Hold your horses

For all those employers (all none of you)  ready to race ahead and give notices to employees about health insurance exchanges, you are going to have to hold off for awhile. Despite the Affordable Care Act (aka “Obamacare”) requirement that employers provide written notice

(1) informing the employee of the existence of an Exchange, including a description of the services provided by such Exchange, and the manner in which the employee may contact the Exchange to request assistance;
(2) if the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code of 1986 and a cost sharing reduction under section 18071 of Title 42 if the employee purchases a qualified health plan through the Exchange; and
(3) if the employee purchases a qualified health plan through the Exchange, and the employer does not offer a free choice voucher, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.

The Department of Labor has postponed the March 1, 2013 deadline:

The Department of Labor has concluded that the notice requirement under FLSA section 18B will not take effect on March 1, 2013 for several reasons. First, this notice should be coordinated with HHS’s educational efforts and Internal Revenue Service (IRS) guidance on minimum value. Second, we are committed to a smooth implementation process including providing employers with sufficient time to comply and selecting an applicability date that ensures that employees receive the information at a meaningful time. The Department of Labor expects that the timing for distribution of notices will be the late summer or fall of 2013, which will coordinate with the open enrollment period for Exchanges.

Photo: From Wikipedia Commons
Description Horses starting out of the gate at w:Lone Star Park, April 10, 2010
Date 10 April 2010, 16:03:02
Source Flickr: And They’re Off
Author R Hensley

A former co-worker of mine, David Spence of the Royce Law Firm, was quoted in a Forbes blog today about Cutler v. Franchise Tax Board, where the California Second District Court of Appeal ruled as unconstitutional Cal. Rev. & Tax. Code § 18152.5 which allows sellers of small business stock (called “qualified small business stock” or “QSBS”) to exclude some of the gains on the stock if the seller reinvests the income in a qualified new small business in California. The Cutler case found that the California statute is unconstitutional because it prefers in-state corporations over out-of-state corporations:

because the statute affords taxpayers a deferral for income received from the sale of stock in corporations maintaining assets and payroll in California, while no deferral is afforded for income from the sale of stock in corporations that maintain assets and payroll elsewhere, the deferral provision discriminates on its face on the basis of an interstate element in violation of the commerce clause.

The Forbes blog criticizes the Franchise Tax Board for not allowing the statute to proceed: “Why. . . has California’s Franchise Tax Board (FTB) decided to eliminate a major tax benefit that helps attract creative risk-takers to set up shop here in California instead of in other states with lower taxes and fewer regulations?” However, the FTB was not the one who challenged the statute. Instead, the taxpayer who was denied the benefit of the statute because the business he had invested in did not qualify under the statute. The appellate court upheld the taxpayer’s argument that the statute was unconstitutional; the FRB had defended the statute. The FTB may not agree with the court’s conclusion, but it has a duty to uphold the law. Thus, the FTB has published a circular explaining that it will still allow the exclusion of gains:

For 2007 and prior tax years that are still open under the statute of limitations, a QSBS gain exclusion or deferral will be allowed if the taxpayer meets all requirements under California law, other than the unconstitutional California property and payroll requirements.

If the statute is unconstitutional, it was unconstitutional from the beginning — it means that there was never, legally, an exclusion of this income. The FTB does not have the power to decide which statutes are enforceable, and which are not. While dealing with the government, and especially tax agencies, can be absolutely maddening, it doesn’t help anyone to suggest that government is wrongfully refusing a deduction, when a court has already ruled the deduction is illegal.

Employers know that there is an election here in California November 6th, but what obligation do employers have to accommodate their employee’s need to cast ballots? Under section 14000 of the California Elections Code, if an employee does not have time off the clock to go vote, an employer has to provide paid time off:

(a) If a voter does not have sufficient time outside of working hours to vote at a statewide election, the voter may, without loss of pay, take off enough working time that, when added to the voting time available outside of working hours, will enable the voter to vote.
(b) No more than two hours of the time taken off for voting shall be without loss of pay. The time off for voting shall be only at the beginning or end of the regular working shift, whichever allows the most free time for voting and the least time off from the regular working shift, unless otherwise mutually agreed.
(c) If the employee on the third working day prior to the day of election, knows or has reason to believe that time off will be necessary to be able to vote on election day, the employee shall give the employer at least two working days’ notice that time off for voting is desired, in accordance with this section.

American glass ballot box, circa 1884. Courtesy of the Smithsonian.

According to section 14001 of the Elections Code, employers have to give notice ten days in advance of statewide elections of the provisions of section 14000. The English language notice is here; the Spanish language notice can be found here.
If employees need to take time off, it is best to schedule as far in advance as possible. Employees don’t have the right to come to work late, or leave early, without notice.
With polls open 12 hours in California, most employees should be able to vote when they are not on duty. For those for whom it is unavoidable, schedule it in advance.

While allowing two paid hours off to vote may seem unfair to some employers, a lot of Americans sacrificed far more so that everyone has the right to vote. Allowing two hours off to vote twice every two years is not an intolerable burden.

When I was in junior high, Anthony Newley had a song that he toured the talk shows with, and which had some modest success on the radio. It was titled “Teach the Children of the World”:

Anthony Newley, left, 1969.

Teach the children of the world

Teach them before its just too late

Teach the parents of tomorrow

They are the children of today

I haven’t been able to find a video of it online, but I remembered its chorus through my education, and now through my children’s. I bring it up now because a brave educator and his family are facing the ultimate terror, because of their devotion to education: the loss of their daughter.

Malala Yousafzai is a 14-year-old girl in Pakistan who was shot by the Taliban for standing up for the right of women and girls to be educated. According to the Taliban’s spokesman, there is no doubt why:

A Taliban spokesman, Ehsanullah Ehsan, confirmed by phone that Ms. Yousafzai had been the target, calling her crusade for education rights an “obscenity.”

Malala was incredibly brave to advocate for education, but I do not need to exclaim her virtues when others, like a former First Lady of the United States, can do it so much better. Her father, Zaiuddin, is an educational activist in Pakistan’s Swat Valley, where actions have consequences. He has consistently fought for the right of girls to an education, to his peril and that of his family.

Education wasn’t an obscenity to me, but a lifeline. We all know teachers that have made the difference in our lives: my fifth-grade teacher, Mrs. Dorothy Mason; my English and US History teachers in junior high, Ms. Deborah Malm, and Mr. Peter Booz; my social studies teacher in high school, Ed Burke — I am leaving out so many more. I count myself lucky to be the son-in-law of a teacher who spent 38 years working with the handicapped, with infinite patience and good cheer.

Great teachers deserve all the respect we can give them. In Japan, where I taught English for two years, teachers are given the honorific sensei, just as doctors are. Great teachers open up the world, one child at a time — but for all time.  The very best teach you to think, which is what the Taliban fear. Zaiuddin Yousafzai belongs in the Teacher’s Hall of Fame for making education available where it is most needed. Our prayers are with him and his family, and especially his daughter, Malala. I am glad that Zaiuddin is teaching the parents of tomorrow – the children of today.

10/17/2012 Update: Malala Yousafzai (see the link to a great political cartoon) was flown to Britain after having a bullet removed, and is now out of a coma. The early word is that she seems to have feeling in all her limbs. Just as good, it seems that Pakistan has woken to protest the Taliban’s barbarism.

Your phone rings, and it is your friend from the PTA: your name is listed in the local paper for having skipped jury duty last month. Your friend informs you that you may be subject to jail time and/or a fine. You were called for jury duty awhile ago, but you checked the website, and you didn’t have to go in — but when was that? Last year? The year before? Your friend sounds worried, but tells you that there is a number to call, and you get the number. Now your fingers are shaking a little bit as you dial.
Your fingers start shaking a little more as you listen to the recorded message tell you the bad news that you may face a thirty day jail term and a $500 fine — but then you hear that this is all just a joke, but you can use the number to mess around with the head of one of your friends. What the —?

No joke. Photo courtesy of Photos-public-domain.com

This is really happening in Pennsylvania, as the Administrator for the Courts, Zygmont Pines (yes, that is his real name) is warning about the hoax. The only question is how soon it will spread to the jokers here in California. As much of a drag that jury duty is, it is vitally necessary for our justice system. If one of your friends tries to play this one on you, just tell him its really not funny.

As the son of a stockbroker, I grew up listening to talk about large, well-established businesses. IBM. Gerber. Proctor & Gamble. All successful companies, in industries that will last a long time. But all, in their way, static. IBM’s headcount of American employees has been falling for years. Most Fortune 500 companies in America that are not in the financial world or in computing are losing jobs, not gaining them. When national unemployment is over 8%, the US needs to focus on the companies that add employees. Those are small businesses.

That is why I was interested in an article about small businesses in The Daily Beast about the real job creators. Small businesses are providing most of the new jobs in the US, but too many of them are left to fend for themselves, as the larger, more connected companies demand and receive far more face time from policymakers.

Small businesses need to organize around their common interests: they need to preserve and improve their flexibility. They need to know that they can hire someone without risking their business. Most small business owners want their employees protected from dangerous situations — and want their competitors subject to the same common sense rules, so that the more ruthless can’t leverage that ruthlessness to the detriment of the compassionate. They want their employees to have decent healthcare — but can’t afford to pay an increasingly large percentage of their revenue for it. Few employers want to be health insurance experts — which they become, involuntarily, when the burden of the decision on health insurance rests on them. The need capital and credit, but they are hard to find.

Small businesses have lots of challenges, from efficiencies of scale to being noticed in the marketplace. When employment rests on their shoulders, though, it behooves policymakers to make the small business environment a pleasant one.

UPDATE:  The Federal Court of Appeals for the District of Columbia has delayed enforcement of the posting of the collective bargaining rights poster to allow for an appeal.  A Federal District Court in South Carolina has also struck down the rule, and that will likely be appealed. The D.C. Circuit probably will not hear the case until later in the summer, and a decision might not be made for several months after that. Until further notice, employers do not need to put the poster on the wall.

“For protection against abuses by legislatures the people must resort to the polls, not to the courts.”

Munn v. Illinois, 94 US 113, 134 (1877).

Courts are good at procedural issues, and rights protection. They are ill-equipped to decide the best way to do things.

The volume of “snail mail” is down tremendously compared to a few years ago, so when a business owner gets a letter in the mail claiming that the business has a disability access problem, it should stand out. Unfortunately, it doesn’t, even when it should. A letter about “ADA” is not something about your great-grandmother’s elderly neighbor: it is about the law regarding disability access. This is one of the truest cases where a little prevention saves a lot later.

The ADA. In 1990, Congress passed and President George H.W. Bush signed the Americans with Disabilities Act (“ADA”). The ADA sought to stop discrimination against those with disabilities, and bring as many of the disabled as possible into the mainstream of society. It required that businesses provide “reasonable accommodations” for those who are disabled. This led the ADA to be called the “Full Employment for Lawyers Act,” as lawyers were brought in to decide what is “reasonable” under what circumstances.

One of the ADA’s most contentious portions is Title III, the Public Accommodations Act. It sought to ensure that no one is prevented from enjoying any place of public accommodation – like restaurants, hotels, sports stadiums, schools, and universities – because of their disability. Congress did not require such places from rebuilding everything anew. Congress imposed the requirement only when there was “new” construction – which included any modifications or alterations, even if the “modifications” had nothing to do with disability access. Many businesses ignored the requirement, to their loss.

Thomas Frankovich is a disability access lawyer who was in the legal press recently. Some serial ADA plaintiffs have filed dozens, if not hundreds, of ADA lawsuits. They actually seem to make a living from suing businesses that have failed to cure problems. The ADA makes this possible, because it allows a successful party in ADA litigation to recover their attorneys’ fees – something not normally the case in the United States.

I have encountered Frankovich a few times. I could never get away with dressing like Frankovich. However, he was professional, fair, and knew both the law in general and the facts of the particular case. He did not draft the ADA, nor did he draft California’s Unruh Civil Rights Act, which allows damages of at least $4,000 and attorneys’ fees. Congress and the California Legislature drafted these laws; Frankovich and his clients cannot be blamed for taking advantage of them, anymore than Sandy Koufax and Bob Gibson could be blamed for being only 60 feet, six inches from home plate when they fired their fastballs at hitters.

In my experience, Frankovich and his clients give three written warnings to companies to fix the disability problems. While one of Frankovich’s clients was sanctioned several years ago for repeatedly claiming the same physical injuries in multiple cases on the same day (and actually 13 cases over five days), Frankovich largely prevailed in a state bar proceeding based upon the same case; the bar found there was a lack of evidence that Frankovich engaged in any unprofessional conduct (other than improperly communicating with a represented party on a two minute phone call). My single reservation, based upon my own experience, is that most of defendant businesses are run by first-generation immigrants, who may not have as thorough understanding of the laws here in the United States.

There are defenses to the ADA — modifications to meet the ADA only need to be done when there is other work done on the property, but after 20 years few properties fit this definition anymore. There can also be insurance under the general liability insurance policy, but insurers are diligently trying to erase that possibility. But the best thing to do is to invest in some preventive maintenance, to make the property compatible under current ADA guidelines.

There are two morals of this story. First, obey the law; don’t just ignore letters claiming a disability access violation. Second, don’t make scapegoats out of those who use the laws Congress passes; take complaints to the ones who wrote the laws, not to those who work under them.

News Flash: cellular providers here in the US are going to work together to inhibit cell phone theft, by shutting down access to the cell phone system for a phone reported stolen. We’d be more impressed with the progress if it hadn’t been done in Australia nearly a decade ago. It may not stop thieves wanting a new paperweight or data on the phone (like contacts, texts, files, or other things), but it will end the resale value, and thus the incentive to steal them.