Yesterday, the United States Senate confirmed Gwynne Wilcox and David Prouty to seats on the National Labor Relations Board (Board). These confirmations seal the deal on a Democratic majority on the Board and undoubtedly will mean re-visiting much of the Board precedent established under the Trump-era Board (which, in turn, had overturned many of the Obama Board’s most controversial decisions).

Wilcox is a partner at Levy Ratner in New York and will be the first Black woman in NLRB history to serve on the Board. Wilcox will fill a vacant seat.

Prouty is General Counsel for the Service Employee International Union (SEIU) Local 32BJ. Prouty will fill Republican appointee William Emanuel’s seat when his term expires on August 27, 2021.

The appointments of Wilcox and Prouty will put the Board at its full 5 member strength with a 3-2 Democratic majority.

Due to the change in the political makeup of the Board, employers can expect the Biden Administration to fulfill campaign promises to shift from the more employer-friendly, Trump-era Board decisions to decisions that reflect a union- and employee-friendly focus, giving greater protections to worker organizing, collective bargaining, and the right of employees to engage in protected, concerted activity.

Employers should pay close attention to new NLRB decisions as they may have a significant impact on businesses’ interaction with their workers, as well as workplace policies and procedures.  Because federal labor laws apply, in some respects, to both unionized and non-union workplaces, the Biden Board’s decisions will be important even for those companies without unionized workforces.  

Below are a number of significant developments related to COVID-19 that impact businesses of all sizes, across industries:

DOJ Says Vaccine Mandates Not Prohibited by EUA

This week, the Department of Justice (DOJ), Office of Legal Counsel (OLC) released to the public, a memo dated July 6, 2021. The memo can be found here and discusses vaccine mandates and the OLC’s position that the Food, Drug, and Cosmetic Act’s (FDCA) Emergency Use Authorization (EUA) provisions do not prohibit employer vaccine mandates. The opinion comes at an inflection point in time as employers nationwide debate whether to mandate the now widely-available COVID-19 vaccine to their employees or simply recommend it.

Substantively, the OLC opinion states that the language of the FDCA EUA provisions specify only that certain information be provided to potential vaccine recipients and does not prohibit entities from imposing vaccination requirements.

The OLC memo is a welcome opinion for some employers and business entities, including a number of public entities, that have issued vaccine mandates for employees in recent days and weeks.

A Trend Toward Mandatory Vaccines?

California will require all state employees and healthcare workers to be vaccinated or be subject to weekly COVID testing and mask requirements in order to remain in the workplace. All employees of the City of New York will also be required to be vaccinated or subject to weekly testing. The Mayor of New York City asked that all businesses in the City think about mandating vaccines for their employees. The Department of Veterans Affairs also issued a vaccine mandate for all of its healthcare workers. Finally, some reports indicate that President Biden will announce this week that COVID vaccines will be mandated for all federal employees or, if an employee refuses vaccination, they will be subject to frequent testing and additional mask requirements.

In addition to the DOJ’s memo, at least two federal courts have ruled in favor of vaccine mandates. See our blog post on this here.  At this point, it seems that a challenge to a vaccine mandate based on the vaccine’s EUA status is unlikely to be successful. It could also be that these arguments become moot should the vaccines receive full FDA approval in the near future. However, some states have barred “vaccine passports” so businesses should continue to monitor laws, guidance and cases related to these issues and update their policies to ensure the measures taken are appropriate in the jurisdiction in which they operate.

Updated Mask Guidance for Vaccinated Individuals

On Tuesday, July 27, 2021, the Centers for Disease Control (CDC) updated its mask guidance for vaccinated individuals. In May, the CDC changed its mask guidance to state that fully vaccinated individuals could resume most pre-pandemic activities without wearing a mask. However, due to the recent rise of COVID-19 cases due to the Delta variant, the CDC has changed course.

The new guidance states that even fully vaccinated individuals should wear a mask in indoor public places if they are “in an area of substantial or high transmission.” The CDC has placed a detailed map of the U.S. on its website, here, where you can search for a location by County and State in order to determine whether an area is one with “substantial or high transmission.” The classification for a particular County will be fluid and will change based on the number of cases recorded on a weekly basis.

For employers with operations in multiple counties and/or states, it will likely be difficult to keep track of each location’s classification in order to determine whether vaccinated individuals should be required to mask up indoors.  Businesses should also pay attention to state and local guidance which could provide for more restrictions due to the uptick in COVID-19 cases because of the Delta variant.

 

On July 21, 2021, in a 3-1 decision, the National Labor Relations Board (“NLRB”) ruled that a union does not violate federal labor law with the display of the infamous “Scabby the Rat,” and other similar inflatable symbols, at workplaces that do not employ those union’s workers.   Former NLRB General Counsel Peter Robb, a Trump appointee, had long attempted to kill off Scabby, arguing that using the balloons at secondary protests was an unlawful attempt to threaten and coerce neutral parties.  However, two Republican NLRB members, John Ring and Marvin Kaplan, joined Democratic Chair Lauren McFerran to dismiss the case.  Ring and Kaplan based their decision on First Amendment grounds, while McFerran’s concurrence explained that NLRB precedent required the dismissal.

Several federal court opinions had previously given Scabby a reprieve, determining  that unions’ use of inflatable rats and other balloons at protests is protected under the First Amendment.

The matter stems from a 2018 demonstration featuring Scabby by the Operating Engineers Local 150 in front of an RV trade show.  The union was engaged in a dispute with a company that did business with an RV supplier.

The NLRB’s decision makes it easier for Scabby and other similar inflatable symbols or balloons to appear at any employer’s workplace.  In the event such union demonstrations arise, employers should consult with labor counsel for further advice.

In a closely-watched case that may be a preview of other court decisions involving COVID-vaccination mandates for students returning to school and employees returning to the workplace, a federal district court has denied a request to enjoin Indiana University’s COVID-19 vaccine policy for students. The policy includes a requirement that students provide documentation proving that they have been vaccinated – a so-called “vaccine passport.”

A group of eight students had alleged that the public school’s requirement that they be vaccinated, or else qualify for an exemption or take time away from campus in the fall, violated their privacy and body-autonomy rights under the U.S. Constitution. The U.S. District Court for the Northern District of Indiana disagreed. It found that Indiana University’s rule – which would not have prevented the students from attending classes remotely, deferring their enrollment, or following certain masking and social distancing rules – was made in the legitimate interests of public health.

In denying the students’ request that the court enter an injunction to suspend the policy, the court weighed the efficacy of vaccinations to protect against the spread of COVID-19, as well as the many avenues for seeking exemptions from vaccination the school provided. Indeed, of the eight plaintiffs, seven had or would qualify for some form of exemption. Therefore, the court found, the school’s rules properly balanced between the students’ due process rights under the U.S. Constitution and the school’s own right to protect against threats to its school community.

The students have indicated that they will appeal this ruling, but in the meantime IU’s vaccine mandate remains in effect. The district court’s ruling sends another strong signal that vaccine requirements likely pass legal muster when they include appropriate exemptions for those who must opt out for medical or religious reasons, as well as other practical considerations. Employers, many of whom took note of the recent Texas federal court decision in Bridges v. Houston Methodist Hospital, approving a vaccine mandate by a healthcare employer, should continue to monitor cases and update their policies to ensure appropriate measures for keeping their employees safe upon their return to work this summer or fall.

On July 21, 2021, the U.S. Department of Labor (“DOL”) announced that a wide range of government contractors would be required to pay private sector employees at least $15 per hour, in a plan to carry out President Joe Biden’s executive order signed this past April.  Our blog post about President Biden’s executive order requiring the wage increase can be found here.

The new wage floor is set to take effect on new or extended contracts beginning on January 30, 2022.  The minimum wage would rise by $4.05 from its current level of $10.95.  In addition, the regulation would provide annual increases to keep pace with inflation, eliminate the lower minimum wage for tipped workers on federal contracts by 2024, cover workers with disabilities, and outfitters and guides operating on federal lands.  The DOL predicts that the pay raise would impact approximately 327,000 workers.

The DOL will accept public comments on the proposed rule for the next 30 days.  President Biden’s executive order requires that the DOL finalize the regulation by November 24th of this year.

Employers with federal contracts should carefully review their agreements to determine whether, and how, the proposed rule could impact rates of pay.  In the event that the proposed rule becomes final, going forward employers will need to be prepared to enter into agreements that comply with the new terms.

On March 29, 2021, the City of Philadelphia enacted an ordinance providing for paid Public Health Emergency Leave (PHEL). Our blog post on the requirements of the leave can be found here. That leave requirement is now expired and employers no longer need to provide this leave.

The PHEL’s sunset provision tied its expiration specifically to the rescission or expiration of the Pennsylvania Governor’s Proclamation of Disaster Emergency. However, “public health emergency” was defined much broader in the ordinance and included any “declared or proclaimed emergency related to a public health threat, risk, disaster or emergency that affects Philadelphia that is made or issued by a federal, state or local official with the authority to make or issue such a declaration or proclamation.” As such, there was confusion as to when the PHEL would expire.

On June 10, 2021, the Pennsylvania Assembly rescinded the Governor’s Proclamation of Disaster Emergency. Due to the conflict with regard to the definition of “public health emergency” in the PHEL ordinance, some believed the PHEL remained in effect even after the rescission of the Governor’s Proclamation of Disaster Emergency.

However, this week, the City updated its website to state “This March 29, 2021 Public Health Emergency leave expired on June 10, 2021. Eligible employees who are unable to work for covered reasons on the day of expiration may use any remaining Public Health Emergency Leave balance for one week following this expiration date.” Based on this publication by the City, as well as the sunset provision in the PHEL ordinance, it is safe to say that PHEL leave expired as of June 10, 2021, with the exception of certain situations where leave could be used by employees through June 17, 2021, and that employers are no longer required to provide such leave to employees.

Within hours of his inauguration, President Biden broke with tradition by firing the General Counsel of the National Labor Relations Board (NLRB) after he refused to resign.  Some companies have claimed that this decision was improper and left the acting General Counsel named in his place without legal authority to act, setting up an anticipated wave of legal challenges.

In the first court decision to address the issue, a New Jersey federal judge in Goonan v. Amerinox Processing, Inc. suggested that there was no impediment to the President’s removal of former NLRB General Counsel Peter Robb:

Based on the plain language of [the National Labor Relations Act], the President may relieve the General Counsel of his or her duties without the process required for Board members . . . the Act itself provides for the designation of an Acting General Counsel when the General Counsel’s position becomes vacant, however that vacancy came to be.

The case arose when the NLRB sought an injunction against company unfair labor practices.  The company argued that the NLRB was without authority because of the allegedly improper removal of the General Counsel, who, it claimed, has the sole authority to authorize the NLRB to pursue such actions. The court rejected that claim, noting that the National Labor Relations Act (NLRA) does not require a specific process for removal of the General Counsel.  The court further held that the NLRA gives the authority to seek injunctive relief to the NLRB itself and that authority had been delegated to the Regional Director who sought the injunction, effectively sidestepping the question of the authority of the Acting General Counsel.

This is unlikely to be the last legal battle over the removal of former General Counsel Robb and the authority of his successor, but it does pose a setback to companies that are seeking to void legal action by the NLRB on the basis of the alleged lack of legal authority of the Acting General Counsel.

 

In October 2020, Pennsylvania regulations took effect that increased the salary threshold for exempt employees to the federal level, and would have increased the threshold above the federal minimum beginning in October 2021.

However, a recent budget compromise between Democratic Governor Tom Wolf and a Republican-led state legislature has resulted in the regulations’ repeal.

As a result, employers can continue to treat employees as exempt if they satisfy the existing Fair Labor Standards Act (“FLSA”) threshold of $684 per week, or $35,568 per year, as well as the applicable duties test.  Employers should review salaried employees’ compensation and duties to ensure FLSA compliance, as well as compliance with the existing provisions of the Pennsylvania Minimum Wage Act that were not impacted by the repeal of the salary regulations.

On July 9, 2021, the White House issued an executive order (“EO”) with the stated objective of countering anti-competitive forces throughout the economy.  One specific directive is the limitation of non-compete agreements, which include not only restrictive covenants, but also “other clauses or agreements that may unfairly limit worker mobility.”  Potentially, this could include customer and employee non-solicitation provisions, which some courts construe in the same manner as employee restrictive covenants.  Such agreements today are governed by state laws, which vary significantly state-by-state.

In an accompanying fact sheet, the White House noted that competition in labor markets empowers workers to demand higher wages and greater dignity and respect in the workplace.  It further stated that roughly half of private-sector businesses require at least some employees to enter non-compete agreements, affecting some 36 to 60 million workers.  President Biden made the following remarks while signing the EO:

[W]e’re going to improve competition for workers.  I’ve talked a lot about non-compete agreements — contracts that say you can’t take another job in your field, even if you get a better deal.  I made a speech — I was just reminiscing with my staff — back in 2018, at the Brookings Institution, where I talked about the non-compete clauses that were just — I found — to be absolutely ridiculous, but how prevalent they were throughout industries.

Under the EO, the Federal Trade Commission is specifically tasked with using the FTC Act’s rulemaking authority “to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.”  The EO further establishes a White House Competition Council, made up of several cabinet members, to coordinate, promote, and advance Federal Government efforts to address overconcentration, monopolization, and unfair competition in or directly affecting the American economy.

What does the EO mean for employers?  The details remain to be seen.  The FTC (and other federal agencies) have yet to issue proposed rules for public review and comment.  As the New York Times noted, the EO’s import ultimately rests on the “ability of regulators to carry out the rules the White House seeks and to write them in ways that survive legal challenges.”

Regardless of the ultimate rulemaking approach, it is safe to assume that employers should be prepared for a shift in bargaining power toward employees when it comes to non-competition agreements.  Existing agreements with low-wage employees not privy to confidential information or trade secrets may be found unenforceable.  Informed prospective employees may balk at signing restrictive covenant agreements that were previously treated as pro forma.  And, it seems likely that this shift will further fuel judicial sentiments against enforcement of non-compete agreements.  To adapt, employers should begin to consider a more judicious approach to the use of non-compete covenants, including which employees sign them and the necessary scope of the restrictions.

 

 

As we previously reported here, the Supreme Court declined to hear an appeal from the Gloucester County, Virginia School Board in a transgender bathroom case. As a result, the underlying opinion from the Fourth Circuit, which aligns with guidance from the Department of Education under the Biden Administration, stays intact.

Shannon Farmer and Niki Hatza weigh in on the impact of the Court’s decision in The National Law Review.