2014 AR SHRM CONFERENCE
ARSHRM
Legislative Affairs Update –Spring 2014 By Thomas Dunlap, PHR
As statewide HR professionals converge on Ft. Smith for the annual ARSHRM State Conference, there continues to be a need to monitor the legislative landscape for potential changes that impact the profession. Fortunately, the State Legislature will be idle, having just completed their limited fiscal session in March. Unfortunately, the U.S. Congress has pretty well moved from governing into full time campaigning, and the bare knuckle match to see who will control the U.S. Senate in 2015 is well underway. If you’re not convinced of that, just watch a little evening television over the next few days. The Arkansas General Assembly convened in February for the purpose of considering annual budget bills, which generally doesn’t present a risk to HR interests. In order for non-budget legislation to be introduced, a resolution must be approved by a two-thirds majority in both chambers. The fiscal session is held during even number years, or what you might consider to be the offseason of the State Legislature. The overwhelming focus of this year’s Fiscal Session was the appropriation for the Medicaid expansion, what we now call the “Private Option”. The Affordable Care Act (A.C.A.) provides federal dollars to expand Medicaid to 138% of the federal poverty level, which would enroll just over 200,000 Arkansans. One of the big outcomes in the 2012 Supreme Court decision on the A.C.A. was that States could decide whether to go along with this Medicaid initiative. The 2013 Legislature narrowly authorized the expansion as long as the coverage was available through private companies, but now in 2014 they would also have to approve the funding to administer the expansion. This would require a two-thirds majority in both Chambers, and with a durable Republican majority in the Legislature, there were no guarantees it would pass. The appropriation cleared the Senate first, when Senator Jane English negotiated her swing vote around a new statewide workforce education and training initiative. The changes include additional money and resources for Workforce Services and two year colleges to directly target the skills gap for Arkansas specific job needs. While not much is known yet about this initiative, there will definitely be an HR interest in how this program is deployed statewide in 2015. Moving on to the House of Representatives, a series of votes failed to reach the two thirds requirement even after rifle shot amendments were made to appease a few holdouts. Finally, the appropriation passed the morning after the candidate filing deadline, when it became safe for members to hold their nose and vote without drawing a primary opponent later this year. It would be easy to dismiss the Medicaid expansion as a bystander issue to the HR profession, but that is simply not the case. First, there is the economic impact of uncompensated care on the health care system that drives up costs for group health plans, followed by workforce considerations for smaller and more rural health care providers who might not be able to make payroll without a healthy Medicaid program. But a more significant issue that didn’t receive much attention during the General Assembly’s appropriation debate is that employers are responsible for their employees who enter the Exchange and receive a subsidy for coverage. Employers will pay a penalty when that occurs (starting 2015), and the Medicaid expansion was designed to be a penalty free zone for employees below 8
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138% of the federal poverty level. A failed expansion, private option or not, removes the safe harbor for employers and sends those uncovered individuals into the Exchange where a penalty could be assessed. That would mean a new tax on employers estimated to be as much as $27-40 million dollars statewide. (http://www.arkansasstatechamber.com/assets/ files/pdf/MedicaidChoices_TaxSurprises.pdf ) Other issues brewing for the Spring 2015 General session include the new Social Media law passed last spring, or Act 1480. ARSHRM recently met with the Arkansas Department of Labor and the original bill sponsor, Rep. Nate Steel, to advocate technical corrections to the Act that will maintain the password protection for the employee or prospect, but allow everyone to be friends again. ARSHRM is also monitoring a ballot initiative to raise the minimum wage in Arkansas to $8.50 by 2017. Supporters must collect over 60,000 signatures by July for this to appear on the statewide ballot in November. Zooming out to the Federal level, most of the HR related action will take place in the regulatory arena. Congress appears to be irrevocably broken in 2014, but we can expect a few gotcha votes to occur that opponents can use for campaign commercials. Much of that activity will be for stagecraft, and not have long term HR implications. Instead of dealing with a distracted Congress, the White House advances their agenda through the Cabinet level agencies. We saw a huge HR issue erupt on March 13th from the Department of Labor, where FLSA regulations may be adjusted to require overtime pay for several million employees currently under the executive or professional exemption. This would involve raising the salary test well above the current amount of $455 per week, and it is unclear yet what the new test will be, and whether this will come from a proposed rule or by Executive Order. Fortunately for attendees, more developments to these issues and a few answers to unresolved questions will be available at the April ARSHRM Conference. HR professionals who stay informed of public policy initiatives and can apply them to their organization’s business strategy become more valuable every day. See you in Fort Smith!
Thomas Dunlap, PHR, Director AR SHRM State Legislative Affairs tdunlap@rogersark.org