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EEOC to implement plan to enhance agency presence on January 1, 2006. The US Equal Employment Opportunity Commission (EEOC) will begin implementing a plan on January 1, 2006 to reposition the Commission's field structure to enhance the agency's enforcement presence, improve customer service and public access, and increase efficiency. Under the plan, no jobs will be lost, no offices will close and two new offices will be opened in Las Vegas, Nevada and Mobile, Alabama. The plan reduces the number of managers and administrators and increases front-line staff doing investigations, mediations and litigation -- delivering a more streamlined and efficient structure with greater customer service and more public accessibility. "We're pleased, after three years of crafting and consulting on our plan, to move forward with implementation," said Chair Cari M. Dominguez. "Repositioning will enable the EEOC to expand its front-line staff to give the public better, faster service and to work more efficiently with severe budgets." "EEOC is expanding -- not reducing -- its presence," Chair Dominguez said. All current EEOC offices will continue to provide a full range of services and two new offices will open in areas that need more service. More staff will be available for daily interactions with the public. The public will continue to do business as usual with the Commission, calling, visiting and writing offices as they always have, soon with two additional offices. The public may continue to file charges in any convenient EEOC office. Background. The Commission has been engaged in a comprehensive review of its organizational structure and operations for three years. Chair Dominguez was guided by the President's requirement that agencies be structured to be customer-centered and results-driven. The Chair also required that any proposal be employee-friendly, so no EEOC office would close and no employee would lose a job, be required to make a geographic move, or be downgraded. The Commission voted to approve the plan on July 8, 2005. For months, going back even before that vote, Chair Dominguez, Chief Operating Officer Leonora Guarraia and other top EEOC officials met with a host of groups representing the civil rights community, the bar, and labor unions; and with numerous Members of Congress and the Government Accountability Office, to discuss the plan and field questions. The agency also solicited public comments on the proposal, held a public forum on June 23, 2005 and posted extensive questions and answers on its website. Plan phases. The field structure plan is the second of three repositioning efforts to put the Commission in a more viable position to carry out its mission, given shifting demographics, a changing business environment, explosive technological advancements and budgetary considerations. The first phase involved establishing a National Contact Center (NCC) on a pilot basis. The NCC has been operational for 10 months and has already greatly improved customer service in a variety of ways. The NCC provides immediate access to customer service representatives in 150 languages between 8 am and 8 pm Eastern time. An automated system with answers to frequently asked questions is accessible on a 24-hour basis, seven days a week. Calls are monitored for quality assurance and to track demographics, issues and concerns to help shape the center's operations and future EEOC policy. All calls to the NCC are toll-free. The third phase will involve a more streamlined Washington headquarters, with well-defined lines of responsibilities and clarification of roles. The EEOC's structure was established in 1979 at a time when the EEOC had approximately 3,800 employees. With the attrition of staff in the 1980s and 1990s, the EEOC today has some 2,400 employees. EEOC proposes revisions to Privacy Act fee schedule. The EEOC is seeking comments on proposed revisions to its Privacy Act fee schedule. The proposed schedule of fees conforms to the EEOC's Freedom of Information Act (FOIA) fee schedule, which was recently updated on October 3, 2005 (70 FR 57510). Background. The EEOC is proposing to amend 29 CFR 1611.11. This section contains a schedule of fees utilized by the EEOC for purposes of assessing costs to individuals who seek access to records under the Privacy Act (5 USC 552a). The proposed fee schedule would amend 29 CFR 1611.11 to conform the fees charged under the Privacy Act to the fees charged under the Freedom Of Information Act fee schedule (FOIA) (See 29 CFR 1610.15, as amended by 70 FR 57510 (2005)). In effect, the fees for duplication, attestation and certification of records under the Privacy Act are being made consistent with the fees charged for those services under the FOIA. Pursuant to Executive Order 12866, the EEOC has determined that the regulation will not have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State or local tribal governments or communities. Therefore, a detailed cost-benefit assessment of the regulation is not required. Proposed changes. PART 1611 – PRIVACY ACT REGULATIONS
Section 1611.11 Fees. (a) No fee shall be charged for searches necessary to locate records. No charge shall be made if the total fees authorized are less than $1.00. Fees shall be charged for services rendered under this part as follows:
(b) All required fees shall be paid in full prior to issuance of requested copies of records. Fees are payable to "Treasurer of the United States." Seeking comments. Written comments should be submitted to Stephen Llewellyn, Acting Executive Officer, Executive Secretariat, Equal Employment Opportunity Commission, 1801 L Street, NW, Washington, DC 20507. As a convenience to commenters, the Executive Secretariat will accept comments of six pages or less transmitted by facsimile ("fax") machine. The telephone number of the fax receiver is (202) 663-4114. This is not a toll free number. The six-page limitation is necessary to assure access to the equipment. Receipt of fax transmissions will not be acknowledged although a sender may request confirmation by calling the Executive Secretariat at (202) 663-4070 (voice) or (202) 663-4074 (TTY). These are not toll free numbers. Copies of comments submitted by the public will be available for review at the EEOC s library, room 6502, 1801 L Street, NW, Washington, DC, between the hours of 9:30 am and 5 pm. Additionally, members of the public may submit comments through http://www.regulations.gov. The EEOC must receive comments on or before January 11, 2006. For further information please contact: Thomas J. Schlageter, Assistant Legal Counsel, or Michelle Zinman, Senior General Attorney at (202) 663-4640 (voice) or (202) 663-7026 (TTY). This notice is also available in the following formats: large print, Braille, audiotape and electronic file on computer disk. Requests for this notice in an alternative format should be made to the EEOC's Publication Center at 1-800-669-3362. OFCCP amends VEVRAA regulations to incorporate VEOA, VBHCIA changes. The Department of Labor’s (DOL) Office of Federal Contract Compliance Programs (OFCCP) has issued a final rule revising the regulations implementing the affirmative action provisions of the Vietnam Era Veterans' Readjustment Assistance Act of 1974, as amended, 38 USC §4212 (2001). The affirmative action provisions of VEVRAA require parties holding government contracts or subcontracts of $10,000 or more to "take affirmative action to employ and advance in employment" covered veterans. Notice of the final rule was published in the Federal Register on December 1, 2005. It becomes effective on January 3, 2006 and will apply prospectively. The final rule makes three general revisions to the OFCCP's VEVRAA regulations at 41 CFR §60-250. First, it generally conforms the VEVRAA regulations to the Veterans Employment Opportunities Act of 1998 (VEOA) and the Veterans Benefits and Health Care Improvement Act of 2000 (VBHCIA). Second, it removes references to letters of commitment because the violations formerly incorporated into the letter of commitment are now summarized in the Compliance Evaluation Closure Letter. Third, it removes language about the effective date of the rule published in 1998 because that language is obsolete. JVA changes not incorporated. The final rule does not incorporate changes made to VEVRAA by the Jobs for Veterans Act (JVA) that was signed by President Bush on November 7, 2002. The JVA amended the VEVRAA requirements applicable to federal contracts and subcontracts entered on or after December 1, 2003, by raising the contract amount threshold for VEVRAA coverage, modifying the categories of protected veterans, and making changes to job listing requirements. At a later date, the OFCCP will issue regulations implementing the JVA changes that will apply to contracts entered on or after December 1, 2003. VEOA changes. The VEOA amended §4212(a) in two ways. First, §7 of the VEOA raised the amount of a contract required to establish VEVRAA coverage from $10,000 to $25,000. Second, §7 of the VEOA granted VEVRAA protection to a new group of veterans, called "other protected veterans" -- those who have served on active duty during a war or in a campaign or expedition for which a campaign badge has been authorized. VBHCIA changes. The VBHCIA amended VEVRAA by creating a new class of protected veteran, called "recently separated veteran." Recently separated veteran is defined in VEVRAA as "any veteran during the one-year period beginning on the date of such veteran's discharge or release from active duty." However, the term "recently separated veteran" is also defined in the Workforce Investment Act of 1998 (29 USC ¶2801 et seq.) (WIA) as "any veteran who applies for participation under this chapter within 48 months after the discharge or release from active military, naval, or air service." The WIA is administered by the Department of Labor's Employment and Training Administration (ETA), which has issued regulations implementing the WIA at 20 CFR §660-671. Although ETA does not refer to "recently separated veteran" in its regulations, ETA uses the WIA definition of "recently separated veteran." To eliminate confusion, "recently separated veteran" means, for the purposes of the revised regulations, any veteran during the one-year period beginning on the date of such veteran's discharge or release from active duty. AAP updates required. Contractors are required to update their affirmative action programs (AAPs) to reflect the requirements of the revised regulations during their standard 12-month AAP review and updating cycle. A contractor that has prepared an AAP under the old regulations may maintain that AAP for the duration of the AAP year even if that AAP year overlaps with the effective date of the new regulations. OFCCP's limited exemption of some requirements in light of Katrina has expired. The temporary limited exemption from some of the requirements of the laws administered by the OFCCP for new federal, non-construction contractors performing work directly related to the Hurricane Katrina relief effort expired on December 9, 2005. It will not be renewed. The exemption, issued on September 9, 2005, related to the requirements to develop written affirmative action programs under OFCCP regulations implementing the three laws – Executive Order 11246, as amended, Section 503 of the Rehabilitation Act, as amended, and Section 4212 of the Vietnam Era Veterans' Readjustment Assistance Act, as amended -- enforced by the OFCCP. According to a statement posted on the OFCCP's website the exemption "was granted to provide private companies that were not performing work for the federal government at that time with easier access to federal contracts during the national crisis wrought by Hurricane Katrina." The agency also stated that, "[w]hile in effect, the limited exemption in no way affected federal contractors' obligation to comply with all equal employment opportunity and nondiscrimination laws enforced by OFCCP." Fifth Circuit Court of Appeals announces return to New Orleans. . The Fifth Circuit Court of Appeals has announced its plan to return the court's operations to its New Orleans headquarters. The court has operated since Hurricane Katrina from the Bob Casey United States Courthouse in Houston, Texas. The return plan contemplates shutting down the Houston operations at close of business on Friday, December 16, 2005 and reopening for business at the John Minor Wisdom Court of Appeals Building in New Orleans on Monday, January 9, 2006. Emergency matters will continue to be accepted for filing during the period of shutdown in accordance with the court's order posted at www.ca5.uscourts.gov. The Fifth Circuit, the second largest in size of the twelve regional federal courts of appeals, docketed 9646 appeals in the court year ended June 30, 2005. The court's headquarters are in the John Minor Wisdom Court of Appeals Building in New Orleans, which sustained only modest damage from the devastating strike of Hurricane Katrina on August 29, 2005. For continuity of operations, and to ensure the safety and security of court employees and court records, it was necessary to move the court's operations away from New Orleans immediately following the storm. The federal courts' presence in New Orleans actually predates the Act of 1891, which established the US Circuit Courts of Appeals in the country's modern three-tiered federal court structure. From 1891 until 1915, the United States Court of Appeals for the Fifth Circuit was housed in the historic Customs House on Canal Street. The circuit court moved into its current facilities in 1915, remaining there continuously except for a hiatus from 1963 until 1971 while the Wisdom Building underwent renovation. Five major hurricanes have struck the Wisdom Building during its history, the unnamed storms of 1915 and 1947, Betsy in 1965, Camille in 1969, and Katrina in 2005. Even with the massive flooding following Katrina's landfall, the Wisdom Building took on very little water in its basement level. The circuit's computer servers and paper records, located on the first floor about two feet above street level, were not damaged. Chief Judge Carolyn Dineen King stated: "The Fifth Circuit's return to New Orleans marks a welcome return to our circuit home that has served us so well. We have had 134 employees temporarily relocated from New Orleans on duty in Houston. After more than two months of rescue operations and drying out, New Orleans is on the road to recovery. The Fifth Circuit, part of the city's fabric for more than a hundred years, is proud to call New Orleans home." The court's first hearing following Katrina has been scheduled for Wednesday, January 18, 2006, where all of the judges of the court will conduct an en banc proceeding. Regular panel hearings of the court will begin in February 2006 and continue thereafter.
DOL finalizes first ever USERRA regulations. The Department of Labor's (DOL) Veterans Employment and Training Service (VETS) has published comprehensive regulations under the Uniformed Services Employment and Reemployment Rights Act (USERRA). This publication is the first time since its USERRA's passage in 1994 that the DOL has issued regulations to explain and clarify USERRA. USERRA protects employment and reemployment rights and benefits of service members upon their return to civilian life. The final rule containing the regulations was published in the Federal Register on December 19, 2005 (70 FR 75246-75313). The new implementing regulations are drafted in a question-and-answer format and explain how USERRA protects returning service members against job discrimination and retaliatory actions due to past military service, current or future military obligations. According to the DOL, most employers want to do the right thing for their employees, but are sometimes unclear about their responsibilities. The regulations are intended to clarify the law for both employers and returning service members and aim to ensure that USERRA rights are implemented without unnecessary delays. Key provisions address the following reemployment issues:
Since September 11, 2001, more than 525,000 men and women have been mobilized, more than 390,000 of National Guard and Reservists have been demobilized, and almost 139,000 remain on active duty. This is the largest military deployment since World War II, according to the DOL. Assistant Secretary of Labor for Veterans Employment and Training Chick Ciccolella, at a December 16, 2005 press briefing, said the new regulations will "allow employers maximum flexibility but not at the expense of service members' rights." "Our citizen soldiers put themselves in harm's way to defend our freedoms, and now it's our turn to be there for them," said Secretary of Labor Elaine L. Chao in a statement. "These regulations provide comprehensive guidance on USERRA, which works to preserve the seniority, promotion, health care, pension and other benefits of our citizen soldiers when they return home to the jobs they left to serve our country." Notice rule also published. The DOL also published, on December 19, 2005, the final version of its notice for employers to use in informing employees of their rights, benefits and obligations under USERRA (70 FR 75313-75317). On December 10, 2004, President Bush signed into law the Veterans Benefits Improvement Act of 2004 (VBIA). Among its provisions, the VBIA requires employers to post a notice informing employees of their rights under USERRA. Under the VBIA, the Secretary of Labor had to make the required notice of USERRA rights available to employers no later than 90 days after the President signed the bill into law. Accordingly, an interim final rule was published in the Federal Register on March 10, 2005 (70 FR 12106 - 12109). The DOL has posted two posters on its website at http://www.dol.gov/elaws/userra.htm -- one for use by private and state employers and one for use by federal agency employers -- that can be posted in order to comply with the notification requirements. The two posters include the logos and telephone numbers of VETS as well as the other agencies that assist VETS in the administration and enforcement of USERRA. National Disaster Medical System service. Pursuant to 42 USC §300hh-11(e)(3), certain service in the National Disaster Medical System is considered to be service in the uniformed services for the purposes of USERRA, although the appointee is not considered to be a member of the uniformed services. Because this service is the only USERRA-covered service not contained in USERRA itself and, as a result, may be overlooked, the DOL has modified the text of the notice in the final rule to include mention of this service. NLRB announces pilot ADR program for settling unfair labor practice cases pending before Board. The National Labor Relations Board (NLRB) has created a pilot alternative dispute resolution (ADR) program to assist the parties in settling unfair labor practices cases pending before the Board on exceptions to decisions issued by the Agency's administrative law judges. The pilot ADR program will run for a 2-year period. Participation in the program is voluntary, and a party who enters into settlement discussions under the program may withdraw its participation at any time. The Board will provide the parties with an experienced neutral, usually an NLRB administrative law judge, to facilitate confidential settlement discussions to explore resolution options that serve the parties' interests. Where feasible the settlement conferences will be held in person, but some conferences may be held telephonically. The Board will stay further processing of the unfair labor practice case for 60 days from the first meeting with the neutral or until the parties reach a settlement, whichever occurs first. Extensions of the stay beyond the 60 days may be granted by the neutral only with the agreement of all parties. The Board established this pilot ADR program in response to the success experienced by other federal agencies and the federal courts in settling contested cases through ADR, as well as the success of the NLRB’s own settlement judge program at the trial level. In announcing the program, Chairman Robert J. Battista stated: ADR programs provide the parties with several benefits, including savings in time and money, greater control over the outcome of their cases, and more creative, flexible and customized resolutions of their disputes. Settlement discussions conducted with the assistance of an ADR neutral may broaden resolution options, often by going beyond the legal issues in controversy, and may be particularly useful where traditional settlement negotiations are likely to be unsuccessful or have already been unsuccessful. Other features of the Board's pilot ADR program include:
Questions regarding the program may be addressed to the program director, Gary Shinners, who may be contacted by telephone at (202) 273-3737, or by email at gary.shinners@NLRB.gov. Joseph Frankl named Assistant General Counsel in NLRB's Division of Operations-Management. Arthur F. Rosenfeld, Acting General Counsel of the NLRB, has announced the appointment of career NLRB official Joseph F. Frankl as Assistant General Counsel in the Division of Operations-Management. Frankl has been serving in the NLRB's Office of the General Counsel since 1994, assisting and advising the General Counsel in the development and execution of legal, managerial, and policy programs. He served as Acting Deputy General Counsel from December 2000 to April 2001 under Acting General Counsel Leonard R. Page. The Division of Operations-Management conducts the oversight and management of the Agency's 32 Regional Offices on behalf of the General Counsel, a presidential appointee. In his new position, Frankl will be responsible for supervising eight of the Board's Regional Offices, with jurisdiction over eleven southwestern and western states and Puerto Rico. A native of New York City, Frankl received his AB degree with honors in economics from the University of Michigan in 1975 and his JD degree from Northeastern University School of Law in 1979. During law school he worked as a student legal assistant at the NLRB's Regional Office in Boston, MA (Region 1), under the auspices of Northeastern's cooperative legal education program. He is a member of the bars of the Supreme Judicial Court of Massachusetts, the U S Supreme Court, and several US Courts of Appeals. DOL opens new temporary Wage and Hour Offices in the Gulf Region. The DOL has announced the reopening, at new temporary locations, of the Wage and Hour Division's New Orleans district office and Biloxi, Mississippi, field office. Following Hurricane Katrina both offices were damaged and closed. The work normally handled out of these offices continued in the aftermath of the hurricane from the Baton Rouge, Louisiana, Mobile, Alabama, and Hattiesburg, Mississippi, field offices, as well as the Jackson, Mississippi, area office. "We've opened these temporary offices to be closer to the Gulf Coast residents during this rebuilding phase," said US Labor Secretary Elaine L. Chao. "We've also dispatched more Spanish-speaking investigators in the area, which will boost compliance assistance services and increase enforcement to better protect workers." The DOL has deployed additional resources to the region, including five Spanish-speaking investigators, to provide added enforcement support to handle an increased workload as a result of Hurricane Katrina. Public service announcements are also available to air in the region in both English and Spanish beginning today to increase awareness about the labor laws enforced by the Wage and Hour Division. The Wage and Hour offices are now located at the following addresses: Temporary New Orleans District Office Temporary Biloxi Field Office The public service announcement can be found at www.dol.gov/opa/media/audio. To obtain further information about laws administered by the Wage and Hour Division visit the agency's Web site at www.wagehour.dol.gov. Information is also available from the DOL toll-free help line at 1-866-4USWAGE (1-866-487-9243).
House passes tax reconciliation legislation. The House of Representatives passed the Tax Relief Extension Reconciliation Bill of 2005 (H.R. 4297) by a vote of 234-197 on December 8, 2005. The $56.5 billion measure must now be reconciled with the Tax Relief Bill of 2005 (S. 2020), which the Senate passed on November 17, 2005. In addition to extending the lower tax rate on capital gains and dividends through the year 2010, the House bill includes a host of expiring tax provisions that are widely supported by lawmakers from both parties. Among its many provisions, the House bill would extend the research and experimentation tax credit, the state and local sales tax deduction, the Archer MSAs and tax incentives to revitalize the District of Columbia. The House-Senate conference on the tax reconciliation bill could begin during the week of December 12, when the Senate returns from recess. However, GOP leaders have expressed doubt about whether a conference report will come to a vote before 2006. Administration view. In a statement of administration support released on December 8, 2005, the White House said that the capital gains and dividend provisions had directly contributed to strengthening the nation's economy and produced additional revenues that reduced the federal budget deficit. "These extensions are necessary to provide certainty for investors and businesses and are essential to sustaining long-term economic growth," according to the administration statement. "Today's vote was about extending crucial tax relief and sustaining the economic growth the U.S. has experienced since Republicans enacted tax relief in 2003," said House Ways and Means Committee Chairman William M. Thomas, R-Calif. Democratic lawmakers, however, charged that the tax cuts would increase the federal budget deficit, despite claims by Republicans that the tax cuts would pay for themselves by generating new jobs. "In five short years, the Republican party's failed economic policies have instigated $1.57 trillion in budget deficits and added $3 trillion to the national debt," said House Minority Whip Steny H. Hoyer, D-Md. 2005 Form M-1 is published by DOL. The DOL’s Employee Benefits Security Administration (EBSA) will publish in the December 9, 2005, Federal Register the 2005 Form M-1 annual report for multiple employer welfare arrangements (MEWAs). Plan administrators may use EBSA's online filing system to expedite processing of the form. MEWAs are arrangements that offer medical benefits to the employees of two or more employers or to their beneficiaries. The annual filing date for the 2005 Form M-1 is March 1, 2006. In addition, administrators can request an automatic 60-day extension to May 1, 2006. The 2005 form has few changes from the previous year. The online filing system is available on EBSA's website. It allows filers to complete the form and submit it at no cost. The online form can be completed in multiple sessions and can be printed for the filer's records. The Web site includes a user manual, frequently asked questions and a link to submit questions electronically. Online filing is an example of President Bush's E-Government initiative to use technology to make it easier for citizens and businesses to interact with the government. To use the online filing process, go to www.askebsa.dol.gov/mewa/. Technical assistance for the online filing system is also available by calling (202) 693-8600. Information about the Form M-1 and how to fill it out is available on the Website or by calling (202) 693-8360. Paper copies of the form may be obtained by calling EBSA s toll free number at 1-866-444-EBSA (3272) or visiting the Website at www.dol.gov/ebsa and clicking on Forms/Doc Requests.
IRS announces 2006 mileage rates. The Internal Revenue Service (IRS) has issued the 2006 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Beginning January 1, 2006, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:
The new rate for business miles compares to a rate of 40.5 cents per mile for the first eight months of 2005. In September, the IRS made a special one-time adjustment for the last four months of 2005, raising the rate for business miles to 48.5 cents per mile in response to a sharp increase in gas prices, which topped $3 a gallon. "The IRS took the extraordinary step of temporarily increasing the standard mileage rates in the aftermath of Hurricane Katrina," IRS Commissioner Mark W. Everson said. "We promised to continue closely monitoring the situation. The 2006 mileage rates reflect that gas prices have dropped." The standard mileage rates for business, medical and moving purposes are based on an annual study of the fixed and variable costs of operating an automobile. Runzheimer International, an independent contractor, conducted the study for the IRS. The mileage rate for charitable miles is set by statute. For the first eight months of 2005, the standard rate for miles driven for medical or moving purposes was 15 cents per mile, and, except for special Hurricane Katrina rates, the standard rate for miles driven in service of a charitable organization was 14 cents per mile. For the last four months of 2005, the agency raised the standard rate for miles driven for medical or moving purposes to 22 cents per mile. The standard rate for charitable miles remained at 14 cents per mile --except for charitable miles relating to Hurricane Katrina. Consumer Price Index falls in November; largest decline since 1949. Consumer prices as measured by the Urban Wage Earners and Clerical Workers index (CPI-W) decreased 0.9 percent in November, prior to seasonal adjustment, reported the Bureau of Labor Statistics. The CPI-W, which is used as an escalator in union contracts and in federal entitlement payments, registered a November level of 193.4 (1982-84=100), which was 3.5 percent higher than the index in November 2004. Consumer prices as measured by the All Urban Consumers index (CPI-U) also decreased 0.5 percent in November, prior to seasonal adjustment. The November level of 197.6 (1982-84=100) was also 3.5 percent higher than its level in November 2004. On a seasonally adjusted basis, the CPI-W declined 0.8 percent, while the CPI-U declined 0.6 percent in November (USDL 05-2314, Bureau of Labor Statistics). Among the various components comprising the CPI-W as seasonally adjusted, Medical care registered the largest increase, up 0.7 percent, followed by Housing, up 0.5 percent. Education and communication followed, up 0.4 percent. Food and beverages and Other goods and services both recorded increases of 0.3 percent, followed by Apparel, up 0.1 percent. Transportation registered the largest decline, down 5.7 percent, followed by Recreation, down 0.1 percent. Docking of exempt employee pay for weather-related absences ok. In a pair of recent Wage and Hour Opinion letters, the Department of Labor (DOL) indicated that during adverse weather conditions, employers can deduct the pay of exempt employees who choose not to report to work due to the weather, and that even when the workplace is closed, employers may require exempt employees to take vacation or leave time, without jeopardizing the exempt status of the employee. In the situation where the workplace is closed, the DOL pointed out that since employers are not required to provide any vacation time to employees, "there is no prohibition on an employer giving vacation time and later requiring that such vacation time be taken on a specific day(s). Therefore, a private employer may direct exempt staff to take vacation or debit their leave bank account, whether for a full or partial day's absence, provided the employees receive in payment an amount equal to their guaranteed salary." However, an exempt employee who has no accrued benefits, or has a negative balance, in the leave bank account still must receive the employee's guaranteed salary for any absence(s) occasioned by the employer or the operating requirements of the business. (W&H Opinion Letter, FLSA2005-41, October 24, 2005.) In the situation where the workplace remains open and the employee does not report to work, the opinion letter explained that employers can make deductions for full-day absences (deductions for less than a full day are not permitted under the regulations). The absence would be treated as being for " personal reasons." Since the time off would not be considered an absence for sickness or disability, the deduction of pay would not affect the exempt status of the employee. (W&H Opinion Letter, FLSA2005-46, October 28, 2005.)
Senate version of deficit reduction bill would increase PBGC premiums. By a 51 to 50 vote on December 21, 2005 (with Vice President Dick Cheney casting the deciding vote), the US Senate has passed a massive deficit reduction bill. Among its many provisions is one that would increase the premiums that employers pay to the Pension Benefit Guaranty Corporation (PBGC). The Bill, S. 1932, would increase the annual premium paid to the PBGC from $19 to $30 per participant. Further, it would increase from $2.60 to $8 the per-participant premium paid to the PBGC by multiemployer plans. If the bill becomes law by January 1, 2006, the changes would take effect then. For plan years beginning in 2007, under the Senate version of the bill, the amount of the PBGC premium would be adjusted annually for inflation. Further, under the Senate bill, a $1,250 per-person premium would be imposed on certain terminated single-employer plans. Special rules would apply for plans terminated in bankruptcy reorganizations. However, because the Senate version of the deficit reduction bill differs from the House version, the House and the Senate need to iron out these differences. IRS suspends nonqualified plans reporting requirements. The Internal Revenue Service (IRS) has announced that, for tax year 2005, it will not enforce the reporting and withholding requirements that apply to nonqualified deferrals and to nonqualified deferred compensation included in income under Code Sec. 409A. Future guidance may require the filing of corrected information returns and the furnishing of corrected payee statements for 2005. Although payors will not be required to report and withhold, those who receive taxable deferred compensation in 2005 are not excused from paying the tax. However, since the absence of payor reporting will make correct recipient reporting difficult, the IRS will not assert penalties with respect to includible amounts that recipients fail to report if the recipient does properly report the income in accordance with the expected future guidance. Interest will be imposed on underpayments resulting from the failure to include deferred compensation in income. Forms 941 and W-2. For calendar year 2005, an employer is not required to report deferrals for the year under a nonqualified deferred compensation plan as Code Sec. 409A deferrals in box 12 of Form W-2 using code Y. For calendar year 2005, an employer is not required to include in the total amount of wages as defined in Code Sec. 3401(a) amounts includible in the gross income of an employee under Code Sec. 409A that the employee has neither actually nor constructively received during the calendar year. Thus, an employer may exclude such amounts from wages for income tax withholding purposes and is not required to report such amounts as wages paid to the employee in box 2 of Form 941 or in box 1 of Form W-2. Additionally, an employer is not required to report such amounts as Code Sec. 409A income in box 12 of Form W-2 using code Z. Forms 1099. For calendar year 2005, a payer is not required to report deferrals for the year under a nonqualified deferred compensation plan as Code Sec. 409A deferrals in box 15a of Form 1099-MISC. For calendar year 2005, a payer is not required to report amounts includible in the gross income of a nonemployee under Code Sec. 409A that the nonemployee has neither actually nor constructively received during the calendar year. Thus, a payer is not required to report such amounts as nonemployee compensation in box 7 of Form 1099-MISC or as Code Sec. 409A income in box 15b of Form 1099-MISC (IRS Notice 2005-94, IRB 2005-52). IRS issues 2005 cumulative list of changes for individually designed plans. The IRS has published the 2005 Cumulative List of Changes in Plan Qualification Requirements (2005 Cumulative List) that includes statutory changes and guidance that applies to individually designed plans. This includes single employer individually designed defined contribution plans, employee stock ownership plans (ESOPs), and individually designed defined benefit plans. Generally, the Cumulative List identifies statutory, regulatory and IRS guidance changes that must be taken into account in a plan sponsor's submissions to the IRS for opinion, advisory and determination letters whose remedial amendment period begins on the February 1, 2006 following issuance of the Cumulative List. Determination letter applications. The IRS will begin accepting determination letter applications for Cycle A beginning on February 1, 2006 through January 31, 2007. Individually designed plans have been assigned to Cycle A if the last digit of the plan sponsor's employer identification number is 1 or 6. (See Rev. Proc. 2005-66 for the details of the staggered remedial amendment program.) The 2005 Cumulative List informs plan sponsors and practitioners of issues that the IRS has specifically identified for review in determining whether a plan has been properly updated. In order to be qualified, a plan must comply with all relevant qualification requirements, not just those on the 2005 Cumulative List. The IRS will not review plan language for guidance issued after December 13, 2005, unless it is on the 2005 Cumulative List. In addition, the 2005 Cumulative List does not extend the deadline by which a plan must be amended to comply with any statutory, regulatory or guidance changes. Bush signs hurricane relief bill, including pension provisions, into law. On December 21, 2005, President Bush signed the Gulf Opportunity Zone (GO Zone) Act of 2005 (HR 4440). The hurricane tax relief bill codifies and expands the pension-related relief provided under the Katrina Emergency Tax Relief Act of 2005 (KETRA) (P.L. 109-73) to include victims of Hurricanes Rita and Wilma. The measure also includes tax technical corrections provisions related to the American Jobs Creation Act of 2004 (P.L. 108-357), the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) and other recently enacted legislation. Distribution and loan relief for Wilma and Rita victims. KETRA relief would be expanded to any "qualified hurricane distribution," which is defined also to include distributions relating to Hurricanes Rita and Wilma. The hurricane relief measure would waive the 10% penalty tax for premature distributions from IRAs and qualified retirement plans for individuals who suffered an economic loss because of Hurricanes Rita or Wilma and whose principal residence is located in the Rita or Wilma disaster areas. Individuals eligible for this special treatment would be permitted to pay income tax on such distributions ratably over a three-year period. Amounts distributed could be recontributed to a qualified retirement plan over the three-year period following the distribution date and receive rollover treatment. The waiver of the 10% penalty, 3-year income averaging, and recontribution provisions for hurricane-related retirement plan withdrawals would be limited to $100,000 per individual. Distributions for home purchases that were not finalized because of Hurricanes Rita or Wilma could also be recontributed to a qualified retirement plan or IRA. Limitations on loans from qualified employer plans would be increased for Hurricane Rita and Hurricane Wilma victims by doubling the thresholds to the lesser of $100,000 or 100 percent of the individual's account balance. Payments due from hurricane victims on qualified plan loans on or after August 25, 2005, and before January 1, 2007, could be deferred, and twelve months could be added to the maximum repayment period of affected loans. The bill would also codify and expand the ability to make retroactiveplan amendments under KETRA to apply to changes made pursuant to new Code Sec. 1400Q or regulations issued thereunder. Option to treat elective deferrals as after-tax Roth contributions. A special rule allows employees with at least 15 years of service with certain organizations to make additional elective deferrals to a tax deferred annuity, subject to an annual and a cumulative limit. The cumulative limit is $15,000 reduced by any additional pretax elective deferrals made for preceding years. For tax years beginning after 2005, under a technical correction to EGTRRA included in the Katrina relief package, plans may allow employees to designate pretax elective deferrals as Roth contributions. Under the provision, the $15,000 cumulative limit is reduced also by designated Roth contributions made for preceding years. PBGC regulations update mortality assumptions used in valuing benefits for terminating plans. Mortality assumptions used by the Pension Benefit Guaranty Corporation (PBGC) will be more closely aligned with the best practice of private insurers when the agency adopts an updated mortality table on January 1, 2006. The PBGC's new final regulation on mortality assumptions was published December 2, 2005 in the Federal Register. The PBGC calculates the liability of terminating underfunded pension plans by matching the price that a private insurer would charge to assume the obligation. Mortality assumptions help determine how long a pension plan participant will receive benefits and are a key element in these calculations. The PBGC combines its mortality assumptions with private-sector annuity prices to derive an interest factor that produces the present value of future benefits. Since 1993, the PBGC has based its mortality assumptions on GAM-83, a group annuity mortality table that reflects experience before 1983. For pricing purposes, a majority of private insurers have since adopted a version of GAM-94, which reflects recent improvements in life expectancy. Because the mortality component was based on outdated information, the PBGC's derived interest factor has been lower than would otherwise be the case. The agency estimates that its interest factor will rise by 50-100 basis points when it adopts GAM-94 in January. The PBGC will use GAM-94 projected into the future to take into account expected improvements in mortality. Mortality will be projected to the year of the benefit valuation plus an additional 10 years to approximate the duration of liabilities in terminating plans. Pension plan valuations based on projections of mortality improvement are more accurate than valuations that do not use projections, which understate liabilities. PBGC's liability calculations are used to determine the claim the agency files in bankruptcy against sponsors of terminating pension plans. The updated mortality assumptions are not expected to cause a significant change in the agency's overall claims amount because the agency will adjust its interest factor accordingly. The updated mortality assumptions will also be used by employers when submitting information on benefit liabilities to the PBGC under section 4010 of the Employee Retirement Income Security Act. The PBGC is a federal corporation created by the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by workers. Its two insurance programs cover nearly 44.1 million American workers and retirees participating in more than 30,000 private-sector defined benefit pension plans, including some 1,600 multiemployer plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and investment returns.
No change in interest rates for the first quarter of 2006. The Internal Revenue Service (IRS) has announced that there will be no change in interest rates for the calendar quarter beginning January 1, 2006. The interest rates will be seven percent for overpayments (six percent in the case of a corporation), seven percent for underpayments, nine percent for large corporate underpayments, and four and one-half percent for the portion of a corporate overpayment exceeding $10,000. Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus three percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus three percentage points and the overpayment rate is the federal short-term rate plus two percentage points. The rate for large corporate underpayments is the federal short-term rate plus five percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half of a percentage point. These interest rates are computed from the federal short-term rate based on daily compounding determined during October 2005 (IR-2005-140, December 8, 2005; Rev. Rul. 2005-78, IRB No. 2005-51, December 19, 2005). Government may offset Social Security benefits to collect old debt. The federal government may offset Social Security benefits to collect a student loan that has been outstanding for more than 10 years, a unanimous Supreme Court determined on December 7, 2005. In Lockhart v United States (No 04-881), the Court ruled against James Lockhart, who owes about $77,000 in student loans to the Education Department. To collect the debt, the Treasury Department began offsetting a portion of Lockhart's Social Security disability benefits and old-age benefits. But Lockhart claimed the government did not have the authority to collect the debt from his Social Security payments because the debt was old and barred by the Social Security Act's anti- attachment provision at Act §207 (42 USC §407). Conflicting statutes set stage for appeal. The case involved the interplay of several statutes. The Social Security Act contains significant anti-attachment provisions. But the attachment of benefits in some circumstances is allowed if a debt-collection statute expressly refers to the Social Security Act's anti-attachment provisions. The Debt Collection Act of 1982 allows the federal government to offset government payments to collect outstanding debts. However, it was not until 1996, under the Debt Collection Improvement Act, that the government's offset authority was extended to Social Security payments. The Debt Collection Act also contains a 10-year limitation on the collection of old debts, which Lockhart relied on to support his position that the government was barred from offsetting his benefits to collect his debts that were more than 10 years old. However, the Higher Education Act, as amended in 1991, states that the government's authority to collect outstanding student loan debts is unaffected by limitation periods contained in other statutes. Lockhart had argued Congress could not have intended in 1991 to repeal the 10-year limitations period as to offsets against Social Security benefits since debt collection by Social Security offset was not authorized until five years later. Congress not required to foresee all consequences of legislation. In rejecting Lockhart's position, the court determined that the amended Higher Education Act trumps the Debt Collection Act. "It is clear," the court wrote, "that the [amended Higher Education Act] remove[s] the 10-year limit that would otherwise bar offsetting petitioner's Social Security benefits to pay off his student loan debt." The court held that Congress is not required to foresee all consequences of a statutory enactment in order to give effect to its plain meaning. The court's decision affirms the Ninth Circuit's opinion in this case, but overturns the position held by the Eighth Circuit in Lee v. Paige. Justice Sandra Day O'Connor authored the court's opinion. Justice Scalia, in a separate opinion, concurred with the court's decision. There was no dissent. Employers may now verify workers' Social Security numbers online. Employers can now use the Internet to verify that the payroll record of employee names and Social Security numbers matches the Social Security Administration's (SSA) records. The new service, called Social Security Number Verification Service (SSNVS), is available through Social Security's Business Services Online (BSO) website at http://www.socialsecurity.gov/bso/bsowelcome.htm. According to the SSA, using SSNVS is faster and easier than submitting requests on magnetic media or paper listings, or even using the agency's telephone verification option. Additionally, making sure that wage reports contain employee names and Social Security numbers that match the SSA's records will help ensure the successful processing of annual wage reports and save administrative processing costs. It also allows the agency to properly credit employees' earnings records, which determine their future Social Security benefit entitlement. While the service is available to all employers and third-party submitters, it can only be used to verify current or former employees and only for wage reporting (Form W-2) purposes. For more information, visit http://www.socialsecurity.gov/employer/ssnv.htm or call the Employer Reporting Service Center at 800-772-6270, Monday-Friday, 7 a.m. to 7 p.m. EST (SSA/IRS Reporter, Winter 2005). Social Security unveils 2005 enhancements for electronic services. The SSA has enhanced its online registration and electronic wage reporting services for the upcoming tax filing season. These new and enhanced services will be available December 19, 2005, via the Business Services Online (BSO) web page, Social Security's secure, interactive suite of Internet services for the business community. The web page can be found at http://www.socialsecurity.gov/bso/bsowelcome.htm. The new online registration enhancements for the 2005 tax year will make it easier for household employers to register online. According to the Internal Revenue Service's SSA/IRS Reporter (Winter 2005) the new wage reporting enhancements will mean that:
The SSA-IRS Reporter also has some year-end reminders for employers:
If an employer would like to view the e-filing screens before actually using them, the Social Security Administration has an online tutorial available. Also, the BSO Handbook offers step-by-step instructions on how to access all of the electronic services. Both the tutorial and the handbook can be found at http://www.socialsecurity.gov/bso/bsowelcome.htm. An employer may call the Employer Reporting Service Center from Monday-Friday, 7 a.m. to 7 p.m. EST, at 800-772-6270, or e-mail the SSA at employerinfo@ssa.gov.
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