Tag: Labor Law

How the Labor Shortage is Impacting the Supply Chain: Would Immigration Reform Help?

As the COVID-19 pandemic continues to present challenges to the US economy, labor shortages are contributing to the ongoing supply chain disruptions facing many industries. Companies are finding it difficult to find the right candidates for the jobs they’re looking to fill while millions of Americans are quitting their jobs or threatening to strike or walking out for better working conditions.

One industry in particular affected by the labor shortages brought on by COVID-19 is the   shipping and warehousing industry. At the Port of Los Angeles, for example, there aren’t enough workers to unload goods from ships, causing shipping delays across the US. Additionally, a shortage of truck drivers is contributing to the problem. Ninety percent of leaders who spoke to the U.S. Chamber of Commerce said labor shortages are impacting economic growth in some areas.

To help remedy the problem, President Joe Biden announced the Port of Los Angeles will be open 24/7, with logistics companies FedEx and UPS making similar pledges. Another potential solution is increasing immigration through offering more worker visas in order to bring in more workers to the country.

Difficulty Hiring During COVID-19: Labor & Visa Shortages

US Chamber of Commerce Chief Policy Officer Neil Bradley told CNN Business that immigration is one of the key ways to solve the labor shortage. However, despite immigration’s potential to add additional employees to the workforce, the number of immigrants US employers can hire has remained flat. Additionally, while there are options for workers with a high level of education, there aren’t as many visa options for employers needing seasonal or temporary worker visas or workers in many service industry roles.

The Chamber of Commerce requested Congress and the White House to double the cap on employment-based visas, specifically to double H-1B temporary worker visas and H-2B visas for seasonal workers.

“When we see these workforce gaps in the nonprofessional roles for instance, US companies are not typically able to turn to the US immigration system to help fill that need,”  said Caroline Tang, immigration shareholder in the Austin office of Ogletree Deakins.  “Across the board, there’s just a tighter labor market now in terms of candidate availability, people willing to do certain types of work or wanting to come back to work in environments where they will be more physically closer to other people, which oftentimes are the roles that really heavily impact our supply chain.”

Also contributing to the ongoing supply chain disruptions is the labor shortage that’s impacting  a wide variety of industries. Some of the factors impacting the labor market during the COVID-19 pandemic include the demand for higher wages as the prices for goods and services rises, as well as better benefits and protections for workers. Additionally, some workers aren’t able to come back to work because they’re taking care of family members sick with COVID-19, or are sick with the virus themselves or childcare problems. Many workers are also leaving their jobs in record numbers, and are delaying coming back to work. For example, in August, 4.3 million Americans quit their jobs.

“I think everyone has been impacted by the Great Resignation as people are calling it. And certainly, that has impacted a lot of the industries that impact our supply chain and a lot of areas in the US,” Ms. Tang said.

Specifically, Ms. Tang said the semiconductor industry in particular is impacted by the labor and supply chain shortages. The shortage is expected to last until 2022 and beyond, and impacts a variety of industries from the automotive industry to appliances and toothbrushes.

“I work extensively in the semiconductor industry. They have definitely been impacted by pandemic related supply chain issues, which we can tell from the cost of automotive prices here in the US since all these cars rely on microprocessors,” she said.

Even though many of the supply and labor shortage issues are expected to last for many years to come, companies can take steps to help mitigate some of the problems they’re facing, Ms. Tang said.

US Company Workers Offshore Solve Some of the Visa Quota Issues

“For the companies that have international offices, they have a wider footprint and have some options with staffing their workers in other countries. So, for instance where companies hire some college graduates from the US who are not able to get one of those H1-B visas, they might potentially work in the person’s home country where they don’t need a visa to work. And that way they can keep that person working on the same project and still contributing research and development efforts for that company,” Ms. Tang said.

If a company doesn’t have international offices, handling visa shortages and delays may be a little harder.

“If a company doesn’t have an international footprint, it’s hard. I’ve been talking to employers that say, ‘Hey, we are just sort of living with the fact that we might only have these employees on our payroll for two to three years because of their visa limitations.’ We need to be considering what we’re going to do about succession planning and making sure that we diversify our employee population as much as possible. I think it’s definitely requiring a lot of creativity from employers,” Ms. Tang said.

How US Immigration Policy Affects the Labor Shortage 

One potential method for addressing labor shortages is to alter current U.S. immigration policy. Despite the ongoing need for workers in all industries, visa caps have remained relatively static, limiting the number of foreign nationals allowed to work in the U.S. long-term. Changes to such policies would be a considerable boon for the supply chain especially, allowing companies to quickly fill roles left empty by the pandemic.

The most likely target for change might be the H-1B visa, which allows employers to hire foreign workers for positions that require particular skills or specialized knowledge. “The annual quota on H-1B visa numbers – it would certainly be helpful to increase that quota,” said Ms. Tang. “That 85,000 number has been static for many, many years. It’s not a fluctuating number based on any sort of economic conditions or economic or supply or demand. So, I certainly think it would be beneficial for the government to have some sort of system where that quota number can have a fluctuating number depending on our economic conditions.”

How Does US Immigration Policy Impact the US’ Supply Chain Woes?

Of course, changes to H-1B policy intended for highly skilled employees, are only helpful to a certain point. Some sectors of the U.S. economy are in dire need of employees for non-professional roles, such as the retail and service industries, where highly specialized knowledge is not as critical. According to the Bureau of Labor Statistics (BLS), foreign-born workers were more likely than native-born workers to be employed in service occupations; natural resources, construction, and maintenance occupations; and production, transportation, and material moving occupations. Companies often utilize the H-2B visa to fill these gaps; again, however, logistical considerations and static caps stand in the way. In May, the BLS released updated statistic revealing that employment fell by 2.7 million among the foreign born from 2019 to 2020, a decline of 9.8 percent.

Ms. Tang points to manufacturing as a key example of an industry for which immigration reform would be a windfall. “For the non-professional roles, I think there is certainly an area where perhaps the government needs to create some sort of a work permit to fill these specific demands that our manufacturers are seeing in that area, with respect to the need to staff their manufacturing facilities,” she said. “A visa that’s available that’s for seasonal or peak load work, but again, there’s a quota on that visa as well.”

Per the BIS, the demographic composition of the foreign-born labor force differs from the native-born US labor force. In 2020, men accounted for 57.3 percent of the foreign-born labor force, compared with 52.1 percent of the native-born labor force. By age, the proportion of the foreign-born labor force made up of 25- to 54-year-olds (71.8 percent) was higher than for the native-born labor force (62.2 percent). Labor force participation is typically highest among persons in the 25-54 age bracket.

“It can be very difficult to get the perspective of timing, and oftentimes, employers who are trying to pursue this H-2B visa, if the pursuit of that visa is unsuccessful and they miss the quota, then they’re out of luck with respect to being able to staff the staff in these areas that really require someone to be doing the frontline work.”

In considering how to alter U.S. immigration practices to address supply chain woes, it is also vital that American workers are not forgotten. Policy changes must take into account a variety of factors to ensure a fair playing field. “There have been some proposals in the past, that number be moved up or down based on for instance, the unemployment rate in the United States, so that you were not disadvantaging US workers,” said Ms. Tang. “But in years when unemployment is extremely low, and clearly we are having labor shortage issues, perhaps we can increase the quota numbers there for the H-1B.”

Aging Workforce and the US Losing its Ability to Attract and Keep Top Talent – Is Immigration Reform a Solution?

The US Census Bureau (USCB) projects that one in every five US residents will be older than age 65, by 2030. Additionally, by 2030 the USCB projects that net international migration will overtake birthrate as the primary driver of population growth in the United States, a first for the US. Accordingly, US will have to rely more on foreign workers as our workforce ages. If the labor shortage continues, the Chamber of Commerce said it’s possible the shortage will pressure lawmakers to act to raise the cap on workers. 

Additionally, bringing in more foreign workers in the US could help boost the economy, as foreign workers tend to be more focused in the service industries and more likely to be of prime workforce age, can fill job shortages and create additional jobs to alleviate the strain on the supply chain. Who wants to live in a country with shortages of basic supplies and poor infrastructure, if they have a choice to live elsewhere?  If lawmakers don’t act, the US risks losing talent and entrepreneurs to other countries that have more flexible immigration policies.

“I think we’re going to see some brain drain from the US to other countries that are perceived as having more favorable immigration systems and policies – for instance, Canada,” Ms. Tang said. Entrepreneurs need workers for their enterprises and have global mobility, and the US’ worker shortage for both service workers and specialized high skilled workers, limits the US’ ability to compete in the world marketplace.

Copyright ©2021 National Law Forum, LLC

Article By Rachel Popa, Chandler Ford, Jennifer Schaller of The National Law Review / The National Law Forum LLC

For more articles on immigration and hiring, visit the NLR Labor & Employment section.

Is it Secret, Is it Safe? What Employers Need to Know About the California Privacy Rights Act

In most contexts, employees should have a low expectation of privacy in the workplace. Their computers, desks, and other common areas may be subject to strict company control and their conduct subject to workplace policies. There are many aspects of employee privacy and related laws, of which California employers must be aware. One such area with rapidly approaching deadlines, is the California Privacy Rights Act (“CPRA”).

In November 2020, Californians voted in favor of the CPRA, further expanding employee and consumer privacy rights for California residents. Following consumer privacy trends like Europe’s Global Data Privacy Regulation, California has been on the move to enhance privacy, not just for consumers, but for employees. The CPRA amends the California Consumer Privacy Act (“CCPA”), which the California legislature passed in 2018 and went into effect January 1, 2020. Unlike the CCPA, which was amended in 2019 to have a limited application to employees, job applicants and independent contractors, the CPRA will extend various individual rights to employees, job applicants and independent contractors. Consequently, employers subject to the CPRA will need to start preparing in the near future to ensure they have the necessary procedures, policies and contract amendments in place by the CPRA’s January 1, 2023 effective date.

What Is the CCPA?

In general, the CCPA was enacted to enhance the privacy rights of California residents by providing them with notice of how their personal information is being processed, the purpose for such processing, and allowing them greater control of their personal information. While the CCPA provides California residents the right to access, to deletion and to opt-out of “sales” of their personal information, it did not extend most of these rights to California employees. It did, however, expand employee rights in two significant ways: (1) it requires mandatory privacy notices and disclosures about the data collected by employers and purpose for collection; and (2) it provides for statutory damages ranging from $100 to $750 if certain personal information is breached. Further, the CCPA requires businesses to have “reasonable security procedures and practices” in place to protect their California employees’ personal information.

Which Employers Are Subject to the CPRA?

The CPRA amends the CCPA’s definition of a covered “business” to minimize its impact on small to medium sized businesses. The CPRA applies to for-profit organizations that collect personal information on California residents, determine the purposes and means of processing the personal information, do business in California and satisfies one of the following thresholds:

  1. as of January 1, had annual gross revenues in excess of $25 million in the preceding calendar year; or
  2. buys, sells or shares the personal information of at least 100,000 California consumers or households; or
  3. derives at least fifty percent of its annual revenue from selling or sharing consumers’ personal information.

It is important to note that an employer does not need to have a physical location in California to be subject to the CPRA, but rather it must only satisfy the definition above.

What Is the CPRA and How Does It Impact the CCPA?

The CPRA materially amends the CCPA by adding a number of provisions to expand employee privacy rights. However, like the CCPA, the CPRA does not apply to personal information collected from an individual acting as a job applicant, an employee, owner, director, officer, staff member or contractor, with regard to benefits administration and maintenance of emergency contact information.

New Business Definition. Although it contains many of the same definitions as the CCPA, the CPRA changes one of the thresholds for an entity to meet the definition of a “business” subject to the law – in that it changes threshold from 50,000 to 100,000 or more consumers or households, and removes devices from the threshold.

Sensitive Personal Information Definition. The CPRA includes “sensitive personal information” as a defined term and requires businesses provide notice to employees when such information is processed, the purposes for the processing, whether the information will be sold or shared, and the length of time the business intends to retain each category of sensitive personal information. The term is broadly defined to include social security and driver’s license numbers, financial account information, credit card numbers, account passwords, geolocations, genetic data, biometric information, records of products purchased, internet browsing history, and content of emails and text messages. See Cal. Civ. Code §1798.140(ae).

Individual Rights. The CPRA also provides for new and modified individual rights, which impact employees. It imposes restrictions and requirements on personal information, including disclosure requirements, opt-out requirements, opt-in consent for use and disclosure, and limitations on purposes for which information may be used. For example, the CPRA includes a right to correction, whereby consumers may request corrections to personal information if it is inaccurate. It provides a right to opt out of the use of automated decision-making technology (including profiling in connection with decisions related to work performance, economic status, health, personal preferences, location or movements). It also provides the right to restrict or limit the use and disclosure of sensitive personal information for secondary purposes, such as prohibiting businesses from disclosing certain information to third parties.

Flow-down Provisions. The CPRA also contains flow-down provisions that require employers to understand how third parties use, share and secure consumer data. Employers should identify third parties and vendors that receive their employee or applicant personal information (e.g., payroll companies, health/benefits/wellness providers, HR consultants, staffing agencies, etc.) and conduct vendor inquiries and diligence about how those third parties use, share and secure the employee personal information. The CPRA requires businesses with such vendors to enter agreements to ensure compliance with the CPRA, including the right to, upon notice, take reasonable steps to remediate unauthorized use of personal information.

Data Retention. The CPRA requires businesses to inform California residents of the length of time they will retain each category of personal information and sensitive personal information or the criteria used to determine that period.

Expanded Right of Action for Breach of Login Credentials. Moreover, the CPRA expands the types of data breaches for which a California resident can recover statutory damages to include breaches of personal online login credentials (such as passwords or security questions that permit access to an online account). The existing right to recover statutory damages, particularly when coupled with this expansion, provides covered employers a strong incentive to enhance their security measures.

Yeah, But, What if We Don’t Comply?

Failure to comply with the CCPA (and later the CPRA) can carry significant fines. The CCPA currently charges the Office of the Attorney General (OAG) with issuing regulations and enforcing the CCPA. The OAG can bring civil actions to enforce the law and impose penalties up to $7,500 for intentional violations and $2,500 for unintentional violations. The CCPA also contains a private right of action, allowing for $100 to $750 in damages for each incident of breach. These penalties can add up quickly, particularly in a class action context. There is, however, a 30-day cure period in which an employer can cure a violation and provide an express written statement that the violation has been cured, to avoid penalties. Cal. Civ. Code §§1798.150(b); 1798.155(b).

Under the CPRA, the 30-day cure period no longer applies to general violations of the law, but rather only as a means of preventing individual or class-wide statutory damages as part of a private right of action for security violations. In addition, the CPRA creates a new enforcement mechanism and establishes the California Privacy Protection Agency (CPPA). The CPRA expands rulemaking and enforcement power to the CPPA, which includes the authority to require businesses to submit annual privacy and security risk assessments and to audit those assessments. The CPPA will be governed by a five-member board, which was appointed in March.

When Does the CPRA Go into Effect?

The CPRA will become operative on January 1, 2023, and enforcement actions are slated to begin on July 1, 2023. However, it is important to recognize that the CPRA includes a one year “look back provision” which requires that when a business receives a request on January 1, 2023 (the day the law goes into effect), it must be prepared to provide responsive information going back to January 1, 2022. With these deadlines looming, California employers should prepare their CPRA compliance workplans as soon as possible, and begin taking the necessary steps to come into compliance.

How Do Employers Prepare for the CPRA?

It will take most businesses at least 12 months to become substantially compliant with the CPRA. With the CCPA already in place, employers should already be on the move to update their privacy compliance practices. However, below is a checklist to help build effective privacy and security programs to prepare for the CPRA:

  • Determine if your organization is a covered business under the CPRA.
  • Create a team consisting of members from HR, Legal, Compliance and IT to lead your CPRA compliance project.
  • Map and classify personal information and identify sensitive personal information.
  • Revise (or develop) workforce disclosures to include new definitions and rights.
  • Develop workforce request workflows for rights to access, correct, opt-out of sharing and sales, and delete personal information.
  • Put in place contractual provisions with workforce vendors including diligence and contractual indemnity.
  • Develop, enforce and audit document retention policies.

Although new rulemaking may impact the exact confines of the CPRA, employers should create a plan now and start to take the necessary steps to come into compliance as 2023 will soon be upon us.

©2021 Greenberg Traurig, LLP. All rights reserved.
For more articles on privacy law, visit the NLRCommunications, Media & Internet

What Were the Three Biggest Labor Law Developments In 2020?

With the year end in sight, employers are looking back on a tumultuous 2020 and preparing for more labor law changes in 2021. This year at the National Labor Relations Board (NLRB), companies saw a lot of positive change from a management perspective. Election rule changes gave employers some breathing room on the union avoidance front, and the NLRB exercised restraint in relaxing its enforcement standards against employers during the pandemic. But as the new year approaches, a union-friendly administration waits in the wings, presenting a real possibility that the positive change for employers may be coming to an end.

Employer-Friendly Election Rules

2020 saw the NLRB’s much maligned ambush election rules scrapped, in part, and replaced with employer-friendly rules. The ambush election rules had resulted in truncated campaign periods that left employers at a disadvantage. The new rules, while not without their own challenges, extend the period of time between the filing of a representation petition and the election. Employers can look forward to 2021 knowing the new rules will give them more time to combat a union organizing drive.

NLRB’s COVID-19 Response and Guidance

The NLRB’s guidance related to COVID-19 was at times slow and presented a mixed bag to employers.

On one hand, the NLRB’s election-related guidance gave Regional Directors wide discretion on how to conduct elections during the pandemic. This led to a large increase in mail-ballot elections, normally the less-preferred method of conducting elections. Ultimately, this did not change the overall union win rate, which remained around 70 percent.

On the other hand, the NLRB demonstrated a willingness to give employers leeway during the pandemic. Faced with an emergent situation without a true parallel in case precedent, employers were forced with situations where they had to make immediate unilateral changes to terms and conditions of employment, for example requiring temperature screenings or PPE, changing staffing levels, or shutting down facilities. Normally, making unilateral changes to terms and conditions of employment without first bargaining with the union will result in an unfair labor practice charge. But starting in July, the NLRB began issuing informal advice email memos instructing Regional Directors to dismiss several complaints where employers were forced to make these unilateral changes because of the emergency posed by COVID -19. The NLRB general counsel’s position was that if the unilateral change was reasonably related to the emergent pandemic, employers were justified in carrying out the change unilaterally so long as they bargained with the union within a reasonable time thereafter.

New Presidential Administration Coming in 2021

In November, employers learned that Joe Biden had been elected as the new President of the United States. Set to take office on Jan. 20, 2021, President-elect Biden described himself as “the strongest labor president you have ever had” – setting the tone for what could be big changes on the horizon. Any labor law changes supported by the new Biden administration would likely have to wait until the composition of the NLRB’s five-member Board changes. At the earliest, that would be August 2021. Further, Biden will not be able to appoint his own NLRB general counsel – the official in charge of all NLRB Regional Offices – until November 2021. While wholesale changes are not likely until late 2021 at the earliest, employers should brace for a pro-union shift, which could take the form of precedent-changing decisions, rulemaking, or even substantive pro-union legislation.

What a year – we’ll see what 2021 has in store. Stay tuned.

© 2020 BARNES & THORNBURG LLP
For more articles on labor law, visit the National Law Review Labor & Employment section.

“Ban the Box” Update: St. Louis Enacts Ordinance; California and Hawaii Expand Existing Laws

Under the St. Louis ban the box Ordinance (the “Ordinance”), which takes effect January 1, 2021, employers in St. Louis with 10 or more employees may not:

  1. Base a decision to hire or promote on an applicant’s criminal history, “unless the employer can demonstrate that the employment-related decision is based on all information available including the frequency, recentness and severity of the criminal history and the history is reasonably related to or bears upon the duties and responsibilities of the job position;”
  2. Inquire about a job applicant’s criminal history until after the employer has determined that the applicant is otherwise qualified for the job position, and interviewed the applicant, “except that such an inquiry may be made of all job applicants who are in the final selection pool from which the position will be filled;”
  3. Publish job advertisements, including electronically, that exclude applicants on the basis of criminal history;
  4. Include statements on job applications and other hiring forms, including electronic documents, that exclude applicants on the basis of criminal history;
  5. Inquire into, or require applicants to disclose their criminal history on initial job applications and other hiring forms, including electronic documents; and
  6. “Seek to obtain publicly available information” concerning job applicants’ criminal history.

With respect to prohibition Nos. 3 through 6, the Ordinance creates an exception where federal, state, or local law prohibits the employer from hiring an individual with a certain criminal history.

California

The California Fair Chance Act (“CFCA”) makes it an unlawful employment practice for an employer with five or more employees to include on an application for employment any question that seeks the disclosure of an applicant’s conviction history, or to inquire into or consider the conviction history of an applicant, until that applicant has received a conditional offer of employment. Additionally, the Act requires employers to: (a) make individualized assessments as to whether the conviction history has a direct adverse relationship with the specific duties of the job; and (b) provide notice under a specific procedure to employees if they intend to deny employment based on the conviction history.

Among other changes, new regulations promulgated by the California Fair Employment and Housing Council, effective October 1, 2020, expand the definition of an “applicant” to include individuals who begin work upon receiving a conditional offer of employment but before the employer has conducted or completed a criminal background check.  Ostensibly prompted by the delay some employers are encountering in obtaining relevant criminal history information due to the COVID-19 pandemic, the new rule ensures that individuals working pursuant to a conditional job offer still enjoy the protections afforded by the CFCA to “applicants.”

Also of note, the California Department of Fair Employment and Housing recently issued Frequently Asked Questions concerning the CFCA, detailing employers’ obligations under the law and providing guidance on how employers may conduct a compliant criminal background check.

Hawaii

Hawaii, which was one of the first states to create a “ban the box” law, recently added a notable amendment to the law. Effective September 15, 2020, SB 2193 prevents most private sector employers from considering felony convictions older than seven years, and misdemeanor convictions older than five years, reducing the look-back period from 10 years.

Other 2020 “Ban the Box” Developments

Maryland: As we previously reported, Maryland’s “ban the box” law, effective February 29, 2020, prohibits private employers with fifteen or more full-time employees from asking job applicants to disclose any criminal records or criminal accusations prior to the first in-person interview.

Virginia: Effective July 1, 2020, a new law that decriminalizes simple possession of marijuana also contains a “ban the box” provision prohibiting employers from requiring job applicants to disclose information concerning criminal charges, arrests, or convictions for simple possession of marijuana.

Suffolk County, New York: As we discuss here, effective August 25, 2020, Suffolk County employers with fifteen or more employees are prohibited from inquiring about a job applicant’s criminal convictions during the application process or before a first interview.

Waterloo, Iowa: Effective July 1, 2020, a new City ordinance prohibits employers with fifteen or more employees within the City of Waterloo from, among other acts, requiring applicants to disclose arrests, convictions, or pending criminal charges during the application process, including, but not limited to, any interview.  An employer, however, may “discuss” such information with an applicant if the applicant voluntarily discloses it.

*                            *                                  *

Employers covered by a “ban the box” law in one or more of the jurisdictions discussed above should review and, if necessary, update their policies and procedures, including job advertisements, applications, and other hiring (and where relevant, promotion) forms to ensure they are compliant with all applicable mandates.  Employers should also consider training personnel involved in the hiring process, particularly recruiters, human resources personnel, and those tasked with interviewing applicants and conducting criminal background checks.

©2020 Epstein Becker & Green, P.C. All rights reserved.
For more articles on labor law, visit the National Law Review Labor & Employment section.

COVID-19 Telecommuting Tax and Leave Issues for Employers

Months into the COVID-19 pandemic, many employer telecommuting arrangements remain in place, with several large corporations opting to extend these arrangements well into 2021.  The benefits of such arrangements have been clear for many employers during the pandemic, including that they permit continued productivity while keeping employees safe.  However, the longer that employees remain out of the office, the more telecommuting-related issues arise, including with respect to taxation of employee income and leave requirements, which we discuss below.

Tax Implications of an Employee Working Remotely Due to the COVID-19 Pandemic

As a general rule, employees pay income tax in the state in which they perform services for an employer.  For example, if a teleworking employee lives and works entirely in New Jersey despite the fact that her employer is located in Florida, the worker’s income tax would be withheld according to New Jersey law and paid to the State of New Jersey.  Many states have reciprocal agreements with one another on the treatment of taxes when an employee works in one state and lives in another.  Two neighboring states will agree that an employee who works in State A can pay income tax in their home State B, allowing the employee to file one tax return each year.  In the absence of tax reciprocity agreements between neighboring states, employees may be subject to income taxes in two states (for example, New York and New Jersey).  With masses of employees teleworking in a different state from their typical work arrangement, where the employee should pay income taxes becomes increasingly complicated.

Some states have addressed this issue and other business-related tax implications caused by COVID-19.  For example, the Massachusetts Department of Revenue issued emergency regulations concerning telecommuting employees, outlined in a Technical Information Release (“TIR”).  The TIR became effective on March 10, 2020 and remains in effect until Governor Baker gives notice that the state of emergency is over.  The TIR clarifies (1) the treatment of personal income taxes for employees currently working outside the state (i.e., telecommuting) due to COVID-19; (2) sales and use tax nexus for vendors with a “physical presence” in Massachusetts solely due to COVID-19; (3) whether a business is subject to a corporate excise tax with employees currently “conducting business” on its behalf in Massachusetts; and (4) whether to tax employees currently working inside or outside Massachusetts for Paid Family and Medical Leave purposes (more on this piece below).

New Jersey similarly issued FAQ’s addressing telecommuting tax implications.  The state’s Division of Taxation waived the “nexus-creating” impact on out-of-state businesses with employees currently working in New Jersey as a result of COVID-19.  The Washington D.C. Office of Tax and Revenue published similar information stating that it will not impose a corporate franchise tax nexus on employers because employees are telecommuting during the public emergency caused by COVID-19.

In the absence of guidance from each state on remote work tax implications, employers are encouraged to consult legal counsel or their accountants on how out-of-state remote workers impact company tax obligations.

Leave Law Implications of Employee Remote Working

It was hard enough before the pandemic started to untangle the complex web of leave entitlements that may apply to an employer’s workforce in different states.  This web of leave laws becomes even more complicated however, when employees telecommuting in a different state from which they typically work begin to impact the employee’s eligibility for local leave.

For example, how does an employee who regularly works in New York City but is now working remotely from New Jersey accrue sick leave?  Is the employee entitled to New York City Sick and Safe Time and/or New Jersey Sick Leave?  Ultimately (and absent additional guidance) the answer will depend on the eligibility requirements of the leave, and the specifics of the employee’s work history.

In this scenario, New Jersey’s FAQs on sick time provides that “a telecommuter who routinely performs some work in New Jersey is entitled to full earned sick leave covered under [New Jersey’s] Earned Sick Leave Law so long as the employee’s base of operations or the place from which such work is directed and controlled is in New Jersey.”  Based on this guidance, would an employee who typically works in New York City, but who is currently telecommuting in New Jersey as a result of the pandemic be entitled to sick leave under New Jersey law?  As the pandemic, and in turn this telecommuting arrangement, continues, at what point does the employee’s base of operations shift to New Jersey requiring the employer to provide sick leave?

At the same time, would this employee still be entitled to accrue sick leave under New York City’s law (and New York State’s new law, discussed in our previous post)?  New York City’s law, which was recently amended, has interpretive guidance (applicable under the old law) stating that an employee only accrues sick leave under the New York City law when they perform services in New York City.  If they are subject to a temporary telecommuting arrangement, do they lose eligibility to accrue New York City sick leave?  Will New York City update its guidance to address this issue?  Will New York State issue guidance under its new law to address this issue as well? Employers should also be mindful that employees may be able to maintain multiple accruals depending on where they perform services.

In Massachusetts, the state has thankfully clarified how to treat employee eligibility for the Massachusetts Paid Family and Medical Leave Act.  Employers and employees began contributing to the Commonwealth’s trust for paid family and medical leave benefits back in 2019, and most leave entitlements will become available in a few short months on January 1, 2021 (see our blog posts on preparing for Massachusetts Paid Family and Medical Leave here and here).  However, many employees regularly working in Massachusetts commute in from neighboring states including Rhode Island and New Hampshire.  With such employees now living and teleworking outside of Massachusetts, should employers still deduct contributions from employee paychecks?  Fortunately, the Massachusetts DOR addressed this issue in its Technical Information Release described above:  An employee who previously performed services outside of Massachusetts and was not subject to PFML will not become subject to PFML solely because the employee is temporarily working from home in Massachusetts.  Likewise, an employee who previously performed services in Massachusetts but is temporarily working from home outside of Massachusetts solely due to COVID-19 continues to be subject to the PFML rules.  However, if employers decide to extend teleworking arrangements beyond the pandemic, this guidance will no longer apply.  Employers will need to determine if and when an employee becomes subject to (or is no longer subject to) Massachusetts Paid Family and Medical Leave.

Employers may be able to conduct a quick analysis to determine whether an employee is or is not entitled to a certain leave benefit while COVID-19 state of emergencies remain in place in many states.  However, if long-term telecommuting arrangements become the norm after the pandemic ends, employers must reevaluate applicable leave policies to ensure they align with their new remote workforce.

Parting Shot

As the last several months of telecommuting has taught us, working from home can have both benefits and drawbacks.  Employers are encouraged to consult with counsel before making tax and leave-related decisions that impact employees, as they relate to remote working during the COVID-19 pandemic.

©1994-2020 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.
For more articles on tax and labor topics, visit the National Law Review Labor & Employment section. 

What is the Pregnant Workers Fairness Act and What Happens if it Becomes Law?

The House of Representatives passed the Pregnant Workers Fairness Act (PWFA) (H.R. 2694), which could have major implications for companies around the country. If enacted, the PWFA would require most employers to provide reasonable accommodations for pregnant employees along the lines of what is required for disabled employees under the Americans with Disabilities Act.

According to the House Committee on Education and Labor’s research, 62% of workers have witnessed pregnancy discrimination on the job, which can take the form of “losing a job, being denied reasonable accommodation, or not being hired in the first place.” This discrimination can be particularly damaging to Black and Latina employees, “who are overrepresented in low-wage, physically demanding jobs,” a harsh reality that is intensified during the COVID-19 pandemic given that pregnant women “who contract the virus are more likely than non-pregnant women to be hospitalized.”

While federal laws, including the Pregnancy Discrimination Act and the American with Disabilities Act, protect pregnant employees against certain forms of discrimination, the House passed the PWFA because “there is currently no federal law that explicitly and affirmatively guarantees all pregnant workers the right to a reasonable accommodation so they can continue working without jeopardizing their pregnancy.”

If it becomes law, the PWFA will provide that:

  • Private sector employers with more than 15 employees, as well as public sector employers, must make reasonable accommodations for pregnant workers and job applicants so long as the accommodation does not impose an undue hardship on the employer;
  • Pregnant employees cannot be retaliated against for requesting a reasonable accommodation and cannot be denied employment opportunities, or be required to take leave if another reasonable accommodation is available; and
  • the remedies available would include lost pay, compensatory damages, and attorneys’ fees

Hundreds of organizations, including the business community, civil rights groups, and employment/labor advocacy organizations have endorsed the PWFA. Next stop is the Senate, where the bill has been referred to the Committee on Health, Education, Labor, and Pensions. The intersection between pregnancy and disability discrimination, including the reasonable accommodations for employees that may be available, will continue to be a key employment law area to watch.

© 2020 Zuckerman Law
ARTICLE BY Eric Bachman of Zuckerman Law
For more articles on labor law, visit the National Law Review Labor & Employment section.

Leave for Oregon’s Volunteer Emergency Responders During Unprecedented Wildfires

On September 9, 2020, Oregon Governor Kate Brown issued Executive Order No. 20-41 invoking the Emergency Conflagration Act Statewide in light of extreme fire danger. Governor Brown’s invocation of the Emergency Conflagration Act remains in effect until at least November 1, 2020, as wildfires continue to rage. More than 1 million acres of land have burned across Oregon since September 7, 2020. To put things in perspective the area burned is nearly five times the size of New York City.  According to Governor Brown, Oregon is facing an unprecedented level of uncontained fire. To put the flames out, Oregon will need all the help that it can get from its courageous firefighters and first responders.

Employers may want to be aware of their ability under Oregon law to grant unpaid leave requests for volunteer firefighters and other first responders who need to perform services to battle the wildfires and perform search and rescue efforts.

Pursuant to ORS 476.574, Oregon private and public employers may provide unpaid leave to employees who are volunteer firefighters, members of rural fire protection districts, or firefighters employed by a city or private firefighting service to perform service in accordance with Oregon’s Emergency Conflagration Act. Pursuant to ORS 404.250, Oregon private and public employers may also “[u]pon request of an employee who is a search and rescue volunteer accepted to participate in search and rescue activities by the sheriff … grant a leave of absence to the employee.”

If an employer provides unpaid leave to an employee who is a volunteer firefighter or search and rescue volunteer, the leave must extend “until release from such service permits the employee to resume the duties of employment.” Once granted leave, the employee has a right to reinstatement to his or her previous position or an equivalent position without loss of seniority, accrued leave, or other benefits. Employers may require employees taking leave for purposes under the act to use all of their available accrued vacation or other paid time off before extending unpaid leave.

Employers that permit employees to take unpaid leave for emergency response activities must follow the prescriptions of ORS 476.574 and ORS 404.250, as a failure to do so may be considered an unlawful employment practice under Oregon law. An aggrieved employee who claims an unlawful employment practice may file a complaint with the commissioner of the Oregon Bureau of Labor and Industries or may bring a civil action in circuit court. Aggrieved employees may be entitled to recover compensatory damages, back pay, costs, and attorney’s fees. Aggrieved employees may also be entitled to equitable relief, such as a reinstatement of employment.

In sum, employers of these covered individuals may want to be aware that Oregon law permits optional leave during this critical time. Employers that decide to provide leave may want to consider carefully their statutory obligations in order to avoid a violation resulting in an unlawful employment practice during the protected leave.

© 2020, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.

For more on emergency unpaid leave, see the National Law Review Labor & Employment law section.

New NLRB Rule Defining Joint-Employer Status to Take Effect

The National Labor Relations Board has announced the issuance of its final rule governing joint-employer status. The new rule, which was first proposed in September 2018 and has been the subject of extensive public comment, will become effective April 27, 2020.

The critical elements for finding a joint-employer relationship under the new rule is the possession and the exercise of substantial direct and immediate control over the terms and conditions of employment of those employed by another employer.  The essence of the new rule is described in the Board’s February 25, 2020 press release:

To be a joint employer under the final rule, a business must possess and exercise substantial direct and immediate control over one or more essential terms and conditions of employment of another employer’s employees. The final rule defines key terms, including what are considered “essential terms and conditions of employment,” and what does, and what does not, constitute “direct and immediate control” as to each of these essential employment terms. The final rule also defines what constitutes “substantial” direct and immediate control and makes clear that control exercised on a sporadic, isolated, or de minimis basis is not “substantial.”

Evidence of indirect and/or contractually reserved control over essential employment terms may be a consideration for finding joint-employer status under the final rule, but it cannot give rise to such status without substantial direct and immediate control. Importantly, the final rule also makes clear that the routine elements of an arm’s-length contract cannot turn a contractor into a joint employer.

The new rule marks a return to a standard similar to that which the Board followed from 1984 until 2015.  In 2015, in Browning-Ferris Industries, the Board adopted a much more liberal test under which a finding that the putative joint employer possessed indirect influence and the ability (including through a reserved contractual right) to influence terms and conditions, regardless of whether the putative joint employer actually exercised such influence or control, could result in it being held to be a joint-employer of a second employer’s employee.

As a practical matter, the standard under the Board’s new rule should make it much more difficult to establish that a company is a joint-employer of a supplier, contractor, franchisee, or other company’s employees. The new rule will mean that a party claiming joint-employer status to exist will need to demonstrate with evidence that the putative joint-employer doesn’t just have a theoretical right to influence the other employer’s employees’ terms and conditions of employment, but that it has actually exercised that right in a substantial, direct and immediate manner.

This new rule is likely to make it much more difficult for unions to successfully claim that franchisors are joint-employers with their franchisees, and that companies are joint-employers of personnel employed by their contractors and contract suppliers of labor, such as leasing and temporary agencies.

©2020 Epstein Becker & Green, P.C. All rights reserved.

For more on the Joint-Employer Rule see the National Law Review Labor & Employment Law section.

Love at Work: 5 Things for Employers to Know

Workplace romances are inevitable. According to a recent survey by the Society for Human Resource Management, one out of every three American adults is or has previously been in a workplace romance. Given this reality, coupled with the #MeToo movement and the resulting renewed emphasis on preventing workplace sexual harassment, it is important to have a basic understanding of the key practical and legal issues surrounding workplace relationships. Below are answers to five common questions.

1. Is workplace romance unlawful?

No. Title VII of the Civil Rights Act of 1964 is the primary federal law governing sexual harassment in the workplace. Two coworkers having a consensual romantic relationship does not, by itself, violate Title VII. Legal and/or employee relations issues can arise, for example, when romantic relationships involve supervisors and subordinates, when a romance “goes bad,” when there are concerns with favoritism, or when two coworkers bring their romance into the workplace in a way that makes others uncomfortable.

2. When does a workplace romance cross the line?

It is impossible to identify all behaviors that may violate Title VII. Fundamentally, the statute prevents harassment because of a person’s sex. According to the Equal Employment Opportunity Commission (EEOC), “[u]nwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature constitute sexual harassment when this conduct explicitly or implicitly affects an individual’s employment, unreasonably interferes with an individual’s work performance, or creates an intimidating, hostile, or offensive work environment.”

Harassment can include offensive remarks or physical behavior. While Title VII does not generally prevent teasing, offhand comments, or other isolated incidents, such behavior can rise to the level of harassment if it is so frequent or severe that it creates a hostile work environment. The harasser can be a supervisor, an agent of an employer, a coworker, or even a nonemployee. The victim of sexual harassment can be anyone affected by the offensive conduct.

3. Aren’t some workplace relationships beneficial?

Yes. Research has shown that, generally, employees who form genuine relationships with their coworkers and supervisors are happier and more engaged at work, and less likely to leave for another company. Many employers encourage connections between supervisors and subordinates to improve workplace culture. The concept of a “work spouse,” referring to a coworker with whom an employee has a close personal relationship, is increasingly common given the amount of time many employees spend in the workplace. Studies suggest that this kind of tight bond can increase employee motivation, productivity, and retention. Workplace relationships can, however, become the source of legal or practical woes if boundaries are crossed.

4. What can employers do?

Most employers have sexual harassment policies outlining their expectations regarding behavior in the workplace. Employers may also want to provide regular training relating to those policies—in some states, such as California, Connecticut, Illinois, and New York, such training is required. In addition, given the risks relating to workplace romance, employers may also want to consider implementing policies outlining employee conduct expectations related to romantic relationships with coworkers or even third parties, such as vendor employees. There are a variety of permutations to such policies, and some employers prohibit romantic relationships altogether. Others prohibit only romantic relationships between employees and their supervisors. Sometimes, such policies identify the situations in which romantic relationships are permitted (e.g., employees working in different departments) or the potential consequences of romantic relationships (e.g., an employee’s being transferred or having his or her employment terminated).

5. What is a “love contract”?

With a workplace romance, particularly one involving a supervisor and subordinate, there is some risk that an employee may allege that a relationship was involuntary. To mitigate that risk, some employers require employees to disclose any workplace romance and enter into a consensual relationship agreement, commonly called a “love contract.” A love contract is a written acknowledgment signed by both employees involved in a relationship confirming the voluntary and mutual nature of the relationship. Generally, a love contract states that both employees have received, read, and understood the company’s anti-harassment policy and that the relationship does not violate the policy. Love contracts can be perceived negatively by employees, so it is prudent to carefully consider their pros and cons.

© 2020, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.

For more on HR-related concerns, see the National Law Review Labor & Employment law section.

California Law Creates New Risk Factor

Last year, California enacted AB 5 imposing the so-called A-B-C test for employee status under California’s Labor Code.  The legislation basically extended the California Supreme Court’s holding in Dynamex Operations West, Inc. v. Superior Court, 4 Cal. 5th 903 (2018) which imposed the test in the more limited context of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission.

Although aimed at the gig economy, AB 5 has impacted a wide range of traditional businesses.  For example, it was widely reported last year that Vox media had laid off hundreds of California free-lance writers in response to AB 5.  Not surprisingly, the American Society of Journalists and Authors, Inc., and National Press Photographers Association has filed a lawsuit in federal court challenging the new law (A hearing on California’s motion to dismiss is scheduled for March 23).  A ballot initiative measure is currently in circulation to change for “app-based” transportation and delivery drivers.  This month, the California Trucking Association succeeded in obtaining a federal court order enjoining enforcement of AB 5 as to any motor carrier operating in California.

I am music and I write the songs, but am I an employee?

Great uncertainty still abounds about the applicability, application and even constitutionality of AB 5.  Thus, it is not surprising to see issuers identifying AB 5 as a risk factor in their filings with the SEC.  For example, Warner Music Group Corp.  included this risk factor in its Form 10-K concerning independent songwriters and and recording artists:

“Although we believe that the recording artists and songwriters with which we partner are properly characterized as independent contractors, tax or other regulatory authorities may in the future challenge our characterization of these relationships. We are aware of a number of judicial decisions and legislative proposals that could bring about major reforms in worker classification, including the California legislature’s recent passage of California Assembly Bill 5 (“AB 5″). AB 5 purports to codify a new test for determining worker classification that is widely viewed as expanding the scope of employee relationships and narrowing the scope of independent contractor relationships. Given AB 5’s recent passage, there is no guidance from the regulatory authorities charged with its enforcement, and there is a significant degree of uncertainty regarding its application. In addition, AB 5 has been the subject of widespread national discussion and it is possible that other jurisdictions may enact similar laws. If such regulatory authorities or state, federal or foreign courts were to determine that our recording artists and songwriters are employees, and not independent contractors, we would be required to withhold income taxes, to withhold and pay Social Security, Medicare and similar taxes and to pay unemployment and other related payroll taxes. We would also be liable for unpaid past taxes and subject to penalties. As a result, any determination that our recording artists and songwriters are our employees could have a material adverse effect on our business, financial condition and results of operations.”

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

For more on California’s AB5 see the National Law Review Labor & Employment Law section.