Policy Matters Newsletter - May 2021

Seyfarth Shaw LLP

 The Great Loosening: Easing of Coronavirus Restrictions Across The Union. Since Joe Biden’s election, this space has discussed the great expansion of the Paycheck Protection Program, as well as the great undoing of a number of Donald Trump era rules and orders. The CDC brought the Country into the third iteration of this saga when it announced that it would be loosening guidance on face covering requirements for vaccinated individuals — which Seyfarth attorneys discussed here — setting the labor and employment community’s hair on fire. Shortly after the CDC announcement, OSHA followed suit shortly thereafter, announcing that fully vaccinated individuals may resume their pre-COVID-19 pandemic activities. 

While many are celebrating the federal government’s more laissez faire approach to masking, readers of this newsletter should be aware that the guidance provides for an exception where masking is still required by “federal, state, local, tribal, or territorial laws, rules, and regulations, including local business and workplace guidance.” As such, before opening up their businesses to mask-less revelers, employers must first check their local requirements before changing any masking policy. Below is a small sampling of where the state of the law stands on masking:

  • New York: As of Wednesday, New York has officially adopted the CDC interim guidance for fully vaccinated individuals. Before the CDC announcement, New York has already issued reopening guidance curtailing a number of COVID-19 restrictions, namely with respect to social distancing and capacity limits.
  • New Jersey: Governor Murphy recently issued executive orders to gradually ease the capacity restrictions on indoor and outdoor gatherings (Executive Order 238and Executive Order 239), similar to New York. Unlike in New York, though, Governor Murphy stood firm on saying it’s too soon to drop New Jersey’s indoor public mask rules for vaccinated people, despite new guidance.
  • Connecticut: Connecticut has updated its masking guidance to conform to the CDC’s recommendations.
  • Pennsylvania: The commonwealth’s masking order was tied to the CDC guidance. As such, when the new CDC guidance on mask wearing changed, so did the guidance regarding the same in Pennsylvania. The City of Philadelphia, unlike the state in which it sits, will continue to require masks indoors, underscoring the importance of checking local regulations.
  • Massachusetts: As Seyfarth noted here, this week, Massachusetts Governor Charlie Baker announced that the Commonwealth will end most COVID-19 restrictions by May 29. In addition, the Commonwealth will rescind all gathering limits and the mask mandate will be lifted and replaced with an advisory in line with the guidance issued by the CDC.
  • California: In the beginning of April, Governor Newsom announced that California would be reopening on June 15. Unlike its counterparts to east, however, Governor Newsom tweeted that California will not implement the new CDC masking guidelines until the previously announced reopening date of 6/15. As Seyfarth noted here, Cal/OSHA will consider changes to the COVID-19 Emergency Temporary Standard, including a provision that would exempt fully vaccinated workers from the mask requirement.
  • Washington: On Tuesday, the state of Washington updated its guidance concerning face coverings to conform to the CDC’s recommendations for vaccinated individuals.

Infrastructure Counter Offer Running Late. A group of Republican senators led by Senator Shelly Moore Capito (R-WV) met with President Biden last week to discuss their $568 billion infrastructure package, which would keep the 2017 tax cuts and dedicate half of its total funding to roads and bridges. Paying for the proposal, however, isn’t quite clear, but the answer, at least according to the GOP, is certainly not a corporate tax rate hike. President Biden gave the senators a deadline of this past Tuesday to submit another counterproposal, but they appear to have blown the deadline. Seyfarth has reported extensively on President Biden’s $2.25 trillion infrastructure proposal, including on how it would impact the energy sector.  What movement might be contained in the forthcoming Republican counterproposal is difficult to say. It’s also not clear that one will be coming at all. But we will continue to report on any new developments.

First Rapid Response Complaint Under The USMCA (NAFTA successor). Under the United States-Mexico-Canada Agreement (USMCA), Mexico’s labor laws were reformed dramatically, for example by adopting an union organizing system similar to that under the National Labor Relations Act in the United States. A combination of American and Mexican unions and advocacy groups filed the first complaint (called a request for review) under the USMCA, alleging that Tridonex, which is a subsidiary of the U.S. company Cardone, had interfered in union election and terminated employees for their union support, among other allegations. The complaint will be investigated by the U.S. Interagency Labor Committee, which includes the Secretary of Labor and the U.S. Trade Representative, among other members. If the Committee finds evidence of a violation, the U.S. Representative will file a petition to invoke the USMCA’s arbitration process, which is called the “rapid response mechanism.” So what are the potential consequence? Well, if the panel of arbitrators ultimately finds that Tridonex violated the provisions of the USMCA, it could lose access to preferential tariffs granted under the USMCA. Manufacturers that depend on supply chains including facilities in Mexico must prepare for investigations like these and implement practices and policies to ensure compliance with the USMCA’s labor provision to avoid disruptions and increased costs.

She’s Just Not That Into You: Workers Compensation Exclusivity And Presumptions. Since the onset of the pandemic, and without a federal liability shield in place, employers have been rightfully concerned over whether the courts would push claims based on workplace contraction of COVID-19 through the exclusive workers’ compensation system. After a long wait, we can confidently say that question, for the most part, has been answered. One case study is illuminating  -- On May 10, 2021, a judge for the U.S. District Court for the Northern District of California dismissed a lawsuit filed by the wife of a construction worker against his employer after he allegedly contracted COVID-19 at his workplace and transmitted it to her. The court found her claims against her husband’s employer, even though she was not the defendant’s employee, were “barred by the exclusive remedy provisions of California’s workers’ compensation statutes” This piece of precedent is important in that (1) it comes from a traditionally employee friendly venue and (2) the court found the doctrine barred proceeding in Court even though the plaintiff was in no way affiliated with the defendant employer. While there are always exceptions, employers should rest somewhat confident knowing that claims of this nature will likely be funneled through the workers’ compensation system.

It’s A Love / Hate Thing: COVID-19 Passports. Although many states and private companies are developing apps and other technology to allow people to show proof of vaccination upon admission to an event or facility, other states are taking steps to ban vaccine passports altogether.  Florida was the first state in the union to enact legislation banning the use or requirement of vaccine passports. And Texas Governor Greg Abbott issued an executive order banning the use or requirement of vaccine passports, viewing them as an affront to Texans’ personal freedoms. And in case you missed it, on May 5, 2021, Seyfarth attorneys and special guests from the U.S. Chamber of Commerce and World Economic Forum held a webinar exploring how businesses might implement vaccine passports within their workforces.  Check it out here. Seyfarth has previously reported on how vaccine passports could be invaluable to resuming international business travel. For multi-state employers considering a passport solution, it will be important to stay abreast of how states address the issue via legislation and executive orders.  We will continue to monitor developments on this front.

 The DOL Independent Contractor Classification Rule Is Officially Rescinded. Now What? As we noted here, on January 6, 2021, the DOL still under then President’ Trump’s helm, finalized a new rule, making it easier for companies, including those in the “gig economy,” to classify their workers as independent contractors, rather than employees. On March 11, with President Biden firmly ensconced in the Oval Office, the DOL proposed to formally rescind the Independent Contractor rule. As Seyfarth noted here, the DOL formally rescinded the helpful rule on May 5, reverting the analysis back to a confusing a balancing test that varies from circuit to circuit, creating litigation results that often seem like they are dependent on each judge’s particular views. The Coalition for Workforce Innovation, which implored the DOL to not rescind the rule, has filed suit alleging that rescinding the rule violation the Administrative Procedure Act. Many in the plaintiffs’ bar will advocate for the DOL to adopt the so-called ABC test, as it is used in California, either through notice-and-comment rulemaking, amicus briefs, opinion letter(s), Administrator Interpretation, or other. Regardless of the form, the DOL under President Biden is expected to issue its own interpretation of how it believes courts should define employee under the FLSA. Representative McHenry (R-NC) has introduced legislation titled the "Gig Worker Equity Compensation Act" (H.R. 2990), which would preempt any state law that creates a presumption that an individual is an "employee" for purposes of wage-rate and benefit requirements. Stay tuned — we certainly will.

Less-Carrot, More-Stick When It Comes To DOL Enforcement. We at the PMN have been following closely changes in enforcement priorities under the Biden administration. On the first day of President Biden’s tenure, he rescinded the Trump-era “PRO Good Guidance” rule. The “Guidance” rule limited the force of informal guidance in DOL enforcement actions, permitting more employer freedom to interpret federal statutes. With that EO rescinded, the DOL was able to expand its enforcement priorities. Seyfarth summarized the shift in enforcement strategy here, and provided a few tips for employers staring down a potential enforcement investigation. In addition to retaining competent counsel, employers should anticipate the difference in enforcement actions by equipping themselves for responding to a potential investigation by, for example, obtaining a copy of Seyfarth’s FLSA Handbook, which can be found here.

Labor Shortages Abound.  There were a record 8.1 million job openings available going into April. The GOP points to enhanced federal unemployment benefits as part of the cause of the shortage. As a result, at least fourteen states have moved to cut off those benefits and roughly thirty are reinstating a requirement that unemployed people prove they are looking for work to receive benefits. However, the Department of Labor reported that 473,000 people filed initial claims for jobless benefits in the week ending May 8, down 34,000 from the previous week and the lowest since the pandemic began. This indicates that although unemployment benefits are a factor in the slow pace of hiring, a combination of lingering health concerns, lack of child care and workers being choosier about their job choices are also likely to blame. There are also other factors that contribute to the slow hiring that may not be as easy to track, like early retirements and career changes. Moreover, some businesses actually grew during the pandemic, and some just need more workers to comply with the additional COVID-19 protections. Conclusion: no single factor is causing this issue.

Johnny, We Hardly Knew Ye: The Elusive OSHA ETS. We here at PMN have been following a potential emergency temporary standard since Nancy Pelosi introduced the HEROES Act almost a year ago. The ephemeral ETS is still in review by the Office of Management and budget. But now that OSHA endorsed the CDC mask rule, the legal basis for an ETS is even more elusive, not that it wasn’t already elusive. In order to institute an ETS, OSHA must prove that COVID-19 poses a “grave danger” to workers that a regulation can prevent, and requires OSHA to give “due regards” to recommendations from the CDC. It’s gonna be hard to justify an emergency standard when the emergency is being addressed, at least according to the CDC. This is not to say an ETS won’t be forced through, but expect the Texas courthouse express to be in litigation overdrive as various associations rush down to Texas to start litigation to stop the ETS, if it finally emerges.

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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