On Oct. 18, ASA submitted a letter to the U.S. Office of Information and Regulatory Affairs asking that the forthcoming Covid-19 Emergency Temporary Standard, which will apply to businesses with 100 or more employees, consider the unique operating characteristics of staffing agencies by including alternative size tests for determining their small business status under the ETS.

ASA proposed that the ETS adopt the headcount approach used for determining employer eligibility for the Employee Retention Tax Credit under the Taxpayer Certainty and Disaster Tax Relief Act of 2020—i.e., 130 hours per month, without regard to full-time equivalent employees.

ASA also proposed that the ETS should include alternative size tests for determining small business status based on financial measures like revenue and assets. The letter suggested that the ETS adopt the tests used in the federal Paycheck Protection Program. Under the PPP, a staffing agency is a small business concern if its annual revenue is $30 million or less. The letter further suggested that the ETS include a size test similar to the “alternative size standard” from the U.S. Small Business Administration, under which a borrower was considered a small concern if its maximum tangible net worth at the time of application was not more than $15 million and its average net income after federal income taxes (excluding any carryover losses) for the prior two full fiscal years was not more than $5 million.

ASA is in the process of seeking a meeting with OIRA to discuss these proposals.

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On Oct. 18, ASA filed an amicus brief asking the U.S. Supreme Court to review a class action relevant to health care staffing agencies and others that reimburse traveling workers through per diem payments.

ASA asked the court to reverse a Ninth Circuit Court of Appeals ruling that a health care staffing agency’s payments are compensation for work and thus must be included in traveling workers’ regular rate of pay for overtime purposes. If allowed to stand, the Ninth Circuit’s decision could harm many staffing agencies, particularly in the health care sector. As many as 20 other firms face or have faced similar lawsuits.

Per diem payments may be excluded from calculation of overtime under the Fair Labor Standards Act if the payments reimburse workers for meals, incidentals, and housing incurred on behalf of the employer while working away from home. They may not, however, effectively function as compensation for work.

The plaintiffs allege that the agency’s per diem payments functioned as compensation because they were prorated when the workers did not work hours or shifts required under their contracts. The trial court rejected this argument, but the Ninth Circuit reversed, holding that a combination of factors indicated that the payments functioned as compensation for hours worked. The factors included tying the per diem deductions to shifts not worked regardless of the reason for not working. The ASA brief argues that the court incorrectly interpreted the relevant statute to prohibit such practice.

The Supreme Court reviews only a limited number of cases each session, and it will be several months before it is announced if the court will grant review of this case. ASA is represented by one of the top Supreme Court litigators in the country: Donald Verrilli, who was U.S. Solicitor General from 2011 to 2016.

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