It’s Not Really ”Repeal and Replace”; It’s Transition – pt 1

FAffordable Care Actor the last six years, Republicans have talked about repeal and replacement of the Affordable Care Act.  The election outcome now puts Republicans in a position of authority to take action on the Affordable Care Act.  As we look ahead to the 115th Congress, it is important to move away from political rhetoric and consider what can actually be achieved as a matter of public policy.

First, the Affordable Care Act is an extremely complex law including many more provisions than those related to coverage.  Complete repeal of the law is not remotely realistic.  For years Republicans have claimed support for provisions within the bill, some of which were actually bipartisan ideas.  No one should assume complete repeal.  The President-elect has already publicly voiced his support, for example, for continuing the bar on pre-existing condition exclusions from coverage.

Second, repeal and replace has been the mantra for many years, but that’s not actually the most accurate description of what Republicans want to do with the Affordable Care Act.  Republicans want to provide consumers with market-driven, high-value, cost-efficient health care coverage choices provided by private insurers.  That’s what Democrats arguably intended to do with the coverage provisions of the Affordable Care Act.

Ultimately, Republicans are going to transition the Affordable Care Act to function more to their liking.  The core of that function will still be covering millions of Americans through market-driven, high-value, cost-efficient health care coverage choices provided by private insurers.  The challenge for Republicans will be to limit the number of people who lose coverage in the transition, and it is simply wrong to assume Republicans intend to cause people to lose coverage.  For example, merely repealing the individual mandate will lead to significant market disruption and loss of coverage.  But if the individual mandate is transitioned to a late enrollment penalty, disruption and loss of coverage could be greatly minimized.

Finally, transition will not occur quickly.  While there is much more information about the consequence of policy decisions today than there was in 2009, writing legislation, determining the impact of legislation, and then moving legislation through Congress will take much of 2017.  This is not something that is likely to happen in a special session early in 2017.

This post is the first in a series.  In the posts that follow, we will describe the critical issues that Republicans must tackle as they transition the Affordable Care Act into a version of health care reform that they must own and defend.

ARTICLE BY Stephen M. Weiner & Rodney L. Whitlock of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

©1994-2016 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

Congress Returns for Lame Duck Session as President-Elect Trump Prepares New Administration

Capitol, Congress, Lame Duck, President-Elect TrumpA New Administration and a New Congress: What to Expect

On Tuesday, November 8, the American public elected Donald J. Trump as the 45th President of the United States and elected one-third of the 100 Senators and all of the House Members who will make up the 115th Congress. As a result of the elections, President-Elect Trump will have the opportunity to work with a Republican Senate and a Republican House to address the challenges facing the country.

In his victory speech, President-Elect Trump said:

Now it’s time for America to bind the wounds of division; [we] have to get together. To all Republicans and Democrats and Independents across this nation, I say it is time for us to come together as one united people. It’s time. I pledge to every citizen of our land that I will be president for all Americans, and this is so important to me.

In the aftermath of the most bruising and bizarre presidential election in modern history, will anything get done in Washington DC? Given the stark divisions between the Republican and Democratic parties and the message voters sent to policymakers inside the Capital Beltway, can policymakers overcome their differences to address the pent up demand to resolve major issues that have been multiplying for the better part of a decade?

Senate Legislative Activity

The Senate will convene on Monday, November 14, in pro forma session. On Tuesday, November 15, the Senate will convene at 4:00pm. Following any Leader remarks, the Senate will be in a period of morning business, with Senators permitted to speak therein for up to 10 minutes each until 5:00pm. At 5:00pm, the Senate will proceed to the consideration of H.R.4511, Gold Star Families Voices Act. There be 30 minutes of debate followed by a vote on passage of the bill.

House Legislative Activity

On Monday, November 14, the House will meet at 2:00pm for legislative business, with votes postponed until 6:30pm. The following legislation will be considered under suspense on of the rules:

  • H.R. 1192 – National Clinical Care Commission Act;

  • H.R. 1209 – Improving Access to Maternity Care Act;

  • H.R. 2713 – Title VIII Nursing Workforce Reauthorization Act of 2016;

  • H.R. 4365 – Protecting Patient Access to Emergency Medications Act of 2016, as amended;

  • H.R. 985 – Concrete Masonry Products Research, Education, and Promotion Act of 2015, as amended;

  • H.R. 4665 – Outdoor Recreation Jobs and Economic Impact Act of 2016, as amended;

  • H.R. 2566 – Improving Rural Call Quality and Reliability Act of 2016; and

  • H.R. 2669 – Anti-Spoofing Act of 2016

On Tuesday, November 15, the House will meet at 12:00pm for legislative business. The following legislation will be considered under suspension of the rules:

  • H.R. 5732 – Caesar Syria Civilian Protection Act of 2016, as amended;

  • H.R. ___ – Iran Sanctions Extension Act;

  • H.R. 5332 – Women, Peace, and Security Act of 2016, as amended; and

  • H.Res. 780 – Urging respect for the constitution of the Democratic Republic of the Congo in the democratic transition of power in 2016, as amended

On Wednesday, November 16, the House will meet at 10:00am for morning hour and at 12:00pm for legislative business. On Thursday, November 17, the House will meet at 9:00am for legislative business, with last votes expected by 3:00pm. The House will consider:

  • H.R. 5711 – To prohibit the Secretary of the Treasury from authorizing certain transactions by a U.S. financial institution in connection with the export or re-export of a commercial passenger aircraft to the Islamic Republic of Iran, Rules Committee Print (Subject to a Rule); and

  • H.R. 5982 – Midnight Rules Relief Act of 2016 (Subject to a Rule)

On Friday, November 18, no votes are expected in the House.

ARTICLE BY Brandon C. Roman of Squire Patton Boggs (US) LLP

© Copyright 2016 Squire Patton Boggs (US) LLP

Power of Communication in Legal Marketing – The Medium Does Change the Message Part 2

communicationsCommunication is important to almost everything we do–and today, we have more ways to reach out than ever before.  Lee Broekman of Organic Communication and Judith Gordon of LeadeEsQ presented at the LMA Tech1 conference in San Francisco, focusing on empowering communication by understanding the medium. In Part 1 we discussed some of the advantages and challenges of communicating face to face and through print.  In this article, we will examine communication over the phone and panel communication–or any way of communication through a screen.

Phone as a medium is what it sounds like–talking on the telephone either one or one or on a conference call. The danger with this form of communication is all the other things we might be doing while we are on the phone–especially on a conference call–everyone knows how easy it is to click over to email, check Facebook on your smartphone, or start to scribble your to-do list on the paper at your desk. While you are still physically on the call, your attention drifts to the other things on your to do list. This hints at what Gordon calls “the lost art of focus.”  She says, “Today’s attention spans have been radically reduced by our tether to technology. We leap from conversation to conversation—from the person speaking to us to email to headline notifications to texts back to the person speaking—without fully engaging in any one of those communications.” Staying engaged on a phone call, and reminding yourself to be present and aware is important when using the phone as a medium. One way to do this is to make sure the conversation is a back and forth–and not just a series of monologues. Additionally, if the call is a conference call with multiple participants, making sure there is a plan in place, so that each participant has a role, and that ground rules are established and enforced, can help.

Panel refers to any form of communication with a screen between the speaker and the listener.  With technology, this is becoming common–web meetings, webinars and some panels where there is an audience in the room, but also some audience members are tuning in via videoconference.  Gordon says, “Presenters are well served by understanding that their ‘audience’ may be viewing or only listening to a recording at a later point in time, and taking those parameters into account when preparing their presentations.” Going beyond just the people in the room is important–and one way to make sure everyone stays engaged is to have an interactive portion. Another good practice for webinars is to focus on visuals. Broekman says, “When our communication is on a panel, we need to color our black and white text and bulleted lists with vibrant visuals that will captivate our audience and keep them attentive to our intention. Many webinars present dry data instead of information that is new, relevant and interesting. Charismatic conversation, speaker photos and conceptual images in shorter timeframes will go a long way towards making the communication in this channel more effective.”

Another major concern with a panel can be a false sense of distance, and the tendency to feel bold when you cannot see the person you are talking to. This barrier is one reason Internet comment sections can get nasty, and people become callous over social media. These tendencies can be devastating when they seep into professional communications.  Broekman argues, “If you can’t say it to someone’s face, don’t say it behind a screen.”

Other pitfalls haunt Panel as a communication method.  Like the phone, placing the screen between people communicating removes the opportunity to see facial expressions and body language.  Gordon says, “When we remove that layer of information, our brains ‘fill in the blanks’ by superimposing our own judgment, which can be devastating.” Additionally, Broekman describes one of the biggest communication problems as a failure to listen with an intention to understanding the speaker. “Instead of listening to what the other person is saying, we listen to our own internal dialogue and filter information through our personal judgments, thoughts, opinions and ideas.”  A screen between parties can only amplify the tendency to hear what we want to hear.  With that said, clarity in transmission is crucial, and consistent checks on understanding are important.  Above all, awareness of the potential for misunderstanding is important.

For attorneys, communication is paramount. Communication is also very complicated. Gordon says, “to put it simply, lawyers ‘speak for’ their clients. Whether in transactional matters or litigation, lawyers are conduits of their clients’ intentions. To fully and accurately represent another—the essence of a lawyer’s work—understanding the fundamentals of communication is essential. Key communication skills—such as the ability to listen, understand, and then accurately present a client’s position to third parties in negotiations or litigation—are essential to a successful practice, and the smooth running of our legal system.”

Click here to read part one: Power of Communication in Legal Marketing – The Medium Does Change the Message Part 1

ARTICLE BY Eilene Spear of The National Law Review / The National Law Forum LLC
Copyright ©2016 National Law Forum, LLC

1 Broekman and Gordon spoke at the Legal Marketing Technology Conference on October 6th in San Francisco. Their session was entitled Webinars, Podcasts and Mobile (Oh My!) The Medium Does Change the Message. The LMA Tech conference is the largest conference dedicated to technologies that law firms use to identify, attract and support clients.

Election 2016 Likely to Result in End of ACA as We Know It, But Employers and Plan Sponsors Should Stay Course for Now

affordable care act acaOver the past five years or so, Republican Congressmen have repeatedly taken steps to repeal President Obama’s landmark legislative effort – the Patient Protection and Affordable Care Act (the “ACA”). However, those efforts either failed to advance in Congress or were vetoed by President Obama. Tuesday’s Presidential and Congressional election, in which Donald Trump was elected President and Republicans maintained a Congressional majority in both houses, puts the future of the ACA in jeopardy. Indeed, President-elect Trump and Congressional leaders have already confirmed that repeal of the ACA is a top priority.

Although the ACA is certainly in the crosshairs, the path to outright repeal is not so clear. Republicans have majority control in both chambers of Congress, but they do not have a filibuster-proof supermajority in the Senate. This means that unless Congress changes procedural rules, Democratic Senators can effectively block though filibuster any blanket repeal of the ACA.

So what other options do Congress and President-elect Trump have? First, Congress could invalidate many of the ACA’s revenue-related provisions through budget recollection legislation. This is not a novel approach to effect healthcare legislation – the ACA itself was a product of budget reconciliation legislation passed after Democrats lost their Senate supermajority in 2010. Budget reconciliation legislation cannot be held-up by filibuster, but the subject of the legislation must be related to revenue. Non-revenue related provisions can be struck from this type of legislation.

In 2015, the Republican-controlled Congress passed budget reconciliation legislation to invalidate many of the ACA’s revenue-related provisions. Although that legislation was vetoed by President Obama, it might be used as a template for new legislation once President-elect Trump takes office. Here are some key parts of the 2015 legislation:

  • The individual and employer mandates (and associated reporting requirements) would be repealed.

  • Expansion of Medicaid to electing States would be repealed.

  • The availability of premium and cost-sharing subsidies on the public insurance Marketplace would be repealed.

  • Taxes, such as the “Cadillac Tax”, medical device tax and increased Medicare taxes on high-earners would all be repealed.

Other ACA market reforms, such as first-dollar coverage of preventive healthcare, prohibition on preexisting condition exclusions, prohibition of annual and lifetime limits on certain benefits, and required coverage of dependents through age 26, are generally not related to revenue and probably cannot be included in budget reconciliation legislation.

Second, President-elect Trump could take immediate action to impact agency enforcement of various aspects of the ACA. For example, President-elect Trump could issue a directive to agencies to stop all enforcement of regulations currently in effect under the ACA. In addition, incoming Presidents often take immediate action to stop regulatory efforts in process. This means that proposed and pending regulations would never become effective. At the moment, regulations related to expatriate healthcare coverage and opt-out payments are currently proposed and regulations related to the Cadillac Tax are being drafted. In addition, recently proposed regulations would expand Form 5500 filing requirements to include attestations regarding compliance with the ACA. Presumably, those regulatory efforts would end.

Moreover, a significant part of the ACA’s enforcement infrastructure is found in sub-regulatory guidance – there are 34 interpretive FAQs alone – meaning that there are opportunities for the new administration to take action without significant procedural hurdles. One could surmise that the days of expansive interpretations of the ACA in sub-regulatory guidance are over and, in some cases, prior sub-regulatory guidance would be reversed.

To the extent that the ACA is limited or eliminated by these actions, there is then the question of what stands in its place. Throughout his campaign, President-elect Trump has made clear that he intends not just to repeal the ACA, but also replace it with something new. Concrete details are lacking at the moment, but the following are possible components of his replacement plan:

  • A cap on the employer deduction for health coverage provided to employees.

  • Individuals without employer-provided health coverage would receive a tax credit against the cost of coverage purchased on the individual market. The tax credit would not be an advanced premium credit, but would instead be taken in full when filing income tax returns.

  • Expansion of health savings accounts, including increased contribution limits, and improved price transparency from healthcare providers.

  • Insurance companies would be able to sell policies across state lines.

  • Provide block grants to states for Medicaid.

  • Allow consumer access to imported drugs meeting safety standards.

Ultimately, it is far too early to know exactly what President-elect Trump and the Republican-controlled Congress will do with respect to the repeal of the ACA and the enactment of new health care reform or what the impact of any of those changes will be. Even if the ACA is ultimately repealed in full or in part, it is unlikely to happen on “day one.” Therefore, at least for the time being, employers and plan sponsors should continue operating their health plans in compliance with the ACA.

ARTICLE BY Robert M Projansky, Steven D Weinstein & Damian A Myers of Proskauer Rose LLP
© 2016 Proskauer Rose LLP.

Workplace Law Under President-Elect Donald Trump: What to Expect

labor law elections

President-elect Donald Trump will assume office on January 20, 2017, with a Republican majority in both the Senate and the House of Representatives. While it is difficult to predict whether the new administration will be able to deliver on President-elect Trump’s campaign promises, we can expect significant policy and enforcement shifts. For example, judicial appointments to the U.S. Supreme Court and other federal courts will have significant and far-reaching implications. This analysis focuses on the likely dramatic impact of the Trump Administration on workplace law.

Courts

The U.S. Supreme Court has been operating with eight justices since the sudden passing of Justice Antonin Scalia in February. There also are many judicial vacancies on the federal bench. President-elect Trump likely will appoint judges more inclined to preserve the strict certification standards for class actions and rein in novel interpretations of laws such as the Americans with Disabilities Act (e.g., on disparate impact and reasonable accommodation issues).

Government Enforcement

Federal agencies increasingly have been aggressive and controversial in their enforcement methods. Under new leadership in the Department of Labor (DOL), the Equal Employment Opportunity Commission (EEOC), and the Office of Federal Contract Compliance Programs (OFCCP), among others, one can expect a return to traditional, more conservative theories of discrimination previously recognized by federal courts. We may see the EEOC ease its systemic discrimination enforcement activity and enforcement position on the ADA, Title VII, and the Pregnancy Discrimination Act. An important issue to watch is the EEOC’s position on Title VII’s application to LGBT issues. Corporate diversity and inclusion programs are not likely to be affected by the new administration, as they are driven much more by demographic changes in the population, labor force, and marketplace and risk management considerations, and much less by federal law and policy in the short-term.

Further, the focus of current controversial regulatory action will change. New DOL leadership may revisit recent DOL proposed or implemented regulations, including those subject to court injunctions. Congress may also now pass legislation to repeal the new DOL overtime rule that raises the salary level for exempt employees effective December 1, 2016, and President-elect Trump might agree. Ongoing challenges to the Occupational Safety and Health Administration (OSHA) final rules (e.g., silica and the electronic recordkeeping rule) may result in settlements that lessen the regulatory impact of the rules. Aggressive enforcement coupled with significant publicity and fines have been key tools implemented by the current administration. Under new leadership, these agencies may ease back on such aggressive approaches and offer greater cooperation to the employer community as they try to balance the purposes of the law with business realities.

Executive Orders and Actions

President-elect Trump has announced an intention to undo President Barack Obama’s Executive Orders, many of which impose significant employment-related prohibitions and requirements on government contractors. The new administration likely will rescind at least some of those Executive Orders, chief among them the controversial Fair Pay and Safe Workplaces Executive Order.

In addition, President-elect Trump has stated he will reverse the Deferred Action for Childhood Arrivals (DACA) and Deferred Action for Parents of Americans (DAPA) Executive Actions. It is unclear whether this would only address the enjoined executive relief programs or also include revocation of work authorization documents for currently eligible workers under DACA.

EEO-1 Pay Data Reporting

Final rules revising the EEO-1 report to add W-2 earnings and work hours reporting are scheduled to go into effect in early 2018. The new administration may consider rescinding the changes before first reporting is due in 2018 or revising the reporting to ease the burden on employers.

National Labor Relations Board (NLRB)

Currently, the NLRB has a 2-1 Democratic majority, with two vacant seats. Since the President traditionally has had the opportunity to appoint Board members to achieve a majority along political lines, the open seats likely will be filled by Trump appointees. This will create a more business-oriented NLRB. A new Board with a Republican majority is likely to revisit recent NLRB rules and decisions, including those covering (1) class action waivers, (2) joint employers, (3) inclusion of temporary workers in bargaining units with an employer’s regular workers, (4) quickie elections, (5) expansion of protected concerted activity (e.g., its impact on workplace policies), (6) definition of appropriate bargaining units, and (7) status of college/university adjunct faculty, graduate students, and student athletes. The new Board also may not make additional changes the current Board would make, such as extending Weingarten rights to non-union workplaces and making misclassification of employees as independent contractors a separate violation of the National Labor Relations Act (NLRA). In addition, the Labor-Management Reporting and Disclosure Act (LMRDA) “persuader” regulations, which are currently enjoined, may be revisited.

Sarbanes-Oxley Act and Dodd-Frank Act

During the campaign, President-elect Trump singled out the Dodd-Frank Act of 2010 (DFA) as making it impossible for banks to lend money to businesses for the purpose of creating jobs. A repeal of the DFA might encourage Congress and the Securities and Exchange Commission to rely more heavily on the Sarbanes-Oxley Act of 2002 (SOX) whistleblower provisions and thus mandate that corporate compliance programs, as developed by publicly traded companies, be increasingly robust, providing for greater “self-regulation.” Further SEC enforcement actions regarding confidentiality agreements likely will decrease.

Affordable Care Act (ACA)

President-elect Trump has vowed to repeal and replace the ACA. The extent to which this comes to fruition, the timing of any dismantling efforts, and the types of replacements that are offered will be of utmost importance to employers. While there has been much mentioned in broad brush strokes about a full repeal, it is unlikely that that can or will occur. Alternatives, such as the reliance on private healthcare savings accounts, market-based universal coverage and allowing for insurance plans to be offered across state lines have been floated, however, there is no Republican consensus on what the path away from the ACA will look like. Employers will be eager to see what is done to change and lessen employer obligations under the ACA, but for the meantime, will have to stay the course.

Fiduciary Rule

The DOL’s fiduciary rule concerning the expanded definition of who is considered a fiduciary under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code, as well as certain exemptions addressing conflicts of interest, also may be subjected to increased scrutiny in light of the President-elect’s opposition to the current administration’s financial initiatives and, more generally, “unnecessary” regulations. It is hard to determine at this point where these types of regulations on fiduciary status and conduct will rank among a long list of priorities for the new administration.

Federal Tax Reform

President-elect Trump has promised sweeping federal tax reform, including tax cuts for corporations. While the viability of implementing such changes rests with the Republican Congress, the lack of specificity as to what tax reform would look like under the new administration leaves many questions. These questions include how tax reform may affect benefits plans and arrangements, such as qualified retirement plans, fringe benefits, and executive compensation arrangements.

E-Verify

The new administration may focus on expanding enforcement of existing immigration laws in the workplace, which may include encouraging more employers to use E-Verify under existing law, as well as working with Congress to expand mandatory use of E-Verify. Under current federal law, E-Verify is voluntary for employers, except as mandated by executive order for federal government contractors.

International

The new administration may suspend temporarily the issuance of visas to certain countries and regions designated as high risk. President-elect Trump has indicated he will ask the Department of State, Department of Homeland Security, and the Department of Justice to begin a comprehensive review of high-risk visa cases to develop a list of regions and countries for which visa issuance will be suspended until a proven and effective vetting mechanism is implemented. Individuals from countries such as Syria, Iraq, Libya, and other designated high-risk areas, or individuals who have traveled to such countries, will face even longer delays obtaining visas for both short- and long-term travel to the U.S. In addition, global mobility may be affected if the U.S. restricts or delays business visas, resulting in reciprocal treatment by the affected countries.

U.S. companies operating in major European markets and other countries with strong labor interests may encounter increasingly complex labor relations and works council issues, as the United States is perceived as more nationalistic and less deferential to local employee protections. Further, there may be increasing pressure from foreign vendors, suppliers, customers, and employees on U.S. companies to certify that they will comply with ILO standards.

Post-Employment Restrictions

The new administration is unlikely to continue attempts to prohibit non-compete agreements we have seen from the White House over the past months, at least on a federal level. On a state level, legislatures still may respond to the Obama Administration’s “call to action” and introduce measures to curb the use of non-compete agreements, as, for example, has been promised by New York State Attorney General Eric Schneiderman.

The “Antitrust Guidance for Human Resource Professionals,” issued by the Department of Justice and Federal Trade Commission, is not likely to continue as a priority for the new administration. The guidance promised criminal prosecution of human resource professionals who, for example, enter into “naked” no-poach agreements.

Trade Secret Protection

Adding to the bi-partisan federal Defend Trade Secrets Act, which provided a civil right of action under the Economic Espionage Act, a new administration may adopt protectionist policies, bringing further enforcement efforts to misappropriation of trade secrets flowing to foreign powers, including to China.

Cybersecurity

President-elect Trump has expressed a desire to reduce, rather than increase regulation. However, political party hacking and unfavorable email dumps from WikiLeaks, coupled with continued data breaches affecting privacy and public sector entities, may prompt the new President and Congress to do more. Politics aside, cybersecurity is a top national security concern, and it is having a significant impact on private sector risk management strategies and individual security.

DOL Opinion Letters

The long-standing practice of the Administrator of the Wage and Hour Division of the DOL issuing official opinion letters regarding application of the Fair Labor Standards Act (FLSA) upon which employers rely may make a comeback. In recent years, the DOL had stopped issuing opinion letters, choosing instead to issue less frequent “Administrator Interpretations” with wider applicability and scope, but less specificity. Two significant Administrator Interpretations concerned “joint employment” and “independent contractor” status under the FLSA. Both have been viewed as clear efforts to expand the rights of workers under the law and place additional burdens on employers. New opinion letters are issued on a variety of topics and could scale-back or withdraw the Obama Administrator Interpretations, permitting employers greater flexibility in using independent contractors and giving business more certainty in expanding through use of franchises.

White Collar

The President-elect has been critical of excessive and unnecessary government regulation in such areas as health care, energy, and the environment. We may see a decreased investigatory focus in these areas, and fewer federal prosecutions of health care organizations, pharmaceutical companies, and manufacturers.

Focused on security and protecting the homeland, the new administration may enhance emphasis on international terrorism investigations, import/export violations, and immigration offenses.

Given his pledge to improve life in “inner city” areas, we should expect greater resources and attention to be devoted to the prosecutions of criminal activity by violent gangs and an effort to address crimes that affect the daily lives of the residents of America’s cities.

***

An important question for many, especially those that operate in multiple states and must comply with the current patchwork of state laws on data breach and sick leave, for example, is whether a federal law that supersedes state law is likely. With Republicans in control of the executive and legislative branches, that remains to be seen.

ARTICLE BY Howard M. Bloom & Philip B. Rosen of Jackson Lewis P.C.

Jackson Lewis P.C. © 2016

A New Regulatory Paradigm For The SEC Following the Election?

SEC sealMany are speculating on the future of federal securities regulation as a result of the election of Donald J. Trump and the concomitant Republican control of both houses of Congress. Broc Romanek, for example, asks whether Michael S. Piwowar will become the SEC’s next Chairman.  Broc notes that Commissioner Piwowar is an economist, not a lawyer.  Since the SEC is concerned with financial regulation, a background in economics should be a strong plus.

Since I’ve already seen signs of holiday decorating in the stores, I’ve drawn up my own short wish list for whomever takes the helm of the SEC.

The SEC should fundamentally change its approach to evaluating regulations. When considering the adoption of any new substantive regulation, the fundamental question must always be “Why is this regulation necessary?”  A regulation isn’t necessary simply because someone thinks it is a good idea or constitutes a perceived “best practice”.  A regulation is necessary only when it can be demonstrated that there is some market impediment that can only be removed by government intervention.  It seems that regulations are too often adopted in reverse.  It is tantamount to a doctor, knowing that a drug has proved beneficial in some cases, prescribes it to her patients without first making a diagnosis.  If a market impediment exists, then the regulatory effort should be directed at removing the impediment not imposing additional requirements.

The SEC should ask Congress to repeal Section 16(b) liability.  When Congress enacted Section 16 more than four score years ago, it was recognized that it was a “crude rule of thumb”.  Given the rapidity of modern trading, the arbitrary six month period seems positively quaint. The calculation of profits under the rule can be bizarre.  In some cases, persons are liable even when they recognized no overall economic profit.  Congress enacted the rule to deter insider trading, but many persons who are guilty of trading on the basis of material non-public information aren’t even subject to the rule.  In practice, the rule has become an economic boon to a few lawyers and a technical trap for many.  At eighty plus years, Section 16(b) has had a good run, but now is time for it to leave the stage.

The SEC should abandon and repudiate its attempts to co-opt attorneys. Attorneys are their clients’ advisers and advocates.  They are not gatekeepers as the SEC has on occasion supposed.  The SEC should amend its attorney conduct (Part 205) rules to eliminate the purported ability of lawyers to disclose client confidences to the SEC.  See Conflicting Currents: The Obligation to Maintain Inviolate Client Confidences and the New SEC Attorney Conduct Rules, 32 Pep. L. Rev. 89 (2004) and this post.  The SEC should also amend its whistleblower rules to eliminate the possibility of attorneys obtaining whistleblower awards.  See SEC Condemns Breach Of Client Confidences While Offering Possible Bounties For Breaches.

Allow companies to pick their reporting periods.  There has been much debate about whether publicly traded companies suffer from short-termism.  Although short-termism may have multiple causes, the SEC’s rigid requirement of quarterly financial information pressures companies to focus on short-term results.  Why not let companies pick their own reporting periods?  This will allow companies to telegraph to the market whether they are focused on short-term or long-term performance.  To those who say that this is a bad idea, I say why not let the market decide?  If investors think that semi-annual or annual reporting is inadequate, then companies making those choices will be undervalued and will incur higher costs of capital.  Some companies might even elect to report more frequently than every quarter (e.g., bi-monthly).  The beauty of this approach is that it is transparent and allows the market to achieve equilibrium at the optimal time for each issuer.

Allow companies to decide whether they will be subject to routine SEC review.  It is hard to assess the efficacy of SEC staff review of filings. I’m sure that the SEC believes that staff review improves disclosure and that may well be the case.  One way to test that position, is to allow companies to elect whether to have their filings be subject to SEC staff review.  These elections would be public.  Investors could then decide whether SEC review reduces risk through enhanced disclosure (because companies will do a better job because they know they are subject to review and/or because the staff’s comments result in improved disclosure).  The efficacy of review should be reflected in differences in the cost of capital.

Readers will note that repeal of the Dodd-Frank Act is not on my wish list.  That is the subject of this blog by Cydney Posner at Cooley LLP. As a final note, this is my personal wish list and it does not necessarily represent the wish list of my firm, partners, or any my firm’s clients.

ARTICLE BY Keith Paul Bishop of Allen Matkins Leck Gamble Mallory & Natsis LLP

© 2010-2016 Allen Matkins Leck Gamble Mallory & Natsis LLP

Post-Election Outlook for Higher Education

higher educationAmerican higher education confronts a starkly different reality today in the aftermath of an election that yielded both a Republican administration and a Congress with Republican majorities in the House and Senate.  While the full impact may take years to assess, a preliminary review suggests some results are likely in the near term, including:

  • Dramatic changes in Department of Education enforcement actions based on departmental guidance;

  • Less government support for public institutions as Republicans seek to constrain both state and federal spending;

  • Less support for the concept of free community college;

  • Substantial changes in the manner in which federal student aid is administered;

  • Added scrutiny of institutions with large endowments;

  • Greater pressure for lower tuition.

In the long term, the federal regulatory environment will stabilize, and institutions can adapt to the new environment in which they will operate.  For now, institutions facing enforcement actions based on departmental guidance should consider the likely impact of the election on enforcement actions based on departmental guidance.  A new set of policy makers will soon be ensconced at the Department of Education, and their priorities can be expected to be quite different.  Those changes in priorities will be quickly reflected in changes in guidance documents, and the revised guidance documents could either be helpful or harmful to institutions currently subject to enforcement actions.

ARTICLE BY James H. Newberry Jr.
© Steptoe & Johnson PLLC. All Rights Reserved.

Arizona Voters Approve Paid Sick Leave for Employees and Minimum Wage Increase

Arizona Minimum Wage and Paid Sick Time OffThe election results are in, and President-elect Donald Trump’s victory over Secretary Hillary Clinton has the nation abuzz and undoubtedly will for the foreseeable future.  However, the Presidential race was not the only notable race or measure on the ballot.  Although the dust hasn’t quite settled from last night’s historic vote, there a number of approved ballot measures that employers will need to understand and prepare for immediately.

Specifically, in Arizona, the Minimum Wage and Paid Sick Time Off Initiative, also known as Proposition 206, passed by a 59% to 41% margin.  The paid sick time component of the law will go into effect July 1, 2017, while the minimum wage increase begins in just a few months by raising the Arizona minimum wage to $10.00 per hour effective January 1, 2017.

The first component of the new Arizona law inserts Article 8.1 entitled “Earned Paid Sick Time” into Section 5, Title 23, Chapter 2 of the Arizona Revised Statutes.  The new paid sick time law applies to covered employers regardless of the number of employees; a covered employer with at least one Arizona employee is obligated to comply with the law.  Accrued paid sick time may be used for the employee for his or her own mental or physical illness, injury or health condition; or to care for a family member’s – as the term family member is defined under the statute – mental or physical illness, injury or health condition.  Here are the major points of emphasis:

All employees will accrue paid sick time at a minimum rate of one hour for every 30 hours worked for the employer.

Employees of an employer with 15 more employees may cap maximum annual accrual of paid sick time at 40 hours, while smaller employers may cap the maximum annual accrual at 24 hours.

Employees who are exempt under the Fair Labor Standards Act of 1938 (“FLSA”) will be assumed to work 40 hours in each work week for purposes of calculating paid sick time accrual, unless their normal work week is less than 40 hours, in which case earned paid sick time accrues based on actual hours worked.

Unused earned paid sick time must be carried forward to the following year consistent with the accrual limits of the statute. Employers may forego this requirement by following a procedure specified in the statute.

A 90-day probationary period for new employees may apply to the use, but not accrual, of paid sick time.

The new law includes specific employee protections making it unlawful for an employer to retaliate or discriminate against an employee for exercise of his or her use of paid sick time.

Further complicating the new law will be the statutory provision allowing employers to do away with the accrual method in favor of simply providing an employee at the beginning of the year all earned paid sick time that an employee is expected to accrue during the year.  (This provision brings Arizona’s law relatively on par with neighboring California’s paid sick time law.)  The new Arizona law contains other provisions explaining issues such as an employer’s ability to pay its employees for earned, unused paid sick time rather than carrying it forward to the next year; notice required by the employee for use of paid sick time; and the employer’s ability to request documentation to verify proper use of paid sick time.   Notably, the law does not require the payment of accrued but unused paid sick time upon termination of employment.

Employers should note that the provisions of the new paid sick time law are minimum requirements, and nothing in the new law prevents an employer from establishing a more generous policy or continuing one already in place.

The second component of the new Arizona law adjusts Arizona Revised Statute § 23-363 to require a gradual increase of Arizona’s minimum wage beginning this coming January.  Arizona’s new minimum wage will be $10.00 per hour effective January 1, 2017.  Thereafter, the minimum wage will be raised to $10.50 effective January 1, 2018, $11.00 effective January 1, 2019, and $12.00 per hour effective January 1, 2021.  Beginning in 2021, the minimum wage will continue to be adjusted annually based on Arizona’s cost of living.  Employers with employees who customarily and regularly receive tips as part of their income may continue to pay employees $3.00 less than the minimum wage in accordance with Arizona’s minimum wage act if the employer can prove the employee is earning at or beyond the minimum wage after tips are counted.

Arizona’s passing of Proposition 206 continued a national trend of answering demands for paid sick time and increasing the minimum wage.  Maine and Colorado also agreed to raise the minimum wage, while Washington voters approved of both a minimum wage increase and to provide paid sick leave for employees in similar fashion to Arizona’s measure.

Arizona employers are encouraged to reach out to local employment attorneys for additional guidance or as questions may arise.

ARTICLE BY Daniel B. Pasternak of Squire Patton Boggs (US) LLP
© Copyright 2016 Squire Patton Boggs (US) LLP

President-Elect Trump’s Impact on Affordable Care Act

Health, Stethoscope, Affordable Care ActFor years, the Republican-controlled Congress has vowed to repeal or significantly scale back President Obama’s landmark legislation – the Patient Protection and Affordable Care Act (the “ACA”). During his campaign, President-elect Donald Trump repeatedly promised that he would “immediately repeal and replace” the ACA upon taking office.  Assuming Trump follows through on his promise, the ACA’s days are likely to be numbered, at least in its current form.  The scope of such repeal remains uncertain, however.  Trump has indicated that the ACA cannot simply be repealed – it must be replaced.  To date, he has not provided the details of any alternative to the ACA.

Under the current House proposal, the ACA’s individual and employer mandates would be repealed outright.  Although the controversial excise tax on high-cost health care (i.e., the so-called “Cadillac Tax”) would also be repealed, the proposal would put a cap on the deduction that employers can take for the cost of healthcare provided to employees.  It is also expected that the proposed alternative would give tax credits to individuals without employer-provided health coverage and expand the tax benefits associated with health savings accounts.  Certain popular aspects of the ACA, such as the prohibition of preexisting condition exclusions, dependent coverage through age 26 and Medicaid expansion, would remain in place. Democrats are likely to strongly oppose the House proposal. There probably will be little that Democrats will be able to do, however, to stop the repeal/replacement of the ACA facing Trump and a Republican-controlled Congress.

ARTICLE BY Paul M Hamburger of Proskauer Rose LLP

© 2016 Proskauer Rose LLP.

President Donald J. Trump – What Lies Ahead for Privacy, Cybersecurity, e-Communication?

President TrumpFollowing a brutal campaign – one laced with Wikileaks’ email dumps, confidential Clinton emails left unprotected, flurries of Twitter and other social media activity – it will be interesting to see how a Trump Administration will address the serious issues of privacy, cybersecurity and electronic communications, including in social media.

Mr. Trump had not been too specific with many of his positions while campaigning, so it is difficult to have a sense of where his administration might focus. But, one place to look is his campaign website where the now President-elect outlined a vision, summarized as follows:

  • Order an immediate review of all U.S. cyber defenses and vulnerabilities by individuals from the military, law enforcement, and the private sector, the “Cyber Review Team.”

  • The Cyber Review Team will provide specific recommendations for safeguarding with the best defense technologies tailored to the likely threats.

  • The Cyber Review Team will establish detailed protocols and mandatory cyber awareness training for all government employees.

  • Instruct the U.S. Department of Justice to coordinate responses to cyber threats.

  • Develop the offensive cyber capabilities we need to deter attacks by both state and non-state actors and, if necessary, to respond appropriately.

There is nothing new here as these positions appear generally to continue the work of prior administrations in the area of cybersecurity. Perhaps insight into President-elect Trump’s direction in these areas will be influenced by his campaign experiences.

Should we expect a tightening of cybersecurity requirements through new statutes and regulations?

Mr. Trump has expressed a desire to reduce regulation, not increase it. However, political party hackings and unfavorable email dumps from Wikileaks, coupled with continued data breaches affecting private and public sector entities, may prompt his administration and Congress to do more. Politics aside, cybersecurity clearly is a top national security threat, and it is having a significant impact on private sector risk management strategies and individual security. Some additional regulation may be coming.

An important question for many, especially for organizations that have suffered a multi-state data breach, is whether we will see a federal data breach notification standard, one that would “trump” the current patchwork of state laws. With Republicans in control of the executive and legislative branches, at least for the next two years, and considering the past legislative activity in this area, a federal law on data breach notification that supersedes state law does not seem likely.

Should we expect an expansion of privacy rights or other protections for electronic communication such as email or social media communication?

Again, much has been made of the disclosure of private email during the campaign, and President-elect Trump is famous (or infamous) for his use of social media, particularly his Twitter account. For some time, however, many have expressed concern that federal laws such as the Electronic Communications Privacy Act and the Stored Communications Act are in need of significant updates to address new technologies and usage, while others continue to have questions about the application of the Communications Decency Act. We also have seen an increase in scrutiny over the content of electronic communications by the National Labor Relations Board, and more than twenty states have passed laws concerning the privacy of social media and online personal accounts. Meanwhile, the emergence of Big Data, artificial intelligence, IoT, cognitive computing and other technologies continue to spur significant privacy questions about the collection and use of data.

While there may be a tightening of the rules concerning how certain federal employees handle work emails, based on what we have seen, it does not appear at this point that a Trump Administration will make these issues a priority for the private sector.

We’ll just have to wait and see.

ARTICLE BY Joseph J. Lazzarotti of Jackson Lewis P.C.

Jackson Lewis P.C. © 2016