Here We Go Again: Sixth Circuit Lifts Stay of OSHA COVID-19 ETS for Employers With 100 or More Employees

UPDATE: US Supreme Court Halts Federal Vaccination Mandate for Employers, but Permits CMS Rule to Take Effect

On Friday, December 17, 2021, a three-judge panel of the U.S. Court of Appeals for the Sixth Circuit lifted the Fifth Circuit’s stay that had prevented the Occupational Safety and Health Administration’s (OSHA) Emergency Temporary Standard (ETS) on COVID-19 from being implemented for employers with 100 or more employees. The ETS is now able to move forward absent issuance of a stay from the U.S. Supreme Court. OSHA has issued new compliance dates for employers.

The Sixth Circuit’s ruling was issued by a 2-1 vote, with Judges Julia Gibbons and Jane Stranch ruling in favor of OSHA’s and Judge Joan Larsen dissenting.

Several petitioners in the case have already filed emergency appeals to the U.S. Supreme Court with requests for the stay to be reinstituted, pending a hearing on the matter. In such emergency appeals, the requests go directly to the justice assigned to the applicable Circuit, which in this instance will be Justice Brett Kavanaugh. The assigned justice has the discretion to decide the request on his or her own or submit the request to the full court to consider. At this time, it is unclear when this decision will be made or if the Supreme Court will hear the case.

The key points from the ETS along with the new compliance dates are summarized below:

Compliance

  • Deadlines for Compliance. The new compliance dates according to OSHA are:
    • January 10, 2022: OSHA will not issue citations for noncompliance with any of the requirements of the ETS before January 10.
    • February 9, 2022: For testing requirements, OSHA will not issue citations for compliance with testing requirements, so long as an employer is exercising reasonable, good faith efforts to come into compliance with the standard.
  • Covered Employers. The ETS covers all employers with 100 or more employees. Part-time employees and remote workers are included in the number of employees for the purpose of determining coverage, but employees of staffing agencies need not be included. Only employees at U.S. locations are counted. Two or more related entities may be regarded as one employer – and thus their employees must be counted together – if they handle safety matters as one company.
  • Time Off for Vaccination. Covered employers must support vaccination by providing reasonable time, including up to four hours of paid time, to receive each vaccination dose. Employers must provide reasonable time off and paid sick leave to recover from side effects following each dose.
  • Masking. All covered employers must ensure that unvaccinated employees wear a face mask while in the workplace.
  • Vaccination or Weekly Testing. All covered employers must implement and enforce a policy that mandates their employees receive the necessary shots to be fully vaccinated – either two doses of Pfizer or Moderna, or one dose of Johnson & Johnson – unless the employer instead implements and enforces a policy mandating any unvaccinated employee to produce a negative test weekly and wear a mask while in the workplace. All covered employers must ensure that any employee still unvaccinated after the specified date (now no later than February 9, 2022, provided the employer is making good-faith efforts to come into compliance) begins producing a verified negative test to their employer on at least a weekly basis. COVID-19 tests that are both self-administered and self-read do not satisfy this requirement.
  • Acceptable Proof of Vaccination Status. Employers must determine the vaccination status of each employee. Acceptable proof of vaccination status is a record of immunization from a health care provider or pharmacy, a copy of the COVID-19 Vaccination Record Card, a copy of medical records documenting the vaccination, or another copy of immunization records from a public health system. A signed and dated employee attestation is acceptable in instances when an employee is unable to produce proof of vaccination. These records must be preserved while the ETS is in effect and are subject to audit by OSHA.

Exemptions / Variations

  • Remote Workers. Employees who telework or do not report to a workplace where other people work are exempt from compliance with the vaccination and testing requirements. However, they still must be counted for purposes of determining whether the 100-employee threshold has been met.
  • Outdoor Workers. Employees who work “exclusively outdoors” are exempt from the ETS vaccination and testing requirements. An employee works exclusively outdoors if he or she works outdoors for the duration of every workday except for de minimis use of indoor spaces where others are present.
  • Part-time Workers. The ETS applies to part-time workers as well as full time workers, although the weekly testing requirements are adjusted if an unvaccinated part-time employee does not enter the office every week. If away from the workplace for a week or longer, the employee must produce a verified negative test within seven days before returning to the workplace.
  • Medical or Religious Exemptions. The employer vaccination policy required by the ETS should provide for those legally entitled to reasonable accommodation for disability or religious reasons. Such exempt employees must participate in the weekly COVID-19 testing requirement and wear face coverings.

Employees who have previously contracted COVID-19 are not exempt from the vaccination, testing, or masking requirements.

For states with state-administered OSHA plans, such as Michigan, the ETS required the state OSHA agency to adopt the federal ETS standard or measures at least as protective as the federal ETS within 30 days of the ETS’s issuance. At this point, Michigan has not yet issued its plan, but this would be expected to occur within the next 30 days. It remains to be seen whether MIOSHA, Michigan’s own worker safety agency, will modify the ETS and trigger additional requirements for Michigan employers.

Please contact your Varnum attorney or any member of the firm’s labor and employment practice team with questions about how the ETS will affect your workforce. We are continuing to monitor for further developments.

Michigan Minimum Wage to Increase in 2022

On January 1, 2022, the minimum wage in Michigan will increase to $9.87 per hour. This is a 22-cent increase from the current rate of $9.65 per hour, and the first increase in Michigan since 2020, before the COVID-19 pandemic hit.

Michigan law requires automatic annual increases in the minimum hourly wage on January 1 of each year, up to $12.05 through 2030. However, the law also states that when the unemployment rate in Michigan exceeds 8.5 percent for the calendar year before the planned increase, the annual increase will automatically be delayed and there will be no increase in the minimum wage. In 2020, the unemployment rate in Michigan reached 9.9 percent, and as a result the minimum wage did not increase in January 2021.

The state also announced that in 2022 the minimum hourly wage rate for tipped employees will increase 8 cents from $3.67 per hour to $3.75 per hour. Likewise, the minimum hourly wage for employees 16-17 years of age will increase by 19 cents to $8.39 per hour.

Michigan employers will be responsible for paying any shortfalls to an employee if the employee’s hourly rate, including gratuities, does not equal or exceed the new minimum wage requirements.

Please contact your Varnum attorney, or any member of the firm’s labor and employment practice team, with questions about how the increase will affect your workforce.

NHTSA Issues $24.3 Million Whistleblower Award: 5 Key Takeaways for Auto Suppliers

On November 9, 2021, the National Highway Traffic Safety Administration (NHTSA) issued its first-ever whistleblower bounty to a former Hyundai engineer. In the wake of this payout, plaintiff and whistleblower law firms are actively targeting employees of automotive companies up and down the supply chain given the lottery-like awards that are possible under the Motor Vehicle Safety Whistleblower Act (MVSWA). While the MVSWA was passed by Congress in 2015, the rulemaking process is still underway, with an expected publication date in early 2022.

Notwithstanding the lack of promulgated rules, and as evidenced by this recent payout, automotive companies must take heed of the MVSWA and prepare for an increase in whistleblower complaints.

In this advisory, Varnum’s Automotive and Investigations attorneys outline actions companies under NHTSA’s jurisdiction should take to ensure that their compliance programs and related policies and procedures are robust in the wake of this emergent risk.

Background on the MVSWA

The MVSWA, passed by Congress in 2015, established a program under which NHTSA may compensate whistleblowers who are connected to the automobile industry with significant monetary awards if they report motor vehicle safety issues, such as potential vehicle safety defects. The whistleblower award program is not limited to employees of or contractors for original equipment vehicle manufacturers; it also applies to any employee or contractor of a part supplier or dealership.

To qualify for an award, original information provided by the whistleblower must lead to the imposition of sanctions exceeding $1 million. Whistleblowers are incentivized to report violations by way of potential awards ranging between 10 to 30 percent of collected sanctions stemming from their complaint.

Additionally, in June of 2021, NHTSA posted a new website to facilitate whistleblowers to provide information about violations to the agency. This website helps whistleblowers determine what information should be provided and how to do so.

$24.3 Million Dollar Award

NHTSA demonstrated that the MVSWA has teeth when it issued its first whistleblower award on November 9, 2021. Kim Gwang-ho, an engineer who was employed by Hyundai, was awarded $24.3 million after he provided information to NHTSA about safety issues with engines used in Hyundai and Kia vehicles. The payment represented 30 percent of the $81 million collected by the government for violations of the Vehicle Safety Act—the statutory maximum. After the award was announced, a spokesperson for NHTSA emphasized that the agency is committed to awarding those who come forward with information.

How to Handle a Whistleblower

The MVSWA protects whistleblowers from retaliation. Among other things, the program prohibits a vehicle manufacturer, part supplier, or dealership from taking any material adverse employment actions against an employee on account of the employee’s reporting of a violation. Any complaints of retaliation are investigated by OSHA.

If a whistleblower reports a potential violation, the company must avoid taking adverse employment action that could be viewed as retaliatory, such as reduced hours, reassignment to a less desirable position, or falsely accusing the employee of poor performance. It is a best practice for a company that is the subject of a whistleblower complaint to not attempt to identify an anonymous whistleblower.

Five Actions to Prepare for an Increase in Whistleblowing

With the recent substantial award and actions by NHTSA to facilitate whistleblower complaints, employers should prepare for a potential increase in whistleblower complaints. Companies should be prepared both proactively – by implementing policies to minimize the likelihood of a whistleblower complaint – and reactively – by ensuring that whistleblower complaints are efficaciously handled and resolved. To that end, companies should:

  1. Educate employees on the company’s commitment to safety, encouraging them to identify safety concerns through an internal reporting system.
  2. Set expectations with employees on the process for reviewing and addressing safety complaints, including training on the steps of the review process and expected time frame for resolution.
  3. With most whistleblower complaints generally filed only after an employee feels that his or her concerns on a safety issue were not adequately addressed, it is critical that companies communicate with employees who have raised safety concerns, including providing appropriate updates on the process and the review.
  4. Develop policies addressing and training management to avoid retaliation for whistleblower complaints.
  5. Ensure that whistleblower complaints are directed to in-house or outside counsel to develop and implement an internal review and investigation to identify exposure, coordinate a response, and minimize potential disruption and financial impact.

Please contact a member of the Varnum Automotive and Investigations teams for more information about conducting an audit of your company’s compliance structure, creating and implementing a whistleblower policy, or the NHTSA Whistleblower Program and how it may affect your company.

Federal Contractor Vaccine Mandate Stayed Nationwide

As previously reported, on November 30, a federal judge in Kentucky halted the implementation of the vaccine mandate for federal contractors and subcontractors in Kentucky, Ohio, and Tennessee. Now, a federal judge in Georgia has issued a nationwide injunction blocking the vaccine mandate for federal contractors and subcontractors. Unlike the limited injunction issued in Kentucky, the Order issued in Georgia on December 7, 2021, blocks the vaccine mandate countrywide.

The vaccine mandate for federal contractors and subcontractors had most recently required full vaccination by January 18. With this December 7 Order, the January 18 deadline has been put on hold nationwide. The Order also serves as the final federal-level effort to block all of President Biden’s vaccine mandates covering employees other than direct employees of the federal government. The OSHA Emergency Temporary Standard (ETS) and CMS Interim Final Rule have already been enjoined nationwide.

What does this mean for employers covered by the federal contractor mandate? Covered employers can currently halt their efforts to comply with the implementation of the rule but should be ready to proceed with the requirements of the rule should the injunction be reversed.

Please contact your Varnum attorney, or any member of the firm’s labor and employment practice team, with questions about how this change will affect your workforce.

Throughout COVID-19, Varnum’s Labor and Employment Team has helped employers across the country navigate emergent laws and regulations that impact their workforce and operations, including with respect to vaccination mandates. 

On November 9, 2021, Varnum Labor and Employment attorneys presented a one-hour webinar on the most pressing concerns and questions regarding OSHA’s COVID-19 vaccine and testing rules. To request a recording of the webinar and gain access to frequently asked questions and other resources, please click here.

We stand ready to assist you with this new rule and related workplace adjustments. If you have immediate questions, please contact your Varnum attorney.

House Bill Proposes Changes for Estate Planning Under the Build Back Better Act; Senate Yet to Act

Earlier this fall, we sent out an advisory regarding the estate tax planning implications of the proposed Build Back Better Act (the “Act”), which had been introduced in the House of Representatives. In its then-current form, the legislation would have had drastic impacts on transfer taxes, grantor trust rules, and income taxes. The House debated and revised the Act for two months before passing the Act on November 19. Below we summarize how the passed version of the Act differs from the version of the Act we summarized in October. Note, however, that the Act is now being reviewed and revised by the Senate, so we should expect further changes.

Transfer Taxes

As initially proposed, the Act would have reduced the current $11.7 million basic exclusion amount (BEA) to approximately $6 million on January 1, 2022. The current version of the Act does not reduce the basic exclusion amount. The BEA is scheduled to increase on January 1, 2022 to $12.06 million. However, as previously noted, the BEA will revert to its pre-2017 Tax Cuts and Jobs Act level in 2026 ($5 million, which will be adjusted for inflation at that time), absent further legislation.

Grantor Trust Rules

Estate planners and their high net worth clients were taken aback by the initial Act’s proposal to eliminate grantor trust rules, which planners have been using for decades to help reduce the size of clients’ taxable estates and to achieve income tax savings. The new rules would have applied both to trusts created after the passage of the Act and to subsequent transfers to trusts that predated the Act. The updated version of the Act does not contain any change to the existing grantor trust rules under current law, which means that this planning can continue to be used.

Income Tax Rates

The initial version of the Act contained several changes to income tax rates, and many of those still exist in the current version of the Act. The proposals most relevant to high net worth individuals that remain in the Act are as follows:

  • A five percent tax surcharge on individuals with annual income exceeding $10 million and an additional three percent tax surcharge on individuals with annual income exceeding $25 million.
    • The five percent tax surcharge would be imposed on an estate or trust with undistributed taxable income of $200,000 or more.
  • The Act includes several limitations on the ability of high-income taxpayers to take advantage of certain retirement account tax breaks.
    • Beginning in 2029: Additional contributions to a Roth IRA or traditional IRA would be barred for a tax year if a taxpayer’s income exceeds $400,000 ($425,000 for head of household and $450,000 for married taxpayers) and if the contributions would cause the total value of an individual’s IRA and defined contribution accounts as of the end of the prior tax year to exceed $10 million.
    • Beginning in 2022: “Backdoor” Roth IRA conversions would be eliminated. This tactic allows individuals to avoid the Roth IRA contribution limits by making nondeductible contributions to a traditional IRA and then transferring those contributions to a Roth IRA later. However, under the proposed legislation, individuals would not be able to convert after-tax contributions in an IRA or qualified retirement plan to a Roth account, regardless of income.
    • Beginning in 2032: The Act would eliminate all Roth conversions if a taxpayer’s income exceeds the applicable thresholds provided above ($400,000, $425,000, and $450,000, respectively).
  • For sales or exchanges of qualified small business stock made pursuant to a binding contract that was in effect on September 13, 2021 or later, gains would be taxed for those with annual incomes above $400,000, which is a change from current law. 

As we have learned over the past few months of debate, this proposed legislation is just that – proposed – and is subject to change. We will update you when the final version of the Act is passed.

Courts Halt Federal Vaccination Mandates Amid Legal Challenges

Vaccine card

The Biden Administration’s various vaccine and/or testing mandates for employers with over 100 employees, certain healthcare providers, and federal contractors, continue to face significant legal challenges. Following is an update on the status of those legal challenges.

OSHA ETS

As previously reported, the federal Sixth Circuit Court of Appeals based in Cincinnati has been chosen to preside over litigation concerning OSHA’s Emergency Temporary Standard (ETS) requiring companies with at least 100 employees to mandate COVID-19 vaccinations or submit to weekly testing and mask requirements. The ETS imposed two compliance deadlines: proof of vaccination and mask-wearing for unvaccinated employees beginning December 6, and the additional requirement of weekly testing for unvaccinated employees beginning January 4. Prior to the case being transferred to the Sixth Circuit, the Fifth Circuit Court of Appeals issued a nationwide stay of the ETS, which currently remains in effect.

OSHA has requested the Sixth Circuit to dissolve or modify the stay. The Sixth Circuit has released a timeline for parties to file briefs, responses and replies with a final filing date of December 10. This means that the Sixth Circuit is unlikely to take further action until approximately mid-December. In the meantime, OSHA has made clear that it will stand down on its efforts to implement the ETS pending further litigation.

The Sixth Circuit’s decision may not be an “all or nothing” outcome. In its Emergency Motion to dissolve the stay, OSHA requested that the Sixth Circuit modify the stay to allow certain components of the ETS to go into effect if the stay is not lifted in its entirety. Specifically, OSHA requested that the masking-and-testing requirement remain in effect pending the litigation of the stay and that the stay be limited to allow employers the option to adopt COVID-19 policies, notwithstanding any state or local laws that may restrict such policies.

For now, employers who would otherwise be covered by the ETS should still remain prepared to comply in the event the stay is lifted. However, the ETS is currently stayed until at least December 10 and, unless the stay is lifted, either as a result of OSHA’s request to dissolve or a later decision of the Court, the ETS will not take effect. Employers should also continue to monitor state and local laws, which could impose additional requirements.

Healthcare Employers: CMS Interim Final Rule

On Tuesday, November 30, a federal judge in Louisiana issued a preliminary injunction to block the start of the CMS Interim Final Rule (the “CMS Rule”). The injunction applies nationwide except for ten states that are already under a preliminary injunction order issued on November 29 in Missouri.[1]

The CMS Rule was released on November 5, and established conditions of participation on various Medicare and Medicaid certified providers and suppliers. Generally, the rule mandated that covered staff must be fully vaccinated by January 4. The CMS Rule also set a deadline for accommodation requests and receipt of the first vaccine dose by December 6. As of now, these conditions are halted nationwide.

What does this mean for healthcare employers? Healthcare employers should continue to monitor state and local laws that will impact existing employer vaccine mandates. In the meantime, covered employers who do not wish to proceed with a vaccine mandate may pause their efforts to comply with the CMS Rule. However, these preliminary injunctions are likely to be appealed, and thus healthcare employers should be ready to proceed with the requirements of the rule should the controlling injunction be reversed.

Federal Contractors and Subcontractors Vaccine Mandate

Separately, on Tuesday, November 30, a federal judge in Kentucky issued a preliminary injunction blocking the implementation of the vaccine mandate for federal government contractors and subcontractors. The ruling is limited to the three states, Kentucky, Ohio, and Tennessee that challenged the Federal Contractor and Subcontractor mandate. It is the first ruling against the contractor mandate but may be an indicator of additional challenges in light of the success of this first challenge.

The original deadline for covered employees to be fully vaccinated was January 4, 2022, but it had already been extended to January 18. At the moment, employers covered by the federal contractor mandate in Kentucky, Ohio, and Tennessee can halt their efforts to comply with the rule. However, like employers covered by the CMS rule, these employers should be ready to proceed with the requirements of the rule should the injunction be reversed. Federal contractors and subcontractors in other states, including Michigan, should continue to monitor for any additional court rulings, but should otherwise be ready to comply with the January 18 deadline and the other provisions of this mandate, barring any additional legal developments.

Please contact your Varnum attorney, or any member of the firm’s labor and employment practice team, with questions about how these changes will affect your workforce.

[1] These states include Alaska, Arkansas, Iowa, Kansas, Missouri, New Hampshire, Nebraska, Wyoming, North Dakota, and South Dakota.

Throughout COVID-19, Varnum’s Labor and Employment Team has helped employers across the country navigate emergent laws and regulations that impact their workforce and operations, including with respect to vaccination mandates. 

On November 9, 2021, Varnum Labor and Employment attorneys presented a one-hour webinar on the most pressing concerns and questions regarding OSHA’s COVID-19 vaccine and testing rules. To request a recording of the webinar and gain access to frequently asked questions and other resources, please click here.

We stand ready to assist you with this new rule and related workplace adjustments. If you have immediate questions, please contact your Varnum attorney.

A Brief Summary of the Corporate Transparency Act

UPDATE: The Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury issued the Beneficial Ownership Information Reporting Requirements final rule on September 30, 2022. Please see our recent advisory for more: Corporate Transparency Act’s Reporting Requirements: Is Your Company Prepared?

The Corporate Transparency Act (CTA) was enacted as a part of the National Defense Authorization Act by Congress on January 1, 2021. When it becomes effective, it will mainly apply to small U.S. businesses, requiring certain companies to file a report providing the name, date of birth, current address, and unique identification number (from a passport or driver’s license, for example) of the company’s “beneficial owner(s).” The report will be filed to the Financial Crimes Enforcement Network (FinCEN), which is a bureau of the U.S. Treasury Department. This information must be updated every year to reflect any changes.

Effective Date

The CTA will become effective when the regulations published by the FinCEN go into effect, and that date can be no later than January 1, 2022 (one year after enactment of the CTA). On April 5, 2021, FinCEN published a proposed set of regulations to gather public comments. Since there have been no additional updates from FinCEN regarding the official publication, it is very likely that the regulations will become effective on January 1, 2022, making the CTA effective on the same date.

Timing for Compliance

The CTA will be applicable to companies depending on when the company was formed:

  • For entities existing before the date that FinCEN has published final regulations on the CTA, the reporting must be done in a timely manner, and not later than two years after the effective date of the regulations; and 
  • For entities formed or registered after the FinCEN regulations are effective, the reports must be filed at the time of formation or registration.

Additionally, a reporting company must update the information provided to FinCEN upon a change in beneficial ownership within one year of the change.

Reporting Requirements

For purposes of the CTA, the reporting requirements apply to any company that is a “Reporting Company”. The CTA defines this term as: “a corporation, limited liability company, or other similar entity” that is created by the filing of a document with the state or Indian Tribe, or formed as a foreign entity registered to do business in the United States. The definition explicitly excludes an extensive list of entities (a total of 24 listed). Among those excluded, the most prominent ones include:

  • Publicly traded companies (subject to SEC regulations);
  • Companies employing more than 20 full-time employees in the United States, operating from a physical office in the United States, AND having filed a tax return demonstrating more than $5 million in gross receipts/sales; and
  • Dormant companies which have been in existence for more than one year, are not engaged in “active business,” AND not owned (either directly or indirectly) by a non-U.S. individual.
  • Additional exceptions exist for certain financial institutions, charitable trusts, and pooled investment vehicles.

Beneficial Ownership

Under the CTA, a “beneficial owner” is an individual who, directly or indirectly (1) exercises substantial control over an entity; or (2) owns or controls at least 25 percent of the ownership interests in an entity.

There are five exceptions from the term “beneficial owner”:

  1. A minor child, if the child’s parent’s or guardian’s information is otherwise is reported properly;
  2. An individual acting as a nominee, intermediary, custodian, or agent on behalf of another individual;
  3. An individual acting as an employee whose control is derived solely because of employment status;
  4. An individual whose only interest in the entity is through a right of inheritance; and
  5. A creditor of the entity, unless the creditor meets the requirements of a beneficial owner.

Summary

As the one-year anniversary of the CTA enactment comes closer, it would be important for small business owners or entrepreneurs who are planning on starting new business entities to pay close attention to FinCEN’s publication for the CTA regulations. Varnum will keep a close eye on the issue and would be happy to help any business owners or entrepreneurs regarding compliance.

Sixth Circuit Selected to Hear Consolidated ETS Legal Challenges

On November 16, the United States Panel on Multi-District Litigation conducted a lottery among the federal court circuits in which lawsuits are pending over OSHA’s ETS. Under the rules applicable to the ETS, all legal challenges to the ETS are to be consolidated and transferred to one Circuit Court of Appeals for hearing and decision. The lottery resulted in the selection of the Sixth Circuit Court of Appeals to receive and hear these cases. We will continue to monitor for further developments.    

Throughout COVID-19, Varnum’s Labor and Employment Team has helped employers across the country navigate emergent laws and regulations that impact their workforce and operations, including with respect to vaccination mandates. 

On November 9, 2021, Varnum Labor and Employment attorneys presented a one-hour webinar on the most pressing concerns and questions regarding OSHA’s COVID-19 vaccine and testing rules. To request a recording of the webinar and gain access to frequently asked questions and other resources, please click here.

We stand ready to assist you with this new rule and related workplace adjustments. If you have immediate questions, please contact your Varnum attorney.