Welcome to the latest edition of AlphaStaff's Monthly Compliance Updates!
We are pleased to provide you with national and state legal updates and highlight resources provided by some of AlphaStaff’s trusted legal partners to guide and help keep you in compliance.
National Updates
Texas Court Sets Aside the FTC’s Non-Compete Rule with Nationwide Effect
On August 20, 2024, the U.S. District Court for the Northern District of Texas ruled that the Federal Trade Commission (FTC) lacked authority to enforce its new non-compete rule, which sought to prohibit most non-compete agreements and required employers to issue non-enforcement notices. The court set aside the rule, meaning it will not take effect on September 4, 2024, as originally planned. The decision, which applies nationally, found that the FTC exceeded its statutory authority under the Administrative Procedure Act (APA) and acted arbitrarily by failing to justify the rule’s broad scope. This ruling offers employers a temporary reprieve, but the FTC is expected to appeal. Employers should use this time to assess their use of non-compete agreements and prepare for potential future developments regarding the rule.
Click here for more details from Littler.
Overtime Rule Clears Major Hurdle Ahead of January 1, 2025 Effective Date
A recent ruling from the 5th Circuit Court of Appeals affirmed the Department of Labor's (DOL) authority to set a salary basis floor for workers to be considered exempt from overtime pay, a significant win for the agency just before a new rule takes effect on January 1, 2025. This rule will raise the minimum salary threshold for exemption from overtime to $58,656 annually. Despite the Supreme Court's recent decision limiting the power of federal agencies, the court upheld the DOL's right to define the terms of the Fair Labor Standards Act's (FLSA) overtime exemptions, which include salary thresholds.
While this ruling is a victory for the DOL, challenges remain, and a national injunction could still halt the upcoming salary increase. Employers should stay informed about ongoing litigation and continue reviewing employee classifications, updating payroll systems, and communicating potential changes to affected employees.
Click here for more details from Fisher Phillips.
Fifth Circuit Vacates DOL’s 80/20/30 Rule for Tipped Employees
In Restaurant Law Center v. U.S. Department of Labor, the Fifth Circuit Court of Appeals vacated the Department of Labor’s (DOL) “80/20/30 Rule” that placed strict limitations on how hospitality employers could apply the federal tip credit, a provision under the Fair Labor Standards Act (FLSA). The court found the rule inconsistent with the FLSA and deemed it arbitrary and capricious. The 80/20/30 Rule, formalized in 2021, categorized work into “tip-producing,” “directly supporting,” and “not part of the tipped occupation” tasks, limiting the time spent on non-tip-producing tasks to qualify for application of the federal tip credit and mandating full minimum wage payment for certain duties.
The court criticized the DOL for disaggregating tasks within tipped occupations and concluded that employees cease to be tipped workers when they perform tasks unrelated to their tipped occupation, rather than based on time spent on untipped tasks. This decision effectively ends the 80/20/30 Rule within the Fifth Circuit (covering Texas, Louisiana, and Mississippi).
Employers should review state and local laws, as some may impose stricter requirements regarding tipped employees and tip credits.
Click here to read more from Littler.
Healthcare Employers Must Prepare for OSHA to Release Proposed Workplace Violence Rule by Year’s End
Federal workplace safety officials are planning to release a proposed rule by the end of this year aimed at reducing workplace violence in healthcare settings. The Occupational Safety and Health Administration (OSHA) is expected to propose a standard in December 2024 that would require healthcare employers to implement workplace violence prevention programs. The rule could be finalized and effective as early as next year.
The proposed rule follows years of review and is intended to protect healthcare workers, who face higher risks of violence than those in other industries. Key requirements will likely include written prevention programs, hazard assessments, staff training, and specific recordkeeping for workplace violence incidents.
Healthcare employers should review their current safety policies to ensure compliance with existing federal and state laws, including OSHA’s general duty clause and guidelines on workplace violence prevention. Being proactive in aligning with these potential new regulations could help mitigate legal risks and ensure worker safety.
Click here to read more from Fisher Phillips.
Election Day Consideration for Employers
As the general election draws closer, it is crucial for employers to stay informed about relevant labor and employment laws. We have identified three valuable resources to help you navigate potential changes and ensure compliance. The first provides general guidance on employer’s rights and responsibilities regarding political issues. The second focuses on voting leave laws by state, highlighting your obligations to provide employees with time off to vote. The third discusses labor and employment-related legislation that will appear on the ballot, offering insight into key issues that could impact your workforce. Together, these resources will help you stay prepared and compliant during this election season.
Employers in the following states should make sure to review the included resources as these states require employees to be paid for leave or prohibit employers from docking employee wages and, in some cases, require the posting of notices regarding rights to voting leave: Alaska, Arizona, California, Colorado, District of Columbia, Illinois, Iowa, Kansas, Kentucky, Maryland, Minnesota, Missouri, Nebraska, Nevada, New Mexico, New York, Oklahoma, South Dakota, Tennessee, Texas, Utah, West Virginia, Wisconsin, and Wyoming.
Election Season FAQs for Employers (Click Here to Read)
A State-By-State Guide of Voting Leave Law (Click Here to Read)
Workplace Law Issues on State Ballots this Election Day (Click Here to Read)
State Updates
Possible California Leave Entitlements for Parents Now that School is Back in Session
California employers should be aware of several key leave entitlements available to employees with children, especially as the school year begins.
- School Activity Leave - This unpaid leave allows participation in school activities such as field trips or conferences but is limited to eight hours per month.
- Suspension or Expulsion Meetings - Employers are prohibited from terminating or discriminating against employees who take paid/unpaid time off to attend school meetings regarding a child’s suspension or expulsion.
- Paid Sick Leave - Parents can use accrued Paid Sick Leave to care for a child who is ill or needs preventive care. As of 2024, California's minimum required sick leave has increased to five days or 40 hours. Employers should also review any applicable local sick leave ordinances.
These laws were developed to ensure that working parents in California have the necessary support to care for their children. California employers should remain familiar with these laws and ensure that their policies are compliant.
Click here to read more from Jackson Lewis.
Los Angeles Publishes “Model Contract” Under Freelance Workers Protections Ordinance
The City of Los Angeles has introduced a "Model Contract" under the Freelance Workers Protections Ordinance (FWPO), which took effect on July 1, 2023, to protect freelance workers. This ordinance applies to freelancers performing services worth $600 or more in a calendar year for businesses in Los Angeles. It mandates written contracts, timely payments within 30 days (if not specified in the contract), and record retention for four years. Additionally, the law prohibits retaliation against freelancers for exercising their rights.
Prior to executing a model contract with a potential freelancer, hiring entities must first confirm that freelance workers are properly classified under California Labor Code Section 2775 et seq. Once classification is confirmed, the model contract can be adapted to suit specific engagements, covering the scope of work and payment terms in line with the FWPO. Misclassification or other violations of this ordinance could carry significant legal consequences, including damages, attorney fees, and additional penalties.
Click here to read more from Littler.
The County of Los Angeles Will Soon Post Notice and Sample Documents to Comply with the County’s Sweeping Fair Chance Ordinance
Starting September 3, 2024, employers with jobs located in unincorporated areas of Los Angeles County, including remote and hybrid positions, must comply with the new Fair Chance Hiring Ordinance. This ordinance extends beyond federal and state laws, affecting both contractor and freelance workers, and adds further complexity to California’s criminal background check requirements.
Key compliance considerations for employers include:
- Reviewing and updating job applications to remove impermissible inquiries about criminal history.
- Updating workplace postings and websites with the necessary information on fair chance hiring.
- Providing training for recruiters and hiring personnel on permissible criminal history inquiries and the fair chance process.
- Preparing for potential delays in staffing due to background check procedures and ensuring compliance with new documentation and assessment requirements.
Employers are encouraged to proactively evaluate their hiring practices to align with the ordinance and review related compliance under federal, state, and local employment laws.
Click here to read more from Littler.
Florida’s Minimum Wage Will Rise Again on September 30, 2024
Effective September 30, 2024, Florida’s minimum wage will increase to $13 per hour for non-tipped employees and $9.98 for tipped employees, continuing the scheduled increases approved by voters in 2020. Employers should ensure that updated minimum wage posters are displayed in visible locations.
Failure to comply with the new requirements can result in back wages, fines, and possible lawsuits. Employers should also be mindful of local wage theft ordinances, which may impose stricter penalties, especially in counties like Miami-Dade. To stay compliant, businesses should remain informed about future wage increases and any potential amendments that could raise the minimum wage beyond 2026.
AlphaStaff has notified all clients with impacted employees as well as updated Prism to reflect the new wage, so no further action is needed for our existing clients with Florida employees. Updated labor posters will automatically be distributed to any client subscribed to our poster services through our vendor partner, Poster Guard. If you do not receive posters through Poster Guard, please contact your HR Account Manager for more information.
Click here to read more from Fisher Phillips.
Georgia’s Restrictive Covenants Act Does Not Require That Restrictive Covenants Contain Express Geographic Restriction
In a September 2024 ruling, the Georgia Supreme Court reversed a prior decision by the Georgia Court of Appeals in North American Senior Benefits, LLC v. Wimmer. The court held that an employee non-solicitation covenant does not need to contain an express geographic restriction to be enforceable under the Georgia Restrictive Covenants Act (GRCA). However, such covenants must still be reasonable in geographic scope. The GRCA requires restrictive covenants to be “reasonable in time, geographic area, and scope,” but the Georgia Supreme Court clarified that these geographic terms may be implied rather than explicitly stated.
This decision impacts both employee non-solicitation and non-competition covenants, suggesting that although geographic restrictions are not mandatory, employers should still include reasonable geographic limits in these agreements to ensure they are enforceable. Employers are encouraged to review their restrictive covenants, as the court's ruling may affect the enforceability of current and future agreements.
Click here to read more from Littler.
Illinois Passes State Law Offering Protection to Employees from Unfair Enforcement of Employment Verification Practices
Illinois has enacted Senate Bill 0508 (SB0508), strengthening employment protections for workers flagged by systems like E-Verify due to identification discrepancies. Effective January 1, 2025, the new law ensures that employers cannot impose verification requirements exceeding federal standards and must provide specific notices to employees when discrepancies arise. These notices must include details about the deficient documents, instructions on correcting the discrepancies, and the employee’s right to representation during related discussions.
Employers must also inform employees of any discrepancy notices received from federal or state agencies within five business days. Additionally, SB0508 mandates employers post notices in the workplace regarding any Form I-9 inspections by governmental agencies, detailing the inspecting entity and the nature of the inspection. If work authorization is contested, employers must provide further notice and ensure employees know their rights and timelines.
Violations of SB0508 could result in liability for damages, attorney’s fees, and/or civil monetary penalties, so employers should review and update their compliance processes to align with these new requirements.
Click here to read more from Littler.
Federal District Court Rules Illinois Employer’s Zero-Tolerance Marijuana Policy Justified Termination
A recent ruling by a federal district court in White v. Timken Gears & Services, Inc. has clarified that zero-tolerance marijuana policies are lawful in Illinois, reinforcing employers’ rights to enforce such policies even after the state legalized recreational marijuana use. In 2019, Illinois passed the Cannabis Regulation and Tax Act (CRTA), which legalized adult recreational marijuana use but also allowed employers to continue implementing and enforcing drug-free workplace policies. However, the extent to which these policies could be enforced, especially in light of Illinois’s Right to Privacy in the Workplace Act (IRWPA), remained uncertain.
In this case, the plaintiff, a Territory Account Manager, tested positive for marijuana during a random drug test, which was in violation of his employer’s Drug and Alcohol Policy. This policy not only prohibited the use of controlled substances, including marijuana but also required random drug testing of employees. After the plaintiff failed multiple drug tests, the employer terminated his employment, leading the employee to file a lawsuit claiming that the termination violated the IRWPA, which protects employees from being fired for lawful activities conducted off-premises during nonworking hours.
The court’s analysis focused on key provisions of the CRTA, which permit employers to adopt “zero tolerance or drug-free workplace policies” that are not limited to workplace conduct. The court determined that the employer’s actions were lawful under the CRTA, which authorizes the enforcement of such policies through reasonable and nondiscriminatory random drug testing. The court ruled that the employer’s policy was neither discriminatory nor unreasonable, particularly since the employee had been given multiple opportunities to comply with the policy.
This decision underscores the importance for Illinois employers to clearly define and communicate their drug-free workplace policies and ensure that these policies are enforced consistently and in a non-discriminatory manner. Employers should review their current policies to confirm they align with state law and ensure that employees are fully informed of the potential consequences of violations.
Click here to read more from Littler.
Illinois Employers Using Artificial Intelligence for Workplace Purposes Will Soon Need to Provide Notice
Starting January 1, 2026, Illinois employers must provide notice to applicants and employees if they use artificial intelligence (AI) in employment decisions including recruitment, hiring, promotion, training, and discipline. This law, signed by Governor J.B. Pritzker, defines AI broadly, covering any machine-based system that generates outputs like predictions, recommendations, or decisions. It also explicitly includes generative AI, such as ChatGPT. Employers are prohibited from using AI in a way that discriminates against any protected class under Illinois law, which includes race, color, religion, and several other categories.
The specific requirements for this notice, including the content and delivery method, will be detailed by the Illinois Department of Human Rights before the law takes effect. Employers should take special note that this law also prohibits the use of zip codes as a proxy for race in AI applications, and violations can result in administrative charges or lawsuits, with potential remedies including compensatory damages and reinstatement.
To comply with the new law, employers should begin by auditing their AI systems to ensure they are not unintentionally discriminatory. It is also important to vet AI vendors carefully and ask critical questions to avoid liability. As the law’s implementation approaches, staying updated on regulatory details is crucial, as is updating company policies and handbooks to reflect the new legal requirements.
Click here to read more from Littler.
Revised Poster Requirement in Massachusetts Starting September 16, 2024
The Massachusetts Department of Industrial Accidents (DIA) has released a revised Workers' Compensation Notice to Employees, which must be utilized by employers starting September 16, 2024. Employers subject to the state's workers' compensation law must display this notice in a location visible and accessible to all employees. If no such space exists, employers may distribute the notice by mail or electronically.
The revised notice requires employers to fill in key information, such as the contact details for HR or the workers’ compensation representative, the workers’ compensation insurance carrier, and, if applicable, the preferred medical facility. Any updates to this information must be reflected by re-posting the notice.
Employers should ensure compliance by posting or distributing the updated notice and keeping it current as necessary.
Click here to read more from Littler.
Massachusetts High Court Rules that Benefit Accrual Not Required During Paid Family and Medical Leave
The Massachusetts Supreme Judicial Court has ruled that employers are not required to allow employees to accrue benefits like seniority, vacation, or sick leave while on leave under the Paid Family and Medical Leave Act (PFMLA). This decision clarifies that, although employees must be reinstated to their pre-leave status, they do not earn additional benefits during their absence.
Key considerations from this ruling include:
- Benefit Accruals: Employers are not obligated to allow the accrual of benefits like vacation or sick leave during PFMLA leave. However, employers can choose to offer more generous benefits.
- Health Insurance: Employers must maintain health insurance coverage during PFMLA leave, but employees may be required to continue paying their portion of the premiums.
- Job Restoration and Retaliation: Employees must be returned to their prior or equivalent position without retaliation after their leave.
Employers should review their policies, clearly communicate benefit accrual details during leave, and stay informed on evolving legal interpretations of PFMLA obligations.
Click here to read more from Fisher Phillips.
Michigan Supreme Court Clarifies Minimum Wage and Tipped Rates and Schedule for 2025 and Future Years
On September 18, 2024, the Michigan Supreme Court issued a clarification regarding future minimum wage rates and the minimum cash wage for tip-credit employees, following its July 31, 2024, decision that found certain legislative amendments unconstitutional. The court clarified that when discussing future rates, it intended to address the “minimum cash wage” rather than the “tip credit,” and corrected an omission in the schedule for phasing out the tip credit. The court also confirmed that all future rate increases will take place on February 21st of each year, beginning in 2026, rather than January 1st as proposed by the state. Additionally, the court approved the state’s approach to adjusting preset rates for inflation for 2025 through 2028, aligning them with the originally intended rates for 2019 through 2022.
The clarified schedule for Michigan’s minimum wage and tip credit phases out tip credits by 2030, with employers required to ensure minimum cash wages increase progressively.
AlphaStaff will continue to monitor legislative changes and keep you informed.
Click here to read more from Littler.
New Jersey Employers to Register for State-Administered Retirement Savings Program
New Jersey employers with 25 or more employees who do not offer a retirement plan must comply with the New Jersey Secure Choice Savings Program Act by enrolling in the state-administered retirement savings program, RetireReady NJ. Employers with 40 or more employees must register by September 15, 2024, while those with 25-39 employees have until November 15, 2024. The program allows employees to voluntarily save for retirement through automatic payroll deductions, without employer contributions. Alternatively, employers can opt out of this requirement by offering their own retirement plan instead.
Covered employers must either enroll in the program or certify their exemption via the RetireReady NJ portal by the established deadline. It is important to timely register or certify an exemption to avoid non-compliance and missed deadlines.
Click here to read more from Fisher Phillips.
Pay Transparency on the Horizon for New Jersey Employers
New Jersey is on the verge of enacting a new pay transparency law, expanding the obligations already imposed by its stringent pay equity legislation. The proposed Senate Bill 2310, which has unanimously passed the state Senate, would mandate employers to disclose compensation details in job listings and for promotional opportunities. If passed by the Assembly and signed into law by the governor, the bill would apply to New Jersey employers with 10 or more employees and would require them to include wage or salary ranges and a general description of benefits in all job postings, both internal and external.
The proposed law builds upon the Diane B. Allen Equal Pay Act, which prohibits pay discrimination based on protected characteristics such as race, gender, and age unless justified by seniority, merit, or bona fide business reasons. Employers in Jersey City are already subject to local pay transparency requirements, which could be a precursor to this state-wide mandate.
Penalties for non-compliance under the new bill could range from $300 to $600 per violation, and the bill emphasizes internal transparency by requiring employers to announce promotional opportunities to all eligible employees before making a promotion decision.
Employers in New Jersey should begin preparing by closely monitoring the progress of this bill, reviewing their current job posting practices, and ensuring their compensation policies are ready to meet the new transparency requirements if the law is enacted.
Click here to read more from Fisher Phillips.
New York Retailers Must Implement Safety Measures to Combat Workplace Violence
New York retail employers will soon face new safety obligations under the Retail Worker Safety Act (RWSA), signed by Governor Hochul. Effective March 4, 2025, retail businesses with 10 or more employees must implement a workplace violence prevention policy and training program. The New York Department of Labor will be responsible for developing a model policy for employers. The policy must identify workplace risks and methods for incident prevention and clearly establish the prohibition against retaliation.
Additionally, employers must conduct annual training on violence prevention, including de-escalation techniques and emergency procedures. For larger retailers with 500 or more employees nationwide, panic buttons must be installed by January 1, 2027, allowing employees to contact 911 immediately in emergencies.
Employers in New York should begin assessing their current policies, workplace risks, and emergency procedures now, while awaiting the DOL's model policy and training.
Click here to read more from Fisher Phillips.
