The DE OFCCP Week in Review (WIR) is a simple, fast and direct summary of relevant happenings in the OFCCP regulatory environment, authored by experts John C. Fox, Candee Chambers and Jennifer Polcer. In today’s edition, they discuss:

• Democrats Introduce Workforce Justice Act in Congress Seeking to Federally Mandate “Ban-the-Box” Compliance
• What Employers Should Know About the American Rescue Plan Act of 2021
• Biden Administration Seeks to Withdraw Trump Administration Tip-Pooling Wage-Hour Rules

Wednesday, March 3, 2021: Democrats Introduce Workforce Justice Act in Congress Seeking to Federally Mandate “Ban-the-Box” Compliance

Democrats re-introduced the Workforce Justice Act, House Bill 1598. Rep. David Trone (D-Md.) previously introduced a similar bill in 2020 during the 116th Congress. The bill seeks to deny certain types of federal financial assistance to those states which fail to pass statutes prohibiting private employers from asking about the criminal history of job applicants. Legislation seeking to prohibit employer pre-offer inquiries of a job applicant’s criminal justice history are often referred to as “Ban-the-Box” legislation because employers checking the criminal histories of applicants for employment often require those applicants to check a box if they have the described criminal justice history about which the application form makes inquiry. Specifically, the bill would require the states to implement prohibitions within three years after enactment of the bill. If a state were to fail to implement the changes HB 1598 would mandate, the state would become ineligible for federal criminal justice assistance grants provided for personnel, training, equipment and supplies for state, local and tribal police forces.

As employers know, “second-chance hiring” has been pushed by civil rights advocates to address higher minority unemployment rates given the disproportionate imprisonment rates among minorities, to reduce recidivism rates among parolees (2/3rds of whom are rearrested within 3 years of release from prison), and to provide individuals with a criminal past a better chance to find work. “Ban the box” laws have recently gained some popularity, to the point that thirteen states and the District of Columbia now have laws prohibiting private employers from asking certain criminal history questions on job applications.

To date, there is no federal prohibition against asking job applicants about their criminal history on written application forms.  While time ran out on the 116^th Congress to take action on the Act when it was previously introduced, it’s early introduction in this 117th Congress signals that Democrats are going to take another run at this legislation. At this time, however, the legislation has little chance of succeeding in the United States Senate, even if it were to pass in the House of Representatives. This is because of the composition of the United States Senate and because of the current Senate Rules which would require any such legislation to pass on a bi-partisan vote of 60 or more Senators.

This checkerboard of states with “Ban-the-Box” legislation could very well continue if this does not pass in the Senate, adding to the many challenges multi-state employers face in determining which states (and in some cases, municipalities) have passed the legislation.

Monday, March 15, 2021: What Employers Should Know About the American Rescue Plan Act of 2021

President Biden signed the American Rescue Plan Act (“ARPA”) on March 11th last week, opening the faucet to funding and subsidies of at least $1.9 trillion. Employers should be aware of the various provisions ARPA contains impacting the business community:

• Increased funding and expanded eligibility for small businesses through the Paycheck Protection Program first established under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”);
• Directed increased monitoring and enforcement actions against employer worksites transmitting the COVID-19 virus. As a result, employers will need to be proactive to ensure worker protections from COVID-19 transmittal at work. ARPA increased funding to the U.S. Department of Labor and OSHA for worker protection activities and included funding for training and enforcement actions;
• Extended the tax credit available to employers which have voluntarily continued to provide paid sick leave for illness due to COVID-19 under the Families First Coronavirus Response Act (“FFCRA”). (As employers may recall, the requirement to provide paid sick leave under FFCRA expired on December 31, 2020). ARPA extended the tax credit employers may claim to cover the cost to provide paid leave from March 31, 2021 to September 30, 2021 if the employer voluntarily chooses to extend its paid sick leave program. For such employers, ARPA also increased the limit of the tax credit (to $12,000.00) available to employers to recompense their COVID-19 related paid sick leave costs;
• ARPA added three qualifying reasons for leave under the FFCRA if an employer chose to voluntarily provide such leave. Employees may now take paid leave, if the employer has chosen to provide the leave to allow an employee to:
  • obtain a vaccination for COVID-19,
  • recover from any injury or illness related to immunization or vaccination, or
  • seek or await results of testing for COVID-19;
• Beginning April 1, 2021 and ending on September 1, 2021, the federal government will subsidize 100% of the costs of COBRA premiums employees pay to continue their medical benefits for themselves and their dependents when a COBRA-qualifying change of benefits status triggers at COBRA-covered companies. ARPA also now requires employers to update their COBRA notices to eligible employees. We expect federal agencies to soon provide a model of that notice. (You may also wish to check with your medical insurance carrier to get the required updated COBRA notice from it and/or to ensure the carrier is using the updated notice when sending COBRA notices to qualifying employees on your company’s behalf)

Wednesday, March 17, 2021: Biden Administration Seeks to Withdraw Trump Administration Tip-Pooling Wage-Hour Rules

The Wage and Hour Division (“WHD”) of the U.S. Department of Labor (“DOL”) transmitted to the White House Office of Management and Budget, Office of Information and Regulatory Affairs, a new proposed Rule related to minimum wage treatment of tipped workers.  The substance of the new Proposed Rule is not yet publicly known. The Biden proposed Rule (to come) will seek to amend or withdraw a pending Trump Final Rule on the same subject. The issue involves interpretations of the Congress’ amendments to the Fair Labor Standards Act through the Consolidated Appropriations Act of 2018 (CAA).

How We Got Here

The Trump WHD announced a Final Rule on December 22, 2020 which it published in the Federal Register on December 30, 2020 (with a March 1, 2021 legally effective date). It is that Final Rule the Biden Administration is now seeking to revise. On February 25, 2021 the Biden WHD issued a Rule which delayed the Trump Final Rule until April 30, 2021. As a result, the WHD’s 2011 tip pooling rules are still in effect.

What’s the Dispute?

The Trump WHD Final Rule would allow employers to pay a $2.13 per hour minimum wage for tipped employees regardless of the amount of time those tipped employees spent on non-tip generating duties if their tips nonetheless added up to the federal minimum hourly wage of $7.25. Note: The prior 2011 Rule the Trump Administration seeks to amend through its pending Final Rule had required that tipped employees could spend only at most 20% of their workday on non-tip generating duties for the $2.13 per hour minimum wage rate to apply. This was the so-called “80/20 rule.” The Trump WHD Final Rule also seeks to install a new permission allowing tip pools to be shared with non-tipped kitchen staff like dish washers and cooks and a prohibition first contained in the 2018 CAA that prohibited management employees from participating in tip-pooling arrangements.

Even before the Biden Administration’s actions this week, eight states and the District of Columbia brought suit in January 2021 seeking to reverse the Trump WHD Final Rule. This Complaint centered its attack primarily on the proposed demise of the 80/20 rule. The Complainants challenged its withdrawal as “arbitrary and capricious” and not otherwise in accordance with law in violation of the Administrative Procedure Act.

What’s Next?

The Biden Administration’s proposal could obviate the pending litigation by either seeking to withdraw the pending Trump Final Rule, or by proposing a new Rule different from the Trump WHD Final Rule. Employers should keep an eye on both the proposed Rule that the Biden Administration eventually publishes, as well as whether private companies seek to intervene in the pending lawsuit in defense of the Trump WHD Final Rule.