Employment & Labor (U.S.)

In October 2023, the National Labor Relations Board issued a final rule that lowered the standard for companies to qualify as joint employers. You can read more about the rule here.

On March 8, 2024, a federal judge in Texas struck down the final rule. U.S. District Judge J. Campbell Barker granted summary judgment in favor of the business coalition that challenged the 2023 rule. In short, the 2023 rule established a two-step test which requires: (1) the entity qualify as a common-law employer of the workers in question, and if so (2) the entity have control over one or more essential terms and conditions of employment. The court agreed with the business coalition’s contention that “the second test is always met if the first test is met, so the rule’s joint employer inquiry has just one step for all practical purposes.” The court found that “if an entity exercises or has the power to exercise control (even indirect control) over at least one essential term, the entity is an employer, jointly with workers’ undisputed employer.” And because such a result “would treat virtually every entity that contracts for labor as a joint employer,” the Board’s 2023 final rule “exceeds the bounds of the common law and is thus contrary to law.”Continue Reading Texas judge vacates NLRB’s new joint employer rule

Employers in all industries should take notice that efforts to unionize appear to be spiking in 2024.  Indeed, data made available by the National Labor Relations Board (NLRB) shows that, in just the first few months of the current fiscal year, the number of union representation cases, or so-call “R-cases,” filed with the NLRB is on a meteoric rise – indicating that recent trends with respect to union organization efforts may be amplifying.

This was predicted in our prior article about the NLRB’s decision in Cemex Construction Materials Pacific, LLC, which established a new framework for the union representation process. Under Cemex, when a union requests recognition based on a majority support of the employees to be in the bargaining unit, an employer must either: (1) recognize and bargain with the union; or (2) promptly file a RM petition to challenge the union’s claim of majority support by seeking an election, pursuant to Section 9(c)(1)(B) of the NLRA, unless the union has already filed a petition for a representation election pursuant to Section 9(c)(1)(A) of the Act. The time for the employer to act is limited, as it is generally held that the employer has only 14 days after the demand for recognition in which to file an RM petition.Continue Reading Employers take notice: Union representation petitions are spiking in 2024

Governmental entities play a vital role in upholding federal labor and employment regulations and would face significant disruption in the event of a government shutdown. In September, we provided a brief review on how a shutdown would affect the government agencies that enforce federal labor and employment laws — the U.S. Equal Employment Opportunity Commission

On February 8, 2024, the U.S. Supreme Court issued Murray v. UBS Securities LLC, No. 22-660, which addressed the proper framework for establishing a whistleblower claim under the Sarbanes-Oxley Act of 2002 (SOX). Under SOX, an employee who works for a covered company is protected from retaliation if they disclose information that the employee reasonably believes shows a violation of federal securities law, SEC rules, or any federal law related to fraud against shareholders. In Murray, the Court held that an employee is not required to prove that their employer acted with animus when it engaged in an adverse action against the employee.

In Murray, a research strategist at a securities firm voiced concerns to his supervisor about leaders of the firm’s trading desk purportedly engaging in unethical and illegal efforts to skew his independent reporting on commercial mortgage-backed securities. Despite receiving a strong performance review, the employee was subsequently terminated, which the employer alleged was a result of reduction in force. The employee then filed a SOX complaint with the Department of Labor (DOL) and, after the 180-day waiting period passed without a final decision from the DOL, subsequently filed suit in federal district court.Continue Reading Supreme Court eases employees’ burden to establish SOX retaliation claims and possibly other whistleblower claims

In an exceptional development that could dramatically change collegiate sports in the United States, the Regional Director for Region 1 of the National Labor Relations Board (NLRB) recognized the fifteen players of the Dartmouth College men’s varsity basketball team as employees with a right to unionize under the National Labor Relations Act (NLRA), in a decision issued on February 5, 2024. As a result, the players are eligible to vote on whether they want to be represented by the Service Employees International Union, Local 560 for collective bargaining purposes. If a majority of the voting players vote in favor of the union, they will create the first-ever union of NCAA athletes.

The Dartmouth College decision signifies a shift by the NLRB. In 2015, the NLRB declined to exercise jurisdiction over a similar bid to unionize by Northwestern’s football team, thereby declining that opportunity to recognize student athletes as employees at that time. The opportunity was seized in the Dartmouth College decision, however, as the Regional Director distinguished the Northwestern decision – perhaps most notably, based on the fact that Dartmouth College competed in the Ivy League Conference, exclusively with other private schools that were subject to the NLRB’s jurisdiction, where Northwestern competed in the Big Ten Conference, in which every other school in the conference was a state-run institution that was not subject to the NLRB’s jurisdiction.Continue Reading NLRB’s recognition of Dartmouth College men’s basketball team as employees could change collegiate sports forever

On January 29, 2024, the Delaware Supreme Court issued an important decision addressing the enforceability of restrictive covenants. As detailed below, in Cantor Fitzgerald v. Ainslie, the court upheld forfeiture-for-competition provisions set forth in a limited partnership (LP) agreement and ruled in favor of the partnership not having to pay out millions to former partners.

Key highlights

In Cantor Fitzgerald, the Delaware Supreme Court decision relied significantly on the following factors in enforcing the LP agreement as written and determining that the disputed provisions were, in fact, enforceable:

  • The restrictive covenant did not bar the claimants from engaging in competitive activities.
  • Rather, the provisions in question provided, in part, that receipt and retention of prior conditional awards of a portion of their compensation would be subject to the condition precedent that the recipient refrained from competing – in other words, these were forfeiture-for-competition provisions.
  • These forfeiture-for-competition provisions were not liquidated damages provisions (triggered by a breach of contract); rather, these provisions set up a condition precedent (not competing with the employer) to the employees’ receipt of the amounts that had been held back. 
  • The “employee choice doctrine” suggests that courts do not review forfeiture-for-competition provisions for reasonableness where, as here, the employee voluntarily terminates employment (as opposed to remaining employed and vesting in the contingent compensation amounts).

Continue Reading Delaware Supreme Court confirms enforceability of restrictive covenant provisions in favor of employer-partnership, reversing Chancery Court determination

Following a number of other states, the District of Columbia Council passed The Wage Transparency Omnibus Amendment Act of 2023 (the 2023 Act), which was approved by Mayor Muriel Bowser on January 12, 2024, and is pending Congressional review. The 2023 Act amends the D.C. Wage and Transparency Act of 2014 (the 2014 Act) to compel openness in compensation by requiring employers to publish wage bands for advertised positions, prohibiting wage screening of applicants, and requiring disclosure of the existence of healthcare benefits prior to interviews.Continue Reading Show them the money: D.C. law to require employers to disclose compensation to job candidates

Employment legislation and litigation are often about trends. In the mid-to-late 2010’s, for instance, lawmakers across the U.S. enacted numerous bills concerning paid time off for employees, such as for sick and family leave. A more recent trend involves regulatory and legislative attempts to limit or even outright ban non-compete agreements.

In New York State, the unquestionable employment litigation trend over the past several years has revolved around frequency of pay claims under Section 191 of the New York Labor Law (NYLL). This trend was born out of a radical 2019 appellate court decision that broke from more than a century of judicial precedent.

As more fully discussed below, however, two recent developments – one legislative and one judicial – suggest that the flood of frequency of pay lawsuits may soon be a thing of the past.Continue Reading Are frequency of pay lawsuits in New York soon to be a thing of the past?

On January 10, 2024, the U.S. Department of Labor (DOL) published its final independent contractor rule in the Federal Registrar in an attempt to provide greater clarity and consistency on how to classify a worker as an employee or independent contractor under the Fair Labor Standards Act (FLSA).

For decades, federal courts have analyzed the question using a multifactor, totality-of-the-circumstances economic reality test, with no factor or factors being dispositive. However, a rule that was published on January 7, 2021, known as the 2021 IC Rule, set forth “core factors” where some factors should be given additional weight over others. The 2021 IC Rule was criticized for not being supported by the DOL’s historical position and not fully aligned with the FLSA’s text.Continue Reading Navigating the labor landscape: Department of Labor announces final rule on independent contractors

Last week, Governor Hochul announced a suite of proposed measures aimed at addressing rising maternal and infant mortality rates. As is relevant to New York employers, this includes a proposed expansion of New York State Paid Family Leave to include 40 hours of paid leave to attend prenatal medical appointments. If signed into law, this would make