As we previously reported, on August 26, 2022, the U.S. Court of Appeals for the Eleventh Circuit issued a decision narrowing the nationwide injunction against the COVID-19 vaccination mandate for federal contractor employees set forth in President Biden’s Executive Order 14042. Although the Eleventh Circuit found the vaccination mandate to be unlawful, it found the nationwide injunction (applicable to all federal contractors across the country) to be overbroad and reduced the scope of the injunction to apply only to the States and parties that challenged the mandate in the case. This allows the vaccination mandate to go into effect for federal contractors in the majority of the country. On October 14, 2022, the Safer Federal Workforce Task Force issued guidance about its intentions and course of action following the Eleventh Circuit’s decision. The new Task Force guidance strongly implies that the federal government will resume enforcing Executive Order 14042’s vaccine mandate. Before the government does so, however, the Task Force outlines a three-step process that will occur: First, the Office of Management and Budget will notify federal agencies regarding their obligations to comply with the remaining injunctions against Executive Order 14042, which continue in effect. Second, the Task Force will update its guidance regarding COVID-19 safety protocols for federal contractor and sub-contractor workplaces. Due to the injunctions, the Task Force has not updated its contractor guidance since November 2021, despite great changes in the state of the COVID-19 pandemic since that time. The October 14, 2022, notice does not provide any hints as to what types of updates the Task Force may make. Third, and finally, OMB will provide additional guidance to federal agencies regarding the resumption of enforcement of contract clauses implementing Executive Order 14042’s requirements. Prior to this notice, the federal government will continue not to enforce any of Executive Order 14042’s requirements. The timeframes under which these steps will occur are not defined by the Task Force’s notice. As noted above, the Eleventh Circuit’s decision did not affect other pending injunctions prohibiting enforcement of the vaccination mandate against contractors and subcontractors in the States of Missouri, Nebraska, Alaska, Arkansas, Iowa, Montana, New Hampshire, North Dakota, South Dakota, Wyoming, Kentucky, Tennessee, Ohio, and Florida. In addition, members of the Associated Builders and Contractors also retain the protection of the former nationwide injunction. All other contractors not covered by pending injunctions will need to resume their efforts to comply with Executive Order 14042. That said, it is unknown at this time how the Task Force will modify its guidance. For example, will the Task Force now require that covered contractor employees obtain booster shots in addition to the initial vaccination. Although the exact contours of the modified guidance are important, there are steps federal contractors can take to begin preparing now, to avoid being caught under potentially short deadlines as the three-step process unfolds over an unknown timeline.

On October 12, 2022, the U.S. Supreme Court heard oral arguments in a case that considers whether a supervisor who earned over $200,000 annually may still be eligible for overtime pay under the Fair Labor Standards Act (FLSA). The case centers on the interpretation of the regulatory scheme surrounding highly compensated employees and their exemption status under the FLSA. The Plaintiff in the case was a worker in a supervisory role on an oil rig and his compensation was based on a daily rate. The plaintiff argued that his daily rate of pay did not constitute a salary.  Prior to the Supreme Court, the Fifth Circuit en banc agreed with the Plaintiff and found that he was not paid a salary such that he was not an exempt employee under the FLSA. This case has implications for how employers will pay workers, and whether there is potential exposure for overtime claims, even for highly compensated employees. Polsinelli will continue to monitor and report on this case.

On September 27, 2022, Governor Gavin Newsom approved SB 1162 to significantly expand the pay reporting and pay scale requirements for California employers.  These requirements are effective January 1, 2023. Pay Reporting Requirements SB 1162 amends California Government Code § 1299 and requires private employers with 100 or more employees to submit a pay data report (the “Report”) to the Civil Rights Department (the “Department”) by the second Wednesday of May each year beginning in 2023. The Report must include the following information from the prior calendar year: The number of employees by race, ethnicity and sex in the following job categories: Executive/senior-level officials and managers First/mid-level officials and managers Professionals Technicians Sales workers Administrative support workers Craft workers Operatives Laborers and helpers Service workers The mean and median hourly rate for each combination of race, ethnicity, and sex within each of the above-listed job categories; The number of employees by race, ethnicity, and sex whose annual earnings fall within each pay band used by the U.S. Bureau of Labor Statistics in the Occupational Employment Statistics Survey; The employer’s North American Industry Classification System (NAICS) code; and A section for the employer to provide clarifying remarks regarding the information provided, if any. Private employers with 100 or more employees hired through labor contractors (i.e. an individual/entity that supplies a client employer with workers to perform labor within the client employer’s usual course of business) must submit a separate report to the Department that includes the information above for those employees, along with the names of all labor contractors used to supply employees. Private employers with more than one establishment (defined as an economic unit producing goods or services) must submit a report covering each establishment. The Report must be in a format that the Department can search and sort through readily available software. If a private employer does not comply with these requirements, the Department may seek an order for compliance and recover associated costs.  Additionally, upon request of the Department, a court may impose a civil penalty of no more than $100 per employee for the employer’s failure to file the Report, and a civil penalty of no more than $200 per employee for the employer’s subsequent failure. Pay Scale Requirements SB 1162 amends California Labor Code section 432.2 and imposes new wage disclosure requirements on all private and public employers with 15 or more employees. Since 2018, Labor Code Section 432.2 has prohibited California employers from relying on the salary history of a job applicant in deciding whether to extend an offer of employment or what salary to offer, unless the applicant voluntarily discloses this information.  Employers have also been prohibited from seeking, either personally or through an agent, salary history information about an applicant. SB 1162 expands Section 432.2 to also require covered California employers to affirmatively provide pay scale information (i.e. the range of the salary or hourly rate the employer expects to pay for the position) on job postings, including postings made by third-party job sites used to advertise positions. Covered employers must also provide pay scale information upon request to current employees for their current position. An aggrieved applicant or employee may file a complaint with the Labor Commission within one year of discovering the employer’s violation.  The Labor Commissioner impose may order the employer to pay a civil penalty of no less than $100 and not to exceed $10,000. Employers are required to maintain a record of each employee’s job title and wage history during employment and for three years following the termination of employment.  An employer’s failure to keep records in violation of this section creates a rebuttable presumption in favor of an employee’s claim filed with the Labor Commissioner. Polsinelli attorneys will be monitoring new developments in this area and remain prepared to assist employers.

The California State Legislature adjourned on August 31, 2022. Following the adjournment, several bills with significant implications for employers were presented to Governor Newsom for signature or veto by September 30, 2022. Governor Newsom signed multiple bills, now laws, that California employers need to be aware of going into the new year. Below is a brief overview of the most notable updates. COVID-19 Employee Protections COVD-19 Supplemental Paid Sick Leave (AB 152): Current Covid-19 Supplemental Paid Sick Leave (“SPSL”) was set to expire on September 30, 2022. With the signing of this bill, the current COVID-19 SPSL requirements will be extended through December 31, 2022. This bill does not create a new bank of leave for employees to use but instead provides employees an additional three (3) months to use any banked SPSL. Extension of Workers’ Compensation Rebuttal Presumption for COVID-19 (AB 1751): This bill extends the current rebuttable presumption established for workers’ compensation for COVID-19 to January 1, 2024, as well as extending coverage to certain state employees who were not covered previously. Extension of COVID-19 Notice Requirements (AB 2693): Under previous notice requirements, employers were required to provide notice to individual employees who were potentially exposed to COVID-19. These requirements have been extended to January 1, 2024, but employers are now permitted to post a notice in the workplace for 15 days instead of providing individual notice. Leave Protections Mandatory Bereavement Leave (AB 1949): Effective January 1, 2023, employees with at least 30 days of active service who request bereavement leave upon the death of a covered family member must be provided with at least five (5) days of bereavement leave that does not need to be taken consecutively. Expansion of Those Included as “Designated Persons” Under CFRA and PSL (AB 1041): AB 1041 amends Government Code Section 12945.2 and Labor Code Section 245.5 to expand the California Family Rights Act (“CFRA”) and California Paid Sick Leave (“PSL”). Specifically, the class of people for whom an employee may take leave to care for is expanded to include a “designated person” identified at the time the employee requests the leave under both PSL and CFRA. With this expansion, a “designated person” means any individual related by blood or whose association with the employee is the “equivalent of a family relationship,” including a domestic partner. Other Notable Updates Creation of Fast-Food Sector Council (AB 257): The Fast Food Accountability and Standards Recovery Act will establish a Fast Food Sector Council comprised of 10 members, which will establish standards on minimum wages and other working conditions applicable to certain fast food workers. Most immediately, the Council will have the authority to raise the minimum hourly wage for workers as high as $22 next year. Although AB 257 is set to take effect January 1, 2023, a referendum has been filed seeking to block it until the matter can be put before voters. Retaliation for Emergency Conditions (SB 1044): Effective January 1, 2023, in the event of an “emergency condition,” employers are prohibited from taking or threatening adverse action against any employee who walks off the job because the employee feels unsafe. Employers also cannot prevent employees from accessing their mobile device or other communications device for seeking emergency assistance, assessing the safety of the situation, or communicating with a person to confirm their safety. Employment Discrimination and Cannabis (AB 2188): Effective January 1, 2024, AB 2188 will make it unlawful for employers to discriminate against an individual based on their use of cannabis outside of work or when an employer-required drug test finds non-psychoactive cannabis in the individual’s system (which indicates usage, not impairment). Certain workers are exempt from these protections and the new law will not prohibit drug-free workplace policies or prohibit employers from disciplining employees for the use or possession of cannabis during work hours. Expansion of Pay Data Reporting and Posting of Pay Scale in Job Postings (SB 1162): Effective January 1, 2023, California will join a growing list of states that require the disclosure of pay scales in job postings. Additionally, the existing obligation for California employers to supply pay scale information to job applicants upon request will extend to current employees. The new law also imposes certain recordkeeping requirements relating to job titles and wage rates. SB 1162 further modifies the timing and requirements for the submission of pay data reports by California employers with 100 or more employees. Finally, the law imposes various civil penalties for violations of the above-described requirements. A more detailed summary of these new job posting and pay data reporting requirements is provided here. The above is intended only as a brief overview of these new laws. For a deeper dive into details of these newly passed bills, as well as other California employment law updates, please tune into the webinar What’s on the Horizon: California Employment Law Updates for 2023 on November 1, 2022, at 11:00 a.m. – 12:00 p.m. PT by registering at: https://sites-polsinelli.vuturevx.com/121/3739/landing-pages/rsvp-blank---cle.asp?sid=5260a168-c2be-4c55-86e9-3032624c3d5c. Our team continues to monitor and review emerging laws and employers are always encouraged to reach out with any questions.

The U.S. Department of Labor is set to issue a Proposed Rule that will have a significant impact on the test used to determine whether someone is an independent contractor or an employee under the Fair Labor Standards Act (“FLSA”). The DOL’s intent in issuing this Proposed Rule is made clear by Secretary of Labor Marty Walsh’s comments: “While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors, particularly among our nation’s most vulnerable workers.  Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages. The Department of Labor remains committed to addressing the issue of misclassification.” An unpublished version of the Proposed Rule indicates it will make it easier for the DOL to find that workers have been misclassified as independent contractors rather than employees. The current test, in effect since March, 2021, analyzes five factors and places the greatest weight on two “core factors”: the nature and degree of control over the work and the worker’s opportunity for profit or loss based on personal initiative or investment.  The DOL now seeks to rescind the 2021 test and replace it with the new Proposed Rule. The new Proposed Rule will focus on the “economic reality” of the worker’s situation, ultimately asking – Are the workers economically dependent upon an employer for work (and therefore an employee) or are they in business for themselves (and therefore an independent contractor)? The economic reality test in the Proposed Rule will return to a “totality of the circumstances” analysis, under which no specific factors have greater weight, and all are considered in view of the economic reality of the whole relationship. The DOL is further proposing to return the consideration of investment as a stand-alone factor, and to provide additional analysis of the control factor, including detailed discussions of how scheduling, supervision, price-setting, and the ability to work for others should be considered. Furthermore, the Proposed Rule will not limit control only to control that is actually exerted. The Proposed Rule will also re-focus the analysis on the “integral” factor, which considers whether the work is integral to the potential employer’s business. The permanency of the relationship is another factor under the Proposed Rule that often weighs against independent contractor status for many workers who provide services for the same entity over an extended period of time. The Proposed Rule is scheduled to be published in the Federal Registry on October 13, which will begin a 45-day comment period. For more information regarding the anticipated Proposed Rule, contact your Polsinelli attorney.

The U.S. Foreign Corrupt Practices Act (FCPA) and the U.K. Bribery Act 2010, along with dozens of trade treaties and conventions, forbid consummated (and attempted) improper or unethical payments to government officials or prospective parties to commercial deals by you or your employees or agents. Generally speaking, the FCPA can apply to prohibited conduct anywhere in the world and extends to publicly traded companies and their employees. The FCPA carries with it the prospect of $25 million in fines and 25-year jail terms, but these can be stacked higher. The U.K. law, including its penalties, are even more stringent. Both laws prosecute individuals, but can also punish employers for facilitating such payments. The reach of the FCPA and the U.K. Act is wide and deep, given how difficult it is to avoid “taking action” in the U.S. or in nations linked to the British Commonwealth.  And employers may expose themselves to risk for not training their workforce and requiring third parties to act with integrity. Beyond the need to book every expense accurately, there is a larger and more compelling need to avoid conflicts of interest, report outside interests, win business fairly, and have an anti-corruption culture.  In addressing these important points, employers must consider any number of questions, including: Who is a government official? What is a bribe in various contexts? How much value is “too much”? What about sports event tickets? What about places where “everyone does it that way”? What if we didn’t know the local broker did that? The good news is there is a specific set of actions and documents which can put an employer in much better stead if an agent or employee “goes rogue.” Drawing from real world and practical dilemmas, Polsinelli attorneys can help your leadership teams build better recognition of when an offer crosses the line, react before the line is crossed, lead towards candor, and draft policies and procedures for reporting and correcting questiona

Today OFCCP announced that it is extending the deadline to respond to and submit objections pursuant to its August 19, 2022, Notice in the Federal Register regarding a Freedom of Information Act (“FOIA”) request from Will Evans, a Senior Reporter and Producer with the Center for Investigative Reporting (“CIR”). The request seeks federal contractors’ Type 2 Consolidated EEO-1 Report Data. For a discussion of the scope of the request and additional details about the substance and process of objecting, click here. What Has Changed? OFCCP indicated that after publishing the Notice in the Federal Register, it had received numerous requests from contractors and contractor representatives to extend the time period for submitting objections. In addition, during this same time period, some federal contractors have reached out to OFCCP seeking to verify whether they are included in the universe of “Covered Contractors” during the requested timeframe for the reports. To accommodate these concerns, OFCCP has extended the deadline to submit objections by a month – from September 19, 2022, to October 19, 2022. Further, OFCCP will also be taking the additional step of emailing contractors that OFCCP believes are covered by the FOIA request. OFCCP will use the email addresses provided by contractors registered in OFCCP’s Contractor Portal, as well as the email addresses provided as a contact for the EEO-1 report when submitted. This undertaking should provide some clarity to contractors who are unsure if they are within the scope of the FOIA request. Important Reminders OFCCP has created a Portal for submitting objections to the FOIA request, and has provided FAQs to aid in determining if a contractor is covered by the request and how to object to the request. In addition, OFCCP has provided direction for seeking assistance by contacting the OFCCP FOIA Help Desk by phone or email. What Happens Next? If you do not submit an objection to the FOIA request, then OFCCP will release the data to CIR as a part of a rolling production after October 19. If you do submit an objection, OFCCP will independently evaluate the objections and make a determination regarding withholdings under Exemption 4. Both the objector and CIR will receive notice of a determination to withhold data. If there is information in your EEO-1 Reports that you don’t want published or accessible to competitors, act quickly to submit objections to OFCCP prior to the October 19 deadline. Otherwise, you should expect that your report’s data may be provided to a reporter who will make it public. For questions or assistance in evaluating whether you should file an objection to the FOIA request, or in preparing an objection, please contact your Polsinelli attorney.

Employers considering a reduction in force involving remote workers may be subject to the Worker Adjustment and Retraining Notification Act (the “WARN Act”) (29 U.S.C. §2100 et. seq.) and corresponding state regulations. The WARN Act applies to employers with at least 100 full-time workers or 100 full-time and part-time workers who work an aggregate of at least 4,000 hours per week. It is triggered when at least 50 full-time workers comprising no less than one-third of the full-time workforce at a “single site of employment” suffer an employment loss. In general, the WARN Act requires an employer to provide 60 days’ advance written notice when there will be a plant closing or mass layoff to impacted non-union workers, union representatives, and certain government officials. Regarding remote workers, the U.S. Department of Labor recently published guidance stating that a “single site of employment” is the location “to which they are assigned as their home base, from which their work is assigned, or to which they report.” Thus, if an employer has a sole physical office in Chicago, for example, with 25 in-person full-time workers, but also has 100 remote full-time workers who all report to that office, the WARN Act would be triggered if the employer reduced 45 remote workers, despite the fact that none of the in-person workers in the Chicago office were impacted. In addition to the federal WARN Act, employers conducting a reduction in force involving remote workers may be subject to mini-WARN state laws. For example, Illinois has an unforeseeable business circumstances exception to the written notice requirements, but the state’s Department of Labor must first determine the applicability of that exception. See 820 ILCS 65/15. This is significant because it may require an employer to delay sending the written notice under the WARN Act until the state determines whether the exception under its law applies. Aside from Illinois, the following states also have mini-WARN laws: California, Connecticut, Delaware, Florida, Georgia, Hawaii, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New York, North Dakota, Ohio, Oregon, Tennessee, Vermont, and Wisconsin. The law regarding reductions in force involving remote workers is in its infancy and there will be plenty of related litigation. Accordingly, employers should seek advance consultation with their Polsinelli attorneys when considering reductions in force that stand to affect remote workers.

The National Labor Relations Board has issued a proposed rule that would, once again, relax the burden to demonstrate joint employer liability. This action is a step toward reversing the Trump administration’s rule which provided that an employer only can be a joint employer of an unrelated entity if it exercised direct and immediate control over the unrelated entity’s employees. The proposed rule, which, based on the composition of the current Labor Board, will likely take effect, makes it easier to establish a joint employer relationship. For example, if companies share or co-determine essential job terms, joint employer status may be found, and both employers could be found liable for unfair labor practices.  It could also result in a non-employer (or an entity who believes it is not the employer) being required to engage in collective bargaining over non-employees.  The non-employer also could be subjected to picketing without violating the laws against secondary boycotts.  This would be the case even if an employer has indirect or unexercised control over the terms and conditions of a job. Employers may contact their Polsinelli attorney for assistance with the significant ramifications coming from the proposed rule.

We are pleased to release the next episode of "The Future is Now" hosted by Polsinelli's Labor & Employment Practice. In this podcast, Robert E. Entin, Shareholder, and Mark D. Nelson, Senior Partner, review the first year of National Labor Relations Board’s General Counsel, Jennifer Abruzzo, and what to expect for Year 2. Spoiler alert, things don’t look much better. Click here to listen to the full podcast.

This week, the National Labor Relations Board (NLRB) reversed a 2019 decision concerning union apparel bans in the workplace. This decision was the first of the Biden Administration era NLRB to shift precedent. In the split decision, the NLRB ruled that any attempt by an employer to restrict an employee’s ability to wear union clothing or insignia is “presumptively unlawful.” Now, employers may only restrict workers from wearing pro-union clothing or insignia if they are able to establish “special circumstances,” representing a heightened burden for employers to justify limitations on employees’ apparel. At issue was the employer’s apparel policy, which required employees to either wear black polos imprinted with the company’s logo or a black shirt with no logo. During a union organizing campaign, employees attempted to wear shirts bearing a union logo. The NLRB concluded that the employer’s policy implicitly prohibited employees from wearing pro-union apparel and insignia without the presence of special circumstances, as the employer had previously permitted production employees to wear different colored shirts or shirts with logos unrelated to the employer. Because no special circumstances were present to justify the policy, the NLRB ordered that the company rescind its policy prohibiting employees from wearing black shirts with pro-union insignia. This decision marks the first time the NLRB has issued a ruling that overturns or materially shifts Board precedent under the Biden Administration. Employers should be mindful of the changing landscape and are advised to contact their Polsinelli attorneys should they have questions on how such decisions impact them.

On August 19, 2022, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) published a Notice in the Federal Register regarding a Freedom of Information Act (“FOIA”) request from Will Evans, a Senior Reporter and Producer with the Center for Investigative Reporting (“CIR”).  The FOIA request seeks the disclosure of certain government contractor compliance reports submitted to the Equal Employment Opportunity Commission. The OFCCP is allowing affected contractors to submit objections to the FOIA request if they fear confidential commercial information may be disclosed and ultimately published. The Scope of the Request The FOIA request was initially made in January 2019 but has been amended multiple times and now seeks all Type 2 Consolidated EEO-1 Report demographic data submitted by federal contractors and first-tier subcontractors from 2016-2020. The request does not include EEO-1 requests from single-establishment (Type 1) contractors, other EEO-1 reports filed by Type 2 (multi-establishment) contractors or Component 2 reports with compensation data. Type 2 Consolidated EEO-1 Reports are consolidated reports of demographic data for all employees at headquarters as well as all establishments, categorized by race/ethnicity, sex, and job category. OFCCP estimates that nearly 15,000 companies filed reports subject to the FOIA request. A company can use the EEO-1 Online Filing System’s historic data to determine if they filed EEO-1 Reports between 2016 and 2020. What If I Don’t Want My EEO-1 Reports Made Public? FOIA grants the public the right to request access to records from any federal agency. However, there are certain exemptions that allow agencies to redact – or entirely withhold – certain requested information. In its Notice, the OFCCP states it believes that the information requested may be protected from disclosure under FOIA Exemption 4 – which protects disclosure of confidential commercial information. Accordingly, OFCCP is now requesting that any federal contractor who filed a Type 2 Consolidated EEO-1 Report as a federal contractor between 2016 and 2020 and who wishes to object to the disclosure of the information submit an objection to the OFCCP by September 19, 2022. How Do I Submit an Objection? Because of the large number of affected companies, OFCCP has established a portal for contractors to submit written objections. While the OFCCP encourages the use of the portal, objections may also be submitted via email to OFCCPSubmitterResponses@dol.gov, or by mailing to “ATTN: FOIA Officer (FRN), Office of Federal Contract Compliance Programs, Division of Management and Administrative Programs, 200 Constitution Avenue NW, Room C3325, Washington, DC 20210. All objections, however submitted, must be received by OFCCP by September 19, 2022. What Must I Include in the Objection? The OFCCP specifically requires the objection to include the contractor’s name, address, and contact information, and should, at a minimum address the following questions to determine if information should be withheld pursuant to FOIA Exemption 4: What specific information in the Report does the contractor consider to be a trade secret or commercial or financial information? What facts support the contractor’s belief that this information is commercial or financial in nature? Does the contractor customarily keep the information private or closely-held, what steps are taken to protected the confidentiality of the information, and to whom has it been disclosed? Does the contractor contend the government provided an express or implied assurance of confidentiality, or were there express or implied indication that the government would publicly disclose the information? How would disclosure of this information harm an interest of the contractor? Will it, for example, cause foreseeable harm to economic or business interests? How Do I Know if My Information Is Covered Under FOIA Exemption 4? The OFCCP Notice points contractors to two recent court decisions that should be considered in determining whether information may be withheld pursuant to Exemption 4. In Food Marketing Institute v. Argus Leader Media, 139 S. Ct. 2356 (2019), the Supreme Court determine the term “confidential” in FOIA means what it did at the time of its enactment: “private” or “secret.” Following this, the Department of Justice issued a step-by-step guide for determining whether information is confidential under Exemption 4. Further, in a case involving CIR, a district court determined that Type 2 Consolidated EEO-1 Reports were not protected from disclosure under Exemption 4 – finding that conclusory and verbatim rationale about the data contained in the reports did not support a finding that they were commercial. Center for Investigative Reporting v. U.S. Dep’t of Labor, 424 F. Supp. 3d 771 (N.D. Cal. 2019).  The OFCCP notes this is the only case discussing the commerciality of the EEO-1 Report data. What Happens Next? If you do not submit an objection to the FOIA request, then OFCCP will release the data to CIR as a part of a rolling production after September 19. If you do submit an objection, OFCCP will independently evaluate the objections and make a determination regarding withholding the information under Exemption 4. Both the objector and CIR will receive notice of a determination to withhold data. The Bottom Line If there is information contained in your EEO-1 Reports that you don’t want published or accessible to competitors, act fast to submit objections to OFCCP. Otherwise, you should expect that your report’s data may be provided to a reporter who will make it public. For questions or assistance in evaluating whether you should file an objection to the FOIA request or how to present your objection, please contact your Polsinelli attorney.

On August 26, 2022, the Eleventh Circuit Court of Appeals issued its long-awaited decision in the federal government’s appeal of a lower court order striking down the Biden Administration’s COVID-19 vaccination mandate for federal contractors and subcontractors.  Although the Eleventh Circuit agreed with the district court that the vaccination mandate exceeded the President’s authority to issue, the appellate court found that the district court’s nationwide injunction was too broad in scope and limited the scope of the injunction to apply only to the parties before the court.  This means that the vaccine mandate could resume in many other states that are not covered by an injunction from another court. A brief history may be helpful:  On September 9, 2021, President Biden issued Executive Order 14042, directing federal agencies to include a COVID-19 vaccination mandate in new federal government contracts, renewals and extensions of existing contracts, and, where possible, existing contracts even in the absence of a renewal or extension.  On September 24, 2021, the Safer Federal Workforce Task Force issued guidance implementing the Executive Order’s requirements.  Several lawsuits were filed in federal district courts across the country challenging the vaccine mandate, leading to the issuance of numerous injunctions of varying scope.  One of these injunctions was issued by the U.S. District Court for the Southern District of Georgia and barred the vaccine mandate in all federal contracts and solicitations nationwide. In assessing the federal government’s appeal of the nationwide injunction, the Eleventh Circuit rejected the government’s argument that Congress had delegated the President authority to impose a vaccine mandate under the Federal Property and Administrative Services Act, also known as the Procurement Act.  Instead, the court held that the Procurement Act only provided limited authority to address the government’s procurement process, not impose health-related measures of vast, national significance. More significantly, however, the court found that the nationwide scope of the Georgia court’s injunction was overbroad and that the injunction should provide relief only to the parties in the lawsuit – i.e., the States of Alabama, Georgia, Idaho, Kansas, South Carolina, Utah, and West Virginia, and the members of the Associated Builders and Contractors (“ABC”).  As a result, the Georgia injunction is now limited to prohibiting the federal government from imposing the vaccine mandate requirement in new or existing contracts with those states or ABC members or considering the mandate in solicitations for which those states or an ABC member is a bidder.  Several other injunctions remain in effect, but cover only contractors in the States of Missouri, Nebraska, Alaska, Arkansas, Iowa, Montana, New Hampshire, North Dakota, South Dakota, Wyoming, Kentucky, Tennessee, Ohio, and Florida.  The federal government can now enforce the vaccine mandate with respect to federal contractors and subcontractors outside of those states and ABC’s membership. As of the morning of August 29, 2022, the Safer Federal Workforce Task Force has not yet updated its website to account for the Eleventh Circuit ruling.  However, contractors outside of the states that remained covered by court injunctions must resume preparations to ensure that all “covered contractor employees,” as defined by the task force’s guidance, are vaccinated against COVID-19 or have a religious or medical exemption from vaccination.

On August 26, 2022, the Eleventh Circuit Court of Appeals issued its long-awaited decision in the federal government’s appeal of a lower court order striking down the Biden Administration’s COVID-19 vaccination mandate for federal contractors and subcontractors.  Although the Eleventh Circuit agreed with the district court that the vaccination mandate exceeded the President’s authority to issue, the appellate court found that the district court’s nationwide injunction was too broad in scope and limited the scope of the injunction to apply only to the parties before the court.  This means that the vaccine mandate could resume in many other states that are not covered by an injunction from another court. A brief history may be helpful:  On September 9, 2021, President Biden issued Executive Order 14042, directing federal agencies to include a COVID-19 vaccination mandate in new federal government contracts, renewals and extensions of existing contracts, and, where possible, existing contracts even in the absence of a renewal or extension.  On September 24, 2021, the Safer Federal Workforce Task Force issued guidance implementing the Executive Order’s requirements.  Several lawsuits were filed in federal district courts across the country challenging the vaccine mandate, leading to the issuance of numerous injunctions of varying scope.  One of these injunctions was issued by the U.S. District Court for the Southern District of Georgia and barred the vaccine mandate in all federal contracts and solicitations nationwide. In assessing the federal government’s appeal of the nationwide injunction, the Eleventh Circuit rejected the government’s argument that Congress had delegated the President authority to impose a vaccine mandate under the Federal Property and Administrative Services Act, also known as the Procurement Act.  Instead, the court held that the Procurement Act only provided limited authority to address the government’s procurement process, not impose health-related measures of vast, national significance. More significantly, however, the court found that the nationwide scope of the Georgia court’s injunction was overbroad and that the injunction should provide relief only to the parties in the lawsuit – i.e., the States of Alabama, Georgia, Idaho, Kansas, South Carolina, Utah, and West Virginia, and the members of the Associated Builders and Contractors (“ABC”).  As a result, the Georgia injunction is now limited to prohibiting the federal government from imposing the vaccine mandate requirement in new or existing contracts with those states or ABC members or considering the mandate in solicitations for which those states or an ABC member is a bidder.  Several other injunctions remain in effect, but cover only contractors in the States of Missouri, Nebraska, Alaska, Arkansas, Iowa, Montana, New Hampshire, North Dakota, South Dakota, Wyoming, Kentucky, Tennessee, Ohio, and Florida.  The federal government can now enforce the vaccine mandate with respect to federal contractors and subcontractors outside of those states and ABC’s membership. As of the morning of August 29, 2022, the Safer Federal Workforce Task Force has not yet updated its website to account for the Eleventh Circuit ruling.  However, contractors outside of the states that remained covered by court injunctions must resume preparations to ensure that all “covered contractor employees,” as defined by the task force’s guidance, are vaccinated against COVID-19 or have a religious or medical exemption from vaccination.

The District of Columbia Council passed the Non-Compete Clarification Act of 2022 (“Act”) in late July 2022, setting standards for how and when employers can use and enforce covenants not to compete. The Act notably clarifies and narrows the scope of D.C.’s Ban on Non-Compete Amendments Act passed in 2020, which (as its title suggests) banned the use of new non-compete agreements for all but certain medical employees. The new, clarified Act now allows the use of non-compete agreements for “highly compensated employees,” set at $150,000 per year in total compensation, as well as certain medical employees, and implements new substantive and procedural requirements for non-compete agreements. Employers May Use Non-Competes for Highly-Compensated Employees The biggest change implemented by the Act is restoring the ability of employers outside of the medical field to use non-compete agreements.  Employers may now enter and enforce non-compete agreements with “highly compensated employees” making over $150,000 in total compensation.  Employers can use a wide variety of forms of compensation to meet the threshold, including hourly or salary wages, bonuses, commissions, overtime, and vested equity, but may not include non-cash fringe benefits.  The Act continues to prohibit non-compete agreements for employees who do not meet this threshold.  However, the Act also scales back its application to employees who do not work primarily in D.C.  Whereas the original non-compete ban arguably applied to any employee who worked in D.C. for any period of time at all, the Act clarifies that the non-compete ban now applies only to employees who spend 50% or more of their time working in D.C. or who spend a “substantial” amount of work time in D.C. and do not spend more than 50% of their work time in another jurisdiction. The Act retains and modifies the prior non-compete ban’s exception for “medical specialists.”  Employers may permissibly enter a non-compete agreement with these employees if the employee is licensed to practice medicine, acts as a physician, has completed medical residency, and receives $250,000 or more in total compensation. Certain Agreements Not Subject to the Non-Compete Ban The Act excludes several types of agreements from its prohibition on non-competes for employees making less than the $150,000 threshold.  First, non-competes remain enforceable in connection with the sale of a business.  Second, the Act makes clear that non-disclosure agreements are not subject to the ban.  Finally, the Act contains an interesting, though somewhat ambiguous, exclusion for agreements providing a “long term incentive,” defined as bonuses or equity-type compensation “for individual or corporate achievements typically earned over more than one year.” Unfortunately, the Act does not clarify the prior non-compete ban’s ambiguity with respect to customer and employee non-solicitation agreements.  Although these agreements impose more limited restrictions on the employee’s activity and do not in most cases prohibit the employee from working in a particular field like a non-compete does, other states that have limited or prohibited non-compete agreements have taken varying and inconsistent positions on whether those limitations also apply to non-solicitation agreements.  Employers using non-solicitation agreements in D.C. should take care in structuring those clauses to avoid arguments that the non-solicitation acts in effect as a non-compete. Requirements for Non-Competes The Act imposes new substantive and procedural requirements that an employer must meet to enforce a non-compete against a highly-compensated employee: The agreement must specify the scope and nature of the non-compete (e.g. services, roles, competitive entities covered); The agreement must specific the geographic scope of the non-compete restriction; The duration of the non-compete may be for a maximum of one year for non-medical specialists or two years for medical specialists; The employer must provide the non-compete agreement 14 days in advance of the employee’s start date or the date the employee is required to sign the agreement. Employers Permitted to Limit Outside Employment The Act also restores D.C. employers’ ability to use “moonlighting” policies that limit or prohibit employees from working with other employers.  Previously, D.C.’s non-compete ban prohibited these policies, such that an employee could even work for a competitor during employment.  Now, employers may restrict employees from accepting outside employment when the employer reasonably believes working for a second employer will: Cause the employee to disclose confidential and/or proprietary information; Conflict with industry-specific or professional rules regarding conflicts of interest; or Impair the employer’s ability to comply with a contract, grant, or any law or regulation. New Notice Requirements The Act includes new notice requirements to employees. First, when an employer has a policy that includes one of the exclusions to the definition of “non-compete provision” (e.g. a policy limiting outside employment) the employer must provide such policy (1) within 30 days after October 1, 2022, (2) within 30 days of an employee’s first day of employment, and (3) after the employer makes a change to such policy. Additionally, employers must include a notice when presenting a highly compensated employee with a non-compete provision. D.C. employers should carefully review the Act and update their employment agreements to ensure that they continue to have the benefit of non-compete protection after the Act becomes effective in October 2022.

In March 2022, we reported on a controversial directive issued by the Office of Federal Contract Compliance Programs (OFCCP) that appeared to assert, for the first time, that federal contractors and subcontractors are required to conduct statistical pay equity audits on an annual basis, and also took an aggressive position that documents relating to these audits are likely not protected by the attorney-client privilege or work product doctrine.  In response to widespread criticism from the contractor community, OFCCP, on August 18, 2022, issued a new, “revised” directive that yields ground on some of the prior directive’s more aggressive positions.  That said, the new directive makes clear that OFCCP is not relaxing its focus on pay equity, and contractors and subcontractors similarly should not relax their efforts in this area. First, OFCCP clarified that the compensation analysis that its regulations require contractors to perform is not necessarily a statistical regression analysis of the type preferred by OFCCP.  The revised directive replaces the term “pay equity audit” with “compensation analysis” and clairifies that various methods may suffice.  However, contractors should not take this as a license to perform only cursory analyses.  When OFCCP reviews the information about the compensation analysis that is required to be provided (described below), it could conclude that an employer’s chosen method of analysis was insufficient.  In addition, conducting rigorous pay equity analyses has its own business case independent of OFCCP’s requirements, as ensuring pay equity aids significantly in an employer’s talent acquisition and retention efforts, helps maintain workplace morale and mitigates the risk of private-plaintiff pay discrimination litigation. Most importantly, OFCCP’s revised directive abandons the agency’s prior position that it would seek “a complete copy” of a contractor’s pay equity audits and that such audits conducted for the purpose of complying with OFCCP regulations are, by definition, not privileged.  OFCCP’s revised directive provides contractors with three options to provide in lieu of the full analysis: A redacted version that removed privileged material. A separate, non-privileged analysis to be provided in full. A detailed affidavit describing the contractor’s efforts. Regardless of which of these options the contractor elects, the information provided to OFCCP must describe: when the analysis was conducted, the number of employees included and number and categories of any employees excluded from the analysis, what forms of compensation the contractor analyzed and how different types of compensation were separated or combined for analysis, a confirmation that compensation was analyzed by gender, race, and ethnicity, and the method of analysis used by the contractor. OFCCP also “recommends” that contractors provide additional information about their compensation analyses.  The revised directive states that OFCCP would also like to receive information about the employee pay groupings evaluated, how and why employees were grouped into these groupings, and what variables, factors, and controls the contractor used (such as time in the role, degrees, performance ratings, etc…), and the model statistics for any regression analyses conducted.  Unlike the prior directive, OFCCP recognizes that many contractors consider these types of information to be privileged.  That said, there can be value in providing these types of information to the agency – for instance, OFCCP may accept a contractor’s pay analysis groups if provided, rather than forming its own (typically overbroad) groups.  The decision on whether to provide this information will need to be made after careful analysis with counsel of the benefits and drawbacks of doing so. Finally, OFCCP’s revised directive also requires contractors to disclose certain information about any corrective measures it takes in response to disparities found during the compensation analysis.  The contractor must provide information regarding the nature and extent of any disparities, whether the contractor investigated the root cause of the disparities, what types of “action-oriented programs” the contractor implemented to correct the disparities, and how the contractor intends to measure the impact of its programs. Although OFCCP’s revision to its controversial directive is a welcome sign for contractors, it does not signal any reduction in OFCCP’s emphasis on combatting actual or perceived pay discrimination.  Nor does it imply that contractors should reduce their efforts to proactively monitor their compensation systems.  Pay equity is an area in which an ounce of prevention is worth a pound of cure, and it benefits employers to stay on top of their data to identify and redress the potential disparities that may inevitably develop over time.  However, even the more limited revised directive makes clear that federal contractors and subcontractors must carefully structure these analyses to satisfy OFCCP’s requirements and maintain the protection of attorney-client privilege.

In a July 28, 2022 e-mail communication, OFCCP emphasized the need for federal government contractors to certify their compliance with the affirmative action plan (AAP) requirements of Executive Order 11246 through OFCCP’s Contractor Portal. Although the June 30, 2022 deadline for AAP certification has passed – and OFCCP’s e-mail makes clear the deadline was not extended – contractors who have not yet certified compliance should do so immediately to avoid additional consequences. OFCCP’s e-mail asserts that federal contractors and subcontractors who do not certify compliance with the applicable AAP requirements will “be more likely to appear on OFCCP’s scheduling list than those who have certified their compliance.” Reducing the likelihood of being audited by OFCCP provides a strong incentive for contractors to ensure they are compliant with any AAP requirements and to certify those requirements. OFCCP’s e-mail also clarifies that both contractors who fail to certify and those who state in their certification that they have not developed or maintained an AAP will face an increased risk of audit. Accordingly, businesses that work for or with the federal government – whether directly or indirectly – should immediately ascertain whether they are subject to AAP requirements, implement any required AAP and certify compliance. Contractors who do not certify compliance by September 1, 2022 will face additional consequences. OFCCP’s e-mail states that the agency will send a list of non-certifying contractors to federal agency contracting officers for the purpose of those contracting officers assisting OFCCP in achieving compliance. Notably, penalties under OFCCP’s regulations for failure to maintain an AAP include withholding of progress payments due under a federal contract, cancelation or termination of contracts and debarment from federal contracting. Even if a contractor avoids these drastic penalties, it may be faced with the requirement to enter a conciliation agreement with OFCCP that imposes burdensome recordkeeping and reporting obligations. The certification requirement applies to all federal supply and service contractors and subcontractors who are required to implement an AAP - i.e., those with 50 or more employees and contracts of $50,000 or greater in value. OFCCP has not yet imposed a certification requirement on construction contractors. Although the June 30, 2022 deadline for contractors to certify AAP compliance via the Contractor Portal has passed, federal contractors and subcontractors still have time and incentive to belatedly comply with the certification requirement. However, that time is running short with the September 1, 2022 deadline fast approaching, and contractors will need to act expediently to identify and comply with their AAP obligations.

The National Labor Relations Board and The Department of Justice joined forces to sign a memorandum of understanding (“MOU”) between the two entities. The MOU follows President Biden’s Executive Order in 2021 aimed at increasing competition in the economy. The NLRB and DOJ plan to coordinate in order to ensure workers are able to freely exercise their rights and to protect competitive labor markets. According to the DOJ, this new partnership will allow the two agencies to “share information on potential violations of the antitrust and labor laws, collaborate on new policies and ensure that workers are protected from collusion and unlawful employer behavior.” The two agencies plan on greater coordination in information sharing, enforcement activity and training. Furthermore, the two agencies will now refer potential violations that they discover in their own investigations to each other. For employers, this continues the trend of the federal government stepping up their investigatory and enforcement actions. Employers should continue to consult with their Polsinelli attorney to ensure compliance with federal, state, and local laws.

On July 12, 2022, the EEOC revised its informal guidance regarding COVID-19 and related matters in the workplace. In doing so, the EEOC made several revisions concerning employer testing protocols, items to consider for vaccine mandates, among other revisions to FAQs. Most notably, the EEOC revised its guidance regarding viral screening of employees for COVID-19. The EEOC no longer considers viral screening (or testing) to automatically meet the business necessity standard under the ADA as it did at the outset of the pandemic. Rather, employers need to evaluate whether current pandemic and individual circumstances warrant testing to prevent workplace transmission. Those factors must lead to a decision that testing is a business necessity and not just a preferable policy. The EEOC guidance provides the following factors to consider in determining whether circumstances indicate testing would be a business necessity: The level of community transmission; The vaccination status of employees; The accuracy and speed of processing for different types of COVID-19 viral tests; The degree to which breakthrough infections are possible for employees who are “up to date” on vaccinations; The ease of transmissibility of the current variant(s); ·The possible severity of illness from the current variant; What types of contacts employees may have with others in the workplace or elsewhere that they are required to work (e.g., working with medically vulnerable individuals); and The potential impact on operations if an employee enters the workplace with COVID-19 may include. For questions or assistance in adjusting your COVID-19 practices to comply with the EEOC’s guidance, please contact your Polsinelli attorney.

On June 7, 2022, the D.C. Council approved a bill that limits an employer’s ability to test for cannabis.  Under the Cannabis Employment Protections Amendment Act, most D.C. employers may not fire, fail to hire, or take other personnel actions against an employee for using cannabis, participating in D.C.’s or another state’s medical cannabis program, or failing an employer-required or requested cannabis drug test.  The bill also provides that employers must allow employees to use medicinal marijuana as a disability accommodation in most circumstances. The new employment protection for cannabis use is subject to several exceptions.  Adverse actions based on an employee’s or applicant’s cannabis usage are not prohibited where the employee’s position is designated as “safety sensitive,” the employer’s action is required by a federal statute, regulation, contract, or funding agreement, the employee engaged in cannabis-related conduct (i.e., use, possession, transfer, display, sale, growth) at the employer’s premises, while working, or during working hours, or in situations where an employee is impaired while working or during working hours. The bill defines “safety sensitive” positions as those “in which it is reasonably foreseeable that, if the employee performs the position’s routine duties or tasks while under the influence of drugs or alcohol, he or she would likely cause actual, immediate, and serious bodily injury or loss of life to self or others.”  These positions include police, special police, hazardous machine operators, and active construction site workers.  The bill also does not prohibit employers from adopting or implementing drug-free workplace policies or testing employees for cannabis after an accident, upon reasonable suspicion of drug use, or if the employee works in a safety-sensitive position. Under the bill, employers will be required to issue a notice of employee rights regarding cannabis use within 60 days after the bill becomes “applicable,” and annually thereafter.  The notice must also include whether the employee’s position has been designated a safety sensitive position and state the employer’s protocols for any testing for alcohol or drugs. Employers who violate the bill could face civil fines for each violation, payment of lost wages, compensable damages, and attorneys’ fees. Mayor Muriel Bowser has until July 17, 2022 to sign the bill. If the Mayor signs the bill, it will become law after a 60-day Congressional review. However, many of the above-referenced provisions will not be “applicable” to employers until their fiscal effect is included in an approved budget plan or 365 days after Mayor Bowser approves the act, whichever is later. Covered employers in the District should begin reviewing their drug testing and drug-free workplace policies to ensure compliance with the new bill.  In addition, it will be critical to designate safety-sensitive positions that remain subject to testing requirements (other than post-accident or reasonable suspicion).  Finally, due to the requirement that adverse actions based on an employee’s impairment be supported by specifically articulable symptoms, employers that are concerned about employee drug usage should train managers on recognizing and documenting workplace impairment.

On July 8, 2022, Mayor Eric Garcetti signed the Healthcare Workers Minimum Wage Ordinance.  The ordinance imposes on covered employers a minimum wage of $25.00 for qualifying healthcare workers who work in the City of Los Angeles. Who is Covered: The ordinance applies to an employer who employs or exercises control over healthcare workers within the City of Los Angeles. An “employer” is any person, such as an individual, corporation, partnership, LP, LLP, LLC, business trust, estate, trust, association, joint venture, agency, instrumentality, or any other legal or commercial entity, whether domestic or foreign, including a corporate officer or executive who directly or indirectly or through any other person (i.e., through a temporary service, staffing agency) employs or exercises control over the wages, hours, or working conditions of any employee. To qualify as a healthcare worker covered by the ordinance, the individual must: (1) be employed to work at or by a covered healthcare facility (as defined in the ordinance); and (2) provide patient care, healthcare services, or services supporting the provision of healthcare.  Under the first prong, a healthcare worker is employed to work at a covered healthcare facility only if that individual’s primary work assignment is physically located at one or more such facilities.  By way of example, the ordinance notes that delivery workers primarily outside a covered healthcare facility would not be healthcare workers unless they are employed by the facility. The ordinance provides several examples of healthcare workers including a clinician, professional, non-professional, nurse, certified nursing assistant, aide, technician, maintenance worker, janitorial or housekeeping staff person, groundskeeper, guard, food service worker, laundry worker, pharmacist, nonmanagerial administrative worker, and business office clerical worker.  Managers and supervisors are specifically exempt from the ordinance as healthcare workers. What is Required: On August 13, 2022, covered employers must ensure that each qualifying healthcare worker it employs, or over whom it exercises control over, is paid a minimum wage of $25.00 per hour.  On January 1, 2024, and annually afterwards, the minimum wage will increase based on the annual increase in the cost of living. The ordinance defines minimum wage as compensation for labor, whether this amount is fixed or calculated by the standard of time, task, piece, commission, or other calculation.  Minimum wage does not include bonuses, shift differentials, premium pay, reimbursement/allowances for work equipment or other expenses, meal/lodging credits, tips, gratuities, or the cost of benefits (i.e., medical, dental, retirement, or similar benefits). Employers are prohibited from funding the required minimum wage increases by: (1) reducing healthcare workers’ premium pay or shift differentials; (2) reducing healthcare workers’ vacation, healthcare, or other non-wage benefits; (3) reducing healthcare workers’ hours of work; (4) laying off healthcare workers; or (5) increasing charges to healthcare workers for parking or work-related materials or equipment.  An employer is in violation of this ordinance if the minimum wage requirements are a substantial motivating factor for the employer to take any of these prohibited actions unless the employer can prove that it would have taken the same action at the time that it did regardless of the ordinance. Effective Date: The ordinance goes into effect on August 13, 2022. One-Year Waiver: To avoid reduction in employment or work hours for healthcare workers, a court may grant an employer a one-year waiver from the minimum wage requirements. The employer, however, must demonstrate by substantial evidence that complying with the ordinance would raise substantial doubt about the employer’s ability to continue as a going concern under generally accepted accounting standards. This evidence must include documentation of the employer’s financial condition along with the condition of any parent or affiliated entity, and evidence of actual or potential direct financial impact of complying with the ordinance. Even if the court grants a one-year waiver, the employer must nevertheless comply with the requirements set forth under federal, state, or local laws, including other applicable laws regarding minimum wage. Polsinelli attorneys will be monitoring new developments in this area and remain prepared to assist employers.

The Supreme Court addressed the intersection of the First Amendment’s Establishment and Free Speech clauses as they relate to a public employee’s personal religious expression when done in the public eye. In a 6-to-3 decision, it held that public employers are not required to suppress employees’ religious expressions where the expression is not within the employee’s scope of employment, there is no evidence the employee was coercing others to join the expression and the public employer tolerates similar secular speech. The case is Kennedy v. Bremerton School District. The case involved a former high school football coach who was suspended (and ultimately his contract was not renewed) for participating in three postgame prayers on the field. His players did not join in the prayers (though members of the public and opposing team did), and, at the times the coach engaged in the prayers, other coaches were permitted to engage in private secular actions, such as checking their phones or visiting with family and friends. The coach had previously ended the practice of team-wide, pregame prayers. Importantly, the majority stated that courts no longer use the three-part test outlined in Lemon v. Kurtzman for evaluating Establishment Clause issues, and instead look to “historical practices and understandings.” For public employers—local, state and federal—the Court’s holding could make the choice to discipline or terminate an employee for religious exercise or speech feel precarious. If you have questions about how the Kennedy decision impacts your employer-employee relationship, contact your Polsinelli attorney.

On June 24, 2022, the United States Supreme Court issued its long-anticipated ruling in Dobbs v. Jackson Women’s Health Organization. In Dobbs, the Supreme Court upheld Mississippi’s abortion restrictions making most abortion procedures illegal after 15 weeks of pregnancy, and, in the process, overturned Roe v. Wade and Planned Parenthood v. Casey, which established a federal constitutional right to abortion. By holding there is no constitutional right to an abortion in the United States Constitution, the Supreme Court has left to the states policy related to abortion. Although the Dobbs decision itself did not outlaw the procedure, several states have “trigger laws,” designed to go into effect upon Roe’s and Casey’s reversal, or pre-Roe laws that outlaw or limit abortions. Other states are expected to implement additional restrictions and bans in the coming months. This leaves employers to grapple with a patchwork of state laws addressing abortion and related issues. At the same time, several federal laws remain in place that impact employers addressing abortion-related issues in the workplace. Included in the issues that should be on employers’ minds are the following: Anti-discrimination laws Leave laws Speech issues Privacy Employee benefits Travel assistance / relocation policies Criminal liability Updating policies Join us on July 12 as we discuss the employment law and employee benefits issues that arise out of the Dobbs decision. You may RSVP to the Webinar via the link here. In the meantime, if you have any questions or would like to discuss how the Dobbs decision impacts your workforce and company, contact your Polsinelli attorney.

On June 15, 2022, the U.S. Supreme Court issued its highly anticipated opinion in Viking River Cruises, Inc. v. Moriana, which considered whether or not claims brought under the California Private Attorneys General Act (“PAGA”) can be waived by an arbitration agreement. Existing case law in California held that PAGA claims could not be waived via an arbitration agreement because these claims are brought on behalf of the state. The defendant in Viking River Cruises challenged this California rule on the grounds that it was preempted by the Federal Arbitration Act (“FAA”). The Court’s nuanced opinion in Viking River Cruises delivers good news to California employers who use arbitration agreements with their employees insofar as the Court ruled that the FAA preempts California’s rule that PAGA actions cannot be divided into individual and representative claims. Thus, while the Court stopped short of invalidating California’s rule preventing wholesale waivers of PAGA claims via an arbitration agreement, the Court held that an enforceable arbitration agreement can mandate arbitration of individual PAGA claims. Therefore, in the case at issue, the Court ruled that the named PAGA representative’s individual PAGA claims were subject to an arbitration agreement she had signed with her employer. Although the arbitration agreement included a waiver of class, collective or representative PAGA actions, it also included a severability provision specifying that if the waiver was found invalid, such a dispute would be litigated in court, and any portion of the waiver that remained valid would be enforced in arbitration. As a result of having to arbitrate her individual PAGA claims, the Court further held that the named PAGA representative, therefore, lacked statutory standing to maintain her representative PAGA claims in court, and that these claims must be dismissed. While the precise implications of the Viking River Cruises case will likely be refined through further litigation, the Court’s opinion represents a favorable shift in the law for California employers who can now compel arbitration of an employee’s individual claims where that employee has signed an enforceable arbitration agreement that covers such claims, and seek dismissal of any related representative PAGA action for lack of standing. Additionally, following the Supreme Court’s decision in Viking River Cruises, the Ninth Circuit is set to consider a Petition for Rehearing en banc in another case, Chamber of Commerce of United States v. Bonta, which deals with the enforceability of AB 51, a new California law prohibiting mandatory arbitration agreements as a condition of employment which has been stayed pending the Court’s decision in Viking River Cruises. In light of the Viking River Cruises decision, employers will want to immediately review their arbitration agreements to evaluate whether they are effectively written to cover individual PAGA claims and avoid wholesale waivers of PAGA claims. As issues relating to California arbitration agreements continue to make their way through the courts, Polsinelli attorneys will be monitoring new developments in this area and remain prepared to assist employers with navigating these issues.

California reaffirms its reputation as the most employee-friendly state and raises potential liability for employers. On May 23, 2022, the California Supreme Court issued the long-awaited decision in Naranjo v. Spectrum Security Services, Inc., finding that meal and rest period premiums are “wages” under California law and thus employers could be liable for failure to properly report and timely pay those premiums. California law requires employers to pay non-exempt employees a premium of one hour of pay for non-compliant meal or rest periods – such as when an employee is unable to take their break or does not receive a full, uninterrupted break. California state and federal courts have reached conflicting interpretations as to whether premium pay is considered “wages” for purposes of California waiting time penalties (Cal. Lab. Code § 203) and wage statement requirements (Cal. Lab. Code § 226). The Naranjo case involves a class of security guards who alleged that Spectrum Security Services had violated California labor law by failing to report the premium pay for missed meal breaks on employees’ wage statements and failing to timely pay the premium for missed breaks upon an employee’s separation from employment. A California appellate court found that the premium payments did not constitute “wages” and thus employers could not be penalized for failing to timely pay or report such wages. The California Supreme Court reversed that decision and held that premium payments for missed meal or rest breaks are wages and thus can result in wage statement and waiting time penalties. In a unanimous decision, the California Supreme Court specifically held that “[a]lthough the extra pay is designed to compensate for the unlawful deprivation of a guaranteed break, it also compensates for the work the employee performed during the break period.” What Employers Should Know The decision reaffirms the importance of strict compliance with California’s labor laws and the harsh implications and penalties that can stem from meal and rest break violations. As Naranjo now makes clear, meal and rest period violations can subject employers to waiting time and wage statement penalties if the premium payments are not properly reported and timely paid. To limit liability and exposure, California employers must be cognizant of recent developments and vigilant in updating and enforcing meal and rest period policies and payment procedures to ensure prompt reporting and payment of wages.

Earlier this week, the Supreme Court unanimously held in Morgan v. Sundance that litigants are no longer required to show prejudice when opposing a party’s delayed attempt to compel arbitration. Previously, an Eighth Circuit decision refused to find that the right to arbitrate a dispute was waived after months of ongoing litigation unless the party opposing arbitration could show their litigation position was prejudiced by the delay. Since the two parties had not yet litigated on the merits, the Eighth Circuit majority ruled that the plaintiff was not prejudiced by the delayed arbitration demand. The Supreme Court vacated the Eighth Circuit decision, reasoning that the Federal Arbitration Act does not authorize “special, arbitration-preferring procedural rules.” The Court explained that the analysis of whether a party has waived a contractual right typically does not examine whether the other party is prejudiced as a prerequisite to finding a waiver. The Court held that by requiring “that kind of proof before finding the waiver of an arbitration right, the Eighth Circuit applies a rule found nowhere else….” This is an important decision for employers because many employers use mandatory arbitration programs as a way to manage and mitigate the risk of employee claims, as arbitration facilitates class and collective action waivers, and in some cases can be less expensive than court litigation. As a result of the decision, employers should know that employees no longer have the burden of showing prejudice when challenging an arbitration agreement after litigation has already ensued. Delays in seeking to compel arbitration can alone doom an employer’s ability to arbitrate a dispute. This puts the onus on employers to promptly review their onboarding files and other agreements with employee-plaintiffs to identify applicable arbitration clauses, and act to compel arbitration of the dispute if arbitration is the desired forum. If employers delay in seeking to compel arbitration, individual and class action plaintiffs may be able to keep their claims in court. The decision settles inconsistencies among circuit court decisions on how to handle disputes when a defendant has delayed arbitration. It reminds the courts that it cannot impose arbitration-friendly legal requirements that are not backed by existing law. If you have questions or would like more detailed information, Polsinelli’s Labor & Employment team is here to assist.

On May 20, 2022, the Office of Federal Contract Compliance Programs (OFCCP) released its Corporate Scheduling Announcement List (CSAL), which identifies 400 federal supply and service contractor and subcontractor establishments that will be audited by the agency in fiscal year 2022. The CSAL does not commence OFCCP’s compliance evaluation, but does notify the identified contractors that they will soon receive a scheduling letter requiring the production of affirmative action plan (AAP) documents and data. The timing under which scheduling letters will issue may change as the Biden OFFCP moves away from certain Trump administration practices.  Under the Trump OFCCP, the agency built in a 45-day delay between the publication of the CSAL and the mailing of scheduling letters, to allow contractors to prepare for the compliance evaluation. In a recent directive, OFCCP eliminated that delay period. In addition, the Trump OFCCP allowed contractors to produce the written portion of their AAP in response to the scheduling letter while obtaining a 30-day extension of time to produce the voluminous personnel transaction data that the scheduling letter requests.  OFCCP also eliminated that extension in most cases.  These changes mean that contractors may face a dramatically reduced period of time in which to compile their AAP materials, review them, and make any necessary corrections prior to submission to the agency. Also of note is that OFCCP identified only 400 supply and service contractor establishments in the FY2022 CSAL.  For FY2021, the CSAL scheduled 750 supply and service contractor establishments for audits.  Consistent with OFCCP’s renewed focus on enforcement, the smaller number of contractors selected for audit may indicate that the agency intends to take a deeper dive in each audit into reviewing the contractor’s compliance. In light of the changes to the audit process, contractors who find themselves listed on the CSAL should consult with counsel regarding their response to the agency in order to ensure that their AAPs are fully compliant with OFCCP regulations and their personnel data does not show potential gender or race-based disparities in hiring, termination, promotions, or compensation.  There is much to be gained for contractors in identifying and addressing these issues before submitting documents or data to OFCCP.  Polsinelli regularly represents federal contractors and subcontractors in OFCCP audits, and is available for consultation with contractors identified in the CSAL.

The Department of Justice (DOJ) and federal government continue to aggressively pursue antitrust violations and promote the federal government’s interest in heavily limiting the use of non-competition agreements.  While the DOJ has recently been unsuccessful in its target of “no poach” and “no hire” agreements and wage-fixing issues in antitrust trials, employers should not interpret this as a sign the government will back off its efforts to limit the use of non-competition agreements by employers across all industries. With the DOJ taking a more active role in prosecuting antitrust matters, there is a real risk antitrust claims will increasingly gain traction in restrictive covenant litigation.  In fact, the DOJ recently filed a Statement of Interest in a Nevada state court case regarding the enforceability of post-employment restrictive covenants of anesthesiologists.  The DOJ encouraged the state court to consider antitrust principles when evaluating the restrictive covenants, and further asserted its position that post-employment restrictive covenants may constitute impermissible restraints of trade under the Sherman Act, while providing a roadmap for the court to declare the agreements unenforceable on this basis. While the validity of non-competition agreements currently remains controlled by state law, the federal government’s attention to such agreements may ultimately limit the use of such agreements to situations where the agreement is truly necessary to protect a well-defined category of trade secrets.  Employers should keep this in mind when preparing new agreements and take the time to carefully evaluate existing non-compete agreements and hiring practices to determine any potential issues.  And, for employers who have or are contemplating “no hire” agreements with competitors, it is wise to consider how these may be scrutinized if challenged. Polsinelli attorneys continue to monitor actions taken by the federal government involving non-competition agreements and are prepared to assist employers with navigating this everchanging landscape.

Maryland recently joined nine other states (and the District of Columbia) in providing employees in the state with a right to paid family and medical leave.  Although employer contributions to the paid family and medical leave program will not begin until 2023 and employees may not apply for benefits until 2025, when the law goes into effect it will dramatically expand the leave rights available to Maryland employees because the law applies to employees and employers who are not covered by the federal Family and Medical Leave Act (FMLA). When the new paid family and medical leave program takes effect, employees will be entitled to take up to either 12 or 24 weeks of paid leave per year for the following reasons: To care for a newborn child or a child newly placed for adoption, foster care, or kinship care. To care for a family member with a serious health condition. To attend to the employee’s own serious health condition that prevents the employee from performing the functions of his or her position. To care for a military servicemember with a serious health condition resulting from military service. Due to the deployment of a family member for military service. Ordinarily, an employee is entitled to a total of 12 weeks of leave per year, but if an employee takes leave for both the birth or placement of a child and the employee’s own serious health condition, the leave entitlement expands to a maximum of 24 weeks. The employee is entitled to paid benefits from a state-operated fund in a percentage of their average wages capped at $1,000 per week.  The paid leave fund is funded by employer and employee payroll tax contributions.  Although all employers in Maryland must provide leave, only employers with 15 or more employees (apparently, company-wide) must contribute to the state fund.  Alternatively, employers may establish self-funded private employer plans to provide paid leave, in which case they need not contribute to the state fund.  Any leave the employee takes runs concurrently to their FMLA leave entitlement, if any. The new paid leave law expands federal FMLA in several ways that will increase the number of employees entitled to leave. First, all employers with one or more employees in Maryland are covered by the law, dispensing with FMLA’s requirement that the employer have 50 or more employees within a 75-mile radius.  Second, employees need only be employed for 12 months and work 680 hours in that period to be eligible, decreasing FMLA’s 1,250 hour threshold.  Third, as noted above, employees can in some circumstances be entitled to 24 weeks of leave in a year, doubling the 12 week entitlement under FMLA.  Finally, employees are entitled to take intermittent leave (i.e., leave in small chunks rather than a continuous leave period) for all qualifying reasons, whereas FMLA does not permit intermittent leave for the birth or placement of a child in the absence of the employer’s agreement. As under the federal FMLA, employees are entitled to reinstatement to their former position upon return from leave.  However, the law potentially expands employee job protections by providing that an employee may be terminated only “for cause” while on leave.  It is unclear whether a termination due to a reduction in force or position elimination, which may be permissible under FMLA, would qualify as a “for cause” termination, or whether “cause” will require some affirmative misconduct by the employee.  Because the new law allows employees to recover up to three times the value of lost wages and other compensation, as well as reasonable attorney’s fees, in the event of a violation, employer missteps could carry significant consequences. The new Maryland leave entitlement is a reminder to employers that employee leave and other protections continue to proliferate at the state and local level.  As employers grow increasingly comfortable with remote work as a long-term arrangement, they should remain aware that many state laws, like Maryland’s new law, can be triggered by having a single employee working in the state – even if the employee is working from home.  Employers will need to keep track of the locations from which their employees are working (even as employees are increasingly mobile) and be aware of any specific leave or other entitlements under the laws of those jurisdictions. POLICIES AND PROCEDURESAPRIL 11, 2022

On March 31, 2022, on Transgender Day of Visibility, the EEOC announced that it will expand the available gender options in the voluntary self-identification questions included on its intake forms. The changes will apply to the following stages of the EEOC intake process: The voluntary demographic questions relating to gender in the EEOC’s online portal that is used by the public to submit inquiries about filing a charge of discrimination, as well as the Online Spanish Initial Consultation Form and Pre-Charge Inquiry Form, will be modified to include an option to mark “X” instead of selecting either male or female as the respective gender. The EEOC’s charge of discrimination form will be modified to include “Mx.” in the list of prefix options a Charging Party can use. This change comes in light of the Biden Administration’s Fact Sheet announcing measures several government agencies will be taking to increase inclusion of transgender and non-binary individuals in government services.  These changes will also indicate more clearly for employers when a charging party is making a sex discrimination claim based on their transgender status, pursuant to the Supreme Court’s Bostock decision in 2020. Although the EEOC’s announcement contains no new requirements for employers, employers may consider changing their applications and onboarding documents to include non-binary gender selections and prefix options, consistent with the EEOC’s lead.

On March 31, 2022, the Office of Federal Contract Compliance Programs (OFCCP) issued its second Directive, No. 2022-02, of the Biden Administration.  The new Directive implements both procedural and substantive changes to OFCCP compliance evaluations that signal that the agency will seek to act more aggressively in identifying and prosecuting alleged discrimination in its compliance audits.  In the Directive, OFCCP rescinds four Directives (2018-06, 2018-08, 2020-02, 2021-02) issued under the Trump administration to increase the certainty, efficiency, and transparency of the agency’s operations, a major priority of former OFCCP Director Leen.  By eliminating these safeguards, the new Directive increases the risk that federal contractors and subcontractors face from OFCCP compliance evaluations. Some of the major changes implemented by the Directive include: Reducing Time for Contractor Response to Scheduling Letter:   The new Directive expedites the early stages of an OFCCP compliance evaluation, and reduces contractors’ opportunity to prepare for an evaluation after the publication of OFCCP’s Corporate Scheduling Announcement Letter (CSAL) listing the contractor establishments selected for audit.  First, the Directive rescinds the prior 45-day delay between the publication of the CSAL and OFCCP’s issuance of scheduling letters requiring the production of documents and data.  Second, the Directive requires that all affirmative action plan data be provided within 30 days of receipt of the scheduling letter, where previously contractors were entitled to a 30-day extension of time to provide granular, employee-level data regarding personnel transactions like hiring, firing, promotions, terminations, and compensation.  Contractors will now be losing the opportunity for advance notice of a compliance evaluation and will face tight timelines to collect, review, and analyze data that often can be voluminous. Coordination of Multi-Establishment Evaluations:  The Directive also provides that when a contractor has multiple establishments undergoing compliance evaluations, the agency will coordinate its reviews of “common policies and practices.”  Although this change could benefit contractors by providing certainty and streamlining multiple evaluations, it also poses the potential that OFCCP may seek to bootstrap alleged violations at one establishment into broader, multi-establishment relief by asserting the existence of a common policy or practice. Broader Scope of Supplemental Requests: The Directive also changes OFCCP’s approach to supplemental requests for documents and data outside the scope of the initial scheduling letter.  Although the Directive purports to retain the requirements that the agency “reasonably tailor” supplemental requests to areas of concern, allow a “reasonable time” to respond, and include the basis for the request, it broadens the scope of documents and information that OFCCP may request.  Although previous Directives limited the scope of supplemental requests to the types of data outlined in OFCCP’s scheduling letter at the desk audit stage, the new Directive omits this limitation and states that “supplemental requests do not limit the agency’s ability to request additional information or expand the investigation.”  OFCCP also claims the right to seek documents for a period of 2 years preceding the date of the scheduling letter, and also to seek documents post-dating the scheduling letter in order to “fully investigate and understand the scope of potential violations.” Increased Interviews Outside of the Onsite Process:   The Directive signals OFCCP’s intention to request witness information and conduct more witness interviews.  In conducting these interviews, OFCCP states its plan to “directly contact these individuals without the contractor serving as an intermediary.”  OFCCP limits the contractor’s right to have an attorney or representative present at an interview to its discussions with “upper-level managers and directors,” and denies the contractor the opportunity to be present for interviews with non-management personnel.  Although employees are given the opportunity to request to have “a personal representative, such as a union representative or personal legal counsel” present, it is not clear whether non-management employees could choose to be represented by their employer’s counsel.  OFCCP also reiterates its position that the contractor is not entitled to have counsel present in the agency’s interviews with former employees in most cases. Enhancements to the Neutral Selection Process for Evaluations:   The Directive indicates that OFCCP will “enhanc[e]” its methodology for scheduling compliance evaluations in order to “reach a broader universe of contractors and subcontractors” and “identify those with greater risk factors.”  The specifics of this effort are not outlined in the Directive. Emphasis on Contractor Self-Auditing Obligations:  Finally, the Directive hints that OFCCP will place enforcement priority on contractor self-auditing obligations to review and analyze their workforce data for potential roadblocks to equal employment opportunity.  In the previous Biden OFCCP Directive, OFCCP declared that the requirement that contractors perform an “in-depth analysis” of the “total employment process” imposed a requirement for annual quantitative pay equity analyses to identify and resolve disparities in compensation.  The new Directive continues this approach by emphasizing the need for “a proactive approach to compliance where federal contractors actively self-audit employment systems.”  This suggests that OFCCP may review whether contractors are sufficiently analyzing their employment systems in the “in-depth” nature OFCCP requires.  Contractors should ensure they are performing and documenting these analyses as OFCCP seems to be placing emphasis on the self-audit obligation. The new Directive is the latest indication that the Biden OFCCP intends to take a more aggressive enforcement approach than the Trump OFCCP under Director Leen.  The agency’s new approach of providing little advance warning of compliance evaluations and quick initial productions of full affirmative action plan data heightens the need for contractors to ensure they are actively maintaining their affirmative actions plans throughout the year, and not just in response to a scheduled evaluation.

The emerging trend of laws banning inquiries into salary history and promoting pay transparency will soon expand to federal contractors.  On March 15, 2022, President Biden issued an Executive Order titled “Executive Order on Advancing Economy, Efficiency, and Effectiveness in Federal Contracting by Promoting Pay Equity and Transparency.”  The Executive Order directs the FAR Council to issue a proposed rule that “enhances pay equity and transparency,” and to specifically limit or prohibit federal contractors from inquiring about and considering salary history information when making employment decisions.  Once issued, this regulation will be the first salary history law with national application at the federal level. While the Executive Order does not outline the specific restrictions on salary history inquiries for federal contractors, employers can look to the various state and local salary history laws that have been enacted over the past decade to get a flavor of the potential requirements of the forthcoming rule.  Most state salary history laws, at a minimum, prohibit inquiring about salary history on job applications, making it likely that the forthcoming rule will include such a provision.  Other elements of the rule may address (1) whether employers can rely on voluntary salary history disclosures provided by applicants during negotiations; (2) whether the prohibition on inquiring into salary history will apply to both applicants and current employees; and (3) whether there will be a requirement that salary ranges be provided in job postings (similar to the pay transparency laws in Colorado and New York City) or upon an applicant’s or employee’s request. Federal contractors should consider reviewing their job applications and hiring and promotion policies to determine what, if any, impact such a rule will have on their employment decisions. Even without a legal restriction on the use of salary history in setting compensation, reliance on an applicant’s salary history to set their new compensation is laden with risk as many courts find that salary history is not alone a legitimate justification for any resulting pay differentials.

On March 15, 2022, the Office of Federal Contract Compliance Programs (OFCCP) issued its first directive of the Biden Administration to address the requirement that federal government contractors and subcontractors perform pay equity audits. Consistent with predictions that the Biden OFCCP would focus on pay equity enforcement, the new Directive 2022-01 highlights the requirement that federal contractors and subcontractors perform regular pay equity audits as part of their affirmative action program (AAP) obligations, and indicates that OFCCP will closely scrutinize the results of these audits during its compliance evaluations. OFCCP’s AAP regulations have long required that a federal contractor “perform in-depth analyses of its total employment process to determine whether and where impediments to equal employment opportunity exist,” including evaluation of “compensation system[s] to determine whether there are gender-, race-, or ethnicity-based disparities.” However, OFCCP has not previously provided specific guidance about the scope of this requirement.  In the new directive, OFCCP appears to take the position that the AAP regulations require that contractors perform a regular, in-depth pay equity audit of their workforce to identify potential disparities. More importantly, OFCCP’s directive also makes clear that the agency intends to request and scrutinize contractor pay equity audits in its compliance evaluations.  Under the directive, if a compliance evaluation “reveals disparities in pay or other concerns about the contractor’s compensation practices,” then OFCCP intends to request documentation of the contractor’s pay equity audits.  Some circumstances that OFCCP identifies as triggering a request for this follow-up information include: 1.     Pay disparities or evidence of pay discrimination among similarly-situated employees. 2.     Employee complaints of pay discrimination or other anecdotal evidence of discrimination. 3.     Inconsistencies in how the contractor is applying its pay policies. 4.     Statistical analyses or other evidence that a group of workers is disproportionately concentrated in lower paying positions or pay levels based on a protected characteristic. If one of these circumstances occurs, OFCCP will seek “a complete copy” of the pay equity audit showing all pay groupings that were evaluated, any variables used, and the results of the analyses. OFCCP will also seek information about model statistics if a statistical analysis is employed and the frequency of audits, communication to management, and how the results were used. The directive also takes an aggressive position regarding the privileged status of contractor pay equity audits.  Contractors commonly perform pay equity audits with the assistance of legal counsel in order to ensure the audit is protected from disclosure by the attorney-client privilege.  In the directive, however, OFCCP takes the position that because its regulations require that contractors maintain and provide OFCCP with evidence of their compliance with the AAP obligations, “contractors cannot withhold these documents by invoking attorney-client privilege or the attorney work-product doctrine.”  The directive does recognize, however, that a contractor may conduct a “separate” pay equity audit for the purpose of obtaining legal advice, not for compliance with OFCCP obligations, which remains privileged.  The directive asserts that the failure to provide pay equity audits in response to an OFCCP request will be considered “as an admission of noncompliance with these regulatory requirements.” The new directive ups the ante for federal contractors and subcontractors to perform regular pay equity audits as part of their AAP compliance efforts.  Such audits have always been advisable as a best practice to identify and rectify potential compensation disparities before they ripen into litigation, but are now a required exercise for those doing business with the federal government.  In light of OFCCP’s aggressive positions about the application of the attorney-client privilege to pay equity audits, contractors and their counsel will also need to carefully structure their audits in order to ensure that at least a portion of the audit remains protected from disclosure.

On March 15, 2022, the Office of Federal Contract Compliance Programs (OFCCP) issued its first directive of the Biden Administration to address the requirement that federal government contractors and subcontractors perform pay equity audits. Consistent with predictions that the Biden OFCCP would focus on pay equity enforcement, the new Directive 2022-01 highlights the requirement that federal contractors and subcontractors perform regular pay equity audits as part of their affirmative action program (AAP) obligations, and indicates that OFCCP will closely scrutinize the results of these audits during its compliance evaluations. OFCCP’s AAP regulations have long required that a federal contractor “perform in-depth analyses of its total employment process to determine whether and where impediments to equal employment opportunity exist,” including evaluation of “compensation system[s] to determine whether there are gender-, race-, or ethnicity-based disparities.” However, OFCCP has not previously provided specific guidance about the scope of this requirement.  In the new directive, OFCCP appears to take the position that the AAP regulations require that contractors perform a regular, in-depth pay equity audit of their workforce to identify potential disparities. More importantly, OFCCP’s directive also makes clear that the agency intends to request and scrutinize contractor pay equity audits in its compliance evaluations.  Under the directive, if a compliance evaluation “reveals disparities in pay or other concerns about the contractor’s compensation practices,” then OFCCP intends to request documentation of the contractor’s pay equity audits.  Some circumstances that OFCCP identifies as triggering a request for this follow-up information include: 1.     Pay disparities or evidence of pay discrimination among similarly-situated employees. 2.     Employee complaints of pay discrimination or other anecdotal evidence of discrimination. 3.     Inconsistencies in how the contractor is applying its pay policies. 4.     Statistical analyses or other evidence that a group of workers is disproportionately concentrated in lower paying positions or pay levels based on a protected characteristic. If one of these circumstances occurs, OFCCP will seek “a complete copy” of the pay equity audit showing all pay groupings that were evaluated, any variables used, and the results of the analyses. OFCCP will also seek information about model statistics if a statistical analysis is employed and the frequency of audits, communication to management, and how the results were used. The directive also takes an aggressive position regarding the privileged status of contractor pay equity audits.  Contractors commonly perform pay equity audits with the assistance of legal counsel in order to ensure the audit is protected from disclosure by the attorney-client privilege.  In the directive, however, OFCCP takes the position that because its regulations require that contractors maintain and provide OFCCP with evidence of their compliance with the AAP obligations, “contractors cannot withhold these documents by invoking attorney-client privilege or the attorney work-product doctrine.”  The directive does recognize, however, that a contractor may conduct a “separate” pay equity audit for the purpose of obtaining legal advice, not for compliance with OFCCP obligations, which remains privileged.  The directive asserts that the failure to provide pay equity audits in response to an OFCCP request will be considered “as an admission of noncompliance with these regulatory requirements.” The new directive ups the ante for federal contractors and subcontractors to perform regular pay equity audits as part of their AAP compliance efforts.  Such audits have always been advisable as a best practice to identify and rectify potential compensation disparities before they ripen into litigation, but are now a required exercise for those doing business with the federal government.  In light of OFCCP’s aggressive positions about the application of the attorney-client privilege to pay equity audits, contractors and their counsel will also need to carefully structure their audits in order to ensure that at least a portion of the audit remains protected from disclosure.

On February 17, 2022, the United States Department of Agriculture (USDA) published a Notice of Proposed Rulemaking updating USDA’s Agriculture Acquisition Regulation (AGAR), the agency’s counterpart to the Federal Acquisition Regulation (FAR).  In the proposed rulemaking, USDA included a requirement to add two new clauses that would revive and expand the Obama-era “blacklist rule” requiring contractors to disclose violations of certain labor and employment laws, and certify compliance with labor laws during the term of the contract. USDA’s new AGAR regulation requires the agency to include two clauses in every supply and service (including construction) acquisition above the simplified acquisition threshold.  The first clause, entitled “Labor Law Violations,” requires the contractor to certify compliance with 15 specified labor laws, and equivalent state-law enactments, and promptly report to the contracting officer any future adjudications of noncompliance. Contractors must also certify, to the best of their knowledge, that their subcontractors and suppliers are in compliance with the specified laws.  Under the clause, these certifications may give rise to False Claims Act liability if untrue. The second clause, entitled “Past Performance Labor Law Violations,” requires contractors submitting offers to certify that they and any subcontractors are in compliance with all previously required corrective actions for adjudicated labor law violations, and to provide a list of any such violations prior to award. The labor laws that are subject to the certification requirement include: Fair Labor Standards Act (FLSA), Occupational Safety and Health Act (OSHA), National Labor Relations Act (NLRA), Service Contract Act (SCA), Davis-Bacon Act (DBA), Title VII of the Civil Rights Act, Americans with Disabilities Act (ADA), Age Discrimination in Employment Act (ADEA), and Family and Medical Leave Act (FMLA), among others. USDA’s move brings to mind the saying that “everything old is new again,” and in that vein, it is worth reviewing the prior history of the Obama-era efforts to impose a similar certification requirement across federal contracting.  On July 31, 2014, then President Obama issued Executive Order 13673 requiring contractors to disclose alleged labor law violations in connection with contracting proposals, ostensibly for the purpose of assisting agencies in their “responsible source” determination.  However, the Executive Order’s implementation was enjoined by a federal judge in October 2016.  Congress then repealed the implementing regulations on March 27, 2017, using a procedure that barred the FAR Council from issuing a similar rule without Congress’s affirmative approval. USDA’s proposed rulemaking could be the start of individual agency-level efforts to impose Executive Order 13673’s requirements on an agency-by-agency basis.  Given the history of the Obama Administration’s similar blacklisting rule, one can expect legal challenges if the rule is eventually finalized.

In a rare showing of bipartisanship, the Senate passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, which allows employees or others to escape mandatory arbitration clauses in connection with any case raising issues of sexual harassment or assault. President Biden previously expressed support for the bill and is expected to quickly sign it into law. Specifically, the bill gives employees and others alleging a “sexual assault dispute” or “sexual harassment dispute” the ability to elect to render a mandatory arbitration clause invalid or unenforceable.  Because this ability is phrased as an “election,” it appears that the person resisting arbitration must affirmatively challenge the arbitration agreement, rather than the arbitration agreement being entirely unenforceable. The bill defines a “sexual assault dispute” as a “dispute involving a nonconsensual sexual act or sexual contact”. A “sexual harassment dispute” is defined as a dispute relating to any of the following conduct directed at an individual or group of individuals: Unwelcomed sexual advances. Unwanted physical contact that is sexual in nature, including assault. Unwanted sexual attention, including unwanted sexual comments and propositions for sexual activity. Conditioning professional, educational, consumer, health care, or long-term care benefits on sexual activity. Retaliation for rejecting unwanted sexual attention.” The bill applies not only to federal claims under Title VII of the Civil Rights Act of 1964, but also to state and tribal law claims as well.  Employees can also avoid class, collective, or multi-plaintiff action waivers in connection with sexual harassment or sexual assault disputes.  In addition, the bill provides that the validity and enforceability of an agreement is to be decided by the court, rather than an arbitrator, which will likely increase the probability that disputes will be resolved in favor of court litigation rather than arbitration. Employees frequently bring a sexual harassment, also referred to as hostile work environment, claim as part of a broader action with other employment-based claims.  Although the bill does not explicitly address how mandatory arbitration would apply to such a mixed action, it provides that it reaches actions that “relate to” sexual harassment or assault claims.  This broad language raises the prospect that employees alleging sexual harassment along with other, potentially unrelated claims will be able to litigate the entire dispute in court. The new bill, once signed, will undoubtedly have far-reaching implications given the millions of individuals subject to arbitration clauses.  Numerous recent Supreme Court decisions giving broad construction of the scope and applicability of the Federal Arbitration Act (“FAA”) may be called into question. Polsinelli attorneys will continue to monitor for related developments. Arbitration has long been a key tool in employers’ playbooks to manage their risk and potential liability under the plethora of federal, state, and local laws governing their personnel practices.  This bill deals a blow to employers’ ability to mandate arbitration in the context of sexual harassment claims.  Employers who rely on mandatory arbitration as part of their risk management programs should consult with counsel to adjust their practices in response to this bill and other recent developments.

Beginning on May 15, 2022, employers in New York City must begin listing salary ranges in any advertisements for jobs, promotions, or transfer opportunities. The new measure is the latest in a nationwide trend of state and local laws designed to promote pay equity by increasing employee bargaining power in pay negotiations. Under the new law, any employer with more than four employees in New York City commits an “unlawful discriminatory practice” if it advertises a job, promotion, or transfer opportunity without stating the minimum and maximum salary for that position in the advertisement. Notably, independent contractors are included in the calculation of whether an employer meets the four-employee threshold. The employer must list a salary range extending from the “lowest to the highest salary the employer in good faith believes at the time of the posting it would pay” for the advertised job. The disclosure requirement does not apply to temporary staffing firms. Under the New York City Human Rights Act, the penalties for violations are hefty, as the city can impose a civil monetary penalty of up to $125,000 per violation, or $250,000 for violations that result from an employer’s willful, wanton, or malicious action. The law does not define or specify what types of communications regarding open positions qualify as advertisements. Based on the inclusion of advertisements for promotion or transfer opportunities, it appears that the disclosure requirement applies to internal listings as well as advertisements to the public. In addition, the law requires disclosure of a “salary” range, but does not specify what if any additional disclosure must be made of non-salary compensation like commissions, bonuses, and stock or other equity awards. With the new requirement, New York City joins Colorado in requiring pay disclosures in job advertisements. Several other states, including Connecticut, Nevada, California, Maryland, and Washington have similar laws requiring employers to provide certain disclosures in response to an employee’s request. Other states are currently considering similar bills. This growing nationwide trend underscores the need for employers to review their recruiting and onboarding processes. In addition, the disclosure of salary ranges could lead to pay discrimination claims from employees who discover they fall at the bottom end of an employer’s range. Accordingly, when employers assess the salary range they will include in any public or internal advertisement, they should also consider auditing the compensation of existing employees in the position to ensure that any disparities in pay are justified by legitimate and objectively-identifiable differences in the employees’ positions or backgrounds.

On January 25, 2022, California Governor Gavin Newsom, Senate President pro Tempore Toni G. Atkins, and Assembly Speaker Anthony Rendon announced a framework for an agreement to reactivate California’s COVID-19 paid supplemental sick leave through September 30, 2022.  Although there is no official timeline as to when the official agreement will be effectuated, a few details about the tentative new law have been shared.  First, the paid sick leave will be in effect through September 30, 2022.  Second, the law would apply to businesses with 26 or more employees.  Third, the agreement includes a proposal to restore business tax credits to offset the employer’s paid sick leave expenses. Fourth, employees would be entitled to the paid leave when having to take care of themself or a family-member with Covid-19.  Fifth, full-time employees will be entitled up to 80 hours of paid-time off while part-time workers would be eligible for paid leave equal to the number of hours they typically work in a week. Lastly, under the deal, the COVID-19 sick leave would be retroactive and cover COVID-related absences since Jan. 1, 2022. Polsinelli will of course continue to update clients on future developments with regard to this legislation.

Following the Supreme Court’s ruling earlier this month, the Occupational Safety and Health Administration (“OSHA”) is withdrawing the vaccination and testing emergency temporary standard (“ETS”). The withdrawal is effective upon publication in the Federal Register, January 26, 2022. State OSHA departments are not required to take any action. In its announcement, OSHA stated that it is only withdrawing the vax-or-test rule as an emergency temporary standard, but is not withdrawing the action as a proposed rule. OSHA is now working to finalize a permanent COVID-19 Health Standard. Such a rule will follow the more traditional notice and comment procedures. Employers should still be vigilant to ensure that their policies related to workplace safety and the vaccination of its employees are compliant with local and state orders and laws. Employers should consult their Polsinelli attorneys if they have any questions.

Today, the United States Supreme Court issued two much-anticipated opinions concerning the Occupational Safety and Health Administration’s Emergency Temporary Standard on vaccination and testing (“OSHA ETS”) and the CMS Medicare and Medicaid Programs Omnibus COVID-19 Health Care Staff Vaccination Interim Final Rule (“CMS Vaccine Mandate”). I.  In a 6-3 ruling, the Supreme Court stayed the OSHA ETS from taking effect pending resolution of the case in the U.S. Court of Appeals for the Sixth Circuit. In the per curiam opinion, the Supreme Court stated that the challengers to the OSHA ETS “are likely to succeed on the merits of their claim that the Secretary of Labor lacked authority to impose the mandate.” The Supreme Court further held that the OSHA ETS is not authorized by the Occupational Safety and Health Act. The Court noted that Occupational Safety and Health Administration had never adopted a broad public health regulation before. The “lack of historical precedent” and the broad authority to implement the regulation was a “telling indication” that the OSHA ETS is beyond the agency’s authority. For now, the OSHA ETS is stayed pending resolution of the case in the United States Circuit Court for the Sixth Circuit. As such, this case will now return to the Sixth Circuit where the court will hear the case on its merits, and not just for preliminary relief. Bottom Line: At this time, employers do not need to require their workforce to be vaccinated or to get tested in compliance with the OSHA ETS. II.  In a 5-4 ruling, the Supreme Court stayed temporary injunctions of the CMS Vaccine Mandate issued by the U.S. District Courts for the Eastern District of Missouri and the Western District of Louisiana. In stark contrast to the ruling concerning the OSHA ETS, the Supreme Court opined that the CMS Vaccine Mandate fell within the authorities that Congress conferred upon the Secretary of Health and Human Services. The Supreme Court further held that the CMS Vaccine Mandate was not arbitrary and capricious. Now that the temporary injunctions issued by the U.S. District Courts for the Eastern District of Missouri and the Western District of Louisiana have been stayed, covered employers in all states should take steps, or continue to take steps, to comply with the CMS Vaccine Mandate. Bottom Line: Employers subject to the CMS mandate must comply. CMS released guidance to State Survey Agency Directors concerning the CMS Vaccine Mandate (“Guidance”) in late December 2021 in an effort to help companies comply. Under the Guidance, by January 27, 2022, facilities must have: Policies and procedures in place to ensure that all facility staff, regardless of clinical responsibility or patient or resident contact are vaccinated for COVID-19; and 100% of staff have received at least one dose of COVID-19 vaccine, or have a pending request for, or have been granted qualifying exemption, or identified as having a temporary delay as recommended by the CDC. A facility that is above 80% and has a plan to achieve a 100% staff vaccination rate by February 28, 2022 would not be subject to additional enforcement action. Facilities that do not meet these parameters could be subject to additional enforcement actions depending on the severity of the deficiency and the type of facility (e.g., plans of correction, civil monetary penalties, denial of payment, termination, etc.). By February 28, 2022, covered facilities must have: Policies and procedures in place to ensure that all facility staff, regardless of clinical responsibility or patient or resident contact are vaccinated for COVID-19; and 100% of staff have received the necessary doses to complete the vaccine series (i.e., one dose of a single-dose vaccine or all doses of a multiple-dose vaccine series), or have been granted a qualifying exemption, or identified as having a temporary delay as recommended by the CDC, A facility that is above 90% and has a plan to achieve a 100% staff vaccination rate within 30 days would not be subject to additional enforcement action. Facilities that do not meet these parameters could be subject to additional enforcement actions depending on the severity of the deficiency and the type of facility (e.g., plans of correction, civil monetary penalties, denial of payment, termination, etc.). Finally, facilities failing to maintain compliance with the 100% standard by March 28, 2022 may be subject to enforcement action. Polsinelli attorneys will continue to monitor and report on the OSHA ETS and CMS Vaccine Mandate and will host a webinar regarding the current state of all vaccination mandates next Wednesday, January 19 from 12:00 pm to 1:30 pm CT. Please register to attend here. In the meantime, your Polsinelli attorney can assist with questions you have regarding current vaccine mandates.