How will employment law change in 2013?

1. New state and federal laws and regulations will add employee rights and protections.

In 2012, states like New Jersey and Oregon enacted laws protecting the jobless against hiring discrimination, and other states like California and Illinois enacted laws barring employers from demanding access to workers’ social networking accounts. The federal government is likely to follow suit with new protections proposed in recent bills, such as the Employment Non-Discrimination Act that bars sexual orientation discrimination, and the Paycheck Fairness Act, which creates new remedies for female workers claiming pay disparity. While stalled in Congress, the President may impose these protections through rulemakings by executive agencies (like the EEOC or Department of Labor), as was done to implement the stalled DREAM Act, and the “quickie election rule” for union representation elections. (The latter was struck down by the courts on procedural grounds.) In short, 2013 will likely bring more rights for employees and more restrictions for employers.

2. Employers face new costs and burdens regarding health insurance.

Several provisions of the Obamacare law go into effect in 2013, including:

  • Employers must start withholding additional Medicare tax from the wages of high-earning employees. The Medicare tax increased this year from 1.45 percent to 2.35 percent for an employee who receives wages of more than $200,000.
  • Employers must, by March 1, 2013, provide each current employee with a written notice informing them of the existence of a state-run health insurance exchange. These become open for enrollment on October 1, 2013. The notice must state that the employee may be eligible for a premium tax credit and may lose employer health plan contributions if he or she buys insurance through an exchange.
  • Employers of 250 or more employees must disclose the costs of employer-sponsored insurance on employees’ W-2 Forms for 2012. (By year end, the IRS may require smaller employers to make this disclosure in 2014.)
  • Annual dollar limits on coverage of “essential health benefits” must be phased out, limited to $2 million in 2013.

Additional provisions go into effect in 2014, including penalties on employers of 50 or more full-time employees that do not provide the required level of insurance coverage. This is almost certain to dramatically increase 2013-2014 health plan rates.

3. Taxes will go up, with a few new tax exemptions for employees and employers.

On January 1, 2013, Congress passed the American Taxpayer Relief Act of 2012 (H.R. 8), which:

  • Increases the Social Security (FICA) employee tax by not extending the Bush-era 2 percent payroll tax cut;
  • Increases the tax rate for wage earners making over $400,000 from 35% to 39.6%;
  • Extends the employee tax exemption for employer-provided education assistance of up to $5,250 per year regardless of whether the education is job-related;
  • Extends the increased employee exemption for employer-provided transit benefits; and
  • Reinstates and extends the Work Opportunity Tax Credit, which gives employers a tax credit for hiring qualified veterans.

4. The NLRB will continue expanding labor law and promoting union membership.

In 2012, the NLRB issued many pro-union rules and decisions. These include the “quickie election rule” struck down by the D.C. Federal Court of Appeals, and several general counsel memos attacking employer policies on at-will employment and social media. Additionally, in December 2012, the NLRB issued decisions that significantly change U.S. labor law. These decisions now allow unions to continue automatically deducting dues from employees’ paychecks after the expiration of a collective bargaining agreement, and force employers in unionized workplaces to notify the union and bargain with it before disciplining an employee.

In 2013, the NRLB (made up of three Democratic board members) will likely issue rules and decisions that make it easier to unionize workplaces, expand union power, increase employee payments to unions, and create new employee rights in unionized and non-unionized workplaces.

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