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Government Affairs Bulletin-- March 2017

Tags:  (2017 Feb 28th - 4:30pm)

Fair Labor Standards Act Overtime Regulations – The US District Court for the Eastern District of Texas issued a preliminary injunction preventing the implementation of the revised overtime regulations. The case was brought by 21 states. The Obama Administration appealed the decision to the US Court of Appeals for the Fifth Circuit. The Trump Administration requested an additional 30 days to decide how to handle the appeal and must do so by early March. There is a motion pending in the District Court that was brought by the Texas AFL-CIO seeking to intervene as a party in the case.

Affordable Care Act – The Trump Administration and Republicans in Congress have indicated that they plan to repeal and replace the Affordable Care Act (ACA). Both houses of Congress have passed measures directing the relevant Congressional committees to draft budget reconciliation legislation beginning the repeal process. By using the Congressional Budget Act, only 51 votes are needed in the Senate, but the legislation can only include those provisions that have an impact on revenue. The popularity of the ACA has grown, with for the first time, polls finding that more people view the law as a good idea rather than a bad one. There is no consensus yet on a replacement plan with growing concern among some Republicans in Congress about not repealing parts of the ACA without having agreed on a replacement or repair plan. The House Republican leadership stated that a repeal/replace bill would be introduced after the President’s Day recess. In the Senate, any replacement plan is likely to need 60 votes to pass, so the support of some Democrats will be needed.

Affordable Care Act Excise Tax – Legislation (H.R. 173) has been introduced that would repeal the excise or “Cadillac” tax that was included as part of the Affordable Care Act. The 2018 effective date was delayed until 2020 because of a law passed by Congress. The legislation has 80 cosponsors and IPMA-HR supports this legislation.

Affordable Care Act Insurance Subsidies Litigation – The US District Court for the District of Columbia ruled in favor of Republicans in the US House of Representatives who sued the Obama Administration claiming that only Congress could appropriate funds to provide subsidies to insurance companies. The decision was appealed by the Obama Administration and the appeals court agreed to delay the appeal until late February to give the new administration a chance to decide how to proceed with the case. Two ACA recipients sought to intervene in the case and this was denied. If the appeal is dropped, insurance companies will lose the subsidies and could withdraw from the exchanges unless Congress appropriates the funds.

Regulatory Reform – The Trump Administration has frozen all new or pending regulations to give the new administration time to review them. The President also issued an Executive Order directing that for every new regulation, agencies need to identify at least two existing regulations that will be repealed. The total incremental cost of all new regulations during this fiscal year shall be no greater than zero. Regulations concerning the military, national security, or foreign affairs are not covered by the Executive Order. Three advocacy groups filed a lawsuit challenging the Executive Order contending that it usurps the Congressional authority to enact laws to protect public health, safety, and the environment. Under the Administrative Procedures Act, the repeal of existing regulations requires the same process as the adoption of new regulations with agency analysis, legal review, and public notice and comment. Congressional Republicans also are using the Congressional Review Act (CRA) to disapprove of recently finalized regulations. Under the CRA, before a rule can take effect, an agency must submit the rule to Congress and the Government Accountability Office (GAO). Upon receipt of the rule by Congress, members of Congress have a specified time in which to submit and act on a joint resolution disapproving the rule. If both houses pass the resolution, it is sent to the President for signature or veto. If the President were to veto the resolution, Congress could vote to override the veto. Prior to this session of Congress, since passage of the CRA in 1996, it has been used only one time to disapprove a rule.

Wellness Litigation – AARP sued the EEOC seeking an injunction to prevent the implementation of the wellness regulations. AARP argued that the 30% wellness program participation incentives would render the program involuntary. The District Court for the District of Columbia denied the request since an injunction is “an extraordinary and drastic remedy.” The judge believed that there was nothing in the Americans with Disabilities Act or the Genetic Information Nondiscrimination Act that foreclosed the EEOC’s interpretation. The EEOC finalized the rules in May 2016, but the AARP did not file its lawsuit until October. The court concluded that “enjoining the rules now will cause uncertainty for employers as to the lawfulness of their wellness programs and uncertainty for employees as to the terms and cost of their health insurance.” AARP indicated that it will continue to pursue the case.

FLSA Regular Rate Litigation – The US Court of Appeals for the Ninth Circuit ruled in the case of City of San Gabriel v. Flores that unspent dollars paid to employees as part of a flexible benefit program should be included in the regular rate calculation for determining FLSA overtime. The city provided a flat dollar amount every month to be used towards the purchase of medical, dental and vision insurance. Any unspent dollars were returned to the employee as taxable income. The 9th Circuit stated that since about 40-50% of the monthly amount is cashed out to employees, the plan was not a bona fide plan resulting in the entire monthly amount having to be included in the regular rate. The City has appealed the decision to the US Supreme Court and IPMA-HR joined an amicus brief in support of the city’s petition for review by the Supreme Court.

Municipal Bond Tax Exemption – IPMA-HR joined with almost 30 organizations urging Congress to continue the federal tax exemption for municipal bonds. Tax-exempt municipal bonds have financed more than $2 trillion in new infrastructure investments during the last 10 years. There are 80 members of the House of Representatives that have signed a letter expressing support for tax-exempt municipal bonds.

For additional information, please contact Neil Reichenberg, IPMA-HR executive director,