No Federal Regulatory Relief in Sight

By Grossman, Robert J. | HRMagazine, February 2013 | Go to article overview

No Federal Regulatory Relief in Sight


Grossman, Robert J., HRMagazine


Compliance burdens are a fact of business life.

A major bone of contention in last year's presidential campaign was what Republicans call "job-killing" regulations.

Former Gov. Mitt Romney pledged to roll back paperwork and environmental regulations and to repeal Dodd-Frank financial reforms and most of the Patient Protection and Affordable Care Act.

But President Barack Obama's re-election means his administration will continue to follow an aggressive regulatory philosophy that draws frequent criticism from the business community and conservatives.

Still, Obama remains boxed in. With the House under GOP control, prospects for passing measures supported by Democrats and unions-such as the Equal Pay Act and the Employee Free Choice Act-are virtually nil.

The president is making overtures to business leaders and will try to engage and cajole them in an effort to win more support and restore economic growth. He is often willing to step in where Congress won't. In many areas, he's prepared to rely on executive powers to move his agenda. The executive order on immigration last August, which allows certain illegal immigrants to apply for work permits and deportation deferral, is an example of such a White House strategy.

On the regulatory front, federal officials will operate under legislative authority already on the books. They will turn up the heat using rulemaking and stepped-up enforcement, pushing to the limit to protect workers.

The fact is, under either party, regulatory agencies deploy a mix of tactics to foster compliance with employment laws. But, even in today's polarized and contentious political climate, moderation rules. The business of government is conducted either center-right or center-left, depending on who is in power.

Burgeoning Burden

In a recent survey, 52 percent of business owners and executives ranked regulatory burden among their top five concerns. Onethird of the respondents had been fined or penalized an average of 6.4 times during the previous 12 months for not complying with government regulations, according to a May 2012 report from the ADP Research Institute.

Since passage of the Regulatory Flexibility Act of 1980, federal efforts have been under way to control relentless growth of regulation and compliance activities. They include:

* Cost-benefit analyses of new regulations.

* Identification of alternative ways to achieve regulatory objectives.

* Review of existing regulations.

According to U.S. Office of Management and Budget analysis, "The estimated annual benefits of major federal regulations ... from Oct. 1, 2000, to Sept. 30, 2010, for which agencies estimated and monetized both benefits and costs, are in the aggregate between $132 billion and $655 billion, while the estimated annual costs are in the aggregate between $44 billion and $62 billion. These ranges reflect uncertainty in the benefits and costs of each rule at the time that it was evaluated."

As the federal researchers noted, benefits and costs for many rules, such as future benefits of some disclosure requirements, cannot be quantified.

Despite these purported benefits, small and midsize employers in particular say the costs associated with time, dollars and red tape have grown. A study conducted for the U.S. Small Business Administration found regulatory costs rising to at least $1.7 trillion annually.

This year, for instance, the number of federally mandated coding categories of illness and injury for Medicare reimbursement to hospitals will rise from 18,000 to 140,000. Nine new medical codes for certain electronic health care transactions relate to injuries caused by parrots, and three relate to burns from flaming water skis.

What to Expect

The Obama administration's agenda will feature plenty of new rulemaking with HR implications. Some regulatory proposals are now at the comment stage; others are pending final reviews or are on tap to be issued any day. …

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