Employment & Labor (U.S.)

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The U.S. Supreme Court agreed to review a case on appeal from the Fourth Circuit involving the burden of proof required for an employer to show that an employee’s job position is exempt from overtime under the Fair Labor Standards Act (FLSA). The high court’s decision will have a notable impact on the ability of employers to defend misclassification claims brought under the FLSA.

While the Fifth, Sixth, Seventh, Ninth, Tenth, and Eleventh Circuits have applied the “preponderance of the evidence” standard, the Fourth Circuit has repeatedly applied the notably higher “clear and convincing” standard, including most recently in Carrera v. EMD Sales, 75 F.4th 345 (4th Cir. Jul. 27, 2023). The Court agreed to review the Fourth Circuit’s decision in Carrera to resolve this split among the federal circuits on the appropriate burden of proof for FLSA exemptions.Continue Reading U.S. Supreme Court agrees to resolve the split between the Circuits on the burden of proof for FLSA exemptions

On Monday, June 3, 2024, Attorney General Platkin and Director Sundeep Iyer of the New Jersey Division on Civil Rights (DCR) proposed a new rule (N.J.A.C. 13:16) that would clarify the legal standard and the burdens of proof for claims of disparate impact discrimination under the New Jersey Law Against Discrimination (LAD). 

The standard does not change the legal framework already applied by the courts in the employment context under the LAD, but this would resolve any question about the viability of a disparate impact claim and/or the framework to be applied.

Disparate impact discrimination occurs when a policy or practice that is neutral on its face has a disproportionately negative effect on members of a protected class. Such a policy is unlawful unless the policy or practice is “necessary to achieve a substantial, legitimate, non-discriminatory interest” and there is no “equally effective alternative that would achieve the same interest.”Continue Reading Attorney General and DCR proposes rule to clarify disparate impact discrimination under the New Jersey Law Against Discrimination

The New Jersey Supreme Court’s recent ruling in Savage v. Township of Neptune, places limits on the enforceability of non-disparagement clauses in settlement agreements. The court unanimously held that such clauses are unenforceable if they prevent employees from discussing details related to claims of discrimination, retaliation, or harassment, aligning with protections under the New Jersey Law Against Discrimination (LAD).

Christine Savage, a former police sergeant, filed a lawsuit in December 2013 against the Neptune Township Police Department, alleging sexual harassment, sex discrimination, and retaliation. The parties entered into a settlement agreement which included a non-disparagement clause. In 2016, Savage filed another lawsuit against the same defendants, claiming they continued their discriminatory and retaliatory conduct. This second lawsuit was settled in July 2020, also with a non-disparagement clause in which both parties agreed not to“make any statements … regarding the past behavior of the parties, which statements would tend to disparage or impugn the reputation of any party.”Continue Reading New Jersey Supreme Court limits use of non-disparagement provisions in New Jersey LAD settlements

On May 6, 2024, the California Supreme Court issued a significant ruling in Naranjo v. Spectrum Security Services, Inc. (Case No. S279397). The decision provides much-needed clarity on California’s wage statement requirements and also held that employers can assert a good faith defense to wage statement claims under appropriate circumstances.

Labor Code section 226 states that California employers must provide employees with accurate itemized wage statements. Employees can seek statutory penalties if an employer fails to provide accurate itemized wage statements and such failure is “knowing and intentional”. (Lab. Code, section 226, subd. (e)(1).). While the statutory penalties are capped at $4,000 per employee (in addition to the employees’ associated attorneys’ fees and costs), the aggregated wage statement penalties can add up quickly in the class action context.Continue Reading Key victory for California employers: California Supreme Court accepts good faith defense to wage statement violations

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…

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