Right out of the gate, President Biden signaled his intention to reverse the direction of U.S. employment rules. Within days of his inauguration, he issued a series of executive orders affecting the federal workforce, signaling his intentions to seek legislation with a more expansive reach.
In the narrowly Democrat-majority Congress, lawmakers quickly reintroduced the Raise the Wage Act. The bill would increase the federal minimum wage to $15 an hour by 2025. Plus, Congress is likely to consider renewal of the emergency paid sick and family medical leave mandates contained in last year’s Family First Coronavirus Response Act. And Congress may call on employers to provide retroactive recognition pay to frontline and other essential workers because of the pandemic.
The Department of Labor and National Labor Relations Board also have the power to move employment regulation in a new direction, noted Jon Taets, NACS director of government relations. “That’s where the real risk is. They don’t need Congress. It’s rulemaking—straight rulemaking,” he said.
Robert Duston, a partner with Saul Ewing Arnstein & Lehr in the Washington, D.C., area, warned retailers: “Whenever we go to a Democratic administration, it’s a huge headache for you folks.”
Federal Minimum Wage
Biden included raising the federal minimum wage to $15 per hour in his COVID-19 stimulus proposal as well. That wage was last increased in 2009, though 29 states and more than 40 localities have passed their own wage laws with rates higher than the federal minimum. In February, the nonpartisan Congressional Budget Office (CBO) released a new report on the economic impacts of raising the federal minimum wage to $15 per hour by 2025 as the Raise the Wage Act and Biden’s proposal seek to do. The CBO found that raising the wage would increase pay for 17 million workers directly but also likely cost 1.4 million workers their jobs entirely. CBO determined the Raise the Wage Act would increase the federal deficit by $54 billion over 10 years.
Those numbers, coupled with reticence on the part of most Republican members of Congress to dramatically change the minimum wage, indicate it is unlikely that such legislation will become law this Congress unless Democrats are able to manipulate some Senate rules that allow for bypassing the filibuster. The same is true of other far-reaching organized-labor-supported legislation likely to move out of the House of Representatives this Congress.
One of Biden’s first executive orders required the Occupational Safety and Health Administration (OSHA) to issue new COVID-19-related guidance and to consider whether any emergency temporary standards were needed to protect workers from the dangers of the pandemic.
“Biden’s executive order directed federal OSHA to determine if there needs to be an emergency COVID-19 regulation. It’s a safe bet that federal OSHA will determine that they will need one,” said Todd Logsdon, co-chair of Workplace Safety and Catastrophe Management practice for Fisher & Phillips LLP in Atlanta. He predicted that by the middle of March “we will see a temporary standard.” Such a standard stays in place for six months, “then it either goes away or it becomes permanent. I expect it will become permanent.” States are allowed to run their own OSHA programs, but only about half do so. If new federal OSHA standards are rolled out, “states have to have something similar,” he said.
To see what provisions a federal emergency standard might contain, Logsdon suggested looking at the four states that have rolled out their own standards to address COVID-19 in workplaces. “Look at what those four states have done. Michigan and Oregon are not too bad,” he said. “California is onerous. [Business] owners are hoping for Virginia. I think Virginia might be a good template.” California imposes standards on employers, while Virginia allows employers to self-assess their level of risk.
There may be changes in the way employers are required to report COVID-19 cases to health departments, he added, as well as a possible increase in training obligations.
Something that OSHA could address, according to Duston, is some type of mask-wearing mandate. “Will OSHA go with an employee mask mandate? Most stores would appreciate a clear mandate. But a customer mandate—I don’t know if c-stores want that.”
Maverik practices social distancing and requires employees to wear masks, regardless of local ordinances, according to Kim Lazerus, vice president, human resources, for the Salt Lake City-based company. Maverik already complies with federal, state and local rules in the 11 intermountain west states in which it operates, and “we do not anticipate any additional challenges,” she said.
To protect its nearly 6,500 employees, Maverik has “done some creative things with scheduling,” Lazerus said. Since late last summer, “people work with a core group, so it keeps them exposed to the same individuals. It has helped us limit the number of people impacted” by an outbreak.
Before the scheduling system was put in place, large groups of employees had to quarantine when an individual tested positive, she added, and “We have had to shut down the store. That’s impactful on the bottom line.”
Most stores would appreciate a clear [mask] mandate.
The most expensive question, Duston said, is will OSHA issue standards regarding ventilation, such as the speed and regularity of the movement of air in a workspace or the use of outside air or air filters? “That would get attention. Older stores only have so much ventilation,” he said. “If there’s a requirement on that, it will bena pocketbook issue.”
Lazerus said that early in the pandemic Maverik looked into making ventilation upgrades and found that “it would be significant for us. We put it on hold.”
While Logsdon said he’s heard “a lot of talk” about ventilation requirements, “I don’t think you will see that in the emergency standards. It may say to ‘develop a plan,’” which could open the door “to new standards for retailers” down the road.
OVERTIME AND JOINT-EMPLOYER RULES
Beyond new OSHA standards, NACS expects the Department of Labor (DOL) and the National Labor Relations Board (NLRB) to be very active as well, Taets said. Two key rules issued by the Trump Administration rolled back changes the Obama Administration made that have significant impacts on the convenience industry and business in general. Those were the so-called overtime rule and the joint-employer rule. Biden’s Labor Department is expected to seek to change both of those rules again, returning them closer to what the Obama Administration sought to do.
Both the DOL and the NLRB have nearly identical joint-employer rules, and NACS expects both agencies to seek similar changes under the new administration. The joint-employer rules govern when an employee of one company does enough work that benefits another company to be considered jointly employed by both companies. If joint employment is determined, one company can be held liable for labor violations committed by the other with respect to that employee.
This is most prevalent in franchise scenarios where a local employee working at a franchise may be deemed jointly employed by the franchisor as well; however, depending on the government’s interpretation, that could be applied to certain supplier or maintenance situations in even non-franchised convenience operations. Under Obama, both the NLRB and the DOL loosened the government’s tests used to determine joint employment, making it easier for a worker to be considered jointly employed. The Trump Administration reversed those actions, and NACS expects the Biden Administration to return them at least closer to the looser Obama standards.
The Obama DOL also made a significant change to the “white-collar” exemption salary threshold of the overtime rule. Any employee making below the salary threshold must be paid at 1.5 times their average hourly rate for any hours worked beyond 40 in any given week. In 2016, the DOL more than doubled that threshold from an annualized $23,660 to $47,476. (The rule is actually determined on a week-to-week basis, not annually.) That rule was struck down by a federal judge in 2017 before it could go into effect. The Trump Administration took up the cause and in 2019 issued a new rule that set the threshold at an annualized rate of $35,568, which was much closer to an inflation adjustment from the old threshold. NACS considers it likely that the Biden DOL will reopen that rulemaking and seek to, at a minimum, raise that threshold, though likely not quite as high as the Obama team sought to do, Taets explained.
Congress can renew the emergency paid sick and family medical leave mandates contained in last year’s Family First Coronavirus Response Act (FFCRA). The mandates required certain employers to provide employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19.
Hagood Tighe, co-chair of Fisher & Phillips Wage and Hour practice in Atlanta, outlined key ways that a new law could differ from FFCRA:
- The paid leave obligation could be extended to apply to employers with more than 500 employees (who were not covered by the FFCRA) and less than 50 employees (who may have had a small business exemption under the FFCRA).
- The plan could extend the federal tax credit to employers for the full cost of paid leave for employers with less than 500 employees.
Based on its size, Maverik was not required to provide leave under the FFCRA, according to Lazerus, “but we did create our own program, which mimicked the FFCRA program.” Expanding leave isn’t a big concern, she said. “Our owners want employees to be able to take care of themselves and their families.”
Whenever we go to a Democratic administration, it’s a huge headache for you folks.
Any type of emergency leave that is passed will bring with it administrative headaches, Tighe warned. One thing that isn’t clear, he said, is whether any new leave program would be considered an extension of the prior emergency program: “If someone took leave under the old program, will that time off count, or will a new 14-week entitlement be started? That could have a pretty big impact.”
Tighe said he’s been talking to employers who are considering providing leave on their own but that he tells them “be cautious. Wait and see how this plan plays out.” That’s because any employer-provided leave might have to be given in addition to any government-mandated benefits.
Biden has expressed interest in broadening the scope of paid leave. “I doubt we will see that in the immediate term, but I think paid leave will be proposed a little later. I do think you will see something coming,” Tighe said. “If Congress requires it, I hope it would replace any paid leave at the local level. It would make it easier to comply with one law rather than a patchwork of laws.”
Another possible move by Congress may be to call on employers to provide back recognition pay to frontline and other essential workers. It’s not clear how that might affect convenience stores, according to Taets. “We haven’t seen the language. I tend to think there will be some effect, but we can’t be sure yet.”
No Quick Action
The NLRB and Equal Employment Opportunity Commission (EEOC) may not change direction quickly. Although both agencies are chaired by Democrats, they started this year with Republican majorities on their governing boards and may continue to have a Republican majority for some time.
The NLRB is governed by a five-person board and a general counsel. Early on, Biden fired the Trump-appointed general counsel but “substantially, until August nothing can be done,” Duston said. That’s when Republicans lose their majority on the board.
The NLRB will probably “look for ways to make organizing easier for labor unions. That may or may not have an effect on c-stores,” Taets said. “I would not be shocked if the NLRB looked at ways to make it easier to organize small organizations. This is one space where I think Biden is going to pick somebody a lot more progressive. Labor is an area where he’s been more progressive.”
Last September, the Senate confirmed three new EEOC commissioners, ensuring the agency will have a Republican majority until July 2022. “EEOC issues are ever present. Nothing is going to dramatically change” in the short run, Duston said.
As the new administration moves forward on all these fronts, Taets urged c-store executives “to talk to legislators. There’s pressure that can be put on Congress to influence the direction labor law takes."