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Just Trying to Keep Up with All of the Changes

COBRA

Last week we got hit with a surprise with the changes to COBRA under the newly passed economic stimulus package. 

All employers whether covered under the Federal COBRA regulations for organizations with 20 or more employees or the state issued mini-COBRA laws for companies with less than 20 employees, must offer employees who made less than $145,000 or $290,000 if filing jointly (Since most employers do not know if employees file joint tax returns, this could be a bit problematic) an option to continue their medical insurance by paying only 35% of the monthly premium (instead of 102% of the premium as stated under COBRA legislation) for up to 9 months.  The remaining 65% of the premium must be paid by either the insurance company or the company.  Companies that have to pay the 65% of the insurance premiums can take a credit from payroll taxes or apply to the Treasury Department for re-payment of the premiums paid by the company.  After 9 months of coverage under COBRA, the cost will rise to 102% of the monthly premium.

These lower COBRA rates must be offered to all employees who involuntarily left the organization since September 1, 2008 and extends to employees involuntarily terminated through December 31, 2009.  Employers are required to send out new COBRA notices to all of these employees and must give these employees another 60 days to decide if they want to take COBRA at the reduced rate.  Now the insurance will not be retroactive to September 1, but will start on March 1, 2009.  New notices must be sent to all employees who fall into this category.

IRS Form 941 - The IRS has issued a new Form 941 in which employers can claim their tax credit. Click on this link to get the IRS information - https://www.irs.gov/newsroom/article/0,,id=204505,00

Labor Relations

President Obama is turning the tides regarding unions by signing four executive orders.  All four of the Executive Orders pertain only to federal contractors and are summarized below.

Executive Order 13494 prohibits federal contractors from seeking reimbursement for expenses incurred by employers attempting to persuade employees not to form or join a union. Executive Order 13494 also states that federal contractors may not seek reimbursement for any expenses related to union organizing campaigns.

Executive Order 13495 requires federal contractors taking over new contracts for the same services in the same location as previous contracts to offer jobs to qualified employees of the previous contractor. The Order excludes managerial and supervisory employees from its provisions.

Executive Order 13496 requires every federal contractor to display a poster notifying employees of the federal laws “encouraging the practice and procedure of collective bargaining and protecting the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid or protection.” The Department of Labor will determine the actual wording, size, and placement of the poster.  This order revokes an order signed by President Bush which required notification to the employees of federal contractors that they could “opt out” of certain portions of union dues that were not directly related to the administration of the collective bargaining agreement.

Executive Order 13502 authorizes “project labor agreements” in certain large scale federal construction contracts. One of the results of this order is that contracting agencies may now require private-sector contractors to sign on to a union contract for the life of the project. The order applies only to construction projects worth more than $25 million.

Employee Free Choice Act – President Obama has publicly stated, “I do not view the labor movement as part of the problem, to me it’s part of the solution.”  He has also announced support of the Employee Free Choice Act, which, in the opinion of this writer, is probably the worst piece of legislation ever proposed.  Even George McGovern, who has always been a big supporter of organized labor, has a commercial against the bill.  Please click this link - https://mckenziehr.com/enews/december2008.htm and write to your Congressional Representatives and Senators.  The biggest contention with this law is that it will do away with the secret ballot election that has been the mainstay in union organizing since 1947.

Thanks for reading the McKenzie Mailer.  Let us know if we can be of assistance with any of your human resources needs.

Bob McKenzie
President
McKenzieHR
potential@mckenziehr.com