Author: jfortenberry@fortenberrylaw.com

From Google Labs, “The In Quotes feature allows you to find quotes from stories linked to from Google News.” Suggested use: You can insert the word “retirement plans” or “health care” and find out what the candidates or other individuals had to say about such benefits-related topics. Read about the feature here.

(From Be Spacific)

Some of the benefits-related provisions in EESA passed by the Senate in addition to the executive compensation provisions discussed here (House bill and Senate bill provisions on executive compensation appear to be identical–see comparison here):

Extension and Modification of AMT credit allowance against Incentive Stock Options (ISOs).

Extension of IRA rollover provision allowing taxpayers to make tax-free contributions from their IRA plans to qualified charitable organizations.

Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 requiring private insurance plans that offer mental health benefits as part of the coverage to offer such benefits on par with the medical-surgical benefits.

Doubling of limitations on loans and deferral of loan payments from loans under qualified plans in Midwestern disaster area.

Nonqualified deferred compensation provisions for deferred compensation plans of “nonqualified entities”

More detail on these provisions in this Senate Finance Committee Summary.

See also this News Release.

GovTrack has posted a comparison of the EESA legislation which was passed last night by the Senate and the previous bills which were in circulation on the House side here. (More comparisons here.)

From MarketWatch, “Senate approves $700 billion financial rescue plan.” Excerpt:

Wednesday morning, groups representing large and small businesses and retired persons urged the Senate and House to approve the legislation and kick-start the flow of credit. Leaders of the Business Roundtable, the National Federation of Independent Business and the AARP said that businesses and retirement savings are at risk without passage of the rescue package.

“We need action now to protect jobs and homes and retirements,” commented Bill Novelli, the AARP’s chief executive. “People are calling in great fear because their 401(k)s are basically disappearing.”

The Senate has just passed their version of the Emergency Economic Stabilization Act of 2008 (“EESA”). Access the text of the bill here. The Wall Street Journal covers the story here.

The bill appears to contain the same reference to retirement plans as did the House bill that was discussed in a previous post here.

Also, there appears to be this nice little Warren Buffett provision in the bill:-)

(3) PRIVATE SECTOR PARTICIPATION.—The Secretary shall encourage the private sector to participate in purchases of troubled assets, and to invest in financial institutions, consistent with the provisions of this section.

Great article from CFO.com entitled “Benefits: Adult Education.” Excerpt:

By offering more and better education around benefits, companies not only help employees make the most of their perquisites, but also gain from increased retention, higher productivity, and related forms of goodwill.

“Benefits are probably the largest untapped potential retention tool that organizations have,” says Steve Miranda, chief of human resources at the Society for Human Resource Management in Alexandria, Virginia. But all too often, he says, “they turn into nonperforming assets because they aren’t being used to create ‘stickiness.'” In other words, to tap the full benefit of benefits, companies should package them with more-useful instructions. “People are clamoring for more communication,” says Miranda.

More:

To usefully address such questions, companies have learned to dole out data in small bursts — using E-mail blasts and podcasts, monthly intranet postings, or even animated characters online. (Ceridian, an HR services company, actually created online commercials featuring a superhero named Flexman, who saves people from financial binds by explaining the virtues of flexible-spending accounts.)

You can access one of the commercials featuring Flexman here.

The Senate has begun debate on the Troubled Assets Relief Program (“TARP”) as established under the Emergency Economic Stabilization Act of 2008 (“EESA”). You can access the text of the Senate version of the bill here (after you click on the link, scroll down for the bill) and listen to the debate live on C-SPAN here.

We have known for some time that the IRS was planning a compliance project targeting colleges and universities. In today’s email was a press release from the IRS indicating that the compliance project is now upon us. Excerpt:

Approximately four hundred U.S. colleges and universities will begin receiving compliance questionnaires from the Internal Revenue Service in the next few days as part of the agency’s focused effort to study key areas in the tax-exempt community. The college and university questionnaire will focus on unrelated business income, endowments and executive compensation practices. The questionnaires are being sent to a cross-section of small, mid-sized and large private and public four-year colleges and institutions.

The Questionnaire is part of the Colleges and Universities Compliance Project. The IRS says in the press release that, after it receives responses, it will analyze the results of the compliance questionnaire and conduct examinations for a sample of the organizations (i.e. the lucky winners).

Please note that the Questionnaire compiles a lot of detailed information from colleges and universities about the benefits they provide to executives. Some of the items included are:

Contributions to employee benefit plans including 403(b) plans, 457(b) plans, 457(f) plans, and health plans

Incentives (short term and long term)

Contributions to life, disability and long term care insurance

Contributions for split-dollar life insurance

Loans/credit extensions (including forgone interest or debt forgiveness)

Severance

Organization-provided housing or utilities

Other executive fringe benefits

The compliance project is patterned after the one targeting hospitals over the last couple of years. (Read the IRS’s summary of the results of that project here.) Many colleges and universities will likely want to assemble a group of professionals, consisting of counsel and others, to assist in this project. (In other words, better to assemble them now in preparing the response, than later when notification of an audit has been received.)

Important links:

Colleges and Universities Compliance Project Website
Actual Compliance Questionnaire Being Sent to Colleges and Universities
Instructions for the Compliance Questionnaire
Cover letter Being Mailed to Colleges and Universities

Thanks to Benefitslink for the tip about a very important case, Golden Gate Restaurant Association v. City and County of San Francisco, et al., from the Ninth Circuit upholding the San Francisco mandatory healthcare expenditure law. A lot of folks weighed in on that case including the DOL, the American Benefits Council, the U.S. Chamber of Commerce, ERIC, and many others, knowing how important the result in the case would be due to the healthcare initiatives being proposed across the country. (You can read the DOL’s Amicus Brief filed in the case here.)

In the Golden Gate case, the district court had enjoined the employer spending requirements of the San Francisco Health Care Security Ordinance, holding that ERISA preempted the spending requirement. The Ordinance requires all covered employers to make a certain level of health care expenditures on behalf of their covered employees. However, the Ninth Circuit reversed, holding that the Ordinance is not preempted by ERISA.

Many will probably think that this case now creates a split in the Circuits due to the Fourth Circuit opinion in the Retail Industry Leaders Association v. Fielder case (noted below). That case dealt with Maryland’s Fair Share Health Care Fund Act (discussed in previous posts which you can access here). However, the Ninth Circuit in its opinion distinguishes that case and states its belief that a split will not be created.

The Ninth Circuit’s key holdings in the case:

(1) “The fact that an employer makes its payments to the City rather than to the employees confirms, if confirmation were needed, that the employer’s administrative obligations under the City-payment option do not create an ERISA plan. Under the Ordinance, an employer has no responsibility other than to make the required payments for covered employees, and to retain records to show that it has done so. The payments are made for a specific purpose, but the employer has no responsibility for ensuring that the payments are actually used for that purpose.”

(2) “The HAP, administered by the City, is not an ERISA plan. Rather, the HAP is a government entitlement program available to low- and moderate-income residents of San Francisco, regardless of employment status.”

(3) “The Ordinance in this case stands in stark contrast to the laws struck down in Egelhoff, Shaw and Agsalud. The Ordinance does not require any employer to adopt an ERISA plan or other health plan. Nor does it require any employer to provide specific benefits through an existing ERISA plan or other health plan. Any employer covered by the Ordinance may fully discharge its expenditure obligations by making the required level of employee health care expenditures, whether those expenditures are made in whole or in part to an ERISA plan, or in whole or in part to the City. The Ordinance thus preserves ERISA’s “uniform regulatory regime.” See Davila, 542 U.S. at 208. The Ordinance also has no effect on “the administrative practices of a benefit plan,” Fort Halifax Packing Co., 482 U.S. at 11, unless an employer voluntarily elects to change those practices.”

(4) “There is a critical distinction between the ordinance in Greater Washington and the Ordinance in this case. Under the ordinance in Greater Washington, obligations were measured by reference to the level of benefits provided by the ERISA plan to the employee. Under the Ordinance in our case, by contrast, an employer’s obligations to the City are measured by reference to the payments provided by the employer to an ERISA plan or to another entity specified in the Ordinance, including the City. The employer calculates its required payments based on the hours worked by its employees, rather than on the value or nature of the benefits available to ERISA plan participants. Thus, unlike the ordinance in Greater Washington, the Ordinance in this case is not determined, in the words of § 514(a), by “reference to” an ERISA plan.”

(5) “Finally, the Association contends that the Ordinance is preempted under the analysis set forth in Retail Industry Leaders Association v. Fielder, 475 F.3d 180, 183 (4th Cir. 2007). The Association contends that we will create a circuit split if we uphold the Ordinance. We disagree. We see no inconsistency between the Fourth Circuit’s holding in Fielder and our holding in this case.”

The court held that the San Francisco ordinance was distinguishable from the Maryland statute in the Fielder case in that the Ordinance does not “effectively mandate that employers structure their employee healthcare plans to provide a certain level of benefits.”

(By the way, the court cites this article in their opinion: Preemption and Civic Democracy in the Battle Over Wal-Mart by Catherine Fisk, University of California, Irvine Law School, and Michael M. Oswalt.)

UPDATE: From the San Francisco Sentinel:

A restaurant association spokesman said today the group will appeal a federal circuit court ruling that upheld an employer spending mandate in the city of San Francisco

Retirees are not surprisingly getting hammered in the recent economic downturn. And yet, this poll from Rasmussen indicates that “retirees, whose investments are being buffeted by the shifts in the stock market and generally have a more immediate need for that money, favor letting Wall Street and the financial sector work out its own problems by a 47% to 41% margin.”