Welcome to the latest edition of AlphaStaff's Monthly Compliance Updates!
We are pleased to provide you with a recap of National and State Legal Updates and highlight resources provided by some of AlphaStaff’s trusted legal partners to help guide and keep you in compliance.
National Updates
EEOC Releases Comprehensive Guidance Regarding Job Applicants and Employees with Hearing Disabilities
On January 23, 2023, the U.S. Equal Employment Opportunity Commission (EEOC) released a technical assistance document updating the employer guidance on the legal requirements under the Americans with Disabilities Act (ADA) for job applicants and employees who are deaf or hard of hearing or have other hearing disabilities. The document outlines (1) when an employer may ask an applicant or employee questions about a hearing condition and how it should treat voluntary disclosures, (2) what types of reasonable accommodations applicants or employees with hearing disabilities may need, (3) how an employer should handle safety concerns about applicants and employees with hearing disabilities, and (4) how an employer can ensure that no employee is harassed because of a hearing disability or any other disability. For more information, visit this link.
Employers Should Draft Severance Agreements with Caution
On February 21, 2023, the National Labor Relations Board (NLRB) rendered a decision that should prompt employers to review their current templates for severance agreements. This decision resurrected an NLRB standard that existed before 2020. Once again, employers are prohibited from including confidentiality provisions and non-disparagement clauses in severance agreements with an employee that has rights under Section 7 of the National Labor Relations Act (NLRA). It is important to understand that an employer's inclusion of these provisions in a severance agreement amounts to an unlawful labor practice whether or not the employer attempt to enforce these provisions. Please visit this link for more information and the employer's next steps based on this pendulum-swinging decision.
Highly Paid Employees Might be Entitled to Overtime Pay After SCOTUS Decision
A recent decision by the Supreme Court of the United States could impact employers' approach to policies for high-earning workers. In the Helix Energy Solutions Group, Inc. v. Hewitt case, an employee sought to be paid overtime premiums even though he was compensated more than $200,000 annually. He claimed he was misclassified because he was paid a guaranteed daily rate instead of a weekly salary. The employer, Helix Energy Solutions, argued that this employee was exempt under the Federal Labor Standard Act based on the "highly compensated employee" exemption. SCOTUS rendered a decision in favor of the employee, relying heavily on a strict textual interpretation of the FLSA's regulations. The Court held that since the employee was paid a day rate instead of a weekly salary, he did not meet the "salary threshold test" necessary to be classified as exempt from the FLSA. This decision should trigger alarm bells for employers that currently pay highly compensated employees on a day rate, shift rate, or similar payment method. Now is the time to review current employee classifications and compensation practices to ensure compliance with applicable federal and state requirements. Please see this link for more information.
I-9 Remote Verification May be Coming to an Early End
As a result of the national and public health emergency related to the COVID-19 virus, on October 11, 2022, the Department of Homeland Security (DHS) and the U.S. Immigration and Customs Enforcement (ICE) announced a nine-month extension until July 31, 2023, of the policy allowing remote, virtual verification of the documentation required for a Form I-9 when a company's workforce is working remotely. On January 31, 2023, President Biden announced that the national emergency will end on May 11, 2023. This could signal an acceleration of the end of remote I-9 verifications. Once the national emergency ends or normal operations resume, all employees onboarded using remote verification must report to their employer within three business days for in-person physical verification of their identity and employment eligibility documentation. Many immigration attorneys believe that DHS may act to provide relief from this three-day rule because compliance may be impossible for many employers that hired hundreds or thousands of remote employees during the pandemic; however, employers should begin to prepare for compliance regardless. Click here for more insight from Littler Mendelsohn on this issue.
State Updates
California Courts Provide Employers More Reason to Review Their Arbitration Agreements
Recently, the California Court of Appeals rendered decisions in two cases highlighting the necessity of using clear, precise language when drafting arbitration agreements. In Hernandez v. Meridian Management Services, LLC, the plaintiff signed an arbitration agreement with Intelex. Hernandez was an employee of multiple entities related to Intelex that shared payroll, H.R., legal, and risk management teams. When she was terminated, the plaintiff filed suit against the various entities related to Intelex but excluded Intelex as a defendant. These entities attempted to enforce the arbitration agreement arguing that they were third-party beneficiaries of the agreement. Both the trial court and appellate court disagreed, holding that there was no indication that the related entities intended to benefit from the agreement. In Murrey v. Superior Court, the court reversed a previously granted motion to compel arbitration on the grounds that the terms of the arbitration agreement signed by the plaintiff were unjust or one-sided in favor of the employer. One example the court cited for its decision was that the arbitration agreement imposed discovery costs on the employee that the employee would not have otherwise incurred had the matter been heard in court. These two cases serve as yet another reminder to employers of the difficulties that they potentially face when enforcing arbitration agreements in California and, as a result, the importance of drafting clear, precise arbitration agreements. Follow this link from our trusted legal partner, Jackson Lewis, to read more about these two decisions and their potential impact on arbitration agreements in California.
Paid Leave for Any Reason Coming to Illinois
On January 10, 2023, the Illinois legislature passed the Paid Leave for All Workers Act (PLFAW), followed by Governor Pritzker's announcement that he would sign this legislation into law. Illinois is now the third state in the country (after Maine and Nevada) to require private employers to provide earned paid leave to employees to be used for any reason. The PLFAW Act will take effect January 1, 2024, providing nearly all Illinois workers with a minimum of 40 hours of paid leave, or a pro-rata number of hours, during a designated twelve-month period. Employers can choose to frontload the leave on the first day of employment or the first day of a designated twelve-month period or use an accrual method. Under the Act, leave accrues at the rate of one hour of paid leave for every forty hours worked. The law will deem exempt employees to have worked 40 hours in each workweek for purposes of PLFAW Act accrual unless their regular workweeks are less than 40 hours. Read more here from Ogletree Deakins.
Illinois Supreme Court Opens the Door for Massive Damage Awards in Biometric Cases
The Illinois Supreme Court has ensured that employers who don't strictly comply with the Illinois Biometric Information Privacy Act could be on the hook for massive damage awards, a ruling that should cause employers to immediately review their biometric collection practices. Read more here from Fisher Phillips.
Indiana Senate Approves Ban on Doctor Non-Compete Agreements
On February 7, 2023, the Indiana Senate passed a bill to ban non-compete agreements between doctors and their healthcare-provider employers and included an amendment to remove restrictions on referral incentives. Senate Bill 7, which must still be approved by the Indiana House of Representatives, would take effect on July 1, 2023, but would not apply to agreements "originally entered into" prior to that date. Click on this link to read more.
New Jersey Enacts "Temporary Workers' Bill of Rights"
The New Jersey Temporary Workers' Bill of Rights creates significant obligations for staffing firms and third-party employers. The law, signed into law by New Jersey's governor on February 6, 2023, affects the rate and frequency of pay for temporary laborers, imposes new recordkeeping requirements on staffing firms, and creates steep penalties for retaliation, among other things. Follow this link to read more about the far-reaching practical implications of this new legislation.
New York City Local Law 144 and Automated Employment Decision Tools Used in the Hiring Process
"Automated employment decision tools" (AEDTs) use data from statistical modeling, data analytics, or artificial intelligence to issue a score, classification, or recommendation that is used to assist or replace discretionary decision-making in the hiring process. Pre-programmed algorithms and criteria are used to help employers and recruiters make informed decisions on each applicant. In response to increased public and governmental scrutiny of the use of such technologies, in 2021, the NYC Council enacted Local Law 144 with the purpose of protecting employees and job applicants from potential biases and discriminatory effects that may result from the use of AEDTs. Local Law 144 requires employers to conduct bias audits on the AEDTs, including those that utilize artificial intelligence and similar technologies. It also requires employers to provide specific notices about using such tools to employees or job candidates who reside in NYC. The law was to take effect January 1, 2023; however, due to the high volume of comments requesting clarification and guidance, especially those concerning key compliance issues, the New York Department of Consumer and Worker Protections postponed enforcement of the law until April 15, 2023. Click here for an update on Local Law 144 from Jackson Lewis.
Wisconsin Employers Can Insist Upon Unpaid Lunch Breaks
The U.S. Court of Appeals for the Seventh Circuit recently ruled that Wisconsin wage and hours laws concerning the compensability of meal periods empower employers to require such breaks to be unpaid. Under Wisconsin law, bona fide meal periods are not considered work time and therefore are not compensable for non-exempt employees. But some stringent requirements must be met for the meal period to be considered "bona fide." Read more here from Littler Mendelsohn.