Policy Matters Newsletter - April 2021 #2

Seyfarth Shaw LLP

Is That Infrastructure? Biden Plans To Retrofit Not Just Roads And Bridges. Astute readers of this newsletter have almost assuredly heard the phrase “that’s infrastructure” mentioned by Biden administration officials as they press for inclusion of things like broadband, child / elder care, and the electrical grid in his Job’s proposal. One of the more controversial proposals would allocate $10 Billion to enforcement agencies to “[p]rotect the health, safety, and rights workers of color.” This should not come as a surprise, though, as President Biden has made clear from the outset that he intends to infuse principles of racial equality into his agenda. Indeed, at the outset of his presidency, he signed an Executive Order revoking former President Trump’s EO which declared that the U.S. Armed Forces, government contractors, federal agencies, and recipients of federal grants shall no longer promote so-called “divisive concepts” as a part of any training programs or policies. President Biden’s Job’s Plan -- which mentions racial equity nine times -- does not stray from his promise to seek racial equity.

This anti-bias proposal is only a microcosm of the broader attacks on the proposal. The most relevant, and difficult, question will be how to pay for it. The GOP has balked at the overall cost of the measure. The GOP’s point is well taken: given the political constraints, how does the administration, and its allies in Senate, plan to pay for and pass the proposal? On the one hand, Republicans’ plan would move some of the money allocated to states, localities and tribes left over from the COVID-19 relief plans and add user fees on electrical vehicle without touching the tax rate; the Biden administration’s plan, conversely, plans to pay for the measure by increasing the corporate tax rate from 21% to 28% and winding down the 2017 tax cuts passed under then-President Trump.

Logistically speaking, democrats are pondering proceeding through two separate infrastructure bills: one smaller measure -- likely roads and bridges -- Democrats hope to pass on a bipartisan basis, and one larger bill that would go through reconciliation, requiring only democratic votes in the Senate. On a related note, the Senate GOP, just yesterday, announced a $568 billion counterproposal.

Like stimulus packages in 2020, this plan, and its future developments, will be the hot topic of this newsletter for the foreseeable future, so stay tuned. 

Sweeping Changes Coming To Unemployment Insurance. Democratic senators released a proposal Wednesday to vastly overhaul the unemployment insurance system and increase state jobless benefits. The so-called “discussion draft” from Senator Ron Wyden (D-Or), who chairs the Senate Finance Committee, and Senator Michael Bennet (D-Col) would require states to offer 26 weeks of jobless benefits at 75-percent of a worker's wages. Laid off workers would also be eligible for a new $25 federally-funded weekly allowance per dependent. The proposal would require states to extend eligibility to part-time workers and those who quit their jobs with “good cause,” as well as create a permanent $250 weekly benefit for any jobless workers not covered by the traditional unemployment insurance system, such as those who are self-employed and independent contractors. These enhanced benefits will be funded by expanding the wages on which employers must pay unemployment taxes while reducing the overall tax rate. Most employers typically pay a 0.6 percent tax on the first $7,000 in wages employees earn to contribute to the federal unemployment fund, which is used to pay for the administration of state unemployment agencies. This proposal will likely be met with opposition by Republicans and the business community in general.

Increased Enforcement Is En Vogue And It Is Not Limited To The DOL. As Seyfarth noted here, the California Senate is considering SB 606, which would drastically expand the authority of the Division of Occupational Safety Health (Cal/OSHA) to issue citations, require abatement, and seek court orders to address alleged violations of workplace safety laws. The bill is sponsored primarily by the powerful California Labor Federation, and the United Food and Commercial Workers.

Increased Enforcement Equals Increased Workplace Investigations. Since President Biden’s election, increased enforcement has been at the forefront of the minds everyone in the labor and employment community. Indeed, a number of Seyfarth experts recently hosted a webinar centered exclusively around enforcement. The consensus is clear: The Department of Labor -- particularly the wage and hour division -- is seeking to hire additional investigators to increase enforcement, particularly concerning joint employment and independent contractor classification. Indeed, President Biden’s discretionary funding request for Fiscal Year 2022 includes $14.2 billion -- a $1.7 billion increase from 2021 -- specifically for the DOL.

The news does not improve for employers -- the DOL recently did away with the PAID program -- which many employers thought was successful -- which allowed employers to self-report FLSA violations to the Department of Labor without risk of litigation, enforcement proceedings, or liquidated damages. In its statement scrapping the program, the DOL noted that “[t]he U.S. Department of Labor will rigorously enforce the law, and we will use all the enforcement tools we have available.” Look out.  Thankfully, Seyfarth is on the job to help employers prepare for potential investigations. Specifically, Seyfarth has released three tools for employers to use to limit the risk of facing an aggressive WHD investigation or a costly wage and hour lawsuit.

As The Pandemic Tamps Down, The California Legislature Ramps Up. As we noted in our discussion on a potential Emergency Temporary Standard, across the nation, shots are getting into arms and the pandemic might be breaking through the clouds. Regardless, the California Legislature continues to pass urgent measures related to the pandemic. First, as we noted here, in March, the California Legislature passed SB 95, and Governor Newsom signed it into law, effective immediately as new Labor Code section 248.2. Like the old CA Supplemental Sick Leave Law, the new law requires employers to provide full-time employees with a new allotment of up to 80 hours of CA-SPSL for 2021. The new CA-SPSL greatly expands covered uses, including leave for receiving a vaccination. Moreover, as we noted here, Governor Newsom -- out-of-the blue for many -- signed SB 93, requiring certain employers to offer vacant positions to laid-off employees who are qualified for those positions based on a preference system. Interestingly, the Goveror vetoed an almost identical bill in September, which we wrote about here.

Additional H-2B Seasonal Visas Coming To A Business Near You.  This week, the Department of Homeland Security (“DHS”) announced a supplemental increase of 22,000 visas for the H-2B Temporary Non-Agricultural Worker program. DHS cited the increasingly opening economy as justification for the move. Employers seeking to hire H-2B workers will have to certify in their petitions that there are not enough US workers who are “able, willing, qualified and available” to do the temporary work they are seeking. Regardless, the increase in temporary work visas is hopefully a sign that we are at the tail end of the economic rut caused by the pandemic.

Democratic Lawmakers Push For Withdrawal Of Trump Administration Rules On Independent Contractors And Joint Employment. President Biden's Department of Labor, helmed by Secretary Marty Walsh, is seeking to rescind both rules. More than 75 House Democrats sent two letters to Labor Secretary Marty Walsh Tuesday celebrating his proposal to rescind those rules, writing that the independent contractor rule “creates a competitive disadvantage for law-abiding businesses that properly classify their workers as employees,” and “could also impose a significant financial burden for federal, state, and local governments due to billions in lost tax revenues.” On the joint employer rule, they wrote that it “ma[de] it harder for businesses to be held liable as a ‘joint employer’ when their franchisees or contractors violate” labor laws, itself a reversal from Obama-era policy. As we have previously reported, the Trump Administration's independent contractor rule's effective date has been delayed until May 7, 2021. And as we reported, the joint employer rule went into effect on March 16, 2020, but that was largely invalidated by federal court litigation, which is now before the Second Circuit. Rescission of the rules would moot the litigation and obviate the need for public comment or further delay of the effective date. 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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