Legislative Update

Department of Health Holding Hearing on 11/29: Proposed Rules/Regulations Pertaining to The Public Health & Safety Act

by Linda S. Lulli, SPHR, Legislative Affairs Director, RI State Council of SHRM

The Director of the RI Department of Health (DOH) has issued a "Notice of Public Hearing" related to proposed rules and regulations that the DOH has promulgated as a result of the enactment in June 2004 of "The Public Health and Workplace Safety Act." The hearing is scheduled for Monday, November 29, 2004 at 10:00 AM in the Auditorium of the Cannon Building (RI DOH) in Providence, RI. Individuals will have an opportunity at the hearing to provide perspectives and concerns related to the proposed DOH rules and regulations.

"The Public Health and Workplace Safety Act," repeals certain provisions within Section 2 of Chapter 23 of the RI General Laws ( "Health and Safety") related to "Smoking in Public Places" (i.e., Chapter 23-20.6, 20.7, and 20.7.1) and replaces them with "The Public Health and Workplace Safety Act" (to become Chapter 20.10 under Title 23 of the General Laws of RI).

This act broadens the prohibition of smoking in enclosed areas from "certain public places" to "all public places" in the state of RI and includes exemptions for specific locations such as hotel/motel rooms designated as "smoking rooms," designated rooms and areas in assisted living and nursing home facilities, and outdoor smoking areas of places of employment. The Act mandates that outdoor smoking areas of places of employment must be physically separated from the enclosed workplace so as to prevent migration of smoking into the work environment, and also requires posting of "no smoking" signs in specified locations where smoking is prohibited.

The DOH has made available on their website (www.health.ri.gov/news.php) a copy of the proposed regulations. The provisions of "The Public Health and Workplace Safety Act" can be accessed at http://www.rilin.state.ri.us/Billtext/BillText04/HouseText04/H8392aa.pdf

Follow-up on FLSA Reform

Thank you to all those who wrote letters or made phone calls to their legislators regarding FLSA reform. Linda Lulli, State Council Legislative Affairs Director, has provided an update on the outcome of recent votes and the impact on HR policies and practices. Learn more

Support FLSA Reform: Call Senator Chafee NOW!

The following message from Elissa O'Brien, HRM-RI President, was sent by e-mail to all HRM-RI members on 5/3/04

Dear HRM-RI Member,

We need your VOICE! Please call Senator Lincoln Chafee and ask him to SUPPORT the Department of Labor's final overtime regulations and ask him to OPPOSE Senator Harkins's Amendment. Details and talking points are included in this e-mail. Call Senator Chafee's Office in Washington at (202) 224-2921 and ask to speak with the Senator's Legislative Assistant, Jennifer Perkins.

Calls must be made on Monday May 3 or Tuesday May 4, before the Harkin Amendment hits the senator floor for a vote.

Your Participation is needed to educate our elected officials on this issue that we, as HR professionals, deal with on a daily basis.

SUPPORT DOL FINAL OVERTIME REGULATIONS; OPPOSE SEN. HARKIN'S AMENDMENT!

CALL SENATOR CHAFEE TODAY VOTE EXPECTED as early as TUESDAY MAY, 4!

Call SEN. CHAFFEE'S OFFICE at: (202) 224-2921 (ask for Jennifer Perkins)

The Issue

The U.S. Department of Labor (DOL) has published final regulations on part 541 of the Fair Labor Standards Act (FLSA) for the administrative, professional, executive exemptions otherwise known as the white-collar regulations.

Senator Tom Harkin (D-IA) plans to offer an amendment in the Senate that would allow for the increase in the salary level to take place and freeze in place all other aspects of the part 541 white-collar regulations at their pre-March 2003 requirements.

The Harkin amendment would create a two-tiered system for overtime eligibility: one set of rules for "grandfathered" employees (pre-March 2003 hires); and another for new employees entering the workforce. Under such a system, HR professionals would be required to administer two sets of tests to determine a worker's overtime protection with different workers performing the same duties for the same employer possibly receiving different treatment under the overtime laws based on their respective date of hire.

Adopting the amendment would increase the amount of confusion in the law and would be a recipe for increased litigation. The Harkin amendment individualizes regulations that were meant to serve as a meaningful guide to assist human resource professionals and employers in making exempt nonexempt determinations based on a unified set of regulations.

Action Needed

Senators need to hear from their constituents to support modernization of the white-collar exemptions and oppose the Harkin amendment.

CALL your SENATORS May 3rd & May 4th

Call-In Instructions:

1. Dial Senator Chaffee's Office at (202) 224-2921.

2. Ask to be connected with Jennifer Perkins, Legislative Assistant on Labor Issues.

3. Tell Ms. Perkins that you're a human resource professional and understand the Senate could take up the issue very soon.

4. If needed, use talking points below. Conclude the conversation by asking, "Can I count on the Senator Chafee's opposition to this amendment?"

If you work for an employer located in any of the following states, it is crucial that you contact these particular Senators as well. These members, including Senator Chafee, are key to the outcome of this very important vote.

Talking Points

*The DOL's final rule is substantively different from the proposal regulation released in March 2003.

*The DOL adopted some, though by no means all, of the suggestions made by SHRM and changes sought by organized labor. We believe that DOL managed to strike a fair compromise that will slow down litigation as well as guarantee overtime for many workers. The final rule is a welcome improvement from the current regulations.

*Blue collar workers have always have been entitled to overtime and the DOL explicitly spells out that all blue collar such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, construction workers and laborers are entitled to overtime, no matter how highly paid they might be.

*Senator Tom Harkin (D-IA) will offer an amendment that will have a disastrous impact on the final white-collar regulations. I recommend you oppose this amendment.

*The amendment will attach exemption status (exempt or nonexempt) to the individual employee rather than base it on actual job duties performed. As an employee grows, develops skills, work experience, and is promoted, the associated duties of that employee will undoubtedly change as well as the rate and level at which the employee is paid. The Harkin amendment will freeze the manner in which employees is classified in place.

*The clarity of the final FLSA rule will enable HR professionals to classify employees as exempt or non-exempt while reducing the threat of litigation and improper classification.

*The final rule will strengthen overtime protection for 6.7 million workers nationwide and ensure that an additional 1.3 million employees gain overtime protection.

Background

The original FLSA included a "white-collar exemption" for certain salaried employees, as executive, administrative or professional workers, exempt from overtime. The regulations written by the DOL to define these terms included a set of "tests" that employers could apply to determine each worker's overtime status. The tests, comprised of a string of dependant questions and answers, queried things such as, "does the employee have knowledge of an advanced type?" and, if so, "does the employee exercise discretion and judgment?" The answers to these questions determined whether that worker qualified as "exempt" or "nonexempt" from the FLSA.

Today, the rules that are applied in determining overtime eligibility for white-collar workers are a half-century old. As a result, employers are forced to guess where modern-day "webmasters" and "network engineers" fit into an FLSA rule that describes obsolete job titles. Furthermore, the "tests" used to establish whether a worker qualifies as an "exempt" executive, administrative or professional staff member leave much room for interpretation and unintentional misclassification.

Since 1997, the number of class action lawsuits involving the FLSA has tripled. The expense of avoiding litigation, such as retaining professionals to interpret and oversee FLSA compliance, has consumed valuable resources. And for those companies named in lawsuits, the cost of legal fees and nuisance suit settlements damage profitability and weaken their ability to reward existing workers and create new jobs. The DOL estimates that litigation over these rules drains more than $2 billion from the U.S. economy every year.

Outstanding Public Service Award 2004

This award is sponsored by the SHRM-RI State Council to recognize the outstanding contributions of a Public Servant who has promoted, sponsored, or initiated legislation that has demonstrated awareness of the value of involvement of human resource professionals in the legislative process and has affected positive changes in workplace legislation.

Each member of a Rhode Island SHRM Chapter and each member of the SHRM Rhode Island At-Large community may submit a nomination. To learn more or to download the official nomination form, click here.

Modifications to Section 541 of the Fair Labor Standards Act (FLSA)

Sent to all SHRM members by e-blast on 11/25/2003

Opponents of the U.S. Department of Labor’s (DOL) proposed regulations to revise and update Section 541 of the Fair Labor Standards Act (FLSA) white collar exemption provisions, agreed to drop their attempt to block the proposed regulations from being finalized by the DOL. In September, Senator Tom Harkin, (D-IA), led a successful effort to add a provision to the Senate version of the FY 2004 appropriations bill for the departments of Labor, Health and Human Services and Education that in essence would prevent DOL from moving forward with the proposed regulations.

Although the House version of the spending bill did not include a similar provision, House and Senate negotiators have for the last month been attempting to reconcile the differences between the two appropriations measures with the remaining issue being whether to include or drop the "Harkin" amendment in the final 2004 Labor, HHS, education conference report.

The Labor, HHS, education appropriations measure will now be included in an end of the year "Omnibus spending bill" which combines all unfinished fiscal year 2004 appropriations measures. Action on the Omnibus is expected in the House and Senate in December, though may be carried over into January of 2004.

The proposed regulations, which were issued on March 31 by the DOL, would amend part 541 of the FLSA to streamline and simplify the exemptions for executive, administrative, and professional employees. Several key aspects of the proposed regulation include:

• Duties Tests — the proposed regulations would restructure and organize the current regulation and eliminate both the long and short duties tests and create a new single standard test for the executive, administrative, professional, and outside sales exemption.
   
• Highly Compensated Exemption — the proposed regulation creates a new highly compensated exemption for employees who are: (1) making more then $65,000, (2) performing office or nonmanual work, and (3) performing one or more identifiable executive, administrative, or professional functions as described in the standard duties test. The salary basis test would not apply to individuals in this category.
   
• Disciplinary Deduction for Exempt Employees — the proposed regulation allows an exception to the pay-docking rule of exempt employees for full-day disciplinary suspensions without placing the employees’ exemption at risk. For example, an employer would be permitted to suspend an exempt employee without pay for one, two, or three days for reasons such as sexual harassment or workplace violations.
   
• Safe Harbor for Employers for Deductions of Pay — the proposed regulation creates a safe harbor for employers for inadvertent deductions from pay from otherwise exempt employees if the employer:
   
  
  1. Maintains a written policy prohibiting improper pay deductions,
  2. Notifies employees of the policy, and
  3. Reimburses employees for any inadvertent deductions.
      
  If an employer maintains this type of policy and has not repeatedly and willfully violated the salary basis rule, the exempt employees would keep their exempt status.

It is anticipated that the DOL will produce a final regulation in Spring 2004 and the Society for Human Resource Management (SHRM), on behalf of its members, will continue to work with the Congress and the Administration to ensure that the DOL is able to move forward with the regulatory process.

We also want to express special gratitude to all SHRM members who wrote to President Bush thanking the Administration for their strong and continued support for the rule changes and our Key Contacts who were able to reach out to House/Senate conference committee members and leadership.

To date SHRM members have sent more than 7,300 letters to President Bush. Your VOICE has been heard!!!

Medicare and Prescription Drug Bill Passes House and Senate
President Bush Expected to Sign the Bill into Law

The Senate gave final congressional approval Tuesday to the most extensive changes to Medicare since its creation in 1965, including a new prescription drug benefit for 40 million older and disabled Americans. The 54-44 vote sends the bill to President Bush, who is eager to sign it into law. The House passed the measure on Saturday on a vote of 220-215. Key provisions of interest to HR professionals:

• Interim Prescription Drug Benefit: Starting in April 2004, Medicare beneficiaries are eligible to receive a prescription drug discount card that would yield savings to participants estimated to be at 15 percent to 25 percent. Low-income beneficiaries would also get a $600 subsidy applied to the card but would still be required to make a co-payment of between 5 percent and 10 percent for each prescription drug.
   
• Competition: Beginning in 2006, the legislation would give beneficiaries the option of enrolling in private health maintenance organizations or preferred provider organizations as opposed to traditional fee-for-service Medicare. Beginning in 2010, the legislation provides a "demonstration," project with direct competition between traditional Medicare and private plans in as many as six metropolitan areas.
   
• Medical Savings Accounts: The bill would allow people with high-deductible health insurance policies — at least $1,000 a year for individuals and $2,000 for couples -- to set aside contributions on a tax-free basis for health expenses, including insurance premiums, prescription drugs and long-term care. Individuals younger than 65, employers or family members would make pretax contributions equal to the deductible, up to a maximum of $2,600 a year for individuals and $5,150 for families. After 65 years of age, earnings and distribution also would be tax-free.
   
• Retiree Coverage: Employer retiree plans offering actuarially equivalent coverage receive 28 percent payment for the drug costs between $250 and $5,000. The subsidy for retiree prescription drug coverage is excludable from taxation.
   
• Employer Plans: Qualified retiree plans have maximum flexibility on plan design, formularies, and networks. Employers can provide premium subsidies and cost-sharing assistance for retirees that enroll in a Medicare prescription drug plan and integrated plan.
   
  Employers can also negotiate preferential premiums from integrated plans. In addition, tax-free subsidies, perhaps worth as much as $70 billion, would be provided to employers who maintain drug coverage for retirees once the Medicare drug benefit begins in 2006.
   
• Main Drug Benefit: Beginning in 2006, beneficiaries could sign up for a stand-alone drug plan or join a private plan that offers drug coverage. They would be charged an estimated premium of $35 per month, or $420 per year. After meeting a $250 deductible, insurance would pay 75 percent of drug costs up to $2,250.
   
  There would be no coverage for drug costs between $2,250 and $3,600 out of pocket -- the so-called coverage gap. When out-of-pocket spending reaches $3,600, insurance covers 95 percent of drug costs or requires a modest co-payment. The premium, deductible, and coverage gap would be waived for people earning up to $12,123 a year. The subsidies would be phased out between $12,123 and roughly $13,500 in yearly income.
   
• Income Test: For the first time, higher-income seniors –- those with incomes of more than $80,000 as an individual or $100,000 as a couple -- would be required to pay more for their Medicare Part B (doctor, out-of-hospital coverage) premiums than other beneficiaries.
   
  Now, beneficiaries pay 25 percent of the Part B premium and the government pays the rest. Individuals with incomes greater than $80,000 would pay a larger premium. The size of their premium would increase on a sliding scale, topping out at 80 percent for people with incomes over $200,000. The deductible would rise from $100 to $110 in 2005 and thereafter be indexed to the growth in Part B spending.
   
  Individuals with incomes below $13,055 and couples with incomes below $17,619 and with assets no greater than $6,000 per individual and $9,000 per couple would pay no deductible and no monthly premium for the new drug benefit.

As employers remain a critical player in the provision of health care to individuals, SHRM commends Congress for its tough decisions and gumption to take the most difficult step in addressing this important issue – the first step.

SHRM looks forward to continuing work with Congress and its continued efforts to improve upon and reform our country’s health care system.

Yours in grassroots advocacy,
Amani Council
Manager, Member Advocacy
SHRM 703-535-6029

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