The COVID-19 pandemic has changed, and likely will continue to change, workplaces in Michigan permanently. The highly contagious nature of SARS-CoV-2 (the new coronavirus that causes COVID-19) and new variants has significantly affected Michigan employers, employees, their workplaces, and their families.
Regulatory Measures in Michigan
The Michigan Occupational Safety and Health Administration ("Michigan OSHA") has adopted the federal OSHA emergency COVID-19 rule applicable to healthcare workers and applies existing rules and the general duty clause to address COVID-19 workplace enforcement. Michigan has adopted a COVID-19 anti-retaliation statute prohibiting employers from discharging, disciplining, or retaliating against employees who elect to stay home if they or their close contacts have COVID-19 or symptoms.
As the response to COVID-19 continues, to avoid potential liabilities and provide safe workplaces, Michigan employers will want to ensure they monitor applicable orders or directives from Michigan’s Department of Health and Human Services, the Centers for Disease Control and Prevention (CDC) and Michigan OSHA and federal OSHA.
COVID-19 Causes Permanent Changes for Employers
Due to the COVID-19 pandemic, many Michigan employers faced downturns, closures, and reductions in force. As the pandemic has subsided and changed, some reductions have become permanent, while some employers have struggled to keep up with consumer demand or to overcome worker shortages. Employers also continue to deal with uncertainty, rising costs and wages, and repeated updates to COVID-19-related federal, state, and local laws addressing the workplace.
For the foreseeable future, the workplace will remain changed as employers fully return to on-site work or adopt remote or hybrid work models while also seeking to protect their employee populations and limit the risk that their workplaces become sites of future community spread based on new COVID-19 variants.
COVID-19 caused employers to accept a temporarily remote workforce, and now many businesses continue to use or adopt semi-permanent remote work or hybrid work models. However, employers will find they still need to define and enforce reasonable limits on work hours, performance expectations, and “workplace” safety rules, as well as ensure remote employees remain subject to company policies, develop effective hiring and onboarding practices, and define and bolster communication expectations.
The impact of the COVID-19 pandemic is likely to have long-term implications on safety and health. In response to the ongoing pandemic, most employers developed or updated existing infection control policies and sick leave policies (in addition to evaluating additional protective measures for their workforces, including physical barriers, additional spacing, and staggered shifts).
Additionally, employees with protected disabilities are now more likely to request remote work as a reasonable accommodation, requiring employers to engage the required interactive process and, if supportable, justify why in-person work is required.
Employers dependent on in-person work models have been challenged to recruit employees to on-site work and must, even as the pressure of the pandemic fades, work to define why in-person work is required. Such employers have found it necessary to consider or adopt more aggressive recruiting and retention efforts, including higher starting wages/salaries, more generous benefit package and other non-traditional employment “perks.”
Finally, many employers have contemplated either COVID-19 vaccine incentives or mandatory vaccines as permitted by the Equal Employment Opportunity Commission (EEOC). Developments in this area are developing, fluid and certain to continue, depending upon the effectiveness of vaccine, vaccination rates, and emerging COVID-19 variants.
Global entities, including those operating in Michigan, continue to take a hard look at anti-discrimination and anti-harassment policies, and commitment to social justice and diversity.
In an increasingly illuminated stage, with pressures for transparency, employers have been re-examining how they manage their workforces and interact with their local and broader communities.
Many employers have long been on a path of reframing how they view sensitive issues, with many shifting the focus from simply preventing illegal conduct to adopting a proactive approach in promoting a more respectful and inclusive work environment. Now global businesses have taken their commitment to diversity, inclusion, and equity beyond their own walls, emphasizing their commitment to societal change.
Traditional training has focused on legal requirements, civility, respect, and bias (including unconscious bias) and on educating workers on multiple avenues to identify concerns to employers. Emphasizing this trend, during the height of the pandemic, Michigan’s Governor issued an executive order recognising racial inequality as a public health crisis and executive directives mandating implicit bias training for all healthcare workers and state employees.
Global employers that do not make it clear that their organizations actively oppose discrimination, racism, and sexism risk diminishing their reputations and may seriously damage their ability to recruit, hire, and maintain a diverse workforce.
The Black Lives Matter and Me Too movements have placed the spotlight on discriminatory actions and practices, including systemic racism and implicit bias, leading employers to provide additional support and training to their existing workforces in an effort to mitigate or eliminate bias, thereby enhancing their abilities to recruit, hire, and develop diverse workforces.
Finally, multiple studies confirm that Generation Z, now entering the workforce, will be the most diverse workforce of any previous generation, and is on track to be the most well-educated generation as well. Global employers that fail to embrace diversity risk losing the recruitment battles for these workers.
The law has struggled to keep up with rapid advances across industries. Before the COVID-19 pandemic, employers had already warmed to the “gig” economy approach, sometimes relying heavily on transient, temporary, and short-stint workers, many focused on particular projects or ventures. COVID-19 pushed that emphasis as consumers made demands on gig-heavy economies.
With the steady and perhaps increasing emphasis on the gig economy, employers must understand the challenges and risks of contracting for services and promoting contracted services. While the economy has drastically changed, applicable US law has not.
Employers (or entities contracting for services or personnel) must consider the costs, savings, and potential risks related to particular choices in this framework. Misclassifying workers as “independent contractors” who should be classified as “employees” leads to the following potential legal issues: collective bargaining, taxes, wage and hour compliance, benefits, and anti-discrimination laws. These areas are based on workers having “employee” status. Independent contractors typically have no such protections under federal and most state employment laws.
The question regarding whether a worker or group of workers is properly classified can easily lead to disputes before administrative agencies and state and federal courts. See more detailed information on the independent contractor relationship in Michigan in 2.1 Defining and Understanding the Relationship.
Most companies prefer to operate union-free for reasons such as avoiding limitations on dealing directly with their employees, general workplace flexibility, and minimizing the risk of work stoppages. Union membership has significantly declined in the United States for decades, with private sector union membership hovering around 6.3%. Unions remain strongest on the coasts (eg, New York, California). The South historically has the lowest unionization rate, but many states in the Midwest have seen union numbers reduced. In contrast, the rate of unionization in Michigan has increased from 13.6% in 2019 to 15.2% in 2020 as a percentage of overall employment in Michigan. This increase in Michigan’s unionization rate in 2020, however, was due to a decline in overall employment in Michigan, mostly in non-union jobs, and not necessarily due to successful union-organizing campaigns.
Michigan is a right-to-work” state. As such, it is unlawful for a collective bargaining agreement in Michigan to require employees to pay union dues.
During the COVID-19 pandemic, there has been a national uptick in unionization efforts and the change in the presidential administration will continue to make the environment more favorable to unions. To the extent workers feel their workplace is unsafe or believe they should receive things such as “hazard pay,” or oppose employers making COVID-19 vaccines mandatory, companies are seeing unions try to exploit those issues to gain entry to the company. Also, in a benefit to organized labor, the National Labor Relations Board (NLRB, or "Board") began conducting mail ballot elections once it began conducting representation elections. Unions have frequently sought mail ballot elections over manual (in-person) elections because they believe manual elections, which almost always take place on the employer’s premises, give employers an unfair advantage during representation elections.
The NLRB is vested with enforcing the National Labor Relations Act (NLRA), which provides workers with certain rights with respect to unionizing and discussing, protesting, etc their terms and conditions of employment. The NLRB governs private sector labor relations in the United States, and its regulations and administrative decisions apply to all 50 states. Consisting of five members appointed by the president, their views can change from administration to administration. Because the law is national in scope, no specific region, generally speaking, has a “leg up” on another when it comes to US labor law.
The NLRB still has yet to weigh in on many pressing issues related to the COVID-19 pandemic. For example, it is not yet clear whether companies have to bargain with unions over their emergency measures undertaken in response to the virus. In addition, it is not clear whether bargaining with unions must be done face to face (as is customary) or via videoconference. On the other hand, the law is established that union-represented employers have to bargain with unions over changes in working conditions, such as the decision to mandate COVID-19 vaccines in the workplace. Protected concerted activity claims related to safety complaints arising from COVID-19 have also continued to increase.
Furthermore, legislation is pending in Congress entitled the “Protecting the Right to Organize Act” (the “PRO Act”) that, if passed, will overhaul the NLRA, making it much easier for unions to organize employees in the US, among other significant changes. Accordingly, companies looking to start or augment their business in the USA should continue to closely monitor important legal obligations under the NLRA, decisions coming out of the NLRB, and legislation being contemplated, especially in light of the recent change in the presidential administration, which is likely to lead to decisions that favor unions and expand employee rights to organize unions, collectively bargain, and engage in protected concerted activity.
It is important that the parties agree on the terms and conditions at the outset of their relationship, and ensure that the agreement reached is consistent with applicable law.
The default service relationship in the United States is that of employer and employee. Most states, including Michigan, are “at-will” employment jurisdictions, meaning either party (the employer or the employee) can terminate the relationship at any time and without having to provide a reason – provided, of course, that the termination decision is not otherwise prohibited by law (ie, due to discrimination or retaliation). Although Michigan is an employment-at-will jurisdiction, an employer can forfeit its at-will right to terminate an employee by promising employment for a fixed period or stating (including verbally) that employment will only be terminated under certain circumstances, such as for “good cause or reason.” A carefully drafted disclaimer can help avoid these pitfalls.
Employees may also have contracts specifying the terms and conditions of their employment. Such contracts are not required in the United States, but may be warranted depending on the type of employee in question (ie, an executive). Barring a formal written contract, terms defining the relationship are typically relegated to documents such as offer letters, job descriptions, employment policies, or employment handbooks. Even if an employer defaults to the presumptive at-will employment status, individual employment agreements often address confidentiality, intellectual property, plus non-competition and non-solicitation covenants that are enforceable if reasonable in scope and duration – see 4.1 Restrictive Covenants.
Joint employment is not the norm and applies only in limited circumstances, usually in a legal proceeding as a mechanism by which an employee attempts to recover damages against a third party. For a third party to be joint employer, the third party must have exerted significant control over the employee. Factors to consider in determining joint employer status are:
Under the NLRA, the NLRB currently may find two or more entities are joint employers if they are both employers within the meaning of the common law and if they share or codetermine matters governing the essential terms and conditions of employment. The NLRB has changed the standard it uses in this context several times over the years and may look to do so again under the new administration, so it is important to keep abreast of all changes on this front. Most recently, the Biden administration rejected a Trump administration Department of Labor (DOL) rule that would have been more favourable to employers.
The importance of control in a relationship extends to the determination of whether a worker is an independent contractor versus an employee. Contracting is very popular in the USA; the number of contractors as a percentage of the workforce has doubled since the 1990s (see GAO-15-168R Contingent Workforce). As contracting has grown in popularity, it has attracted more scrutiny from the courts, lawmakers, and administrative agencies. Accordingly, simply describing a worker as an independent contractor is not sufficient. The law in this area is rapidly evolving and there are no rigid rules for determining whether a person is an independent contractor. Various jurisdictions and administrative agencies in the USA have adopted different tests to determine whether an individual is an independent contractor.
Most of the enforcement activity is at the federal level. The US government will seek unpaid income taxes, unemployment taxes, and overtime, as examples. Misclassified independent contractors can also seek benefits (health insurance and retirement) under the federal Employee Retirement Income Security Act. The federal government, generally, applies a common law control test, exemplified by the six factors used by the DOL:
At the state level, potential misclassification liabilities include income tax, unemployment, and workers’ compensation. In Michigan, an "economic reality test" has traditionally been applied to determine if an employer/employee versus independent contractor relationship exists. That test focuses primarily on whether the work performed is an integral part of the employer’s business and if the compensation from the employer is their primary income source. Recently, the Michigan unemployment agency adopted the US Internal Revenue Service 20-factor test.
Nationally, the Biden administration has signalled its approval of the California “ABC” test, which requires the hiring entity to satisfy all three of the following conditions:
This test makes it more difficult for employers to satisfy the independent contractor requirements, and if adopted by the federal DOL, could be adopted by Michigan’s administrative agencies.
Businesses and workers are often complicit in the objective to characterize the relationship as a non-employment independent contractor – both parties save money. However, governments lose a lot of revenue and critically examine those relationships. Also, if the relationship sours or the worker is injured while working, the independent contractor will often seek employment-related benefits, such as workers’ compensation or unemployment, and the business will have no insurance coverage in place to manage the risk. Best practice, at a minimum, is to be conservative in characterizing workers as independent contractors and to make sure appropriate insurance coverages are in place for non-employee independent contractors.
Unpaid internships have been the subject of considerable scrutiny in the past few years, notably from the standpoint of whether private businesses can rely on unpaid interns. The US Department of Labor’s Wage and Hour Division has developed a test for evaluating whether an individual constitutes a “trainee” (intern) for the purposes of the Fair Labor Standards Act (FLSA) and is thereby not required to be paid.
Michigan does not have different enforcement guidance.
The COVID-19 pandemic continues to negatively impact the ability of employers to attract and retain foreign national talent. The pandemic, and the federal government’s response, disrupted virtually every aspect of the US immigration system. The processing of immigration benefits by US Citizenship and Immigration Services (USCIS) has dramatically slowed; visa processing abroad by the US Department of State (DOS) is sporadic; and entry into the US is sometimes impacted by geographic travel bans based on local COVID conditions and often requires an approval of a “National Interest Exception” based on critical infrastructure needs for a foreign national employee to enter under a waiver to the COVID-19-related travel bans.
Corporate Structure and Relationships
Employers are finding it increasingly difficult to sponsor foreign nationals for employment in the US. Increased scrutiny by USCIS and DOS has resulted in lengthy delays in the adjudication process and greater rates of visa denials. The pandemic has resulted in even longer delays due to the temporary closure of local immigration offices for in-person services and the suspension of routine visa services by DOS. In addition, various presidential proclamations have prohibited a number of foreign national employees from seeking entry to the US to initiate or return to employment.
H-1B and L visas
Employers often consider the H-1B and L visa when sponsoring foreign nationals for employment in the US. However, due to increased scrutiny and changes in the immigration processes for the above visa classifications, employers may also wish to consider the H-1B1, E, and TN visas in addition to the H-1B and L.
The H-1B visa is generally reserved for specialty occupations – positions requiring the theoretical and practical application of a body of highly specialized knowledge and that requires the attainment of a bachelor’s degree or higher in a specialty or its equivalent as a minimum for entry into the occupation in the US. New H-1B petitions are sometimes subject to an annual lottery due to high demand and USCIS has conducted a lottery in recent years. In 2020, the lottery underwent a significant processing change and resulted in the implementation of an additional fee for employers. This classification has experienced increased scrutiny in recent years, resulting in lengthy processing delays and increased rates of denial. Of note, while several presidential proclamations limited the ability of foreign nationals to enter the US on various visa classifications, Presidential Proclamation 10052 specifically restricted the ability of employees in the H-1B visa to enter the US to initiate or resume employment.
The L visa is generally reserved for international companies seeking to transfer executives, managers, or specialized workers to the US. As with the H-1B visa, the L visa has experienced heightened scrutiny, resulting in lengthy processing delays and increased rates of denial. In addition, a change in the immigration process for renewals has added to the length of time required for a renewal and increased costs. Various presidential proclamations, including Presidential Proclamation 10052, have restricted the ability of employees in the L-1 visa classification to enter the US to initiate or resume employment.
H-1B1, E, and TN visas
Due to the challenges of securing visa sponsorship for foreign national employees through H-1B or L visa classifications, employers are exploring alternatives to include the H-1B1, E, and TN visa classifications.
The H-1B1 visa is reserved for citizens of Chile and Singapore. As with the H-1B visa, the H-1B1 is generally restricted to specialty occupations. Similar in many respects to the H-1B visa, the H-1B1 is attractive to many employers due to the relative ease and reliability of the H-1B1 sponsorship process. This visa classification is generally a more reliable and faster option than the H-1B visa, although there is concern with timing due to the suspension of routine visa services at US embassies and consulates due to the pandemic.
Another option for sponsorship of foreign national employees is the E visa. The E visa category includes treaty traders (E-1), treaty investors (E-2), and Australian specialty occupation workers (E-3). To qualify as an employee of a treaty trader or treaty investor, the employee must share the same nationality as the employer, and the employee must be engaged in the duties of an executive, manager, or specialized worker. The E-3 visa applies to Australian nationals performing services in a specialty occupation similar to the H-1B visa category but are more easily attainable. As with the H-1B1 visa, employers have generally found the E visa to be reliable, fast, and cost-effective, although there is concern with timing due to difficulty in securing appointments at many US embassies and consulates because of the pandemic.
The TN (NAFTA) visa allows employers to sponsor citizens of Canada and Mexico for employment in the US in a professional capacity. While the North American Free Trade Agreement (NAFTA) has been replaced by the United States–Mexico–Canada Agreement (USMCA), USMCA retains the TN visa classification. To be eligible for the TN classification, the profession must be noted on the treaty (list) and the foreign national employee must satisfy the qualifications for eligibility for employment in that profession. Employers have generally found this visa classification to be reliable, fast, and cost-effective. Of note, an employer seeking to sponsor a Canadian citizen for employment under this visa classification may simply have the sponsored employee present an application package directly to a US Customs and Border Protection agent. Unfortunately, Mexican citizens requiring a visa are generally required to attend an appointment at a US embassy or consulate and there is concern with timing due to the suspension of routine visa services at US embassies and consulates due to the pandemic.
To remain union-free, it is critical to establish a positive culture and get buy-in from the employer’s leadership team. The vast majority of union campaigns start because of perceived toxicity in the workplace (eg, favoritism or no outlets for employees to express their views). Being union-free vests the organization with the autonomy to make decisions about policies and other terms and conditions of employment.
To the extent the company desires to remain union-free, the importance of hiring a strong HR and employee relations staff who can establish a positive culture and get buy-in from the managers cannot be overstated. It is critical to establish a positive culture and get buy-in from the employer’s leadership team. The vast majority of union campaigns start because of perceived toxicity in the workplace (eg, favoritism or no outlets for employees to express their views). Being union-free vests the organization with the autonomy to make decisions about policies and other terms and conditions of employment. If the employees are represented by a union and/or ever vote a union into the workplace, an employer has a legal obligation to bargain virtually every potential change to workers’ terms and conditions of employment with the union.
Reaching a collective bargaining agreement with a union after being organized also can be a lengthy process. According to a recent analysis by Bloomberg Law, on average, it takes 409 days between the time a union is certified and the time a collective bargaining agreement is finalized with the employer. During this period, employers are not permitted to make unilateral changes in employee wages, hours, and working conditions. Accordingly, many employers strive to remain union-free in order to enjoy maximum flexibility.
The pre-hire and interviewing process is a significant opportunity for Michigan employers to identify and hire the strongest employment candidates. Before the employment interview, employers should consider requiring applicants to complete an employment application that accurately describes prior educational and work history, reasons for leaving prior employment, references, and any special skills.
The employment application should include a certification by the applicant that they provided complete, accurate, and truthful information on the application. It should also include an affirmation of the “at-will” nature of the employment relationship and limit any verbal or written modifications. Employers should refrain from making verbal or written assurances of "long-term" or "permanent" employment, or other statements that could adversely affect the employer’s ability to successfully assert that the employee was employed at-will at a later time. Employment applications should reflect that applicants are aware of post-offer testing and background checks, and the ability to request reasonable accommodations, if needed.
The employment application and the interview process should not ask questions or elicit information about legally protected characteristics such as age, national origin/race, religious practices, pregnancy or desire to have children, sex, sexual orientation or gender identity, or medical conditions or disabilities and similarly should avoid questions that would elicit this type of information.
Background Checks and Physical Assessment
Many jurisdictions “ban the box,” meaning the employer is prohibited from asking about criminal convictions on an employment application. Michigan does not have a ban the box statute except for state employers. In fact, a 2018 Michigan executive order actually prohibits any restriction on private employers’ ability to inquire about an applicant’s criminal history. Local ordinances may limit background checks, too. The background check process (criminal and credit) is also regulated by the federal Fair Credit Reporting Act.
The Americans with Disabilities Act (ADA) requires employers to provide reasonable accommodation to disabled applicants to permit them to participate equally in the hiring process.
The ADA prohibits employers from any pre-employment inquiries about an applicant’s medical conditions. Thus, the employer may not ask any questions designed to elicit medical information prior to a conditional job offer being made.
After a conditional offer of employment has been made, the employer may then conduct a post-offer medical examination, provided that this is required of all applicants for the position. To withdraw an offer of employment, the employer must be able to demonstrate that the individual is unable to perform the essential functions of the job in question, even with reasonable accommodations.
The Genetic Information Nondiscrimination Act (GINA) similarly imposes restrictions on employers during the hiring process (and afterward), making it unlawful for employers to request genetic information with respect to employees. Because genetic information is defined broadly to include family medical history, employers should ensure that any post-offer medical examinations, even those conducted by occupational doctors, do not elicit this information.
COVID-19 Creates New Issues
The COVID-19 pandemic has not changed this basic process, but it has raised a host of new issues that might arise during the interactive process as well as caused employers to revisit what are the essential functions of a job. For example, an applicant may have an underlying condition (asthma, diabetes) for which they seek reasonable accommodations that may not have been discussed pre-pandemic. In addition, while attendance at the workplace on a day-to-day basis has historically been recognized as an essential function of the job, the success of remote work has forced many employers to revisit whether remote work may serve as a reasonable accommodation for a particular applicant/employee.
The pandemic has also led employers to begin asking basic health questions related to whether an applicant/employee has had symptoms relating to COVID-19 (eg, a fever over 100.4 degrees) and as the country continues to experience the spread of variants, it seems more likely that some employers will begin implementing mandatory vaccination policies. Inquiring into an applicant/employee’s vaccination status is permissible. However, the employer would still have a duty to reasonably accommodate non-vaccinated applicants/employees if they have a sincerely held religious belief that prevented them from getting vaccinated, or a disability covered by the ADA.
Michigan Anti-discrimination Laws
Under Michigan law, it is illegal for employers to discriminate in the hiring process based on certain protected categories, as detailed below.
The Elliott-Larsen Civil Rights Act (ELCRA)
Michigan's Elliott-Larsen Civil Rights Act (ELCRA), MCLS § 37.2101 et seq, prohibits job application questions about the following protected characteristics of the applicant: race, color, national origin, age, sex, height, weight, or marital status (MCLS § 37.2206(2)). Unlike federal law, Michigan’s statute does not currently include sexual orientation or gender identity as protected categories. MCLS § 37.2202(1)(d) prohibits hiring discrimination due to a person's pregnancy, childbirth, or a related medical condition. MCLS § 37.2205a prohibits application questions regarding an applicant’s misdemeanor arrest, detention, or disposition that did not result in a conviction.
The Michigan Persons with Disabilities Civil Rights Act
The Michigan Persons with Disabilities Civil Rights Act, MCLS 37.1101 et seq, prohibits job application questions concerning the disability of a prospective employee that are unrelated to the duties of the particular job (MCLS § 37.1206(2)(a)). The law also prohibits hiring discrimination on the basis of an applicant's disability or genetic information unrelated to the duties of a particular job (MCLS § 37.1202(1)(a)). Employers may not refuse to hire an individual when adaptive devices or aids would enable the individual to perform the job (MCLS § 37.1202(1)(f)).
The Michigan Department of Civil Rights Pre-Employment Inquiry Guide
The Michigan Department of Civil Rights Pre-Employment Inquiry Guide provides practical guidance to employers regarding the legal limitations on job applications in Michigan.
Local Anti-Discrimination Ordinances
In addition to the classifications protected by state law, several Michigan cities have passed ordinances that prohibit hiring discrimination based on sexual orientation, gender identity, gender expression, and other characteristics.
During 2020 and 2021, employers’ use of restrictive covenants to limit their employees’ post-employment competitive activities became a more volatile issue. Presently, there is no federal law governing an employer’s use of restrictive covenants. However, on July 9, 2021, President Biden issued an executive order, on “Promoting Competition in the American Economy,” that, among other things, was critical of employers’ use of non-compete agreements. The executive order directed the Federal Trade Commission (FTC) to “consider working with the rest of the Commission to exercise the FTC’s statutory rulemaking authority under the Federal Trade Commission Act to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.” As of the date of this publication, the FTC had not yet promulgated any regulations addressing this issue. In addition, in early 2021, a bill titled “The Workforce Mobility Act of 2021” was introduced in the Senate, which, if passed, would eliminate the use of non-compete agreements in most employment relationships.
In Michigan, the enforceability of restrictive covenants changed significantly in 1985. Prior to 1985, restrictive covenants were considered void and illegal as restraints of trade under Michigan statutory law. On March 29, 1985 this statute was repealed and replaced with MCLA §445.774(a), which is now applicable to restrictive covenants and agreements entered into after March 29, 1985. The 1985 statute now permits a restrictive covenant that “protects the employer’s reasonable competitive business interests” provided the restrictive covenant is “reasonable as to its duration, geographical area, and the type of employment or line of business.”
A restrictive covenant must be supported by “sufficient consideration.” The courts continue to define and evaluate “sufficient consideration,” “reasonable duration,” and “geographical area.” A Michigan Court of Appeals decision found the “[m]ere continuation of employment is sufficient consideration to support a non-compete agreement in an at-will setting.” With respect to duration, the courts have generally found a period of six months to three years to be reasonable. The reasonableness of the geographical area will be determined by the scope of the business and the legitimate competitive business interests of the party seeking to enforce the restrictive covenant. Restrictive covenant provisions seeking to preclude an individual from working in any capacity in any location for a competitor have been found to be unreasonable.
If a court finds a restrictive covenant to be “unreasonable in any respect,” the Michigan statute permits a court to “limit the agreement to render it reasonable in light of the circumstances in which it was made and specifically enforceable agreement as limited.”
Michigan has adopted the Michigan Uniform Trade Secrets Act (MUTSA), MCLA 445, 1901 et seq. Under MUTSA, “trade secret” means information (which includes a formula, pattern, program, device, method, technique, or process) having independent economic value from not being generally known or readily ascertainable that has been subject to reasonable efforts to maintain its secrecy. The party seeking to protect a trade secret must also demonstrate the defendant did not have express or implied consent to disclose or use the trade secret information.
Michigan’s definition of trade secret does not protect all information a company may consider proprietary or confidential, and courts require the party alleging a trade secret violation to specifically identify the alleged misappropriated trade secret. Examples of information that has garnered trade secret protection include information regarding specialized equipment and industrial processes, chemical processes, manufacturing methods, marketing and sales strategies, contractual details for customers, pricing lists and profit margins. Customer lists may be protected, but if such lists are compiled from personal or publicly available sources, or if the information is readily ascertainable from other channels, they may lose protection. Software, computer programs, data compilations and automation tools are not automatically entitled to trade secret protection and also must meet MUTSA’s elements required for such protection.
A party making a MUTSA trade secret claim must do so within three years. Remedies may include both injunctive relief and damages for the actual loss (compensatory damages) and unjust enrichment, or a reasonable royalty for the unauthorized disclosure. Attorneys’ fees may also be recovered. Other civil remedies for trade secret protection under tort and other common law theories are displaced by MUTSA’s remedies; however, a party may still pursue contractual remedies.
Because not all information may be considered a trade secret by Michigan courts and because contractual remedies are not preempted by MUTSA, contractual protection of information through confidentiality agreements more broadly defining proprietary and/or confidential information is a common and recommended practice. Such agreements are generally enforceable in Michigan.
The Federal Defend Trade Secrets Act of 2016 (DTSA) also creates a federal civil cause of action for trade secret misappropriation. DTSA is similar in many respects to MUTSA, but does not preempt or displace MUTSA.
Privacy rights in Michigan are covered by both common law and statutory protections. The Supreme Court of Michigan has recognized four common law privacy claims:
In some respects these claims overlap, each turning on particular facts that generally involve the disclosure of information that is either “highly offensive,” “unreasonable,” or “false” and that are private and/or disclosed publicly or to a large number of people.
Michigan also provides statutory privacy protections for certain information. Michigan has an eavesdropping statute prohibiting eavesdropping by third parties, including employers, on private conversations (MCLA 750.539a et seq). In such cases, all participants in the conversation must consent to recording the conversation. A participant may, however, record the conversation. Despite several challenges to the interpretation of this law, the Michigan Supreme Court has declined to change prior lower court precedent.
Michigan’s Polygraph Protection Act prohibits employers from requiring that applicants or employees take a polygraph (MCLA § 37.201 et seq). Michigan’s Persons with Disabilities Civil Rights Act prevents employers from performing genetic testing or requesting genetic information (MCLA 37.1101 et seq).
Michigan’s Bullard-Plawecki Right to Know Act prohibits employers from gathering or maintaining records regarding “an employee’s associations, political activities, publications, or communications of non-employment activities,” without written authorization (MCLA 423.508).
Michigan’s Social Security Number Privacy Act, MCLA 445.81 et seq, limits how an employer may use, display, or transmit an employee’s social security number and violations may result in civil and/or criminal penalties. Among other things, this statute requires encryption if four or more consecutive numbers of a person’s social security number will be used to gain access to the internet, websites, or computer systems or networks.
Michigan’s Internet Privacy Protection Act, MCLA 37.271 et seq, generally prohibits employers from accessing personal internet or social media accounts of employees and prohibits retaliation against a person who fails to disclose such information.
An employer in Michigan can prescribe limits on an employee’s use of its data or equipment, but exceptions do apply.
Even before the Black Lives Matter and Me Too movements, employers should have had thorough policies addressing discrimination, harassment, and retaliation, and will have supported the implementation of such policies through proactive training.
Training, which many employers mandate, will identify the types of behaviors that are inappropriate in the workplace, how to report concerns and specifically identify who to report those concerns to, and prohibit retaliation against those who pursue complaints or assist in an investigation. Supervisors’ training should also identify the supervisor’s role in setting the standard of professional workplace behavior, and how to appropriately escalate, investigate, document, and address reports of prohibited behaviors, including through any needed intermediate remediation and discipline. Most employers also include workplace respect, diversity and anti-bullying training designed to foster an inclusive and respectful workplace.
In reaction to the Black Lives Matter movement, the State of Michigan declared that racial inequity is a public health crisis and mandated implicit bias training for healthcare workers and state employees. There is no such mandatory training legislation for employees of private employers, although the majority of private employers are redoubling efforts to identify and eliminate unconscious bias from hiring, firing, and other employment decisions.
More generally, examining corporate culture and policies in these areas, and ensuring that employees – and especially managerial personnel – are properly trained to root out bias, harassment, and prejudice has taken on even greater importance given the growing social awareness of these issues over the last few years. Coupled with the widespread use of social media, this has made many employers rethink their approach on these subjects, both from a legal and a general business standpoint. Part of that process has led companies to shift their focus from just preventing illegal conduct to actively promoting more inclusive and respectful workplaces. Many employers have taken it upon themselves to adopt policies and training programs consistent with promoting a culture of inclusion, and to paying more attention to equity and implicit bias concerns raised by employees.
The Occupational Safety and Health Administration (OSHA) is the federal agency charged with enforcing all applicable safety laws and regulations in the OSH Act. Roughly 22 states have been granted authorization to establish their own occupational safety and health programs. Michigan has an approved state plan, and the Michigan Occupational Safety and Health Administration (MIOSHA) administers the OSHA statutory and regulatory mandates. Michigan typically follows the federal OSHA regulations and does not implement standards that are stricter than the federal guidelines.
Initially, Michigan established its own employer response requirements to the COVID-19 pandemic through executive orders. The Michigan Supreme Court struck down some executive power to issue such orders, but public health orders remained viable. As of this writing, Michigan has repealed its emergency COVID-19 workplace rules and efforts to establish a permanent COVID-19 rule. MIOSHA has instead adopted the federal OSHA emergency COVID-19 rule applicable to healthcare workers and applies existing rules and the general duty clause to other COVID-19 workplace enforcement. A Michigan statute also prevents employers from disciplining or retaliating against employees electing to stay home if they or their close contacts have COVID-19 or COVID-19 symptoms. Michigan employers will want to ensure they also check for other applicable orders or directives from other agencies within the state, especially as the COVID-19 situation remains fluid.
The Michigan worker’s compensation framework has several advantages for employers, including relatively modest statutory caps on benefits available under the Act, the ability of the employer to direct authorized medical care, and a robust exclusivity provision. The Michigan Worker’s Compensation Act is adjudicated through an administrative law structure, with hearings being held by a single hearing member assigned to that geographic location. Appeals from the decision of the single hearing member may be appealed to the full Board.
The provision of employee benefits and the documentation of employee benefit plans is largely a matter of federal law under the Employee Retirement Income Security Act of 1974 (ERISA). Generally, state law is preempted as it relates to employee benefit plans.
Effective March 29, 2019, the Michigan legislature enacted a paid medical leave statute requiring covered employers (those with 50 or more employees – including outside of Michigan) to provide 40 hours of paid time off for an eligible employee’s or their family member’s health condition, due to domestic violence or sexual assault, or closure of work or school due to a public health emergency. Employers must pay close attention to the coverage requirements defining an eligible employee. Additionally, employers can select from front loading or accrual over time of the 40-hour paid leave benefit. Employers also have flexibility, by policy, to define increments of use and the notice, procedural, and documentation requirements associated with use. Many employers will satisfy the paid leave requirement with existing paid vacation days, paid personal days, and other paid time off.
Michigan’s Payment of Wages and Fringe Benefits Act regulates the frequency of wage payments, format, and allowable deductions for the benefit of the employer and related procedures.
Terminating an employee is one of the most difficult decisions facing employers and is also the most likely to result in litigation.
If the employment relationship is at-will, it means that an employee has no contractual right to continued employment. That said, employers should always explain the basis for any employment termination. In the context of a lawsuit claiming that the termination decision was unlawfully discriminatory or retaliatory, many statutes permit an employer to avoid liability where they are able to articulate a legitimate, non-discriminatory (and/or non-retaliatory) basis for making their decision.
Termination of Employment by Operation of Contract
Where the employer and employee have entered into an employment agreement, that agreement will often address how and under what circumstances the employment relationship will terminate. Close attention should be paid to the language of the employment agreement, especially where there are defined terms addressing termination for “cause,” “change of control,” and other provisions. Employees are not entitled to severance pay as a result of termination unless the employer agrees to provide it according to the terms of an agreement or policy, or a discretionary decision to offer it. Many employers offer severance pay upon termination. Best practices dictate that severance or separation agreements include a release and waiver of all claims against the employer (unless release and waiver is precluded by explicit operation of law).
Separation Agreements and Releases
Waivers by employees age 40 or over are subject to special procedures to obtain a release of claims under the federal Age Discrimination in Employment Act (ADEA). In order for a waiver of claims to be valid under the ADEA, the release and waiver provisions must:
In the case of a group termination – ie, involving termination of two or more employees from the same decision-making process – employees receive 45 days (not 21 days) to consider the agreement (again, with a seven-day revocation provision) and a disclosure identifying the class of employees eligible to receive the severance package, their ages and the ages of all employees within the same job classification, division or organization who are not eligible or selected for participation in the termination program along with identifying the selection criteria.
WARN Act Obligations
The Worker Adjustment Retraining and Notification Act of 1988 (the “WARN Act”) applies to any business that employs 100 or more employees (excluding part-time employees) and terminates employees under circumstances that qualify as a “plant closing” or “mass layoff.” In those instances, the employer must provide affected employees and certain government officials at least 60 days' advance notice of the job loss event. Employers that fail to do so may be required to pay the affected employees back pay for each day of the violation, reimburse for any loss of benefits and medical expenses incurred, and pay civil penalties.
In addition to the federal WARN Act, Michigan has its own “mini-WARN” Act. Michigan’s mini-Worker Adjustment and Retraining Notification (mini-WARN) law, the Employee-Owned Corporation Act, MCL §§ 450.731–450.738, encourages (but does not require) an employer to notify the Michigan Department of Licensing and Regulatory Affairs (LARA), the affected employees, any employee organization representing them, and the affected community as soon as possible after making a decision to close a facility at which at least 25 employees work.
In Michigan, employers may not discipline, terminate, or otherwise retaliate against an individual who misses work because they are quarantining due to a positive COVID-19 test, are displaying principal symptoms of COVID-19, or have had close contact with someone who tested positive for COVID-19. The provisions of this statute enacted in response to the COVID-19 pandemic must be carefully evaluated and applied (see Michigan Public Act No 238, amended December 29, 2020).
The Families First Coronavirus Relief Act (FFCRA) has created new leave mechanisms for qualifying employees, including paid leaves for limited periods. These leaves were originally mandatory but became voluntary on January 1, 2021. Employers are eligible for a tax credit for voluntarily providing payments through September 30, 2021. However, although voluntary, these FFCRA leaves are subject to potential interference and retaliation claims. As such, many employers are not participating. Nevertheless, terminating someone because they have the virus or are suspected of having the virus can result in disability discrimination or retaliation claims.
Alternative Dispute Resolution
The law in the United States generally favors the private adjudication of disputes.
If the employer and employee have entered into an enforceable agreement to arbitrate a dispute, and the disputed matter is the type of claim that the parties agreed to arbitrate, courts typically will order the parties to proceed to arbitration. Arbitration can cover the full range of employment-related disputes.
Michigan law presumes that the employment relationship is at-will and terminable by either party for any reason or no reason, with or without notice. Care must be taken to ensure that an employer follows Michigan requirements for preserving the at-will status of the employment relationship.
Where there is an individual written contract of employment, or an agreement that the employment relationship will continue for a specified, definite duration, termination of the employment agreement proceeds according to the terms of that agreement. If termination violates the terms of that agreement, the employer may be subject to a breach of contract/wrongful termination claim and damages equivalent to the pay the employee would have received under the contract.
In Michigan, a non-union employee who argues that their employment is not at-will, but rather requires “just cause” to terminate, may attempt to prove such in one of three ways:
An employer’s emphasis of the at-will nature of employment and use of a contractual disclaimer (in employment applications, offer letters, handbooks, policy statements, etc) as well as the employer’s reserved right to change or terminate its policies at any time (and with or without notice) is critical to limiting liability and avoiding a plaintiff/employee’s argument that they may only be terminated for “just cause.” Also, supervisory training to avoid misleading assurances or implied promises of continued employment is required to avoid the creation of circumstances supporting a “just cause” claim.
While beyond the scope of this summary, employers can establish internal dispute resolution procedures that are “final and binding” to support the use of “just cause” or “satisfaction” (versus “at-will”) employment status.
Even with at-will employment, other employment agreements are enforceable, such as those concerning confidentiality, intellectual property, and restrictive covenants to arbitrate and waive class-action participation, and/or an agreement to shorten the statute of limitations.
There are many federal employment laws that prohibit discrimination, harassment and retaliation based on legally protected characteristics (sometimes referred to as “immutable traits”) or based on legally protected activity by an employee. The legally protected characteristics that are protected under federal law include age, gender (including sex and now including sexual orientation and/or gender identity), pregnancy, race, color, national origin, disability, military or veteran status, genetic information, religion, and citizenship. Federal law is now settled, with the US Supreme Court decision in Bostock v Clayton County, 140 S.Ct. 1731, 590 U.S. ____ (2020), that discrimination based upon an employee’s sexual orientation and gender identity is prohibited by Title VII.
In addition to federal laws, Michigan’s civil rights laws expand the coverage of legally protected characteristics to include height, weight, and marital status; however, Michigan’s Elliott-Larsen Civil Rights Act has not yet added sexual orientation and gender identity as protected characteristics.
Employees in Michigan do not have to first exhaust administrative remedies by filing a charge with the Michigan Department of Civil Rights before bringing a civil suit alleging discrimination, harassment, and/or retaliation under Michigan’s civil rights laws. The limitations period for filing a civil suit is three years, although most courts enforce agreements to abbreviate the limitations period that applies to actions brought to enforce Michigan civil rights in employment laws. (Note: an abbreviated limitations period is not generally enforced in the context of federal employment claims.)
An explicit policy prohibiting discrimination, harassment, and retaliation is a key component in addressing employee concerns and defending against a civil suit. Equally important, in terms of regulating workplace behaviors and defending against litigation, is the provision of periodic training, and especially supervisors’ training; supervisors, as the employer’s agents, are subject to individual liability under many Michigan civil rights laws.
The "Me Too" and "Black Lives Matter" movements have highlighted harassment and retaliation claims based on sex and race, and may lead to an uptick in such claims. COVID-19 has brought forth claims based on employee medical conditions and accommodations, and alleging retaliation based on voiced safety concerns. Michigan passed legislative immunity from liability for a COVID-19 claim brought against an employer so long as the employer acted in compliance with all federal, state, and local statutes, rules, regulations, executive, and agency orders related to COVID that had not been denied legal effect at the time of the conduct or risk that allegedly caused the harm. The legislation (HB 6030) applies retroactively to any claim that accrues after March 1, 2020.
As part of the COVID-19 pandemic, Michigan initially prohibited employers from discharging, disciplining, or otherwise retaliating against an employee who stays home from work because the employee (i) tests positive for COVID-19, (ii) exhibits one or more of its principal symptoms, or (iii) comes into close contact with a person who tests positive for COVID-19 or exhibits one or more of its principal symptoms (Executive Order 2020-166). All Michigan COVID-19 executive orders have now been rescinded. However, Michigan’s legislature passed MCL 419.401 et seq, which prohibits discrimination and/or retaliation against an individual (vaccinated or not) who is quarantining after a positive COVID-19 test or who exhibits principal symptoms of COVID-19.
Under federal law, sexual harassment claims that are settled may not be tax deductible if subject to a non-disclosure clause. Michigan does not have such a provision.
With few exceptions, the FLSA governs wage and hour claims brought by employees in Michigan. The FLSA requires that all covered, non-exempt employees be paid at least minimum wage for every hour worked, and receive overtime pay at no less than 1.5 times the regular rate of pay for all hours worked in excess of 40 within a workweek.
Potential wage and hour-related claims can include misclassification of a worker as an independent contractor or consultant (rather than as an employee), misclassification as exempt from overtime pay, payroll docking policies and practices, “off-the-clock” unpaid work hours, meal periods, breaks, overtime, record-keeping, deductions from pay, and rounding.
Michigan law severely restricts when and how an employer can deduct money from an employee’s paycheck.
Because an individual employee’s wage claim may be small, wage claims may be brought in a class action (referred to as a Rule 23 class) or a collective action under Section 216(b) of the FLSA. Through either framework, a large number of employees citing similar wage or compensation errors may join together to seek back pay, front pay, punitive or liquidated damages, and attorneys’ fees. Carefully crafted individual agreements to arbitrate claims, including a waiver of the right to proceed in a class or collective action, may help combat the risks and costs associated with class and collective actions, though certain lawmakers at the federal level have recently addressed potential lawmaking to limit or eliminate employee arbitration agreements.
Nearly every federal and Michigan employment law protects employees who report perceived unlawful acts, or participate in an investigation into the same. Even if it is ultimately determined that the employee’s perception is wrong, the employee will generally have “a right to complain” and still be protected unless it is shown that the employee knew they were making a false report. Thus, protection is granted to employees who report or complain about, for example:
Employers are well advised to establish a standalone non-retaliation policy. When an employee who has engaged in protected conduct must be disciplined or discharged, an employer should be able to provide substantial (and, ideally, documented) evidence of its non-retaliatory basis for the discipline or discharge.
As discussed in 6.2 Discrimination, Harassment, and Retaliation Claims, in response to COVID-19, Michigan law prohibits employers from discharging, disciplining, or otherwise retaliating against employees who stay home from work for certain COVID-19-related reasons.
The growth of social justice movements has also created increased awareness of the ability to pursue government redress of grievances. While Michigan has not yet done so, some states have adopted laws prohibiting confidentiality provisions in separation agreements that would otherwise prevent employees from discussing the facts of a discrimination or harassment claim with government agencies. The impact of COVID-19 has accelerated the number of employees reaching out to government officials to express concerns over a variety of health-related issues, including hygiene protocols and adherence to social distancing and mask mandates that have been adopted by government bodies. This trend will result in more investigations and potential actions by law enforcement, state health agencies, and the state and federal OSHA.
The growth of various social justice movements has caused many employers to reassess their training programs with respect to discrimination and harassment. The previous focus on simply preventing illegal conduct has shifted to one fostering a culture of inclusion. Part of that process involves giving greater emphasis to identifying bias, including unconscious or implicit bias; a greater awareness and sensitivity to these issues, particularly on the part of human resources personnel and managers; and strengthening the mechanisms by which employees can express concerns and by which those concerns will be evaluated. The promotion of environments that encourage reporting and offer multiple avenues to bring concerns forward, coupled with an appropriate response to the behaviors at issue, are important components of such a program.
In response to racial disparities surrounding healthcare illustrated by the COVID-19 pandemic, the Michigan Governor declared racial inequity to be a public health crisis and directed the LARA to begin the process of promulgating rules to establish implicit bias training standards as part of the knowledge and skills necessary for licensure, registration, and renewal of licenses and registrations of health professionals in Michigan. The Governor also directed all state employees to attend implicit bias training.
In addition to wage and hour claims, certain forms of discrimination claims are often brought in a class action under Federal Rule of Civil Procedure 23. A class action allows a large number of employees citing similar alleged discriminatory practices to join together against an employer to make claims for monetary and equitable relief.
Potential damages vary depending on the statute under which an employment-related claim is brought, but may include back pay, front pay, punitive or liquidated damages, and attorneys' fees. The court can also order the employer to reinstate/rehire employees found to have been improperly discharged.
In class and collective actions, the remedies may be multiplied by the number of employees implicated. Seemingly minor errors in the payment of wages that by themselves would not cause concerns about litigation by an individual plaintiff can mutate into high-stakes litigation when large numbers of employees and former employees combine and become eligible for unpaid wages, liquidated damages and penalties, and attorneys' fees and costs, particularly when the potential minor errors span a number of years.
Labor Law Trends
A Democratic majority for the National Labor Relations Board
As of the writing of this update, the National Labor Relations Board (NLRB, or “Board”) is comprised of a three-member Republican majority (members John Ring, Marvin Kaplan and William Emanuel) and a one-Democrat (Chairman Lauren McFerran) minority. In late August 2021, after years of Republican control, the NLRB will return to a Democratic majority when member Emanuel’s term expires and union-side attorneys Gwynne Wilcox (confirmed for the current vacant seat) and David Prouty (confirmed for Emanuel’s seat) join McFerran. This shift will likely result in a return to more pro-labor decisions being issued by the Board.
A Biden-nominated NLRB General Counsel
The General Counsel for the NLRB exerts significant influence in determining the cases that reach the Board and for the day-to-day operations of the agency. On his first day in office, President Biden terminated the prior General Counsel for the NLRB, Peter Robb (a Republican), even though Robb’s term had nearly ten months remaining. This is the first time a president has taken this step. Thus far, legal challenges over Robb’s dismissal have failed. Biden first appointed an interim General Counsel, Regional Director Peter Ohr, and nominated Jennifer Abruzzo (a Democrat) to permanently fill the position. During his interim term, Acting General Counsel Ohr issued a memorandum on March 31 advocating for an expansion of the types of employee conduct that would constitute protected concerted activity, including discussions concerning “political and social justice advocacy,” and “societal issues.”
Abruzzo was approved by the Senate on July 22, 2021. Prior to her nomination, Abruzzo worked as special counsel for the Communication Workers of America (CWA) and was previously Acting General Counsel and Deputy General Counsel at the NLRB under Richard Griffin’s tenure as General Counsel. Abruzzo will also likely continue many of Ohr’s initiatives or expand them, shifting the NLRB to a much more pro-labor stance. Abruzzo is expected to reverse course on agency budget cuts and staffing reductions implemented under Robb’s tenure. In addition, she is expected to reverse numerous Trump-era NLRB decisions, including those impacting non-union employers and employees, such as those pertaining to the legitimacy of employer workplace rules and policies, and the scope of protected concerted activity.
Potential impact of the PRO Act
President Biden has asserted he will be the most “pro-labor” president in the nation’s history. The current administration and the current Democratic Congressional majority has proposed passing the Protecting the Right to Organize Act (the "PRO Act"). If passed, the legislation will be the most significant revision to labor law since the National Labor Relations Act (NLRA) was passed in 1935. The PRO Act would significantly alter the law in favor of organized labor. The PRO Act would modify the current joint employer standard, invalidate agreements mandating individual arbitration, ban state-passed right-to-work laws (including Michigan), implement monetary penalties for unfair labor practice violations, and require interest arbitration where an employer and union cannot agree on the terms of a first collective bargaining agreement.
While it initially appeared the legislation would not have sufficient support to overcome a filibuster in the Senate, it appears that provisions of the Act (including the monetary penalties) may be included in a Senate budget reconciliation bill, which could be passed by a simple majority of Democratic legislators.
Anticipated reversal and re-evaluation of Trump-era decisions
Despite its Republican majority and prior solicitation of briefs on the issue, the Board elected to maintain its longstanding contract-bar doctrine, under which the Board has historically held that it will not process any representation or decertification petition filed during the first three years of a valid collective bargaining agreement. The Board also upheld the use of large inflatable figures in determining that they were not in violation of the NLRA’s ban on threatening or coercive conduct during union pickets and boycotts. However, following McFerran’s appointment to Chair of the Board, the Board withdrew its proposed rule regarding whether students who received financial compensation in connection with their studies were “employees” under the Act. With Democrats taking majority control of the Board in August 2021, it is expected they will target prior Trump-Board decisions for reversal in several areas, including:
It is also anticipated that the Democratic majority will seek to re-do administrative rules related to union election rules and joint employers. Furthermore, President Biden’s budget proposal for the 2022 fiscal year for the NLRB calls for USD2.1 million to allow the NLRB to launch programs to inform non-union employees about their rights under the NLRA, including the right to form unions and request that employers address workplace complaints. The State of Michigan, under its current Democratic administration, has already implemented such initiatives on a state level.
Vaccines and the Return to the Workplace
Despite the availability of vaccines at the end of 2020/early 2021, the COVID-19 pandemic continues to cause significant disruption to employers and employees. With a large number of individuals initially hesitant to get vaccinated, employer vaccine strategies have varied. Guidance from the US Equal Employment Opportunity Commission (EEOC) has indicated that employers can require employees to be vaccinated so long as they provide accommodations to those who cannot be vaccinated for religious or medical reasons. EEOC has also indicated employers may offer certain incentives to encourage staff to be vaccinated. Requirements and incentives related to vaccines are, however, considered mandatory subjects of bargaining, requiring employers with union-represented workforces to provide notice and the opportunity to bargain before they can be required for union-represented employees.
As of this writing, momentum continues to build in support of employer vaccine mandates (subject to conditions stated above) – even as the vaccines retain only emergency US Food and Drug Administration (FDA) approval. The US Department of Justice issued an opinion on July 6, 2021 that COVID-19 Emergency Use Authorization status does not prohibit mandates. Vaccine mandates have been supported in the healthcare and higher education settings by federal courts, but appeals are likely to be filed and additional lawsuits are being filed challenging such mandates. Most recently, President Biden required vaccines or testing and mask usage for federal workers and contractors. The situation regarding vaccine mandates is fluid and continues to develop. Even where vaccinated, Michigan law prohibits discrimination and/or retaliation against any individual quarantining after they test positive for COVID-19 or exhibit principal symptoms of COVID-19.
Given the fluidity of the situation, most Michigan employers have not mandated vaccinations (given the tight labor market), but may require unvaccinated workers to continue wearing masks, and have restarted efforts to test unvaccinated workers, especially given the recent surge in certain COVID-19 variants. Michigan employers will want to continue to monitor developments in this area.
Liability Shield Laws For COVID-19 Claims against Employers
As the COVID-19 pandemic grew during 2020, some states passed legislation to provide protection or “immunity” to employers, healthcare providers, and governments from lawsuits alleging they are responsible for employee and/or contractor COVID-19-related illness and injury. Michigan passed such a law. Michigan’s law shields employers from liability where the employer acts pursuant to, and in substantial compliance with, public health directives in place when the cause of action accrued. Some liability shield laws allow an exception where the employer engaged in reckless, intentional, or willful and wanton misconduct, but Michigan’s law does not contain this provision. Even in those cases, an employee or contractor who believes they contracted COVID-19 in the workplace faces an uphill climb to prove that the workplace conditions caused the illness or death, as opposed to the employee’s activities and contact outside the workplace.
COVID-19 Occupational Safety and Health
In the spring of 2021, Michigan rescinded the majority of its previous emergency orders and rules issued in response to the COVID-19 pandemic, including orders limiting public gatherings and requiring mask usage. It also abandoned its prior effort to establish emergency and permanent workplace rules related to COVID-19 and, instead, adopted the US Department of Labor, Occupational Safety and Health Administration (OSHA) emergency temporary standard to protect healthcare workers from occupational exposure to COVID-19 in settings where people with COVID-19 are expected to be present.
However, employers still have a general duty under state law to provide a workplace free from recognized hazards that are causing, or likely to cause, death or serious physical harm to the employee. As such, Michigan employers are strongly encouraged to follow applicable Centers for Disease Control and Prevention (CDC) and OSHA recommendations to mitigate potential workplace hazards related to COVID-19, especially as doing so comes with the added benefit of Michigan’s liability shield law discussed above.
Remote work and its impact on the workplace
Before the pandemic, only 10% of full-time US employees worked remotely. However, the pandemic changed the workplace for millions of white-collar workers, as almost overnight nearly half began working remotely. With the subsiding of the pandemic, many employer and employees’ expectations about the future of work, and how and where it will be performed, have been reordered.
One clear carryover from the pandemic is that remote work platforms, in one form or another, are likely to stay. It is estimated that nearly 37% of jobs in the US can be performed remotely and predictions are that nearly a quarter of the US labor force will continue to work remotely.
While many employees have openly embraced the flexibility accompanying remote work, employers are also finding such models helpful when recruiting mobile young professionals, reducing capital expenditures and expanding access to talent on more regional or national levels. Regardless of these apparent “opportunities”, other employers are maintaining more traditional notions of work or are implementing hybrid workplace models where some employees return to the office and others continue working from home, either on a full- or part-time basis. Ultimately, businesses will have to make decisions based on what best suits the particular business, but such models themselves may result in greater workplace diffusion and fragmentation.
Regardless of the model, employers will need to understand the challenges in trying to coordinate permanent remote or hybrid work structure models. In terms of collegiality and access, remote work is not the same as being together physically. Another challenge is that such models provide less direct control over employees. Still another is the fragmentation of the workday due to a blurring of work and personal obligations, potentially compounded by diffusion of the workplace between those working from the office and those working remotely. Another concern regarding such models is the notion that there is not the same emphasis on collaboration or “group” innovation opportunities with remote work, as employees tend to work in silos. How these trends and competing interests will play out with Michigan and US employers remains to be seen.
Remote work platforms have also changed rapidly during the pandemic, with more “visibility” for employers and monitoring of employee communication. Some platforms are now using cameras, artificial intelligence, and sensors to examine body language and recognize and track participants’ gestures, with corresponding scoring of the effectiveness of meetings based on such factors. Others are creating automated to-do lists, features for individual employees to check in about action items they agreed to complete, and recorded and searchable meeting transcripts. Thus, while employees may initially enjoy the perceived “flexibility” of the workplace, it may come with other unforeseen constraints and corresponding privacy concerns.
Finally, employers adopting such models will have to consider how such models will change their policies and benefits, such as employee monitoring; timekeeping; compensation; the monitoring of breaks and lunch periods; how sick pay and paid time off (PTO) banks will apply; equality of treatment of employees; providing for work from home infrastructure, including compliance with any applicable OSHA requirements; accommodation of disabilities; and how benefit offerings may change to accommodate remote work models.
Continued and renewed focus on pay equity and employer accountability
The focus on pay equity, justice initiatives, and employer accountability has continued throughout the pandemic, and with support from the Biden administration and many state legislatures, that focus appears to be sharpening.
Pay equity has traditionally included the concept of “equal pay for equal work,” although this standard has more recently found disfavor in some quarters. The current trend is to push for consideration of “equal pay for work of equal value” or concepts of “comparable worth.” The COVID-19 pandemic and racial justice movement is providing additional current leverage to pass new legislation to address such inequities, given the data demonstrates the uneven impact the pandemic has had on working women and workers of color. Job losses among women during the pandemic were higher, comprising nearly 55% of overall job losses.
Democrats in the House of Representatives have reintroduced the Paycheck Fairness Act in Congress. This legislation seeks to address issues of pay equity through transparency requirements that would show workers what others make. There are also proposals from federal agencies such as the SEC to increase disclosure requirements of certain workforce data, such as pay information or diversity plans. However, given the current gridlock in the federal legislature, state and local level initiatives are more likely.
Just prior to the beginning of the pandemic, Michigan’s Democrat Governor signed a directive forbidding state agencies from asking applicants about current or prior salaries. This type of initiative has seen support nationally, and thus far at least 14 other states have passed similar laws applicable to public and private employers. Michigan law prohibits discrimination in compensation between men and women who hold similar positions through the Elliott-Larsen Civil Rights Act and the Workforce Opportunity Wage Act. Recent proposals seek to expand these protections. For example, several bills were introduced in March 2021 to the Michigan House of Representatives and Senate seeking to strengthen protections and further address wage gap issues. This proposed legislation would require employers to disclose, upon request, wage information for similarly situated employees and prohibit all private employers from asking a job applicant about the applicant’s past compensation. The proposals seek to create a commission on pay equity within Michigan’s Department of Civil Rights.
Despite such initiatives, employees are not necessarily waiting for change. At some large companies, including in Michigan, employees have used social media to share salary information with each other, a step that is protected concerted activity under the NLRA. These employee-led initiatives have revealed companies paying men more than women at many job levels and resulted in company action in response. Investors and shareholders are also pressuring companies for pay equity and race equity changes, and a shift in traditional oversight roles. And more companies are performing pay equity audits (PEAs), which generally involve comparing the pay of employees doing similar work in an organization to stay ahead of social media or legislative pressure. Because PEAs have multiple levels of complexity and can disclose information regarding past inequities and create other legal risks, many companies engage counsel or other outside resources to address such trends.
COVID-19 continues to impact employee benefits
It has been well over a year since the world was exposed to COVID-19, and employers are still evaluating, implementing, and/or complying with statutory and regulatory provisions impacting employee benefits, including the following.
Continuing impact of the COVID-19 pandemic on immigration operations
US Citizenship and Immigration Services (USCIS) continues to be impacted by the pandemic. In March 2020, USCIS suspended routine in-person services. USCIS later implemented social distancing and other safety precautions and slowly resumed in-person services in June 2020 at many local offices.
The pandemic slowed immigration operations and has added to a pre-existing case backlog at USCIS. Many immigration benefit applications and petitions are experiencing significant delays in adjudication despite the resumption of in-person services.
In response to the pandemic, USCIS implemented several temporary policies to assist employers and applicants with the immigration process.
The agency began reusing previously captured biometrics to process applications for a renewal of an employment authorization document, allowed for copies of signatures on applications and petitions to be submitted rather than original signatures, and provided for a temporary 60-day extension to respond to an immigration request for additional evidence or notice of intent to deny.
In March 2020, the US Department of State suspended routine visa services as a result of the COVID-19 pandemic. Some US embassies and consulates are beginning a phased resumption of routine visa services; however, many US embassies and consulates continue to remain closed to routine visa services based on local COVID conditions.
The Biden administration has worked to undo many of the restrictive immigration policies implemented by the previous administration; however, the new administration has not undone all the actions instituted by the Trump administration.
The Biden administration revoked the “Buy American and Hire American” (BAHA) executive order of 2017. BAHA resulted in an increase in requests for evidence and denials issued by USCIS. The Biden administration also instructed USCIS to return to a longstanding policy providing deference to employers requesting extensions of previously approved petitions.
While the new administration revoked or otherwise declined to extend several presidential proclamations (PPs) from the previous administration limiting the ability of foreign nationals to enter the US, others remain in place and continue to impact the ability of foreign nationals to enter the US. PP 9993 suspended the entry of foreign nationals who were physically present within the Schengen area during the 14-day period preceding their entry or attempted entry into the US. The Schengen area includes most all European nations. PP 9996 extended the restriction to cover the United Kingdom and Ireland. These bans were enacted in March 2020 and remain in place, without a set end date.