Seyfarth Policy Matters Newsletter - July 31, 2020

Senator McConnell Unveils Controversial New Stimulus Plan; $2 Trillion Gulf Remains.  This week, the Senate GOP released the details of an approximately $1 Trillion stimulus package, the so-called HEALS Act, the Senate Republican response to the already passed HEROES Act, which Seyfarth summarized here. What the measure leaves out is equally as remarkable as what is in the measure, such as the absence of the President’s pet payroll tax cut, new funding for state and local governments, and hazard pay for essential front-line workers. As explained in more detail below, the measure does, however, include a liability shield to protect businesses from coronavirus-related lawsuits; another round of direct stimulus payments; a new round of funding for the Paycheck Protection Program, as well as more money for emergency business loans; and a reduced extension of emergency federal unemployment benefits. As readers of this newsletter are assuredly very well aware, the liability shield and reduced unemployment benefits are the most controversial sticking points, and may ultimately be deal breakers as Republicans and Democrats try to find a middle ground in the $2 Trillion gorge between the HEROES Act and the HEALS Act.

The Liability Protection is Strong With You: Stimulus Bill Would Provide a Powerful Shield Against Lawsuits.  In what is probably the most controversial component of the package, plaintiffs seeking to recover for COVID-19 exposure in the work place must show by a heightened standard of clear convincing evidence that: (1) the defendant did not make reasonable efforts to comply with the government standards, (2) the defendant engaged in gross negligence or willful misconduct, and (3) actual exposure to coronavirus caused the injury. Practically speaking, this heightened standard will make it exceedingly difficult to press a COVID-19 claim against an employer. The bill also makes clear that reasonable efforts to comply with any set of governmental guidance fits within the protection’s rubric, even where other such standards conflict. For a more thorough summary of available defenses for compliance with such standards, see Seyfarth’s piece here. For the federal litigators reading this newsletter, the bill would also establish exclusive federal-court jurisdiction over all COVID-19-related claims against any businesses operating under the interstate or foreign commerce clauses of the Constitution. Page 55, Subtitle D, Section 181 of the bill contains the liability protections related to federal employment laws for employers who follow government guidance. Section 184 of the same Subtitle would also make important changes to employer WARN Act requirements, providing that the COVID-19 national emergency would provide an additional exception to WARN notice requirements.

Setting the Anchor: GOP Proposal on Unemployment Insurance.  The bill would extend, from July 31 to October 5, and reduce, from $600 to $200, the Federal Pandemic Unemployment Compensation program established under the CARES Act. After that, and until December 31, 2020, the payment would be an amount that, when combined with the state’s base unemployment compensation, equals 70% of lost wages, and would be capped at $500 a week. This would presumably provide states sufficient time for their respective unemployment departments to prepare for calculating 70% of employees’ lost wages.

Tax-Related Provisions of the Heals Act.  The measure would also allow businesses to deduct 100% of the cost of food or beverages purchased from a restaurant for business meals until January 1, 2021. The deduction is currently available for 50% of meal expenses.  The measure includes an expansion of the Paycheck Protection Program, including a streamlined forgiveness process and a provision to permit some smaller businesses to take out second PPP loans. Finally, the bill also contains a number of tax-related provisions: expanding the refundable payroll tax credit; establishing a 50% refundable payroll tax credit for workplace safety expenses; expanding the Work Opportunity Tax Credit to include employers that hire individuals receiving coronavirus-related unemployment benefits. Importantly, if the measure passes, it would also include a provision allowing gig workers to continue to collect full unemployment insurance without changing their worker classification from independent contractor to employee, and all the employer obligations that classification entails. Of course, in California, AB 5, and all its progeny, which Seyfarth has reported on extensively, would unduly complicate this measure.

Teetering on the Unemployment Insurance Cliff: McConnell Signals Willingness to Compromise on Extending Impending Deadline.  On Wednesday, Senator McConnell (D-KY) signaled hope that a deal on unemployment insurance could be reached by the time this newsletter issues, at the very least through a stand-alone bill.  President Donald Trump and Treasury Secretary Steven Mnuchin also hinted Wednesday they were willing to reach a short-term agreement. However, Democrats reportedly rejected a stand-alone offer to extend enhanced unemployment at the current $600 a week for four months; the White House then rejected the Democrats counter to extend the current amount through the first quarter of 2021. This negotiation demonstrates a modicum of movement, but will that be enough to get any kind of stimulus over the legislative finish line? According to recent developments, the White House has announced it is willing to proceed without a liability shield, undercutting Senator McConnell’s position that a stimulus package without a liability shield would be a non-starter. An agreement is still not likely before the program expires tonight, but crazier things have happened in D.C. Meanwhile, 2,800 miles West, Governor Gavin Newsom has formed a strike team directed to “create a blueprint for improvements” to the system to improve on inefficiencies — the extent to which were mostly unknown until the pandemic hit.

WARNing: NYS WARN Act Amplification Passes Both Houses.  In swift and nearly unanimous action, the NYS Senate passed Bill No. S8748 last Thursday after its sister bill, A10674, passed the Assembly the day prior, also nearly unanimously. As discussed previously, the bill was originally introduced into the Assembly by Democrat Steven Otis in late June. The bill requires employers with WARN Act notice obligations to notify affected communities and school districts, in addition to other WARN obligations, to ensure that these communities are aware of mass layoffs, plant closings, and major relocations. The genesis of the bill lay in the problems caused by the sudden closure of the Doral Arrowwood resort in Westchester County, NY. The surrounding communities, which were financially tied to the resort, were blindsided when they learned of the closure in the press.

Massachusetts Joins NY, NJ and CT in Issuing Mandatory Quarantine Order on Travelers from Hot Spots.  Last Friday, Massachusetts Governor Charlie Baker issued COVID-19 Order No. 45 adopting a mandatory 14-day quarantine for travelers arriving in the state. The effective date of the Order is this coming Saturday, August 1, 2020.  Seyfarth’s Employment Law Outlook blog recently noted that the state’s Department of Public Health (DPH) issued updated guidance, clarifying how out-of-state travelers are expected to comply with the Order. In general, the sector-specific guidelines were updated to emphasize an employer’s responsibility to strongly discourage travel to high-risk locations and ensure that employees engaged in business-related travel were aware of and complied with the Order. Meanwhile, New York, New Jersey and Connecticut announced on Tuesday (Cuomo, Murphy, Lamont) that they’ve added travelers from three additional states, as well as Washington, D.C. and Puerto Rico, bringing the original list of eight states included in the joint incoming Travel Advisory to 34, representing nearly 70% of the states in the Union. Illinois, Kentucky and Minnesota were added as they have met the metrics to qualify for the Travel Advisory. Travelers who do not comply with Massachusetts’ rules may be subject to a civil fine of $500 per day. New York is imposing a $2,000 fine on travelers who leave its airports without completing a form that states they will self-quarantine, while travelers to Connecticut are subject to a $1,000 fine for failing to comply with the advisory. New Jersey, however, is not imposing any fines at this time.

Farewell, Congratulations, and Godspeed, Fearless Leader.  This week, we would like to officially wish a fond farewell to Randel K. Johnson, who will be assuming a position on the U.S. Department of Labor Administrative Review Board. The Board issues final agency decisions after review or on appeal of matters arising under a wide range of employee protection laws. Randy has been an integral part of Seyfarth’s Government and Policy Relations Practice Group and its publication, the Policy Matters newsletter. We wish you the best and thank for your tireless efforts, and remarkable thought leadership.

 

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The Policy Matters newsletter is a publication of Seyfarth's Government Relations & Policy Practice and is authored by Randy Johnson and Scott Mallery. Randy Johnson is a Partner in Seyfarth's Washington, DC office and chairs the firm's Government Relations & Policy Practice Group (GRPG); Scott Mallery is Counsel in Seyfarth's Sacramento, CA office.