What are the Challenges to the Rule?

There are three challenges to the rule. On November 6, 2023, the Service Employees International Union (“SEIU”) filed a petition in the D.C. Circuit, seeking to further expand the scope of the new rule. Shortly after the SEIU filed, on November 9, 2023, the U.S. Chamber of Commerce and a coalition of business groups filed a suit in the Eastern District of Texas, asking the Court to block the rule. The business groups argue that the new rule violates both the common-law foundation of the joint-employer test and the National Labor Relations Act. The suit also alleges that the Biden-era NLRB violated the federal rulemaking process by replacing the current joint-employer rule without a good reason.

In addition to the pending litigation, on November 9, 2023, a bipartisan group of lawmakers introduced a resolution seeking to eliminate the new rule under the Congressional Review Act. Even if this resolution gains traction, President Biden is likely to veto the legislation if it reaches his desk.

What Should Employers Do?

While awaiting the effective date of this rule, employers should continue to examine their business structure to determine whether any agreements they have in place fall under the purview of the new rule, including outsourcing and staffing agency agreements. This examination is particularly important as status as a joint employer potentially gives a company a role at the bargaining table and subjects it to liability. Kelley Drye will provide an update if the NLRB alters the proposed new rule in light of these recent challenges.

The new rule specifically provides that a company may be considered a joint employer if it has authority to control the essential terms and conditions of employment, whether or not such control is exercised. Significantly, the control may be direct or indirect. The new rule broadens the definition of “essential terms and conditions of employment” to include “work rules and directions governing the manner, means, or methods of work performance.” Essential terms and conditions of employment also include wages, hours of work, assignment and supervision of duties, discipline, hiring and firing, and working conditions.

Background

By adopting this new standard, this rule reverts from the NRLB’s 2020 rule which had narrowed the joint-employer test to include only those situations where the company exercises direct control over the conditions of employment. The 2020 rule had reversed an employee-friendly, Obama-era decision, Browning-Ferris Industries of California, Inc., d/b/a BFI Newby Island Recyclery, 362 NLRB 1599 (2015), which held that a company could be considered a joint employer where the company indirectly controlled the essential working conditions of another company’s employer. Now, in another reversal by the NLRB, the new rule marks a return to a broad, employee-friendly standard akin to the BFI standard.

What it means for employees

As the new rule broadens the definition of joint employer, companies should evaluate whether their business structure means they could be considered joint employers due to any “indirect” control over another company’s employers. This change is particularly important for companies who outsource staffing, employee management, or human resources or those who are considering entering into such relationships. As both traditional outsourcing and managed services providers have grown into multi-billion-dollar industries, large and small businesses often outsource to fill skill gaps, cut costs, and maintain flexibility. Common sectors for outsources include payroll, IT, cybersecurity, human resources, and customer service. Given this increasing trend of utilizing outsourcing, companies should pay special attention to the NLRB’s new rule in analyzing their business relationships. With that backdrop, companies should take a fresh look at any staffing and third party agreements to determine whether they contain reserve control provisions, which are likely probative of joint-employer status.

Companies should recognize that status as a joint employer gives them a role in the following areas:

• The Bargaining Table: Joint employers are required to bargain over the employment terms over and conditions as well as all other mandatory subjects of bargaining that it possesses or exercises the authority to control. As such, companies should identify if there are any forthcoming bargaining sessions and prepare with counsel accordingly.
• Liability: Joint employer status subjects a company to liability for lawsuits and other administrative claims. Companies should take preemptive steps to ensure their compliance with employment laws and develop best practices to avoid a potential increase in claims.

Representation Process

On August 25, 2023, the NLRB issued a Final Rule expediting the representation process, which takes effect on December 26, 2023. Typically, the representation process commences with representation petitions filed by employees, unions, or employers seeking an election. The election determines whether employees wish to be represented for purposes of collective bargaining with their employer. The NLRB will review the petition and determine if an election should be conducted and will direct an election. In cases where the parties do not agree on the voting unit or other issues, the NLRB’s regional office holds a pre-election hearing to decide whether an election should be conducted. The NLRB’s recent rule expedites each step of the representation process, including the election and pre-election hearing procedures, thereby benefiting employees seeking to unionize.

How does the Final Rule Change the Election Process?

There are ten key changes to the pre-election hearing process, notifications of election information, and election process, which depart from the 2019 rule, and are set forth below.

1. Pre-election hearings will be scheduled to open eight calendar days from the service of the Notice of Hearing, altering the 2019 rule of 14 business days.
2. Regional directors will have discretion to postpone pre-election hearings for up to two business days where a party shows special circumstances and for more than two business days where a party shows extraordinary circumstances. Previously, regional directors could postpone a pre-election hearing for an unlimited amount of time if a party demonstrated good cause.
3. There is a tighter deadline for the filing of the non-petitioning party’s Statement of Position, which is seven days after service of the Notice of Hearing, rather than eight business days (or 10 calendar days) after service.
4. Regional directors will have discretion to postpone the due date of a Statement of Position for up to two business days if there are special circumstances and more than two in cases of extraordinary circumstances. Previously, regional directors could postpone the due date for an unlimited amount of time if there was good cause.
5. A petitioner shall respond orally to the non-petitioning party’s Statement of Position at the start of the pre-election hearing rather than filing a responsive written Statement of Position prior to the pre-election hearing.
6. An employer has two business days after service of the Notice of Hearing to post the Notice of Petition for Election in the workplace and electronically distribute it rather than five business days to complete these requirements.
7. Disputes concerning individuals’ eligibility to vote or inclusion in an appropriate unit are no longer allowed to be raised at the pre-election hearing. Regional directors have authority to exclude evidence from the pre-election hearing that is not relevant to whether there is a question of representation.
8. Parties may not file post-hearing briefs unless they have the special permission of the regional director or hearing officer, departing from the 2019 rule, which permitted post-hearing briefs.
9. Regional directors ordinarily should specify the election details—(the type, date(s), time(s), and location(s) of the election and the eligibility period)—in the decision and direction of election and simultaneously transmit the Notice of Election with the decision and direction of election. Previously, election details did not need to be specified in the Notice of Election.
10. Regional directors shall schedule elections for “the earliest date practicable” after issuance of a decision and direction of election. The waiting period of 20 business days between the decision and direction of election and the election is eliminated.

If employers anticipate that their employees may file a representation petitions, employers should familiarize themselves with the updated representation process and work with counsel to address any concerns.

In the event that a representation petition is filed, employers should be prepared to move quickly in complying with all procedural requirements and challenging the representation petition, if necessary. As employers’ ability to obtain additional time throughout the representation process is significantly curtailed by these changes, employers will also have less time to engage in negotiations during the election and pre-election processes and must have counsel who can capitalize on tight timelines.

Changes in Protected Activity

In Miller Plastic Products, Inc., the NLRB announced its return to a “totality of the circumstances” test for determining what constitutes protected concerted activity by employees under Section 7 of the National Labor Relations Act (the “Act”). Miller Plastic Products, Inc. involved the termination of a worker who raised concerns about COVID-19 safety protocols and the company’s decision to stay open in the beginning of the pandemic. The NLRB ruled that the company violated the Act as the worker was engaged in protected concerted activity. In Miller Plastic Products, Inc., the NLRB overruled its 2019 Alstate Maintenance, LLCdecision, which had narrowed the test for determining concerted activity using a checklist of factors and returned to the 1986 rule in Meyers Industries Inc., providing a fact-specific examination that looks at the totality of the circumstances. The NLRB also addressed the issue of whether single-worker actions constitute protected organizing activity and concluded a holistic approach evaluating whether an individual’s protests have some connection to group or concerted action is warranted.

Similarly, in American Federation for Children, Inc.,the NLRB held that federal labor law protects workers who advocate for nonemployees, such as interns, reversing a Trump-era ruling that allowed employers to penalize employees for aiding unprotected colleagues. Specifically, the NLRB overruled its 2019 Amnesty International decision, which held that the statutory concept of “mutual aid or protection” did not encompass the efforts of statutory employees to help themselves by helping others who are not statutory employees. In American Federation for Children, Inc., the NLRB concluded that the Act protects the efforts of employees who take action to support nonemployees when those actions can benefit the employees who undertake them.

After the shifts announced by Miller Plastic Products, Inc. and American Federation for Children, Inc., employers should be prepared to address employee complaints that could fall into the category of concerted activity or protected advocacy on behalf of nonemployees in a manner that complies with the Act.

We don’t think the story is that simple. While (for example) the Chair of the Federal Trade Commission has underscored the silliness of noncompetes applied to fast food workers (we agree), the reality is that high-level executives, employees whose jobs involve the creation of trade secrets, and employees at the top of customer-management hierarchies really can use information and relationships they do not “own” to their unfair competitive advantage. And what about your startup, now worth $100 million, that you sell to a private equity firm? Should you be allowed to instantly compete against the business and goodwill you just sold for a lot of money?

The blunt instrument pursued by the FTC, the National Labor Relations Board, and state legislatures—an outright, sweeping ban on “noncompetes,” which they usually define as any agreement that tends to interfere with obtaining future employment—will run into precisely these kinds of legitimate concerns. One state leading the blunt-instrument charge, New York, is facing this public-policy question now. We say it’s a “policy” question because (to put it bluntly, pun intended), it may seem great to be a progressive jurisdiction, but it starts to seem less great when businesses and the jobs they create flee to other states with less sweeping and more sensible limitations.

On June 20, 2023, the New York State legislature passed a Bill that, if signed by Governor Kathy Hochul, would effectively ban noncompetition agreements and certain other restrictive covenants throughout the state, for all employees, regardless of whether they flip burgers or own hedge funds, and without taking into account the considerations involved in the sale of a business. There are reasons Hochul’s executive pen has hovered over the Bill without signing (hint: re-read the first sentence of this paragraph). Recent gossip out of Albany suggests that the Governor may require certain amendments to the proposed law before reconsidering it. Those amendments—all likely aimed at tailoring the law to address legitimate employer concerns—might include minimum salary thresholds to enforce a noncompete, additional consideration an employer might have to pay to make a noncompete enforceable, requirements that would allow noncompetes to be enforced only if an employee had certain job duties, and carveouts for certain industries.

Translation: if you are an employer that is panicking, please take a deep breath. Think of your planned beach vacation. Manifest a future that isn’t devoid of noncompete protections. Your noncompetes aren’t unenforceable yet, and whatever form the New York “ban” will take is less likely to look like a “ban” than a series of surmountable obstacles that will force employers to deploy noncompetes more sparingly and thoughtfully. (By the way, this is something we have always advised employers to do anyway; you ultimately have to explain to courts why this restriction as applied to this employee is absolutely critical to protecting your business from unfair competition, and your argument had better sound plausible.)

The Pending Legislation in New York

The pending Bill would result in a near-total ban on noncompetition agreements in New York, regardless of compensation, job requirements or access to confidential information. The Bill does not even mention, let alone account for, noncompetes that might protect buyers in the event of the purchase of a business (though there are arguments that a seller of a business may not qualify as a “covered individual” under the law).

Although the Bill is intentionally broad, it does not affect the enforceability of (i) fixed-term employment agreements, (ii) agreements preventing solicitation of clients that the employee learned about during their employment, or (iii) agreements prohibiting the disclosure of trade secrets, confidential information, or proprietary client information. Thus, even under the new Bill’s framework, New York employers still have some means of legitimately protecting their business information and other legitimate interests.

The Bill provides a private right of action for employees to sue their employers in state court in order to void potentially unlawful agreements. Further, the Bill provides that employers who attempt to enforce unlawful agreements or have their employees sign them, may be liable for lost compensation, attorneys’ fees, and liquidated damages up to $10,000 per violation.

What to Do Now

Nothing, really. While Governor Hochul has previously expressed her support for a noncompete ban for low-wage workers, that support is a far cry from a full-throated condemnation of all noncompetes. Even the public statements of the Bill’s sponsor, State Senator Sean M. Ryan, have implied ways of narrowing the current bill without burning everything down; for example, he is on the record as saying that the ban would provide greater access to healthcare by not forcing doctors to have to leave their chosen geographic location if they leave their employer.

Ok, we see the argument when it comes to ensuring broad access to patients’ choice of healthcare professionals. And we certainly see the argument on behalf of fast-food workers. The moral argument for liberating other downtrodden employees, like impossibly wealthy portfolio managers at investment firms, seems a little less obvious.

Low-wage workers and doctors are much more sympathetic as subjects of a noncompete ban than, say, investment bankers, who may be able to use their employer’s trade secrets and non-public information to unfairly compete virtually from day one. And while the Bill would allow employers to still protect their trade secrets, the truth of the matter is that proving a violation of a confidentiality and nondisclosure obligations is a tough or undesirable position to be in: you have to wait to see the evidence of damage, unlike with a true noncompete, where you don’t have to worry as much about the damage in the first place, and where proving a violation if often a matter of a quick peek on Google or LinkedIn.

The death of the noncompete in New York and elsewhere, therefore, has already been greatly exaggerated. (It also feels a bit disrespectful to talk about what life will be like following the death of a long-honored family member when they’re actually still alive and sitting next to you in the living room.) Similar to the FTC’s and NLRB’s similar efforts to curb noncompetition agreements, the impact of New York’s latest action is a long way off from being felt, and the nature of the desired impact is likely to come up for debate again in the legislature. To be clear, the momentum against noncompetes does make it likely that New York and other jurisdictions will adopt restrictions more on the order of what Illinois has done, i.e., perhaps no outright ban, but various requirements as to minimum salary level and consideration paid in exchange for a noncompetes that will make their broad use or overuse more difficult for employers. The use of noncompetes is otherwise too embedded in legitimate protection of important company interests for their opponents’ fantasies about their disappearance to materialize in any simple, unified, dramatic way.

Our best, and admittedly simple, advice to our clients is to keep calm, carry on, and wait and see. Don’t ditch your noncompetes just yet, because you may not have to. If you have any questions regarding noncompetition agreements, restrictive covenants or other ways to protect important information, please contact a member of our Labor and Employment team.

What will this all mean for employers? There are challenges for sure, but with planning they are manageable. We take a look at the top trends that will shape labor and employment law in the months to come.

DISCRIMINATION AND EEO ISSUES

More enforcement

Given trends from last year and public messaging from top enforcers, we anticipate an increase in harassment and discrimination litigation, particularly for class-based claims.

In its recently released 2022 Financial Report, the EEO signaled its plan to strengthen enforcement around systemic discrimination. The Agency heralded several victories including obtaining $29.7 million in monetary benefits for victims and collecting over $28 million in damages from 10 lawsuits asserting systemic discrimination last year. Enforcers also recovered a combined $403 million from the Agency’s top 10 settlements of 2022 (nearly doubling rates from the previous year). Highlights include an $18 million settlement with Activision Blizzard over sexual harassment and pregnancy-bias claims and $8 million from Circle K stores over disability and pregnancy discrimination issues.

Even more, the EEOC’s enforcement hike has considerable support from the White House. The President’s proposed budget requests $481 million for the EEOC – a 5.7% increase over its 2023 allocations. While this money is unlikely to materialize in full, it does underscore the growing political support for anti-discrimination and harassment enforcement.

For its part, the workplace plaintiffs’ bar is also seeing historic scores. Last year, plaintiffs won nearly $2 billion combined and saw higher rates of success certifying classes in employment bias, benefits, and wage and hour cases. Top settlements included $597 million from Sterling Jewelers for sex bias claims; $118 million from Google in a pay discrimination dispute; and $185 million between the MLB and minor league players for violations of state and federal wage laws.

Expanded protections

The list of protected classes is growing – quickly. New York added discrimination based on citizenship or immigration status to its prohibitions while Illinois amended its anti-discrimination laws to include “work authorization status.” Seattle passed a first-of-its kind law banning “caste” discrimination while California joined New York in adopting protections based on an employee’s “reproductive health decision making” and off-duty cannabis use. CROWN Act legislation, which prohibits discrimination based on hairstyle and hair texture, is also making its way through the states. The Illinois version became effective most recently, on January 1, when the state joined California, New York, New Jersey, Washington D.C., and several other jurisdictions that have based similar bans. Because these classifications are jurisdiction specific, employers have an added burden of keeping up with numerous changing state and local laws to ensure compliance.

Pregnancy protections are also ramping up. In late December, the Protections for Nursing Mothers (PUMP) Act took effect, expanding protections for nursing employees under the FLSA. The new law covers both exempt and non-exempt employees, expanding its reach to nearly 9 million more employees, including teachers and nurses. Even more, the federal Pregnancy Workers Fairness Act will take effect this June, requiring employers to provide reasonable accommodations for workers with known limitations connected to pregnancy, childbirth, or related medical conditions.

Practical considerations for employers

Watch out for these “hot” areas and be wary if there is an EEOC investigator poking around your company. Be especially careful concerning potential workplace harassment or indications of systemic or ongoing infractions, requests for accommodation (including related to disability and FMLA leave), any accommodations for pregnant persons, and issues of pay disparity. All of these are examples of complaints that can lead to class actions, or large verdicts, so they should be handled carefully.

ARTIFICIAL INTELLIGENCE

Maybe it is not surprising to hear that nearly 1 in 4 organizations use artificial intelligence HR tools, according to a 2022 survey from the Society for Human Resource Management. Nearly 80 percent use AI for recruiting and hiring. This has sparked backlash from government regulators, who worry this software may run afoul of nondiscrimination laws if it illegally rejects candidates based on a protected characteristic.

In its recently proposed “Strategic Enforcement Plan,” the EEOC makes clear that it will target employers using HR software, including programs that incorporate algorithmic decision-making in recruitment, selection, or production and performance management tools. Last May, the EEOC sued three companies under the “iTutorGroup” umbrella for programming its online recruitment software to reject some older applicants. The agency sought back pay and liquidated damages for more than 200 applicants they say were illegally denied jobs based on age.

States are also taking up this cause. Illinois was the first in 2020, followed by Maryland, to regulate the use of automated decision tools in hiring interviews. New York City moved the goalpost even further with a new law that will require employers to audit certain automated tools for bias and post a number of public disclosures. While that law was set to take effect on January 1, enforcement has been postponed until April 15, 2023 to give regulators time to finalize proposed rules surrounding the law. California regulators have taken similar steps to ensure employers and vendors could face liability under state law, regardless of whether there was discriminatory intent, through a new proposed rulemaking. Even more, the California Consumer Privacy Act recently took effect, expanding data privacy law to cover employees, applicants, and others in the workplace.

Practical considerations for employers

In short, employers will likely need to contend with a growing number of state laws on this issue, compounded by complexities of advertising remote work across several jurisdictions. For businesses using AI, consult with outside counsel (yes, you can call us) to ensure compliance with this legal patchwork. For businesses not formally using AI, be sure to audit whether employees are using AI tools. Clients are increasingly beginning to monitor employee use of various AI tools and create policies around their use in the workplace. Even if a tool is not distributed by the company, it may still raise legal concerns for employers if employees are using it unlawfully for work purposes. New York City employers can read more about the city’s recently passed sweeping AI law here.

LABOR, LABOR, LABOR!

Unions are, once again, getting prime political billing in Washington while the NLRB continues its pattern of aggressive enforcement. During the State of the Union, President Biden called on Congress to pass the Protecting the Right to Organize Act and condemned companies for “breaking the law by preventing workers from organizing.” While the Act is unlikely to succeed, this does signal that unions will take center-stage in the upcoming elections.

The NLRB got a $25 million funding boost to its 2023 budget. It had originally requested more than $100 million to account for an increase in its caseload, including an uptick in union representation petitions. In the last year, the NLRB has handed down a host of pro-union decisions and overturned some key Trump-era decisions. This included requiring employers to again deduct union dues after a collective bargaining agreement expired and a major opinion on severance agreements (more on that below).

On the horizon, the NLRB’s general counsel has signaled an interest in reconsidering when an employee is an “independent contractor,” educating the workforce about their rights under federal law, and tackling captive audience meetings.

As unions spread into new, non-traditional industries and we see a general uptick in labor activism (including strikes), the NLRB will likely continue is active role in shaping the workplace.

Practical considerations for employers

Employers with unions should already be familiar with the NLRB and the requirements of the NLRA. However, be aware that unions are becoming more active, and are looking now to organize pockets of the workforce who may not be unionized yet. Employers without unionized employees should watch out for new union organizing and upcoming rulings from the NLRB impacting all employees, not just those already unionized.

PAY TRANSPARENCY

Pay transparency has become a hallmark of the Equal Pay movement. With legislatures around the country enacting a patchwork of new restrictions and obligations, this is becoming a potential landmine for multistate employers.

This started years ago when several jurisdictions enacted laws prohibiting employers from inquiring about an applicant’s salary history. Next, states began requiring employers to disclose compensation ranges to applicants upon request or when making an offer. And now, states including California and New York, are moving the ball even further with laws requiring employers to disclose salary ranges in job postings if the job could be performed in that jurisdiction, including sometimes for internal opportunities. California and Illinois also require some employers to submit their pay data to state agencies. This not only affects how employers negotiate compensation for newcomers, it could also open the door to costly lawsuits should transparency laws unearth potentially discriminatory pay disparities. Even more, some states now prohibit retaliating against an employee for discussing their own or other employees’ pay.

On the federal level, the EEOC has also established pay equity as a main enforcement priority. So as pay ranges become more common on job applications and general anti-discrimination enforcement kicks up, we expect pay transparency issues to be a major focus to come.

Practical considerations for employers

Pay transparency issues can create exposure on multiple fronts for employers, including legal liability and public scrutiny. Employers operating in California and New York should take particular note of local laws, including requirements for job postings and data reporting. This may mean conducting an internal audit, updating hiring templates, and consulting with counsel. Read more of our coverage on laws in New York and California.

EMPLOYEE PRIVACY (Looking at You, Biometrics)

Biometric data has become big business for employers. This includes a host of services that rely on fingerprints, facial scans and voice recognition to do things like verify an employee’s identity, launch automated assistants, access events, or track time. But as these types of tools became more common, regulators took notice.

Illinois was the first state to directly regulated biometric data as a consumer (and employee) privacy matter. We’ve been covering the state’s Biometric Information Privacy Act (BIPA) since it first starting making waves for employers in court. Just recently, two monuments state supreme court decisions were handed down that should give any employer operating in the jurisdiction pause. The court made clear that BIPA violations will be tallied by act, not by individual. This means a new violation could accrue every time an employee uses a biometric time clock, potentially several times per work shift, and could open even more cases on this already contentious law. We expect this will lead to even more BIPA-related cases with huge payouts for employees and the plaintiffs’ bar.

Even more, other states are trying their hand at similar types of legislation. Texas and Washington have similar biometric laws, but do not allow for a private right of action. As of this January, Maryland and Mississippi have introduced new biometric privacy bills and other states may follow suit. We will continue to monitor major developments in this area of law as the legislative season moves forward.

Practical considerations for employers

Biometric tools can be very valuable in the workplace, but compliance with related privacy laws is also a challenge. The best advice is get good privacy counsel, as this is an area of the law which has become increasingly complex and specialized. Read more on BIPA – a monster of privacy statute – here.

RESTRICTIONS ON RESTRICTIVE COVENANTS

Noncompetes: An FTC Final Rule on … Maybe?

We’ve covered the Federal Trade Commission’s proposed rule that would ban essentially all noncompete agreements extensively (read more here) as unfair restraints of trade. From the Agency’s vantage, these common contractual provisions illegally suppress competition and employee wages. Before promulgating a final rule, the agency must accept public comment. The deadline to submit comments has been extended several times. Even if the rule is finalized, it will likely face a host of court challenges.

Practical considerations for employers

We’ve covered the FTC’s proposed rulemaking in depth (read that here), but there are some key takeaways for employers:

• Craft any restrictive covenant with caution. Restrictions on an employee’s post-employment prospects (be it their next job or their ability to “speak out” against their former employer) are increasingly disfavored.
• Restrictions should be targeted and narrowly tailored to protect an employer’s interests. In other words, try not to use boilerplate agreements, and tailor each agreement to the position or the person who is signing it.
• Carefully consider who signs a noncompete. This should be limited to senior executives or those who have access to sensitive data or information. Even more, be aware of local laws that could render restrictive convents more difficult to enforce.

Nondisclosures and Non-disparagement

The Biden administration has seemingly adopted a whole-of-government approach to restrictive covenants. Aside from the FTC’s historic rulemaking, the EEOC has identified overly broad waivers, releases, and non-disclosure and non-disparagement agreements as priorities for the Agency as barriers to access to the judicial system. And in December, Congress passed the Speak Out Act, which curtailed the use pre-dispute restrictive covenants that would prohibit employees from speaking out against sexual assault or sexual harassment.

The NLRB’s McLaren Macomb decision also took aim at the use of non-disclosure and non-disparagement clauses in severance agreements, which may apply to both union and non-union employers. (We covered that here.) And in a recent memo, the Board’s General Counsel Jennifer Abruzzo issued guidance following McLaren. Notably, it reasons that maintaining or enforcing a severance agreement with offending provisions would constitute a continuous violation and suggests employers may avoid liability by notifying former employees that certain provisions are no longer applicable in their severance agreements.

Practical considerations for employers

What to do with existing non-disclosure or non-disparagement agreements is a tricky issue, as there is no clear answer here. The “safest” option would be to look at all agreements and revise any agreement that contains a clause which may conflict with these new regulations. However, most clients are taking a “wait and see” attitude. The devil may be in enforcement of agreements in the future, and there may need to be consideration of whether an agreement should be enforced, if it contains a conflicting provision.

As the year unfolds and new laws and regulations come into view, we’ll keep you up-to-date with the major changes and issues you should be thinking about.

During the Trump administration, the NLRB issued a set of rulings that generally allowed employers to include confidentiality and non-disparagement clauses in severance agreements. These provisions are used to protect an employer’s reputation from disgruntled former staff while safeguarding the more sensitive details of the agreement (such as compensation) from public view. Last week, the Board wiped the deck with these Trump-era decisions. Now, any such clause may be deemed unlawful if it too broadly restricts a worker’s rights, including to speak out against their former employer.

What does this mean for severance agreements past and future? We take a look.

The highlights of the NLRB’s recent decision in McClaren Macomb.

McLaren Macomb, a unionized teaching hospital, was forced to furlough eleven workers during the COVID pandemic. The employees’ severance agreements included standard confidentiality and non-disclosure provisions used by almost all employers in this type of situation. Generally speaking, the workers were barred from disclosing the details of the agreement to others (including their coworkers) and from making public statements disparaging the hospital.

Under Trump-era NLRB rules, these provisions would have been on solid ground. The Board had given employers wide latitude in enacting severance agreements, essentially permitting them unless the employer had committed a separate unfair labor practice. However, when hospital workers filed charges, the new Board got an opportunity to change course. And, in keeping with recent Board trends, it did.

The McLaren ruling expressly overruled previous decisions in Baylor University and International Game Technology, which were handed down during the Trump administration. For their part, those decisions had also reversed longstanding precedent. Essentially, this new decision reverts back to an old standard. A severance agreement will violate the National Labor Relations Act if its terms have a “reasonable tendency” to interfere with, restrain, or coerce employees in exercising their Section 7 rights.

What does the NLRB’s decision mean for employers?

Employers must proceed with caution. The NLRB used this decision to reinforce its view that an employee’s right to speak about their employment covers a “wide range” of third parties, including judicial, legislative, and political forums as well as news and social media platforms. The boundary of that right? When the communication is “not so disloyal, reckless, or maliciously untrue as to lose” protection.

The Board here takes a decidedly pro-employee stance, describing its “duty to protect” the Act’s “broad grant of rights” and reasoning that any such agreement has inherent coercive potential. To that end, the Board reasoned that even offering such an agreement may constitute an unfair labor practice, regardless of whether the employer seeks to enforce it.

Does this mean confidentiality and non-disparagement clauses are banned entirely?

No. The Board did not suggest that all confidentiality or non-disparagement clauses are per se unlawful. McClaren dealt with broadly drafted clauses restricting a wide range of activity. In striking down the employer’s non-disparagement clause, the Board reasoned that the clause prohibited “any statement” that could include labor issues and disputes or the terms and conditions of employment. The language could also chill efforts to assist other employees, including cooperating with future Board investigations.

Similarly, the confidentiality provision at issue in McClaren was broad and prohibited even disclosures about the existence of the agreement, which the Board reasoned could also interfere with future charges or prevent the employee from assisting a future NLRB investigation. Even more, the Board cautioned that the clause would prohibit employees from discussing severance terms with former coworkers who may be offered similar agreements or with union representatives or others attempting to unionize. The severance agreement in McClaren did not include carve-out language stating that nothing in the agreement should be construed to interfere with or restrict the employees’ Section 7 rights.

It is also worth noting that managers and supervisors are not afforded Section 7 rights under the NLRA. Therefore, the McClaren decision should not have any impact on provisions in separation agreements with managers and supervisors.

What should employers do now?

Employers should review and narrowly tailor any confidentiality and non-disparagement clauses in their existing agreements and ensure the employees’ Section 7 rights are protected. This may include affirmative exemptions for participation in protected activities and for assisting others in doing so, including cooperating with any Board investigative process. It may be prudent to:

• Scrutinize your agreements. An employer relying on broad, sweeping clauses like those in the McClaren case should consider affirmative corrective steps discussed above.
• Consult counsel. If you have concerns about existing provisions, consult an attorney to ensure your agreements are lawful and you are protected from any future legal liability.
• Stay tuned. With an active and more progressive Board, there is more to come. We will keep you updated on all major NLRB actions in the days and months ahead.

Who Needs to Keep Reading?

Any employer nationwide preparing for, concerned about, or currently involved in union organizing activity within their workforce. This decision will likely affect the strategies taken to combat organizing efforts and to contest them before the NLRB.

What Happened?

In the recent decision American Steel Construction Inc. v. International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, AFL-CIO (the union commonly known as the “Ironworkers”), the NLRB held that employers who wish to broaden a proposed bargaining unit beyond the union’s desired complement (usually to defeat organizing efforts) must demonstrate the excluded employees have an “overwhelming community of interest” with the union’s narrower proposed group.

The essential ruling in this NLRB decision effectively switched the burden when determining the applicable bargaining unit from the union to the employer. Now, if the employer wishes to contest a proposed bargaining unit, it has the burden to show the union’s proposed unit is improperly narrow under the new “overwhelming” standard. Before the American Steel decision, it was the duty of the union to demonstrate that workers who were included and excluded from a proposed bargaining unit had “sufficiently distinct” interests from one another. As the prior standard was favorable to employers seeking to defeat union organizing efforts or at least minimize the number of unions involved with their workforce, the new standard is overwhelmingly beneficial to labor unions’ ability to organize a bargaining unit in a manner of their choosing. Accordingly, unions will be able to organize a workforce in piecemeal and/or in groups of employees sized to ensure winning union certification elections.

In all, the NLRB will use the following factors when determining whether to approve a petition for a bargaining unit “subdivision”: whether the petitioned-for unit (1) shares an internal community of interest; (2) is readily identifiable as a group based on job classifications, departments, functions, work locations, skills, or similar factors; and (3) is sufficiently distinct. If an employer challenges a union’s subdivision petition, the NLRB will apply community-of-interest factors to determine whether there is an “overwhelming community of interest” between the petitioned-for and excluded employees.

What Are The Probable Impacts of the Ruling?

For more than a decade, employers have been able to combat bargaining unit subdivisions where not all of a location’s employee complement is part of the same (or any) union (what some call “micro bargaining units”) due to the prior standard that the union make a showing that a proposed unit subdivision was “sufficiently distinct” from excluded employees. It is likely that unions will increase their attempts, and their success rate, at creating bargaining unit subdivisions within workforces. A subdivision comprised of employees in more similar circumstances will have a higher likelihood of being ratified by the proposed bargaining unit. This is in part because the union can more easily design the bargaining unit to exclude workers that are against unionization.

In all, and depending on the number of years this change remains the NLRB standard, employers campaigning against unionization will have to be prepared with evidence to meet the “overwhelming community of interest” standard to expand a proposed bargaining sub-unit. If employers can meet the standard, they theoretically expand the likelihood of defeating the unionization vote and decreasing the number of unions or bargaining units in a single workforce.

Haven’t We Been Here Before?

Yes. In this decision, the NLRB explicitly reinstated what is known as the Specialty Healthcare standard implemented in 2011 under the Obama administration. In the most recent republican administration, Specialty Healthcare was overturned in favor of the pro-employer standards articulated in the PCC Structurals (2017) and Boeing (2019) decisions. In the Biden-led administration, in which the majority of the NLRB again leans Democratic, collective bargaining determinations return, in part, to an Obama-era standard.

First, the Supreme Court is poised to take action. The Court recently agreed to consider a case at the heart of the right to strike: Can employers sue unions in state court when strikes cause economic harm, such as destruction of property?

The case arises from a dispute between a cement company and its truck drivers in Washington state. Contract negotiations between the local Teamsters union and employer, Glacier Northwest, had broken down. In August of 2017, union leaders instructed drivers to bring their trucks back to the yard and strike. According to the company, the union intentionally timed this so that the concrete in the trucks had already been mixed, which could solidify in the drums and destroy them. The union countered that the trucks were left running so the concrete wouldn’t harden. Glacier Northwest sued the union to recover damages.

This will be the Court’s first major labor decision since 2018. If the judges side with the Glacier Northwest, it will likely open the door to more litigation between unions and employers when labor action causes economic harm to an employer. Be sure to look out for an alert when this case is decided.

Second, union support among American workers continues to grow. According to a recent Gallup report, approximately 71 percent of Americans approve of labor unions. This marks the highest rate in more than 55 years. And the support is only likely to grow as Millennial and Gen Z workers become a greater proportion of the workforce. Both have the highest rates of union support of all generations and Gen Z workers support unions more today than previous generations did at their age. This has played out in recent organizing with many of the highest-profile union drives being led by Gen Z or Millennial organizers.

Third, labor is getting more organized with greater political support. The Biden administration is decidedly pro-union with proposed legislation and regulations that support organizers. This includes a more union-friendly NLRB, the Protecting the Right to Organize Act, changes to joint employer rules at the Department of Labor (more on that here), and a more active NLRB General Counsel, among others.

Meanwhile, organizers are becoming more effective. From October to March of this year, election petitions increased 57 percent over the same period last year. And unions are winning significantly more often. From January to July of this year, there were 826 union elections with 70 percent being successful, according to the NLRB.

What does this mean for employers? Companies facing increased union activity or new election petitions must take precautions to ensure they are acting within the law. For employers who have never dealt with union concerns, there are practices and potential pitfalls they must learn, and consulting with counsel is always a best practice. To learn more about the post-pandemic union surge, watch our recent webinar here.

The NLRB’s newly proposed rule drastically expands the joint employer standard to encompass relationships where a company holds indirect and unexercised control over the terms and conditions of another company’s employee.

Employers would be wise to begin thinking now how this will impact their business.

Background

The NLRA does not expressly address situations where employees are employed jointly by two or more companies As a result, the NLRB and courts have typically applied common-law agency principles to determine when one or more entities jointly employ a particular group of employees.

In an Obama-era decision, Browning-Ferris Industries of California, Inc., d/b/a BFI Newby Island Recyclery, 362 NLRB 1599 (2015), the NLRB held that the “right to control, in the common-law sense, is probative of joint-employer status, as is the actual exercise of control, whether direct or indirect.” Id. at 1614. Essentially, the BFI majority found that a company could be deemed a joint employer even where its control over the essential working conditions of another company’s employees was indirect, or in circumstances where it was contractually reserved, but not exercised. Id. at 1613-14.

In February 2020, in an effort to roll back BFI, the Trump-era Board published a final rule that narrowed the joint-employer test to include only those situations where the two employers “share or codetermine” the essential terms and conditions of employment, such as hiring, firing, discipline, supervision, and direction. The employer-friendly final rule defined “share or codetermine” as the possession and exercise of “such substantial direct and immediate control over one or more essential terms or conditions of their employment as would warrant finding that the entity meaningfully affects matters relating to the employment relationship with those employees.”

The final rule also considered indirect control over essential terms or conditions of employment, contractually reserved control over essential terms or conditions of employment, and control over mandatory subjects of bargaining other than essential terms and conditions of employment into the joint-employer analysis, “but only to the extent [they] supplement[] and reinforce[] evidence of the entity's possession or exercise of direct and immediate control over a particular essential term and condition of employment.”

The final rule went into effect on April 27, 2020.

The Proposed Joint-Employer Standard (Revisited)

The NLRB’s new proposed rule rejects the 2020 rule’s narrow focus on “direct and immediate control” and returns to the rationale in the BFI decision, stating that “a party asserting a joint-employment relationship may establish joint-employer status with evidence of indirect and reserved forms of control, so long as those forms of control bear on employees’ essential terms and conditions of employment.”

The proposed rule would also expand the definition of “essential terms and conditions of employment,” to include “work rules and directions governing the manner, means, or methods of work performance.”

The proposed rule reflects the Board’s view that the NLRA’s purpose of promoting collective bargaining and stabilizing labor relations “are best served when two or more statutory employers that each possess some authority to control or exercise the power to control employees’ essential terms and conditions of employment are parties to bargaining over those employees’ working conditions.”

Members of the public may file comments on the Board’s proposal on or before November 7, 2022 and replies to comments filed during the initial comment period must be filed on or before November 21, 2022.

Thinking Ahead…

Employers should begin to consider how the new joint employer standard will impact their existing business structure. Under the proposed rule, a company would be considered a joint employer if they co-determine not just scheduling, wages, and benefits, but also THE direction of the manner and means of performance, even where they do not retain any direct and immediate control over those terms and conditions.

This means that companies that currently outsource staffing, employee management, and/or human resources may no longer use those attenuated relationships to act as a shield for compliance with the NLRA, including potential bargaining obligations.

Thinking ahead, employers should begin look at their staffing and other third party agreements to determine whether they contain reserved control provisions. Even if never exercised, under the propose rule, such provisions are likely probative of joint-employer status. Companies should also consider whether it is now necessary to retrain managers who oversee employees of another entity, such as a staffing agency.

What does the new law mean for the future of employment arbitration? Can employers still have any type of a mandatory arbitration program? The answers to these questions are not immediately obvious, but you can be assured that the Me Too Bill will make harassment claims more expensive and more complicated to resolve. It is also not a surety that the end of arbitration will be good for victims or potential plaintiffs.

What the law will mean for your business will depend on a number of factors, including where you are doing business (as mandatory arbitration is already prohibited in some states), and whether your company had a mandatory arbitration program in place for customers or employees. However, all businesses may see an uptick in harassment claims, as that often happens whenever there is a very public legal development in this area.

What does the Me Too law say?

The main provision of the law is short enough to reproduce here:

“[A]t the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, or the named representative of a class or in a collective action alleging such conduct, no predispose arbitration agreement or predispose joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.”

The terms “sexual assault dispute” and “sexual harassment dispute” are not confined to federal claims, but is any such claim as defined according to “applicable Federal, Tribal, or State law.”

What are the key elements to the law?

ONE - Employers may no longer be able mandate the arbitration of claims of sexual assault or sexual harassment, whether those claims are brought under federal or state law.

The new law does not redefine assault and harassment, and instead defines those terms as any instance where such claims may be brought under applicable federal or state law.

Now more than ever, it is important to understand how the state you are doing business in defines sexual harassment or sexual assault. For example, in New York, sexual harassment is defined far more broadly than it is in Title VII, and constitutes instances where “an individual is subjected to inferior terms, conditions or privileges of employment” on the basis of their sex. Perhaps even more importantly, while Title VII applies only to employers with 15 or more employees, the New York State Human Rights Law applies to employers of any size. Even if you are a small employer to whom Title VII does not apply, if your state has similar laws to New York, the Me Too law could apply to you!

TWO - Plaintiffs also cannot waive their right to bring claims of sexual assault or harassment collectively through a class action.

THREE - Importantly, the law applies to both claims of sexual harassment and assault, and does not just apply to employment disputes. It extends to any person who might sign a mandatory arbitration agreement or a mandatory waiver of their right to bring a class action for a claim of sexual misconduct.

For instance, a “services” company may have previously mandated, through its terms of service, the arbitration of any claims brought by a customer that they were sexually assaulted by an employee. These types of mandatory arbitration clauses will no longer be enforceable.

FOUR - The law provides that it “shall apply with respect to any dispute or claim that arises or accrues on or after the date of enactment of this Act.”

Therefore, it will apply to current arbitration agreements, even those signed before the law went into effect.

There may be an argument that a claim of sexual harassment or assault that is now in arbitration can be completed, but companies will certainly not be able to enforce an arbitration mandate going forward.

FIVE - Finally, the law states that it must be a federal judge, not an arbitrator, who decides whether a claim is subject to arbitration.

What should you do now?

According to a 2018 study, 53.9% of nonunion private-sector employers have mandatory arbitration procedures, so the new law will have a far-reaching effect. But depending on where you do business, the law may change very little.

New York, Maryland, Vermont, New Jersey, and Washington have all passed similar laws effectively banning mandatory arbitration for employee claims of sexual harassment in the workplace. In fact, New Jersey’s law is the most expansive of these, and bans the mandatory arbitration of all claims of discrimination, not just sexual harassment. Meanwhile, California has taken things further than any other state and effectively banned all mandatory arbitration agreements in the employment context. Those doing business in any of those states should have already addressed these limitations in their arbitration policies.

Nonetheless, this new law provides a ripe opportunity for every business to review their sexual harassment and arbitration policies. If your policy covers harassment claims, consider changing it for the future. We do not believe it makes sense to have employees who have already signed an agreement re-sign, as this will create administrative headaches.

But you should revise all future mandatory arbitration agreements to affirmatively state that notwithstanding anything else in the agreement, the signatory has the choice to bring their claims of sexual harassment or assault in court, collectively or individually, and that they are not required to individually arbitrate those claims.

For existing employees, create a policy statement that makes clear that they are no longer required to arbitrate harassment or assault claims, even if those are covered in an agreement they may have signed in the past. As long as this carve-out is clear, the old agreements should still be enforceable.

Can you still arbitrate other claims?

Yes. Subject to applicable state laws, companies remain free to mandate arbitration or a waiver of class action rights for all other claims, including salary or wage/hour claims, other types of discrimination, retaliation, or any other kind of liability.

Can you still arbitrate harassment or assault claims?

That now depends on the claimant. We do believe that employees may opt to arbitrate even assault or harassment claims. It will just have to be clear that this is their choice, so forms will have to be developed to give them that choice.

This type of a choice will be easier to enforce if the employee has an attorney, and it may be advisable to suggest that they consult with counsel before choosing to arbitrate a harassment claim.

What about claims which combine sexual harassment or assault with other allegations?

Employees are smart, as are lawyers. You may well see them add on harassment to every claim, just to get out of mandatory arbitration. What are your options then?

While the new law is not clear and will have to be fleshed out in the courts, it does appear that if an employee combines a harassment claim with other claims, you may still be able to require that they arbitrate the non-harassment aspects of their case. Strategically, this will depend on whether harassment or assault is the “main” claim or just tacked on. If harassment is not the primary claim, it may make sense to push the other claims to arbitration, but be ready for a fight. That is a decision best left to you and your counsel.

What about prevention?

There is no hiding this change in the law from plaintiff’s attorneys and employees, and it may well cause an uptick in claims. You may also be facing juries, not arbitrators, in the future. Thus, all employers should take stock of your current training and prevention policies and redouble efforts to prevent sexual harassment or assault from occurring in the first place.

As yourself some key questions:

• Is training reaching everyone?
• Is it time to offer a live (not online) training to key executives?
• Is there a region or business unit where harassment is a problem? Do they need some extra guidance?

Implementing and enforcing zero-tolerance policies can be one of your most powerful tools. Empower your Human Resources department to conduct thorough investigations and act independently to root out misconduct. Put systems in place that ensure that employee complaints are solicited and kept as confidential as possible.

The end goal is to stop sexual harassment before it starts, and well before you face a verdict in the court of public opinion.

Maybe not. One NLRB Regional Director recently reinforced the argument that physicians, and other highly-credentialed medical providers, are not supervisors simply by virtue of their position near the top of healthcare institution chain of command – and can in fact seek to organize. They could also be part of the same unit with other staff. On January 21, 2022, in Piedmont Health Services, Inc. and Piedmont Health Services Medical Providers United, Case 10-RC-286648, the NLRB directed an election of a proposed bargaining unit consisting of physicians, nurse practitioners, certified nurse-midwives, and physician assistants. Supervisors are of course excluded from the proposed unit, but, as will be explained below, the NLRB in this case draws a clear line between what constitutes a supervisor when it comes to medical providers, and what does not.

• At each individual site, Piedmont employs a lead medical provider who is responsible for overseeing all healthcare providers at their assigned site. These lead medical providers report to the Chief Medical Officer. The parties stipulated that lead medical providers were statutory supervisors to be excluded from any proposed unit.
• Lead medical providers are responsible for supervising all other providers at the site, and were responsible for administrative tasks such as authorizing time off and directing work hours, completing performance evaluations, monitoring work flow, and reviewing generally the work of the health care providers and their interactions with staff.
• Lead medical providers are also responsible for ensuring health care providers are practicing medicine up to current standards.
• The petitioned-for employees, on the other hand, were generally expected to provide healthcare services to patients and did not participate in the administrative functions reserved for the lead medical providers or other administrative staff, such as human resources.
• For example, the petitioned-for employees did not assign schedules for other employees, did not assign employees to work at specific locations, did not possess authority to hire employees (despite the fact they could recommend employees for hiring), did not have authority to promote employees, and did not actually adjust any employee grievances (again, only providing recommendations for adjustment).
• The NLRB also discredited the fact that certain petitioned-for physicians were found to be the “supervising physician” of another credentialed provider, as required by North Carolina’s professional licensing law. This was because the NLRB has previously held that a governmental requirement that a healthcare provider be supervised by a physician does not necessarily establish them as a supervisor under the NLRA.
• The fact that the petitioned-for employees would occasionally fill-in as lead medical providers was also not sufficient to deem them supervisors.
• Additionally, the physicians shared a community of interest with the other petitioned-for employees as they were not organized into separate departments, and were functionally integrated with each other, including sharing common supervision. Likewise, all the petitioned-for employees generally performed similar or identical work – providing healthcare services to patients.

Tuesday, June 22nd at 12:30pm ET

Restrictive Covenants 101: NDAs, Non-Competes & Other Tools To Protect Your Company

A company’s confidential information and customer relationships are its lifeblood—and are the assets that can walk out the door too easily with a departing employee. Too few companies take a considered approach to protecting those assets. NDAs and noncompetes can help, but using them without a holistic strategy can be worse than no protection at all. Join the Kelley Drye Labor and Employment team for a practical look at how to use—and not to use—restrictive covenants, and how to tailor them to your company’s unique needs.

During the Trump years, the National Labor Relations Board (meaning, the actual five-member Board in Washington, whose decisions drive interpretations of federal labor law) got a lot less friendly to organized labor, and a lot friendlier to employers. That meant a lot of things, including making it easier for unions to prove that two employers were really one “joint” employer, harder for employees to organize, and harder for employers to unilaterally change terms and conditions of employment without bargaining.

The Board is less like the lifetime-appointed Supreme Court and more like your new boss who doesn’t care how your old boss did things. That’s because Board members serve out fixed but limited terms—meaning that a new Presidential administration brings new Board members when the terms of existing Board members expire. While the Board claims to rely on its own precedents (and, to some extent, does), Board members are fundamentally political appointees, and their interpretations of labor law mirror the labor agenda of the Presidents who appoint them.

Enter Biden’s appointment of Gwynne Wilcox to the Board on May 26. Biden has not exactly been subtle about his labor policy agenda: as he announced the American Jobs Plan on March 31, he reminded us that he’s “a union guy. I support unions. Unions built the middle class. It’s about time they start to get a piece of the action.”

A piece of the action, indeed. Ms. Wilcox clearly knows what she’s doing when it comes to federal labor law, but what she’s doing is deeply informed by what she has done. She’s a dyed-in-the-wool union-side attorney from a law firm that exclusively represents unions, and from a position with one of the largest and most powerful unions in the Northeast, which is part of the SEIU.

To be clear, that’s not an inherent criticism. I work with labor reps all the time to negotiate collective bargaining agreements, to reach resolutions to labor disputes, and generally to try to impose order on the often-chaotic world of real workers with real issues working for (and sometimes against) the interests of real employers with their own very real problems. At its best, the relationship between labor and management is collaborative. At its worst, it can be a fistfight, and often is. So while it would be easy to characterize Wilcox’s appointment as nakedly political, that may miss the real point.

The real story here is the perspective of Board members—literally, of the lens through which they view the world of labor relations. Union-side attorneys and representatives have an almost congenital distrust of management, just as management innately suspects that unions don’t care much about how they can negatively impact workplaces by creating an us-and-them, divisive, adversarial environment. Those perspectives aren’t usually the express issue in a case, but they are an incredibly important dynamic that drives how Board rulings are made.

When Biden’s increasingly Democratic Board is called on to resolve closer questions of federal labor law, its Democratic appointees will be operating with the assumption that the NLRB’s job is to protect employees from their own employers, and that is certain to create an increasingly pro-labor tilt to their decisions. (Management usually finds this assumption, which isn’t inevitable, pretty odd, since employers are the ones creating jobs, paying employees, providing health benefits, and so on.) Unions will have the benefit of the doubt, and management won’t. In this context, the “benefit of the doubt” will mean erring on the side of allowing unions to make demands, to bargain, and thus to have a larger say in how a business is run.

Starting this year, then, expect that when a case comes up on review before an increasingly pro-labor Board, the Board will resolve ambiguities in ways that favor unions and curtail employers’ rights to act unilaterally, without negotiation with (or interference from) organized labor. The Biden administration has already started taking steps to reverse the Trump Board’s most employer-friendly rules and decisions. The momentum of that trend will only increase.

For now, we have to wait and see what the impacts will be. As we’ve shared in prior blogs, employers should keep a watchful eye on developments at the NLRB, remembering that the National Labor Relations Act applies in many respects to both unionized and non-union employers. NLRB rules about how employees can communicate about work-related issues via email, for example, have been applied just as often to employers who aren’t unionized at all. The Board’s willingness to regulate outside of a unionized context, and to regulate unionized employers in increasingly pro-union ways, will pick up speed. We’ll be there to update you as it happens.

Tuesday, May 18th at 12:30pm ET

Wage & Hour Laws: How To Avoid Common Pitfalls

The DOL’s Wage and Hour Division recovered a record $1.4 billion in back wages for workers in the past 5 years. According to the WHD, that’s an average of $1,120 for each employee. Suffice it to say that your company’s potential liability under wage-and-hour laws continues to be very real, and very expensive.

Happily, much of this risk can be reduced with the right policies and practices in place—if you know what to look for in an ever-changing regulatory and enforcement environment.

Join the Kelley Drye Labor and Employment team for as we help participants look for their next big litigation risk by helping them find their blind spots.

• Misclassifying non-exempt employees as exempt from overtime requirements
• Failing to recognize what time is compensable
• Misclassifying employees as independent contractors
• Getting tripped up on differences between federal and state laws

CLICK HERE TO REGISTER FOR THIS WEBINAR

5,800 workers at an Amazon warehouse in Bessemer, Alabama are currently voting whether to join a union in an election that runs through March 29^th. The current unionization efforts have captured national attention and drawn support from both sides of the aisle, including Republican Senator Marco Rubio. A win in the election would be a major victory for the labor movement. Amazon is the second-largest private employer in the United States, and it has avoided unionization at all of its U.S. facilities up to this point. Is this recent unionization effort a reflection of a larger change brewing in the labor world?

Unionization has been on the decline in the country for several decades. Former President Trump continued, and in many cases expanded, a general trend of unfriendly labor policies in Washington. As we’ve previously covered, the Trump National Labor Relations Board (NLRB) was notoriously business friendly and promulgated several rules and issued decisions making it more difficult for workers to unionize.

But there are signs the times may be changing. Organizing efforts have been gaining traction, such as teacher walkouts spreading to multiple states and increased grass-roots activism. Major private-sector employers, like Amazon, are also facing increased collective action from workers.

the biggest sources of support for unionization, however, may just come from a recent former foe—the Oval Office. President Biden promised during his campaign to be “the strongest labor president you have ever had,” and he has wasted no time advancing his pro-labor agenda.

A mere minutes into his presidency, Biden axed the Trump-appointed General Counsel of the NLRB, Peter Robb. He continued to clear house at the agency, firing Robb’s top deputy, Alice Stock, shortly after.

The NLRB under Biden has already started taking steps to reverse the Trump NLRB’s most employer-friendly rules and decisions. The Acting General Counsel has withdrawn several guidance memos issued by the former General Counsel Robb. The agency also recently abandoned a proposed rule that would have prevented student teaching assistants from forming unions. These actions suggest the days of an employer-friendly Board are long gone. The union-friendly NLRB will likely increase enforcement efforts and promulgate rules that make it easier for workers to organize and bargain collectively.

Support for unionization can also be seen at the legislative level. The House passed the Protecting the Right to Organize (PRO) Act earlier this month. Unlike Former President Trump, President Biden has already indicated his support for the law. While the bill currently seems unlikely to pass the Senate, if enacted, the PRO Act would mean sweeping changes for labor law, including making it easier for workers to organize, limiting employers’ abilities to contest union elections, and expanding penalties for violations of the National Labor Relations Act (NLRA).

What this will ultimately mean for unionization in the U.S. remains to be seen. The decades-long decline in membership may finally be reversed, or the rate of decline may just slow. Regardless, employers should still brace themselves for a new era of labor relations. Employers should take particular care to ensure they are complying with the NLRA and all related rules and regulations for unionized workers. Additionally, employers should be sure to stay current and continue to monitor the activity of the NLRB.

Forget speculation about what is to come: the Biden administration has already acted to unravel the Trump legacy in employment and labor regulation—and to expand worker protections.

Join us on April 15, 2020 at 12:30 p.m. ET for a complimentary webinar, where we will take a deep dive into the regulatory changes immediately impacting your business.

Thursday, April 15th at 12:30pm ET

This Is Happening: Immediate Employment Law Impacts under the Biden Administration

• Significant changes to overtime classifications and wage & hour regulation
• Expansion and extension of COVID-19 laws and regulations
• Independent contractor classification rules
• Easier union organizing, and a more pro-union National Labor Relations Board
• Increased OSHA enforcement
• And others . . .

Click here to register

Number of Charges Dropped But Recovery Soared

Defying earlier predictions, the number of charges filed fell again in FY 2020. With just 67,448 charges filed, 2020 saw the lowest amount of filed charges since 1997. Why? No one can say, but it’s likely that the pandemic and the resulting shutdown, mass layoffs, and remote work played a big role. Despite a lower number of charges, the agency still managed to recover a whopping $106.1 million for charging parties and other aggrieved individuals—the largest recovery through the EEOC’s litigation program in the past 16 years. The EEOC filed 93 merit suits and resolved 165 merit lawsuits. Title VII suits brought in the largest recovery, but ADA claims accounted for $15.7 million, nearly double last year’s recovery, and Age Discrimination in Employment claim recoveries increased by over $15 million to $16.3 million.

Does this show a trend of fewer employment lawsuits? Not likely. This could indicate that plaintiffs are not going through the EEOC as they had in the past. In fact, in our practice, we saw fewer formal charges but an increase in threatening attorney letters. We also saw an increase in state and local charges and lawsuits, which may not have been filed with the EEOC.

Retaliation Rising

And despite decreasing charges, employers should still take notice of the types of claims which were filed. The report shows that even though claims were down, the agency still secured $439.2 million for victims through voluntary resolutions and litigation. The EEOC also increased its merit factor resolution rate from 15.6 percent in FY 2019 to 17.4 percent in FY 2020. Additionally, with a new administration that promises to be more worker-friendly, 2021 may be record year for claims. As this post will show, the data in the EEOC report further confirms many of the areas we have warned employers to look out for in the current year.

Notably, retaliation remained the most frequently cited claim, accounting for 55.8% of all filed charges. Following behind were disability (36.1 percent), race (32.7 percent) and sex (31.7 percent).

Focus on Disability

Disability discrimination claims remained a focus for the agency. And, it is no surprise that these claims, especially with the pandemic, remain a large portion of charges filed with the EEOC. While the number of claims filed in nearly every other category decreased, the number of disability claims increased slightly. Discrimination claims reached their highest ever percentage of all charges filed, continuing a growing trend present since 2008.

Disability issues are not going to abate in 2021. Indeed, with employees who have been working from home are asked to return to the office, and lingering fears of COVID-19 persists, claims under the Americans with Disabilities Act (ADA) will continue to be a space to watch in 2021.

Pregnancy Claims Increasing

While the number of pregnancy discrimination charges has been decreasing over the past several years, a cool $15.3 million was still secured for charging parties and other aggrieved individuals on such claims, representing an increase of one million dollars since FY 2012. We cautioned employers that pregnancy discrimination will likely be a hot issue in 2021 and could bring an increasing numbers of charges and recoveries in the new year.

LGBTQ Issues to Watch

Claims of LGBTQ discrimination have been a growing enforcement priority for the agency. The EEOC data show 1,857 charges were filed for LGBTQ-based sex discrimination. While this is slight dip from last year, it is over 1,000 more charges than were filed in 2013, when the agency first started tracking such charges. The agency also increased its merit factor resolution rate and secured $6 million for charging parties and other aggrieved individuals. We anticipate LGBTQ rights will continue to be an enforcement priority in 2021.

Pay Equity Remains an Issue

The EEOC also continues to increasingly focus on Equal Pay Act claims. In FY 2020, Equal Pay Act claims remained at 1.5 percent of all charges filed. This represents a gradual trend of increasing percentage of all charges filed since 2011, and a return to 2002 levels. The agency secured $10.7 million for charging parties and other aggrieved individuals on such claims. While that was almost half of what was recovered in FY 2019, it is nearly double the amount recovered five years ago. In our prior blog, we anticipated pay equity will be a major trend in the upcoming year. As promised in her campaign, Vice President Harris and the Biden administration will likely support any efforts for pay equity legislation. These efforts will likely mean even more Equal Pay Act claims will be filed in the current year.

Conclusion

Despite general decreases in overall number of charges, employers should not let their guard down, especially under the new administration. Employers should particularly take heed of the significant increase in monetary recoveries through litigation. As we mentioned before, employers should be particularly cautious of retaliation and discrimination claims. Here are some best practices for employer for the remainder of 2021.

• Continue to provide regular training and make sure internal complaint and investigation procedures and policies are properly followed.
• Review and retrain management and HR personnel on how to respond to requests for accommodation.
• Review and update pregnancy leave polices to ensure compliance with current federal and state laws.
• Proactively conduct pay equity audit to ensure there are no gender disparities.

Laws That Took Effect in 2020

Workers’ Compensation COVID-19 Liability

By signing SB 1159 into law on September 17, 2020, California Governor Newsom codified his earlier issued executive order, which states that under certain circumstances, when an employee tests positive for COVID-19, there is a rebuttable presumption that the employee contracted the virus while at work and, therefore, said illness is covered by the employers’ workers’ compensation insurance coverage.

Additional Exemptions from the ABC Test

At the beginning of 2020, AB 5 took effect, codifying the Dynamex “ABC test” to determine whether a worker is properly classified as an employee or independent contractor. In September 2020, the Governor signed into law AB 2257, which expanded the list of occupations exempt from the test, revised the referral agency exemption, and expanded the business-to-business exemption to include relationships between two or more sole proprietors.

Some of the occupations added as exemptions include insurance underwriters, those providing professional consultant services, and musicians involved in a single-engagement live performance relationship.

It is important for employers to note that just because workers may be exempt from the ABC test, they do not automatically classify as employees, but instead their classification must be determined by the Borello multifactor test. Under Borello, the primary test of an employment relationship, known as the "right to control" test, is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired.

Laws Effective January 1, 2021

COVID-19 Infection Reporting Requirements

Effective January 1, 2021, employers are required to provide written notice to all employees assigned to a worksite and employers of subcontracted employees who were on the premises of any potential COVID-19 exposure within one business day of receiving “a notice of potential exposure.” Employers must also notify local public health agencies within 48 hours of all workplace outbreaks, defined as three or more laboratory-confirmed COVID-19 cases within a two-week period. Any employer in violation risks the shutdown of the entire worksite.

Expansion of Medical Leave Under the CFRA

Senate Bill 1383 significantly expands family and medical leave under the California Family Rights Act (“CFRA”). The CFRA will now apply to all entities with at least five employees, including public agencies. It requires employers to provide up to twelve weeks of unpaid leave for an employee’s serious medical condition or that of a qualifying family member. Additionally, SB 1383 also expands the list of qualifying members to include siblings, grandparents, and grandchildren. Employers should also be aware that in certain circumstances, CFRA leave will not run concurrently with leave under the Family Medical Leave Act (“FMLA”) including leave for care of an adult child capable of self-care, a grandparent, grandchild, or sibling. Employers should reevaluate how they track FMLA and CFRA leave in circumstances where such leave runs separately.

You can find additional information on this expansion here.

Leave Expanded for Victims of Crime and Abuse

Under Labor Code section 230.1, employers with 25 or more employees were previously prohibited from terminating a victim of domestic abuse, sexual assault, and/or stalking to take time off to seek medical attention. AB 2992 expands these protections to a victim of any crime causing physical or mental injury or a threat of physical injury. It also requires employers to allow victims to take time off not only to seek medical attention, but also to obtain services from specified entities related to an experience of crime or abuse, including psychological counseling or mental health services, or to participate in safety planning and take other actions to increase safety from future crime or abuse.

Employees Permitted Additional Six Months to file DLSE Complaints

Previously, employees had only six months from the occurrence of a violation to file a complaint against an employer with the California Division of Labor Standards Enforcement (DLSE). However, AB 1947 extends that time an additional six months, leaving employers potentially on the hook for a full year after the complained-of conduct.

In addition, employers can also be subject to an award of reasonable attorneys’ fees to an employee who prevails on a “whistleblower” claim.

Minimum Wage Increase

Effective January 1, 2021, minimum wage in the State of California increased to $13 per hour for employers with 25 or fewer employees and $14 per hour for employers with 26 or more employees. This increase in state minimum wage requires employers to reevaluate the salary of exempt employees, as they are entitled to a “monthly salary equivalent to no less than two times the state minimum wage for full-time employment” in order to maintain the employees’ exempt status. Additionally, many cities and counties throughout California have enacted their own minimum wage laws that exceed the state’s minimum wage requirements, including, but not limited to, the cities of Los Angeles and San Francisco. California employers must comply with both state and local minimum wage laws.

Mandated Report of Abuse

The California Child Abuse and Neglect Reporting Law requires “mandated reporters” to formally report any suspected child abuse to law enforcement. AB 1963 expands the list of “mandated reporters” to include: (i) human resources employees working for a business with at least five employees that also employs minors; and (ii) front-line supervisors of businesses with at least five employees whose duties require direct contact with, and supervision of, minors in the performance of the minors’ duties in the workplace. Employers should ensure that any newly designated “mandated reporters” receive training in the identification and reporting of child abuse and neglect.

Limited No-Rehire Provisions in Settlement Agreements

Since January 1, 2020, “no-hire” provisions, which restrict an employee who has filed a claim against an employer from working for the employer, its parent, subsidiary or other affiliates, have been prohibited from use in employment settlement agreements, subject to limited exceptions. AB 2143 loosened the restrictions by allowing the “no-hire” provision when either (i) the employee failed to file the claim in good faith; or (ii) the employer has made and documented a good faith determination that the employee engaged in sexual assault, sexual harassment, or criminal conduct prior to the employee bringing the claim.

Laws To Take Effect In Coming Months/Years

New Requirements in Reporting Pay Data

Beginning on March 31, 2021, certain California employers will be required to report to the Department of Fair Employment and Housing information regarding employee pay data on an annual basis. The new law applies to employers that employ at least 100 employees and are required to file an annual Employer Information Report (EEO-1) under federal law.

Each applicable employer will be required to report the number of employees by gender, race, and ethnicity in their respective job categories used to report demographic information on the EEO-1 form, such as executive or senior-level officials, first or mid-level officials, laborers, technicians or service workers. Such employers are also required to establish and implement effective written procedures for determining the quantity and types of equipment used.

For a more detailed breakdown of this new requirement, please refer to our October post.

Hospital Employers Required to Maintain PPE Stockpiles

Beginning April 1, 2021, employers of workers in California general acute care hospitals are required to maintain a three-month supply of personal protective equipment (PPE), including surgical masks, eye protection, and specified respirators. Employers must also establish and implement effective written procedures for determining the type and quantity of each type of PPE used in its normal consumption.

Diversity Requirements For Corporate Boards

On September 30, 2020, AB 979 was signed into law, and requires a publicly held domestic or foreign corporation with its principal executive office located in California to meet certain diversity requirements as it pertains to its board of directors. These companies must have at least one director from an underrepresented community on its board by the end of 2021. In addition, by the end of 2022, a corporation with 5 to 8 directors must have a minimum of 2 directors from underrepresented communities, and a corporation with 9 or more directors to have a minimum of 3 directors from underrepresented communities. A director from an underrepresented community refers to a director who self-identifies as Black/African American, Hispanic/Latinx, Asian, Pacific Islander, Native American/Native Hawaiian/Alaska Native, or Gay/Lesbian/Bisexual/Transgender.

Liability Extends to Successor Employers

Effective January 1, 2022, AB 3075 expands the potential liability of any employer regarding wages, damages, and penalties owed to employees to its successor entity. This expansion applies to any entity that has acquired a business through a merger or consolidation, and either: (i) uses substantially the same workforce or services to offer substantially the same services as the original business; (ii) has substantially the same owners or managers that control the labor relations as the original business; (iii) employs any person who controlled the wages, hours or working conditions of the original workforce as a managing agent; or (iv) is an immediate family member of any owner, partner, officer or director of the original business.

In addition, a company is also required to include in its filed statement of information whether any officer or director has an outstanding final judgment issued by the Division of Labor Standards Enforcement or a court of law for a violation of any wage order or Labor Code violation.

If you are seeking guidance related to any of these newly passed laws or any other employment-related issue, please contact a member of the Kelley Drye Labor and Employment team.

Federal labor and employment laws aside, New York employers should be reminded of new state laws for 2021. Here are just a few of the highlights.

• Eligible employees in New York can now start taking the paid sick leave they began accruing in September 2020;
• COVID-19 leave under the federal Families First Coronavirus Response Act (FFCRA) expired, but New York’s COVID-19 leave law remains in effect;
• The New York City Fair Chance Act was amended in several respects, and now regulates how an employer can respond to a conviction that occurs while someone is working for them, making it harder for New York employers to terminate based on criminal history.
• COVID-19 is considered a protected class in New York City; and
• Employees have more opportunities for time off with New York State Paid Family Leave benefits increasing to 12 weeks.

We had previously written about the New York Paid Sick Leave Law—as of January 1, 2021, New York employers are required to provide their workers with sick leave, which employees began accruing on September 30, 2020.

The amount of leave depends on the size of the employer, but covers EVERY employer:

• Employers with 100 or more employees must provide 56 hours or 7 days of paid sick leave per calendar year.
• Employers with between 5 and 99 employees must provide 40 hours of paid sick leave per calendar year.
• Employers with 4 or fewer employees and a net income of 1 million dollars in the previous tax year must provide 40 hours of sick leave, if net income is LESS than $1 million dollars in the previous tax year, you must provide 40 hours of unpaid leave.

1. For a mental or physical illness, or health condition of an employee or an employee’s family member, regardless of whether the illness, injury, or health condition has been diagnosed or requires medical care at the time the employee requests the leave;
2. For the diagnosis, care, or treatment of a mental or physical illness, injury or health condition of, or need for medical diagnosis of, or preventative care for, an employee or an employee’s family member; or
3. For an absence from work for the following reasons due when the employee or employee’s family member has been a victim of domestic violence, a family offense, sexual offense, stalking or human:

i. to obtain services from a domestic violence shelter, rape crisis center, or other services program;

ii. to participate in safety planning, temporarily or permanently relocate, or take other actions to increase the safety of the employee or employee’s family members;

iii. to meet with an attorney or other social services provider to obtain information and advice on, and prepare for or participate in any criminal or civil proceeding;

iv. to file a complaint or domestic incident report with law enforcement;

v. to meet with a district attorney’s office;

vi. to enroll children in a new school; or

vii. to take any other actions necessary to ensure the health or safety of the employee or the employee’s family member or to protect those who associate or work with the employee).

New York City Earned Safe and Sick Time Act Amendments (ESSTA)

On September 28, 2020, Mayor Bill de Blasio signed legislation amending New York’s Paid Safe and Sick Time Act to align with the New State Paid Sick Leave law.

According to the amendments, which were effective September 30, 2020:

• Employers with 4 or fewer employees must now provide up to 40 hours of paid sick leave per calendar year, if their net income was greater than $1 million dollars in the previous tax year; and employers with 100 or more employees will now be required to provide up to 56 hours per calendar year of paid safe and sick time leave.
• Employees are no longer required to work 80 hours within New York City to be eligible for safe and sick leave.
• Employers must provide employees with pay statements or a separate writing each pay period that includes the amount of sick and safe leave accrued and used by the employee during the pay period, and the employee’s total balance of sick and safe leave.
• Employers that require documentation from their employees after using 3 or more consecutive days of safe and sick leave must now reimburse the employee for all fees charged by a health care provider or other provider for providing the documentation.
• There is a list of adverse actions that employers are prohibited from taking in response to employees’ use or attempted use of safe and sick leave, which includes any disciplinary action taken against an employee, or action that may deter an employee from taking leave.

On December 10, 2020, the New York City Council passed legislation expanding employment protections under the New York City Fair Chance Act (the “ban-the-box” law) for applicants and employees with criminal charges or arrests. The law is to take effect on or about July 28, 2021.

As a reminder, the FCA requires employers to consider 8 factors to decide whether a job applicant’s criminal conviction history directly relates to the job applied for, or if the applicant would create an unreasonable risk to property, persons, or the general public, if hired. The FCA also (i) prohibits inquiries concerning a job applicant’s criminal history until a conditional offer of employment has been made, (ii) requires employers to provide the job applicant with a notice and written analysis of the eight FCA factors, and (iii) provides the applicant with 3 business days to respond before a conditional offer of employment can be withdrawn.

The FCA amendments create the following new requirements for employers:

• Before a conditional offer may be withdrawn, or a current employee adversely affected on the basis of a pending criminal charge, arrest, or accusation, an employer must individually assess the relevance of the alleged criminal conduct using 7 factors similar to the 8 FCA factors. Employers must provide a notice setting forth the substantive basis for any disqualification based on a pending criminal matter and review any responsive information timely submitted by the applicant or employee.
• In addition to the required pre-employment analysis, the FCA job-related analysis applies to criminal convictions arising during employment.
• It is unlawful to either make any inquiry about non-pending arrests or criminal accusations, adjournments in contemplation of dismissal, youthful offender adjudications or sealed offenses, when such an inquiry would violate the New York State Human Rights Law. Currently, the FCA prohibits denying employment on these bases, but does not prohibit inquiries about such information.
• Employers are prohibited from inquiring about, or denying employment based on, violations and non-criminal offenses (excluding an applicant’s motor vehicle record).
• The FCA amendments also codify the existing rule that an employer can only revoke a conditional offer based on criminal history after all other screening and background checks have been completed.

As per the New York City Commission on Human Rights, “Harassment and discrimination on the basis of race, national origin, age, and disability (including having COVID-19 or another serious illness) is illegal under the New York City Human Rights Law. In recent months, we have seen a sharp increase in instances of hostility and harassment directed at Chinese and other Asian communities related to COVID-19 anxiety.” (emphasis added).

The Commission also previously provided guidance that it is unlawful for an employer to harass or discriminate against an employee based on a belief that a worker contracted, or is more likely to contract, COVID-19 as a result of their race, national origin or other protected status.

Minimum Wage Increases

Effective December 31, 2020, the minimum wage, tip credit and minimum salary levels in New York increased for many employers. Increases are dependent on the employer’s location. There will be no increase to the minimum wage or minimum salary levels for employers in New York City who are already required to pay their employees $15 per hour. Employers in the rest of the State, however, must take note of the increases to the minimum wage. As of December 31, 2020, the hourly minimum wage increased in Long Island and Westchester County to $14 and in the rest of the state to $12.50. Annual increases for the rest of the state will continue until the rate reaches $15 minimum wage (and $10 tipped wage).

More information on NY minimum wage increases can be found here.

New York State Paid Family Leave (PFL)

In 2021, eligible employees have access to up to 12 weeks of job protected, paid time off to bond with a new child, care for a family member with a serious health, or to assist loved ones when a family member is deployed abroad on active military service. Employees may also be eligible to use PFL if a worker or a minor dependent child are under an order of quarantine or isolation due to COVID-19.

The PFL wage replacement benefit is also increasing. In 2021, employees taking PFL will receive 67% of their average weekly wage, up to a cap of 67% of the current New York State average weekly wage of $1,450.17. The maximum weekly benefit for 2021 is $971.61.

An Overview and FAQ on NYS PFL can be found here.

Whatever their political orientation, businesses are cautiously eyeing a Biden-Harris administration for signs of “Obama redux,” or perhaps an even more aggressive labor agenda, particularly in the form of Executive Orders from a Democratic administration energized by (or careful to placate) its more progressive elements.

Biden’s actual legislative opportunities in Congress are far more uncertain and run from modest to expansive, largely depending on the results of Georgia’s U.S. Senate runoff elections on January 5, 2021. If Republicans keep control of the Senate, employers should expect more gridlock in Washington. That kind of stalemate may well result in the exact reaction some state legislatures had to Trump: more progressive employment legislation at the state and local levels. But with Executive Orders remaining, recent Presidents’ weapon of choice (a trend for which Trump became known but which, ironically, was ushered in by Obama himself), employers can also expect a Congressionally stymied Biden-Harris administration to compensate with more of the same. We don’t have to look far for evidence of these plans: for example, Biden has already committed to rescinding President Trump’s Executive Order 13950, which directed federal contractors to refrain from conducting diversity and inclusion training.

Other predictions include the following:

Coronavirus

President-elect Biden campaigned on shutting down the coronavirus, not the economy. Employers can expect his administration to issue workplace safety rules for employers to follow on a national level to protect workers from exposure to the virus. The new president could implement these rules quickly even without Senate confirmed leadership at the Labor Department or OSHA.

Expanded family leave and emergency paid sick leave under the Families First Coronavirus Response Act (FFCRA) will expire on December 31, 2020. During the campaign, President-elect Biden indicated that he would support: (1) expanding the additional $600 per week in federal unemployment benefits that expired in July 2020, and (2) an extension of emergency paid sick leave and family medical leave under the FFCRA. Biden would likely support a bill that would make these benefits available to both employees and part-time workers, gig workers, and independent contractors. Senate Republicans favor the inclusion of valuable liability protections for businesses. In the event Senate Republicans keep control of the Senate, President-elect Biden may support a compromise bill with both benefits for employees and employers (for employers making a good faith effort to comply with COVID safety measures).

Additionally, President-elect Biden supports 12 weeks of paid leave for all workers to care for their newborns, newly adopted or fostered children, for their own or a family member’s serious health condition, or to care for injured service members or deal with “qualifying exigencies arising from the deployment” of a family member in the Armed Services.

Misclassification – Employee vs. Independent Contractor

The ping pong that has gone on over the legal definition of an “employee” will likely continue, as President-elect Biden has committed to “work with Congress to establish a standard modeled on the ABC test for all labor, employment, and tax laws.” (The “ABC” test finds its origins in California state law, most clearly embodied in 2020’s Assembly Bill 5, or “AB5,” which is shorthand for “almost impossible to classify workers as independent contractors.”)

Whether the Biden-Harris administration can actually deliver on its promise of legislative action with respect to independent contractor misclassification remains to be seen. However, President-elect Biden’s invocation of California’s ABC test is a strong signal that his administration will ramp up enforcement action designed to root out independent contractor misclassification.

National Labor Relations Board

While a Republican-controlled Senate is unlikely to pass union friendly legislative proposals, President-elect Biden will place individuals on the National Labor Relations Board who share his pro-union views, and who are likely to overrule many of the precedents issued during the Trump administration and who will revive the Obama-era rules expediting union elections, requiring contractors to agree to be neutral with respect to union organizing, and impose a version of the “Fair Pay and Safe Workplaces” order.

OSHA

Similarly, a Biden-Harris administration will likely include the reinstatement of the Obama-era rule requiring employers to publicly disclose occupational illnesses and injuries at their workplaces, which is intended to incentivize compliance with health and safety standards.

Pay Equity

When Vice President-elect Kamala Harris was herself a presidential hopeful, she revealed her intention to make the U.S. a worldwide leader in the fight for pay equity. If Republican control in the Senate remains, it is unlikely that the Biden administration could push through Congress any pay equity legislation imposing significant burden on private employers. However, pay parity standards for federal contractors are likely along with the resuscitation of the Obama-era requirement that pay data be disclosed by employers on EEO-1 reports and a directive to the OFCCP to aggressively enforce prohibitions on wage discrimination by federal contractors.

Arbitration

If the Democrats gain control of the Senate, employers can expect Biden to sign the Forced Arbitration Injustice Repeal (“FAIR”) Act, which is legislation that would prohibit employers from requiring employees to sign pre-dispute arbitration agreements as a condition of employment. If Republicans maintain their Senate majority, the FAIR Act will be blocked in the Senate.

Immigration

The Biden Administration is expected to make it easier for businesses to use immigration to strengthen their businesses.

Minimum Wage

President-elect Biden previously called for a $15 federal minimum wage. The Biden Administration also will seek to eliminate the reduced minimum wage for tipped employees (i.e., the tip credit) and likely will seek an increase in the minimum salary to qualify as an exempt employee under the FLSA.

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Kelley Drye's Labor and Employment team will continue to track and provide updates on the latest legislative and regulatory developments. If you have any questions, please contact our co-chairs, Barbara Hoey and Mark Konkel.