Category: Labor & Employment

Biden Administration Requests Review of DOL’s Final “ESG” Rules for ERISA Fiduciaries – What Does that Mean for the DOL’s Final Proxy Voting Rules?

On October 30, 2020, the U.S. Department of Labor (the “DOL”) issued a final rule on “ESG” investing (summarized here) which requires ERISA plan fiduciaries to base investment decisions on financial factors alone, prohibits fiduciaries from selecting investments based on non-pecuniary considerations, and which could restrict “do-good” or “ESG” investing (the “ESG Rule”).  However, the fate of the ESG Rule is currently unclear, as the Biden administration directed the DOL to review the rule in a fact sheet issued on January 20, 2021.

In a separate (but related) rulemaking, the DOL published in the Federal Register on December 16, 2020, a final rule confirming its position that ERISA’s fiduciary duties of prudence and loyalty apply to an ERISA plan fiduciary’s exercise of shareholder rights, including proxy voting, proxy voting policies and guidelines, and the selection and monitoring of proxy advisory firms (the “Proxy Voting Rule”).  The Proxy Voting Rule went into effect on January 15, 2021 (although certain aspects of this rule have later compliance dates, as discussed below).

The ESG Rule and the Proxy Voting Rule were each structured in a manner that would amend the DOL’s “investment duties” regulation at 29 C.F.R. 2550.404a-1.  When the DOL finalized the ESG Rule, it reserved a section of the amended regulation for the final Proxy Voting Rule.  It is uncertain what action the Biden administration will take with respect to the ESG Rule following its review thereof, but it is very possible that the Proxy Voting Rule will have the same fate given how intertwined the two rules are.

The Proxy Voting Rule reflects the DOL’s attempt at clarifying its prior proxy voting guidance that “may have led to confusion or misunderstandings on the part of plan fiduciaries.”  In particular, the DOL acknowledged that there is a view among some that ERISA plan fiduciaries are required to vote all proxies or exercise every shareholder right – the Proxy Voting Rule makes clear that is not the case.  The Proxy Voting Rule instead takes a principles-based approach and details the obligations of fiduciaries when making such decisions in order to satisfy their duties of prudence and loyalty, which include the following:

  • act solely in accordance with the economic interest of the plan and its participants and beneficiaries;
  • consider any costs involved;
    • relevant costs will depend on the facts and circumstances, and could include: direct costs to the plan of determining how to vote and actually submitting the vote; potential reduction of management fees by reducing the number of proxies voted that have no economic consequence for the plan; any out-of-the-ordinary costs or unusual requirements, such as may be the case of voting proxies on foreign corporation shares; or any opportunity costs of voting, such as forgone earnings from recalling securities on loan or any restrictions on selling the underlying shares.
  • not subordinate the interests of the participants and beneficiaries in their retirement income or financial benefits under the plan to any non-pecuniary objective, or promote non-pecuniary benefits or goals unrelated to those financial interests of the plan’s participants and beneficiaries;
  • evaluate material facts that form the basis for any particular proxy vote or other exercise of shareholder rights;
  • maintain records on proxy voting activities and other exercises of shareholder rights; and
  • exercise prudence and diligence in the selection and monitoring of persons (if any) who have been delegated authority to exercise shareholder rights, or who have been selected to advise or otherwise assist with the exercise of shareholder rights.
    • note, however, that a fiduciary may adopt a practice of following the recommendations of a proxy advisory (or similar) firm only if the fiduciary first determines that the service provider’s proxy voting guidelines are consistent with the requirements above.

The Proxy Voting Rule also provides an optional safe harbor for plan fiduciaries that adopt and follow proxy voting policies with specific parameters that are prudently designed to serve the plan’s economic interest.  The safe harbor is intended to reduce compliance burdens with respect to decisions as to whether to vote proxies, and does not apply with respect to decisions as to how to vote proxies.  The safe harbor permits a plan to adopt either or both of the following (though these are not meant to be the exclusive means for compliance):

  • A policy to limit voting resources to particular types of proposals that the fiduciary has prudently determined are substantially related to the issuer’s business activities or are expected to have a material effect on the value of the plan’s investment in the issuer.
  • A policy of refraining from voting on proposals or particular types of proposals when the size of the plan’s holdings in the issuer relative to its total investment assets is below a quantitative threshold that the fiduciary prudently determines, considering the plan’s percentage ownership of the issuer and other relevant factors, is sufficiently small that the matter being voted upon is not expected to have a material effect on the investment performance of the plan’s portfolio (or plan assets under management in the case of an investment manager).

If adopted, a proxy voting policy must be reviewed periodically by the plan fiduciary, and may not prohibit the fiduciary from (i) voting the proxy, if the fiduciary prudently determines that the matter being voted upon is expected to have a material effect on the value of the investment or the investment performance of the plan’s portfolio (or plan assets under management in the case of an investment manager) after taking into account the costs involved, or (ii) refraining from voting the proxy, if the fiduciary prudently determines that the matter being voted upon is not expected to have such a material effect after taking into account the costs involved.

The Proxy Voting Rule also reiterates the DOL’s longstanding position that the responsibility for voting proxies rests with the plan trustee, unless the plan trustee is being directed by the plan’s named fiduciary or voting authority has been delegated to an investment manager.  If authority to manage plan assets has been delegated to an investment manager, the investment manager will have the exclusive authority to vote proxies unless the applicable plan documents or investment management agreement specifically provide otherwise.

An investment manager of a pooled investment vehicle that holds assets of more than one employee benefit plan must either (i) reconcile (insofar as possible) any conflicts in the proxy voting policies of such plans, and vote (or abstain from voting) the relevant proxies in proportion to each plan’s economic interest in the pooled investment vehicle, or (ii) develop an investment policy statement consistent with the Proxy Voting Rule that the participating plans must accept before they are allowed to invest in the pooled investment vehicle.

The Proxy Voting Rule does not apply to shareholder rights that are passed through to participants and beneficiaries of individual account plans.  In such a case, the plan trustee must follow the direction of the plan participant or beneficiary, but only if the direction is consistent with the plan terms and not contrary to ERISA.

The Proxy Voting Rule went into effect on January 15, 2021 and applies to the exercise of shareholder rights after such date; provided, that (i) fiduciaries that are not SEC-registered investment advisers have until January 31, 2022 to comply with the requirements to evaluate material facts providing the basis for exercising a shareholder right and to maintain records on proxy voting activities, and (ii) all fiduciaries have until January 31, 2022 to comply with the requirement to confirm that a proxy firm upon whom the fiduciaries intend to rely has proxy voting guidelines that comply with the Proxy Voting Rule and the requirements relating to investment managers of pooled investment vehicles.

The Proxy Voting Rule also removes from the Code of Federal Regulations the DOL’s Interpretive Bulletin 2016-01, which may have been interpreted to permit consideration of a broader set of factors when making determinations regarding proxy voting, as it no longer reflects the DOL’s views on the exercise of shareholder rights.

© 2020 Proskauer Rose LLP.

ARTICLE BY Ira G. Bogner, Seth J Safra and Adam W Scoll of Proskauer Rose LLP
For more, visit the NLR Labor & Employment

DOL Ends PAID Program: Creating a Catch-22 for Employers; Cross Your Fingers or Come Clean?

Following the anticipated agenda of the new Biden administration, on January 29, 2021, the Department of Labor immediately ended the Payroll Audit Independent Determination program (the “PAID Program”) first launched in 2018 by the Department’s Wage and Hour Division. Ending the PAID Program signals that, under the new administration, the Wage and Hour Division will be increasingly focused on payroll policies and practices and will seek to penalize employers without first providing an opportunity to self-report and remedy mistakes.

Employers who fail to comply with the minimum wage and overtime provisions of the Fair Labor Standards Act (FLSA) expose themselves to liability for payment of any back wages owed, which are then doubled as liquidated damages, plus certain costs and fees, including attorney fees an employee incurs in pursuing an action against the employer. The PAID Program provided employers potential relief from the significant penalties resulting from a minimum wage or overtime violation, which often happens without any intent or malice on the employer’s part. Under the program, employers could audit their minimum wage and overtime payroll practices, and if such an audit uncovered any FLSA violations, the employer could self-report the same and work with the Department of Labor to ensure all back wage payments were made. Upon doing so, the employer would obtain a release of any FLSA claims relating to the error and avoid potential liability for liquidated damages, other civil penalties, and employees’ attorney fees.

With the PAID Program cancelled, employers who discover minimum wage and overtime violations are left with difficult choices as to remedying such violations. This cancellation, in fact, creates a catch-22 situation for employers—does the employer cross its fingers and hope the violation is never uncovered, or does it come clean and pay its employees back wages, only to signal the violation and open the door for a lawsuit and the associated liquidated damages, penalties and employee attorney fees? While individual circumstances would dictate how the employer should react, of course, losing the opportunity to remedy the situation, make the employees whole, and avoid multiplied liability is an unfortunate development for employers.

As the cancellation of the PAID Program is a likely harbinger of the Biden administration’s treatment of wage and hour issues, now is a good time to review your payroll policies to ensure compliance with the FLSA. This is particularly important for employers who offer pay differentials or other bonus-type payment programs, including those who provide such payments as a reward to their employees for in-person work during the COVID-19 pandemic.

© 2020 Davis|Kuelthau, s.c. All Rights Reserved

ARTICLE BY Anthony J. Steffek of Davis|Kuelthau, s.c.
For more, visit the NLR Labor & Employment section

Flexibility for Flex Accounts – Congress Provides New Relief to Employees

Under the Consolidated Appropriations Act, 2021 (H.R. 133)(the “Act”) (here), which was signed into law on December 27, 2020, new relief is available for employees who participate in health care flexible spending accounts and dependent care flexible spending accounts (“FSAs”).   While the Internal Revenue Service (“IRS”) issued limited relief for FSA participants in 2020 (here), that guidance only expanded opportunities to make mid-year elections.  It did not address the desire of so many employees to extend access to their unspent FSA balances beyond the 2020 plan year.

The changes under the Act are intended specifically to address this concern.  Importantly, the changes are optional.  Employers who implement these changes will likely experience higher costs due to reduced forfeitures and changes in plan administration.  Additionally, changes to health FSAa could adversely affect the participant’s eligibility to contribute (or receive contributions) to a health savings account.  Below is a summary of the changes affecting FSAs:

Larger Carryover Balances

Generally, amounts that remain in an FSA at the end of a plan year are forfeited and no longer accessible to the employee (i.e. the “use-it-or-lose it” rule).  With the elimination of many elective medical procedures, daycare closings, and at-home schooling during the pandemic, many FSA participants were unable to utilize their FSAs in 2020.

Under prior guidance issued by the IRS (here), plans may allow employees to carry over up to a specified dollar amount ($550 in 2021) of the year-end balance for use in the subsequent plan year. Pursuant to the Act, however, there is no dollar limit on the amount that participants may be permitted to carry over with respect to a plan year that ends in 2020 or 2021.  By allowing such a carryover, the employee will have access to the amount carried over to pay or reimburse covered expenses in a subsequent plan year.

Extended Grace Periods

As an alternative to a carryover feature, prior IRS guidance (here) allows a plan to provide for a grace period of up to 2.5 months following the end of the plan year to apply unused balances to covered expenses incurred during that period.  A plan is not permitted to have both a carryover feature and a grace period.  Accordingly, under this relief, a plan with a grace period for a plan year ending in 2020 or 2021 may extend such period for up to 12 months after the end of such plan year.  As with the carryover relief described above, this will allow the employee to apply the unused balances to the payment of covered expenses throughout the subsequent plan year.  Note, however, if the participant was planning on making contributions to a health savings account in 2021 or 2022, the extension of a grace period under a general flexible spending account will cause such participant to be ineligible to make (or receive) such contributions.  Accordingly, the employer will want to ensure that the account is re-characterized as a limited purpose FSA during the extended grace period.

More Permissible Election Changes

As a general rule, elections under an FSA are irrevocable during the year absent a permissible election change event.  As mentioned, the IRS issued guidance in 2020 to temporarily ease the application of these rules.  The Act further allows plans to be amended to permit eligible employees to make a prospective change to their 2021 plan year FSA elections even if there is no change in status event. This relief is particularly helpful for employees participating in calendar year FSA arrangements who did not have an opportunity to consider the effects of the Act’s changes before 2021 elections became final.

Extended Period for Health Care Reimbursements

Participation in a health FSA is generally required to terminate when the employee terminates employment, except to the extent the employee is eligible for and makes a timely election for continuation coverage.  On the contrary, coverage under a dependent care FSA is permitted to run through the end of the year in which such termination occurs (without an affirmative election by the employee).  Under the Act, a health FSA may allow a participant whose employment is terminated during calendar year 2020 or 2021 to continue to receive reimbursements through the end of the plan year in which such participation ceased (including any grace period, as may be extended in accordance with the Act).

Reimbursements for Aged-Out Dependents

An employee enrolled in a dependent care FSA may receive reimbursements of dependent care expenses for a child who has not attained age 13.  The Act, however, increases the age to 14 for those employees who elected coverage under a dependent care FSA during an enrollment period that ended on or before January 31, 2020 and have dependents that attained age 13 during the 2020 plan year.  Pursuant to this relief, an employee may receive reimbursements for expenses incurred for the remainder of the 2020 plan year and may use the balance in the 2021 plan year.

Plan Amendments

These changes are discretionary, but if any one or more of them is adopted, the employer must adopt a retroactive plan amendment not later than the last day of the first calendar year following the calendar year in which the amendment is first effective (i.e. for changes effective for calendar year plan year 2021, by December 31, 2022).

© 2020 Winstead PC.
ARTICLE BY Lori Oliphant of Winstead
For more, visit the NLR Labor & Employment section.

OSHA Issues Updated COVID-19 Guidance in Compliance with President Biden’s Executive Order

As directed by President Joe Biden’s Executive Order issued on January 21, 2021 requiring the Federal Government to take swift action to protect workers from the COVID-19 pandemic, the Occupational Safety and Health Administration (“OSHA”) has released updated guidance on how to prevent exposure and the spread of COVID-19 in the workplace.

The guidance entitled “Protecting Workers: Guidance on Mitigating and Preventing the Spread of COVID-19 in the Workplace” was posted on OSHA’s website on January 29, 2021.  As with OSHA’s previous recommendations, this guidance is not mandatory and does not have the same legal effect as an OSHA standard.  However, it does give some insight into what OSHA expects to include in an emergency temporary standard (“ETS”) which the new Administration wants the agency to consider and potentially implement by March 15, 2021.

Most employers will be familiar with the elements in the guidance, but here are some of the significant new measures addressed in the guidelines:

  • Employers should provide all workers with face coverings (i.e., cloth face coverings, surgical masks), unless their work task requires a respirator.  Many states did not require this and OSHA did not previously recommend employers purchase masks.
  • Provide a COVID-19 vaccine at no cost to eligible employees.
  • Do not distinguish between vaccinated workers and those who are not vaccinated for purposes of implementing safety measures.
  • Minimize the effect of quarantine and isolations by implementing non-punitive policies, and provide paid sick leave. Employers with less than 500 employees are encouraged to provide FFCRA leave which is still available (though not mandatory) through March 31, 2021 under the Families First Coronavirus Response Act.
  • Provide guidance on screening and testing.
  • Assign a workplace coordinator responsible for COVID-19 issues.

OSHA’s guidance related to the COVID-19 pandemic continues to evolve and further changes are expected with President Biden’s new Administration.  James “Jim” Frederick, a former United Steelworkers safety official, has been named by the Administration to act as the head of OSHA on an interim basis.  Mr. Frederick has indicated that in that role he will be focused on drafting and implementing an enforceable emergency COVID-19 standard.  While these efforts may be opposed by various industry groups, employers need to be aware of these potential new developments so they can take appropriate steps to ensure that they are following the best recommendations to address the pandemic and provide their employees a safe and healthy working environment.

Jackson Lewis P.C. © 2020

ARTICLE BY Raymond Perez, II and Mary L. Bradley of Jackson Lewis P.C.
For more, visit the NLR Labor & Employment

The First 48 Hours – A New OSHA COVID-19 Standard on the Way?

In President Biden’s first 48 hours on the job, he issued approximately 30 executive orders.  One of these is an Executive Order on Protecting Worker Health and Safety.  The Order, as the title implies, directs the federal government to “take swift action to reduce the risk that workers may contract COVID-19 in the workplace.” The Order further requires the issuance of “science-based guidance” to achieve this goal.

Under the Order, the Secretary of Labor (Al Stewart was designated as the Acting Secretary of Labor, effective January 20, 2021, pending Senate confirmation of the nominee, Boston Mayor Marty Walsh) is to:

  • By February 4 – issue “revised guidance to employers on workplace safety during the COVID-19 pandemic;”
  • Consider whether emergency temporary workplace standards are necessary, including wearing masks in the workplace – and, if deemed necessary – to issue the new standard by March 15;
  • Undertake a review of OSHA’s present enforcement efforts, and determine whether immediate or long-term changes are necessary to “better protect workers and to ensure equity in enforcement;”
  • Launch a national enforcement effort focused on COVID-19-related violations that put the largest number of workers at serious risk or are contrary to anti-retaliation principles; and,
  • Coordinate a multidepartmental, multilingual outreach campaign to educate workers on their rights under the safety and health laws, including through engagement with labor unions, community organizations and industries – with a special emphasis on communities that have been the hardest hit by the pandemic.

OSHA (the Occupational Safety and Health Administration) has a comprehensive web page devoted to COVID-19, which includes identification of applicable regulations, enforcement memoranda, recording and reporting requirements, links to various pandemic-related “tools” and “resources,” as well as specific workplace guidance by industry.

To date, OSHA had not issued any new temporary or other regulatory standards applicable to workplaces aimed specifically at COVID-19.  Rather, OSHA’s principal deputy assistant secretary under the Trump administration, Loren Sweatt, testified to Congress in 2020 that OSHA did not believe such new standards were necessary because “OSHA has standards in place to protect employees and employers who fail to take appropriate steps to protect their employees may be violating them. Such standards include conducting hazard assessments, ensuring sanitation and cleanliness, providing PPE, and requiring training and education, as well as the general duty clause itself.”

As the number of fatalities in the U.S. has more recently climbed exponentially, it is very likely that OSHA, under the Biden administration, will proceed in a different direction.  Stay tuned for further developments.

ARTICLE BY Daniel A. Kaplan of Foley & Lardner LLP
For more, visit the NLR Labor & Employment section.

President Biden Installs Two Deputy Assistant Secretaries at Workplace Safety and Health Agency to Jump-Start Agenda

On Jan. 19, 2020, the day before President Biden was sworn in as the 46th president of the United States, his transition team announced that James Frederick will be appointed deputy assistant secretary of labor for occupational safety and health, a non-Senate confirmed position. In this role, Mr. Frederick will run the Occupational Safety and Health Agency (OSHA) until President Biden nominates someone for assistant secretary of labor for occupational safety and health and the Senate confirms the nominee.

Since September 2019, Mr. Frederick has been a part-time consultant for ORC HSE Strategies, LLC, where he provided member employers with, among other things, advice on and assistance with regulatory and legislative matters and assessment and integration of health and safety management systems. Before that, he was assistant director of the Health, Safety & Environment Department of the United Steel, Paper and Forestry Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW), the largest industrial union in North America. As assistant director, Mr. Frederick testified before congressional panels and federal agencies regarding safety and health issues including workplace violence, beryllium, silica, hazard communication and ergonomics. Mr. Frederick worked for more than 20 years at USW, which represents workers employed in the metals, rubber, chemicals, paper, energy, and government and service sectors.

In addition to installing Mr. Frederick to a leadership position within OSHA, the new administration also announced that Joseph T. Hughes will serve as deputy assistant secretary for pandemic and emergency response for OSHA. Previously, Mr. Hughes was director of the National Institute for Environmental Health Sciences Worker Education and Training program, which provides grants to unions and nonprofit organizations to train workers on occupational safety and health.

It is unclear whether President Biden will formally nominate Mr. Frederick to be the permanent assistant secretary of labor for OSHA or whether Mr. Frederick will remain within the agency’s leadership if the president nominates someone else to head the agency. It is also unclear when President Biden will officially nominate someone for the position and when the Senate will hold a hearing on the nomination. As a point of reference, the Senate did not confirm Dr. David Michaels, assistant secretary of labor for OSHA during the Obama administration, until December 2009, nearly a year after President Obama assumed office.

Because a permanent assistant secretary of labor for OSHA will likely not be confirmed for at least a few months, if not more, Mr. Frederick and Mr. Hughes will likely play a significant role in jump-starting the Biden administration’s workplace safety agenda. This includes, among other things, assessing the need for and enacting an enforceable standard that would require employers to take steps to protect workers from contracting COVID-19 at the workplace. To the extent OSHA adopts an emergency temporary standard (or permanent standard) related to COVID-19, or infectious diseases more generally, OSHA may look to the COVID-19 safety and health regulations that “state-plan” states like Virginia, California, Oregon, and Michigan have enacted as a model.

©2020 Greenberg Traurig, LLP. All rights reserved.
ARTICLE BY Michael T. Taylor and Adam Roseman of Greenberg Traurig, LLP
For more, visit the NLR Labor & Employment section.

EEOC Says Employers May Mandate COVID-19 Vaccinations – Subject to Limitations

With one pharmaceutical company already receiving emergency use authorization for its COVID-19 vaccine, and a second drug maker apparently on the cusp of receiving authorization, employers, eager to return to normal business operations, are considering whether they can require that their employees be vaccinated.  In analyzing this issue, employers are looking to the Equal Employment Opportunity Commission (EEOC) for direction on their ability to require vaccinations, given the legal protections under the Americans with Disabilities Act (ADA) and other federal employment laws.

On Wednesday, December 16, 2020, the EEOC delivered welcome news in the form of a revised pandemic guidance concluding that employers generally can mandate that employees receive a U.S. Food and Drug Administration (FDA)-authorized or approved COVID-19 vaccine.

That EEOC guidance, however, includes a variety of cautionary instructions for employers, including for example, potential restrictions on disability-related questions and recognized protections that must be afforded to employees seeking exemption from vaccination requirements due to medical conditions or sincerely held religious beliefs.

The following summary of the guidance provides some helpful information for employers on this complex topic:

  1. Can an employer require that employees receive one of the new FDA-authorized COVID-19 vaccinations?

ANSWER: Generally, yes.  The EEOC stated that equal employment opportunity laws “do not interfere with or prevent employers from following CDC or other federal, state, and local public health authorities’ guidance and suggestions.”  However, there are potential complications that employers must consider before implementing a mandatory vaccination program.

The EEOC confirmed that vaccination itself is not a medical examination, but it also pointed out that certain medical-related questions need to be posed to an individual before the vaccine is given to assure that the person does not have a medical condition that makes the vaccine unsafe. The EEOC explains that those questions can constitute “disability-related inquiries” regulated by the ADA, which employers may only ask under certain circumstances.

Notably, the EEOC indicates that the limitations on asking those disability-related inquiries do not exist when the vaccine is given (and the questions posed) by a third party that is not controlled by the employer such as a pharmacy or healthcare provider rather than by the employer directly or by a healthcare provider working under contract for the employer.  It also explained that it is permissible for an employer to offer the vaccination to employees on a voluntary basis, provided that the employee’s decision to answer pre-screening, disability-related questions is entirely voluntary.

Certainly, the most significant limitation on a mandatory program is that the employer has to ensure that it properly considers requested exemptions by an employee from the vaccination requirement because of the worker’s (i) sincerely held religious beliefs protected under Title VII or (ii) medical conditions which make receipt of the vaccine dangerous or otherwise inappropriate for that individual consistent with the reasonable accommodation requirements of the ADA.

  1. Can an employer ask an employee if he or she has already received the vaccine or, similarly, require proof that the employee has been vaccinated?

ANSWER:  Generally, yes. The EEOC guidance explains that these particular questions do not constitute a “disability-related inquiry” because an employee may choose not to have the vaccine for a variety of reasons wholly unrelated to any medical condition.  However, an employer has to meet certain requirements if it wants to find out why an employee has not received the vaccine. Questioning the employee about the reasons that individual has not been vaccinated does constitute a “disability-related inquiry” because of the possibility that it will elicit information about a disability.

That inquiry can only be made, according to the EEOC, if the question is “job-related and consistent with business necessity” as provided under the ADA. To meet this job-relatedness standard, the employer will need to establish that the worker’s failure to be vaccinated would pose a “direct threat” to the well-being of that employee or others with whom the employee would have contact as part of his or her job duties. Language elsewhere in the EEOC pandemic guidance suggests that an employer should be able to establish that “direct threat” standard if the employee has significant contact with other workers or third parties as part of performing his or her job duties.

  1. Can an employer have its own medical staff or a contracted healthcare provider conduct the vaccinations?

ANSWER:  Generally, yes. The EEOC guidance does not suggest an employer is barred from having its own in-house vaccination program or contracting directly with an outside healthcare provider to administer the vaccinations to the company’s employees. However, as indicated above, the EEOC does indicate that there are potential limitations on the employer either directly, or through a contracted service provider, asking pre-vaccination medical questions.  For that reason, some employers may mandate the vaccine but not administer it directly to employees.

  1. Can an employer fire an employee who refuses to be vaccinated? 

ANSWER:  Possibly, in limited circumstances.  The EEOC guidance reminds employers that it will need to make reasonable accommodations to employees seeking an exemption due to disability-related reasons or religious objections and will need to follow the established reasonable accommodation process under either the ADA or Title VII before taking any adverse employment actions.  The EEOC cautions employers that if it can establish that an employee who is not vaccinated poses a direct threat (that cannot be accommodated without an undue hardship), the employer can exclude the employee from the worksite, but the employer cannot terminate the employee without further consideration of the employee’s legal protections or other possible accommodation, including whether the employee can perform his or her job remotely.  In assessing hardship, the EEOC noted that the prevalence in the workplace of employees who already have received a COVID-19 vaccination and the amount of contact with others, whose vaccination status could be unknown, may impact the undue hardship consideration.

  1. Does the EEOC guidance mean that all employers should adopt a mandatory vaccination program?

ANSWER:  Not necessarily; a mandatory vaccination program may not be the best choice for many employers.  First, any such program would require that employers implement appropriate procedures with respect to processing of disability and religious accommodation requests.  Any employer with a mandatory vaccine program must ensure that there is no retaliation against employees who request an accommodation under the ADA or Title VII.  There may also be retaliation protection under Section 11(c) of the Occupational Safety and Health Act of 1970 pertaining to whistle blower rights for an employee who refuses vaccination because of a reasonable belief that he or she has a medical condition that creates a real danger of serious illness or death (such as serious reaction to the vaccine).

Further, polling data continues to show that a significant percentage of Americans prefer not to receive the COVID-19 vaccine.  Some employees, for example, may be wary of the vaccine given how rapidly it was developed.  As a way of recognizing this issue, the EEOC guidance points out that the FDA authorization for these COVID-19 vaccines is only pursuant to the Emergency Use Authorization standard—which is different than an FDA approval (licensure) of a vaccine—and therefore these vaccines have not received all of the prolonged consideration by the FDA that is typical of common vaccinations such as the vaccines for seasonal influenza or chickenpox.

As a result, employers mandating the vaccine should be prepared for some resistance from employees.  Additionally, it is important to remember that the EEOC guidance is only that—guidance—and not a law. Consequently, some employees may still legally challenge mandatory vaccination programs under various theories and there is no guarantee that a court will react favorably to a particular legal challenge. There are also, as explained above, important legal nuances and limitations with a mandatory program even under the EEOC’s guidance.

Also, while not an EEO issue, for employers with a unionized workforce, the employer must consider bargaining requirements prior to unilaterally implementing a mandatory vaccine policy.  Additionally, employers may need to consider state law obstacles to mandatory vaccination in some jurisdictions.

What is clear is that if an employer wants to pursue a mandatory vaccination program, the company’s management, together with its legal and HR teams, should engage in significant planning and develop a program detailing how the process will work from beginning to end and carefully consider the potential legal limitations identified by the EEOC in its guidance.

© 2020 Bracewell LLP

ARTICLE BY Robert S. Nichols,  Amy Karff Halevy and Rebecca L. Baker of Bracewell LLP
For more, visit the NLR Coronavirus News section.

Can U.K. Employers Make COVID-19 Vaccinations Mandatory?

So, can employers mandate that their workforce receive the vaccine? Employers have a legal duty to ensure the health and safety of their workforce as far as reasonably possible, so such a requirement would appear to be an effective means of satisfying this duty. However, whilst there may be certain settings where such a requirement is reasonable — for example, in health care or other high-risk areas — employers should be very cautious about pursuing a policy of mandatory vaccination since this could have a number of legal implications.

Primarily, such a policy could expose an employer to claims, including for discrimination and/or constructive dismissal if an employer were to take detrimental or disciplinary action because an employee refuses to be vaccinated and such refusal is related to a characteristic that is protected under U.K. discrimination law (namely, age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex or sexual orientation). For example, there is a risk of maternity or disability discrimination where employees who are pregnant or suffering from a medical condition that amounts to a disability are not able to have the vaccine and are consequently treated less favourably by their employer than employees who have had the vaccine. Likewise, such a requirement could also amount to age discrimination if younger employees, who are likely to be the last category of people being offered the vaccine as part of the NHS rollout, are treated less favourably than older employees who have had the vaccine.

A policy of mandatory vaccination could also infringe employees’ right to privacy under Article 8 of the Human Rights Act 1998. Technically an employer may be able to justify such a breach, but this is likely to be difficult where less personally invasive measures are available to employers to maintain the health and safety of their workforce, such as social distancing and the wearing of face coverings.

Employers should also consider the data protection implications of mandating vaccinations since holding data on whether an employee has had the vaccine is likely to be considered a special category of data under applicable data protection law (meaning that it needs more protection because it is sensitive). In order to lawfully process such data, there must be a lawful basis for the processing, and additional conditions and supporting documentation must be put in place, including conducting an impact assessment to identify and minimise any risks.

Whilst a policy of mandatory vaccination may present difficulties from a legal perspective, employers may want to put in place nonmandatory guidance about the vaccine to encourage their employees to have it. Additionally, employers should not rely on vaccination to replace other protective measures in the workplace, such as social distancing and the wearing of face coverings, and should continue to assess their workplace risks as the pandemic unfolds.

© 2020 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.

ARTICLE BY Alex Denny and Emma Vennesson of Faegre Drinker
For more, visit the NLR Labor & Employment section.

Want to Know if Your Employees Received the COVID-19 Vaccine? Some Best Practices to Consider

While its rollout has been slow, the vaccine is being administered across the U.S. and in other countries. As of January 15, 2021, nearly 36 million doses of a COVID-19 vaccine have been administered, just over 11 million in the U.S. For a variety of reasons, organizations want to know whether their workforce members (employees, contractors, etc.) have been vaccinated. Some are trying to assess prospects for return to work, while others want to provide incentives to get the vaccine, and still others are managing customer demands to know if their vendor’s workforce has been vaccinated.

The EEOC has provided some guidance on the issue:

K.3. Is asking or requiring an employee to show proof of receipt of a COVID-19 vaccination a disability-related inquiry? (12/16/20)

No.  There are many reasons that may explain why an employee has not been vaccinated, which may or may not be disability-related.  Simply requesting proof of receipt of a COVID-19 vaccination is not likely to elicit information about a disability and, therefore, is not a disability-related inquiry.  However, subsequent employer questions, such as asking why an individual did not receive a vaccination, may elicit information about a disability and would be subject to the pertinent ADA standard that they be “job-related and consistent with business necessity.”  If an employer requires employees to provide proof that they have received a COVID-19 vaccination from a pharmacy or their own health care provider, the employer may want to warn the employee not to provide any medical information as part of the proof in order to avoid implicating the ADA.

So, based on the answer to the question posed above, we know the EEOC’s position is that asking or requiring employees to provide information on whether or not an employee was vaccinated is not a disability-related inquiry under the Americans with Disabilities Act (ADA). But that may not be the end of the inquiry. These are several considerations and best practices that organizations might consider before putting such requests to their workforce members.

  • Who wants the information, and why? As noted above, there could be several reasons for wanting to ask employees about their vaccination status. Those reasons can affect compliance and best practice considerations. For example, if an organization is working to accommodate customer demands for vaccination status of the organization’s employees who are performing services at the customers’ facilities, the organization might want to consider, among other things:
    • Does it need to provide the information to the customer?
    • Is consent/authorization necessary?
    • How should the information be transmitted?
    • Who at the customer would have access to that information?
    • Will the customer safeguard it?
  • What steps can be taken to limit compliance risk? If an organization decides to ask workforce members about their vaccination status, there are steps it can take to minimize compliance risk. For instance, an organization can minimize the chance of an ADA violation by (i) designing the request so it is not likely to elicit information about a disability, (ii) not asking why an individual did not receive a vaccination, and (iii) warning the employee not to provide any medical information as part of the requested proof of receipt of a COVID-19 vaccination. Similarly, employers that are subject to the California Consumer Privacy Act (CCPA) and wondering whether their notice at collection to California employees needs to cover vaccination information may decide to provide notice in the abundance of caution.
  • Is it necessary to even ask employees directly…couldn’t the organization look at its health plan’s claims information for vaccine-related administration charges? Aside from being arguably more administratively difficult, this method likely would be considered a violation of the HIPAA privacy rule. Plan sponsors may not use protected health information under HIPAA for an employment purpose without the employee’s authorization.  
  • Does the collection and processing of vaccination information raise data privacy and security risks? Even if making the request is not a disability-related inquiry, it may be considered a medical inquiry, and the employee’s response, confidential medical information. While not subject to HIPAA in the employer-employee context, this information still may have protections under state statutory and common law. Consider, for example, that several states, such as California and Florida, include “medical information” as part of the definition of “personal information” under their breach notification laws. Accordingly, if that information is breached, which could include access to the information by an unauthorized party, notification may be required.

Additionally, statutory and common law obligations exist to require employers to safeguard employee personal information, which may include information about their physical health, such as vaccination status. Thus, maintaining reasonable safeguards to protect such information is prudent. This might include access management measures and record retention and destruction policies. It also may include having clear guidelines for making disclosures of this information and determining whether an authorization is needed before such information may be disclosed or accessed by a third party.

These are just some of the issues organizations may find themselves grappling with as COVID-19 vaccinations become more available. Thinking them through carefully should help organization minimize their compliance and legal risks as they continue to manage their businesses through this pandemic.

Jackson Lewis P.C. © 2020
ARTICLE BY Joseph J. Lazzarotti of Jackson Lewis P.C.
For more, visit the National Law Review Coronavirus News section.

Can Employers Fire Rioters? Employers’ Rights in Policing Employee Off-Duty Conduct and Employment Law Consequences of the Capitol Riots

Within days of the January 6, 2021, riot at the U.S. Capitol, employees who were observed as part of the mob entering the Capitol were discharged by their employers. Some of the individuals involved in the events at the Capitol were knowingly filmed as part of the insurrection (and many were seen posing for selfies).

A photograph of a rioter wearing clothing with the word “Auschwitz” prominently displayed has been widely disseminated. Other rioters were photographed and videoed carrying Confederate flags or nooses. In some instances, employers saw images of their employees and took action in response. For example, one rioter was reportedly discharged by his employer after an image circulated of him storming the Capitol while still wearing his employee badge around his neck.

In addition to those who directly participated in the breached at the Capitol, before and after the riot, employees discussed—on social media—the events and expressed their views in support of or in opposition to the insurrection, or on the issue of wearing masks or shirts expressing threatening or offensive views.

Even if most of the conduct occurred outside the workplace, coworkers—and often community members—who have seen images of employees involved in the riot, expressing support for the riot, or wearing masks or clothing with some of the messages of the rioters, are voicing complaints to employers.

Private employers have significant discretion to discharge employees, even for off-duty conduct, especially conduct that is unlawful. While public employers may have less discretion, they tend to have more rules that specifically outline what constitutes unlawful off-duty behavior. And while some states have laws that protect political speech or lawful off-duty conduct, those laws would not protect employees from discharge for their illegal or violent conduct or threats. Most states, for instance, would not prohibit employment actions based on some of the clothing with logos and insignias that rioters were wearing. The following are answers to frequently asked questions about these issues.

Do private-sector employees have free speech rights to make anti-Semitic, racist, or other inflammatory statements or social media messages?

No, not under federal law. Employees often have the mistaken belief that their statements enjoy blanket protection under the First Amendment. The First Amendment specifically prevents the federal government from interfering with freedom of speech, but it does not guarantee that right in private settings, including in private workplaces (and social media platforms). Therefore, a private-sector employee’s speech (whether made in person or in writing on social media) are not shielded from employment consequences under the mantle of freedom of speech. Such employee expression would also include the wearing of t-shirts, sweatshirts, or masks with offensive or harassing messages, as were seen in images from the Capitol riot. With the rise of social media, employers have quickly become aware of employees’ off-duty behavior from the reports of other employees. After the neo-Nazi, white-supremacist rally in Charlottesville, Virginia, August 11–12, 2017, it took only a few hours for participating individuals to be identified and for employers to be called to take action against them.

Note that Connecticut state law extends freedom-of-speech protections to private employees. As noted below, other state laws prohibit discrimination based on lawful off-duty conduct, which could include speech. Even there, in the case of the riot at the Capitol, an employer might be able to take action based not on an employee’s speech but based on the employee’s unlawfully entering of the Capitol building.

Can employers discharge employees for off-duty conduct?

It depends. Some states have laws that ban employers from taking adverse employment action against employees based on lawful off-duty conduct. Presently, California, Colorado, Louisiana, New York, and North Dakota prohibit employers from firing or retaliating against employees for off-duty lawful activity, including speech. Arguably, this could include conduct that their employers and coworkers may find offensive. However, even in these states, illegal conduct, including unlawful entry into the U.S. Capitol, looting, or violence, would not be protected.

In the remaining states, laws do not exist that would preclude an employer from taking action against an employee based upon the employee’s off-duty conduct.

In fact, employers may face legal, reputational, and cultural risks by ignoring off-duty conduct, especially where the conduct may constitute harassment of a member of a protected class. For example, some rioters were seen carrying the Confederate flag, brandishing nooses, and wearing t-shirts or displaying tattoos with unquestionably offensive—and in some cases threatening—slogans like “Camp Auschwitz.” Rioters also apparently erected a gallows with a noose outside the Capitol. These symbols and messages are historically significant and threatening based on race and religion. Images of a coworker carrying or wearing these symbols may cause other employees to be uncomfortable in the workplace, and, in most states, may form the basis for employment action.

Can employers discharge employees who participate in protests?

It depends. Employees who participate in legitimate, peaceful political protests are protected by law in over a dozen states and jurisdictions, including in California; Colorado; Guam; Louisiana; Minnesota; Missouri; Nebraska; Nevada; South Carolina; Utah; West Virginia; Seattle, Washington; and Madison, Wisconsin. Those jurisdictions bar employers from retaliating against employees for engaging in political activities. New Mexico protects employees’ right to express their political opinions. As previously noted, some jurisdictions protect employees’ lawful off-duty conduct, including speech. Other states and jurisdictions—including the District of Columbia, Illinois, Iowa, Louisiana, New York, and Utah; Puerto Rico; the U.S. Virgin Islands; Broward County, Florida, and Urbana, Illinois—specifically prohibit employers from discriminating against employees based on their political party membership, election-related speech, or political activities.

However, the events of January 6, 2021, went beyond a political protest to illegally storming the Capitol. Such illegal conduct would not be protected. Further, threats and expressions of racist violence or harassment are not political speech. So while employers may consider applying their policies and expectations consistently to peaceful protesters on different sides of an issue, conduct that is not comparable (e.g., storming into the U.S. Capitol as compared to peacefully attending a rally) need not be treated the same. After the events that occurred in Charlottesville, Virginia, in 2017, employers have grappled with how to make sure that they are protecting their employees and their companies’ reputations while not disciplining employees for lawful off-duty conduct.

An employer may wish to consider various factors prior to taking adverse action against an employee for off-duty activity, including how the employee’s conduct may reflect on the company and its employees. Such considerations may also include whether employees will be required to work with a coworker who has made offensive, racist, discriminatory, or hateful comments regarding an employee’s immutable characteristics, such as race, sex, or sexual orientation. More importantly, an employer may want to consider whether the employee engaged in violent conduct such that the employee will be seen as having a propensity for violence that could make coworkers feel unsafe. Moreover, this violent off-duty conduct could put the employer on notice and potentially give rise to negligent retention claims.

In sum, employers may want to assess the potential damage to a company’s culture and reputation (both internally and externally) that may follow from condoning or condemning employee comments and conduct. Many employers have chosen to err on the side of standing up against racism, anti-Semitism, and threats to safety and democracy.

© 2020, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.
For more visit the NLR Labor & Employment section.