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Legislative Update 2009

Legislative Update 2009. The American Recovery and Reinvestment Act, Employee Free Choice Act, and everything else David W. thomas , esq . Topics. American Recovery and Reinvestment Act of 2009 (a.k.a. the stimulus plan) COBRA expansion CHIP expansion

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Legislative Update 2009

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  1. Legislative Update 2009 The American Recovery and Reinvestment Act, Employee Free Choice Act, and everything else David W. thomas, esq. David W. Thomas, Esq. MichieHamlett Lowry Rasmussen & Tweel PLLC 500 Court Square, Suite 300, Charlottesville, VA 22901 (434) 951-7200

  2. Topics • American Recovery and Reinvestment Act of 2009 (a.k.a. the stimulus plan) • COBRA expansion • CHIP expansion • Employee Free Choice Act (“card-check”) • Changes to the FMLA • Sick Leave David W. Thomas, Esq. MichieHamlett Lowry Rasmussen & Tweel PLLC 500 Court Square, Suite 300, Charlottesville, VA 22901 (434) 951-7200

  3. American Recovery and Reinvestment Act (“ARRA”) Covered Topics: • Making Work Pay Tax Credit • Increase in the EITC • Transportation Fringe Benefit Parity • Work Opportunity Tax Credit • Increase in Unemployment Insurance Benefits • COBRA subsidy David W. Thomas, Esq. Michie Hamlett Lowry Rasmussen & Tweel PLLC 500 Court Square, Suite 300, Charlottesville, VA 22901 (434) 951-7200

  4. Programs of Indirect Effect • Making Work Pay Tax Credit (FY ‘09) • $400/$800 for incomes up to $75K/$150K (phased) • EITC • Eligible employees with 3 or more children • Credit increased to 45% of first $12,750 in income • Transportation Fringe Benefit • Maximum benefit increased to $230 • Now equal to amount for qualified parking David W. Thomas, Esq. MichieHamlett Lowry Rasmussen & Tweel PLLC 500 Court Square, Suite 300, Charlottesville, VA 22901 (434) 951-7200

  5. Work Opportunity Tax Credit • A voluntary program by which employers earn a tax credit for hiring individuals from one or more specific groups. • Under the new law, employers are eligible to earn a tax credit for hiring unemployed veterans and disconnected youths after December 31, 2008. • Unemployed veteran under this Act if discharged or released from active duty in the Armed Forces at any time during the 5-year period ending on the hiring date, and is in receipt of unemployment compensation under state or federal law for at least four weeks during the one-year period preceding the date of hire. • A “disconnected youth” is considered one who is between the ages of 16 and 25, is not regularly attending school or employed during the 6-month period preceding the hiring date, and is not “readily employable by reason of lacking a sufficient number of basic skills.” David W. Thomas, Esq. MichieHamlett Lowry Rasmussen & Tweel PLLC 500 Court Square, Suite 300, Charlottesville, VA 22901 (434) 951-7200

  6. Unemployment Benefits • Previously, eligible for 26 weeks of unemployment benefits. • Would have increased benefits by 20 weeks (33 in some states) • Total weeks of unemployment available: • Low-unemployment state - eligible for 46 weeks of benefits. • High-unemployment state - eligible for 59 weeks of benefits. • Increased unemployment benefits by $25 per week. • Increased coverage to part-time workers • This stimulus package also provided money to encourage the states to give employment benefits to part-time workers and more low-wage workers. • First $2,400 of unemployment benefits would be tax-free. David W. Thomas, Esq. MichieHamlett Lowry Rasmussen & Tweel PLLC 500 Court Square, Suite 300, Charlottesville, VA 22901 (434) 951-7200

  7. Virginia Says “No Thank You” • Virginia has already extended benefits to 46 weeks. • To qualify, Virginia had to expand its unemployment benefits to part-time workers and those in retraining. • Would have made Va. eligible for additional $125 million (on top of $60 million already received). • House rejected 53-46. • Will be a major campaign issue this fall. • Federal money ran out in 2010, at which time either programs have to be cut or UI taxes (currently $98/worker) increased by appx. $4.50 per worker. David W. Thomas, Esq. MichieHamlett Lowry Rasmussen & Tweel PLLC 500 Court Square, Suite 300, Charlottesville, VA 22901 (434) 951-7200

  8. COBRA subsidy – The Basics • Workers can qualify for a 65% subsidy for their COBRA health insurance premiums. • Worker must have involuntarily separated. • Lawyer-speak for laid-off or fired • Terminated between Sept. 1, 2008 and Dec. 31, 2009. • Workers fired between Sept. 1, 2008 and Feb. 16, 2009 can still elect coverage. • Applies to business offering continuation coverage under state law (Va. Code §38.2-3541). David W. Thomas, Esq. MichieHamlett Lowry Rasmussen & Tweel PLLC 500 Court Square, Suite 300, Charlottesville, VA 22901 (434) 951-7200

  9. COBRA Subsidy – Eligibility • Employee must have been terminated between Sept. 1, 2008 and Dec. 31, 2009 • Income limits – phase out • Individuals: $125K to $145K • Couples: $250K to $290K • If you anticipate that might apply (due to severance), obtain a waiver. • If employee becomes ineligible, IRS will “recapture” • Only applies to 9 months of coverage! David W. Thomas, Esq. MichieHamlett Lowry Rasmussen & Tweel PLLC 500 Court Square, Suite 300, Charlottesville, VA 22901 (434) 951-7200

  10. COBRA Subsidy - Notice • Any employee terminated between Sept. 1, 2008 and Feb. 16, 2009 who didn’t elect COBRA coverage can do so now. • Even if they initially elected but discontinued, may elect to re-start. • Plan must provide notice of the new election opportunity. • Employee has 60 days from the notice to elect coverage. • So if your plan hasn’t sent out notice, do so now! • Does not extend the maximum period of COBRA coverage (generally 18 months) • Does not apply to non-COBRA plans governed by state law. David W. Thomas, Esq. MichieHamlett Lowry Rasmussen & Tweel PLLC 500 Court Square, Suite 300, Charlottesville, VA 22901 (434) 951-7200

  11. COBRA subsidy – How it works • Eligible former employees will continue to pay premiums as before, only at 35% of the total. • Employer pays 65% of the premium. • Even if premiums are sent to a third-party administrator. • Employer claims a credit for those payments on Form 941 – Employer’s Quarterly Federal Tax Return (or similar). • Subsidy is treated as a credit toward payroll tax liability. • Counted at the time the former employee’s premium payment is received. David W. Thomas, Esq. MichieHamlett Lowry Rasmussen & Tweel PLLC 500 Court Square, Suite 300, Charlottesville, VA 22901 (434) 951-7200

  12. COBRA Subsidy – To Do List • Immediately review records to determine eligibility of any former employees. • Send out notices immediately • Update COBRA materials (or ensure plan administrator has done so). • If you offer multiple plans, determine whether to permit individuals to elect a different plan once they COBRA. • Review severance policies and severance agreements to revisit the issue of any employer COBRA premium contributions. • Develop process and procedures for the administration of the COBRA subsidy. David W. Thomas, Esq. MichieHamlett Lowry Rasmussen & Tweel PLLC 500 Court Square, Suite 300, Charlottesville, VA 22901 (434) 951-7200

  13. Children’s Health Insurance Program Reauthorization Act (“CHIP”) • Expands CHIP by providing additional special enrollment rights related to group health plan coverage. • In Virginia, known as FAMIS (Family Access toMedical Insurance Security”) • Applies to employers that maintain group health plans that already implicate FAMIS. • Will require that special notices be included in your 2010 plan information. David W. Thomas, Esq. MichieHamlett Lowry Rasmussen & Tweel PLLC 500 Court Square, Suite 300, Charlottesville, VA 22901 (434) 951-7200

  14. FMLA • Applies to companies with 50+ employees who have worked 20 or more workweeks in the current or previous calendar year. • Must grant a total of 12 work weeks of unpaid leave : • for the birth and care of a newborn child of the employee; • for placement with the employee of a son or daughter for adoption or foster care; • to care for a spouse, son, daughter, or parent with a serious health condition; • to take medical leave when the employee is unable to work because of a serious health condition; or • for qualifying exigencies arising out of the fact that the employee’s spouse, son, daughter, or parent is on active duty or call to active duty status as a member of the National Guard or Reserves in support of a contingency operation. • Does not have to be consecutive! David W. Thomas, Esq. MichieHamlett Lowry Rasmussen & Tweel PLLC 500 Court Square, Suite 300, Charlottesville, VA 22901 (434) 951-7200

  15. Changes to FMLA • Primarily apply to notice requirements • Employee must provide 30-days advance notice where foreseeable and practicable. • Or as soon as foreseeable/practicable • Employee must provide “sufficient information” for employer to determine if FMLA applies David W. Thomas, Esq. MichieHamlett Lowry Rasmussen & Tweel PLLC 500 Court Square, Suite 300, Charlottesville, VA 22901 (434) 951-7200

  16. FMLA • Employer must post approved notice of FMLA rights. • Failure to do so is subject to fine • Must also include notice in employee handbooks or through other written guidance. • Employer must affirmatively notify employee that leave designated as FMLA leave. http://www.dol.gov/esa/whd/fmla/finalrule/whdfs28.pdf David W. Thomas, Esq. MichieHamlett Lowry Rasmussen & Tweel PLLC 500 Court Square, Suite 300, Charlottesville, VA 22901 (434) 951-7200

  17. Employee Free Choice Act(“card-check”) • Requires the NLRB to certify a union after a majority of a firm's workers have signed union cards. • Second, the EFCA requires companies and newly certified unions to enter binding arbitration if they cannot reach agreement on an initial contract after 90 days of negotiations. • Neither party can appeal the arbitrator’s ruling • Contract in place for two years. David W. Thomas, Esq. MichieHamlett Lowry Rasmussen & Tweel PLLC 500 Court Square, Suite 300, Charlottesville, VA 22901 (434) 951-7200

  18. Employee Free Choice Act • What business groups are saying: • Would effectively end private balloting • Binding Arbitration would mean the end of true collective bargaining, and would significantly lengthen the process • Penalties are one-sided • What Unions are saying: • Removes Current Barriers that Prevent Workers from Forming Unions to Bargain Collectively • Guarantees Workers a Contract When They Form a New Union. • Strengthens Penalties against Companies which Break the Law During Organizing Campaigns and First Contract Negotiations. David W. Thomas, Esq. MichieHamlett Lowry Rasmussen & Tweel PLLC 500 Court Square, Suite 300, Charlottesville, VA 22901 (434) 951-7200

  19. Employee Free Choice Act • Employee Free Choice Act likely dead for this Congress • Sen. Dianne Feinstein (D-CA) and Sen. Arlen Specter (R-PA) jointly delivered a fatal blow to the Employee Free Choice Act of 2009 ("EFCA" or "card check") when they each announced they would vote against the union-sponsored legislation. • Specter, one of just three Senate Republicans who voted for Obama's stimulus bill, faces a well-spring of fevered opposition to EFCA from the Pennsylvania business community. • Specter is currently running behind in polls for the 2010 Republican primary for his own Senate seat. • Feinstein has also announced that she will not be voting for the bill. • "I have thought for some time that the way to approach this issue is by trying to see if there can't be a compromise between the business community, the agriculture community and labor. • "This is an extraordinarily difficult economy, and feelings are very strong on both sides of the issue. I would hope there is some way to find common ground that would be agreeable to both business and labor." • Without these two votes, Democrats have no hope of garnering the 60 votes necessary to overcome certain Republican filibuster of this sizzling issue. David W. Thomas, Esq. MichieHamlett Lowry Rasmussen & Tweel PLLC 500 Court Square, Suite 300, Charlottesville, VA 22901 (434) 951-7200

  20. Sick Leave (Exempt Employee Only) • Under the Fair Labor Standards Act, an exempt employees salary can be reduced when the employee misses a full day of work, in excess of the paid sick leave or personal days offered by the company. • However, if the employee works any portion of the day, you must pay her the full days salary. • Ironically, if you offered no paid sick leave benefits, you would always have to pay this employee her full salary every week, even if she missed one or more full days of work. • So, if you use PTO, you may want to specify what portion is “vacation” and what portion “sick leave” • Also relevant if you pay for accumulated leave at any point. David W. Thomas, Esq. MichieHamlett Lowry Rasmussen & Tweel PLLC 500 Court Square, Suite 300, Charlottesville, VA 22901 (434) 951-7200

  21. David’s practice is compromised primarily of employment law and commercial litigation. His experience includes employee benefits and compensation, employment discrimination, commercial litigation, employment law, construction law and criminal defense. A native of Virginia, David attended Thomas Jefferson High School for Science and Technology in Alexandria before matriculating to Swarthmore College and the University of Virginia Law School. During law school, David worked for the Greene County Commonwealth's Attorney's office, where he prosecuted a broad range of criminal cases. • Following graduation, David clerked for the Hon. Danny C. Reeves in federal district court in Kentucky, where he was exposed to a broad range of federal litigation as well as appellate litigation before the Sixth Circuit. David then moved to Washington, D.C. to practice with a large national firm based out of Palo Alto, California, representing technology companies in commercial, securities and antitrust litigation. David then moved to a regional litigation firm, where he practiced in the area of products liability before getting the opportunity to return to Charlottesville. Education: Swarthmore College (B.A., magna cum laude, 2002) University of Virginia School of Law (J.D., 2005) Professional Activities: Admitted in Virginia and the District of Columbia Admitted to practice before the United States Fourth Circuit Court of Appeals and the United States District Courts for the Eastern and Western Districts of Virginia Virginia State Bar, Pro Bono Committee co-chair, Young Lawyers Division Virginia Trial Lawyers Association, Business Litigation Section member Charlottesville-Albemarle Bar Association Thomas Jefferson American Inn of Court Legal Aid Justice Center Unemployment Panel Community Activities: UVaClub of Charlottesville, Schools Committee chair Legal Aid Justice Center, Unemployment Panel David W. Thomas, Esq. MichieHamlett Lowry Rasmussen & Tweel PLLC 500 Court Square, Suite 300, Charlottesville, VA 22901 (434) 951-7200

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