By: Leah K. Sell, Esq.
The Biden-Harris administration will bring many changes for businesses and employers. While there is much speculation on what these changes may entail and when they may happen, there are some assured legal changes, many arising out of recent voter actions, that employers should be aware of moving into 2021.
Voters in Mississippi approved ballot measures permitting the use of medical cannabis. Medical cannabis use was already legal in Arizona, Montana, and New Jersey, but voters there also passed measures to legalize the use of recreational cannabis. South Dakota voters simultaneously approved the use of both medical and recreational cannabis. In Oregon, voters approved measures decriminalizing small amounts of controlled substances.
The Marijuana Opportunity Reinvestment and Expungement Act of 2019 (MORE Act) was also recently passed in the U.S. House of Representatives. The MORE Act would remove cannabis from the federal controlled substance list. This would enable states, including those listed above, to determine the approved use and legality of cannabis without conflicting federal law, as is the current landscape. Additionally, the Act would apply a 5% federal tax to cannabis sales, in part to fund reforms and programs for those most impacted by the current federal criminalization of cannabis. While the Act is unlikely to pass the Senate, even with the recent shift to a Democratic majority, the Act is an important indication that cannabis legislation will at least be considered by federal lawmakers in the near future.
Employers will want to watch carefully as legislation is implemented, including state laws, to enact the approved ballot measures. Policies and procedures, including definitions of “legal drugs” and testing programs, will need to be updated accordingly to comply with these new actions.
Florida voters elected to join the majority of U. S. states in providing incremental increases for the state’s minimum wage. The Florida minimum wage will rise to $10/hour on Sept. 30, 2021 and continue to increase by one dollar each September 30 until it reaches $15/hour.
Many states have passed similar legislation for a pre-determined incremental increase, until a figure, often $15/hour, is reached. In other states, such as Minnesota, the incremental increase is determined annually based upon inflation, cost of living, or other metrics.
As wage increases are determined and effective on dates throughout the year, employers must be mindful of variations in wage at all times and throughout varying jurisdictions. For instance, in New York, wage requirements vary not only annually, and by employer size, but also by geographic location; with New York City not surprisingly having the highest wage requirements in the state.
Earlier this year, California passed the California Assembly Bill 5 (AB-5), a new law raising the burden on businesses to classify a worker as an independent contractor rather than as an employee. Voters in November passed Proposition 22, a limited exemption to AB-5 for app-based gig-economy drivers. Proposition 22 narrowly defines who an app-based gig-economy driver is and provides additional requirements to utilize the exemption. Some of these requirements include minimum net earnings, the provision of accident insurance, health care subsidies, and limitations on driving times.
While Pennsylvania does not have ballot measures, it did see several pieces of employment legislation passed in 2020. These include Act 9 regarding unemployment notice requirements for employers and an increase in the minimum salary threshold required for employees to be classified as exempt under hour and wage laws.
On October 3, 2020, the minimum salary threshold to classify an employee as exempt in Pennsylvania increased to $684 per week ($35,568 annually) to align with current federal minimum salary requirements. However, on October 3, 2021 the Pennsylvania requirement will eclipse the federal minimum and rise to $780 per week ($40,560 annually). In 2022, the Pennsylvania salary minimum will increase to $875 per week ($45,500 annually). In 2023, and every third year thereafter on October 3rd, the salary requirement will be adjusted to reflect the earning of the 10th percentile of those employees working in such exempt positions.
The Department of Labor recently finalized its Proposed Rule regarding independent contractor classification. The Final Rule utilizes a five factor “economic realities” test in an effort to streamline independent contractor classification decisions. The future of this Rule is unknown however, given almost certain legal challenges, state law differences such as AB-5, and potential changes with the new administration.
Businesses should carefully review the classification of workers as independent contractors or employees, particularly for those working in California and other jurisdictions following an AB-5-like increased burden. A wait-and-see approach for any decision based on the DOL Final Rule may be best practice until the Rule’s efficacy is more determinable. Employee exemption status should also be analyzed, not only to meet the federal minimum, but also any applicable state and local requirements. Adjustments to salary or reclassification may be required.
Colorado voters passed a ballot measure creating a statewide program for paid family and medical leave. Eligible workers will be able to take 12 weeks of paid leave, with an additional four weeks of leave for pregnancy or childbirth-related complications. The leave will be funded through a payroll tax on employers and employees.
Congress did not extend the federally mandated paid leave provisions of the Families First Coronavirus Response Act (FFCRA) which ended on December 31, 2020. However, it did provide an extension of the tax credits until March 31, 2021 for those employers who voluntarily continue to provide paid leave for reasons relating to COVID-19 under FFCRA. Several states and localities have enacted their own new sick leave requirements which include provisions for additional paid sick leave either specific to COVID-19 or relating to any public health emergency.
2021 is sure to bring many changes, including those to the workplace via ballot measures, legislative actions, new local ordinances, and the changes the new administration will bring. Employers should take care to assess employment policies and procedures and make appropriate updates in light of these changes throughout the year.
If you have any questions regarding these employment law, or any other employment-related legal issue, please contact Leah K. Sell.
Leah Sell is an Associate with Leech Tishman, and a member of the firm’s Employment & Labor, Corporate, Cannabis and LaunchPad Practice Groups. She is based in the firm’s Pittsburgh office and can be reached at 412.261.1600 or firstname.lastname@example.org.
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