Co-Editors, Scott A. Witty, saw@hanftlaw.com and Richard R. Burns, rrb@hanftlaw.com, or 218.722.4766. Please feel free to forward this e-mail or share it with others. If there are other topics of interest to you or any other suggestions concerning this newsletter, please let us know.
This Month’s Topics:
- EMPLOYERS MAY VOLUNTARILY PROVIDE FFCRA PAID LEAVE
- U.S. DEPARTMENT OF LABOR CLARIFIES RULE TO DETERMINE INDEPENDENT CONTRACTOR STATUS
- PRESIDENT BIDEN AND THE LABOR DEPARTMENT
- EEOC PROPOSED RULES COULD HAVE SIGNIFICANT IMPACT ON EMPLOYER WELLNESS PROGRAMS
- Tip Of The Month
EMPLOYERS MAY VOLUNTARILY PROVIDE FFCRA PAID LEAVE
As of January 1, 2021, employers subject to the Families First Coronavirus Relief Act (FFCRA) are no longer required to provide paid leave to employees for COVID-19 related reasons. The Consolidated Appropriations Act, 2021 (CAA), which became law on December 27, 2020, allowed the FFCRA’s paid leave requirement to end. Congress, however, retained the FFCRA tax credit through the first quarter of 2021. This means covered employers may voluntarily provide eligible employees with FFCRA leave through March 31, 2021 and still recover the costs of the leave through the FFCRA’s fully refundable tax credit.
Importantly, the CAA does not restart the clock on FFCRA paid leave. Accordingly, employers cannot claim the tax credit for providing an additional 10 days of paid leave to employees who already exhausted their FFCRA paid leave rights in 2020. But there is some uncertainly regarding expanded Family and Medical Leave Act (FMLA) leave. For employers who measure their employees’ 12 weeks of FMLA leave in a 12-month period using the “calendar year” method, it is unclear whether employees are entitled to an additional 12 weeks of expanded FMLA leave under the FFCRA. Hopefully, the Department of Labor will provide guidance on this issue.
As a reminder, even though the FFCRA leave requirement expired at the end of 2020, employers must still pay employees for any qualifying leave taken through December 31, 2020. Further, employers who decide to voluntarily provide FFCRA paid leave should continue to comply with all FFCRA documentation requirements and provide the leave consistently to all eligible employees in order to avoid discrimination and disparate treatment claims.
U.S. DEPARTMENT OF LABOR CLARIFIES RULE TO DETERMINE INDEPENDENT CONTRACTOR STATUS
On January 7, 2021, the Department of Labor (DOL) published a final rule regarding worker classifications under the Fair Labor Standards Act (FLSA). The distinction between employee and independent contractor is critical under the FLSA because employers must comply with federal wage and overtime requirements for employees, but not independent contractors. Previously, the DOL and most courts used a seven-factor economic realities test to analyze the work relationship between potential employer and individual to determine whether the individual is an employee or an independent contractor. The Department’s final rule, issued after 1,800 comments submitted within the 30-day comment window, reaffirms focus on the economic realities of the relationship, but reduces the test to five non-exhaustive factors and assigns the most probative value to two factors. Under the final rule’s economic realities test, the first two core factors carry greater weight: (1) the individual’s nature and degree of control over the work; and (2) the worker’s opportunity for profit or loss based on initiative and/or investment. If a core factor analysis does not definitively determine worker classification, then the following additional factors are considered: (3) the amount of skill required for the work; (4)the relationship between worker and potential employer; and (5) whether the work is part of an integrated unit of production. The rule is scheduled to take effect March 8, 2021, though it could be revoked, along with any other controversial rule, by majority vote of Congress.
PRESIDENT BIDEN AND THE LABOR DEPARTMENT
With a new President in the White House, changes are expected for employers. In addition to the likely repeal of the employee/independent contractor rule, the joint employer rule – circumstances where two entities are considered the employer and responsible for all employment laws from equal employment to wage and hour may face a challenging future. It was adopted in January 2020, but major parts of it were struck down by a New York Federal Judge in September of 2020. It is likely the Biden Administration simply will not move forward with defending this regulation further in court proceedings.
Also, there are a number of controversial Executive Orders that may be quickly reinstated. The ban on sensitivity training, issued in September by former President Trump, was one of the first executive actions taken, so such training by Federal contractors could again be required. Also, an Obama era directive known as the Fair Pay and Safe Workplace Order, requiring bidders for Federal contracts to disclose labor law violations, will likely be renewed, as well as an order that looks like a type of successor employer determination, revoked by the Trump Administration, that required federal contractors to take over work from an incumbent contractor to give a right of first refusal to employees of its predecessor. Labor Department regulations eliminating many of the quick Union elections rules may be more difficult to overturn promptly, but it is clear the Biden Administration will be much more labor friendly. We can also expect a process to further increase the minimum compensation necessary to meet the salary exempt employee test for overtime payments to begin at the Labor Department.
Finally, COVID-19 relief legislation includes a proposal to raise the Federal minimum wage to $15.00. More than likely this will occur, but it may very well be phased in. This proposal is controversial as it does not take into account the cost of living in various areas of the country. Moreover, the hard hit leisure industry includes many entry level jobs, and it is difficult to see how struggling industries can absorb those increased costs.
EEOC PROPOSED RULES COULD HAVE SIGNIFICANT IMPACT ON EMPLOYER WELLNESS PROGRAMS
On January 7, 2021, the Equal Employment Opportunity Commission (“EEOC”) issued proposed rules governing employer wellness programs (i.e. where employers offer incentives for participating in a program aimed at improving employee health). Under the proposed EEOC rulemaking, employers would generally be restricted to de minimis incentives for participating in wellness programs. The rules indicate that a de minimis incentive would include a water bottle or gift card of modest value. In contrast, incentives such as paying for an employee’s annual gym membership or rewarding an employee with airline tickets would not be de minimis. With that said, there are some significant exceptions to the de minimis general rule, including one that would allow employers to offer employees an incentive of up to 30% of the total cost of coverage, if the incentive is in connection with a health-contingent insurance plan. Employers should review proposed rules to see what, if any, impact they may have on existing or planned wellness programs.
TIP OF THE MONTH:
The FLSA requires employers to pay employees a minimum wage for all hours worked, but may exclude time spent changing clothes or washing at the beginning or end of each workday. Courts view this “preparatory activity” exception narrowly. Thus, employers need to be aware that other preparation activities (other than dressing or washing) must be treated as compensable working time. This includes time spent preparing tools or workstations, picking up assignments or time spent walking/driving to a jobsite (not including commute) before an employee’s shift actually begins.
2021 EMPLOYMENT AND LABOR LAW SEMINAR:
Due to COVID-19, we will not be holding the Annual Employment and Labor Law Seminar in March 2021. We expect the seminar to resume in 2022.
Hanft Fride’s business and trial lawyers are located at 1000 U.S. Bank Place, in Duluth, Minnesota. Visit our website at www.hanftlaw.com for general information on the firm and our attorneys. Our employment lawyers include Tom Torgerson, Rob Merritt and Scott Witty. Richard Burns is now of Counsel.
The information provided in this E-letter is general in nature and should not be used as a substitute for professional services and advice. The communication and receipt of this information is not intended to create an attorney-client relationship. Readers should consult with their legal counsel before taking any action on matters covered in this E‑letter.
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Copyright 2020 by Hanft Fride, P.A. All rights reserved. Hanft Fride, A Professional Association, 1000 U.S. Bank Place, 130 W. Superior Street, Duluth, MN 55802. Phone 218.722.4766; Fax 218.529.2401.