On September 9, 2022, the New Jersey Cannabis Regulatory Commission (Commission) released interim Guidance (Guidance) on the workplace drug testing provisions of the state’s recreational marijuana law, known as the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (Act).  This is the Commission’s first workplace guidance since the adoption of the Act in February, 2021, and is intended to serve as a placeholder until the Commission formulates and approves standards for Workplace Impairment Recognition Expert (WIRE) certifications. 

The Act authorizes state residents over the age of 21 to engage in the recreational use of marijuana and prohibits employers from taking adverse employment action solely because an employee has cannabis metabolites in their system.  However, the Act does permit employers to enforce workplace policies that prohibit employees from being under the influence of marijuana or impaired by marijuana or marijuana products at work.  In response, the Act created the role of the WIRE, which is an individual designated by the employer who would be certified to assess whether an employee is under the influence in the workplace or during work hours. 

The Act requires employers to utilize WIREs to conduct drug tests and a physical evaluation of the employee.  The Act also requires the Commission to issue regulations establishing certification standards for WIREs; however, the Commission has not issued any regulations to date.  Although the interim guidance does not provide the certification standards for WIREs, it does provide interim procedures employers may utilize in detecting and identifying an employee’s workplace use of, or impairment arising from, suspected use of marijuana or marijuana products. 

First, the Guidance clarifies that a drug test indicating the presence of cannabis alone is insufficient to support an adverse employment action, but that a test combined with “evidence based documentation of physical signs or other evidence of impairment during an employee’s work hours may be sufficient to support an adverse employment action.” 

Second, the guidance suggests that to demonstrate physical signs or other evidence of impairment sufficient to support an adverse employment action, employers should designate an interim staff member who is “sufficiently trained” to assist with making determinations of suspected marijuana use during an employee’s work hours. 

Third, the guidance provides a “Reasonable Suspicion Observation Report” that the designated staff member can utilize to document the behavior, physical signs, and evidence that support the employer’s determination.  Employers are permitted to utilize their own form if they wish to do so. 

Fourth, the guidance suggests that employers establish a standard operating procedure for completing the Reasonable Suspicion Observation Report. 

Finally, the Guidance reiterates the Act’s carve out for federal contractors.  Under the Act, federal contractors are permitted to revise their policies to be consistent with federal law, rules, or regulations, if it is determined that compliance with the Act would result in a probable adverse impact on the federal contractor. 

As a result of this interim guidance, New Jersey employers should review and revise their current drug testing policies to be consistent with the interim guidance.  In addition, employers should designate appropriate supervisors/managers who can serve as the designated person(s) responsible for determining reasonable suspicion of cannabis use/impairment during working hours.  It is important that such supervisors/managers receive appropriate training in impairment detection protocols.  Finally, employers should be sure to use the Reasonable Suspicion Observation Report or a version of this form, and the mandated standard operating procedure developed for these situations, in a manner that is consistent with the interim guidance.

Ballard Spahr’s Labor and Employment Group regularly advises clients on navigating medical and recreational cannabis laws and are available to assist New Jersey employers in compliance measures. 

Yesterday, the NLRB published a proposed rule designed to rescind and replace the Trump-era rule used to determine whether two companies are joint employers under the NLRA. Under the rule adopted during the Trump Administration, an employer can be a joint employer with another entity if it has substantial direct and immediate control over the essential terms and conditions of employment of the other entity’s workers.

The proposed new rule sets forth a much broader test whereby an employer is a joint employer of particular employees if the employer has a relationship with those employees under established common-law agency principles, and the employer shares or codetermines those matters governing at least one of the employees’ essential terms and conditions of employment (e.g., wages, benefits, hours of work, etc.). Under the proposed rule, “share or codetermine” means an employer possesses the authority to control (whether directly, indirectly, or both), or exercises the power to control (whether directly, indirectly, or both), one or more of the employee’s essential terms and conditions of employment. Thus, a party asserting a joint-employment relationship may establish joint-employer status with evidence of indirect and reserved forms of control, such as a contractual reservation of rights, so long as those forms of control bear on employees’ essential terms and conditions of employment.

The proposed rule increases the risks of joint employer status for many employers. If two entities are joint employers under the NLRA, both must bargain with the union that represents the jointly employed workers; both are potentially liable for unfair labor practices committed by the other; and both are subject to union picketing or other economic pressure if there is a labor dispute.

Ballard Spahr’s Labor and Employment Group is monitoring the new development and is ready to guide employers through the current and potential regulatory environment.

On August 26, 2022, the United States Court of Appeals for the Eleventh Circuit narrowed the nationwide injunction of Executive Order 14042, which requires federal contractors and employees who work on or in connection with a covered federal contract, or share a workplace with another employee who works on or in connection with such contracts, to be fully vaccinated against COVID-19. The Eleventh Circuit held that the nationwide injunction issued by a federal district court in Georgia in January 2022 was overly broad. The Eleventh Circuit narrowed the injunction to apply to only the federal procurement contracts and selection processes involving the actual parties to the case, which include the states of Georgia, Alabama, Idaho, Kansas, South Carolina, Utah, and West Virginia, as well as the Associated Builders and Contractors, a construction-industry trade organization. The Eleventh Circuit left the injunction in place “to the extent that it bars federal agencies from considering the enforceability of the mandate when deciding who should receive a contract, if any plaintiff belongs to the pool of bidders.” The case is Georgia v. President of the United States.

The Eleventh Circuit stated that the plaintiffs in the Georgia v. President of the United States case will likely succeed on their underlying claim that the mandate exceeds the President’s authority, rejecting the Administration’s argument that the Procurement Act, on which President Biden relied, allows the President to take any action that enhances efficiency. The Eleventh Circuit therefore agreed with the federal court that “the President likely exceeded his authority under the Procurement Act when directing executive agencies to enforce [the COVID-19 vaccine] mandate.” But ultimately, the Eleventh Circuit narrowed the nationwide reach of the Georgia federal court’s injunction, finding that the injunction was overly broad and that extending the injunction beyond the parties to the original lawsuit was unfounded.

Despite the Eleventh Circuit’s action, court watchers expect that there will be further lawsuits in other jurisdictions on the issue of the enforceability of Executive Order 14042, and notably the Biden Administration has not changed its stance on the vaccine mandate for federal contractors. Ballard Spahr regularly advises federal contractors on this issue; and recommends that federal contractors consult with counsel regarding such contracts and vaccine mandates.

For more information about the previous nationwide injunction, see our blog posts here and here.

On August 26, 2022, the U.S. Court of Appeals for the District of Columbia Circuit turned back efforts by a group of unions seeking to force the Occupational Safety and Health Administration (OSHA) to quickly issue a permanent rule establishing protections for healthcare workers from COVID-19.  

A unanimous three-judge panel in In re: National Nurses United, et al. held that the court lacks jurisdiction to compel OSHA to retain the now-expired Healthcare Emergency Temporary Standard (Healthcare ETS) it issued in June 2021.  The court also held that it does not have the power to require OSHA to promulgate a permanent standard because the agency could, at the end of the rulemaking process, ultimately decide not to issue one.  According to the court, promulgating and enforcing COVID rules fall squarely within OSHA’s prosecutorial discretion and, therefore, “is inappropriate for judicial control through mandamus.”

For additional information on the now-expired Healthcare ETS and OSHA’s plans to adopt a permanent ETS, read our prior blog posts.

On August 19, 2022, the U.S. Departments of Labor, Treasury, and Health & Human Services issued final rules entitled, “Requirements Related to Surprise Billing: Final Rules,” which modify the independent dispute resolution (IDR) process implemented under the No Surprises Act. 

The No Surprises Act (the Act), enacted as part of the Consolidated Appropriations Act, 2021 (CAA), created novel protections against out-of-network balance billing and established an IDR process for resolving payment disputes between certain providers and health plans when they are unable to agree upon an appropriate price for out-of-network services.  Following challenges in the Eastern District of Texas – which resulted in the court vacating key aspects of the interim rules governing dispute resolution – the Departments issued their new regulations finalizing portions of the previous rules on the controversial IDR process. 

Under the new rules, the IDR process seeks to ensure transparency in the qualifying payment amount (QPA) calculation process as it relates to the practice of “downcoding,” which occurs when plans and issuers manipulate the QPA by using different service codes than the codes providers originally used in billing.  Employers and sponsors of group health plans should prepare themselves to implement and comply with these new rules by consulting with claims administrators and counsel. 

For additional information, please see the full Legal Alert prepared by our Health Care and Employee Benefits and Executive Compensation colleagues, who regularly advise plan sponsors and plan administrators navigating these laws.

On August 18, New Jersey Governor Phil Murphy signed into law S315 (22R), which aims to protect employment and wages and benefits during changes in control at health care facilities. When a change in control occurs, the former and “successor” health care employers will now both have new, and very significant, legal obligations. This law has the potential to alter dramatically the landscape of healthcare acquisitions across the Garden State.

The law is effective November 16, 2022 (90 days after enactment).

Continued Employment and Benefits

The law’s most notable obligation is imposed on buyers or other successor employers. Specifically, for a period of four months after the change in control (“transition period”), successor employers must offer continued employment to eligible employees without reducing wages or paid time off, or reducing the total value of benefits (e.g., health care, retirement, and education benefits).

If an employee accepts the employment offer, the successor employer may not terminate the employee without cause during the transition period, unless the layoff is part of a larger reduction in force and the choice of retained employees is based on seniority and experience. Following the transition period, the successor employer must also evaluate all retained employees, and offer to continue their employment if their performance has been satisfactory.

The successor employer must maintain records of each employment offer and performance evaluation for at least three years following the offer or evaluation.

Other Obligations

The law also requires a written agreement between the former and successor employers, outlining the new law’s obligations. And it requires the former employer to provide a list of eligible employees to both the successor employer and any collective bargaining representatives at least 30 days prior to the change in control. This list must contain the name, address, date of hire, phone number, wage rate, and employment classification of each eligible employee.

Also at least 30 days prior to the change in control, the former employer must notify each eligible employee of their rights under this law and post a notice of these rights in the workplace.

Definitions

An “eligible employee” means any individual employed at least 90 days prior to the change in control, and a “health care entity” means any health care facility licensed under P.L. 1971, c. 136, a staffing registry, or a home care services agency.

A “change in control” means a sale, assignment, transfer, contribution, or other disposition of all or substantially all assets used in a health care entity’s operations (including by consolidation, merger, or reorganization). It does not include any change in control in which either the former or successor health care employer is a government entity.

NLRA Preemption?

Compliance with this new act creates substantial issues for a unionized successor employer, including imposing upon that health care employer a duty to recognize and bargain with the predecessor’s labor union and to assume the pre-existing collective bargaining agreement, consistent with legal principles established decades ago under the National Labor Relations Act.

But because these union-related obligations arise under the NLRA, there are arguments that the new NJ law is preempted. However, that question requires additional analysis beyond the scope of this alert.

Penalties?

Employees have a private right of action for unpaid wages if the successor employer fails to continue paying wages and other benefits at the previous rate, or for retaliation if the employer fails to make an employment offer to an eligible employee. Affected employees are entitled to all available remedies, including immediate reinstatement and damages for unpaid wages.

In light of these potential penalties, New Jersey health care facilities contemplating a consolidation, reorganization, or transfer of control must take this new law into account and should consult with experienced labor counsel before moving ahead with a transaction.

The Employer Shared Responsibility Provisions (commonly known as the “employer mandate”) under the Affordable Care Act (ACA) require covered large employers to pay an assessment under the Internal Revenue Code if they fail to offer health coverage to their full-time employees that meets certain standards. Those standards include a requirement that the coverage be affordable for full-time employees. “Affordability” is determined as a percentage of earnings. The IRS recently announced a significant decrease in the percentage for 2023.

The employer mandate applies only to employers with at least 50 full-time employees (or part-time employees, where a part-time employee counts as a fraction of a full-time employee based on hours worked). Covered employers may be gearing up for annual enrollment and determining how much to charge employees for health coverage in 2023, and may wish to take the new affordability percentage into account – particularly if low-wage workers make up a significant portion of the workforce.

For more information on this change, see the full Legal Alert by our Employee Benefits and Executive Compensation colleagues, who regularly consult with clients related to employee health benefit plans.

The United States Court of Appeals for the Seventh Circuit has rejected the Equal Employment Opportunity Commission’s appeal seeking to overturn the trial court’s decision that Walmart did not violate the Pregnancy Discrimination Act when it accommodated all workers injured on the job, but denied all pregnant women a similar accommodation. EEOC v. Wal-Mart Stores East, LP, 7th Cir., No. 21-01690.

From 2014-2017, Walmart had a light duty accommodations policy for workers injured on the job. Walmart’s policy was pregnancy-neutral – eligibility depended on whether the employee suffered an injury at work. Walmart denied light duty accommodation requests under the policy to all employees injured off the job in order to, among other things, help reduce its costs and exposure under state workers’ compensation law.

Affirming the grant of summary judgment to Walmart, the appeals court held the company acted in line with Young v. United Parcel Service Inc., 575 U.S. 206 (2015), a 2015 U.S. Supreme Court decision that laid out a three-step test for assessing pregnancy accommodation claims. At step one, the employee must show that her employer refused her request for an accommodation, and then granted accommodations to others with similar restrictions. For step two, the employer must offer evidence to demonstrate its reasons for refusing the employee’s request were legitimate. At step three, the employee must “provid[e] sufficient evidence that the employer’s policies impose a significant burden on pregnant workers, and that the employer’s ‘legitimate, nondiscriminatory’ reasons are not sufficiently strong to justify the burden, but rather – when considered along with the burden imposed – give rise to an inference of intentional discrimination.” 575 U.S. at 229.

In its appeal, the EEOC urged that claims made under the Pregnancy Discrimination Act warrant broader discovery to learn “whether the employer explained why it excluded pregnant employees from a benefit.” The Seventh Circuit disagreed, holding that Walmart provided an adequate justification – compliance with state workers’ compensation requirements – to demonstrate its reasons for refusing the employee’s request were legitimate and nondiscriminatory.

The decision, found here, is binding in Illinois, Indiana and Wisconsin, and reinforces that all employers should carefully consider their policies and practices, to ensure that they take into account all relevant factors and comport with the three step test when responding to pregnant employees’ requests for accommodation. Ballard Spahr regularly consults with our clients on these matters.

The Department of Health and Human Services (HHS) has issued proposed regulations under the nondiscrimination provisions of Section 1557 of the Affordable Care Act (ACA). The proposed rules restore and augment a number of the nondiscrimination requirements in regulations that were published in 2016, but later stripped away in rules published in 2020. For example, the proposed regulations expand the rules on sex discrimination, expand the entities covered by Section 1557, revise the notice requirements and change requirements regarding policies and training, among other things.

Health care providers, insurers, and plan sponsors should determine whether they are subject to the new rules and consider the changes that they will need to make to comply, particularly to the extent that they made changes based on the 2020 regulations. 

Ballard Spahr attorneys covered the proposed rules at length in a legal alert that can be found here.  

Effective last week, the Occupational Safety and Health Administration’s (OSHA) Region 3 Administrator, whose jurisdiction covers PA, DE, MD, VA, WV, and Washington DC, released a Regional Emphasis Program (REP) for Warehousing Operation which seeks to reduce injury/illness rates in the warehousing industry by conducting comprehensive inspections to address hazards that may include those associated with powered industrial trucks, lockout/tagout, life safety, means of egress and fire suppression.

The REP applies to warehousing, storage, and distribution yard operations in Region 3. The REP will not be applied to marine terminals or shipyards, and is set to expire in five years, unless renewed. According to the release, the incident rate for industries covered by the REP, including warehousing and storage, food and beverage stores, and grocery wholesalers, is higher than the incident rate for all private industry.

The REP projects that OSHA will conduct programmed inspections, which are inspections scheduled based upon objective or neutral selection criteria, as well as unprogrammed inspections, such as inspections conducted in response to reports of imminent dangers, complaints, or referrals. Unprogrammed inspections, the REP notes, may be conducted without regard to the subject establishment being on the current cycle for programmed inspection. Employers impacted by the REP should prepare for these inspections.

Ballard Spahr’s Labor & Employment Group regularly advises employers on health and safety compliance at the federal, state and local levels and is prepared to help employers respond to OSHA’s new guidance.