Employers Turn to Lobbyists to Navigate Benefits Policy Issues

By Mark Jr.

May. 27, 2009

In the face of stepped-up activity on workplace law in Washington, employers are increasingly turning to lobbying organizations to help them navigate actual and potential changes in benefits policy.

President Barack Obama and Democratic majorities in Congress see government action as the primary catalyst for economic growth and as the remedy for inequities in the workplace.

For example, the $787 billion economic stimulus package signed by Obama in February originally contained a provision that would have required employers to extend health care until age 65 to laid-off workers 55 or older or who have been with the firm 10 years. But that measure was knocked out by business community lobbying.

More recently, the Society for Human Resource Management issued a set of principles for workplace flexibility designed to begin talks on Capitol Hill that could lead to alternatives to mandatory sick leave legislation expected to be introduced in May.

For specific areas where changes in the law can be costly, employers rely on organizations like SHRM and the American Benefits Council, a national trade association for mostly large companies, to be their eyes and ears in Washington.

Rather than seeing a decline in its membership at a time when businesses are shedding expenses, ABC has added 11 new member companies to its roster so far this year, marking a 4 percent increase, says Jason Hammersla, a spokesman. The group now has 286 members.

“We’ve found ourselves being approached by new companies,” says Deanna Johnson, ABC director of membership. “They are feeling the impact of the recession, and how it has affected their benefits.”

SHRM membership also has been rising. It now stands at 252,000, up from 225,000 in 2007. Some of the spike can be attributed to increased interest in what Congress is doing, says Amy Thompson, SHRM director of public affairs. The organization’s legislative conference in Washington in March sold out, drawing 589 paid registrants. Attendance was 551 in 2008 and 512 in 2007. Sessions on workplace legislation have been added to all SHRM conferences for the rest of the year.

It’s not just lobbying organizations that are experiencing an increase in activity. The premium for Washington information puts demands on groups that help their members understand developments in the capital, even if they don’t promote specific bills.

WorldatWork, a professional association that concentrates on total rewards, compensation, benefits and work/life balance, opened a Washington office in 2007 in order to better communicate with members of Congress. SHRM is located across the Potomac from Washington in Alexandria, Virginia.

Cara Welch, director of public policy at WorldatWork, didn’t have a staff at first. Over the last couple months, she has added two colleagues to the policy shop and started a blog, Public Policy Perceptions.

Welch is trying to satiate the appetite for Washington guidance from WorldatWork’s 30,000 members, who are trying to gauge how all the legislative activity might affect their operations.

“They’re coming to expect more and more information,” Welch says. A webcast in December drew more than 350 participants. In 2008, Welch spoke at three or four WorldatWork events. Her speaking schedule exceeded that total in the first quarter of 2009.

“We’re just working all the time,” Welch says.

Another organization that does not lobby but does provide information and analysis is the Employee Benefit Research Institute. The group has added several new members and others have increased their participation this year, according to Dallas Salisbury, EBRI president and CEO. He adds that some members have dropped out because of budgetary strains caused by the recession.

Salisbury says members increasingly want to know about target-date funds, which were added as qualified default investments for retirement plans by the Pension Protection Act. EBRI databases and models analyzing the funds have led to issue briefs for congressional staff and contributed to EBRI hearing testimony.

SHRM, WorldatWork, EBRI, ABC and other organizations will stay active as Congress and the Obama administration maintain their focus on benefits policy.

Lobbying in action
Lobbyists for employers took actions immediately with the introduction of the stimulus package earlier this year. One major concern that employers had about the legislation was a nine-month, 65 percent subsidy for COBRA costs for workers laid off between September 1, 2008, and December 31, 2009.

The HR Policy Association and ABC were among the lobbying groups that spent hours on Capitol Hill fighting aspects of the provision—and managed some victories. In the original stimulus bill, employers would have been required to extend COBRA coverage until workers 55 or older, or who have been with the company 10 or more years, are eligible for Medicare.

Consulting firm PricewaterhouseCoopers estimates that the policy would have increased costs for employers by $39 billion-$65 billion because workers who maintain COBRA coverage tend to file claims that are more expensive than the health care charges for the average person in a company plan.

There was no magic way for business groups to persuade members of Congress—and just as important, their staffs—that their point of view was correct. It required wearing down a lot of shoe leather on Capitol Hill. ABC engaged in key discussions with the Joint Tax Committee, the House Education and Labor Committee and the House Energy and Commerce Committee. From January 26 to February 11, the group also sent letters to the House and Senate stimulus bill negotiators, Senate leadership and the Senate Finance Committee.

“Once politicians were educated on [the ‘55-and-10’ proposal], they realized it wasn’t a free ride,” says Mike Thompson, a principal in HR services for PricewaterhouseCoopers. “That’s why it’s critical we stay on top of the agenda.” PwC wasn’t involved in lobbying but provided analyses of the cost of the 55-and-10 provision to the HR Policy Association.

That provision, which may come up again in broader health care reform, was only one facet of a complex, massive and fast-moving stimulus bill that flew through the legislative process in weeks. It’s difficult for individual companies to keep up with every development, so they depend on ABC and other groups.

“It’s the details that matter,” says Lynn Dudley, ABC senior vice president for policy. “We are a portal for companies to weigh in on an efficient basis.”

Lobbying groups helped save companies tens of billions of dollars by killing the 55-and-10 proposal. Membership in ABC costs $4,000 annually for companies that employ fewer than 5,000. It costs $6,000 annually for larger companies.

Many companies have their own government relations representatives in Washington. But they follow legislation pertaining to the company’s portfolio. Tracking and influencing benefits policy is something that they tend to outsource.

“We’re able to come in and help them on a particular area that they may not be familiar with because it’s not part of their normal line of business,” Johnson says.

The communication goes two ways. ABC connects companies to congressional staff and administration officials so that they can learn about legislative and regulatory developments that are likely to impact their bottom line.

Those discussions also provide an opportunity for the companies to weigh in on how a proposal might change the benefits packages they offer to employees.

The corporate testimonials can potentially change minds on Capitol Hill. “To hear those details from the company helps terrifically,” Johnson says.

Getting the concerns of HR professionals in front of Congress was the motivation for SHRM to release its principles for workplace flexibility on May 7. In a letter to all members of Congress, SHRM proposed that companies be shielded from federal benefits mandates if they voluntarily offer paid time off. SHRM acted in advance of the introduction of a bill that would require employers to offer seven paid sick days annually.

“We want to try to start a dialogue before people get entrenched in reacting to a specific piece of legislation,” says Mike Aitken, SHRM director of government affairs.

SHRM followed up on the letters with ads in Capitol Hill newspapers and meetings with congressional staff.

Corporations don’t depend solely on organizations like SHRM and ABC to be their Washington surrogates. Sometimes they come together on their own, as they did in 2007 to form a coalition to protect the Employee Retirement Income Security Act, the federal law that bars states from setting their own benefits coverage rules.

The catalyst for the formation of the National Coalition on Benefits was a hearing held by Rep. Robert Andrews, D-New Jersey and chairman of the House labor subcommittee on health, employment, labor and pensions.

At that meeting and on other occasions, Andrews has expressed a willingness to ease ERISA rules to let states impose so-called “pay-or-play” mandates on companies. Under such legislation, an employer would have to meet minimum coverage standards set by a legislature, city council or another local government body.

“This is the first big employer coalition formed in health care, and it was formed around ERISA,” says Martin Reiser, manager of government policy for Xerox and chairman of the benefits group.

The coalition now numbers more than 175 companies and trade associations. Since its formation, it has conducted 75 meetings on Capitol Hill.

Those sessions revolve around the concern that the cost of meeting different health care coverage standards in different states would threaten their ability to provide benefits.

“It’s a bottom-line, non-negotiable issue for a lot of companies,” Reiser says. “There’s a growing recognition of the importance of ERISA at the staff and member [of Congress] level.”

Companies will be watching intently developments on ERISA and other benefits policy—and crafting benefits strategies and scenarios for whatever laws may finally emerge.

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