Workplace Laws and Regulations

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Earlier this month, the Solicitors Regulation Authority (SRA) updated its warning notice on the appropriate use of non-disclosure agreements (NDA), creating increased regulatory obligations for lawyers advising on, drafting and negotiating settlement agreements.

The updated warning notice reflects principles set out in existing Acas guidance which applies to anyone involved in settlement agreements. Whilst the warning notice only applies to those regulated by the SRA, i.e., law firms and lawyers (including in-house lawyers), it will be interesting to see whether the changes, which effectively give teeth to certain principles in the guidance as they apply to lawyers, have a wider impact on market practice approach to NDAs in settlement agreements. Failure by lawyers to comply with the SRA warning notice can result in them facing disciplinary action by the SRA for breach of their regulatory obligations.Continue Reading New SRA requirements for dealing with NDAs: Impact on settlement agreements

As the use of artificial intelligence (AI) systems rapidly spreads throughout society, legislators across the U.S. are hustling to try and ensure that these systems are created and implemented in a safe and fair manner everywhere they are being used. The workplace is one such area that is starting to gain interest in this regard.

Legislators have begun considering, and in a few cases even passed, bills aimed at preventing so-called “algorithmic discrimination” in the workplace. This refers to biased outcomes that can happen when employers use AI systems, or “automated decision tools” (ADTs), as a substantial factor in making consequential decisions such as whether to hire, promote, or discipline. According to the White House, “Algorithmic discrimination occurs when automated systems contribute to unjustified different treatment or impacts disfavoring people based on their race, color, ethnicity, sex (including pregnancy, childbirth, and related medical conditions, gender identity, intersex status, and sexual orientation), religion, age, national origin, disability, veteran status, genetic information, or any other classification protected by law.”

We will summarize the status, applicability, and provisions of various U.S. state- and local-level bills proposing to regulate algorithmic discrimination that are actively pending or passed as of the date of this article’s publication below.Continue Reading Employers beware: AI-based workplace discrimination laws are coming to the U.S.

On August 20, 2024, Northern District of Texas Judge Ada Brown barred the U.S. Federal Trade Commission’s (FTC) rule banning non-competes from taking effect. The rule, which proposed to ban virtually all existing and future non-compete agreements across the U.S., and was scheduled to go into effect on September 4, 2024, is now effectively blocked.

Judge Brown reasoned that the FTC’s non-compete ban constituted an unlawful agency action, stating that the FTC lacks the authority to ban practices it deems unfair methods of competition by adopting substantive rules. Specifically, Judge Brown concluded that:

the FTC lacks statutory authority to promulgate the Non-Compete Rule, and that the Rule is arbitrary and capricious. Thus, the FTC’s promulgation of the Rule is an unlawful agency action . . .[The rule] is hereby SET ASIDE and shall not be enforced or otherwise take effect on September 4, 2024, or thereafter.”

Continue Reading Texas federal court strikes down FTC non-compete rule

On August 9, 2024, Illinois Governor J.B. Pritzker signed HB 3773 into law, amending the Illinois Human Rights Act (IHRA) to regulate the use of artificial intelligence (AI), including generative AI, in employment decisions by employers with operations in Illinois. Following Colorado, which passed a similar bill in May 2024, Illinois is the second state to enact regulations expressly addressing potential algorithmic discrimination.Continue Reading Illinois becomes second state to regulate employers’ use of Artificial Intelligence in employment decisions

On August 28, 2024, New York State’s new law governing workplace-related contracts with freelancer workers – known as the Freelance Isn’t Free Act (FIFA) – will take effect. FIFA is designed to protect freelancers, i.e., independent contractors, from non-payment, late payment, and retaliation by hiring parties. It also imposes new requirements on hiring parties to provide written contracts, timely payment, and recordkeeping for freelance workers.

Background

In 2016, New York City enacted its own Freelance Isn’t Free Act, which was one of the first laws in the country to provide protections and remedies for freelance workers (and which we detailed here). The state law largely mirrors the city law, but with some key differences. For example, the state law excludes certain categories of workers from its coverages, including sales representatives, attorneys, licensed medical professionals, and construction contractors.Continue Reading How to prepare for New York State’s Freelance Isn’t Free Act

On May 7, 2024, the Federal Trade Commission (FTC) published a final regulatory rule that, if it takes effect as planned, which is currently scheduled for September 4, 2024, would invalidate and ban virtually all non-compete agreements in the U.S. Following publication of the rule in the Federal Register, legal challenges were promptly filed in Texas and Pennsylvania federal courts (another challenge was filed in Florida federal court in June). Motions seeking to preliminarily enjoin the final rule from taking effect followed, with the petitioners in each case arguing, among other things, that the FTC lacks authority to issue substantive rules concerning workplace non-compete agreements and, also, that the FTC did not sufficiently tailor the rule to the claimed purpose underlying it (by essentially issuing a blanket non-compete ban).Continue Reading What should U.S. businesses be doing right now concerning the FTC’s non-compete rule?

Beginning October 1, 2024, Maryland will require employers to disclose wage ranges and “other compensation” in job postings and upon the request of an applicant in an effort to promote greater wage transparency in the hiring process. The Maryland Wage Range Transparency Act amends the state’s existing law prohibiting employers from making salary history inquiries to now include these job posting wage transparency requirements. Maryland joins a growing number of states that have passed job posting pay disclosure requirements, including California, Colorado, Connecticut, the District of Columbia, Hawaii, Illinois, Minnesota, Nevada, New York, Rhode Island, and Washington.

Maryland’s new pay disclosure requirements apply both to external and internal job postings and cover any solicitation intended to recruit applicants for a specific available position. It also applies to any job posting for a job where work will be “physically performed at least in part” in Maryland but does not explain what “in part” means, leaving employers to guess if a single day or several months meets the test, or whether a remote worker who comes to periodic meetings in Maryland is covered. Continue Reading Maryland joins the growing list of states requiring pay disclosure in job postings

On July 25, 2024, the California Supreme Court ruled in the case of Castellanos v. State of California that Proposition 22, also known as App-Based Drivers as Contractors and Labor Policies Initiative, is constitutional. The statewide ballot measure from 2020 exempts certain app-based drivers from California’s independent contractor classification law. This decision will significantly impact ongoing gig economy litigation as well as potential future litigation.

In 2021, drivers for services including Uber Technologies Inc., Lyft Inc. and DoorDash Inc., joined with the Service Employees International Union and its California chapter to challenge Proposition 22. The drivers and union claimed that the voter-approved ballot measure passed in November 2020 must be struck down because it infringed on the California legislature’s power to set workers’ compensation laws. During the May 2024 oral arguments in San Francisco, the justices appeared skeptical of the drivers’ position, expressing concerns about the chilling effect on future ballot initiatives and questioning why the legislature simply could not create new workers’ compensation laws in response. The court concluded that Article XIV, section 4 of the California Constitution does not limit the ability of California voters to enact laws through the initiative process that touch on workers’ compensation, rendering Prop 22 constitutional.Continue Reading California Supreme Court upholds Prop 22: California gig drivers to remain contractors

As we previously reported, the U.S. Equal Employment Opportunity Commission’s (EEOC) final rule on the Pregnant Workers Fairness Act (PWFA) went into effect on June 18, 2024. The final rule provides guidance on how the EEOC will interpret and enforce the PWFA, including with respect to conditions that may qualify for accommodation, examples of what constitutes an accommodation, and clarification on the process through which employers and employees engage in the interactive process to obtain an accommodation.

Legal challenges to the final rule

The final rule has been the subject of several legal challenges. Recently, a U.S. District Judge in Louisiana issued a preliminary injunction that partially blocks the provision in the final rule requiring workplace accommodations for “purely elective abortions.” In the final rule, the EEOC takes the position that a person’s choice to have (or not have) an abortion qualifies as a medical condition that falls under the PWFA’s purview. The constitutionality of the final rule was challenged by the attorneys general of Louisiana and Mississippi, along with four religious organizations.Continue Reading EEOC’s final rule on the Pregnant Workers Fairness Act in flux

On July 1, 2024, the first phase of the U.S. Department of Labor (DOL)’s updated overtime rule went into effect, raising the minimum salary threshold for employees who are classified as “exempt” under the white-collar exemptions to the Fair Labor Standards Act (FLSA). The rule is subject to legal challenges but, as detailed below, remains in effect for now (other than for the State of Texas as a government employer).

A full summary of the rule is available here. In short, as of July 1, 2024, employees must be paid $844 per week ($43,888 annualized) to satisfy the salary threshold for the executive, administrative and professional exemptions. To satisfy the highly compensated” exemption salary threshold, employees must be compensated at least $132,964 per year (and a minimum of $844 per week). Effective January 1, 2025, the minimum salary threshold is set to increase to $1,128 per week ($58,656 annualized) for the executive, administrative, and professional exemptions, and to $151,164 per year for the highly compensated employee exemption. From there, the rule provides for updates to the minimum salary threshold every three years, starting July 1, 2027.Continue Reading Federal court challenges to DOL overtime rule yield mixed results while foretelling a merits ruling before end of year