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Federal Policy Update - October 6

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The Hill reports, “The Senate confirmed President Trump’s second pick to the National Labor Relations Board (NLRB) Monday evening, shifting the balance of power from Democrats to Republicans. William Emanuel, a corporate lawyer who works for Littler Mendelson in Los Angeles, is the second Trump nominee to be confirmed to the board after Marvin Kaplan's confirmation in August. They are hoping the newly aligned board will reverse the ruling that redefined what constitutes a joint-employer and made franchisors responsible for labor law violations committed by their franchisees, as well as a ruling that allowed unions to organize employees in so-called micro-unions. A roll back of 2014 rules which sped up union elections is also on the wish list.

Bloomberg news reports, “Trump Wage-Hour Nominee Enters Loaded Senate Hearing – President Donald Trump’s selection to oversee the Labor Department’s wage enforcement arm testifies before a Senate panel Wednesday, offering a sneak peek at a new era of minimum wage and overtime enforcement. The confirmation hearing for Cheryl Stanton promises to include questions from Democrats on why the DOL no longer supports what was considered the Obama administration’s signature wage-and-hour achievement: a 2016 rule that would’ve expanded overtime pay access to an estimated 4.2 million workers. But that regulation has been blocked in federal court, and the department is now reviewing public comments on how to rewrite the rules governing when workers are excluded from time-and-a-half coverage. But when members of the Senate HELP Committee grill Stanton on this topic and other Wage and Hour Division policies, detailed responses are unlikely. Stanton, currently the director of the South Carolina Department of Employment and Workforce, will likely be interrogated about a 2016 state civil lawsuit alleging she never paid a housecleaning service for four cleaning visits. The cleaning company withdrew the complaint after Stanton paid in full, according to court documents. The HELP Committee will likely approve her nomination, as the GOP-majority panel doesn’t need a single Democratic vote to advance Stanton to the Senate floor.

Fox Business reports, “Target Corp. is raising its minimum hourly wage for workers to $11 starting next month and then to $15 by the end of 2020, a move it says will help it hire and keep the best employees and make shopping a better experience for customers. The initiative announced Monday is part of the discounter's overall strategy to improve its business, which includes remodeling stores, expanding its online services and opening up smaller urban locations. Target quietly raised entry-level hourly wages to $10 last year from $9 from the previous year, following initiatives by Walmart and others to hike pay in a very competitive marketplace. But Target's increase to $15 per hour far exceeds not only the federal minimum of $7.25 but the hourly base pay at Walmart, the nation's largest private employer, and plenty of its retail peers whose minimum hourly pay hovers around $10. Now Target's raise could force somerivals to match the pay.”

The 60-day period for commenting on possible changes to the Obama administration's controversial overtime rule closed Monday. While many of the 165,000 commenters agreed that the U.S. Department of Labor had authority to set a clear salary threshold for workers to qualify for the Fair Labor Standards Act's "white collar" exemptions, they remained deeply split over exactly what that threshold should be. The Labor Department had been seeking feedback as it looks to update the FLSA's overtime exemptions for so-called EAP workers, a designation that includes executive, administrative, professional, outsidesales and computer employees. Under President Barack Obama, the DOL had finalized a rule that would have doubled the minimum salary threshold required to qualify for the exemption from $23,660 annually to just over $47,000 per year, increased the overtime eligibility threshold for highly compensated workers from $100,000 to about $134,000, and created an index for future increases. The rule had been estimated by the Obama DOL to extend overtime protections to more than 4 million workers, but was enjoined by U.S. District Judge Amos Mazzant just days before it would have taken effect in December. He ultimately invalidated the rule in its entirety in late August.


Bloomberg news alert - JD Supra reports, “As discussed previously, earlier this year, the U.S. Food and Drug Administration (FDA or the Agency) delayed its Menu Labeling Rule (the Rule) until May 7, 2018. FDA’s announcement in May came just one day before the Rule was set to go live. By way of background, the Rule requires restaurants and “similar retail food establishments” (e.g., convenience stores and grocery stores) that are part of a chain of 20 or more locations and that sell similar menu items to post on menus and menu boards: (1) calorie information; (2) a statement on suggested daily caloric intake; and (3) a statement that written nutrition information is available upon request (and provide such information upon request).&rdquo In response to the Agency’s Rule delay, the Center for Science in the Public Interest (CSPI) and the National Consumers League (NCL) sued FDA. Also last week, the Agency indicated via a proposed rule that it would delay enforcement of the new Nutrition Facts and Supplement Facts (NFSF) requirements from 2018 to 2020 for certain companies.


Bloomberg news alert (BNA), “Proposed tax rates for pass-throughs may unintentionally reduce small business 401(k) offerings. If tax plan is adopted as proposed, many workers could be left without workplace retirement savings plans. An oversight in the Republican tax framework released last week could cause some small-business owners to lose their appetite for offering retirement plans. The tax overhaul plan released Sept. 27 suggests creating a new top pass-through income tax rate of 25 percent and a top personal rate of 35 percent. The top corporate tax rate would be 20 percent. A pass-through entity is a business, usually a small one, whose owners pay taxes on their profits at an individual rate rather than at a corporate rate. There isn't a special tax rate for pass-throughs under the current tax system. These businesses avoid the “double taxation” that corporations incur when they're taxed on their income and shareholders are taxed on dividends. Under the proposed tax plan, retirement plan contributions from pass-through small-business owners would be deductible against the 25 percent tax rate, but could be taxed at the individual rate of 35 percent when the 401(k) funds are withdrawn.”

BNA, “Repeal of Estate Tax Could Have Big Effect on States - States have to prepare for the impact a possible repeal of the federal estate tax would have on their revenues, speakers said at a meeting of the Western States Association of Tax Administrators. National Economic Council Director Gary Cohn recently said immediate estate tax repeal would be included in tax reform. The Republicans’ framework also proposes to eliminate most itemized deductions, including the federal deduction for taxes paid to state and local governments. Eliminating the SALT deduction is likely to annoy taxpayers in high-tax states.”

The New York Times reports, “Republicans Are Reconsidering Full Repeal of State and Local Tax Deduction - Republican leaders are backing away from a proposal to fully repeal an expensive tax break used by more than 40 million tax filers to deduct state and local taxes amid pushback from fellow lawmakers whose residents rely on the popular provision. The state and local tax deduction is estimated to cost $1.3 trillion over the next decade and its repeal is central to paying for a sweeping tax rewrite unveiled last week by Republican lawmakers and administration officials. But elimination of the provision has emerged as a flash point in the nascent debate over the plan, with Republicans in high-tax states worried about backlash from residents who could see their tax bills rise. The White House and Republican lawmakers are considering alternatives to an outright repeal, including allowing taxpayers to choose between deducting their mortgage interest or state and local taxes, a limit on the deduction or a special tax break for middle-class families that live in areas with high property taxes.


With defections from Sens. Ted Cruz, Rand Paul, Susan Collins, and John McCain, attempts to pass the Graham-Cassidy-Heller-Johnson healthcare bill to replace the Affordable Care Act died. Senate Majority Leader Mitch McConnell pulled the bill from voting soon after.

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