Seyfarth Policy Matters Newsletter - November 2020

Seyfarth Shaw LLP

Housekeeping. If you have not yet had a chance to visit Seyfarth’s post-election special legal alert, it can be found here

Stimulus, Vaccines, and Corona. OH MY!

  • First, The Stimulus.  The status of additional stimulus remains where it has been as we have been tracking it for months, ever since the House passed the HEROES Act: nowhere. While the White House has been intimately involved in negotiations through Treasury Secretary Steven Mnucin, the current Administration has washed its hands of it, leaving the current impasse to Congress to deal with. Senate Majority leader Mitch McConnell has demanded Democrats lower the overall size of the package. But as cases across the nation surge, democratic leaders have implored Senator McConnell to return to the bargaining table.
  • Forget The Newspaper Wars, We Have Moved On To Big Pharma Wars.  As the virus goes, so goes the economy. This week, 2020 has gifted Americans a sight rarely seen in 2020: good news! Pfizer and Moderna have been in a battle over who will be first-to-market with a COVID-19 vaccine. This week, we learned that a vaccine is not only imminent, but it is also reported to be 95% efficacious.  The federal government, through Operation Warp Speed, has been working since the pandemic started to make one or more COVID-19 vaccines available as soon as possible. This week, Pfizer announced it would be seeking emergency use authorization from the FDA. We are well aware of the multitude of challenges that lie ahead in the distribution space, but that a vaccine is here, and effective, is remarkable. The next question for employers will be what to do once they have access to a vaccine Thankfully, Seyfarth wrote about just that.
  • Back To Bad News: The Pandemic Is Spreading Faster And Bigger Than Ever.  As those not living in purposeful ignorance are well aware, the Coronavirus is spreading like, well, the plague. States across the Country are implementing additional restrictions to address the spread. While these restriction may help stop the spread, they will not reverse the economic depression on the horizon. That the restrictions can only affect one piece of the COVID-19 pie, evinces that all three of these pieces must point in the same direction — stimulus for the economy, restrictions to prevent unnecessary spread, and, ultimately, a vaccine to get the economy, and everyday life, back to normal.

Who Is In Contention For Labor Secretary?  We here at the PMN firmly believe that often personnel is policy. As such, whoever takes the mantle at the Department of Labor will hold sway over large swaths of policy that directly affects employers. In the Policy Matters Newsletter Election 2020 Special Report, we — mostly in jest — discussed what a potential Bernie Sanders led DOL would look like. We first note that, given the uncertain power dynamic in the Senate, and that Bernie Sanders hails from a State with a Republican Governor, it is unlikely he will end up as Secretary of Labor.

So now that the dust has settled, and we can all agree a Sanders appointment is unlikely, what potential names jump out? Well, it has been reported that Michigan congressman and former union organizer Andy Levin  has secured the support of some union leaders. At the same time, other union leaders are pushing for Boston Mayor Marty Walsh. Also in the mix are California Labor Secretary Julie Su, former acting Secretary under President Obama, Seth Harris, and Deputy secretary of labor in the Obama Administration Chris Lu. Regardless of the ultimate choice, he or she will first have to be confirmed by what is shaping up to remain a GOP controlled Senate, and that may affect the choice. A Seth Harris, for example, may be more likely to be confirmed given that his stances, while firmly left of center, tend to lean more conservative than the other choices. Regardless of the left / right alignment of the candidate, employers should brace for a more employee-friendly DOL, with a significant increase in investigations and legal actions filed against employers.

ADA Title III Under Joe Biden.  We here at PMN have discussed a lot how enforcement will be a central tenet of the most relevant employment agencies under a Biden administration. To that end, it is also worth exploring how the DOJ will enforce the provision of Title III of the ADA. As Seyfarth noted here, as it did under Obama, expect the DOJ to aggressively pursue enforcement actions against employers, especially in the accessibility space when it comes to technology. Moreover, at the end of President Obama’s term, there was more rulemaking activity around issuing accessibility standards for the websites of state and local governments covered by Title II of the ADA. A Biden Administration would likely revive that rulemaking.

Governor Newsom “Hits The Emergency Breaks” On Reopening.  On Monday, Governor Gavin Newsom held a press conference that surprised most in the business community, announcing changes to the state's tier system for reopening in the pandemic, including a curfew for businesses similar to Los Angeles and New York. With the changes, 94% of California's population is now in the most restrictive purple tier. That means no indoor dining at restaurants or indoor operations of gyms, museums, or movie theaters; bars are closed unless they offer full service meals outside, which would put them in the restaurant category. After a tier demotion, a county must show data on the three metrics (cases/100,000, positivity, health equity) in the less-restrictive tier for three weeks before moving back. Indeed, just yesterday, Governor Newsom announced a 10:00 curfew for the 94% of counties in the purple tier. These changes largely are consistent with additional restrictions in other West Coast states like Oregon and Washington, which Seyfarth summarized here. The additional restriction are not relegated to the West Coast — the entire United States has seen a remarkable surge in new cases, once again forcing businesses to shutter their doors. Winter is coming.

President Trump’s Public Charge Rule Survives…At Least Until January 20.  In February, the Department of Homeland Security (“DHS”) began implementation of a new public charge rule, which limits the ability of legal immigrants to gain full citizenship based on their receipt of public benefits, including Medicaid. Earlier this month, a federal judge blocked implementation of the measure as violative of the Administrative Procedure Act. On Nov. 3, 2020, the Seventh Circuit Court of Appeals stayed the district court’s decision enjoining the rule nationwide, permitting USCIS to resume implementation of the rule. For now, the rule makes it more difficult for immigrants who use public services to remain here legally. However, in the likely chance that Joe Biden is sworn in on January 20th, expect DHS under his leadership to strike out the rule as soon as possible.

Trump’s Team Promises A Flurry Of Executive Actions Before Inauguration Day.  The Trump team — in a tacit acknowledgment of losing the election to Joe Biden — has pledged to finalize a number of conservative policy preference through executive action. In the immigration space, for example, the administration has pledged to finalize a rule — which we discussed here, here, and here, restricting employers’ ability to hire workers through the H-1B visa program. Expect the Trump team to issue a flurry of additional executive actions and regulation (or, really, deregulation) in the environmental, workplace safety, employee misclassification, immigration, as well as many other policy spaces.

Prop 22 Easily Passed In California. What Does This Signal In Other States? And The Feds?  Proposition 22, which passed with surprisingly flying colors, exempts gig companies like Uber, Lyft, DoorDash, and Instacart from needing to classify their workers as employees and pay into benefits like workers’ compensation and health insurance. Instead, the companies will offer a limited package of new benefits in exchange for the right to keep their drivers and delivery workers classified as independent contractors—what Uber CEO Dara Khosrowshahi has called a “third way” for gig workers, and which Seyfarth explored here. Mr. Khosrowshahi recently signaled that gig companies intend to expand the Proposition 22 strategy into other states.

Most states, however, do not have an initiative system akin to California. So if the state route does not work, could we see a more uniform national standard as it relates to worker classification? Well, in late September, the DOL issued for the first time proposed interpretations, defining employee versus independent contractor under the FLSA. The interpretations, if finalized, would provide clearer guidance for companies and, in many cases, could minimize the chances that courts apply the FLSA definition of employee to workers who seemingly should be treated as contractors. As noted above, the Trump team is hastily moving to finalize rules prior to January 20, so readers should expect the rule to be Finalized before the end of the year. As we noted here, if the current lead holds as Wisconsin recounts ballots, Biden has already endorsed California’s controversial ABC test — which Seyfarth’s California-centric publication his written on the extensively, and even has its own tag dedicated to the issue — and called for implementation of a similar test on a national level. The Chamber of Commerce encouraged — with a helpful assist from Seyfarth — the DOL to adopt the rule to provide a definitive standard for employers wrestling with this tricky area.

Are States Doing Anything to Protect Businesses’ Experience Rating During the Pandemic?  As readers of this newsletter are aware, the infusion of unemployment insurance through the CARES Act has really been the key to preventing a mass economic calamity during the pandemic. But what effect has the pandemic, which has necessitated thousands of layoff, had on employers experiencer ratings? Typically, the more people a business lays off, the higher its experience rating, and in turn, the employer must pay higher UI taxes. Thankfully, most states have already established policies — typically through executive action or regulation — to not increase an employer’s experience rating for laying off workers during the pandemic. Regardless of your state’s current policy as it relates to experience rating, given the gargantuan number of applicants that have drained UI trust accounts, it’s a near certainty that states will need to raise taxes to replenish these critical trust accounts.


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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