AlphaAdvisor Compliance Updates

Welcome to the latest edition of AlphaStaff's Monthly Compliance Updates!

We are pleased to provide you with February's federal and state legal updates and highlighted resources provided by some of AlphaStaff’s trusted legal partners to guide and help keep you in compliance.

Federal Updates

DOL Clarifies Interaction Between FMLA and Paid Family and Medical Leave Benefits

On January 14, 2025, the U.S. Department of Labor (DOL) issued an Opinion Letter addressing how the Family and Medical Leave Act (FMLA) substitution rule applies when an employee on FMLA leave is receiving state or local paid family and medical leave (PFML) benefits. The ruling clarifies that when an employee receives PFML benefits, they are not on unpaid FMLA leave, meaning the FMLA substitution rule does not apply.

Under the FMLA substitution rule, an employer may require, or an employee may choose, to use accrued paid leave (such as PTO, vacation, or sick leave) during an unpaid FMLA leave.

However, if an employee is receiving short-term disability (STD) or workers’ compensation benefits, the substitution rule is not applicable because the leave is already paid (even if those benefits only provide the employee with partial pay). In those situations, the employee may use accrued, employer-provided paid leave to obtain full pay while on FMLA leave only if the employer and employee agree. The DOL’s Opinion Letter confirms that PFML benefits should be treated similarly to STD and workers’ compensation; that is, accrued paid leave may only be used to “top up” PFML benefits to full pay if both the employer and employee agree.

As more states implement PFML programs, employers should assess their policies and consult with legal counsel to ensure compliance with federal and state leave laws.

Click here for more information from our trusted legal partner, Littler Mendelson.

OSHA Increases Civil Penalties for 2025

On January 9, 2025, the Department of Labor (DOL) announced its annual inflation adjustments to OSHA civil penalties, which will apply to violations issued on or after January 15, 2025.

Below is a summary of the essential updates:

Serious, Other-Than-Serious, and Posting Requirements: Increased from $16,131 to $16,550 per violation.
Failure to Abate: Increased from $16,131 to $16,550 per day beyond the abatement date.
Willful or Repeated Violations: Increased from $161,323 to $165,514 per violation.

State plan workplace safety agencies must also increase their maximum penalties to the federal OSHA penalties, at minimum.

Employers should review and enhance their workplace safety protocols to comply with these updated regulations. Immediate actions include reassessing current safety measures, ensuring all posting requirements are met, and preparing for potential inspections by OSHA. These adjustments are necessary not just to avoid fines but to affirm your commitment to providing a safe and healthy work environment for all employees.

AlphaStaff may be able to assist with your loss and safety concerns. Please contact your HR Account Manager for further information. You can also follow this link for more information about the applicable penalties from Littler Mendelson.

DHS Announces Permanent Rule for 540-Day Automatic Extension of Work Authorization Renewals

The Department of Homeland Security (DHS) has announced that the 540-day automatic extension of expiring employment authorization documents (EADs) will become permanent policy under a final rule that took effect on January 13, 2025. The rule ensures that certain eligible applicants who timely file EAD renewal applications between May 4, 2022, and September 30, 2025, will receive the automatic extension while their application is processed. Eligible applicants include refugees, asylees, adjustment of status applicants, spouses of E, H-1B, and L-1 nonimmigrants all with unexpired I-94s in certain designated statuses, special agricultural workers, VAWA beneficiaries, and Temporary Protected Status (TPS) recipients.

To qualify for the extension, applicants must have timely filed an EAD renewal application within the designated period, request the renewal in the same category as their expired EAD, and satisfy other general eligibility requirements. The automatic extension will end when USCIS issues a decision on the renewal application or at the end of the 540-day period, whichever comes first. Some groups have additional considerations.

For Form I-9 verification, employees must present an expired EAD along with a receipt notice showing a timely-filed EAD renewal application. Employers should be aware of the possibility that this new policy could be amended or rescinded under the new administration.

Additional insights from our legal partner, Jackson Lewis, can be found at this link.

AI and Other Decision-Making Tools: Does the Fair Credit Reporting Act Apply?

The Consumer Financial Protection Bureau (CFPB) has issued new guidance reminding employers that certain AI-driven decision-making tools and tracking systems used in hiring, promotions, and other employment decisions may trigger compliance obligations under the Fair Credit Reporting Act (FCRA). Employers using third-party services to evaluate employees or candidates must assess whether these tools constitute consumer reports and whether the vendor qualifies as a consumer reporting agency (CRA).

FCRA typically applies when an employer requests a consumer report from a CRA for employment purposes, such as background checks or credit reports; however, AI-based tools that analyze or compare certain data from external sources to data related to the employee, or generate algorithmic performance evaluations, may also fall under FCRA regulations.

Key considerations include:

Data sources: If an AI tool incorporates external consumer data (even if the employee is the consumer), such as credit history or public records, it may be subject to FCRA.
Vendor intent: If the vendor creates reports intended for employment decisions rather than just assisting with drafting evaluations, the vendor may be considered a CRA.
State and federal implications: Emerging laws, such as Colorado’s AI Act, impose additional obligations on employers using AI in employment decisions.

To mitigate risks, employers should thoroughly vet AI-based tools, review vendor data practices, and ensure compliance with applicable laws before implementing automated decision-making systems in the workplace.

For additional information, follow this link to an article from our trusted legal partner, Jackson Lewis.

EEOC Issues New Guidance on Wearable Technologies

The Equal Employment Opportunity Commission (EEOC) has issued new guidance on the use of wearable technologies in the workplace, highlighting key compliance considerations under federal employment discrimination laws, particularly the Americans with Disabilities Act (ADA), the Pregnant Workers Fairness Act (PWFA), Title VII, and the Genetic Information Nondiscrimination Act (GINA).

Wearable technologies include smartwatches, fitness trackers, wearable cameras, GPS devices, exoskeletons, and biometric monitors that track employees’ physical or mental conditions. When employers use these devices to collect employee data, they must ensure compliance with federal anti-discrimination laws.

Key considerations from the EEOC’s guidance include:

Medical Examinations and Disability-Related Inquiries: Employers must limit the use of wearables that collect health data to job-related and business necessity circumstances, such as workplace safety or reasonable accommodation assessments.
Confidentiality: Any medical or disability-related data from wearables must be kept confidential and stored separately from personnel files.
Non-Discrimination: Employers cannot use wearable-generated data in ways that discriminate against employees based on protected characteristics. For example, using heart rate data to infer pregnancy and making employment decisions based on that information could violate EEO laws.
Reasonable Accommodations: Employers may need to modify wearables policies to accommodate employees based on religious beliefs, pregnancy, or disabilities.
Accuracy & Validity: Employers must evaluate the accuracy of wearable data, ensuring it does not disproportionately disadvantage certain protected groups.

Employers utilizing wearable devices should carefully review the EEOC’s guidance, establish clear policies, and consult legal counsel to mitigate risks related to privacy, discrimination, and workplace safety.

Click this link for additional information from Jackson Lewis on the EEOC’s new guidance on wearable technologies.

U.S. Supreme Court Makes Clear There Is No Heightened Standard for Employers to Establish an FLSA Exemption Applies

The U.S. Supreme Court unanimously ruled in E.M.D. Sales, Inc. v. Carrera that employers do not need to meet a heightened “clear and convincing” standard of proof when claiming an exemption from the Fair Labor Standards Act (FLSA)’s minimum wage and overtime requirements. Instead, the Court confirmed that the standard burden of proof in civil cases—preponderance of the evidence—applies when employers assert FLSA exemptions as an affirmative defense.

The case arose after sales representatives sued their employer for unpaid overtime, arguing they were not exempt under the FLSA’s outside sales exemption. The trial court, applying the higher burden of proof, ruled in favor of the employees, and the Fourth Circuit affirmed. The Supreme Court overturned the ruling, clarifying that a heightened standard is rarely used in civil cases unless explicitly required by statute or where constitutional liberties are at stake, neither of which applies to FLSA exemptions.

The decision aligns the Fourth Circuit with other federal appellate courts and reinforces the Supreme Court’s prior ruling in Encino Motorcars, LLC v. Navarro, which held that FLSA exemptions should receive a fair reading rather than an unduly restrictive one. Employers can take comfort that they do not face an increased burden in proving exemptions and should continue to document and justify exemption classifications based on FLSA criteria. This ruling also underscores the importance of legal compliance and clear exemption policies to mitigate litigation risks.

Click here to read more from Jackson Lewis on the less burdensome standard for employers.

Expanding Pay Transparency Laws: What Employers Should Know

As state and local governments continue to enact pay transparency requirements, businesses should be prepared for new compliance obligations in the coming year. These laws impact hiring, promotions, and compensation practices, with variations across different jurisdictions.

Noncompliance may lead to fines or legal challenges, and class action lawsuits related to pay disclosure have already emerged in some jurisdictions. As enforcement increases, businesses should ensure their practices align with legal requirements.

With the continued evolution of pay transparency laws, businesses should stay informed, review policies, and implement best practices to support compliance and mitigate risks.

Click here to learn more from Fisher Phillips about evolving pay transparency requirements and how they may impact your hiring practices.

Increased Wage and Hour Scrutiny for Southeastern Healthcare Employers

The U.S. Department of Labor’s Wage and Hour Division (WHD) is intensifying its focus on healthcare employers in the Southeastern region of the United States, targeting residential care facilities, nursing homes, and home health providers for violations of the Fair Labor Standards Act (FLSA). In the past year alone, the WHD has conducted nearly 400 investigations, recovering more than $4.1 million in back wages and damages for over 2,000 healthcare workers. With enforcement efforts expected to continue in 2025, healthcare employers should take proactive steps to ensure compliance.

Compliance Considerations include:

Overtime Calculations: Employers must ensure non-exempt employees are properly compensated for overtime at 1.5 times their regular rate of pay, including bonuses, shift differentials, and other incentive pay.
Worker Classification: The WHD is cracking down on misclassification of independent contractors—a key issue in the healthcare industry. Employers should verify that workers classified as 1099 contractors meet legal standards for independent contractor status.
Exempt vs. Non-Exempt Status: Employees classified as exempt from overtime must meet specific FLSA criteria, regardless of job title or contract terms. Employers should review job descriptions and actual job duties to confirm proper classification.
Compensable Work Time: Employers must pay for all work-related activities, including training, onboarding, travel during shifts, donning and doffing protective gear, and interrupted breaks.
DOL Investigations: The WHD does not provide advance notice of investigations. Employers should ensure payroll records, timekeeping logs, and worker classifications are accurate and readily available to avoid penalties and disruptions.

With heightened enforcement in Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee, healthcare employers should review pay practices, worker classifications, and recordkeeping procedures to ensure FLSA compliance. Conducting internal audits and training managers on wage and hour regulations can help mitigate risks and prevent costly investigations.

Click here to read more from our trust legal partner, Fisher Phillips.

Federal Court Ruling Reinforces Employer Obligation to Pay for Actual Work Time

A recent decision by the 3rd Circuit Court of Appeals serves as a critical reminder that employers must pay hourly employees for the actual time spent performing job-related activities, not just an estimate of what should be reasonable. The ruling upheld a $22 million verdict against East Penn Manufacturing, a Pennsylvania employer, for failing to compensate employees fully for time spent changing into protective gear and showering due to workplace hazards.

The court’s decision does not prohibit the use of reasonable time estimates, but it reinforces the need for accurate tracking of actual work hours. This ruling highlights the importance of paying employees for all compensable time and maintaining thorough timekeeping practices to mitigate the risk of costly legal challenges.

Read the full article from Fisher Phillips.

DOL Withdraws 80/20/30 Tip Credit Rule: What Employers Need to Know

The U.S. Department of Labor (DOL) has officially withdrawn the 2021 tip credit rule, eliminating the 80/20/30 rule that required tipped employees to be paid full minimum wage for certain non-tipped tasks. This decision aligns with the 5th Circuit’s ruling in Restaurant Law Center v. DOL, which found no basis for the rule in the Fair Labor Standards Act (FLSA). The withdrawal means employers can now rely on the prior “dual jobs” rule, which allows for more flexibility in applying the tip credit.

Important considerations for employers include:

Tip Credit Rules Revert to “Dual Jobs” Standard: Employers can continue taking the tip credit for tipped employees unless they perform entirely separate non-tipped duties (e.g., a server working as a maintenance worker).
The 80/20/30 Rule No Longer Applies: There is no federal requirement to track whether tipped employees spend more than 20% of their time or 30 consecutive minutes performing non-tipped duties.
State Laws May Still Apply: Some states maintain their own 80/20 rule or ban tip credits altogether, so state compliance remains critical.

The withdrawal of the 80/20/30 rule is a positive development for employers using the tip credit, but state laws still vary. Employers should continue reviewing policies, training managers, and monitoring legal updates to ensure compliance in all jurisdictions where they operate.

Read more from Fisher Phillips about the withdrawal of the 80/20/30 Tip Credit Rule.

State Updates

California Expands Non-Compete Ban: What Employers Need to Know

As of January 1, 2024, California strengthened its ban on non-compete agreements, making them unenforceable regardless of where and when they were signed. This law led to new legal challenges, particularly for out-of-state employers with employees in California. While no California appellate court has ruled on the law yet, several federal cases have already provided insight into how courts may interpret its reach.

Key Takeaways from Recent Court Decisions

California Law Does Not Automatically Override Other States’ Laws: Courts have upheld non-compete agreements governed by other states’ laws (e.g., Massachusetts in DraftKings Inc. v. Hermalyn), signaling that California’s ban does not always apply nationwide.
Out-of-State Employees May Not Necessarily Be Permitted to Void Non-Compete Agreements by Relying on California Law: Courts have rejected attempts by non-California employees to void non-competes under California law (Bowser v. Foundation Building Materials and Poer v. FTI Consulting). However, the result may differ if a non-California employee who works for a California-based employer challenges the non-compete agreement.

California’s non-compete ban now extends beyond state lines, but its full reach is still being tested in the courts. Employers should stay informed on emerging case law and work with legal counsel to adjust agreements and policies accordingly.

To find out more, click here for an article from Fisher Phillips.

California Supreme Court Cases Employers Should Watch in 2025

The California Supreme Court is set to rule on several key employment law cases in 2025, which could significantly impact employers in the state. These cases address issues ranging from whistleblower protections and arbitration agreements to workers’ compensation and wage claims.

Key Pending Cases

Brown v. City of Inglewood: The Court will determine whether elected officials qualify as “employees” under California’s whistleblower protection law.
California Department of Corrections and Rehabilitation v. Workers’ Comp. Appeals Bd.: This case examines how enhanced workers’ compensation benefits for serious and willful misconduct should be calculated.
Fuentes v. Empire Nissan, Inc.: The ruling will clarify whether arbitration agreements with procedural flaws, such as tiny, unreadable print, can still be enforced if they are fair in substance.
Iloff v. LaPaille: The Court will address what constitutes an employer’s “good faith” defense to liquidated damages and whether wage claimants can seek paid sick leave penalties in de novo wage claim trials.
Zhang v. Superior Court: This case will determine whether California’s Labor Code section 925 can override an arbitration agreement’s forum-selection clause, potentially affecting the enforceability of out-of-state arbitration agreements.

These decisions will shape employer obligations in whistleblower protections, wage and hour compliance, arbitration enforceability, and workers’ compensation liability. Employers in California should stay informed and review policies to ensure compliance as new legal standards emerge.

Follow this link for more details on these cases from Jackson Lewis.

Colorado Updates Privacy Act Rules: New Biometric and Children’s Data Protections

The Colorado Attorney General’s Office has finalized updates to the Colorado Privacy Act (CPA), bringing new compliance requirements for businesses handling biometric data, employee biometrics, and children’s privacy. These rules take effect beginning in mid-2025 and introduce strict notice and consent obligations for businesses.

The most notable compliance obligations under this new law include:

Biometric Data Consent (Effective July 1, 2025): Businesses must obtain written or electronic consent before collecting biometric data (e.g., fingerprints, voiceprints, facial recognition). Fresh consent is required for any new use of the data.
Notice Requirements: Businesses must provide clear, advance notice about what biometric data they collect, why they need it, how long they will keep it, and whether it will be shared.
Children’s Privacy Protections (Effective October 1, 2025): Businesses offering online services to minors must obtain parental consent before processing their data, limit data retention, and avoid features that manipulate minors’ engagement.
Legal Clarifications: Companies can request opinion letters from the Attorney General’s Office for guidance on CPA compliance, potentially using them as a good faith reliance defense in case of disputes.

Businesses operating in Colorado, particularly those handling biometric data or minors’ information, should start updating their policies and processes now to align with the CPA’s new requirements before enforcement begins.

Click here for Fisher Phillip’s insights on the CPA’s new compliance requirements.

Delaware Issues First WARN Act Regulations, Adding New Compliance Requirements for Employers

Five years after enacting its Worker Adjustment and Retraining Notification (WARN) Act, Delaware has issued its first set of regulations, aligning closely with the federal WARN Act but introducing key distinctions that impact employers with Delaware-based employees.

Under the new regulations, employers must comply with the following:

Notice Content Requirements: Unlike federal WARN, Delaware WARN notices must include employees’ names, job titles, and contact information in notices to all affected employees and union representatives. Additionally, notices must contain specific information on unemployment benefits and reemployment services, similar to New York WARN.
Service of Notice: Employers must now use official letterhead, have a signed attestation of truthfulness, and send notices to the Delaware Department of Labor via first-class or certified mail, postmarked at least 60 days before an employment loss. The regulations remain silent on whether email notice is permissible.
Sale of a Business: The new regulations shift responsibility for WARN notice compliance to the employer—either seller or buyer—who orders a mass layoff, plant closure, or relocation, which may impact notice timing obligations.
Stricter Exception Criteria: The regulations impose stricter conditions for using exceptions to the 60-day notice rule. For instance, employers claiming the “seeking capital” exception must demonstrate a realistic opportunity to secure funding. Similarly, new conditions apply to exceptions for temporary employment and natural disasters, the latter now explicitly including pandemics.
Extensions & Rescissions: If a mass layoff is delayed beyond 60 days, a new WARN notice is required. If the planned action is canceled, employers must notify the Delaware Department of Labor as soon as possible.

Delaware employers should review their workforce reduction policies to align with the updated WARN regulations. Ensuring proper content in notices, adhering to stricter exception criteria, and understanding notice obligations in business sales are critical compliance steps. Employers are encouraged to consult with legal counsel to navigate these new requirements effectively.

Littler Mendelson has outlined additional information on Delaware’s WARN Act, please click here to learn more.

Florida Employers Should Consider Accommodations for Off-Duty Use of Medical Marijuana, Court Rules

A Florida state court has ruled that employers must consider accommodations for the off-duty use of medical marijuana under the Florida Civil Rights Act. In Giambrone v. Hillsborough County, No. 20-CA-4719 (Fla. 13th Cir. Ct. Dec. 10, 2024), the court granted summary judgment in favor of an EMT who was placed on administrative leave after testing positive for marijuana, despite holding a valid medical marijuana card.

The court found that Florida’s constitutional amendment legalizing medical marijuana does not require accommodation for on-site medical marijuana use but does require employers to accommodate the off-site use of medical marijuana so long as employee is a qualified patient. The court found that the employer’s refusal to accommodate Giambrone’s off-duty medical marijuana use constituted disability discrimination. The court also rejected the employer’s argument that federal law prohibits marijuana use, emphasizing that Giambrone’s licensing was regulated by the state, not federal authorities.

This decision reinforces the need for Florida employers to reassess their drug testing policies, particularly in light of protections for employees who are qualified medical marijuana patients. Employers should carefully evaluate positive drug test results, ensure compliance with state disability laws, and consider reasonable accommodations where applicable.

Jackson Lewis provides additional detail here.

Illinois’ Cook County Amends Paid Leave Rules

Cook County, Illinois, has implemented amendments to its Paid Leave Ordinance, introducing new employer obligations. The changes, which took effect immediately, require employers to update their paid leave policies, accrual methods, and notification procedures.

The most notable amendment to the leave ordinance includes:

Paid Leave Accrues During Paid Leave: Employees will continue to accrue paid leave while using their accrued leave, although these hours will not count toward overtime calculations.
Written Paid Leave Policy Requirement: Employers must maintain and distribute a written paid leave policy outlining employee rights and benefits. This policy must be provided at the start of employment and annually thereafter.
Remote Worker Notice Requirement: Employers must share the County-issued Workplace Poster with remote employees using their normal communication channels, such as email or an intranet.
Calculation of Paid Leave for Employees with Multiple Job Codes: Employers must calculate paid leave based on either (a) the average hourly rate across job functions or (b) the greater of the minimum wage or the employee’s lowest rate.
FMLA Rules Take Precedence Over Local Regulations: Employers may require FMLA-eligible employees to use accrued paid leave before taking unpaid FMLA leave.

Employers in Cook County (excluding Chicago) should update leave policies, payroll systems, and employee notifications to ensure compliance with these changes.

Follow this link to an article from Jackson Lewis to read more about these recent amendments.

Illinois Eliminates Subminimum Wages for Workers with Disabilities

On January 21, 2025, Governor JB Pritzker signed the Dignity in Pay Act (HB793) into law, mandating the phase-out of subminimum wage authorizations under Section 14(c) of the Fair Labor Standards Act (FLSA) by December 31, 2029. This change aligns Illinois with 18 other states that have already eliminated the use of Section 14(c) certificates, which previously allowed certain employers to pay workers with disabilities less than the minimum wage.

The law directs the Illinois Department of Human Services (IDHS), the Illinois Council on Developmental Disabilities (ICDD), and the Illinois Department of Labor (IDOL) to develop a multi-year transition plan by July 1, 2025, ensuring employers and employees successfully shift to competitive wage employment. A newly created transition grant program will provide financial and technical assistance to employers currently utilizing subminimum wages, helping them integrate individuals with disabilities into competitive employment, supported employment, entrepreneurship, and community-based programs.

Employers currently using Section 14(c) certificates should begin developing transition strategies to comply with the law. With the Illinois minimum wage at $15.00 per hour as of January 1, 2025, and expected to rise, proactive planning is essential. Employers should stay informed about grant opportunities and compliance benchmarks to ensure a smooth transition before the 2029 deadline.

Click here to read more from Littler Mendelson about wages for workers with disabilities.

Michigan Governor Signs Two New Laws that Impact Minimum Wage and Paid Sick Leave Laws

On February 21, 2025, Michigan Governor Gretchen Witner signed two bills into law that revised the minimum wage, tip, and paid sick leave standards expected to take effect that day. Key aspects of the proposed amendments include:

Minimum Wage & Tip Credit: The amended law increases the minimum cash wage a tipped employee must receive from their employer, but not as much as was anticipated. Additionally, the amendments retain the tip credit as an option for qualified employees.

Frontloading Sick Leave: Employers can avoid the carryover requirements if, at the beginning of each year, they frontload a specific amount of leave: 40 hours (small businesses – 10 employees or less) or 72 hours (other businesses). No Private Right of Action for ESTA Violations: Employees are no longer be able to sue employers directly for Earned Sick Time Act (ESTA) violations and instead need to file complaints with the state’s Labor and Economic Opportunity agency. Note also that smaller employers are subject to lower requirements under the ESTA.

Rebuttable Presumption Changes: Employers will no longer face an automatic presumption of violating ESTA if they take action against an employee within 90 days of the employee exercising ESTA rights.

Carryover Caps: Employers will be allowed to limit carryover of unused sick time at year-end, addressing concerns about unlimited carryover.

Smallest Sick Leave Usage Increment: The minimum time increment for using ESTA leave is one hour “or the smallest increment that the employer uses to account for absences of [sic] use of other time”, indicating that employers don’t have to track smaller increments if it is their policy to require employees to use such smaller increments when they are taking other types of paid or unpaid leave (e.g., vacation).

Michigan employers should consult legal counsel to ensure readiness for both of these laws and any future amendments. Updating sick leave policies, payroll systems, and compliance strategies accordingly will help Michigan employers avoid potential penalties.

Littler Mendelson provides additional information here.

New Jersey’s Law Against Discrimination Applies to Automated Decision-Making Tools

The New Jersey Attorney General’s Office (NJAG) has issued guidance clarifying that the New Jersey Law Against Discrimination (LAD) applies to algorithmic discrimination in the same way it applies to other forms of discrimination. The guidance highlights concerns about how artificial intelligence (AI) tools, widely used by New Jersey employers, could contribute to discriminatory outcomes in hiring, housing, and other covered areas.

AI tools, including machine learning models and decision-making algorithms, can lead to discrimination at various stages:

Design: Biases can be introduced based on the choices developers make regarding inputs, algorithms, and decision-making models.
Training: AI models trained on biased data may perpetuate systemic inequities.
Deployment: Employers and other entities may misuse AI tools in ways that result in discrimination, even unintentionally.

The NJAG emphasizes that organizations using AI tools remain liable under the LAD for any resulting disparate impact or treatment, even if they did not design the tool or understand its mechanisms. Companies must assess, test, and regularly evaluate their AI-driven decision-making processes to mitigate discrimination risks. Employers should work closely with AI developers and establish governance strategies to ensure compliance, reducing legal exposure as AI regulations continue to evolve.

For additional information, follow this link to an article from our trusted legal partner, Jackson Lewis.

Governor Hochul Seeks to Expand New York WARN Notice Requirements to Include AI Disclosures

New York is poised to expand its Worker Adjustment and Retraining Notification (WARN) Act requirements, with new amendments expected to mandate additional disclosures in layoff notices. In her recent State of the State address, Governor Kathy Hochul announced that the New York Department of Labor will amend the regulations to require employers to disclose whether layoffs are related to the use of artificial intelligence (AI). This change aims to provide the state with data on AI’s impact on the workforce while ensuring that technology adoption aligns with economic stability for workers. However, the proposal does not specify how this information should be presented or how the collected data will be used.

If implemented, this would be the first AI-related WARN notice requirement in the U.S., reflecting the increasing role of AI in workplace decisions. Additionally, pending legislation (S2595) in the New York State Senate seeks to further expand the WARN Act by broadening coverage to include certain controlling individuals and affiliates, removing the part-time employee exception when determining mass layoff thresholds, and imposing mandatory severance obligations similar to those in New Jersey.

Employers planning a WARN-triggering event in New York should monitor these developments closely. Given the evolving nature of the NY WARN Act, companies should review their compliance strategies and consult legal counsel to prepare for potential new obligations.

Click here to read more about the New York Warn Act from Littler Mendelson.

New York Expands Workers’ Compensation Coverage for Mental Health Injuries

On December 6, 2024, Governor Kathy Hochul signed S.6635/A.5745 into law, expanding workers’ compensation coverage for employees suffering from job-related mental health injuries due to extraordinary work-related stress. The law took effect on January 1, 2025, and allows all employees, not just first responders, to file for workers’ compensation benefits for mental health injuries.

Previously, only first responders could bring such claims, and their stress had to be incurred during a work-related emergency. Under the revised Section 10(3)(b) of New York’s Workers’ Compensation Law, employees no longer have to prove that their stress was greater than what is typically experienced in their role. However, they must still demonstrate that the stress they endured was extraordinary and that it arose in the course of their employment.

Key aspects of the new law include:

Expanded eligibility: All employees—not just first responders—can now file workers’ compensation claims for work-related mental health injuries.
Workers’ compensation exclusivity: Employees who successfully claim workers’ compensation benefits for a mental health injury are generally barred from suing their employer for emotional distress.
Potential exceptions: Employees may still pursue emotional distress claims in court if their employer fails to maintain workers’ compensation insurance or if the injury results from an intentional tort committed by the employer.
Application moving forward: The law does not apply retroactively, meaning claims will only be considered for behavior occurring on or after January 1, 2025.

Given the likely increase in mental health-related claims, employers should review and update their workers’ compensation policies to ensure they account for the expanded coverage. Businesses should also consult with labor and employment counsel to assess potential risks and ensure compliance with the new law.

Follow this link to read more from our trusted legal partner, Littler Mendelson.

New York’s Warehouse Worker Injury Reduction Program Creates New Employer Responsibilities

Effective June 1, 2025, large warehouse employers in New York must implement an injury reduction program under the newly enacted Warehouse Worker Injury Reduction Program. The law, signed by Governor Kathy Hochul on December 21, 2024, applies to employers with over 100 employees at a single warehouse or more than 1,000 across multiple locations.

The program aims to prevent musculoskeletal injuries, a leading cause of lost work time. Employers must conduct written worksite evaluations with a qualified ergonomist to identify risk factors such as rapid pace, repetitive motions, and awkward postures. Employees must be notified of evaluation results, and risk factors must be addressed within 30 days, or a corrective action plan must be provided.

Annual employee training is required, covering early detection of musculoskeletal disorders, workplace risk factors, injury prevention methods, and employees’ rights. Training must be in the employees’ primary language. Employers with on-site medical facilities must ensure compliance with New York’s physician supervision requirements and maintain written evaluations of medical treatment protocols.

New York continues its focus on workplace safety, with the Retail Worker Safety Act set to take effect in March 2025. Employers should prepare by reviewing safety protocols, training programs, and compliance requirements to mitigate risks and ensure adherence to the new law.

Click here to read more from our trusted legal partner, Jackson Lewis.

Oregon Updates Salary Threshold for Enforceable Noncompetition Agreements

The Oregon Bureau of Labor and Industries (BOLI) has increased the minimum salary threshold for enforceable noncompetition agreements. Effective immediately, an employee must earn at least $116,427 annually in gross salary and commissions at the time of termination for the agreement to be enforceable—up from $113,241.

Key Noncompetition Agreement Requirements in Oregon:

Advance Notice: Employers must notify new employees in writing at least two weeks before their start date if a noncompetition agreement is required. For existing employees, an agreement is only enforceable if it follows a bona fide advancement.
Duration Limit: Agreements cannot exceed 12 months from the employee’s termination date.
Protectable Interest: The employee must have access to trade secrets or competitively sensitive confidential information for the agreement to be valid.
Written Confirmation: Employers must provide the employee with a signed, written copy of the noncompetition terms within 30 days of termination.

If a noncompetition agreement fails to meet these statutory requirements, it is automatically void—meaning the employee does not need to take legal action to invalidate it. These rules do not apply to bonus restriction agreements or non-solicitation agreements.

Oregon employers should review and update their noncompetition agreements to ensure compliance with the new salary threshold and other statutory requirements.

Click here to read more from Littler Mendelson regarding Oregon's noncompetition agreements.

What Employers Need to Know After Puerto Rico Supreme Court’s Employment Discrimination Ruling

The Puerto Rico Supreme Court has issued a landmark decision interpreting key provisions of the Puerto Rico Labor Reform Act of 2017 and clarifying the application of the McDonnell Douglas burden-shifting framework in employment discrimination cases under the Puerto Rico Anti-Discrimination Act (Act No. 100). In Jimenez Soto v. Carolina Catering Corp., the Court ruled that local employment discrimination claims must align with federal law, particularly Title VII of the Civil Rights Act.

The case involved the termination of a Dominican employee whose permanent resident card had expired. The employee alleged national origin discrimination, but the Court held that Act 100 does not cover discrimination based on citizenship or immigration status. In reaching this decision, the Court relied on federal court precedents, as required by the 2017 Labor Reform Act.

A significant outcome of this ruling is the Court’s confirmation that Act 100 claims must follow the McDonnell Douglas framework. This process requires employees to first establish a prima facie case of discrimination. If successful, the burden shifts to the employer to present a legitimate, non-discriminatory reason for the adverse employment action. The employee must then prove that the reason was merely a pretext for discrimination. The Court also affirmed that while employers bear the burden of producing evidence, the ultimate burden of persuasion remains with the employee.

Additionally, the Court adopted the federal "same actor" doctrine, which presumes a lack of discriminatory intent if the same individual hires and terminates an employee within a short period.

This decision reinforces the need for employers in Puerto Rico to align their employment policies with both local and federal anti-discrimination laws. Employers should proactively review hiring and termination policies, provide training for managers, and consult with legal counsel to ensure compliance and minimize risk.