The General Counsel of the National Labor Relations Board (“NLRB”) set her sights on a new target with the latest memorandum: non-competition agreements. The memorandum, while not binding, lays out the General Counsel’s belief that the proffer, maintenance, and enforcement of agreements containing provisions prohibiting employees from competing with their former employer are unlawful because they have a tendency to chill employees’ rights under Section 7 of the National Labor Relations Act, which protects employees’ right to organize. Indeed, General Counsel Abruzzo states that “retaining employees or protecting special investments in training employees are unlikely to ever justify an overbroad non-compete provision.” Specifically, General Counsel Abruzzo provides that a non-compete provision in an employment or severance agreement is unlawful “when the provisions could reasonably be construed by employees to deny them the ability to quit or change jobs by cutting off their access to other employment opportunities that they are qualified for based on their experience, aptitudes, and preferences as to type and location of work.” These provisions, General Counsel Abruzzo believes, interfere with employees’ ability to: Concertedly threaten to resign to secure better working conditions; Carry out concerted threats to resign or otherwise concertedly resign to secure improved working conditions; Concertedly seek or accept employment with a local competitor to obtain better working conditions; Solicit their co-workers to go work for a local competitor as part of a broader course of protected concerted activity; Seek employment, at least in part, to specifically engage in protected activity, including union organizing, with other workers at an employer’s workplace. The memorandum notes that non-compete provisions that only restrict an individual’s managerial or ownership interest in a competitor could be lawful. Furthermore, it is important to note while the National Labor Relations Act applies to all workforces, including non-union workforces, it does not apply to statutory supervisors or managers. Consult your Polsinelli attorney for assistance evaluating your non-competes against this new guidance as well as other recent developments such as the Federal Trade Commission’s pending proposal addressing non-competes.

On December 29, 2022, President Biden signed the Providing Urgent Maternal Protections (“PUMP”) for Nursing Mothers Act into law. The law went into effect immediately, as we previously reported.  The United States Department of Labor has now issued a field assistance bulletin providing guidance to the Wage and Hour Division on the enforcement of the PUMP Act. The guidance explains that covered employers must “provide nursing employees reasonable break time each time such employee has a need to pump breast milk at work for one year after the child’s birth.” (Emphasis in Bulletin). The guidance further explains that, although an employee and employer may agree to a schedule for pumping, “an employer cannot require an employee to adhere to a fixed schedule that does not meet the employee’s need for break time each time the employee needs to pump.” Additionally, if the employer and employee agree to a schedule, it should be adjusted if the employee’s pumping needs change. The PUMP Act does not require employers to pay employees for break time used to pump, but the guidance clarifies that employers should consider whether breaks need to be paid pursuant to the Fair Labor Standards Act (“FLSA”) and applicable state and local laws. Per the guidance, non-exempt employees should be paid for time spent pumping unless the employee is completely relieved from all work duties. For exempt employees, an employer cannot reduce the employees’ salary to compensate for the pumping break time. In addition to requiring employers to provide time to pump breast milk, covered employers must provide nursing employees a place to pump breast milk at work that is shielded from view, free from intrusion from coworkers and the public, available each time it is needed by the employee, and not a bathroom. The guidance explains that the space must also be functional for pumping and “contain a place for the nursing employee to sit, and a flat surface, other than the floor, on which to place the pump.” Additionally, employees “must be able to safely store milk while at work, such as in an insulated food container, personal cooler, or refrigerator.” Employers may not retaliate against an employee for asserting rights under the PUMP Act, and an employee may file a complaint with the Wage and Hour Division or a lawsuit against an employee for a violation of the PUMP Act. Finally, the guidance reminds employers to post and keep a notice regarding the FLSA’s requirements. The notice is available from the Wage and Hour Division and was recently updated to address the PUMP Act requirements. Employers should ensure that their policies and procedures comply with the updated guidance and that they have an appropriate space available for nursing employees.  If you have any questions about the requirements under the PUMP Act, contact your Polsinelli attorney.

On May 19, 2023, the United States Court of Appeals for the Sixth Circuit became the second federal appeals court to heighten the standard for plaintiffs to obtain court-authorized notice to potential plaintiffs in Fair Labor Standards Act (“FLSA”) collective action lawsuits. Similar to the Fifth Circuit’s January 2021 decision in Swales v. KLLM Transport Services LLC (previously reported here), the Sixth Circuit’s decision plainly rejects the widely-used FLSA certification process adopted in Lusardi v. Xerox Corp., where in order to receive “conditional certification” plaintiffs are only required to make a modest factual showing that other employees are subject to an unlawful common policy or practice to receive court-authorized notice before the court engages in an analysis of whether those employees are “similarly situated” to the plaintiff. In its decision, the Sixth Circuit did not track the Fifth Circuit’s standard, which requires district courts to “rigorously scrutinize” whether potential opt-in plaintiffs are similarly situated at the outset of the case. Instead, the Sixth Circuit held in Brooke Clark v. A&L Homecare and Training Center, LLC that a plaintiff must demonstrate a “strong likelihood” that members of the notice group are similarly situated to the plaintiff before a district court can authorize notice of the lawsuit to other potential plaintiffs. The Sixth Circuit further stated that the “strong likelihood” standard requires a showing greater than necessary to create a genuine issue of fact, but less than by a preponderance of the evidence. After these noteworthy decisions in the Fifth and Sixth Circuits, time will tell if other circuits will adopt heightened notice standards for plaintiffs in FLSA collective actions and whether the United States Supreme Court will tackle the issue. Contact your Polsinelli attorney for further guidance regarding this decision and guidance regarding wage and hour matters.

So far in 2023, artificial intelligence (AI) has been at the leading edge of the technological revolution, as the potential applications for tools like ChatGPT have drawn considerable buzz.  In April 2023, we reported on New York City’s first-in-the-nation ordinance imposing notice and audit requirements on the use of artificial intelligence tools by employers.  More recently, the Equal Employment Opportunity Commission (EEOC) issued two guidance documents addressing AI in the HR context, specifically tackling the issues of adverse impact and disability accommodations. Employers are increasingly using AI and machine learning (ML) tools to help optimize employment decisions like hiring, promotions, and terminations.  Some examples of these tools identified in the EEOC guidance include resume scanners to identify promising candidates, employee monitoring software that rates employees based on productivity metrics, virtual assistants or chatbots that question applicants about their qualifications, video interviewing software that evaluates facial expressions and speech patterns, and testing software that provides job or cultural fit scores.  Generally, an AI/ML tool is one that wholly or partially relies on a computerized analysis of data to make employment decisions.  As with many new technologies, however, in some cases, technological advancement may jeopardize legal compliance.  Employers will have to consider the implications of these tools under both new laws (like New York City’s) and older laws like those administered by the EEOC. EEOC’s first guidance document assessed the employer’s obligation to ensure that AI/ML tools used in employment selection procedures do not adversely impact protected classes under Title VII (e.g., gender, race).  An AI/ML tool that has a “substantial” disproportionate impact on a protected class may be discriminatory if it is not job-related and consistent with business necessity or if more favorable alternatives are available.  An adverse impact can occur if a tool awards higher ratings or is more likely to select or reject, members of a certain protected class in comparison to other protected classes.  A few important takeaways from EEOC’s guidance on adverse impact: Employers may be responsible for the effect of third-party software.  EEOC’s guidance signals the agency will look to hold employers responsible for adverse impact even if the AI/ML tool in question is third-party software the employer did not develop.  The guidance states that this responsibility can arise from either the employer’s own administration of the software or a vendor’s administration as an agent of the employer. Employers rely on vendor assurances at their own risk.  Although EEOC encourages employers to “at a minimum” ask their AI/ML software vendors about steps taken to assess adverse impact, EEOC’s position is that reliance on the vendor’s assurances is not necessarily a shield from liability.  Employers still face liability “if the vendor is incorrect about its own assessment.” Self-audits are advisable.  Given the inability to rely on a vendor’s assurances, employers are best served by periodically auditing how the AI/ML tools they use impact different groups.  To do such an audit, employers need access to the AI/ML tool’s underlying data, which is best ensured at the time the tool is implemented. EEOC’s second guidance document addressed the impact of AI/ML tools on individuals with disabilities under the Americans with Disabilities Act (ADA).  The ADA guidance makes clear that this is an altogether different analysis than the Title VII adverse impact analysis described above.  Moreover, because of the individualized nature of the impact of disabilities and the ADA reasonable accommodation analysis, validation of an AI/ML tool, or a statistical finding that the tool does not adversely impact individuals with disabilities generally, are not sufficient to ensure ADA compliance.  Instead, EEOC anticipates a more individualized process in which the employer assesses whether the limitations of a particular employee or applicant’s condition would cause the employee or applicant to be “screened out” or unfairly rated by the AI/ML tool.  EEOC’s guidance anticipates that employers, as a best practice, would provide relatively in-depth notice of the operation of AI/ML tools and the availability of alternative processes in order for the accommodation process to occur. AI/ML offers the potential to transform the workplace, among other business processes, by allowing employers to sort through vast quantities of data and quickly glean actionable insight.  However, EEOC and jurisdictions like New York City have identified the potential for discriminatory biases to be built into AI/ML algorithms, or for these algorithms to disadvantage individuals with disabilities.  In order to avoid running afoul of new laws designed to address AI/ML, and existing laws like Title VII and ADA that went into effect decades ago but nonetheless govern AI/ML use, employers should carefully review their processes for using these tools in the human resources and recruitment context.

Recent layoffs at several high profile companies, and the putative class actions filed in their wake, highlight the importance of legal compliance when making and effecting these difficult decisions. A patchwork of laws at both the federal and state level requiring advance notice of layoffs and closures to employees and state and local government officials may be implicated.  This includes the federal Worker Adjustment and Retraining Notification Act (“WARN”) and state-counter parts (often called “mini-WARN” acts). Determining whether the WARN Act will apply involves first analyzing both the number and type of employees an employer has (i.e., full-time or part-time, as defined in the statute).  Covered employers must then determine if WARN’s notice requirements are triggered, which may happen when closing facilities or conducting mass layoffs. If WARN does apply, the employer must provide 60 days advance notice to the union representative (if applicable), the employee, and state and local government officials, unless an exception applies that will shorten the period. Violations are subject to back-pay damages, attorneys fees and civil penalties.  Most state mini-WARN include similar provisions, though the triggering thresholds are often lower. Navigating these requirements is key for ensuring legal compliance and minimizing exposure to legal claims, including claims that are ripe for class treatment. Employers should consult with legal counsel early to best address any WARN implications.

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.

On April 6, 2023, the New York City Department of Consumer and Worker Protection issued its final rule interpreting the City’s Local Law 144 regulating the use of "automated employment decision tools," which went into effect on January 1, 2023. These AI-powered tools—ranging from programs that screen resumes for basic qualifications to those that assess and assign scores to candidates based on mannerisms and responses in video interviews—are increasingly being used by employers, but have generated controversy due to the potential for bias. The new regulations provide important guidance and clarification on Local Law 144’s requirements, and employers in the City should ensure that any automated tools used in their human resources processes are compliant with the new requirements. First, the regulations clarify the types of "automated employment decision tools," or AEDTs, that are subject to Local Law 144. The ordinance defines AEDTs as a "computational process, derived from machine learning, statistical modeling, data analytics, or artificial intelligence, that issues simplified output, including a score, classification, or recommendation, that is used to substantially assist or replace discretionary decision-making for making employment decisions." The regulations clarify when an AEDT will be found to "substantially assist or replace discretionary decision-making, listing three scenarios that will subject an AEDT to Local Law 144: The employer relies “solely” on the AEDT’s score, ranking, or recommendation in making employment decisions; The employer relies on other factors in addition to the AEDT’s output, but weighs the AEDT’s output more heavily than any other criterion; or The AEDT’s output is used in a way that can overrule conclusions from other factors, including human decision-making. Employers using AEDTs in their hiring or promotion selection processes would therefore be well-served to adopt policies explicitly setting out how the AEDT’s output is used in the process. The regulations also address the bias audits required by Local Law 144. An employer’s use of an AEDT in the City is unlawful unless the AEDT has undergone a bias audit within the year prior to its use. Bias audits must be conducted by an independent auditor who, as the regulations provide, (i) has not been involved in the use, development, or distribution of the AEDT, and (ii) does not have an employment relationship with or financial interest in, the employer or a vendor that develops or distributes the AEDT. The bias audit must assess the selection or scoring rate and impact ratio for each rating or classification assigned by the AEDT based on EEO-1 sex, race, and ethnicity categories, as well as intersectional categories of sex, ethnicity, and race (i.e., white females vs. Hispanic males). The regulations also prescribe what types of data (i.e., single employer data, multi-employer data, or test data) can be used in the audit. Employers implementing AEDTs will need to obtain and closely review bias audits for the AEDT to ensure compliance with Local Law 144. Finally, the regulations address the notices of AEDT usage required by Local Law 144. Employers using an AEDT must provide notice to employees and applicants of the AEDT’s use and publish a summary of the results of the most recent bias audit for the AEDT. The regulations confirm that these notices can largely be provided through the employer’s website if certain conditions are met, but to the extent AEDTs are used in promotion decisions, additional notice must be circulated to existing employees through a written policy or other means. The regulations confirm that although the employer must notify employees and applicants of a procedure to request an alternative selection procedure not utilizing an AEDT, employers are not required to provide an alternative if requested. Finally, the regulations also outline the employer’s obligation to retain documents regarding the use of AEDTs and produce them to employees upon request, unless releasing the records is otherwise barred by law. New York City’s Local Law 144 is the most comprehensive regulation to date of the use of artificial intelligence and machine learning applications in human resources, but employers should expect other jurisdictions to quickly follow suit given the recent media attention to ChatGPT and other AI applications. In light of the new regulations, employers will need to take stock of what AI applications they are using in their human resources processes and how those applications are being used, and ensure that the applications are supported by appropriate bias audits and notices.

Employers utilizing staffing agencies should be on high alert given the Department of Labor’s (“DOL”) recent investigations targeting these arrangements. Specifically, the DOL has been actively investigating businesses that contract with certain types of staffing agencies that rely on placing 1099 independent contractors for labor. Due to unprecedentedly tight labor markets, employers increasingly rely on staffing agencies to provide them with supplemental workers necessary to run their businesses. The businesses contracting for staffed labor often assume that the staffing agency is following the law and will take responsibility for any liability related to the workers they place.  Unfortunately, all too often, this is not the case. In many situations, staffing agencies treat the workers they place as independent contractors, which can result in a misclassification finding when those workers are assigned a routine schedule at a facility or in another office setting and subject to supervision. The most troubling development regarding the staffing agency and staffed business dynamic is that the DOL has recently been targeting the staffed entity for liability associated with non-payment of overtime due to the staffing agency’s misclassification of the workers as independent contractors. In other words, the DOL is attempting to hold the staffed businesses accountable for the staffing agency’s alleged misclassification. For example, the DOL recently sued a healthcare management business for a staggering $19 million allegedly owed in back wages as a result of unpaid overtime to workers the company obtained from a staffing agency that failed to pay the overtime.  The staffing agency, which was not named in the lawsuit, did not pay overtime to the workers based on the position that they were independent contractors and not employees. The legal theory for holding a staffed business liable for the unlawful pay practices of the staffing agency is called “joint employment.” Joint employment liability may exist when two or more employers share control or supervision over a worker, resulting in legal obligations and liabilities for all parties involved. A joint employment finding generally results in joint and several liability for all entities or individuals held to be joint employers. A joint employment finding may occur under a variety of employment-related laws including wage and hour, workplace safety, union organizing and anti-discrimination. Joint employment claims are often brought as class actions, which focus on large groups of workers with the potential for substantial recovery. Independent contractor misclassification cases are frequently brought as class actions with the common thread being the theory that the classification decision was incorrectly applied to a group of similarly situated workers. Similarly, the DOL will generally focus their investigation on all allegedly misclassified independent contractors rather than certain individuals. Staffing agencies typically recruit, screen, and hire workers, and then assign them to work at the staffed employer's preferred work site. However, in some cases, staffing agencies may classify these workers as independent contractors instead of employees. Likewise, the staffed business also treats the worker as independent contractors even when the characteristics of an employment relationship may exist, such as the worker being subject to the employer's control, supervision, and direction. When this happens, the staffed business may be subject to misclassification exposure based on a joint employment theory of liability. The takeaway is that an employer should carefully vet any staffing agency providing supplemental workers to determine how the staffing agency classifies the workers and confirm the business is legally compliant. These workers may be entitled to various legal protections, such as minimum wage, overtime pay, workers' compensation, medical insurance and unemployment benefits. If these workers are misclassified as independent contractors, the staffed business may be exposed to legal claims (usually on a class and/or collective basis) and face significant financial damages. Employers should also carefully review the indemnification and other provisions of the contract entered into with staffing agencies to ensure the staffing agency takes sole responsibility for ensuring the staffed workers are treated in a legally complaint manner.

As we start to come out of the pandemic, many businesses are deciding to embrace remote workforces on a more permanent basis for a variety of reasons, including cost saving, increased talent pool, and employee satisfaction. However, maintaining a remote workforce also presents the challenge of navigating various state and local laws that may be implicated. In general, the law of the state where the employee is physically located will govern their employment, regardless of where the company is located. Accordingly, it is critical for employers to determine which state and local employment laws apply to their workforce. Among the most critical employment laws that can vary significantly state-to-state are those relating to wage and hour issues. Although some states simply follow federal law, many have their own minimum wage laws, and businesses with remote employees in multiple states will need to ensure they are paying each employee at least the minimum wage required by the state or local jurisdiction where the employee is located. Similarly, many states have their own overtime laws, which may provide for a higher rate of overtime pay or a lower threshold for the number of hours worked before overtime is required. Additionally, certain states have nuanced meal and rest period requirements. Moreover, many states have specific laws regarding the information that must be contained on wage statements, the frequency of pay days, the timing of final pay, and the payment of accrued but unused paid time off. Employers with remote workforces should also be mindful of state and local leave requirements applicable to their employees in various jurisdictions, including family and medical leave and paid sick leave. Importantly, the applicability of these leave laws is often triggered by national employee headcounts (even if only applicable to employees in the state), whereas others are triggered by state headcounts. Even beyond these most common employment laws, numerous other state and local laws can be implicated by having a remote workforce—including those relating to state-specific notices and posters, workers’ compensation, harassment training, background checks, drug testing, and pay transparency laws. In fact, some of the more recent pay transparency laws may apply to job postings for positions open to remote employees across the country, regardless of whether the company ends up hiring an employee in a state with an applicable pay transparency law. Finally, businesses with remote employees should be aware of the tax implications of remote work. Hiring even one remote employee in a new state could require a company to file a corporate tax return in that state or register in the state to withhold payroll taxes. Businesses with remote employees need to consider and stay abreast of the different state and local laws that apply to their workforce and take steps to ensure that they are in compliance with all applicable laws. Polsinelli attorneys are prepared to assist employers with navigating various state laws and adopting compliant practices and policies.

On March 20, 2023, 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 March 31, 2023, with contractors and subcontractors having until June 29, 2023, to submit the required certification. This is the second year of OFCCP’s annual certification requirement. As for 2022, contractors must again certify that they have developed and maintained Affirmative Action Compliance for each of their workplace establishments or functional/business units, as applicable.  This year, contractors and subcontractors must also disclose the start date of their AAP coverage period.  OFCCP is seeking to add weight to the certification requirement, as the agency’s announcement indicates 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 evaluations. The certification requirement applies to existing federal contractors. Entities that newly become federal contractors or subcontractors have 120 days to develop an AAP and must certify compliance through the Contractor Portal within 90 days. In 2022’s certification cycle, Polsinelli assisted many federal contractors and subcontractors in completing the Contractor Portal certification requirement and assisted 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 again available to provide practical assistance to contractors and subcontractors with the certification process.

On January 1, 2024, Illinois will join Maine and Nevada as the only U.S. states to mandate that covered employers provide their employees with earned paid leave that can be used for any reason. Generally, the Paid Leave for All Workers (PLFAW) Act entitles most employees who work in Illinois with up to 40 hours of paid leave for a 12-month period to use at their discretion. Employers will be prohibited from requiring employees to explain why they are taking leave and to provide supporting documentation. Employees may decide how much of their accrued paid leave to take, but an employer’s policy may require that employees take a minimum of two hours of paid leave per occurrence. Employers may develop a notification policy; however, the policy must be reasonable and subject to the following limitations to comply with the new law: If use of paid leave is foreseeable, employers may require employees to provide 7 calendar days' notice before the date the leave is to begin. If use of paid leave is not foreseeable, employers may require employees to provide notice of the leave as soon as is practicable after the employee is aware of the necessity of the leave. In addition, employers will be prohibited from requiring employees to search for or find a replacement worker to cover the hours during which the employee takes paid leave. The paid leave will accrue at the rate of one hour of paid leave for every 40 hours worked; however, employers may opt to frontload employees with 40 hours or a pro-rata share of paid leave at the start of the 12-month period. Exempt employees whose workweek is routinely 40 hours are deemed to work 40 hours per week for purposes of accruing paid leave. Paid time off under the PLFAW Act must be paid at the employee’s regular hourly rate of pay; however, special rules apply for employees who earn tips and/or commissions. Employees may begin using accrued paid leave 90 days after the start of employment or on April 1, 2024, whichever is later. Certain employers will be excluded, including, for example, those with certain student or short-term employees who are employed at an institution of higher education; employees of school or park districts; certain transportation and construction employees; and employees who are subject to a collective bargaining agreement that includes a clear and unambiguous waiver of the new law. Further, Chicago and Cook County employers that provide paid sick leave in accordance with the Chicago and Cook County ordinances on paid sick leave will not be required to provide an additional 40 hours of paid leave. And likewise, employers who already provide at least 40 hours of paid leave for any reason may not be required to provide any additional paid leave to employees if the leave provided aligns with the new statutory requirements. The PLFAW Act contains many nuances, such as when the 12-month period under this new law begins, employer benefits for frontloading the paid leave, notification, posting and recordkeeping requirements, and whether unused accrued paid leave must be paid upon termination. Employers with Illinois employees should begin preparations for complying with the PLFAW Act by contacting their Polsinelli attorney to review their paid leave policies.

On March 22, 2023, the General Counsel of the National Labor Relations Board (the “Board”) issued a memorandum purporting to provide guidance in response to inquiries about the Board’s February 2023 decision in McLaren Macomb (which we covered in a previous blog post). In that decision, the Board held that the merely offering of a severance agreement containing broadly drafted nondisparagement and confidentiality provisions was unlawful under the National Labor Relations Act (the “Act”). The decision raised more questions than answers, which employers hoped would be resolved by the much-anticipated guidance from the General Counsel. While the guidance does not provide any specific examples of clauses that are permissible or impermissible, the General Counsel did offer further guidance on her interpretation of the decision that employers should weigh in drafting and enforcing separation agreements. The key takeaways are as follows: RetroactiveApplication. The memo confirmed that the decision applies retroactively, including to agreements entered prior to February 21, 2023. Further, the memo stated that the General Counsel believes that, despite the Act’s six-month statute of limitations period, “maintaining and/or enforcing a previously-entered severance agreement with unlawful provisions” will constitute a continuing violation, such that an unfair labor practice (ULP) charge would not be time-barred if filed beyond that six-month window. Application to Supervisors. While the General Counsel correctly noted that supervisors are not protected by the National Labor Relations Act, she references at least one scenario under which she “believe[s]” that severance agreements proffered to statutory supervisors may fall within the decision. Specifically, the General Counsel indicated that a provision that prevents a former supervisor from participating in a Board proceeding could be unlawful. Potential Consequences of Overbroad Clauses. The General Counsel indicated that Regions should generally seek to void only unlawful provisions, rather than the entire agreement. Foreshadowing the Board’s Next Targets. In addition to confidentiality and nondisparagement clauses, the General Counsel dubbed a number of other common contractual provisions as “problematic” and potentially unlawful, including restrictive covenants, “broad liability releases and covenants not to sue that may go beyond the employer and/or may go beyond employment claims and matters as of the effective date of the agreement,” and requirements that an employee participate in future investigations or proceedings. Polsinelli will continue to monitor developments from the Board regarding severance agreement.  Contact your Polsinelli attorney for further information on the General Counsel’s memorandum and for assistance in navigating the potential impact of the decision.

Today is the deadline for covered employers to submit their 2022 workplace injury and illness data electronically on Form 300A to the U.S. Occupational Safety & Health Administration (“OSHA”). Covered employers must submit Form 300A electronically via OSHA’s online Injury Tracking Application. This reporting requirement covers: Employers with at least 250 employees; and Employers with 20 to 249 employees, if they are in a specific industry with historically high rates of occupational injuries and illnesses, such as manufacturing, utilities, wholesale trades, and general freight trucking. For those employers with at least 20 employees that must submit Form 300A based on their industry, OSHA has created a list that is organized by North American Industry Classification System (“NAICS”) codes, which is available by clicking here. Importantly, certain employers are partially exempt from having to report the data regardless of their number of employees, unless OSHA expressly instructs them to report. A list of those partially exempt industries is available by clicking here. All employers, including those partially exempted by reason of company size or industry classification, must report to OSHA any workplace incident that results in a fatality, in-patient hospitalization, amputation, or loss of an eye, pursuant to 29 CFR §1904.39. When submitting Form 300A to OSHA, employers must take care to use their correct employer identification number. Should a covered employer miss the March 2 reporting deadline, it may still submit Form 300A through December 31, 2023, but it may be subject to a monetary penalty. It is important for employers to keep in mind that this reporting requirement is in addition to other OSHA recordkeeping requirements that apply to most employers.  For guidance complying with OSHA’s recordkeeping requirements regarding workplace injuries, contact your Polsinelli attorney.

On March 1, 2023, the Office of Federal Contract Compliance Programs (OFCCP) published a Final Rule rescinding a prior rule the agency published late in the Trump administration that broadened the scope of Executive Order 11246’s religious exemption. As a result of the new rule, fewer federal contractors or subcontractors will likely qualify for the religious exemption, and the scope of conduct exempted from Executive Order 11246’s anti-discrimination requirement will likely be reduced. Since the Bush 43 administration, Executive Order 11246 and OFCCP’s implementing regulations have provided that the Equal Employment Opportunity clause required by Executive Order 11246 would not apply to “a Government contractor or subcontractor that is a religious corporation, association, educational institution, or society, with respect to the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities.” The 2020 rule provided definitions of the terms “religion,” “particular religion,” “religious corporation, association, educational institution, or society,” and “sincere” that arguably broadened the scope of the exemption beyond the corresponding exemption in Title VII of the Civil Rights Act. The 2020 rule also provided that OFCCP’s should be construed in favor of broad protection of religious exercise. With the 2020 rule’s definitions, and the broad construction provision now eliminated, the interpretation of the religious exemption reverts back to Title VII standards. This will likely make it more difficult for some organizations (particularly those that are for-profit) to claim the exemption. In addition, there will likely be less protection for actions taken based on religion-adjacent tenets, as opposed to membership in a particular sect. The practical effect of the 2020 rule was limited, and the effect of its rescission will likely also be limited. Religious contractors remain subject to Executive Order 11246’s other requirements, such as its affirmative action obligations. In addition, contractors are also covered by other federal, state, and local laws prohibiting discrimination on the basis of religion. Federal contractors who wish to consider religious factors in making personnel decisions should work carefully with legal counsel to evaluate their status as a religious entity under the exemption’s new scope and other applicable laws and ensure the religious nature of each position is well documented in order to lessen the risk of discrimination claims in making religion-influenced personnel decisions.

California employers received welcome reassurance last week that they are free to require employees enter into arbitration agreements as a condition of employment. This is the result of an opinion from the Ninth Circuit last week that affirmed a trial court decision that had invalidated California Assembly Bill 51 (AB 51) before it went into effect. Among other things, AB 51 sought to make it a crime for employers to require employees to agree to arbitrate claims as a condition of employment. This law, therefore, in essence, would have only allowed employers to offer voluntary arbitration agreements to employees and not allow them to make signing an arbitration agreement a condition of employment. It was well-settled that states cannot target the enforcement of arbitration agreements for special treatment. Rather, the U.S. Supreme Court has repeatedly held that arbitration agreements must be treated like any other agreement under state law. That is, if they were lawfully entered (i.e., without fraud, duress or coercion) and are for a lawful purpose, then they must be enforced. In applying this precedent to AB 51, the Ninth Circuit found that California’s attempt to target the creation rather than the enforcement of arbitration agreements was “too cute by half.” This was not the Ninth Circuit’s first bite at this apple, however. In September 2021, this same three-judge panel ruled that parts of AB 51 were NOT pre-empted by the FAA. That panel then withdrew its opinion in August 2022, shortly after the U.S. Supreme Court’s decision in Viking River Cruises v. Moriana (holding that the FAA pre-empts state laws limiting arbitration of individual PAGA claims). In issuing its new opinion, one of the judges changed his mind. This new decision is not necessarily the end of the saga for AB 51. The California Attorney General has several options. He could accept the ruling and stop trying to resurrect AB 51. He could go back to the trial court and fight to revive the law (these decisions have only been preliminary, in other words, the courts are saying that there is a “high likelihood” that the law is pre-empted). He could appeal this decision to the entire Ninth Circuit (therefore, instead of a three-judge panel hearing the matter, it would be 29 judges!). Or he could appeal to the Supreme Court. Employers should stay tuned for what happens next. What Does This Mean For Employers in California Right Now? Employers in California with existing arbitration programs that are mandatory or permit employees to opt out may continue such programs. Companies that have opted to avoid arbitration programs altogether or only provide voluntary agreements (i.e., not make signing a condition of employment) may now want to revaluate whether the time is right to implement an arbitration program. Polsinelli attorneys will continue to monitor and review emerging laws impacting arbitration programs for California employers. For individual guidance and advice, please do not hesitate to reach out to us directly.

On February 22, 2023, the U.S. Supreme Court ruled that high-earning professionals can only be overtime-exempt if they are paid on a “salary basis” as defined by the Fair Labor Standards Act (“FLSA”). In Helix Energy Solutions Group Inc. et al. v. Michael J. Hewitt, the Court affirmed the Fifth Circuit’s en banc decision that Helix Energy Solutions Group Inc. violated the FLSA by classifying an oil rig worker as exempt under the FLSA because it paid his $200,000+ annual compensation on a day-rate basis instead of a salary basis. The Court reasoned that the daily basis on which Hewitt was paid a “certain amount if he works one day in a week, twice as much for two days, three times as much for three, and so on” was not equivalent to being paid a salary even though he earned over $200,000 annually. The Court further explained that a "true salary" should involve a steady stream of pay workers may rely on week after week. In addition, the court opined that employers could theoretically meet the FLSA’s salary basis requirement by adding a guaranteed weekly amount to a worker’s day rate or by converting the worker's pay to a straight weekly salary for time s/he spends on the rig. Here, the employer did neither. The Court’s decision relied on a narrow interpretation of the FLSA’s text, ruling that an employee paid exclusively on a day-rate basis cannot meet the salary basis test, even if the day rate exceeds the required weekly salary amount. Justice Kagan summarized the majority’s strict interpretation by writing: “[m]ost simply put, an employee paid on an hourly basis is paid by the hour, an employee paid on a daily basis is paid by the day, and an employee paid on a weekly basis is paid by the week.” Ultimately, because Hewitt’s day-rate pay failed the salary basis test, the Court held he was not exempt from the FLSA’s overtime requirements. Contact your Polsinelli attorney for assistance in navigating this decision’s potential impact on your workforce.

The National Labor Relations Board (the “Board”) issued another precedent-shifting decision, this time taking aim at provisions commonly included in severance agreements. In McLaren McComb, an employer now violates Section 8(a)(1) of the National Labor Relations Act (“the Act”) when it merely “proffers” a severance agreement that conditions severance benefits on the waiver or restriction of an employee’s exercise of his or her rights afforded by the Act, including broadly written provisions prohibiting the employee from disparaging the employer or disclosing the terms of the agreement. In its decision, the Board reasoned that a broad non-disparagement provision in a severance agreement is unlawful because “public statements by employees about the workplace are central to the exercise of employee rights under the Act.” Section 7 of the Act provides protections for employees who communicate with a wide variety of third parties (including on social media) regarding terms and conditions of employment, an ongoing labor dispute, and even former supervisors and coworkers. Thus, the Board reasoned, that conditioning receipt of severance benefits on acceptance of a non-disparagement provision has a chilling tendency on workers’ ability to communicate to improve the terms and conditions of their employment and, thus, constitutes a violation of the Act. The Board similarly reasoned that provisions that prohibit disclosure of the agreement’s terms “to any third person” are unlawful because of their chilling effect on the exercise of an employee’s Section 7 rights. While the Act applies to all employers – even those without a unionized workforce –employers still have opportunities to protect themselves. For example, the decision does not apply to employees who are excluded from the Act’s coverage, including supervisors. The ruling also does not grant employees carte blanche to say whatever they want. Rather, the Board placed limitations on its ruling, stating that “employee critique of employer policy pursuant to the clear right under the Act to publicize labor disputes is subject only to the requirement that employees’ communications not be so disloyal, reckless, or maliciously untrue.” Contact your Polsinelli attorney for assistance in navigating the decision’s potential impact on your agreements.

In a recent 4-3 decision, the Illinois Supreme Court held that claims under sections 15(b) and 15(d) of Illinois’ Biometric Information Privacy Act (BIPA) accrue each time a private entity collects a biometric identifier (such as a fingerprint, voiceprint, or retinal scan) from a person and each time a private entity transmits such a biometric identifier to a third party. In Cothron v. White Castle System, Inc., 2023 IL 128004, the Court answered a certified question from the Seventh Circuit Court of Appeals, concluding that “the plain language of section 15(b) and 15(d) shows that a claim accrues under [BIPA] with every scan or transmission of biometric identifiers or biometric information without prior informed consent.” In practical terms, the decision significantly impacts employers and others who routinely collect biometric identifiers, as now each collection or disclosure of a biometric identifier without informed consent—as opposed to just the first such collection or disclosure—could result in statutory fines of $1,000 to $5,000, as well as having to pay the opposing side’s attorney fees and costs. BIPA Background The Illinois General Assembly unanimously adopted BIPA in 2008 in response to growing concern among the public about the collection and use of biometrics. 740 Ill. Comp. Stat. 14/5(d)-(e). Biometrics are “biologically unique” personal identifiers. Id. at § 14/5(c). They include “a retina or iris scan, fingerprint, voiceprint, or scan of hand or face geometry.” Id. at § 14/10. To address the public’s concern, the Act regulates how private entities may collect and handle biometric data and provides a private cause of action for any person “aggrieved by” a violation of the statute. Id. at § 14/20. A successful plaintiff can recover the greater of actual damages or statutory damages of $1,000 for each negligent violation and $5,000 for each reckless or willful violation. Id. The Cothron Opinion The Cothron case came to the Illinois Supreme Court on a certified question from the Seventh Circuit: “Do section 15(b) and 15(d) claims accrue each time a private entity scans a person’s biometric identifier and each time a private entity transmits such a scan to a third party, respectively, or only upon the first scan and first transmission?” Plaintiff, a longtime White Castle employee, alleged that not long after her employment began, White Castle introduced a system that “required employees to scan their fingerprints to access their pay stubs and computers.” Cothron, 2023 IL 128004, ¶ 4. A third-party vendor then verified each scan and authorized the employee’s access. Plaintiff alleged that White Castle violated BIPA by implementing the fingerprint scanning system without obtaining her consent. White Castle moved for judgment on the pleadings, arguing that plaintiff’s action was time-barred because her claim accrued in 2008, which is when White Castle first scanned her fingerprint after BIPA went into effect. Plaintiff argued that a new claim accrued each time she scanned her fingerprints and White Castle sent the data to its third-party authenticator, thereby rendering her action timely with respect to any unlawful scans and transmissions that occurred within the applicable limitations period. The District Court for the Northern District of Illinois agreed with plaintiff and denied White Castle’s motion. The District Court then certified its order for immediate interlocutory appeal to the Seventh Circuit. The Seventh Circuit found the parties’ competing interpretations of BIPA claim accrual reasonable, and so certified this important question of state law to the Illinois Supreme Court. In the Supreme Court, White Castle again argued that under the plain language of sections 15(b) and 15(d), claims can accrue only once—when the biometric data is initially collected or disclosed. White Castle also argued that because BIPA seeks to protect “a right to secrecy in and control over biometric data” and because one can only lose that secrecy and control once, only the initial collection or disclosure of biometric data is actionable. Id. at ¶¶ 33-34. The Supreme Court majority rejected these arguments, concluding that the “injury” for a section 15 claim is not based on an initial loss of secrecy of or control over biometric data; the “injury” is the statutory violation itself. Id. at ¶ 38. Accordingly, each statutory violation supports a separate claim. While observing the potential for large damages awards, the Court determined that was an issue best left to the legislature. The dissenting opinion strongly disagreed. Among other things, the dissenters believe that the statute is best interpreted to say that the injury occurs upon the first scan and later ones do not add to it. The dissent also discussed the possible absurd results of annihilative liability from the majority’s view, remarking that such consequences could not square with legislative intent. Id. at ¶¶ 61-63. Now that the Illinois Supreme Court has answered the certified question, the case goes back to the Seventh Circuit for further proceedings. Key Takeaways In a 4-3 decision, the Illinois Supreme Court ruled that a claim under Illinois’ Biometric Information Privacy Act (BIPA) may accrue each time a private entity collects or discloses biometric identifiers (such as fingerprints and retina scans) without informed consent, as opposed to accruing only with the first collection or disclosure. Because a claim may accrue with each collection or disclosure of biometric identifiers, motions to dismiss on statute of limitations grounds may be more limited. As the majority and dissenting opinions reflect, damages of $1,000 or $5,000 may now be assessed for each BIPA violation, not just the first instance of collecting or disclosing a biometric identifier without informed consent. For example, if an employer requires an employee to scan his or her fingerprint every time they need to access the employer’s computer systems and the employee has not given informed consent, each such scan could result in damages of either $1,000 or $5,000. In other words, damages awards may add up quickly and create severe consequences. Businesses that collect biometric identifiers or information from their employees or customers should seek legal advice regarding their compliance with all aspects of BIPA.

This month, businesses in Missouri will be permitted to sell recreational marijuana products. The permitted sales are one of the many changes that came about because of Constitutional Amendment 3, which legalized the recreational use of marijuana in Missouri. Notably, employers may still prohibit employees from working while under the influence of marijuana and may discipline, discharge, refuse to hire or otherwise take adverse employment action against an individual for their lawful use of recreational marijuana, even when such use occurs during non-work hours and off the employer’s premises. With the increased availability of recreational marijuana products and the inevitable confusion some employees may have as to what is and is not permitted under Constitutional Amendment 3, it is a good time for employers to revisit their policies and messaging concerning drug and alcohol use and drug testing. Employers should be mindful of the dichotomy between recreational marijuana use and medical marijuana use. For questions or assistance in adjusting your drug and alcohol use and/or drug testing policies, please contact your Polsinelli attorney.

Non-compete agreements have had a rough 2023, most recently with President Biden specifically calling them out on Tuesday evening during his State of the Union and emphasizing his Administration’s opposition to them.  This, of course, is on the heels of the FTC’s recently announced proposed rule banning most non-compete agreements, as we recently reported. Congress now is also getting in on the action to ban non-compete agreements. Last week, a bi-partisan group of legislators reintroduced the Workforce Mobility Act (the “Act”) which seeks to ban non-compete agreements with limited exceptions. The Act is similar to the FTC’s proposed rule but does have key differences. The Act, which refers to non-compete agreements as “blunt instruments that crudely protect employer’s interests”, defines a non-compete agreement as: an agreement, entered into after the date of enactment of this Act between a person and an individual performing work for the person that restricts such individual, after the working relationship between the person and individual terminates, from performing— (A) any work for another person for a specified period of time; (B) any work in a specified geographical area; or (C) any work for another person that is similar to such individual’s work for the person that is a party to such agreement. Any agreements that meet the above definition will have “no force or effect” except for specific instances involving (1) the sale of goodwill or ownership interests in a business, including certain severance agreements for Senior Executives, or (2) partnership dissolutions or disassociations. Otherwise, any non-compete agreements will be unenforceable—and even expose employers to potential liability for attempting to enter into any such agreements. Other key takeaways from the proposed Act include: Under its language, the Act should only apply prospectively. As such, non-compete agreements already entered into could survive potential enactment of the Act. If the Act becomes law and the FTC’s proposed rule is implemented, there will be a conflict concerning the enforceability of existing non-competes – under the FTC’s proposed rule, existing non-competes would need to be rescinded within 180 days after publication of the final rule. An additional conflict between the Act and the FTC’s proposed rule concerns enforceability of non-competes for Senior Executives and high earners. While the Act would exempt Senior Executives who sign particular severance agreements, the FTC’s proposed rule does not contain that exemption. The Act would not ban non-solicitation agreements and even promotes the use of non-disclosure agreements covering trade secrets as reasonable alternatives to protect competitive information. The Act would require the Federal Trade Commission (“FTC”) and Department of Labor (“DOL”) to assist with enforcement of the Act which would be tricky if the FTC’s proposed rule is implemented, as it differs in ways from the proposed Act. The Act would allow for a private right of action for “an individual who is aggrieved by a violation.” If successful, such individual would be entitled to actual damages and reasonable costs and attorney fees. The reintroduction of the Workforce Mobility Act, and the national trend against non-compete agreements reinforces the need for employers to safeguard their competitive information with other measures. Just last month we provided guidance on best practices that can be implemented by employers to ensure their information is protected. We will continue to follow developments surrounding the proposed legislation and are prepared to assist employers with questions surrounding immediate actions that can be taken to respond to possible bans on non-competes.

The Supreme Court of Illinois recently resolved an outstanding and hotly debated question – claims brought under the Illinois Biometric Information and Privacy Act (BIPA) are subject to a five-year statute of limitations. The Court, in Tims v. Black Horse Carriers, Inc., determined that Illinois’ “catch-all” five-year limitations period applied, as opposed to the one-year statute of limitations applied to claims for libel, slander and the “publication of matters violating the right to privacy.” Prior to the decision, the trial court in Tims determined the five-year statute of limitations applied. The intermediate appellate court overturned, holding that two separate limitations periods applied BIPA claims: five years for claims under section 15(a), (b) and (e), and one year for claims under section 15(c) and (d). The Illinois Supreme Court then clarified the five-year statute of limitations would apply to all BIPA claims. It reasoned that the law favored having a uniform limitations period, the legislative intent and policy of BIPA was better served through a longer limitations period, and statutes that do not include a specific statute of limitations are subject to the five-year statute of limitations. While this decision brings clarity, it also solidifies that a longer limitations period will apply to all BIPA claims. Employers should audit their technologies for use of biometrics and also review their relevant privacy policies and procedures to ensure compliance with all of BIPA provisions, particularly because these claims are often subject to class action litigation.  The experienced employment and privacy attorneys at Polsinelli can help you navigate this review.

As we recently reported, on January 5, 2023, the Federal Trade Commission proposed a rule banning the use of non-compete covenants in nearly all circumstances. The FTC is seeking comments on the proposed rule until March 20, 2023. Even if the proposed rule or a variation of it is ultimately implemented, it will likely face a multitude of legal challenges. To learn more about this proposed rule, please see our recent webinar recording here. Note: Guests will have to register, then can click on the View Content link. A new browser window will pop up with the recording. Nevertheless, in the immediate aftermath of this proposed rule, employers are asking, “what now?” In recent years, we forewarned of the impending threat to the use of non-compete covenants and emphasized the need for employers to protect their confidential information through other means. Regardless of the outcome of the proposed rule, the FTC’s action is a reminder that non-compete covenants are under ever increasing scrutiny and criticism, and employers must consider alternative ways to protect their confidential and trade secret information. Over a year and a half ago, we encouraged employers “to revisit the protections they have in place to protect trade secret and confidential information and their investments in employee training.” Especially in light of the FTC’s announcement, we reiterate that employers would be wise to revisit those protections and engage in a thorough three-step process to evaluate, identify and protect their confidential and competitive information. The steps include: 1. Conducting a comprehensive review and identification of the company’s competitive, confidential and trade secret information; 2. Identifying who has access to that information; and 3. Evaluating how to best protect that information (potentially without the use of non-competes). While this auditing process takes time and energy and is not a one size fits all solution, it is an investment in the protection of competitive information that will pay dividends if the need to protect that information through litigation ever arises. Generally, some of the safeguards the employer can use to protect this information include: Ensuring access to shared files is on a need-to-access basis only; Limiting access to client information to only those clients whom a particular employee services; Limiting access to research and development information to only those individuals in research and development who are working on the particular project; Republishing policies forbidding the use of personal email accounts for business purposes; Implementing safeguards for the electronic mailing and sharing of confidential documents; Having employees acknowledge/reaffirm their understanding that company competitive information is owned by the company and only certain people are allowed access; Utilizing non-solicitation covenants in appropriate circumstances. Identifying and ensuring adequate protection for competitive information is paramount, given the ongoing threats to the viability of non-compete agreements – both at the state and federal levels. Polsinelli attorneys can assist employers with the evaluation, identification and protection process described above by following our “TS 360” program. We also will continue to follow developments surrounding the proposed rule and are prepared to assist employers with questions surrounding immediate actions that can be taken to respond to the possible ban on non-competes.

Historically, a pregnant woman with a “normal” pregnancy was not considered “disabled” under the Americans with Disabilities Act (“ADA”), and, therefore, there was no requirement for employers to provide her with a reasonable accommodation during pregnancy. Effective June 29, 2023, that rule will change. On December 29, 2022, President Biden signed into law two laws protecting pregnant and nursing mothers. The two laws are the Pregnant Workers Fairness Act (the “PWFA”) and the Providing Urgent Maternal Protections (“PUMP”) for Nursing Mothers Act. Each of these Acts provides new, additional protections to pregnant women. The PWFA provides that covered employers must provide “reasonable accommodations” to allow pregnant workers to perform the essential functions of their positions. PWFA incorporates various definitions from the ADA and, as a result of that, employers must engage in the interactive process with pregnant employees who request an accommodation in order to attempt, in good faith, to reach such an accommodation which may include temporarily adjusting the non-essential functions of the job and/or leave. The PUMP Act, which went into effect immediately, amends the Fair Labor Standards Act and requires certain employers to provide reasonable break time for all employees, including salaried employees, to express breast milk as needed and to provide a clean and private space for nursing mothers to express milk separate and apart from restrooms. Although some state and local laws already provided employees protections and rights similar to those under the PWFA and the PUMP Act, this is the first time these protections and rights apply under federal law. Employers should ensure that their policies and procedures comply with the PWFA and PUMP Act. If you have any questions about the requirements under these laws, contact your Polsinelli attorney.

To ring in the 2023 new year, the Federal Trade Commission (“FTC”) has taken multiple actions targeting the use of non-compete agreements, all of which are consistent with President Biden’s July 2021 Executive Order on competition in the labor market. The FTC has proposed both a rule banning the use of non-compete agreements with employees and independent contractors, and it also took legal action under its existing authority against three companies for their use of non-competes. The FTC’s proposed rule would ban employers from entering into, maintaining, or enforcing non-compete clauses with their workers, including employees, independent contractors and unpaid workers. The FTC’s notice does not mince words about its effect, as the agency states its intention to “categorically ban employers from using non-compete clauses.” The rule defines a non-compete clause as “a contractual term between an employer and a worker that prevents the worker from seeking or accepting employment with a person, or operating a business, after the conclusion of the worker’s employment with the employer.” Though the rule does not target non-solicitation or non-disclosure clauses, it proposes a functional test to determine whether a clause meets the definition, meaning that a non-disclosure or non-solicitation covenant that effectively bars an employee from seeking employment in their chosen industry could be considered a non-compete. Non-compete clauses that require the employee to pay liquidated damages to the employer in the event of competition are also prohibited. The rule would apply retroactively and require employers to rescind any existing non-compete contracts within 180 days after publication of the final rule. Employers would also be required to provide individualized notice to the employees within 45 days of rescinding the non-compete clause. Importantly, the rule would not apply in the context of a sale of a business or ownership interest of at least 25%. The FTC also brought an enforcement action against three different companies to invalidate their respective worker non-compete agreements pursuant to its broad authority under Section 5 of the FTC Act. In the respective legal actions, the FTC ordered the companies to cease enforcing their agreements and to notify all employees they were no longer bound by the agreements. This comes on the heels of the FTC’s major policy announcement that the agency would vigorously enforce Section 5’s prohibition on unfair methods of competition and that this enforcement effort would cover areas that may otherwise not be within the purview of other antitrust laws, such as the Sherman and Clayton Acts. If ultimately published as a final rule, employers can anticipate the non-compete ban will face immediate legal challenge on numerous grounds, as noted in FTC Commissioner Wilson’s lone dissent to the proposed rule. Given the importance of non-compete agreements to many employers’ efforts to protect their competitive information and relationships, employers should carefully monitor these developments. Now is the time to re-evaluate strategies for protecting competitive information by focusing on other avenues available by contract or under law that do not rely on non-competes. This includes careful examination and identification of protectable information (trade secrets), the measures in place to keep such information secret, and employees’ access to such information. Employers can contact their Polsinelli attorneys to assist with drafting comments to the proposed rule and guidance on auditing and re-tooling these strategies in the wake of these FTC developments.

One year during the holidays, probably when I was about six or seven, I was gifted a Magic 8 Ball.  Hours were spent asking what I believed to be the most salient questions of the day, such as “Will the White Sox ever win the World Series?” or “Am I going to be an astronaut when I grow up?” or “Does this girl like me?”  Fast forward forty-plus years to my non-astronaut job, and the question I get most often from clients this time of year is, “Should Employers have any hope for impartiality and good decisions from the National Labor Relations Board (“NLRB” or the “Board”) in 2023?”  Posed to the old Magic 8 Ball, the answer is “Don’t count on it.” If the past week is prologue, 2023 is shaping up to be more 2022 than 2020.  Consider the following pro-Union, pro-employee decisions issued by the NLRB: Redefining “make whole” awards to include damages above and beyond backpay, for example, reimbursement for medical/transportation/legal expenses, increases in health insurance costs, in addition to other out-of-pocket expenses; Reversing precedent and permitting “micro-units” once again while shifting the burden to Employers to demonstrate the inappropriateness of a petitioned-for units under the “overwhelming community of interest standard”; Rejecting a request to undo the disclaimers, an Employer must provide to workers when defending unfair labor practice charges; and Limiting property owners’ rights to oust non-employee protesters from its property. All of these decisions were split, with the three Board Members appointed by a Democratic president constituting the majority. This week, the Magic 8 Ball provided the answer “Signs point to yes” when asked whether captive audience meetings (e.g., mandatory meetings where employers can relay facts, opinions, and experiences to employees to try and lawfully persuade them to vote against union representation) will be eliminated next year.  The NLRB General Counsel gave this present to unions/employees when she argued in a post-hearing brief that employer captive audience meetings are inherently coercive and should be outlawed.  It is expected that the Board will agree, effectively stripping one of an employer’s most effective tools to educate employees as to the risks of unionization. The Magic 8 Ball was kind when it answered, “Better not tell you now,” about whether the General Counsel’s Notice of Proposed Rulemaking will ruin the holidays for employers.  Any day now, we expect a reversal of the joint employer test, which would restore the Obama Board’s holding that two separate entities will be found joint employers, even if the secondary employer possesses only indirect control, which never is exercised.  This is a complete 180 from the NLRB’s current position on joint employers, where the secondary employer must exert substantial direct and immediate control over the primary employer’s employees. The General Counsel also is expected to formalize her more recent Notice of Proposed Rulemaking, which will bring back or modify: “Blocking charges” when unfair labor practices (“ULPs”) are committed during representation elections.  Instead of going ahead with elections and impounding ballots, the Region will indefinitely postpone elections, potentially for years, until ULPs are investigated and ultimately adjudicated. The voluntary recognition bar.  Procedural safeguards (i.e., notifying the NLRB of voluntary recognition and allowing a 45-day window for a challenge) would be swept away in favor of a complete and immediate bar that would preclude employees from decertifying unions they did not elect and/or rival unions to file an election petition. Construction industry voluntary recognition rules where employers/employees/rival unions will be limited to six months to challenge voluntary recognition under a pre-hire contract.  Likewise, the Board will honor collective bargaining agreements that seek to convert Section 8(f) contracts (which can be terminated with proper notice upon expiration) to 9(a) agreements (which would need to be decertified by employees). With such favorable policies coming from the Board, the Magic 8 Ball has suggested that “It is decidedly so” as to whether we should continue to expect an increase in union organizing and strikes.  Representation petitions increased by 53% this calendar year, and high-profile organizing and disputes at Starbucks, Amazon and Apple littered the news.  The New York Times’ employees went on strike, and Twitter janitors also walked off the job.  With the Board making it easier than ever to unionize, employers will face heightened challenges to remaining non-Union. While the prognosis does not look great, there is one case that may receive a favorable result for employers.  The United States Supreme Court granted certiorari in a case called Glacier Northwest which, if it finds for the company, will allow employers to pursue litigation against unions that intentionally engage in property damage.  There, a union struck a concrete contractor when it was about to make a pour, effectively destroying the concrete and costing the employer several thousands of dollars.  The employer sued under an intentional tort theory, but on appeal, the Court of Appeals held that when an activity (such as the picketing in this case) is arguably subject to Section 7 or 8 of the Labor Act, state and federal courts must defer to the Board.  As the Board has found this activity protected (and consequently, the employer unable to recoup damages), a favorable decision from the Supreme Court would eliminate a tool unions have used to exert maximum (yet lawful) economic damage in labor disputes. The Magic 8 Ball says it is “Very doubtful” that “help” will arrive for employers from the Board before the next presidential election, at its earliest.  For those of our clients that would like to remain non-union, education and training of managers and supervisors as to the signs of union organizing is strongly recommended.  Please contact your Polsinelli attorney with any questions.  And try to enjoy the holidays!

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.

In November 2020, Colorado voters approved a ballot initiative for a state-run paid family leave benefits program. Under Colorado’s Family and Medical Leave Insurance (“FAMLI”) program, employees and most employers will make contributions into the FAMLI fund, and employees may take 12 weeks of paid leave per year for certain family and medical reasons. Employees who suffer serious health conditions caused by pregnancy or childbirth complications may take up to 4 more weeks of paid leave per year for a total of 16 weeks. Deductions from employee wages for contributions to the FAMLI program begin on January 1, 2023, and employees may begin taking FAMLI leave on January 1, 2024. Although employees cannot take leave until 2024, employers must notify employees of FAMLI benefits by January 1, 2023. Specifically, employers must post a poster available on the Colorado FAMLI Program website by January 1, 2023. The poster must be hung in a prominent and visible workplace location. For employers with remote employees, the poster should be shared electronically with employees. Employers can also prepare for the FAMLI requirements by registering with the My FAMLI+ Employer online system through the Colorado FAMLI Program website. The first premium payments from employers are due April 30, 2023. If you have questions about the FAMLI program, contact your Polsinelli attorney, and continue following the Polsinelli at Work blog in 2023 for more information about the FAMLI program.

On November 21, 2022, OFCCP proposed a new Scheduling Letter and Itemized Listing that will greatly increase the amount and specificity of documents and information that federal government contractors must provide in compliance evaluations.  The Scheduling Letter is the notice that OFCCP issues to contractors and subcontractors selected for the agency’s annual compliance evaluations.  These changes highlight the agency’s increased focus on enforcement, and the need for contractors to carefully document their performance of affirmative action plan requirements. OFCCP’s new proposed Scheduling Letter seeks to add numerous additional document requirements beyond those the agency currently requests in its audits.  These new requirements fall into several categories: Focus on Action-Oriented Programs and Outreach Activities:   OFCCP’s regulations have long required that contractors implement action-oriented programs to seek to increase the representation of minority, female, individuals with disabilities, and military veteran employees, and engage in outreach activities to effectively recruit members of those groups.  The proposed Scheduling Letter increases the level of specificity of the information OFCCP will be seeking from contractors about these efforts, as OFCCP is proposing to require contractors to provide documentation of outreach and recruitment activities, as well as the criteria that the contractor uses to evaluate the effectiveness of the activities and implement alternative efforts in the event that existing outreach is deemed ineffective. Scrutiny of Artificial Intelligence in Hiring Decisions:   The proposed Scheduling Letter seeks to add a new document request for documentation of the contractor’s policies and practices regarding the use of artificial intelligence, algorithms, automated systems, and other technology-based procedures in recruiting, screening and hiring.  With recent legislation in New York City and elsewhere, the use of AI in personnel decision-making is becoming an area of interest to legislators, and OFCCP appears to be joining that trend. More Detailed Data on Personnel Transactions:   OFCCP is also proposing to require contractors to provide additional data about personnel transactions over the prior affirmative action plan year.  For promotions, a stated area of focus for the agency in recent years, OFCCP proposes to require contractors to state whether each promotion was competitive or non-competitive, provide documentation about policies and practices concerning promotions, and also identify the supervisors involved in the promotion and the effect of the promotion on compensation.  For terminations, employers under OFCCP’s proposal would be required to provide information about the reason for each employee termination (i.e., retirement, resignation, conduct) over the previous plan year. Additional Data on Employee Compensation:    OFCCP similarly is proposing to require more contractors to submit more detailed data about employee compensation.  First, OFCCP has expanded the scope of the compensation data production by requiring two years of compensation data, up from one under the current Scheduling Letter, and also requiring information about the compensation of individuals provided by staffing agencies.  Second, whereas under the current Scheduling Letter, contractors may submit information about factors used to determine compensation (such as education, experience, etc.) and compensation policies, this submission would become a requirement under OFCCP’s new proposal. Providing Information About Compensation Analyses:   On the heels of OFCCP’s directive earlier in 2022 requiring federal contractors to perform pay equity audits (later rephrased by the agency as a “compensation analysis”), OFCCP is proposing to require contractors to provide certain information about their performance of the analysis.  Notably, OFCCP’s directive on compensation analyses stated that such information would be required only where OFCCP’s audit revealed pay disparities, but OFCCP is now proposing to require all contractors selected for audit to provide the information up-front in response to the Scheduling Letter.  Under the proposal, contractors must provide documentation showing that they satisfied the obligation to evaluate their compensation systems, including documentation demonstrating when the analysis was completed, the number of employees included or excluded in the analysis, what forms of compensation were reviewed, confirming that compensation was analyzed by race, gender, and ethnicity, and identifying the method of analysis used. Production of Policies and Arbitration Agreements:   Finally, OFCCP is proposing to require contractors to produce equal opportunity, harassment, and similar employment policies.  Interestingly, the agency is proposing to require employers to also provide employment agreements containing arbitration clauses. OFCCP’s current Scheduling Letter does not expire until April 30, 2023, and the new letter, if approved, would take effect after that point.  Contractors and others may submit written comments as part of the approval process through January 20, 2023.  Although it remains to be seen whether the proposed Scheduling Letter will ultimately be approved in its proposed form, OFCCP’s proposals highlight the need for federal contractors and subcontractors to take the outreach and evaluation (including compensation analysis) requirements in OFCCP’s affirmative action plan regulations seriously, as OFCCP is signaling that it intends to take a hard look at contractors’ efforts in meeting these obligations.

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.

On November 1, 2022, job postings for positions in New York City – including remote positions that can be performed in New York City – must include a salary range listing the minimum and maximum salary or hourly wage amounts the employer believes it will offer for the advertised job.  New York City’s law follows a similar measure in Colorado, with additional pay transparency requirements in California, Washington state, and potentially New York State slated to follow. The New York City law is relatively typical of the new wave of pay transparency laws that are being considered by state legislatures nationwide.  It applies to all employers with at least four (4) employees or independent contractors (even if properly classified as such), and at least one (1) employee working in New York City.  Such employers must include in any job advertisement or listing a description of the lowest and highest salary or hourly wage that the employer believes in good faith as of the time of the posting that it will pay for the position.  Unlike Colorado’s pay transparency law, employers need not include amounts payable as benefits, bonuses, commissions, or other compensation – only hourly wages or salary.  The law applies not only to external job postings but also to internal promotion or transfer opportunities.  The law applies to any job opportunity that can or will be performed, in whole or part, in New York City, including remotely from the employee’s home.  The law provides for steep maximum penalties of up to $250,000 per violation, though employers can avoid penalties for a first-time violation by correcting the job posting within 30 days of receiving notice of the violation. Employers face several challenges from pay transparency laws like New York City’s.  For example, some employers regard their pay data as proprietary information, which now must be disclosed publicly in job listings.  That said, many employers also find benefit in setting applicants’ pay expectations prior to investing time in interviewing applicants who would not be willing to accept an eventual offer.  Likewise, pay transparency laws can bring pay disparities among existing employees to light.  For example, if an employer discloses that a position has a pay range of $100,000 - $250,000, an employee on the lower end of the scale may assume that they are paid less than others due to their sex or other protected characteristic.  The employer then has the burden to justify the differential under many existing pay discrimination laws. With pay transparency becoming a nationwide trend, employers across the country – particularly those with employees in the affected states or who offer remote positions – should take several steps to identify and address pay equity issues that may be brought to light by pay transparency laws: Evaluate Employee Compensation for Potential Disparities:  An ounce of prevention is worth a pound of cure, and if employers review and address pay disparities before disclosing a pay range, the risk of disclosure can be greatly reduced. Create, Bolster, and Publish Compensation Policies:   Private sector compensation is often based on numerous factors about the employee’s position and background, and employer transparency about these factors both bolsters arguments that differences are justified by legitimate concerns and may educate employees on why they are paid differently, so they do not jump to the conclusion of discrimination. Consider Whether Positions Should Be Fully Remote:   Pay transparency laws offer few options for employers that do not wish to publish pay ranges, but in some cases, the laws may not apply if a position is tied to a specific geographical area based on legitimate, business justifications. From their start in Colorado and New York City, pay transparency laws will likely proliferate to numerous other jurisdictions, including some of the country’s major commercial centers.  The best way for employers to mitigate the risks created by the new pay transparency laws is to tackle pay equity issues within their workforces.  For questions regarding the new pay transparency laws, contact your Polsinelli attorney.

The Equal Opportunity Clause in federal contracts requires employers to post a notice for employees regarding nondiscrimination. The Officer of Federal Contractor Compliance Programs (OFCCP) adopted a new updated poster. In order to maintain compliance, all covered federal contractors should update their posters as soon as possible. In recent years, OFCCP designated the EEO is the Law and its Supplement as the required poster.  Earlier this month the Equal Employment Opportunity Commission (the “EEOC”)  released an updated workplace nondiscrimination notice. The new notice is titled “Know Your Rights: Workplace Discrimination is Illegal” and is available on the EEOC website and OFCCP website. Per the Equal Opportunity Clause, the notice must be placed in “conspicuous places, available to employees and applicants”. With many applicants applying digitally and more employees working remotely, federal contractor employers should also consider sharing the notice digitally to share the notice with applicants and remote or hybrid workers. While a deadline has not been set for employers to post the updated notice, employers, especially those with a pending or upcoming OFCCP audit, should post the updated notice soon to ensure that they satisfy the posting requirements. Additionally, employers that use a subscription service for required workplace notices should contact their service provider to ensure that they receive the updated version. If you have questions about required notices, contact your Polsinelli attorney.

Federal law requires employers to post a notice for employees regarding federal anti-discrimination laws. The Equal Employment Opportunity Commission (the “EEOC”) provides the notice, and the EEOC recently released an updated workplace discrimination notice. The notice is titled “Know Your Rights: Workplace Discrimination is Illegal” and is available now on the EEOC website. The updated notice is more “reader-friendly” than the previous version because it uses simpler language and is more visually appealing. The updated notice also provides employees information not previously provided in the previous version. For example, the updated notice notes that harassment is a prohibited form of discrimination; clarifies that sex discrimination includes discrimination based on pregnancy and related conditions, sexual orientation, and gender identity; and provides information about equal pay discrimination for federal contractors. It also includes a QR code that links to the EEOC website about how to file a Charge of Employment Discrimination. Per the EEOC, the notice must be placed in “a conspicuous location in the workplace where notices to applicants and employees are customarily posted.” Employers should also consider sharing the notice digitally to inform remote or hybrid workers of their rights. The EEOC has not set a deadline for employers to post the updated notice, but employers should post the updated notice soon to ensure that they satisfy the posting requirements. Additionally, employers that use a subscription service for required workplace notices should contact their service provider to ensure that they receive the updated version. If you have questions about this notice or other required notices, contact your Polsinelli attorney.

The first jury verdict to address violations under Illinois’ Biometric Information Privacy Act (BIPA) resulted in a $228 million judgment against BNSF Railway. The case involved a class of more than 40,000 truck drivers who had their fingerprints scanned for identity verification purposes – without the required notice and consent – when they visited BNSF railyards to pick up and drop off loads. The jury determined the statute was violated 46,500 times, an amount equal to the number of drivers who had their fingerprints scanned, and that the violations were reckless or intentional, a finding that carries a price tag of $5,000 per violation. The case presents two issues that have yet to be resolved by courts.  The first issue is whether damages should be calculated per person or each time biometric information is scanned. This issue is currently before the Illinois Supreme Court, but no ruling has been issued. The second issue is whether a company who contracts with a third-party vendor who in turn collects biometrics can be held liable for any BIPA violations. This issue is likely to be decided by the Seventh Circuit Court of Appeals if and when BNSF appeals the verdict. Regardless of the ultimate answers to these questions, this case demonstrates the importance of auditing current privacy practices to ensure compliance with applicable law, as well as ensuring third-party contracts have clear provisions regarding compliance and indemnification. This is particularly true as more states enact BIPA-like statutes. If you have questions on your privacy practices, contact your Polsinelli attorney.

As we previously reported, on August 26, 2022, the U.S. Court of Appeals for the Eleventh Circuit issued a decision narrowing the nationwide injunction against the COVID-19 vaccination mandate for federal contractor employees set forth in President Biden’s Executive Order 14042. Although the Eleventh Circuit found the vaccination mandate to be unlawful, it found the nationwide injunction (applicable to all federal contractors across the country) to be overbroad, and reduced to scope of the injunction to apply only to the States and parties that challenged the mandate in the case.  This allows the vaccination mandate to go into effect for federal contractors in the majority of the country.  On October 14, 2022, the Safer Federal Workforce Task Force issued guidance about its intentions and course of action following the Eleventh Circuit’s decision. The new Task Force guidance strongly implies that the federal government will resume enforcing Executive Order 14042’s vaccine mandate.  Before the government does so, however, the Task Force outlines a three-step process that will occur: First, the Office of Management and Budget will notify federal agencies regarding their obligations to comply with the remaining injunctions against Executive Order 14042, which continue in effect. Second, the Task Force will update its guidance regarding COVID-19 safety protocols for federal contractor and sub-contractor workplaces.  Due to the injunctions, the Task Force has not updated its contractor guidance since November 2021, despite great changes in the state of the COVID-19 pandemic since that time.  The October 14, 2022 notice does not provide any hints as to what types of updates the Task Force may make. Third, and finally, OMB will provide additional guidance to federal agencies regarding the resumption of enforcement of contract clauses implementing Executive Order 14042’s requirements.  Prior to this notice, the federal government will continue to not enforce any of Executive Order 14042’s requirements. The timeframes under which these steps will occur are not defined by the Task Force’s notice. As noted above, the Eleventh Circuit’s decision did not affect other pending injunctions prohibiting enforcement of the vaccination mandate against contractors and subcontractors in the States of Missouri, Nebraska, Alaska, Arkansas, Iowa, Montana, New Hampshire, North Dakota, South Dakota, Wyoming, Kentucky, Tennessee, Ohio, and Florida.  In addition, members of the Associated Builders and Contractors also retain the protection of the former nationwide injunction. All other contractors not covered by pending injunctions will need to resume their efforts to comply with Executive Order 14042.  That said, it is unknown at this time how the Task Force will modify its guidance.  For example, will the Task Force now require that covered contractor employees obtain booster shots, in addition to the initial vaccination.  Although the exact contours of the modified guidance are important, there are steps federal contractors can take to begin preparing now, to avoid being caught under potentially short deadlines as the three-step process unfolds over an unknown timeline.

As we previously reported, on August 26, 2022, the U.S. Court of Appeals for the Eleventh Circuit issued a decision narrowing the nationwide injunction against the COVID-19 vaccination mandate for federal contractor employees set forth in President Biden’s Executive Order 14042. Although the Eleventh Circuit found the vaccination mandate to be unlawful, it found the nationwide injunction (applicable to all federal contractors across the country) to be overbroad and reduced the scope of the injunction to apply only to the States and parties that challenged the mandate in the case. This allows the vaccination mandate to go into effect for federal contractors in the majority of the country. On October 14, 2022, the Safer Federal Workforce Task Force issued guidance about its intentions and course of action following the Eleventh Circuit’s decision. The new Task Force guidance strongly implies that the federal government will resume enforcing Executive Order 14042’s vaccine mandate. Before the government does so, however, the Task Force outlines a three-step process that will occur: First, the Office of Management and Budget will notify federal agencies regarding their obligations to comply with the remaining injunctions against Executive Order 14042, which continue in effect. Second, the Task Force will update its guidance regarding COVID-19 safety protocols for federal contractor and sub-contractor workplaces. Due to the injunctions, the Task Force has not updated its contractor guidance since November 2021, despite great changes in the state of the COVID-19 pandemic since that time. The October 14, 2022, notice does not provide any hints as to what types of updates the Task Force may make. Third, and finally, OMB will provide additional guidance to federal agencies regarding the resumption of enforcement of contract clauses implementing Executive Order 14042’s requirements. Prior to this notice, the federal government will continue not to enforce any of Executive Order 14042’s requirements. The timeframes under which these steps will occur are not defined by the Task Force’s notice. As noted above, the Eleventh Circuit’s decision did not affect other pending injunctions prohibiting enforcement of the vaccination mandate against contractors and subcontractors in the States of Missouri, Nebraska, Alaska, Arkansas, Iowa, Montana, New Hampshire, North Dakota, South Dakota, Wyoming, Kentucky, Tennessee, Ohio, and Florida. In addition, members of the Associated Builders and Contractors also retain the protection of the former nationwide injunction. All other contractors not covered by pending injunctions will need to resume their efforts to comply with Executive Order 14042. That said, it is unknown at this time how the Task Force will modify its guidance. For example, will the Task Force now require that covered contractor employees obtain booster shots in addition to the initial vaccination. Although the exact contours of the modified guidance are important, there are steps federal contractors can take to begin preparing now, to avoid being caught under potentially short deadlines as the three-step process unfolds over an unknown timeline.

On October 12, 2022, the U.S. Supreme Court heard oral arguments in a case that considers whether a supervisor who earned over $200,000 annually may still be eligible for overtime pay under the Fair Labor Standards Act (FLSA). The case centers on the interpretation of the regulatory scheme surrounding highly compensated employees and their exemption status under the FLSA. The Plaintiff in the case was a worker in a supervisory role on an oil rig and his compensation was based on a daily rate. The plaintiff argued that his daily rate of pay did not constitute a salary.  Prior to the Supreme Court, the Fifth Circuit en banc agreed with the Plaintiff and found that he was not paid a salary such that he was not an exempt employee under the FLSA. This case has implications for how employers will pay workers, and whether there is potential exposure for overtime claims, even for highly compensated employees. Polsinelli will continue to monitor and report on this case.

On September 27, 2022, Governor Gavin Newsom approved SB 1162 to significantly expand the pay reporting and pay scale requirements for California employers.  These requirements are effective January 1, 2023. Pay Reporting Requirements SB 1162 amends California Government Code § 1299 and requires private employers with 100 or more employees to submit a pay data report (the “Report”) to the Civil Rights Department (the “Department”) by the second Wednesday of May each year beginning in 2023. The Report must include the following information from the prior calendar year: The number of employees by race, ethnicity and sex in the following job categories: Executive/senior-level officials and managers First/mid-level officials and managers Professionals Technicians Sales workers Administrative support workers Craft workers Operatives Laborers and helpers Service workers The mean and median hourly rate for each combination of race, ethnicity, and sex within each of the above-listed job categories; The number of employees by race, ethnicity, and sex whose annual earnings fall within each pay band used by the U.S. Bureau of Labor Statistics in the Occupational Employment Statistics Survey; The employer’s North American Industry Classification System (NAICS) code; and A section for the employer to provide clarifying remarks regarding the information provided, if any. Private employers with 100 or more employees hired through labor contractors (i.e. an individual/entity that supplies a client employer with workers to perform labor within the client employer’s usual course of business) must submit a separate report to the Department that includes the information above for those employees, along with the names of all labor contractors used to supply employees. Private employers with more than one establishment (defined as an economic unit producing goods or services) must submit a report covering each establishment. The Report must be in a format that the Department can search and sort through readily available software. If a private employer does not comply with these requirements, the Department may seek an order for compliance and recover associated costs.  Additionally, upon request of the Department, a court may impose a civil penalty of no more than $100 per employee for the employer’s failure to file the Report, and a civil penalty of no more than $200 per employee for the employer’s subsequent failure. Pay Scale Requirements SB 1162 amends California Labor Code section 432.2 and imposes new wage disclosure requirements on all private and public employers with 15 or more employees. Since 2018, Labor Code Section 432.2 has prohibited California employers from relying on the salary history of a job applicant in deciding whether to extend an offer of employment or what salary to offer, unless the applicant voluntarily discloses this information.  Employers have also been prohibited from seeking, either personally or through an agent, salary history information about an applicant. SB 1162 expands Section 432.2 to also require covered California employers to affirmatively provide pay scale information (i.e. the range of the salary or hourly rate the employer expects to pay for the position) on job postings, including postings made by third-party job sites used to advertise positions. Covered employers must also provide pay scale information upon request to current employees for their current position. An aggrieved applicant or employee may file a complaint with the Labor Commission within one year of discovering the employer’s violation.  The Labor Commissioner impose may order the employer to pay a civil penalty of no less than $100 and not to exceed $10,000. Employers are required to maintain a record of each employee’s job title and wage history during employment and for three years following the termination of employment.  An employer’s failure to keep records in violation of this section creates a rebuttable presumption in favor of an employee’s claim filed with the Labor Commissioner. Polsinelli attorneys will be monitoring new developments in this area and remain prepared to assist employers.

The California State Legislature adjourned on August 31, 2022. Following the adjournment, several bills with significant implications for employers were presented to Governor Newsom for signature or veto by September 30, 2022. Governor Newsom signed multiple bills, now laws, that California employers need to be aware of going into the new year. Below is a brief overview of the most notable updates. COVID-19 Employee Protections COVD-19 Supplemental Paid Sick Leave (AB 152): Current Covid-19 Supplemental Paid Sick Leave (“SPSL”) was set to expire on September 30, 2022. With the signing of this bill, the current COVID-19 SPSL requirements will be extended through December 31, 2022. This bill does not create a new bank of leave for employees to use but instead provides employees an additional three (3) months to use any banked SPSL. Extension of Workers’ Compensation Rebuttal Presumption for COVID-19 (AB 1751): This bill extends the current rebuttable presumption established for workers’ compensation for COVID-19 to January 1, 2024, as well as extending coverage to certain state employees who were not covered previously. Extension of COVID-19 Notice Requirements (AB 2693): Under previous notice requirements, employers were required to provide notice to individual employees who were potentially exposed to COVID-19. These requirements have been extended to January 1, 2024, but employers are now permitted to post a notice in the workplace for 15 days instead of providing individual notice. Leave Protections Mandatory Bereavement Leave (AB 1949): Effective January 1, 2023, employees with at least 30 days of active service who request bereavement leave upon the death of a covered family member must be provided with at least five (5) days of bereavement leave that does not need to be taken consecutively. Expansion of Those Included as “Designated Persons” Under CFRA and PSL (AB 1041): AB 1041 amends Government Code Section 12945.2 and Labor Code Section 245.5 to expand the California Family Rights Act (“CFRA”) and California Paid Sick Leave (“PSL”). Specifically, the class of people for whom an employee may take leave to care for is expanded to include a “designated person” identified at the time the employee requests the leave under both PSL and CFRA. With this expansion, a “designated person” means any individual related by blood or whose association with the employee is the “equivalent of a family relationship,” including a domestic partner. Other Notable Updates Creation of Fast-Food Sector Council (AB 257): The Fast Food Accountability and Standards Recovery Act will establish a Fast Food Sector Council comprised of 10 members, which will establish standards on minimum wages and other working conditions applicable to certain fast food workers. Most immediately, the Council will have the authority to raise the minimum hourly wage for workers as high as $22 next year. Although AB 257 is set to take effect January 1, 2023, a referendum has been filed seeking to block it until the matter can be put before voters. Retaliation for Emergency Conditions (SB 1044): Effective January 1, 2023, in the event of an “emergency condition,” employers are prohibited from taking or threatening adverse action against any employee who walks off the job because the employee feels unsafe. Employers also cannot prevent employees from accessing their mobile device or other communications device for seeking emergency assistance, assessing the safety of the situation, or communicating with a person to confirm their safety. Employment Discrimination and Cannabis (AB 2188): Effective January 1, 2024, AB 2188 will make it unlawful for employers to discriminate against an individual based on their use of cannabis outside of work or when an employer-required drug test finds non-psychoactive cannabis in the individual’s system (which indicates usage, not impairment). Certain workers are exempt from these protections and the new law will not prohibit drug-free workplace policies or prohibit employers from disciplining employees for the use or possession of cannabis during work hours. Expansion of Pay Data Reporting and Posting of Pay Scale in Job Postings (SB 1162): Effective January 1, 2023, California will join a growing list of states that require the disclosure of pay scales in job postings. Additionally, the existing obligation for California employers to supply pay scale information to job applicants upon request will extend to current employees. The new law also imposes certain recordkeeping requirements relating to job titles and wage rates. SB 1162 further modifies the timing and requirements for the submission of pay data reports by California employers with 100 or more employees. Finally, the law imposes various civil penalties for violations of the above-described requirements. A more detailed summary of these new job posting and pay data reporting requirements is provided here. The above is intended only as a brief overview of these new laws. For a deeper dive into details of these newly passed bills, as well as other California employment law updates, please tune into the webinar What’s on the Horizon: California Employment Law Updates for 2023 on November 1, 2022, at 11:00 a.m. – 12:00 p.m. PT by registering at: https://sites-polsinelli.vuturevx.com/121/3739/landing-pages/rsvp-blank---cle.asp?sid=5260a168-c2be-4c55-86e9-3032624c3d5c. Our team continues to monitor and review emerging laws and employers are always encouraged to reach out with any questions.