Client Advisory: Employment Law Trends and Potential Impact on EPL Insurance Claims

May 2021

Now that we are past the first three months of the Biden administration, it is an opportune moment to identify several of the latest trends in employment law and legislation that will influence Employment Practice Liability (EPL) insurance claims. This advisory will examine, among other issues, the following employment issues and trends:

• COVID-19 vaccinations
• Requiring mask wearing for Federal workforce
• EEOC changes and increased litigation
• Wage and hour (“W&H”) changes
• Misclassification of Independent Contractors
• Higher minimum wage for Federal employees
• More funding and enforcement at EEOC, OSHA, and NLRB

Many employers are attempting to manage the health concerns of employees recognizing CDC Guidelines while being sensitive to privacy issues, concerns of co-employees, social pressures and employment liability pitfalls. Primary amongst these considerations is whether an employer can require its employees be vaccinated before returning to the workplace. Other concerns include:

• Can employers offer incentives (such as time off or a bonus) for employees to be vaccinated?
• What are the limits of employer incentive programs?
• What happens if an employee refuses to receive the vaccine?
• Can an employer discipline or terminate an employee for their refusal to get vaccinated?
• Will there be an increase in allegations of wrongful termination?

While we offer general recommendations as to these questions below, specific questions and/or concerns should be directed to legal counsel.

The EEOC published a helpful question and answer guide last updated on December 16, 2020, regarding vaccines. Disclosure 1 1 "What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws,” Section K. Vaccinations, https://www.eeoc.gov/wysk/what-you-should-know-about-covid-19-and-ada-rehabilitation-act-and-other-eeo-laws. See also OSHA Guidelines issued on January 29, 2021, Protecting Workers: Guidelines on Mitigating and Preventing the Spread of COVID-19 in the Workplace, https://www.osha.gov/coronavirus/safework.  Generally, an employer may mandate that employees receive an FDA-authorized COVID-19 vaccination, subject to some limitations. Those limitations include accommodating employees with disabilities, sincerely held religious beliefs or practices that would prevent the employees from receiving the vaccine and genetic information discrimination. An employee may refuse to be vaccinated premised upon (1) the Americans with Disabilities Act (ADA) and (2) Title VII of the Civil Rights Act of 1964 as it relates to religious exceptions and (3) Title II of the Genetic Information Nondiscrimination Act of 2008.

Can employers offer incentives for employees who agree to receive the COVID-19 vaccine? In general, the answer is yes, subject to some limitations. Employers can offer incentives to employees who receive the vaccine, but there is some uncertainty regarding the type and/or amount of those incentives. Any type of incentive program must clearly be designated as “voluntary.” While the limits on these COVID-19 vaccine incentive programs remains untested, some employers have offered gift cards with a value of $75 to $100. The EEOC has not, as yet, published guidance or commented on vaccination incentive programs, so the question remains unresolved at the present.

If an employer is considering mandating employee vaccines prior to employees returning to work, the employer should be aware of any state and local laws in addition to the foregoing EEOC guidance. A number of states have proposed legislation that would prevent state and local governments and private businesses from mandating the vaccine. This proposed legislation varies from state to state and may protect employees who do not wish to get a vaccine.

IMPACT: We anticipate that there will be considerable litigation regarding vaccination requirements as well as employer incentives for voluntary or discretionary COVID-19 vaccination programs.

On January 20, 2021, President Biden signed an Executive Order issuing a mask mandate for Federal employees. Disclosure 2 2 Executive Order on Protecting the Federal Workforce and Requiring Mask Wearing, January 20, 2021, Presidential Action, https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-protecting-the-Federal-workforce-and-requiring-mask-wearing/ The EO requires that “on-duty or on-site Federal employees, on-site Federal contractors, and other individuals in Federal buildings and on Federal lands must wear masks, maintain physical distance, and adhere to other public health measures, as provided in CDC guidelines.” This EO applies to all “Federal employees” and “Federal contractors” which means employees (including members of the Armed Forced and members of the National Guard in Federal service) and contractors (including such contractors’ employees) working for the executive branch.

If a Federal employee refuses to wear a mask, that employee may face disciplinary measures. Again, this mask mandate is subject to limitations (such as disabilities or religious issues). Employers again need to take into account the ADA and Title VII of the Civil Rights Act of 1964.

IMPACT: We expect that there will be litigation and EPL claims emanating out of mask mandates, though this is a fast-changing area for the CDC and OSHA.

We foresee that the EEOC will be more active in the pursuit of claims under the Biden administration. On February 26, 2021, the EEOC released data for FY 2020 regarding the agency’s Enforcement and Litigation Data. Disclosure 3 3 EEOC Releases Fiscal Year 2020 Enforcement and Litigation Data, Press Release, February 26, 2021, https://www.eeoc.gov/newsroom/eeoc-releasesfiscal-year-2020-enforcement-and-litigation-data  In FY 2020, the EEOC filed 97 enforcement lawsuits, the lowest number of lawsuits in any year since 1997 (the earliest available record). In comparison, the EEOC filed 157 lawsuits in FY 2019 and 217 lawsuits in FY 2018. Disclosure 4 4 EEOC Litigation Statistics, FY 1997 through FY 2000, https://www.eeoc.gov/statistics/eeoc-litigation-statistics-fy-1997-through-fy-2020  The current Chair of the EEOC is Charlotte Burrows who was designated as the Chair in January 2021 by President Biden. The EEOC is a bipartisan agency that will continue to have a Republican majority until at least the middle of 2022 when former Chair and current Commissioner Janet Dhillon’s term is set to expire. Dhillon is a Republican who may or may not be re-nominated. Substantive policy changes are subject to full commission votes; however, it is expected that Burrows will be able to control the agenda of the Commission and limit future votes on what it perceives to be non-friendly proposals.

The Payroll Audit Independent Determination Program (“the Program”) launched by the Trump era U.S. Labor Department’s Wage and Hour Division has been rendered null and void by the Biden administration. The stated purpose of the Program was to encourage businesses to self-report wage-and-hour violations to the Labor Department in return for protection against further legal liability. By terminating the program, the U.S. Labor Department’s Wage and Hour Division’s has signaled an inclination toward stricter enforcement of wage and hour violations. Disclosure 5 5 DOL Ends Trump Plant to Let Employers Report Wage Violations, January 29, 2021, Ben Penn, https://news.bloomberglaw.com/daily-labor-report/dolends-trump-plan-to-let-employers-self-report-wage-violations?context=article-related

IMPACT: The termination of the Program and stricter enforcement of wage and hour violations will likely lead to an increase in wage and hour litigation.

The U.S. Labor Department’s Wage and Hour Division (the “Division”) is also focusing on independent contractor misclassification and joint employment relationships when they investigate businesses for payroll violations. The Division is looking to increase the number of investigators on the Division’s enforcement team in order to enhance their ability to investigate alleged wage and hour violations. The increase in the Division’s enforcement capacity is important in light of the April 27, 2021, Executive Order requiring Federal contractors pay their employees a $15 minimum wage beginning March 30, 2022. The Biden Administration continues to push for a phased-in universal $15 minimum wage. Disclosure 6 6 Biden Acting Wage Chief Looman Steers Agency to Enforcement Mode, April 21, 2021, https://news.bloomberglaw.com/daily-labor-report/biden-actingwage-chief-looman-steers-agency-to-enforcement-mode?context=search&index=8

IMPACT: We expect increased litigation to come from the misclassification of independent contractors and alleged wage and hour violations.

On April 27, 2021, President Biden signed an Executive Order which raised the minimum wage for Federal contractors to $15 per hour. Disclosure 7 7 Executive Order on Increasing the Minimum Wage for Federal Contractors, April 27, 2021, https://www.whitehouse.gov/briefing-room/presidentialactions/2021/04/27/executive-order-on-increasing-the-minimum-wage-for-Federal-contractors/ The EO states, “Accordingly, ensuring that Federal contractors pay their workers an hourly wage of at least $15.00 will bolster economy and efficiency in Federal procurement.” Marty Walsh, the new Secretary of Labor, has also announced his support for $15 per hour minimum wage.

IMPACT: With the ongoing COVID-19 pandemic and the number of unemployed or furloughed employees around the country, the increase of the Federal minimum wage to $15 per hour is a hot button issue to watch.

The Biden administration has expressed an interest in doubling EEOC funding in order to hire more investigators and “fulfill its mission and address workplace discrimination.” The EEOC has announced plans to hire approximately 450 new staff members to help with its mission of ending workplace discrimination. The current EEOC Chair, Charlotte Burrows, announced the new hiring goal in order to “rebuild” the EEOC staff during a recent event.

Furthermore, the Biden administration has proposed increasing funding and hiring more investigators at Occupational Safety and Health Administration (OSHA). At the National Labor Relations Board (NLRB), the Trump era of pro-business decisions has ended and we expect to see more of the pro-employee positions and protections.

IMPACT: How do these recent developments impact EPL insurance claims? With more funding, staff and enforcement activity, along with a pro-employee stance, we fully expect to see an increase in EPL claims.

For questions about this advisory, please contact:

Lisa Frist, JD
Vice President, Claims Account Executive
Executive Risk Advisors
404.497.7590
LFrist@mcgriff.com

Tim Rasool, JD
Vice President, Claims Account Executive
Executive Risk Advisors
404.847.1604
TRasool@mcgriff.com

To learn more about McGriff Executive Risk Advisors, please contact:

David Sellars
Executive Vice President, Co-Division Leader
Executive Risk Advisors
404.497.7582
DSellars@mcgriff.com

Dusty Cahill
Executive Vice President, Co-Division Leader
Executive Risk Advisors
404.497.7537
DCahill@mcgriff.com