DMGS Federal Update

CHANGE TO OVERTIME PAY RULES

On May 18, 2016, the Department of Labor (DOL) issued its final rule that would increase the salary employers must pay employees in order to be considered exempt from overtime rules.  The DOL estimates that 4.2 million current exempt employees will become entitled to overtime pay.  More information on the final rule can be found here.

Key Provisions of the Final Rule (from Department of Labor website)

The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. Specifically, the Final Rule:

  • Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);
  • Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and
  • Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

The effective date of the final rule is December 1, 2016. The initial increases to the standard salary level (from $455 to $913 per week) and HCE total annual compensation requirement (from $100,000 to $134,004 per year) will be effective on that date. Future automatic updates to those thresholds will occur every three years, beginning on January 1, 2020.

NET NEUTRALITY

On June 14, a federal appeals court upheld the ruling that the Federal Communications Commission (FCC) has the power to regulate internet service providers (ISP) similar to the way that it regulates telephone providers.  This means that the FCC can enforce net neutrality rules it previously issued that ban ISPs from giving priority for paid fast lanes.  While it’s a victory for the FCC, ISPs are planning to continue to fight net neutrality rules and Congress is working to pass measures that would cut the FCC’s funding and prohibit it from enforcing the net neutrality rules.   

INTERNAL REVENUE SERVICE

On June 14, the House passed H.R. 5053, the Preventing IRS Abuse and Protecting Free Speech Act. The bill prohibits the Internal Revenue Service (IRS) from requiring some tax-exempt organizations under the 501(c) tax code to identify their donors.  Currently, non-profits are required to disclose donors’ information if they give over $5,000.  The measure aims to protect the identity of these donors and is in response to the investigation into the IRS over potential targeting of conservative groups.    

Energy and Environment

ENERGY AND WATER APPROPRIATIONS BILL FAILS ON THE HOUSE FLOOR

On May 26, the House failed to pass the Energy and Water Development Appropriations Act, 2016 (H.R. 5055) by a vote of 112 – 305. Providing $37.4 billion in funding, the bill failed due to disagreements over the overall spending levels in the bill and also gay and transgender rights. Several amendments were added surrounding the President’s executive order directing public schools to allow transgender students to use bathrooms based on their gender identity.  The Senate had previously passed its version of the bill on Thursday, May 12. 

Military

DEFENSE APPROPRIATIONS

On May 17 and May 26 respectively, the House and Senate Appropriations Committee passed their versions of the Defense Appropriations bill.  The full House is slated to take up the bill (H.R. 5293) this week, which provides $ 576.3 billion in spending for defense programs.  Past debates of the bill have included discussion surrounding gay and transgender service member rights as well as discussions on how to curb terrorism.  The bill includes $517.1 billion in base funding and $58.6 billion in Overseas Contingency (OCO) funding.  The bill is expected to pass the House floor, barring any issues over amendments.   

On May 18, the House passed the National Defense Authorization Act.  H.R. 4909 authorizes the funding for the construction of facilities in conjunction of the  Air Force squadron of C-17’s at the 911th Airlift Wing.

MILCON-VA

On May 19, the FY 2017 Military Construction and Veterans Affairs Appropriations bill (H.R. 4974) passed the full House on a vote of 295 – 129. This legislation provides for funding for housing, training, and equipment for military personnel and their families. It also contains funds for the maintenance of base infrastructure. Finally, this bill funds veterans’ programs and benefits.  Most importantly, the bill provides the $85 million necessary for the C-17 squadron at the 911th

This legislation provides $81.6 billion in discretionary funding, $1.8 billion above FY 2016 levels. Funding for the Department of Veterans Affairs is increased by 3% from FY 2016 level. Additional funds are intended to increase the speed, efficiency, and effectiveness of health services provided to veterans. Military construction funding was $250 million above the President’s request. This additional funding will provide for the contraction and maintenance of family housing, health facilities, and overseas facilities and infrastructures.

Also on May 19, the Senate passed its version of the FY 2017 appropriations bill on a vote of 89 – 8. The bill, H.R. 2577, was a minibus that included funding for transportation, veterans, and $1.1 billion for combatting the Zika virus.  The bill allows Veterans Affairs to recommend medical marijuana to patients in states in which it has been legalized.  The bill passed by the Senate includes $190.1 billion in discretionary and mandatory funds for military construction and veterans, and $114.2 billion for transportation and housing programs. 

Transportation

TRANSPORTATION-HUD (THUD)

On May 19, the Senate passed a transportation funding measure as part of the minibus for transportation, veterans and Zika funding. In addition to the details outlined in the previous section, the bill allows for $74.7 billion in transportation funding, $1.7 billion more than in fiscal 2016 and $2.5 billion less than requested.  The House Appropriations Committee also passed its version of the bill (H.R. 5394) on May 24. 

Upcoming

The House Appropriations Committee is slated to take up the Homeland Security Appropriations bill that was passed by the Subcommittee on June 9th.  The bill will allow for $41.1 billion in spending and increases funding for the Transportation Security Administration (TSA), which has come under fire for long security lines at airports.  The bill also places a ban on the President’s executive actions on immigration pending the outcome of legal challenges.   

On June 14, Senator Bob Casey introduced legislation that would prohibit anyone convicted of a misdemeanor hate crime from purchasing firearms.  Sen. Casey said that he has been working on this legislation for some time but was spurred to introduce it sooner as a result of the unfortunate events in Orlando this past weekend.   

The House Energy and Commerce Committee will take up H.R. 2646, introduced by Congressman Tim Murphy, to address mental health issues.  The bill expands access to psychiatric services for individuals and families in mental health crisis.      

 

NJ Primary Key Races and Recap

On Tuesday, June 7th, 2016, NJ held it’s primary election. Although it is a late-season primary, it became a battleground between Hillary Clinton and Vermont Sen. Bernie Sanders. Clinton’s victory over Sanders in NJ is seen as decisive, although Sanders has vowed to remain in the race. This breakdown looks at the Presidential race and key Congressional and Legislative races.

Presidential 
Donald Trump 
received 80% of the vote, walking away with NJ’s 51 Republican Delgates

Hillary Clinton defeated Bernie Sanders. Clinton received 63.3% of the votes (542,708 votes) to Sanders’ 36.7% (315,218 votes). Clinton is now the presumptive Democratic nominee.

US Congress- Contested Races
District 1: US Congressman Donald Norcross defeated challenger Alex Law with 69.7% of the vote in the Democratic Primary. Congressman Norcross will face Republican challenger Bob Patterson in the November General Election

District 2: David Cole defeated Tino Rozzo to receive the Democratic party’s nomination for Congress. Cole will faceCongressman Frank LoBiondo in the November General Election.

District 3: Frederick LaVergne defeated Jim Keady with 62.7% of the vote to receive the Democratic Party’s nomination for Congress. LaVergne will face Congressman Tom MacAuthur in the general election.

District 4: Congressman Chris Smith defeated challenger Bruce MacDonald with 92% of the vote. Congressman Smith will face Democratic challenger Lorna Phillipson in the fall.

District 5: Congressman Scott Garrett retained the Republican Party’s nomination for Congress with 82.3% of the vote defeating  Michael Cino and Peter Vallorosi. Congressman Garrett will face Joshua Gottheimer in the fall.

District 7: Congressman Leonard Lance retained the Republican Party’s nomination for Congress with 53.9% of the vote, defeating challengers David Larsen and Craig Heard. Congressman Lance will face Peter Jacob in the November general election.

District 8: Congressman Albio Sires received 87% of the vote against young upstart Eloy Delgado for the Democratic Party’s nomination for Congress. Congressman Sires will face Agha Khan in the general.

District 11: Congressman Rodney Frelinghuysen retained the Republican Party’s nomination for Congress, defeating Rick Van Glahn with 76.2% of the vote. Congressman Frelinghuysen will face Democrat Joseph Wenzel in November. Wenzel defeated Richard McFarlane and Lee Anne Brogowski with 71% of the vote.

District 12: Congresswoman Bonnie Watson Coleman retained the Democratic Party’s nomination for Congress, defeating Alexander Kucsma with 93.7% of the vote. Congresswoman Watson Coleman will face Steven Uccio in the general.

DMGS Washington DC Update

WASHINGTON, DC UPDATE
CONGRESSIONAL APPROPRIATIONS
Congress continues to prioritize the marking up and passage of 12 appropriations bills before the adjourn for summer recess. The chart below outlines where each appropriations bill is in the process.

ENERGY AND WATER APPROPRIATIONS BILL FAILS TO PASS HOUSE
The House FY 2017 Energy and Water appropriations bill failed to pass (with a vote of 112 in favor and 305 against). 130 Republicans and 175 Democrats opposed the measure. Democratic opposition to the measure centered around policy riders that would weaken the Clean Water Act, permit individuals to carry guns on land owned by the Army Corps of Engineers, and forbid the federal government from cutting off funds to North Carolina due to its new law regarding transgendered individuals and the restrooms they are permitted to use. On the Republican side, opposition came about from an amendment by Senator Patrick Maloney that would forbid federal contractors from discriminating against LGBT individuals. Failure to pass this bill could jeopardize Congress’ attempt to return to regular order in the budget process. Leadership in the House and Senate have committed to re-evaluating their approach in getting the remaining appropriations bill to the President’s desk. One such approach may include controlling the bills and amendment process more tightly.

 

CONGRESS IN SESSION
Dates below indicate when the House and Senate are in session from now until the end of August. Summer recess commences after July 15 and end on September 5.
Senate
Week of June 6:                   6, 7, 8, 9, 10
Week of June 13:                13, 14, 15, 16, 17
Week of June 20:                20, 21, 22, 23, 24
Week of June 27:                27, 28, 29, 30
Week of July 4:                    6, 7, 8
Week of July 11:                 11, 12, 13, 14, 15

House
Week of June 6:                   7, 8, 9, 10
Week of June 13:                13, 14, 15, 16
Week of June 20:                21, 22,23, 24
Week of July 4:                    5, 6, 7, 8
Week of July 11:                 11, 12, 13, 14, 15

 

DEPARTMENT OF LABOR RULE ON EXEMPT AND NON-EXEMPT EMPLOYEES
The Department of Labor has published a final rule that doubles the minimum salary employers must pay in order to classify employees as exempt (from overtime under the Fair Labor Standards Act). The new minimum salary level established by the rule is $47,476, more than double the current level – $23,660. This significant increase is $3,000 lower compared to the salary level put forward in the proposed version of the rule (published in February of 2015). This salary threshold will now be automatically updated every three years. The salary level for highly compensated employees will increase from $100,000 to $134,000. To see the final rule in its entirety, click here. It’s effective date is December 1, 2016.

2016 Presidential Primary Update

Presidential Primary Update

DONALD TRUMP IS THE REPUBLICAN PRESUMPTIVE NOMINEE
Donald Trump reached the requisite number of delegates to officially clinch the Republican nomination when he passed the 1,237 delegate threshold on Thursday, May 26. Trump has been widely considered to be the presumptive Republican nominee since the Indiana Primary. His last remaining competitors, John Kasich and Ted Cruz, ended their campaigns after poor showings in that state. Republicans hold their convention in Cleveland from July 18th to the 21st.

HILLARY CLINTON IS THE DEMOCRATIC PRESUMPTIVE NOMINEE
Hillary Clinton reached the requisite number of delegates to officially clinch the Democratic Nomination when she passed the 2,383 delegates threshold following the New Jersey and California primaries. Clinton has been widely considered to be the presumptive Democratic nominee, although Senator Bernie Sanders has vowed to continue his campaign until the Democratic Convention in Philadelphia on July 25th-28th.

OVERALL STANDING OF DEMOCRATIC PRESIDENTIAL NOMINEES (2,383 delegates needed for the nomination)

Hillary Clinton: 2,755 delegates (wins include Iowa, Nevada, South Carolina, Alabama, Arkansas, Georgia, Massachusetts, Tennessee, Texas, Virginia, American Samoa, Louisiana, Mississippi, the Northern Mariana Islands, Florida, Illinois, Missouri, North Carolina, Ohio, Arizona, New York, Connecticut, Delaware, Maryland, Pennsylvania, Guam, Kentucky, North Dakota, California, New Mexico, New Jersey / Clinton has the support of 537 unpledged or “super” delegates).

Bernie Sanders: 1,804 delegates (wins include New Hampshire, Colorado, Minnesota, Oklahoma, Vermont, Democrats Abroad, Kansas, Nebraska, Maine, Michigan, Idaho, Utah, Alaska, Hawaii, Washington State, Wisconsin, Wyoming, Rhode Island, Indiana, West Virginia, Oregon,Montana  / Sanders has the support of 42 unpledged or “super” delegates)

The Democrats will hold their convention in Philadelphia from July 25th to the 28th.

The remaining primaries and caucuses are listed below

June 14 – District of Columbia Democratic Primary

Washington Update: Supreme Court Matters

Recent SCOTUS Decisions 

Since April 15, 2016 ten cases were presented and argued in front of the Supreme Court. These cases include United States v. Texas, United States v. Bryant, Universal Health Services v. U.S. ex rel. ESCOBAR, Birchfield v. North Dakota, Encino Motorcars, LLC v. Navarro, Kirtsaeng v. John Wiley & Sons, Cuozzo Speed Technologies LLC v. Lee, Mathis v. United States, Dietz v. Bouldin, McDonnell v. United States. No formal decision has been reached in these cases. They are briefly summarized directly below:

  • United States v. Texas, asks the question; does the Obama administration have the authority to implement its deferred-action policy for undocumented immigrants and is there a right by the states to challenge the policy? It also draws into question whether the Department of Homeland Security (DHS) should have notified the public about the policy and allowed them to weigh in. In addition, the Court must determine if the policy violates the Constitution’s clause requiring the president to ensure that the laws are “faithfully executed.”
  • Universal Health Services v. United States ex rel. Escobar discusses what the criteria are for a claim to be considered fraudulent when it is sought by a government contractor based on the “implied certification” theory of legal falsity.
  • Encino Motorcars, LLC v. Navarro addresses the question of whether “service advisors” at car dealerships are exempt from the Fair Labor Standards Act’s overtime-pay requirements under 29 U.S.C. §213(b)(10)(A).
  • Cuozzo Speed Technologies, LLC v. Lee discusses the issue of inter partes review (IPR) within the Patent process. The question focuses around the issue of whether IPRs can be considered substitutes for litigation or if they are extensions of the examination process. Furthermore, this case asks, does the Patent Trail and Appeal Board have the authority to use the broadest reasonable interpretation or do they need to use a more plain or ordinary meaning for interpretation when they are conducting IPR proceedings? 
  • McDonnell v. United States examines the vagueness and conditionality of the Hobbes Act and the honest-services fraud statute. In this case former governor McDonnell and his wife were charged with violating federal law by taking a bribe in return for “official acts” and conspiracy to commit “honest services” and Hobbs Act crimes.

On April 28, 2016 the Court issued its decision in Heffernan v. City of Paterson stating that “when an employer demotes an employee out of a desire to prevent the employee from engaging in protected political activity, the employee can challenge that demotion even if the employer’s actions are based on a factual mistake about the employee’s behavior.” On April 29, 2016 the Court denied the authority to stop Texas from enforcing a strict photo ID requirement for voters in that state, but left it open and in the jurisdiction of the federal appeals court until July 20, 2016. In the case of Hurst v. Florida, the Supreme Court ruled that Florida’s “unique system” of imposing death sentences was unconstitutional because it granted judges the authority to make the final decision.

Update: Nomination of Merrick Garland to the SCOTUS scotus-no-scalia

It was reported on May 10 that Chief Judge Merrick Garland submitted an unsolicited questionnaire to the Senate Judiciary Committee. There is still much controversy over the appointment of Garland to the Supreme Court among members of Congress. As Garland meets with Senators, there are mixed feelings as the confirmation struggle continues. It was reported that eight former U.S. solicitors general from Democratic and Republican administrations have endorsed Garland’s nomination.

Washington Update: Transportation and Health Care

Health Care: Update on Opioid Use

On Friday, May 13th, comprehensive legislation aimed at combating opioid addiction passed in the House with a vote of 400-5. This package contains 18 pieces of bipartisan legislation, including a mandate to the FDA to convene special advisory boards when painkillers without addiction-deterrent ingredients are produced, increases to funding for overdose reversal drugs, a reduction in the volume of unused drugs, and majust-out-new-guidelines-on-how-to-treat-opioid-addiction-800x560ndated opioid addiction educational programs.

The President previously proposed $1.1 billion in new funding to combat opioid addiction in his last budget. Speaker Paul Ryan’s office has complained that the series of bills has not received widespread attention due to the raucous presidential primary. House Minority Leader Nancy Pelosi (D-CA) commented that the “good bipartisan” legislation is essentially worthless if Republicans continue refusing to provide the emergency funding required to make a difference. White House Press Secretary Josh Earnest commented that the administration’s perspective on this legislation is that it lacks “substance.” However, at the time of writing, no veto threat has been issued.

Transportation: TRANSPORTATION-HUD (THUD) (S. 2844)

The Senate’s Transportation, Housing and Urban Development, and Related Agencies Appropriations Act authorizes $114.2 billion for FY 2017. $56.5 billion would be allocated to discretionary appropriations. It provides $827 million less discretionary funding than in 2016 and about $2.5 billion less than what was requested by the President. Highway, transit, and transportation safety program funding increased compared to FY 2016. However, the bill did not include White House requests for additional mandatory funding for some transportation programs. It instead provides more funding than requested for Community Development Block Grants and Airport Improvement Grants. This bill provides about 2% more funding than 2016 for Housing and Urban Development programs.

Washington Update: Energy, Environment, and the Military

Energy and Environment: Energy and Water Appropriations Bill Passes Senate

On Thursday, May 12, the Senate passed the Energy and Water Development Appropriations Act, 2016. This bill supplies $37.5 billion for energy and water spending Specifically, it provides funding for research into wind energy, allows for the extensions of nuclear plant licenses, and earmarks funding for private-sector nuclear water storage programs. The bill is $61 million higher than the President’s requests. Part of this increase, $1.16 billion, is allocated to defense-related programs within the Department of Energy (compared to FY 2016). The bill also invests in the country’s waterways and wind power industry. Of the already appropriated funds for renewable energy, $95.4 million would be dedicated for wind-energy research. The Energy Department is due to receive $29.01 billion of this funding, $1.09 billion more than what was allocated in 2015.

Military: Defense Appropriations

The Senate Armed Services Committee convened in open and closed sessions from May 9 – 13 to discuss appropriations proposed in the National Defense Authorization Act for Fiscal Year 2017. The legislation provides $517.1 billion in discretionary funding, which is an increase of $3 billion from FY 2016, and $587 million below the President’s budget request. In this bill, $58.6 billion is provided for Overseas Contingency Operations and Global War on Terrorism funding. The full committee held meetings in closed sessions from Wednesday May 11 through Friday May 13. Chairman John McCain is expected to release a text of the committee’s discussions and a summarized report in the near future (which, at the time of writing, had yet to occur).

The House defense spending bill released Tuesday evening boosts funding by $15.7 billion compared to FY 2016 to cover base Pentagon programs. The spending measure also reverses the Department of the Army’s strength cuts and funds a 2.1% military pay raise. This bill is also likely to contain the requirement for women, ages 18 to 26, to register for the Selective Services.

MILCON-VA

On April 13, the House Appropriations Committee approved the FY 2017 Military Construction and Veterans Affairs Appropriations bill. This legislation provides for funding for housing, training, and equipment for military personnel and their families. It also contains funds for the maintenance of base infrastructure. Finally, this bill funds veterans’ programs and benefits.

This legislation provides $81.6 billion in discretionary funding, $1.8 billion above FY 2016 levels. Funding for the Department of Veterans Affairs is increased by 3% from FY 2016 level. Additional funds are intended to increase the speed, efficiency, and effectiveness of health services provided to veterans. Military construction funding was $250 million above the President’s request. This additional funding will provide for the contraction and maintenance of family housing, health facilities, and overseas facilities and infrastructures.

The Senate Appropriations Subcommittee on Military Construction and Veterans Affairs also approved their respective FY 2017 appropriations bill on April 13. This legislation includes $83 billion in discretionary funding, $3.1 billion above FY 2016 levels. $7.93 billion is earmarked for military construction projects, $241 million below FY 2016 levels, but $486 million above the President’s request. $172.4 million of this funding is earmarked for Overseas Contingency Operations. This bill also increases the Department of Veterans Affairs funding by 4.8%. These additional funds are intended for improvements to health care, benefit claims, the Board of Veterans Appeals, the VA Inspector General, medical and prosthetic research, and IT infrastructure. The total $177.4 billion in discretionary and mandatory funding for the Department of Veterans Affairs is a $14.7 billion above the FY 2016 level. Discretionary funds for VA programs total $74.9 billion. This legislation includes an increase of $1.6 billion in medical care funding, as requested by the administration, to improve patient access to care, and to provide additional health care services, including hepatitis C treatments, veterans’ caregiver services, and homeless veterans’ assistance.

Compiled by: Luc Montimy, DMGS Pittsburgh