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 29, 2024, the Equal Employment Opportunity Commission (“EEOC”) issued final guidance on workplace harassment. The guidance is effective immediately and is the first time the EEOC has updated its workplace harassment guidance since 1999. It reflects changes in the law in the last two decades, including making clear that federal law prohibits discrimination on the basis of sexual orientation and gender identity. The guidance provides an overview of anti-harassment laws but does not change legal requirements currently applicable to employers. While the guidance is not law and not binding on a court, it is intended to serve as a resource for employers, employees, and others, and provides insight into how the EEOC views various topics related to workplace harassment. Employers should review the guidance because it provides 75+ examples, as well as other information, that can be helpful in understanding the nuances of anti-harassment laws. For example, the guidance notes that “[n]ot all harassing conduct violates the law, even if it is because of a legally protected characteristic,” and it provides several examples of unlawful harassment. The guidance also covers topics such as establishing causation, hostile work environment, liability for harassment claims, and remote work. If you have any questions about workplace harassment, contact your Polsinelli attorney.

On April 23, 2024, the Federal Trade Commission (“FTC”) conducted a special Open Commission Meeting to vote on a Final Rule (the “Rule”) banning most non-compete clauses as an “unfair method of competition.” By a vote of 3-2, the Rule was approved for publication in the Federal Register. The Rule becomes effective 120 Days from Publication in the Federal Register (the “Effective Date”). Here is what you need to know: What clauses are impacted by the Rule? The Rule defines a prohibited “non-compete clause” to include any contract term, workplace policy, or term or condition of employment, written or oral, that prohibits a worker from, penalizes a worker for, or functions to prevent a worker from seeking work, accepting work, or operating a business after prior employment ends. Other types of post-employment covenants (e.g., non-solicitation) could be attacked under the Rule if they have the effect of a non-compete. What employers and workers are impacted by the Rule? Generally, the Rule will impact all employers other than certain banks, savings and loan companies, non-profits, and common carriers, which are not subject to the FTC’s authority by law. The Rule applies to paid and unpaid workers, including employees, independent contractors, externs, interns, volunteers, apprentices, and sole proprietors. The Rule does not apply to the franchisee in a franchisor relationship. What conduct is prohibited by the Rule? The Rule prohibits employers from (1) entering into or attempting to enter into a non-compete clause, (2) enforcing or attempting to enforce a non-compete clause, and (3) representing that a worker is subject to a non-compete clause. The Rule applies to non-compete clauses entered before the Effective Date unless the non-compete clause is with a “Senior Executive”. The exception for “Senior Executives”: Unlike the proposed rule, the final version of the Rule provides an exception for non-compete clauses entered into with Senior Executives before the Effective Date. A Senior Executive means a worker receiving total annual compensation (excluding fringe benefits) of at least $151,164 in the preceding year, and was “in a policy-making position”—meaning the entity’s president, CEO, officer, or other person who has final authority to make policy decisions that control significant aspects of the entity (and not just a subsidiary or affiliate). The exception for “bona fide sales of business”: The Rule does not apply to non-compete clauses entered into “pursuant to a bona fide sale of a business entity, of the person’s ownership interest in a business entity, or of all or substantially all of a business entity’s operating assets.” The Rule does not limit this exception to only those holding at least 25% ownership interest in a business, like the proposed rule did. What does the Rule require employers to do now? On or before the Effective Date (unless the Rule is enjoined), employers are required to provide all workers with impacted non-compete clauses clear and conspicuous notice to the worker that the non-compete clause will not be, and cannot be, legally enforced against the worker. The notice must be provided in writing by hand deliver, mail, email or text message, and group communications are permissible. The Rule provides model notice language. What happens to existing lawsuits? The Rule does not apply to causes of action related to non-compete clauses that have accrued prior to the Effective Date. Put another way, the Rule likely will not change cases involving alleged violations of non-compete clauses occurring before the Effective Date. What do we expect next? Lawsuits challenging the Rule were filed within hours of the vote, including a lawsuit filed in the United States District Court for the Eastern District of Texas by the U.S. Chamber of Commerce. Given the scope of the Rule and its impact, it is anticipated that at least some courts will enjoin the Rule from taking effect until the U.S. Supreme Court has an opportunity to weigh in on the Rule’s validity and constitutionality. Is there still risk when hiring a competitor’s employees? Yes. The Rule does not take effect for months and may never take effect if the court challenges are successful. The Rule also does not apply to conduct occurring before the Effective Date, so actions taken now still have risk. More importantly, the Rule generally does not eliminate all risk to hiring employees from a competitor because even without non-compete clauses, employers can bring suit based on other contract terms (non-solicitation and non-disclosure clauses), trade secrets, and legal theories to protect their interests when former employees go to work for a competitors. Contact your Polsinelli attorney if you need guidance reviewing your non-compete agreements or strategy around restrictive covenants.

As has been expected, and as we addressed at the end of 2023 in our previous blog post, on April 23, the U.S. Department of Labor (“DOL”) at long last issued its final rule raising the salary thresholds for overtime exemptions. The rule, “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees,” addresses the scope of the carveout for positions deemed to be exempt from the overtime requirements of the Fair Labor Standards Act (“FLSA”). Specifically, the final rule sets into motion increases in the salary threshold that must be met for a position even to be potentially exempt. The salary thresholds are higher in the final rule than they were in the proposed rule. Beginning July 1, 2024, the salary threshold will increase to $43,888/year from the current level of $35,568/year. Following that, the threshold level will increase to $58,656/year on January 1, 2025. The January 2025 level equates to $1,128/week. The DOL has said that the increased threshold beginning January 1, 2025, will affect some 3 million workers. In addition to the general salary exemption thresholds, the rule will raise the threshold for classification as a highly compensated employee, from the current $107,432 to $132,964 in July 2024 and then to $151,164 in January 2025. This will not be the last increase – the rule sets forth that automatic updates to the threshold amounts will take place every three years based on the latest earnings data. As has been the case with previous attempts at increases through DOL rules, we anticipate there will be challenges to the rule. Finally, the rule will not alter the duties necessary for the exemption qualification of a position. And employers should remember that some states have higher salary thresholds for exemption under their state wage-and hour laws. Contact your Polsinelli attorney for further guidance regarding this rule change and other wage-and-hour matters.

FTC Final Rules Banning Non-Competes Vote Next Tuesday As you know, last year, the FTC issued a proposed rule banning virtually all non-compete agreements (which does not include non-solicitation agreements, confidentiality agreements and the like). Yesterday, the FTC announced that a special Open Commission Meeting will be held virtually on Tuesday, April 23, 2024, at 2 p.m. EDT at which time the FTC is expected to vote on a Final Rule. Here is what you need to know for now: When is the vote on the Final Rule to ban non-competes? Tuesday, April 23, 2024 at 2 p.m. EDT. The Open Commission Meeting will be available to view here.  What is expected to happen? The consensus among Polsinelli’s Restrictive Covenant and Trade Secret Practice Group, other experts, and scholars is that the FTC will vote to implement a Final Rule substantially similar to the Proposed Rule. In short, that means that it will vote to ban essentially all non-competes with limited exceptions (some form of ownership in the entity being sold – the Proposed Rule had a 25% threshold). When will the Final Rule be effective? The Final Rule is expected to become effective 60 days after publication in the Federal Register. (The FTC has the ability to implement the Final Rule sooner if necessary due to an “emergency situation” but we do not anticipate that in this instance.) What can you do now? Understand that the vote will be Tuesday; that does not mean the Rule will be effective Tuesday. Understand that the Rule likely will not be effective until 60 days after publication in the Federal Register and that we anticipate that there will be litigation seeking to block the Rule from going into effect, as discussed below. Evaluate your use of non-competes, and develop strategies for navigating the uncertainties of the time. Strategically and thoroughly analyze your trade secret protocols and protections. What do we expect next? Experts and scholars (and we) fully expect the Final Rule will be challenged in Federal Court with the challenging parties seeking immediate injunctive relief preventing implementation of the Final Rule, based upon the FTC exceeding its authority. Contact your Polsinelli attorney if you need guidance reviewing your non-compete agreements or strategy around restrictive covenants.

The Office of Federal Contract Compliance Programs (OFCCP) announced that the Contractor Portal for federal contractors and subcontractors to certify compliance with their affirmative action plan (AAP) obligations will open on April 1, 2024, with contractors and subcontractors having until July 1, 2024, to submit the required certification. This is the third year of OFCCP’s annual certification requirement. Contractors must again certify that they have developed and maintained annual affirmative action plans for each of their workplace establishments or functional/business units, as applicable.  Beginning last year, contractors and subcontractors were required to enter the start date of their currently maintained AAP. For the current 2024 certification period, contractors are certifying compliance for its most recent AAP start date.  In addition, covered federal contractors must disclose the number of employees which are included in each establishment AAP.  OFCCP continues to stress the need to meet this reporting deadline. The agency has indicated that contractors who fail to certify compliance (due to either failing to complete the certification or stating in the certification they have not complied) “will be more likely to appear on OFCCP’s scheduling list” for annual compliance audits. The certification requirement applies to existing federal contractors. OFCCP encourages new contractors to register as soon as possible after entering a contract and then update certification within 90 days of developing their AAP. Polsinelli assists many federal contractors and subcontractors in completing the Contractor Portal certification requirement and assists many entities doing business (directly or indirectly) with the federal government in determining whether they are subject to AAP obligations. Polsinelli’s OFCCP & Affirmative Action Plans practice is available to provide practical assistance to contractors and subcontractors with the certification process.

On Tuesday, April 30, 2024, the Equal Employment Opportunity Commission (EEOC) will open the 2023 EEO-1 Component 1 Report for employers to report the race, ethnicity and gender of their employees. The EEO-1 reporting period is scheduled to remain open until Tuesday, June 4, 2024. This reporting is mandatory for private sector employees with 100 or more employees and certain federal contractors with 50 or more employees. In addition, employers with less than 100 employees who are related to other entities, such that combined, there are over 100 employees, may also be required to file. The EEOC anticipates posting updates regarding the 2023 EEO-1 Component 1 data collection by Tuesday, March 19, 2024, including the 2023 EEO-1 Component 1 Instruction Booklet and the 2023 EEO-1 Component 1 Data File Upload Specifications. Polsinelli will continue to monitor developments with the EEO-1 report. If you have questions about EEO-1 reporting or need assistance preparing this report, contact your Polsinelli attorney.

As we reported last month, effective January 1, 2024, non-compete agreements in California are unenforceable regardless of where the contract is signed. This means employees who sign non-competes outside California, then move to California and seek new employment in violation of the non-compete, can rely on California law to invalidate the non-compete. Practically speaking, this creates unpredictable challenges for employers with mobile or largely remote workforces. More importantly, AB 1076 makes it unlawful for employers to include a non-compete clause in an employment contract or require an employee to enter a non-compete. Any employer who uses, or attempts to use, a non-compete with employees working in California can now be sued by those employees, and the law entitles the employee to an injunction, damages, and attorneys’ fees in the lawsuit. In addition, by February 14 – next week – employers must provide notice to any current or former employee employed after January 1, 2022, that their non-compete clause or non-compete agreement is void. This notice must be individualized and, in writing, sent to the employee’s last known mailing and email address. Employers who fail to provide the required notice on time may be assessed a civil penalty of up to $2,500 per violation. Members of Polsinelli’s Restrictive Covenant and Trade Secret Practice Group are available to assist employers in mitigating the risks of using non-competes and other restrictive covenants with employees.

On January 31, 2024, several U.S. government agencies released proposals and guidance aimed at imposing new pay transparency and salary history requirements upon federal government contractors and subcontractors. These proposals, should they go into effect, will subject federal contractors and contractors to a suite of pay equity regulations mirroring those recently enacted in progressive states like California and New York. Proposed FAR Clause Implementing Salary History Restrictions Most significantly, the FAR Council, which consists of the Administrator for Federal Procurement Policy and the heads of the Defense Department, NASA, and the General Services Administration, published a proposal to amend the Federal Acquisition Regulation (FAR) to implement a new pay equity clause. Under the new proposal, the new clause would be applicable to the bulk of federal government contracts that are performed in the United States and its outlying areas, and will also flow down to subcontractors at any tier.  The proposed clause applies to recruitment for any position that works “on or in connection with” a federal contract – an established standard covering not just the employees who perform the direct services called for under the contract, but also support services that are necessary for the contract’s performance. The proposed FAR clause prohibits several actions in connection with an employer’s use of an applicant’s prior compensation level in past positions during the recruiting process: Contractors cannot seek an applicant’s compensation history from the applicant or the applicant’s former employer, or require the applicant to disclose compensation history. Contractors cannot retaliate against or refuse to interview or hire applicants who do not respond to an inquiry about compensation history. Contractors cannot rely on an applicant’s compensation history (if known or discovered) as criteria for screening applications or in determining the applicant’s new compensation upon hire. Notably, the prohibition on using prior compensation in setting an applicant’s new compensation applies even if the applicant voluntarily discloses their compensation in pay negotiations. The proposed clause would also impose compensation disclosure requirements for contractors’ job advertisements. The clause requires that all advertisements for positions that work on or in connection with a federal contract must disclose the range of salary or wages the contractor believes in good faith that it will pay for the position. Job listings must also disclose a “general description” of benefits and other types of compensation (i.e., commissions, bonuses, etc…) offered. If more than 50% of compensation will come from non-wage or salary compensation, then the contractor must specify the percentage of overall compensation or dollar amount of each other form of compensation. Job advertisements must also include a notice of rights under the new FAR clause and information about how to submit claims of discrimination. New OFCCP Guidance on Salary History Concurrently with the proposed FAR clause, the Office of Federal Contract Compliance Programs (OFCCP) issued Frequently Asked Questions guidance about the use of salary history in setting compensation. The guidance does not, at least directly, impose new obligations on contractors, but does suggest that OFCCP will view an employer’s use of salary history in setting compensation as a potential indicia of pay discrimination. OFCCP’s guidance does not explicitly take the position that contractors may not use or rely upon salary history in setting compensation. Rather, the guidance states that “the practice may contribute to unlawful discrimination, depending on the specific facts and circumstances at issue.” The guidance also does not treat the use of salary history data voluntarily provided by an applicant in negotiations as different from information collected or required to be provided by the employer. The guidance suggests that the use of salary history by a contractor may be reviewed by OFCCP in compliance evaluations as part of its examination of the employer’s broader compensation policies. The FAR Council is accepting comments on its proposed rule until April 1, 2024, which could lead to changes in its scope prior to implementation. Still, federal contractors and subcontractors should review their compensation and recruiting practices to identify whether salary history data is collected and how it is used in setting compensation, as even absent these proposals, the use of salary history in setting compensation is a potential vulnerability that may expose an employer to equal pay claims.

On January 9, 2024, Shareholders in our Restrictive Covenant and Trade Secret Practice Group conducted a webinar covering “What Employers Need to Know About Non-Competes in 2024.” A recording of that webinar is available here. Below, the Team addresses some of the additional questions concerning the status of the FTC Proposed Rule, anticipated challenges to the Proposed Rule, FTC Lawsuits Against Employers for Imposing Non-Competes, Exceptions to Non-Compete Bans, Employee “Theft,” and Hiring Employees Subject to Non-Competes that were posed during the webinar. 1. The Status of the FTC Proposed Rule Banning Non-Competes The comment period ended on April 19, 2023, and we are now waiting on the FTC to issue a Final Rule. There is no deadline for the FTC to issue a Final Rule, though the general consensus is that the FTC will issue a Final Rule in April 2024. No one knows with certainty what the Final Rule will say, and the FTC is not restricted by the proposed rule or comments. It can adopt the proposed rule as is, modify, or even implement an entirely different rule without any additional rulemaking process. The FTC’s advocacy for a full ban since the comment period closed suggests it does not intend to change course, and employers would be wise to prepare for a Final Rule substantially similar to the proposed one. 2. Anticipated Challenges to the FTC Final Rule Regardless of what the Final Rule looks like, it will be immediately challenged in court (similar to the vaccine mandate challenges), with the Final Rule taking effect unless and until it is enjoined. The prevailing opinion is that there are very strong arguments to attack the FTC’s authority to issue the rule, primarily that the FTC exceeded its rule-making authority. Regardless of the ultimate success of the legal challenges, it will still generate uncertainty in the interim and give rise to public policy arguments against enforcement in current disputes (which some judges may find persuasive). Moreover, the rulemaking effort is merely another example of growing hostility towards non-compete covenants, and we will likely see Congress and states, including New York, revisit this issue. 3. FTC Lawsuits Against Employers for Imposing Non-Competes During 2023, even without the authority of a Final Rule, the FTC filed three complaints against employers over their use of non-competes. The claims alleged the employers imposed non-competes on employees in an unfair manner that tended to harm competition, consumers, and workers, thus violating antitrust laws. The Complaints were unrelated to any enforcement efforts by the employers at issue, but the FTC argued that the noncompetition agreements at issue had the effect of prohibiting workers in the affected industries from earning higher wages and were therefore unfair labor practices. This ties into the cooperation agreements entered into between the FTC, the NLRA and DOL in 2023, which make it more likely that employers’ non-competes may come under scrutiny as a result of an unrelated audit or investigation. 4. Exceptions to Non-Compete Bans in the Proposed Final Rule The FTC Proposed Rule is very broad and applies to all kinds of paid and unpaid workers, while some state laws are more narrow (bans for employees only) or are less clear in whether they are intended to apply to other categories of workers beyond employees. Similarly, the FTC Proposed Rule did not contain a carve out for highly compensated workers. Other state laws, like Illinois, Colorado, Maryland, Maine, Nevada, Oregon, Rhode Island, Virginia, Washington and Washington D.C., allow for non-competes if an employee makes above a certain salary threshold. It is best practice to evaluate each case based on its facts and review the applicable law, since there is no one-size-fits-all approach to non-compete guidance at this time. 5. Employee “Theft” Most of the laws voiding non-competes do not impact the enforceability of non-solicitation clauses, though some do (e.g., Colorado and Illinois). However, with the federal government’s recent focus on antitrust, non-solicitation clauses purporting to prohibit the hiring of employees by a competitor or business partner may come under closer scrutiny. Employers should be wary of any agreement that could be interpreted as restricting the ability to hire employees. 6. Hiring Employees Subject to Non-Competes Even with the changes in the law, hiring employees subject to non-competes can still be risky. Generally, non-competes are not per se invalid, and lawsuits to enforce non-competes can be made even if the covenant in question is likely to ultimately be found overbroad or unenforceable. Unfortunately, the path to proving a non-compete is unenforceable in court, and arbitration is disruptive, time-consuming and expensive. Polsinelli attorneys are available to help you evaluate the facts of each particular situation on a case-by-case basis to develop a risk management strategy for hiring and retaining employees.

Late last year, the EEOC quietly announced its most recent Strategic Enforcement Plan, covering 2024–2028. To no surprise, the EEOC has indicated that it will implement a concerted effort to focus its resources on employment practices that often result in class and collective action lawsuits. More specifically, the EEOC announced the following “subject matter priorities” for the next four years: “Eliminating Barriers in Recruitment and Hiring” (including use of artificial intelligence for hiring, apprenticeship/internship programs, online-focused application processes, screening tools for hiring—such as pre-employment tests and background checks, and the underrepresentation of women and workers of color in industries such as manufacturing, tech, STEM, and finance, for example); “Protecting Vulnerable Workers and Persons from Underserved Communities from Employment Discrimination” (including immigrant workers, persons with mental or developmental disabilities, temporary workers, older workers, and workers traditionally employed in low-wage jobs); “Addressing Selected Emerging and Developing Issues” (including the use of qualification standards or other policies that negatively affect disabled workers, protecting workers affected by pregnancy, childbirth or related medical conditions, preventing discriminatory bias towards religious minorities or LGBTQIA+ individuals, and the use of artificial intelligence or automated recruitment tools for hiring); “Advancing Equal Pay for All Workers” (including a focus on employer policies that prevent or attempt to limit workers from asking about pay, inquiring about applicants’ prior salary histories, or prohibiting workers from sharing their compensation with coworkers); “Preserving Access to the Legal System” (including the use of overly broad releases or nondisclosure agreements, the implementation of unlawful mandatory arbitration provisions, and any failure to keep records required by statute or EEOC regulations); and “Preventing and Remedying Systemic Harassment.” The EEOC has indicated that it will focus on Charges that touch on the above topics while also intentionally prioritizing systemic enforcement actions and impact litigation to eradicate what it perceives to be discriminatory employment practices. As demonstrated briefly above, the EEOC has a keen interest in scrutinizing artificial intelligence and mass hiring practices via automatic recruitment tools, in addition to a renewed focus on employment practices that could have an adverse impact on those with intellectual or health-related disabilities, among other things. This could directly lead to an increase in Commissioner Charges, systemic investigations, pattern or practice lawsuits, and class action litigation regarding the topics listed in its Strategic Enforcement Plan. Employers should be vigilant in monitoring these key areas of risk related to the EEOC’s new Strategic Enforcement Plan, as EEOC investigations can quickly escalate to regional or even nationwide systemic investigations and corresponding litigation. Contact your Polsinelli attorney for further guidance on how you can bolster your employment practices to minimize the risk of potential EEOC enforcement actions, as well as class and collective actions, in your workplace.

Despite objections by thousands of employers and its continuing review of records, the OFCCP has been ordered by a federal court to produce all EEO-1 Type 2 reports of federal prime contractors and first-tier subcontractors from 2016-2020 as requested by the Center for Investigative Reporting (“CIR”) through multiple FOIA submissions. CIR filed litigation to enforce its FOIA request in December 2022 in the Northern District of California. On December 22, 2023, that court issued an order requiring OFCCP to produce the EEO-1 Type 2 reports, determining that the information included in the reports was not the type of “commercial” information protected from release under FOIA. Specifically, the court found that the reports were not exempt from disclosure under Exemption 4 of FOIA as the information in the reports is not “intrinsically valuable business information” and the headcounts in all industries and across broad job categories do not provide “commercial insight…specific to the operations of a federal contractor.” The court also rejected OFCCP’s assertion the data constituted trade secrets protected from disclosure and found no substantial risk of harm through the disclosure of competitive business secrets. While the court initially required OFCCP to produce the EEO-1 Type 2 reports by January 19, 2024, the parties agreed to extend the deadline to February 20, to give OFCCP an opportunity to determine whether to appeal the decision. It is anticipated that an appeal of the decision will delay any required disclosure of the reports. Contact your Polsinelli attorney for further guidance regarding this anticipated disclosure and other government contractor matters.

Around the world and across the United States, we see so many languages spoken. People around the world communicate in thousands of different languages. Given the wide origins of workers and companies with international operations, the question arises: to what extent should employers accommodate language needs, as in translating handbooks, policies, notices, or memos? Legally, the answer is murky: states and foreign jurisdictions adopt varying approaches. For example, in the United States, there is a varied patchwork of federal law that can apply requiring notices in languages besides English, while we have some states (Georgia, North Carolina, Michigan, Arizona, Missouri, etc.) that do not have any requirements for translating employment-related documents. In contrast, states like Ohio, Indiana, Maryland, and Washington encourage employers to provide translation or guidance for employment-related documents, while states like New York, Illinois, Virginia, and Massachusetts require notices and posters in languages besides English. Finally, some states like Tennessee, Colorado, Texas, and California have more specific laws and case law on requirements for translating employment-related documents. For employers with international operations, the answer will significantly vary based on an employee’s location. Some countries (like Australia and Switzerland) do not have any requirements, while many countries in Latin America, the United Kingdom, New Zealand, Singapore, etc. have recommended or preferred languages. Other countries like Israel, Denmark, India, South Africa, and Japan have requirements that employers ensure employees understand employment-related documents or that a document in a specific language will prevail in a dispute. However, many countries, such as Belgium, Canada, France, Romania, Ukraine, the United Arab Emirates, China, etc., do have specific language requirements, and some of them are based on regions within countries. It is clear that there is a lot of variety across the United States and around the world on whether employers must translate workplace documents. Employers should tread carefully with languages for employment documents, especially in light of ever-changing statutes across countries. Polsinelli is monitoring these requirements around the world. Contact our International Employment Law group for assistance with employment document translation in jurisdictions around the world, including those that may not have been discussed in this summary.

On January 9, 2024, the U.S. Department of Labor released the final details of their Independent Contractor test. This test addressing when companies can classify workers as independent contractors has been hotly debated since the last proposed rule by the Trump administration was struck down by the current DOL. The new rule will take effect on March 11, 2024. The new Independent Contractor focuses on the “economic realities of the working relationship” to determine if whether the worker is economically dependent on the company for work or if the worker is in business for themselves. The test is based on the “totality of the circumstances” and includes the following six factors: The opportunity for profit or loss depending on managerial skill; Investments by the worker and the company; Degree of permanence of the work relationship; Nature and degree of control of the worker – including whether the employer uses technological means of supervision (such as by means of a device or electronically), reserves the right supervise or discipline the worker, or places demands on a worker’s time that do not allow the worker to work for others or work when they choose; The extent to which the work performed is an integral part of the company’s business; and The skill and initiative of the worker – i.e., whether the worker possesses and uses specialized skills that they bring to the job, or is the worker dependent on training from the company to perform the work. While the DOL identified these six factors, it is clear that no factor has a predetermined weight, and also indicated that other “additional factors” may be relevant if they are indicative of whether the worker is in business for themselves. Pending the effective date, the DOL has issued FAQs which can be found at: https://www.dol.gov/agencies/whd/flsa/misclassification/rulemaking/faqs With this new test, companies should carefully review whether the workers they have classified as independent contractors meet the new requirements and take any appropriate action if they believe they are misclassified. Polsinelli attorneys are available to assist with this review and analysis.

On December 22, 2023, New York Governor Kathy Hochul declined to sign legislation (S3100) that would have outlawed noncompete clauses in virtually all employment contracts. If it had gone into effect, New York would have been the fifth state to ban non-competes outright, joining California, North Dakota, Oklahoma, and, most recently, Minnesota. In vetoing the bill, however, Governor Hochul did not forgo the possibility of a future ban. Rather, she expressed concern with the current bill’s “one-size-fits-all” approach – particularly considering the varying industries that call New York home, and their interests and needs to retain high-paid workers. These comments and discussions between the Governor and the New York State Senate appear to signal that it is possible that a noncompete ban may still be possible in the near future – if a salary threshold can be met. Prior to the veto, the Governor and the Senate had discussed exempting workers earning more than $300,000 per year. New York business leaders gave feedback that even a lower threshold of $250,000 could be a workable number. Another issue not addressed by the most recent proposed legislation is the exemption of noncompete provisions between buyers and sellers in the sales of businesses. Many other states with such bans or restrictions on noncompete agreements have such a carve-out. While the recent veto is a victory for New York employers, the reality is that noncompete provisions are still heavily under attack. Employers should carefully evaluate their policies and practices that protect their confidential information, trade secrets, and other valuable business interests to ensure that even if noncompete agreements are one day banned, they are adequately protected. Contact your Polsinelli attorney if you have any questions or need assistance regarding this or other restrictive covenant issues.

As 2023 comes to a close, so did the notice-and-comment period for the U.S. Department of Labor’s (DOL) proposed rule increasing the minimum salary required for employees to be exempt under any of the “White Collar Exemptions” from overtime pursuant to the Fair Labor Standards Act (“FLSA”). With that period closing in November, it can be anticipated that steps will be taken in the upcoming election year to implement the new rule. As a reminder, and as explained in our previous blog post, the DOL has proposed the threshold salary level for exemption from overtime be raised from $35,568/year ($684/week) to $55,000/year ($1,059/year). It also proposes increasing the Highly Compensated Employee exemption threshold to $143,988 annually. The rule will not modify the duties necessary for exemption qualification. Employers may wish to keep these thresholds in mind as they review and implement compensation decisions in the new year. Employers should also take note that six states (Alaska, California, Colorado, Maine, New York, and Washington) have minimum salary requirements for overtime exemption that both exceed the current federal level and will further increase on January 1, 2024. Contact your Polsinelli attorney for further guidance regarding this potential rule change and other wage-and-hour matters.

As 2023 comes to a close, employers should be aware of the hourly minimum wage rate increases set to take effect in various jurisdictions on January 1, 2024. 22 states and more than 40 local jurisdictions will ring in the New Year with new minimum wage rates. Minimum wage employees in the following states will be impacted by the upcoming increases: Alaska, Arizona*, California*, Colorado*, Connecticut, Delaware, Hawaii, Illinois*, Maine*, Maryland*, Michigan, Minnesota*, Missouri, Montana, Nebraska, New Jersey, New York, Ohio, Rhode Island, South Dakota, Vermont, and Washington*. Those states identified with an asterisk also have local jurisdictions with minimum wage increases effective January 1, 2024, which are higher than the applicable state minimum wage. Employers should confirm that any minimum wage rates are adjusted properly.  In addition, employers with tip credit employees should review their tip credit notices to ensure full compliance with applicable laws (including cash wage being paid to the tipped employee and the amount of tip credit claimed by the employer). Contact your Polsinelli attorney if you have any questions or need assistance regarding your wage and hour compliance before the arrival of the New Year.

Chicago employers will soon need to ensure that they provide leave in accordance with a new Chicago law. Specifically, on December 31, 2023, the Paid Leave and Paid Sick and Safe Leave Ordinance will go into effect in the City of Chicago. This new law will require employers to provide Chicago employees up to 40 hours of paid sick leave to be available for use for specific sick leave purposes AND up to 40 hours of paid leave to be used for any reason each year. By December 31, 2023, employers must have a written policy in place, give notice of the policy to their employees, and post a notice to be provided by the City of Chicago. The Chicago ordinance applies to any employers with at least one employee who work at least two hours in a two-week period in the City of Chicago. Employers can choose for paid leave to accrue throughout the year or front-load the required leave for employees at the beginning of the year. If employees accrue leave throughout the year, each covered employee must accrue one hour of paid sick leave and one hour of paid leave to be used for any reason for every 35 hours an employee works. Under the ordinance, employers may have to pay out unused paid leave available for use for any reason upon separation of employment or transfer of employment outside Chicago, depending on the size of the employer. Specifically, employers with 100 or more employees must pay out accrued but unused paid leave that is available for use for any reason upon separation of employment or if the employee transfers to work outside of Chicago. Employers with 51-100 employees must pay out up to 16 hours of this leave through January 1, 2025. After January 1, 2025, these employees will have to pay out all accrued but unused paid leave available for use for any reason. Employers with 50 or less employees have no pay out requirements. Additionally, the pay out requirements do not apply to accrued but unused paid sick leave. Further, Chicago employees must be allowed to rollover up to 80 hours of accrued but unused paid sick leave and 16 hours of general paid leave at the end of the year. If you have questions or would like assistance preparing paid leave policies, contact your Polsinelli attorney.

Employee Handbooks are an important tool to help communicate policies, establish company culture, and protect an organization. However, they can also cause problems for a company if not drafted and implemented carefully, or used across borders without aligning with local law and custom. Join Polsinelli attorneys Harry Jones and Emily Tichenor next Tuesday, October 24, as they address what to include in a Handbook, what you may not want to include in a Handbook, important Handbook updates to make for 2024, and how to make the best use of your Employee Handbook. Register for the SHRM-KC webinar taking place on October 24 at 12:00 PM CT.

A recent case from the Eastern District of California emphasizes the importance of employers having facially neutral and lawful wage-and-hour policies – as such policies can help in defeating class certification. In Tavares, et al. v. Cargill, Inc., et al., the Plaintiff sought certification of a Rule 23 class consisting of all hourly and non-exempt employees who worked at the Defendants’ Fresno, California meat-processing facility. That proposed class included about 4,000 employees, most of whom were production employees. Plaintiff claimed, among other things, that those employees had not been properly compensated for minimum wage and overtime, largely due to purportedly having to perform tasks before and after clocking into the timekeeping system for which they were not paid. Those tasks included donning/doffing, pre-shift COVID health checks, cleaning lockers, and reading breakroom bulletin boards. Plaintiff claimed the Defendants had a uniform policy of requiring this work be performed off-the-clock. The court found, however, that the Defendants’ policies were facially valid – that such tasks were supposed to be occurring while clocked in, if they were required at all. To determine any violation of that policy – and thus, a potential violation of wage-and-hour laws – would require numerous individualized inquiries, including whether each class member wore PPE, whether they utilized their lockers, and whether they were required to look at any breakroom bulletin boards. The court’s willingness to reject class certification at a single work location based on the various individualized circumstances presented by the proposed class reflects the continuing trend of heightened scrutiny of granting class and collective certification in wage-and-hour cases. Contact your Polsinelli attorney or a member of the Employment Class & Collective Actions practice group for further guidance regarding this decision and other wage-and-hour matters.

On October 31, 2023, the Equal Employment Opportunity Commission (EEOC) will open the 2022 EEO-1 Component 1 Report for employers to report the race, ethnicity and gender of their employees (by job category) with a due date on December 5, 2023. Of note, the relevant data should be gathered based on an employer’s workforce from October 1, 2022 to December 31, 2022. This reporting is mandatory for private sector employees with 100 or more employees, employers with less than 100 employees who are related to other entities so there is a combined employee count over 100 employees may be required to report and certain federal contractors with 50 or more employees. The EEOC is in the process of releasing numerous resources to assist employers in reporting, including the Filer Support Message System that will open on October 31, 2023, the Instruction Booklet released on September 6, 2023, and the Data Upload Specifications which is anticipated to be released on September 13, 2023. At this time, there are no known changes to the substance of what employers must report but the actual report may look different and likely will be streamlined; however, that is only for the 2022 EEO-1 Reporting and is subject to change in the following years. Polsinelli will continue to monitor developments with the EEO-1 report. If you have questions about EEO-1 reporting, contact your Polsinelli attorney.

Earlier this month, the Fifth Circuit Court of Appeals (covering Texas, Mississippi, and Louisiana) issued an en banc decision in Hamilton v. Dallas County holding employees no longer have to show they were subject to an “ultimate employment decision” in pleading Title VII discrimination claims. Previously, Title VII discrimination claimants in the Fifth Circuit had to establish an “ultimate employment decision” such as hiring, firing, granting leave, promoting, or unfairly compensating employees. Now, plaintiffs need only allege discrimination affecting “terms, conditions, or privileges of employment.” This brings the Fifth Circuit standard in line with many other circuits, including the Fourth, Sixth, Eleventh, and D.C. Circuits. Hamilton involved a Dallas County policy allowing male detention center officers to have full weekends off while female officers were not. The Fifth Circuit was not persuaded that this sex-based scheduling policy was acceptable under Title VII’s statutory text. Hamilton broadens the types of personnel actions providing the basis for a cognizable Title VII discrimination claim in the Fifth Circuit. However, the Court did not define a particular standard for “terms, conditions, or privileges of employment,” other than reminding us that “de minimis workplace trifles” are not enough. At the very least, this decision serves as a worthwhile reminder that “[n]owhere does Title VII say, explicitly or implicitly, that employment discrimination is lawful if limited to non-ultimate employment decisions.” Employers with operations in the Fifth Circuit should review their policies to ensure (1) they are consistent with the new standard and (2) they are being neutrally applied. If you have any questions or need assistance in revising your company’s policies, consult your Polsinelli attorney.

The National Labor Relations Board has issued a new rule that returns to pre-2019 union election standards. The primary impact is that workers will wait less time to vote on whether to unionize and employers will have less time respond to unionization efforts. The new rule will apply to representation petitions filed on or after December 26, 2023. One of the key revisions made by this new 2023 Rule is a requirement that elections are to be held prior to litigation being resolved. Previously, issues such as unlawful conduct and workers’ eligibility to vote were required to be litigated prior to an election being held. Another one of the key provisions is the elimination of a 20-day waiting period between approval of an election petition and the beginning of a vote. Instead, regional directors are now required to hold elections “at the earliest date practicable.” Employers are also now required to post the Notice of Petition for Election in conspicuous workplace locations within 2 business days after service of the Notice of Hearing. If employers regularly communicate with its employees electronically, the employer must also electronically distribute the notice within 2 business days. Previously employers had 5 days. Pre-election hearings must also commence within 8 calendar days from the service of the Notice of Hearing. Additionally, the 2023 Rule limits pre-election hearings to issues of whether representation is present. Issues such as the size and scope of a proposed unit or eligibility will be resolved after elections. In sum, under the 2023 Rule, employers must act quickly to protect their interests. Employers should contact their Polsinelli attorney immediately if they suspect a union campaign.

In May 2022, the EEOC filed an age discrimination lawsuit against a group of affiliated companies employing English-language tutors. According to the EEOC, for a brief period in the spring of 2020, those companies programmed application software to automatically reject female applicants over 55 years old and male applicants over age 60. The lawsuit alleged this screening process affected over 200 applicants that were above the programmed age thresholds. The parties have now reached a settlement. The settlement itself is expansive. As is typical with many EEOC settlements, the provisions extend beyond monetary payments. Here, in a consent decree filed in federal court, the employers agreed to various non-monetary obligations, including providing notice of the lawsuit to high-level executives and HR employees, retaining a third-party group to conduct extensive training on all federal equal employment opportunity laws, and inviting the rejected applicants to re-apply (with reporting obligations to the EEOC). This lawsuit and the subsequent settlement is likely just the first of many of its kind, but it highlights the need to proceed with caution when relying on automated decision-making processes, as well as AI usage generally. Employers should accordingly critically assess the use of technology – such as the application software at issue in the EEOC’s lawsuit – and ensure that its use complies with applicable employment laws. For additional guidance regarding the use of AI in the workplace, contact your Polsinelli attorney.

The National Labor Relations Board (the “Board”) issued its long-awaited decision regarding employer work rules that impacts both unionized and non-unionized workplaces. In Stericycle, the Board altered the standard for whether a seemingly neutral workplace rule is nevertheless unlawful. Now, for such a rule to be unlawful, the General Counsel must only prove that the rule has a “reasonable tendency” to chill employees from exercising their rights under the National Labor Relations Act. The new standard is a return to a more expansive interpretation of Section 7 Rights and erodes the balancing test that has been in place since the Board’s Boeing decision. The Board made clear that under the new standard employers may still rebut the General Counsel’s showing by proving that the rule advances a legitimate and substantial business interest. The employer must also demonstrate that they are unable to advance that same interest with a narrower rule. The Board also stated that the new workplace rule standard will be applied retroactively, meaning any workplace rules currently in place will be evaluated under this new standard. If an employer is engaged in a pending case regarding a workplace rule, that rule will also be evaluated under the new standard. The remedy in such a case will be to rescind the rule. Employers should contact their Polsinelli attorneys for assistance in reviewing their workplace rules and handbooks.

Under Title VII of the Civil Rights Act, private sector employers with 100 or more employees and certain federal contractors with 50 or more employees are required to provide demographic information of their workforces—otherwise known as EEO-1 Component 1 reporting. This includes data such as sex, race, ethnicity, and job categories. The 2022 reporting period has been delayed. It is currently scheduled to open in the fall of 2023—with no date set in stone. The EEOC is in the process of doing a three-year renewal of EEO-1 Component 1 reporting with the Office of Management and Budget (“OMB”) which is required by the Paperwork Reduction Act. While the Biden administration has expressed support for collecting compensation data with the EEO-1 report, EEOC has made clear on the EEO-1 Component 1 page that it is not making changes to the EEO-1 Component 1 data collection categories.  Rather, EEOC is seeking to update how the data is collected from employers and to reduce the burden of this collection on employers, including no longer requiring “multi-establishment filers” to submit separate reports based on the size of establishments. While EEOC has not announced a deadline for 2022 EEO-1 Component 1 reporting, required employers and contractors should continue ensuring they are collecting the necessary demographic data to be ready for the deadline. Once a deadline is determined, it will be posted on the EEO-1 Component 1 page, and employers should note that the actual reporting process may look different (and may be less burdensome) if the OMB approves changes to the data collection methods. If you have questions about required notices, contact your Polsinelli attorney.

In a recent case from the District of Colorado, a federal judge made clear that (at least in the Tenth Circuit) the first step of conditional certification is not just a rubber stamp to move on to the next stage of litigation in Fair Labor Standards Act (“FLSA”) collective action lawsuits. And while other courts are rejecting the two-step process altogether (see our recent blog post here), even when the lower conditional certification standard is applied, it still can have some teeth to it. In Bowling v. DaVita, Inc., the plaintiff sought conditional certification of a nationwide collective of nurses and technicians claiming unpaid overtime wages based on working through their required unpaid lunch breaks pursuant to a company-wide policy. Despite the existence of a written policy requiring that employees be compensated for working during lunch breaks, the plaintiff argued that the employer actually mandated employees always clock out for lunch breaks – but that they also remain available to and actually perform work while off-the-clock. At the time of the motion seeking conditional certification, six other individuals had joined the lawsuit. Ultimately, the court rejected a nationwide collective in applying the Tenth Circuit standard: whether the Plaintiff had made substantial allegations that the proposed collective members were subject to a single decision, policy, or plan. Based on the allegations and evidence before it, the court determined that conditional certification was appropriate only in the 9 states in which the employees in the lawsuit (the named plaintiff plus the six who joined the lawsuit) had worked. The court explained that the term “substantial” must carry weight – and with personal knowledge limited to the practices and policies in those 9 states, allegations regarding other locations were not substantial. This willingness to limit the scope of the collective to only those states where individuals who joined the lawsuit actually had knowledge appears to be in line with the growing trend of heightening the standard for certifying a collective action. With these trends and changes, it may be just a matter of time before the Supreme Court finally weighs in on what the standard should be. Contact your Polsinelli attorney for further guidance regarding this decision and other wage-and-hour matters.

Governor Greg Abbott recently signed House Bill No. 567, also known as the CROWN Act, into law. Following the bill’s enactment on September 1, 2023, Texas law will prohibit race-based hair discrimination in employment, schools, and housing. Under the new law, Texas Labor Code provisions referring to racial discrimination include “discrimination because of or on the basis of an employee’s hair texture or protective hairstyle commonly or historically associated with race.” A “protective hairstyle” includes braids, locks, and twists. Additionally, the CROWN Act makes it unlawful for employers, labor unions, and employment agencies to adopt or enforce grooming policies with race-based hair discrimination. Texas joins twenty-one other jurisdictions in prohibiting such discrimination: Alaska, California, Colorado, Connecticut, Delaware, Illinois, Louisiana, Maine, Massachusetts, Maryland, Minnesota, Nebraska, Nevada, New Jersey, New Mexico, New York, Oregon, Tennessee, Virginia, Washington, and the U.S. Virgin Islands. Texas employers should review their dress and grooming policies for compliance before the CROWN Act goes into effect on September 1, 2023.  If you have any questions regarding these new protections or need assistance in revising your company’s policies, please consult your Polsinelli attorney.