As the November presidential election increasingly dominates 2016 headlines, employers will be paying close attention to at least three key compliance issues. Affordable Care Act developments, Fair Labor Standards Act Overtime Rules, and Paid Family and Medical Leave Federal Mandate. 

Voters will be reminded that on controversial issues like these, as well as on immigration reform and minimum wage, they share the same aspiration as employers—for political compromise as the key to practical public policy.  

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Compliance 2016: What Employers Can Expect in the New Year

Thu Jan 7, 2016

As the November presidential election increasingly dominates 2016 headlines, employers will be paying close attention to at least three key compliance issues.

Number One Affordable Care Act Developments—

December 2015 brought late-breaking news on two ACA compliance matters—the Cadillac Tax and sections 9055 and 9056 information reporting.

On the Cadillac Tax, Congress (on a bipartisan vote) pushed back the effective date by two years, from 2018 to 2020. In the new year lawmakers could debate:

  • Has the 40% excise tax merely been delayed or effectively killed?
  • What substitute ideas make sense and, if it’s not replaced,
  • How to offset loss of this $90 billion ACA funding source—perhaps by cutting premium subsidies?

On extension of due dates for information reporting, especially to June 30  for Form 1095-C electronic filers, the central 2016 question has to be:

  • Will more time solve the problem or are IRS requirements too complex?

Credit IRS leaders for recognizing, belatedly (Dec 28), that their plan for Forms 1094 and 1095 employer reporting was not ready for prime time. But IRS also has to be asked whether its current compliance design, with complicated indicator codes, will prove viable in 2016. And if not, what’s Plan B?

What about ACA Repeal? Employers should ignore congressional votes this year to eliminate the Affordable Care Act. Presidential politics will resonate loudly on Capitol Hill and candidates will call for overhaul of President Obama’s signature domestic achievement. It’s not going to happen in 2016.

Number Two Fair Labor Standards Act Overtime Rules—

This March marks two full years since President Obama directed the Secretary of Labor to “modernize and streamline” federal overtime rules to extend overtime protections to millions more workers.

Last June the Department of Labor proposed new rules that would entitle some 5 million additional workers to overtime pay under the Fair Labor Standards Act. Most significant would be to double the salary level threshold, below which salaried employees are eligible for overtime pay, from the present $23,660 per year to $50,440 in 2016. 

What should employers expect in 2016? With some 250,000 comments received during the public comment period it’s understandable that the Labor Department was unable to finalize new regulations last year. Nevertheless, delay into 2016 poses at least two problems:

  1. Publication of a final rule could occur right in the middle of the presidential election campaign, turning overtime pay, like too many HR policy issues, into a political football. Politicizing overtime pay eligibility could undermine consensus policymaking.
  2. Pushing final regulations too far into 2016 risks narrowing the window between publication and effective date. Rather than having 4-6 months to implement new and obviously more complicated overtime rules, employers could face a 30-60 day window, making timely compliance almost impossible.

Employers can only hope that the White House and congressional Republicans will keep communication channels open in this election year and perhaps agree to delay implementation until after the next president is inaugurated in January 2017.

Number Three Paid Family and Medical Leave Federal Mandate—

In his State of the Union Address one year ago, President Obama called on Congress to approve legislation that would require employers to provide most employees seven days of paid sick leave a year. A number of employer organizations expressed opposition, with SHRM saying it was “the wrong approach” that would “limit employer flexibility” and “stifle workplace innovation.”

Meanwhile, states and localities continue to enact their own paid leave laws, including California, New Jersey and Rhode Island as well as cities like San Francisco, Seattle and New York. And Washington DC is considering a 16-week paid family and medical leave bill.

Should employers expect federal mandatory paid leave legislation to become law this year? No. 

Notwithstanding the President’s position congressional Republicans say they have no plans to bring paid leave legislation up this year. Indeed, House Speaker Paul Ryan in November called the legislation “another federal entitlement” and made clear it would not be approved in 2016.

Employers expect that when Election 2016 turns to domestic policy the Affordable Care Act, Fair Labor Standards Act rules and mandatory paid leave will be top concerns. Democratic presidential candidates are likely to reflect President Obama’s positions on these issues while Republicans will tend to advocate alternative approaches.

As Campaign 2016 unfolds, voters will be reminded that on controversial issues like these, as well as on immigration reform and minimum wage, they share the same aspiration as employers—for political compromise as the key to practical public policy.