or Medicare eligibility.

Special Elections and Alternate Enrollment Options: Qualified individuals, who initially decline COBRA coverage, have an additional 60 days after they receive notice of the special election period to elect to receive the subsidy. The election period begins on the date of enactment. Group health plans may provide a special enrollment right for eligible individuals to elect different coverage under the plan in conjunction with a COBRA continuation coverage election. The alternate coverage must meet certain requirements and may not be more expensive than the original coverage.

 Notice Requirements: COBRA notices must include information on the availability of the premium assistance. Model notices from the Department of Labor will be published 30 days after enactment.

Effective Date:  The law is effective for premiums as of the first calendar month following the date of enactment.

UPDATE:  IRS Releases Information for Employers to Claim COBRA Assistance Credit on Payroll Tax Form