House Ways and Means Committee Releases Tax Reform Proposal

Society of American Florists

Citing the need for simplicity and fairness first, Republicans on the House Ways and Means Committee in late June released a tax reform proposal they say will make it easier to create jobs, raise wages and expand opportunities for all Americans.

This blueprint for tax reform is among a handful of proposals that Republicans in the House, led by Speaker Paul Ryan, have recently released to help establish the party platform leading up to the November elections.

The reform proposal as written:

Retains many of the big-ticket items, such as the mortgage deduction, the charitable deduction and the deductions for employee health insurance and retirement plan savings
Consolidates the seven individual tax brackets down to three with a top rate of 33%
Removes pass-through entities from the individual tax rates and instead subjects them to a 25% tax rate
Establishes a flat 20% tax on C Corporations
Eliminates a number of the deductions on both the individual and corporate side
Replaces the depreciation rules and allows businesses to immediately write off the full cost of investments
Repeals the estate and gift tax, without mention of the step-up in basis—which could prove problematic for small businesses
Repeals the Alternative Minimum Tax (AMT) for individuals and corporations

Use of Mobile Devices for Work Under Scrutiny by Department of Labor
Acknowledging the widespread use of mobile devices by employees away from the workplace and outside of scheduled work hours, the Department of Labor (DOL) will begin to collect information on how the use of mobile devices affects employers’ calculations of work time and overtime under the Fair Labor Standards Act (FSLA).

DOL will issue a request for information (RFI) in July. Whether the RFI is the first step in another rule by DOL is unclear at this time. However, the complications and possible burdens that would accompany a possible new rule merit SAF monitoring DOL’s actions.

In late May, the DOL finalized a rule that dramatically changed overtime regulations.

The new rule doubles the threshold of those who qualify for overtime from the current level of $23,660 per year ($455 per week) to $47,476 per year ($913 per week). Between 4.2 million and 10 million additional workers will be eligible for overtime pay under the rule. In addition, the overtime threshold level will adjust automatically in the future rather than having DOL propose changes and solicit comments on those changes.

Working at a desk inside an office for eight hours a day is no longer the universal standard of work. With advances in technology, employers already struggle with how to track hours employees are working. As the lines between work and home have blurred, tracking hours has only gotten more difficult.

Time spent working outside the office on mobile devices and computers by non-exempt employees can complicate work-time calculations made by employers under the FLSA and could ultimately affect overtime determinations.

Courts and the DOL recognize that employers aren’t liable under the FLSA for negligible, or “de minimis,” uncompensated work time, but there’s little guidance on what constitutes negligible as it relates to technology and mobile devices. Because the time spent to check and respond to email on a mobile device can take as little as a few seconds, it may appear to be de minimis. However, an employee might be engaged in that kind of activity five times an hour for several hours. The law is unclear on where the line is drawn between de minimis and compensable hours worked, and this lack of clarity is especially problematic when addressing the subject of mobile device use outside work hours by non-exempt employees.

Many employers already have policies in place regarding off-hours use of technology by overtime-eligible employees. While any formal rule is a long way off, business owners in the industry should review their policies on the use of mobile devices. Restricting remote connectivity to exempt employees may reduce liability and exposure for some employers.

Progress on SAF-Backed Health Care Expense Legislation
A bill to allow small businesses to help pay premiums and other out-of-pocket costs associated with medical care and services for their employees was passed by the House in late June. The Senate has also begun the process to expedite consideration of The Small Business Health Care Relief Act, H.R. 5477.

SAF has supported this legislation and has signed on to letters sent to Capitol Hill urging members of Congress to endorse legislation permitting small businesses to help pay health care costs for their employees.

The Affordable Care Act (ACA) made it illegal for small businesses to assist their employees with health care expenses unless it was through a federally-approved health care insurance plan.

Prior to the enactment of the ACA, many small business owners who wanted to help their employees pay for their medical care or reimburse them their health care expenses could do so through a Health Reimbursement Arrangement (HRA).

In 2013, the Internal Revenue Service (IRS) issued guidance saying that all employers who fail to offer a group health plan, but provide tax preferred dollars through an HRA for their workers to pay for health insurance or other medical expenses would be fined up to $100 per day, per employee. That totals $36,500 annually per employee up to $500,000.

The Small Business Health Care Relief Act will allow small businesses to provide HRAs to once again help their workers and families pay for premiums or other medical expenses. This provides small employers with additional flexibility and allows those small companies—the majority of whom don’t have human resource departments or benefits specialists—a simpler, easier way to help their employees with rising medical costs. GT

“SAF in the Lobby” is produced by the Society of American Florists, 1601 Duke Street, Alexandria, Virginia 22314; Tel: (703) 836-8700 or (800) 336-4743; Fax: (703) 836-8705; or visit the SAF Web site: www.safnow.org. For more information on legislative issues, contact the Government Relations Department.