The recent Seventh Circuit decision in Halperin v. Richards provides a reminder to ERISA fiduciaries who are also corporate officers (frequently referred to as “dual-hat officers”) that they can be held liable under both ERISA and state tort law for the same underlying acts.

When paper company Appvion Inc. filed for bankruptcy in 2017, the liquidation plan granted Appvion’s creditors the right to pursue state law tort claims against former Appvion executives.  Halperin v. Richards concerned state law claims raised by certain creditors against former Appvion executives alleging that the executives fraudulently inflated the value of Appvion stock in the years leading up to the bankruptcy.

The executives countered by arguing that ERISA preempted the state law claims because at all relevant times, Appvion’s employee stock ownership plan (“ESOP”) owned 100% of Appvion’s stock.  The executives argued that because the ESOP owned all Appvion stock and ERISA governs the duties of ESOP fiduciaries, ERISA preempted state law duties owed to shareholders and state law causes of action for breaching those duties.

The Court disagreed and ruled that “ERISA expressly contemplates such parallel liability for dual-hat directors and officers,” reasoning that ERISA § 408(c)(3), which permits individuals who are corporate officers (and therefore, owe a duty of loyalty to the corporation) to serve as ERISA fiduciaries, does not prohibit state law claims “which would impose corporate liability that runs parallel to, not in conflict with, ERISA’s fiduciary duties… the directors and officers’ corporation-law and ERISA duties both prohibit the fraudulent conduct alleged by [creditors].”

The key takeaway from this case is that ERISA fiduciaries who are also corporate officers or directors must remain cognizant of their obligations under both ERISA and state law.  The duties imposed by ERISA on dual-hat fiduciaries will not necessarily create a preemption shield relieving them of their obligations under state law.

Last week, in Winegard v. Newsday LLC, the U.S. District Court for the Eastern District of New York issued a decision that may finally tee up the issue of website accessibility to be directly addressed by the Second Circuit and provided businesses without a brick and mortar presence with unexpected relief by dismissing a serial plaintiff’s putative class action lawsuit alleging that a newspaper’s failure to provide closed captions of online videos for individuals who are deaf or hard of hearing violated Title III of the Americans with Disabilities Act (“Title III” or “ADA”).

In dismissing the case, the Court adopted a more stringent, strict constructionist, approach to analyzing the applicability of Title III to websites, holding that Title III does not apply to the website in question because it is not, in and of itself, a “place of public accommodation” (“PPA”).  Diving into the ADA’s text and history, the Court noted that the ADA already defines “public accommodations” as private entities such as hotels, restaurants, stadiums, grocery stores and gymnasium, and further, 49 of the 50 examples “indisputably relate to physical places,” indicating that PPA are limited to “actual, physical places.”  The Court further stated that, had Congress intended for the term to encompass more than a physical PPA, it could have, but in the 31 years since it passed the ADA, never did.  Echoing the Eleventh Circuit’s recent decision in Gil v. Winn-Dixie, the Court held that whether a website itself qualifies as a PPA “is an issue for Congress to resolve.”  On this basis, the Court applied what other jurisdictions have deemed the “nexus theory,” holding that for a website to have accessibility obligations under Title III, it must “offer the same ‘goods and services’ as the business’s brick and mortar operation” and plaintiff must plead a connection between the website and the brick and mortar location.

In reaching its decision, the Court was cognizant that other district court judges in the Second Circuit who had previously considered the issue of website accessibility had adopted a more expansive view of the law, focusing on the intent of the ADA as a sweeping civil rights law.  The Court, however, distinguished the present set of facts from those in Pallozzi v. Allstate Life Insurance Co, 198 F. 3d 28 (2d Cir. 1999), in which the Second Circuit extended Title III’s reach beyond a physical PPA to an insurance policy.  The Court rejected the notion that this decision “compel[led] an outcome at odds with the plain-reading above,” because plaintiff had never alleged that Newsday operated a “public-facing, physical place in which newspapers – or any other goods or services are sold.”  In Pallozzi, on the other hand, the insurance policy in question was connected to a physical insurance office.  As such, the Court held that the Newsday website was not a PPA under Title III of the ADA.

By adopting this narrower approach, the Court has arguably created an express split that could finally create the impetus for the Second Circuit to directly address Title III’s applicability to websites.  For the time being, this decision should provide businesses whose websites are not clearly connected to a PPA with some additional ammunition to fight back against the endless wave of website accessibility suits that continue to plague district courts in this Circuit.  As the Court acknowledged, however, it is contrary to other decisions inside and outside of the Second Circuit and does not apply where there is a nexus between a PPA and its website.

For now, businesses must continue to await an act of Congress or regulations from the Department of Justice for the definitive guidance that they have been asking for over the last several years.  In the meantime, the easiest way to avoid falling prey to a website accessibility lawsuit, including one regarding a failure to provide closed captioning, is to achieve substantial conformance with WCAG 2.1 Levels A and AA (as confirmed via human-based auditing from both the code and user perspectives).

As featured in #WorkforceWednesday:  This week, we look at how the COVID-19 Delta variant is shifting employer vaccination policies and how that shift is conflicting with regulations in some states.

The Shift to Mandatory Vaccinations

The Delta variant of COVID-19 is fueling another new chapter of the pandemic: mandates. Recent federal and state action is driving a trend toward employers mandating vaccines. Read more about state action in California and New Jersey.

States Hold Firm with Passport and Mandate Bans

While the trend is shifting back toward greater caution regarding COVID-19, states like Florida and Texas are sticking with bans on vaccine mandates and proof of vaccination requirements.

DOL Wage and Hour Chief Nominee Stalled in Committee

In an 11-11 party-line tie, the Senate labor committee is deadlocked on approving David Weil’s return to the Department of Labor as the Wage and Hour Division Administrator, a post he held under the Obama administration.

See below for the video and podcast links. For Other Highlights and more news, visit https://www.ebglaw.com/insights/vaccine-mandates-mandate-bans-wage-and-hour-nomination-stalls/.

Video: YouTubeVimeo.
Podcast: Apple PodcastsGoogle PodcastsOvercastSpotifyStitcher.

Employers in the First Circuit know that unconscionability challenges to employment arbitration agreements are commonplace. In Trainor v. Primary Residential Mortgage, Inc., the U.S. District Court for the District of Rhode Island recently addressed an employee’s arguments that an agreement’s venue clause requiring a Rhode Island employee to arbitrate her claims in Utah and a provision excluding certain claims from the scope of the arbitration agreement rendered the arbitration agreement unconscionable and unenforceable. The court rejected the first argument based on the employer’s on-the-record concession that it would agree to virtual arbitration, and the second because the exclusions from the arbitration agreement benefitted both parties and were cabined to limited circumstances. In light of Trainor, employers may want to review their arbitration agreements to preserve their ability to agree to virtual arbitration to moot a challenge to a venue clause and to ensure that any exceptions to the duty to arbitrate are symmetrical and narrowly tailored.

Background

In early 2018, Nicole Trainor accepted a job with Primary Residential Mortgage, Inc. (“PRMI”) as a business development representative.  Upon accepting the job offer, Ms. Trainor signed a required PRMI Standard Employment Agreement (“Agreement”) broadly stating the parties agreed to arbitrate all claims or disputes between them before the American Arbitration Association (“AAA”) in Utah.  The Agreement then carved out four categories of claims from the arbitration provision: challenges to the validity of the Agreement’s class-action waiver, proceedings for administrative relief (such as unemployment benefits, disability insurance, workers’ compensation, and charges of employment discrimination), actions to enforce Ms. Trainor’s non-solicitation and confidentiality covenants, and claims that Ms. Trainor exceeded the scope of authority PRMI granted to her.   Later that year, PRMI denied Ms. Trainor’s request for a remote-work accommodation, and subsequently terminated her employment on the grounds that her job required that she be physically present in the office.  Ms. Trainor then filed suit, and PRMI moved to compel arbitration under the Agreement. Ms. Trainor opposed the motion by arguing that the Agreement was unconscionable (and therefore, unenforceable) for a variety of reasons.

Decision

The court granted PRMI’s motion to compel arbitration and rejected all of Ms. Trainor’s arguments that the Agreement was unconscionable. While it gave short shrift to most of her contentions, its reasoning behind rejecting two of them is noteworthy for employers.

First, Ms. Trainor argued the Agreement was “lopsided,” characterizing the arbitration clause’s four exceptions as giving PRMI the option to “litigate [virtually] any claim it would ever have against an employee in court,” while simultaneously constraining her to arbitration.  The court rejected Ms. Trainor’s broad characterization of those exceptions. The court began by noting that two exceptions—namely, challenges to the validity of the class-action waiver and claims for administrative relief—actually benefitted Ms. Trainor, not PRMI.  The court then recognized that the last two exceptions—specifically, actions to enforce Ms. Trainor’s restrictive covenants and claims asserting she exceeded the scope of her authority as PRMI’s agent—favored PRMI, but applied only in limited circumstances, leaving “many claims that could plausibly be brought by PRMI that would be subject to arbitration.” As such, “[a]lthough the lack of mutuality provide[d] some support for [Ms.] Trainor’s arguments, it [was] insufficient to render the arbitration provision unconscionable.”

Second, Ms. Trainor argued the Utah venue provision was logistically and financially oppressive, because it would require her to travel from Rhode Island (where she lived and worked) to Utah.  The court deemed this argument moot, because PRMI conceded to virtual arbitration in its motion, and therefore, the arbitration would involve no travel or travel expenses.

Employer Takeaways

Trainor is a helpful reminder to employers to review their arbitration agreements for two reasons:

  • First, in light of Trainor’s holding that the employer could permissibly carve out certain claims from the scope of the arbitration agreement, employers may want to reconsider their decision to exclude (or not to exclude) certain types of claims from their agreements’ purview. Employers whose arbitration agreements contain exceptions for certain types of actions against employees may want to review those exceptions to determine whether they are sufficiently narrow so that both the employer and employee have an obligation to arbitrate most of their claims against each other. Employers that rely on arbitration agreements that do not contain exceptions for certain types of actions against employees may want to consider adding them for claims that may be better suited for litigation, such as claims for injunctive relief to enforce restrictive covenants or to prevent the misappropriation of trade secrets.
  • Second, virtual arbitration may be appealing for some employers, particularly in the current COVID-19 environment, because it eliminates the burden of sending company representatives to testify wherever the employer might be subject to suit, while avoiding arguments that it is unfair or oppressive for employees to travel far away from their home states to arbitrate their claims. Employers interested in virtual arbitration should consider expressly referring to it in their agreements, or short of that, reviewing their agreements to ensure that none of their provisions (such as a modification or waiver clause) would prevent a court from giving effect to an on-the-record concession that the employer will submit to virtual arbitration instead of enforcing the agreement’s venue clause.

Taking these steps may help avoid motion practice over an arbitration agreement and increase the likelihood that a court will enforce it against an employee who seeks to avoid it.

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Ashley Krezmien, a 2021 Summer Associate (not admitted to the practice of law) in the firm’s Boston office, contributed to the preparation of this post.

There has been a recent flurry of movement – both in the courts and in state legislatures – on the marijuana law front across several states.  As we previously reported, on February 22, 2021, New Jersey Governor Phil Murphy signed three separate cannabis reform bills into law (NJ A21, NJ A 1897, and NJ A5342/NJ S3454), formally legalizing the use and possession of recreational marijuana in the Garden State.  The new laws contain express workplace-related provisions that impact New Jersey employers by establishing non-discrimination rules for recreational cannabis users or marijuana users, codifying that employers do not have a duty to accommodate cannabis use in the workplace, and establishing procedures for employee drug testing.  The laws’ employment provisions were effective immediately, but they do not become operative until the New Jersey Cannabis Regulatory Commission (“CRC”) adopts implementing regulations.

As we have also reported, on March 31, 2021, New York Governor Andrew Cuomo signed a bill legalizing recreational cannabis in the state of New York, effective immediately.  Among the many changes that this new legislation brought were amendments to and expansion of New York’s lawful off-duty conduct law to protect cannabis use by employees when they are not on the job.  This statewide change follows New York City’s April 2019 ban on pre-employment cannabis testing, which deems screening for marijuana or THC as a condition of employment to be an unlawful discriminatory practice, with limited exceptions.

Other jurisdictions are catching up to the marijuana law frenzy.  From East Coast to the South, Midwest, and Southwest, state lawmakers have legalized cannabis and restricted employers from making employment decisions based on employees’ and prospective employees’ use of marijuana.  Here’s a round-up of the most recent developments:

New Laws

Alabama

On May 17, 2021, Alabama Governor Ivey signed the Darren Wesley ‘Ato’ Hall Compassion Act (“Hall Act”).  Named in honor of the son of an Alabama lawmaker who had passed away at age 25, the Hall Act legalized certain forms of medical marijuana, but explicitly stated that Alabama has no plans to authorize recreational use of marijuana.

The Hall Act restricts legal usage to that of cannabis products (not hemp) that can be ingested – for example, by tablet or non-sugarcoated gummy – topical products, suppository, transdermal patch, or by nebulizer.  The Hall Act expressly does not allow for the use of cannabis products that are smoked or vaped, baked goods, or candies.  Patients may be certified and receive medical marijuana cards only for certain enumerated “qualifying medical condition[s],” including, but not limited to, cancer treatment side effects, HIV/AIDS-related nausea or weight loss, other illnesses causing nausea, complications related to multiple sclerosis, and/or “[a] condition causing chronic or intractable pain in which conventional therapeutic intervention and opiate therapy is contraindicated or has proved ineffective.”  The Hall Act establishes the Alabama Medical Cannabis Commission, which will, among other things, implement a medical marijuana program in the state and provide an annual report to the state legislature about the implementation of the law.

Despite providing some protections for medical marijuana users, the Hall Act does not require employers “to permit, accommodate, or allow the use of medical cannabis, or to modify any job or working conditions of any employee who engages in the use of medical cannabis.”  The Hall Act also does not prohibit employers from “refusing to hire, discharging, disciplining, or otherwise taking an adverse employment action” as a result of the worker’s medical marijuana use.  An employer may take an adverse action against a medical marijuana user regardless of impairment or lack of impairment, and regardless of whether the worker’s medical marijuana use is the sole reason or a factor in the employer’s decision to take an adverse employment action. Further, the Hall Act does not create a right of action for adverse employment measures taken on the basis of medical marijuana use.  In fact, the law provides that a worker whose employment is terminated for using medical marijuana or refusing to take a drug test may, in some circumstances, be “legally conclusively presumed to have been discharged for misconduct.”

The Hall Act does not affect workers’ compensation premiums or discounts, or an employer’s ability to assert defenses related to workers’ compensation benefits based on the results of a worker’s drug test.  Employers are not prohibited from establishing or enforcing drug testing policies, including drug-free workplace policies, or requiring a worker to disclose that they are a medical marijuana card holder.  The Hall Act does not affect employment restrictions imposed by the Department of Transportation, nor does it specifically address represented workers.

Connecticut

Joining its tristate neighbors of New York and New Jersey, Connecticut became the 19th state to legalize recreational marijuana use when Governor Ned Lamont signed legislation into law on June 22, 2021, decriminalizing possession or use of a limited amount of cannabis by adults aged 21 or older as of July 1, 2021.

While adult possession in Connecticut is now legal, portions of the cannabis reforms will phase in, including those affecting Connecticut employers.  Starting October 1, 2021, all employers must prohibit all smoking, including the use of electronic nicotine and cannabis delivery systems (i.e., e-cigarettes or vaping devices), at all business facilities.  Previously, smoking bans were required only at workplaces with five or more employees and did not specifically include a prohibition on electronic smoking devices, and employers could have designated smoking rooms.

Other provisions that took effect July 1, 2022, include:

  • The Act exempts certain employers and categories of employment, including (but not limited to) emergency responders, positions requiring operation of a motor vehicle or heavy machinery, security clearance, or jobs entailing the supervision or care of children, medical patients, or vulnerable persons.
  • Employers covered by the Act do not have to allow employees to use or be under the influence of cannabis while at work, but employers must permit employees to possess (though not use) medical marijuana at work.
  • Employers may establish written policies prohibiting employee use, possession, or consumption of recreational cannabis, and requiring drug testing. Such policies must be made available to current employees prior to enactment, and to prospective employees at the time of any job offer. Absent such policy, employers will be prohibited from terminating or taking any adverse action against employees or prospective employees on the basis of that person’s use, or lack of use, of cannabis products outside of the workplace, with exceptions for employers with federal contracts or other federal funding.
  • With a few exceptions, a positive result for THC in a drug test will not be a permissible basis for a termination of employment or refusal to employ someone.
  • Employees have a 90-day statute of limitations to pursue grievances of an employer’s alleged violations of the law. Remedies for prevailing plaintiffs include reinstatement, back wages, attorneys’ fees and costs.

Montana

On May 18, 2021, about six months after voters approved two ballot initiatives to legalize and regulate marijuana, Governor Greg Gianforte signed off on legislation that sets January 1, 2022 as the first day of legal cannabis sales in Montana, permitting adults aged 21 or older to possess, purchase, and cultivate limited amounts of cannabis and/or THC.  The new recreational marijuana law includes provisions prohibiting employers from refusing to hire or discriminating against a person on the basis of off-duty use of a “lawful product” outside of workplace premises.  There are, however, situations where even off-duty usage could be the basis for an adverse action against an employee.  For example, if off-duty marijuana usage interferes with an individual’s ability to perform a job, conflicts with a bona fide qualification reasonably related to a person’s occupation, or violates a contractual obligation requiring abstinence from marijuana, an employer could address such circumstances without running afoul of the state’s new law.  Montana law also does not require employers to permit or accommodate marijuana usage in any workplace, nor does it prohibit employers from disciplining an employee for intoxication by marijuana products while working or for any other violation of a workplace drug policy.  Montana employers should review any pre-employment drug screening requirements as well as employee drug testing policies in light of the forthcoming changes.

New Mexico

Since June 29, 2021, adult recreational use of marijuana has been legal in New Mexico. On April 12, 2021, Governor Grisham signed the state’s recreational marijuana bill – the Cannabis Regulation Act (“CRA”) – into law.  The CRA provides several explicit protections for employers. For example, unless otherwise agreed to between the employer and worker, employers may “prohibit and take an adverse employment action” on the basis of a worker’s impairment, possession, or use of “intoxicating substances.”  Employers do not have to take any action that would violate federal law or that would result in the loss of a federal contract.  Additionally, the law does not “prevent or infringe upon the rights of an employer to” have and maintain written zero-tolerance policies about the use of cannabis products, including imposing discipline up to and including termination for a positive drug test.  Employers may take adverse employment action on the basis of the possession or use of marijuana at work or during work hours.

With regard to represented workers, the CRA does not “invalidate, diminish or otherwise interfere with any collective bargaining agreement” or the bargaining powers of any party to a collective bargaining agreement.  Note that the CRA does not apply to Title II of the Railway Labor Act, which concerns air carriers.

Philadelphia, PA

Effective January 1, 2022, Philadelphia will join New York City in prohibiting employers, labor organizations, and employment agencies, and all of their agents, from requiring job applicants to submit to a marijuana drug test as a condition of employment, making such a drug test an “unlawful employment practice.”  There are, however, several exceptions to the law.  For example, the prohibition will not apply to workers in the following safety-sensitive positions: police officers or those in other law enforcement positions; any position requiring a commercial driver’s license; any position that includes the supervision or care of children, medical patients, disabled or other vulnerable people; any position where the worker may significantly impact the health and/or safety of other workers and/or members of the public, as determined by the enforcement agency, and pursuant to the law.

Furthermore, the prohibition on pre-employment marijuana drug testing does not apply to certain required drug testing, including: drug testing required by any federal or state statute, regulation or order that requires such drug testing for safety or security reasons; any contract between the federal government or an employer; and any prospective worker who is party to a valid collective bargaining agreement that specifically addresses pre-employment drug testing of applicants.

In advance of January 1, 2022, Philadelphia employers should evaluate their pre-employment drug testing policies, determine whether any of the positions are exempted from the ordinance, and prepare to cease pre-employment drug screening for marijuana, where necessary.

Virginia

In April 2021, Virginia became the 16th state to legalize recreational use of marijuana. Effective July 1, 2021 – a date accelerated by amendments made by Governor Ralph Northam and approved by the legislature – adults over 21 years of age may possess up to an ounce of marijuana and engage in at-home growing of marijuana.  The retail sale of marijuana in Virginia, however, will not begin until January 1, 2024.  Under Virginia’s recreational marijuana law, the newly-formed Virginia Cannabis Control Authority will implement regulations for the state’s marijuana industry.

Virginia’s recreational marijuana law does not address any obligations or protections in the employment context.  Virginia employers may need to wait for regulations issued by the Virginia Cannabis Control Authority to determine how the new recreational law affects the workplace.

Additionally, on July 1, 2021, new protections for workers under amendments to Virginia’s medical marijuana law took effect.  Under these amendments, employers may not take adverse employment action or discriminate against workers’ lawful use of medical cannabis oil.  Employers may still, however, take an adverse employment action against workers who are impaired while at work.  Employers may also “prohibit possession” during work hours.  The amendments also clarify that employers are not required to take action that would violate federal law, or result in the loss of a federal contract or federal funding.  The amendments specifically qualify that they do not “require any defense industrial base sector employer or prospective employer, as defined by the U.S. Cybersecurity and Infrastructure Agency, to hire or retain any applicant or employee who tests positive for [THC] in excess of 50 ng/ml for a urine test or 10 pg/mg for a hair test.”

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Employers and health care professionals should prepare to address issues that may arise from the potential conflict between state and federal law in devising compliance, both in terms of reporting and human resources issues.  As states and localities increasingly permit the lawful use of medicinal and recreational marijuana, and prohibit certain pre-employment practices, employers – and particularly those with multi-state operations – must review and evaluate their current policies with respect to marijuana use by employees, prospective employees and patients.

* América Garza, a 2021 Summer Associate (not admitted to the practice of law) in the firm’s New York office, contributed to the preparation of this post.

As featured in #WorkforceWednesday:  This week, we look at the restriction and legislation of non-compete agreements.

The Future of Non-Compete Agreements

The restriction and legislation of non-compete agreements is gaining traction around the country, with states and the federal government passing or proposing new restrictions on the clauses. In July, President Biden signed an executive order that discussed the regulation of non-compete agreements, which in the past has only been the province of the states. Attorneys Pete Steinmeyer and Brian Spang discuss how the executive order impacts employers, changes to expect, and how to best prepare for the future.

More on Biden’s Executive Order on Non-Compete Agreements

On July 9, 2021, President Biden signed the Executive Order on Promoting Competition in the American Economy, which encourages the Federal Trade Commission (“FTC”) to employ its statutory rulemaking authority “to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.” Executive Order, Section 5(g). While the language in this executive order refers to the “unfair” use of non-compete clauses, the Biden administration’s explanatory statement makes clear that “the President encourages the FTC to ban or limit non-compete agreements” altogether. Read more about this executive order.

How Jurisdictions Are Taking Action

Just as employers in the District of Columbia begin navigating the District’s recently enacted non-compete ban, changes to the law are already in the works. As we previously reported, earlier this year, the District enacted the Ban on Non-Compete Agreements Amendment Act of 2020 (D.C. Act 23-563) (“Act”), which prohibits employers from requiring or requesting that an employee sign any agreement containing a non-compete provision. For a more detailed summary and analysis of the Act, please refer to our December 22, 2020, article.

Governor Steve Sisolak recently signed Assembly Bill 47, which amends Nevada’s statute governing non-compete agreements (Nevada Revised Statutes 613.195). Employers should be aware of several changes to the law, which will go into effect on October 1, 2021. For more on this amendment, click here.

See below for the video and podcast links. For Other Highlights and more news, visit http://www.ebglaw.com/eltw221.

Video: YouTubeVimeo.
Podcast: Apple PodcastsGoogle PodcastsOvercastSpotifyStitcher.

On August 6, 2021, New Jersey Governor Philip Murphy signed Executive Order 252 (“Order 252”) requiring health care and high-risk congregate settings to maintain a policy requiring workers to either provide adequate proof of vaccination or submit to weekly COVID-19 testing. Although Governor Murphy declared an end to the state’s Public Health Emergency in June, he retained the authority to issue orders related to vaccine distribution, administration, and management as well as COVID-19 testing and data collection. Following the CDC’s vaccine guidance, Order 252 recognizes the “importance of heightened mitigation protocols in certain congregate and health care settings,” and it takes additional steps to address the significant risk of spread and the vulnerability of the populations served in those settings.

Who is covered?

Health care facilities are defined as hospitals, specialty hospitals, ambulatory surgical centers, long-term care facilities, intermediate care facilities, residential substance abuse disorder treatment facilities, clinic-based settings, community-based health care settings, and registered health care service firms operating within New Jersey.

High-risk congregate settings include state and county correctional facilities, secure care facilities operated by the Juvenile Justice Commission, licensed community residences for individuals with intellectual and developmental disabilities (IDD) and traumatic brain injury (TBI), licensed community residences for adults with mental illness, and certified day programs for individuals with IDD and TBI.

Covered workers encompass employees, both full and part-time, contractors, and other individuals working in health care facilities and high-risk congregate settings, including individuals providing operational or custodial services or administrative support.

What is required?

Health care facilities and high-risk congregate settings (“Covered Settings”) must implement a workplace policy requiring covered workers to either (1) “provide adequate proof that they have been fully vaccinated” or (2) “submit to COVID-19 testing at a minimum of one to two times weekly.” Proof of one’s fully vaccinated status may be substantiated by the following documents:

  • The CDC COVID-19 Vaccination Card issued to the vaccine recipient by the vaccination site, or an electronic or physical copy of the same;
  • An official record from the New Jersey Immunization Information System (NJIIS) or other state immunization registry;
  • A record from a health care provider’s portal/medical record system on official letterhead signed by a licensed physician, nurse practitioner, physician’s assistant, registered nurse or pharmacist;
  • A military immunization or health record from the United States Armed Forces; or
  • A docket mobile phone application record or any state specific application that produces a digital health record.

The above documents must also state (1) that the administered vaccine is a COVID-19 vaccine authorized for Emergency Use Authorization in the United States or the World Health Organization and (2) the administration date for each dose. Under Order 252, a covered worker is considered fully vaccinated for COVID-19 “two weeks or more after they have received the second dose in a two-dose series or two weeks or more after they have received a single-dose vaccine.” Any covered worker who is not fully vaccinated, whose vaccination status is unknown, or who has failed to provide sufficient documentation, is considered an unvaccinated covered worker.

Unvaccinated covered workers must undergo screening tests “at a minimum of one to two times per week.” A Covered Setting may choose to provide or administer testing on site or to require workers to submit test results. Covered Settings must track and report test results to local health departments. The Order does not address who is responsible for bearing the costs associated with testing, or whether the time spent being tested is compensable time.

Minimum Requirements & Data Protection

Covered Settings are free to mandate additional or stricter requirements to a vaccination or testing policy or to require more frequent testing of covered workers. In other words, Order 252 creates a baseline requirement for Covered Settings, and any vaccination or testing policy must at least “comport with the minimum requirements.” In addition, Order 252 prohibits municipalities, counties, or any agency of the State from enacting any order, rule, or regulation that in any way conflicts or interferes with the requirements of the Order.

Covered Settings collecting vaccination information from covered workers must do so in compliance with all federal and state laws, including the Americans with Disabilities Act, which regulates the collection and storage of such information.

Effective Date

Order 252 takes effect on September 7, 2021, at which time “any covered workers that have not provided adequate proof that they are fully vaccinated must submit to weekly or twice weekly testing on an ongoing basis until fully vaccinated.” Any Covered Setting that fails to comply with Order 252 by September 7, 2021, may be subject to penalties.

Just as Washington, D.C. employers begin navigating the District’s recently enacted non-compete ban, changes to the law are already in the works. As we previously reported, earlier this year D.C. enacted the Ban on Non-Compete Agreements Amendment Act of 2020 (D.C. Act 23-563) (the “Act”), which prohibits employers from requiring or requesting that an employee sign any agreement containing a non-compete provision. For a more detailed summary and analysis of the Act, please refer to our December 22, 2020 article.

In response to concerns raised by the employer community, Councilmember Elissa Silverman has proposed the Non-Compete Conflict of Interest Clarification Amendment Act of 2021 (the “Bill”), which would clarify the Act’s effect on conflict of interest and confidentiality provisions, and specify at least one way employers can satisfy the Act’s notice requirement. The key provisions of the Bill, summarized below, are helpful in responding to employer concerns, but only narrowly address the issues.

Conflict of Interest Provision

One of the open questions is whether the Act’s ban prohibits conflict of interest provisions. The Bill clarifies that the Act does not extend to “bona fide conflict of interest provisions,” which are defined as a “provision or workplace policy that bars an employee from accepting money or a thing of value from a person during the employee’s employment with the employer because the employer reasonably believes [it will] cause the employer to (A) conduct business in an unethical manner or (B) violate applicable [laws].” In other words, the Bill allows an employer to prohibit its employees from working for another person or organization that the employer reasonably believes would create a conflict of interest in operating the employer’s own business, but only provided the conflict would cause the employer to operate unethically or violate the law.

Confidentiality Provision

As enacted, the ban on non-compete agreements does not extend to confidentiality provisions. The Act defines confidentiality provisions as those that restrict an employee “from disclosing the employer’s confidential, proprietary, or sensitive information, client list, customer list, or a trade [secret].” The Bill would broaden this definition to include confidentiality provisions that prohibit employees from both disclosure and use of the protected information.

Notice Requirement

Finally, the Act requires employers to provide employees with notice of the non-compete ban within ninety calendar days of the applicability of the Act, seven calendar days after the date of hire, or fourteen calendar days after the employee submits a written request for the notice. The Bill would help employers satisfy part of this notice requirement by adding the Act’s required language to the model D.C. Notice of Hire Form, which employers already must give to new employees, as well as to employees promoted or given pay increases, under the Wage Theft Prevention Amendment Act of 2014. It is unclear, however, whether the Bill will require the same language to be included on the Notice of Hire Form for temporary staffing firms. Further, employers will still need to provide the required notice language in some other format to current employees after the Act becomes applicable, or upon an employee’s written request.  The separate notice requirement for medical specialists remain unchanged.

Additional Changes Expected

The Bill remains pending before the Committee on Labor and Workforce Development (the “Committee”) and, therefore, is subject to change. On July 14, 2021, the Committee held a public hearing to discuss the bill and to hear from industry leaders regarding their concerns. At the hearing, critics expressed concern with the Act’s restrictions on simultaneous employment (e.g., moonlighting), and pressed for an amendment to allow employers to prevent employees from working simultaneously for a direct competitor (e.g., banning a professional baseball player from playing for two teams). Additionally, critics asked that the Bill permit post-employment restrictions on key employees, like senior executives or employees with access to sensitive information. Business leaders argued that absent such restrictions, there is less incentive for employers to train employees who have the ability to leave and join a competitor at any time.

In an effort to balance employee mobility with creating a “friendly and sensible” environment for employers, Councilmember Brooke Pinto suggested permitting the use of targeted non-competes for certain categories of employees. At the hearing, Councilmember Pinto proposed amending the Act to permit the use of post-employment restrictions on employees making more than $80,000 per year and limiting the length of the non-competes to six months or less. Under Councilmember Pinto’s proposal, employers would be required to pay an employee a pro rata fee if the non-compete keeps the employee from a job entirely.  Councilmember Pinto’s proposal also would allow the prohibition of moonlighting if simultaneous employment would cause confidential information to be exposed to or used by a competitor.

Likely Delay in Implementation

At the hearing, councilmembers also discussed the timing of the ban. As we previously explained, the District’s non-compete ban is not applicable until the Council appropriates money to fund the law.  During her opening statement, Councilmember Silverman confirmed that she has proposed funding for the Act in the Fiscal Year 2022 Budget, which the Council is currently deliberating. However, and more importantly for employers, Councilmember Silverman also recommended the Act’s implementation date be pushed back to April 2022 to give the Council time to react to the business community’s concerns and to possible federal action on non-compete agreements, which has been advocated by President Biden. The Fiscal Year 2022 Budget Support Act, released since the July 14 public hearing, includes a provision that would change the Act’s applicability date to April 1, 2022.

District employers should continue to prepare for the implementation on the ban on non-compete acts, with the understanding that the implementation date will likely be postponed and that the contours of the ban may change.  We will continue to monitor and provide updates as the Bill continues through the legislative process.

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Alexandria Adkins, a 2021 Summer Associate (not admitted to the practice of law) in the firm’s New York office, contributed to the preparation of this post.

As featured in #WorkforceWednesday:  This week, we look at how COVID-19 restrictions are tightening to curb the spread of the Delta variant, how NYC is ramping up enforcement of its ban-the-box law, and how Biden’s budget could impact employers.

COVID-19 Restrictions Tighten

The rapid spread of the COVID-19 Delta variant has many in the United States talking about the potential of a second lockdown. The Biden administration is now mandating vaccines or strict testing for federal workers, and the Centers for Disease Control and Prevention is recommending that vaccinated people in high-risk areas wear masks indoors. Learn more.

New York City Fair Chance Act Amendments Go Into Effect

Employers in the Big Apple are revamping their hiring procedures to comply with new amendments to the city’s Fair Chance Act.

Biden Budget Proposes Increased Funding for Worker Protections

President Biden’s $6 trillion 2022 budget proposal features the American Jobs Plan, which includes infrastructure-related projects Congress is already moving forward on, and the American Families Plan. Both contain labor and employment initiatives. Read more.

See below for the video and podcast links. For Other Highlights and more news, visit http://www.ebglaw.com/eltw220.

Video: YouTubeVimeo.
Podcast: Apple PodcastsGoogle PodcastsOvercastSpotifyStitcher.

President Biden’s $6 trillion 2022 budget proposal focuses on worker protections—including the American Jobs Plan and the American Families Plan. Both of these plans contain labor and numerous employment initiatives. The budget proposes increased funding for the Department of Labor (“DOL”), the Equal Employment Opportunity Commission (“EEOC”), and the National Labor Relations Board (“NLRB” or “Board”).

The 2022 budget calls for $2.1 billion, an increase of $304 million, in DOL’s worker protection agencies. Over the past four years, those agencies have lost approximately 14 percent of their staff, limiting DOL’s ability to perform inspections and conduct investigations.

For example, staff losses at the Occupational Safety and Health Administration (“OSHA”) and the Mine Safety and Health Administration have strained resources, particularly amid the increased threats to workplace health and safety created by the pandemic. The 2022 budget provides an increase to OSHA of more than $73 million to help OSHA rebuild its rulemaking and enforcement capacity, expand its whistleblower protection program, and increase its outreach and compliance assistance. OSHA hopes to double the number of inspectors by the end of President Biden’s first term—a significant increase of 207 new enforcement positions and of 63 for the whistleblower programs.

At DOL’s Wage and Hour Division (“WHD”), the 2022 budget increases funding by more than $30 million. This would be used to support WHD’s efforts to review worker misclassification issues, along with enforcing other regulated areas, such as prevailing wages and family and medical leave.

Finally, the 2022 budget requests a $35 million increase in funding for the Office of Federal Contractor Compliance Programs (or “OFCCP”), the chief regulator for federal contractors. The request restores resources to oversee and enforce the equal employment obligations of federal contractors, including protections against discrimination based on race, gender, disability, gender identity, and sexual orientation. The 2022 budget request includes funding for an additional 175 staff positions for enforcement.

The EEOC proposed budget increases the agency’s funding level by 10 percent to approximately $446 million. The budget calls for the EEOC to also play a role in the worker misclassification program being spearheaded by DOL and would increase the EEOC’s total full-time staff to about 2,260 by adding additional lawyers, investigators, and mediators.

The NLRB’s requested budget of $301.9 million is a 10.1 percent increase from fiscal year 2021, and it is intended to fortify its workforce after downsizing during the Trump administration. Eighty-one percent of the requested budget is allocated for annual staff compensation, including 108 new field office positions and 13 new Board-side office staff members to maintain adequate staffing among mission support.

While the final budget numbers are not complete until approved by Congress, the Biden administration’s emphasis on greater worker protection, enforcement, and regulatory oversight could not be clearer.

We will continue to monitor budget developments in Washington.