Legislative Updates

On February 8, 2021, Circuit Judge Christina Klinger ruled on an election contest complaint that Constitutional Amendment A, a 2020 ballot measure that legalized marijuana in South Dakota beginning in 2021, was unconstitutional because it violated the state’s one-subject rule and revised the state’s constitution instead of amending it. The case is expected to be appealed to the South Dakota Supreme Court.

South Dakota Senate Bill 190, entered on February 3, 2021, seeks to revise provisions regarding unfair or discriminatory practices by including "sexual orientation, gender identity, or identification as a Native American Two-Spirit" as protected categories. 

The Department of Labor (DOL) has released a new model Employer CHIP Notice with information current as of Jan. 31, 2021. As a reminder, employers with group health plans that cover participants in states that provide premium assistance subsidies through Medicaid or the Children’s Health Insurance Program (CHIP) are required to notify their employees annually, regardless of the employer’s location.

The DOL’s model notice, which employers may use for this disclosure, is updated periodically to reflect changes in the states that offer premium assistance subsidies, as well as the contact information for those states. Click here for more information.

On January 29, 2021, the U.S. Department of Labor announced that its Occupational Safety and Health Administration (OSHA) issued new worker safety guidanceto:

• Help employers and workers implement a coronavirus protection program; and
• Identify risks that could lead to exposure and contraction;

The guidance recommends several essential elements in a prevention program:

• Conduct a hazard assessment.
• Identify control measures to limit the spread of the virus.
• Adopt policies for employee absences that don’t punish workers as a way to encourage potentially infected workers to remain home.
• Ensure that coronavirus policies and procedures are communicated to both English and non-English speaking workers.
• Implement protections from retaliation for workers who raise coronavirus-related concerns.

The guidance is not a standard or regulation, and it creates no new legal obligations. It contains recommendations as well as descriptions of existing mandatory safety and health standards. The recommendations are advisory in nature, informational in content, and are intended to assist employers in recognizing and abating hazards likely to cause death or serious physical harm as part of their obligation to provide a safe and healthful workplace.

On January 27, 2021, the U.S. Immigration and Customs Enforcement (ICE) announced the Employment Eligibility Verification (Form I-9) flexibility rule will be extended to March 31, 2021 because of COVID-19 and the need for precautions. This flexibility rule, applicable only to remote workplaces, defers the physical presence requirement for in-person verification of the Form I-9 identity and employment eligibility documentation. However, the flexibility rule does not apply if there are employees physically present at the workplace. If there are employees physically present, then an employer must verify their Form I-9 identity and employment eligibility documentation in-person.

On March 19, 2020, the DHS first announced that the physical presence requirements were deferred due to COVID-19. The DHS and ICE websites provide additional updates about when the extensions will end and when normal operations will resume.

On January 26, 2021, an Internal Revenue Service press release (IR-2021-21) reminded employers to take advantage of the extended employee retention credit for businesses that choose to keep their employees on the payroll despite the challenges posed by COVID-19. The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted December 27, 2020, changed the employee retention tax credits previously made available under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), including modifying and extending the Employee Retention Credit (ERC), for six months through June 30, 2021. Several of the changes apply only to 2021, while others apply to both 2020 and 2021.

As a result of the new legislation, eligible employers can now claim a refundable tax credit against the employer share of Social Security tax equal to 70 percent of the qualified wages they pay to employees after December 31, 2020 and through June 30, 2021. Qualified wages are limited to $10,000 per employee per calendar quarter in 2021. Thus, the maximum ERC amount available is $7,000 per employee per calendar quarter, for a total of $14,000 in 2021.

Employers can access the ERC for the 1st and 2nd quarters of 2021 prior to filing their employment tax returns by reducing employment tax deposits. Small employers, those with an average of 500 or fewer full-time employees in 2019, may request advance payment of the credit (subject to certain limits) on Form 7200, Advance of Employer Credits Due to COVID-19, after reducing deposits. In 2021, advances are not available for employers larger than this.

Effective January 1, 2021, employers are eligible if they operate a trade or business during January 1, 2021 through June 30, 2021, and experience either:

• A full or partial suspension of the operation of their trade or business during this period because of governmental orders limiting commerce, travel or group meetings due to COVID-19; or
• A decline in gross receipts in a calendar quarter in 2021 where the gross receipts of that calendar quarter are less than 80 percent of the gross receipts in the same calendar quarter in 2019 (to be eligible based on a decline in gross receipts in 2020 the gross receipts were required to be less than 50 percent).

Employers that did not exist in 2019 can use the corresponding quarter in 2020 to measure the decline in their gross receipts. In addition, for the first and second calendar quarters in 2021, employers may elect (in a manner provided in future IRS guidance) to measure the decline in their gross receipts using the immediately preceding calendar quarter (the fourth calendar quarter of 2020 and first calendar quarter of 2021, respectively) compared to the same calendar quarter in 2019.

In addition, effective January 1, 2021, the definition of qualified wages was changed to provide:

• For an employer that averaged more than 500 full-time employees in 2019, qualified wages are generally those wages paid to employees that are not providing services because operations were fully or partially suspended or due to the decline in gross receipts. 
• For an employer that averaged 500 or fewer full-time employees in 2019, qualified wages are generally those wages paid to all employees during a period that operations were fully or partially suspended or during the quarter that the employer had a decline in gross receipts regardless of whether the employees are providing services.  

Retroactive to the March 27, 2020, enactment of the CARES Act, the law now allows employers who received Paycheck Protection Program (PPP) loans to claim the ERC for qualified wages that are not treated as payroll costs in obtaining forgiveness of the PPP loan.

On January 21, 2021, the Centers for Disease Control (CDC) updated its guidance on COVID-19 workplace testing. The guidance emphasizes that workplace-based testing should not be conducted without employees informed consent so they understand the testing process and may act independently to make choices that align with their values, goals, and preferences.

The guidance details the disclosures that an employer must provide to its employees, for instance:

• Test manufacturer, name, purpose, and type.
• How the test will be performed.
• Known and potential risks of harm, discomforts, and benefits of the test.
• What a positive or negative test result means, including:
• • Test reliability and limitations; and
  • Public health guidance to isolate or quarantine at home, if applicable.

The guidance also addresses topics employers should be prepared to discuss with their employees, such as test scheduling and payment, testing sites, communication and interpretation of results, employee privacy, and how to get assistance.

The CDC also provides a SARS-CoV-2 Testing Strategy: Considerations for Non-Healthcare Workplaces website, updated October 21, 2020, which identifies additional, important disclosures that employers should give to employees contemplating testing.

On January 19, 2021, the U.S. Department of Labor released the following new opinion letters addressing Fair Labor Standards Act (FLSA) compliance:

• FLSA2021-6: Addressing whether the FLSA’s “retail or service establishment” exemption applies to staffing firms that recruit, hire, and place employees on assignments with clients. 
• FLSA2021-7: Addressing whether certain local small-town and community news source journalists are creative or learned professionals under Section 13(a)(1) of the FLSA. 
• FLSA2021-8*: (withdrawn as of 1/26/21) Addressing whether certain distributors of a manufacturer’s food products are employees or independent contractors under the FLSA. 
• FLSA2021-9*: (withdrawn as of 1/26/21) Addressing whether requiring tractor-trailer truck drivers to implement legally required safety measures creates control by the motor carrier for worker classification (employee or independent contractor) under the FLSA and whether certain owner-operators are correctly classified as independent contractors.

On January 15, 2021, the U.S. Department of Labor released the following Fair Labor Standards Act (FLSA) opinion letters:

• FLSA 2021-5: This letter provided a step-by-step calculation of overtime pay under the FLSA when a tipped employee works as a server and bartender, receives tips, and also receives automatic gratuities or service charges.
• FLSA 2021-4*: (withdrawn as of 1/26/21) This letter found that a restaurant can implement a nontraditional tip pool under the FLSA’s new regulatory changes, not yet effective but set to be soon, so long as it does not include any managers or supervisors, the employer does not take a tip credit, and it pays the full minimum wage to both the tipped employees (servers) who contribute to the pool and the non-tipped employees (hosts or hostesses) who receive tips from the pool. A nontraditional tip pool includes both tipped employees and non-tipped employees.
• FLSA 2021-3: This letter assessed three different entities and whether they satisfy the FLSA’s establishment requirement, which provides an exemption from minimum wage and overtime provisions for workers of an amusement or recreational establishment, and whether an accrual method of accounting may be used to satisfy the FLSA’s Receipts Test.

*2021-4 was withdrawn. It was determined to be issued prematurely because it was based on a rule that has not taken effect. The withdrawal is an official ruling of the Wage and Hour Division for purposes of the Portal-to-Portal Act, 29 U.S.C. § 259, and the letter may not be relied upon as a statement of agency policy as of the withdrawal date.

On January 15, 2021, the U.S. Equal Employment Opportunity Commission (EEOC) approved revisions to its Compliance Manual Section on Religious Discrimination. The updated guidance describes how Title VII of the Civil Rights Act of 1964 protects against religious discrimination in the workplace and details legal protections available to religious employers. Importantly, the EEOC states that “the manual does not have the force and effect of law and is not meant to bind the public in any way. It is intended to provide clarity to the public on existing requirements under the law and how the EEOC will analyze these matters in performing its duties.”