Seyfarth Policy Matters Newsletter - August 2020

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23 State AGs Coordinate to Sweep Shaky Legal Footing of Immigration Executive Orders.  As we at the PMN summarized here, and as Seyfarth explored here, on April 23, President Trump issued an Executive Proclamation banning entry for most legal immigrants being sponsored by U.S. citizens or legal permanent resident family members, by their employers, or who had won the diversity visa lottery. The April proclamation was set to expire in 60 days, but President Trump renewed it on June 22 – which we wrote about here – also adding new bans on non-immigrant workers arriving on H-1B, H-2B, J, and L visas. Recently, 23 state attorneys general jointly filed an amicus brief in support of a legal challenge to the orders. The AGs contend that President Trump’s immigration bans “substantially disrupt the nation’s carefully calibrated immigration system, which is the product of decades of well-founded policy judgments made by Congress.” Additionally, Seyfarth prepared a brief on behalf of the Society for Human Resource Management (SHRM) and over 100 sponsoring organizations, host family members, and employers who participate in the J-1 visa program. On a somewhat related note, the Second Circuit Court of Appeals has narrowed a previous nationwide injunction on the administration policy limiting immigration among people using public benefits, limiting application of the injunction to New York, Connecticut, and Vermont. About 2500 miles to the West, the 9th Circuit issued a similar ruling, upholding an injunction of an Administration policy barring migrants from seeking asylum in the U.S. if they first passed through another nation, but also narrowing the previous nationwide injunction to states within the 9th circuit.

A Little Much-Needed Breathing Room: ICE Extends Flexibility on I-9 Compliance.  As Seyfarth wrote here, ICE announced that employers will have an additional 30-day extension to take advantage of the relaxed requirement to defer the in-person, physical inspection of new hires’ identity and employment eligibility documentation that was initially granted in March and will now expire on September 19, 2020. Importantly, the extension of the “policy only applies to employers and workplaces that are operating remotely. If there are employees physically present at a work location, no exceptions are being implemented at this time for in-person verification of identity and employment eligibility documentation for Form I-9.”

Stimulus Negotiations Fail; Trump Acts Without Congress.  As was widely reported in the press, the gulf between the Senate GOP, House Democrats, and the White House was simply too wide to result in any kind of a negotiated legislation. As the PMN summarized recently, the Senate version of the stimulus – the HEALS Act – contained too many controversial provisions for stakeholders to settle on a compromise between that legislation and the House version – the HEROES Act – which passed months ago, summarized in detail by Seyfarth here. While the proposed liability shield and extended unemployment provisions were certainly among the most controversial provisions of the HEALS Act, it has been widely reported that the main source of disagreement was fiscal aid for states and cities. Unfortunately for the swaths of citizens currently hurting for a variety of reasons, the negotiating stakeholders have signaled that an additional stimulus package won’t see the light of day until, at the earliest, September. Indeed, reports abound that the parties remain at a negotiating standstill. After the collapse of the negotiations, President Trump followed through on his threat of executive action. Seyfarth provided a summary of the four executive actions here. The executive orders taken appear to have far less force than originally promised. In the four blurbs below, we summarize each executive action taken by the President.

Executive Memorandum Extends Federal Student Loan Forbearance to End of the Year.  President Trump published a Memorandum directing the US Department of Education (“DOE”) to extend federal student loan re-payment relief by three months. The CARES Act, directed the DOE and its loan servicers put all federal student loan borrowers into administrative forbearance until September 30, 2020, with interest accrual suspended as well. This Memorandum would extend the forbearance until the end of the year, December 31, 2020. Memo at §2. The DOE has an extensive FAQ page about how pandemic forbearance works on its website. Federal loan payments are expected to restart on January 1, 2021.

Executive Memorandum Seeks to Defer Payroll Tax Obligations.  Long on the President’s tax cut wish list has been a Payroll Tax cut. As negotiations over the next stimulus package evolved, it became clear that such a tax cut would not be a part of any negotiated legislation. Indeed, such a tax cut was not even mentioned in the Senate’s proposed HEALS Act. Perhaps the lack of a visible payroll tax cut in the Senate proposal or negotiations over the next stimulus bill is a reflection of economists warnings against such a tax cut. Despite the potential pitfalls of using a payroll tax cut to stimulate the economy, President Trump issued an Executive Memorandum that directs the Secretary of Treasury to defer the withholding, deposit, and payment of the employee portion of social security tax (but not Medicare tax) on wages or compensation paid during the period of September 1, 2020, through December 31, 2020. In somewhat of a surprise move, the U.S. Chamber of Commerce – a typically of President Trump’s executive actions – came out strong against the President deferring the Payroll Tax obligation unilaterally. Notably, the President’s Memorandum provides only for the deferral of the employee portion of social security tax – an affected employee will ultimately be required to pay any remaining deferred tax. It remains unclear whether this action will boost the economy. Treasury Secretary Mnuchin recently said the government will not be able to force participation in the program. Indeed, a number of large American companies have said they will not adhere to the President’s tax deferral offer under the memorandum, noting that “under a simple deferral, employees would be stuck with a large tax bill in 2021.” In response, Larry Kudlow, director of the Administration’s Economic Council, said “[a]s far as the payback is concerned, . . . you could stretch that out over a long period of time, so the payback won’t be immediate and no one will be burdened.” Stay tuned to this space.

The 3rd Executive Memorandum Seeks to Extend – Reduced – Enhanced Unemployment Benefits.  As most breathing Americans are aware, the enhanced $600 a week of unemployment benefits under the CARES Act expired on July 31, 2020. The world watched as negotiations to extend the benefit faltered. In response to the legislative failure, President Trump issued an Executive Memorandum, attempting to redirect previously appropriated funds from general disaster relief to provide unemployment benefits in the form of an up to $400-per-week unemployment compensation supplement, to be provided for so long as the Disaster Relief Fund contains at least $25 billion in funds or until December 6, 2020. The Memorandum also increases the required minimum weekly assistance requirement from $1 of state unemployment compensation assistance to at least $100. This action is expected to result in approximately five weeks of benefits before exhausting available funding in the Disaster Relief Fund. The DOL and FEMA recently issued guidance to provide states with technical assistance for administering LWA, which Seyfarth analyzed here. The biggest change from how benefits were distributed under the CARES Act is that the federal government will now only pay for only 75% of the costs associated with this benefit. Because of the changes to the system, it could take states weeks to adopt a new system of distributing unemployment benefits. While some states have pledged to adopt new unemployment systems in exchange for federal dollars, many states, have relayed their hesitation to implement an entirely new system in order to obtain additional federal aid. Moreover, and perhaps more importantly, this Memorandum stands on dubious legal footing and will almost certainly face myriad legal challenges. For a more in-depth summary of the memo, see Seyfarth’s piece here.

President Trump Marshals Federal Knowledge Base to Determine Means to Halt Evictions.  President Trump signed an Executive Order seeking to determine ways to assist renters and homeowners during the COVID-19 pandemic. The EO directs the Department of Health and Human Services and the Centers for Disease Control to “consider whether any measures temporarily halting residential evictions are necessary to halt the spread of COVID-19.” The departments of the Treasury and Housing and Urban Development were also instructed to identify sources of funding for rental assistance. The four-month CARES Act moratorium on evictions ended July 25, and most states are letting their own temporary protections expire. At the same time, the federal enhancement to unemployment benefits is being adjusted down. According to some (see also here), the EO alone likely will not be enough to halt evictions.

California Judicial Counsel Extends Moratorium on Eviction; Urges Legislative Action.  Speaking of the eviction problem, as Seyfarth noted in prior updates, on April 6, 2020, the California Judicial Council issued emergency amendments to the California Rules of Court that (1) prohibited the issuance of a summons or entering of a default in eviction actions and (2) stayed pending judicial foreclosure actions. A Seyfarth detailed here, on August 13, 2020, the Judicial Council voted 19-1 for these rules to remain in effect only through September 1, 2020. California Supreme Court Chief Justice Cantil-Sakauye comments on the extension make clear that this is likely the last time the Judiciary will extend the rule. Specifically, the Chief Justice implored the political branches to act expeditiously to resolve the looming crisis in evictions, foreclosures and homelessness.

New York Moves to Decrease COVID-19 Liability Protections For Health Care Facilities.  On August 3, 2020, Governor Andrew Cuomo signed Bill No. S8835 into law, which eliminated a number of the protections provided under the Emergency or Disaster Treatment Protection Act (“EDTPA”). New York first passed the EDTPA as part of the New York State budget (Bill No. S7506) on April 3, 2020. The EDTPA applied retroactively to the beginning of the COVID-19 emergency declaration in New York and provided health care facilities and health care professionals with protection from civil and criminal liability in connection with COVID-19-related health care services and in connection with the care of any other individuals during the period of the COVID-19 emergency. When Governor Cuomo signed the new law on August 3, a number of significant liability protections were eliminated. For a review of the protections that were eliminated and a full analysis of the new law, see Seyfarth’s latest Legal Update.

California Legislature Seeks to Alter Workers’ Compensation System to Benefit Employees Who Contract COVID-19.  As we noted here, in the beginning of May, Governor Newsom issued Executive Order N-62-20, which essentially shifted the burden of proof on workers’ compensation claims that typically falls on workers and instead requires companies or insurers to prove that the employees didn’t get sick at work. California lawmakers have advanced two bills – AB 196 (essential occupations) and AB 664 (first responders) – seeking to expand on the Governor’s order by creating a presumption that workers who fall ill have contracted the virus at work. The measures head to the Senate Appropriations Committee, where many costly and controversial bills go to die. If they get out, it’s on to the Senate floor, where, historically, bills that see that red floor move to the Governor’s desk.

Connecticut and New Jersey Also Move to Decrease COVID-19 Liability Protections For Those Employing Essential Workers.  It’s not every day that a State Executive Order trends at #1 on reddit.com. This happened on Wednesday, when Executive Order No. 7JJJ, signed by Connecticut Gov. Ned Lamont on July 24, went “viral.” With certain qualifications, Governor Lamont’s Order creates a “rebuttable presumption that an employee who initiates a claim for payment of [workers’ compensation] benefits . . . and who missed a day or more of work between March 10, 2020 and May 20, 2020, inclusive, due to a diagnosis of COVID-19, or due to symptoms that were diagnosed as COVID-19, contracted COVID-19 as an occupational disease arising out of and in the course of employment.” Other states have allowed their legislatures to work through and debate such presumptions. For example, we at the PMN have been reporting on Bill No. S2380 in the New Jersey Legislature for the past few months. On July 30, the New Jersey State Assembly and Senate passed the Bill with a 42-27 vote in the Assembly and a 27-12 vote in the Senate. As we previously reported, the Bill would create a rebuttable presumption that the contraction of COVID-19 by an essential employee is work-related for purposes of collecting workers’ compensation. If signed into law by Governor Phil Murphy, the legislation would take effect immediately and be retroactive to March 9. Bill at §3. Gov. Murphy’s Executive Order No. 171, issued on August 1, extended the public health emergency, which he declared in his March 9 Executive Order No. 103.

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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