On December 7^th, 2020, an important interim final rule (IFR) from U.S. Department of Homeland Security (DHS) will officially take effect.  This IFR, “Strengthening the H-1B Nonimmigrant Visa Classification Program,” was originally published on October 8^th, 2020.

According to the DHS, the IFR strengthens H-1B nonimmigrant visa programs, protects U.S. workers, and restores the program’s integrity. The program under the IFR will also better guarantee that H-1B petition approvals occur for only qualified beneficiaries and petitioners.

 Background of H-1B Program

The H-1B program was originally intended to allow employers to fill gaps in their workforce and remain competitive. The DHS, however, felt that the program expanded far beyond that, often to the detriment of U.S. workers. According to the agency, data shows that more than 500,000 H-1B nonimmigrants have already displaced U.S. workers. This, theoretically, has led to reduced wages in the U.S. labor market and the stagnation of wages in certain occupations. The updates to the H-1B visa program were part of a larger Trump Administration goal to protect affected American workers.

Overview of New Rule

Overall, the DHS claims that this rule combats the use of H-1B workers as low-cost replacements for qualified American workers.

Accordingly, the new rule:

• narrows the definition of “specialty occupation” by closing what the DHS considered an overbroad definition. The agency removed the words “usually,” “normally required,” and “common to the industry” from the definition;
• establishes that petitioners state that a bachelor’s degree in a specialty or its equivalent is a minimum requirement for hire. This must always be the requirement for the occupation as a whole; and
• enhances the DHS’s ability to enforce compliance through inspections and monitor compliance before, during, and after H1-B petition approval.

Employer Takeaways

When hiring foreign workers, employers need to follow foreign worker classification rules as dictated by the DHS for specific positions.  Consequently, those who employ foreign workers should consult with legal counsel to determine if their hiring policy complies with established rules. Failure to comply with the new IFR could lead to possible hefty fines and lawsuits as dictated by the DHS.

The U.S. Department of Labor (DOL) has a reminder for employers this holiday season regarding safety and pay.  Firstly, as enforced by the DOL’s Occupational Safety and Health Administration (OSHA), employers must keep employees safe in the workplace. Secondly, under laws enforced by the DOL’s Wage and Hour Division (WHD), employers must also protect worker pay by following proper wage & hour practices.

Overview of Employer Responsibilities

As we enter a unique holiday shopping season, employers must train all workers to recognize and prevent job hazards. Safe work practices must also incorporate ways to prevent exposure to the coronavirus. At the same time, employers must comply with federal rules governing the payment of wages for temporary or seasonal workers.

Workplace Safety Under OSHA

Under the Occupational Safety and Health Act of 1970 (OSH Act), employers are responsible for providing safe workplaces for employees. This includes temporary or seasonal employees who are only hired for a set period of time. OSHA offers resources on holiday workplace safety for warehousing, delivery, and retail workers. Guidance is also available for protecting workers from exposure to the coronavirus in:

• retail and high customer-volume environments;
• stockrooms and loading docks; and
• package delivery.

OSHA has also recently released updated guidance on cloth face coverings and their use in public settings.

Additional information is available on workers’ rights, the protection of temporary and seasonal workers, and safety for young workers.

Complying with Wage Requirements

Just as temporary and seasonal employees need a safe workplace to work in, they also need to receive proper pay. With added seasonal hiring, employers may not be fully aware of the rules that regulate such work.

The WHD enforces federal minimum wage, overtime pay, recordkeeping, and child labor requirements of the Fair Labor Standards Act (FLSA). The WHD has listed common holiday season labor violations that employers should try to avoid. These include:

• failing to pay salespeople and cashiers for time spent prepping or closing out a register;
• requiring stock room and warehouse personnel to work through breaks without compensation; and
• not providing overtime pay to employees working more than 40 hours in a workweek.

To help protect worker safety and their pay during this holiday season, employers can learn more by viewing the WHD’s guide for Seasonal Employment.

On November 17^th, 2020, the U.S. Equal Employment Opportunity Commission (EEOC) announced its need for public input on updated guidance. The guidance discusses how Title VII of the Civil Rights Act (Title VII) protects individuals from workplace religious discrimination. It also sets forth the legal protections available to religious employers. The updated information will be in the EEOC’s Compliance Manual’s section on Religious Discrimination (Manual).

During a public meeting on November 9th, 2020, the EEOC voted (3-2) to publish its proposed changes to the Manual. The draft guidance is available for review here.

Updates to the Manual

The current version of the Manual, last updated in 2008, does not reflect recent legal developments and emerging issues. Since 2008, several Supreme Court decisions, as well as the lower courts, have altered the legal landscape. The revisions to the guidance include:

• important updates to protections for employees from religious discrimination in the context of reasonable accommodations and harassment; and
• an expansion on the discussion of legal defenses that may be available to religious employers.

Submitting Comments

The 30-day comment period for comments ends on December 17th, 2020. Employers should provide input in a narrative form here in letter, email, or memoranda format. Or, send hard copies to:

Public Input, EEOC,
Executive Officer,
131 M Street, N.E.,
Washington, D.C. 20507.

The input provided is later posted publicly on http://www.regulations.gov and may show email addresses.

After reviewing the public comments, the EEOC will consider appropriate revisions to the draft guidance before replacing the 2008 version. This request for comments comes after the EEOC released its annual Fiscal Year 2020 Agency Financial Report. Also highlighted in the report, the EEOC announced it recovered a record $535 million for workplace discrimination victims.

Employee Takeaways

While Title VII applies federally to employers with 15 or more employees, some states have their own religious discrimination laws. Some of these state laws could apply to small employers with as few as 1 employee, depending on the state.  Accordingly, employers need to investigate which, if any, state-specific anti-discrimination laws they need to follow.  Employers should also make sure that all employees are fully trained on the workplace’s discrimination prevention policies and procedures.

The Department of Labor’s (DOL) Occupational Safety and Health Administration (OSHA) has published an update to COVID-19 Frequently Asked Questions. Released November 18th, the resource now addresses OSHA’s opinions on cloth face coverings as “personal protective equipment” (PPE). The update comes after the Centers for Disease Control and Prevention (CDC) announced their own findings about cloth face coverings.

CDC and OSHA Determinations

Recently, the CDC determined that some cloth face coverings have the potential to provide personal protective benefits. However, the CDC noted that ” [further] research [will] expand the evidence base for the protective effect of cloth masks…” Factors such as design, construction, and fabric will have a substantial impact on the overall effectiveness of a face covering. As such, OSHA has announced that it does not consider cloth face coverings to be PPE at this time.

OSHA does however continue to strongly encourage workers to wear face coverings when they are in close contact with others. This would help in reducing the risk of spreading COVID-19 at the workplace. OSHA has also previously noted that employers may require workers to wear cloth face coverings for possible hazard abatement. Currently, however, the agency’s guidance remains unchanged. OSHA does not consider cloth face coverings PPE and they are not required under OSHA’s PPE standard (29 CFR 1910.132).

Employer Takeaways

The addition to the FAQs marks the latest release from OSHA addressing protective measures for workplaces during the coronavirus pandemic. Previously, OSHA published numerous guidance documents for workers and employers, available on OSHA’s COVID-19 resources webpage. Recent guidance included information on how to apply existing injury and illness recording and reporting requirements to the COVID-19 pandemic.

Under the Occupational Safety and Health Act of 1970 (OSH Act), employers are responsible for providing safe workplaces for employees. By following OSHA guidance, employers can keep workers safe from infection and injury and show good-faith compliance with OSHA standards.

On November 18^th, 2020, Immigration and Customs Enforcement (ICE) announced an extension of rule flexibilities related to Form I-9 compliance. The initial rule update, announced earlier this year, was set to expire on November 19th, 2020. Due to the continued COVID-19 pandemic, the Department of Homeland Security (DHS) will extend this policy until December 31^st, 2020.

Background of Original Order

In March 2020, due to workplace COVID-19 precautions, the DHS announced that it would exercise discretion when enforcing employment verification. Specifically, the department would defer the physical presence requirements associated with the Employment Eligibility Verification (Form I-9). This policy only applies to employers and workplaces that are operating remotely. If there are employees physically present at a work location, in-person verification of identity must still occur.

Document Inspections

Even though employers do not need to verify identity and employment documents physically, they still need to inspect documents remotely. This inspection can occur over video link, fax, email, etc. Retention and physical inspection of documentation, however, has not changed, even during the pandemic. For example, when employees are in the workplace, employers must collect Section 2 documents within three days of its completion. In a remote working situation, employers also should enter “COVID-19” as the reason for the physical inspection delay. Employers should enter this information in the Section 2 Additional Information field once physical inspections take place after operations resume. In the same section, or in Section 3, as applicable, the employer should add “documents physically examined” with the date.

Employer Takeaways

If employers have already been following the original March 2020 order, there is nothing more that they need to do. They just need to continue staying in compliance with that updated policy until December 31^st, 2020. Going forward the DHS will continue to monitor the ongoing national emergency and provide updated guidance as needed. Employers should monitor the DHS and ICE websites for additional updates and when normal DHS and ICE operations will resume. 2020 has been a busy year for the DHS and the Form I-9. Since May 1^st, employers should be using the updated version of the form (version 10/21/2019) for verification purposes. Any employers not using the latest version are not in full compliance with I-9 documentation requirements.

On November 18^th, 2020, the Internal Revenue Service (IRS) issued additional guidance on Paycheck Protection Program (PPP) loans. Created in conjunction with the Treasury Department (Treasury), the guidance addresses the tax treatment of PPP expenses. More specifically, when a loan from the Small Business Administration’s PPP is not forgiven by the end of the year.

As part of the guidance, both agencies issued a revenue ruling and a revenue procedure. Overall, the guidance states that if businesses aren’t taxed on the proceeds of a forgiven PPP loan, expenses aren’t deductible. In some cases, a loan may have been initially considered as a candidate to be “forgiven,” but they eventually aren’t. Those businesses can deduct their PPP expenses. The additional guidance comes a couple months after the SBA released information on ownership changes and PPP loan forgiveness.

Revenue Procedure 2020-51 (Rev. Proc. 2020-51)

Rev. Proc. 2020-51 provides a safe harbor for PPP loan participants whose loan forgiveness has been partially or fully denied. It also allows participants who decide to forego loan forgiveness, to claim a deduction for certain otherwise deductible eligible payments:

• the taxpayer’s timely filed, original income tax return or information return, as applicable, for the 2020 taxable year; or
• an amended 2020 taxable year return or administrative adjustment request (AAR) under section 6227 of the Tax Code.

Revenue Ruling 2020-27 (Rev. Rul. 2020-27)

Rev. Rul. 2020-27 explains if a PPP loan participant that has paid certain otherwise deductible expenses can deduct those expenses. Those deductions, however, could only take place in the taxable year when borrowers paid or incurred expenses. The deductions could also only occur if the taxpayer reasonably expected to receive forgiveness of the covered loan. The ruling also includes guidance for participants not applying for forgiveness currently but intend to apply for tax year 2021.

Notice 2020-32

The IRS and the Treasury also recently released guidance in Notice 2020-32 about deducting expenses for PPP loans. The notice clarifies that the following deductions are not allowed under the Tax Code:

• expenses that are otherwise deductible if the payment of the expense results in PPP forgiveness under the CARES Act; and
• when gross income does not include the income associated with PPP loan forgiveness.

Employer Takeaways

Although the guidance seems to clarify the tax deducibility of PPP loan expenses, there are rules that participants should follow. The release of Rev. Proc. 2020-51, Rev. Rul. 2020-27, and Notice 2020-32 can help borrowers in calculating deductible expenses. If there are further questions, participants should contact their PPP loan lender for clarifications on possible tax deduction opportunities.

On November 16^th, 2020, the U.S. Equal Employment Opportunity Commission (EEOC) released its annual Fiscal Year 2020 Agency Financial Report. According to the report, the agency secured a record $535 million in recovery for victims of discrimination in the workplace during fiscal year 2020, which ended September 30th, 2020.  Additionally, the agency also made significant progress in managing pending inventories of charges, hearings, and appeals.

Overview of Fiscal Year 2020

When the fiscal year began, the agency wanted to focus on three separate goals:

• agency-wide inventory reduction strategies;
• building on technological enhancements and new digital systems; and
• the hiring of front-line staff.

By implementing these goals, the EEOC reduced the private sector charge workload by 3.7 percent to 41,951. This is the lowest pending inventory that the agency has seen in 14 years. The decrease also builds on a 12.1 percent decrease that the EEOC reached in FY 2019. At the same time, the agency increased the percentage of charges resolved with an outcome favorable to the charging party. This was a rise of nearly two percent, to 17.4 percent.

Additionally, in the federal sector, the EEOC successfully decreased the pending inventory of hearing receipts for the third consecutive year. This was a reduction of 15.7 percent, from 12,933 in fiscal year 2019 to 10,905 in fiscal year 2020. The EEOC also reduced the number of federal sector appeals that were more than 500 days old by 32 percent.

Additional Fiscal Year 2020 Highlights

The EEOC also showed improvements in other areas:

• The agency secured a record amount of recovery, more than $535 million, for victims of discrimination in the workplace. This includes $333.2 million relief for employees and applicants in the private sector and state and local government workplaces. The EEOC achieved this through mediation, conciliation, and other administrative enforcement. $106 million was also secured but through litigation. The litigation recovery was the highest since 2004. The EEOC also secured $96.2 million in monetary relief for federal employees and job applicants.
• The agency adapted its mediation program to provide mediations remotely during the pandemic. More than 6,700 successful mediations resulting in $156.6 million in benefits to charging parties.
• Educational, training, and outreach events were still provided during fiscal year 2020. Despite the COVID-19 pandemic, EEOC staff conducted more than 2,690 outreach events reaching nearly 300,000 people.

Employer Takeaways

In addition, during Fiscal Year 2020, the EEOC also provided critical information in response to the global pandemic. Created for employers, the various guidance provided at a look at the connection between COVID-19-related issues and employment discrimination laws. This included a Q&A document, What You Should Know About COVID-19, the ADA, the Rehabilitation Act, and Other EEO Laws. Updated several times to address additional questions, the document received approximately 1 million downloads. While many EEOC laws apply to employers with 15+ employees, many states have their own laws prohibiting job discrimination. To prevent possible fines or lawsuits, employers need to investigate which, if any, state-specific anti-discrimination laws they need to follow.

On November 12^th, 2020, the U.S. Department of Labor (DOL) announced a final rule establishing registration requirements for pooled benefit plan providers. The rule implements registration requirements pursuant to the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act).

Background of the SECURE Act

The SECURE Act amended both the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code. It established a new type of multiple employer plan (MEP) called a “pooled employer plan.”  Pooled employer plans are only administered by a “pooled plan provider.”

According to the Employee Benefits Security Administration (EBSA), pooled employer plans offer employers greater flexibility in their benefit offerings. Specifically, small unrelated employers now can offer workplace retirement savings option with reduced burdens and costs to the business.

The SECURE Act allows pooled plan providers to start operating pooled employer plans beginning on January 1st, 2021. Pooled plan providers, however, must register with the Secretaries of Labor and Treasury before they begin operations as a provider.

Explanation of the Final Rule

The final rule establishes a straightforward electronic registration process for businesses that want to offer pooled employer plans. The process requires pooled plan providers to register at least 30 days before beginning operations. The registration, however, carries an exception period of November 25th, 2020, to January 31st, 2021 (see below). Plans must also submit the following:

• supplemental filings regarding specific reportable events; and
• a final filing after the termination of the provider’s last pooled employer plan and it ceased operations.

For the period of November 25th, 2020, to January 31st, 2021, the EBSA will waive the 30-day requirement to register. The waiver is only granted, however, provided registration occurs no later than the start of the plan.

Employer Takeaways

There are rules that employers considered as “pooled plan providers” must comply with. Failure to comply could lead to fines and penalties levied by the DOL. Pooled plan providers must register by electronically submitting the new EBSA Form PR. The new electronic filing system will be available on November 25th, 2020, with the new Form PR released before launch.

On October 30^th, 2020, the Department of Labor (DOL) released final rule “Financial Factors in Selecting Plan Investments.” In an earlier proposed rule, the DOL aimed to regulate environmental, social, and corporate governance (ESG) investing by employee benefit plans. These were plans that fall subject to the Employee Retirement Income Security Act (ERISA). In the final rule, however, the DOL rejected the ESG language as too unclear. The final rule instead removes all ESG terminology, focusing instead on whether a factor is “pecuniary,” or relates to money.

Summary of the Final Rule

Overall, the final rule largely dismisses the materiality of ESG factors when making investment decisions. It instead adopts the idea that considering ESG is at odds with financial factors and fiduciary responsibilities of plan sponsors. As such, considering ESG factors when making investment decisions are now prohibited if not pecuniary in nature. Plan fiduciaries must select investment courses of action based solely on financial considerations relevant to the economic values of those items.

The final rule pivots on two ERISA duties required of fiduciaries:

• Fiduciary Duty of Prudence. A fiduciary has to perform a financial analysis of reasonably available alternative investment options. Decisions take into account the risk of monetary loss and opportunity for monetary gain. These decisions are consider the opportunity of diversification, liquidity, and projected returns. Only when a comparison of these factors yields no difference, then fiduciaries can consider non-pecuniary factors.
• Fiduciary Duty of Loyalty. The rule language focuses on whether an investment factor is pecuniary or non-pecuniary. A fiduciary has a duty of loyalty to investors to determine a course of action based on pecuniary factors. The financial interests of participants cannot only be non-financial objectives. Any fiduciaries that choose funding using non-pecuniary objectives would therefore be in violation of the final rule.

The final rule is effective on January 12th, 2021.

Employer Takeaways

Any employer or employer-associated group who acts as the fiduciary for company benefit plans needs to comply with this rule. While fiduciaries aren’t prohibited from considering ESG factors if “pecuniary,” they may want to avoid ESG factors when making decisions. This will help avoid additional documentation and compliance requirements, and any regulatory adherence to fiduciary obligations under the final rule.

This final rule is not the only guidance that the DOL has released recently regarding benefit plans. In October, the agency updated a resource to help plan administrators determine information about their group plan or insurance issuer. Specifically, the tool helps employers check if their plan or insurance complies with provisions of ERISA. Employers can also verify if their plan or insurance complies with the Mental Health Parity and Addiction Equity Act (MHPAEA).

On November 7^th, 2020, the U.S. Department of Labor’s (DOL’s) Occupational Safety and Health Administration (OSHA) issued guidance for employers. The guidance included a one-pager created to help employers understand what standards are most frequently cited during coronavirus-related inspections. OSHA based these documents on data from citations recently issued. Many of the findings were the result of complaints, referrals, and fatalities reported to OSHA. Covered industries include hospitals and healthcare, nursing homes and long-term care facilities, and meat/poultry processing plants.  This comes a day after OSHA announced levying nearly $2.5 million in COVID-19 violations. 

Overview of the Guidance

The one-pager and guidance document provide available resources that address the most frequently cited standards. Standards addressed include Respiratory Protection, Recording and Reporting Occupational Injuries and Illnesses, Personal Protective Equipment, and the General Duty Clause. The one-pager also provides examples of requirements employers must follow, such as:

• Provide a medical evaluation before a worker completes fit-testing or uses a respirator.
• Establish, implement, and update a written respiratory protection program with required worksite-specific procedures.
• Train workers to safely use respirators and/or other PPE in the workplace. Retraining should occur when there are changes in the workplace that might make previous training obsolete.
• Store respirators and other PPE properly in a way to protect them from damage and contamination, and deformation.
• Keep required records of work-related fatalities, injuries, and illness.

OSHA is providing the guidance to help employers protect workers and increase compliance with OSHA requirements.

Available OSHA Resources

OSHA’s On-Site Consultation Program offers no-cost and confidential occupational safety and health services to small- and medium-sized businesses. It helps identify workplace hazards, provides advice for OSHA standards compliance, and helps establish and improve safety and health programs. On-Site Consultation services are separate from enforcement and do not result in penalties or citations.

Employer Takeaways

Under the Occupational Safety and Health Act of 1970 (OSH Act), employers are responsible for providing safe workplaces for employees. Since the beginning of the pandemic, OSHA has stated that employers have a responsibility to handle workplace COVID-19-related issues.  Specifically, this responsibility could include creating new policies, reporting and recording cases of COVID-19-related injuries or illness, and implementing proper training. By complying with the OSH Act, employers can keep employees safe and healthy and avoid possible fines and penalties.