Legal Updates – January 2021

Employers May Require COVID-19 Vaccination

On December 16, 2020, The Equal Employment Opportunity Commission (“EEOC”) issued long awaited guidance for employers regarding mandatory COVID-19 vaccines.  The guidance implies that a mandatory workplace vaccination program is permissible, provided that the employer allows for disability and religious exemptions.  There are a number of practical and legal issues employers should consider when deciding whether and how to implement a mandatory program in the workplace.

Vaccination is Not a Medical Examination.  The Americans with Disabilities Act (“ADA”) generally prohibits an employer from requiring a medical examination or making inquiries as to whether an employee is an individual with a disability or the nature or severity of a disability, unless such an examination or inquiry are both “job-related and consistent with business necessity.”  In its updated guidance, the EEOC clarifies that the vaccination itself is not a “medical examination” within the meaning of the ADA.  The EEOC reasons that an employer who administers the vaccine is not seeking information about an employee’s current health status or impairments.  Accordingly, administering a COVID-19 vaccine is not prohibited or limited by the ADA.

Other Inquiries May Be a Medical Examination.  While the administration of the vaccine is not a medical examination under the ADA, the EEOC points out that “pre-screening vaccination questions may implicate the ADA’s provision on disability-related inquiries, which are inquiries likely to elicit information about a disability.”  If pre-screening questions constituting a medical inquiry are asked of employees, the employer may ask the pre-screening questions only where they are “job-related and consistent with business necessity.”  As the EEOC explains, this means “an employer would need to have a reasonable belief, based on objective evidence, that an employee who does not answer the questions and, therefore, does not receive a vaccination, will pose a direct threat to the health or safety of her or himself or others.”

The EEOC guidance notes two exceptions to this requirement: (1) where the vaccine program is voluntary and therefore the employee’s decision to answer pre-screening questions is voluntary; and (2) when the employee receives an employer-required vaccine “from a third party that does not have a contract with the employer, such as a pharmacy or other healthcare provider.”  In the latter situation, the EEOC guidance states the ADA’s “job-related and consistent with business necessity” restriction would not apply to the healthcare provider’s pre-screening questions.

Requiring Proof of Vaccination.  The EEOC guidance also states that asking employees to show proof that they have received COVID-19 vaccines is not a disability-related inquiry under the ADA.  The EEOC explains that simply “requesting proof of receipt of a COVID-19 vaccination is not likely to elicit information about a disability.” For this reason, employers may ask for proof that an employee has received the vaccine without violating the ADA.  However, the EEOC guidance states that other questions, including asking employees why they did not receive a vaccination, may qualify as a medical inquiry under the ADA and would, therefore, be permitted only when such inquiry is “job-related and consistent with business necessity.”

Responding to Employees’ Disability-Related Concerns.  The EEOC guidance addresses how employers that mandate vaccinations should respond to employees who indicate they are unable to receive a vaccination due to disability.  The EEOC guidance states an employer may require that an individual employee “not pose a direct threat to the health or safety of individuals in the workplace,” but when such a requirement tends to screen out individuals with disabilities, “the employer must show that an unvaccinated employee would pose a direct threat due to a ‘significant risk of substantial harm to the health or safety of the individual or others that cannot be eliminated or reduced by reasonable accommodation.’”  For example, an employee who will remain working from home indefinitely may not present a direct threat to the workforce if they are not vaccinated.  Additionally, as time passes COVID-19 may not present the same threats to safety.  In its new guidance, the EEOC provides that employers should conduct an “individualized assessment” to see whether a direct threat exists.  This assessment should weigh four factors:

  • The duration of the risk;
  • The nature and severity of the potential harm;
  • The likelihood that the potential harm will occur; and
  • The imminence of the potential harm.

If an employer determines that a direct threat is posed by an employee being unable to receive a COVID-19 vaccination, the EEOC advises that an employer must explore whether a reasonable accommodation is possible.  The EEOC identifies possible accommodations to include allowing remote work or permitting an employee to take available leave under the law or the employer’s policy.  As in other situations, employers have an obligation under the ADA to “engage in a flexible, interactive process” with employees to identify potential accommodations that do not pose an undue hardship.  Appearing to recognize a “herd immunity” concept, the EEOC suggests that the “prevalence in the workplace of employees who already have received a COVID-19 vaccination and the amount of contact with others” is relevant to determining whether accommodating an unvaccinated employee poses an undue hardship.

Excluding Employees From Work.  If an employer determines that an unvaccinated worker poses a direct threat, the EEOC warns that it cannot then exclude that employee from the workplace “unless there is no way to provide a reasonable accommodation (absent undue hardship) that would eliminate or reduce this risk so that the unvaccinated employee does not pose a direct threat.”

The EEOC guidance states that if an employee’s failure to be vaccinated poses a direct threat that cannot be reduced to an acceptable level, the employer can exclude that unvaccinated employee from the workplace, but warns employers that a decision to exclude does not mean an employer can automatically terminate the employment of that employee.  The EEOC guidance states that employers will need to determine if any other rights apply under the EEO laws or other federal, state, and local authorities.

Religious Objections.  In addition to disability considerations, the EEOC’s guidance also confirms that employers must explore reasonable accommodations for employees who assert that a “sincerely held religious belief, practice, or observance prevents the employee from receiving the vaccination.”  The EEOC cautions that employers “should ordinarily assume that an employee’s request for religious accommodation is based on a sincerely held religious belief.”  However, employers may request supporting information if they have “an objective basis for questioning either the religious nature or the sincerity of a particular belief, practice, or observance.”

Assuming that an employee’s religious objection to COVID-19 vaccination is sincerely held, the EEOC advises that Title VII requires employers to provide a reasonable accommodation unless doing so imposes an undue hardship.  In demonstrating an undue hardship, an employer is required to show that an accommodation imposes “more than a de minimis cost or burden” on the employer.

GINA Does Not Apply.  Finally, the EEOC guidance states that while many COVID-19 vaccines use mRNA technology, neither administering a COVID-19 vaccine to employees nor requiring employees to provide proof of a vaccination is prohibited by the Genetic Information Nondiscrimination Act (“GINA”).  Because the CDC has explained that mRNA vaccines “do not interact with our DNA in any way,” the EEOC guidance states that requiring employees to receive an mRNA vaccination is not prohibited or governed by GINA.  Employers who will require employees to provide proof they have received a COVID-19 vaccination should warn employees not to provide genetic information.

Takeaways for Employers. The updated EEOC guidance provides long-awaited clarification for employers contemplating employee vaccination strategies.  The bottom line is that, according to the guidance, employers may lawfully offer COVID-19 vaccinations to employees on a voluntary or mandatory basis.  However, mandatory vaccine programs implicate certain restrictions and requirements under the ADA and Title VII, such as the need to provide reasonable accommodations for disabilities and sincerely held religious beliefs and to determine the permissibility and scope of other vaccine-related pre-screening questions.  Employers should carefully consider and assess these and related issues prior to implementing a COVID-19 vaccination program in order to ensure appropriate procedures and safeguards are in place to comply with ADA and Title VII requirements.

Employers should consider taking the following steps prior to implementing a vaccination program:

  • Consider and assess the EEOC’s guidance and related issues before implementing a COVID-19 vaccination program to ensure appropriate procedures and safeguards are in place to comply with ADA, Title VII, and other federal and state laws.
  • Develop a COVID-19 vaccine policy that clearly provides for the rights afforded under federal and state laws.
  • Document direct threat analysis based on roles and responsibilities.
  • Establish a process and protocol to engage employees in an interactive process if they cannot have a vaccine for health or other reasons.
  • Update COVID-19 policies to account for this new guidance and the company’s COvID-19 vaccine program.

COVID-19 Relief Bill for Individuals and Small Businesses

After some delay, President Trump signed the COVID-19 relief bill on December 27, 2020, narrowly avoiding a partial government shutdown.  The nearly $900 billion stimulus bill was passed by Congress on December 21, 2020 and includes assistance for struggling Americans and businesses.  It also includes significant provisions that will impact employee benefit plans.

Direct Payments to Individuals

The Bill provides an additional round of direct payments of $600 for individuals making up to $75,000 per year and $1,200 for couples making up to $150,000 per year, as well as $600 payment for each child dependent.  This means, for example, that an eligible family of four will receive $2,400 in direct payments.

Unemployment Benefits

The Bill will temporarily extend existing pandemic unemployment insurance programs created by the Coronavirus Aid, Relief, and Economic Security (‘CARES”) Act.  The Pandemic Unemployment Assistance program, which provides aid to self-employed, temporary workers, independent contractors, and gig workers, has been extended and will continue to provide additional weeks of unemployment insurance and an extra benefit of $100 per week for some workers who are both self-employed and have salaried jobs.  The Bill also extends the Pandemic Emergency Unemployment Compensation program and provides an additional thirteen weeks of benefits to those who exhausted their regular state benefits.

The Bill also adds provisions to require documentation of earnings and employment, whereas the prior relief bill permitted a self-certification.  The Bill also requires states to establish a process for verifying an applicant’s identity to combat fraud and abuse of the unemployment programs.  The Bill includes return-to-work reporting requirements and states must provide a reporting mechanism for employers to identify employees who turn down a job and to notify claimants of the requirement to accept suitable work, unless there is a good cause for refusal.

Paycheck Protection Program

The Bill includes an extension of the small business Paycheck Protection Program (“PPP”), which has provided small businesses with forgivable loans to keep them afloat and retain employees throughout the pandemic.  The expansion includes more than $284 billion for forgivable PPP loans.  The Bill also includes $15 billion in dedicated funding for live venues, independent movie theaters, and other cultural institutions.

Particularly hard-hit businesses that already receive PPP grants will be eligible for a second round of funds.  These businesses must have no more than 300 employees and demonstrate at least a 25% reduction in gross revenues between comparable quarters in 2019 and 2020.  These subsidies under PPP are not taxed and the maximum loan size is 2.5 times the average monthly payroll costs, up to $2 million.  Small businesses that are in the accommodation and food services industry are eligible to receive loans equal to 3.5 times their monthly payroll costs.  Borrowers will receive full loan forgiveness if they spend at least 60% of their PPP second-draw loan on payroll costs over a time period of their choosing between eight weeks and twenty-four weeks.

The bill also makes changes to the existing PPP.  It allows for full deductibility of business expenses on forgiven PPP loans for both first- and second-draw loans, and expands PPP allowable and forgivable expenses to include supplier costs on existing contracts and purchase orders, including the cost for perishable goods at any time, costs relating to worker protective equipment and adaptive costs, and technology operation expenditures.  It further provides needed assurances to PPP lenders that no enforcement action can be taken against a lender who originated the loan in good faith, complied with all regulations, and relied in good faith on a borrower’s certification and documentation.  The Bill also enhances borrower flexibility by allowing borrowers to select their loan forgiveness covered period between eight weeks and twenty-four weeks.  Finally, the Bill simplifies the forgiveness application process for smaller loans (those up to $150,000) while increasing the ability to audit and review forgiven loans.

Paid Sick Leave

The Bill provides a tax credit to support employers who offer paid sick leave to employees.  Under the Families First Coronavirus Response Act (FFCRA), enacted in March of 2020, many employers were required to provide their employees with two weeks of fully paid leave related to COVID-19, and up to twelve weeks of partially paid family and medical leave.  The new Bill did not extend the requirement for certain employers to provide FFCRA leave, but it did extend refundable payroll tax credits and employee eligibility for such paid sick and family leave, enacted in the FFCRA, from December 31, 2020 to the end of March 2021.  It also modifies the tax credits so that they apply as if the corresponding employer mandates were extended through the end of March 2021.  This provision is effective as if included in FFCRA.

While employers with fewer than 500 employees will no longer be required to provide paid leave under federal law as of January 1, 2021, they should be mindful of other paid leave requirements under state and local laws, as well as their own paid leave and PTO policies.

No COVID-19 Liability Shield

While lawmakers were split over the inclusion of a federally mandated pandemic liability shield, the Bill does not include liability protection from COVID-19 related lawsuits for businesses, universities, and health care centers.

Student Loan Repayments

The CARES Act allows employers to make non-taxable student loan repayments of up to $5,250 annually on an employee’s behalf under a qualified educational assistance plan, but only until December 31, 2020.  The Bill extends this provision for five years, allowing such non-taxable payments to be made until December 31, 2025.

Flexible Spending Account Changes

The Bill provides relief with respect to flexible spending account (“FSA”) funds that went unused during 2020, giving plan sponsors the flexibility to allow funds to rollover and be used throughout 2021 and funds from 2021 to rollover to 2022.  Under this relief, rollover of unused funds is permitted for both health care and dependent care FSAs.

Other FSA relief allows plan sponsors to:

  • Permit prospective mid-year election changes for any reason, even without a life event, during the plan year that ends in 2021. If adopting this relief, plan sponsors may wish to limit the number of changes or set other conditions, for example, prohibiting election changes that would reduce contributions below amounts that have already been reimbursed under a health care FSA.
  • Allow participants who terminate employment in 2020 or 2021 to be reimbursed for health care expenses incurred after termination (during the same plan year and associated grace period, if applicable) without electing COBRA.
  • Permit use of 2020 dependent care FSA funds (including funds rolled over from 2020 to 2021) for expenses incurred with respect to a 13-year-old child if the child turned 13 during 2020 or 2021.

Plan sponsors seeking to adopt all or a portion of this relief generally must amend their plans prior to 2022.  These rules are optional, and employers that would ordinarily receive forfeited funds if participants failed to use them before the deadline, may elect not to amend their cafeteria plans to permit these changes.  Employers that elect to make use of the bill’s increased flexibility will likely see fewer forfeitures and incur higher costs for the plans.

Additional Time to Collect Employee Social Security Tax Deferred in 2020

Earlier this year, Notice 2020-65 permitted employers to defer the withholding and deposit of employee Social Security taxes. (See our earlier coverage on this.)  Under the notice, employers must deposit those deposit those deferred taxes before April 20, 2021, or interest and penalties will accrue.

The Bill would extend the time that employers have to collect the deferred tax from employees until the end of 2021, rather than April 30, 2021.  Although employers, other than the federal government, that took steps to defer employee Social Security taxes may welcome the extension, it also increases the risk that the deferred taxes will not be fully collected.  A longer period in which to collect the deferred taxes also gives employees a longer period in 2021 to leave employment before the tax is collected.  An employer who pays the employee’s 2020 Social Security tax for the employee in 2021 is required to treat that payment as an additional wage payment to the employee in 2021.

Surprise Medical Billing

Effective for plan years beginning on or after January 1, 2022, group health plans and health insurance issuers are required to take certain steps to protect covered persons from surprise medical billing, that is, billing for costs incurred when an out-of-network provider is unexpectedly involved in surprise medical billing, i.e., billing for costs incurred when an out-of-network provider is unexpectedly involved in a participant’s care.  The Bill requires health plans to treat the following services as if they were in-network services:

  • Out-of-network emergency care
  • Certain services provided by out-of-network providers at in-network facilities
  • Air ambulance services

Any cost-sharing payments made by a participant for these services must count towards the in-network deductible and out-of-pocket maximum as if they were performed by in-network providers.  The Bill also prevents out-of-network providers from balance billing the participant for such services.

By July 1, 2021, the Departments of Labor, the Treasury, and Health and Human Services must issue rules addressing how health plans must determine the appropriate amount of payment to be made to the non-participating provider.  If an out-of-network provider disagrees with the amount of its payment, the Bill requires that the provider and the health plan engage in informal discussion followed, if necessary, by binding arbitration.  Additionally, the Bill requires the above Agencies to audit health plans to ensure compliance with these provisions.

No Additional Funding for States or Localities

The Bill does not include significant funding for states dealing with COVID-related budget shortfalls.

More Relief Forthcoming?

This Bill was a long time coming and was nearly derailed at the last minute by President Trump’s initial refusal to sign it.  It is unclear what additional COVID relief the next Congress will seek, and whether the Democrats and Republicans will be able to come together on what a new relief package would look like.  We will continue to keep you apprised as developments occur.

 

Update on President Trump’s Executive Order on Combating Race and Sex Stereotyping

On December 22, 2020, a California federal judge issued a preliminary injunction blocking President Trump’s Executive Order on Combating Race and Sex Stereotyping (“Executive Order”).  The Executive Order restricted diversity training for federal contractors by prohibiting contractors from providing training covering “divisive topics” (See our earlier coverage here and here).  The nationwide preliminary injunction immediately took effect and prohibits the federal government from implementing or enforcing key provisions of the Executive Order.

Santa Cruz Lesbian and Gay Community Center et al v. Trump

Nonprofit organizations that provide anti-racism and anti-LGBT bias training filed suit in November claiming that the Executive Order violates their free speech and due process rights under the U.S. Constitution.  The federal judge agreed, finding that plaintiffs are likely to win their argument that the Order’s prohibitions are too vague and violate free speech rights of anti-discrimination organizations.  The ruling enjoins the enforcement of key provisions of the Executive Order and prohibits the government from:

  1. Requiring federal contracts to contain clauses banning the training prohibited by the Executive Order or enforcing such clauses to the extent already included in government contracts,
  2. Requiring contractors to provide notice of Executive Order’s restrictions,
  3. Terminating or suspending contracts, or imposing other sanctions, on the basis of purported non-compliance with the Executive Order,
  4. Requiring contractors to bind subcontractors to the Executive Order,
  5. Using a hotline to gather information about contractor non-compliance or investigating any such tips,
  6. Publishing additional Requests for Information seeking information on the prohibited training, or
  7. Requiring government agencies to condition grants on compliance with the Executive Order.

The preliminary injunction does leave intact the government’s ability to enforce the prohibition in the federal workforce.

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