NATIONAL CLUB ASSOCIATION
1201 15th Street NW | Suite 450 | Washington, DC 20005
Toll Free: 800-625-6221 | Fax: 202-822-9808
www.nationalclub.org
Government Matters:
2012 Update
Brad D. Steele
Vice Pres.
of Government Relations
National
Club Association
th Street NW | Suite 450 | Washington, DC 20005
1201
and15General
Counsel
Toll Free: 800-625-6221 | Fax: 202-822-9808
www.nationalclub.org
steele@nationalclub.org
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
OUR MISSION

“To defend, protect and advance the interests and well-being of
private social and recreational clubs”

As the trade association for the private club industry, NCA is based in
Washington, DC to:


Be involved in the political world, and

Shape the policies that come from it
Simply put, we make sure the private club industry’s voice is heard

On Capitol Hill,

In the agencies,

In the statehouses, and

In the courthouses
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
TODAY’S ROADMAP



Election Review
Legislative Outlook
Regulatory Outlook
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
ELECTION REVIEW
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE HOUSE OF REPRESENTATIVES

Balance of power:

Pre-election: 242 Republicans - 193 Democrats

Post-election: 232 Republicans – 193 Democrats, as of now

10 seats still too close to call (7 Republican, 3 Democratic)


Republicans flipped 10 seats and Democrats flipped 13 seats

So, net gain of three seats for the Democrats


Total net loss can be no more than 10 for Republicans
Speaker of the House John Boehner (R-Ohio) will retain the gavel


Reps. Bachmann (R), Bono Mack (R), and Barber (D) (replaced Giffords)
Worst case scenario is the Republicans have a majority of 14 seats
Redistricting caused races to be interesting

Four of the 11 Republican seats in Illinois flipped

Three of the seven Democratic seats in North Carolina flipped
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE SENATE

Balance of power:

Pre-election: 53 Democrats (with 2 Independents) – 47 Republicans

Post-election: 55 Democrats (with 2 independents) – 45 Republicans

Republicans flipped Nebraska

Democrats flipped Indiana, Maine and Massachusetts and held six of their
seven other six open seats


So, net gain of two seats for Sen. Majority Leader Harry Reid (D-Nev.)


Conn., Hawaii, N.M., N.D., Va., and Wis. – Neb. was the seventh
Major success for the Democrats to their expand majority
However, without 60 votes, the Republicans will still be able to filibuster any
controversial bill

The gridlock will only get worse
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE WHITE HOUSE

The President wins re-election

2012 vote: 60,100, 000 (51%) – 57,415,000 (49%)



2012 Electoral College vote: 303 – 206 (Fla.’s 29 still to close to call)

2008 Electoral College vote: 365 – 173

First President to win re-election with less EC votes than the previous
election
2012 States: 26 (w/DC) – 24 (Fla. is too close to call)


2008 States: 29 (w/DC) – 22
The President won every battleground state: Colo., Iowa, Nev., N.H., Ohio,
Va., Wis., and Fla. is leaning his way


2008 vote: 66,880,000 (53%) – 58,340,000 (46%)
Ind. and N.C. returned to the Republican fold, but it did not matter
At the end of the day, the polls were right
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
LEGISLATIVE OUTLOOK
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE PATIENT PROTECTION
AND AFFORDABLE CARE ACT (ACA)

The law will go into effect on January 1, 2014

This year’s new requirement – the W-2 reporting mandate

Clubs must disclose all money spent for health insurance premiums by both
the employer and employee on the employee’s W-2 form


Clubs that issued less than 250 W-2s in the preceding year are exempt
in 2012
Still not taxable income, yet....

However, the President has proposed removing the tax exemption for
those who traditionally join private clubs
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE PATIENT PROTECTION
AND AFFORDABLE CARE ACT (ACA)

American Health Benefit Exchanges

By 2014, each State must have an Exchange that offers government
approved plans

It is a marketplace to purchase health insurance policies – like Travelocity or
Expedia

An Exchange must:

Certify that each policy meets the government established requirements

Provide a comparative analysis of each plan

Provide cost information for each plan

Assign a rating to each plan
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE PATIENT PROTECTION
AND AFFORDABLE CARE ACT (ACA)


The Exchange and private clubs

SHOP Exchange – Small Business Health Options Program

Clubs with 100 or less employees may use the Exchange to purchase
insurance for their workers

All such employers may pool together to lower costs

States may allow clubs with 100 + employees into a SHOP Exchange in
2017
Club leadership may select the level of coverage and employees may
select any plan within that level

Platinum Level – 90/10

Gold Level – 80/20

Silver Level – 70/30

Bronze Level – 60/40
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE PATIENT PROTECTION
AND AFFORDABLE CARE ACT (ACA)

Beginning March 1, 2013, clubs are required to notify employees
about the Exchange

HHS will provide a model disclosure form

You must disclose:

What services the Exchange provides,

How to contact it,

That your employees may be eligible to receive a tax credit or subsidy,
and

That they may lose the employer’s contribution, but any payment they
make for health insurance will be tax exempt
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE PATIENT PROTECTION
AND AFFORDABLE CARE ACT (ACA)

The Employer Mandate

Clubs with an average of 50 full-time employees must offer insurance

Clubs with 50 that offer ins. will be fined $3,000 for each employee who:


Clubs with 50 that do not offer ins. will be fined $2,000 per full-timer (less
the first 30) if:


One employee goes to the Exchange and receives a tax credit or subsidy
Clubs will only pay the lesser of the total $3,000 penalty vs. the total
$2,000 penalty


Is not offered or declines the plan, goes to the Exchange and receives a
tax credit or subsidy
Penalties are indexed to the nat’l average premium growth rate
So, who is “full-time” and how does he get a tax credit or subsidy
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE PATIENT PROTECTION
AND AFFORDABLE CARE ACT (ACA)


Full-time employee – one who is employed on average at least 30
hours/week during any month (120 hours in a four-week span)

These are the employees who will determine if you fall under the law

These are the employees to whom you must offer ins. or risk being fined

The IRS has issued a request for comments on this definition and its
workability – 130 hours/month
Part-time employees are to be counted when determining if your
club has 50 full-timers

Take the total hours worked by part-timers in a month and divide by 120
then add that number to the number of full-timers to see if you reach 50

Part-timers are counted but you don’t have to offer them insurance
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE PATIENT PROTECTION
AND AFFORDABLE CARE ACT (ACA)


What about Variable Hour Employee – is he full-time?

Variable Hour Employee – Based on facts and circumstances at his start date,
it cannot be determined he is reasonably expected to work 30 hours/week

If he is full-time, you must offer ins. or risk being fined
Ongoing Variable Hour Employees – Safe Harbor from fine

Club picks a Standard Measurement Period (3-12 months) and a Stability
Period (6-12 months, but no shorter than SMP)

If the employee averages 30 hours/week during the SMP, he is full-time

Club must offer him ins. for the Stability Period

If he does not, no need to offer ins.

A club following this guidance will not be fined if the employee goes to the
Exchange and receives a tax credit or subsidy
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE PATIENT PROTECTION
AND AFFORDABLE CARE ACT (ACA)

New Variable Hour Employees – Safe Harbor from fine

Club picks an Initial Measurement Period (3-12) and the Stability Period but
the Stability Period must be the same number of months as for ongoing
employees

If the employee averages 30 hours/week during the IMP, he is full-time


If he does not, no need to offer ins.


Club must offer him ins. for the Stability Period
BUT, club must test him again as an “ongoing employee” beginning with
the 1st SMP that begins after his start date – this may overlap with the
IMP
A club following this guidance will not be fined if the employee goes to the
Exchange and receives a tax credit or subsidy
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE PATIENT PROTECTION
AND AFFORDABLE CARE ACT (ACA)

Administrative Period – Safe Harbor from fine

For ongoing employees, a clubs may have a 90 day Administrative Period
between the SMP and the Stability Period to get these employees notified
and enrolled in a plan

For new employees, a club may delay the start of the IMP and it may also
have an Administrative Period after the IMP

BUT, the total delay may still only be 90 days

Also, the IMP and the Administrative Period cannot total more than 13
months from a new employee’s start date
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE PATIENT PROTECTION
AND AFFORDABLE CARE ACT (ACA)

Employee eligibility for the Exchange’s tax credit or subsidy

For clubs that offer ins., a FTE is eligible for a tax credit/subsidy if:

That employee’s household income is no more than 400% FPL ($92,200
for a family of 4), and

His premium cost for a self-only plan is more than 9.5% of his
household income – “unaffordable”


Eligibility is also there if the insurance plan pays less than 60% of health
care costs


IRS proposed safe harbor – no fine for a club if the employee’s
premium cost is no more than 9.5% of his W-2 wages
HHS will issue guidance on how to determine if a plan meets this
requirement
For clubs that don’t offer ins., a FTE is eligible if:

That employee’s household income is no more than 400% of FPL
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE PATIENT PROTECTION
AND AFFORDABLE CARE ACT (ACA)
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE PATIENT PROTECTION
AND AFFORDABLE CARE ACT (ACA)

Rules for seasonal workers

If a club has 50 full-timers, then its full-time seasonal workers must be
offered insurance


If the seasonal workers are new Variable Hour Employees, then the IMP
may be longer than their seasonal employment
If a club has less than 50 full-timers, but seasonal workers push it over the
threshold, then:

Club will have to offer ins. if it reaches the threshold for more than 120
days with clearly full-time seasonal workers

Club will not have to offer if it reaches the threshold for 120 days or less

If your seasonal workers are Variable Hour Employees, then you may have
to establish whether they are full-time for the 120 day requirement (and
offer ins. to your other full-time employees), but you will not have to offer
ins. to the seasonal workers until after the IMP
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE PATIENT PROTECTION
AND AFFORDABLE CARE ACT (ACA)

Rules for probationary periods for new full-time employees


Clubs with 200 or less employees

You may have up to a 90 day probationary period for new full-time
employees before offering insurance

New Variable Hour Employees who are later deemed to be full-time will
have longer than 90 days because of the Initial Measurement Period
Clubs with more than 200 full-time employees

You may not have a probationary period and must automatically enroll
new full-timers in the insurance plan

New Variable Hour Employees who are later deemed full-time will have
the Initial Measurement Period as their probationary period

This requirement has been delayed until regulations are issued
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE PATIENT PROTECTION
AND AFFORDABLE CARE ACT (ACA)

What must be included in the government approved plans?

Each plan must have the government’s Essential Health Benefits package:

Ambulatory patient services

Emergency services

Hospitalization and prescription drugs

Maternity, newborn care and pediatric services, with oral/vision care

Mental health, behavioral health and substance use disorders services

Rehabilitative and habilitative services and devices

Laboratory services

Preventative, wellness & chronic disease services (no cost to employee)

HHS will add other benefits, too

These new benefits are expected to increase costs by an average of 3%-5%
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE PATIENT PROTECTION
AND AFFORDABLE CARE ACT (ACA)


All government approved plans must be “nondiscriminatory”

The nondiscrimination rules are in the Internal Revenue Code § 105(h)

Clubs are required to offer the same benefits, waiting periods, contributions
and type of coverage to all classes of employees regardless of their
compensation

Failure to meet this requirement makes the plan discriminatory and the fine
is $100/day for each employee the plan discriminates against

There is a cap of the lesser of $500,000 or 10% of the price of the plan the
club paid the previous year
This requirement has been delayed until regulations are issued
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE PATIENT PROTECTION
AND AFFORDABLE CARE ACT (ACA)

What additional costs can be expected?

A fee on drug manufacturers

Starting next year, a 2.3% tax on medical device makers


Starting in 2014, an insurance comp. fee for all policies sold - a.k.a. the
“Health Insurance Tax” (HIT)



A bill to repeal this tax passed the House 270-146; no action in the Senate
This is expected to cause a nearly 4% premium increase
Starting in 2018, a 40% excise tax on ins. companies for selling high cost
policies

$10,200 premium threshold for self-only plans

$27,500 premium threshold for family plans
All of these new costs will be added to your club’s insurance premium
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE PATIENT PROTECTION
AND AFFORDABLE CARE ACT (ACA)

What new taxes will be imposed on club members?


New Medicare taxes starting 2013

For unearned income, a 3.8% tax on net investment income (interest
and dividends) for those making more than $200,000/$250,000

For earned income, a payroll tax hike of .9% for every dollar made over
$200,000/$250,000 (payroll adjustments need to be in place)

Neither one of these is indexed for inflation
Clubs need to budget for a potential decrease in revenue

With the .9% payroll tax increase alone, a club with 50 families making
$500,000 per year could lose over $100,000
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE PATIENT PROTECTION
AND AFFORDABLE CARE ACT (ACA)

Congressional Budget Office (CBO) issued new projections this year

CBO said the total cost for the ACA in ‘10-’19 was $938 billion




The ‘14-’23 cost is now $2.6 trillion
CBO says more employers will stop offering insurance

New estimates say gov’t will earn $15b because of the employer mandate

A House Ways and Means survey found 70% of Fortune 100 companies:

Could save $29 billion by dropping ins. in 2014 ($415 million each), and

Could save almost $422 billion from ‘14-’23 (nearly $6 billion each)
CBO also says 4 million employees will go into Exchanges (2.5%?)

Ways and Means survey says up to 65 million could go into Exchanges

More people in Exchanges means more subsidies paid by gov’t
Thus, greater pressure on Congress to hike taxes on private club members
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
POTENTIAL TAX INCREASES



1/1/13, the marginal income tax rates go up

The 28% rate will jump to 31%

The 33% rate will jump to 36%, and

The 35% rate will jump to 39.6%
Capital gains and dividend tax rates go up, too

Capital gains increases from 15% to 20%

Dividend rates go from 15% to an individual’s marginal rate
Family making $500,000 will pay more than $11,000 in new fed. taxes


With 20 such families at your club, you could lose more than $200,000/yr.
Do not forget that the payroll tax break and many business tax breaks
expire on 1/1/13, too
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
REGULATORY OUTLOOK
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
DEPT. OF LABOR’S H-2B REGULATIONS

H-2B “Wage Rule”

Hikes the “prevailing wage” by nearly $4.50/hour


NCA and our allies on the H-2B Workforce Coalition filed suit



Rule was to go into effect on September 30, 2011
DOL delayed the rule to let the court act, then Congress stepped in
Congress passed DOL’s spending bill for FY13 and removed funding for it

Unfortunately, the funding law is good for only 6 months of FY13

Thus, clubs are relieved from this requirement until March 27, 2013
The lawsuit is still pending
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
DEPT. OF LABOR’S H-2B REGULATIONS

The H-2B “Overhaul Rule” – revamps the entire program

Corresponding Employment:

Clubs must pay U.S. workers the prevailing wage if they do
“substantially the same work” as H-2B workers

Not for U.S. workers who have been employed at least 1 year and
whose responsibilities aren’t cut back

Clubs must pay H-2B workers 75% of their hours in a 12 week period whether they work or not

Full-time for H-2B workers is 35 hours not 30

Clubs must post a “workers’ rights poster” from DOL in all necessary
languages
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
DEPT. OF LABOR’S H-2B REGULATIONS

The H-2B “Overhaul Rule,” continued

Clubs must pay transportation, hotel, food and visa costs for H-2B workers
or reimburse them in the first week


Clubs must provide transportation costs to U.S. workers and offer
housing if it is offered to their H-2B workers

Clubs must offer the job to a U.S. worker up to 21 days before the H-2B
worker is to start – even if the H-2B worker is already on the way

“Temporary” is now 9 months not 10
A federal lawsuit was filed in Florida to stop the rule

The judge stopped the rule until the case is resolved and DOL appealed
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
NATIONAL LABOR RELATIONS BOARD


The National Labor Relations Board (NLRB) is a five-member board
that governs relations between unions and employers

Majority selected by the President

It can issue regulations and establish case law
On 1/1/12, the NLRB lost one member and was left with only two

On 1/4/12, the President recess appointed three new members

This is the first time a President has used the recess appointment power
while the Senate was still in session

Questions have been raised regarding the legality of these
appointments

If the appointments were done inappropriately, then everything the
NLRB does will be thrown out, but until then clubs must follow the
NLRB’s rules/case law
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
NLRB REGULATIONS

The “Poster Rule” – was to start April 30, 2012

Clubs must display a “Notification of Employee Rights” poster describing:

How employees can unionize, and

What constitutes unfair labor practices

However, the poster does not state how employees may decertify a union

Failure to post the notice is an “unfair labor practice” in and of itself

NCA’s issue with this rule is that disgruntled employees will have more of
an opportunity to bring a union into the club or file unfounded claims
against the club

If this happens, immediately contact club counsel before responding to
employees
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
NLRB REGULATIONS

The “Poster Rule,” continued

NCA and our allies filed a federal lawsuit in D.C. to stop the rule

The District Court ruled against us and we appealed

The U.S. Court of Appeals stopped the rule until the case is resolved


The decision should come by the end of the year
A similar case was also filed in a South Carolina federal court

That District Court ruled for us and the NLRB appealed

The U.S. Court of Appeals could rule by late Spring 2013

If we lose the DC appeal, we will ask to stop the rule from going into effect
until the South Carolina appeal is resolved

We have used the S.C. judge’s rationale to bolster our DC appeal argument
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
NLRB REGULATIONS

The “Quickie Election Rule” – was to start April 30, 2012

Allows unions to call for an election within 10-21 days of a petition being
filed

Severely limits your workers’ ability to receive complete information
about union costs

Severely limits a club’s ability to effectively prepare for a union election
battle

Promotes union “stealth campaigns”

This is where union organizers quietly secure the necessary votes and
then call for an election
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
NLRB REGULATIONS

The “Quickie Election Rule,” continued

The Chairman of the House Education and the Workforce Committee, Rep.
John Kline (R-Minn.), introduced a bill to kill the “Quickie Election Rule”

It passed the House, but no action in the Senate

On the same day that bill passed the House, the NLRB passed the rule 2-1

NCA and our allies filed a federal lawsuit in this matter, too

The D.C. District Court ruled for us and the NLRB appealed

The decision should come by mid-2013
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
NLRB CASE LAW



Specialty Healthcare

NLRB ruled that unions are entitled to select smaller subsets of larger
employee groups to organize

Burden is on employers to prove that the excluded employees “share an
overwhelming community of interest” with the smaller subset
Lancaster Symphony Orchestra

NLRB ruled musicians were employees (not independent contractors) and
could vote on forming a union

Since orchestra set work hours, pay schedules, dress code and standards
for behavior, they were “employees”
Roundy’s, Inc. (Pending)

Will give unions access to clubs during business hours to campaign if you
let others into the club during business hours (Red Cross, etc.)
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
DOL’S DISCLOSURE REGULATION

The “Gag Rule”

DOL issued a proposed rule that will severely impact a club’s ability to get
legal advice during a union organizing campaign

If a club hires a lawyer to help with almost any aspect of a union
campaign, then it must file complicated disclosure reports with DOL


The lawyers must also file reports disclosing all clients seeking labor
advice and the fees charged


It is a paperwork nightmare
Many law firms will pull back from this type of work
Without lawyers, most clubs will be unable to effectively give their side
of the story
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
NLRB & DEPARTMENT OF LABOR

Together, the NLRB’s regulations/rulings and the Dept. of Labor’s rule
mean:

Unions will have more agitated workers because of the “Poster Rule;”

Unions will have a quicker official election campaign because of the
“Quickie Election Rule;”

Unions will be able to target a smaller subset of your workers;

Unions will be able to include your caddies and other independent
contractors;

Unions will be entitled to come onto your property during business hours
to conduct the campaign; and

Unions will be less likely to encounter opposition because you can’t find
adequate legal assistance
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
THE NATIONAL CLUB ASSOCIATION
YOUR VOICE IN WASHINGTON, D.C. – JOIN TODAY!
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS