New Employment Laws From The Federal Omnibus Spending Bill

With the text of the final bill clocking in at over 1,600 pages, it is no wonder that some items that made their way into the 2023 Consolidated Appropriations Act (aka the omnibus spending bill) that was signed into law at the end of 2022 have gotten less attention than others.

Small businesses should be aware of two important employment law changes that were included as part of the spending bill, and which will go into effect this year.

Pregnant Workers Fairness Act

The Pregnant Workers Fairness Act has been introduced in every Congress since 2011 and made it across the finish line as an amendment to the spending bill in large part due to bipartisan support and backing from some of the large employer-side groups including the Society of Human Resources Management (SHRM).

The provisions will go into effect on June 27, 2023, and apply to all private employers with 15 or more employees.

In sum, the new law requires covered employers to provide reasonable accommodations for pregnancy, childbirth or related medical conditions the same way that they would for other disabilities.

Up to this point, federal law has only gone so far as expressly prohibiting discrimination against employees because of their pregnancy or pregnancy related conditions.

In 2015, the Supreme Court ruled that it would be discriminatory for an employer to provide an accommodation to an employee with a non-pregnancy related short-term disability but refuse a similar accommodation to an employee with a pregnancy related condition.

But where there is no comparable employee with a non-pregnancy related disability, an employee’s rights to seek an accommodation for a pregnancy-related disability became blurry.

Because of the lack of clarity and protections at the federal level, more than half of the states have already enacted some type of pregnancy accommodation law.

Accordingly, the extent to which the Pregnant Workers Fairness Act will change an employer’s legal obligations will largely depend upon where the employer is located.

To the extent that the employer is located in a state that imposes obligations that go above and beyond the Pregnant Workers Fairness Act, the employer will still need to comply with the more rigorous state law.

To the extent that the employer is located in a state with no pregnancy accommodation law, the employer will need to make sure that they are complying with the Pregnant Workers Fairness Act by June of this year.

Specific Requirements

The specific requirements of the Pregnant Workers Fairness Act are as follows–

Covered employers are prohibited from refusing to provide reasonable accommodations for “known limitations” arising from an employee’s pregnancy, childbirth or related medical condition.

Employers will only be excused from providing a reasonable accommodation if it can show that the accommodation would impose an undue hardship on the operation of the business.

What constitutes a “reasonable accommodation” or an “undue hardship” for the purposes of the Pregnant Workers Fairness Act will be the same as under the Americans with Disabilities Act (ADA) and there has been extensive rulemaking, guidance and case law fleshing these concepts out in the context of the ADA.

When it comes to making an accommodation, employers will be further prohibited from forcing employees to accept an accommodation selected by the employer without going through the interactive process with the employee.

The interactive process is also a concept defined in the ADA which is incorporated into the Pregnant Workers Fairness Act. Additionally, employers may not force employees to take leave (paid or unpaid) if another form of reasonable accommodation is available that would allow the employee to perform the essential functions of their job.

The new law further prohibits employers from denying employment opportunities to otherwise qualified employees or applicants based on the fact that they will need an accommodation due to limitations from pregnancy, childbirth or a related medical condition.

Finally, the law prohibits employers from taking adverse action against an employee for requesting or taking advantage of a reasonable accommodation for limitations related to pregnancy, childbirth or a related medical condition.

Like the ADA and other federal employment non-discrimination laws, the Equal Employment Opportunity Commission (EEOC) will be primarily responsible for enforcing the new law.

Pump for Nursing Mothers Act

The other notable employment law change that was passed as part of the omnibus spending bill is the Pump for Nursing Mothers Act. The Pump for Nursing Mothers Act expands employers’ obligation to provide employees with time and space for lactation.

The major provisions of the new law went into effect at the time the legislation was signed into law.

In 2010 Congress amended the Fair Labor Standards Act (FLSA) to require employers to provide non-exempt employees with breaks and a private place to express breast milk for a year after the birth of their child.

The Pump for Nursing Mothers Act expands the requirement so that it applies to all employees, exempt and non-exempt.

The newly expanded law requires that employers provide employees with reasonable lactation breaks for up to a year after their child’s birth and that the employer designate a private place that is not a bathroom where the employee may use to take these breaks free from intrusion from their coworkers or others.

The law does not require that employees be paid for these breaks unless they are not completely relieved of their work duties while taking the breaks (for example if they are working at the same time as they are pumping).

There are a few exceptions to these requirements.

First, businesses with less than fifty employees do not have to comply with the break requirements if they can establish that the obligations would “impose an undue hardship causing the employer significant difficulty or expense, when considered in relation to the size, financial resources, nature or structure of the employer’s business.”

Small businesses that plan to rely on this exception are well advised to seek legal counsel to ensure that they can satisfy the high standard that they will be required to meet to establish an undue hardship.

There are also industry specific exemptions (which were negotiated at the last minute and drew some ire) for air carriers, rail carriers and motor coach operators.

Before initiating an action against an employer for failing to comply with the Pump for Nursing Mothers Act, employees will be required to notify the employer of their non-compliance and provide the employer with ten days to come into compliance.

Accordingly, businesses should take their obligations under the law, and any complaints of non-compliance by employees very seriously.

Employers should also check whether there are any state or local laws that apply to them which relate to lactation breaks.

As is the case when it comes to any federal employment law, if the employer is located in a jurisdiction that has a state or local law that is more rigorous than the federal law, the employer will need to comply with the more restrictive requirements.

SEC Considering Easing Proposed Climate Related Risks Disclosures

In a sign that some of the aggressive Republican pushback is working, the Securities and Exchange Commission (SEC) is considering easing a proposed rule that would compel companies to disclose climate-related risks.

The Wall Street Journal reported recently that the SEC is reconsidering just how stringent the reporting requirement will be.

The final version of the rule is still expected to require climate disclosures from companies, although the SEC might raise the threshold for reporting.

The rule was first proposed in March and it says companies must report direct and indirect greenhouse gas emissions and the reports must be audited by an outside party.

Attorneys general from 25 states filed a lawsuit against the Administration last month over the plan to allow retirement fund managers to consider ESG. The lawsuit, filed in Texas federal court, sought a preliminary injunction to stop the rule from going into effect.

Gov. Ron DeSantis (R-FL) additionally approved a measure prohibiting state-run fund managers in Florida from considering environmental, social, and governance standards (ESG) factors when making investments.

The proposed rule fits President Biden’s broader climate agenda, including cutting greenhouse gas emissions by more than half by the end of the decade, when compared to 2005 levels.

The U.S. Department of Labor already has a rule that would allow retirement plan managers to weigh ESG when making investments. This is contrary to and a reversal of Trump-era rules restricting such considerations on the grounds that they don’t prioritize investor returns.

In June, EMA submitted comments on the SEC’s proposed rule that would mandate extensive climate disclosures by public companies.

While most energy marketers represented by EMA are not public companies and, therefore, are not required to report directly to the SEC, EMA is concerned due to the costs and burdens their SEC-regulated suppliers would incur by being required to disclose greenhouse gas emissions from upstream and downstream activities in its value or supply chain under many, if not most, circumstances.

For public companies that sell motor fuels and heating fuels to be compliant with the Proposed Rule, if finalized, they would need to track and disclose data derived from downstream customers, including energy marketers’ individual and day-to-day operations.

Unlike the large corporations regulated by the SEC, energy marketers, as small businesses, do not have, and cannot afford, compliance officers or attorneys dedicated solely to SEC compliance activities.

This could force energy marketers of all sizes, but especially those with smaller-sized operations, to report data they may be unable to provide, which would result in a costly, additional expense or possibly the loss of business from the inability to report data to their suppliers or customers.

EMA also cited privacy and potential liability concerns with the proposed rule.

The other good news is that the 6-3 conservative majority of the Supreme Court of the United States (SCOTUS) is likely to weigh in at some point once the rule is finalized and challenged by concerned parties including EMA.

Click Here to read EMA’s comments on the proposed rule.