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Pending Legislation Update...

Tuesday, November 28, 2017   (0 Comments)
Posted by: Nikki Schutte
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Pending Legislation


            There are two bills currently pending in the U.S. Congress which have implications for employers.  The first is H.R. 1, the Tax Cuts and Jobs Act, which would affect employer-provided benefits.  The second is H.R. 4219, the Workflex in the 21st Century Act, which would expand paid leave and workplace flexibility opportunities for all employees.


Tax Cuts and Jobs Act


            Most employer-provided benefits receive tax preferred treatment, generally meaning that such benefits are either not taxed at all to the employer or the employee, or they enjoy tax-deferred status.  Think of health care plans, wellness incentives, subsidies for parking and transit and tuition assistance for undergraduate and graduate degrees.  This tax preferred treatment obviously creates an incentive for employers to provide these benefits.  However, this tax preferred status results in less immediate revenue to the federal government.  The Tax Cuts and Jobs Act would eliminate the tax-exempt status of many employer-provided benefits, including employer-provided educational assistance, qualified tuition reduction arrangements, adoption assistance, moving expenses, child care and employee achievement awards.  All of these are important, but of particular interest to SHRM is the proposed change in the tax treatment of employer-provided educational assistance.  The Tax Code currently permits an employee to exclude up to $5,250 per year in education assistance provided by their employer for course at the associate, undergraduate and graduate level.  Currently, neither the employer or employee pays federal income tax on assistance up to this amount.  SHRM opposes this bill and is supporting other legislation which would increase the limit to $11,500 per year, and which would include student loan repayment as tax-free educational assistance.  The bill passed the House on November 16, 2017.  There is a similar bill in the Senate.  If it passes, the bills would need to be reconciled and then a final bill would have to be voted on in both chambers.


Workflex in the 21st Century Act


            One of the hot issues for employers right now is paid leave.  Eight states and more than 30 localities have adopted some form of paid sick leave laws.  Another issue is initiatives requiring employers to establish predictable work schedules, guaranteeing employees' right to request a flexible work schedule or placing restrictions on use of compressed work weeks.  It can be difficult for employers to comply with all of these various laws.  The Workflex in the 21st Century Act would expand paid leave and workplace flexibility opportunities for all employees.  The bill would amend ERISA to create a Qualified Flexible Work Arrangement plan, which would allow participating employers to follow a federal framework for paid leave and workflex instead of the sometimes conflicting and always complicated state and local laws.  For those employers who adopt such a plan, it will preempt state and local paid leave laws and workflex laws assuming the employers offer a minimum threshold of paid leave and flexible work options to all employees.  The bill includes two major components:  (1) paid leave; and (2) flexible work arrangement.  The number of hours of paid leave would be scaled to the size of the employer and the eligible employee's length of service with the employer.  The employer would have to offer at least one flexible work arrangement to each employee, including:  (1) telework; (2) job-sharing; (3) compressed work schedules; (4) predictable scheduling; (5) flexible scheduling; or (6) a biweekly work week.  A participating employer would automatically satisfy all state and local paid sick leave requirements. 


            SHRM developed this legislation and of course supports it.


Written by: Clay Creps
PHRMA Legislative Affairs Director



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