Government Matters: 2010 Update

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1 Government Matters: 2010 Update BRAD D. STEELE VP of Gov t Relations & General Counsel National Club Association th Street NW, Suite 450 Washington, DC steele@nationalclub.org

2 National Club Association The advocate for clubs your lobbyist On Capitol Hill In the agencies In the statehouses In the courthouses NCA makes sure the private club industry s voice is heard And, NCA provides answers for club leaders Through conferences, seminars, personal consultations and with numerous publications

3 Today s Roadmap The Political Landscape Congressional Action Regulatory Action

4 The Political Landscape: Capitol Hill

5 House of Representatives Make-up: 257 Democrats 178 Republicans, Rep. Parker Griffith (Ala.) switched to Republican Party in December Only need 218 to pass anything Expanded 39 vote Democratic majority means Speaker Nancy Pelosi (D-Calif.) can do as she pleases She can lose some Blue Dogs (49); She can lose some New Democrats (56); and She has less need to engage the minority party

6 Make-up: 58 Democrats 40 Republicans 2 Independents Senate The majority has a filibuster-proof Senate If all members of the majority tow the line, the Senate can function just as the House does Health care bill first time that has happened The retirement of Senators Chris Dodd (D-Conn.), Byron Dorgan (D-N.D.), Roland Burris (D-Ill.) and Ted Kaufman (D-Del.) raise questions about keeping the 60 votes Sen. Robert Byrd (D-W.Va.), 92, is the longest serving Member of Congress 52 and has health issues

7 Congressional Action in 2010

8 Tax Increases The President s plan Increases the top 2 marginal income tax rates from 33% to 36% and from 35% to 39.6% Increases the capital gains and dividends tax rate from 15% to 20% Limits personal exemption and itemized deductions (mortgage interest) for the wealthy Family making $500,000/yr. will pay more than $11,000 in new taxes With 20 such families at your club, you could lose more than $200,000/yr.

9 The Patient Protection and Affordable Care Act The 2,457 page, $1.0T Senate bill has some good points: Insurers must accept everyone regardless of a pre-existing condition Insurers must renew coverage on individuals even if they suffer health problems during the year Insurers may not place a limit on lifetime benefits and they must place a limit on annual out of pocket expenses Insurers may not look at gender or past claims to determine yearly rates

10 The Patient Protection and Affordable Care Act And, the bill has some bad points, too: Ins. companies with policies costing more than $8,500 or $23,000 will be subject to a 40% tax on the amount above those thresholds Cost will be passed on to those who own such Cadillac policies $60B small business health ins. tax Ins. companies will pay a new gov t fee, but CBO says fee will be passed to you and your members Rx manufacturers and medical device makers will pay new gov t fee All must carry ins. or be fined $750, but 8% rule

11 The Patient Protection and Affordable Care Act Then there are some very bad points: Clubs with 50 + full-time employees will be fined up to $750/employee if they don t offer ins. Full-time employee = 30 hours/service week Seasonal workers are included if your club has 50 + employees or if you work them more than 120 days Clubs with a waiting period of more than 60 days - $600 fine Clubs that do offer ins. can be fined, too If the ins. cost is more than 9.8% of an employee s income and he goes to gov t exchange, then $3K/employee up to $750 times total no. of employees

12 The Patient Protection and Affordable Care Act Finally, the bill will have a significant impact on your members, too: Medicare payroll tax is increased by.9% for those making $200K/$250K or more With only 50 members making $250,000, this tax hike could cost your club over $100,000 Your members could be forced to choose between their kids education funds, their own retirement funds, or their discretionary spending at the club to pay these new costs, fines and taxes

13 Health Care Reform Outlook The House wants more subsidies in lieu of a public option and a reduction in Cadillac tax That could mean: Higher fines/taxes on businesses House proposed an 8% payroll tax on businesses that did not offer insurance or that did not contribute enough to their employees premiums (72.5% and 65%) A return to the House surtax on the wealthy An individual making over $500K or a family making over $1 million would have a new 5.4% surtax with 20 members making over $500K, the surtax alone could cost a club over $200K Higher payroll taxes and capital gains taxes

14 Health Care Reform Outlook The House passed its bill and the Senate passed its bill So, there is little room to make a lot of changes, but House Members and leadership feel extremely slighted Pres. Obama will meet with House Dems. at their issues conference this Thursday for final push Looks like early February for passage

15 Employee Free Choice Act The Card Check bill introduced by the late Sen. Ted Kennedy (D-Mass.) - 40 cosponsors House version introduced by Rep. George Miller (D-Calif.) co-sponsors Passed the House in 07, but failed in the Senate by 9 votes Dems. have those 9 votes in 2010 The Card Check bill strips the secret ballot election from workers deciding to join a union If a majority sign a card, then your club is union

16 The Card Check Bill The bill states that if the initial CBA cannot be reached within 120 days, then a federal arbitrator imposes a 2 yr. contract No employee vote and no changes to reflect the needs of the club The bill makes it more difficult for the club to talk with employees about risks of union representation Adds fines of up to $20,000 for new unfair labor practices

17 The Card Check Bill The Quickie Election compromise Union calls for election after quietly campaigning Election held within 5-10 days from call Sen. Tom Harkin (D-Iowa) Chair of HELP likes the quickie election language AFL-CIO annual convention in Pittsburgh Pres. spoke and unions want 1,000 organizers ready once EFCA passes If there is a yes vote on cloture in the Senate, the bill will become law

18 American Clean Energy and Security Act The Cap and Trade bill introduced by Rep. Henry Waxman (D-Calif.), Chair of the Energy and Commerce Committee Caps carbon dioxide emissions by requiring power plants to use cleaner fuel to create electricity Forces the reduction in the use of coal and oil and a retrofitting of plants to burn new fuels Hopes for a 17% reduction in emissions by 2020 What new and cleaner fuels? Higher production costs will be passed on to consumers

19 The Cap and Trade Bill The minority offered an alternative: Set new carbon emission standards for all new power plants, but exempt existing ones Existing plants would be given tax incentives to install changes to limit emissions Speaker Pelosi forced the Waxman bill through the House All parties acknowledge that there will be higher costs for the rate payer, but it still passed the House

20 Clean Energy Jobs and American Power Act The Senate version of Cap and Trade introduced by Sen. Barbara Boxer (D-Calif.), Chair of the Environment & Public Works Committee, and Sen. John Kerry (D-Mass.) They used the House bill as their model, but increased the carbon emissions reduction from 17% to 20% The bill is a top priority in 2010 Already out of Sen. Boxer s committee If passed, your club will pay more for energy

21 CIR ASAP The House immigration bill, entitled Comprehensive Immigration Reform for America s Security and Prosperity, introduced by Rep. Solomon Ortiz (D-Texas) proposes: Stronger border security, Stronger employment verification mechanisms, Creating a pathway to citizenship for undocumented aliens, Creating a Commission on Immigration and Labor Markets, and Broad visa reforms including H-2B visas

22 CIR ASAP The Commission on Immigration and Labor Markets A new federal agency that would recommend to Congress and the President the number of foreign workers to be admitted into the country Number would change each year based on the Commission s decision Composed of 7 political appointees who make this decision rather than the business community that needs and uses the workers

23 CIR ASAP The bill also reforms the H-2B visa program No renewal of the RWE & no increase in visa cap Requires clubs to: Notify the state and local unions of the job opening, Pay a new $800 application fee and all transportation costs, visa fees and subsistence costs of the workers (currently required by DOL), Pay H-2B workers the CBA wage or prevailing wage or median of BLS wage or at least 150% of minimum wage, and Provide workers compensation Clubs cannot hire an H-2B worker unless: The real prevailing wage for the job increased by 3% over the last year or you offer to pay 3% more

24 CIR ASAP Penalties for failure to comply include Fines of up to $10,000 Debarment from the program for 1-5 yrs. H-2B workers would have the right to sue Any person whose wages or working conditions have been directly and adversely affected by an employer in violation of these laws Lawsuit is filed in federal court They may recover back wages, court costs and attorney s fees

25 Regulatory Action in 2010

26 COBRA Payments Employers who have terminated, or will terminate, an employee between and must offer a subsidy for the COBRA premium The original end date was The subsidy is effective starting and lasts up to 15 months Extended the subsidy an extra 6 months Employer pays 65% of the cost but the employer may reduce the 65% premium from FICA and withholding taxes

27 SSA No-Match Rules President Obama rescinded the Bush rules with no new guidelines, BUT DHS is now targeting employers rather than the illegal aliens and No-Match letters are red flags E-Verify is a way to protect your club Though the Bush rules are gone, clubs should still follow them: Notify your employee and assist him as he resolves the issue with SSA Document what you do and what he does Don t fire him unless he has shown he s not doing what a reasonable person would do

28 The National Club Association YOUR VOICE IN WASHINGTON, DC JOIN TODAY!