Policy Matters Newsletter - October 14, 2022

Seyfarth Hosts Government Relations Policy Summit.  Aaand we are back to our regular scheduled programming. On September 30 2022, Seyfarth hosted an in-person policy summit that included four panels and a keynote conversation, discussing what the next two years of this administration portend:

1. Use of and Limits to Executive Action in the L&E Space. This panel included Rajesh D. Nayak, Assistant Secretary for Policy, U.S. Department of Labor; Emily M. Dickens, Chief of Staff, Head of Government Affairs and Corporate Secretary, Society for Human Resource Management; Harry Litman, Journalist, Professor, Lawyer; the panel was moderated by Scott P. Mallery, Counsel, Seyfarth Shaw.
2. Focus on Labor Relation This panel included Evan Armstrong, Vice President, Workforce, Retail Industry Leaders Association (RILA); Mark Codd, Vice President, Managing Director, IRI Consultants; and was moderated by Marshall B. Babson, Counsel, Seyfarth Shaw.
3. Immigration and the Workplace. Can we meet the needs of U.S. Employers? This panel included Doug Rand, Senior Advisor to the Director of U.S. Citizenship and Immigration Services (USCIS); Stuart Anderson, Executive Director of the National Foundation for American Policy; Chenai Kirkpatrick, Director, Global Policy & Regulatory Affairs, Society for Human Resource Management; and was moderated by Leon Rodriguez, Partner, Seyfarth Shaw.
4. Employment Discrimination. This panel included Jocelyn Samuels, Vice Chair, U.S. Equal Employment Opportunity Commission (EEOC); Marc Freedman, Vice President, Employment Policy, U.S. Chamber of Commerce, Annette Tyman, Partner, Seyfarth Shaw; the panel was moderated by Lawrence Z. Lorber, Counsel, Seyfarth Shaw.
5. The final event from the summit was a keynote conversation between Seema Nanda, Solicitor of Labor, U.S. Dept. of Labor, and Scott Hecker, Senior Counsel, Seyfarth Shaw.

The summit proved to be an excellent event, only minimally affected by the arrival of Hurricane Ian. For those who were not able to attend either in-person or remotely, a recording of the various panels and keynote conversation can be found by clicking the embedded links above. These links are only temporally available, so get in while the gettin’s good.  

(**Please be aware that this was a no press event and that the content shared is confidential and only for the personal purposes of our registered attendees to this event and clients. The links will be active for 7 business days.)

DOL — Finally — Releases NPRM Regarding Independent Contractors. One of the principal topics discussed during the first panel held during our recent summit on executive action was federal agency rulemaking. Fortuitously, this Tuesday, the DOL made available for public consumption its proposed final rule regarding classification (“IC”) of workers as either independent contractors or employees under the Fair Labor Standards Act (“FLSA”). We have been following and summarizing this issue since the Biden administration chose to rescind the rule promulgated by the DOL under the former administration. The importance of this new rule to employer community should not be understated.

So, since it is important, what would the rule do? Well, a great place to start is Seyfarth’s excellent piece summarizing the rule.

Besides that, what are some of the highlights? Well, unlike the rule promulgated by the Trump administration, which provided for a more straight-forward legal test for classification, the new rule is essentially a return to a more ambiguous totality-of-the-circumstances. The relevant factors to consider include: (1) The worker’s opportunity for profit or loss depending on managerial skill; (2) Investments made by the worker and the employee; (3) Degree of permanence of the work relationship; (4) Nature and degree of the business’s control over the worker; (5) Extent to which the work performed is an integral part of the employer’s business; and (6) Whether the worker uses specialized skills in performing the work. Under the proposed rule, no one factor would be dispositive or entitled to predetermined weight.

That the DOL is attempting to place a thumb on the scale in favor of employee classification is apparent from the guidance issued along with the new rule. For example, as it relates to the first factor, the proposed rule specifically notes that “decisions by a worker that can affect the amount of pay that a worker receives, such as the  decision to work more hours or take more jobs, generally do not reflect the exercise of  managerial skill indicating independent contractor status under this factor.” Or, as to the fourth factor, the DOL notes that even control required by outside factors, such as “complying with legal obligations, safety standards, or contractual or customer service standards may be indicative of control” and therefore points to an employee classification.

It is well known that the majority of the employer community was pleased with the Rule promulgated by the Trump administration, and preferred that rule to the one recently promulgated. That being said, the proposed rule does offer somewhat of a measured approach that is not as daunting to the employer community as it could have been.

California Legislative Session Wraps Up, And There Are Some Doozies. September 30, 2022 marked Governor Newsom’s last day to either approve or veto bills passed by the Golden State Legislature. He did not veto any of the biggest employment measures, and some of the approved measures carry some hefty obligations. See Seyfarth’s excellent summary of those measures that passed and those that did not. Headlining the measures signed by the Governor is SB 1162, summarized By Seyfarth here, which expands existing requirements that employers with 100 or more employees provide the California Civil Rights Department (CRD, f/k/a the DFEH) with specified EEO-1 pay data. The new law also requires employers to submit a second report if they have 100 or more employees hired through labor contractors (provided at least 1 employee is in CA).  Another remarkable measure signed by the Governor was AB 2188, summarized by Seyfarth here, which amends the FEHA to make it an unlawful employment practice to discriminate against an applicant or an employee because of the individual’s use of cannabis off the job and away from the workplace, or an employer-mandated drug test that reveals the individual has nonpsychoactive cannabis metabolites in their hair, blood, urine, or other bodily fluids.  A blow to the employer community was the Governor’s veto of SB 1262, which would have required publicly accessible electronic indexes of defendants in criminal cases to permit searches and filtering of results based on a defendant’s driver’s license number or date of birth.

Evidentiary Substantiation Of The EEOC’s Unanticipated Silence. Recently in this space, we discussed the lack of staffing, and general lack of action out of the EEOC. As Seyfarth summarized here, that lack of staffing translated into this fiscal year closing with a strikingly low number of filings from the EEOC, which begs the question: will this filing drought continue?  We do not expect such a dearth of EEOC action to persist — with a Democratic majority inevitably to come, a generous budget increase, and several new strategic objectives planned for this FY 2023, a busy year may very well lie ahead.

Self Service Kiosks Are The Future, But What About The ADA? This author grocery shops at Safeway, and I cannot recall the last time I went through a check-out line, almost always choosing the self-checkout kiosk option. The economic and practical utility of such kiosks can’t be understated. But as discussed during our recent panel, the use of AI and self-service kiosks has abundant potential for unknowing discrimination.  For example, these kiosks can be impossible to use by people who are blind or persons who use scooters and wheelchairs. As such, as Seyfarth summarized here, the U.S. Access Board recently issued an Advanced Notice of Proposed Rulemaking (“ANPRM”) for self-service kiosks. The ANPRM notes that the accessibility of similar equipment, such as ATMs and fare machines, is already covered in non-public accommodation contexts. As such, The ANPRM seeks comments regarding e.g., capabilities, functions, or other objective criteria that should define the types of devices covered as SSTMs or self-service kiosks and whether requirements for ATMs and fare machines in the current ADA and ABA Accessibility Guidelines should be updated.

NYC: First In Time To Tackle Bias in AI. Speaking of the potential of discrimination in the use of AI, On September 23, 2022, as Seyfarth summarized here, New York City’s Department of Consumer and Workplace Protection (“DCWP”) released the highly anticipated proposed rules implementing Local Law Int. No. 1894-A, which regulates the use of automated employment decision tools (“AEDT”) in hiring and promotion decisions.  The new Rule, which will take effect on January 1, 2023, conditions the use of AEDTs by employers and employment agencies on their compliance with certain requirements, such as performing bias audits and  furnishing notifications to candidates and employees. For those interested in submitting public comments on the proposed rules to DCWP, the deadline is October 24, 2022. Comments can be submitted through the NYC Rules website or by email to Rulecomments@dcwp.nyc.gov. DCWP will hold a public hearing on the proposed rules on Monday, October 24, 2022 at 11:00 a.m. ET which is accessible by phone and videoconference.

Warehousing Operators Beware: OSHA - New Emphasis Program. Federal OSHA has continued to shift its enforcement priorities toward warehouses,  logistics and e-commerce. As Seyfarth summarized here, OSHA’s Region III — which includes Pennsylvania, Delaware, West Virginia, and the District of Columbia — recently issued a Regional Emphasis Program (REP) instruction (CPL 2022-01 (CPL 4)) for Warehousing Operations that “establishes policies and strategies to be followed when scheduling and conducting OSHA programmed regional emphasis inspections of warehousing, storage, and distribution yard operations.”  OSHA explained that “with the rapid growth of e-commerce, the warehousing industry has significantly expanded. This emphasis program will address hazardous conditions these workers continuously face every day.” The emphasis program is scheduled to continue through August 3, 2027.

More Of The Great Loosening: NY Leads The Way. The nation has seen a trend of restrictions instituted to protect the populace from COVID-19 falling consistently over the past year. New York is the latest to permit those guardrails to lapse. Specifically, as Seyfarth noted here, Mayor Adams of NYC has announced that the private-sector employee vaccination mandate will become optional as of November 1, 2022. In lieu of the mandate, the City is asking businesses to encourage their employees to get vaccinated and stay up-to-date on boosters.  Moreover, as Seyfarth noted here, New York state has also updated its COVID-19 guidance to come into line with the CDC’s newest recommendations curtailing quarantine requirements.

Final Rule Issues Intended To “Fix” Obamacare “Family Glitch.” Since its inception, so-called “Obamacare” has suffered from one consistent loophole that kept families from qualifying for subsidized health insurance when one member received coverage from their employer that was considered affordable — even if the cost of covering the entire family was unaffordable. To fix the Glitch, the Department of the Treasury has issued a final rule that amends the regulations regarding eligibility for “Obamacare” subsidies to provide that affordability of employer-sponsored minimum essential coverage for family members of an employee is determined based on the employee’s share of the cost of covering the employee and those family members, not the cost of covering only the employee. This will, ostensibly, fix the glitch. The Kaiser Family Foundation estimates that more than five million people are affected by the glitch.