Category: Labor & Employment

Additional Guidance Issued for President Biden’s American Jobs and American Families Plan

Introduction

In April 2021, President Biden announced the “American Families Plan,” which included some significant tax law changes. Among the proposed changes included in the “American Families Plan” was the increase of the tax rate that would apply to long-term capital gains, significant limitations on the amount of gain that could be deferred on the sale of real estate under the like kind exchange rules of Section 1031 of the Internal Revenue Code (the “Code”) and a proposed tax event on certain investment assets that are transferred as a result of a death of the owner.

On May 28, 2021, the United State Department of Treasury issued a report entitled “General Explanation of the Administration’s Fiscal 2022 Revenue Proposals. Similar reports are issued each year by the Department of Treasury as part of the annual budget process and these reports are generally referred to as the “Green Book.” What is relevant is that the Green Book issued on May 28th included more details on tax law change previously proposed in President Biden’s “American Families Plan.”

A summary of the significant tax law changes proposed in the Green Book is below:

  1. Proposed Tax Law Change Applicable to Long-Term Capital Gains of Non-Corporation Taxpayers.

Entities that are taxable as C corporations for U.S. federal income tax purposes are subject to the same tax rate on taxable income regardless of whether the income is ordinary income or capital gain. In contrast, for individuals who recognize income directly or as a result of the flow through of items of income, gain, loss and deduction from a limited liability company or S corporation, a different tax rate will apply depending upon whether the income is ordinary income or capital gain.

In general, if an individual sells a capital asset that has been held for more than 12 months, the regular marginal rates referenced above do not apply and instead, tax is imposed at a rate of 20% on the excess of the amount realized on the sale over the seller’s tax basis in the asset. Because these gains are passive in nature, the net investment income tax of 3.8% will also apply.

Under the proposed tax law change set forth in the Green Book, gain arising from the sale of a capital asset that has been held for more than 12 months (i.e., a long-term capital gain) would be subject to U.S. federal income tax at ordinary income rates, with the top marginal rate of 37%. This proposed tax rate increase would apply only to the extent that the taxpayer’s income exceeds $1 million. As above, this threshold amount would be adjusted by the consumer price index that is used to index other tax rate thresholds. Under this proposal, if the sale was also subject to the 3.8% net investment income tax, the tax rate for U.S. federal tax purposes would be 40.8%.

  1. Proposed Tax Law Change Applicable to Marginal Income Tax Rate

The Green Book provides, somewhat cryptically, that the above-referenced tax increase would “be effective for gains required to be recognized after the date of announcement.” It is unclear if this retroactive effective date would be April 28th, the date President Biden first announced the capital gain rate proposal in the context of his “American Families Plan” proposal or if it means May 28th, the date the Green Book was released.

The TCJA changed the marginal tax brackets that applied to individuals for purposes of determining the U.S. federal income tax rate applicable to ordinary income. Under the TCJA, the top marginal tax rate for such income was lowered from 39.6% to 37% for income over $628,300 for married individuals filing a joint return (for 2021). The elimination of the 39.6% tax bracket under the TCJA was set to expire ono January 1, 2026.

The Green Book sets forth a change to the marginal tax rates to reinstate the 39.6% marginal tax rate and to have it apply to taxable income over $509,300 for married individuals filing a joint return for 2022. For future tax years, the $509,300 threshold would be adjusted by the consumer price index that is used to index other tax rate thresholds. The reinstatement of the 39.6% tax bracket and the lowering of the taxable income threshold for this top marginal rate would apply to taxable years beginning after December 31, 2021.

  1. Proposed Tax Law Change Increase to the Tax Rate Applicable to C Corporations.

The 2017 Tax Cuts and Jobs Act (the “TCJA”) eliminated the concept of marginal tax rates for entities that are treated as C corporations for U.S. federal income tax purposes. Under the TCJA, C corporations were subject to U.S. federal income tax at a flat rate of 21%. Under the proposal outlined in the Green Book, the elimination of marginal tax rates would continue but the rate of tax would be increased to a flat 28%.

According to the information set forth in the Green Book, this tax rate increase would apply for taxable years beginning after December 31, 2021. The Green Book includes a transition rule for corporations that have a taxable year that begins after January 1, 2021 and ends after December 31, 2021 which in effect requires the higher tax rate to apply to the portion of the taxable year that occurs in 2022.

  1. Proposed Tax Law Change to the Tax Treatment of Profits Interests.

Over the past several years, the tax treatment of “carried interests” has been the subject of much discussion. In general terms, a “carried interest” is structured as an interest in a limited liability company or limited partnership and is granted to service providers. From a tax perspective, the “carried interest” is designed to qualify as a profits interest for U.S. federal income tax purposes so that it is tax free to the recipient on issuance. The perceived abuse is that in many cases, when distributions are made on the “carried interests” the character of the gain that flows through is capital gain rather than ordinary income (as would be the case if the payment was directly in exchange for services).

In 2017, the TCJA amended the Code to include Section 1061 to impose new tax rules on carried interest that would impose ordinary income treatment if the carried interest was held less than three years. Under the TCJA, this three-year holding period required did not apply to certain real estate partnerships.

Under the proposal outlined in the Green Book, the rules applicable to “carried interests” would again be changed to provide that any amount allocated to an investment services partnership interest (an “ISPI”) would be subject to tax at ordinary rates regardless of the character of the gain at the partnership level. Under this proposal, the gain arising from the disposition of an ISPI would likewise be treated as ordinary income, regardless of how long the interest was held. The income allocated in respect to an IPSI would also be subject to SECA, notwithstanding whether the interest was a limited partnership interest that is otherwise exempt from SECA or a non-manager interest in an LLC. This ordinary income treatment would apply only if the individual’s income from all sources exceeded $400,000.

For purposes of this proposed tax law change, an ISPI would be defined as an interest in a limited liability company or partnership held by a person that provides services to the entity and (i) substantially of the entity’s assets are investment-type assets, such as securities and real estate and (ii) over half of the entity’s contributed capital is from partners in whose hands the interest constitutes property not held in connection with the conduct of a trade or business. The proposal sets forth special rules that allow an interest in a limited liability company or partner held by a service provided to avoid ISPI treatment if the partner contributed capital in exchange for the interest and the interest is subject to substantially the same terms as interests issued to non-service providers. An interest will not qualify under this “invested capital” exception if the capital contribution is funded by a loan or advance guaranteed by another partner.

The proposal would repeal Code Section 1061 and would be effective for taxable years beginning after December 31, 2021 (even if the interest was granted prior to this date).

  1. Proposed Tax Law Change to the Deferral of Gain on the Sale of Real Estate under the Like Kind Exchange Rules.

Section 1031 of the Code allows a taxpayer to avoid the current recognition of taxable gain on the sale of property by engaging in a like kind exchange. In 2017, the TCJA amended Section 1031 to limit application of the like kind exchange rules to real property.

The proposal set forth in the Green Book would further restrict the application of Section 1031 by limiting the amount of gain that could be deferred in a like kind exchange to $500,000 ($1,000,000 for married individuals filing a joint return). As drafted, it is unclear how this limitation would apply to REITs or property held by an entity that is taxable as a C corporation. The assumption is that the $500,000 would apply to these entities but this is not entirely clear.

The new limitation would apply to exchanges occurring after December 31, 2021.

  1. Proposed Tax Law Change Applicable to the New Requirement to Recognize Long-Term Capital Gains for Assets Held at Death or Transferred During Lifetime.

In general, the current tax laws provide that the recipient’s basis of property acquired at death is the fair market value of those assets as of the decedent’s date of death. The recipient’s basis of property acquired by gift is the same as the donor’s basis as of the date of such gift. There is no realization event when property is acquired at death or via gift, unless and until that property is subsequently sold (and any gain would be determined based on the recipient’s adjusted basis).

Under the current proposal outlined in the Green Book, there will be a realization of capital gains to the extent such gains are in excess of a $1 million exclusion per person, upon the transfer of appreciated assets at death or by a gift, including transfers to and distributions from irrevocable trusts and partnerships. The proposal would provide various exclusions and exceptions for certain family-owned and operated businesses.

In addition, gains on unrealized appreciation will be recognized by a trust, partnership or other non-corporate entity at the end of an applicable 90-year “testing period” if that property has not been the subject of a recognition event during that testing period. The 90-year testing period for property begins on the later of January 1, 1940 or the date the property was originally acquired, with the first possible recognition event to take place on December 31, 2030.

Under the proposal outlined in the Green Book, realized gains at death could be paid over 15 years (unless the gains are from liquid assets such as publicly traded securities). There would be no gain recognition for transfers to U.S. spouses or charities at death. The Green Book states the effective date of the above-referenced changes would be effective for property transferred by gift, and property owned at death by decedents dying, after December 31, 2021.

  1. Proposed Tax Law Change to Expand Income Subject to the Net Investment Income Tax or SECA Tax.

Under current tax law, individuals filing joint returns that have taxable income in excess of $250,000 are subject to the 3.8% net investment income tax. In general, the net investment income tax applies only to the following categories of income and gain: (i) interest, dividends, rents, annuities and royalties, (ii) income derived from a trade or business in which the individual does not materially participate and (iii) net gain from the disposition of property (other than property held for use in a business in which the individual materially participates).

The net investment income tax does not apply to self-employment earnings. However, self-employment earnings are subject to self-employment tax (“SECA”). Under Section 1402 of the Code, limited partners are statutorily exempt from SECA, as are shareholders of an S corporation on the flow through of income from the S corporation. In general, the statutory exclusion of limited partners from SECA has been widely interpreted to also exclude members of limited liability companies from SECA.

The Green Book notes that depending upon the type of business entity used, active owners of a business can be treated differently under the net investment income tax and SECA and there are circumstance in which an active owner of a business can legally avoid the imposition of both the net investment income tax and SECA. To address this perceived abuse, the Green Book sets forth a proposal designed to ensure that all trade or business income is subject to an additional 3.8% tax either through the net investment income tax or SECA. Specifically, if an individual had adjusted gross income of more than $400,000, the net investment income tax would apply to all income and gain from a business that was not otherwise subject to SECA (or regular employment taxes).

The proposal also includes a change to the scope of SECA. Under this proposal, all individuals who provide services and materially participate in a partnership or a limited liability company would be subject to SECA on their distributive share of income that flows through from the entity. In addition, under this proposed tax law change, a shareholder of an S corporation that materially participated in the business of the S corporation would be subject to SECA on their distributive share of income that flows through from the entity.

The exemptions from SECA for rents, dividends, capital gains and certain other income would continue to apply. Nonetheless, both of these proposed tax law changes to the net investment income tax and SECA would have the effect of a 3.8% tax rate increase on all income from a business regardless of whether it was conducted through a sole proprietorship, a limited liability company, a partnership or an S corporation. The Green Book states that the effective date of the above-referenced changes would be for tax years beginning after December 31, 2021.

  1. Proposed Tax Law Change to the Extend the Excess Business Loss Deduction Limitations.

The TCJA added Section 461(l) to the Code to impose a limitation on the amount of loss from a pass-through business entity that can be used by a taxpayer to offset other income. As currently in force, this limitation applied to non-corporate taxpayers for tax years beginning after December 31, 2020 through 2027.

This limitation applies to “excess business losses” which are defined as the excess of losses from a business activity over the sum of (x) the gains from the business activities and (y) $524,000 for married individuals filing a joint return. This threshold amount is indexed for inflation. The determination of whether there is an “excess business loss” is determined at the individual level rather than on an entity by entity basis. As a result, all losses and gains attributable to a business are aggregated for purposes of applying the loss limitation.

Under the proposal set forth in the Green Book, this limitation would not expire after 2027 but would be permanent.

  1. Proposed Tax Law Change to Require Financial Institutions to Provide Comprehensive Financial Account Information to the IRS Through 1099 Reporting.

The IRS has estimated that the tax gap for business income is $166 billion per year. The IRS believes the primary cause of this tax gap is a lack of comprehensive information reporting and the resulting difficulty identifying noncompliance outside of an audit. In order to decrease the business income tax gap, it is purposed that the IRS will require comprehensive reporting on the inflows and outflows of financial accounts.

Pursuant to the proposal, financial institutions would report data on financial accounts on informational returns, which would report gross inflows and outflows from the accounts. Further, the information return would breakdown the amount of physical cash, any transactions with foreign accounts, and transfers to and from related party accounts. This regime would apply to all business and personal accounts held with financial institutions, including bank, loan, and investment accounts. It is further proposed that payment settlement entities would continue to report gross receipts on Form 1099-K, but would also report gross purchases, physical cash, payments to foreign accounts, and transfer inflows and outflows on its payee accounts. Similar reporting would also apply to cryptocurrency.

The proposal would be effective for tax years beginning after December 31, 2022.

  1. Fifteen Percent Minimum Tax on Book Earnings of Large Corporations

The Green Book expresses concern about reducing the disparity between the income reported by large corporations on their federal income tax returns and the profits reported to shareholders in financial statements. Accordingly, it proposes to impose a 15% minimum tax on worldwide book income for corporations with such income in excess of $2 billion. Taxpayers would calculate book tentative minimum tax equal to 15% of worldwide pre-tax book income less certain tax credits. The book income tax equals the excess, if any, of tentative minimum tax over regular tax. The proposal would be effective for taxable years beginning after December 31, 2021.

  1. Proposed Changes to Global Intangible Low-Taxed Income (“GILTI”)

The TCJA enacted the GILTI rules as a sort of minimum tax on earnings of controlled foreign corporations (“CFC’s”). A U.S. shareholder’s GILTI inclusion is determined by combining its pro rata share of the tested income and tested loss of all its CFCs. Tested income is the excess of certain gross income of the CFC over the deductions of the CFC that are properly allocable to the CFC’s gross tested income. However, this inclusion is reduced by a deemed 10% return on depreciable tangible property of the CFC (referred to as qualified business asset income, or “QBAI”).

In addition, a corporate U.S. shareholder is generally allowed a 50% deduction against its GILTI inclusion. Further, for corporate U.S. shareholders, 80% of foreign corporate income taxes attributable to GILTI may be allowed as a foreign tax credit. Finally, Treasury Regulations provide that if the foreign effective tax rate on the gross income of a CFC exceeds 90% of the U.S. corporate income tax rate, the U.S. shareholder of the CFC is generally permitted to exclude that gross income (and the associated deductions and foreign income taxes) from its GILTI inclusion.

The Green Book proposal would make several changes to these rules. First, the QBAI exemption would be eliminated, so that the U.S. shareholder’s entire CFC tested income would be subject to U.S. tax. Second, the section 250 deduction for a global minimum tax inclusion would be reduced to 25%. Given the increased corporate tax rate, the GILTI tax rate would generally increase to 21% (disregarding the effect of any available foreign tax credits). Third, the averaging method for calculating a U.S. shareholder’s GILTI inclusion would be replaced with a per country rule. Under this standard, a U.S. shareholder’s GILTI inclusion would be determined separately for each foreign jurisdiction in which its CFCs have operations. Concomitantly, a separate foreign tax credit limitation would be required for each foreign jurisdiction. Finally, the proposal would repeal the high tax exemption (for both GILTI income and subpart F income). These proposals would be effective for taxable years beginning after December 31, 2021.

Taken together, these changes will substantially increase the tax rate of many U.S. multinationals on foreign income. The Green Book proposals essentially enact a full inclusion regime, which is exacerbated by the inability of U.S. shareholders to offset losses in one country against income in another. Further, the increased tax rate resulting from the combination of an increased corporate tax rate and reduced GILTI deduction coupled with the per-country limitations on foreign tax credits will substantially increase some taxpayers’ effective tax rates on foreign income.

  1. Enact New Limitations on Corporate Tax Base Erosion

    1. Elimination of Foreign-Derived Intangible Income (“FDII”) Provisions

The FDII provisions (also a TCJA enactment) were intended to encourage exports of intangible property and services. Very generally, FDII is the excess of the taxpayer’s income from certain U.S. sources derived in connection with property or services that are sold by the taxpayer to a foreign person for a foreign use over the amount of QBAI used to produce such property.

Believing that FDII is not an effective way to encourage research and development (R&D) in the United States, rewards prior innovation rather than incentivizing new R&D and incentives companies to offshore manufacturing, the Green Book proposes to repeal FDII in its entirety. The Green Book indicates that the resulting revenue will be used to incentivize R&D in the United States but provides no details on how this will be done. The repeal would be effective for taxable years beginning after December 31, 2021.

  1. Repeal of Base Erosion Anti-Abuse Tax (“BEAT”); Enactment of Stopping Harmful Inversions and Ending Low-Tax Developments (“SHIELD”) Law

The BEAT was another TCJA innovation. Under the BEAT rules, a minimum tax was imposed on certain large corporate taxpayers that also make deductible payments to foreign related parties above a specified threshold. A taxpayer’s BEAT liability is computed by reference to the taxpayer’s modified taxable income and comparing the resulting amount to the taxpayer’s regular tax liability. The taxpayer’s BEAT liability generally equals the difference, if any, between 10% of the taxpayer’s modified taxable income and the taxpayer’s regular tax liability.

The Green Book proposal would repeal the BEAT and replace it with a new rule referred to as SHIELD. Under SHIELD, a deduction (whether related or unrelated party deductions) would be disallowed to a domestic corporation or branch, in whole or in part, by reference to all gross payments that are made (or deemed made) to “low-taxed members,” which is any financial reporting group member whose income is subject to an effective tax rate that is below a designated minimum tax rate. The designated minimum tax rate will be determined by reference to a rate agreed to under one of the pillars of the Base Erosion and Profit Shifting plan put forth by the OECD. If SHIELD is in effect before agreement has been reached, the designated minimum tax rate trigger will be 21%.

A financial reporting group is any group of business entities that prepares consolidated financial statements and that includes at least one domestic corporation, domestic partnership, or foreign entity with a U.S. trade or business. Consolidated financial statements means those determined in accordance with U.S. GAAP, IFRS or another method authorized by the Treasury Department. A financial reporting group member’s effective tax rate is determined based on the members’ separate financial statements on a jurisdiction by jurisdiction basis. Payments made by a domestic corporation or branch directly to low-tax members would be subject to the SHIELD rule in their entirety. Payments made to financial reporting group members that are not low-tax members would be partially subject to the SHIELD rule based on the aggregate ratio of the financial reporting group’s low-taxed profits to its total profits.

The proposal provides authority for the Secretary to exempt from SHIELD payments in respect of financial reporting groups that meet, on a jurisdiction-by-jurisdiction basis, a minimum effective level of tax. The SHIELD rule would apply to financial reporting groups with greater than $500 million in global annual revenues and would be effective for taxable years beginning after December 31, 2022.

  1. New Deduction Limitations on Disproportionate United States Borrowings.

The Green Book expresses concern that under current law multinational groups are able to reduce their U.S. tax on income earned from U.S. operations by over-leveraging their U.S. operations relative to those located in lower-tax jurisdictions. Under the proposal, a financial reporting group member’s deduction for interest expense generally would be limited if the member has net interest expense for U.S. tax purposes and the member’s net interest expense for financial reporting purposes (computed on a separate company basis) exceeds the member’s proportionate share of the group’s net interest expense reported on the group’s consolidated financial statements. A member’s proportionate share of the financial reporting group’s net interest expense would be determined based on the member’s proportionate share of the group’s earnings (computed by adding back net interest expense, tax expense, depreciation, depletion, and amortization) reflected in the financial reporting group’s consolidated financial statements.

When a financial reporting group member has excess financial statement net interest expense, a deduction will be disallowed for the member’s excess net interest expense for U.S. tax purposes. For this purpose, the member’s excess net interest expense equals the member’s net interest expense for U.S. tax purposes multiplied by the ratio of the member’s excess financial statement net interest expense to the member’s net interest expense for financial reporting purposes. However, certain financial services entities would be excluded from the financial reporting group. Further, the proposal would not apply to financial reporting groups that would otherwise report less than $5 million of net interest expense, in the aggregate, on one or more U.S. income tax returns for a taxable year.

A member of a financial reporting group that is subject to the proposal would continue to be subject to the application of thin capitalization rules (section 163(j)). Thus, the amount of interest expense disallowed for a taxable year of a taxpayer that is subject to both interest expense disallowance provisions would be determined based on whichever of the two provisions imposes the lower limitation. A member of a financial reporting group may also be subject to the Shield rule, discussed above.

The continued proliferation of interest deduction limitations is likely to be of concern to multinational groups that would now need to consider not only the application of debt-equity rules and thin capitalization rules but also the rules on disproportionate United States borrowings and, possibly, the SHIELD rules. Further, as lenders often want to lend to the parent of multinational groups (and those groups often want to maximize their borrowing capacity), it is typical for a U.S. parented multinational to be the primary borrower and cause its foreign subsidiaries to guarantee the debt obligation. The proposed limitation on disproportionate United States borrowings may force those borrowers to seek ways to introduce leverage into their foreign subsidiaries or cause these subsidiaries to become co-borrowers. However, doing so may require running the gauntlet of interest deduction limitations, withholding taxes and foreign exchange requirements in numerous countries.

  1. Provide New Business Credit for On-Shoring a U.S. Trade or Business

The proposal would create a new general business credit equal to 10% of the eligible expenses paid or incurred in connection with onshoring a U.S. trade or business. For this purpose, onshoring a U.S. trade or business means reducing or eliminating a trade or business currently conducted outside the United States and starting up, expanding, or otherwise moving the same trade or business to a location within the United States, to the extent that this action results in an increase in U.S. jobs. In addition, the proposal would disallow deductions for expenses paid or incurred in connection with offshoring a U.S. trade or business.

Jeffrey M. Glogower and Brandon Bickerton contributed to this article. 

© Polsinelli PC, Polsinelli LLP in California
ARTICLE BY William J. Sanders, D. Scott Lindstrom,
Edward J. Hannon, John T. Woodruff, Stephen J. Bahr and Adam W. Randle of  Polsinelli PC
For more articles on Biden’s American Jobs and American Families Plan, visit the NLRAdministrative & Regulatory section.

The College Athlete Right to Organize Act – Labor Unions Enter the Pay-for-Play Debate

The debate about compensating college athletes has presented itself in many forms recently, including a recent argument before the United States Supreme Court. As that notion gains momentum, U.S. legislators have stepped in by presenting legislation to ensure that labor organizations have their place at the table. On May 27, 2021, Senators Chris Murphy (D-CT) and Bernie Sanders (I-VT) and several members of the House of Representatives introduced legislation that would extend collective bargaining rights and the other protections of the National Labor Relations Act (NLRA or Act) to any athlete who receives any form of compensation from their public or private college or university and is required to participate in an intercollegiate sport. They call it the “College Athlete Right to Organize Act.”

The 2014 Union Petition by Northwestern Football Players

This legislation is not the first attempt to gain bargaining rights for college athletes. In 2014, members of Northwestern University’s football term filed a petition with the National Labor Relations Board (Board) asking that the University recognize the College Athletes Players Association as their exclusive representative for purposes of bargaining. While the Regional Director, Peter Sung Ohr (who is now the Board’s Acting General Counsel), agreed that players who receive scholarships are employees entitled to the rights and protections of the NLRA, the Board declined to assert jurisdiction. It did so without deciding whether the players are employees under the Act. In part, the Board declined because it does not have jurisdiction over public institutions, meaning that it maintains jurisdiction over only 17 of the 125 colleges and universities that participate in the same football division as Northwestern. The others are public institutions exempt from the Act.

The College Athlete Right to Organize Act Declares College Athletes Common Law Employees and Would Cover Both Private and Public Universities

The College Athlete Right to Organize Act addresses both of those issues. First, after denouncing the NCAA and its member institutions’ practices as “exploitive and unfair,” the College Athlete Right to Organize Act broadly declares that college athletes meet the common law definition of an “employee” because they “perform a valuable service… under a contract for hire in the form of grant-in-aid agreement.” Second, and more significant, the Act extends the NLRA to public institutions of higher education with respect to the employment of college athletes. Currently, the NLRA broadly excludes government entities.

Mandatory Multiemployer Bargaining Within an Athletic Conference

The College Athlete Right to Organize Act also introduces multiemployer bargaining as a matter of right by stating that “college athletes must be able to form collective bargaining units across institutions of higher education that compete against each other.” Thus, the College Athlete Right to Organize Act provides that the “Board shall recognize multiple institutions of higher education within an intercollegiate athletic conference as a multiemployer bargaining unit, but only if consented to by the employee representatives” of the players, meaning that multiemployer bargaining may proceed without the consent and over the objection of the colleges and universities. This change could have significant implications for colleges and universities operating within the same athletic conference, as it would require institutions with different resources, priorities and goals to approach negotiations with players in a generally uniform manner, which may not be suitable for a particular institution.

The Act’s Future

Whether the College Athlete Right to Organize Act gains any momentum remains to be seen. What’s clear is that debate around the issue of compensating college athletes is intensifying. As that debate matures, it seems that at least some legislators want to ensure that labor unions have a seat at the table.

Copyright © 2021 Robinson & Cole LLP. All rights reserved.

ARTICLE BY Natale V. Di Natale and Emily A. Zaklukiewicz of Robinson & Cole LLP
For more articles on college sports, visit the NLREntertainment, Art & Sports section.

The Elements of Your COVID-19 Voluntary Vaccine Policy

About half of the U.S. working age, vaccine-eligible population has now been vaccinated, according to Centers for Disease Control and Prevention (“CDC”) tracking data.  New CDC guidelines allow the fully vaccinated to unmask, except were applicable law or private businesses and workplaces say otherwise.

If that was supposed to be an incentive, it has yet to kick in.  COVID-19 vaccination rates are slowing considerably. There is growing concern for getting everyone safely back to work—and soon— especially among small- to mid-size employers still emerging from the pandemic.

Making vaccinations mandatory is technically an option, but many employers don’t want to go there, and an increasing number of  states are in the process of banning it anyway.  Thus, there is no shortage of ideas for incentivizing employees to get the shot—from on-site opportunities to extra vacation days, and employers are ardent for knowledge about which employees have already been vaccinated.

Nondiscriminatory incentives for getting the shot and a valid mechanism for learning who got it—those points and more can be deployed in a voluntary vaccine policy.  Here are the key elements:

Education:

Anti-vaccine messaging is all over the internet, but the case for the safety and effectiveness of the COVID-19 vaccines gets better every day.  Employers, especially small- to mid-size employers, can leverage both public and private resources to make the case to their employees.  For example, the CDC has done its job in addressing vaccine safety, vaccine benefits, and perhaps most importantly, vaccine myths and facts.  But one of its best educational contributions to date is this video that directly addresses, in compelling fashion, the most common concerns about how the vaccines were safely developed in such a short time, and whether the new mRNA technology is known to be safe.  Beyond public sources, holding private sessions for employees with local professors or doctors of epidemiology can not only make a compelling case for vaccination, but also debunk in real time the growing list of anti-vaccine myths about COVID-19 vaccination.

Voluntary Policy:

With limited exceptions for certain disabilities and religious observances, under current Equal Employment Opportunity Commission (EEOC) guidance (and subject to state law), it is legally permissible for employers to mandate that employees receive a COVID-19 vaccine as a condition of employment.  A voluntary policy should explain that, and state that the employer has opted not to make vaccination a condition of employment.  Instead, the employer strongly encourages all eligible employees to be vaccinated against COVID-19 on a voluntary basis, subject to the individual advice of the employee’s doctor and the recommendations of the CDC and the FDA.  This explanation that the program could be made mandatory but is not will itself be an incentive for some.

Incentives:

As cited above, there are many types of incentives for vaccination—transportation reimbursement, one-day on-site shot clinics, additional days of vacation or other paid leave (a popular option), extra sick days off specific to the aftereffects of vaccination, monetary payments, merchandise or gift card perks, and entertainment events.  Usually any such incentives come with an eligibility time limit—for example, for all employees fully vaccinated by August 1.  The policy should also address proof of eligibility, such as submission of a copy of the vaccination card, or a print screen of the provider’s online record of the vaccination.  Caveat:  Last week, the EEOC issued updated guidance allowing vaccine incentives—so long as such incentives do not unduly pressure employees to disclose protected medical information.

Legal Compliance: 

For any of these incentives to pass legal muster, they should be made subject to existing employer policies, such as advance notice for use of PTO, and separate maintenance of medical records.  In addition, incentive policies should provide for “exception awards” for those employees with a medical condition and/or disability that conflicts with getting vaccinated; and employees with sincerely held religious beliefs, observances, or practices that conflict with getting vaccinated.  Eligibility rules for such awards must be carefully crafted and allow for the employer to engage in the interactive process to seek out accommodations that will enable the employee to be vaccinated.  In addition, the policy should prohibit disclosure of certain information unnecessary to the eligibility for the program—such as genetic information.

Additional Elements: 

Other considerations for a voluntary vaccine policy include the question of whether it will need to be administered annually, which seems likely enough; how time off for the vaccine and any aftereffects will be scheduled; whether employees will be put on notice that they assume the risks—of vaccination or of coming to work unvaccinated; and nondiscrimination and nonretaliation (especially by co-workers) as to those who choose to vaccinate or not vaccinate.

As COVID-19 continues to abate and, as we watch for mutations in the virus as well as in state and federal law, employers must stay up-to-date with their policy guidance and risk management.

© 2021 Foley & Lardner LLP

ARTICLE BY Kenneth C. Broodo of Foley & Lardner LLP
For more articles on voluntary COVID-19 vaccinations, visit the Coronavirus News section.

As Local Mask Mandates Expire, How Should Employers Respond?

Following the May 13, 2021, and May 16, 2021, guidance from the U.S. Centers for Disease Control and Prevention (CDC) relaxing mask requirements for fully vaccinated individuals outside of healthcare and select other settings, most state and local government mask mandates have been lifted or will soon be allowed to expire. As a result, many employers across the U.S. are exploring their options regarding their masking policy.

Recap of the CDC’s guidance

The CDC’s guidance states that fully vaccinated individuals “can resume activities without wearing a mask or staying 6 feet apart, except where required by federal, state, local, tribal, or territorial laws, rules, and regulations, including local business and workplace guidance.”

Essentially, this means that fully vaccinated individuals can leave their masks at home unless a state or local mask mandate or a business’ policy says otherwise. The CDC also suggests fully vaccinated individuals with compromised immune systems ask their healthcare provider about continuing to wear a mask and/or social distance.

As for unvaccinated individuals, the CDC recommends continuing precautions, including wearing a mask and social distancing.

WHAT DOES IT MEAN TO BE FULLY VACCINATED?

According to the CDC, individuals are considered fully vaccinated:

  • Two weeks after their second dose in a 2-dose vaccine series, such as the Pfizer or Moderna vaccines
  • Two weeks after a single-dose vaccine, such as Johnson & Johnson’s Janssen vaccine

Also at the federal level, the Occupational Safety and Health Administration (OSHA), which oversees workplace safety, directed employers to the new CDC guidance. However, employers should be aware that OSHA continues to consider an Emergency Temporary Standard which may include mask guidance and requirements.

Expiring local orders

State and local laws mandating masks continue to decrease in number and Wisconsin is following this trend. On March 31, 2021, the Wisconsin Supreme Court invalidated the statewide mask mandate. On June 1, 2021, the City of Milwaukee’s mask ordinance will expire, and the City of Madison’s and Dane County’s joint mask requirement ends June 2, 2021.

Three common approaches to changing workplace mask policies

Considering recent changes in state and local mask mandates as well as mounting pressure from employees to make policy adjustments, many non-healthcare employers are changing their mask policies. Although there has been a spectrum of approaches, the following are three common ones:

1. WAIVING MASK REQUIREMENTS FOR FULLY VACCINATED EMPLOYEES

Many employers are sticking closely to the recent CDC guidance by retaining a mask requirement for employees who are not fully vaccinated and allowing fully vaccinated employees to forgo masks. A key decision point for employers when choosing this approach is whether to require proof of vaccination. Many employers are relying on the honor system as there are important legal considerations before asking employees about their vaccination status.

2. RETAINING MASK REQUIREMENTS REGARDLESS OF VACCINATION STATUS

Some employers are retaining mask requirements for all employees. Reasons for this may include: an inability to socially distance in the workplace, uncertainty regarding the potential OSHA standard or a local order requiring that masks remain in place.

3. ELIMINATING THE MASK REQUIREMENT ALTOGETHER

Some employers are eliminating mask requirements for all employees. Reasons for this approach may include: a fully vaccinated workforce, an outdoor work environment or the ability to socially distance during the entire workday with limited crossover. It is important to note that this approach carries the most risk for employers because the CDC still recommends masking in public spaces in certain instances, like being unvaccinated, and OSHA continues to consider an Emergency Temporary Standard.

Communicate any changes and be clear that unmasking is optional

Any changes to an employer’s mask policy should be formally communicated to employees via the same methods used to convey general workplace guidance. Such policy changes should emphasize that unmasking, as allowed by the policy, is optional, thereby allowing individuals who wish to continue masking, for whatever reason, to do so.

Each approach comes with varying legal risks and benefits, depending upon the specific facts related to the workforce, industry and other variables. Employers considering changes to their mask policies should contact legal counsel to discuss these issues and update their COVID-19 safety plans to reflect any changes to their practices.

Copyright © 2021 Godfrey & Kahn S.C.

ARTICLE BY Rebeca M. Lopez and Sarah K. Mueller
of Godfrey & Kahn S.C.
For more articles on mask mandates, visit the NLRCoronavirus News section.

May 2021 Legal Industry News Highlights: Attorney Moves, Law Firm Pro Bono Work & Innovation

We’ve returned with another edition of our legal industry news column for May. Read on for the latest news on attorney promotions, law firm recognition, pro bono work and legal technology and innovation:

Attorney Promotions & Moves

The International Financial Law Review (IFLR) recognized Blakes’ law firm partners Pamela Huff and Catherine Doyle as IFLR1000 Woman Leaders for the quality of their advice and the consistent recommendations of their clients and peers.

Ms. Huff is the head of the Blakes Restructuring & Insolvency group and advises on Canadian business law. Ms. Doyle is a leading member of Blakes’ Project & Financial Services group. Ms. Doyle has been a part of some of the most impactful infrastructure deals in Canada.

Jamie M. Ramsey joined Frost Brown Todd as the newest litigation member of the Cincinnati, Ohio office. Mr. Ramsey’s litigation experience includes breach of contract claims and trademark infringement to class action litigation. Mr. Ramsey also has experience helping clients navigate the legal framework impacting the collection, use, and protection of personal information.

“Jamie’s work with everyone from start-ups to Fortune 500 companies will provide our clients additional insight into how to manage risks to both their operations and reputations,” said Cincinnati Member-in-Charge Chris Habel. “He represents companies in both Ohio and Kentucky, and we couldn’t be more excited to have him in our Cincinnati office.”

Marjorie J. Peerce, managing partner of Ballard Spahr’s New York Office, is the new Vice President of the New York City Bar Association (NYCBA). Ms. Peerce served as Chair of the NYCBA Board of Directors since May 2020. She also formerly served as Chair of the NYCBA’s Criminal Law Committee and served on the Mass Incarceration Task Force. The NYCBA, founded in 1870, works to maintain the high ethical standards of the legal profession and includes over 150 committees.

Ms. Peerce is a founder and leader of Ballard Spahr’s Blockchain Technology and Cryptocurrency team, and handles high profile civil and criminal matters in state and federal courts in New York and around the US.

Adrian Cyhan joined Stubbs, Alderton and Markiles, LLP as a partner in the firm’s Intellectual Property & Technology Transactions practice. Mr. Cyhan is a patent attorney who focuses on identifying, protecting and leveraging intellectual property assets and providing related counsel and advice.

Mr. Cyhan manages intellectual property portfolios and handles intellectual property-related transactions such as joint ventures, acquisitions, and divestitures.

“I’ve known Adrian for several years and I’m thrilled we will be working together. He’s an exceptional attorney and a creative thinker. Bringing Adrian on-board reflects SA&M’s commitment to expanding our premier IP and technology law practice,” said Kevin D. DeBré, the Stubbs, Alderton and Markiles’ IP & Technology Transactions practice chair.

Law Firm Pro Bono & Philanthropy

Bradley Arant Boult Cummings LLP attorneys Corby C. Anderson, Matthew S. DeAntonio, Erin Jane Illman, and Jonathan E. Schulz joined the 2020 class of the North Carolina Pro Bono Honor Society. The attorneys each provided more than 50 hours of pro bono legal services in 2020 to North Carolinians in need.

“Our Charlotte attorneys continue to go above and beyond to provide equal access to justice for all,” said Bradley Pro Bono Counsel Tiffany Graves. “We are very proud of their commitment to the community and their well-earned recognition by the North Carolina Pro Bono Honor Society.”

Bradley Arant Boult Cummings attorneys work with the Safe Alliance’s Victim Assistance/Legal Representation Program to help victims of domestic violence and the Charlotte Center for Legal Advocacy, which helps low income residents of the Charlotte metropolitan area and west-central North Carolina.

The North Carolina Pro Bono Honor Society is administered by the North Carolina Pro Bono Resource Center, which launched in 2016.

The American Bar Association (ABA) Standing Committee on Pro Bono and Public Service selected Sheppard, Mullin, Richter & Hampton as an individual recipient of its 2021 Pro Bono Publico Awards. The awards are scheduled to be presented on the opening day of the 2021 ABA Annual Meeting, which runs through Aug. 10.

The Committee selected Sheppard Mullin for its actions following the death of George Floyd. The firm launched the Active Bystandership for Law Enforcement (ABLE) project with Georgetown Law’s Innovative Policing Program, which came from an initiative to teach officers to become active bystanders and prevent misconduct in the New Orleans Police Department.

The initiative led to Sheppard Mullin successfully litigating cases in California to obtain disclosure of records of police misconduct, as well as executing a plan to manufacture and secure face shields for frontline workers in Los Angeles.

The Committee also selected Cynthia Chandler, the director of Bay Area Legal Incubator, Oakland, California, TerryAnn Howell of Nelson Mullins in Miami, Neal Manne of Susman Godfrey LLP in Houston and Rebecca Rapp of the Ascendium Education Group in Madison, Wisconsin as recipients of the 2021 Pro Bono Publico Awards.

Ms. Chandler grew the Bay Area Legal Incubator with the Alameda County Bar Association and Legal Access Alameda to help coach diverse attorneys on how to build successful, affordable law practices serving low and middle-income clients throughout California.

Ms. Howell helped launch a COVID-19 Small Business and Nonprofit Clinic with Legal Services of Greater Miami at Nelson Mullins through Lawyers for Good Government. She also volunteers alongside other Nelson Mullins attorneys at the Tenants’ Equal Justice Clinic (TEJC), a project of Legal Services of Greater Miami.

Mr. Manne dedicated 40 years of his career to high-impact pro bono work. His accomplishments include being recognized by the American College of Trial Lawyers for his pro bono work, as well as being named Attorney of the Year by Texas Lawyer. Most recently, Mr. Manne helped reform Houston’s money bail system and represented two death row exonerees.

Ms. Rapp helps increase access to areas dubbed as “legal deserts” due to a shortage of attorneys, including a project to provide legal help to technical colleges around Wisconsin. She also assists clients at legal clinics and serves on the boards and committees of several access-to-justice organizations. Ms. Rapp also testified before the Wisconsin Supreme Court on removing limitations on pro bono services.

Legal Aid Service of Broward County (LAS) and Coast to Coast Legal Aid of South Florida (CCLA) announced the recipients of their 2021 Annual Recognition Awards.

LAS and CCLA presented the awards in a series of live presentations via Facebook Live May 4–7, 2021.

The 2021 recipients include:

●               Lauren Alperstein, Esq., of Boies Schiller Flexner LLP received the Attorney of the Year Award.

●                Van Horn Law Group received the Law Firm of the Year award.

●               Ofer Shmucher, Esq. and Shera Anderson, Esq. of Shmucher Law, PL received the Spirit of Justice Award.

●               Theresa Edwards, Esq., of American Justice, P.A. received the Commitment to Justice Award.

●                Anthony J. Karrat, Esq., Executive Director of Legal Aid Service of Broward County received the Russell E. Carlisle Advocacy Award.

●               Edwin Cordova, Esq., Supervising Attorney of the Housing Unit at Legal Aid Service of Broward County received the Jacquelyn and Bruce Rogow Employee of the Year Award.

Law Firm Innovation & Technology

Winstead law firm partnered with Texas Health Catalyst at Dell Medical School at The University of Texas at Austin to support entrepreneurs who are in the early stages of developing healthcare technology products.

Winstead provides entrepreneurs with resources on legal matters such as entity formation, licensing from universities, IP strategy, funding, lease agreements, OSHA, privacy/global agreements, as well as educational programming and opportunities to meet and network with other startup professionals.

“Winstead is committed to moving healthcare technology and the latest innovations in the life sciences industry forward,” said Winstead Shareholder Lekha Gopalakrishnan. “Our collaboration with Texas Health Catalyst is intended to advance their mission of addressing unmet needs in healthcare through technology innovation.”

Davidoff Hutcher & Citron LLP (DHC), a New York-based commercial law and government relations firm, formed their Cannabis Practice Group to help clients navigate regulations around adult recreational marijuana in New York State. DHC’s Cannabis Practice Group builds upon DHC’s decades of experience in highly regulated and similar industries, such as New York’s wine, liquor and packaged goods industries.

“The Office of Cannabis Management will be implementing laws and regulations governing the growing and evolving cannabis industry in New York. They will be similar to those that govern entities regulated by the State Liquor Authority, and both will exist under a tiered system,” said Steve Malito, Chair of the Cannabis Practice Group. “Davidoff Hutcher & Citron is uniquely qualified to advise our clients in the cannabis space as they navigate the complexities of these regulations.”

In line with recent Environmental, Social and Governance (ESG) efforts nationwide, Schiff Hardin announced the formation of their new ESG Team to help companies develop programs and company disclosures that incorporate the many ESG principles. Amy Antoniolli leads the team along with key members Sarah Fitts, Jane Montgomery, and Katherine Walton.

“Stakeholders have made clear that corporate responsibility is not just a fad or a slogan, and industry is responding as quickly as possible,” said Ms. Antoniolli. “Schiff has seen ESG quickly become an integral part of a company’s reporting and a significant factor in successful business deals. With stakes this high, companies have the opportunity to meet ESG metrics that protect their bottom line and their reputation.”

Copyright ©2021 National Law Forum, LLC
For more articles on the legal industry, visit the NLRLaw Office Management section.

Santa Clara County Orders Businesses to Track Employees’ COVID-19 Vaccination Status

Santa Clara County wasted no time in altering its public health regulations in response to the county’s graduation to the ‘yellow tier’ of California’s Blueprint For a Safer Economy on May 18, 2021.  Within hours, the County announced a new Public Health Order that went into effect on May 19, 2021.

The Order retires several of the most burdensome requirements of the County’s October 5, 2020, Risk Reduction Order.  As a result, businesses are no longer required to (1) maximize the number of people who work remotely; (2) submit Social Distancing Protocols to the County Public Health Department; or (3) observe County-issued limitations on in-person capacity.

However, the Order imposes several new requirements on employers, including:

  1. Face Coverings: All businesses must require employees and customers to wear face coverings in accordance with the Mandatory Directive on Use of Face Coverings.
  2. Capacity limitations: Some businesses remain subject to State-issued COVID-19-related capacity limitations and must limit the number of people inside their facilities to a certain percentage of their usual maximum occupancy.
  3. Industry-Specific Requirements: Businesses must follow any industry-specific guidance from the State.
  4. Mandatory Reporting Regarding Personnel Contracting COVID-19: Businesses must require that all personnel immediately alert the business if they test positive for COVID-19 and were present in the workplace either:
    1. within the 48 hours before the onset of symptoms or within 10 days after onset of symptoms if they were symptomatic, or
    2. within 48 hours prior to the date on which they were tested or within 10 days after the date on which they were tested if they were asymptomatic.

If a business learns that any of its personnel have tested positive for COVID-19 and were at the workplace during the specified time frame, the business is required to report the positive case within 24 hours to the County Public Health Department at sccsafeworkplace.org.

Businesses must also comply with all case investigation and contact tracing measures directed by the County.

  1. Ascertainment of Vaccination Status: Businesses must ascertain the vaccination status of all personnel. Under the order, personnel includes employees, contractors, and volunteers. Until a person’s vaccination status is ascertained, they must be treated as not fully vaccinated.  Personnel who decline to provide vaccination status must also be treated as unvaccinated.

Businesses must complete their initial ascertainment of vaccination status for all personnel within 14 days of May 19, 2021, or no later than June 1, 2021.  Thereafter, businesses must obtain updated vaccination status for all personnel who were not fully vaccinated every 14 days (e.g., June 15, June 29, July 13, etc.).  Businesses must maintain appropriate records to demonstrate compliance with this provision.  The County has provided a template self-certification form for this purpose.

  1. Mandatory Rules for Personnel not Fully Vaccinated: Businesses must require all personnel who are not fully vaccinated to:
    1. comply with all applicable provisions of the Mandatory Directive on Use of Face Coverings, and
    2. comply with all applicable provisions of the Health Officer’s Mandatory Directive on Unvaccinated Personnel.

In announcing the new Order, the County’s Health Officer indicated additional changes will occur in conjunction with California’s “reopening” on June 15, 2021.  Dr. Cody predicted the future changes will even further differentiate between vaccinated and unvaccinated people.

Employers doing business in the County must act quickly to reconcile their new obligations under the Order with other California laws, chiefly the Fair Employment and Housing Act (“FEHA”), which is enforced by the state’s Department of Fair Employment and Housing (“DFEH”).  The DFEH previously issued guidance for employers that will assist in this endeavor.

Jackson Lewis P.C. © 2021

ARTICLE BY Patrick C. Stokes and Kate L. Brown of Jackson Lewis P.C.
For more articles on COVID-19 Vaccination Status, visit the NLRCoronavirus News section.

COVID-19: Returning to A Mask-Free Workforce? Not Quite Yet

On 13 May 2021, the Centers for Disease Control and Prevention (CDC) issued new guidance, stating that individuals who are fully vaccinated against COVID-19 “can resume activities without wearing a mask or staying 6 feet apart, except where required by federal, state, local, tribal, or territorial laws, rules, and regulations, including local business and workplace guidance.” This forced employers across industries to evaluate their existing face covering/mask policies absent additional guidance from the Department of Labor (DOL) or Equal Employment Opportunity Commission (EEOC). On 17 May 2021, the Occupational Safety and Health Administration (OSHA) announced its endorsement of the CDC’s new guidelines, but did not provide any additional guidance for employers. Specifically, OSHA stated that it “is reviewing the recent CDC guidance and will update our health materials on this website accordingly. Until those updates are complete, please refer to the CDC guidance for information on measures appropriate to protect fully vaccinated workers.” Given that OSHA has not formally revised its existing guidelines and recommendations related to face covering requirements in the workplace as a means of mitigating the spread of COVID-19 and the EEOC has not updated its COVID-19 guidance since December 2020, employers should tread carefully and closely consider the risks involved before relaxing any face covering workplace restrictions.

OSHA IS RESPONSIBLE FOR WORKERS; CDC PROVIDES GUIDANCE FOR THE PUBLIC

The CDC’s mission is to protect the American public from “health, safety, and security threats,”1 while OSHA’s mission is to “ensure safe and healthful working conditions for workers.”2 The Occupational Safety and Health Act (OSH Act) contains a general duty clause, which requires employers to provide workers with a workplace free from recognized hazards that are causing or are likely to cause death or serious physical harm. Throughout the pandemic, OSHA has interpreted this clause to mandate the use of masks in the workplace to limit the spread of COVID-19.

Although the CDC’s guidance throughout the pandemic has helped inform many employer decisions, it is important to keep the CDC’s guidance in context. First, the CDC’s guidance is just that—guidance. OSHA, on the other hand, is responsible for enforcing the requirements of OSH Act, promulgates rules and standards, and assesses penalties to ensure compliance with the OSH Act. Second, as noted above, the CDC’s recommendations are aimed at protecting the American public, while OSHA’s rules and standards are designed to ensure employers provide a safe working environment to their employees. While OSHA has apparently endorsed the new CDC guidance, OSHA may publish more detailed guidance concerning the relaxed use of masks for vaccinated individuals in the workplace. Until then, OSHA has not formally removed its most recent COVID-19 guidance for employers published on 29 January 2021, which includes mandating the use of masks by both employees and third parties in the workplace.

STATE AND LOCAL LAW

Many state and local laws, executive orders, and other guidance continue to require masks in the workplace (and inside public places). Indeed, the CDC does not have authority over state or local governments that may impose stricter requirements, and its recent guidance explicitly defers to state and local laws. Importantly, although some State Executive Orders across the country have been changed since the most recent CDC guidance went into effect, some other State Executive Orders remain in effect and some require mask wearing and social distancing. Therefore, employers should consult state and local restrictions before lifting any mask wearing policies.

Further, some jurisdictions also have employer liability statutes and specific workers’ compensation standards that mandate employer compliance with certain health and safety guidelines, which may include state and local regulations. These statutes often provide that when employers adhere to safety standards designed to prevent the spread of COVID-19, the employer is able to limit exposure or reduce liability when and if an employee contracts COVID-19 in the workplace.

INDUSTRY GUIDANCE

Employers must also consider whether the CDC’s new guidance actually changes anything for them, as the guidance does not apply to all industries or to all settings. For example, vaccinated individuals are still required to wear a face covering on airplanes and in healthcare facilities. Employers who work in or regularly interact with these industries should be mindful that requirements may differ. Any changes to a mandatory face covering policy should be made with those considerations in mind.

CONTRACTUAL OBLIGATIONS

In addition to government regulations, some employers may be contractually obligated under a lease or other agreement to maintain a mask mandate, regardless of the new CDC guidance. Therefore, prior to implementing any relaxed mask-related policies, employers should evaluate whether contractual or landlord restrictions may apply. Employers also should consider consulting any applicable insurance policies before modifying mask mandates.

EQUAL EMPLOYMENT OPPORTUNITY CONSIDERATIONS

Finally, the EEOC has not updated its “What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws” (WYSK) to account for the widespread availability of vaccines or the impact of vaccinations on mask wearing in the workplace. However, the current WYSK guidance provides some helpful information for employers considering lifting mask mandates in the workplace. For example, as discussed in our December 2020 alert on workplace vaccination considerations, asking for an employee’s vaccination status is not a prohibited medical inquiry under the Americans with Disabilities Act. Thus, if an employer elects to lift mask restrictions in the workplace, it should consider whether it will require employees to show proof of vaccination before allowing the employee to be present in the workplace without a mask, balancing risk avoidance with considerations of workplace culture and morale. If an employer chooses to require proof of vaccination, such proof should be limited to (i) an employee’s CDC vaccination card and a (ii) corresponding identification card, such as a driver’s license. Further, employers should ensure that employees do not bring an entire medical file or unrelated medical documents as proof of vaccination. Limiting who has access to information regarding employee’s vaccination status is advisable and employers that choose to inquire about vaccination status should develop a written protocol for collecting such information and keeping it confidential. Such employers requiring proof of vaccination should maintain information related to an employee’s vaccination status separate from the employee’s general personnel file. Employers also may consider designating a human resources contact to administer the policy and maintain the list of vaccinated employees.

Keeping anti-discrimination laws in mind, employers should carefully consider how they will enforce a revised face covering policy in a non-discriminatory manner and while awaiting further guidance from the EEOC. Whether or not an employee is wearing a mask may inadvertently reveal the employee’s vaccination status. Thus, the risk for employers will be in how employees are treated in response to unavoidable disclosure. Managers and supervisors should be reminded of company equal employment opportunity policies and should be trained to not exclude masked individuals (or vice-versa) from employment opportunities. While distinguishing between unvaccinated and vaccinated employees may seem non-discriminatory, employers must remember that many individuals will remain unvaccinated because of a medical disability or a sincerely held religious belief and others may simply be more comfortable continuing to wear a mask in the workplace.

KEY TAKEAWAYS

  • Employers should consider a number of factors before implementing a revised face covering/mask policy in the workplace.
  •  Employers should work with their counsel to ensure their workplace policies are compliant with the OSH Act and all applicable state and local laws, including anti-discrimination laws.
  • Employers should expect an increase in employee concerns related to wearing a mask in the workplace and should prepare responses to anticipated questions and develop a plan for messaging the changes to their workforce before making any policy changes.
  • Employers should consider requiring proof of vaccination before allowing an employee to go without a mask in the workplace. If an employer chooses to do so, proof of vaccination should be in the form of the CDC vaccine card and government issued identification.
  • Employers who are lifting mask restrictions for vaccinated employees should have a clear reporting procedure for employee concerns. Such a reporting procedure should not involve employee-to-employee communications.
  • Employers who are lifting mask restrictions for vaccinated employees should consider identifying for employees’ scenarios where mask wearing still may be expected such as visiting customer locations that mandate mask wearing, visiting industries excluded from the CDC’s relaxed mask guidance, traveling and/or meeting with third parties, or attending events (where vaccine status of visitors cannot be ascertained).
  • Employers should consider how a revised face covering policy may affect return-to-work plans. Employees, especially those who are immunocompromised or those who have children or individuals who are at high-risk of COVID-19 in their residences, may be more reluctant to return to a physical location with relaxed mask wearing policies.
    Copyright 2021 K & L Gates

For more articles on CDC mask guidance, visit the NLR Coronavirus News section.

100 Days of the Biden Administration, Part II: Key Labor and Employment Policy Developments

In its first 100 days in office, the Biden administration has advanced its policy priorities, many of which have involved repealing the policy accomplishments of the previous presidential administration. The Biden administration can be expected to advance its own proposals soon.

The first part of this two-part blog series focused on the Biden administration’s first 100 days and reviewed the administration’s legislative plans. The second part of the series addresses policy developments occurring at the executive branch agencies and independent agencies.

U.S. Department of Labor

Personnel Is Policy

On March 22, 2021, the U.S. Senate confirmed former Boston mayor and union official Martin Walsh as secretary of labor. While it is still early, many in the business community remain optimistic about Walsh’s willingness to listen to their concerns. As for other leadership positions at the U.S. Department of Labor (DOL), the deputy secretary of labor nominee, Julie Su, and solicitor of labor nominee, Seema Nanda, have had their confirmation hearings but have not been voted on by the full Senate. Su runs California’s Labor and Workforce Development Agency, while Nanda is an Obama-era DOL vet and former chief executive officer of the Democratic National Committee. If Su and Nanda are confirmed by the Senate, they will work with Walsh as the top three officials dictating policy at the DOL.

OSHA and Workplace Safety

  • Assistant secretary nominee. In early April 2021, President Joe Biden announced his intention to nominate Douglas L. Parker to be the assistant secretary of labor for the Occupational Safety and Health Administration (OSHA). Parker currently serves as chief of California’s Division of Occupational Safety and Health (Cal/OSHA).
  • OSHA emergency temporary standard. For months, workers’ advocates and Democrats have been calling on OSHA to issue an emergency temporary standard (ETS) to protect workers from COVID-19. On January 21, 2021, President Biden doubled down on these demands when he issued an executive order instructing the DOL and OSHA to consider issuing an emergency temporary standard by March 15, 2021. On April 26, 2021, more than a month past the deadline, OSHA sent its draft ETS to OIRA for approval. Any final ETS could be impacted by recent guidance from the U.S. Centers for Disease Control and Prevention, which recently eased mask requirements.
  • COVID-19 vaccine reactions. On April 20, 2021, OSHA issued new guidance on when an employer must record in its injury and illness logs an employee’s adverse reaction to a COVID-19 vaccination. In short, if an employer requires employees to get vaccinated, then any adverse action is “work-related” and, therefore, recordable.

Wage and Hour

  • Independent contractor rule. On May 6, 2021, the DOL rescinded its independent contractor rule, which had set forth a test for independent contractor status that focused on “the worker’s opportunity for profit or loss” due to individual initiative and investment. Although the rule was finalized on January 7, 2021, it never became effective.
  • Joint-employer rule. On March 12, 2021, the DOL proposed to rescind the Fair Labor Standards Act joint-employer rule that took effect in March 2020, but was subsequently vacated by a district judge in New York. The rule had set forth a four-factor test for determining joint-employer status.
  • Tip rule. While portions of the 2020 final tip rule went into effect on April 30, 2021, the Wage and Hour Division (WHD) delayed until December 31, 2021, the effective date of the provisions concerning civil money penalties and employees who perform tipped and non-tipped work.
  • Liquidated damages. On April 9, 2021, the WHD “return[ed] to pursuing pre-litigation liquidated damages” in lieu of litigation, after temporarily halting the practice in order to encourage economic recovery during the pandemic.
  • PAID program. The DOL discontinued the Payroll Audit Independent Determination (PAID) program, which the Trump administration initiated in 2018 to encourage employers to voluntarily correct certain underpayments to employees.

Federal Contractors and the Office of Federal Contract Compliance Programs (OFCCP)

  • OFCCP director. Jenny R. Yang, former chair of the U.S. Equal Employment Opportunity Commission, is now the director of the OFCCP. Expect her to focus the agency on increased enforcement, particularly around compensation discrimination.
  • Minimum wage increase. On April 27, 2021, President Biden issued an executive order that will require covered federal contractors and subcontractors to pay employees a minimum of $15 per hour by January 2022.
  • Diversity and inclusion training. President Biden revoked Executive Order 13950, relating to federal contractors’ diversity and inclusion training efforts.
  • Religious exemption. The OFCCP proposed to rescind a December 2020 regulation that is intended to provide protections for religious organizations to “hire employees who will further their religious missions, thereby providing clarity that may expand the eligible pool of federal contractors and subcontractors.”

Office of Labor-Management Standards

The DOL subagency that “promotes labor-management transparency as well as labor union democracy and financial integrity” proposed to rescind a Trump-era rule that required increased financial disclosures from labor organizations.

Labor-Management Relations

Unprecedented Firing of NLRB GC

Within hours of being inaugurated, President Biden fired Peter Robb, the National Labor Relations Board’s general counsel. Robb’s term wasn’t scheduled to expire until November 2021. This was an unprecedented decision, as NLRB general counsel are traditionally permitted to serve out their terms during changes in administrations. The move sends a message to stakeholders that the administration is going to be very aggressive in the traditional labor arena. It also allows the administration to begin “teeing up” cases in anticipation of taking full control of the Board by fall 2021.

A Republican Board. For Now.

Republicans will hold a majority on the NLRB through August 2021 because Board members’ terms are staggered. Expect a lot of political activity surround the Board during the late summer and early fall as President Biden tries to get his Board member nominees confirmed. The administration hopes that a Democratic-controlled Board can start enacting policy changes by the second half of the year.

Graduate Students

On March 15, 2021, the Board withdrew its regulatory proposal to exempt from the coverage of the National Labor Relations Act students who, in connection with their undergraduate and graduate studies, are financially compensated for the services they provide to private colleges or universities.

Contract Bar

On April 21, 2021, a bipartisan Board upheld its contract-bar doctrine, which bars union elections during the term of a collective bargaining agreement for up to three years.

Pending Matters

  • Uniform policies. The Board is reviewing the public feedback that it requested on its standard regarding employer uniform policies and whether they interfere with employees’ wearing of union insignia.
  • Employer investigations. The Board is also reviewing public feedback it requested on the issue of the proper standard to apply in situations in which employers question employees in the course of preparing defenses to unfair labor practice allegations.

 Immigration

USCIS Director Nominee

In mid-April 2021, President Biden announced his intent to nominate Ur Jaddou to be director of U.S. Citizenship and Immigration Services (USCIS). Jaddou previously served as USCIS chief counsel.

H-4 Work Authorization

On January 25, 2021, USCIS withdrew a Trump administration proposal that would have rescinded work authorization permits for dependent H-4 spouses.

“Executive Order on Restoring Faith in Our Legal Immigration Systems and Strengthening Integration and Inclusion Efforts for New Americans”

On February 2, 2021, President Biden issued an executive order to begin unwinding Trump-era immigration policies by directing the secretary of state, the attorney general, and the secretary of homeland security to “review existing regulations, orders, guidance documents, policies, and any other similar agency actions” that do not, among other things, “promote integration, inclusion, and citizenship, and … embrace the full participation of the newest Americans in our democracy.”

Public Charge Rule

The administration will no longer defend the public charge rule in the courts as it begins the process of repealing the regulation.

H-1B Wage Allocation Rule Postponed

On February 4, 2021, USCIS announced that it would postpone the effective date of its H-1B wage allocation selection rule until December 31, 2021. Published in the Federal Register on January 8, 2021, the rule was originally scheduled to go into effect on March 9, 2021.

H-1B Prevailing Wage Rule

The DOL’s Employment and Training Administration (ETA) proposed to delay the effective date of the rule entitled “Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States.” The original regulation was finalized in the final days of the Trump administration and was set to go into effect on March 15, 2021. The ETA postponed the rule’s effective date until May 14, 2021, and is seeking a further delay to November 14, 2022.

Trump-Era Visa Bans

On February 24, 2021, President Biden revoked Proclamation 10014, issued in April 2020, which banned individuals from seeking entry to the United States on immigrant visas. In addition, the Trump administration’s Proclamation 10052, which banned individuals from entering the United States on certain nonimmigrant visas (such as H-1B and L-1), expired on March 31, 2021.

© 2021, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.
For more articles on the Biden administration, visit the NLR Administrative & Regulatory section.

In-N-Out Burger Served with COVID-19 Workplace Safety and Wage Violation Lawsuit

This week’s spotlight among COVID-19 related workplace litigation involves a common trend of employees alleging retaliation for reporting workplace COVID-19 safety hazards along with unrelated wage and hour allegations.

In Becerra v. In-N-Out Burger, a former butcher for the burger joint filed a Private Attorney General Act (PAGA) complaint alleging various violations of the California Labor Code and unfair business practices. According to the complaint, In-N-Out failed to enforce COVID-19 safety measures, including social distancing and requiring employees to wear personal protective equipment (PPE). The plaintiff claims the meat department was full of sick employees, many of whom exhibited COVID-19 symptoms, but In-N-Out did not place them on medical leave.

The plaintiff filed a report with the L.A. Public Health Department regarding the meat department’s alleged failure to observe safety protocols, and he informed other butchers of their right to report workplace safety concerns. The plaintiff contends that, as a result of his reporting workplace conditions and encouraging other employees to report, In-N-Out retaliated against him by giving him a “final warning” for attendance violations.

In-N-Out reports that it terminated the plaintiff’s employment because he provided false documentation about an absence and exhausted his sick leave. The plaintiff alleges that his previous absences were excused, and that he and similarly aggrieved employees were terminated for attempting to use sick leave. He also claims that In-N-Out failed to pay separated employees their final wages and provide accurate wages statements.

The plaintiff’s allegations are based in the early months of the pandemic when PPE was sparse and employers grappled with how to adjust their workplaces.  However, the alleged wage-related claims will cover a larger time frame.

Employers have learned a lot over the past year in terms of COVID-19 workplace safety.  Employers should remain vigilant, focusing on proper safety protocols and keeping potentially sick employees out of the workplace.

© 2021 BARNES & THORNBURG LLP

ARTICLE BY Colleen Naumovich and Kathleen M. Anderson of Barnes & Thornburg LLP
For more articles on COVID-19 Workplace Safety and Wage Violations, visit the NLR Coronavirus News section.

Recent OSHA Update Targets Restaurant Industry

Occupational Safety and Health Administration (OSHA) has recently updated its COVID-19 response plan. Last year, OSHA focused much of its COVID-19 related attention on healthcare, elderly care, and prisons. This new Updated Interim Enforcement Response Plan for COVID-19 and National Emphasis Program — Coronavirus Disease 2019 (COVID-19) guidance shifts its focus to other industries where OSHA feels there could be spread of COVID-19. As part of the guidance, OSHA specifically targeted full-service and limited-service restaurants for inspections.

Restaurants should be prepared for on-site or virtual OSHA inspections. To prepare, restaurants should:

  • Ensure all OSHA recordkeeping (OSHA 300, 300A, and 301s) is in order and up to date.
  • Ensure any contact tracing for COVID-19 illness is properly documented.
  • Ensure a COVID-19 response plan is documented and in place-include relevant Federal, state and local guidance.
  • Ensure compliance with OSHA standards, specifically Personal Protective Equipment and Blood Borne Pathogens.
  • Ensure employees are trained on COVID-19 related hazards, reporting of COVID-19 symptoms, prevention of COVID-19, and document this training.
  • Ensure employees are trained that they will not be retaliated against for raising concerns regarding safety, specifically COVID-19 related safety.

Note that we are still waiting for OSHA’s Emergency Temporary Standard to be issued. OSHA has provided its proposed standard to the White House where it is currently being reviewed. Once that is issued, there will likely be more requirements for all industries with respect to COVID-19 related employee safety and health.

This article was written by Jane H. Heidingsfelder at Jones Walker law firm. For more information on OSHA guidance, please visit our Labor and Employment news page.