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DOL Withdraws Final Rule on Independent Contractor Status under FLSA

On May 5, 2021, the Department of Labor (“DOL”) announced a new final rule withdrawing the “Independent Contractor Status Under the Fair Labor Standards Act” final rule (Independent Contractor Rule) that had been published on January 7, 2021, to take effect on March 8, 2021. Of note, the DOL is not issuing new federal guidance on independent contractor status with this new rule. The DOL indicated that the January 2021 rule “is inconsistent with the FLSA’s text and purpose, and would have a confusing and disruptive effect on workers and businesses alike. . . .” The new Rule will be published on May 6, 2021.

Employers should keep in mind that many states, including Wisconsin, have adopted their own tests for independent contractor status. These state laws can vary widely from state-to-state, and even within a state, depending upon the issue being addressed (i.e., unemployment eligibility, wage and hour, tax liability). Lake Effect continues to monitor federal and state laws and guidance relating to independent contractor status, and we will keep you apprised of developments in this area.

Lake Effect is here to answer your questions about independent contractors, FLSA, and labor laws. We continue to monitor important legal and HR developments, as well as COVID-related updates from federal, state, and local authorities. Please keep watching our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.

Human Resources / Legal - 05/05/2021

Major Provisions of Final Tip Pool Rule Become Effective April 30, 2021

Three main provisions of the US Department of Labor’s final tip pool rule take effect April 30, 2021. Other parts of the rule are delayed and could be further revised by the Biden Administration. For a complete discussion of the final rule, issued on December 22, 2020, please see Lake Effect’s prior blog on this topic.

The following provisions of the final tip pool rule take effect April 30, 2021:

Employers, managers, and supervisors are prohibited from sharing or keeping any portion of tips received by employees; this prohibition applies regardless of whether the employer takes a tip credit and regardless of the type of tip pool implemented.
Employers who do not take a tip credit have two options for tip pooling. Employers may create a “traditional tip pool” and/or a “nontraditional tip pool,” which includes employees who do not regularly receive tips, such as cooks and dishwashers. Employers who take a tip credit can only create a traditional tip pool.
An employer who takes a tip credit or creates either type of tip pool must identify on its payroll records each employee who receives tips and maintain records of the weekly or monthly amount of tips reported by each employee.

The effective date of the remaining provisions of the final tip pool rule has been delayed until December 31, 2021. Those delayed provisions address:

The assessment of civil monetary penalties against employers who “willfully” or otherwise violate the FLSA’s prohibition against keeping employee tips.
The application of the FLSA tip credit to tipped employees who perform tipped and non-tipped duties. The effective date of these provisions is delayed until December 31, 2021.

Lake Effect is here to answer your questions about federal and state wage and hour laws that impact employers across all industries. We continue to monitor important legal and HR developments, as well as COVID-related updates from federal, state, and local authorities. Please watch our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.

Legal - 04/29/2021

IRS Issues Guidance on ARPA Tax Credits and COVID-19 Vaccinations

On April 21, 2021, the IRS and the US Treasury Department published a fact sheet on the tax credits available under American Rescue Plan Act (ARPA) to employers who provide paid leave to employees who get COVID-19 vaccinations. ARPA extends tax credits previously established under the Families First Coronavirus Response Act (FFCRA) to reimburse employers for the cost of voluntarily providing paid sick and family leave to employees due to COVID-19. For a complete discussion of the ARPA and FFCRA leaves, please see Lake Effect’s prior blog. The new fact sheet confirms the following:

Employers eligible for the tax credits are those with fewer than 500 employees, including governmental employers, other than the federal government and federal agencies.
Eligible employers may receive tax credits for wages paid for leave taken by employees to receive COVID-19 vaccinations or recover from any illness or condition related to such vaccinations.
As set forth in Lake Effect’s prior blog on FFCRA tax credits, the credits cover 100% of the costs of qualified sick and family leave wages, the employer’s share of social security and Medicare taxes on those wages, and any qualified health plan expenses allocable to those wages.
Eligible employers may claim tax credits for sick and family leave paid to employees to receive or recover from COVID-19 vaccinations from April 1, 2021 to September 30, 2021.
Employers may use IRS Form 941 to claim the tax credits and can keep the federal employment taxes that they otherwise would have deposited up to the full amount of the credit for which they are eligible. Employers may also request an advance of the credits by filing IRS Form 7200.
Self-employed individuals may claim comparable tax credits on their Individual IRS Form 1040.

Employers should work closely with their tax advisors to understand the tax implications of COVID-related paid sick and family leaves, including those covering vaccinations. We are closely monitoring developments relating to COVID-19 and the workplace. Keep watching for blogs and emails from your Lake Effect team for important legal updates and HR best practices. The attorneys and HR professionals at Lake Effect HR & Law are ready and willing to help. Contact us at info@le-hrlaw.com or 1-844-333-5253.

COVID-19 Resources / Legal - 04/27/2021

Call to Action: New COBRA Notices Due Soon

On April 12, 2021, Lake Effect HR & Law posted a blog notifying our readers about new COBRA provisions under the American Rescue Plan Act of 2021 (ARPA). We encourage employers who are federal or state COBRA covered employers to take prompt action, as deadlines for notices are upon us.

Starting April 1, 2021, employers are required to send a new ARPA COBRA summary fact sheet and new required COBRA notice to covered employees and their dependents who have had qualifying events.
By May 31, 2021, employers are required to send a new ARPA COBRA summary fact sheet and new extended COBRA election notice to covered employees and their dependents who had certain qualifying events between October 1, 2019 and April 1, 2021.

Please see our prior blog for live links to the required ARPA COBRA summary fact sheet and new COBRA notices. As always, if you need assistance or advice on administering these new COBRA notices, please reach out to the HR professionals and attorneys at Lake Effect HR & Law. Please know that employers and plans may be subject to an excise tax under the IRS Code for failing to satisfy the new COBRA requirements. The tax may be as much as $100 per qualified beneficiary.

We continue to monitor developments and guidance relating to the American Rescue Plan Act of 2021 and other legislative efforts to address the continuing impact of the COVID-19 pandemic. We will provide you with employment-related updates on these topics as they arise.

Human Resources / Legal - 04/19/2021

American Rescue Plan Act Extends and Expands Voluntary Employer-Provided FFCRA Leaves

Under the American Rescue Plan Act of 2021 (ARPA), employers who opt to continue paid leaves originally required under the Families First Coronavirus Response Act (FFCRA) can provide a greater amount of paid leave for a broader range of reasons and still receive tax credits to cover 100% of costs related to those leaves.

FFCRA originally required employers with fewer than 500 employees to provide employees with 2 weeks of Emergency Paid Sick Leave (EPSL) and up to 12 weeks Emergency Family and Medical Leave (EFML) (if employees satisfied one of the reasons set forth under FFCRA. For a complete review of FFCRA leaves and requirements, see Lake Effect’s prior blogs on this topic. These mandatory leaves expired December 31, 2020. The stimulus bill passed on December 22, 2020, permitted employers to voluntarily allow employees to use any remaining EPSL or EFML by March 31, 2021 and still receive the related tax credits.

The ARPA further extends and expands original FFCRA leave allowances and related employer tax credit provisions as follows:

Time period extended: Covered employers can continue to provide employees with EPSL and EFML through September 30, 2021 and receive tax credits to cover 100% of costs associated with such leaves. Covered employers can decide to offer both EPSL and EFML, only one of them, or neither.
Additional 10 days of EPSL: Covered employers may provide employees with an additional 10 days of EPSL between April 1, 2021 and September 30, 2021 and receive tax credits to cover 100% of related costs.
New reasons for EPSL: In addition to the previous qualifying reasons set forth in FFCRA, employers may provide employees EPSL for time spent awaiting COVID-19 test results, obtaining a COVID-19 vaccine, or recovering from “any injury, disability, illness or condition related to such” vaccine. Pay for these new leave reasons will be at 100% (up to a max of $511/day or $5,110 for 10 days).
Additional 12 weeks of EFML: Covered employers may provide employees with an additional 12 weeks of EFML (all at 2/3 pay, up to a maximum of $12,000) between April 1, 2021 and September 30, 2021. Note this is an increase from 10 to 12 weeks of paid leave, and from $10,000 to $12,000 in maximum pay per employee.
New reasons for EFML: Employers may provide employees EFML for all the qualifying reasons permitted for use of EPSL, including time spent awaiting COVID-19 test results, obtaining a COVID-19 vaccine, or recovering from the effects of such vaccine.
New non-discrimination requirement: Employers will not receive tax credits for costs associated with voluntary EPSL or EFML if it discriminates in favor of highly compensated employees, full-time employees, or longer-tenured employees in providing leaves.

We continue to monitor developments and guidance relating to the American Rescue Plan Act of 2021 and other Biden Administration efforts to address the continuing impact of the COVID-19 pandemic. We will provide you with employment-related updates on these topics as they arise.

COVID-19 Resources / Legal - 03/16/2021

Twelve Months Later: How Has Your Organization Evolved?

The past 12 months have been a time like no other, forcing organizations to pivot quickly to accommodate a new reality. Now is the time to review handbook policies and internal processes that may have been revised on the fly in response to changing circumstances.

You can start by reviewing the ways your organization has changed since the start of the pandemic in terms of policy and process changes:

Did employees’ transition to work remotely?
Will they continue to do so? Did they start or expand use of personal devices for business purposes?
Have schedules or reporting relationships changed to adapt to new circumstances?
Have employees performed remote work from other states? (If they intend to remain there, you may need to register for general business, payroll, and/or unemployment tax purposes in that state. You may also need to review your current benefits offerings, as well specific employment laws for that state or local area. See our blog on state employment laws to consider with remote employees.)
Has your brand or business model changed in response to the pandemic? Do you need to update position descriptions or organizational charts?

As you identify changes that have occurred and adjustments that will be necessary, review your employee handbook and update relevant policies to reflect your decisions. (Note: We do not recommend changing the handbook for policies that are temporary in nature, such as allowing employees to work remotely only until worksites open again. Temporary policies can be freestanding.)

In addition, consider the impact that the past year had on your employees and your organization’s culture:

Some employees may have been working onsite throughout the pandemic. Others may be excited to return to the workplace, and still others may be cautious to return. This can result in actual or potential conflicts between employees who may judge or simply not understand another’s perspective.
Some employees may be experiencing mental health issues resulting from isolation or other challenges encountered over the past year, while others are thrilled to be out of the house and back in the office.
Some employees may feel the stress of changing family routines and expectations, and they may need additional time to adapt or help family members adapt.
Some employees may be grieving the loss of a loved one during the pandemic, while others have experienced minimal personal impact.
Some employees may need more time than others to reacclimate to their commute and former schedule at a worksite.

As your employees and you address these difficult issues, you can reaffirm a culture of inclusion, acceptance, and respect with effective planning, clear communication, flexibility, and empathy.

Lake Effect is here to answer your questions about how to handle these important workplace transitions and evolution, while maintaining your culture and supporting your mission and vision. We continue to monitor important legal and HR developments, as well as COVID-related updates from federal, state, and local authorities. Please keep watching our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.

COVID-19 Resources / Human Resources - 03/10/2021

New Law Limits COVID-19 Civil Liability For Wisconsin Employers

Governor Evers signed 2021 Wisconsin Act 4 into law on February 26, 2021, providing Wisconsin employers with broad protection from civil law claims relating to COVID-19. Effective March 1, 2020, Wisconsin businesses, schools, and non-profit organizations are immune from civil liability for the death of or injury to any individual or damages caused by an act or omission resulting in or relating to exposure to COVID-19. The law applies retroactively to all claims arising on or after March 1, 2020, except it will not apply to lawsuits actually filed before March 1, 2020. Furthermore, immunity under the law will not apply to an entity whose actions or omissions involve reckless or wanton conduct or intentional misconduct.

2021 Wisconsin Act 4 provides employers substantial protection from civil lawsuits brought by employees, contractors, customers, students, vendors, and family members of these individuals. Despite the new protections, Wisconsin employers should continue to closely monitor and follow guidance from local, state, and federal public health officials on COVID-19 safety and mitigation measures. Failure to do so could constitute evidence of reckless, wanton, or intentional misconduct, which would negate the civil immunity afforded under the Act 4. Such a failure could also trigger claims under OSHA’s general duty clause for failure to provide employees a work environment free from recognized hazards. Employers should also note that employees can continue to seek remedies under applicable workers’ compensation statutes.

COVID-19 Resources / Legal - 03/08/2021

OSHA Recommends Measures to Reduce Workplace Spread of COVID-19

Responding to a directive from the Biden administration, OSHA posted new guidance on January 29, 2021 to help non-healthcare employers identify COVID-19 risks and implement effective measures to minimize its spread in the workplace. The guidance is not a standard or regulation, and it creates no new legal obligations. It is advisory in nature, containing recommendations and detailed descriptions of existing safety and health regulations. However, it will likely be one yardstick used to measure compliance with OSHA’s “General Duty Clause,” which requires employers to provide workers with a workplace free from recognized hazards that cause or are likely to cause death or serious harm.

The new guidance specifies that implementing a workplace COVID-19 prevention program is the most effective way to reduce its spread at work. An effective program includes such elements as:

Assigning a workplace coordinator responsible for COVID-19 issues.
Identifying where and how employees might be exposed at work.
Identifying a combination of measures to limit the spread of COVID-19 at work including separating and sending home potentially infected employees, implementing physical distancing and barriers, requiring face coverings, improving ventilation, and using applicable PPE, as well as good hygiene and cleaning/disinfection practices.
Providing reasonable accommodations or modifications to workers at higher risk of severe illness.
Effectively communicating with employees about COVID-19 in a language they understand and providing them with guidance on screening and testing.
Educating and training employees on COVID-19 policies and procedures.
Minimizing the negative impact of quarantine and isolation on workers by allowing telework or work at alternative locations where possible.
Recording and reporting COVID-19 infections and deaths consistent with applicable OSHA requirements. See Lake Effect’s blogs on this issue.
Establishing a process for employees to anonymously express concerns about COVID-19 hazards and ensuring that they are not discriminated or retaliated against in any way.
Making COVID-19 vaccines available to employees and requiring all employees to follow preventive practices, regardless of whether they are vaccinated. See Lake Effect’s blog on this issue.

This is not an exhaustive list of OSHA’s new recommendations, and this new guidance contains detailed information about each aspect of an effective workplace COVID-19 prevention program. Employers should work closely with legal counsel to understand all requirements and implement a COVID-19 workplace prevention program consistent with this new OSHA guidance. Lake Effect is here to help you through this process and ensure that you are taking all possible steps to provide a workplace free from the recognized hazards created by the COVID-19.

COVID-19 Resources / Legal - 02/01/2021

New CDC Guidance Requires Informed Consent for Workplace COVID-19 Testing

On January 21, 2021, the U.S. Center for Disease Control (CDC) issued new guidance for non-healthcare employers who conduct workplace COVID-19 testing. While the CDC previously confirmed that workplace testing is permissible as part of a comprehensive approach to reducing virus transmission, the new guidance clarifies that it should not be conducted without employees’ informed consent. According to the CDC, “informed consent requires disclosure, understanding, and free choice, and is necessary for an employee to act independently and make choices according to their values, goals, and preferences.”

According to the CDC, employers should adopt at least the following measures to promote free decision-making and informed consent to COVID-19 testing in the workplace:

Implement safeguards to protect employee privacy and confidentiality.
Provide complete and understandable information about how a testing program may impact employees’ lives, such as whether a positive test result or refusal to participate in testing may mean exclusion from work for any period of time.
Explain parts of the testing program that would be particularly important to employees as they decide whether to participate (i.e., key reasons that may guide their decision).
Inform employees about the testing program in their preferred languages using clear, non-technical terms. Solicit employee input on the readability of the information.
Train supervisors and managers on their roles and responsibilities regarding testing and encourage them to avoid pressuring employees to participate in testing.
Consider the consent process as an active information-sharing process between the employer and the employee. Throughout the process, encourage and answer employees’ questions, facilitate their understanding, and promote their free choice.

In addition, employers must ensure the disclosures listed below are made to employees:

The manufacturer and name of the test.
The type of test and its purpose.
How the test will be performed.
The known and potential risks of harm, discomforts, and benefits of the test.
What it means to have a positive or negative test result, including test reliability and limitations and any public health guidance triggered by a particular result.

Many of these are contained in the FDA’s emergency use authorization patient fact sheet for each approved COVID-19 test (scroll down on the linked page to find the test-specific fact sheet), which must be provided to any party receiving that test.

Employers who conduct workplace COVID-19 testing must develop plans to address a host of other testing-related topics and questions, including:

Their reasons for testing, frequency of testing, and consequences to employees of testing/non-testing.
Locations, scheduling, procedures, and payment for testing.
Communication and interpretation of test results, applicable leaves and/or benefit policies.
Personal information needed to test and privacy of results.
Internal resources for employees who need additional information, assistance, treatment after test procedure.

Given the CDC’s detailed requirements for informed consent and disclosures relating to workplace-based COVID-19 testing, employers in non-healthcare settings should proceed cautiously when considering the implementation of testing programs or protocols. Rather than conduct workplace testing, some employers may be well-advised to minimize administrative burdens and legal exposure by strongly encouraging employees to undergo frequent COVID-19 testing administered by reliable, unrelated third parties.

COVID-19 Resources / Legal - 01/26/2021

DOL Issues Timely Wage and Hour Rule and Guidance

***Update, January 27, 2021***

UPDATED BY EXECUTIVE ORDER – CLICK HERE FOR UPDATED INFORMATION

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Over the last few weeks, the Department of Labor (DOL) has been busy ticking items off its to-do list. We have seen action on everything from tip pooling to employee notices to travel time.

Tip Pooling and Tip Credits
In October, 2019, Lake Effect blogged on the Department of Labor’s (DOL) proposed new Fair Labor Standards Act (FLSA) regulations on tip pooling, tip credit, and payments to tipped employees. The DOL published the Final Rule on December 22, 2020, implementing most of the changes to tip pooling and tip payments that were proposed in 2019. See also a helpful summary and FAQ provided by the DOL. The Final Rule is effective March 1, 2021.

This new rule will be helpful for restaurant, bar, and hospitality employers making plans to expand or resume operations in the coming months. Many hospitality employers have implemented – or may now consider implementing – tip pools to supplement employee compensation, improve morale, and incentivize all workers to maximize performance. In short, tip pooling can be a useful tool to enhance employee recruitment and retention.

The new tip credit and tip pooling regulations include the following:

No tips for managers, supervisors, or employers: The regulations expressly prohibit employers from keeping employees’ tips and likewise prohibit managers and supervisors from sharing any employee tips, regardless of whether the employer takes a tip credit and regardless of the type of tip pool implemented. Employers who retain pooled tips or share them with managers or supervisors will be subject to civil penalties under the new regulations.
- Relying on the FLSA duties test, a manager or supervisor is defined as “any employee (1) whose primary duty is managing the enterprise or a customarily recognized department or subdivision of the enterprise; (2) who customarily and regularly directs the work of at least two or more other full-time employees or their equivalent; and (3) who has the authority to hire or fire other employees, or whose suggestions and recommendations as to the hiring or firing are given particular weight.” This also includes any workers “who own at least a bona fide 20 percent equity interest in the enterprise in which they are employed and who are actively engaged in its management.”
No 80/20 rule for tip credits: The regulations remove the long-standing 80/20 rule that required employers who take a tip credit (see our prior blog for an overview of tip credits) to carefully track the amount and timing of non-tipped work that employees perform. Under the new regulations, employers may take the tip credit regardless of the amount of non-tipped work an employee is performing provided the normally non-tipped work is performed “contemporaneously with” or “for a reasonable time immediately before or after” their normally tipped work duties.
Employers who take a tip credit are limited to a traditional tip pool: Employers who take a tip credit may create only a “traditional tip pool,” which is limited to employees who “customarily and regularly” receive tips.
Employers who do not take a tip credit have two tip pool options: Employers who do not take a tip credit now have two options for tip pooling. Employers may create a “traditional tip pool” and/or a “nontraditional tip pool,” which includes employees who do not regularly receive tips, such as cooks and dishwashers.
Record-keeping of tip credit and tip pool: Employers who take a tip credit or create tip pools must identify on their payroll records each employee who receives tips and maintain records of the weekly or monthly amount of tips received by employees, as reported by the employee to the employer. Employers can rely on employees’ information tracked on IRS Form 4070.
Timing of payment of tip pool tips: Employers must pay their employees the pooled tips no later than the date on which regular wages are paid to employees and, for credit card based tips, “as soon as practicable after the regular payday.” This further supports the requirement that employers must not retain tips.

Electronic Posting of Required Labor Law Posters
Acknowledging that telework will likely continue for the foreseeable future in many workplaces, the DOL provided new guidance regarding labor law posters. In a field assistance bulletin issued on December 29, 2020, the DOL confirmed that employers can satisfy applicable employee notice obligations by providing required labor law postings to employees on the internet or an intranet. Employers also must display hard copies of the posters in the actual workplace for applicants and employees who are unable to telework.

Compensation for Personal Activity Travel Time
Again acknowledging the continuation of telework, the DOL issued a wage and hour opinion letter on December 31, 2020 addressing the issue of travel time to/from work and home when an employee works part of the day remotely and part of the day in the worksite, and engages in personal activities during their travel time. The DOL reiterated that a non-exempt employee does not need to be paid for time the employee is off duty and is not working, nor for commuting time. The DOL also reinforced that the continuous workday doctrine would not apply to the fact patterns presented by the employer because, during the travel time for personal activities, the employee was clearly off duty, could use their time for their own purposes, and could choose when they would resume work at home or at the worksite. Likewise, the employee’s commuting time to and from work, during which time the employee performed no work duties, was not compensable commuting time.

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For additional information and discussion of DOL rule making, rules, and guidance, please see Lake Effect’s prior blogs on wage and hour issues. We will continue to closely monitor all developments in this area and provide you with important updates.

Lake Effect is here to answer your questions about federal and state issues affecting employers. We continue to monitor important legal and HR developments, as well as COVID-related updates from federal, state, and local authorities. Please keep watching our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.

Lake Effect HR & Law is in business to maximize each client’s workplace potential with a commitment to kindness, true partnership, and exceptional service.

Legal - 01/05/2021

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