The Department of Labor (“DOL”) issued revisions to its Temporary Rule implementing the Families First Coronavirus Response Act (“FFCRA”) on Friday, September 11, 2020 (the “Revised Temporary Rule”). The Revised Temporary Rule was issued in response to the decision by U.S. District Judge J. Paul Oetken of the Southern District of New York on August 3, 2020 (the “District Court Decision”), which had vacated portions of the DOL Temporary Regulations under the FFCRA (“The Original Temporary Rule”).  Our blog post explaining the District Court Decision is found here.

The Revised Temporary Rule is set to be published on September 16, 2020 and will become effective immediately.

By way of summary, The Revised Temporary Rule addresses the following issues:

  • DOL reaffirmed the requirement that FFCRA leave may only be taken if the employer has work available to the employee;
  • DOL reaffirmed that employees must obtain permission from their employer in order to take intermittent FFCRA leave (when applicable), and provided further explanation of what constitutes intermittent leave due to school closures;
  • DOL revised the definition of “health care provider” to mean that employers may exclude from FFCRA eligibility those employees who are employed to provide diagnostic services, preventive services, treatment services, or other services that are integrated with and necessary to the provision of patient care; and
  • DOL revised the notice and documentation requirements to clarify that employees must provide notice of their need for leave as soon as practicable, but not in advance

The Work-Availability Requirement

The Original Temporary Rule provided that FFCRA leave was not available to an employee whose employer did not have work available at the time of the leave, since the language of the FFCRA grants paid leave only to employees who are “unable to work (or telework) due to a need for leave because” of one of six qualifying reasons related to COVID-19.  The District Court Decision vacated the work availability requirement because it concluded that the language of the FFCRA could require either “but for” causation, or it could permit leave when the qualifying reason is one of several reasons why the employee is unable to work.  The District Court found that the DOL had not adequately explained the basis for its interpretation of the FFCRA as requiring but for causation.

The Revised Temporary Rule makes clear that an employee is not eligible for paid leave for any of the qualifying reasons, unless the employer would otherwise have work for the employee to perform. The DOL also provided a more robust explanation of its interpretation that the FFCRA requires that the qualifying reason is the but for cause of the inability to work, which should ensure that the work availability requirement survives future judicial scrutiny.

In this regard, the Revised Temporary Rule provides much-needed clarity, as after the District Court Decision was issued, employers were left to choose between providing FFCRA paid leave to employees with qualifying reasons for whom no work was available and risking that the corresponding tax credit would be denied, or denying the leave in such circumstances based upon the work availability requirement and risking an employee lawsuit.  It is now clear that FFCRA leave may not be taken if the employer has no work available for the employee for reasons unrelated to the qualifying reason.

Intermittent Leave

The Original Temporary Rule, (i) prohibited intermittent leave for on-site workers due to COVID-19 related illness, isolation or quarantine, and (ii) permitted intermittent leave for other qualifying reasons (such as COVID-19 related childcare) and for employees who can work remotely, but only if the employer agreed to permit the intermittent leave arrangement. The District Court Decision upheld the prohibition of intermittent leave for on-site workers due to illness, isolation or quarantine, but vacated the requirement that the employer consent to intermittent leave for other qualifying reasons based upon its conclusion that the DOL had not adequately explained the rationale for the employer consent requirement.

The Revised Temporary Rule reaffirms the DOL’s position that employer approval is needed to take any intermittent FFCRA leave, and further explains the basis for the approval requirement. Essentially, the Revised Temporary Rule notes that the DOL FMLA regulations require employer consent for intermittent FMLA leave for the birth or placement for adoption of a child, and explains the agency’s position that such employer consent is also appropriate in the context of applicable FFCRA intermittent leave, in order to avoid unduly disrupting the employer’s operations.

Unfortunately, the Revised Temporary Rule does not discuss the outcome in the event that the employer does not consent to intermittent leave under the FFCRA.  In the context of FMLA leave for the birth or placement for adoption of a child, the employee would have the option to take up to 12 weeks of continuous FMLA leave if the employer did not agree to permit intermittent leave.  However, it would seem inconsistent with the FFCRA for an employee who was only unable to work due to a qualifying reason intermittently, to be required to take continuous paid leave.  Therefore, it seems questionable that the employer would be entitled to the corresponding tax credit if continuous leave was made available under such circumstances.   Accordingly, we recommend that employers seek experienced employment law counsel prior to denying any request for intermittent FFCRA leave under circumstances where such leave could be permitted under the Revised Temporary Rule.

Given the variety of approaches taken by various schools this fall, it is significant to note that the DOL has taken the position that partial school closings actually constitute separate FFCRA qualifying events and are not intermittent leave situations that would require employer consent. The rulemaking includes the following discussion:

The employer-approval condition would not apply to employees who take FFCRA leave in full-day increments to care for their children whose schools are operating on an alternate day (or other hybrid-attendance) basis because such leave would not be intermittent under § 826.50. In an alternate day or other hybrid-attendance schedule implemented due to COVID-19, the school is physically closed with respect to certain students on particular days as determined and directed by the school, not the employee. . . .  For the purposes of the FFCRA, each day of school closure constitutes a separate reason for FFCRA leave that ends when the school opens the next day. The employee may take leave due to a school closure until that qualifying reason ends (i.e., the school opened the next day), and then take leave again when a new qualifying reason arises (i.e., school closes again the day after that). Under the FFCRA, intermittent leave is not needed because the school literally closes (as that term is used in the FFCRA and 29 CFR 826.20) and opens repeatedly. The same reasoning applies to longer and shorter alternating schedules, such as where the employee’s child attends in-person classes for half of each school day or where the employee’s child attends in-person classes every other week and the employee takes FFCRA leave to care for the child during the half-days or weeks in which the child does not attend classes in person. This is distinguished from the scenario where the school is closed for some period, and the employee wishes to take leave only for certain portions of that period for reasons other than the school’s in-person instruction schedule. Under these circumstances, the employee’s FFCRA leave is intermittent and would require his or her employer’s agreement.

Although the Revised Temporary Rule reaffirms that employer approval is needed to take FFCRA leave intermittently in situations in which intermittent FFCRA leave is permitted, the DOL has also made clear that the alternate day or other hybrid-attendance school schedules now in place in many schools actually qualify as separate brief periods of continuous leave.  Accordingly, in such circumstances, employers must allow eligible employees to take FFCRA leave if they are unable to work because they have to care for their child during the times that they are not permitted to attend school in-person.

Revised Definition of “Health Care Provider”

The FFCRA allows employers to exclude from FFCRA paid leave eligibility those employees who are “health care providers” or “emergency responders.” In concluding that the prior definition of “health care provider” was overly broad, the District Court found that for the purposes of defining a “health care provider” who could permissibly be excluded from FFCRA eligibility, the definition must depend on the “skills, role, duties, or capabilities” of the employee, not merely the identity of the employer. Otherwise, the term could include employees of health care facilities whose roles have nothing whatsoever to do with providing healthcare services.

In responding to the District Court Decision, the Revised Temporary Rule limits the definition to those employees who are “capable of providing health care services.” Specifically, the health care provider must be “employed to provide diagnostic services, preventive services, treatment services, or other services that are integrated with and necessary to the provision of patient care and, if not provided, would adversely impact patient care.” The Revised Temporary Rule’s definition also includes the definition of “health care provider” used under the FMLA.

The Revised Temporary Rule contains a list of three types of employees who may qualify as “health care providers.” First, it includes nurses, nurse assistants, medical technicians, and any other persons who directly provide diagnostic, preventive, treatment services, or other services that are integrated with and necessary to the provision of patient care. It also includes those employees providing those services under the supervision, order, or direction of or providing direct assistance to individuals providing those services. Third, it includes those employees who, although they do not directly interact with patients, their services are integrated into and necessary to providing health care services – such as lab technicians who process test results necessary for diagnoses and treatments.

By contrast, the Revised Temporary Rule identifies a non-exhaustive list of those individuals who are not health care providers – IT professionals, building maintenance staff, human resources personnel, cooks, food service workers, records managers, consultants, and billers. These individuals’ roles, though related to patient care, are too far attenuated to be integrated and necessary components of patient care.

Revising the Notice and Documentation Provision

The Revised Temporary Rule also revised the notice requirements to clarify that notice of the FFCRA’s Paid Sick Leave may not be required in advance. Rather, it may only be required after the first workday or portion of a workday for which the employee takes Paid Sick Leave. After that time, employers may require notice as soon as practicable.

With respect to the FFCRA’s expanded FMLA leave, notice is also required as soon as practicable. If the reason for leave is foreseeable, the Revised Temporary Rule states, “it will generally be practicable to provide notice prior to the need to take leave.” The DOL points out in the preamble to the Revised Temporary Rule that for normal FMLA leave, advance notice is typically required if the need for leave is foreseeable. Thus, although the Revised Temporary Rule does not expressly require advance notice for expanded FMLA leave under the FFCRA, it does so implicitly by codifying DOL’s position that advance notice is generally practicable if the need for leave is foreseeable.

In sum, although some questions are left unanswered, the Revised Temporary Rule clarifies many of the uncertainties left in the wake of the District Court Decision. It clarifies that employers need not provide FFCRA leave when no work is available to the employee for reasons unrelated to their need for FFCRA leave. It reaffirms that employer consent is required before employees take FFCRA leave intermittently in applicable scenarios. It simplifies the definition of “health care provider” employees who may be excluded from FFCRA coverage. Finally, it reaffirms that notice of the need for FFCRA leave, and documentation to substantiate the leave, must be provided as soon as practicable (but not necessarily in advance of the leave, unless practicable to do so).

Should you have any questions about how the Revised Temporary Rule may affect your Company’s FFCRA obligations, please contact any member of the McNees Labor & Employment Practice Group.

Accurately tracking hours worked by non-exempt employees for purposes of overtime pay has always been an area of potential risk for employers.  The issue is thorny one because of how the federal Fair Labor Standards Act (FLSA) defines what constitutes compensable hours worked for minimum wage and overtime pay purposes.  The risk is magnified significantly when non-exempt employees work remotely and/or have access to their work e-mail and network resources outside their scheduled work hours.

An unprecedented number of employees currently are working remotely due to COVID-19, making this issue and this risk more relevant than ever.  Earlier this week, the U.S. Department of Labor (DOL) issued a Field Assistance Bulletin (FAB) [https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/fab_2020_5.pdf] reaffirming employers’ wage and hour responsibilities for non-exempt employees working remotely due to COVID-19 or otherwise.  The FAB does not change existing legal requirements for employers.  However, it highlights this key issue and provides useful guidance for compliance.

Contrary to a common misconception and perhaps common sense, the FLSA does not require employers to track and pay for only those hours worked by non-exempt employees that the employer scheduled or otherwise directed the employee to work.  Instead, for minimum wage and overtime pay purposes, the FLSA requires employers to track and pay for all time that it “suffers or permits” the employee to work.  If the employer knew or had reason to believe that work is being performed by the employee, the time must be counted as hours worked, even if the employee was not directed to work at that time, and even if the employee was expressly directed NOT to work at that time.

For employees who can perform their job duties only at the employer’s physical location, this requirement typically does not present a problem.  However, in a remote work situation where employees can access their work e-mail, phone, and/or computer network 24/7, the opportunity exists for employees to work “off-the-clock,” creating risk of unpaid overtime and even the potential for class-based claims.

Employers are required to exercise control to ensure that work is not performed that they do not wish to be performed.  In its recent FAB, the DOL explained that “[a]n employer may have actual or constructive knowledge of additional unscheduled hours worked by their employees, and courts consider whether the employer should have acquired knowledge of such hours worked through reasonable diligence.”

To meet this requirement, employers should provide “a reasonable reporting procedure for nonscheduled time and then [compensate] employees for all reported hours of work, even hours not requested by the employer.”  The FAB confirms that employers need not compensate employees for hours worked that they do not know about and have no reason to know about.

The FAB clarifies that employers not necessarily required to cross-reference employees’ phone records or other non-payroll records to determine whether employees have worked outside scheduled work hours.  However, in a situation where a non-exempt employee is sending e-mails to his/her immediate supervisor outside the employee’s reported work hours, it would be difficult for the employer to maintain that it did not and should not have known that the employee was performing work off-the-clock.

Takeaways

Employers with non-exempt employees working remotely should take a number of steps to minimize the risk of unpaid overtime claims.

  • Have and disseminate a time-recording policy that sets forth how non-exempt employees are to report their hours worked and makes clear that non-exempt employees (1) must record all hours worked, (2) should not work outside their scheduled work hours without prior authorization from management, and (3) must report any hours worked, even those worked without prior authorization.
  • Ensure that management is aware of the risks presented in this area and the need to monitor compliance, particularly with respect to e-mails and calls received outside of a non-exempt employee’s scheduled work hours.
  • Address employees who fail to comply with these expectations, through counseling and even disciplinary action if the employee continues to fail to comply. But, do not refuse to pay the employee for unauthorized work.
  • Make compliance with these expectations part of your workplace culture. Giving non-exempt employees the “freedom” to complete their job responsibilities remotely on their own schedule may seem like a positive thing to do from an employee relations/culture perspective, but doing so creates potential liability unless the employer is accurately tracking and paying for the work hours.

If you have any questions about managing hours of remote employees or best practices for updating your company’s policies, please contact any member of the McNees Labor & Employment Group.

On Monday, August 3, 2020, U.S District Judge J. Paul Oetken of the Southern District of New York issued a Decision and Order striking down portions of the Department of Labor (“DOL”) regulations implementing the Families First Coronavirus Response Act (“FFCRA”). Particularly, the order vacated the following portions of the DOL regulations:

  • The requirement that work is available to the employee as a condition of eligibility for FFCRA leave;
  • the definition of “health care provider”;
  • the requirement that an employee secure employer consent for intermittent leave; and
  • the requirement that an employee provide documentation prior to taking FFCRA leave.

The Work-Availability Requirement

The Court first held that the DOL exceeded its rulemaking authority by excluding from eligibility those   employees for whom an employer does not have work available. The FFCRA grants paid leave to employees who are “unable to work (or telework) due to a need for leave because” of any one of six qualifying reasons related to COVID-19.  However, the DOL regulations provided that FFCRA leave was not available to an employee whose employer did not have work available at the time of the leave.  For example, if the employer conducted a temporary furlough due to a government shelter-in-place order or a lack of business, the DOL took the position that FFCRA leave would not be available.  In doing so, the DOL required that the FFCRA qualifying reason was the “but-for” cause of the employee’s inability to work – if the employee would not have had employment available, even in the absence of the qualifying reason, then “but-for” causation did not exist.

The Court found that the language of the FFCRA making leave available when the employee is “unable to work (or telework) . . . ‘because of’” a qualifying reason is ambiguous, since it could require “but for” causation, or it could permit leave when the qualifying reason is one of several reasons why the employee is unable to work.  Even though the Court seemed to acknowledge that the interpretation chosen by the DOL was a plausible interpretation of the statutory language, it struck down the DOL’s interpretation, finding that the agency had failed to adequately explain the basis for its interpretation during the rulemaking process.

Health Care Provider Definition

The FFCRA granted the DOL the authority to issue regulations permitting employers to exclude “health care providers” and emergency responders from the definition of employee under the FFCRA.  Although, for other purposes, the regulations incorporate the FMLA’s definition of health care provider (i.e., doctors and others who provide health care services), the DOL regulations defined health care provider for purposes of the exclusion from coverage to include anyone employed at any doctor’s office, hospital, nursing facility, retirement facility, medical school, medical testing laboratory, pharmacy, or any similar site where medical services are performed.

The Court held that the FFCRA’s statutory language requires that the healthcare provider exclusion is limited to employees who are capable of furnishing healthcare services, and that the definition in the DOL regulations was “vastly overbroad,” because it included “employees whose roles bear no nexus whatsoever to the provision of healthcare services.”  The Court noted that “an English professor, librarian, or cafeteria manager at a university with a medical school” would all be health care providers under the DOL regulation, and that such a result was inconsistent with the FFCRA.

Intermittent Leave

On the issue of intermittent leave, the Court first noted that the FFCRA did not address intermittent leave at all, and that the DOL’s regulatory powers permit the agency to fill the gap left by Congress through reasonable rulemaking, as necessary to carry out the purposes of the Act.  The Court upheld the DOL regulations insofar as they prohibit intermittent leave for on-site workers due to COVID-19 related illness, isolation or quarantine, because the prohibition of intermittent leave in those cases serves an important public health objective – reducing the risk of viral infection.

The DOL regulations permit intermittent leave for other qualifying reasons (such as COVID-19 related childcare) and for employees who can work remotely, but only if the employer and the employee agree to an intermittent leave arrangement. The Court held that the DOL had failed to offer any rationale for the requirement of employer consent to such intermittent leave and, therefore, vacated the DOL regulation insofar as it requires employer consent before an employee may take intermittent leave.

Documentation Requirements

Finally, the Court vacated the portion of the regulations imposing a requirement to provide documentation containing information about the need for leave prior to taking paid leave under the FFCRA. The Court found this requirement is inconsistent with the statute’s unambiguous notice provisions, neither of which require that documentation be provided by an employee in advance of taking paid leave under the FFCRA. Notably, however, the Court held that the documentation requirements are invalid only to the extent that they are a precondition to obtaining leave. The Court allowed the substance of the DOL’s documentation requirements to stand. In other words, employees still must provide the same documentation of the need for leave under the FFCRA, but they simply cannot be required to provide it in advance.

Conclusion

The Court’s decision modifies the DOL regulations by vacating those provisions discussed above.   The decision could have significant ramifications for employees who experience a qualifying reason for FFCRA leave, but are on temporary furlough for other reasons; for workers in the healthcare field; and for those who want to take intermittent leave for reasons permitted under the regulations.  However, the ruling does not include a nationwide injunction, so it leaves open the possibility that other courts might uphold the regulations.  To say the least, the decision creates significant uncertainty as to the validity of the portions of the regulations that have been vacated.  The DOL might also appeal the Court’s ruling, or the agency could engage in a new rulemaking to bolster its justification for those portions of the regulations that the Court found to be lacking support.

For now, employers who rely upon those portions of the DOL regulations that were vacated by the ruling will risk violating the FFCRA if courts within their jurisdiction eventually agree with Judge Oetken’s decision.  As such, pending further developments, we recommend that employers modify their FFCRA compliance processes to comply with the Court’s decision.

Should you have any questions or concerns about the impact of this decision on employer obligations, please contact any member of the McNees Labor & Employment Practice Group.

The National Labor Relations Board has restored a prior standard, one that had stood for about 80 years before being overturned in 2016, which governs an employer’s duty to bargain over employee discipline during the time period between when a new union is certified and a first contract is negotiated.  In 800 River Road Operating Company, LLC d/b/a Care One at New Milford, 369 NLRB No. 109 (2020), the Board reinstated the rule that employers have no duty to bargain before imposing discretionary discipline, which is consistent with the employer’s existing policy or practice, prior to bargaining a first contract with a newly certified union.

In reaching this conclusion in 800 River Road, the Board reversed its 2016 decision in Total Security Management Illinois 1, LLC, 364 NLRB No. 106 (2016), which had required employers to bargain over employee disciplinary action upon commencement of a collective-bargaining relationship.  Specifically, Total Security required employers to provide a new union with notice and opportunity to bargain regarding the discretionary aspects of an existing disciplinary policy before issuing “serious discipline” to a bargaining unit employee.

In reversing Total Security, the Board was fairly critical of its holding.  The Board noted that the decision was inconsistent with United States Supreme Court and Board precedent, and created a “complicated and burdensome” scheme that was inconsistent with the general body of law surrounding bargaining practices.

Although the 800 River Road decision will be applicable to a limited number of cases, it is important for employers who have recently been forced to bargain with a new union.  It will allow those employers to continue to implement existing disciplinary policies and procedures consistently and without the need to bargain.  Also, the Board announced that its 800 River Road decision would be applied retroactively.

The National Labor Relations Board has traditionally applied separate tests to evaluate whether employee discipline violated the National Labor Relations Act, depending on the context of the underlying misconduct. This has resulted in heightened protection for employee misconduct that takes place during the course of protected activity, such as strikes.  However, in General Motors LLC, the Board abandoned the context specific analysis to apply one consistent standard.

Historically, the Board’s Wright Line standard is used to determine whether employee discipline was an unlawful response to employee protected activity.  In other cases, the Board presumed that discipline based on abusive conduct during Section 7 protected activity violates the Act, unless the Board determines that the abusive conduct lost the protection of the Act.  Two different standards have been used for evaluating these cases.

In evaluating employee misconduct that occurs in the workplace, the Board has applied the four-factor Atlantic Steel test, which considers “(1) the place of the discussion; (2) the subject matter of the discussion; (3) the nature of the employee’s outburst; and (4) whether the outburst was, in any way, provoked by an employer’s unfair labor practice.” In the case of social-media posts and most cases involving discussions among employees in the workplace, the Board has examined the totality of the circumstances to determine whether employee discipline was unlawful.

The Board has used yet another standard to evaluate employee misconduct during a strike.  In the context of a picket-line, the Board applies the Clear Pine Mouldings standard, which also considers all of the circumstances in determining whether non-striking employees reasonably would have been coerced or intimidated. If so, then the misconduct loses the protection of the Act.

In General Motors LLC, the Board held that these varied standards have failed to yield predictable, equitable results.  The Board cited to cases overturning employee discipline and requiring employers to reinstate employees accused of making threatening and racist comments toward coworkers and supervisors.  As a result, the Board concluded that the appropriate approach is to apply the Wright Line analysis in evaluating employee misconduct regardless of the context.

Under Wright Line, an employee must show that (1) the employee engaged in Section 7 protected activity, (2) the employer knew of that activity, and (3) there is a causal connection between the discipline and the Section 7 activity.  If this initial case has been made, the burden of shifts to the employer to prove it would have taken the same action even in the absence of the protected activity.

We believe that the Board’s decision will result in fewer disciplinary decisions being overturned by the Board and will result in more predictability for employers.  Hopefully, it will eliminate some of the more extreme cases of the misconduct in and outside of the workplace.  Certainly, the Board’s General Motors decision will be a welcomed relief for employers evaluating possible disciplinary action for employee misconduct.

On July 16, 2020, the U.S. Department of Labor (“DOL”) released a series of new forms that can be used by employers and leave administrators related to the Family and Medical Leave Act (“FMLA”).  The DOL claims the new forms are simpler and easier to understand for employers, healthcare providers, and employees. Some of the more significant updates include the replacement of questions that require written responses with statements that can be completed by checking a box, and electronic signature features.  The new forms can be found through using the links below:

Employer FMLA Notice Forms:

  • Eligibility Notice (form WH-381) – This form is used to notify employees of their eligibility for FMLA leave (or the reason(s) they are not eligible).
  • Rights and Responsibilities Notice (form WH-381) – This form is used to notify eligible employees of the specific expectations and obligations associated with their FMLA leave request, including the requirement to provide a certification addressing the need for FMLA leave, if applicable.
  • Designation Notice (form WH-382) – This form is used to inform employees whether their FMLA leave request is approved or whether additional information is needed to approve or deny the requested leave.

FMLA Certification Forms:

These new forms, like prior versions of the DOL’s FMLA forms, can be used by employers to comply with their obligations under the FMLA.  However, employers are not required to use the new FMLA forms.

In a Q&A section addressing the newly released FMLA forms, the DOL states that the FMLA does not require the use of any specific form or format.  Thus, employers may use the DOL’s forms (either the older or newer versions) or they may create their own versions of the FMLA forms.  If an employer creates its own FMLA forms, however, the forms should be reviewed by legal counsel to ensure compliance with the FMLA regulations. The entire Q&A section addressing other aspects of the new FMLA forms can be found at the bottom of the page on the DOL’s website.

In addition to the new streamlined FMLA forms, the DOL also issued a Request for Information, which asks for feedback from the public regarding the effectiveness of the current FMLA regulations.  Through this process, employers can provide feedback and suggestions regarding issues they have experienced in administering the FMLA in their workplaces.  Employers have until September 15, 2020 to provide their feedback and suggestions.

If your organization needs assistance with FMLA compliance or submitting feedback through the DOL’s Request for Information process, please contact any member of the McNees Labor and Employment Group.

On July 8, 2020, in the consolidated cases of Little Sisters of the Poor Saints Peter and Paul Home v. Pennsylvania et al. and Donald J. Trump, President of the United States, et al. v. Pennsylvania et al., the U.S. Supreme Court ruled that employers can exclude coverage for birth control from their health care plans if they oppose contraception on moral or religious grounds.

The Women’s Health Amendment to the Patient Protection and Affordable Care Act (“ACA”) requires ACA covered employers to provide women no-cost coverage for preventative care as defined by the Preventative Care Guidelines provided by the Health Resources and Services Administration.  “Contraceptive methods” are considered preventative care under the Guidelines.

In 2011,  the Departments of Health and Human Services, Labor, and Treasury (“Departments”) created a narrow exemption from the requirement to provide contraceptive coverage for houses of worship, their integrated auxiliaries, religious orders, and conventions or associations of churches.  In 2013, the Departments provided an accommodation for other religious organizations allowing for contraceptive coverage to be provided without cost-sharing directly to the employer’s participants, independent of the employer’s health plan.  To receive an accommodation, the religious organization had to self-certify that it opposed providing coverage for some or all of the contraceptive services on account of religious objections; it is a nonprofit entity; and it held itself out as a religious organization.  In 2015, the accommodation was expanded to include any for-profit entity that is not publicly traded and is owned by a small number of individuals who object to providing coverage based upon the owners’ religious beliefs.

In 2018, the Departments issued final rules, which significantly expanded the exemption (“2018 Rules”).  The 2018 Rules made the accommodation process voluntary and  expanded the exemption to include organizations which objected to the contraceptive mandate based on sincerely held religious beliefs that opposed contraceptive coverage and created a “moral exemption” for nonprofits and for-profit, non-publicly traded companies, with sincerely held moral objections to providing the coverage.

The Commonwealth of Pennsylvania, joined by the State of New Jersey, challenged the 2018 Rules and the U.S. District Court for the Eastern District of Pennsylvania issued a nationwide injunction preventing the Departments from implementing the 2018 Rules.  In July 2019, the Third Circuit affirmed the District Court’s decision.  This week, the Supreme Court overruling the Third Circuit, held that the Departments had the authority to provide the exemptions to employers with religious and conscientious objections.

Therefore, if you are an employer who has a sincere religious or moral objection to providing contraception coverage to your employees, you will not have to include the coverage in your health plan.  The self-certification is no longer required.  However, if you would prefer that your employees have the opportunity to receive contraceptive coverage independent of your health plan, then the accommodation procedure remains available and you would follow the self-certification procedures.

If you would like more information on how to invoke the religious or moral exemption or complying with the accommodation procedure, please contact any member of our Labor and Employment Law Practice Group.

On June 15, 2020, the U.S. Supreme Court issued its long-awaited decision in Bostock v. Clayton County and two related cases that presented the same issue: whether employment discrimination on the basis of an individual’s sexual orientation or gender identity constitutes unlawful sex discrimination under Title VII of the Civil Rights Act of 1964.  In recent months, many Supreme Court observers refused to predict how the Court would rule, saying it was too close to call, but many predicted the outcome would turn on the vote of Justice Neil Gorsuch, a President Trump appointee.  Justice Gorsuch authored the 37-page majority opinion, and, in a 6-3 decision, the Court determined that employment discrimination on the basis of sexual orientation or gender identity is unlawful under Title VII.

The Court’s Reasoning.  Justice Gorsuch’s reasoning was straightforward: Title VII clearly prohibits discrimination on the basis of sex, and when an employer discriminates against an individual based on the gender of who he/she loves or which gender he/she identifies as, that individual’s “sex” is a factor in the decision.  Put another way, an employer who hires women who date men, but refuses to hire men who date men is ultimately differentiating between the candidates based on their sex.  While this reasoning drew criticism from three dissenting justices (Thomas, Alito and Kavanaugh) as violating the intent of the legislators who passed Title VII, Justice Gorsuch cited several prior Supreme Court decisions in which Title VII’s strict prohibition on “sex discrimination” was interpreted to reach results that the drafters may not have envisioned.  Indeed, some believed the Court’s 1998 decision in Oncale v. Sundowner Offshore Services, Inc. (holding that same-sex sexual harassment is an unlawful form of sex discrimination under Title VII) authored by Gorsuch’s predecessor,  Antonin Scalia, made the outcome in the Bostock case a foregone conclusion.

What the Decision Means for Employers.  Several federal courts sitting in Pennsylvania have in recent years reached the same conclusion that the Supreme Court did in the Bostock decision.  In addition, the Pennsylvania Human Relations Commission (PHRC) issued written guidance in 2018, advising that the Commission consider discrimination on the basis of sexual orientation and gender identity to be unlawful under the Pennsylvania Human Relations Act.  So, the risk of liability for such discrimination is not new to employers in the Commonwealth.  However, the Supreme Court’s decision brings a degree of finality to how Title VII must be interpreted and will likely increase the number of such claims filed with the PHRC, Equal Employment Opportunity Commission and in federal courts.  At a minimum, employers should consider revising their equal employment opportunity policies to clearly prohibit discrimination on these grounds – and to update non-discrimination/non-harassment training to ensure the scope of the law is understood by managers and employees alike. Likewise, human resources professionals would be well-advised to consider best practices for addressing internal complaints of discrimination on these grounds.

What the Decision Does Not Mean.  In his written opinion, Justice Gorsuch pointed out that the employers involved in the trio of cases before the Court were not asserting a religious basis under the Religious Freedom Restoration Act (RFRA) to justify the challenged discrimination.  It remains possible that an employer with a religious objection to homosexuality or transgender status could successfully defend a discrimination claim on that basis.  Likewise, Justice Gorsuch pointed out that the Court’s opinion in the Bostock case should not be construed to require any particular outcome pertaining to issues such as dress codes or use of locker rooms and rest rooms; those issues, according to the Court, would also need to be addressed in subsequent cases.  A closely related issue is whether employers commit unlawful discrimination by refusing to cover gender reassignment therapy and surgery in their health plans.  Three days prior to the Bostock decision, the Trump Administration rolled back an Obama-era regulation under the Affordable Care Act that required such coverage for certain employers; however, the question that remains is whether such coverage exclusions are now unlawful under Title VII (or the Americans with Disabilities Act).  Justice Gorsuch’s reminder of what his written opinion does not purport to address serves as a clear reminder that there are many related issues that have yet to be sorted out in court.  It may take years for a consensus to be reached on all of these issues; however, LGBTQ legal rights have advanced significantly over the past five years (starting with the Supreme Court’s recognition of same-sex marriage in June 2015) and odds are good that they will continue to do so.

There is no question that the Bostock case is a monumental decision for the LGBTQ community.  However, many employers in Pennsylvania have already adjusted their practices to prohibit discrimination on the basis of sexual orientation and gender identity.  For those employers that have not done so, the Bostock decision removes any question that it is now necessary to do so.  If you have any questions regarding the decision, this article or best practices for updating your policies and training programs, please contact any member of our Labor and Employment Law Practice Group.

Nearly one month after Pennsylvania shut down in March to slow the spread of COVID-19, Governor Wolf announced a three-phase plan to reopen the Commonwealth.  Counties were to be classified in to red, yellow, and green phases with each step carrying progressively easing restrictions.  As more counties approach the least-restrictive green phase, employers should consider several factors as Pennsylvania emerges from the shutdown and workers begin returning to their regular jobsites.

Masks or No Masks

One decision nearly every employer will have to make during the green phase is whether to excuse any employees from wearing masks as they return to work.  There is no one-size-fits-all answer to this question.  Employees who work physically demanding jobs or in high temperature environments may face health risks if required to wear a mask while working – and guidance from the Pennsylvania Department of Health does not require masking in any situation where a mask would cause a safety or health risk.  By contrast, workers whose jobs are less physically demanding or are located in climate controlled environments will typically be able to safely wear face masks while at work.  Likewise, public-facing employers whose employees have regular, in-person customer contact will have a heightened need for protection regardless of whether they work in heat; in these situations some employers may opt to require face shields in lieu of masks.  Whatever an employer decides regarding the use of masks in its facility, its decision should be based on applicable government guidance and sound reasoning that considers employee and public safety alike.

Cleaning Up and Keeping Clean

Before COVID-19, employers probably gave little thought to the cleaning regimens in place at their facilities.  With employees returning to work,  businesses should examine their cleaning practices and protocols.  Areas that are commonly occupied by multiple employees or customers (think lobbies and break rooms) should be cleaned and disinfected nightly, as should commonly touched surfaces and objects.  Broad-spectrum cleaning agents that kill viruses and bacteria are best.  Individual workstations and whole-office cleanings should also take place regularly.

Complying with State and Federal Guidelines

Governor Wolf and the federal Centers for Disease Control have each issued guidance for employers.  As green phase approaches, employers should regularly consult these resources to ensure that they are complying with applicable guidelines.  Where compliance is not feasible, employers should be prepared to support their actions through sound reasoning and by complying to the extent possible.

Educating Employees

As Pennsylvania moves from yellow phase to green, employers should formulate a strategy to educate employees on return to work protocols and procedures, and ongoing efforts to mitigate risks associated with COVID-19.  Education and communication ensures that employees are mindful of, and understand, new policies and procedures.  Their awareness of ongoing mitigation efforts not only helps to lower anxiety about returning to work, but also increases the likelihood that employers’ mitigation efforts are successful.

Expect Some Bumps in the Road and Have a Plan for Handling Them

What should an employer do about workers who refuse to come back to the jobsite?  Should employees travel out of state on business?  What if an employee develops COVID-like symptoms upon returning to work?  Employers should consider these and other issues that are likely to arise as their workforces return to the job and have plans in place to address them.  When the answer to a problem is not clear, businesses should seek legal counsel to avoid making mistakes that could prove costly.

If you have any questions about preparing your Pennsylvania business for operation in the green phase, contact any member of our Labor & Employment Group.

IRS guidance, Notice 2020-29 and 2020-33, issued on May 12, 2020 addresses unanticipated changes in health and dependent care expenses because of the 2019 Novel Coronavirus (COVID-19) pandemic by  providing for increased flexibility with respect to mid-year elections under a Section 125 cafeteria plan during calendar year 2020 related to employer sponsored health coverage, health Flexible Spending Arrangements (health FSAs), and dependent care assistance programs.  It is also providing increased flexibility with respect to grace periods to apply unused amounts in health FSAs, and dependent care assistance programs incurred through December 31, 2020 and has increased the $500 limit for unused amounts remaining in a health FSA that may be carried over into the following year to $550.

Mid-year Elections Under a Section 125 Cafeteria Plan
For mid-year elections made during calendar year 2020, a Section 125 cafeteria plan may be amended to permit employees who are eligible to make salary reduction contributions under the plan to:

  1. make a new election for employer sponsored health coverage on a prospective basis, if the employee initially declined to elect employer-sponsored health coverage;
  2. revoke an existing election for employer sponsored health coverage and make a new election to enroll in different health coverage sponsored by the same employer on a prospective basis (including changing enrollment from self-only coverage to family coverage);
  3. revoke an existing election for employer-sponsored health coverage on a prospective basis, provided that the employee attests in writing that the employee is enrolled, or immediately will enroll, in other health coverage not sponsored by the employer;
  4. revoke an election, make a new election, or decrease or increase an existing election regarding a health FSA on a prospective basis; and
  5. revoke an election, make a new election, or decrease or increase an existing election regarding a dependent care assistance program on a prospective basis.

An employer utilizing this relief is not required to provide unlimited election changes but may determine the extent to which such election changes are permitted and applied, provided that any permitted election changes are applied on a prospective basis only, and the changes to the plan’s election requirements do not result in failure to comply with the nondiscrimination rules applicable to cafeteria plans.

Extended Claims Period for Health FSAs and Dependent Care Assistance Programs

An employer may also amend its Section 125 cafeteria plan to permit employees to apply unused amounts remaining in a health FSA or a dependent care assistance program as of the end of a grace period ending in 2020 or a plan year ending in 2020 to pay or reimburse expenses incurred for the same qualified benefit through December 31, 2020.  The guidance also increased the $500 limit for unused amounts remaining in a health FSA that may be carried over into the following year by making the carryover amount 20 percent of the maximum salary reduction amount under Section 125(i), which is indexed for inflation.  For a plan year starting in 2020, the maximum unused amount allowed to be carried over to the immediately following plan year beginning in 2021 is $550 (20 percent of $2,750, the indexed 2020 limit under Section 125(i)).

An amendment for any of the above provisions for the 2020 plan year must be adopted on or before December 31, 2021, and may be effective retroactively to January 1, 2020, provided that the Section 125 cafeteria plan operates in accordance with Notice 2020-29 or Notice 2020-33 or both, as applicable, and the employer informs all employees eligible to participate in the Section 125 cafeteria plan of the changes to the plan.

For more information on these changes and other employee benefit law changes, contact a member of our Labor and Employment or Employee Benefits Group.