Seyfarth Policy Matters Newsletter - May 22, 2020

An Exercise in Listening: Bipartisan Effort to Revamp the PPP. As we have noted here, here, and here, the PPP is simultaneously the most used and the most contentious provision in the CARES Act. Members of Congress have finally heard enough complaints from their small business-owner constituents on the ills and anxieties surrounding their engagement with the PPP and, last Friday, bipartisan legislation - H.R. 6886 - was introduced that would make it easier for the government to forgive emergency loans to small businesses. The House plans to hold a vote on the legislation as early as next week. Joining forces in drafting and sponsoring the legislation, dubbed the “Paycheck Protection Program Flexibility Act,” are Representative Chip Roy (R-TX) and Representative Dean Phillips (D-MN). According to their jointly issued May 11 press release, the legislation seeks to achieve the following: Allow loan forgiveness for expenses beyond the 8-week covered period; eliminate restrictions limiting non-payroll expenses to 25% of loan proceeds; eliminate restrictions that limit loan terms to 2 years; ensure full access to payroll tax deferment for businesses that take PPP loans; and extend the rehiring deadline to offset the effect of enhanced unemployment insurance.

Roundup of Federal Agencies’ Guidance for Employers. Various federal agencies have recently issued additional COVID-19 guidance for employers in a variety of industries. Some of this guidance applies to workplaces and employers generally, while others target specific industries, such as bars and restaurants, manufacturing, child care, schools, and mass transit. This past Sunday, the CDC quietly published its 60-page Activities and Initiatives Supporting the COVID-19 Response and the President’s Plan for Opening America Up Again. It covers not just nonessential businesses, but also offers suggestions on contact tracing and best practices for schools, places of worship, and public transportation. On Monday, the Occupational Safety and Health Administration (OSHA) published its Guidance on Preparing Workplaces for COVID-19. Last Tuesday, May 12, the Federal Emergency Management Administration (FEMA) released its Exercise Starter Kit with sample documents organizations can use to conduct their own planning workshop to navigate the complexities of returning to full operations during the coronavirus pandemic. And on May 7, the Equal Employment Opportunity Commission (EEOC) published updates to its Technical Assistance Questions and Answers, What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws.

“Principles of Fairness”: President Trump Directs Agencies to be Fair in Dealing with Employers Acting in Good Faith. On Tuesday, President Trump signed an Executive Order (“Regulatory Relief to Support Economic Recovery”) that contains a wellspring of potential to transform the enforcement landscape across a variety of industries. The governing philosophy of the Order seems to be the directive to agencies to “consider the principles of fairness in administrative enforcement and adjudication (at §6),” while going on to enumerate 10 such principles. In substance, the Order directs agencies to, among other things: “identify regulatory standards that may inhibit economic recovery,” and then consider an array of responses “for the purpose of promoting job creation and economic growth (at §4).” The Order also directs agencies to “consider whether to formulate, and make public, policies of enforcement discretion that . . . decline enforcement against persons and entities that have attempted in reasonable good faith to comply with applicable statutory and regulatory standards, including those persons and entities acting in conformity with a pre-enforcement ruling (at §5).” The essence of the Order is to instruct the agencies to take a common sense and balanced approach to enforcement in these unsettled times, rather than a heavy handed, “gotcha” philosophy. Indeed, one of the most notable provisions of the Order, §6(j), states that “Agencies must be held accountable for their administrative enforcement decisions,” implicitly injecting a word of caution to enforcement officials, similar to the principles underlying the Equal Access to Justice Act, to truly evaluate the merits of cases before proceeding.

Build, Buy and Play: New Jersey and California Give Green Light for Limited Resumption of Business. Last week we discussed Governor Cuomo’s announcement that four upstate regions of New York State were ready to reopen this past Saturday. Relatedly, in New Jersey, citing a decrease in the rate of reported new cases of COVID-19, the Governor has now taken measures, through executive orders, that will: (1) lessen the restrictions on non-essential construction projects and non-essential retail businesses (Executive Order 142); (2) allow residents to visit public and private beaches, boardwalks, lakes, and lakeshores in the State (Executive Order 143); (3) allow elective surgeries and invasive procedures to resume (Executive Order 145); (4) reopen charter fishing and watercraft rental businesses (Executive Order 146); and (5) reopen an array of open-air recreational sporting venues, such as golf driving ranges, batting cages and shooting ranges (Executive Order 147). Each of the Orders contain specific restrictions on reopening due to the ongoing risk of community spread of COVID-19. See Seyfarth’s in-depth Legal Update discussing the Orders. Concurrently, NJ state legislators began to clamor for an easing of restrictions. Last Friday, State Senator James W. Holzapfel (R) introduced SCR113, urging the Governor to safely reopen non-essential businesses. Mirroring that resolution in substance, Assemblyman Gregory P. McGuckin (R), of an almost identical geographic district, introduced ACR178 last Friday. On Monday in California, after consistently issuing parallel shelter-in-place orders, the counties of San Francisco, Alameda, Contra Costa, Marin, together with the City of Berkeley, announced a joint effort to reopen retail businesses for curbside operations and related retail supply chain businesses on or before this past Tuesday, May 19. Santa Clara County distanced itself from the group, announcing that it will allow these businesses to reopen beginning Friday, May 22. San Mateo County will allow certain services which do not require close customer contact to resume operations beginning this past Monday, May 18, in addition to curbside retail pick-ups and Retail Supply Chain Businesses. See Seyfarth’s Legal Update exploring the orders. Meanwhile, Oakland, San Francisco, and San Jose all passed emergency paid sick leave ordinances mandating employers to provide supplemental leave to employees unable to work as a result of the COVID-19 public health emergency. See Seyfarth’s Legal Update discussing the ordinances.

NY and NJ State Legislation Aimed to Empower Essential Employees Introduced. On May 11, New York State Sen. Brad Hoylman (D) introduced a bill, S8309, that would allow workers to be eligible for unemployment benefits if they left a job because “the employer maintained or refused or failed to cure a health or safety condition that made the environment unsuitable.” Governor Andrew Cuomo’s office is currently reviewing the legislation, whose backers include the New York State AFL-CIO, The Legal Aid Society and the National Employment Law Project. On May 15, in New Jersey, Assemblywoman Valerie Vainieri Huttle (D) introduced Bill Nos. A4156 and A4153, which, among other things: “permits health care professionals to refuse to perform certain services onsite at certain times during ongoing coronavirus disease 2019 pandemic” (No. A4156 at §2); and amends the “Disqualification for Benefits” section of the NJ Code to specify that, for the sake of being eligible for unemployment benefits, “good cause” for voluntarily leaving work includes being compelled to work in circumstances that violate health and safety standards or otherwise jeopardize health. . . .” (No. A4153 at Statement).

DOL Final Rule Allows Bonuses for Workers Paid Using Fluctuating Workweek Method. On Wednesday, the U.S. Department of Labor (“DOL”) announced a Final Rule that allows employers to pay bonuses or other incentive-based pay to salaried, nonexempt employees whose hours vary from week to week (“fluctuating workweek”). Although a similar rule was proposed in 2008, the DOL ultimately did not adopt it into its final rule iteration in 2011. The COVID-19 pandemic supplied the impetus for the DOL to bring the fluctuating workweek method of calculation, payment of bonuses, and premiums into alignment and to ease return to work for employees: “Some employers are likely to promote social distancing in the workplace by having their employees adopt variable work schedules, possibly staggering their start and end times for the day. This rule will make it easier for employers and employees to agree to unique scheduling arrangements while allowing employees to retain access to the bonuses and premiums they would otherwise earn.” Substantively, such payments must generally be included in the calculation of the regular rate unless a statutory FLSA exemption applies.

Senate Labor Committee to Vote on EEOC and NLRB Nominations. On June 3, the Senate Labor Committee is scheduled to hold an executive session for committee members to vote on three Equal Employment Opportunity Commission (EEOC) nominations: those of Keith Sonderling, Andrea Lucas, and Jocelyn Samuels; as well as two National Labor Relations Board (NLRB) nominations: Marvin Kaplan and Lauren McFerran. The nominations have been on the docket since March 16 of this year.

OSHA Requires Most Employers to Find if Virus is Work-Related. As we noted recently, many states have legislated protections for essential workers, including a rebuttable presumption that the contraction of COVID-19 by an essential employee is work-related for purpose of claiming workers’ compensation benefits. On Tuesday, OSHA jumped into the Agency guidance fray, releasing a new policy impacting all employers who are required to keep OSHA injury and illness logs, in that they must now make their own determination — with guidance from OSHA — whether a worker’s contraction of the virus was in-fact job related. Previously, OSHA mandated only that health-care employers, corrections facilities, and emergency-response providers were required to make that determination. The Agency notes that “recording a COVID-19 illness does not, of itself, mean that the employer has violated any OSHA standard.” The confluence of these two mandates — state-mandated presumptions of workplace contraction of the virus for workers’ compensation purposes, and OSHA’s investigatory framework for determining whether COVID-19 was indeed contracted at the workplace — may produce heated litigation down the road.

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The Policy Matters newsletter is a publication of Seyfarth’s Government Relations & Policy Practice and is authored by Randy Johnson, Scott Mallery, and Samuel P. Sroka.  Randy Johnson is a Partner in Seyfarth’s Washington, DC office and chairs the firm’s Government Relations and Policy Practice Group (GRPG); Scott Mallery is Counsel in Seyfarth’s Sacramento, CA office; and Samuel P. Sroka, J.D. is a Proposal Manager in Seyfarth’s New York City office.