Policy Matters Newsletter - October 1, 2021

Will-They-Won’t-They Saga Continues: As we noted, about two weeks ago, more centrist democrats in the House pushed the speaker into a promise to hold a vote on the bi-partisan infrastructure bill passed by the Senate on September 27. Yesterday came and went without a vote. At the least, Senator Manchin telegraphed that he might be comfortable with a $1.5 Trillion reconciliation measure, but did not give any policy specifics. And we still don’t know where Senator Sinema stands on a dollar amount.  As we are writing this piece, the President is on his way to Capitol Hill to try to rescue both packages. Regardless, the progressive caucus has shown no sign of changing its position on the dual-track strategy. As such, at this point, any person without a “Sen” or “Rep” next to their name that proclaims to know how the reconciliation and infrastructure packages are going to proceed on the hill is likely in need of a credibility check. The situation changes hour by hour, not day by day.

So, instead of a bunch of hand-wringing text on procedure, we will explore two important pieces that might be in the reconciliation package. First, Sen. Ron Wyden recently introduced the  Unemployment Insurance Improvement Act, which is just a modified version of the discussion draft Senators Wyden and Bennet released in April, and we summarized. It is designed to fit within the Finance Committee’s piece of the reconciliation package. Thankfully, the language does not include the worrisome provision that would have imported California’s ABC test for purposes of unemployment insurance. Second, The House Ways and Means Committee passed its provisions of the reconciliation budget, part of which that would allow for 12 weeks of paid family and medical leave for all workers. On average, the benefits would pay workers about two-thirds of regular wages and would be available for full- and part-time employees, as well as gig workers and those who are self-employed. The measure provides three avenues for workers to get benefits: (1) existing state-run programs, (2) employer-provided plans potentially contracted out to insurers, or (3) directly from the U.S. Treasury for workers who don’t have another option. The program would be funded through the federal budget, not a specific payroll tax as has been suggested. State-run and employer plans would get federal grants to cover most or all of their costs. Should this pass, employers will have to address “a host of complex operational challenges, the most acute of which is a rigid deference to the states,” according to American Benefits Council President James A. Klein.

Infrastructure Bill A Boon For Telecom Unions.  Should it pass, a small section (16 words of the 2,700-page bill) of the current bipartisan infrastructure bill could direct billions of dollars to companies with large unionized workforces for broadband expansion. This could create opportunities for organized labor in the telecommunications industry to grow their membership significantly. Specifically, the part of the bill that distributes $42.5 billion to broadband would give preference to companies with a record of complying with labor and employment laws. This could give an advantage to companies that already have large professionalized union workforces over the various layers of subcontractors in the telecommunications industry. Under the Senate-passed bill, groups that receive federal money for broadband work would have to take into account a company’s “demonstrated record of and plans to be in compliance with federal labor and employment laws” before approving and awarding money for a specific project. Companies must prioritize three additional factors: the speed of the proposed broadband service, how fast the project can be completed, and whether it is in a high poverty, underserved area.  This short, 16-word section of the bill has mostly flown under the radar so far, and it is difficult to predict how much weight will be given to companies with past NLRA or OSHA violations where that company performs well in the three other factors.  If the bill passes the House and is ultimately signed by President Biden, look for potential rulemaking on this front. Stay tuned.

HIPAA: It Is What We Thought It Was, According To HHS. As we noted, since the president took the podium to announce the federal government’s intention to require all employers with 100 or more employees to ensure either (1) employees are vaccinated or (2) show a weekly negative COVID-19 test, the employer community has struggled with the practicalities of implementing this new requirement. This requirement, of course, depends upon OSHA issuing its Emergency Temporary Standard, which still may be weeks away. Thankfully, yesterday, the U.S. Department of Health and Human Services' (HHS) Office for Civil Rights (OCR) issued guidance on the interplay between the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and COVID-19 vaccine. A lot of misinformation concerning HIPPA and COVID-19 vaccination disclosures have circulated, and as such, OCR Director Lisa Pino noted that "[w]e are issuing this guidance to help consumers, businesses, and health care entities understand when HIPAA applies to disclosures about COVID-19 vaccination status.” At bottom, the guidance reminds the public that the HIPAA Privacy Rule does not apply to employers or employment records. The HIPAA Privacy Rule only applies to HIPAA covered entities (health plans, health care clearinghouses, and health care providers that conduct standard electronic transactions).

Federal Contractors Must Ensure Employees Are Fully Vaccinated By December.  As part of President Biden’s Path Out of the Pandemic, the President signed Executive Order 14042, Ensuring Adequate COVID Safety Protocols for Federal Contractors, which directs executive departments and agencies to ensure that parties who contract with the federal government provide COVID-19 safeguards in their workplaces.  Specifically, federal contractors and subcontractors with a covered contract will be required to conform to the following workplace safety protocols: 1) all employees must be vaccinated, including virtual employees.; 2) employees and visitors must comply with masking and physical distancing; and 3) individuals shall be designated to coordinate COVID-19 safety efforts at the workplace.  However, the Guidance just issued suggests that the final contract clause will suggest that contracting agencies go beyond the covered contracts the Executive Order references to include most or all federal contracts and perhaps make it retroactive.  Note that the contractor requirement requires a final contract clause to be issued by the FAR Council which is supposed to be issued by October 8, with an effective date of October 15.

As we have reported on in the past, President Biden has also issued a directive to OSHA to issue an ETS requiring that employers with more than 100 employees institute a vaccine mandate. We are, of course, still waiting on the ETS. Employers, including but not limited to those who do business with the federal government should check out Seyfarth’s recent podcast on the implications of the federal vaccine mandate, which addresses vaccine mandates and what they mean, designing a vaccine plan that’s right for your business, legal challenges to expect to the mandates, testing requirements, accommodation strategies, and more! 

States and municipalities are beginning to follow the federal government’s lead on vaccine mandates. Recently, Seyfarth reported that King County, Washington (which includes Seattle) instituted a requirement that, starting October 25th, patrons will be required to provide proof of full vaccination or a negative test for COVID-19 to enter any restaurant, bar, gym, theater, or entertainment venue within the county. King County also strongly recommends that employers and business owners independently require vaccination of employees or volunteers.

Seyfarth has also released a comprehensive Vaccine Policy Playbook for employers that is a valuable guide to navigating these evolving issues.  Check it out!

Safety Guidance For Federal Contractors, Finally. As noted in the previous blurb, at the beginning of his administration, the President convened the heads of a number of agencies -- CDC, FEMA, OMB -- to form what is referred to as the Safer Federal Workforce Task Force, aimed at keeping employees safe and their agencies operational during the pandemic. As Seyfarth’s workplace safety team noted, the task force, in accordance with EO 14042, issued workplace safety guidance that includes definitions, explanations, and exceptions, covering federal “contractor and subcontractor workplace locations and individuals in those locations working on or in connection with a Federal Government contract or contract-like instrument.”

 “Leading the Nation”: Governor Newsom Signs Legislation Relevant To Employers. The Governor was not afraid to invoke this (often, but not always) truism about California public policy as he signed into law a number of bills which are the first in the nation of their kind. California’s legislative session -- which Seyfarth summarized -- ended on September 30, 2020, leaving that legislation in the hands of Mr. Newsom. The Governor has acted on the most controversial measures, signing most but vetoing some, as summarized below.

 First up, the Governor signed AB 701 -- nation leading legislation, according to the Governor -- which imposes stringent notice and other requirements (which Seyfarth summarized) on employers of employees subject to quotas in large California warehouse distribution centers. Just as daunting for applicable employers, the Governor also signed SB 62, summarized by Seyfarth, which exposes delineated entities (such as large retailers) contracting for the performance of garment manufacturing, to joint and several liability with any manufacturer and contractor for the full amount of any unpaid wages. This week, as Seyfarth noted, the Governor also signed other legislation of import to employers:  AB 1003 (wage theft = grand theft), AB 1033 (small employer mediation program / CFRA leave), SB 606 (workplace safety citations), and SB 639 (minimum wage for employees with disability). The Governor also vetoed a couple of measures: AB 123 (would have increased the formula for determining paid family leave); AB 1074 (would have extended certain recall rights to hotel workers); and AB 616 (would have streamlined labor elections for agricultural employees).

 While on the topic of California, we should note the 9th Circuit’s recent holding -- which Seyfarth summarized --  reversing the district court’s injunction of AB 51, which Seyfarth also summarized. In a nutshell, AB 51 makes it unlawful for employers to impose arbitration agreements on employees as a condition of employment. On September 15, in a 2-1 decision, a Ninth Circuit panel struck down most of the district court’s injunction, holding that AB 51 is largely not preempted by the FAA. Specifically, the Court held that employers cannot be penalized for executing a consensual arbitration agreement, but they can be penalized for making an arbitration agreement a condition of employment. Expect an immediate appeal, either to a larger ninth circuit panel, or to the Supreme Court. Stay tuned!

SEIU Lawsuit Challenges NLRB’s Joint-Employer Rule.  The Service Employees International Union, the union behind the “Fight for 15” movement, filed a lawsuit last week aiming to strike down a Trump Administration-era National Labor Relations Board rule that made it more difficult to hold companies liable as "joint employers." The phrase refers to a company that has enough control over employees to be liable if they’re mistreated and obligated to negotiate with them if they unionize, even though that company does not issue employees’ paychecks.  The suit, filed in the Federal District Court for the District of Columbia, says the rule violates the National Labor Relations Act by limiting the factors the NLRB can consider in determining whether a company can be held jointly liable for violations of the law or whether it can be made to bargain with unions. The Biden administration’s final rule repealing the Trump-era joint employer rule is expected to go into effect in the coming weeks, but that process has been delayed and slow-going.  Whether as a result of the lawsuit or the Biden Department of Labor’s repeal efforts, the Trump-era joint employer rule will likely be gone soon.