Backend Category: Coronavirus

National accounting firm Withum shares information to help you understand the tax implications of the recent Internal Revenue Service (IRS) ruling addressing the proper treatment of improperly forgiven paycheck protection program (PPP) loans. The IRS ruled that the PPP loan forgiveness amount is not tax-free, even if the Small Business Administration (SBA) and the lender granted the borrower full loan forgiveness, if the taxpayer did not satisfy the factual requirements for loan forgiveness.

The Safer Federal Workforce (SFW) Task Force issued updated Frequently Asked Questions based on Office of Management and Budget (OMB) guidance on non-enforcement of vaccination on Federal contracts and subcontracts. The guidance, which applies to those that had been governed by the vaccination mandates in EO 14042, comes after recent court decisions stayed the effectiveness of those rules pending further legal challenges.

Below is the updated guidance from the OMB and the SWF:

Regarding Applicable Court Orders and Injunctions: The Office of Management and Budget has issued guidance on implementing requirements of Executive Order 14042 while ensuring compliance with applicable court orders and injunctions, including those that are preliminary and may be supplemented, modified, or vacated, depending on the course of ongoing litigation.

• For existing contracts or contract-like instruments (hereinafter “contracts”) that contain a clause implementing requirements of Executive Order 14042: The Government will take no action to enforce the clause implementing requirements of Executive Order 14042, absent further written notice from the agency, where the place of performance identified in the contract is in a U.S. state or outlying area subject to a court order prohibiting the application of requirements pursuant to the Executive Order (hereinafter, “Excluded State or Outlying Area”). In all other circumstances, the Government will enforce the clause, except for contractor employees who perform substantial work on or in connection with a covered contract in an Excluded State or Outlying Area, or in a covered contractor workplace located in an Excluded State or Outlying Area.
• Currently Excluded States and Outlying Areas: All of the United States and its outlying areas, including:
  1. The fifty States;
  2. The District of Columbia;
  3. The commonwealths of Puerto Rico and the Northern Mariana Islands;
  4. The territories of American Samoa, Guam, and the United States Virgin Islands; and
  5. The minor outlying islands of Baker Island, Howland Island, Jarvis Island, Johnston Atoll, Kingman Reef, Midway Islands, Navassa Island, Palmyra Atoll, and Wake Atoll.
• NOTE: Federal agency COVID-19 workplace safety protocols for Federal buildings and Federally controlled facilities still apply in all locations. Contractor employees working onsite in those buildings and facilities must still follow Federal agency workplace safety protocols when working onsite.

Legislative and regulatory developments are picking up pace in Washington, DC, in advance of the Congressional recess. Key issues of interest to MCAA members include vaccination requirements, clean energy, electric vehicle tax credits, and revised Davis-Bacon regulations.

Vaccination Requirements On Hold

The Biden Administration’s vaccination mandates for employees in firms with more than 100 employees, and Federal contractors and subcontractors are now all on hold in the wake of invalidating court decisions and OSHA regulatory action.

MCAA has filed comments with OSHA, seeking a measured re-implementation of the OSHA Emergency Temporary Standard (ETS) on COVID-19 if a supervening court decision in the Sixth Circuit Court of Appeals would reinstate the rule by lifting the stay on enforcement before a full decision on the merits of the legal arguments. So, until further court action, the vaccination requirements remain in public policy “purgatory,” awaiting further judicial action.

The Senate passed a resolution of disapproval of the vaccination mandates in the OSHA ETS by a vote of 52 to 48 this week (Senators Joe Manchin (D-WV) and Jon Tester (D-MT) broke party lines and voted for the resolution). Similar passage in the House is judged very unlikely. It is even less likely that the President would sign such a resolution, if passed, condemning his own action.

New Clean Energy Executive Order Announced

President Biden released a Clean Energy Executive Order on December 8, 2021, containing a broad scope of administrative actions that “…. demonstrates how the United States will leverage its scale and procurement power to lead by example in tackling the climate crisis. The Executive Order will reduce emissions across federal operations, invest in American clean energy industries and manufacturing, and create clean, healthy, and resilient communities. The President is building on his whole-of-government effort to tackle the climate crisis in a way that creates well-paying jobs, grows industries, and makes the country more economically competitive.”

Among the many elements of the initiative, several below impact the construction industry:

“Transition federal infrastructure to zero-emission vehicles and energy efficient buildings powered by carbon-pollution-free electricity. … The federal government will work with utilities, developers, technology firms, financiers and other to purchase electricity produced from resources that generate no carbon emissions, including solar and wind, for all its operations by 2030. … With the scope and scale of this electricity demand, the federal government expects it will catalyze the development of at least 10 gigawatts of new American clean electricity production by 2030, spurring the creation of new union jobs and moving the country closer to achieving a carbon pollution-free electricity sector by 2035.”

“Modernize the federal building portfolio to reach net-zero emissions by 2045, including a 50 percent reduction in building emissions by 2031. The federal government will work across existing real property and during new building construction and major renovations to increases water and energy efficiency, reduce waste, electrify systems, and promote sustainable locations for federal facilities to strengthen the vitality and livability of the communities in which federal facilities are located. Additionally, the Biden-Harris Administration will implement the first-ever Federal Building Performance Standard and will use performance contracting to improve buildings with no up-front costs.” 

“Make federal agencies more adaptive and resilient to the impacts of climate change, and increase the sustainability of federal supply chains, achieving net-zero emissions from federal procurement by 2050. The companies that supply the federal government are critical partners in achieving our climate goals and growing the economy and American jobs. Cutting emissions from the federal government’s procurement also means buying materials with a lower carbon footprint. The federal government will launch a “buy clean” initiative for low-carbon materials and prioritize the purchase of sustainable products, such as products without added perfluoroalkyl or polyfluoroalkyl substances (PFAS). Through these actions, the federal government will provide a large and stable signal to the market for sustainable and low-carbon goods made in America, advancing America’s industrial capacity to supply the goods and materials for the future while growing good jobs for American workers.

Electric Vehicle Tax Credits Under Review

The Senate parliamentarian is considering whether the Administration’s proposal to add $4,500 to the $7,500 tax credit for the purchase of electric vehicles that are assembled by domestic US union labor is appropriate for inclusion in the Build Back Better reconciliation proposal pending in Congress.

Revised Davis-Bacon Regulations Inching Forward

The long-awaited proposal to revamp the US Department of Labor’s (DOL) Wage and Hour Division regulations implementing the Davis-Bacon Act took the final step in the regulatory process. On December 3, 2021, DOL sent the regulatory proposal to the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA) for a final look-through.

MCAA commented on those regulatory proposals earlier this year, seeking changes in peak week reporting and asking for a review of the 50% threshold for prevailing wage determinations. These changes are of consequence now as the infrastructure legislation will bring a broad expansion of Davis-Bacon projects across all markets covered by the measure.

MCAA will continue to monitor legislative and regulatory actions and provide updates as appropriate. In the meantime, questions about these activities can be directed to John McNerney.

The Safer Federal Workforce (SFW) Task Force issued more detailed compliance guidance for direct Federal prime contractors and subcontractors performing on direct Federal contracts subject to the COVID-19 employee vaccination mandates under the Biden Administration’s Executive Order 14042. Below is a MCAA summary of the “new” Frequently Asked Question guidance issued on November 1, 2021. They are marked “New” on the SFW Task Force website linked below.

Compliance

Q: What steps should a covered contractor take if a covered contractor employee refuses to be vaccinated?

Answer Summary – If the recalcitrant worker has not requested an accommodation, and no such request is pending, then the guidance says the employer should resort to the terms of their employee handbooks or applicable  bargaining agreements for the appropriate disciplinary steps. It refers to the progressive discipline procedures used for Federal personnel for example. During the pendency of the applicable process, the guidance suggests, the worker’s continued presence on the covered workplace must be in compliance with safety protocols for unvaccinated workers.

Q: What steps should an agency take if a covered contractor does not comply with the requirements in the Task Force’s Guidance for Federal Contractors and Subcontractors?

Answer Summary – The answer says the agency should work with contractors who are trying in good faith to meet compliance challenges. On the other hand,  the answer suggests, if the contractor is not taking steps to comply, the agency should consider significant actions, such as contract termination.

Vaccination and Safety Protocols

Q:  If a corporate affiliate of a covered contractor does not otherwise qualify as a covered contractor, are the employees of that affiliate considered contractor employees subject to COVID-19 workplace safety protocols for Federal contractors established through the Task Force Guidance?

Answer Summary – The answer says that if the two entities are in a joint control relation with each other or a third party, then employees of the non-covered affiliate are considered contractor employees when working at a covered worksite.

Q: If the workplace where a covered contractors employees perform work on or in connection with a covered contract is a location owned, leased, or otherwise controlled by a corporate affiliate of a covered contractor that does not otherwise qualify as a covered contractor under Task Force guidance, is the workplace considered a covered contractor workplace?

Answer Summary – Again, assuming a control relationship among the entities, if an employee of a covered contractor is likely to be present during the term of the covered contract at the 3^rd party site, then that site is considered a covered contract workplace.

Q: If a covered contractor can access a covered contractor employee’s vaccination documentation, consistent with relevant privacy laws, does the covered contractor need to require the employee to show or provide documentation?

Answer Summary – No, the answer says, if the contractor can access the documentation directly through precious documentation responses, an employer vaccination program record, or a state immunization database.

Q: Do all requests for accommodation need to be resolved by the covered contractor by the time the covered contractor’s employees begin work on a covered contract or at a covered workplace?

Answer Summary – No, the answer says, if the accommodation requests are pending at that time, then the employer must require during the pendency of the resolution of the accommodation that the employee follow the workplace safety protocols for employees who are not fully vaccinated as per the SFW Guidance.

Q: When a covered contractor’s employees are not vaccinated because a covered contractor has provided the employee with an accommodation, what workplace safety protocols must the employee follow while in a Federal workplace?

Answer Summary – The affected agency will determine what protocols apply at that Federal worksite for unvaccinated workers. In general, the answer refers to masking, social distancing and testing procedures. However, the answer says it will amount to a fact-specific assessment by the agency with respect to the individual work circumstances, and notes that some circumstances may not be amenable to any such accommodation.  In any case, the answer states contractors that have unvaccinated workers onsite at a covered Federal worksite must notify the agency contracting officer of which employees have received an accommodation in lieu of vaccination to facilitate that fact-based determination.

Litigation Update

The Vaccination EO 14042 is under challenge by the State of Florida in a lawsuit for a temporary and permanent injunction filed in the US District Court for the Middle District of Florida last week. (State of Florida v. Bill Nelson, Administrator of NASA et al, 8:21-cv-2524, USDC MDFla., Tampa Division).

The complaint is a broad and vigorous challenge to the Administration’s use of the Federal Property and Administrative Services Act preamble authority to prescribe regulations to promote economy and efficiency of Federal contracts. The suit challenges that as a pretext to pursue otherwise inappropriate Federal public health policy.  The suit also challenges the SFW Task Force and OMB exercise of regulatory authority over the ordinary course of procurement regulations vested in the Federal Acquisition Regulatory Council.  The suit asserts the State of Florida’s direct interest in its various Federal contracts with NASA and GSA.

MCAA will report details of the litigation and the scope of any injunction when and if it is issued during the preliminary compliance period.  Also, as to the various compliance procedures and judgments contained in the SFW Task Force Guidance, employers should be aware that generally, collective bargaining over the effects of a new Federal law or regulation is a mandatory subject of bargaining and is not subject to unilateral management implementation. Also, the summary answers above are meant for general communication. The full and complete text of the Guidance should be consulted for complete compliance analysis and planning. However, it also should be noted that some flexible rule of reason compliance standards are suggested in the new FAQs.

OSHA Emergency Temporary Standard Released

On November 4, 2021, the OSHA Emergency Temporary Standard applicable to all employers with 100 or more employees was released. This ETS is separate and apart from the EO 14042 vaccination mandate that applies to Federal prime contractors and subcontractors irrespective of employment  numbers.  The OSHA ETS expressly states that its requirements do not apply to workplaces covered by EO 14042 mandates, as follows:

Which employers are covered by the ETS?

• Private employers with 100 or more employees firm- or corporate-wide.
• In states with OSHA-approved State Plans, state-and local-government employers, as well as private employers, with 100 or more employees will be covered by state occupational safety and health requirements.

Which workplaces are not covered by the ETS?

• Workplaces covered under the Safer Federal Workforce Task Force COVID-19 Workplace Safety: Guidance for Federal Contractors and subcontractors; and
• Settings where any employee provides healthcare services or healthcare support services when subject to the requirements of the Healthcare ETS (§ 1910.502).

White House Extends Vaccination Deadline Under EO 14042

Also, on November 4^th release of the OSHA ETA, the White House briefing notice extended the vaccination deadline under EO 14042 to be concurrent with the ETS deadline – January 4, 2022 – beyond the original EO 14042 vaccination deadline of December 8, 2021, as follows:

Streamlining Implementation and Setting One Deadline Across Different Vaccination Requirements: The rules released today ensure employers know which requirements apply to which workplaces. Federal contractors may have some workplaces subject to requirements for federal contractors and other workplaces subject to the newly-released COVID-19 Vaccination and Testing ETS. To make it easy for all employers to comply with the requirements, the deadline for the federal contractor vaccination requirement will be aligned with those for the CMS rule and the ETS. Employees falling under the ETS, CMS, or federal contractor rules will need to have their final vaccination dose – either their second dose of Pfizer or Moderna, or single dose of Johnson & Johnson – by January 4, 2022. This will make it easier for employers to ensure their workforce is vaccinated, safe, and healthy, and ensure that federal contractors implement their requirements on the same timeline as other employers in their industries. And, the newly-released ETS will not be applied to workplaces subject to the federal contractor requirement or CMS rule, so employers will not have to track multiple vaccination requirements for the same employees.