DOL Secretary, 'Cadillac Tax,' $15 Minimum Wage Highlight Busy Week

July 19, 2019
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​Department of Labor Secretary Alex Acosta's resignation July 12 preceded a busy week for the federal government, including House bills repealing the so-called "Cadillac tax" and pushing a $15 minimum wage by 2025. Here are some of the significant events this week affecting employers:


Trump Picks Eugene Scalia to Fill Secretary of Labor Role

President Donald Trump announced July 18 that he intends to nominate Eugene Scalia, son of the late U.S. Supreme Court justice Antonin Scalia, to be the next secretary of labor.

If confirmed by the Senate, Scalia would replace Alexander Acosta, who resigned under pressure due to his role in securing a plea deal for convicted sex offender and newly indicted Jeffrey Epstein.

Scalia is an attorney with Gibson, Dunn & Crutcher in Washington, D.C., and is a member in the firm's labor and employment practice group, as well as the administrative law and regulatory group.



Overtime Rule May Be Issued Faster Under New DOL Leadership

Employers can expect to see change more quickly at the Department of Labor (DOL), including issuance of a final overtime rule perhaps as soon as by the end of the year, now that the department is under new leadership—new Acting Labor Secretary Patrick Pizzella.

Pizzella is completely committed to ensuring the rule is finalized by year's end, said Michael Lotito, an attorney with Littler in San Francisco, "knowing that once 2020 begins, all focus turns to the election and any new rules take on heightened politization." 

Paul DeCamp, an attorney with Epstein Becker Green in Washington, D.C., and a former administrator with the Wage and Hour Division as well, said, "Pat was at DOL when I was there and I know him pretty well." He said Pizzella "is very focused on getting things done. He is the kind of leader who will quickly develop an understanding—if he has not already done so—of what the department can realistically achieve during the remainder of this term, and he will push to ensure that the various agencies at the department continue to make progress along that path."

McCutchen observed that Pizzella provides continuity, as he was labor deputy secretary, which should help speed rule-making.


House Passes Health Care 'Cadillac Tax' Repeal Bill

The U.S. House of Representatives voted on July 17 to abolish the so-called "Cadillac tax" on employer-sponsored high-value health plans, set to take effect in 2022. If the Senate passes the measure and the president signs it into law, the threat employers have faced from the tax would disappear.

The House passed H.R. 748, the Middle Class Health Benefits Tax Repeal Act, by an overwhelming, bipartisan vote of 419 to 6. The Senate will now decide whether to vote on the measure. The Senate companion bill, S. 684, introduced in March by Sens. Martin Heinrich, D-N.M., and Mike Rounds, R-S.D., currently has 42 co-sponsors.

"As 2022 approaches, more employers will have to closely scrutinize their health benefit offerings and make the necessary changes to avoid the tax, which may include reducing benefits and/or altering wellness and chronic care prevention programs," wrote Johnny C. Taylor, Jr., SHRM-SCP, president and CEO of the Society for Human Resource Management (SHRM) in a July 12 letter to Congress.

While the excise tax was intended to target high-value plans, "modest plans will also be impacted, meaning millions of Americans and their families could face higher co-pays and deductibles, causing some to decline employer-provided health care," Taylor noted. "The Cadillac tax must be dealt with well in advance of its proposed implementation date, otherwise employees could see further changes in their benefit options," he explained.

Employer-sponsored insurance is the largest source of health coverage for Americans, covering more than 181 million people.


House Passes $15 Minimum-Wage Bill

The U.S. House of Representatives approved a bill that would gradually raise the minimum wage to $15 an hour by 2025. However, the bill is not likely to be considered in the Republican-controlled Senate.

The House voted 231-199 in favor of H.R. 582, with most Democrats voting for the wage increase and most Republicans voting against it. The current minimum wage of $7.25 an hour was set in 2009, and Democrats argued during the July 18 vote that an increase was "long overdue." Rep. Rosa DeLauro, D-Conn., said that workers earning the minimum wage can't pay for basic expenses, such as housing, medical care and education. "Congress needs to make this right," she said.

Rep. Barbara Lee, D-Calif., called the current rate "a poverty wage." She argued that "no one in the richest nation in the world should be struggling like this."

Republican congressmembers, however, argued that a $15-an-hour minimum wage would hurt a thriving economy. "The harm inflicted by this bill far outweighs the benefits," said Rep. Virginia Foxx, R-N.C. She said the wage hike would "dampen progress."

Rep. Ron Wright, R-Texas, called the bill "radical legislation." He said the effects of doubling the minimum wage would be felt in urban and rural areas alike, forcing employers to cut jobs and possibly go out of business.


House Committee Passes Bill to Ban Employment Credit Checks

The House Committee on Financial Services on July 11 passed legislation that would prohibit employers from using credit reports for employment decisions, except when required by law or for a national security clearance.

The bill would also prohibit hiring managers from asking questions about applicants' financial past during job interviews or including questions about credit history on job applications.

Opponents of the practice say that it blocks upward mobility, disproportionately affects minority job seekers and can be an invasion of privacy.

On the other hand, those in favor of credit checks on job candidates argue that the information is an indicator of a person's judgment and potential risk to the organization, especially for certain positions involving finances and accounting.

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