Sweeping amendments to New York City’s “Ban the Box” law are now in effect

Back in 2015, New York City joined the “Ban the Box” bandwagon and passed a law that delays when criminal background checks can be run on most Big Apple job applicants. Specifically, the Fair Chance Act (FCA) prohibits NYC employers from inquiring about a job applicant’s criminal conviction history until after a conditional offer of employment is extended and requires that employers undertake a multi-step process if they want to rescind a job offer based on the results of a criminal history inquiry.

Against this backdrop, on January 10, 2021, the New York City Council passed important amendments to the FCA, which amendments went into effect July 29, 2021. As detailed below, the amendments significantly expand the scope of the FCA and impose additional affirmative obligations on New York City employers. Continue Reading

What’s all this talk about federal regulation of non-compete agreements?

By Mark S. Goldstein, Edward Schwartz and Michael Lombardino on 19 July 2021 Posted in Employment & Labor (U.S.), US Alert, Workplace Laws and Regulations

On July 9, 2021, the Biden Administration issued a sweeping Executive Order called Promoting Competition in the American Economy (Order). Although it does not immediately change the current legal landscape governing non-compete agreements (or any other aspects of U.S. antitrust enforcement), the Order encourages the Federal Trade Commission (FTC) to “curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility”. In the wake of the Order and other calls for more rigorous enforcement of employee non-compete and similar restrictive covenants, many within the business community wonder if a federal crackdown on non-compete agreements is coming. We address this issue below, and discuss steps employers may want to consider in light of the potential changes ahead.

Brief summary

According to the Fact Sheet accompanying the Order, roughly half of private-sector businesses require at least some employees to sign post-employment non-compete agreements, affecting an estimated 36 to 60 million workers. On multiple occasions over the past decade-plus, there have been calls for federal agencies to investigate and curtail the use of such agreements. President Biden’s Order is the most recent, and potentially significant, development in this area. He had vowed during his campaign to “eliminate all non-compete agreements, except the very few that are absolutely necessary to protect a narrowly defined category of trade secrets.” The Order is a further step towards fulfilling his campaign promise.

According to the White House, the Order “includes 72 initiatives by more than a dozen federal agencies to promptly tackle some of the most pressing competition problems across our economy.” One provision in the Order takes direct aim at non-competes:

. . . the FTC is encouraged to consider working with the rest of the Commission to exercise the FTC’s statutory rulemaking authority under the Federal Trade Commission Act to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.

The language in the Order is not as strident as the wording in the Fact Sheet (which encourages the FTC to “ban or limit” non-compete agreements). But it certainly is expansive, targeting any “other clauses or agreements that may unfairly limit worker mobility.” We do not know if the FTC will follow the President’s lead and issue regulations addressing non-compete and similar agreements. But, at a minimum, we anticipate that employee non-compete, non-solicitation, no-rehire, and similar restrictive covenants will receive closer scrutiny by the Biden Administration, and that stricter enforcement of such agreements is very possible. Continue Reading

California Supreme Court: Meal and rest break premiums must be paid at regular rate of pay; applies retroactively

By Mark Phillips and Ronnie Shou on 19 July 2021 Posted in California Employment Beat, Employment & Labor (U.S.), Wage and Hour, Workplace Laws and Regulations

In Ferra v. Loews Hollywood Hotel, LLC, the California Supreme Court departed from the longstanding view that non-exempt employees’ meal and rest break premiums are paid at the employee’s base hourly rate, rather than the employee’s regular rate of pay used to calculate overtime pay. Instead, the Court held that the phrase “regular rate of compensation” used in Labor Code section 226.7 (requiring employers to pay meal and rest break penalties) is synonymous with the phrase “regular rate of pay” used in Labor Code section 510 (requiring employers to pay overtime). The Court further held that the requirement to pay meal and rest break premiums at an employee’s regular rate of pay applies retroactively because the law was not previously settled on this issue given the divided authority from the California Court of Appeal and conflicting opinion of different federal district courts. Thus, employers cannot claim “reasonable reliance on settled law.”

What is the regular rate of pay?

The “regular rate of pay” encompasses not only an employee’s base hourly rate, but also any non-discretionary bonuses, commissions, and certain other amounts that an employee earned in a given work week. The regular rate of pay is calculated by dividing an employee’s total earnings for the workweek (including, but not limited to, any commissions, nondiscretionary bonuses, and piece rate hours) by the total hours worked during the workweek, including the overtime hours, to come up with the regular rate.

What should employers do?

Employers should immediately update their meal and rest break policies to reflect that any meal or rest break premiums will be paid at an employee’s regular rate of pay. In addition, employers should contact an employment attorney to not only evaluate how best to mitigate any potential exposure from this decision from the California Supreme Court, but also how to ensure compliance from an administrative standpoint moving forward.

Preparing for a return to the workplace in the UK after 19 July 2021

By David Ashmore and Alison Heaton on 19 July 2021 Posted in COVID-19/Novel coronavirus, Employment (UK)

With the lifting of COVID-19 legal restrictions in England on 19 July 2021, David Ashmore (Partner) and Alison Heaton (Knowledge Management Lawyer) from the Reed Smith employment team comment on the key issues/hot topics for employers.

What is changing on 19 July for employers?

The instruction to work from home if you can is being lifted from 19 July 2021. From this date it will be up to employers to decide whether employees should return to working in line with pre-COVID arrangements, retain the current work-from-home set-up, or move towards hybrid working.

Can an employer impose new arrangements from 19 July?

Although employers could require a return to a contractual place of work from 19 July, mandating an immediate change to current work-from-home arrangements is not recommended – not only does it run contrary to the government’s advice to implement any return to the workplace gradually, but is unlikely to be well-received by employees. Instead, employers are advised to prepare for a transition to new/previous arrangements over a period of weeks and months. Having a clear, robust and well-communicated health and safety and return-to-work plans, and adopting a flexible approach wherever possible, will allow for an easier adjustment. Where the employer wants to make changes to contractual arrangements, they will need the employee’s consent.

What if an employee does not want to return to the workplace – is that redundancy?

No. Where the employee is not willing to return to work, and alternative arrangements cannot be agreed, this will not be a redundancy situation (as redundancy only arises if the business closes, there is a closure of the workplace, or where there is a reduced need for employees).

How should employers deal with return-to-office anxiety?

Numerous circumstances may make some individuals reluctant to return to the workplace or previous working arrangements, certainly in the near term. Employers are encouraged to have an open dialogue with staff, taking time to understand each individual’s unique challenges and preferences, and to provide a supportive and flexible approach to find a mutually agreeable solution. They will need to be particularly vigilant in circumstances where the reluctance to return is linked to concerns about health and safety, and act reasonably when responding to concerns. Where it is not being offered, employers can perhaps expect to see a surge in flexible-working requests, and will need to treat these with care – where employees have successfully worked from home and/or flexibly during the pandemic, it may be harder to justify rejecting requests seeking to make that a more permanent arrangement. Continue Reading

Texas employers now shielded from most COVID-19 liability

By Paulo McKeeby, Michael Lombardino and Joseph J. Mammone Jr. on 15 July 2021 Posted in COVID-19/Novel coronavirus, Employment & Labor (U.S.), Texas Employment Beat, Workplace Laws and Regulations

Texas recently enacted the Pandemic Liability Protection Act (PLPA) joining a number of other states that have passed statutory liability protections for businesses against claims arising during a pandemic including the ongoing COVID-19 pandemic. The new law, which has been signed into effect by Governor Abbott, grants retroactive liability protections for both small and large businesses. Under the PLPA, businesses of all sizes are protected from nearly all claims of injury or death from exposure to a pandemic disease regardless of whether the person injured was an employee.

The PLPA does not, however, provide Texas businesses an absolute shield from liability. Under limited circumstances a claim may still be brought for a pandemic-related injury or death:

Where the business knowingly failed to warn the individual of, or fix, a condition within the business’ control, despite having a reasonable opportunity to do so, with the knowledge that the individual was more likely than not to come into contact with or be exposed to the pandemic disease, and the failure to warn or fix the condition was the cause in fact of the individual contracting the disease; or
Where the business knowingly failed to implement, refused to comply with, or acted in flagrant disregard of the standards, guidance, or protocols put forth by the government that are intended to lower the likelihood of exposure to the pandemic disease, despite having a reasonable opportunity to do so, and this failure or refusal to comply was the cause in fact of the individual contracting the pandemic disease.

New Jersey continues its war on worker misclassification

By John T. McDonald and Saranne Weimer on 9 July 2021 Posted in Employment & Labor (U.S.), New Jersey Employment Beat, Wage and Hour, Workplace Laws and Regulations

In early 2020, New Jersey Governor Phil Murphy signed a series of bills aimed at identifying and penalizing entities for misclassification of employees as independent contractors. Yesterday, Governor Murphy signed four additional laws into effect to build upon and expand these efforts: A5890, A5892, A5891, and A1171.

These laws build upon prior efforts, with a notable focus on the expanded information sharing and inter-agency coordination to identify and combat misclassification of workers:

A5890 creates a mechanism for the state to combat worker misclassification through litigation for alleged violations of any wage, benefit, or tax law, and provides additional penalties for the enforcement of stop-work orders, including the ability to assess a civil penalty in an amount the commissioner deems appropriate, the requirement for employers to pay employees for the first ten days of the stop-work order, and the ability of the state to sue on behalf of the employees for non-payment of such wages.
A5892 facilitates additional information exchange between state entities to identify misclassification, including the Department of Labor, the Bureau of Fraud Deterrence, and the Commissioner of Banking and Insurance.
A5891 creates an Office of Strategic Enforcement, funded with one million dollars, to coordinate strategic enforcement of wage, benefit, and tax laws across state agencies.
A1171 creates a public database of certified payroll information for all public works projects.

Independent contractor misclassification has been a focal point throughout the Murphy administration, although the issue took a backseat as the State dealt with the COVID-19 pandemic. As the State continues to rebound from the pandemic, the administration is again re-focusing on these issues. We expect to see aggressive action from the State pursuing alleged misclassification of workers.

If you have any questions about the classification of your Company’s workers, Reed Smith’s experienced Labor & Employment team is available to assist.

BREAKING: New York Labor Department unveils guidance on HERO Act, starting the clock for all Empire State employers to adopt airborne infectious disease exposure plans

By Mark S. Goldstein on 7 July 2021 Posted in Employment & Labor (U.S.), Labor Relations, New York Employment Beat, Workplace Laws and Regulations

Earlier this year, New York lawmakers passed a novel, sweeping overhaul of the State’s workplace health and safety laws. Known as the HERO Act, the law is intended to “to protect employees against exposure and disease during a future airborne infectious disease outbreak.”

Among other things, the HERO Act requires that the New York State Department of Labor (NYSDOL) create written model airborne infectious disease exposure prevention standards to cover Empire State workplaces. More particularly, the NYSDOL is tasked with creating separate model standards for (i) industries representing a significant portion of the workforce, or those with unique characteristics requiring distinct standards, as well as (ii) all worksites that are not included in the specific industry standards.

The NYSDOL’s publication of the model standards is important for a host of reasons, including because all New York employers – regardless of size, industry, or location – will then have 30 days from the date on which the NYSDOL publishes the model written standards, to establish their own airborne infectious disease exposure plan. This requirement can be satisfied by adopting the NYSDOL’s model standards (as applicable based on industry), which it is expected that many, if not most, New York employers will do. (The requirement can also be satisfied by instead adopting an alternative plan that meets or exceeds the NYSDOL’s standards.)

To that end, earlier today, the NYSDOL, in consultation with the New York State Department of Health, issued the long-awaited Airborne Infectious Disease Exposure Prevention Standard, Model Airborne Infectious Disease Exposure Prevention Plan, and various industry-specific model plans for the prevention of airborne infectious disease. The specific industries covered are agriculture, construction, delivery services, domestic workers, emergency response, food services, manufacturing and industry, personal services, private education, private transportation, and retail. All of the materials can be accessed here.

Attention Texas employers: Starting September 1, 2021, companies with just one employee—as well as individual supervisors and coworkers—can be liable for sexual harassment

By Paulo McKeeby, Michael Lombardino and Amanda Brown on 6 July 2021 Posted in Discrimination, Employment & Labor (U.S.), Sexual Harassment, Texas Employment Beat, Workplace Laws and Regulations

The effects of the #MeToo movement for employers continue with Governor Abbott recently signing two new bills into law (effective September 1, 2021) that greatly amplify legal protections against sexual harassment. One bill extends the statute of limitations for sexual harassment claims from 180 days to 300 days. The other opens the door for small employers, and even individual supervisors and coworkers, to be held liable for sexual harassment. Also, Texas employers must now take “immediate and appropriate corrective action” to avoid liability for sexual harassment. We explain these new laws in more detail below, and discuss steps Texas employers may want to consider before the new laws go into effect.

Statute of limitations lengthened for sexual harassment claims (House Bill 21)

Currently, employees must file a charge of discrimination with the Texas Workforce Commission within 180 days of the alleged harassing conduct. House Bill 21, which Governor Abbott signed into law on June 9, 2021, lengthens the statute of limitations for filing sexual harassment claims from 180 days to 300 days from the date of the alleged harassment. The longer limitations period applies only to sexual harassment claims based on conduct that occurs on or after September 1, 2021. The current 180 day statute of limitations remains unchanged for other types of alleged discrimination (e.g., based on race, age, etc.).

Because the statute of limitations under federal law for sexual harassment claims is 300 days, plaintiffs who miss the 180-day deadline under Texas law were typically only able to pursue their sexual harassment claims in federal court (assuming, of course, they initiated legal proceedings within the 300-day federal deadline). Beginning this fall, those plaintiffs will be able to pursue such claims in either federal or state court. Continue Reading

Many NJ COVID-related Executive Orders set to expire July 4

By John T. McDonald and Saranne Weimer on 2 July 2021 Posted in COVID-19/Novel coronavirus, Employment, Employment & Labor (U.S.), New Jersey Employment Beat, US Alert

On June 4, 2021, the New Jersey legislature passed legislation (A5820/S3866) enabling the end of the COVID-19 Public Health Emergency in place since March 9, 2020. Under the legislation, the majority of New Jersey’s COVID-19 related Executive Orders will lapse on July 4, 2021. The legislation specifically keeps fourteen Executive Orders in place until January 1, 2022 (which may be subject to further extension):

Executive Order 106 (Eviction Moratorium)
Executive Order 111 (Healthcare reporting)
Executive Order 112 (COVID-19 Health Care Responders)
Executive Order 123 (Insurance Premium Grace Periods)
Executive Order 127 (Rulemaking Deadlines)
Executive Order 150 (Outdoor Dining Protocols and Process to Expand Premises for Liquor License Holders)
Executive Order 159 (Extension of Certain Statutory Deadlines)
Executive Order 170 (Extension of Certain Statutory Deadlines)
Executive Order 178 (Extension of Certain Statutory Deadlines)
Executive Order 207 (Enrollment in NJ Immunization Information System)
Executive Order 229 (Utility Shut-off Moratorium)
Executive Order 233 (Stimulus Payments Exempt from garnishment)
Executive Order 237 (Summer Youth Overnight and Day Camps)
Executive Order 242 (Lifting of Restrictions)

NJ workers’ compensation exclusivity not so exclusive anymore: NJ Supreme Court issues major ruling on the New Jersey workers’ compensation bar and NJLAD failure to accommodate claims

By Don A. Innamorato and Saranne Weimer on 25 June 2021 Posted in Employment & Labor (U.S.), New Jersey Employment Beat, Workplace Laws and Regulations

On June 8, 2021, the New Jersey Supreme Court made two significant rulings in Richter v. Oakland Board of Education. First, the Court held that an employee need not establish an adverse employment action as an element for a failure-to-accommodate claim under the New Jersey Law Against Discrimination (NJLAD). This holding built on prior case law, particularly in the context of retaliation claims, and was not unexpected given the broad remedial purpose of the NJLAD. The second holding, however, is much more significant and may have far-reaching implications. Specifically, the Court held that the exclusive remedy provision of the New Jersey Worker’s Compensation Act’s (WCA), also known as the “workers’ compensation bar,” does not prevent an employee from recovering for physical injuries through a claim under the NJLAD, and there is no need for the employee to show an intentional wrong (which is generally required to recover for physical workplace injuries outside of the workers’ compensation context). This is a major shift in the law governing workplace injuries and potentially opens a host of new available damages in certain circumstances.