Employment & Labor (U.S.)

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

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

As we discussed in an October 2021 article regarding the future of restrictive covenant agreements in the U.S., President Biden in July 2021 directed the Federal Trade Commission (FTC) to explore potential ways to limit the use of non-compete agreements. In January 2023, the FTC followed through on the President’s directive by proposing a regulatory rule that would effectively ban such agreements.

And on Tuesday afternoon, more than 15 months after publishing the proposed rule and after receiving more than 26,000 public comments on the January 2023 proposal, the FTC at long last unveiled and approved its final non-compete rule (the final rule) in a party line 3-2 vote.Continue Reading BREAKING: FTC bans virtually all existing and future U.S. non-compete agreements

On Wednesday April 17, 2024, the US Supreme Court in Muldrow v. City of St. Louis, Missouri, et al. issued a precedential ruling that will likely pave the way for more employee discrimination claims under Title VII. In a unanimous decision, the Court held that Title VII prohibits discriminatory job transfers even if they do not result in a “materially significant disadvantage” to the employee. The Court clarified that an employee challenging a job transfer under Title VII must establish “some harm” with respect to the terms and conditions of employment, but that such harm “need not be significant.”Continue Reading U.S. Supreme Court clarifies standard for job transfer discrimination under Title VII

On April 15, 2024, the U.S. Equal Opportunity Commission (EEOC) issued its final rule implementing the federal Pregnant Worker’s Fairness Act (PWFA). The PWFA, which went into effect in June 2023,1 requires covered employers to provide reasonable accommodations for employees’ known limitations relating to pregnancy, childbirth, or related medical protections. The PFWA builds on existing pregnancy-related protections and employer obligations under Title VII, the Americans with Disabilities Act, and many state and local laws.Continue Reading EEOC issues final rule on the Pregnant Workers Fairness Act