In a year marked by federal responses to the COVID-19 pandemic, federal agencies managed to finalize some non-pandemic legal developments in 2020: the Department of Labor’s (DOL) new overtime rule and joint employer test both went into effect, and the National Labor Relations Board (NLRB) overturned a handful of Obama-era precedents. With Joe Biden’s election as president in November 2020, the coming four years will likely bring some reversal of the impact of the Trump administration, particularly on the DOL and NLRB. The 2019-2020 Supreme Court term was relatively busy for employment, including a major development for Title VII. Of course, much of the energy and resources of the federal agencies overseeing employment laws were spent on providing guidance to employers related to COVID-19 issues. Below is a summary of major federal employment law headlines from last year and a look at what employers can expect in 2021.
For Missouri and Illinois employers, a review of 2020 state updates and a look forward at 2021 can be found here.
Federal contract worker minimum wage
Effective January 1, 2021, the minimum wage for federal contract workers increases to $10.95 per hour.
EEO-1 data reporting resumes in 2021
Due to COVID-19, the Equal Employment Opportunity Commission (EEOC) waived its requirement that private sector employers submit EEO-1 data last year. In 2021, however, private-sector employers with 100 or more employees, along with employers with 50 or more employees and at least one federal contract or subcontract worth at least $50,000 must submit their 2019 and 2020 EEO-1 surveys. The EEOC has not scheduled the submission date, but it expects to begin collecting the 2019 and 2020 EEO-1 Component 1 data in March 2021 and will notify filers of the precise date the collections will open as soon as it is available.
DOL issues Final Rule on tip pools and eliminates 80/20 Rule
Last month, the DOL issued its Final Rule amending tipped employee regulations under the Fair Labor Standards Act (FLSA). The rule, found here, takes effect March 1, 2021, and provides:
- Employers, managers, and supervisors may not keep any tips received by employees, even if the employer is paying tipped employees minimum wage and choosing not to utilize the tip credit exception under the FLSA.
- Where an employer does take the tip credit, the employer can require that tipped employees pool their tips. However, the pool of employees sharing tips can only include tip-earning workers. Thus, employees who traditionally do not receive tips (dishwashers and cooks) cannot be included in the tip pool and must be provided the minimum wage.
- Where an employer is not taking advantage of the tip credit, the employer may pool tips of tipped employees and also include back-of-the-house employees. Thus, back-of-the-house employees can now be included in a tip pool if an employer does not elect to take advantage of the tip credit for its tipped employees.
The Final Rule also eliminates the 80/20 Rule. During the Obama administration, the DOL took the position that employers could only apply a tip credit for employees spending less than 20 percent of their shift performing non-tipped work. Then, in November 2018, the DOL reissued and adopted an opinion letter stating there is no limit on the amount of duties related to a tip-producing occupation that may be performed, so long as the tasks are performed contemporaneously with direct customer service duties, or for a reasonable period of time immediately before or after performance of direct customer service duties. The Final Rule follows the language in the opinion letter and amends the regulation to make clear it has done away with the 80/20 Rule. Now, an employer may take a tip credit for any hours that an employee performs related, non-tipped duties contemporaneously with their tipped duties, or for a reasonable time immediately before or after performing the tipped duties.
DOL clarifies independent contractor status
In the first week of 2021, the DOL finalized a multifactor test for determining whether workers are independent contractors instead of employees covered by the minimum wage and overtime requirements of the FLSA. Specifically, the test evaluates the “economic realities” of the working relationship to determine if the worker is economically dependent on another business such that the worker is actually an employee.
In the Final Rule, the DOL:
- Identifies and explains two “core factors” that are most probative to the question of whether a worker is economically dependent on someone else’s business or is in business for him or herself:
- The nature and degree of control over the work.
- The worker’s opportunity for profit or loss based on initiative and/or investment.
- Identifies three other factors that may serve as additional guideposts in the analysis, particularly when the two core factors do not point to the same classification. The factors are:
- The amount of skill required for the work.
- The degree of permanence of the working relationship between the worker and the potential employer.
- Whether the work is part of an integrated unit of production.
The Final Rule, found here, will take effect March 8, 2021.
The Supreme Court’s October 2019 term was relatively busy for employment law developments. So what did we learn from the court last year?
Title VII prohibits discrimination on the basis of sexual orientation, gender identity, and transgender status
The Court’s June 2020 decision Bostock v. Clayton County, Georgia, which consolidated a trio of related cases, held that an employer who fires an employee merely for being gay or transgender violates Title VII of the Civil Rights Act. The decision resolved a major lingering question (and circuit split) about how far Title VII’s prohibition on discrimination “because of sex” extends. Apart from the decision’s impact on the interpretation of Title VII, employers must be aware of local and state jurisdictions, including Missouri and Illinois, that have also provided protection against sexual orientation or gender identity discrimination.
The “but for” standard of causation applies to race discrimination claims under Section 1981
In Comcast v. National Association of African American-Owned Media, the court found that a claim of race discrimination under 42 U.S.C. § 1981 fails in the absence of but-for causation, a higher burden than the “motivating factor” standard that the Ninth Circuit Court of Appeals had permitted. This case stems from Comcast declining to carry channels that the plaintiffs produced, allegedly violating Section 1981, a federal law barring racial discrimination in contracts.
The “but for” standard of causation applies to federal sector ADEA claims
Like the court’s decision in Comcast, Babb v. Wilkie found that federal-sector employees bringing ADEA age-discrimination claims must prove age was not just the motivator, but the cause for an adverse employment action.
Private employers may be exempt from the ACA’s birth control mandate
Representing another case in a string of challenges to the Affordable Care Act’s (ACA) requirement that employers provide health insurance that covers access to certain contraceptives, Little Sisters of the Poor v. Pennsylvania explained that private employers with religious or moral objections to providing birth control access may be exempt from this mandate. In reaching this decision, the court agreed with the Trump administration that the exemption to the birth control mandate created by the Department of Health and Human Services was proper under the ACA and federal rules regarding administrative agencies.
The “ministerial exemption” applies to Catholic school teachers, barring employment discrimination claims
The court explained in Our Lady of Guadalupe School v. Morrissey-Berru, which consolidated claims of employment discrimination brought by two Catholic school teachers, that the teachers’ responsibilities included “vital religious duties.” As a result, the ministerial exception under the First Amendment prevented the government from interfering with the right of the religious institutions to decide issues related to faith and doctrine — including employment decisions about who should hold certain roles. The court clarified that whether an employee is considered a “minister” for purposes of the exemption is not based upon the employee’s label but on the work the employee does. Because the ministerial exemption necessarily depends on the facts of each situation, the case does not mean that every Catholic school teacher or employee of a religious institution will fall within the ministerial exception.
What will the October 2020 term bring?
It looks to be a quiet term for employment law apart from an expected opinion on commercial arbitration agreements that will likely be relevant in the employment context. In Henry Schein Inc. v. Archer and White Sales Inc., the court is considering whether a provision in an arbitration agreement that exempts certain claims from arbitration negates an otherwise clear and mistakable delegation of questions of arbitrability to an arbitrator. The case was argued in December 2020.
COVID-19’s continued impact on the workplace
The COVID-19 virus impacted virtually every aspect of the employment relationship, necessitating new laws and guidance on unemployment benefits, protected leave and associated tax credits, workers’ compensation, and discrimination, among other topics. The most notable federal development was the passage of the Families First Coronavirus Response Act (FFCRA), which provided some paid leave benefits to employees for absences related to the coronavirus. Although the mandatory paid leave requirement expired on December 31, 2020, employers who choose to provide FFCRA sick time and family leave time benefits will remain eligible for the tax credit through March 31, 2021. Employees who have exhausted available FFCRA paid leave time entitlements will not be eligible for additional paid time off.
In addition to the resources available from Greensfelder attorneys, we have summarized the most critical employment law developments and guidance related to the COVID-19 pandemic from federal agencies:
Wage and hour developments from the DOL
- FFCRA Frequently Asked Questions provides guidance on paid leave entitlements under the FFCRA
- FFCFA poster notifies employees of their rights under the FFCRA
Disability and accommodation developments from the EEOC and Job Accommodation Network (JAN)
- JAN Accommodation Strategies for Returning to Work during the COVID-19 Pandemic provides advice on assisting individuals with disabilities as they return to the workplace.
- EEOC Technical Assistance Questions and Answersprovides guidance related to COVID-19, the Americans with Disabilities Act, the Rehabilitation Act, and other equal employment opportunity (EEO) laws, including requirements related to the vaccination of employees.
- EEOC Pandemic Preparedness in the Workplace and the Americans with Disabilities Act updates prior guidance related to pandemic preparedness for the COVID-19 pandemic.
Health and safety in the workplace developments from the Occupational Safety and Health Administration (OSHA)
- Frequently Asked Questionsaddress employer questions regarding health and safety in the workplace in light of the pandemic.
- Guidance on Returning to Work updates restrictions intended to slow the spread of COVID-
- Guidance on Preparing Workplaces for COVID-19 provides guidance on responding to the health and safety challenges of the pandemic in the workplace.
- Revised Enforcement Guidance for Recording Cases of Coronavirus Disease (COVID-19) addresses when an employee’s COVID-19 diagnosis is a recordable illness under OSHA’s recordkeeping requirements.
Labor law developments from the NLRB
- General Counsel Memo 20-10 provides suggested guidelines and protocols for conducting in-person union elections during the pandemic.
- General Counsel Memo 20-04addresses the duty to bargain during the pandemic.
If you have questions about any of these updates or would like to discuss how your business may be affected, please contact any of the attorneys in our Employment & Labor group.