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June 2017

3 trends that will impact your workplace in 2017

Health care insurance — be it the Affordable Care Act or its potential replacement, the American Health Care Act — the Fiduciary Rule and pay equity are three key workplace issues to watch throughout the year. Each was addressed in the ABA webinar, “What You Need to Know: Legal Trends Affecting the Workplace in 2017,” held in April.

ACA Repeal Update

“It’s an unbelievably complex subject, nobody knew that health care could be so complicated.”

That quote from President Donald Trump back in February says all you need to know about why this country is still wrestling with a national health care plan that all Americans will be satisfied with. The U.S. House of Representatives, after two failed starts at repealing and replacing the ACA, passed the American Health Care Act on May 4 and sent it to the Senate. Passage is anything but assured.

Panelist Ben Conley, who specializes in employee benefits and executive compensation with Seyfarth Shaw LLP in Chicago, says it’s anybody’s guess what will happen with health care. He says for now the ACA is still the law and that the complexity of the ACA is in the specifics that have made repealing it less popular. In fact, he says the ACA is enjoying its highest public popularity (51 percent) than at any point in its seven-year history.

“Regardless of what you want to call it, both the expansion of Medicaid and the marketplace subsidies are new forms of entitlement programs and, historically, there have been very few instances when large-scale entitlement programs have been repealed,” Conley explained. “Once implemented and people start benefiting from it, they are not going to vote against their own self-interest.  That is what you are seeing playing out right now from constituents at these town halls.”

Any bill Congress comes up with, panelist David G. Gabor, a business and employment attorney with The Wagner Law Group in Boston says, will have to deal with sticking points in the ACA such as the employer mandate, individual mandate, Cadillac tax, adult child mandate and pre-existing conditions. And, most of all, it will need bipartisan cooperation.

Even though the House passed the AHCA, Conley says getting a health care bill will be a battle because “there are significant issues that separate Republicans in the House and Senate.”

DOL Fiduciary Rule update

In 2010 the Department of Labor issued proposed regulations widening the definition of a fiduciary, but got pushback and withdrew the proposed changes in 2011. It issued another ruling in April 2015 and a final rule in April 2016 expanding the “investment advice fiduciary” definition under the Employee Retirement Income Security Act of 1974 (ERISA). The Fiduciary Rule was scheduled to take effect on April 10, but President Trump issued an executive order directing the DOL to reassess it. The rule was formally delayed on April 4, and the new effective date is June 9.

However, Conley believes the rule’s implementation will be extended until Jan. 1, 2018, if it survives at all. “Ultimately, the speculation is that this rule will never see the light of day. The Trump administration has expressed a clear distaste for this rule and as a result if there is way to roll it back entirely, you can expect the administration might follow that avenue,” Conley predicts.

The DOL’s final ruling, issued in 2016, significantly expanded the circumstances in which broker-dealers, investment advisers, insurance agents, plan consultants and other intermediaries are treated as fiduciaries to ERISA plans and individual retirement accounts (IRAs). It precludes them from receiving compensation that varies with the investment choices made or from recommending proprietary investment products absent an exemption; it provided new exemptions, and modified or revoked a number of existing exemptions; and it retained the ERISA distinction between non-fiduciary “investment education” and fiduciary “investment advice.”

“One of the concerns in the financial service industry was that quite often people providing financial advice with respect to investments did not have interests that necessarily aligned with the people whose money they were dealing with,” says Conley.

The counter argument, and the reason he says the new administration doesn’t like the rule, is it creates a void in the investment space. “They fear that by imposing standards that impact the advisor’s ability to give advice they’ll just leave and go do other things, leaving a void,” he says.

Pay Equity: Trends in Employment Law

Gabor says pay equity is trending across the country. He noted that city and state officials (Philadelphia, New York City, California, Maryland, Massachusetts and Texas) are either enacting or considering legislation barring employers from asking prospective hires about their prior salary history. Studies show that women earn 79 percent of what men earn and that blacks on average earn 75 percent of what whites earn.

“Progress has been made but not nearly enough to level the playing field for compensation for women, minorities in this country,” says Gabor, who also discussed gender and sexual orientation discrimination and the interview process during his presentation.

Change is looming for the EEOC regarding a new EEO-1 Report, which is scheduled to be filed in March 2018. The EEO-1 Report, according to Gabor, has been used since 1966 to track employment data regarding discrimination and patterns of exclusion in select job industries or parts of the country. But it was not used to combat pay disparity, which the revision addresses.

The EEO-1 Report has gone from 140 data points to 3,360, and includes such information gathering as gender, race, ethnic, occupational categories, pay bands and hours worked. It also makes clear who has to file (determined by number of multiple entities that can be classified as a single company by sum total of employees), who is exempt and the filing periods.

“The goal of this is to make sure that larger companies are filing reports on an annual basis and to get away from loopholes that prevent people from having to file,” Gabor says. “This enhanced form, coupled with the new software, creates tools for prosecution of improper pay cases.’’

Sexual stereotype discrimination and sexual orientation discrimination cases in employment are winding their way through the courts and companies are learning how to approach gender identity and transgender issues. Gabor noted a recent ruling in a landmark anti-gay discrimination case involving a gay college professor, Hively v Ivy Tech, in which the 7th Circuit ruled that Title VII of the Civil Rights Acts prohibits anti-gay workplace discrimination.  But the 2nd Circuit, deciding in another case, on April 18 ruled that Title VII forbids sexual stereotype discrimination but it does not forbid sexual orientation discrimination, rejecting the EEOC’s claim that it does. “So the 7th Circuit holds one way and the 2nd Circuit says no on sexual orientation but yes on sexual stereotype discrimination,” Gabor says.

The key takeaway on the interview process is that “it is impermissible to ask about pay and benefit history prior to offering a job and compensation to the candidate,’’ Gabor says.

The panel also discussed trends in executive compensation.

“What You Need to Know: Legal Trends Affecting the Workplace in 2017,” was presented by the ABA Section of Administrative Law and Regulator Practice, Division for Public Services, Commission on Disability Rights, Health Law Section, Section of Dispute Resolution, Government and Public Sector Lawyers Division, and the Center for Professional Development. 

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