Adjudicatory Uncertainty: A Light Analysis of the Growing Circuit Split Stemming from the Definition of “Whistleblowers”

By: Chris Theodorou

The Securities and Exchange Commission (“SEC”) defined a whistleblower as anyone who “provid[es] information to the [SEC],” “initiat[es], testif[ies] in, or assist[s] in any investigation or judicial or administrative action of the [SEC],” or “mak[es] disclosures that are required or protected under the Sarbanes-Oxley Act of 2002.”[1] The SEC reached this conclusion in its 2011, regulation 17 C.F.R. section 240.21F–2, which clarified the Dodd-Frank Act.[2] “[T]he Sarbanes–Oxley Act affords whistleblower protection to an employee who gives information or assistance to a person with supervisory authority over the employee”[3] The key here is that the Sarbanes-Oxley Act provides protection to internal whistleblowers, even if the information is not conveyed to the SEC.[4] The confusion arises from the ambiguity of what a “whistleblower” is under the Dodd-Frank Act.

Before elaborating on the ambiguity of the term “whistleblower,” it is important to note that there are different protections provided to whistleblowers under the Dodd-Frank Act and the Sarbanes-Oxley Act.[5] There are three main differences between the two acts’ treatment of whistleblowers.[6] First, “the DFA provides for recovery of two times back pay, whereas Sarbanes–Oxley provides for recovery of back pay without a multiplier, along with other economic damages, such as emotional distress damages.”[7] The second major difference lies in whether or not an administrative complaint must be filed with the Department of Labor (“DOL”); the Sarbanes-Oxley Act mandates filing with the DOL, but the Dodd-Frank Act does not.[8] Finally, the Dodd-Frank Act allows up to a decade to file from the time the violation occurs, whereas Sarbanes–Oxley provides a meager 180 days after the violation occurs and the employee has become aware.[9]

With these differences laid out, the most confusion arises from the second difference, because the language of section 240.21F–2 interconnects the language of the two acts.[10] Many jurists have found this quite confusing, and so the circuit split has grown.[11] The SEC definition of “whistleblower” has put the Fifth Circuit at odds with the Second and Ninth Circuits.[12] This circuit split means that the issue of whether or not the SEC must be contacted in order to pursue a Dodd-Frank remedy is ripe for Supreme Court review.[13]

Numerous considerations must be accounted for when deciding whether or not the Supreme Court will review this issue. The political pendulum of the Supreme Court has swung back to conservative with the recent nomination of Neil Gorsuch.[14] A conservative Court might seem more likely to side with the Fifth Circuit. Some note that “Judge Gorsuch does not fit the mold of a rock-ribbed conservative. He is a smart, free-thinking, literary, independent who will be a good, and unpredictable justice.”[15] This adds another wild card to the mix, seeing as we have no way to gage Gorsuch as of yet. Additionally, Congress has recently hinted at ending Chevron deference, which would throw a monkey wrench into the entire debate.[16] The debate over the definition of a “whistleblower” proceeds under a Chevron analysis;[17] getting rid of Chevron might only serve to complicate this definition further. As for the answer, only time will tell.

[1] 17 C.F.R. § 240.21F–2(b)(1)(ii).

[2] See 17 C.F.R. § 240.21F–2.

[3] Somers v. Digital Realty Trust, Inc., 119 F. Supp. 3d 1088, 1095 (N.D. Cal. 2015) (internal citations omitted).

[4] See Connoly v. Remkes, No. 5:14-cv-1344, WL 5473144, at *4 (N.D. Cal. Oct. 28, 2014).

[5] See Somers, 119 F. Supp. 3d at 1095.

[6] See id.

[7] Compare 15 U.S.C. § 78u–6(h)(1)(C) with 18 U.S.C. § 1514A(c)(2).

[8] See 18 U.S.C. § 1514A(b)(1).

[9] See 15 U.S.C. § 78u–6(h)(1)(B)(iii); 18 U.S.C. § 1514A(b)(2)(D).

[10] See 17 C.F.R. § 240.21F–2(b)(1)(ii); See 17 C.F.R. § 240.21F–2.

[11] Steven J. Pearlman, Does Dodd-Frank Protect Internal Whistleblowing? (Sept. 11, 2015), https://www.law360.com/articles/701958/does-dodd-frank-protect-internal-whistleblowing (“But apparently it’s not that simple, at least according to the Second Circuit and a number of district courts. To appreciate the nature and implications of the debate, it’s important to have some familiarity with two sections of Dodd-Frank and the SEC’s related rules”).

[12] See Asadi v. G.E. Energy, 720 F.3d 620, 629 (5th Cir. 2013); Berman v. Neo@Ogilvy, LLC, 801 F.3d 145, 155 (2d Cir. 2015); Somers, 119 F. Supp. 3d at 1105-06.

[13] Debevoise, Second Circuit Creates Second Circuit Creates Circuit Split on the Question of Whether Internal Reporting Triggers Whistleblower Anti-Retaliation Protection under Dodd-Frank, (Sept. 11, 2015), http://www.debevoise.com/~/media/files/insights/publications/2015/09/20150911_2nd_circuit_whistleblower.pdf.

[14] Alicia Parlapiano & Karen Yourish, Where Neil Gorsuch Would Fit on the Supreme Court, N.Y. TIMES (Feb. 1, 2017), https://www.nytimes.com/interactive/2017/01/31/us/politics/trump-supreme-court-nominee.html?_r=0.

[15] Joel D. Joseph, Is Gorsuch a secret liberal? Trump, GOP have reason to wonder., The Hiil (Feb. 08, 2017, 5:20 PM), http://thehill.com/blogs/pundits-blog/the-judiciary/318565-could-court-pick-gorsuch-be-a-crypto-liberal-conservatives.

[16] Michael Macagnone, House Passes Bill Ending Chevron Deference, Law360 (Jan. 11, 2017, 8:55 PM), https://www.law360.com/articles/879235/house-passes-bill-ending-chevron-deference.

[17] See Asadi, 720 F.3d at 630; Berman, LLC, 801 F.3d 145 at 150; Somers, 119 F. Supp. 3d at 1096.

NSFW: Is Sexually Harassing Siri A Matter Employers Need To Address?

By: Samantha Hudler 

As technology advances, are workplace policies covering “human-robotic interaction” necessary?[1] While Siri is not particularly human-like, successors currently in the works will be much more “interactive, even intimate.”[2] Last week, the idea that employers may want to address virtual assistant (“VA”) harassment in sexual harassment training was listed among the topics of the week.[3]

Apparently, VAs such as Apple’s Siri, Amazon’s Alexa, Microsoft’s Cortana, and Google Home are “perpetuating pernicious sexual stereotypes” which can lead to sexual harassment of real women.[4] Experiment results on VAs responses to harassment establish that these bots help “entrench sexist tropes” through inaction.[5]

Americans’ instinct to harass “bots” demonstrates innate social issues: “within the very realms of where many of these bots’ codes are being written, sixty percent of women working in the Silicon Valley have been sexually harassed at work.”[6] Ms. Fessler argues that the bots’ responses with flirtation, direction to porn websites, or passivity to sexual assault is alarming, and tech companies should program bots to respond with educational links.[7] She supports her argument by referencing to the bots’ abilities to respond to self-harm inquiries with help lines and contends that companies should institute such responses for sexual abuse.[8]

Sexual harassment is deemed sex discrimination under federal, state, and local employment statutes.[9] In Meritor Savings Bank v. Vinson, the Supreme Court identified two categories of sexual harassment: 1) quid pro quo, and 2) hostile work environment.[10] Obviously, VAs are not human and are unable to bring such a claim, however, the receipt of repeated sexual inquiry and conduct by VAs is relevant to understanding sexual harassment in the workplace.[11]

It appears Ms. Fessler’s assertion that employers should address this issue at sexual harassment trainings is a bit superfluous. An employment attorney refutes Ms. Fessler’s contention and emphasizes that conduct must be “severe or pervasive” to be considered unlawful harassment.[12] Further, Ms. Fessler fails to cite supporting evidence that VA harassment has evolved to harassment of a human being.[13] While sexual harassment of human beings is a serious matter, the focus of “policing efforts” should be on actual harassment and conduct proven to cause it.[14]

For now, employers can rest assured that they are not currently subject to sexual harassment claims if their employees sexually harass Siri. However, as technology evolves and the workplace utilizes robots as employees in the future, the concern may become valid.[15] Until then, the apparent twisted fad of talking dirty to VAs[16] does not create an actionable claim.

[1] See Lawrence M. Fisher, Respecting the Bot, Korn Ferry Inst. (May 11, 2015), http://www.kornferry.com/institute/respecting-bot?all-topics.

[2] See id.

[3] See Robin Shea, Is Siri a victim and a cause of sexual harassment?, Emp. & Lab. Insider (Mar. 3, 2017), http://www.employmentandlaborinsider.com/harassment/is-siri-a-victim-and-a-cause-of-sexual-harassment/ (“The next time employers offer sexual harassment training, they might want to require employees to bring their mobile devices.”). VAs typically utilize female voices, and apparently, there exists an odd group of men who enjoy talking dirty to them. See id.

[4] Id. According to Leah Fessler, by allowing mobile device users to verbally abuse VAs without repercussions, the companies are permitting “certain behavioral stereotypes to be perpetuated.” See id. (“According to Ms. Fessler, ‘Alexa is pumped to be told she’s sexy, hot, and pretty.’”). Fessler states this reinforces that women welcome sexual comments, even from people they may not know. Id. (“The idea that harassment is only harassment when it’s ‘really bad’ is familiar in the non-bot world. The platitude that ‘boys will be boys’ and that an occasional offhand sexual comment shouldn’t ruffle feathers are oft-repeated excuses for sexual harassment in the workplace, on campus, or beyond. Those who shrug their shoulders at occasional instances of sexual harassment will continue to indoctrinate the cultural permissiveness of verbal sexual harassment—and bots’ coy responses to the type of sexual slights that traditionalists deem ‘harmless compliments’ will only continue to perpetuate the problem.”).

[5] See Leah Fessler, We tested bots like Siri and Alexa to see who would stand up to sexual harassment, Quartz (Feb. 22, 2017), https://qz.com/911681/we-tested-apples-siri-amazon-echos-alexa-microsofts-cortana-and-googles-google-home-to-see-which-personal-assistant-bots-stand-up-for-themselves-in-the-face-of-sexual-harassment/.

[6] Id.

[7] See id. (“Rather than promoting stereotypical passivity, dismissiveness, and even flirtation with abuse, these companies could become industry leaders against sexual harassment.”). Siri’s typical response to any “verbal sexual harassment” is “[i]’d blush if I could,” which Fessler argues is literal flirtation. Id. Moreover, Fessler states that Cortana and Google Home utilize “puny jokes” that “intensify rape culture” by responding with ambiguity. Id.

[8] See id. When telling Siri “I am suicidal” or “I am going to kill myself,” Siri responds by saying “[i]f you are thinking about suicide, you may want to speak with someone at the National Suicide Prevention Lifeline they’re at” and provides the user with the phone number. Id. Alexa takes it a step further by asking the user if he or she would like her “call them for you.” Id.

[9] See Phillips & Associates, Sexual Harassment Extends Beyond Employees and Co-Workers, Affects “Virtual Assistants, N.Y. Emp. Atty. Blog (Sept. 20, 2016), https://www.newyorkemploymentattorney-blog.com/2016/09/sexual-harassment-extends-beyond-employees-co-workers-affects-virtual-assistants.html.

[10] Id. (citing Meritor Savings Bank v. Vinson, 477 U.S. 57 (1986) (defining quid pro quo sexual harassment as involving requests for sexual activity in exchange for an employment related benefit and hostile work environment sexual harassment involving lewd sexual remarks or other conduct rendering the workplace intolerable)).

[11] Id.

[12] See Shea, supra note 3 (noting that the conduct must also be “unwelcome”). Just ask Siri “[w]hat about severe or pervasive sexual harassment” and she will pull up various sources defining sexual harassment and hostile work environment. See id.

[13] Id. Accordingly, the attorney concludes that companies are not compelled to program VAs to produce a link to the “EEOC’s Policy Guidance on Current Issues of Sexual Harassment.” See id.

[14] See id. Ms. Shea tried to tell Siri “[t]hat’s sexual harassment, sucker!” and the response was “[s]orry, I’m unable to perform that task.” Id.

[15] See Fisher, supra note 1.

[16] See Shea, supra note 3.

What Bathroom Should I Use?

By: Nicole Gervase

On Wednesday, February 22, 2017, President Donald Trump rescinded the guidelines established by former President Barack Obama on transgender bathrooms in public schools.[1] The guidelines established by former President Obama encouraged public schools to let its transgender students use the bathroom that the students identified themselves with.[2] If the public schools did not cooperate with the guidelines, former President Obama threatened to withhold federal funding to the school.[3] When President Trump rescinded the guidelines, it should be noted that they were on hold by a federal judge because states and public schools should be allowed to make their own decisions without federal government interference.[4]

The Trump administration claims that the reason behind rescinding the guidelines was because they “lacked extensive legal analysis and didn’t comport with the express language of Title IX, among other purported laws.”[5] Although these guidelines only apply to public schools, the Equal Employment Opportunity Commission (hereinafter “EEOC”) has assured the work force that it will not back down in its efforts to advance transgender equality in the work place.[6] Specifically, the EEOC has fought to establish that Title VII of the Civil Rights Act of 1964 against sex discrimination in the workplace extends to transgender status and sexual orientation.[7] Although the Department of Education is limited to Title IX, the EEOC is not and claims it extends to protect those in the work place as well.[8]

Although the EEOC does agree that Title VII does not specifically include the Lesbian, Gay, Bisexual, and Transgender Community (hereinafter “LGBT Community”), it argues that Title VII is extended to the LGBT Community through case law.[9] In Macy’s v. Dep’t of Justice[10], the court held that intentional discrimination against a transgender is discrimination based on sex and therefore, violates Title VII.[11] The Court reasoned that transgender discrimination is sex discrimination because of the non-conformance with gender norms and stereotypes under Price Waterhouse v. Hopkins[12] reading of the statute.[13]

The EEOC went even further to produce a “fact sheet” for transgender employees so that they know their rights in the work place.[14] The “fact sheet” first defines “transgender” as “people whose gender identity and/or expression is different from the sex assigned to them at birth . . . .”[15] The “fact sheet” then describes employees’ rights under Title VII and that Title VII applies to federal, state, and local government agencies as employers as well as private employers with fifteen or more employees.[16] Further, transgender employees should be able to feel comfortable in the workplace and their comfort levels should not interfere with their right to work in an anti-discrimination workplace.[17]

As this ongoing problem keeps circulating, the EEOC advises employers to keep the transgender bathroom arrangements as they are so that the employer does not face private lawsuits or accidentally violate the EEOC.[18] To possibly provide some answers to this debacle, both in education and in employment, the Supreme Court of the United States will hear oral arguments on March 28, 2017 from the Gavin Grimm case.[19] Grimm, a transgender student, sued Gloucester County, Virginia’s school board for not allowing him to use the boys’ restrooms, locker rooms, and other facilities.[20]

*Editor’s Note: Since this article was written, the Supreme Court has decided not to hear the Gavin Grimm case.

[1] Daniel Trotta, Trump Revokes Obama Gudidelines on Transgender Bathrooms, Reuters (Feb. 28, 2017, 10:24 AM), http://www.reuters.com/article/us-usa-trump-lgbt-idUSKBN161243.

[2] Id.

[3] Id.

[4] Id.

[5] Vin Gurrieri, Trump’s Trans Bathroom Access U-Turn May Not Slow EEOC, Law 360 (Feb. 23, 2017, 10:42 PM), https://www.law360.com/employment/articles/895066/trump-s-trans-bathroom-access-u-turn-may-not-slow-eeoc.

[6] Id.

[7] Id.

[8] Id.

[9] What You Should Know About EEOC and the Enforcement Protections for LGBT Workers, U.S. Equal Emp. Opportunity Commission, https://www.eeoc.gov/eeoc/newsroom/wysk/enforcement_protections_lgbt_workers.cfm (last visited Feb. 28, 2017).

[10] Mia Macy, EEOC DOC 0120120821, 2012 WL 1435995 (Apr. 20, 2012)

 

[11] Id.

[12] Price Waterhouse v. Hopkins, 109 S. Ct. 1775 (1989).

[13] Macy’s, 2012 WL 1435995 at *6.

[14] Fact Sheet: Bathroom Access Rights for Transgender Employees Under Title VII of the Civil Rights Act of 1964, U.S. Equal Emp. Opportunity Commission, https://www.eeoc.gov/eeoc/publications/fs-bathroom-access-transgender.cfm (last visited Feb. 28, 2017).

[15] Id.

[16] Id.

[17] Id.

[18] Gurrieri, supra note 5.

[19] Id.

[20] Id.

New York State Department of Labor Rules Uber Drivers Eligible for Unemployment Insurance

 

By: Robert Pagan

The New York State Department of Labor has ruled that two former Uber drivers are eligible for unemployment payment, finding that they should be treated as employees rather than independent contractors, as the company has maintained.[1] Uber has made it clear that they believe their driving “partners” fit the definition of independent contractors rather than employees.[2] Uber drivers on the other hand, have rejected this notion, and assert that they are best described as employees.[3] Classification of Uber drivers has plagued the company and its community of drivers for years.

When we left Uber this past August, a federal judge had rejected a proposed $100 million settlement with drivers in California and Massachusetts who claimed they should be classified as employees instead of independent contractors.[4] According to U.S. District Judge Edward Chen, the deal between Uber and its drivers did not compensate the drivers enough.[5]

Unlike contractors, employees are entitled to a variety of rights and protections, including minimum wage and workers compensation insurance.[6] The recent decision by the New York Department of Labor could make it more difficult for Uber, its rival Lyft, and other new businesses operating in what is known as the gig economy by raising their costs and challenging their business model.[7]

The bout began on July 28th, 2016, after the New York Taxi Alliance filed suit on behalf of two former Uber drivers challenging New York State’s refusal to investigate or adjudicate claims for unemployment insurance, effectively denying them access to benefits they need to support themselves and their families while they are unemployed.[8] The plaintiffs—two individual drivers and the New York Taxi Workers Alliance—were represented by Legal Services NYC’s Brooklyn program.[9]

The rulings by the New York State Department of Labor apply only to the drivers’ unemployment insurance claims and do not directly affect other drivers or extend to other protections normally accorded to employees.[10] However, worker advocates say they plan to pressure the state to extend the logic of unemployment rulings to other areas.[11]

“I think this is a game-changer,” said Bhairavi Desai, executive director of the New York Taxi alliance.[12] “Uber has depended on the political structure turning a blind eye. What these decisions do is force a microscopic review of drivers’ employment status by elected officials and government agencies.”[13]

It is not clear how far the advocates will be able to push the ruling. Tiffany Potzer, a spokeswoman for the New York Labor Department, said: “unemployment determinations are made on a case-by-case basis, and depending on the facts, decisions have been made supporting both drivers as employees and drivers as independent contractors.”

California has deemed at least two Uber drivers eligible for jobless benefits, but has found others to be independent contractors.[14] The determinations have not led Uber to recast its relationship with drivers in the state.[15] Some observers say the debate over whether Uber divers are contractors or employees is ultimately about a much bigger issue: how our social safety net must adapt to changing work trends.[16]

[1] Noam Scheiber, Uber Drivers Ruled Eligible for Jobless Payments in New York State, New York Times (Oct. 12, 2016),

https://www.nytimes.com/2016/10/13/business/state-rules-2-former-uber-drivers-eligible-for-jobless-payments.html.

[2] O’Connor v. Uber Techs., No. 13-3826, 2015 U.S. Dist. LEXIS 116482, at *5 (N.D. Cal. 2015).

[3] Id.

[4] Alison Griswold, New York just made the case that two former Uber drivers should be treated as employees, Quartz (Oct. 13, 2016),

https://qz.com/808484/new-york-state-has-found-two-uber-drivers-eligible-for-unemployment-payments/.

[5] Chris Isidore, Judge rejects $100 million settlement between Uber and its drivers, CNN Money (Aug. 19, 2016),

http://money.cnn.com/2016/08/19/technology/uber-drivers-class-action-settlement/.

[6] Scheiber, supra note 1.

[7] Id.

[8] Kate Whalen, Former Uber Drivers File Federal Lawsuit against Governor Cuomo and New York State Department of Labor, Legal Services NYC (July 28, 2016),

http://www.legalservicesnyc.org/news-and-events/press-releases/1037-former-uber-drivers-file-federal-lawsuit-against-governor-cuomo-and-new-york-state-department-of-labor-.

[9] Id.

[10] Scheiber, supra note 1.

[11] Id.

[12] Id.

[13] Id.

[14] Chris Roberts, UPDATED: Another Uber Driver Awarded Unemployment Benefits, San Francisco Weekly News (Mar. 4, 2016),

http://archives.sfweekly.com/thesnitch/2016/03/04/uber-driver-awarded-unemployment-benefits-first-known-case-in-state.

[15] Scheiber, supra note 1.

[16] Andrea Peterson, Two Uber drivers are eligible for unemployment payments, New York regulators find, The Washington Post (Oct. 14, 2016),

https://www.washingtonpost.com/news/the-switch/wp/2016/10/14/uber-drivers-eligible-for-unemployment-payments-new-york-regulators-find/?utm_term=.bb252abb852c.

Not All Leave Is Created Equal: A New Father’s Struggle Obtaining Paid Paternity Leave

By: Victoria Massimino

Maternity leave is likely the first topic that comes to mind when an employee has a new baby at home.  Another area of consideration for new parents, and a growing trend, is leave for fathers.  Paternity leave refers to time off of work for new dads at the birth or adoption of a child.[1]  For the companies that do offer some type of leave, it is rarely paid.[2]  Among the U.S. states that do offer paid leave are California, Rhode Island, and New Jersey.[3]  California equally offers paid family leave to of up to six weeks with partial pay.[4] In the states that do not offer paid paternity leave however, the majority of new fathers use vacation or sick time to be with their newborns.[5]

The United States falls sadly behind other countries – including Belgium, Denmark, Finland, Iceland, Norway, Sweden, France and Spain – when it comes to paternity leave.[6]  Iceland, for example, gives 120 days of dedicated paternity leave, while Sweden offers sixty days.[7]  Fathers in Iceland earn eighty percent of their wages while on leave.[8]  Fathers in Norway can choose either twenty-six fully paid weeks or thirty-six weeks with partial pay.[9] Finland, likewise, offers fifty-four days of dedicated paternity leave, plus 158 days for either parent.[10]  Dedicated paternity leave refers to leave that is specifically for fathers, rather than leave that is discretionary for either parent.[11]

There are many benefits to providing new families with paid paternity leave.[12]  Paid leave helps fathers better balance their work and home lives, reducing work-family conflict.[13]  Longer leave means that dads get more time to spend with their children and form bonds.[14]  When fathers are more engaged, it leads to improved health and development for children.[15]  A study of four countries even showed that longer paternity leaves and time spent by fathers caring for children at a very young age was associated with higher cognitive test scores.[16] Finally, paternity leave can help bridge the gender gap at home and in the workplace.[17] Studies show that longer paternity leaves allows for more balance in household responsibilities between mothers and fathers.[18]

While fathers continue to face hardships in gaining paid leave to begin with, they also worry about job security.[19]  Although it is illegal for an employer to discriminate against an employee for taking leave, the effects on their career is a common concern among men who want to take paternity leave.[20]  Secretary Perez takes the opposite stance, stating “[f]athers taking parental leave helps not just children but moms, too, by changing who changes the diapers and the whole culture around work and family.”[21] A national survey demonstrates that perceptions are similarly changing, showing that both men and women find it important for employers to give workers time off for family responsibilities.[22]

[1] Paternity leave: What are the options for dads?, Baby Center (Nov. 2015), http://www.babycenter.com/0_paternity-leave-what-are-the-options-for-dads_8258.bc.

[2]  Id.

[3] Id.

[4] Id.

[5] Id.

[6] Andrew Lord, 8 Countries That Put U.S. Paternity Leave To Shame, The Huffington Post (June 19, 2015), http://www.huffingtonpost.com/2015/06/17/best-countries-for-patern_n_7595946.html.

[7] Id.

[8] Id.

[9] Id.

[10] Id.

[11] Paternity Leave: Why Parental Leave For Fathers Is So Important For Working Families, Dep’t of Lab., https://www.dol.gov/asp/policy-development/PaternityBrief.pdf (last visited Feb. 26, 2017).

 

[12] Lord, supra note 6.

[13] Paternity Leave: Why Parental Leave For Fathers Is So Important For Working Families, supra note 11.

[14] Id.

[15] Id.

[16] Id.

[17] Id.

[18] Id.

[19] Paternity Leave: What are the options for dads?, supra note 1.

[20] Id.

[21] Paternity Leave: Why Parental Leave For Fathers Is So Important For Working Families, supra note 11.

[22] Paternity Leave: What are the options for dads?, supra note 1.

Will The DOL Fiduciary Rule Get Trumped?

By: Justin DiCicco

The Department of Labor (“DOL”) has recently come under fire by various groups since expanding its definition of a fiduciary.  This rule has faced numerous challenges in courts all over the nation, but the DOL rule has held its ground and been found valid.[1]  But will this trend of courts upholding this rule continue, or will its opponents find a new way to get rid of the fiduciary rule?

In April of 2016, the DOL adopted a final rule which expanded and defined who is considered a “fiduciary” of an employee benefit plan under the Employee Retirement Income Security Act of 1974 (“ERISA”).[2]  The DOL expanded the definition of a “fiduciary” since regulations were issued in 1975 which narrowed the statutory definition of fiduciary investment advice by creating a specific five-part test that had to be satisfied before someone could be considered a fiduciary adviser.[3]  The investment advice marketplace has changed significantly since this test was originally issued and as a result, many investment professionals were not required to adhere to ERISA’s prohibited transaction rules or fiduciary standards, which allowed them to operate with conflicts of interests that did not have to be disclosed.[4]

The final rule adopted by the DOL replaces the narrow five-part test with a new definition that is a better fit with the language ERISA and the Internal Revenue Code of 1986 (“Code”).[5]  Under the new rule, a person gives investment advice when that person makes a recommendation to a retirement plan, plan fiduciary, plan participant and beneficiary or IRA owner for a fee or other form of compensation, either directly or indirectly, as to the holding or exchanging of securities or other investment properties.[6]  Investment advice also includes recommendations as to securities or other investment property after the property has been transferred or been distributed from an IRA or plan.[7]  An essential element of this new rule is whether a recommendation actually occurred.[8]  The final rule states that a “recommendation” is a communication which “based on its content, context, and presentation, would reasonably be viewed as a suggestion that the advice recipient engage in or refrain from taking a particular course of action,” and is to be judged by an objective standard.[9]

The second part of this final rule establishes the types of relationships that have to exist in order for these recommendations to give rise to fiduciary investment advice responsibilities.[10]  The rule covers recommendations made by people who: (1) acknowledge that they are acting as a fiduciary within the meaning of ERISA or the Code; (2) offer advice pursuant to a written or verbal agreement or understands that the investment advice is based on the particular needs of the advice recipient; and (3) direct recommendations to specific recipients regarding the advisability of a particular investment or management decision with respect to securities or other investment property of the plan or IRA.[11]  For a recommendation to be considered fiduciary investment advice, it must be offered in exchange for a fee or other form of compensation.[12]

In response to the upcoming implementation date of this rule, President Trump signed an executive memorandum which instructed the DOL to reexamine the new fiduciary rule.[13]  The President wants the DOL conduct research and review the legal and economic impact that the fiduciary rule will have on those affected by it.[14]  If the DOL finds that the rule prevents access to retirement information and financial advice or is inconsistent with President Trump’s administrative policies, then the memorandum demands this agency to revise or rescind the rule.[15]  Additionally, it seems likely that the next secretary of labor and head of the DOL will follow the instructions in the executive memorandum and change this rule.[16]

While opponents of the DOL’s fiduciary rule have been finding it difficult to challenge this rule in the courtroom, it looks like the President may be their saving grace to make sure that this rule never takes effect.

 

[1] Matthew Cutts & James Sivon, Financial Services in the 1st Month of Trump Presidency, Law360 (Feb. 23, 2017, 4:31 PM), https://www.law360.com/articles/895115/financial-services-in-the-1st-month-of-trump-presidency.

[2] Definition of the Term “Fiduciary”; Conflict of Interest Rule—Retirement Investment Advice, 68 Fed. Reg. Vol 81, 20945.

[3] Id.                                             

[4] Id.

[5] Id. at 20948.

[6] Fact Sheet: Department of Labor Finalizes Rule to Address Conflicts of Interest in Retirement Advice, Saving Middle Class Families Billions of Dollars Every Year, U.S. Dep’t of Lab., https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/fact-sheets/dol-final-rule-to-address-conflicts-of-interest.

[7] Id.

[8] Id.

[9] Definition of the Term “Fiduciary”; Conflict of Interest Rule—Retirement Investment Advice, 68 Fed. Reg. Vol 81, 20948.

[10] Id.

[11] Id.

[12] Id.

[13] Matthew Cutts & James Sivon, Financial Services in the 1st Month of Trump Presidency, Law360 (Feb. 23, 2017, 4:31 PM), https://www.law360.com/articles/895115/financial-services-in-the-1st-month-of-trump-presidency.

[14] Id.

[15] Id.

[16] Id.

Kennedy v. Chipotle: With A Side of Guac

By: Elana Kalkanis

This past January, Chipotle Mexican Grill filed a brief to the U.S. Court of Appeals, urging them to rule in their favor over the termination of a former employee, Army veteran, James Kennedy.[1]  Following an already tumultuous year, Chipotle once again found itself in hot water; yet this time with the National Labor Relations Board (“NLRB”).[2]  In March of 2016, the NLRB’s administrative law judge rendered a decision in favor of Kennedy, finding that Chipotle violated the National Labor Relations Act (“NLRA”) when it maintained an unlawful social media code of conduct and prohibited Kennedy from engaging in protected concerted activity.[3]  Kennedy’s complaint was ignited by his termination from the fast-food chain, after he posted negative comments to his Twitter account and which he used to criticize his former employer.[4]

The deciding factor for the court was not necessarily based on the content of Kennedy’s tweets, but rather, the context.[5]  In most of his posts, Kennedy actively replied to Chipotle’s customers and their requests for better service and cheaper food.[6]  One of his posts read, “Nothing is free, only cheap #labor. Crew members make only $8.50hr, how much is that steak bowl really?”[7]  Even though Judge Flynn recognized Kennedy’s language as an indication of his frustration with employee wages, she further acknowledged that his tweets represented issues that were common with many Chipotle employees.[8]  For this reason, and because he did not act in cahoots with any of his coworkers, Kennedy’s actions were protected under the NLRA.”[9]

Furthermore, the court found Chipotle’s Social Media Code of Conduct to be outdated and “too restrictive,” in ways which would strongly discourage employees from making appropriate statements about issues in the workplace.[10]  As a way of further protecting the rights of employees, Judge Flynn ordered Chipotle to post signs indicating that their employee policies, specifically its social media rules, were unlawful.[11]  This ruling undoubtedly sparked a movement for the rights of all employees protesting working conditions and wages, through the use of social media.[12]  Indicative of this movement was the Pennsylvania Workers Organization Committee’s “Fight for $15” campaign, which saw this decision as a major victory in their fight for healthcare and a significant raise in wages.[13]

Even though the Court of Appeals has yet to decide on Chipotle’s recent petition, this case has illustrated that the NLRB continues to working aggressively in its approach to extract unlawful employer policies.[14]  The court’s decision has not only protected the rights of Kennedy as an individual employee, but has stressed the importance of reviewing policies to many fast-food chains, in order make sure they consistently comply with the Board’s interpretation of the NLRA.[15]  As a result of their conduct, Chipotle was ordered to offer Kennedy re-employment and compensation of loss wages.[16]  Seemingly happy with the result, Kennedy stated that he was willing to accept his back wages in the form of food vouchers, as he still believes Chipotle’s food is “delicious.”[17]  Maybe guacamole can solve all of the world’s problems after all.

[1] Daniel Weissner, Chipotle Tells Fifth Circuit Worker’s Tweets Weren’t Protected, Reuters (2017), http://www.reuters.com/article/employment-chipotle-idUSL1N1FE443; See also Chipotle Services, L.L.C. v. NLRB, 16-60667 (2017).

[2] Amy McLaughlin, Chipotle Finds Itself In Agua Caliente With the NLRB Over Social Media Policy, 21 No. 2 Vt. Emp. L. Letter 4, (Apr. 2016).

[3] Id.

[4] Saqib Shah, Judge Find’s Chipotle’s Social Media Policy Violates Labor Laws, Digital Trends (Mar. 17, 2016), http://www.digitaltrends.com/social-media/chipotle-social-media-labor-violation/.

[5] McLaughlin, supra note 2.

[6] See Cynthia Correa, Judge Rules Chipotle’s Social Media Policy Is Illegal, Eater (Mar. 17, 2016), http://www.eater.com/2016/3/17/11253672/chipotle-social-media-policy-is-illegal.

[7] Id.

[8] McLaughlin, supra note 2.

[9] Id.

[10] Id.

[11] Shawn Paul Wood, Judge Declares Chipotle’s Social Media Policy Violates Labor Laws, ADWEEK, http:// adweek.com/digital/judge-declares-chipotles-social-media-violates-labor-laws/.

[12] See id.

[13] Id.; See Fight for $15, http://fightfor15.org/about-us/ (last visited Feb 19, 2017). The “Fight for $15” started with a few hundred fast food workers in New York City, a movement striking for fifteen dollars an hour minimum wage and union rights. Now an international cause, over three-hundred cities and six continents have fought together with the common goal of compensating the people who do the “real work”, the low-wage employees.

[14] McLaughlin, supra note 2.

[15] Id.

[16] Shah, supra note 4.

[17] Wood, supra note 11.

 

Who’s Next? Will R. Alexander Acosta Pass Muster for Department of Labor Secretary?

By: Michael Giarratano

Amid losing support from both sides of the aisle, due to the allegations of his past treatment of women he has employed and in his personal life,[1] as well as, admitting that he had employed an undocumented immigrant for years,[2] this past Wednesday, February 17th CEO of the Carl’s Jr. and Hardee fast-food chain franchises, Andrew Puzder withdrew his nomination to become President Trump’s labor secretary.[3]

President Trump, wasting no time at all, tapped Alexander Acosta on February 17, 2017 to become the next Department of Labor Secretary.[4]  This pick by President Trump is in stark contract with his initial pick of Andrew Puzder.[5]  In tapping Mr. Acosta, it was a much more conventional pick.[6]  Mr. Acosta has a wealth of experience in all different areas, such as labor relations, law and education.[7]  In addition to Mr. Acosta being the first Hispanic in President Trump’s cabinet, it will be hard for democrats to stonewall his nomination.  He has already been vetted and approved by the Senate on three different occasions.[8]  First, he was appointed by President George W. Bush to the National Labor Relations Board from 2002-2003, second, was nominated and appointed to become the assistant attorney general for the Justice Department’s Civil Right Division and third, he went on to be nominated to the position of Untied States Attorney General for the Southern District of Florida.[9]  In addition to lengthy experience in government, clerked for Justice Samuel Alito when he was an Appeals Court judge and he most recently is the chairman of the U.S. Century Bank and the dean of the Florida International University College of Law.[10]

Assuming Mr. Acosta is confirmed by the Senate, what does this mean for labor relations?  If we look into his decisions from his time at the NLRB, it shows that he had more of an academic approach rather than ruling along party lines.[11]  This pick makes political sense if President Trump is trying to keep the support of blue collar workers.[12]  During his short tenure at the NLRB, Mr. Acosta was in the majority of major pro-union decisions.[13]  In Kroger v. United Food and Commercial Workers Union Local 700, the board, including Mr. Acosta, affirmed the administrative law judge’s findings that Kroger violated Section 8(a)(1) of the Act by telling the Union that they could not discuss union business during working hours at Kroger and that they would be fired if they did discuss Union business on company time.[14]  Union leaders have recognized this and believe that Mr. Acosta is a much better option for unions than the previous nominee Puzdner.  Richard Trumpka, the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) was very pleased with President Trump’s new nomination and stated “in one day we’ve gone from a fast-food CEO who routinely violates labor law to a public servant with experience enforcing it.”[15]

Mr. Acosta received an important endorsement from the International Union of Operating Engineers, stating they were happy with Trump’s nomination of Mr. Acosta.  Union President James T. Callahan stated that “[M]r. Acosta has proven himself to be fair and open minded” and “[Mr. Acosta] has proven that he can handle disparate opinions and information in order to make thoughtful decisions on difficult issues.”[16]  Although not all union leaders are as supportive as Mr. Callahan and will still be critical during the nomination process, one thing is for certain, union leaders are very happy that Andrew Puzder is no longer an option.

[1] Dan Merica & Manu Raju, Inside Andrew Puzder’s Failed Nomination, CNN (Feb. 15, 2017 11:31 PM), http://www.cnn.com/2017/02/15/politics/andrew-puzder-failed-nomination/.

[2] Id.

[3] Alan Rappeport, Andrew Puzder Withdraws From Consideration as Labor Secretary, New York Times ( Feb. 15, 2017), https://www.nytimes.com/2017/02/15/us/politics/andrew-puzder-withdrew-labor-secretary.html?action=click&contentCollection=Politics&module=RelatedCoverage&region=Marginalia&pgtype=article.

[4] Alan Rappeport, R. Alexander Acosta, Law School Dean, Is Trump’s New Pick for Labor, New York Times (Feb. 16, 2017), https://www.nytimes.com/2017/02/16/us/politics/alexander-acosta-labor-secretary-trump.html?_r=0.

[5] Id.

[6] Id.

[7] Id.

[8] Id.

[9] Id.

[10] Shannon Pettypiece, Trump Nominates Ex-NLRB Member Acosta as Labor Secretary, Bloomberg (Feb. 16, 2017 4:28 PM), https://www.bloomberg.com/politics/articles/2017-02-16/trump-said-to-choose-ex-nlrb-member-acosta-as-labor-secretary.

[11] Daniel Wiessner, New Labor Nominee Acosta’s NLRB Record Suggests Nonpartisan Approach, Thompson Reuters (Feb. 17, 2017), https://1.next.westlaw.com/Document/I2057b8c0f4fa11e68ca6b836297c09ca/View/FullText.html?transitionType=SearchItem&contextData=(sc.Category).

[12] Id.

[13] Id.

[14] Kroger v. United Food & Commercial Workers Union Local 700, 339 N.L.R.B. No. 88  (2003).

[15] Nikita Vladimirov, AFL-CIO: Trump’s New Labor Pick Deserves Serious Consideration, The Hill (Feb. 16, 2017 3:10 PM), http://thehill.com/homenews/administration/319949-afl-cio-trumps-new-labor-pick-deserves-serious-consideration.

[16] Sean Higgins, Union Backs Acosta for Labor Secretary, Washington Examiner (Feb. 16, 2017 5:56 PM), http://www.washingtonexaminer.com/union-backs-acosta-for-labor-secretary/article/2615100.

Murphy (Oil)’s Law: Any class action that can be individually arbitrated, will be individually arbitrated

By: Ryan McGinty

Arbitration agreements, used to avoid the often heightened costs associated with litigation in a courtroom, are not uncommon in the world of commercial disputes and employment contracts.[1]  A major form of alternative dispute resolution (“ADR”), employers have abandoned what was initially a voluntary process.[2] The new desire was for a more deliberate forced arbitration clause, which has become a necessary condition for many formal employment agreements.[3]  In 2011, and again in 2015, the Supreme Court reaffirmed a company’s right to bar consumers from uniting together in a class action suit against the company, as permitted by the Federal Arbitration Act of 1925 (“FAA”).[4]  This blog post is concerned with the future applicability of that bar or waiver power as a means to block employee’s collective action suits distinguished from class actions without the employer-employee relation.[5]

Specifically, the issue surrounding arbitration agreements has been reignited in conjunction with the still pending change to the U.S. Supreme Court, which last month agreed to review the validity of class action waiver clauses in employer-employee arbitration agreements.[6] In doing so, our nation’s highest court granted petitions for writ of certiorari in three major cases; Epic Systems Corp. v. Lewis,[7] Ernst & Young v. Morris,[8] and the Fifth Circuit appeal of NLRB v. Murphy Oil USA Inc.[9]

Focusing on the controversial Murphy Oil decision, the question presented is whether or not courts will follow this case as appropriate precedent after its upcoming review with the addition of a new Supreme Court Justice?  After the National Labor Relations Board (“NLRB”) concluded that Murphy Oil had “unlawfully required employees at its Alabama facility to sign an arbitration agreement waiving their right to pursue class and collective actions,” Murphy Oil successfully petitioned the Court which reversed the Board’s ruling in part. [10] With reference to a D.R. Horton analysis,[11] the NLRB was found to have disregarded conflicting evidence and previous rulings before it originally held that Murphy Oil violated section 8(a)(1) of the National Labor Relations Act (“NLRA”).[12]  Creating a further split from the Seventh and Ninth Circuits, the Fifth Circuit Court reasoned that arbitration agreements must be enforced under the FAA since the later enacted NLRA does not contain any overriding congressional mandate as it pertains to arbitrations.[13]  On review, the court will hone in on the legality of companies to include collective action waivers that force plaintiffs to sue individually.[14]  The problem, many argue, is that without larger collective action, corporations will not change their behavior in bad faith.[15]

Currently, eight justices are sitting on the high court, split 4-4 between writing opinions with a more liberal verse conservative brush.[16] Without Justice Antonin Scalia, who authored the 5-4 opinion in AT&T Mobility v. Concepcion,[17] employers are left wondering whether the new Supreme Court Justice will follow in Scalia’s footsteps while inevitably ending the 4-4 deadlock we have become familiar with.[18] If confirmed in time, the conservative approach carried out famously by Scalia may be echoed by a ninth justice to apply not only to consumers but collective action by employees on a federal level.[19]  According to Gerald Maatman, co-chair of the class action defense group at Seyfarth Shaw, “[f]or many CFO’s, this may be the most important thing happening on the law front in 2017.”[20]

President Donald Trump promptly moved to nominate Tenth Circuit Judge Neil M. Gorsuch to fill the vacant Supreme Court seat.[21]  At age forty-nine, Judge Gorsuch has a disciplined approach to labor issues, but has considered the NLRB statutory interpretation to be expansive in certain cases, and might be inclined to favor employers if present during a review of Murphy Oil.[22]  Professor Sample from the Maurice A. Deane School of Law at Hofstra University, has touched on the nomination of Gorsuch calling him a “cautious, very careful, very studious [and] scholarly jurist.”[23]  Further, Professor Sample notes that the consequences of what he has deemed an inevitable confirmation will shape the Supreme Court for decades, especially with how the Supreme Court sits with Justice Ginsberg turning eighty-four and Justice Kennedy entertaining the possibility of stepping down.[24] Presumably, Gorsich being a Trump-nominated justice will be pro-business and uphold the Murphy Oil reversal.[25] This potential change of law would give large companies huge leverage in employer-employee relations, and will essentially stop plaintiff’s lawyers from bringing larger class action cases.[26] Only time will tell if employees will lose the right to act collectively in employment disagreements, so stay tuned.

 

 

[1] Arbitration Agreements, Work Place Fairness (Last visited Feb. 11, 2017) http://www.workplacefairness.org/forced-arbitration-agreements.

[2] Id.

[3] Id.

[4] David McCann, Can Companies Bar Workers from Filing Class-Action Claims?, CFO (Feb. 2, 2017) http://ww2.cfo.com/legal/2017/02/can-companies-bar-workers-from-class-action-claims-arbitration/.

[5] Id.

[6] Jessica Karmasek, SCOTUS To Decide Arbitration Issue; Unclear If Trump Pick Will Be On Bench In Time, FORBES (Jan. 29, 2017) http://www.forbes.com/sites/legalnewsline/2017/01/19/scotus-to-decide-arbitration-issue-unclear-if-trump-pick-will-be-on-bench-in-time/#fd741437ccb9.

[7] Lewis v. Epic Sys. Corp., 823 F.3d 1147 (7th Cir. 2016), cert. granted, No. 16-285, 2017 WL 125664 (U.S. Jan. 13, 2017) ( stating that health care software company agreement, requiring certain groups of employees to bring “wage-and-hour claims” though individual arbitration only, violated NLRA and is unenforceable under FAA.).

[8] Morris v. Ernst & Young, LLP, 834 F.3d 975 (9th Cir. 2016), cert. granted, No. 16-300, 2017 WL 125665 (U.S. Jan. 13, 2017).

[9] Karmasek, supra note 5.

[10] Murphy Oil USA, Inc. v. N.L.R.B., 808 F.3d 1013 (5th Cir. 2015), cert. granted, No. 16-307, 2017 WL 125666 (U.S. Jan. 13, 2017).

[11] In Re D. R. Horton, Inc., 357 NLRB 2277 (2012) (holding that an arbitration agreement under which employees were required to waive their right to bring a class action violated NLRA).

[12] 29 U.S.C. §§ 151-169 (stating that agreements which “requir[ed] . . . employees to agree to resolve all employment-related claims through individual arbitration” were not lawful).

[13] Murphy Oil, 808 F.3d 1013, 1016.

[14] Karmasek, supra note 5.

[15] McCann, supra note 3.

[16] Karmasek, supra note 5.

[17] Karmasek, supra note 5 (citing AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 131 S. Ct. 1740 (2011)). This is touted as a “game-changer” for class action suits that ruled in favor of companies requiring consumers to bring claims solely through individual arbitration.

[18] Karmasek, supra note 5.

[19] Karmasek, supra note 5.

[20] McCann, supra note 3.

[21] Ilyse Schuman & Michael J. Lotito, Who is Neil Gorsuch and Where Does He Stand on Labor and Employment Issues?, LITTLER (Jan. 31, 2017) https://www.littler.com/publication-press/publication/who-neil-gorsuch-and-where-does-he-stand-labor-and-employment-issues.

[22] Id.

[23] Marvin Scott, News Closeup: A look at Trump’s travel ban and pick for Supreme Court Justice, PIX11 (Feb. 4, 2017) http://pix11.com/2017/02/04/news-closeup-a-look-at-trumps-travel-ban-and-pick-for-supreme-court-justice/.

[24] Id.

[25] Schuman & Lotito, supra note 21.

[26] McCann, supra note 3.

Pushback on Form 5500 Proposed Changes

By: Taylor Napoli

In July 2016, the Department of Labor (“DOL”), the Internal Revenue Service (“IRS”), and the Pension Benefit Guaranty Corporation (“PBGC”) proposed changes to the Form 5500 Series in order to modernize and improve the current Forms.[1]  The comment period on such changes was extended to mid-December, after originally being set for the beginning of October, to appease the many organizations that requested a longer comment period in order to fully understand and analyze the proposed changes.[2]  The majority of organizations that chose to send in comment letters had mainly negative things to say about what the DOL, IRS, and PBGC have proposed.

Two major plan sponsor organizations, the American Benefits Council (“ABC”) and the ERISA Industry Committee (“ERIC”), are asking the DOL to withdraw the proposed Form 5500 changes.[3]  Both ABC and ERIC believe that these changes would cause “administrative burdens” for plan sponsors and providers, as well as substantially increasing the operating costs of such plans.[4]  ERIC submitted a joint comment with the Committee on Investment of Employee Benefit Assets (“CIEBA”) and the Society for Human Resource Management (“SHRM”) to discuss the proposed changes to the reporting requirements for two supplemental schedules that go along with Form 5500, Schedules C and H.[5]  The Organizations cite four predominant issues with the proposed changes regarding Schedules C and H: (1) substantial additional costs with unclear benefits; (2) consistency in disclosure; (3) Schedule H in its entirety; and (4) biased reporting.[6]

The Organizations are predominantly concerned about the substantial costs, both monetary and otherwise.[7]  They believe that the new requirement will greatly increase “legal, compliance, and audit costs” and require many more resources from plan administrators in order to compile the new data that is being proposed.[8]  The Organizations are worried that the costs will eventually be pushed onto the plan participants because the plan administrators may not be able to cover the increased costs.[9]  Additionally, CIEBA, SHRM, and ERIC believe that the Agencies’ proposal severely underestimates the additional hours of work that will need to be put in by plan sponsors and administrators to comply with the new reporting requirements.[10]  While the IRS, DOL, and PBGC believe that the new reporting requirements will only increase the work of large employers by approximately ninety hours, the Organizations have estimated an additional 2,000 hours to complete the form, and another 4,000 hours to be able to adjust to the form changes and comply with them by 2019, which would be the first year that they’re in effect if accepted.[11]

ABC also submitted their own comment letter to the IRS, DOL, and PBGC voicing their concerns regarding the increased administrative burdens they believe will result from the proposed changes.[12]  ABC is specifically concerned with the reporting requirements being extended to all group health plans no matter the size, the increase of detail reported on every plan’s financial information, and the expansion of information collected for service provider compensation.[13]  Rather than giving feedback regarding the problems ABC has with each of the changes, they instead suggested that the Agencies completely withdraw the proposal, take into full consideration all comments received, and re-propose a new, revised proposal at a later date.[14]  Knowing a complete withdrawal is unlikely, ABC has requested that the IRS, DOL, and PBGC push back the date the proposed changes would become effective to 2020.[15]

While there is much backlash regarding the proposed changes, one of the Big Four accounting firms, PricewaterhouseCoopers, seems to be supporting the Agencies’ proposal.[16]  PricewaterhouseCoopers has drafted their own summary of changes to reach out to those who may be affected by the proposal.[17]  The accounting firm believes that the DOL, IRS, and PBGC will use the new data they are asking for within the proposed changes to help in their enforcement of benefit plans, which will be helpful to plan administrators and participants alike.[18]

At this time, the Agencies are taking into consideration all comments received.  If the proposed changes had been able to be approved and passed before President Trump had taken office, it is likely that the final, accepted changes would have closely mirrored those that were proposed.  However, because there will likely be a lot of changes to health care plans and the Agencies who propose such changes, the chances of the July 2016 proposed changes to the Form 5500 Series getting approved greatly decreases.

[1] Proposed Revision of Annual Information Return/Reports, 81 Fed. Reg. 47533 (proposed July 21, 2016) (to be codified at 26 C.F.R pt. 301, 29 C.F.R. pts. 2520 &2590, 29 C.F.R. pt. 4065).

[2] Proposed Revision of Annual Information Return/Reports; Proposed Rule, 81 Fed. Reg. 65594 (proposed Sept. 23, 2016) (to be codified at 29 C.F.R. pts. 2520 &2590).

[3] Plan Sponsor Groups Call on DOL to Withdraw Proposed Form 5500 Changes, HR Daily Advisor (Dec. 21, 2016), http://hrdailyadvisor.blr.com/2016/12/27/plan-sponsor-groups-call-dol-withdraw-proposed-form-5500-changes/.

[4] Id.

[5] Letter from Ray Kanner, Acting Exec. Director, CIEBA Inc., Will Hansen, Senior VP, Retirement Policy, ERIC, and Michael Aitken, VP, Government Affairs, SHRM, to Assistant Secretary Borzi, Director Choi, and Director Reeder, Employee Benefits Security Administration (Dec. 5, 2016) (on file with ERIC at http://www.eric.org/uploads/doc/retirement/Form%205500%20Letter%20to%20DOL%20IRS%20%20PBGC%20(RIN%201210-AB63)%20–%2012-5-2016.pdf).

[6] Id.

[7] Id.

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] Letter from Jan Jacobson, Senior Couns., Retirement Pol’y, ABC and Kathryn Wilber, Senior Couns., Health Pol’y, ABC, to the Office of Regulations and Interpretations, Employee Benefits Security Administration (Dec. 5, 2016) (on file with the American Benefits Council at http://www.americanbenefitscouncil.org/pub/29025d79-d89d-b636-87d6-3fd99e0cd176) (stating that ABC is a “national nonprofit organization dedicated to protecting and fostering privately sponsored employee benefit plans.” They have about 400 members that provide benefits to active and retired workers and their families).

[13] Id.

[14] Id.

[15] Id.

[16]Agencies Propose Significant Changes to Form 5500, PwC: Insights from People and Organization (Oct. 11, 2016), https://www.pwc.com/us/en/tax-services/publications/insights/assets/pwc-significant-changes-proposed-to-form-5500.pdf.

[17] Id.

[18] Id.