Justice Department extends comment period for adoption of access guidelines.  The Department of Justice (DOJ) has extended until May 31, 2005, the period in which it will accept comments on its Advance Notice of Proposed Rulemaking (ANPRM) with regard to its adoption of Parts I and III of the revised guidelines implementing the Americans with Disabilities Act of 1990 (ADA) and the Architectural Barriers Act of 1968 (ABA). The comment period was originally scheduled to close on January 28, 2005.

The revised guidelines were published by the Architectural and Transportation Barriers Compliance Board (Access Board) on July 23, 2004 at 69 Federal Register 44083. On September 30, 2004, the DOJ published at 69 Federal Register 58768 an ANPRM in order to begin the adoption process. The DOJ received requests from a variety of interested parties to extend the deadline for public comment, citing the complexity of the data requests, the need to distribute surveys, the overlap of the comment period with the holiday season and the need for additional time in order to prepare an informed response.

An advance notice of proposed rulemaking is merely a preparatory stage in the rulemaking process. Interested parties will receive another opportunity to comment when the Department issues a formal notice of proposed rulemaking. The revised guidelines have no legal effect on the public until they are adopted by the Department in the final stage of the rulemaking process. Comments on the ANPRM may be provided by May 31, 2005, online at http://www.adaanprm.org, or by mail, at P.O. Box 1032, Merrifield, VA 22116-1032. SOURCE: 70 Federal Register 2992, January 19, 2005.

OPM proposes streamlined hiring process for applicants with disabilities. The Office of Personnel Management (OPM) has proposed a rule change that would allow federal agencies to certify, then immediately hire, applicants with a disability who are likely to succeed as federal employees. Currently, OPM regulations permit agencies to make expedited Schedule A "excepted" appointments to persons with disabilities if they have been certified as having mental retardation, severe physical or psychiatric disability. However, the certification process is onerous and complicated, involving review by state and/or federal agencies even when the disability has been clearly diagnosed by a licensed medical authority.

The proposal allows federal agencies to determine, on a case-by-case basis, whether persons with mental retardation and severe physical and psychiatric disabilities can receive an excepted appointment based solely on medical documentation submitted by the applicant. Agencies would retain the option of requiring Department of Veterans Affairs or State Vocational Rehabiltation Agency certification of a disabled applicant where the agencies are unable to make a determination based on documentation submitted by the applicant.

OPM's proposed rule change would standardize and consolidate three existing Schedule A appointing authorities for persons with mental retardation (5 CFR §213.3102(t)), severe physical (5 CFR §213.3102(u)) or psychiatric (5 CFR §213.3102(gg)) disability that vary only slightly from one another. Under the proposed program, agencies would appoint individuals under section 213.3102(u). The new Schedule A authority contains updated certification procedures, a temporary employment option, and requirements for noncompetitive conversion to the competitive service. Public comments on the proposed rule change are due on or before March 14, 2005. Source: 70 Federal Register 1833, January 11, 2005.

USCIS reaches H-2B cap; new processing procedures announced. The US Citizenship and Immigration Services (USCIS) announced on January 4, 2005, that it has received enough H-2B petitions to meet this year's congressionally mandated cap of 66,000 new workers. After January 3, 2005, USCIS will not accept any new H-2B petitions subject to the FY 2005 annual cap.

USCIS will follow the procedures set forth in the notice published on March 16, 2004 in the Federal Register at 69 FR 12340 to address the cap reached during FY 2004. USCIS will use the following procedures for the remainder of FY 2005:

• USCIS will process all petitions received by the end of business on January 3, 2005.
• USCIS will return all petitions subject to the annual cap (along with the filing fee and, if applicable, the premium processing fee) that are filed after the end of business on January 3, 2005.
• Petitioners may re-submit or file new petitions when they have received labor certification approval for work to start on or after October 1, 2005.

William J. Sanchez confirmed as Special Counsel for Immigration Related Unfair Employment Practice. William J. Sanchez received unanimous confirmation by the US Senate to be Special Counsel for the Office of Special Counsel for Immigration Related Unfair Employment Practices at the Justice Department, the Department of Justice announced on January 5, 2005. As a Special Counsel, Mr. Sanchez will work to protect US citizens and other legal immigrants from discriminatory practices as well as educate employers and employees about their rights and responsibilities under the Immigration Reform and Control Act of 1986 (IRCA). Mr. Sanchez was confirmed on December 8, 2004.

Prior to joining the Justice Department, Mr. Sanchez had been a senior partner in the law firms of William J. Sanchez, P.A. and Sanchez and Lopez, P.A. While in private practice, Mr. Sanchez worked on hundreds of immigration court trials as well as numerous appeals before the Board of Immigration Appeals and the federal courts. Among these cases are nationally-recognized class-action lawsuits on behalf of Haitian farm workers and Cuban refugees who attempted to enter the United States on vintage American cars fashioned into water crafts. Early in his career, Mr. Sanchez also served as staff attorney for the Haitian Refugee Center and as Professor of International Law at the Ateneo University in the Philippines.

A native of New York City, Mr. Sanchez has spent most of his adult life in South Florida, where he helped establish one of Florida's largest micro-enterprise institutions in Miami's less-advantaged communities. He has also been involved in numerous nonprofit and charitable endeavors. In the early 1980's, he spent six months working as a Georgetown University student representative in a Vietnamese refugee camp in Palawan, Philippines and in the early 1990's spent a year in Naga, Philippines, founding a Grameen village bank for poor families.

The Office of Special Counsel for Immigration Related Unfair Employment Practices (OSC) was created by the Immigration Reform and Control Act of 1986 (IRCA). OSC protects US citizens and other authorized workers from discrimination based on their national origin or citizenship status in hiring, firing, recruitment or referral for a fee, document abuse, or retaliation for filing a claim. OSC staff also appear before administrative law judges who are specially trained to hear IRCA discrimination cases and conduct outreach and education programs.

The following bills introduced over the month would: Require employers to conduct employment eligibility verification referred (H 19, introduced 1/06/05, by Rep. Ken Calvert, R-CA. Referred to Education Committee.

Amend the Immigration and Nationality Act to reunify families, permit earned access to permanent resident status, provide protection against unfair immigration-related employment practices, reform the diversity visa program, provide adjustment of status for Haitians and Liberian nationals (H 257, Introduced 1/06/05, by Rep. Sheila Jackson-Lee, D-TX. Referred to Judiciary Committee).

Amend the Civil Rights Act of 1964 and the Fair Housing Act to prohibit discrimination on the basis of affectional or sexual orientation (H 288, Introduced 1/06/05, by Rep. Edolphus Towns, D-NY. Referred to Judiciary Committee).

Labor/Wage Hour     Top of Page

Labor board expands e-filing project to include all documents in all cases. The National Labor Relations Board has expanded a pilot E-Filing Project which permits online filing of certain documents, to include all documents in representation and unfair labor practice cases. This project enables parties to connect to the NLRB's website, complete a one-page form, and submit documents directly to the Office of the Executive Secretary. The party is notified by email that the document has been received for processing. When first announced in June 2003, online submissions were limited to selected documents in unfair labor practice and representation cases. In March 2004, the program was expanded to include all documents in representation cases.

NMB's proposed filing fees irritate rail workers. The National Mediation Board (NMB) held a public meeting on Tuesday, January 11, 2005, seeking comment on a controversial regulation it has proposed to streamline the resolution of rail industry grievances and minimize the backlog. Key among opponents' concerns is a provision that would implement filing fees for NMB arbitration of minor labor disputes in the rail industry which would require grievants to pay as much as several hundred dollars to lodge a formal complaint. Fees for specific agency services, from the filing of a grievance to the establishment of a board of adjustment or certification of an arbitrator, would range from $50 to $100 each.

Edward Wyktind, president of the AFL-CIOs Transportation Trades Department (TTD), condemned the proposed rule, saying it would serve "to stifle complaints about unsafe and unfair conduct by the railroads," and described it as an effort to reduce the number of workers who speak up on the job and exercise their rights under union contracts. The labor group characterized the rule as an rail industry-backed plan. "Bush appointees to the National Mediation Board are doing the bidding of the giant railroads," Wytkind said.

250 rail workers marched outside the public hearing in protest of the plan. Meanwhile, George Francisco, president of the National Conference of Firemen and Oilers, and chair of the TTDs Rail Labor Division, testified inside, calling the proposal "a hostile federal tax on our members' right to speak out," and saying the rule would give the railroads "an upper hand over their employees and an even greater incentive to ignore collective bargaining." The TTD noted further that the filing fees for the govermment agency services would effectively apply only to workers, not to management, since employees typically file the grievances that go to arbitration.

Joining the rail unions in opposition to the proposed rule were 120 members of Congress who signed on to a letter from James L. Oberstar, ranking Democratic Member of the House Committee on Transportation and Infrastructure, urging the agency to withdraw its proposal. The letter noted that the filing-fee proposal "is in direct conflict with the 1934 and 1966 amendments to the RLA, in which Congress required the Federal Government to pay for arbitration services that were final and binding, in return for rail labor agreeing to forgo strikes on minor disputes. Such strikes had occurred frequently prior to these amendments. The proposed regulation would therefore undermine the RLA, its legislative history, and the concessions that rail labor made."

The House members also expressed their concerns that the proposed rule would discourage rail workers from pursuing grievances, particularly those claims for contract violations where the financial loss suffered by the employee would be less than the proposed filing fee, such as loss of overtime or a day's pay.

Senators Arlen Specter (R-Pa) and Ted Kennedy (D-Mass) also wrote the agency, contending that the NMB would exceed its legal authority in promulgating the rule. They also argued that the exclusive system of binding arbitration to resolve disputes, as set forth more than 70 years ago in the Railway Labor Act, "was made possible by the unions' agreement to limit their right to strike over employee grievances, in return for federally financed arbitration of the grievances."

In the recent Omnibus appropriations bill, Congress directed the NMB to hold hearings to "examine any potential negative impact of the proposed fees." The National Mediation Board issued its Notice of Proposed Rulemaking in the Federal Register on August 9, 2004 (69 FR at 48177).

Benefits Top of Page

HHS issues final and proposed HIPAA regulation on access to group health coverage. The Department of Health and Human Services has announced a final regulation under the provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) that give workers greater access to group health plan coverage.

The final regulation implements provisions of HIPAA that provide greater portability and availability of group health coverage when workers and family members change or lose a job. The provisions set limits on preexisting condition exclusions that could be imposed and require group health plans and group health insurance issuers to offer "special enrollment" upon certain life events. Identical regulations are being issued simultaneously by the Departments of Labor and Treasury with a joint explanatory preamble.

The regulation finalizes portions of an interim final regulation published on April 8, 1997, that limits the use and duration of preexisting condition exclusions imposed by group health plans and group health insurance issuers. It requires these entities to offer an immediate "special enrollment" opportunity to certain individuals who lose eligibility for other group health coverage or other health insurance, and to otherwise eligible new dependents.

The final regulation, which becomes effective for plan years starting on or after July 1, 2005, does not significantly modify the framework of the 1997 interim final regulation. However, in response to comments received during the public comment period, the final regulation contains features that are intended to bolster HIPAA's consumer protections while minimizing the burdens imposed on group health plans and group health insurance issuers. For example, the final regulation:

• Requires group health plans and group health insurance issuers to include, concurrently with the certificate of creditable coverage provided to individuals when they lose coverage under the plan, an educational statement on their HIPAA rights.
• Includes model language that group health plans and group health insurance issuers can use for the new educational statement.
• Recognizes health plans maintained by foreign governments, and by the U.S. government (such as Veterans Administration coverage) as creditable coverage that can be used to reduce the length of or eliminate a preexisting condition exclusion.
• Offers sample language that plans and issuers can use to satisfy their obligations to provide participants notices of preexisting condition exclusions.
• Clarifies that certain plan benefit restrictions are in fact preexisting condition exclusions that must comply with HIPAA's limitations on such exclusions.

• Would provide an extension of time for individuals to exercise certain HIPAA portability rights, in situations where the individual must exercise those rights within a certain number of days after losing coverage, but the individual is not promptly notified through a certificate of creditable coverage that he or she has lost coverage.
• Would specify that group health plans and group health insurance issuers must provide a certificate of creditable coverage when an individual leaves a group health plan while taking leave under the Family and Medical Leave Act, and that any period of time during which a person does not have coverage while under such leave does not count against him with regard to HIPAA's protections.
• Would set forth a mathematical formula for counting the average number of employees employed by an employer during a year (various HIPAA health insurance reform provisions require the determination of such an average number).

HHS issues final rules on Medicare prescription drug benefit. The Department of Health and Human Services has issued final regulations establishing the new Medicare prescription drug benefit and improved access to health care services through Medicare.

The prescription drug benefit and the other provisions included in the regulations are key elements of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which Congress passed and President Bush signed into law on December 8, 2003. Enrollment for the new prescription drug plans will begin this November.

The new rules give employers and unions a menu of flexible options enabling them to continue providing high-quality drug coverage for their retirees at a lower cost. An employer whose coverage is at least as good as or better than the Medicare benefit and whose contribution to coverage is as good as or better than the Medicare subsidy can receive a tax-free subsidy for continuing that coverage. The rules also help employers supplement or “wrap around” the Medicare drug benefit, so comprehensive coverage can be provided at a lower cost, just as many employers currently supplement Part A and B benefits.

Employers also can use their own customized prescription drug plan or Medicare Advantage plan to provide comprehensive coverage. Finally, for the many retirees in plans with little or no employer contribution, enrolling in the Medicare Part D benefit allows them to lower their drug costs because of the 75 percent subsidy it provides -- and employers can provide financial assistance in this case as well, for example by paying the Part B premium or supporting an account based arrangement to provide tax-free payments for health care costs.

Payroll Top of Page

Previously released per diems increased. The IRS has made changes to some previously released per diem rates. For expenses paid on or after October 1, 2004, the federal per diem rate, which is the sum of the federal lodging rate and the federal meals and incidental expenses rate (M&IE), will increase to $204 (previously, $199) per day for high-cost areas and increase to $129 (previously, $127) per day for all other areas. The revised rates are retroactively effective to October 1, 2004. In addition, the list of high-cost localities has been revised by adding and removing specific localities (see below), as well as changing the portion of the year that some localities are classified as high-cost. Finally, the description of incidental expenses has been revised with regard to transportation between a place of lodging or business and a place where meals are taken.

High-cost locality changes. The following locality has been added to the list of high-cost localities: Traverse City, Michigan. The portion of the year for which the following are high-cost localities has been changed: Fort Lauderdale, Florida; New Orleans, Louisiana; and Silverthorne/Breckinridge, Colorado. The following localities have been removed from the list of high-cost localities: Las Vegas, Nevada; Mackinac Island, Michigan; Myrtle Beach, South Carolina; and Tom's River, New Jersey. The boroughs of Brooklyn, Queens, the Bronx, and Staten Island are no longer separately listed as a high-cost locality and are now combined with the borough of Manhattan. (IRS Rev. Proc. 2005-10, IRB 2005-3, December 22, 2004.)

Pension Law Top of Page

Administration unveils proposals to reform funding rules, strengthen PBGC. Bush administration proposals to reform pension funding rules, improve participant disclosure and revise the Pension Benefit Guarantee Corporation (PBGC) premium structure, including an increase in the flat-rate premium, were unveiled by Secretary of Labor Elaine Chao on January 10, 2005. ”As Chairman of the Board of Directors of the Pension Benefit Guaranty Corporation, I have become increasingly concerned as the number of terminated plans grows and the PBGC is forced to assume ever larger liabilities,” said Chao. “If nothing is done, the financial integrity of the federal insurance system will be compromised and the pension security of 34 million workers and retirees will be more at risk.”

The Administration’s reform plan rests on three core principles. First, reform the funding rules to ensure that employers fully fund their promises, with incentives for full plan funding. Second, change the premiums plans pay to the PBGC to better reflect the plans’ real risks and costs and to ensure the Agency’s financial solvency. Third, increase the disclosure of information about plans to workers, investors, and regulators to ensure greater transparency and accountability.

Calling the current funding rules “nearly incomprehensible,” Chao advocated replacing multiple measures of pension fund liabilities with a “single, accurate” measure. The Administration also would replace multiple approaches to minimum-required and maximum-allowable contributions with one basic method. Under the Administration's proposal, funding targets would be based on the plan sponsor’s financial health and plan liabilities would be measured using a current duration-matched yield curve of corporate bond rates. Employers would be given time to make up funding shortfalls - perhaps a transition period of seven or 10 years, Chao indicated. Financially weak companies or underfunded plans would be restricted in promising additional benefits. During good economic times, plan sponsors could make additional deductible contributions.

Treasury claims it lacks authority to revise “use it or lose it” rule. The Treasury Department lacks the legal authority to change the “use it or lose it” rule that causes employees to lose unused funds in their flexible spending accounts (FSAs) at year's end, according to Treasury Secretary John Snow. In August 2004, Sen. Chuck Grassley (R-IA), Chairman of the Senate Finance Committee, wrote Snow urging the Treasury Department to use its administrative authority to rewrite the “use it or lose it rule.” In his response to Sen. Grassley, written on December 23, 2004, Snow said that, absent Congressional action, “Treasury believes we do not have sufficient legal authority to administratively change this longstanding rule.”

Snow said that the Treasury Department continues to look for “creative Solutions” to resolve this issue that are consistent with an appropriate reading of the law and regulations. One possible approach, he said, may be to provide a brief administrative grace period in the application of the rule, effectively extending the period slightly beyond one year before amounts are forfeited.

IRS, EBSA release final regs implementing HIPAA portability requirements for health coverage. The IRS and the Employee Benefits Security Administration (EBSA) have issued final regulations governing portability requirements for group health plans and issuers of health insurance coverage offered in connection with a group health plan under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Though extensive, the final rules, which become effective on February 28, 2005, and apply for plan years starting on or after July 1, 2005, do not significantly modify the framework of the 1997 interim final regulations. However, in response to comments received during the public comment period, the final regulations contain features that are intended to bolster HIPAA's consumer protections while minimizing the burdens imposed on group health plans and group health insurance issuers. For example, the final rules require an educational statement to be included in the certificate of coverage, explaining individuals' rights to health coverage portability, and include model language that employers can use.

IRS final rules consolidate and modify existing 401(k) plan guidance. The IRS has finalized a sweeping series of regulations governing cash or deferred arrangements under Code Sec. 401(k) and matching and employee contributions under Code Sec. 401(m). The final rules, which adopt, with modification, proposed rules issued on July 17, 2003, primarily reflect the significant changes to the methodology of the applicable nondiscrimination tests and other requirements that have been implemented, since regulations were last issued in 1994, by the Small Business Job Protection Act of 1996 (SBJPA), the Taxpayer Relief Act of 1997, the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), and numerous IRS rulings.

The final rules not only reflect and clarify existing law and administrative guidance, but, generally effective beginning in 2006, implement modifications designed to simplify plan administration and ensure benefits for rank-and-file employees. For example, the final rules: prohibit the pre-funding of elective contributions and matching contributions for purposes of accelerating employer deductions; eliminate the mandatory disaggregation of the ESOP and 401(k) portions of a plan for purposes of ADP and ACP testing; modify the aggregation rules applied in determining the actual deferral ratio and actual contribution ratio of highly compensated employees who are eligible to participate in multiple plans; and, perhaps most significantly, severely restrict the use of "bottom-up" qualified nonelective contributions (QNECs) that enable employers to pass the ADP test by making targeted QNECs to a small group of short-service nonhighly compensated employees (NHCEs).

Social Security Top of Page

SS benefits must grow at slower pace, says White House. Asserting that there are "no free lunches" involved in fixing Social Security's future funding problem, White House Council of Economic Advisers (CEA) Chairman N. Gregory Mankiw indicated that scheduled benefit increases in the program must be altered if the system is to remain sustainable in the long run. "The benefits now scheduled for future generations under current law are not sustainable given the projected path of payroll tax revenue. They are empty promises," Mankiw warned in remarks before the American Economic Association on January 7.

As Mankiw describes it, the aging Baby Boomers are on a collision course with the current benefit structure, unless the formula changes from wage indexing to a slower growing price-indexed system. "Benefits rising with wages could continue if the demographic shift were not occurring because economic growth raises real payroll tax revenue," the CEA head noted. "Conversely, the demographic shift could be accommodated by economic growth if real benefits were growing at a slower pace," Mankiw stated. The combination of scheduled benefit hikes and a growing elderly population "puts the nation on an infeasible path."

The CEA chairman also argued against raising taxes to resolve the problem. "Putting Social Security permanently on a sustainable basis through higher taxes alone would involve raising the tax rate from 12.4 percent of taxable payroll to 15.9 percent," noted Mankiw. Delaying action would worsen the problem, he said. For example, waiting to fix the system until 2042 (the projected year that the Social Security Trust Fund becomes insolvent) would require a seven percentage point increase in the payroll tax rate to 19.4 percent. Such large tax increases would adversely affect the U.S. economy, Mankiw maintained. Without reform, Mankiw said the U.S. will face little choice but "vastly higher taxes and the resulting drag on the economy."

Final rules expand authority for recovery of cross-program debt. The Social Security Administration (SSA) has finalized new and revised regulations that will allow it to implement certain provisions of the Social Security Protection Act of 2004 (PubLNo 108-203, March 2, 2004). These provisions expand the agency's ability to recover benefit overpayments made in one of its programs from benefits payable to an overpaid individual under other programs it administers. The affected programs are disability, retirement and survivors' insurance benefits under Title II, Special Veterans Benefits (SVB) under Title VIII and Supplemental Security Income (SSI) under Title XVI.

Changes ease prior restrictions. Under prior law, only 10 percent of a Title II payment could be withheld to recover SVB and SSI overpayments, and only if the beneficiary was not currently receiving such benefits. Additionally, the SSA was not permitted to recover Title II or SVB overpayments from SSI payments.

Under the amended regulations, which implement changes to Social Security Act §1147, the SSA will be able to recover an overpayment occurring under any of these programs from benefits or payments due in any other of these programs at a rate not to exceed 10 percent of a claimant's monthly benefit amount. The regulations also allow for unlimited withholding of past-due benefits in one program to recover an overpayment paid under another program. They also permit cross-program recovery even if the individual is entitled to receive benefits under the program in which the overpayment was made. Thus, for example, the SSA will be able to recover overpaid Title II or SVB benefits from SSI payments and it will be able to recover overpaid SSI or SVB benefits from a Title II payment, even if the beneficiary is currently receiving benefits.

Comments sought on changes from proposed rules. In its notice of final rulemaking, the SSA announced that it was requesting comments on several of the finalized regulations that were materially different from the proposed regulations previously published. These changes will allow the SSA to use cross-program recovery if an individual is no longer receiving benefits under a particular program but is making regular monthly installments to refund an overpayment previously received under that program. In addition, benefits may be recovered if an individual is receiving monthly payments under a particular program and the agency is recovering a previous overpayment made under that program by adjusting the amount of those monthly benefits. Comments must be received by February 2, 2005, in order to be considered and may be submitted according to the instructions in the notice, the full text of which appears in CCH UNEMPLOYMENT INSURANCE REPORTER WITH SOCIAL SECURITY ¶17,325B.