The Year in Review and the Year Ahead for Employers

Each month, Nyemaster Goode’s Labor & Employment practice hosts Law & the Workplace webinars exclusively for Nyemaster clients. On January 5, 2023, Tom Cunningham kicked off the series with a review of 2022’s key issues in employment law and a look at what employers might expect in 2023. Here’s a summary of the session’s insights.

 

2022: Changes in the Legal Landscape

After two years, President Biden’s legislative and regulatory agenda has made an impact on the workplace.  

 

COVID-19 Vaccination and Testing

The Occupational Health and Safety Administration (OSHA) issued a vaccinate-or-test rule that faced court challenges.

• In November 2021, OSHA issued an Emergency Testing Standard (ETS). It made covered employers require employees to get COVID-19 vaccinations or weekly tests and wear facemasks in certain situations.
• The U.S. Supreme Court heard oral arguments on the challenge case in early January 2022.
• Before the Court’s decision, the Iowa Labor Commissioner announced Iowa would not enforce the ETS, regardless of the decision. That set up a potential regulatory standoff between Iowa and the federal government.
• A week later, the U.S. Supreme Court struck down the ETS, and OSHA withdrew it.
• OSHA said it planned to pursue a permanent rule; nothing has been announced since that time.

 

The Centers for Medicare & Medicaid Services (CMS) promulgated a staff vaccination mandate for health care facilities. The mandate applies to any health care facility regulated under the Medicare/Medicaid conditions-of-participation standards, which includes hospitals, hospices, ambulatory surgical centers, rural health clinics, residential treatment facilities, long-term care facilities, and more.

• According to the mandate, all staff in CMS-covered facilities were to be fully vaccinated by January 5, 2022.
• The rule offered no alternative for testing. It did recognize medical and religious exemptions. Iowa’s statutory standards for exemptions are broader than federal definitions.
• In a January 2022 challenge, the U.S. Supreme Court upheld the CMS mandate.
• CMS issued permanent guidelines for COVID-19 vaccinations in all facilities on October 26, 2022. The enforcement remedy for noncompliance is termination as a CMS provider.

 

MeToo Legislation

Congress passed and the president signed into law the first significant MeToo-era legislation on March 3, 2022. The Ending Federal Arbitration of Sexual Assault and Sexual Harassment Act was the first significant amendment to the Federal Arbitration Act in decades.

• An employee can void mandatory arbitration agreements and contract provisions related to disputes involving sexual assault or sexual harassment.
• For sexual assault or sexual harassment claims, it impacts employment agreements that require disputes to be submitted to arbitration. It permits employees, at their option, to void provisions that waive resolution of such disputes in court. The law also renders voidable at the option of representative plaintiffs any provisions purporting to waive class or collective actions in disputes related to sexual assault and sexual harassment.
• The law includes broad definitions of what constitutes a dispute related to sexual assault and sexual harassment.
• Given the broad definition of what constitutes a dispute, the potential exists that if an employee pursues multiple claims that include sexual assault or sexual harassment allegations, and some that do not but involve claims on other theories of liability predicated on the conduct alleged to constitute sexual harassment, the law may allow the arbitration requirement to be voided as to all claims.
• Employers should have their attorney review employment agreements for compliance with the act.

 

The Federal Speak Out Act prohibits courts from enforcing certain nondisclosure and nondisparagement clauses related to claims of sexual assault or harassment.

• The act defines what constitutes a nondisclosure and nondisparagement provision.
• The nondisclosure definition carves out protections for trade secrets and proprietary information.
• The law applies only to agreements entered into before a dispute arises.
• Terms in employment contracts and confidentiality agreements are subject to the law.
• Nondisclosure and nondisparagement provisions in settlement agreements entered into after a dispute has arisen remain enforceable.
• Employers may need to revise template severance agreements. To comply, employers should consider whether nondisclosure or nondisparagement terms need to include an exemption for sexual assault and sexual harassment allegations that have not yet been made, even if those claims are released by the terms of the severance agreement.

 

NLRB Rule Changes

In the area of labor relations, the National Labor Relations Board (NLRB) has rolled back Trump-era decisions and rulemaking. Three recent cases illustrate the impacts on employers—whether unionized or not.

• Thryve Inc. The decision indicates an expansion of available remedies in unfair labor practice termination cases. Previously, the remedy for an unfair labor practice resulting in termination was reinstatement with back pay. Now, employers can be liable for consequential damages. They must compensate workers for “all direct or foreseeable” harms that result from an unfair labor practice. Employers can still challenge whether alleged consequential damages were direct and/or foreseeable. Examples of consequential damages noted by the NLRB might include:
  • Out-of-pocket medical expenses after loss of health insurance upon termination.
  • Reimbursement for interest and/or late fees paid on late rent or car payments.
  • Interest payments on a loan to cover living expenses.
• American Steel Construction. One commentator referred to this as a bargaining unit gerrymandering case. Employers seeking to broaden a bargaining unit’s scope now have the burden to show workers outside the union’s proposed bargaining unit share an overwhelming community of interest with the included employees. This is a very difficult standard to satisfy. The decision is significant because it’s easier for unions to organize a smaller number of employees.
• Baxter County Performing Arts Center. Workers protesting on a third-party employer’s property may not be ejected from the property unless workers “significantly interfere” with the use of the property or where the owner has some other “legitimate business reason” to remove the protesters. Employers now have to show that off-duty contractors engaging in a protected protest—even when that protest is against a different employer—significantly interfered with the employer’s use of its property. This exacting standard will be difficult to show, and as a result, most peaceful protests likely may be protected.

 

Legislation Related to Pregnant and Nursing Workers

Within the recently passed $1.7 billion appropriations bill, Congress passed two pieces of employment legislation.

• Pregnant Workers Fairness Act (PWFA). The act requires employers to clarify their reasonable accommodations policies related to pregnant workers. Policies must include employees who are pregnant, have pregnancy-related conditions (even though temporary), or have recently given birth. Accommodations can include assignment to light duty, more frequent restroom breaks, and other alternatives.
• Providing Urgent Maternal Protections for Nursing Mothers Act (PUMPNMA). This legislation extends an Affordable Care Act requirement to provide time and space for breastfeeding parents to salaried employees, who were previously excluded. Employers also must provide these benefits for breastfeeding parents for the first year of a child’s life.

 

2023: The Coming Year for Employers

The Iowa Supreme Court is set to address long-unanswered questions about the scope of individual liability under the Iowa Civil Rights Act. Federal regulatory agencies are preparing rule changes. All might have potentially significant impacts for employers.

 

Individual Liability under the Iowa Civil Rights Act

The Iowa Supreme Court hears oral arguments in Valdez v. West Des Moines Cmty. Sch. Dist. on January 19, 2023. At issue is whether individual liability under the Iowa Civil Rights Act (ICRA) extends to a coworker in a case alleging maintenance of a hostile work environment by the employer. A decision is expected before the end of the Supreme Court term in late June.

• To date, the court has recognized individual liability under the ICRA only for allegedly discriminatory decisions resulting in adverse action. In Rumsey v. Woodgrain Millwork, Inc., the court said individual liability is not limited to supervisors with final decision-making authority; rather, it extends to those personally involved in adverse employment actions. Adverse actions include termination, demotion, failure to promote, or other discriminatory decisions
• Hostile environments are alleged to be maintained by the employer. Liability based on coworker conduct arguably exists only when the employer knew or reasonably should have known of conduct and failure to take prompt appropriate remedial action. The plaintiff’s argument is that the ICRA assesses liability against persons, not only employing entities.
• Ultimately, the question becomes: Is every employee in every workplace potentially subject to liability under the ICRA?

 

Independent Contractor Redefined—Again

The battle continues over classifying workers as independent contractors or employees under the Fair Labor Standards Act.

• The Trump-era Department of Labor (DOL) published a final rule clarifying the standards and tests, effective March 8, 2021. They used an “economic reality” test to evaluate whether workers are in business for themselves or are economically dependent on an employer. The final regulations identify two primary factors:
  • The nature and degree of control over the work by the alleged employer.
  • The worker’s ability to generate profit or loss based on how the work is performed.
• The final rule also looked to additional factors to determine the proper status of a worker:
  • Amount of skill required.
  • Temporal duration of the working relationship between the worker and the alleged employer.
  • Whether the work in question is part of an “integrated unit” of production.
• A federal judge ruled the Biden DOL’s attempt to withdraw the rule was procedurally defective. The Trump-era rule went into effect as of March 8, 2021.
• In October 2022, the DOL published a proposed classification rule. Some version of this rule will likely be adopted in 2023. With a goal to classify more workers as employees, the proposed rule returns to the totality-of-the-circumstances analysis of: 
  • Opportunity for profit or loss.
  • Investment.
  • Degree of permanence of the work relationship.
  • Degree of control by the employer over the worker.
  • Whether the work is an integral part of the employer’s business.
  • The worker’s use of skill and initiative.

 

Joint Employer Status

The current NLRB rule says a company may be considered a joint employer of another entity’s employees only if the two share or codetermine the employees’ essential terms and conditions of employment. Those include hiring, firing, supervision, discipline, direction, wages, benefits, and similar elements.  A joint employer “must possess and actually exercise substantial direct and immediate control over … terms and conditions in a manner that is not limited or routine.” Control exercised on a sporadic, isolated, or minimal basis is not deemed substantial.

 

NLRB announced proposed rulemaking to return to the Obama-era definition of joint employer. The proposed rule says a company may be deemed the joint employer of a second company’s employees not only where it directly or immediately exercises control over the second company’s workforce, but where the first company’s control is indirect or even simply reserved but not ever actually exercised.

 

The impact of the change is that a joint employer potentially may be:

• required to bargain with a union representing jointly employed workers;
• subject to joint and several liability for unfair labor practices committed by the other employer; and
• subject to labor picketing that would otherwise be unlawful.

 

Other 2023 Legal Trends

The year is young, and the legal landscape may change. These legal issues may arise over the next 12 months.

• There’s an increased interest in pay transparency laws across the United States, although it currently seems passage of such a law in Iowa is unlikely.
• NLRB may show a renewed interest in employee handbook policies and their potential impact on Section 7 rights, especially in nonunionized workplaces.
• An Equal Employment Opportunity commissioner is attempting to bring discrimination charges against companies who offer travel benefits to employees who seek abortions. She alleges other similarly situated pregnant and disabled employees are discriminated against on the basis of disability and/or sex because they do not get similar travel benefits for out-of-state medical procedures. The investigation is in the early stages.
• DOL and NLRB may increase attempts to nullify class and collective action waivers in arbitration agreements.

 

Nyemaster Labor & Employment attorneys closely watch emerging legal trends. If you have questions about labor and employment issues, contact your attorney.