For years, academics have debated the impact of post-employment non-competes on the economy and workforce. Apparently taking interest in this issue, earlier this month a bipartisan group of United States Senators, including Senator Marco Rubio of Florida, wrote to the United States Government Accountability Office asking it to review and report on non-competes, including how prevalent they are, how they’re used in low-wage fields, the impact of the workforce and economy (including innovation), and actions states have taken to limit the use of non-competes. A copy of the letter can be found here.
Non-competes, non-solicits and similar agreements continue to be viewed with great scrutiny. It is important to review these types of agreements frequently to comport with changing legal standards.
The Department of Labor has (finally) issued its new proposed overtime rule — which sets the minimum salary for an employee to be eligible for the white collar exemptions at $35,308. You can read more about this development here. This is significantly higher than the $23,660 that is currently in place but much lower than the $47,476 that the Obama administration tried to implement in 2016.
It’s important to remember that salary is only the first step in the analysis. Even if an employee is paid a salary over the minimum, the employer still needs to establish that the employee satisfies the job duties requirements to be classified as exempt.
It was less than a year ago that the Supreme Court ruled that employees could be required to individually arbitrate claims (and waive their right to participate in a class action), but arbitration agreements aren’t a silver bullet. In fact, some employers are responding to local legislation and employee resistance by pulling back from arbitration requirements.
Just last week, Google responded to employee protests and announced that it would no longer require its workers to arbitrate employment related claims. Read more about Google’s decision here.
Whether or not employee arbitration agreements make sense is a very company-specific decision. Think carefully about what you’re trying to accomplish with these agreements and talk to your legal counsel about the risks and benefits.
Last week a federal appellate court found that rumors about a female employee “sleeping her way to the top” could create a hostile work environment based on gender. You can read more about the decision here.
Many are viewing this case as another instance of #Metoo impacting the workplace. If you haven’t recently conducted anti-harassment training, now is the time to get it on the calendar!
Last week the Illinois Senate moved forward with Governor Pritzker’s priority to increase the minimum wage to $15/hour by 2025. Read more about it here. We’ll keep you posted as this effort moves forward….
Each year, LP’s Labor & Employment Practice Group is pleased to provide a short checklist of steps that all companies should consider taking to measure their readiness for the coming year. We hope that you find our 2019 Labor and Employment Law Checklist to be a helpful guide to best practices for the year ahead.
Download a fillable PDF here. Print it out for yearlong reference, or get started right away and enjoy the satisfaction of checking some very important items off your list.
- Keep Ahead of Harassment & Discrimination Claims. The #MeToo and #TIMESUP headlines did not slow down in 2018, and preliminary data released by the EEOC showed more than a 50% increase in EEOC charges claiming sexual harassment. In addition, Illinois and New York implemented new requirements relating to harassment policies and training, with Illinois requiring policies for employers that do business with the state or claim EDGE tax credits, and New York implementing strict requirements that apply to all companies with New York employees. The EEOC also issued “Promising Practices for Preventing Harassment” to provide strategies to employers to reduce workplace harassment. Committed and engaged leadership, strong and comprehensive harassment policies, and regular, interactive training tailored to the audience and the organization are the new standard. If you have not conducted training and updated your harassment, discrimination and retaliation policies to meet these standards, put it on the agenda for early 2019.
- Update Policies to Reflect New Reimbursement Requirements. Under a new law targeting employers who require employees to use their personal cell phones for business purposes, Illinois now requires employers to reimburse employees for expenses they incur that are “directly related” to the services they are providing their employer. However, employers can set requirements around how and when requests for reimbursement must be made. It is critical that employers confirm that expense reimbursement policies provide the framework for requesting reimbursement, and that policy manuals are clear that employees are eligible for reimbursement for these expenses, at least to the extent they exceed what the employee would have spent for personal reasons.
- Review Compensation Policies. The gender pay gap continues to draw the attention of lawmakers. For example, California, Connecticut, Delaware, Hawaii, New York, New Jersey, Maryland, Massachusetts, Oregon, Puerto Rico, Vermont and a number of municipalities have adopted laws making it easier to prove discrimination and/or limiting the compensation information that can be requested from applicants. And with the change in leadership in Springfield, Illinois might just follow suit in 2019. Consider reviewing compensation policies to put the emphasis on the value of the work being performed, rather than on what the applicant was paid in his or her last position.
- Confirm Parental Leave Policies Don’t Discriminate. Being more generous with paid leave to new mothers than new fathers can create significant liability if the difference is based on gender and not on the physical act of giving birth or the employee’s designation as a primary care giver. In February 2018, Estee Lauder paid $1 million to more than 200 male workers to settle a charge claiming that the company’s parental leave policy discriminated against male employees. Employers should revisit maternity and parental leave policies to make sure that any difference between the leave being provided to male and female employees is based on a permissible reason.
- Comply with New Military Leave Protections. A new Illinois Law –ISERRA– provides some additional protections beyond those of the Federal USERRA. ISERRA applies to all Illinois employers, regardless of size and requires that a specific notice of rights be posted. Make sure that your team is aware of these new requirements and that the notice is posted in your workplace. Also, if you have a military leave policy, confirm that it reflects ISERRA.
- Are Arbitration Agreements Right for You? After years of uncertainty, the Supreme Court determined that employers can legally require employees to arbitrate any disputes individually. But are these types of agreements right for your company? There are pros and cons of arbitration, so talk with your legal advisors to determine whether the agreements that require individual arbitration make sense for your organization.
- Revisit Workplace Rules Following NLRB Shift. The NLRB, now controlled by Republicans, is undoing many of the standards put in place by the prior NLRB. Many, but not all, of these rules are considered pro-employer, including a more practical approach to determining when handbook policies regarding confidentiality interfere with employees’ right to engage in concerted activity. This means that some of the disclaimers and limitations in employee handbooks that were put into place in response to the “old” NLRB’s standards are no longer necessary. Consider revisiting employee handbooks to clarify policies to be consistent with the current rules.
- Consider Unpaid Intern Standard Changes. For years we have counseled clients not to use unpaid interns or risk a variety of employment claims. However, changes to legal standards from both the courts and the Department of Labor have provided a more practical approach and raises the possibility of treating interns as unpaid. At the heart of the analysis is whether the internship is more for the intern’s benefit or the company’s, and whether the internship is an extension of their education. If you have an internship program that works with students, or are considering one, talk to your legal counsel about whether the internships can be unpaid.
- Update Restrictive Covenants. There has been lots of conversation regarding restrictive covenants. In fact, states are increasingly passing laws related to non-competes. Most recently, Massachusetts passed the most sweeping legislation we have seen in several years, limiting when and how employers can prohibit competition and even requiring additional consideration during the time period in which the employee cannot compete. If your restrictive covenants are more than a few years old, or if they are not specifically crafted to meet the legitimate business needs of the company, it is important to revisit and update them to maximize enforceability.
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As a follow up to our post last year, this week, in a 5-4 decision, the Supreme Court rejected the National Labor Relations Board’s position that class waivers in arbitration agreements violate federal labor law. The Court held that employers can legally require their employees, as a condition of employment, to agree that they will not pursue class action claims against their employers, but rather address legal issues through individual arbitration.
Writing for the majority, Justice Neil Gorsuch stated simply that, “The [Federal] Arbitration Act requires courts to enforce agreements to arbitrate, including the terms of arbitration the parties select.” In support of the decision, he compared the “simplicity and inexpensiveness” of arbitration to “slower, more costly” class actions, which are, in the view of the majority, “more likely to generate procedural morass than final judgment.”
The effects of the decision remain to be seen – Justice Ginsberg read her dissent from the bench, calling for Congress to address the matter. For now, though, employers with arbitration agreements in place will want to add a class-action waiver, and those that do not use arbitration agreements at all may want to reconsider that approach.