IRS Extends Due Dates for 2015 ACA Employer Reporting Information Returns

On Dec. 28, 2015, the Internal Revenue Service (IRS) released Notice 2016-4, which extends filing and distribution deadlines for the employer reporting requirements required under the Affordable Care Act (ACA). This extension will give CFA members more time to ensure full compliance with the law.

ACA’s employer reporting requirements are mandated under Sections 6055 and 6056 of the Internal Revenue Code (IRC). Under IRC Section 6055, self-insured employers must file forms showing the months in which the individuals were covered by “minimum essential coverage.” Under IRC Section 6056, applicable large employers (those with 50 or more full-time equivalent employees) must file forms detailing employee offers and related coverage with the IRS (and distribute to employees). In most cases, employers will use Forms 1094-B and 1095-B and/or Forms 1094-C and 1095-C to comply with IRC Sections 6055 and 6056.

Under Notice 2016-4, the deadline for employers to distribute forms to employees and covered individuals has been extended from Feb. 1 to March 31, 2016. The deadline for employers to file with the IRS has been extended from Feb. 29 to May 31, 2016 (for paper filers) and from March 31 to June 30, 2016 for electronic filers.

FDA Announces Delay in Menu-Labeling Effective Date

The Food and Drug Administration (FDA) formally acknowledged a delay in the Dec. 1, 2016, effective date for enforcement of federal menu-labeling regulations. In its public statement, the agency said the federal menu-labeling rule won’t be enforced until one year after it publishes final guidance on the law.

As you may recall, the menu labeling rule requires caloric information to be included on the menus and menu boards of “covered food establishments,” defined as being a part of 20 or more locations doing business under the same name and offering substantially the same menu items. While the final rule was published in 2014, FDA is also required to publish formalized guidance that helps show companies how to comply with the law; draft guidance was issued in September 2015 but final guidance has yet to be released.

In last December’s spending bill, Congress delayed enforcement of the menu labeling rule until one year after FDA published guidance. However, until yesterday the FDA had not formally confirmed that change. In its statement yesterday, FDA officials said not only would the agency delay enforcement until one year after guidance is issued, but that the guidance language is expected to be published sometime this year.

Legislative Update: DOL Overtime Rule

As you are aware, the U.S. Department of Labor (DOL) recently proposed amendments to its overtime rule, which will greatly affect you, your employees and your business. Last week, efforts to both advance and halt the bill were taken; this issue update serves to provide a summary of both the proposal and recent regulatory and legislative actions on the overtime rule.

Summary of Overtime Proposal

On June 30, DOL issued its initial language amending the overtime rules set forth in the Fair Labor Standards Act (FLSA). The proposal requires overtime pay be granted to employees who earn less than $50,440 a year (or $970 per week) – more than double the current threshold of $23,660 per year (or $455 per week). Further, the language permanently links wage increases to insure that 40 percent of the working population is eligible for overtime pay. While the proposal did not amend the “duties” test, DOL solicited questions from the public about how best to alter the current “duties” exemption.

Regulatory Developments

On March 17, DOL forwarded its most updated language to the Office of Management and Budget (OMB) and Office of Information and Regulatory Affairs (OIRA) for review. This completes the last mandatory step the DOL has to take before issuing the final regulations. This means the final overtime rules could be released as early as April or May, followed by a 60- or 90-day implementation period.

Legislative Developments

On the same day (March 17), legislation was introduced calling for the overtime rule to be stopped in its tracks. The Protecting Workplace Advancement and Opportunity Act, introduced by Sens. Tim Scott (R-SC) and Lamar Alexander (R-TN) (S. 2707) and Reps. Tim Walberg (R-MI-07) and John Kline (R-MN-02) (H.R. 4773), does the following:

  • Nullifies the proposed rule;
  • Requires DOL to conduct a comprehensive economic analysis on the impact of mandatory overtime expansion on small businesses, nonprofit organizations and public employers;
  • Prohibits automatic increases in the salary threshold; and
  • Requires that proposed amendments to the duties test be subject to the notice and comment period.

While the bill is sponsored by both the House and Senate labor committee chairmen, it is not likely to garner the 60 votes needed to pass the Senate. Click here to view the bill in its entirety.

CFA members should expect final regulations to be issued in the next several months and prepare their employee schedules and salaries accordingly.

DOL Releases Final Persuader Rule

This morning, the U.S. Department of Labor (DOL) released its final Persuader Rule. While the language is currently being reviewed, CFA members should be prepared to provide disclosures to DOL in regard to conversations with legal counsel or other experts on unionization issues as well as employee relations, human resources and related topics.

Prior to the issuance of the final rule, employers had to disclose discussions about unionizing if their consultants or attorneys directly communicated with their employees. If the attorney or consultant did not communicate directly with the employees, but rather only advised the employer about how to legally communicate with employees, then no disclosure was required. If the final rule reflects the proposed language, this “advice” exemption is significantly narrowed so that virtually all interaction between employers and labor lawyers or consultants will be subject to the disclosure requirements. The consequences of this rule will likely result in limited employer access to counsel, increased lawsuits, less employer-employee communication and more paperwork requirements.

Click here to view the final rule; click here to view DOL’s fact sheet on the final rule.

Persuader Rule Effective Date

As you may know, the U.S. Department of Labor (DOL) finalized and issued its persuader rule on March 24, 2016. A key legislative priority for CFA, the rule greatly increases the disclosure requirements for employers, attorneys and consultants (“persuaders”) when discussing labor issues, substantially interfering with both an employers’ access to legal advice and attorney-client privilege.

The final persuader regulation states, “This final rule is effective on April 25, 2016. The rule will be applicable to arrangements and agreements as well as payments (including reimbursed expenses) made on or after July 1, 2016” (emphasis added). DOL recently clarified this to mean that, the rule is only applicable to arrangements and agreements made on or after July 1, 2016, and to payments made pursuant to arrangements and agreements entered into on or after July 1, 2016.

Per the U.S. Chamber of Commerce,

It appears that agreements entered into prior to July 1, 2016, are not reportable, even if activities undertaken (and payments made) pursuant to such an agreement occur after July 1 (this applies to indirect persuader activity only; direct persuading will always require reporting). Thus, one could interpret this to mean that indirect persuading activities that occur after July 1, 2016 (even months or years after) are not reportable if they are made pursuant to an open-ended or multi-year agreement entered into prior to July 1, 2016.

This means that employers may have until July 1 to finalize agreements with labor counsel or consultants regarding labor services, as actions taken arising out of these contracts may not be reportable under the new persuader rule. Note that this should not be interpreted as legal advice, and you should check with competent legal counsel before making any final decisions.

Injunction of DOL Persuader Rule

On Monday, the U.S. District Court for the Northern District of Texas enjoined the Department of Labor’s “persuader” rule. The nationwide injunction prevents DOL “on a national basis from implementing any and all aspects of [DOL’s persuader rule] pending a final resolution of the merits of this case or until a further order of this Court, the United States Court of Appeals for the Fifth Circuit or the United States Supreme Court.”

We expect the Department of Labor to appeal this ruling but for the immediate future the DOL is prohibited from enforcing the new rule beginning July 1.

We will continue to provide updates as they become available. In the meantime, while you no longer need to have an executed representation agreement on file with labor counsel by July 1, 2016, there is no harm in continuing to be proactive by signing a letter with your current labor counsel.

CFA Day Forum Gets Franchisees Face-to-Face with Heavy-Hitters

Along with the CFA Day Forum’s mainstay legislative components, members of the Coalition of Franchisee Associations (CFA) gained facetime with legal heavy-hitters in a first-of-its-kind format during this year’s event, held March 17-18, in Washington, D.C.

A joint-employer legal panel kicked off the event at the Capitol Visitors Center Thursday morning and featured Michael Lotito, co-chair of Littler’s Workplace Policy Institute; Michael Einbinder, founding member of Einbinder Dunn & Goniea; Robert Zarco, founding partner of Zarco Einhorn Salkowski & Brito, P.A.; and Ron Gardner, managing partner of Dady and Gardner, P.A.

During the panel, Lotito presented attendees with an overview and history of the joint-employer rule. Einbinder discussed the negative impacts of the new joint-employer rule on franchising, while Zarco followed with why the move is good for the industry. Gardner presented the pros and cons of the ruling, and the floor was then opened up for a question-and-answer session and discussion.

“I feel that the panel discussion served to highlight our concerns as franchisees as well as the different approaches that can be taken,” said Dunkin’ Donuts franchisee Robert Blum. “I think that, while the debate was at times lively, it really engaged the entire audience. At a time when we know that the franchisor is loaded for bear, we must be too.”

Following a luncheon highlighted by Congressional speakers, members joined smaller groups for a legislative review and Hill visits. The cross section of small-business owners, representing 14 franchisee associations, were able to address issues facing everyone. Among the topics taken to members of Congress were the Joint-Employer Standard, Americans with Disabilities Act (ADA) lawsuit reform, the Fair Franchise Act and the Small Business Administration (SBA) Franchise Loan Disclosure Act.

“My husband and I were very excited to join and meet with other franchisees from other parts of the country who share our concerns and are committed to trying to make a difference by joining together to speak with our legislators to help them understand that we are families and small-business owners who are providing jobs and want to leave our businesses to our children and grandchildren,” said Colleen Bailey, a Dunkin’ Donuts franchisee.

The day closed with a reception at Stanton & Greene where franchise owners were able to meet and spend time talking with members of Congress.

On Friday the highlight of the 2016 CFA Day Forum brought together franchisees and legal counsel for a roundtable breakfast, providing an unparalleled service to CFA members. Broken up into 20-minute sessions, attendees were able to take away valuable insight into major issues small-business owners face and ask questions pertinent to their situation.

The unique setting allowed participants to hear from Lotito, Zarco, Einbinder and Jeffrey Haff of Dady & Gardner on a range of topics. Lotito covered “Labor Laws: Overtime and Persuader Rules, Minimum Wage and Others.” Zarco and Einbinder addressed litigation topics. While Zarco spoke on “Avoiding Litigation: How to Protect Your Business,” Einbinder provided insight with “Litigation Strategies: How to Gain the Upper Hand.” Haff discussed “Disputed Exit Strategies: Transfers, Renewals and Right of First Refusal.”

“The roundtable discussions were very helpful for me individually because it provided a forum for me to have various questions addressed that were more specific to my own franchisee situations. I felt that I was able to receive insight into some issues by discussing them with other franchisees from various other concepts as well as the attorneys at the tables,” Blum said.

Blum, attending his third CFA Day Forum, said the benefits to the event are many.

“It has been an eye-opener to see how many Congressmen and senators don’t fully understand the franchise concept. Too many of them think that we are employees of the franchisor. When they learn that we are self-employed small-business owners, they are truly shocked,” he said. “It is also alarming how many of the representatives assume that we are in total alliance with the franchisor. When we are able to educate them of our differences, as well as the fact that we are the entity that is employing the majority of their constituency, that is when we have the biggest impact.”

The CFA Applauds the Introduction of Pro-Franchisee Legislation

Washington, D.C. (July 24, 2015) — The Coalition of Franchisee Associations (CFA) is applauding Rep. Keith Ellison for introducing the Fair Franchise Act of 2015 and the Small Business Administration (SBA) Franchise Loan Transparency Act. These bills protect franchisees from often imbalanced franchise agreements, which, for the most part, are non-negotiable and provide greater transparency to prospective franchisees before they invest significant financial resources toward the purchase of a franchise.

“We thank Rep. Ellison for his leadership in introducing these bills. The Fair Franchise Act addresses many of our key principles as stated in the Universal Franchisee Bill of Rights,” said CFA Chairman Keith Miller. “We also appreciate the support of initial cosponsors, Rep. Conyers, who worked closely with Rep. Coble on similar legislation in the late 1990’s, and Rep. Huffman, who four years ago authored legislation in California to protect franchisees. The CFA looks forward to working on the issues addressed by the legislation with stakeholders in the industry toward a solution that protects franchisee profitability and equity.”

Coalition of Franchisee Associations Adds Three Member Associations

Washington, D.C. (Aug. 6, 2015) — The Coalition of Franchisee Associations (CFA) membership has grown its membership by welcoming the Eastern VA 7-11 Franchisee Owners Association, the South Florida Franchise Owners Association of 7-Eleven and the National TUPSSO Franchise Owners Association.

“We are pleased to have these associations as our newest members,” says Keith Miller, CFA chairman. “As our membership grows, we are in a better position to represent all franchisees. We will continue to work to represent their interests to strengthen franchising by ensuring that the franchisees who invest in our local communities have a voice in working toward a more balanced and profitable position.”

Committed solely to franchisees, represents nearly 39,000 franchise owners and more than 87,000 locations and 1.4 million employees. The organization’s growth is a testament to franchisees recognizing the CFA’s efforts in fighting for franchisee rights, pro small-business legislation and against over-regulation.

California Governor Signs Franchise Bill into Legislation

Washington, D.C. (Oct. 12, 2015) — Gov. Jerry Brown of California signed a new franchise protection law, CFA-sponsored AB 525, Sunday afternoon that gives franchise owners in California the strongest rights in the United States.

“We thank Governor Brown for signing AB 525 and taking this step to better protect the rights and investments of the California franchise owners,” said Keith Miller, chairman of the Coalition of Franchisee Associations (CFA). “This journey started almost five years ago, when then Assemblyman Jared Huffman introduced a comprehensive franchise bill. While not everything wished for was achieved, the legislation signed is a significant achievement. It will give franchisees more rights against termination. It will add transparency to the transfer process. It will put meaningful remedies for improper terminations or non renewals. And most importantly, it acknowledges that franchisees own the equipment and fixtures in their business, and that franchisors must purchase them to take possession upon termination or expiration of the franchise agreement.”

Earlier this year, the CFA and the International Franchise Association (IFA) announced they had worked together to find agreement on several amendments to the bill that would help to ensure that franchising remains an important part of the California economy.“The process of bringing the legislation into existence is a hallmark of a sea change in the franchising industry. With the CFA working together with the IFA to balance and strengthen the law’s provisions to protect the rights of both business owners and brand stewards, franchising can be seen as the powerful entrepreneurial vehicle and leading national jobs generator that it has become. Franchisees are finally being recognized and protected as the serious investors that they are,” said CFA Vice Chairman Rob Branca.

Coalition of Franchisee Associations Supports Introduction of Legislation to Block Proposed Overtime Regulations

WASHINGTON, D.C. (March 22, 2016) – The Coalition of Franchisee Associations (CFA), the largest franchisee-only association in the country, supports the introduction of legislation to block the U.S. Department of Labor’s (DOL) proposed overtime rule. Sponsored by Sens. Tim Scott (R-SC) and Lamar Alexander (R-TN) and Reps. Tim Walberg (R-MI-07) and John Kline (R-MN-02), the Protecting Workplace Advancement and Opportunity Act seeks to nullify the rule and calls for further analysis of the impact on the economy.

“We must always remind legislators and regulators that while we often have ‘Wall Street’ names on the front of our business, we are truly local ‘Main Street’ small businesses that struggle in today’s economy to make a living and support our families,” said CFA Chairman Keith Miller. “We are not against any increases, but those increases need to be based on the economic realities across the country. One size fits all is often a bad measure.”

CFA does not oppose a measured, rationally based increase in the threshold, which is supported by publicly reported, thoroughly vetted data.

“Our members do oppose such a dramatic increase, which does not take into consideration the impact on our businesses,” said Rob Branca, CFA vice chairman. “We also object to automatic increases in the threshold tied to an index without the legislative or regulatory oversight that monitors then-prevalent economic conditions. Indeed, increases in any index will necessarily reflect increases to all other costs borne by businesses in addition to labor costs.”

“This bill helps protect franchisees by requiring regulators to come face-to-face with the economic impact of the language they draft,” said Misty Chally, CFA executive director.

Franchisees Want Private Right of Action to Pursue Franchisor Lies in Disclosure Document

WASHINGTON, D.C.— The Franchise Rule is the guideline that franchisors follow in disclosing the risks and benefits of a franchise investment. It is a rule that the Federal Trade Commission says it strives to update every ten years.

The last time it was amended was 2007. At the time, Susan Kezios, chairperson of the American Franchisee Association, told Blue MauMau just how little change there was for franchisees. “The Federal Trade Commission labored a dozen years to revise its Franchise Rule — only to give birth to a mouse,” declared Kezios.

To be fair, there were changes. For example:

  • Instead of 14 days ahead of the franchise purchase, the disclosure document could be delivered to the buyer in 10 days
  • Franchise brokers no longer needed to be disclosed
  • Reporting of related franchise litigation of the parent company became a requirement

What Kezios was alluding to was that these were superficial changes around what was needed most to give the rule teeth – a franchisee’s private right of action to go after a wayward franchisor in order to help the Federal Trade Commission enforce its rules. There was nothing then, and nothing now in 2016 about the big gorilla in the room – the FTC sharing its power to go after wayward franchisors by giving franchisees a private right of action to enforce its rules through lawsuit.

Kezios back then explained why a private right of action is necessary to give teeth to the Franchise Rule. “Because the FTC has a consistent record of rarely (if ever) enforcing its own Rule, a private right of action would allow franchisees their only remedy for franchisor fraud and material omissions in the 38 states without state franchise registration/disclosure laws. A private right of action would also level the playing field by taking away the unfair advantage of regional franchisors who offer franchises for sale only in non-registration states. Without it, there is no level playing field for franchisees, no checks and balances for franchisors, and no opportunity for the mouse that is the FTC’s revised Franchise Rule to roar.”

Keith Miller, the current chairman of the Coalition of Franchisee Associations, agrees with those statements from eight years ago. He stresses that without the private right of action, there is no remedy via the FTC or state regulators for the franchisee, even if the Franchise Rule is violated and an enforcement agency takes action against a bad franchisor because the franchisee is not able to take the franchisor to court for damages. In addition, the private right of action would allow the franchisee, in a sense, to create enforcement of the Franchise Rule when the FTC or state agency is unable to investigate or take action on alleged violations, often due to limited staffing.

Miller stresses that there are other updates that still need to happen to the Franchise Disclosure Document. “We believe that EBITDA needs to be disclosed,” he told Blue MauMau. However, he thinks that more than anything else, franchisees need a private right of action if the franchisor inserts bogus information to trick franchise investors to buy. “Changes for better disclosure in the Franchise Disclosure Document does not carry much meaning to franchisees unless there is some teeth, a private right of action,” says Miller. “Otherwise, states, or even the federal government, can penalize franchisors for misleading disclosure of EBITDA, but the individual franchisee will be hard pressed to recover from the harm to him or her. Requiring a franchisor to disclose earnings won’t put money in the franchisee’s pocket if a franchisor lies to him,” says the chairman of the franchisee association.

Read the original article from Blue Maumau here.