Category: Labor & Employment

Temperature Checks: Three Things to Know Before Screening Employees and Customers

As businesses begin the calculated process of re-opening their doors to employees and customers, many are considering implementing temperature checks to monitor for at least one known COVID-19 symptom – the fever.

Beyond nailing down the logistics of temperature checks (e.g., who will perform them, has that person been trained, do employees need to be paid while waiting in line, how will social distancing be maintained, etc.) there are several significant legal considerations that should be evaluated before implementation.

The Illinois Biometric Privacy Act

Some temperature screening devices utilize facial-recognition technology to quickly identify those with fever so that they can be promptly tracked down and removed from the facility. While these systems provide logistical advantages, especially to large employers and retailers, they likely implicate provisions of the Illinois Biometric Privacy Act (BIPA) which can lead to costly litigation and result in stiff penalties for anyone who violates the statute, even unwittingly.

According to BIPA, businesses utilizing this type of facial-recognition technology must obtain advance, written consent from the individuals to be scanned, and must also maintain a publicly available policy that specifies information regarding the collection, use, storage, and destruction of individuals’ biometric information. And, again, these policies and consents must be executed and implemented before temperature screenings begin. It is, therefore, critical to determine whether your temperature screening devices perform facial recognition scans or capture other biometric information.

Confidentiality of Employee Information

Employers screening employee temperatures must also remember they are conducting a “medical examination,” as defined by the Equal Employment Opportunity Commission (EEOC) and would be wise to adhere to the EEOC’s guidance on the issue. This means information collected about employees’ temperature, such as the temperature readings themselves, or the fact that an employee had or has a fever, must be treated as confidential medication information and maintained in a confidential file separate from an employee’s personnel file. Employers should also take care to not divulge the identity of any employee sent home with fever, absent consent from the employee to share that information with other personnel, or a strict need-to-know among involved supervisor(s) or members of human resources.

The California Consumer Privacy Act

California’s sweeping new privacy law, the California Consumer Privacy Act (CCPA), contains broad protection of consumers’ “personal information,” and requires businesses subject to the statute to, among other things, notify consumers when their personal information is being collected. Though body temperature is not explicitly mentioned in the statute, the definition of “personal information” is broad, and includes information that “identifies, relates to, describes, is capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer …” It includes biometric information. Whether an individual’s temperature constitutes personal information is up for some debate, but debates often lead to costly litigation, and it is easy enough to amend CCPA notices to include temperature until that debate is resolved in an effort to avoid litigation altogether.

So, if a business is subject to the CCPA and intends to collect employee or customer temperatures (whether or not with the use of biometric technology), it should consider updating its CCPA notices to include “temperature” (and, if applicable, scans of face geometry) to the list of personal information collected.

© 2020 Much Shelist, P.C.

For more employer COVID-19 guidance, see the National Law Review Coronavirus News section.

CDC’s Detailed Guidance to Reopen Businesses

The Center for Disease Control (“CDC”) has issued 60 pages of detailed guidance to reopen businesses, health care facilities and providers, schools, transit, and other industries. This guidance also provides information regarding testing and data to assist with exposure and risk concerns for those industries. The following is an overview of the topics addressed in the newly released guidance.

  • High Risk Employees: Employers with workers at high risk are recommended that they self-identify and employers should avoid making unnecessary medical inquiries. Employers are encouraged to offer options to telework if possible, or duties that minimize their contact with customers and other employees.
  • Restaurants and Bars: Restaurants and bars may reopen utilizing social distancing and reduced capacity. The CDC also recommends formal policies in place to enforce proper hygiene, including the use of cloth facemasks and encourage employees to stay at home if ill. Employers are advised to follow applicable OSHA guidance as well.
  • Surveillance Systems: The CDC sets forth sample surveillance systems to assist with capturing all parameters of the pandemic, including testing, contract tracing and other guidance regarding limiting exposure. This guidance offers details for local and state health departments related to testing efforts and best practices to assist with controlling the spread of the disease and gating criteria.
  • Schools: The CDC recommends that schools remain closed and continue virtual learning. Schools may slowly reopen pursuant to the reopening guidelines, including recommendations for spacing students six feet apart and staggering lunch periods, along with increased social distancing for students and staff. If an individual is diagnosed with COVID-19 schools may consider closing for a short time (1-2 days) for cleaning and disinfection.
  • Summer Camps: At this time, the CDC recommends that summer camps provide services only to children of essential workers and those who live in local geographical area.
  • Child Care: Child care programs should be gearing up to reopen and the guidance sets forth interim guidance to assist with the gradual scale up for operations. Step one restricts daycares to children of essential workers; step two expands daycare services to all children with enhanced social distancing measures; Step three remaining open for all children with social distancing measures.
  • Mass Transit: Mass transit is recommended to consider revising its routes based on local virus spread and advised to coordinate with local health officials.

The list above is not exhaustive, and the latest guidance provides roadmaps for businesses in various industries as they navigate this new normal. Specific to businesses, the CDC’s May 21, 2020 changes include:

  • Updated cleaning and disinfection guidance
  • Updated best practices for conducting social distancing
  • Updated strategies and recommendations that can be implemented now to respond to COVID-19

Related CDC links for businesses include:

For guidance on reopening within Wisconsin, review the Wisconsin Economic Development Corporation’s (WEDC) Reopen Guidelines linked here. WEDC offered general guidelines as well as customized guidance for each industry.

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

For more on business reopening, see the National Law Review Coronavirus News section.

Michigan Ramps Up Workplace Safety Regulations and Enforcement Powers Under New Executive Order

Gov. Whitmer released detailed new workplace safety regulations on Monday, May 18, 2020 through Executive Order 2020-91 (Order). The Order also provides the State of Michigan with enhanced enforcement capabilities and greater consequences for employers who disregard the rules. The Order does not identify an expiration date for the new workplace rules.

New Workplace Safety Rules

The Order sets out 17 general workplace safety rules that apply to all employers who are conducting in-person operations during the coronavirus pandemic, pursuant to Executive Order 2020-92. While some of these workplace safety rules are restated from previous executive orders, others – such as the requirement that employers designate one or more workplace supervisors to oversee COVID-19 control strategies – are new. New rules include mandated COVID-19 employee training and the development of a daily entry self-screening protocol for all employers.

In addition to the general workplace safety rules, the Order identifies numerous industry-specific workplace safety rules to combat the spread of COVID-19. Industries that must comply with these specific rules are: employers whose work is performed outdoors; construction; manufacturing; research laboratories (excluding labs that perform diagnostic testing); retail stores that are open for in person sales; offices; and restaurants and bars.

Enhanced Enforcement Powers

Previously, employers who failed to follow COVID-19 workplace safety rules were subject to a misdemeanor punishable by up to a $500 fine and/or 90 days in jail. The Order now provides two new routes for enforcement. First, the workplace safety rules are given the force and effect of regulations adopted by the state agencies that oversee workplace health and safety. Such agencies are given full authority to enforce the rules, and any challenges to penalties must move through the agencies’ administrative appeals process. Second, the Order states that violations of the workplace safety rules are also violations of the Michigan Occupational Health and Safety Act (MIOSHA). As a result, Michigan’s Occupational Safety and Health Administration will have the authority to conduct investigations into violations, issue penalties and distribute cease operation orders.

In addition, because the Order mandates employee training on how to report unsafe working conditions, employers should anticipate the possibility of such internal reports or MIOSHA investigations. Employers should also be mindful not to retaliate against employees who file such complaints.

© 2020 Varnum LLP

For more on worker safety measures in states and federally, see the National Law Review Labor & Employment Law section.

To Reverify or Not: Form I-9 and Lawful Permanent Residents

On Friday, May 15, the U.S. Department of Homeland Security (DHS) issued a notice clarifying to employers that they cannot reverify Lawful Permanent Residents (LPRs) who presented evidence of permanent residence status that was unexpired at the time of the employee’s initial Form I-9, Employment Eligibility Verification, regardless of later expiration. While employers were never required to reverify LPRs, there has long lacked specific instruction on this, leading many involved in human resources across Pennsylvania and New Jersey to conduct reverifications of LPRs in violation of federal law.

What is Form I-9?

Form I-9, Employment Eligibility Verification (“Form I-9”), is used to:

verify the identity and employment authorization of individuals hired for employment in the United States.” All employers in the United States must are required to implement procedures for the use of Form I-9 that ensure its proper completion for each individual that is hired for employment in the United States—citizens and noncitizens alike.

Federal law requires employers to “allow employees to choose which document(s) they will present from the Lists of Acceptable Documents” that is included with Form I-9. As the DHS M-274, Handbook for Employers, notes, in “Section 1, an LPR may choose to present a List A document (such as Form I-551, Permanent Resident Card, commonly referred to as a Green Card) or a List B and C document combination (such as a state-issued driver’s license and unrestricted Social Security card).”

LPRs are issued a Form I-551, Permanent Resident Card (LPR Card) as evidence of permanent resident status. If an individual is an LPR and presents a valid LPR Card when completing Form I-9, the LPR Card is deemed a sufficient “List A” document, thereby rendering successful the employer’s verification of the individual’s identity and ability to work in the United States. An employee need not present any further evidence. Acceptable LPR Cards include:

  • Those issued from January 1977 to August 1989 that have no expiration date;
  • Currently unexpired, but with 10-year expiration dates; and
  • Currently unexpired, but with 2-year expiration dates.

To Reverify or Not to Reverify?

The DHS notice informs that employers who successfully complete the Form I-9 verification process with an LPR Card that either did not have an expiration date or was a 10- or 2-year LPR Card that was unexpired at the time of verification must not seek to reverify the employee in the future even if the LPR Card later expires.

However, when an individual that is an LPR presents the following to an employer during the Form I-9 verification process, it is necessary to reverify:

  • Expired LPR Card and Form I-797, Notice of Action (which is issued when an individual applies to renew an LPR Card), that indicates the LPR Card’s validity has been extended. Employers should consider these documents as acceptable “List C” evidence, requiring reverification at the end of the extension period. Note that the employee must still present a valid, unexpired “List B” document to satisfy the initial Form I-9 verification.
  • Form I-94 or Form I-94A, Arrival-Departure Record, containing an unexpired temporary I-551 stamp and a photograph of the individual. When presented, these documents are acceptable “List A” evidence. Employers must conduct a reverification no later than when the I-551 stamp expires, or one year after the issuance of Form I-94 or Form I-94A, Arrival-Departure Record, should the record not indicate an expiration date.
  • Current foreign passport with a photograph and either a temporary I-551 stamp or I-551 printed notation on a Machine-Readable Immigrant Visa. Additionally, if the current, foreign passport is, in the rare instance, endorsed with “CR-1,” rather than an I-551 stamp, the employer is reminded that the “CR-1” endorsement is the equivalent of an I-551 stamp. Employers must conduct a reverification when the I-551 stamp or I-551 printed notation on the Machine-Readable Immigrant Visa expires. If there is no expiration date listed, the reverification must occur no later than one year from the date that the I-551 was stamped or “CR-1” was endorsed in the foreign passport.

©2020 Norris McLaughlin P.A., All Rights Reserved

For more on employment verification, see the National Law Review Labor & Employment law section.

Temperature Screening: New Guidance From the CDC, FAQs, and Best Practices

With states beginning to ease stay-at-home orders, employers are formulating plans to return employees to the workplace. As part of this process, many employers are considering implementing regular employee temperature checks in an effort to keep employees safe. While this measure may have seemed unthinkable and fraught with risks even just a couple of months ago, we expect that health screenings, including temperature checks, will become increasingly prevalent in the workplace. In fact, just last week, the Centers for Disease Control and Prevention (“CDC”) issued guidance on how employers and businesses can safely conduct temperature checks. Key portions of that guidance are summarized below, along with a list of common questions and best practices employers should consider before requiring employees to undergo regular temperature checks.

1. Are employers required to screen employees’ temperatures before they enter the workplace?

The answer depends on the state(s) in which the employer operates.  Some states are now requiring employers to conduct regular temperature checks on employees.  For example, Colorado requires certain critical and noncritical businesses to conduct daily temperature checks and monitor employees’ symptoms, and employers with 50 or more employees at one location must implement stations for symptom screenings and temperature checks.  Other states such as Indiana require all employers to implement a COVID-19 response plan, which includes implementing a health screening process for employees that may include regular temperature checks.  Additionally, employers may be subject to different temperature check requirements based on industry.  For example, Washington requires construction contractors to screen all workers at the beginning of their shift by taking their temperature and asking them if they have symptoms.  Any worker found to have a temperature of 100.4 degrees or higher must be sent home.  That said, many states currently have no temperature check mandate, including–for now–Illinois (with limited exceptions such as certain health care and long-term care employees), giving many employers some flexibility to determine how best to screen employees for symptoms, if at all.  Employers should consult and keep a close eye on ever-changing state and local guidelines to determine if and when temperature checks are required.

2. Even if there is no state or local mandate, can employers still require employees to submit to routine on-site temperature checks as a condition of employment?

Yes, provided that temperature checks are administered safely, consistently and in a non-discriminatory manner.  The Equal Employment Opportunity Commission (“EEOC”) has issued guidance confirming that temperature checks are a permissible screening mechanism to use during the COVID-19 pandemic. However, to avoid discrimination claims, employers generally should not pick and choose who is subject to temperature screening unless it is part of a nondiscriminatory plan (e.g., screening only that portion of the workforce where social distancing measures may not be feasible, such as warehouses or manufacturing plants).  Note that if employers choose to screen every employee entering a facility, employers may need to conduct such checks on anyone entering the workplace–not just employees–to minimize the risk of discrimination claims and to reduce the risk of transmission.

3. What are the key CDC guidelines for conducting on-site temperature screenings?

The CDC outlines two options for on-site screenings. The first approach relies on barrier/partition controls and personal protective equipment (“PPE”) and the second approach relies exclusively on PPE.

Under the first approach, the screener stands behind a physical barrier, such as a glass or plastic window or partition.  Using disposable gloves, the screener checks the employee’s temperature by reaching around the partition or through the window.  It is critical that the screener’s face remain behind the barrier at all times during the screening.

Under the second approach, the screener uses a face mask, eye protection (goggles or disposable face shield that fully covers the front and sides of the face), disposable gloves and a gown (if physical contact with an employee is anticipated) when taking employees’ temperatures.

When conducting temperature checks on multiple employees, the screener should use a clean pair of gloves for each employee and ensure that the thermometer is thoroughly cleaned after each use.  If the screener is using a disposable or non-contact thermometer (i.e., non-contact infrared thermometers, tympanic thermometers, and thermal scanners) and he or she does not make physical contact with the employee, then the CDC states that the screener need not change his or her gloves after each check.

Under either approach, the CDC confirms that employees found to have a temperature of 100.4 degrees or higher should be sent home immediately and instructed to promptly contact their doctor.  Employers should follow up with employees who are sent home with additional information about any available benefits and return-to-work protocol.  The CDC further recommends that employees maintain social distancing when waiting for their turn to be screened, and to the extent possible, screening should take place before an employee enters the physical workplace.

The CDC guidance can be found here:  https://www.cdc.gov/coronavirus/2019-ncov/community/general-business-faq.html

4. How should the temperature screeners be selected and trained?

An obvious first choice for a screener is often a medical officer or nurse, if such an employee is available and on staff.  If not, employers should carefully select an appropriate screener, ensure that the individual is comfortable with the role, and consider providing such individual with additional compensation or hazard pay.  Alternatively, there are third-party vendors who now offer these types of services, though such vendors should be carefully vetted.  Finally, employers are even turning to robots or robotic arms to conduct screens in order to reduce the risk of exposure during the screening process.

No matter who is selected, screeners should be trained on how to safely complete temperature screens, the proper use and disposal of PPE, and maintaining employee privacy.  As a best practice, we recommend that employers retain a medical professional to train screeners on how to safely and effectively conduct a temperature check, or at a minimum, employers should consult a medical professional to provide and confirm such information.  We also recommend that screeners sign a document establishing the protocol, requiring confidentiality of employee medical information, and confirming that the individual has been informed of and consents to the risks of serving as a screener.

5. What kind of thermometer should be used?

As a practical matter, we strongly advise that employers use a disposable or no-contact thermometer to prevent the spread of the virus. In fact, without a disposable or contactless device, employers may want to consider abandoning temperature checks altogether (if doing so will not run afoul of state or local law) and instead rely on other screening measures.  The risk of inadvertently using a contaminated device may outweigh any potential benefits gained from implementing a screening protocol in the first place.

However, if an employer uses a sophisticated device, including robots, to screen employees’ temperatures, Illinois employers should be aware of yet another potential legal pitfall.  Some devices and robots rely on artificial intelligence, including in some cases, facial recognition capabilities.  Such equipment could implicate the Illinois Biometric Information Privacy Act (“BIPA”), which has strict notice, disclosure and consent requirements.  Employers should discuss these risks with counsel before using any such devices.

6. If employees are required to undergo a temperature screening before clocking into work, must the employer compensate them for that time?

In most cases, yes.  While the answer to this question may depend, in part, on state law, we generally recommend that employers compensate employees for any time spent waiting to be screened and participating in the screening process in order to comply with the Fair Labor Standards Act (“FLSA”) and state wage and hour laws.  Running afoul of these laws by not paying employees for otherwise compensable pre-shift activities can be much more costly in the long run than paying employees for the time spent in the screening process itself.

7. What are the privacy concerns related to temperature checks?

The Americans with Disabilities Act (“ADA”) requires employers to maintain the confidentiality of all information obtained through disability-related inquiries and medical examinations.  Temperature screening is a medical examination under the ADA. Accordingly, any information collected as part of the screening process must be treated as a confidential medical record and maintained separately from the employee’s personnel file.  It may be disclosed only in limited circumstances. Employers should also consider how to best protect the privacy of those employees who are found to have an elevated temperature and need to be sent home (e.g., allowing for an inconspicuous exit, private screening, drive-through screening, etc.).

8. What if an employee refuses to participate in on-site temperature checks?

As a general matter, employees can be required to undergo temperature checks as a condition of employment, and those who refuse to do so should be sent home.  Employers should communicate the requirements for temperature checks and the consequences for failing to cooperate in a clearly written notice or policy that is distributed to all employees in advance of the implementation of the screening protocol.  Employees who refuse to adhere to those requirements may be disciplined, provided that any such discipline is administered in a consistent and nondiscriminatory manner.  However, for a variety of reasons (including employee morale), employers should consider whether discipline is truly necessary.  The better option may be to simply send the employee home or deny them access to the workplace.  When in doubt, employers should consult counsel before implementing discipline.

9. Is fever alone a reliable indicator of COVID-19?

According to the medical community, no.  Unfortunately, an elevated temperature is not a definitive indicator of the illness, and an employee may be contagious even without a fever. For that reason, and as discussed further below, employers should consider implementing other screening mechanisms either in lieu of on-site temperature screening (if allowed under applicable law) or in addition to temperature screening.

10. If fever is not a reliable indicator of COVID-19, why are employers implementing temperature screening?

Employers are looking for concrete steps they can take to reduce the risk of exposure in the workplace.  Unlike most COVID-19 symptoms, body temperature can be objectively screened and verified.  While temperature screening will not effectively identify asymptomatic cases, it still has the ability to catch positive cases and help prevent a potential outbreak in the workplace.  In many instances, employers are implementing temperature screening in an attempt to alleviate employee anxiety.  Some employers are reporting that employees actually want to have temperature checks in place to know that their employer is taking meaningful, proactive steps to keep them safe.  In other words, temperature screening may be as much of an employee relations (and public relations) tool as it is a prevention mechanism. In weighing the decision to implement on-site screening, employers should consider whether employees will be comforted by the process of temperature checks or if it will instead stoke fear and panic.

11. How should employees be notified of on-site screening measures?

We recommend that employers provide employees with advance, written notice of temperature checks and any other screening measures.  The notice or policy statement should explain the basis and method for conducting the screening, the steps the employer is taking to protect employee safety and privacy, and the consequences for failing to comply.  To avoid a false sense of security, the notice should also make clear that just because someone does not have a fever does not necessarily mean that the person does not have the virus.  The notice should explain that many people who test positive for COVID-19 are asymptomatic, and that employees should continue to take appropriate precautions and self-monitor and report to the employer the presence of any other symptoms.

12. What are the alternatives to on-site temperature screening?

As discussed above, on-site temperature screening presents potential logistical and legal issues that may steer some employers away from taking such measures.  As an alternative to on-site temperature screening, many employers are instead considering and implementing some type of employee self-assessment or self-monitoring protocol.  This can be accomplished through completion of daily self-assessment and/or certification forms in which the employee is asked to self-report temperature, other symptoms, or potential exposure events.  Other employers are relying on a one-time policy document whereby employees acknowledge and agree that by reporting to work each day, they are certifying that they have no symptoms.  Some employers are even incorporating the daily certification into timekeeping software (without disclosing medical information).

According to the CDC, it is reasonable to ask employees to take their own temperature before arriving to work.  This helps reduce the risk that those who are experiencing symptoms of COVID-19 will expose others to the virus by traveling to or reporting to work.  Therefore, some employers may opt to have employees conduct their own temperature checks before arriving at work, which alleviates some of the logistical and legal concerns.  However, note that employers in some states, like California and Illinois, may need to foot the bill for supplying employees with thermometers needed to complete any such self-assessment.

Regardless of the approach taken, we believe that employers should implement some type of symptom screening mechanism, even if it is not an on-site temperature check. And if an employer does decide to conduct on-site temperature screening (or is required to do so by law), we believe temperature checks should be used in conjunction with other screening efforts such as requiring employees to identify other symptoms or potential exposure incidents.  In other words, temperature screening should be just one of many potential tools in the employer’s arsenal to combat COVID-19 in the workplace.

© 2020 Vedder Price

For more on the return to work after COVID-19 process, see the National Law Review Coronavirus News legal section.

COVID-19 Layoff or Pretext for Age Discrimination?

The recent, unprecedented changes to our country and its workforce due to the COVID-19 pandemic have upended the lives of millions. The economic fallout continues and in many instances, employers simply have no choice but to lay off large swaths of their employees due to the lack of business/revenue. And these employers have legitimate reasons for doing so and view this as a heart-wrenching but necessary step.

At the same time, a small subset of employers may decide that, even though mass layoffs are not necessary, they will still lay off certain, older employees. In this scenario, there is no legitimate business need driving the termination but an opportunity to let go of older employees who often have higher salaries. Or the employer is concerned that older employees may trigger additional costs in terms of insurance or paid time off because of their susceptibility to COVID-19. Similarly, the employer may hold stereotypical views that older employees are less likely to function well in a virtual/remote work setting that requires technological skills.

As such, the employer’s claim that it had to lay off the older employee due to the pandemic could be a pretext for age discrimination. The question is, how do courts make this call? The answer to this question centers on how an employee can prove that the employer’s purported reasons were just a mask for illegal behavior.

Signs That The Layoff May Be Age Discrimination

Each case will be reviewed based on its own facts and merits, so no “one size fits all” approach can apply when analyzing age discrimination and pretext claims. In the context of COVID-19 layoffs, there are some red flags that may suggest that the employer is targeting an employee(s) because of their age rather than a legitimate business need to reduce the workforce. These red flags include:

  • The company institutes a relatively small-scale layoff, which includes a number of more experienced, older, and higher paid employees
  • Younger, less experienced, and less expensive employees are retained and in some cases take over the work of the departed, older workers
  • Comments by decision-makers reference (or had referenced) the experience level, age, higher salaries, nearness to retirement, etc. of the older employees
  • The employer hires new, younger employees within a relatively short period of time after the older employees are let go

Many companies will be required to provide laid off employees with specific, written information about the employees it chose to lay off, including their job titles and ages. This is helpful information to assess whether age discrimination may have motivated the termination decision. But often it will be necessary to dig deeper into the employer’s data about the laid off employees to see if a correlation between the termination decision and their ages emerges.

Legal Standards For Age Discrimination And Pretext Claims

The key federal law that prohibits age discrimination in employment is aptly named the Age Discrimination in Employment Act (ADEA). It prevents an employer from discharging or otherwise “[discriminating] against any individual… because of such individual’s age.” 29 U.S.C. § 623(a).

To win, a plaintiff “must prove by a preponderance of the evidence that age was the ‘but-for’ cause of the challenged employer decision.” Gross v. FBL Fin. Servs., Inc., 557 U.S. 167, 177-178 (2009). Circumstantial evidence, as opposed to direct evidence of discrimination (which is less frequently available to plaintiffs), is analyzed under a three-part test created by the Supreme Court in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973).  Note that the Supreme Court clarified that federal employees have a less onerous legal burden to prove in age discrimination claims as compared to private sector employees. Babb v. Wilkie, No. 18-882 (2020).

The McDonnell Douglas framework for an ADEA claim for layoff due to age discrimination is as follows:

STEP 1/prima facie case (burden on plaintiff)

  • They belong to a protected class (older than 40 years old)
  • They were qualified for the job and performing in accordance with the expectations of their employer
  • Employer terminated their employment
  • The employer replaced plaintiff with an individual who was comparably qualified to the plaintiff, but substantially younger, or that they were laid off under circumstances that give rise to an inference of age discrimination

STEP 2 (burden on defendant)

  • Employer must produce evidence that its actions were the result of legitimate and non-discriminatory reasons

STEP 3 (burden on plaintiff)

  • Employee must prove that the non-discriminatory reason(s) offered by the employer in Step 2 were not true reasons, but were a pretext for discrimination based on age.

The Supreme Court held that “it is permissible for the trier of fact to infer the ultimate fact of discrimination from the falsity of the employer’s explanation.” Reeves v. Sanderson Plumbing Prods., 530 U.S. 133, 146-7 (2000). Also, Reeves allows the trier of fact to consider the evidence used to establish a prima facie case of discrimination (first prong of McDonnell Douglas) when they are deciding the final prong of McDonnell Douglas framework. How the employer treats similarly situated (but younger) employees plays a key role in age discrimination cases.

How Can Older Employees Protect Their Rights?

For employees in the private sector, a charge of age discrimination must be filed with the Equal Employment Opportunity Commission (EEOC) within 180 days of the discriminatory act (that is the notice of the layoff). The 180 calendar day filing deadline is extended to 300 calendar days if a state or local agency enforces a state or local law that prohibits employment discrimination on the same basis.

For age discrimination, however, the filing deadline is only extended to 300 days if there is a state law prohibiting age discrimination in employment and a state agency or authority enforcing that law. The deadline is not extended if only a local law prohibits age discrimination.

Note: federal employees have a different charge filing process. Visit www.eeoc.gov for more information.

 

© 2020 Zuckerman Law

ARTICLE BY Eric Bachman of Zuckerman Law.
For more on discrimination in hiring and firing, see the National Law Review Labor & Employment law section.

New York City Ban on Pre-Employment Drug Testing Takes Effect May 10, 2020

Starting May 10, 2020, New York City employers may not require prospective employees to submit to testing for the presence of marijuana or tetrahydrocannabinols (or THC, the main psychoactive component of marijuana) in an individual’s system as a condition of employment. Currently, neither New York state nor New York City have any general ban on drug testing during employment.

The long-awaited ban, which was passed in April 2019 and is included as an amendment to the New York City Human Rights Law, outlines several exceptions based on the employer’s industry and the prospective position. These include, for example, police or peace officers, positions requiring a commercial driver’s license or those governed by Department of Transportation regulations, positions subject to testing under federal or state regulations or grant conditions, and positions requiring the supervision or care of children, medical patients or vulnerable persons. The new law also exempts positions that will be subject to a collective bargaining agreement that already addresses pre-employment drug testing for those prospective employees. The amendment also includes an exception for positions with the potential to impact the health or safety of employees or the public as identified by the New York City Commission.

In March 2020, the New York City Human Rights Commission issued proposed rules, which include proposed categories for safety sensitive roles, including positions that require regularly working on an active construction site, or power or gas utility lines, positions regularly operating heavy machinery, positions in which an employee operates a motor vehicle on an approximately daily basis, or positions in which impairment would pose an immediate risk of death or serious physical harm to the employee or others. The public comment period for the proposed rules has passed, but the expected finalizations of these rules has been delayed as a result of the COVID-19 pandemic.

The amendment bans only pre-employment testing for marijuana; it does not address testing for any other substance or mid-employment marijuana testing. However, all New York state employers should be mindful of the potential application of the New York medical marijuana law and applicable employment-related protections, including its relation to disability protections and accommodations under antidiscrimination laws.

Failure to adhere to the new ban on pre-employment screening can result in civil penalties up to $250,000 as well as consequential and punitive damages and attorneys’ fees.

Employers in New York City should review their existing drug-testing policies to confirm that they are in compliance with the new law, as well as contact their testing vendors to ensure any pre-employment tests comply with the new law.

 

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

ARTICLE BY Nicole A. Truso of Faegre Drinker, legal clerk Kerry C. Zaroogian contributed.
For more on drug testing, see the National Law Review Labor & Employment Law section.

Court Rules That Whistleblower Must Face Trial On Former Employer’s Claims

Life is not necessarily all skittles and beer for whistleblowers.  Sometimes, they are sued by the very companies on which they blew the whistle.  Such is the case in the ongoing case of Erhart v. Bofi Holding, Inc., 2020 U.S. Dist. LEXIS 57137.  Judge Cynthia Bashant limns the background facts as follows:

“Charles Erhart was an internal auditor for BofI Federal Bank. After Erhart discovered conduct he believed to be wrongful, he reported it to BofI’s principal regulator. BofI responded by allegedly defaming and terminating him. Erhart then filed this lawsuit for whistleblower retaliation under state and federal law. The next morning, The New York Times published an article summarizing the lawsuit’s allegations—causing BofI’s stock price to plummet. The Bank quickly commenced a countersuit against Erhart claiming he committed fraud, breached his duty of loyalty, and violated state and federal anti-hacking statutes. The Court consolidated BofI’s countersuit with Erhart’s whistleblower-retaliation action.”

In the cited decision, Judge Bashant grants in parts and denies in part Erhart’s and Bofi’s motions for summary adjudication.  The ruling is lengthy and tackles a variety of issues, some of which I hope to address in future posts.  Nonetheless, a key point for whistleblowers is that Judge Bashant is allowing Bofi’s claims against Erhart to proceed to trial, albeit on a limited basis.

When “Whistleblower” First Became Figurative

Recently, I endeavored to identify the first figurative use of the term “whistleblower” in a reported California opinion.  I was surprised that earliest case dates to the presidency of Ronald Reagan.  Interestingly, the Court addresses the very tension at the heart of Erhart:

“There is a great public interest in the truthful revelation of wrongdoing, and in protecting the ‘whistleblower’ from retaliation; there is very little public interest in protecting the source of false accusations of wrongdoing.”

Mitchell v. Superior Court, 37 Cal. 3d 268, 283, 690 P.2d 625, 634, 208 Cal. Rptr. 152, 161 (1984).  Many cases dating back to the mid 19th Century mention the blowing of whistles, but the references are to actual, not figurative, whistles.

© 2010-2020 Allen Matkins Leck Gamble Mallory & Natsis LLP

For more on whistleblowers, see the National Law Review Litigation & Trial Practice Section.

OSHA Issues New COVID-19 Alert to Restaurants & Beverage Vendors

On May 1, the Occupational Safety and Health Administration (OSHA) issued a new safety alert for restaurant and food and beverage businesses operating during the pandemic. In the alert, OSHA suggests that restaurants providing curbside and takeout service should reserve parking spaces near the front door for pickup, avoid handing food off directly when possible, and allow workers to wear masks.

OSHA also urged businesses to display signs detailing their services such as pickup instructions and hours; take “sensible social distancing” measures such as moving workstations or installing plexiglass partitions; provide alcohol-based hand rubs and a place to wash hands; train workers in proper hygiene practices and the use of workplace controls; and encourage workers to report safety and health concerns.

This alert is the latest in a series of industry-specific documents OSHA has issued offering recommendations on ways to protect workers and patrons during the COVID-19 pandemic.

The agency has made the tips available in a one-page poster employers can display in the workplace.

© 2020 Jones Walker LLP

For more reopening regulations, see the National Law Review Coronavirus News section.

What to Do Now With Your CARES Act PPP Loan

A Warning

Those who have obtained Paycheck Protection Program (PPP) loans (or have applied or been approved for such loans but not yet received the loan proceeds) have been warned by the U.S. federal government to make sure that they, in fact, qualify for the loans. Secretary Mnuchin exonerated lenders who processed the loans and warned that it is the borrowers themselves who sign the application and make the relevant certifications who face potential criminal action for false certifications. Borrowers have now been given a grace period until May 7, 2020, to repay loans they may have obtained “based on a misunderstanding or misapplication of the required certification standard.” This short — now less than one-week — period gives PPP loan borrowers very little time to act and is aggravated by the ambiguity of applicable regulatory and other guidance as discussed below.

Thinking About What to Do

Borrowers are, and should be, asking, “what do we do about our PPP loan?” They are doing so in a unique moment. Indeed, a former member of a Congressional oversight board following the last financial crisis opined in the Wall Street Journal: “[B]orrower beware! Businesses with flexibility should seriously consider to what extent accepting the terms of federal loans or other support may be a Faustian bargain. The ultimate cost may dramatically outweigh the temporary gain.” Understanding the issues that inform the answer to this question, unfortunately, involves some detailed analysis as discussed below.

Broad Loan Availability Initially Heralded and Broad CARES Act Approach

The signing into law of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)on March 27, 2020, was heralded as a critical response to the COVID-19 economic crisis. The PPP loan program was enacted to make $349 billion of loan funds broadly available to qualifying businesses so that those businesses could keep their employees employed. In fact, following enactment, the federal government repeatedly encouraged businesses to apply for (and lenders to quickly process) PPP loans. Even as late as April 15, 2020, Secretary Mnuchin announced that “[w]e want every eligible small business to participate and get the resources they need.” In order to broaden its reach, the CARES Act affirmatively took action to cut back eligibility restrictions in the existing Small Business Administration (SBA) loan program through which PPP loans are administered, including:

  • suspending the requirement that borrowers must not be able to obtain credit elsewhere;
  • repealing the requirement that liquid owners contribute capital alongside an SBA loan;
  • creating a presumption that loan applicants were adversely impacted by COVID-19; and
  • reducing the breadth of the complex affiliation rules.

The SBA itself even published guidance allowing borrowers to restructure their governance arrangements to qualify for a loan.

A Continuing Changing Landscape; Making a Decision to Keep a PPP Loan

Since the passage of the CARES Act, the landscape has continued to evolve — sometimes daily — with ongoing guidance from the SBA and Treasury, whether in the form of Interim Final Rules (immediately effective upon publication in the Federal Register without first soliciting public comment due to the emergency nature of the situation), FAQ guidance from the SBA with new questions and answers added frequently over the past month, or mere public statements by public officials. Through the end of April — just a month into the CARES Act — seven formal Interim Final Rules for the CARES Act have been issued and 12 updates to the SBA’s FAQs on the PPP have been published. It has been difficult to find clear guidance and sure footing, even before the most recent government warnings.

A Sudden Shift in Approach

On April 23, 2020, after significant press reporting and commentary on those participating in the PPP loans, the SBA and Treasury Secretary abruptly shifted course with the publication of a new FAQ (Question 31) stating that the certification each borrower makes in its application that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant” must be made “in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business” (emphasis supplied). As to specific examples where certification might raise questions or get a closer look, an April 23 FAQ highlighted large public companies and an April 24 Interim Final Rule highlighted Private Equity (PE) portfolio companies. On April 28, Secretary Mnuchin made public comments promising audits of all loan amounts over $2 million, and then — also on April 28 — the SBA updated its FAQs twice to highlight this new certification interpretation as also applicable to private companies and to formalize the $2 million audit threshold requirement. In other words, virtually all borrowers must be cognizant of the certification that they made in their loan application.

What Does the Certification Mean?

Unfortunately, there is no real guidance as to what this certification means. However, one thing is certain — this certification and the question of access to “other sources of liquidity” will be judged in retrospect. It is anyone’s guess how long the “look back” risk will exist. Our experience is that these kinds of after-the-fact examinations have a long life. In this respect, a borrower may legitimately ask how it knows if it has access to liquidity — must a public company try to test the capital markets; must a PE fund owner consider drawing down on undrawn commitments or fund level credit agreements to fund a highly distressed portfolio company; will VC-backed companies be judged poorly in this context if their investors have large amounts of so-called “dry powder” to invest; and will private business owners have to evaluate their own wealth, liquidity positions, and borrowing capacity? These are all questions that have no ready answer through current SBA rules or guidance. The fact that the CARES Act “suspended” the normal requirement that a borrower be unable to obtain credit elsewhere and repealed the requirement of liquid owners to contribute capital has simply not been reconciled with the SBA’s new scrutiny on available liquidity, as the Treasury and SBA have leaned hard into the statutory certification requirement that any loan request must be “necessary.” Borrowers and applicants would be excused from asking what it means for the SBA to require liquidity that is not “significantly detrimental to the business.” Does that mean “significantly detrimental” to the current business owners (whether public company stockholders, PE or VC fund investors, or the owners of private businesses themselves) in terms of dilution or the like, or does this important phrase instead mean just what it says — such alternative available liquidity is not “significantly detrimental to the business” itself (e.g., financing that the business cannot make “work“ for any real period of time and which damages the business as a going concern)? Again, the SBA and Treasury have provided no clear answers.

The Other Key Certification Issue:

As borrowers evaluate their options to return loans before the expiration of the safe harbor on May 7, 2020, they must also focus on compliance with the SBA “affiliation” rules. The affiliation rules are complex and directly impact the question of who may apply for a PPP loan. This is because the way in which the CARES Act defines eligible borrowers largely turns on the number of employees involved, and an applicant must generally (under applicable regulatory guidance and rules, but subject to certain waivers set forth in the CARES Act itself) apply the SBA’s affiliation rules to aggregate its own number of employees with that of all of its affiliates. Thus, the application of the SBA’s affiliation rules is critically important to an applicant’s ability to make another certification in each PPP loan application: that “the Applicant is eligible to receive a loan under the rules in effect at the time this application is submitted that have been issued by the Small Business Administration (SBA) implementing the Paycheck Protection Program ….” So, in addition to the question of necessity for the PPP loan and alternate sources of liquidity, borrowers must ensure that they have considered the application of the affiliation rules (unless otherwise waived) in deciding whether to keep SBA loans.

Who Is an Affiliate Under the CARES Act?

According to the SBA, affiliate status for purposes of determining the number of employees of a business concern for PPP loans works as follows:

  • “Concerns and entities are affiliates of each other when one controls or has the power to control the other, or a third party or parties controls or has the power to control both”;
  • “It does not matter whether control is exercised, so long as the power to control exists. Affiliation under any of the circumstances described [in 13 C.F.R. § 121.301(f)] is sufficient to establish affiliation” for applicants for the PPP; and
  • There are four general bases of affiliation that the SBA will consider when determining the size of an applicant: (1) affiliation based on ownership; (2) affiliation arising under stock options, convertible securities, and agreements to merge; (3) affiliation based on management; and (4) affiliation based on identity of interest.

As noted, these affiliation rules are both subtle and complex. Interestingly, even Congress did not seem to get the affiliation rules quite right in the CARES Act. In this regard, there are two SBA-related affiliation rules — rules set forth in 13 C.F.R. § 121.103 (Section 103) and rules set forth in 13 C.F.R. § 121.301 (Section 301). When Congress exempted certain business concerns from the affiliation rules for the PPP, it did so under the Section 103 rules. Yet, according to the SBA April 3 Interim Final Rule, it is, in fact, the Section 301 rules that govern affiliation for the PPP loan program (though the SBA explained that it would, consistent with the Congressional Section 103 waiver, also make that waiver applicable for Section 301).

Uncertainty in Application

As questions have arisen under these affiliation tests, borrowers who relied on them in submitting their application would be well advised to “double check” their analysis with appropriate counsel given the heightened scrutiny that will most certainly be applied in retrospective audits of PPP loan recipients. And, it is not just the application of the four bases of control that have given rise to questions of how the affiliation rules work, but the actual language of the CARES Act itself. In this regard, while the CARES Act clearly waives affiliation rules for “any business concern with not more than 500 employees that, as of the date on which the loan is disbursed, is assigned a North American Industry Classification System [(NAICS)] code beginning with 72,” the CARES Act itself has a separate and more expansive provision for NAICS code 72 companies allowing for more than 500 aggregate employees and which provides: “During the covered period, any business concern that employs not more than 500 employees per physical location of the business concern and that is assigned a North American Industry Classification System code beginning with 72 at the time of disbursal shall be eligible to receive a covered loan.” This seems to be clear and self-executing language. Indeed, both applicable House and Senate publicly available explanations of the CARES Act suggest as much, explaining that a qualifying borrower is “Any business concern that employs not more than 500 employees per physical location of the business concern and that is assigned a North American Industry Classification System code beginning with 72, for which the affiliation rules are waived” (emphasis supplied). But, nowhere has the SBA specifically addressed the question of how these two specific NAICS code 72 provisions of the CARES Act are to be applied in conjunction with one another. Even the SBA FAQs seem to intentionally avoid addressing this issue head-on, leaving borrowers at risk for after-the-fact second-guessing.

The Criminal Issue

Secretary Mnuchin referenced criminal liability for a reason. During the past two decades, for every major crisis this country has witnessed, from the Financial Crisis to Hurricane Katrina, high levels of fraud were identified and addressed post-crisis. From the experience gained in prior disasters, the Department of Justice and other enforcers are well aware that fraud may occur under the CARES Act as well. They almost certainly realize that a strong way to prevent such fraud is to take an early, aggressive stance against misconduct. We would predict that U.S. law enforcement will seek to make extreme examples of the individuals who exploited COVID-19-related government assistance improperly and precluded the assistance from helping those actually in need.

The underlying criminal issues relating to PPP loans are relatively straightforward. The loan application itself makes clear that applicants are required to state they qualify, and advises that there are criminal penalties for knowingly making false certifications. Each applicant, by signing the loan application, makes the following statements:
I further certify that the information provided in this application and the information provided in all supporting documents and forms is true and accurate in all material respects. I understand that knowingly making a false statement to obtain a guaranteed loan from SBA is punishable under the law, including under 18 USC 1001 and 3571 by imprisonment of not more than five years and/or a fine of up to $250,000; under 15 USC 645 by imprisonment of not more than two years and/or a fine of not more than $5,000; and, if submitted to a federally insured institution, under 18 USC 1014 by imprisonment of not more than thirty years and/or a fine of not more than $1,000,000.

This certification is essentially the same certification generally applicable to forms and information required by a bank or the government that involve applications for loans, grants or other financial assistance. The certification provides that if you knowingly mislead or lie on the application, you have committed a felony. However, the one completing such an application should endeavor in good faith to provide correct information. This means not simply guessing or blindly answering to expedite processing of the loan application or superficially making the certifications in question. In short, if you mislead in order to receive a PPP loan or lie to receive forgiveness, there is a material risk that the government will believe a felony has been committed.

As stated above, because of the intense pressure to protect the integrity of the PPP loan program and to deter widespread fraud, government enforcers may well use additional criminal statutes to prevent fraud on the United States and the banks. PPP-related prosecutions may involve the usual bank fraud, wire fraud and other common financial fraud statutes. These specific laws all have the common requisite element of deceit. Further, the government will clearly feel free to use whatever remedies possible to recover ill-gotten PPP money and assess related fines to make the U.S. taxpayers whole through various civil enforcement remedies. To avoid such criminal consequences, borrowers need to exercise their best efforts to provide the government with accurate information. There is no criminal liability for mistakes or inadvertent omissions, but when actions are judged retrospectively, trying to prove a lack of intent is not a situation any borrower would want to face. Of course, possible criminal prosecution is not the only redress or negative consequence that wrongful borrowers may face. There are, for example, civil penalties and actions that can be pursued by regulatory or government authorities, qui tam actions, and possible stockholder or equity holders claims against boards or managers, not to mention the potential negative press.

In Sum – This Much is Clear – Double Check, Document and Be Careful Either Way

It would not be surprising or unreasonable for business owners to ask how they are supposed to act with any comfort as to PPP loans given all the uncertainty noted above, with the Treasury Secretary highlighting criminal penalties in relation to improper applications, and with a new “safe harbor” loan “give back” period running only until May 7. It also would not be surprising to see those borrowers who can find a way to make it without the PPP loan decide to return PPP loan proceeds (or not accept funds that have been approved but not yet been received) — even when they have been truly harmed by the COVID-19 pandemic, even when they have always intended to use the loan to keep employees paid exactly as intended by the CARES Act, and even when they believe they qualify for the PPP loan. What is clear from all of the above is that not much is truly clear with respect to the eligibility criteria and certification requirements for PPP loans. What also seems clear — including from the most recent SBA rules issued April 30 stating that the maximum loan amount for a related corporate group will be limited to $20 million — is that loans (even big loans) for qualifying firms are legitimate.

Some Practical Points

Finally, those borrowers who ultimately elect to keep their loans should strongly consider working with counsel to create a contemporaneous, written record to support their certifications or their current decisions to keep those loans based on the certifications that were made at the time of the loan application. There are two key inquiries. First, the borrower should review compliance with the affiliation rules to support the eligibility certification. Second, the borrower should review support for its “necessity” certification, considering (for example) the following questions:

  • What were the specific facts and circumstances showing that the applicant bore financial hardship and faced material economic uncertainty?
  • Did the applicant consider its ability to access capital, including conducting discussions with those who were in a position to provide capital such as the applicant’s current lender(s) and equity holders?
  • Did the applicant prepare a forecast projecting its liquidity position and effect on the operations of not obtaining a PPP loan and that would demonstrate that the loan was necessary to support the ongoing operations of the borrower? Alternatively, did the borrower conduct any other financial review in connection with such certification?

Best practices would then have the foregoing crisply documented and reviewed and approved by the borrower’s board or other governing body. The written record should demonstrate that a bona fide, good-faith effort was undertaken to support the certifications truthfully. If this exercise cannot produce a defensible written record, then the prudent decision may be to return the loan proceeds, ideally before elapse of the grace period for doing so.

Authored by: Trevor J. Chaplick, Peter H. Lieberman & Nathan J. Muyskens  of Greenberg Traurig, LLP

 

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