Legal Updates – June 2020

News

Supreme Court rules in favor of LGBT workers.

The Supreme Court issued a landmark ruling on June 15, 2020, that protects workers from discrimination in employment on the basis of their sexual orientation and gender identity. The Court found that within Title VII’s prohibition on sex discrimination, includes a prohibition against discrimination based on sexual orientation and gender identity. This means that LGBTQ Americans have new employment rights based in federal law, equal to the protections against discrimination based on race, religion, national origin, and sex. Many states, including Colorado, already have anti-discrimination laws based on sexual orientation and gender-identity, but this ruling now makes this type of discrimination illegal in all states. You can read more about the ruling in this NPR article here.

Lawful Off-Duty Conduct Reminders:

As the nation sees protesting in major cities, with many people showing up to raise awareness for various causes, it is important to make sure employers are aware of lawful off-conduct laws. In Colorado, an employer may not terminate an employee due to the employee’s engaging in any lawful activity off premises during non-working hours. This law was enacted to allow employees the autonomy and freedom to choose how they live outside of work-which includes participating in unpopular, but otherwise lawful activities. While normally this would include political protests, currently protests are met with varying degrees of legality and controversy.

An employer may terminate an employee for lawful off-duty conduct if: (1) it relates to a bona fide occupational requirement or is reasonably and rationally related to the employment activities and responsibilities of a particular employee or a particular group of employees, rather than to all employees of the employer; or (2) it is necessary to avoid a conflict of interest with any responsibilities to the employer or the appearance of such a conflict of interest.

For public employers, employees have their constitutional right to engage in free speech outside the workplace, while not operating in their official capacities.

Given the current socio-political climate, an employer should carefully consider how it responds to its employee’s off-duty conduct, as any negative repercussions could implicate this off-duty conduct law or anti-discrimination laws.

Virus Tracking in the Workplace:

Slowly, workers are returning to the workplace, and although the spread of COVID-19 has slowed down throughout the country, employers still have a myriad of concerns to work through-one of which is keeping its workforce safe and healthy.

Public health officials have stressed the importance of social distancing and contact tracing, especially as the country gradually reopens. While these methods can provide some help in combating the virus, it comes with its risks. Contact tracing is the method of identifying an individual with the Coronavirus, isolating that individual, and working backwards in time to determine who that individual has been in contact with and isolate those other individuals. Tracking technology that can aid in contact tracing and social distancing is available to pinpoint and track a person’s location using GPS signals or other methods, usually through a person’s phone.

Other methods employers may use include screening questions to determine an employee’s past exposure history or temperature checks.

As employers implement these new tactics and guidelines to prevent the spread of COVID-19 in the workplace, employers should also consider some complications that could arise:

    1. Employers should update their policies or issue addendums to outline expectations around virus tracking in the workplace-especially if the employee is required to use their personal phones during work hours to accomplish contact tracing. Additionally, employers should consider how/if they need to reimburse employees for expenses related to these contact tracing methods.
    2. Employers should also consider whether a nonexempt employee is required to check-in after their normally scheduled work hours in order to aid in contact tracing and social distancing. Employers must make sure they are compensating employees for all work performed, including checking in through mobile applications.
    3. Employers should also be careful in adopting strategies that do not violate employee’s privacy. “In general, employers do not become covered entities under Health Insurance Portability and Accountability Act [HIPAA] merely by implementing a mobile app that utilizes employee health information. But if the employer uses a third-party app to gather and assess medical information for purposes of testing through an employer-sponsored group health plan, employee assistance program, or onsite medical clinic that is shared with the employer, the employer should consider any applicable obligations under HIPAA, including business associate agreements and HIPAA privacy notices.

Health apps that fall outside HIPAA requirements likely would be covered under the Federal Trade Commission Act’s Unfair and Deceptive Acts or Practices and the FTC’s Health Breach Notification Rules[7] and any state consumer protection laws, including data safeguards and breach reporting and notification requirements. Employers must continue to monitor legislation in this space, as New York recently proposed a law regarding contact tracing, and Congress has introduced similar measures.”[1]

The Latest PPP Updates that Impact Employers

The COVID-19 pandemic has created a need for new and flexible employment-related legislation to support businesses and entrepreneurs that face an uncertain future. One example of recent legislation is the Payroll Protection Program (PPP). The PPP was part of the $2 trillion Coronavirus Aid, Relief, and Security Act (CARES Act) and it has continued to evolve. The PPP was expanded on June 5th, when both houses of Congress passed the Paycheck Protection Program Flexibility Act (PPPFA). This new legislation supports employers and businesses by reducing restrictions on how PPP money can be spent.

What Qualifies as Payroll Costs?

Borrowers should first note what is defined as a payroll cost. They include: salary, wages, commissions or tips (capped at $100K on an annualized basis for each employee); state and local taxes assessed on compensation; and costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums. Non-payroll costs include rent, utilities, or interest (not principle interest) on any debt incurred prior to February 15, 2020.

Amendment of the “75/25” Rule to “60/40”

Prior to the implementation of the Flexibility Act, 75% of a borrower’s forgiveness had to be spent on payroll costs. Now, under the Flexibility Act borrowers must spend at least 60% of PPP on payroll expenses. The remaining 40% can be spent on authorized non-payroll costs and the Borrower will still receive full forgiveness. This reduction should make it easier to for those wishing to qualify for loan forgiveness. On Monday June 8th, U.S. Treasury Secretary Steven Munchin and Small Business Administration (SBA) Administrator Jovita Caranza issued a joint statement regarding the Flexibility Act. They stated that if less than 60% of the loan forgiveness amount is used on payroll costs, the borrower will still be eligible for partial loan forgiveness.

Lengthening the Covered Period

The Flexibility Act now gives borrowers the option to lengthen its covered period to whichever is earlier: (1) 24-weeks after the original loan date; or (2) December 31, 2020. Borrowers have also been given the option to retain their original 8-week covered period. It is important to note that those who select the new longer coverage period are required to maintain employment levels and salary and wage levels during the 24 weeks.

Easing Rehire Requirements

The PPP’s main objective was to keep as many employees on payroll and ease unemployment numbers and economic struggles for business owners. Originally the PPP required employers who received a loan but laid off or fired staff to have the amount forgiven proportionally reduced due to the staff reduction. The PPP allowed for full forgiveness if employees were rehired by June 30, 2020. The Flexibility Act now extends that deadline to December 31, 2020. The Flexibility Act also adds two new exemptions that allows borrowers to treat unfilled positions as if they were filled by December 31st. But employers are required to prove, honestly, via documentation (1) an inability to rehire the same number of employees in place as of February 15, 2020, and (2) that they were unable to return to the same level of pre-COVID business before February 15, 2020.

In a new SBA report on PPP loans approved through June 6th, there is currently $131 billion remaining for PPP lending. Furthermore, the SBA in conjunction with the Treasury will issue rules and guidelines for Borrowers as well as a modified application form and loan forgiveness application. It is likely we could continue to see adjustments and updates to the PPP, especially if there is a resurgence of COVID cases and more employers face financial uncertainty. Currently, the new regulations have not updated the last day for PPP loan application approval, which remains June 30, 2020.

 

[1] Adam Forma, et al., Considerations for Employers Using Virus Prevention Tech, Law 360 (June 6, 2020), https://www.law360.com/articles/1279944/considerations-for-employers-using-virus-prevention-tech?nl_pk=5bd5b18d-6b8b-4731-9280-f9e2959259e2&utm_source=newsletter&utm_medium=email&utm_campaign=special.

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