Regulations - Labor & Employment

GASB Draft Guidelines Propose Changes to Municipal Pension Reporting

In July 2011, the Governmental Accounting Standards Board (GASB) released two "exposure drafts," guidelines that would change how cities and towns report on the assets and liabilities of their pension plans. The drafts-Accounting and Financial Reporting for Pensions and Financial Reporting for Pension Plans-propose amendments to existing standards as part of an effort to improve how the costs and obligations associated with state and local public pensions are calculated and reported.

If finalized, the new guidelines would require state and local governments to report their net pension liability on their financial statements and several changes in the way cities and towns calculate their total pension liability and pension expenses. For example, cities and towns would be required to use a new discount rate that is based on the expected long-term rate of return for the pension fund and the interest rate on a 30 year AA or higher rated municipal bond index, rather than the traditional rate of return discount rate. The new guidelines would also require cities to use a single actuarial cost allocation method that is based on the starting date of the employee and to count pension expenses as an immediate liability rather than one that is deferred and amortized over 30 years.

GASB is accepting comments on the drafts through September 30; NLC is reviewing both drafts and will likely submit comments.

More information, including instructions on how to submit written comments, is available for download at Additionally, the National Institute on Retirement Security will hold a webinar on the GASB exposure drafts on August 3; information may be found on their web site,

Agencies Request Comments on Shared Responsibility for Employers Regarding Health Coverage

In May 2011, the Internal Revenue Service (IRS) and the U.S. Departments of Health and Human Services (HHS) and Labor (DOL) issued a request for comment in order to initiate a dialogue with public and private sector employers about how to define and count seasonal, temporary, part-time, and full-time employees.  Such a definition will help to determine whether an employer is considered an "applicable large employer" under the Patient Protection and Affordable Care Act (ACA), and therefore subject to the rules pertaining to employer-provided health care.

The ACA requires that employers with more than 50 full-time equivalent workers, including cities and towns, must provide health care coverage that meets the standards of the ACA or else face penalties and fines.  As a result, the definition of a seasonal employee, in particular, is very important, as they are not typically counted when determining whether an employer is an "applicable large employer."

In response to the joint agency request, NLC submitted a letter outlining its concerns over this definition, which the IRS has suggested must follow both DOL rules governing seasonal employees and IRS requirements mandating that the work be completed within a specific four-month period of time. NLC agrees with these rules in theory but countered that the ACA only limits an employee to working no more than 120 days out of a tax year.

DOL Updates Fair Labor Standards Act Regulations

On April 5, 2011, the U.S. Department of Labor's (DOL) Wage and Hour Division released updated Fair Labor Standards Act (FLSA) regulations that reflect changes made to the FLSA since 1977 and court decisions designed to interpret the FLSA's public sector employees use of compensatory leave. DOL first published its notice of proposed rulemaking (NPRM) in the July 28, 2008 Federal Register and invited comments on the proposed changes.

NLC did comment on the regulations at that time and asked DOL to better clarify (1) what is meant by an employee who is engaged in fire suppression or prevention; (2) how overtime by firefighters should be compensated; and (3) that public employers are not required to grant the use of accrued compensatory time if it means that the employer would incur overtime expenses.

It appears that the Department did not adopt the latter position and provided no clarity as to what is meant by an employee who is engaged in fire suppression or prevention or how overtime should be compensated, especially in a situation where the amount of time worked is affected by fluctuations in the number of hours of work in a given work week.

IRS Interim Guidance on Informational Reporting to Employees of the Cost of their Group Health Insurance Coverage

In March 2011, the Internal Revenue Service (IRS) released interim guidance for employers on how to report the cost of employer-sponsored group health plan coverage to their employees. Such reporting, required under the Affordable Care Act (beginning in January 2013 with calendar year 2012 W-2 forms), is meant to provide "useful and comparable consumer information to employees on the cost of their health care coverage." The guidance also provides additional transition relief for smaller employers that are required to file fewer than 250 2011 W-2 forms. They will not be required to report the cost of health coverage on any forms until January 2014.