The new administration has pledged to make several significant workplace changes that broaden worker rights – from pay equity to additional anti-discrimination protections and stronger safety regulations. The changes may potentially usher in additional employment practices-related lawsuits and Workers’ Compensation claims. Here are some of the planned changes and what they potentially mean for Employment Practices Liability Insurance (EPLI) and Workers’ Compensation insurance.
President Biden during his campaign publicly committed to supporting measures that would address pay disparity, pledging to sign the Paycheck Fairness Act during his term. Under current law, an employer may, for example, pay a male employee more than a female employee where the reason for the disparity is based on a “factor other than sex.” The Paycheck Fairness Act would eliminate this flexibility, other than for reasons that include education, training, or experience. The Act would also prohibit employers from restricting employees from discussing wage information and require companies to report to the Equal Employment Opportunity Commission (EEOC) compensation data correlated to employees’ race, sex, and national origin. If the bill is indeed signed, employees would have an easier path to pursuing individual and collective/class actions suits against employers alleging discrimination on the basis of race, sex or national origin. This could result in a spike in EPLI claims. It’s important to discuss employment practices with insureds regarding this issue to help mitigate their liability exposure.
The new administration is also committed to passing the Equality Act, a bill that would ban discrimination against people based on sexual orientation and gender identity with respect to employment, housing, education, and public accommodation. Supporters say that the Equality Act extends basic, broadly accepted tenets of the Civil Rights Act to classes of people that the bill doesn’t explicitly protect, and would cement protections that could otherwise be left up to interpretation. Opponents say the Act infringes on religious rights and goes too far in limiting a person’s or entity’s ability to defend themselves against discrimination claims. Again, if passed, the Act opens up employers to additional EPLI exposures.
Pregnancy Workers Fairness Act
Biden has promised to sign into law the Pregnant Workers Fairness Act, which would require employers to offer employees reasonable work accommodations when their abilities are limited by pregnancy, childbirth, or a related condition. Under the proposed law, reasonable accommodations likely include granting short breaks for employees to express breast milk (already required under federal law) or even temporarily modifying job duties. If the law passes, employers not providing these accommodations could open themselves up to employment-related claims.
More Federal Oversight of Discriminatory Practices
The new administration has proposed doubling the funding for the EEOC to facilitate the agency’s goal of “fulfilling its mission and addressing workplace discrimination.” This would very likely result in an increase in EEOC activity and potential fines.
Eliminating “But-for” Causation Requirement Under the ADEA
The new administration has indicated that it intends to further protect older Americans against age discrimination in the workplace. In the Supreme Court’s decision of 2009, Gross v. FML Fin. Servs., Inc., plaintiffs alleging discrimination under the Age Discrimination in Employment Act of 1967 (ADEA) have been required to prove that age was the “but-for” cause of the harm they suffered, as opposed to merely a “motivating factor.” This “but for” causation standard is a higher standard than required in most other discrimination claims. Eliminating this cause would make it easier for workers to prove they were victims of age discrimination.
Elimination of Class-Action Waivers
Currently, employers using collective action waivers can mandate the resolution of employment-related claims on an individual basis in an arbitration proceeding. This minimizes the employer’s exposure to potential class-wide liability. President Biden has stated that he would sign legislation prohibiting employers from seeking such waivers. By so doing, employers could be potentially exposed to an increase in class-action-related employment suits.
Additional related legislation being discussed that could impact employers and their liability exposures include minimum wage hikes, overtime rule changes, the addition of wage theft provisions to the Fair Labor Standards Act (FLSA), and the expansion of paid leave, among others.
Joint Employment & Independent Contractors
During Biden’s campaign, he pledged to “aggressively pursue employers who intentionally misclassify workers as independent contractors” by “enact[ing] legislation that makes worker misclassification a substantive violation of the law under all federal labor, employment, and tax laws with additional penalties beyond those imposed for other violations.” It’s anticipated that the Biden Administration will take an aggressive, multi-pronged approach to address misclassification, including instructing federal agencies such as the Department of Labor (DOL) and National Labor Relations Board (NLRB) to increase regulation and enforcement, reversing the restrictive “joint employer” standard and seeking to establish a federal standard modeled on the “ABC” test for all labor, employment, and tax laws. The “ABC” test examines whether the worker is (A) free from the control and direction of the hiring entity, (B) performs work that is outside the usual course of business of the hiring entity, and (C) is customarily engaged in an independently established trade, occupation or business.
Changes to worker classification and joint employment will impact both EPLI and Workers’ Compensation insurance and who is responsible for coverage, depending on the industry —including franchises and the gig economy. In general, it’ll be harder for employers to designate workers as independent contractors.
OSHA at the Forefront
The new administration will take a more enforcement-minded approach to workplace safety issues on behalf of the Occupational Safety and Health Administration (OSHA). The effort may include hiring more inspectors, issuing more citations, and seeking higher penalties against employers. The landscape of workplace law may change significantly for employers under the new administration depending on where insureds are located in the country and if proposed federal legislation is broader than in their states’ and cities’ counterparts. It’s important for employers to review their employment practices and remain in compliance, particularly as the landscape shifts.