2021 Off to a Running Start
After the employment-related challenges of 2020, many hoped this year would be a bit less exciting for employers.
2021, it seems, has other plans.
After just one month, employers already appear to be on track to meet or exceed the number of challenges they faced in 2020. With a continuing COVID pandemic, a new administration in the White House, and a shift in the balance of power Congress – we are certain to see many more changes in the months ahead.
Key developments include:
Employee COVID Vaccination- EEOC Guidance Issued
The EEOC issued guidance in late December for employers who may be considering requiring employee vaccinations. Essentially the guidance confirmed that employers may require employees to be vaccinated provided it is for job-related reasons and consistent with business necessity. While the EEOC advised that vaccinations are not “medical examinations” under the Americans with Disabilities Act, some pre-screening questions may be – a distinction more likely to be problematic for employers who intend to administer vaccines.
Employers requiring vaccinations will need to be prepared to evaluate and respond to requests for reasonable accommodation based on disabilities and religious objections.
Paid COVID-Related Leave Provisions- Modified by Consolidated Appropriations Act
The Consolidated Appropriations Act (CAA), which was signed into law on December 27, 2020, allowed the mandatory paid leave provisions of FFCRA to expire as of December 31, 2020 but extended the tax credits for paid sick and extended family leave provided between January 1 and March 31, 2021. This allows employers to choose whether to provide paid leave up to the total leave limits set forth under FFCRA.
While employers may opt not to provide leave, if they do, such leave will be subject to the same limitations on reasons for leave, pay caps, and documentation requirements. On January 4, 2021, the Department of Labor issued additional guidance confirming that employees who did not use FFCRA leave in 2020 may use it through March 31, 2021, but only if their employer voluntarily provides such leave.
The guidance further allows employees who believe their employers violated their rights under FFCRA to file a complaint with the Department of Labor for up to two years (three years if the violation is willful) following the alleged violation. Employers who wish to extend paid leave to employees in 2021 should ensure they have a clear policy that is applied consistently, and should work with their accounting firm to ensure they are properly documenting the paid leave to take the payroll tax credit.
Pennsylvania Overtime Rules– Modifications to Take Effect in October 2021
Revisions to the state Minimum Wage Act, originally put in place in October 2020, will have their first real impact on employers as of October 3, 2021, when the Pennsylvania salary threshold for overtime exemptions will increase from $35,569 (the current federal threshold) to $40,560. Additional increases are slated for 2022 ($45,500) and, beginning in 2023, will increase every three years thereafter.
Like the federal rule, the state overtime rule allows up to 10% of the salary threshold to be satisfied by certain non-discretionary bonuses, incentives, and commissions. The Pennsylvania overtime rule still does not include an exemption for highly compensated or certain computer employees. Employers should review their salaries to identify any affected employees or positions now, and take appropriate steps to comply in October.
On January 20, 2021, President Biden’s Chief of Staff formally asked federal agencies to freeze all pending regulations, including those with pending effective dates, to allow the President’s new appointees to review the rules.
Affected Department of Labor Rules include those addressing tip pooling and independent contractor status, which are summarized below. While the fate of these and other affected regulations is uncertain, employers should continue to monitor additional developments related to those that may impact their organizations.
Tip Pooling- Final Rule Issued – (On Hold)
On December 30, 2020, the Department of Labor published its final rule revising regulations for tipped employees, which was to take effect on March 1, 2021. The rule requires specific notice to employees as a condition of taking a tip-credit (i.e. paying less than minimum wage, provided the reduced wage and tips is equal to or greater than minimum wage).
The rule also expands tip pooling to “back of house” workers, such as cooks, dishwashers, etc., and allows them to be included in the tip pools of “front of house” workers, such as bartenders and servers. This extension of tip pooling is only permitted if the tip pool does not include any owners, managers, or supervisors, and the employer pays the front of house, tipped workers the full minimum wage, and does not take the tip credit. The rule further clarifies that an employer may take a tip credit for employees who perform both tipped and non-tipped duties only if the non-tipped duties: 1) are related to the tipped duties, and 2) are performed contemporaneously (or nearly so) with their tipped duties.
In addition to the regulatory freeze mentioned above, on January 19, 2021, a coalition of eight states and the District of Columbia, led by Pennsylvania Attorney General Josh Shapiro and Illinois Attorney General Kwame Raoul, challenged the rule on the basis that it would reduce wages for tipped workers.
Independent Contractor Analysis– Final Rule Issued (On Hold)
On January 7, 2021, the Department of Labor published a final rule clarifying the standard for evaluating independent contractor vs. employee status under the FLSA. The rule was set to take effect on March 8, 2021. The rule attempts to streamline and simplify the analysis by replacing the prior seven-factor economic realities test with two core factors: 1) the nature and degree of control over work, and 2) the worker’s opportunity for profit or loss.
While these two core factors are the focus of the analysis, the new rule allows three additional factors to be considered in cases where the core factors are not determinative: 1) skill required for the work, 2) degree of permanence in the relationship, and 3) whether the work is part of an “integrated unit of production.” Based on prior comments, it is believed this particular rule is unlikely to survive, but we will continue to monitor and provide updates.
Given the speed with which the Biden administration has taken action on these and other initiatives, the topics above likely represent the tip of the iceberg in terms of the employment law changes that lie ahead in 2021 and beyond. The Employment Law Group at CGA Law Firm will be monitoring key developments as they occur, and will continue to provide employers with the information and guidance they need to prepare and respond to these changes.
If you would like to discuss these or other employment law developments and the impact they may have on your organization, please contact Christine Nentwig at [email protected] or any member of CGA Law Firm’s Employment Law Group.
Christine Nentwig serves as Co-Chair of CGA’s Labor and Employment Law Group and is also a member of the firm’s Business Law Group. Her practice focuses on the representation of businesses regarding complex labor and employment matters in both the private and public sector.
Christine earned her Juris Doctorate (JD) from the University of Maryland School of Law and her Master of Business Administration (MBA) from Northwestern University’s Kellogg School of Management.