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SHRM Newsletter: Senate Extends Employer Tuition Tax Breaks



December 16, 2010

This is Utah SHRM Legal-mail no. 2010-19 prepared for Salt Lake SHRM, the Human Resources Association of Central Utah (HRACU), the Northern Utah Human Resources Association (NUHRA), the Color Country Human Resources Association (CCHRA), the Bridgerland Society for Human Resource Management and Utah at-large members of the national Society for Human Resource Management (SHRM).



SENATE EXTENDS EMPLOYER TUITION TAX BREAKS:  National SHRM reports that the United States Senate voted this week to approve a massive $858 billion tax package that includes a two-year extension to a popular tax break for employer-provided tuition assistance. The proposal passed by an 81-19 vote, showing wide bipartisan support. According to national SHRM, “The legislation extends for two years the tax breaks enacted during the presidency of George W. Bush, including Section 127 or the tuition assistance tax exclusion for employees. The tax cuts were set to expire on December 31, 2010. Section 127, which allows employees to exclude up to $5,250 a year in employer-provided tuition assistance for undergraduate and graduate-level courses, has been a popular tax provision among employers and employees. The two-year extension of the tuition tax break was welcome news for business and employee advocacy groups such as the Society for Human Resource Management (SHRM) and the Coalition to Preserve Employer-Provided Education Assistance, which support a permanent extension of Section 127. Although the legislation passed by the Senate will extend Section 127 for two years, members of the coalition have promised to keep pushing for a permanent extension of popular tax provision.”  The tax bill now goes on for a vote in the United States House of Representatives, where it is expected to pass.  President Obama has indicated he will sign the bill into law.

EMPLOYERS PREDICT MORE LAWSUITS IN 2011:  Responding to a 2010 survey by an employment practices liability insurer, a significant percentage of employers are predicting they will face increased job-related lawsuits next year.  Over one third of these companies (36%) participating in the survey said that an employment lawsuit was their most costly potential loss in 2011.  Almost 20% of responding companies said they expected to face an employment lawsuit in 2011.  The survey results seem driven in part by the record number of employment charges filed this past year with the Equal Employment Opportunity Commission (EEOC), as well as by the fact that employment claims typically rise in difficult economic times.


COURTS BATTLE OVER HEALTH CARE REFORM:  One key element of health care reform requires smaller businesses to provide coverage to employees or pay fees into a pool for coverage.  But one of the most interesting, important and controversial parts of the health care reform package passed by Congress last year was the mandate requiring that uninsured individuals purchase some kind of insurance coverage, even if it must be done with some sort of public assistance.  The theory behind this mandate is that if more people are covered by private sector insurance, it will help bring down the overall costs of health care.  This is supposed to happen by getting some insurance payments to providers who often give health care services to this group without any payment (and who then charge the rest of us more money to make up the difference).  The individual mandate also carries with it the hope that if the uninsured can be covered by private insurance, there will be no need to try to cover them with a public insurance option like Medicare or Medicaid.  The individual mandate has been controversial, described by some as an affront to individual liberty and beyond the legislative power of the federal government.  Thus, shortly after it was passed, several lawsuits were filed challenging the constitutionality of the health care reform law.  The courts are now starting to issue rulings on these lawsuits, and they do not seem to be able agree on the appropriateness of health care reform anymore than the rest of the population.  For instance, federal courts in Michigan and Western Virginia have upheld the mandate, but a different federal court in Eastern Virginia has struck it down.  A Florida court has not yet ruled on a lawsuit pending there.  The individual mandate rule does not take effect until 2014, so the courts still have time to sort this all out.  The final verdict likely will come from the United States Supreme Court.

SUPREME COURT BUSY WITH OTHER EMPLOYMENT CASES TOO:  The United States Supreme Court also will be busy next year with several other employment issues.  The Court has agreed to review the decision granting class certification to 1.5 million current and former Wal-Mart employees in their gender discrimination case. A federal judge and the U.S. court of appeals in San Francisco cleared the lawsuit to proceed as a class action despite the employer’s arguments that the hiring decisions at issue were made by thousands of different local stores and not as part of any national policy. The Court is also considering whether federal law allows for a claim of third party retaliation.  This case involves a claim by a male worker that he was discharged because his fiancée had brought a sex discrimination claim against the company that employed both of them.  Disagreeing with the Equal Employment Opportunity Commission (EEOC), which enforces the law, the lower federal appeals court had dismissed the male worker’s claim as not proper under the statute because he did not engage in any protected conduct himself.  If the Court rules for the plaintiff-employees in these cases, employers could face expanded risks of lawsuits for employment decisions.  Stay tuned for further developments!

OSHA SAYS NO TO TEXTING AND DRIVING:  The federal Occupational Safety and Health Administration (OSHA) has announced an initiative against job-related driving by employees who are distracted by such things as texting and electronic devices.  In October of 2010, an assistant Secretary of Labor for OSHA sent an open letter telling employers they have a “responsibility and legal obligation” to implement and enforce policies prohibiting employees from work-related driving while distracted by things such as texting.  This letter also noted that federal safety laws will be violated when employers require that employees engage in conduct that distracts them while driving on the job.  His letter also suggested violations will occur when employers structure work to make distracted driving a practical necessity or when they encourage it via incentives.  So, take a look at your practices and policies on this point.  And, if you are reading this update while driving, STOP IT!  Good lawyers do not let friends (or clients) text and drive.

Written by: Employment Attorney, Michael Patrick O'Brien
Utah State and Salt Lake SHRM legal director
Phone: 801-534-7315

Legal-mail is a legal and legislative update service sent out about twice a month to various Utah SHRM members and chapters. As a courtesy to SHRM, the Utah law firm of Jones Waldo Holbrook & McDonough P.C. underwrites the costs of the service. If you have any questions or comments, please contact Michael Patrick O'Brien.

Disclosure: These updates are merely updates and are not intended to be legal advice. Receipt of this information does not create an attorney-client relationship.