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| Employment Law
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House passes Attorney-Client Privilege Protection Act. The House overwhelmingly approved H.R. 3013, the Attorney-Client Privilege Protection Act of 2007, a bill that prohibits prosecutors from coercing a company to waive the attorney-client privilege. It would also safeguard the constitutional rights and other legal protections available to employees of an organization that is under investigation. The Department of Justice, SEC, and other enforcement agencies routinely require or expect waivers of these protections, creating an untenable situation for businesses, their employees, and attorneys. Its supporters say the law is necessary to rein in overzealous federal prosecutors who, during criminal investigations, pressure companies to leave their employees out to dry--by agreeing to refuse to pay their legal fees--and to abandon the organization's own legal protections. English-only clash delays EEOC fiscal year 2008 spending bill. The controversy over employer rules requiring employees to speak only English while on the job has caused a quagmire at the conference committee stage of the fiscal year 2008 appropriations bill that funds the Equal Employment Opportunity Commission (EEOC) (HR 3093). The sticking point is an amendment offered and described by Senator Lamar Alexander (R-Tenn), as one which would stop the EEOC from filing lawsuits against employers requiring employees to speak English while on the job. Senate confirms Mukasey as Attorney General. Michael B. Mukasey, a native of New York City who is a former federal district judge and prosecutor, was confirmed by the US Senate late in the evening of November 8 as the nation's 81st attorney general. In September, when he was nominated for the post by President Bush, most senators seemed to support the choice. However, largely because of Mukasey's refusal to label as torture a certain interrogation technique, the nomination became controversial. In the end, the vote to confirm broke down largely along party lines, with all Republicans supporting and most Democrats opposing.
Breyer stays "no-match" lawsuit pending DHS modifications to regulation. On November 23, 2007, Judge Charles Breyer of the Northern District of California granted a stay requested by the Department of Homeland Security (DHS) to suspend proceedings of a lawsuit filed by a group of labor unions, business groups and civil rights organizations over release of its "no-match"regulation. While DHS continues to believe that Breyer erred on October 10 when he enjoined the release of the regulation until the court decides the case on the merits, the agency filed its motion to stay, asking the court to suspend proceedings over the legality of the regulation, so that it could conduct additional rulemaking actions to address issues raised by the court when Breyer issued his preliminary injunction (AFL-CIO v Chertoff, NDCal, No 3:07-cv-04472-CRB). Revised Form I-9 to be enforced beginning December 26. According to official notice published in the Federal Register, all US employers must start using the Department of Homeland Security's (DHS) revised Form I-9, Employment Eligibility Verification and M-274, Handbook for Employers, Instructions for Completing the Form I-9 on or before December 26, 2007, to verify the employment eligibility of their employees hired after November 6, 1986, who are eligible to work in the US in order to prove that their identities match their work authorization documents. On November 7, DHS's immigration services bureau, US Citizenship and Immigration Services (USCIS), announced the availability of the revised Form I-9 with a revision date of June 5, 2007, which is printed as "(Rev. 06/05/07)N" on the lower right corner of the form. USCIS explained that employers would have 30 days, beginning on the date that Federal Register notice is published, to transition to the revised form, which would be the only valid version of the form. The revised Form I-9 contains an updated list of acceptable identity and employment authorization documents reflecting current regulations promulgated under the Immigration Reform and Control Act of 1986. The notice, which was published in the November 26 Federal Register, provides employers with a 30-day grace period to transition employers to the revised form. Enforced by US Immigration and Customs Enforcement, DHS' largest investigative arm, employers that fail to use the revised Form I-9 by the end of the 30-day grace period will incur fines and penalties for noncompliance. Chertoff announces news that DHS, DOL working H-2A visa regulations. On November 6, 2007, in remarks on the state of immigration, Homeland Security Secretary Michael Chertoff confirmed that the Departments of Homeland Security (DHS) and Labor (DOL) were working together on new regulations that would streamline the H-2A temporary/seasonal agricultural worker visa program. The H-2A temporary agricultural program establishes a means for agricultural employers who anticipate a shortage of domestic workers to bring nonimmigrant foreign workers to the US to perform agricultural labor or services of a temporary or seasonal nature. DHS first announced the potential regulations on August 10 as part of a series of reforms the Bush Administration would pursue to address border security and immigration. Shuler introduces bipartisan SAVE Act. Representative Heath Shuler (D-NC) was joined by over eighty other bipartisan members of Congress on November 6, 2007, to introduce the Secure America through Verification and Enforcement (SAVE) Act (H.R.4088). SAVE is a three-part plan to drastically reduce illegal immigration, with a strict emphasis on: (1) border security; (2) employer verification; and (3) interior enforcement. "Today Democrats and Republicans are joining together, putting politics aside and supporting a commonsense bill that is for the good of America," said Representative Shuler. The following bills introduced over the month would:
US Labor Department announces changes for 2009 Form 5500 annual return/report of employee benefit plan. The US Department of Labor's Employee Benefits Security Administration (EBSA), the Internal Revenue Service and the Pension Benefit Guaranty Corp. (PBGC) recently announced the publication of revisions to the Form 5500 annual return/report for plan year 2009, including a deferral for one year of the move to the wholly electronic filing system. Plans and service providers now will have additional time to comply with changes to the 2009 Form 5500 and the change to the wholly electronic filing system. Plans and service providers will not be required to comply with these changes until the due date for the plan’s 2009 Form 5500. IRS issues proposed regulations on user fees for enrolled actuaries. The IRS has released proposed regulations relating to user fees for the initial and renewed enrollment to become an enrolled actuary. The charging of user fees is authorized by the Independent Offices Appropriations Act (IOAA) of 1952. This document also contains a notice of public hearing on these proposed regulations.
IRS issues regulation defining "salary reduction agreement." The IRS has issued a final regulation defining the term " salary reduction agreement" for purposes of Code Sec. 3121(a)(5)(D). The final regulation provides guidance to public schools and Code Sec. 501(c)(3) organizations purchasing Code Sec. 403(b) annuity contracts on behalf of their employees. The regulation, which finalized temporary and proposed regulations without change, is effective November 15, 2007, and applies to contributions to Code Sec. 403(b) plans made on or after November 15, 2007. The temporary and proposed regulations are applicable to such contributions made on or after November 16, 2004. House-passed military tax bill has payroll items. The House passed the Heroes Earnings Assistance and Relief Tax Bill of 2007 (HR 3997), a package of military tax breaks for active and retired military service members on November 6. The bill contains several payroll-related provisions. Currently, pursuant to IRS Rev. Rule 69-136, (1969 CB 252) differential pay is not treated as "wages" for purposes of the federal income tax withholding (FITW), Federal Insurance Contributions Act (FICA) withholding, or the Federal Unemployment Tax Act (FUTA). This is because the service member is treated as terminating the employment relationship with the employer that pays the differential pay upon being called for active duty. However, differential pay is considered income subject to federal income tax.
EBSA issues final revisions to annual reporting forms and regulations. EBSA has released implementing regulations in connection with Form 5500 annual reporting for the 2009 reporting year. Under Titles I and IV of the Employee Retirement Income Security Act of 1974, as amended (ERISA), and the Internal Revenue Code, as amended (Code), pension and other employee benefit plans generally are required to file annual returns/reports concerning, among other things, the financial condition and operations of the plan. Filing the Form 5500, "Annual Return/Report of Employee Benefit Plan," together with any required attachments and schedules (Form 5500 Annual Return/Report) through the ERISA Filing Acceptance System (EFAST) generally satisfies these annual reporting requirements. The Form 5500 Annual Return/Report is the primary source of information concerning the operation, funding, assets, and investments of pension and other employee benefit plans. In addition to being an important disclosure document for plan participants and beneficiaries, the Form 5500 Annual Return/Report is a compliance and research tool for the Department of Labor (Department), Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC) (collectively, the Agencies) and a source of information and data for use by other federal agencies, Congress, and the private sector in assessing employee benefit, tax, and economic trends and policies. Amendment of settlement class exemption (Class PTE 2003-39) proposed by EBSA. The Employee Benefits Security Administration (EBSA) is proposing an amendment of the Settlement Class Exemption, class prohibited transaction exemption (PTE) 2003-39, to expand the categories of assets eligible for the exemption. The proposed amendment would expand the categories of assets that may be accepted by plans in the settlement of litigation, subject to certain conditions. The amendment would permit the receipt of non-cash consideration in settlement of a claim (including the promise of future employer contributions), but only in instances where the consideration can be objectively valued. The proposal also would amend PTE 2003-39 to permit plans to acquire, hold, or sell non-qualifying employer securities such as warrants and stock rights where such securities are received in settlement of litigation, including bankruptcy proceedings. In addition, the proposal would clarify the independent fiduciary's responsibility for assessing the reasonableness of the entire settlement, including any attorney's fee award or other sums paid from the settlement proceeds. PBGC names new chief of staff. Pension Benefit Guaranty Corporation Interim Director Charles E. F. Millard recently announced the appointment of George Koklanaris as chief of staff. Koklanaris comes to the PBGC after five years with the U.S. Small Business Administration, where he served as director of strategic alliances and assistant administrator for field operations. Prior to his federal service, Koklanaris was chief aide to Tom Bolvin of the Virginia House of Delegates. His political experience also includes a stint as a legislative aide for Bob Dix, a member of the Fairfax County Board of Supervisors in Virginia. As a major in the US Army Reserves, Koklanaris served in Kuwait and Iraq as an operations officer in 2006-2007. IRS issues proposed regulations on automatic enrollment. The IRS has released proposed regulations that will affect plans that include an automatic contribution arrangement under Code Secs. 401(k)(13), 401(m)(12), or 414(w). The proposed regulations reflect Section 902 of the Pension Protection Act of 2006, which facilitates automatic contribution arrangements (also referred to an automatic enrollment) in 401(k) plans, as well as similar arrangements in 403(b) and 457(b) plans. The proposed regulations would be effective for plan years beginning on or after January 1, 2008.
Modest social security increase still larger than expected. Social Security beneficiaries will see a modest 2.3% increase in their monthly checks in 2008 as a result of inflation. The 2.3% cost-of-living adjustment, or COLA, will produce an estimated average monthly benefit of $1,079 for all retired workers in 2008, $35 a month more than in 2007. However, $2.90, or 8.3%, of that increase will be eaten up by a rise in the standard premium paid by beneficiaries enrolled in Medicare Part B in 2008. The COLA increase will be applied to this coming year's benefits, beginning with benefits for December 2007, which are first payable in January 2008. Senate amendment would block U.S.-Mexico Social Security agreement. The Senate has passed an amendment to a spending bill that would prohibit the use of funds to make Social Security benefit payments under a totalization agreement with Mexico. Sen. John Ensign (R., Nev), the amendment's sponsor, said the pending totalization agreement would allow Mexican workers to qualify for partial Social Security benefits in the United States with as little as one and one-half years of work history, instead of the normally required 10 years. Family members living in Mexico also would qualify for US Social Security benefits because the proposed agreement would waive rules that prevent payments to noncitizens, such as children and spouses, living outside the United States, Ensign said.
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