Stimulus Bill Impacts Employers

           

Employers take heed!  On February 17, President Obama signed his economic stimulus package into law.  The American Recovery and Reinvestment Act of 2009, commonly known as the stimulus bill, contains a number of provisions of importance to employers.  If your business will receive funds under the Troubled Asset Relief Program (TARP), or any other stimulus program, it is critical that you are aware of these provisions.  The employment-related highlights of the stimulus bill include:

·        whistleblower protection for non-federal employees of employers receiving funds under the stimulus bill;

·        additional obligations placed on employers receiving funding under TARP and Section 13 of the Federal Reserve Act, seeking to hire new H-1B workers;

·        a prohibition on the Small Business Administration (SBA) making certain guaranteed loans available under the bill to small businesses with a record of employing unauthorized aliens;

·        mandates that certain recipients of funds observe the Davis-Bacon Act's prevailing wage rate requirements; and

·        restrictions on compensation to top executives of public companies receiving TARP funds.

 

Whistleblower Protection

 

            The stimulus bill prohibits non-federal employers receiving covered funds from retaliating against an employee who discloses information that the employee reasonably believes is evidence of the following:

·        gross mismanagement of funds;

·        gross waste of funds;

·        a substantial and specific danger to public health or safety related to the implementation or use of funds;

·        an abuse of authority related to the implementation or use of covered funds; or

·        a violation of law, rule, or regulation related to an agency contract or grant relating to covered funds.

 

Notably, this whistleblower provision supplements existing state whistleblower protections without preempting, precluding, or limiting such laws.

 

Immigration: H-1B New Hire Restrictions for Certain Employers

 

The stimulus bill includes language that places additional obligations on H-1B employers receiving funding under the Troubled Asset Relief Program (TARP) or under Section 13 of the Federal Reserve Act (authorizing the Federal Reserve's "Discount Window" for short-term, secured loans to financial institutions and other companies).

 

Effective immediately, the stimulus bill makes it unlawful for recipients of such funding to hire a new H-1B worker unless the company complies with certain conditions previously imposed exclusively on "H-1B dependent employers."  By making such employers subject to the "H-1B dependent" requirements, the stimulus bill requires employers who sponsor a new H-1B visa to demonstrate that, among other things, the employer will not displace any similarly employed U.S. worker in the 90 days prior or 90 days after the filing of an H-1B petition; the employer will not place the H-1B worker with another employer to fill the position of a displaced U.S. worker (i.e. on contract); and the employer has taken good-faith steps to actively recruit U.S. workers, including offering the job to any U.S. worker who applies and is equally or better qualified for the position.

 

In addition, the term "hire" is defined in the stimulus bill as permitting "a new employee to commence a period of employment."  Therefore, these conditions do not appear to apply to H-1B extension petitions filed on behalf of current H-1B employees or may not apply to H-1B change of status petitions filed on behalf of employees currently working for the employer pursuant to another nonimmigrant status (i.e. F-1 [OPT], J-1, TN, etc.).  CIS has indicated additional guidance on these types of filings will be forthcoming.  The stimulus bill includes a two-year sunset provision, with termination on February 16, 2011, unless further legislative action is taken.

 

Restrictions on SBA Loans

 

            In addition, the stimulus bill prohibits the SBA from guaranteeing loans to businesses which the Department of Homeland Security or the Attorney General determines have engaged in a pattern or practice of hiring, recruiting, or referring for a fee unauthorized aliens. 

 

Davis-Bacon Requirements

 

            Two provisions of the stimulus bill incorporate the prevailing wage requirements of the Federal Davis-Bacon Act.  The Davis-Bacon Act requires federal contractors to pay laborers and mechanics not less than the prevailing wage rates for corresponding classes of laborers and mechanics employed on similar projects in the same area. The Secretary of Labor determines prevailing wage rates for inclusion in covered contracts.

 

The stimulus bill requires that recipients (and their contractors and sub-contractors) of guaranteed loans under the Temporary Program for Rapid Deployment of Renewable Energy and Electric Power Transmission Projects shall pay the laborers and mechanics they employ in accordance with Davis-Bacon prevailing wage rates.

 

Additionally, a general provision of the stimulus bill mandates that contractors or subcontractors on projects funded in whole or in part by the stimulus bill, shall likewise pay their laborers and mechanics in accordance with Davis-Bacon prevailing wage rates.

 

Executive Compensation

           

Finally, the stimulus bill provides limits on compensation to senior executives at public companies receiving TARP funds.  Specific prohibitions include the following:

·        "Golden parachute" payments to the senior executive officer or any of the five next most highly-compensated employees of a TARP recipient;

·        compensation that would incentivize a senior executive officer to take unnecessary and excessive risks;

·        the payment of any bonus to certain top executives, depending on the amount of TARP funds the company receives; and

·        compensation plans that would encourage manipulation of reported earnings.

 

Additionally, the provision requires TARP recipients to establish a Board Compensation Committee to oversee executive compensation.

 

For more information about the impact the stimulus bill will have on businesses, you can visit Ice Miller's stimulus Web page.

 

If you have questions about how the stimulus bill may impact employment issues, please contact Ice Miller's Labor and Employment Practice Group.  For questions specifically concerning the immigration-related portions of the stimulus bill, please contact Jenifer Brown.

 

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice.  The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.