Key Highlights New York prohibits arrangements requiring employees to repay or reimburse their employer: The newly enacted Trapped at Work Act bars employers from enforcing agreements that require workers to repay or reimburse training or other costs or payments if they leave employment before a specified period. Ambiguous language creates risk for common compensation practices: Although motivated by controversial training repayment arrangements, many commonplace practices like education stipends, tuition assistance programs, forgivable loans, advanced retention bonuses and certain consulting arrangements may now face challenges. Law applies broadly to workers beyond employees: The Act covers not only employees, but also independent contractors, interns, volunteers, apprentices and other service providers, with only limited statutory exceptions. New York employers are now prohibited from enforcing or requiring so-called “stay-or-pay” contracts that obligate employees to repay money to their employer if they leave employment prior to a stated date.  With the new “Trapped at Work Act,” New York joins other states, including Colorado and California, in protecting employees from requirements to reimburse their employer for employer-provided training. Although the Act and other similar laws have been motivated by criticisms of employer training repayment requirements, the breadth and ambiguity of New York’s new law threaten to go beyond that immediate concern and prohibit or render uncertain many commonplace employee compensation arrangements. The Act prohibits employers from using or enforcing any “employment promissory note,” which is defined as “any instrument, agreement or contract provision that requires a worker to pay the employer, or the employer's agent or assignee, a sum of money if the worker leaves such employment before the passage of a stated period of time,” including any agreement to reimburse training provided by the employer. The scope of the Act is broad, as it applies not only to traditional employees, but also to independent contractors, interns and externs, volunteers, apprentices and sole proprietors providing services. The Act does exclude certain types of agreements from its prohibition, including: Agreements to repay the employer for sums advanced to the employee, other than sums for “training related to the worker’s employment with the employer”; Repayment for property sold or leased to the employee; or Repayments pursuant to a collective bargaining agreement. Although the Act is aimed at controversial arrangements requiring employees to repay their employer for mandatory trainings, it may inadvertently sweep in other commonplace employee compensation frameworks that do not raise similar controversy. These include: Education Stipends: Employers often provide educational or tuition stipends to employees, and it is common to have retention provisions included in such arrangements. It is not clear whether such arrangements would continue to be permissible, given that the funds may not be advanced directly to the employee and the education likely relates to the employee’s position. Forgivable Loans/Advanced Retention Bonuses: Arrangements where funds are fronted to employees, subject to a retention requirement, can potentially fall within the Act’s exceptions, but they must be carefully structured to avoid penalties and enforceability issues. These types of arrangements and bonuses are common in many industries, especially financial services. Liquidated Damages for Consulting Arrangements: Given that the Act applies to independent contractors (even if properly classified as such), it is arguable that a penalty for the contractor’s early termination of the agreement would violate the Act. Even as New York Governor Hochul signed the Act, she noted that its language “was ambiguous in certain respects” and stated that she had agreed with the Legislature to “address these concerns” in the future. Unless and until clarification is provided, however, employers in New York will have to review and carefully modify any agreements that require employees or other workers to repay sums to the employer based on retention considerations.  Failure to do so can lead to the agreement being deemed null and void and subject the employer to fines, ranging from $1,000 to $5,000 for each worker with whom they have a prohibited agreement, as well as liability for attorneys’ fees incurred by the employee in defending against enforcement. For assistance reviewing agreements or other questions relating to this law, be sure to contact your Polsinelli attorney.

Effective October 1, 2024, Maryland will become the sixth state (plus the District of Columbia), to require that employers provide an upfront disclosure of the wage or salary range for open positions in job listings. The new law follows a recent proposed rule similarly seeking to require federal contractors to disclose pay information in job postings. These proliferating pay transparency requirements demonstrate the need for employers to continue focusing on achieving pay equity throughout the workforce. Maryland’s law is applicable to all employers within the state, regardless of size, and applies to any position that will be physically performed, at least in part, in Maryland. As with transparency laws enacted by other states, this leaves uncertainty about the law’s application to fully remote positions that can conceivably be performed from anywhere. The new law requires that employer job listings, whether posted directly or through a third party like a recruiting firm, include a wage and salary range, as well as a general description of the benefits offered for the position. The wage or salary range must be set in good faith by reference to: (1) Any applicable pay scale;  (2) Any previously determined minimum and maximum hourly rate or minimum and maximum salary for the position; (3) The minimum and maximum hourly rate or minimum and maximum salary of an individual holding a comparable position at the time of the posting; or (4) The budgeted amount for the position. The law also applies to internal postings for promotions or transfers.  If this information is not included in a job posting, it must be provided to the applicant before any discussion of compensation takes place, or earlier upon the request of the applicant. Notably, the factors that must be referenced in setting the wage range could potentially be inconsistent – for example, an employer could be hiring for a position in which comparable employees make between $80,000 and $120,000 but have $100,000 budgeted for the hire. The law does not provide guidance on how employers should navigate such discrepancies. In addition to the job posting requirements, the law sets forth anti-retaliation and recordkeeping obligations for employers. Penalties for violation of the new law range from $300 to $600 and take effect only upon a second or subsequent offense, as the law provides that employers will receive a compliance warning for a first offense. The law is enforceable only by the Maryland Department of Labor and does not contain a private right of action. Employers with jobs that can be performed, at least in part, in Maryland should review their pay equity and transparency practices in light of this new law. If you have questions about pay equity and pay transparency practices, contact your Polsinelli attorney.

On April 25, 2023, the Office of Federal Contract Compliance Programs (OFCCP) issued an updated self-identification form for applicants and current employees to voluntarily self-identify as an individual with a disability.  Federal contractors and subcontractors subject to Section 503 of the Rehabilitation Act must invite applicants for employment to self-identify at the pre-offer and post-offer stages, as well as invite current employees to update their self-identification every five years.  Contractors and subcontractors must use the information provided in this form in their Section 503 affirmative action program for individuals with disabilities. The revised form implements updates based on the preferred language for disabilities and includes additional examples of disabilities, among other changes.  The changes are relatively non-substantive in nature, and do not materially alter the contractor’s obligation to invite applicants and employees to self-identify. Employers are required to begin using the revised form by July 25, 2023.  Employers must continue using the prior version of the form until they implement the revised form. The revised form is set to expire on April 30, 2026. Employers can get the new form in English here. The OFCCP is expected to provide the form in additional languages in the coming months. The self-identification requirement for individuals with disabilities is just one of the unique requirements that OFCCP imposes on federal contractors and subcontractors in the recruitment and onboarding processes.  The updated self-identification form presents a good opportunity for employers that have newly become federal contractors or subcontractors, or that have not reviewed their processes for a number of years, to bring their recruiting and onboarding processes into greater compliance (including requirements for third-party recruiters acting on the contractor’s behalf), as failure to collect the sometimes granular information required by OFCCP can have negative consequences in the event of a compliance evaluation. If you have any questions about the updated Voluntary Self-Identification of Disability form, please contact Polsinelli’s OFCCP and Affirmative Action Plans team.

On April 25, 2023, the Office of Federal Contract Compliance Programs (OFCCP) issued an updated self-identification form for applicants and current employees to voluntarily self-identify as an individual with a disability.  Federal contractors and subcontractors subject to Section 503 of the Rehabilitation Act must invite applicants for employment to self-identify at the pre-offer and post-offer stages, as well as invite current employees to update their self-identification every five years.  Contractors and subcontractors must use the information provided in this form in their Section 503 affirmative action program for individuals with disabilities. The revised form implements updates based on the preferred language for disabilities and includes additional examples of disabilities, among other changes.  The changes are relatively non-substantive in nature and do not materially alter the contractor’s obligation to invite applicants and employees to self-identify. Employers are required to begin using the revised form by July 25, 2023.  Employers must continue using the prior version of the form until they implement the revised form. The revised form is set to expire on April 30, 2026. Employers can get the new form in English here. The OFCCP is expected to provide the form in additional languages in the coming months. The self-identification requirement for individuals with disabilities is just one of the unique requirements that OFCCP imposes on federal contractors and subcontractors in the recruitment and onboarding processes.  The updated self-identification form presents a good opportunity for employers that have newly become federal contractors or subcontractors, or that have not reviewed their processes for a number of years, to bring their recruiting and onboarding processes into greater compliance (including requirements for third-party recruiters acting on the contractor’s behalf), as failure to collect the sometimes granular information required by OFCCP can have negative consequences in the event of a compliance evaluation. If you have any questions about the updated Voluntary Self-Identification of Disability form, please contact Polsinelli’s OFCCP and Affirmative Action Plans team.

December never is a “slow” month in “labor law land.” Even though offices are winding down and some are closing for the holidays, the National Labor Relations Board (the “Board”) always enjoys dropping a few seismic cases for unions/employees/employers to enjoy, huddling next to their fires. This year, the Board was in an especially giving mood, gifting two favorable decisions to unions and employees. First, the Board redefined what constitutes a “make whole” remedy, paving the way for damages above and beyond backpay, frontpay, and interest. In a 3-2 decision in a case called Thryv, Inc., the Democratic majority clarified that a “make whole” award must compensate affected employees for “all direct or foreseeable pecuniary harms” resulting from the employer’s unlawful conduct. The decision defines “direct harms” as “those in which an employee’s loss was the direct result of the [employer’s] illegal conduct” and “foreseeable harms” as “those which the [employer] knew or should have known would be likely to result from its violation of the Act, regardless of its intentions.” Examples of foreseeable pecuniary harms could include expenses for transportation, room, and Board; legal expenses and fees; medical expenses incurred, including any increases in premiums, copays, coinsurance, deductibles, other out-of-pocket expenses, and any unpaid medical bills; search-for-work and interim employment expenses; interest and late fees on credit cards, etc.  The dissenting members’ argument that “foreseeable harms” may permit employees to recover a windfall was not persuasive to the majority. In another 3-2 decision, the Board reversed recent precedent and reverted back to the Obama Board “micro-unit” test. In American Steel Construction, the Democratic majority re-shifted the burden back to employers and held that a union petitioned-for unit will be presumptively appropriate unless the employer proves that excluded employees have an “overwhelming” community of interest. Just a few years ago, the Trump Board held that unions had a burden to show “sufficiently distinct” community of interests in order to exclude employees from an otherwise “wall to wall” unit. With yesterday’s decision, unions will more easily be able to define proposed bargaining units and exclude employees who do not share their coworkers’ pro-union sympathies. This means that petitioned-for bargaining units, including groups of as little as two employees, will have an opportunity to vote in a union election, regardless of whether their coworkers share a community of interest. It has been clear for some time that the Board and General Counsel are doing their part to encourage, cultivate, and increase union density in the privatized workforce. In an upcoming blog, Polsinelli will share its thoughts on what to expect from the Board in 2023; spoiler alert, it is not welcome news to employers. In the interim, please contact your Polsinelli attorney for any questions about these decisions and related labor law issues.

On November 8, 2022, Washington, D.C. voters approved Initiative 82, which will eliminate the ability of employers in the city to rely on a tip credit to meet the minimum wage requirement for employees who regularly receive tips.  Once certified and implemented, the District will join seven other states that have eliminated the tip-credit system, including Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington state, with still more jurisdictions considering similar proposals. Under current District law, much like federal law and that of most other states, employers can rely on tips paid by customers to satisfy a portion of the minimum wage requirement for employees who customarily and regularly receive more than $30.00 per month in tips.  Currently, the “cash wage” portion of the District minimum wage that must be paid directly by the employer is $5.35, with the remainder of the $16.10 minimum wage eligible to be satisfied through tips from customers.  This difference of $10.75 is called the “tip credit.”  The employee must actually receive sufficient tips to make up the difference between the cash wage and the minimum wage. Employers of tipped employees in the District will need to prepare to revamp their wage structures to comply with the new Initiative. Initiative 82 will eliminate the ability to take advantage of the tip credit and pay a reduced cash wage by July 1, 2027.  The Initiative does this by rapidly increasing the minimum cash wage until it achieves parity with the generally-applicable minimum wage.  At that point, employers will no longer be permitted to use the tip credit to meet the minimum wage.  Initiative 82’s staged increases are scheduled as follows: January 1, 2023:              $6.00 per hour July 1, 2023:                     $8.00 per hour July 1, 2024:                     $10.00 per hour July 1, 2025:                     $12.00 per hour July 1, 2026:                     $14.00 per hour July 1, 2027:                     Same as minimum wage Employers of tipped employees will be in for an immediate shock as the Initiative’s pair of 2023 increases will raise the cash wage that employers must pay to tipped employees by approximately 50% within less than a year after the Initiative’s passage.  Notably, the District’s minimum wage is tied to inflation, so by 2027, it could be higher than the current $16.10 per hour level. Initiative 82 also opens the door for employers to implement mandatory tip pooling arrangements that include non-tipped employees beginning in 2026.  For example, at a restaurant, this type of arrangement may require servers to split their tips with back-of-house employees like cooks or dishwashers.  Federal law sets forth requirements for such tip-pooling arrangements, which have been the subject of considerable litigation, so employers should consult counsel before requiring employees to pool their tips. Initiative 82 applies to all workers who receive tips, including restaurant servers, bartenders, hairdressers and barbers, nail salon workers, valets, and other hospitality workers. An almost identical initiative, Initiative 77, was approved by voters in 2018 but was subsequently repealed by the District’s Council. This time around, however, reports indicate that a majority of the Council is likely to uphold the voters’ decision and implement Initiative 82.  Employers with tipped employees in the District should prepare for the effects of the decreasing and eventually eliminated tip credit. For questions regarding the new minimum wage initiative for tipped employees, contact your Polsinelli attorney.