Reprinted with permission from the June 19th edition of The Legal Intelligencer. (c) 2020 ALM Media Properties. Further duplication without permission is prohibited.
The Supreme Court of the United States held in Bostock v. Clayton County, Georgia, 590 U.S. ___ (US 2020) that Title VII’s prohibition against discrimination on the basis of sex also bars discrimination on the basis of sexual orientation and gender identity. The Court’s opinion relies on the text of the statute, rejecting arguments from employers regarding the failure to specifically include gender identity or sexual orientation in the statue. The Supreme Court’s decision in Bostock is historic – it expands the protections of Title VII to sexual orientation and gender identity, protections previously denied. The Court’s ruling requires employers to update and modernize their policies and procedures, hiring practices, training and workplace culture.
May 14, 2020
Yesterday the Small Business Administration (SBA) issued updates to its Frequently Asked Questions (FAQs) guidance on the Paycheck Protection Plan (PPP) Loans, and added Questions/Answers (Q&A) 45 and 46, with the latter Q&A being directly related to the certification issues, and to the corresponding May 14th deadline for the return of funds as a “safe harbor” from civil and criminal penalties relating to the certification of need.
As previously reported, the PPP applications required borrowers to certify that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Until its issuance of this Q&A, the SBA’s guidance suggested that it would seek to impose civil and criminal penalties relating to the certification as a first resort, if it determined that the loan was unnecessary. In doing so, the SBA induced a sense of fear; and then further induced a sense of urgency by offering the safe harbor from such penalties, allowing borrowers to return the funds on or before May 7th to avoid such penalties. Such deadline was further extended to May 14th.
As state governments issue stay-at-home orders, employment lawyers across the country have been digesting new employment laws, assisting clients in managing layoffs, furloughs, and leaves of absence, and working to keep up with a changing employment landscape. Federal legislation has imposed dramatic, although temporary, changes to the way employers manage their employees during this trying time. The Families First Coronavirus Response Act (“Families First Act”) and its regulations impose, for the first time under federal law, paid leave obligations. The CARES Act changes the economics of layoffs, furloughs and reduced hours for employers.
On March 18, 2020, President Trump signed the Families First Act into law. The Act includes provisions to assist employers and employees during these extraordinary times. The Families First Act creates two forms of paid leave related to the Covid-19 crisis: two-week paid leave (“Emergency Leave”); and expansion of the Family and Medical Leave Act (“FMLA”) to provide twelve weeks of paid leave (“Expanded FMLA Leave”).
On April 1, 2020, the Department of Labor issued temporary regulations regarding the terms of the Families First Coronavirus Response Act (“Families First Act”). The regulation provides extensive guidance regarding the regulation to help employers comply with its terms.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), signed into law on March 27, 2020, provides $349 Billion in SBA 7(a) forgivable loans to businesses and nonprofits with fewer than 500 employees [see endnote 1), including sole proprietors, the self-employed and independent contractors. Known as the Paycheck Protection Program (PPP), the maximum available loan amount is 2.5 times your average total monthly payroll costs, capped at $100,000 per employee on an annualized basis [see endnote 2]. The loan proceeds can be used for any authorized business purpose, but to the extent used to pay payroll costs, healthcare benefits, eligible rent or mortgage interest payments and utility costs over an eight (8) week period from the date the loan is made, the loan can be forgiven (the lender is paid by the SBA). There is no collateral and no personal guarantees required. There is no requirement regarding exhausting other available credit. The SBA pays the lender all loan origination fees and has waived many of its otherwise onerous requirements. To the extent any loan balance is not forgiven, the interest rate will be fixed at the time of the loan somewhere between 0.50% and 4.0% [see endnote 3], amortized over up to 10 years, payable over two (2) years, with all payments deferred for six (6) months. There is no prepayment penalty. The program is only available through June 30, 2020, but funds are limited, so don’t wait. For more detailed information, see below and PPP Information Sheet.
On March 24, 2020, the United States Department of Labor ("DOL") issued limited guidance regarding the Families First Coronvirus Response Act (the “Act”).
Most importantly, the DOL identified April 1, 2020 as the Effective Date of the Act, contrary to the conclusion of most observers that the Act would go into effect on April 2, 2020. Accordingly, employers of all sizes should plan to come into compliance on April 1, 2020. The DOL also clarified that the Act is not retroactive. The DOL also advises not to send requests for the small business exemption to the department, and that it will issue regulations regarding the small business exemption at a later date.
On March 18, 2020, President Trump signed the Families First Coronavirus Protection Act (the “Act”) into law. The Act includes provisions to assist employers and employees during these extraordinary times.
Expansion of Protections Under the Family and Medical Leave Act
For the period of time beginning April 2, 2020 to December 31, 2020, the Act expands the protections of the Family and Medical Leave Act (“FMLA”). Employees may be eligible for a combination of paid and unpaid leave for a period of up to 12 weeks under the FMLA, under certain conditions.
Late Friday, the United States House of Representatives passed the Families First Coronavirus Response Act (the “Act”). The President has tweeted his support of the legislation, and the Senate will take it up this week.
Most employers these days are aware of the many workplace claims an employee might bring, including allegations of discrimination on account of race, color, religion, sex, national origin, sexual orientation, pay, age, or disability. Among other claims are those brought under the Fair Labor Standards Act (minimum wage, overtime) and the Family Medical Leave Act.
Employers paradoxically seem less aware of a retaliation claim an employee may bring. Paradoxically, because as reported by the Equal Employment Opportunity Commission (“EEOC”-the federal agency responsible for enforcing laws prohibiting employment discrimination), retaliation claims constituted the highest percentage of all charges filed in its fiscal year 2019.
Moreover, as discussed below, retaliation claims, by which an employee can obtain the same remedies as discrimination claims, are often easier for an employee to prove.
A recent opinion by the United States Court of Appeals for the Third Circuit (covering Pennsylvania) illustrates what an employee must do to state a case for retaliation and how an employer might defend the action.
On September 24, 2019, the United States Department of Labor announced a new final rule regarding eligibility for overtime pay. The rule requires employers to revisit their classifications of employees as exempt in order to ensure compliance.
As I discussed in previous articles (Texas Federal Judge Blocks New Overtime Rules and Speaking of Overtime Rules and One Final Overtime Update) the DOL announced rules in 2016 to dramatically increase the salary threshold in order for certain categories of employees to meet the standards for exemption from federal overtime requirements. The rules were met with litigation and a stay of their enforcement.
The new final rule raises the salary threshold from $455 a week to $684 a week, or $35,568 a year. Employers may now use nondiscretionary bonuses and incentive payments, such as commissions to satisfy up to 10% of the salary level. Employees will still have to meet requirements related to their duties in order to meet the standards of exemption for the overtime requirements.
This final rule will become effective on January 1, 2020. As we advised in 2016, employers should take steps to ensure compliance by the end of the year. The first step is to identify any employees who are classified as exempt but are making less than $422 a week, and develop a plan to reclassify those employees, or revise their compensation. This is a good time to revisit the job duties of those employees to ensure that they meet the applicable standards for exemption in terms of their duties as well as their salary. This is also a good time to review overtime policies to ensure appropriate recordkeeping, efficient use of overtime and compliance with applicable law.
AMM can help employers navigate these new rules and review their employee classifications to ensure compliance and minimize risk.