Taxmageddon on the Horizon?

By Stephen D. Bruce, PHR
Editor, HR Daily Advisor

What’s Taxmageddon?

Taxmageddon comes at the end of 2012, when the payroll tax and unemployment benefits extension ends and at the same time we’re likely to need another debt limit increase. If no action is taken, there will be dramatic cuts in spending that are built into the federal budget process, Aitken says.

Aitken offered his tips as part of his annual snapshot of the employment law legislative landscape at SHRM’s Employment Law and Legislative Conference held recently in Wqashington, DC.

Healthcare and Pension Tax Treatment

In looking to deal with budget issues, and because there is so much mandatory spending, there’s one particularly attractive target—the tax-protected status of employers healthcare contributions and pension contributions and earnings. Those tax treatments are likely to get a look, Aitken says.

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Regulatory, Not Statutory

Pay attention to regulatory initiatives at DOL, EEOC and NLRB, Aitken says. Although some “rifle shot” bills are possible, don’t look for major legislation passing. The action will be regulatory from the agencies, he says.

Immigration Reform Impossible

Comprehensive immigration reform is impossible in this environment despite President’s call for it in the State of the Union, Aitken says. However, enhanced employment verification and targeted immigration reform are possible.

Workplace Flexibility

The Obama Administration’s focus on work-flex will continue and advocates will continue to push for expansion of FMLA and paid sick leave at state and local level, but enactment at federal level impossible, Aitken says.

New Affirmative Action Proposed Rule

OFCCP issued on December 9 a proposed rule on nondiscrimination and affirmative action requirements for individuals with disabilities. SHRM strongly supports the goal of increasing employment among individuals with disabilities, but the proposed rule places numerous data collection and record-keeping requirements on federal contractors without showing that these requirements will help employers increase their disability hiring, Aitken says.

Of particular interest are the proposed regulation’s requirements for:

• Annual staff training that must include information on the benefits of employing individuals with disabilities, appropriate sensitivity, and legal responsibilities including reasonable accommodation;
• An annual review of all physical and mental job qualifications including providing a written explanation as to why each requirement is related to the job and;
• Personnel logs to track reasons for rejecting individuals with disabilities for vacancies and training programs, and a description of considered accommodations.

Observers have also noted that there are likely HIPAA conflicts with the proposal. “It’s going to be, ‘Which law should I break today?’” Aitken warns.

EEOC May issue Guidance on Credit Checks

Rumors suggest, says Aitken, that the EEOC may issue “guidance” on the use of credit checks in the employment process in late March/April time frame.

(Guidance does not have the force of law, however it is often honored by courts.)

The expected guidance could place additional restrictions on the use of credit checks in the employment process. Potential provisions may include:

• Tighter definition of “business–related” use;
• Use of report restricted to “finalists” and;
• Requirements to allow employee to explain adverse report before employment decision is made

Bottom line? Wherever you sit on the political spectrum, it’s going to be another great year in HR and compensation.