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Attorney General announces increase in civil fines against employers for immigration violations. Attorney General Michael B. Mukasey announced, with Secretary of Homeland Security Michael Chertoff in a joint briefing on February 22, 2008, newly enacted border security reforms put in place by the Departments of Justice and Homeland Security (DHS). Under the new regulation, which was approved by Attorney General Mukasey and Secretary Chertoff, civil fines will increase by as much as $5,000. The new regulation will take effect on March 27, 2008 and will be published in the Federal Register. Under the Immigration Reform and Control Act of 1986 (IRCA), employers may be fined under the Act for knowingly employing undocumented workers or for other violations, including failure to comply with the requirements relating to employment eligibility verification forms, wrongful discrimination against job applicants or employees on the basis of nationality or citizenship, and immigration-related document fraud. For each of these violations, the employer has the right to a hearing before an administrative law judge in the Executive Office for Immigration Review. Under the new regulation, the minimum penalty for knowing employment of an undocumented worker will increase from $275 to $375. Some of the higher civil penalties will increase by $1,000. For example, the maximum penalty for a first violation increases from $2,200 to $3,200. The biggest increase under the rounding mechanism raises the maximum civil penalty for multiple violations from the current $11,000 to $16,000. These penalties are assessed on a per-alien basis; thus, if an employer knowingly employed, or continued to employ, five unauthorized aliens, that could result in five fines. In addition, employers convicted of having engaged in a pattern or practice of knowingly hiring unauthorized aliens or continuing to employ aliens knowing that they are or have become unauthorized to work in the United States may be fined up to $3,000 per unauthorized employee and/or face up to six months of imprisonment. Further, where company officers get into trouble is with document fraud. Document fraud occurs when persons knowingly use fraudulent identification documents either identity documents that were issued to persons other than themselves or false attestations for the purpose of satisfying the employment eligibility verification requirements. Violators may be fined and/or imprisoned for up to five years. President Bush budgets increases for EEOC and USCCR. President Bush's fiscal year (FY) 2009 budget provides increases of $12.6 million for the US Equal Employment Opportunity Commission (EEOC) and $340,000 for the US Commission on Civil Rights (USCCR). The fiscal year is October 1 through September 30 for both agencies. The President submitted his budget to Congress electronically on February 4, 2008 -- the first time in American history that the Executive Branch submitted a budget proposal, or any other official government document, to the Legislative Branch electronically, according to the White House. EEOC budget. The President's proposed FY 2009 budget of $341,925,000 represents a $12.6 million or 3.8% increase over the agency's FY 2008 budget level of $329,000,000. "This request includes funding to hire 175 additional staff including 66 full-time equivalents for the in-house customer response function and 109 full-time equivalents for our field and headquarters offices," the agency noted. The proposed FY 2009 budget allows for 2,364 full-time equivalents (FTEs) in FY 2008 and 2,541 FTEs in FY 2009. USCCR funding. The FY 2009 proposed budget for the USCCR is $8,800,000 -- a $340,000 increase over the FY 2008 funding level of $8,460,000. The proposed budget projects 47 FTEs for both FY 2008 and FY 2009 -- the same number of FTEs employed by the agency in FY 2007. President proposes over $89 million in OFCCP funding for FY 2009. Under President Bush's Fiscal Year (FY) 2009 budget proposal, the Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) would receive $89,013,000 in funding -- a more than $5 million increase over the $84 million allocated by the President in his FY 2008 proposed budget. The proposed amount represents more than an $8 million increase over the estimated FY 2008 budget allotment (81 million) adopted by Congress. According to a Department of Labor statement on the proposed budget, this request includes a program increase of $2 million for the design of a new case management system, the Federal Contractor Compliance System (FCCS). The DOL states that the increase will allow the program to continue funding of the data integrity team, as part of the Contracts First project, and enable the OFCCP to fill critical managerial and investigatory personnel vacancies to ensure effective enforcement. Under the Contracts First project, the OFCCP looks at contracts as one way to schedule audits because not every federal contractor checks the appropriate box on the EEO-1 Report form to indicate that it has government contracts. OFCCP programs cover close to 100,000 work-sites with a total workforce of 12 million persons. EEOC wants to update its information and technology accessibility regulations. Employees of the US Equal Employment Opportunity Commission (EEOC) will be using the same process the public uses for lodging complaints against the federal agency based on its failure to provide electronic and information technology accessible to individuals with disabilities, under proposed regulatory amendments. In a notice of proposed rulemaking published in the Federal Register on February 19, 2008 (73 FR 9065), the EEOC also seeks to update terminology outlining how it enforces Section 504 of the Rehabilitation Act (Rehab Act) with respect to its own programs and activities and to update or delete parts of its Enforcement of Nondiscrimination on the Basis of Disability in Programs or Activities Conducted by the Equal Employment Opportunity Commission and Accessibility of Commission Electronic and Information Technology regulation (29 CFR Part 1615).
First-ever expansion of FMLA signed into law. On January 28, 2008, President Bush signed into law the National Defense Authorization Act (NDAA) for Fiscal Year 2008 (H.R. 4986/Public Law 110-181), which includes a provision (Section 585) expanding the Family and Medical Leave Act (FMLA) to permit a spouse, son, daughter or next of kin to take up to 26 weeks of unpaid leave to care for servicemembers injured in combat. This marks the first expansion of the FMLA since it was enacted in 1993. Under the expansion, employers must also provide 12 weeks of FMLA leave to the spouse, son, daughter or parent (i.e., "eligible employee") of a servicemember who is on active duty (or has been notified of a pending call or order to return to active duty). This leave would be available in cases of “any qualifying exigency," which is not yet defined in the provision, and will be determined by regulation as promulgated by the Secretary of Labor. A covered service member is defined as "a member of the Armed Forces, including a member of the National Guard or Reserves, who is undergoing medical treatment, recuperation or therapy, is otherwise in outpatient status, or is otherwise on the temporary disability retired list, for a serious injury or illness." The expansion, which was originally championed by Senators Chris Dodd (D-CT), the FMLA's original author, and Hillary Rodham Clinton (D-NY) as the Support for Injured Servicemembers Act, implements key recommendations of the President's Commission on the Care for Wounded Warriors. The House of Representatives passed the NDAA on January 16 by a vote of 369-46 and the Senate passed the measure on January 22 by a vote of 91-3. Labor Department to publish proposed FMLA rule changes. The US Department of Labor's Wage and Hour Division has completed its long-anticipated revisions to the Family and Medical Leave Act (FMLA) regulations, which were published in the February 11 edition of the Federal Register. The proposed regulations would amend key provisions of the FMLA rules, including: employer and employee notice requirements; nonconsecutive periods of service in determining "eligible employee"; the "two-visit" treatment requirement in the definition of "continuing treatment"; fitness-for-duty certification and recertification; HIPAA privacy requirements and contact with healthcare providers; substitution of paid leave; joint employers and the 50-employees-within-75-miles requirement; and, to address employer challenges in administering intermittent leave, an added provision allowing employers to contact healthcare providers to discern whether an employee's absence patterns are consistent with the employee's qualifying medical condition. The proposed rules also include a revised Certification of Health Care Provider form, notice poster revisions, and increased civil penalties for violating notice posting requirements. In addition to the newly enhanced leave rights for family members of service members noted above, under the FMLA, employers with 50 or more employees must grant workers up to 12 weeks of unpaid leave for the birth or adoption of a child, to care for an ailing family member or to take medical leave from work for a serious medical condition. NLRB revises five forms to comply with Privacy Act requirements. Recently, the National Labor Relations Board determined paper case files were subject to the requirements of the Privacy Act of 1974. The Privacy Act requires that the Agency must inform each individual who is requested to supply information of the authority for soliciting the information, whether disclosure of such information is mandatory or voluntary, the purposes for which the information is intended to be used, the routine uses which may be made of the information, and the effects, if any, of not providing the requested information. Charge and Petition forms, as well as subpoenas, have previously been revised to include this language. The following forms have now been revised to include this information: Form NLRB-1026--Request for Certification of Representatives as Bona Fide Under Section 7(b) of the Fair Labor Standards Act of 1938; Form NLRB-4685--Notification of Change of Address; Form NLRB-5081--Questionnaire on Commerce Information; Form NLRB-5168--Affidavit (English and Spanish); Form NLRB-5224--Claimant Expense, Search for Work, and Interim Earnings Report (English and Spanish). The following bills introduced over the month would:
House bill would extend mental health parity requirement. The House recently approved legislation (H.R. 4848) that would extend a 1996 act that requires group health insurance plans to provide the same degree of benefits for mental health services as for medical and surgical services. Under the act, insurers and employers with more than 50 employees that offer mental health benefits are prohibited from establishing annual and lifetime limits on those benefits unless they establish similar limits for medical and surgical coverage. Supporters of the 1996 law -- which was sponsored by the late Sen. Paul Wellstone, D-Minn. -- have failed in recent years to expand the act to forbid employers and insurers from imposing higher co-payments and deductibles for mental health benefits than for medical benefits. Instead, they have had to settle for yearly extensions of the current parity law. The House passed the current extension on February 7 by a 384-23 vote. Opponents of an expanded parity law claim it would result in higher costs to employers and could cause workers to lose insurance coverage. But supporters remain hopeful they can advance their legislation. The Senate last September passed a bill (S. 558) to expand the 1996 parity requirements. A separate, more expansive House proposal (H.R. 1424) is pending. Primary payer requirements expanded for employer health care plans. The Medicare, Medicaid, and SCHIP Extension Act of 2007 (P.L. 110-173), which President Bush signed into law last month, requires group health plans to disclose to the Centers for Medicare and Medicaid Services (CMS) information on situations in which the plans are or were primary to Medicare. The law applies to insurers and third-party administrators for insured group health plans and administrators and fiduciaries of self-funded and self-administered plans. Noncompliance with the requirement can result in civil money penalties of $1,000 per day per individual for whom information is not provided, along with any other penalties imposed by other related laws. The effective date of this provision is Jan. 1, 2009. P.L. 110-173 also requires the CMS to share with plans and payers information on Medicare Parts A and B enrollment. Beginning June 1, 2009, workers' compensation plans must comply with the same reporting requirements as group health plans. The information that plans must disclose includes the claimant's name and other information that the CMS needs to coordinate benefits and to seek reimbursement of overpayments. The CMS will develop regulations specifying what information it will require and in what form it must be submitted. The new law also makes the Medicare Payment Advisory Commission a congressional agency.
President's 2009 budget contains some payroll-related items. The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) (P.L. 107-16) contained several income tax provisions that sunset on December 31, 2010. Under President Bush's proposed 2009 budget, these provisions would be permanently extended. In addition, the tax provisions of the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) (P.L. 108-27) that sunset on December 31, 2010, would also be permanently extended. FUTA surtax: The proposal would extend the 0.2% percent FUTA surtax through December 31, 2009. Information return penalties: The first-tier penalty for failing to file an information return would be increased from $15 to $30, and the calendar year maximum would be increased from $75,000 to $250,000. The second-tier penalty would be increased from $30 to $60, and the calendar year maximum would be increased from $150,000 to $500,000. The third-tier penalty would be increased from $50 to $100, and the calendar year maximum would be increased from $250,000 to $1,500,000. Employee leasing companies: Standards would be set forth for holding employee leasing companies jointly and severally liable with their clients for federal employment taxes. Standards for holding employee leasing companies solely liable for such taxes would also be provided, effective for employment tax returns required to be filed for wages paid on or after January 1, 2009. New-hire directory: The Social Security Act would be amended to expand IRS access to National Directory of New Hires (NDNH) data for general tax administration purposes, including data matching, verification of taxpayer claims during return processing, preparation of substitute returns for non-compliant taxpayers, and identification of levy sources. Data obtained by the IRS from the NDNH would be protected by existing taxpayer privacy law, including civil and criminal sanctions, effective upon enactment. Failure to file electronically: A penalty would be established for a failure to file a return electronically where required. The amount of the penalty would be $25,000 for a corporation or $5,000 for a tax-exempt organization. For failure to file in any format, the existing penalty would remain, and the proposed penalty would not apply, effective for returns required to be electronically filed on or after January 1, 2009. Unemployment insurance: Incentives would be increased for the recovery of state unemployment benefit overpayments and delinquent employer taxes. The proposal would allow states to redirect up to 5% of overpayment recoveries to additional enforcement activity. States would be required to impose a penalty of at least 15% on recipients of fraudulent overpayments, and penalty revenue would be used exclusively for additional enforcement activity. States would be prohibited from relieving an employer of benefit charges due to a benefit overpayment if the employer had caused the overpayment. In certain circumstances relating to fraudulent overpayment of delinquent employer taxes, states would be allowed to permit private collection agencies to retain a portion (up to 25%) of any amounts collected.
Supreme Court permits participant to pursue alleged losses from 401(k) plan account. The Supreme Court has vacated and remanded a decision of the Fourth Circuit Court in Richmond, thus permitting a participant to pursue alleged losses from his 401(k) plan account. Petitioner, a participant in a defined contribution pension plan, alleged that the plan administrator's failure to follow petitioner's investment directions "depleted" his interest in the plan by approximately $150,000 and amounted to a breach of fiduciary duty under the Employee Retirement Income Security Act of 1974 (ERISA). The District Court granted respondent’s judgment on the pleadings, and the Fourth Circuit affirmed. Relying on Massachusetts Mutual Life Ins. Co. v. Russell, 473 U. S. 134, the Circuit held that ERISA §502(a)(2) provides remedies only for entire plans, not for individuals. Although §502(a)(2) does not provide a remedy for individual injuries distinct from plan injuries, it does authorize recovery for fiduciary breaches that impair the value of plan assets in a participant's individual account. Section 502(a)(2) provides for suits to enforce the liability-creating provisions of §409, concerning breaches of fiduciary duties that harm plans. The principal statutory duties imposed by §409 relate to the proper management, administration, and investment of plan assets, with an eye toward ensuring that the benefits authorized by the plan are ultimately paid to plan participants. The misconduct that petitioner alleges falls squarely within that category, unlike the misconduct in Russell. There, the plaintiff received all of the benefits to which she was contractually entitled, but sought consequential damages arising from a delay in the processing of her claim. Russell's emphasis on protecting the "entire plan" reflects the fact that the disability plan in Russell, as well as the typical pension plan at that time, promised participants a fixed benefit. Misconduct by such a plan's administrators will not affect an individual's entitlement to a defined benefit unless it creates or enhances the risk of default by the entire plan. For defined contribution plans, however, fiduciary misconduct need not threaten the entire plan's solvency to reduce benefits below the amount that participants would otherwise receive. Whether a fiduciary breach diminishes plan assets payable to all participants or only to particular individuals, it creates the kind of harms that concerned §409's draftsmen. Thus, Russell's "entire plan" references, which accurately reflect §409's operation in the defined benefit context, are beside the point in the defined contribution context. PBGC will release proposed regs on annual reporting. The Pension Benefit Guaranty Corporation (PBGC) recently announced it is publishing a proposed rule that would implement changes to PBGC's regulation on annual financial and actuarial information reporting (part 4010) as required under the Pension Protection Act of 2006. The proposed rule, which would provide guidance on how to determine whether a 4010 filing is required under the PPA 2006 changes, would waive reporting in certain cases for controlled groups with aggregate underfunding of $15 million or less. It also would specify that the new rules are applicable to information years beginning after 2007; modify the standards for determining which plans are exempt from reporting actuarial information; revise the actuarial information requirements to conform with other PPA changes; and provide other clarifications. The first reports under the new rules would generally be due April 15, 2009. President's 2009 budget contains some pension-related items. The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) (P.L. 107-16) contained several income tax provisions that sunset on December 31, 2010. Three types of current IRAs would be consolidated into a single account called a Retirement Savings Account (RSA). RSAs would be dedicated solely to retirement savings. Other withdrawals would be subject to tax and penalties, effective January 1, 2007. In addition, defined-contribution accounts that permit employee deferrals or employee after-tax contributions, including Code Sec. 401(k), SIMPLE 401(k), Thrift, Code Sec. 403(b), and governmental Code Sec. 457(b) plans, as well as SIMPLE IRAs and SARSEPs, would be consolidated into Employer Retirement Savings Accounts (ERSAs), which would be available to all employers and have simplified qualification requirements, effective for years beginning after December 31, 2008. ERSAs would follow the existing rules for Code Sec. 401(k) plans, subject to the plan qualification simplifications described below. Thus, employees could defer wages of up to $15,500 (as adjusted for inflation) annually, with employees aged 50 and older able to defer an additional $5,000 (as adjusted for inflation). The maximum total contribution (including employer contributions) to ERSAs would be the lesser of 100% of compensation or $46,000 (as adjusted for inflation). The taxability of contributions and distributions from an ERSA would be the same as contributions and distributions from the plans that the ERSA would be replacing. Thus, contributions could be pre-tax deferrals or after-tax employee contributions or Roth contributions, depending on the design of the plan. Distributions of Roth and non-Roth after-tax employee contributions and qualified distributions of earnings on Roth contributions would not be included in income. All other distributions would be included in the participants’ income. Existing Code Sec. 401(k) and Thrift plans would be renamed ERSAs and could continue to operate as before, subject to the simplification described below. Existing SIMPLE 401(k) plans, SIMPLE IRAs, SARSEPs, 403(b) plans, and governmental 457(b) plans could be renamed ERSAs and be subject to ERSA rules, or could continue to be held separately, but if held separately could not accept any new contributions after December 31, 2009, with a special transition for collectively bargained plans and plans sponsored by state and local governments.
Senate approves amended House stimulus package. Intense negotiations between Senate leaders and the White House on February 7 led to agreement on a slightly altered House stimulus package (H.R. 5140) that the Senate quickly approved by a vote of 81-16 and sent to the House for that chamber's approval. The House then approved the legislation by a vote of 380 to 34. The revised version extends rebate checks to some 22 million low-income senior citizens and 250,000 disabled veterans and denies refunds to illegal immigrants. Under the House version, individuals would receive rebate checks of up to $600; married couples of up to $1200, with an additional $300 for each child under 17 years old. The minimum rebate amount is $300 ($600 for married filing jointly). Taxpayers will receive this amount if they have at least $1 of tax liability or $3,000 in qualifying income, defined as the sum of net self employment income, veterans' disability payments (including payments to survivors of disabled veterans), and Social Security benefits. Income eligibility for the rebates is capped at $75,000 for individuals and $150,000 for married couples. SSA proposes new records management system. The Social Security Administration (SSA) has announced its intention to establish a new system of records that will be designed to manage workloads, employee performance and costs. The system would be known as the "Social Security Administration Unified Measurement System/Managerial Cost Accountability System" (SUMS/MCAS). The SSA invites public comment on the proposed system; however, it will become effective March 3, 2008, unless the SSA receives comments warranting otherwise. The SUMS/MCAS system will consist of information concerning five interrelated agency initiatives: (1) Workload counts, (2) performance measures, (3) time allocation, (4) customer service records and (5) managerial cost accountability. The new system will contain some, or all, of the following information about SSA clients and visitors to any SSA facility: Name; Social Security number (SSN); age; address; and date of birth (DOB), along with related claims processing information.
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