Category: Labor & Employment

IRS Issues Guidance on Deferral of Certain Employee Payroll Taxes

On Friday, August 28, the IRS issued Notice 2020-65, providing guidance about the deferral of certain employee payroll taxes under the President’s Executive Memorandum issued earlier in August. As has become the norm in these uncertain times, the guidance must be considered fluid and subject to change without notice. The existing guidance leaves many questions unanswered so we will continue to monitor this issue.

What Is the Employee’s Portion of the Payroll Taxes Subject to Deferral Under Executive Memorandum and Notice 2020-65?

In addition to income tax withholding, payroll taxes include Federal Insurance Contributions Act (FICA) taxes. FICA taxes include old-age, survivor and disability insurance (OASDI) (Social Security) and hospital insurance (Medicare). These payroll taxes apply at a rate of 15.3 percent for wages up to $137,700 for the 2020 calendar year. The obligation for the FICA taxes are equally divided between employers and employees at 7.65 percent, broken down as follows: 6.2 percent for Social Security and 1.45 percent for Medicare. Accordingly, for purposes of the Executive Memorandum and Notice 2020-65 the amount subject to deferral is 6.2 percent of the Social Security taxes as the employee’s share.

What Is Known

  • Deferral of the employee’s share of Social Security taxes appears to be voluntary by the employer based on the language in this notice, Code Section 7508A, and prior statements made by Secretary Mnuchin. Since the deferral is voluntary, the employer may forgo the deferral and timely withhold and pay over the required taxes.
  • The employer is the “Affected Taxpayer” under Notice 2020-65. Thus, an employee cannot require its employer to defer the taxes.
  • The option to defer applies to wages paid to an employee on a pay date during the period beginning September 1, 2020 and ending on December 31, 2020.
  • The option to defer only applies to employees earning less than $4,000 paid for a bi-weekly pay period.
  • The determination of whether the employee earns less than $4,000 per bi-weekly pay period is made on a pay period-by-pay period basis. Notice 2020-65
  • The employer must withhold and pay the deferred taxes under this notice ratably between January 1, 2021 and April 30, 2021 or interest, penalties, and additions to the tax will begin to accrue on May 1, 2021, with respect to any unpaid applicable taxes. Notice 2020-65
  • “If necessary, the Affected Taxpayer [Employer] may make arrangement to otherwise collect the total Applicable Taxes from the employee.” Notice 2020-65. Implies the penalties will be assessed against Employer as the Affected Taxpayer as defined by the guidance.

What Is Not Known

  • What if the employee leaves the company?
  • What if employee doesn’t make enough money to pay the tax back?
  • It appears that the obligation to pay the deferred taxes remains with the employer in either situation above.

Absent further guidance or congressional action, the deferred taxes must be withheld from the employee’s wages and paid over to the government between January 1, 2021 and April 30, 2021. Employers who are considering allowing employees to defer payment of taxes should consult counsel and develop a plan to implement before ceasing to make deductions. Considerations for the plan should include an employee communication plan developed to address employee payment obligations after the deferral period expires or if the employee becomes no longer employed by the employer. In addition, the plan should take into account whether employees are covered by a collective bargaining agreement that triggers notice and bargaining obligations. Also, keep in mind that Michigan employers must have signed authorization from the employee to make deductions from wages. Employers should consider obtaining written authorization from qualifying employees who elect to defer that includes the plan to repay the deferred taxes and a backup in case the employee ceases to be employed before the taxes are paid.

© 2020 Varnum LLP
For more articles on the IRS, visit the National Law Review Tax, Internal Revenue Service and Treasury Legal News section.

District Court Strikes Down DOL Regulation Exempting Non-Healthcare Workers from Paid Leave

On August 3, 2020, the U.S. District Court for the Southern District of New York struck down part of a Department of Labor (“DOL”) regulation that would have prevented huge swaths of employees from taking paid leave under the Families First Coronavirus Response Act (“FFCRA”). The court’s holding has important consequences for employees who may need to take leave from work to care for themselves or others during the ongoing COVID-19 pandemic.

Congress passed the FFCRA on March 18, 2020, to provide paid leave for employees who are experiencing symptoms of COVID-19, are quarantined and cannot work because of COVID-19, or are caring for someone who is quarantined, or a child whose school or care provider is closed, because of COVID-19. In recognition of the essential role of frontline health care workers during the pandemic, however, the FFCRA permits an employer to deny an employee’s request for qualifying leave if the employee is a “health care provider or emergency responder.” The Act defines “health care provider” as “a doctor of medicine or osteopathy who is authorized to practice medicine or surgery (as appropriate)” or “any other person determined by the Secretary [of Labor] to be capable of providing health care services.” The Act also expressly authorizes DOL to “issue regulations to exclude certain health care providers and emergency responders from” from eligibility for paid leave.

DOL Expands Definition of ‘Health Care Provider’

On April 1, 2020, DOL issued a regulation implementing the FFCRA that significantly expanded the definition of “health care provider,” thereby excluding additional employees from eligibility for paid leave under the Act. The definition covered, among other employees, “anyone employed at any doctor’s office, hospital, health care center, clinic, post-secondary educational institution offering health care instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home health care provider, any facility that performs laboratory or medical testing, [or] pharmacy[.]” In its motion to dismiss, DOL conceded that its definition would encompass many employees who are not traditionally considered healthcare workers, such as professors, librarians, and cafeteria managers at a university with a medical school. In this sense, DOL’s new definition of “health care provider” created an exception that threatened to swallow the rule.

District Court Rejects DOL Definition

In its opinion invalidating the DOL definition, the court held that the FFCRA requires DOL to determine that a particular employee is “capable of furnishing healthcare services . . . not that [the employee’s] work is remotely related to someone else’s provision of healthcare services.” DOL’s definition, the court found, “hinges entirely on the identity of the employer, in that it applies to anyone employed at or by certain classes of employers,” as opposed to the identity of the employee, in violation of the statutory text. Administrative procedure law therefore “unambiguously foreclose[d] the [DOL’s] definition” of “health care provider.”  Finding further that DOL’s definition of “health care provider” was severable from the remainder of the regulation, the court simply invalidated that provision, restoring the definition of “health care provider” to the more limited one in the text of the statute.

The court also rejected DOL’s argument that its definition “operationalizes” the goal of “maintaining a functioning healthcare system during the pandemic.” Acknowledging that employees who “do not directly provide healthcare services to patients – for example, lab technicians or hospital administrators – may . . . be essential to the functioning of the healthcare system,” the court nevertheless held that this rationale could not supersede the “unambiguous terms” of the FFCRA, which require DOL to determine whether a particular employee can provide healthcare services.

Keeping Employees Safe 

More broadly, by enabling more employees to stay at home without sacrificing a paycheck, the court’s holding bolsters the FFCRA’s dual purpose of limiting the spread of COVID-19 while at the same time providing financial relief to American workers. The DOL regulation, on the other hand, would have forced employees to report to work despite symptoms of or exposure to COVID-19, increasing the risk of spreading the virus to others, or take leave without pay.

If you need to take leave from work because you are experiencing symptoms of or were exposed to COVID-19, or to take care of a loved one who is at home because of COVID-19, consider consulting with an employment attorney to determine whether you may be eligible for paid leave under the FFCRA.

© Katz, Marshall & Banks, LLP
ARTICLE BY Jessica L. Westerman of  Katz, Marshall & Banks, LLP
For more articles on healthcare, visit the National Law Review Health Care, Medicare, Affordable Care Act, HIPAA Legal News section.

DOL Issues Additional FFCRA Guidance as Schools Reopen

On Aug. 27, 2020, the U.S. Department of Labor (DOL) issued three new Frequently Asked Questions (FAQ) related to the reopening of schools in various formats and employee paid leave eligibility under the Families First Coronavirus Response Act (FFCRA).

The FFCRA requires employers with fewer than 500 employees to provide up to 80 hours of paid leave to employees for certain reasons related to the 2019 novel coronavirus (COVID-19) pandemic under the Emergency Paid Sick Leave Act (PSLA) and expands the Family and Medical Leave Act (FMLA) to provide employees up to 12 weeks of emergency job-protected leave to care for a child as a result of school or child care closings due to a public health emergency. The recent FAQ address caregiver leave associated with the closure of schools, which, if eligible, entitles employees to two-thirds’ pay up to $200 per day ($10,000 in aggregate).

NEW FAQ ADDRESSING SCHOOL CLOSURES

The following is an overview of DOL’s three newly issued FAQ regarding school closures:

A child attends a school operating on an alternate day basis

The DOL confirmed in FAQ #98 that an employee will be eligible for paid leave on an intermittent basis to accommodate a hybrid school schedule whereby children attend school both in-person and remotely. For purposes of the FFCRA and its implementing regulations, the school is effectively closed on days that a child cannot attend in person and leave is available on remote-learning days. The DOL cautions in its guidance that even under these circumstances, leave is only available if no other suitable person is available to care for the child.

A parent chooses remote learning when in-person instruction is available

FAQ #99 makes clear that FFCRA leave is not available to take care of a child whose school is otherwise open for in-person attendance. As a result, if a child needs care because the employee chose a virtual or remote school option, the employee is ineligible for leave. The DOL notes, however, that if the child is home due to a quarantine order or has been advised by a health care provider to self-isolate or self-quarantine, an employee may be eligible to take paid leave to care for the child.

School begins with remote learning, but shifts to in-person instruction if conditions change

FAQ #100 clarifies that leave eligibility will change as schools adopt different teaching models. Using the example of a school that starts virtually with the hope of returning to in-person teaching in the future, the DOL explains that an employee will be eligible for leave during the remote learning period for so long as the school remains closed, but eligibility will end when the school converts to in-person instruction.

ADDITIONAL FFCRA RESOURCES

Consider reviewing the following resources to learn more about the FFCRA:

Copyright © 2020 Godfrey & Kahn S.C.

ARTICLE BY Margaret R. Kurlinski and Christine McLaughlin of Godfrey & Kahn S.C. 

For more on DOL guidance, see the National Law Review Labor and Employment Legal and Regulatory Law News section.

Federal Court Strikes Down Portions of Department of Labor’s Final Rule on COVID-19 Leave, Expands Coverage

On August 3, 2020, the United States District Court for the Southern District of New York struck down portions of the DOL’s Final Rule regarding who qualifies for COVID-19 emergency paid sick leave under the Emergency Paid Sick Leave Act (“EPSLA”) and the Emergency Family and Medical Leave Expansion Act (“EFMLEA”), collectively referred to as the Families First Coronavirus Response Act (“FFCRA”).

Of particular importance to retail employers, the Court invalidated two provisions of the DOL’s Final Rule pertaining to: (1) conditioning leave on the availability of work and (2) the need to obtain employer consent prior to taking leave on an intermittent basis.

Neither the EPSLA nor the EFMLEA contains an express “work availability” requirement. The EPSLA grants paid leave to employees who are “unable to work (or telework) due to a need for leave because” of any of six COVID-19-related criteria. FFCRA § 5102(a). The EFMLEA similarly applies to employees “unable to work (or telework) due to a need for leave to care for . . . [a child] due to a public health emergency.” FFCRA § 101(a)(2)(A).  In its Final Rule, the DOL concluded that these provisions do not reach employees whose employers “do not have work” for them, reasoning a work-availability requirement is justified “because the employee would be unable to work even if he or she” did not have a qualifying condition set forth in the statute.

In rejecting the DOL’s interpretation, the Court stated that “the agency’s barebones explanation for the work-availability requirement is patently deficient,” given that the DOL’s interpretation “considerably narrow[s] the statute’s potential scope.”  Under the Court’s interpretation, employees are entitled to protected leave under either the EPSLA or EFMLEA if they satisfy the express statutory conditions, regardless of whether they are scheduled to work during the requested leave period.

The Court also rejected part of the DOL’s interpretation that employees are not permitted to take the protected leave on an intermittent basis unless they obtain their employer’s consent.  As an initial matter, the Court upheld the DOL’s interpretation that employees cannot take intermittent leave in certain situations in which there is a higher risk that the employee will spread COVID-19 to other employees (i.e., when the employees: are subject to government quarantine or isolation order related to COVID-19; have been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19; are experiencing symptoms of COVID-19 and are taking leave to obtain a medical diagnosis; are taking care of an individual who either is subject to a quarantine or isolation order related to COVID-19 or has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19).

In those circumstances, the Court agreed that a restriction on intermittent leave “advances Congress’s public-health objectives by preventing employees who may be infected or contagious from returning intermittently to a worksite where they could transmit the virus.”  Therefore, in those situations, employees are only permitted to take the protected leave in a block of time (i.e., a certain number of days/weeks), not on an intermittent basis.  As a result, the Court upheld the DOL’s restriction on intermittent leave “insofar as it bans intermittent leave based on qualifying conditions that implicate an employee’s risk of viral transmission.”

The Court, however, rejected the requirement that employees obtain their employer’s consent before taking intermittent leave in other circumstances (i.e., when an employee takes leave solely to care for the employee’s son or daughter whose school or place of care is closed).  In doing so, the Court ruled that the DOL failed to provide a coherent justification for requiring the employer’s consent, particularly in situations in which the risk of viral transmission is low.  The Court’s opinion brings the EPSLA and EFMLEA in line with the existing FMLA, which does not require employer consent.

It is unclear if the DOL will challenge the Court’s decision or revise its Final Rule to bring it in compliance with the Court’s opinion.  Regardless, the Court’s decision takes effect immediately and retail employers should be mindful of this ruling and revisit their COVID-19 leave policies.

Copyright © 2020, Hunton Andrews Kurth LLP. All Rights Reserved.

Return to Work COVID-19 Testing Considerations

As employees increasingly transition back into the physical workplace, employers have begun to grapple with whether and how to deploy COVID-19 diagnostic testing as a return-to-work solution.  Many employers want to avoid extended employee quarantine or isolation requirements that prevent their employees from returning to the office for weeks and disrupt their operations.  But is this potential solution legal?  And is it effective?  Below we discuss practical considerations for employers considering a return to work COVID-19 testing strategy.

Is it Legal?

For the most part, yes.  While the Equal Employment Opportunity Commission (“EEOC”) has approved of COVID-19 diagnostic testing in the workplace generally, it has, as explained further below, recently modified its guidance to discourage its use as a return to work strategy.  Further, approaches vary widely across the states and localities that have taken a position on return to work testing.  For example, while Illinois permits its use, an ordinance in Dallas, Texas prohibits return to work testing.

Is it Effective?  

It depends.  Before mandatory vaccination becomes an option (which we wrote about here), requiring employees to test negative for COVID-19 before returning to work may at first glance seem like a reasonable way to ensure employee attendance while keeping the workplace safe.  For some employers, particularly those that are able to test frequently, quickly and accurately, this may be a sound approach.  But for other employers, they will have to weigh their options carefully.  Recent updated guidance from the CDC, employee complaints about the invasiveness of testing, and very real ongoing concerns about testing availability and accuracy may militate against pursuing a testing strategy at this time.

More specifically, recent guidance from the CDC discourages a test-based strategy as a primary solution finding that a symptom-based screening strategy is sufficient to identify when an individual with symptoms may return to work.  However, if an employer nevertheless decides to proceed with diagnostic testing as part of their COVID-19 mitigation strategy, the CDC recommends having employees test negatively twice with the two consecutive tests coming at least 24 hours, before returning to work.

State and local guidance does not necessarily provide additional clarity on how best to proceed.  For example New York State’s guidance only addresses situations where an employee experiences symptoms upon arrival at work or while at the office, advising that in those instances an employee may return to work with a single negative COVID-19 test (in contrast to the CDC’s recommended two consecutive negative tests).  But New York’s guidance does not currently address whether testing is a solution to a host of other scenarios – for instance, where an employee’s remote screening indicates recent symptoms, known exposure, or where an employee traveled to a place with significant community spread.  In those instances, the New York guidance does not incorporate testing as a return to work solution, instead asserting that individuals who have had known close contact with someone who has COVID-19 (i.e. within 6 feet of someone for ten or more minutes) should (1) isolate for 10 days from the onset of symptoms (if the individual has symptoms); or (2) isolate for 14 days from the date of exposure (if the individual does not have symptoms).  New York’s guidance also states that employees who test positive for COVID-19 must complete at least 10 days of isolation from the onset of symptoms or 10 days of isolation after the first positive test if they remain asymptomatic.

Putting all the guidance aside for the moment, testing may prove futile in many cases regardless.  First, COVID-19 reportedly can take 2-14 days after exposure to become identifiable in a diagnostic test, and thus, employees who test negative may return to work and later discover they have indeed been infected.  And in other cases, testing may prove futile if an employee cannot access a test readily, and thereafter receive their results in a timely manner, which effectively sidelines them from returning to the office anyway.  Further, there is also the possibility of a false negative, particularly when an employee takes a rapid test.  Other employer considerations include how COVID-19 testing, and the resulting disciplining of employees if they refuse to be tested, might affect overall employee morale.

Employers should consider these issues and weigh them against the vitality of other preventative measures such as whether an employee can telework or take a paid or unpaid leave in lieu of returning to work.  If the employee must return to work, employers should consider using other safety measures (whether in lieu of or in addition to testing), such as symptom/exposure questionnaires, temperature checks and workplace social distancing requirements.

What if an Employee Refuses to Take a Diagnostic Test? 

In selecting any of these options, employers should consider creating a policy or procedure that, among other things, discloses the circumstances under which an employee must take a test, the specific test or tests that the employer will accept, and the consequences of an employee’s refusal to be tested prior to returning to work.  Employers should also consider whether they will afford an employee the opportunity to take an unpaid leave of absence where they refuse to take a test in lieu of a disciplinary action.

Further, before resorting to disciplinary measures, employers should first consider the nature of the employee’s objection.  If the employee is simply annoyed or frustrated about the testing policy, disciplinary measures may be appropriate as the employees is failing to adhere to a company safety policy.  However, employers should evaluate whether the employee is asking for a disability accommodation, and if so, should consider alternative options to testing.

A Note about Isolation Practices and Employee Abuses.

In jurisdictions that do not require employees to isolate after potential symptoms or exposure, employers that need employees to work in the office may be turning to COVID-19 diagnostic testing as an alternative or supplement to isolation practices they consider impractical or prone to abuse.  Indeed, some employers are facing scenarios in which employees attempt to take advantage of company isolation policies in an effort to take extended time away from the workplace.

Employers facing this situation may consider implementing a diagnostic testing strategy (where permitted and feasible), but should also consider addressing the various employee abuse scenarios that might unfold and provide cautionary warnings to employees.  For example, New York, New Jersey, Massachusetts, and some other jurisdictions are requiring individuals who travel to certain states with troublesome COVID-19 metrics to quarantine for 14 days upon their reentry.  If an employee is planning travel to a “hot spot” on vacation to avoid returning to work, the employer should consider warning the employee that if they are unable to telework upon their return, they may be required to take additional paid time off or even unpaid leave.  Alternatively, employers facing operational difficulties if employers are away for multiple weeks may wish to revisit paid time off approval processes or condition approval of company-provided vacation time on an employee’s ability to return to work promptly after traveling.  In short, employers may have several options to address employees’ abuse of isolation rules that do not necessarily have to involve the implementation of diagnostic testing.

Final Considerations.

If an employer does decide to implement a testing strategy, it should ensure that its COVID-19 testing and screening protocols and policies adhere to relevant state and local guidelines, which vary greatly by jurisdiction.  Employers should further ensure they are tracking other practical aspects of testing.  For example, employers must safeguard employee medical records in accordance with Americans with Disabilities Act (“ADA”) requirements and the privacy requirements of various states and localities, which we discussed here.  When choosing a diagnostic test, employers must also ensure that the test is reliable and accurate – for instance, some rapid testing kits now entering the market may not meet the EEOC’s reliability and accuracy standards.  Similarly, any testing strategies must be uniformly applied so as not to cause disparate treatment amongst employees.  Employers should refer to the EEOC’s ADA guidance, which we discussed here, to ensure non-discriminatory application of testing policies.

©1994-2020 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

For more on COVID-19 Testing see the National Law Review Coronavirs News section.

COVID-19 Whistleblower Protections: Few Options for Workers Reporting Unsafe Working Conditions

The United States has been rocked by the COVID-19 pandemic in innumerable ways and it has had profound and ongoing impacts on workers. One of the most vexing problems arising from COVID-19 has been protecting workers who object to employers that are failing to implement meaningful safety precautions to protect their workers during the pandemic. As just one of many examples, an Amazon employee was fired after he opposed the company’s failure to meaningfully protect warehouse employees who had potentially been exposed to the coronavirus. This article will examine our failures in addressing this problem through meaningful federal action and highlight instances where local legislators have passed laws to protect workers who find themselves facing this predicament.

The Deficiencies of Federal Law to Protect Workers During the Coronavirus Crisis

The primary federal law requiring a safe working environment is the Occupational Safety and Health Act (“OSH Act”). Section 11(c) of the OSH Act prohibits employers from discharging or discriminating against an employee because the employee exercised any rights under the Act, including the right to raise health or safety complaints. 29 U.S.C. § 660(c). The OSH Act theoretically protects an employee who refuses to work based on unsafe working conditions, although the requirements for a protected work refusal are stringent.

Unfortunately, the OSH Act does not effectively protect workers in general, much less in the face of a burgeoning pandemic. The Act does not have a private right of action, so employees who suffer retaliation for reporting unsafe working conditions cannot sue in court. Instead, Section 11(c) allows employees to file a complaint with the Occupational Safety and Health Administration (“OSHA”) and request that OSHA protect them. Thus, government officials ultimately decide what to do with the OSH Act complaint; if they fail to protect an employee, that employee has no other recourse under the statute. In addition, the OSH Act has a 30-day statute of limitations—the shortest of any federal anti-retaliation statute. Finally, the strict requirements governing what constitutes a protected refusal to work will leave many employees in the cold. OSHA officials have acknowledged the weakness of the OSH Act protections. In 2010, then-Deputy Assistant Secretary for Occupational Safety and Health, Jordan Barab, testified before Congress that Section 11(c)’s lack of a private right of action and statutory right of appeal were “[n]otable weaknesses” in the law. Mr. Barab also lamented the OSH Act’s “inadequate time for employees to file complaints.”

Several states have their own version of the OSH Act, protecting employees who raise concerns about workplace health and safety. Like the federal OSH Act, however, many of these state laws do not contain private rights of action. See, e.g., D.C. Code § 32-1117 (no private right of action); Md. Code, Labor & Empl. § 5-604 (same); but see Va. Code § 40.1-51.2:2 (providing private right of action and a 60-day limitations period for filing a complaint).

Proposed Legislation to Protect Whistleblowers

The Coronavirus Oversight and Recovery Ethics Act (“CORE Act”) put in place meaningful protections against retaliation for individuals who report waste, fraud, and abuse related to government funds that were distributed to combat the COVID-19 pandemic. Like other recent whistleblower protection legislation, it is primarily enforced through the Department of Labor but permits whistleblowers to “kick out” their claims into federal court. Further, language in the bill nullifies the effectiveness of pre-dispute mandatory arbitration provisions with respect to claims asserted under the law. In many ways, it is a model piece of whistleblower protection legislation.

One significant omission from the CORE Act, however, is language amending the OSH Act or otherwise granting meaningful protections to whistleblowers who report workplace health and safety concerns related to COVID-19. Thus, nothing in the bill purports to protect an individual who refuses to come to work, or opposes her employer’s practices, because her employer has failed to take sufficient steps to mitigate COVID-19-related risk to employee health. In most of the country, employees in that situation are left with the OSH Act as their primary recourse for protection against retaliation.

Given the clear deficiencies in the OSH Act’s protections of whistleblowers concerned about workplace safety, whistleblower advocacy organizations like the Project on Government Oversight (“POGO”) have pushed for Congress to pass legislation that would, among other things, “prohibit retaliation against essential workers making disclosures related to worker or public health and safety during the pandemic.” On June 15, 2020, in response to calls from groups like POGO, Senator Kamala Harris and Representatives Jackie Speier and Jamie Raskin introduced the COVID-19 Whistleblower Protection Actto expand the whistleblower protections of the CORE Act.

Protecting Whistleblowers at the Local Level

Given the lack of federal action to address this problem, some municipalities have passed legislation specifically designed to protect employees who report COVID-19-related workplace safety concerns. For example, Mayor Kenney of Philadelphia recently signed into law Bill No. 200328, which requires employers to “comply with all aspects of public health orders addressing safe workplace practices to mitigate risks” related to COVID-19. The bill further states that “[n]o employer shall take any adverse employment or other action against an employee” who refuses to work in conditions that do not comply with public safety guidelines, and that “no employer shall take any adverse employment or other action against any employee for making a protected disclosure.” A “protected disclosure” is defined as a “good faith communication” disclosing information “that may evidence a violation of a public health order that may significantly threaten the health or safety of employees or the public, if the disclosure or intention to disclose was made for the purpose of remedying such violation.” The legislation includes a private right of action and permits awards to successful litigants including reinstatement, back pay, compensatory damages, and liquidated damages “of $100 to $1000 on behalf of the City for each day in which a violation occurs.”

In late May, the City of Chicago enacted a bill that contained slightly narrower but still powerful protections. In the bill, the City of Chicago prohibited employers from retaliating against employees for complying with public health orders relating to COVID-19 issued by the City or the State or for following COVID-19-related quarantine instructions from a treating health care provider. The protections extend to employees who are caring for an individual subject to such a quarantine. The bill includes a remarkable damages provision entitling successful claimants to liquidated damages “equal to three times the full amount of wages that would have been owed had the retaliatory action not taken place.”

These actions by municipalities are meaningful and offer critical protections to citizens living in those cities. At the same time, the need for this local legislation highlights the glaring absence of meaningful protections for workers in the rest of the country. It seems that every week we hear more horror stories about conditions in which workers are forced to work during this pandemic, lest they risk losing their jobs in the midst of a devastating economic downturn. The weaknesses in the OSH Act and the absence of even proposed federal legislation that would fill this critical gap in protection is a moral failure.

Copyright Katz, Marshall & Banks, LLP

For more on COVID-19 related whistleblowing, see the National Law Review Coronavirus News section.

DHS Rules Effective August 2020 Will Push Asylum Seekers Further into Poverty and Marginalization

In late June 2020, the Department of Homeland Security (DHS) announced two regulatory changes intended to deprive asylum applicants of the ability to work lawfully in the United States while they await the adjudication of their asylum applications.  By increasing the obstacles asylum seekers overcome to obtain an Employment Authorization Document, commonly known as a “work permit,” the new rules endanger the health and safety of asylum seekers and their families.

The first rule change, effective August 21, 2020, eliminates the requirement that USCIS must process employment authorization applications within 30 days of receiving the application.  This rule change allows USCIS to adjudicate work permit applications for an indeterminate period of time, which will inevitably result in delays.  The government claims this move will deter immigrants from filing “frivolous, fraudulent, or otherwise non-meritorious [asylum] claims.”  But the rule change is more likely to force asylum seekers further into poverty and informal economies, thereby making it more difficult for them to meet their basic needs.

The second rule change, effective August 25, 2020, severely restricts eligibility for work permits while simultaneously increasing the waiting time for work permits.  This too will have dire consequences for asylum seekers struggling to survive while their asylum applications remain pending.  The new measures mandate the government to:

  1. substantially delay the issuance of work permits by more than doubling the waiting period to apply from 150 days to 365 days;
  2. bar asylum seekers from receiving a work permit if they attempt to enter the United States without inspection on or after August 25, 2020, unless they qualify for very limited exceptions;
  3. deny employment authorization for asylum seekers who file their asylum application after the one-year filing deadline, unless granted an exception;
  4. prohibit employment authorization for applicants who have been convicted of certain crimes or who are “believed” to have committed a serious non-political crime outside the United States;
  5. deny employment authorization applications if the underlying asylum application has experienced “unresolved applicant-caused delays,” such as a request to amend or supplement the asylum application or if the application is being transferred to a different asylum office due to a change in the applicant’s address;
  6. automatically terminate an asylum seeker’s work permit without provision for renewal if an immigration judge denies the asylum case and the applicant does not appeal to the Board of Immigration Appeals (BIA) within 30 days, or if the applicant does appeal but the BIA denies the appeal; and
  7. limit the employment authorization validity period to a maximum of two years.

The effects of these new directives will be devastating. Currently, the inability to work lawfully for at least six months after seeking asylum often leaves applicants homeless, hungry, and without access to health care.  Because federal law does not provide support such as income, housing, or food assistance to asylum applicants, dramatically increasing the waiting period for a work permit will exacerbate the conditions of poverty in which many asylum applicants find themselves.  Without employment authorization, asylum seekers cannot obtain health insurance under the Affordable Care Act, and often cannot apply for a driver’s license or benefit from public assistance programs that offer safe housing and access to food.  Federal law permits states to provide state-funded benefits to asylum seekers, but only about half of the states have extended benefits to that population.   Even when states do provide some public benefits to asylum applicants, it is often only for children, the elderly, or asylum seekers with specific health conditions.

Given these consequences, pro bono attorneys representing asylum seekers who are eligible to apply for a new work permit or to renew an existing work permit now should consider filing employment authorization applications before August 21, when the first of these rules goes into effect.

 

© 2020 Proskauer Rose LLP.

ARTICLE BY Erin M. Meyer and Angela Gichinga at Proskauer Rose LLP.
For more on the topic, see the National Law Review Immigration Law section.

Severance: To Pay or Not To Pay

As the economic downturn from the COVID-19 pandemic continues to impact businesses throughout the United States, many employers face the prospect of implementing reductions in force or other employee terminations. Common questions include whether employers are legally obligated to pay severance, whether offering severance is advisable in the absence of a requirement to do so, and how much to offer. As explained below, severance payments are generally optional and can be used by employers to achieve a number of important goals, including risk mitigation and litigation avoidance.

Are Employers Required to Pay Severance?

As of this writing, no federal or state law obligates employers to pay severance to employees upon termination. Under the federal Worker Adjustment and Retraining Notification (“WARN”) Act and some state equivalents, employers may be required to pay terminated employees wages and benefits for a certain period if they fail to provide adequate notice to those employees as part of a qualifying mass layoff or plant closing. However, these payments under the WARN Act are penalties for non-compliance with the notice requirement rather than true severance and, moreover, can easily be avoided by providing the required notice.

New Jersey will become the first state in the nation to require employers to pay severance in certain circumstances when amendments to its WARN Act equivalent become effective. As part of a series of employer-unfriendly laws enacted in January 2020, New Jersey will require large employers—even those who comply with WARN notice requirements—to pay one week of severance for each full year of service to employees who are terminated as part of a qualifying mass layoff or plant closing. Employers who fail to provide adequate notice must pay an additional four weeks as a penalty. Fortunately, New Jersey has delayed the effective date of this new severance requirement to 90 days after termination of the COVID-19-related state of emergency.

Although no law currently requires the payment of severance, an employer may legally obligate itself to provide severance in a number of scenarios, including:

  • An employment agreement, especially for an executive, may guarantee some amount of severance in the event of a termination without cause.

  • A company policy, whether contained in an employee handbook or not, may provide for severance for employees who are terminated through no fault of their own.

  • A collective bargaining agreement may contain a severance guarantee.

  • Federal, state, and local anti-discrimination laws may compel an employer to offer severance to similarly situated employees in order to avoid a disparate treatment claim.

A practice of paying severance may be viewed under some circumstances to create a plan under the federal Employee Retirement Income Security Act (“ERISA”), with attendant requirements.

Should an Employer Offer Severance?

Absent a requirement or obligation to pay severance, an employer may nonetheless choose to offer severance in order to avoid claims or litigation, to obtain other benefits, or as a matter of goodwill. Indeed, whenever an employer offers severance, the offer should be conditioned upon the employee’s signing a general release of claims against the employer, affiliated entities, and associated personnel. This is true whether there is a specific concern about a claim or lawsuit—for example, where the terminated employee has previously complained about alleged discrimination—or not. Note that certain claims and rights cannot be released by an employee even in exchange for severance, such as claims for unemployment and worker’s compensation and the right to file a discrimination charge with a government enforcement agency.

Employers can also use severance to obtain strategic benefits from terminated employees beyond the release of claims, including confidentiality and restrictive covenants such as non-competition, non-solicitation, and non-disparagement provisions. In some situations, employers may wish to include other provisions as part of the exchange, such as a requirement that terminated employees cooperate with post-termination transition work or be available as a witness for pending or anticipated litigation.

How Much Severance to Offer?

Unless there is a preexisting requirement, policy, or plan to pay severance in a specified amount, the amount of severance to offer is entirely up to the employer. The amount should be sufficient “consideration” to support the employee’s release of valuable rights/ claims; however, there is no minimum threshold or magic number. Ultimately, the right amount of severance is a function of how much the employer is willing to pay and how little the terminated employee is willing to accept in exchange for signing an agreement containing a general release and any other provisions desired by the employer.

A good starting point—though by no means a requirement or standard—is one week of base salary for every year of service. Using a formula to determine severance amounts based on tenure or some other objective criteria helps insulate an employer from allegations of discrimination or unfairness, especially in the context of a group termination. Still, an employer is generally free to adjust the amount of severance to address individual situations.

Severance can be paid in a single lump sum or in installments over time, within certain limitations under the tax code. Employers should note that severance pay will likely be deemed to be W-2 wages by the IRS and state tax authorities, thus requiring employers to withhold employee payroll taxes and to pay employer payroll taxes. In addition, receipt of severance may impact a terminated employee’s eligibility for unemployment insurance benefits.

There are also a variety of other items that can supplement severance pay and may help achieve the employer’s ultimate goal—getting an employee to give a general release or agree to other conditions. Perhaps the most common is subsidized health insurance continuation coverage, in which the employer makes up the difference between the cost for the terminated employee under COBRA and the rate paid by active employees. Other, non-monetary supplements include job placement assistance, reference letters and more.

Takeaways for Employers

Severance is a powerful tool that employers can use to protect against lawsuits, legal fees, unfair competition, and a host of other undesirable situations. It is critical that any offer of severance, whether contained in an agreement/policy or made in conjunction with a termination, include, at a minimum, a requirement that the terminated employee provide a general release of claims. Finally, severance agreements and policies require the input of experienced legal counsel. There are many procedural requirements to ensure that releases and related agreements are fully enforceable, and these requirements continue to evolve.

© Copyright 2020 Sills Cummis & Gross P.C.

For more employee termination considerations see the National Law Review Labor & Employment law section.

Striking for Black Lives While Striking a Balance Between Business Needs and Employee Concerns

Plans are underway in multiple cities across the country for employees to participate in a Strike for Black Lives on Monday, July 20. The initiative encompasses the efforts of Black Lives Matter, the Movement 4 Black Lives, and a union-organizing effort by the Service Employees International Union. Strike for Black Lives encourages employees to “rise up for Black Lives” by walking off their jobs to march; and for those who can’t march, to take an “8:46 Pledge” in recognition of the death of George Floyd. The 8:46 Pledge asks supporters to take 8 minutes and 46 seconds at noon on July 20 to either take a knee, walk off the job, or observe a moment of silence.

Challenged by the threats of COVID-19, economic uncertainty, and now striking employees, employers should be prepared. As a reminder, the National Labor Relations Act (NLRA), which governs both union and non-union workplaces, protects most private sector employees who engage in concerted, protected activities to object to working conditions or terms of employment. On the other hand, employees who miss work without a good reason or for one’s own personal grievances may be subject to companies’ regular policies. Regardless, it is prudent for employers to proceed with caution in taking action against employees who join the Strike for Black Lives. If you have questions or doubts, consult with counsel.

Meanwhile, the Strike for Black Lives and similar events present opportunities for businesses to bolster their commitments to diversity and inclusion beyond standard statements of support. A recent Harvard Business Review article outlines recommendations for employers standing against racism. Others suggest allowing time off on short notice for last-minute marches and demonstrations. Showing flexibility in the application of company policies reflects a willingness to identify with employees’ concerns and reinforces a business’s own support for racial justice.

Although the convergence of extraordinary events in 2020 presents challenges for employers, in the words of John Adams, “Every challenge is an opportunity in disguise.”

© 2020 BARNES & THORNBURG LLP

For more on Black Lives Matter, see the National Law Review Civil Rights law section.

Building a Successful Law Firm—Without an Office

Rent is one of the largest expenses for law firms, sometimes taking up as much as 10 percent of their gross revenue. Too, it’s not uncommon for workers in large cities to have hour-plus commutes to their offices. The majority of today’s clients are more interested in efficiency and reasonable prices than how glamorous their lawyer’s office is. As a result, firms are choosing another way to work: virtual offices.

Marcia Watson Wasserman, Founder and President of Comprehensive Management Solutions, Inc., serves as a consulting COO for boutique and mid-sized law firms, helping numerous lawyers develop and sustain virtual offices. She joined the Law Firm Marketing Catalyst podcast to share her expertise and advice for lawyers considering moving toward virtual work.

Know who you’re working with

With a virtual office, you can’t pop into a colleague’s office or bump into them in the hallway. You won’t see what they’re doing on a daily basis, so you need to trust that they share the same goals, work ethic and commitment to firm culture as you. Marcia finds that people who have worked together at a brick-and-mortar firm before going virtual tend to work best, because an in-person relationship and sense of trust is already established. If you’re going virtual, find colleagues you already know personally, or at the very least, spend plenty of in-person time with them before committing to anything.

Understand your tech tools

 It’s impossible to have a virtual firm without the help of cloud-based technology tools. To have a successful virtual firm, everyone must be an expert on those tools. Law firms are notorious for buying software, then failing to learn how to use it—that won’t fly with a virtual firm. You need remote systems and procedures that streamline your practice and benefit your clients, and everyone must be comfortable using them. At a minimum, you’ll have to invest both money and training time in document management software, video conferencing software, client portals for paying bills, collaboration tools and, of course, encryption and data security tools.

Cultivate communication

How to delegate work, how to offer feedback, how to manage work among teams, when and how to have meetings—these questions are equally important at virtual or brick-and-mortar firms. But at virtual firms, it becomes even more critical that you discuss them openly and have communications systems in place. When communication is only happening by email, it can easily break down. Video conferencing, phone calls and planned communication are the antidote to this problem. Virtual connection also needs to be backed up with in-person events like retreats and social gatherings, at least annually. Maintaining communication at a virtual firm isn’t just important for client work, it’s also crucial to maintain firm culture.

Working from home sounds great, but it’s not for everyone. Some people get lonely working remotely. Others get distracted or they lack the motivation to work if they’re not in an office. Just like lawyers, support staff must have the right personality and skillset to work virtually. Another element to consider with support staff is wage and hour law in your location. Most support staff are non-exempt, and you have to consider supervision, insurance and the myriad of issues that arise when you have staff working remotely. Management issues don’t go away when support staff is out of sight.

Take advantage of time to network

Virtual work doesn’t mean staying home staring at your computer all day. The majority of work might be done from your home office, but networking can still happen in person. Join organizations, go to meetings and attend events to stay connected to your profession and your colleagues. Virtual work also offers more flexibility to meet with clients and attend events important to their industry. You’ll get to know your clients at a deeper level, which they’ll appreciate, and it will get you out of your work-from-home routine—a win for everyone.

If you can’t go fully virtual, start small

Not every firm is suited to virtual work, but many firms can use some of its elements to their advantage. Especially in large cities, more firms are using co-working spaces or opening small satellite offices that are more convenient for lawyers to get to. With more attorneys working outside of the main office a few days a week, the next logical step for some firms is to encourage office sharing. It’s a huge cultural shift for partners to share an office, but it can offer tremendous space and cost savings, and this concept typically doesn’t faze young associates.

© 2020 Berbay Marketing & Public Relations

For more on running a law firm, see the National Law Review Law Office Management section.