Shortly after the DOL’s release of guidance on the use of AI in the workplace, a bipartisan working group from the U.S. Senate and the Biden administration have released additional guidance regarding the use of AI in the workplace.

Bipartisan Senate AI Working Group’s “road map” for establishing federal AI policies

On May 15, 2024, the Bipartisan Senate AI Working Group released a “road map” for establishing federal AI policies. The road map is titled “Driving U.S. Innovation in Artificial Intelligence: A Roadmap for Artificial Intelligence Policy in the United States Senate,” and outlines the opportunities and risks involved with AI development and implementation. Most notably, the road map highlights key policy priorities for AI, such as: promoting AI innovation, investing in research and development for AI, establishing training programs for AI in the workplace, developing and clarifying AI laws and guidelines, addressing intellectual property and privacy issues raised by AI and creating related protections for those affected, and integrating AI into already-existing laws.

The working group acknowledged that the increased use of AI in the workplace poses the risk of “hurting labor and the workforce” but also emphasized that AI has great potential for positive application. This dichotomy necessitates the advancement of additional “innovation” that will create “ways to minimize those liabilities.”

Continue Reading Senate Working Group and Biden administration guidance on the use of AI in the workplace

On April 24, 2024, the U.S. Department of Labor (DOL) issued guidance on how employers should navigate the use of Artificial Intelligence (AI) in hiring and employment practices. The DOL emphasized that eliminating humans from the processes entirely could result in violation of federal employment laws. Although the guidance was addressed to federal contractors and is not binding, all private employers stand to benefit from pursuing compliance with the evolving expectations concerning use of AI in employment practices.

The guidance was issued by the DOL’s Office of Federal Contract Compliance Programs (OFCCP) in compliance with President Biden’s October 30, 2023 Executive Order 14110, which required the DOL to issue guidance for federal contractors on “nondiscrimination in hiring involving AI and other technology-based hiring systems.”

The guidance was issued in two parts: (1) FAQs regarding the use of AI in the Equal Employment Opportunity (EEO) context, and (2) a list of “Promising Practices” that serve as examples of best practices for mitigating the risks involved with implementing AI in employment practices. In short, the FAQs communicate that established non-discrimination principles apply to the use of AI, and the “Promising Practices” provide specific instruction on how to avoid violations when using AI in employment practices.

Continue Reading DOL’s guidance on use of AI in hiring and employment

On 14 May 2024, the government and financial services regulators published their responses to the recommendations made by the Sexism in the City inquiry. Those hoping that the inquiry would quickly lead to solid commitments for reform to tackle sexism in financial services may be somewhat disappointed. While the inquiry certainly created momentum around the discussion, the current government does not intend to push forward legislative changes, and the two regulators (the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA)) are still deep in review of their policy direction, although they have set some expectations about their priorities.

In this blog, we look at the background to the Sexism in the City inquiry, the current status in respect of the inquiry’s recommendations, and where this leaves financial services organisations.

What is the Sexism in the City inquiry?

Launched in July 2023, the House of Commons Treasury Committee’s inquiry was intended as a follow up to the Women in Finance inquiry from 2017. The 2023 inquiry set out to explore progress on issues affecting women in financial services, including the removal of barriers to entry and progression to successful careers, representation at board level, pay gaps, and misogyny and harassment. 

After months of reviewing written evidence, hearing oral evidence and holding focus groups, the Committee published its report on Sexism in the City on 5 March 2024. While the report noted some improvement for women in financial services since the 2017 inquiry, particularly on female representation in senior roles, it also expressed disappointment at the lack of progress on improving instances of non-financial misconduct (e.g. sexual harassment and bullying) against women and the generally poor culture continuing to cause challenges for women in the industry. The inquiry made a number of recommendations to government, and the two regulators, to accelerate change.

How have the government and regulators responded to the inquiry’s recommendations?

Two months after the Committee’s report, the response from HM Treasury, the FCA and PRA has been published. Whilst there is a broad agreement with the Committee’s comments and sentiments about the need for improvement, and various explanations about what steps have already been taken or are currently ongoing, the government and regulators largely stopped short of committing to prompt and significant changes in line with the recommendations.   Continue Reading What next for women in financial services? The government and regulators respond to recommendations from the Sexism in the City inquiry

Today, the Supreme Court justices ruled unanimously in Smith v. Spizzirri, No. 22-1218, that cases involving arbitrable disputes subject to the Federal Arbitration Act (FAA) must be stayed rather than dismissed outright. As a matter of statutory interpretation, the Court reasoned that the words “shall” and “stay” in Section 3 of the FAA had plain meanings requiring that a Court hold a matter pending arbitration and that dismissal would not meet the call of the statutory language. The Court further reasoned that requiring a case to survive pending arbitration promotes judicial efficiency, as FAA Sections 5, 7 and 9 prescribe specific supervisory roles for courts.

Employers can expect that cases brought despite arbitration agreements subject to the FAA will persist, albeit on pause pending the results of arbitration. Given the Court’s reliance on specific statutory language, the Court’s opinion likely does not apply to arbitrable disputes pursuant to a collective bargaining agreement, which are governed by the Labor Management Relations Act, a statute that does not have a provision similar to Section 3 of the FAA.

For the past 20 years, the Private Attorneys General Act (PAGA) has been a thorn to employer’s side in California. In 2004, PAGA, a California state law, was enacted to create a private right of action for workers to file representative actions on behalf of themselves and other workers based on specific labor code violations. The purpose behind enacting such legislation was to give authority to “aggrieved employees” to enforce the law, thereby alleviating the strain on California’s Labor and Workforce Development Agency (LWDA). This private right of action empowered workers with the authority to enforce California’s numerous labor laws that the LWDA purportedly did not have resources to pursue. Successful PAGA litigants recover 25 percent of monetary penalties for state labor law violations, while the remaining 75 percent of penalties go to the LWDA. The statute also allows plaintiffs’ lawyers to recover attorneys’ fees if they prevail on a PAGA lawsuit.   

Continue Reading Is this the end of PAGA?

On April 29, 2024 – for the first time in more than twenty years – the EEOC issued its long-awaited updated Enforcement Guidance on Harassment in the Workplace. The updated guidance, which supersedes the EEOC’s decades-old guidance from the 1980’s and 1990’s, now addresses subjects arising in the modern workplace, including the rise of remote work, the #MeToo movement, and the U.S. Supreme Court’s  decision in Bostock v. Clayton County, 590 U.S. 644 (2020), in which the Court held that Title VII of the Civil Rights Act protects workers from discrimination based on their sexual orientation and gender identity. A few key updates that employers should be aware of include the following:  

Conduct in virtual environments

With the increase in virtual and remote work, the Guidance explains that conduct within a virtual work environment can constitute a hostile work environment. Stated differently, the existence of harassment and a hostile work environment is not limited exclusively to a physical workplace. To illustrate its point, the Guidance identified several example scenarios where harassment could exist in a virtual or remote workplace, such as sexist or ableist comments made during a video meeting or typed into a group chat, “racist imagery that is visible in an employee’s workspace while the employee participates in a video meeting,” or “sexual comments made during a video meeting about a bed being near an employee in the video image.”

Continue Reading EEOC issues long-awaited enforcement guidance on workplace harassment

As we posted on Tuesday, the Federal Trade Commission (FTC) has at long last issued its final regulatory rule banning virtually all existing and future U.S. non-compete agreements. In this series, we will unpack some of the more nuanced questions surrounding the final rule.

Does the final rule bar or invalidate non-compete agreements that ban competition while a worker is still employed by a business?

No. The final rule only applies to post-employment competitive activities. And in fact, in many states, employees have common law obligations to not engage in competitive activities during their employment, regardless and separate from any contractual obligations.

Continue Reading Unpacking the FTC’s ban on U.S. non-compete agreements: Reviewing the fine print

As we posted on Tuesday, the Federal Trade Commission (FTC) has at long last issued its final regulatory rule banning virtually all existing and future U.S. non-compete agreements. In this series, we will unpack some of the more nuanced questions surrounding the final rule. Although the series is generally applicable, today’s post is particularly geared toward non-profit organizations.

Does the final rule apply to entities claiming tax-exempt status as non-profits?

It depends. In the commentary to the final rule, the FTC explains that Congress empowered the agency to prevent “persons, partnerships, or corporations” from engaging in unfair methods of competition. To fall within the definition of “corporation” under the FTC Act, an entity must be “organized to carry on business for its own profit or that of its members.” These FTC Act provisions have been interpreted in commission precedent and judicial decisions to mean that the FTC lacks jurisdiction over corporations not organized to carry on business for its own profit or that of its members.

Continue Reading Unpacking the FTC’s ban on U.S. non-compete agreements: Impact on non-profit organizations

As we posted yesterday, the Federal Trade Commission (FTC) has at long last issued its final regulatory rule banning virtually all existing and future U.S. non-compete agreements. In this series, we will unpack some of the more nuanced questions surrounding the final rule. Although the series is generally applicable, today’s post is particularly geared toward private equity firms and financial institutions.

How does the sale-of-business exception work?

One of the exceptions to the final rule is that it does “not apply to a non-compete clause that is entered into by a person pursuant to a bona fide sale of a business entity, of the person’s ownership interest in a business entity, or of all or substantially all of a business entity’s operating assets.”

This language is fairly similar to an exception included in the FTC’s January 2023 proposed non-compete rule – however, there is an important change in the final rule. Specifically, the proposed rule included an exception for certain non-compete agreements between the seller and the buyer of a business that applied only to a substantial owner, member, or partner, defined as an owner, member, or partner with at least 25 percent ownership interest in the business entity being sold. In the final rule, however, the FTC has dropped the 25 percent ownership interest requirement.

Continue Reading Unpacking the FTC’s ban on U.S. non-compete agreements: Impact on private equity and financial institutions

On April 23, 2024, the U.S. Department of Labor (DOL) announced a final regulatory rule that will raise the minimum salary threshold for employees who are classified as “exempt” under the white-collar exemptions to the Fair Labor Standards Act (FLSA) in two steps: first in July 1, 2024, and then again in January 1, 2025. The new rule also creates a mechanism for subsequent automatic increases every three years thereafter based on then-current economic data, with the next increase slated for July 1, 2027. 

This new rule comes after the DOL proposed these changes last year in August 2023. Under the FLSA and DOL regulations, for an employee to be properly classified as “exempt” from overtime, the employee must be paid at least the minimum salary threshold and the employee’s job position must also meet certain tests regarding their job duties (namely exemptions for job duties performed by executive, administrative, professional, outside sales and computer employees, commonly referred to as the “white collar” exemptions).

Continue Reading U.S. Department of Labor mandates two salary threshold increases for white collar FLSA exemptions and a mechanism for future automatic increases