As the 112th Congress begins to address its legislative agenda, government agencies are busy issuing regulations to enforce the new laws passed last year. From health care to ADA enforcement, regulatory agencies are forcing their way to the front of the political stage.

This bulletin is brought to you by Misty Chally , the Executive Director of the Coalition of Franchisee Associations (CFA)Please be aware of the following issues affecting franchisees across the country:

Menu Labeling

Earlier this week, the Food and Drug Administration (“FDA”) announced that it is going to abandon its original plan to issue “draft guidance” on how the calories are to be displayed on menu boards (and expect compliance by the industry) and then wait until the end of the year to do a final rulemaking. Instead, it will skip its plan to issue “draft guidance” and instead issue an advanced notice of proposed rulemaking (“ANPR”) in the next several weeks – no later than March 23d. The FDA’s original plan would have required restaurants to have to put up new menu boards twice – once based on the draft guidance and again after the final rule (assuming the likely chance that there are differences between the guidance and the final rule).

In other good news, the FDA has also agreed to call regulators in New York City, Montgomery City (MD), California, Vermont and other areas where legislators are advancing their own menu labeling laws to ask them to “stand down” on enforcing their own laws until the FDA finalizes their rule. If those the states and municipalities continue to enforce their local laws, the FDA will not intervene further; only citizens of those states/municipalities can sue, claiming the local law has been preempted by federal law. As a result, it is likely that compliance will still be required in those localities pending the final rule.

After the ANPR is issued, the public will be given a 60-day comment period to provide comments. The final rule will be issued by end of 2011 and the compliance date for the final rule will be at least 6 months later.

Health Care

Since the passage of the Patient Protections and Affordable Care Act in 2010, those that have realized the potential negative effects of this health care law have adamantly fought for its repeal. On January 19th, and as a symbolic gesture of a new regime, the U.S. House of Representatives voted in favor of repealing the entire bill by a 245-189 vote. Three Democrats – Representatives Boren (OK), McIntyre (NC) and Ross (AR) – voted for full repeal.  Thank you to those who responded to the Action appeal.

The bill now moves to the Senate where Majority Leader Reid has publicly stated that he will not schedule the bill to move forward. President Obama has also stated that if the bill were to cross his desk (which his very unlikely), he would veto it. Opponents of the law will now attempt to repeal specific provisions on an individual basis. 

1099 Reporting

A number of bills have been introduced to repeal the 1099 reporting requirements included in the health care law. On Tuesday, Senate Finance Committee Chairman Max Baucus (D-MT) and Senate Majority Leader Harry Reid (D-NV) issued a statement saying they have introduced a bill for full repeal. Concurrently, Senators Mike Johanns (R-NE) and Joe Manchin (D-WA) introduced a bill which authorizes the Office of Management and Budget (“OMB”) to identify unobligated federal funds to cover the cost of repeal. A third bill, which revokes the section in its entirety, has been introduced by Sen. Debbie Stabenow (D-MI) is identical to an earlier bill introduced last year by Rep. Daniel Lundgren, (D-CA) which has attracted 233 Republican co-sponsors.

As you may recall, Section 9006 of the new Health Care law created new 1099 reporting requirements for business transactions exceeding $600. According to the new law, businesses must now file an IRS Form 1099 for all payments of more than $600 a year paid to providers—including corporations—that supply tangible property and services. In response to these requirements, pro-business members of congress have been working to repeal these requirements before they come into effect on January 1, 2012.

Congressional Republicans, Democrats and the White House have all called the reporting provision “burdensome.” Although a repeal of the provision has bipartisan support, lawmakers couldn’t reach an agreement as to how to repeal it prior to the end of 2010. 

Americans with Disabilities Act (“ADA”) Regulations

On July 26th, the Department of Justice (“DOJ”) issued its Advanced Notice of Proposed Rulemaking (“ANPR”) regarding proposed changes to the ADA. These changes focused on increased website accessibility and access to equipment and furniture.

Regarding websites, the proposal applies to entities already covered by Title III of the ADA (defined as private entities that own, operate or lease areas of public accommodation). Providing “website accessibility” includes adding descriptive text, visual notification for sound video, tags for forms, static copies and other options (i.e. larger text, phone options) on your website.

Regarding equipment and furniture, the ANPR is proposed extending ADA requirements to all equipment and furniture (including non-fixed and portable items), as opposed to the current law which applies to “fixed” elements. This includes POS devices and drive-thru equipment.
When asked whether the final rule would be released soon, experts said that while this is a priority for the Obama administration, they do not foresee any rule finalized earlier within the next 2 years.

Expiring Tax Cuts

Just prior to the end of the year, President Obama signed the “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010” into law. Some of the highlights of the new law include:

  • An extension through 2012 of the Bush tax cuts (individual rates, dividends, and capital gains) for all taxpayers
  • Reinstatement of the estate tax for 2011 and 2012 at a 35% rate with a $5 million exemption
  • A reduction in the social security payroll tax for individuals (not the employer share) from 6.2% to 4.2% in 2011
  • A provision allowing businesses to fully expense capital investments in 2011
  • An extension of the alternative minimum tax (AMT) “patch” for 2010 and 2011
  • An extension through 2011 funding for emergency unemployment benefits
  • An extension for 2010 and 2011 of 15-year depreciation for restaurant new construction and building improvements
  • An extension through 2011 of energy tax incentives including those for ethanol
  • An extension through 2011 of the Work Opportunity Tax Credit (WOTC)

Card Check/Labor Issues

The National Labor Relations Board (NLRB) and Department of Labor (DOL) have been busy promoting their “card check” agenda.

First, the NLRB released a Notice of Proposed Rulemaking (NPRM), which would require employers subject to the National Labor Relations Act (NLRA) to post a notice in the workplace informing employees of their rights under the NLRA or face a number of sanctions. As you may recall, President Obama issued an Executive Order in 2009 that required government contractors display such a poster.

Additionally, the NLRB announced a new enforcement policy against employers accused of unlawful conduct during union organizing campaigns. The announcement instructs regional NLRB attorneys to seek the specific remedies in those situations – including increased union access to employees. The memo also states that in cases where an employers’ conduct had a particularly severe impact, the regional attorney may look to pursue additional remedies, including: “granting a union access to non-work areas during employees’ non-work time; giving a union notice of, and equal time and facilities for the union to respond to, any address made by the company regarding the issue of representation; and affording the union the right to deliver a speech to employees at an appropriate time prior to any Board election.”

Finally, DOL released its semi-annual regulatory agenda which includes a proposal to issue a proposed rule in June 2011 revising reporting requirements for costs related to employer communications to employees during organizing drives. Under current law, employers and consultants are not required to report activities classified as advice. DOL has said it intends to narrow the advice exemption.