President Biden Signs the American Rescue Plan Act
On March 11, 2021, President Biden signed the latest stimulus plan, titled The American Rescue Plan Act of 2021. While the entire Bill is over 200 pages in length, the main provisions that may be relevant to employers are as follows:
- Extension of Federal Pandemic Unemployment Assistance. The Act extends enhanced unemployment coverage through September 6, 2021, including the additional $300 federal premium on top of unemployment benefits provided by the state. The total number of weeks of potential unemployment was also increased to 79 weeks from 50 weeks.
- Extended Employer Tax Credits for Paid, Sick and Family Leave. The final Act did not create new mandatory leave laws. However, the Act extends federal employer tax credits through September 30, 2021 to employers who voluntarily provide paid sick and family leave for COVID-related reasons. Credits now include leave for vaccination and for time spent waiting for test results or diagnoses that potentially relate to COVID-19. Note that the Act included additional nondiscrimination rules such that an employer may be required to offer such leave to all employees (instead of only select employees) in order to qualify for the tax credit.
- COBRA Continuation Coverage. The Act provides a tax credit equal to 100% of COBRA continuation coverage costs for employees who lose their job. Employers can claim the refundable tax credit against Medicare payroll tax liability for the cost of the premiums. The assistance is available through September 30, 2021, but ends when an individual becomes eligible for coverage under another group health plan or Medicare.
- Dependent Care Flexible Spending Accounts. The Act raised the 2021 contribution limit for dependent care FSA accounts to $10,500 for single taxpayers and to $5,250 for married individuals filing separately.
- Modification to the PPP Program. The Act increases the amount of funding available under the Paycheck Protection Program, maintains eligibility for certain non-profit organizations and expands eligibility to cover labor organizations, clubs and fraternal benefit societies.
- Employee Retention Credit. The Acts extends the employee retention credit for eligible employers through December 31, 2021. This Act allows eligible employers to claim a credit for paying qualified wages to employees.
The final version of the Bill did not include any increase to federal minimum wage. Early versions of the Bill included an increase to $15 per hour minimum wage, but this was dropped after the Senate Parliamentarian ruled that such a provision could not be included in the Bill. If you have any questions about any aspect of the new law, please feel free to call a member of our employment law or employee benefits team.
The Prickly Issue of Vaccines - Guidance for Virginia Employers
As the vaccines for COVID-19 continue to become more available, we continue to receive three main questions from employers: (1) Can an employer require its employees to be vaccinated, (2) Can an employer require employees to provide their vaccination status, and (3) What steps can an employer take to encourage voluntary vaccination.
Mandatory Vaccination?
Earlier this year, the EEOC released guidance in which it opined that, during a pandemic, an employer can (as a general matter) require its employees to become vaccinated. However, the EEOC also made it clear that employers would have to make reasonable accommodations to a mandatory vaccination policy for religious and disability related reasons.
Further, if an employer would like to exclude an unvaccinated employee from the workplace who has a medical or religious exemption to being vaccinated, employers need to show that the employee’s presence without a vaccine would pose a direct threat (defined as 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). Note, that this must be a case-by-case analysis.
However, even if the employee does constitute a direct threat, an employer must engage in an interactive dialogue with the employee to find other reasonable accommodations that would not pose an undue hardship to allow the employee to work at the workplace. If there are no such accommodations, the employer may exclude the employee from the workplace based on being unvaccinated.
Since the EEOC released this guidance, a number of lawsuits have been filed asserting that businesses should not have the ability to mandate vaccination for COVID-19, since the vaccination is only authorized under an Emergency Use Authorization. These lawsuits have asserted that the FDA has not signed off on safety to the extent they normally would for typical authorization.
Because of these broad exceptions and the expected headaches of dealing with numerous accommodation requests (valid and otherwise), along with the potential for litigation, the vast majority of employers have chosen not to implement a mandatory policy.
Documentation of Vaccinations
The EEOC has also come out with guidance explaining that employers (including those without a mandatory policy) may ask employees for their vaccine status and proof of vaccination. The easiest way to do so would be to ask for the employee’s vaccination card, or other documentation received by the vaccination site. Obtaining proof of vaccination is not without risk, however. The Genetic Information Discrimination Act and the ADA limit an employer’s ability to obtain genetic and disability-based information. As such, your request for proof of vaccination should explicitly state that the employee should not provide any genetic or disability related information in response to the request. This will minimize litigation risk.
Vaccination Encouragement
At this point, there is little-to-no guidance on how wellness-plan rules will apply to employers offering incentives to obtain the vaccine. In fact, the EEOC withdrew its guidance on the matter earlier this year. As such, it isn’t clear which types of incentives employers may offer pursuant to the rules. We do, however, expect more EEOC guidance on this matter very soon.
At this point, we have seen reports of employers offering incentives up to a few hundred dollars. Depending on the structure, there may be a need to offer an alternative to employees who are unable to get vaccinated due to medical or religious reasons. As such, we recommend that you contact your employee benefits specialist before implementing an incentive program.
In addition, the American Rescue Plan Act allows employers to provide paid leave for employees to obtain their vaccination (among other reasons) and obtain a tax credit for doing so (at least for employers under 500 employees). Thus, providing leave for vaccinations may be a mutually beneficial incentive.
An Update on Recently Enacted Virginia Employment Laws
As in 2020, a slew of new pro-employee measures have been signed into law during Virginia’s most recent General Assembly session. These new laws are poised to provide employees in the Commonwealth with broader protections, additional remedies, and a number of new claims that may be asserted against employers. While the following is by no means an exhaustive list of the laws recently enacted in the General Assembly, it includes those most likely to have the greatest impact on Virginia employers in the years to come.
Marijuana Use
During the 2021 General Assembly Session, Virginia became the first southern state to legalize recreational marijuana use. But perhaps of greater importance to employers in the Commonwealth, Governor Northam also signed House Bill (“HB”) 1862 into law. The newly enacted law prohibits an employer from discharging, disciplining, or otherwise discriminating against an employee for that employee’s lawful use of medical cannabis oil while off duty. The bill provides, however, that such prohibition does not restrict an employer's ability to take any adverse employment action for work impairments caused by the use of cannabis oil or to prohibit possession during work hours. Employers are likely prohibited from withdrawing an employment offer from an employee who is a lawful medical user of marijuana, and should update testing procedures accordingly.
Overtime
On March 30, 2021, Governor Northam signed into law the Virginia Overtime Wage Act (HB 2063). Like the Fair Labor Standards Act (FLSA), Virginia’s new overtime law generally requires payment of time and a half an employee’s regular rate for hours worked in excess of forty hours in a workweek. While Virginia’s new law largely tracks the FLSA, certain significant differences are likely to result in higher damages for overtime violations. Moreover, the Virginia Overtime Wage Act also provides a longer statute of limitations than the FLSA, and provides for the potential of triple damages (the FLSA only provides the potential of double damages). Moreover, the new law may proscribe employer’s ability to use alternative pay methods for non-exempt employees, such as the fluctuating workweek method. It is important to note that, under Virginia’s current procedural rules, state court employment litigation is very difficult to get dismissed prior to trial. Thus, even a relative weak case alleging misclassification of workers as exempt from overtime has a chance of making it to trial. Thus, it is more important than ever that you review your exemption designations and procedures related to overtime.
Disability Discrimination
HB 1848 was signed into law this year and extends the Virginia Human Rights Act to include disability as a protected class. As a preliminary matter, the law largely tracks the Americans with Disabilities Act (ADA) and the Virginians with Disabilities Act (VDA). As such, HB 1848 requires employers to engage in a timely, good faith interactive process to identify a reasonable accommodation “if necessary to assist such person in performing a particular job.” Importantly, unlike the VDA and ADA, the Virginia Human Rights Act requires employers to exhaust all reasonable accommodations that permit disabled workers to perform their job before offering leave as an accommodation.
This new law also imposes notification requirements on employers in the Commonwealth. Specifically, under HB 1848, employers must post information concerning an employee’s rights to reasonable accommodations in a conspicuous location. Employers must also include that information in all employee handbooks going forward. Moreover, this information must also be directly provided to all new employees as soon as they start and to any other employees within ten days if they provide notice to their employer that they have a disability. Thus, it is once again time for Virginia employers to update their handbooks and ensure an up to date employment poster is posted.
Paid Sick Leave
HB 2137, requires employers to provide paid sick leave to certain home health workers who provide personal care, respite, or companion services. Such employees are eligible for paid sick leave under the bill if the employee is considered an essential worker and works on average at least twenty hours per week or ninety hours per month. The bill provides for an employee to earn at least one hour of paid sick leave benefit for every thirty hours worked
Discrimination Based on Military Status
Senate Bill 1410 and HB 2161, signed into effect on March 30, 2021, will prohibit discrimination in employment and housing on the basis of a person’s military status, which includes that person’s status as a member of the uniformed services of the United States, a reserve component thereof, or a spouse or other dependent of the same.
In light of these newly enacted and potential laws, we encourage Virginia employers to work with counsel in reevaluating their existing marijuana testing, overtime/classification, sick leave, and anti-discrimination policies to ensure compliance. Should you have any questions or concerns regarding these new laws, please do not hesitate to contact a member of our employment law team.
Employee Benefit Changes under The Consolidated Appropriations Act, 2021
Ingrid Watson and Corina San-Marina
The end of 2020 brought another round of COVID-related (mostly) employee benefit plan changes under The Consolidated Appropriations Act, 2021 (the CAA). A summary of the CAA’s most significant provisions for employee benefit plans is provided below.
Partial Plan Termination Relief (no plan amendment needed)
Employers that laid off or furloughed employees in 2020 can avoid a partial plan termination for their qualified retirement plans (and the required 100% vesting of affected participants that goes along with a partial plan termination) if the company’s employee count as of March 31, 2021 returns to at least 80% of the employee count on March 13, 2020.
Coronavirus-Related Distributions and Money Purchase Pension Plans
The CARES Act permitted participants to take “coronavirus-related distributions” or “CRDs” from their qualified retirement plan. Although the CRD provision expired December 30, 2020 and was not extended under the CAA, the CAA retroactively permits CRDs to be taken from money purchase pension plans.
Qualified Disaster-Related Distributions (optional, but plan amendment by 12/31/2022 for most calendar year plans)
The CAA also authorizes qualified plan distributions of up to $100,000, without penalty, for participants who sustained economic loss because of declared disasters other than COVID-19, such as the California wildfires and Hurricane Isaias. These distributions can be taken through June 25, 2021. The income tax on the distributions may be paid over three years, or participants may repay the distributions within three years.
Qualified Plan Loans (optional, but plan amendment by 12/31/2022 for most calendar year plans)
The CARES Act permitted participants to take a loan from their qualified plan account up to the lesser of $100,000 or 100% of their vested account balance. The CAA contains a similar provision but instead of tying the loans to having a COVID-19 economic loss, the CAA requires participants who are seeking the larger loans to reside in a qualified disaster area and to have suffered an economic loss from such disaster. These loans may be taken until June 25, 2021. The CAA also permits a one-year delay on loan repayments for new and existing plan loans.
Flexible Spending Account (FSA) Relief
The CAA relaxes rules under flexible spending accounts. Employers wishing to adopt any of these changes must amend their FSA plan by the last day of the first calendar year beginning after the end of the plan year in which the amendment is effective.
- Employers may amend their FSAs to permit participants to carryover up to their entire unused FSA balances from the plan year ending in 2020 to a plan year ending in 2021, and from a plan year ending in 2021 to a plan year ending in 2022.
- In the alternative, employers may provide to FSA participants a grace period of up to 12 months for unused FSA amounts for plan years ending in 2020 and 2021.
- Employers who adopt the extended grace period or carryover for Health Care FSAs may also permit employees with HDHP coverage to opt out of the grace period/carryover in order to preserve their HSA eligibility.
- The CAA permits employees who terminate employment in 2020 or 2021 to spend down their Health Care FSA for qualifying medical expenses incurred through the end of the FSA plan year, without requiring the former employee to elect COBRA continuation coverage.
- For qualifying dependents who aged out of Dependent Care FSA coverage during the pandemic, employers may amend the FSA to raise the maximum age for qualifying dependents to age 14. The change is permitted only if the employee was enrolled in the Dependent Care FSA in a plan year with an enrollment period on or before January 31, 2020, the employee had a dependent who turned age 13 during the plan year, and the employee had an unused balance for the plan year. The reimbursement in the subsequent plan year for the age 14 dependent is limited to the unused contributions from the prior year.
- For plan years ending in 2021, employers may amend FSAs to permit employees to prospectively change their Dependent Care FSA and/or Health Care FSA contributions for any reason without experiencing a change in status event. Similarly, employers may also permit employees to make a prospective mid-year change to their health care coverage election for any reason. Employees who elect to drop health care coverage mid-year must attest to having other comprehensive health care coverage.