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DOL Issues Proposed Rule on $15 Minimum Wage for Certain Employees of Federal Contractors and Subcontractors

Contributed by Allison P. Sues, July 29, 2021

On July 23, 2021, the United States Department of Labor (DOL) announced a proposed rule to increase the minimum wage for employees of covered federal contractors and subcontractors to $15.00 per hour. This rule follows President Biden’s Executive Order calling for an increase to the minimum wage for federal contractors. The rule suggests that the minimum wage increase go into effect January 30, 2022 and increase annually beginning in 2023 based on inflation. 

The Proposed Rule is not final and may be revised. The DOL is accepting comments until August 21, 2021 and will publish its final rule on November 24, 2021. Regardless, federal contractors should begin to prepare for likely changes to the minimum wage for certain employees. To assist in this preparation, here are answers to key questions on this rule:

Who is covered by this increase in minimum wage?

In short, any workers on “new contracts” starting on January 30, 2022. 

To be covered, the employee must work on (i.e., performing the specific services provided in the contract) or in connection with (i.e., performing other duties necessary to the performance of the contract) a contract or subcontract with the federal government. The proposed rule intends to cover a wide range of contracts with the Federal Government that fall within four main categories: (1) procurement contracts covered under the Davis-Bacon Act, (2) service contracts covered by the Service Contract Act, (3) concessions contracts granting a right to use Federal land or other property for furnishing services, and (4) any other contracts in connection with Federal property or lands and related to offering services for Federal employees or the general public.  “New contracts” includes not only those new contracts entered into on or after January 30, 2022, but also any pre-existing contracts that are renewed or extended after that date. 

How much notice will employers receive for each subsequent increase to the minimum wage based on inflation?

The DOL will provide at least 90 days of notice before any increases to the minimum wage take effect. 

Does the $15.00 minimum wage extend to employees of federal contractors and subcontractors who earn some or most of their compensation through tips?

No. Under the proposed rule, tipped workers must be paid at least $10.50 per hour.

Will there be increases to the new minimum wage set for tipped workers?

Any time the minimum wage for non-tipped workers increases, the minimum wage for tipped workers will also increase to 85% of the new rate until January 1, 2024. Then, on or after January 1, 2024, tipped workers will receive the same minimum wage as non-tipped employees.

Does the proposed rule provide for additional compensation for tipped workers if their earnings do not equate to the minimum wage set for non-tipped employees?

Yes. If the combination of wages and tips received by the tipped workers does not equal or exceed the standard minimum wage set for non-tipped employees, the contractor must provide additional wages to make up the difference.

Who will enforce this new minimum wage?

The DOL Wage and Hour Division will enforce the new minimum wage. The DOL will accept and investigate complaints of non-compliance with the minimum wage. The DOL may request an employer to remedy any violation. If the employer does not remedy the violation, the DOL could require the contracting agency to withhold payments due under the covered contract to the contractor and then transfer that money to the worker who was not paid the minimum wage.

I Don’t Want to Wear a Mask…Part 5: CDC Reversal…and School Supplies Include Masks?!?!

Contributed by Michael Wong, July 28, 2021

Vector attention sign, please wear face mask, in flat style

Just when we were starting to let loose and enjoy the summer without masks, as a result of rising number of COVID-19 cases and the Delta variant, the CDC revised their guidance for fully vaccinated individuals on July 27, 2021 with the following changes:

  • Fully vaccinated individuals are recommended to wear masks when indoors in areas of substantial or high transmission.
  • Fully vaccinated individuals who have a known exposure to someone with suspected or confirmed COVID-19 should be tested 3-5 days after exposure, and wear a mask in public indoor settings for 14 days or until they receive a negative test result.
  • Universal indoor masking for all teachers, staff, students, and visitors to schools, regardless of vaccination status.

Since OSHA adopted the CDC’s prior changes regarding fully vaccinated individuals not being required to wear masks, it is expected that OSHA will also adopt the CDC’s new guidance. 

What are Areas of Substantial or High Transmission? – It’s not a reference to a certain type of workplace (e.g. hospital), but rather the geographic county that you are in. The CDC’s COVID-19 Data Tracker shows the level of transmission and COVID-19 cases within counties and based on the CDC’s evaluation of community characteristics will identify a risk level. The CDC’s COVID-19 Data Tracker is updated on a daily basis at 8 p.m. EST with the map representing a 7 day period. Based on the current map over 63% of counties in the US are considered areas of substantial or high transmission.

What does that mean for your business? – While it is sometimes hard to turn back the clock, with the threat of OSHA violations and exposure to legal claims, employers should check whether their business falls within an area of substantial or high transmission. If the business does fall within an area of substantial or high transmission, then based on CDC guidance (and likely OSHA’s adoption), businesses will have to re-evaluate their mask policies and consider going back to requiring all individuals coming into their business wear a mask, regardless of whether they have been fully vaccinated or not.

Additionally, pursuant to the CDC guidance regardless of whether or not a business is in an area of substantial or high transmission, fully vaccinated employees who have a known exposure to someone with suspected or confirmed COVID-19 should be tested 3-5 days after exposure and wear a mask in indoor settings for 14 days or until they receive a negative test.

What risks do I face if my business ignores this guidance? – If OSHA adopts the CDC’s new guidance (which it is expected to do), and your business is located in an area of substantial or high transmission, you will be expected to require all employees and visitors, regardless of vaccination status, to wear a mask indoors. If you do not make changes and still allow employees, customers and visitors to go maskless indoors you will face potential fines from OSHA. Additionally, if there is an outbreak in your facility or one of your employees, customers or visitors claims that they contracted COVID-19 at your business, you could face civil claims (including workers’ compensation claims) which would be more difficult to defend based upon you not complying with the CDC and/or OSHAS’s current standard.

Impact on K-12 Schools – School Administrators that have been working long hours to figure out whether or not students and staff have to be masked, just got the answer to that question for this fall. The CDC’s guidance states children in K-12 should return to full-time in-person learning, but that all teachers, staff, students and visitors to K-12 schools, regardless of vaccination status, should wear masks indoors.

State and Local – The trickle down effect of the CDC’s new guidance will not just impact OSHA’s requirements, but those at the state and local levels. As such in the coming days businesses will need to keep up to date with local guidance. For the immediate future, businesses should anticipate being faced with state and local guidance that provide fully vaccinated individuals do not need to wear masks, while the CDC guidance states the opposite. In looking at those conflicts, businesses should recognize that the state and local guidance will likely be updated to comply with the CDC’s guidelines, much like it has in the past.

How to Address? – Businesses are now faced with the impossible task of addressing guidelines that can potentially change on a weekly basis. There is no simple answer.  For businesses that are in a county that is currently considered an area of substantial or high transmission, the best practice will be to err on the side of safety and require employees, customers and visitors to wear masks when indoors. This minimizes the potential risk and exposure to legal claims, while also protecting the business’s workforce from the surge in COVID-19 cases and the Delta variant. In this day and age where maintaining a workforce and recruiting employees is already difficult, keeping one’s workforce intact and working is of utmost importance.

Businesses will also be faced with potential issues in communicating and/or enforcing the new guidelines. When the CDC and OSHA issued the “mask free” announcement it was relatively easy for businesses to take down signs and allow customers, visitors and employees to not wear a mask if they were fully vaccinated. With the CDC backtracking, businesses will be faced with the same issues and problems from when mask mandates were instituted (e.g. viral video of customer and employee confrontations over not wearing masks). Even more problematic is how often will the business want to change its policy and procedures, with the understanding that whether or not the business is located in an area of substantial or high transmission could change on a daily or weekly basis.

Communicating your decision on how to address this issue and whether you will be updating your policy on a regular basis to stay in line with areas of substantial or high transmission, or are simply re-instituting your mask policy, will be key. Likewise training employees on addressing, managing and de-escalating conflicts with customers and other employees will play a major role in addressing these issues, while minimizing potential problems. With these changes, employers must also recognize their obligations to provide reasonable accommodations to employees based on a disability or religious belief. Needless to say, just when we felt we were getting out, we’ve been pulled back into the pandemic life.  

As these issues continue to change and evolve it will be important for businesses to consult with legal counsel experienced and knowledgeable in labor and employment law to help you continue to evolve your business for success during these times.

“Scabby” the Rat Gets Stay of Execution

Contributed by Michael Hughes, July 22, 2021

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The National Labor Relations Board (NLRB) ruled 3-1 on July 21, 2021 that labor unions may continue to use large, inflatable balloons–usually in the shape of an ugly rat–to aid in publicity of labor disputes, whether connected with traditional picketing activity or without.  The inflatable rat balloon used by the International Union of Operating Engineers, Local 150 has been nicknamed “Scabby.”  Scabby was the subject of the NLRB’s ruling.  In that case, Local 150 erected Scabby and banners at the entrance to the parking lot at an RV tradeshow.  The rat and signage identified the company that the union had its primary dispute with (the “primary employer”), but also named Lippert Components, Inc., a customer of the primary employer, stating “Shame on Lippert Components, Inc. for Harboring Rat Contractors.”  Lippert is a major supplier to the RV industry.  All attendees of the tradeshow had to drive past Scabby, the banners, and two seated, stationary union members to enter the parking area.

For many years, labor unions have utilized Scabby, and other inflatable creatures such as a “fat cat,” on their picket lines and other demonstrations. Such use has become ubiquitous at construction site pickets lines. Employers, businesses and the former General Counsel of the NLRB, Peter Robb, sought to execute Scabby in instances, like as used against Lippert Components, where the union employed the rat against “secondary” or “neutral” employers—i.e., employers with whom the union does not have an actual labor dispute.  Ever more frequently, unions have utilized such inflatables against neutral employers in an effort to pressure those neutral employers to stop doing business with the company with whom the union has an actual dispute.

It is a violation of the National Labor Relations Act (NLRA), as an unfair labor practice, for a union to “picket” against a secondary or neutral employer.  Traditional picketing activity, by its nature, necessarily contains a confrontational or coercive element.  Employers and the NLRB GC argued that, even without any other traditional picketing activity, the use of Scabby, by itself, was similarly confrontational and coercive.  Accordingly, they argued, the use of Scabby or other such inflatables, should be considered unlawfully coercive when deployed against businesses and employers with whom the union does not have a dispute.

The NLRB disagreed.  It upheld the ruling of the administrative law judge that found that the use of inflatables are not unlawfully confrontational or coercive of the neutral business.  Unions are allowed to attempt to persuade (but not coerce) neutral employers to stop doing business with the company the union is targeting.  Without threats, coercion or actual picketing, the NLRB found, that the union did not violate the law by using Scabby.  Moreover, as public “speech,” Scabby enjoys protection under the First Amendment to the US Constitution. 

Finally, while it is also an unfair labor practice for a union to even persuade or request employees of a neutral employer to withhold their labor from a neutral employer (i.e., refuse to work), the NLRB found that the use of Scabby, by itself, is not a “signal” for neutral employees to refuse to work and, in any event, in the case before it, no such work stoppages ever occurred.  In their concurring opinion, two members of the Board majority cautioned, however, that each case will need to be viewed on its own facts to determine whether the union’s conduct and activities amounts to unlawful threats or coercion, even without the use of traditional picketing—and noted, approvingly, of a recent case where the union’s use of a loudspeaker at a “coercively loud volume at a secondary employer’s worksite” was found to be unlawful.

Takeaways:

Because the case presented some clear implications of the First Amendment, a bipartisan panel of the NLRB (two republicans and one democrat) formed the majority.  In the wake of the ruling, we can expect that the use of inflatables, banners, signage and leafletting may become even more common against secondary or neutral employers.  These neutral employers may include customers and suppliers of the company with which the union has a dispute.  They may also include general contractors and property owners that subcontract with non-union trades.  While the NLRB’s ruling merely keeps what had been the status quo, it may be seen as a “green light” for other unions to take up these tactics—and for unions to go even further in activities aimed at influencing neutral employers to cut ties with companies the union ultimately is targeting.  There are certain ways to limit the type of activity the unions may engage in, and/or to limit the time and place of such activities, especially at construction sites.  If you are the target of such secondary activity, you should contact your competent labor counsel to determine if the union’s actions are lawful or unlawful in the circumstances, how to limit the impact of the union’s actions, and whether an unfair labor practice can be filed against the union.   

EEOC Issues New Guidance on Title VII’s Prohibition of Sexual Orientation and Gender Identity Discrimination

Contributed By Allison P. Sues, July 16, 2021

Employment law books and a gavel on desk in the library.

On June 15, 2021, The U.S. Equal Employment Opportunity Commission (EEOC) issued guidance on “Protections Against Employment Discrimination Based on Sexual Orientation or Gender Identity.”  This resource reviews the impact of the Supreme Court’s Bostock v. Clayton County case and provides the EEOC’s position on what constitutes unlawful discrimination based on sexual orientation and gender identity.  The EEOC’s answers to key questions on this issue are summarized below. 

Does Title VII’s prohibition against sex discrimination extend to treatment based on sexual orientation or sexual identity?

Yes. In June 2020, the Supreme Court unequivocally held that discrimination based on sexual orientation or gender identity is discrimination based on sex and, therefore, prohibited under Title VII. In Bostock, the Court extended Title VII’s legal protections to LGBTQ+ employees after examining three different discrimination claims where employees claimed that they were fired after their employers learned that they were gay or transitioning from one gender to another.  As with all Title VII protections, employers cannot take any adverse employment action –including decisions involving hiring, firing, promoting, disciplining, training, or providing compensation or other benefits – based on the sexual orientation or gender identity of an employee or applicant. 

Can an employer’s discriminatory action toward an LGBTQ+ employee be justified by customer or client preference?

No.  Even if a company’s clients or customers have a preference to work with people of certain sexual orientations or gender identities, an employer cannot refuse to hire, fire, or reassign an employee based on their LGBTQ+ status. Similarly, an employer cannot assign LGBTQ+ employees to positions that do not interface with the public based on their protected status.

May an employer make employment decisions based on a belief that the employee acts or appears in ways that do not conform to stereotypes about women or men?

No. Even if an employer does not have knowledge of the employee’s gender identity or sexual orientation, employers are not allowed to discriminate based on gender stereotypes.  For example, an employer cannot demote a male employee because it perceives him to behave in stereotypically feminine ways. Relatedly, an employer may not require a transgender employee to dress in accordance with the employee’s assigned sex at birth.  Employers should not have any gender-specific expectations about appearance.

May an employer host separate, sex-segregated bathrooms, locker rooms, or showers for men and women?

Yes.  However, the employer must not prohibit any employee from using the bathroom, locker room, or shower for the gender with which they identify.  For example, transgender women should be allowed to use the women’s bathroom.

Could it be considered unlawful harassment to use names or pronouns inconsistent with an individual’s gender identity?

Yes, possibly. As with all other hostile work environment claims, the harassment must be sufficiently severe or pervasive to be actionable.  If an employer accidentally misuses an employee’s pronoun or forgets to use an individual’s name in isolated incidents, that may not rise to the level of a Title VII violation.  However, an employer that intentionally and consistently refuses to use an employee’s correct name or pronouns may be deemed to be unlawfully harassing that employee. 

More Tweaks to the IL Equal Pay Act

Contributed By Beverly Alfon, July 1, 2021

On June 25, 2021, Governor Pritzker signed into law additional amendments to the IL Equal Pay Act of 2003. 

March 2021 Amendments (Recap)

As outlined in our March 23, 2021 blog article, Will Employers Have to Give 1% of their Total Gross Profits to the State of Illinois? Gov. Pritzker Signs into Law Unprecedented Changes to IL Equal Pay and Corporate Laws, the March amendments to the Act require businesses with 100 or more employees to obtain certification of compliance with the Equal Pay Act from the IL Department of Labor (IDOL).

The certification process requires employers to submit an application that contains a statement affirming compliance with the equal pay principles set forth in Title VII of the Civil Rights Act, the Equal Pay Act of 1963, the IL Human Rights Act, the Equal Wage Act, and the IL Equal Pay Act of 2003. Specifically, the statement must be signed by an officer or agent of the business and confirm the following representations: 

  • The average compensation for the business’s female and minority employees is not consistently below the average compensation for its male and non-minority employees within major job categories when accounting for various distinguishing factors;
  • The business does not restrict employees of one sex to certain job classifications and makes retention and promotion decisions without regard to sex;
  • The wage and benefit disparities are corrected when identified to ensure compliance with applicable anti-discrimination laws; and

In addition, employers who are required to file a federal EEO-1 report must also include a copy of their most recent EEO-1 report.

June 2021 Amendments

Deadline:  Employers subject to the certification requirement as of March 23, 2021, must apply to obtain an equal pay registration certificate between March 24, 2022, and March 23, 2024. Covered employers that obtain authorization to do business in Illinois after March 23, 2021, must apply for certification within 3 years of commencing operations, but not sooner than January 1, 2024. Recertification must occur every 2 years. 

Certification Application Requirements: Covered employers must also submit a “wage records” list of all employees in the past calendar year, categorized by the county in which the employee works, gender and race/ethnicity with corresponding wages paid to each employee over that period, the employee’s start date with the business, and “any other information the Department [of Labor] deems necessary to determine if pay equity exists.” Employers with fewer than 100 employees must certify that they are exempt from requirements.

Compensation Approach: The original legislative text required employers to provide the IDOL with the “system” used to set compensation and required employers to select from certain options (e.g., market-based, performance pay, internal analysis, etc.).  Under the new amendments, the employer is required to describe the “approach” used to determine wages, but the employer is not required to select from any specific system. Instead, the statute states that “acceptable approaches include, but are not limited to, a wage and salary survey.”

Penalties: The March amendments provided that employers who fail to comply with the certification requirements or provide false information to the IDOL would result in a non-discretionary fine of 1% of their annual gross profits. Now, the Act authorizes a penalty of $10,000 for violation of the equal pay certificate requirements.

Grace Period: There is now a 30-day grace period for an employer to correct an inadvertent failure to timely file an application or cure deficiencies in the application for certification.

Third Party Access:  A current employee of a covered employer may request “anonymized” data regarding his/her specific job classification, including pay rate/salary. “Individually identifiable information” will not be subject to FOIA requests.  The June amendments set forth penalties for IDOL employees who are found to have leaked confidential application information – but the IDOL is authorized to share aggregate data and “individually identifiable information” with the IL Department of Human Rights or Office of the IL Attorney General.

Side note: On June 28, 2021, the U.S. Equal Employment Opportunity Commission (EEOC) announced that it is extending the July 19, 2021, deadline to submit and certify 2019 and 2020 EEO-1 Component 1 reports to Monday, August 23, 2021.

Our recommendations to employers remain the same as set forth in our March 23 blog article: 

  • Review and, if necessary, modify equal pay policies that demonstrate a commitment to IEPA compliance.
  • Audit equal pay compliance annually. This includes creating strong/reliable compensation systems that are in line with the law (base wage, benefits, commission programs and bonus opportunities).
  • Update job descriptions annually. Focus not only on job titles, but the actual duties, responsibilities, and qualifications of the position.
  • Evaluate performance reviews. These continue to be the “kiss of death” for many employers since very few evaluators are willing to be honest and direct.
  • Consider partnering with credible 3rd parties to help design and implement compensation systems in order to comply with all applicable anti-discrimination laws.

July 1, 2021 Increase to Chicago Minimum Wage….But No Change to Cook County Minimum Wage Despite Written Notices

Contributed By Michael Wong and Sara Zorich, June 25, 2021

It’s that time of year (again) for increases in minimum wage. However, this year is slightly different! In spite of the Cook County written notices that some employers may have received, the Cook County Minimum Wage for non-tipped employees is NOT increasing, as the unemployment rate for Cook County during the prior year was greater than 8.5%. However, the Cook County Minimum wage for tipped employees will increase on July 1st  from $6.00 to $6.60 to match the increase under Illinois law. For City of Chicago employers, the minimum wage for both tipped and non-tipped employees will increase on July 1st. To provide a full picture, the following chart shows the minimum wage for Illinois employers as of July 1, 2021:  

*    Increases to match the State minimum wage for tipped employees of $6.60.

** The employer size requirements are modified for small employers of Domestic Workers to $14.00/hr for (0-20 employees) but large employers remain 21+. Thus, any employee working as a Domestic Worker is eligible for the Chicago minimum wage

*** City of Chicago contracts and concessionaire agreements: $14.15 for non-tipped employees and $7.65 for tipped employees.

As a reminder, many municipalities in Cook County opted-out of the Cook County Minimum Wage and/or Paid Sick Leave ordinances. If your business is in Cook County (but not the City of Chicago), you must check whether or not the municipality that you are in opted-out and whether they opted out of both or only one.

REMINDERS:

2020 Change to Definition of Covered “Employer” Under Chicago Minimum Wage and Paid Sick Leave –

On July 1, 2020, the 2019 Amendment to the Chicago Minimum Wage and Paid Sick Leave ordinance, went into effect expanding what employers are covered. The new definition deleted the requirement that an employer have a business facility within the geographic boundaries of the City and/or be subject to license requirements. After July 1, 2020, the Chicago Minimum Wage and Paid Sick Leave ordinances defined an employer as any “person who gainfully employees at least one employee.”

Under this change, it can be interpreted that any employer who has an employee who performs at least two (2) hours of work within the geographic boundaries of the City, during any particular two-week period, must pay that employee the Chicago minimum wage for the time spent working within the City of Chicago and record the amount of paid sick leave accrued by that employee for the time spent working in the City!

As an example of the impact of this is the following scenario: a Colorado business sends its non-exempt employee to New York. The employee’s flight has a 2 ½ hour layover at O’Hare (O’Hare and Midway are both within the geographic boundaries of the City of Chicago). Technically under Chicago’s Paid Sick leave ordinance, the Colorado business would have to record the amount of paid sick leave that the employee accrued during the 2 ½ hours that the employee was “working” in Chicago and would be required to pay the Chicago minimum wage of $15.00/hr for the hours the employee was “working” in Chicago.

Any employer who has employees going into the City of Chicago, MUST review and understand their obligations and whether they are currently subject to the Chicago Minimum Wage and Paid Sick leave ordinances.

Chicago Paid Sick Leave Covers Employees in Outside Sales, Members of Religious Organizations, Student Employees of Accredited Illinois Colleges and Universities subject to the FLSA and DOT covered Motor Carriers

The 2019 Amendment to the Chicago Paid Sick Leave Ordinance also made changes to the definition of covered employees. In particular, the amendment specifically states employees covered by the Chicago Paid Sick Leave ordinance (but not the Chicago Paid Minimum Wage) include employees who work in outside sales, for a religious corporation or organization, are a student-employee of an Illinois college or university covered by the Fair Labor Standards Act, or are an employee of a motor carrier covered by the Department of Transportation.

This means that employees who work in outside sales, for a religious corporation or organization, are a student-employee of an Illinois college or university covered by the Fair Labor Standard Act, or are an employee of a motor carrier covered by the Department of Transportation, should be eligible to accrue up to 40 hours of paid sick leave each year under the Chicago Paid Sick Leave ordinance. As the Chicago Paid Sick Leave ordinance has specific requirements regarding accrual rate, carryover, caps, permitted uses, restrictions on use, requesting supporting documentation from employees, and employee notice, it is recommended that you contact experienced employment counsel regarding drafting a policy or questions about compliance.

Remember to Update Your Posters AND Provide written notices to Employees –  

Under the Chicago’s rules, employers have to post the most up to date minimum wage and paid sick leave posters and provide written notices to covered employees each year with the first paycheck after July 1st, whether by paper or electronic means. The City of Chicago posters for Chicago minimum wage and paid sick leave can be found on the City of Chicago webpages for Minimum Wage and Paid Sick Leave in English, Spanish, Polish, Chinese, Filipino and Korean.

Additionally, the Cook County website has posters for Minimum Wage and Sick Leave, but only in English.

The State of Illinois also has its Minimum Wage poster on its website in English or Spanish.

Employers who are unsure whether they must comply, what they must do to comply or are concerned about their policies complying should contact experienced employment counsel to mitigate exposures and minimize risk.

US Department of Labor Proposes Rule to Limit Federal Tip Credit Application

Contributed By Sara Zorich, June 23, 2021

On June 21, 2021, the US Department of Labor (DOL) announced that it has proposed new rulemaking, and is seeking input on significant limits to an employer’s ability to utilize the tip credit. 

Under the current law, the Fair Labor Standards Act and many state laws allow employers to pay employees in tipped positions a lower cash wage, and take a credit against the tips earned by the employee to make up the balance for the applicable minimum wage.  The proposed changes impact when the tip credit is applicable.

The proposed rule places the work that a tipped employee performs into three buckets: (1) tipped work (i.e. a busser bussing a table or server waiting on a table), (2) work directly supporting the tipped work (i.e. busser cleaning the restaurant dining area or preparing tables for the next day), and (3) work not part of the tipped job (i.e. busser cleaning the restaurant kitchen/bathrooms or a hotel housekeeper cleaning nonresidential parts of a hotel, such as a spa, gym, or the restaurant).

The tip credit is applicable to all tipped work. Regarding the second bucket, the DOL has proposed limits on the amount of time the employee can perform “directly supporting” work before the tip credit is no longer applicable. The standards proposed are: (1) if a tipped employee spends more than 20 percent of their workweek performing directly supporting work, then the employer cannot take a tip credit for any time that exceeds 20 percent of the workweek (80/20 rule), and (2) if a tipped employee spends a continuous 30 minutes or more performing work “directly supporting” their job, the employer cannot take a tip credit for that entire period of time that was spent on the directly supporting work tasks.

The two standards can interplay with each other as provided by the following example in the regulations: if a server is required to perform an hour of directly supporting work at the end of each of her five 8-hour shifts, each of those hours spent performing directly supporting work must be paid at the full minimum wage and would not count towards the 20 percent workweek tolerance. If that same server also performs 20 minutes of directly supporting work three times each shift, for a total of 1 hour per day, the employer could take a tip credit for the rest of the server’s supporting work because the 5-hour total did not reach the 20 percent tolerance for a 40-hour workweek.

Further, the regulations seek to clarify the third bucket, stating a tip credit cannot be taken for any time a tipped employee spends performing work that is not part of the tipped occupation (defined as “work that does not generate tips and does not directly support tip-producing work”). All time performing any work that is not part of the tipped occupation must be paid at the full minimum wage.

The proposed rule is open for comments for the next 60 days. In light of these proposed regulations, employers should begin reviewing their job descriptions for tipped employees and analyze the job duties and time for tasks related to tipped work, work directly supporting the tipped work and work that is not part of the tipped occupation.

OSHA ETS: What Health Care Providers Need to Know

Contributed By John R. Hayes, June 18, 2021

On June 10, 2021 OSHA issued its COVID-19 Emergency Temporary Standard (ETS) for the health care industry, along with general guidance for all other employers, which we already touched on in a previous post. However, there remains a lot to unpack, as there are many unanswered questions, especially for the health care field.  Below we dig a bit deeper into the ETS and its practical implications for health care providers.

Are you covered? The first question—and it is not as clear cut as it may seem—is whether the ETS applies to your business. OSHA has issued a flowchart to attempt to answer this question. However, it still remains murky for some. Generally, the ETS applies to settings where coronavirus patients are treated (including hospitals, nursing homes and assisted living facilities) and covers “all settings where any employee provides health care services or health care support services.” These are defined as:

  • Health care services are services that are provided to individuals by professional health care practitioners (doctors, nurses, emergency medical personnel, oral health professionals) for the purpose of promoting, maintaining, monitoring, or restoring health, and are delivered through various means including hospitalization, long-term care, ambulatory care, home health and hospice care, emergency medical response, and patient transport.
  • Health care support services are services that facilitate the provision of health care services, which include patient intake/admission, patient food services, equipment and facility maintenance, housekeeping services, health care laundry services, medical waste handling services, and medical equipment cleaning/reprocessing.

The ETS contains several exemptions to its coverage, and it does not apply to:

(1) the dispensing of prescriptions by pharmacists in retail settings;

(2) non-hospital ambulatory care settings (outpatient settings such as doctor’s offices) where all non-employees are screened before entering and people with suspected or confirmed COVID-19 are not allowed to enter;

(3) well-defined hospital ambulatory care settings and home health care settings where all employees are fully vaccinated, all non-employees are screened prior to entry, and people with suspected or confirmed COVID-19 are not permitted to enter those settings or are not present;

(4) health care support services not performed in a health care setting (off-site services); and

(5) telehealth services performed outside of a setting where direct patient care occurs. 

Moreover, in certain situations, such as where a health care setting is embedded with a non-health care provider (such as a medical clinic in a manufacturing facility), the ETS applies only to the embedded health care setting and not the other parts of the facility. 

Also, in well-defined areas in a health care setting where there is no reasonable expectation that any person with suspected or confirmed COVID-19 will be present the ETS provisions for PPE, physical distancing, and physical barriers do not apply to fully vaccinated employees. To meet this exception, the COVID-19 plan for the employer must include policies and procedures to determine employee vaccination status.

ETS Mandates. If you are an entity covered by the ETS, then what exactly does it require of you? The main requirements are what you have likely had in place throughout the pandemic:

  • Development of a COVID-19 plan. This applies to all covered employers with 10 or more employees.
  • Provide PPE and ensure employees properly wear facemasks that meet OSHA standards when physical distancing is not possible.
  • Cleaning, disinfecting, installing barriers and maintaining social distancing. 
  • Follow general screening and management practices for COVID-19. 
  • Record Keeping/Reporting. Employers must retain all versions of their COVID-19 plan, log and record each instance an employee is COVID-19 positive whether or not the infection was at work, report each work-related COVID-19 fatality and in-patient hospitalization within 24 hours.
  • Vaccination PTO. Employers must provide reasonable time and paid leave for employees to receive COVID-19 vaccinations and recover from any side effects. OSHA defines “reasonable time” as four hours of paid leave for each dose, and 8 hours of leave for any side effects of the dose.
  • Training on the basics of COVID-19 and employer and workplace specific policies on all other ETS requirements, such as screening, cleaning, and sick leave policies.

Medical Removal Protection (MRP) Benefits. Employers with more than 10 employees must provide paid leave to employees if the employee is removed from the workplace under the ETS – basically if the employee is unable to work due to COVID-19 or COVID-19 exposure, regardless of whether the employee was exposed at work or outside the workplace.

  • For employers with more than 10 but fewer than 500 employees, the employee is entitled to their regular rate of pay, up to $1,400 per week for the first two weeks.  Beginning in the third week, if the removal continues that long, then the employee shall receive two-thirds the rate of their regular pay, up to $200 a day. 
  • For employers with 500 or more employees, the employer must pay up to the $1400 cap each week during the entire period of removal, until the employee meets the return to work criteria, which must be made in accordance with guidance from a licensed health care provider or applicable guidance from the CDC.
  • For all employers with more than 10 employees they must continue to provide the benefits to which the employee is normally entitled.
  • The employer is not required to provide overtime pay, even if the employee had regularly worked overtime hours in recent weeks.
  • The employer may reduce the amount paid to the removed employee by compensation the employee receives for lost earnings from any other source, such as employer-paid sick leave or other PTO.
  • For employers with fewer than 500 employees, tax credits are available under the American Rescue Plan for voluntarily provided COVID-19 sick leave through September 30, 2021.

Implementation Timeline. Covered employers must comply with most provisions of the standard within 14 days of publishing, and with the provisions regarding physical barriers, ventilation, and training within 30 days. OSHA states it will use its enforcement discretion to avoid citing employers who are making a good faith effort to comply with the ETS. However, OSHA has made no secret it is overall increasing its enforcement, and is encouraging more in-person inspections. Employers who believe they may be subject to the ETS should review it carefully and consult with experienced employment counsel regarding their obligations under the ETS.

NEED AN HR AUDIT CHECKLIST?  HERE YOU GO!

Contributed By: Jeff Risch, June 16, 2021

Employers of all sizes and industries, operating anywhere in the U.S., need to conduct HR Audits regularly. In 2021 and beyond, it is critical to carefully evaluate all aspects of how to properly and lawfully administer and manage personnel issues. Workplace laws, rules and regulations are constantly changing – what was lawful yesterday may be unlawful tomorrow. Annual HR Audits conducted by those with intimate knowledge and understanding of the latest legal developments, including enforcement, must be part of any employer’s regular processes.

SmithAmundsen LLC’s Labor & Employment Law Practice Group, comprised of attorneys concentrating in Employment, Traditional Labor, Immigration, Benefits/ERISA, OSHA, Workers Compensation and other key areas of focus, encourages HR Managers, Executives, Business Owners, CFO’s, In-House Counsel, and any other manager involved in personnel matters to review and give thought to our latest HR Audit Checklist.

Yes, Your Employer Can Require You To Be Vaccinated, According to a Federal Judge in Texas

Contributed By: John R. Hayes, June 14, 2021

A federal judge in Texas on June 12, 2021 dismissed a lawsuit brought by Texas health care workers challenging their hospital’s COVID-19 vaccine mandate. The scathing opinion by U.S. District Judge Lynn N. Hughes left no doubt that he believed the claims of the 117 plaintiffs were without merit.

The lawsuit was brought by employees of Houston Methodist Hospital, who had refused the vaccine, after the hospital in April announced a policy requiring  vaccination of all employees.  In early June, over 170 employees of the hospital were suspended for two weeks without pay over their decision to refuse getting the COVID-19 vaccine. If these employees did not get vaccinated within two weeks then they would be terminated. At the time of the filing, almost 25,000 Hospital employees had complied with the vaccination requirement, and approximately 285 employees had received medical or religious exemptions. 

The employees refusing the vaccine claimed that the policy of the hospital requiring the COVID-19 vaccine of its employees was an effort to coerce them into becoming test subjects for an untested and unreliable vaccine. Echoing a refrain made by many who are refusing the vaccine, the plaintiffs argued that the lack of full approval by the Food and Drug Administration (FDA), justified their refusal to get vaccinated. While not yet granting full approval for the three vaccines in the United States, the FDA has granted emergency use authorization for the vaccines, and approximately 173 million Americans have received at least one dose, with over 143 million being fully vaccinated.

In his opinion, Judge Hughes found that the plaintiffs were not “coerced” to get the vaccine, and that public policy clearly supports widespread inoculation efforts. Specifically, the court said that lead plaintiff and nurse Jennifer Bridges’ claims that the vaccines are “experimental and dangerous” were “false” and “irrelevant.”  He went on to say Bridges’ argument that the vaccine requirement equates to medical experimentation in Nazi concentration camps was “reprehensible.” 

Further explaining that the employees were not coerced, Judge Hughes stated that the hospital “is trying to do their business of saving lives without giving them the COVID-19 virus. It is a choice made to keep staff, patients and their families safer. Bridges can freely choose to accept or refuse a COVID-19 vaccine; however, if she refuses, she will simply need to work somewhere else.” Calling it “all part of the bargain” between a worker and their employer, the court stated “every employment includes limits on the worker’s behavior in exchange for his renumeration.”   

While the focus of the opinion was on Texas law regarding wrongful discharge, it appears to be the first of its kind regarding vaccine mandates, and has implications nationwide.  Judge Hughes cited to the Equal Employment Opportunity Commission’s (EEOC) updated May 28, 2021 guidance that employers can require employees to be vaccinated against COVID-19, subject to reasonable accommodations for employees with disabilities or sincerely held religious beliefs that preclude vaccination. He further stated that while this guidance is not binding “it is advice about the position one is likely to meet at the Commission.” 

The lawyer for the plaintiffs stated he planned to pursue an appeal.

Ultimately, the decision whether or not to mandate vaccination of its employees is up to the individual employer. While some hospital systems and other health care institutions such as nursing homes and home health care providers in the country are moving to require COVID-19 shots, many private employers have not yet taken that step. And although the EEOC has said employers can require vaccines, subject to certain exemptions, there still remain questions on the legality of doing so, as evidenced by this lawsuit. Any workplace vaccination policy—whether a mandate or one that provides incentives to get the shot—should be carefully considered in advance, ideally vetted by experienced employment counsel. 

We are continuing to monitor this evolving situation, and will update our blog with any new developments.