Policy Matters Newsletter – February 2021

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The Parliamentarian Has Spoken: Minimum Wage Can’t Be Raised Through Reconciliation. At this point, readers of this newsletter are assuredly aware of the substantive contours and the procedural hurdles Joe Biden’s COVID-19 stimulus package faces to enactment. So, what is the most controversial aspect of the package? Well, Republicans have balked at, inter alia, aid to states and expanded unemployment, but increasing the minimum wage through not only a legislative package aimed at addressing a pandemic, but also through the arcane and controversial process known as reconciliation, which won’t require any Republican votes, has received perhaps an inordinate amount of attention. Inclusion of the wage bump through this COVID-19 package / reconciliation all came down to the decision of one unelected expert in parliamentary procedure: the parliamentarian, Elizabeth McDonough. On Thursday evening, McDonough found that an increase in the federal minimum wage cannot continue through the stimulus package, a victory for the chamber’s Republican. This leaves Congress with two options: Senators Romney and Cotton’s bill, the Higher Wages for American Workers Act, that would raise the minimum wage to $10; and the Raise the Wage Act, which we discussed here and here. The latter would almost certainly require Democrats to scrap the filibuster rule, or find some way to get an increase passed through the next round of reconciliation. Joe Biden and his staff have made clear they do not desire to overturn the ruling of the parliamentarian, but the path forward on this issue will be among the first big tests for President Biden and Majority Leader Chuck Schumer.

California Judge Refuses To Enjoin Controversial COVID-19 ETS. Many readers are probably wondering, what exactly is an ETS. Well, thankfully our very own expert Scott Hecker recently recorded a podcast with a fantastic explanation of what exactly an ETS does. We encourage the listen.

As we noted here and here, Cal/OSHA’s Emergency Temporary Standard (ETS) was adopted at the State’s Standards Board’s November 19, 2020 meeting. The ETS was immediately met by a number of legal challenges, most prominently from the National Retail Federation and the National Federation of Independent Business. As expected, on Thursday, SF Superior Court Judge Ethan Schulman held that the Plaintiffs could not show that they were likely to prevail on their claims that the regulation violated (1) the due process clause of the 14th Amendment, (2) the Administrative Procedure Act, or (3) that Cal/OSHA exceeded its legal authority.  As such, Judge Schulman refused to enjoin the measure, permitting enforcement of the same to proceed.

PRO Act Provisions Moving Through Employment Agencies? As our wonderful colleague Kyllan Kershaw out of our Atlanta office noted during our podcast on the PRO Act, the legislation, as a monolith, faces an unlikely and uphill path to enactment. However, the Act does represent a sort of labor “wish list.” And many of the items on that wish list appear to be passing through the various federal employment agencies. For example, something akin to California’s ABC test for worker classification could likely see its way through the DOL Rulemaking process – which we discussed here – instead of legislatively.  This audience is probably aware of all the controversial movement at the NLRB, which we discussed here. As noted, Biden immediately replaced with his own people those at the NLRB in charge of setting the agenda. Meaning those replacements will be able to select cases with the right factual predicate to put in front of the NLRB that will build precedent. Perhaps that precedent will accomplish some of the legislative goals set by the PRO Act?

Another provision in the PRO Act is now making its way through the DOL. The DOL’s Wage and Hour Division recently sent a proposed rule – “Joint employer status under the Fair Labor Standards Act” – to the White House regulatory office for review. Although the substance of the new regulation remains unclear, the DOL’s move shows the agency wants to re-open the rulemaking process, potentially leading to a rescission of the Trump-era standard. The regulation will almost certainly expand the definition of what constitutes joint employment, unlike the now frozen rule under the Trump administration, summarized here, that narrowed the circumstances in which businesses can be deemed joint employers.

DOL Eyes Government Contractors As An Enforcement Priority. The policy group here at Seyfarth has discussed, almost ad nauseam, how increased enforcement of employment laws and regulations will be a staple of the Biden administration. While legislative and other priorities are making headlines, federal agencies, and the DOL in particular, have begun preparations to expand investigative and enforcement capacities. Squarely in the cross hairs of the DOL’s enforcement efforts through its Wage and Hour Division are wage violations by government contractors on federally-funded construction and service projects under the Davis Bacon Act and Service Contract Act. We also expect ramped up enforcement by the Department’s Office of Federal Contract Compliance Programs (OFCCP), which enforces contractor requirements to take affirmative action, to not discriminate, and to refrain from discharging or otherwise discriminating against applicants or employees who inquire about, discuss or disclose their compensation or that of others. For a fantastic conversation with the former head of the OFCCP, Craig Leen, we encourage listening to the following podcast, hosted once again by our very own Scott Hecker. Seyfarth’s Government Relations and Policy group will be hosting a Webinar on March 23rd focused exclusively on enforcement, and monitor your inboxes for more details.

Yes, It Is Controversial, But Many Businesses Support President Biden’s Relief Plan. More than 150 senior business leaders from American companies including banking, technology, hospitality, airlines and real estate sectors have signed a letter to back President Biden’s coronavirus relief package. Signatories range from the chairman of one of the largest law firms, Sullivan Cromwell, to the CEO of Goldman Sachs, to the Chief Legal Officer at Survey Monkey.

Legislation Of Import To American Businesses Is Not Relegated to D.C. As we wrote here, in November, Mexican President Andrés Manuel López Obrador proposed legislation that would effectively eliminate outsourcing of personnel, a move that would have a dire effect on American companies’ Mexican workforces. The prevailing view is that this piece of legislation will pass in the near future. Employers should review their current labor structure to understand whether they are utilizing outsourced labor from either a related services entity or a third party entity. For more information on this fascinating development, feel free to reach out to the authors of the piece, Ana Cid or Caitlin Lane.

Legislation Introduced That Would Expand Bostock Holding Beyond Title VII. As we noted here, in June, with the Majority opinion penned by Justice Gorsuch, the Supreme Court held that an employer who fires an individual merely for being gay or transgender violates Title VII of the Civil Rights Act of 1964. In that iteration of the newsletter, we noted that the decision will likely have reverberations beyond Title VII. Well, last week, Representative David Cicilline reintroduced H.R. 5, also known as the Equality act. Seyfarth has been intimately involved in the development of the equal rights legislation, providing testimony at the House Civil Rights and Human Services Subcommittee’s hearing on H.R. 5  as recently as 2019.  The measure would expand the same LGBTQ protections the Bostock decision insulated as it relates to employment to cover all federally funded programs, as well as "public accommodations." While the Equality Act has broad support among Democrats, many Republicans oppose it, asserting that it would infringe upon religious objections. Not necessarily apropos of the Equality Act specifically, but notable regardless, our very own Leon Rodriguez, former Director, USCS (2014-2017) and  Director, Office for Civil Rights, United States Department of Health and Human Services, joined an Amicus Curiae brief in support of the employees position in Bostock.

California Requires Diversity On Corporate Boards. That Idea Might Go National.  Building on a 2018 law, which mandates minimum numbers of female directors, California now requires publicly held corporations headquartered in California to have corporate boards that include at least one person from an “underrepresented community” by the end of 2021, and two to three, depending on the size of the board, by the end of 2022. As we have noted, often, policy that starts in California finds its way into the national policy discourse. Well, on Tuesday, New Jersey Senator Bob Menendez reintroduced legislation that would require public companies to disclose the racial, ethnic, gender, and veteran composition of their corporate boards and senior management. The measure is supported by a diverse variety of groups and associations. While the bill does not go as far as what California requires, it is an example of west-east symmetry.

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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