Author: LP

Are Your Workers Independent Contractors or Employees: A New DOL Rule Aims to Help Employers Answer That Question

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Author Saman Haque

The U.S. Department of Labor’s (DOL) Wage and Hour Division updated its regulation concerning Employee or Independent Contractor Classification Under the Fair Labor Standard Act, with changes effective March 11, 2024. The revised rule finalizes the proposed rulemaking released in October 2022 with a goal ostensibly to remove confusion over whether a worker falls into the” employee” or “independent contractor” classification for wage and hour purposes. According to the DOL, the updated analysis for classifying “employee” and “independent contractor” seeks to be more consistent with judicial precedent and the Fair Labor Standard Act’s text and purpose.

The terms “worker,” “employee,” and “independent contractor” are often misinterpreted and inappropriately used interchangeably. Because classification as an “employee” provides certain protections, including minimum wage and overtime pay requirements, it is essential that employers make the correct classification. To help prevent misclassification, the DOL has created a resource page, including a helpful infographic, here: Misclassification of Employees as Independent Contractors Under the Fair Labor Standards Act | U.S. Department of Labor (dol.gov) 

What Is the New Rule the Department of Labor Is Adopting?

As of March 2024, the DOL has adopted the economic reality test to determine a worker’s correct classification for purposes of federal wage and hour laws. This test considers the following factors to assess whether a worker is economically dependent on the employer, or if, instead, they are in business for themselves:

  1. Opportunity for profit or loss depending on managerial skill
  2. Investments by the worker and the employer
  3. Degree of permanence of the work relationship
  4. Nature and degree of control
  5. Extent to which the work performed is an integral part of the employer’s business
  6. Skill and initiative

The updated rule does not use a “core factors” approach to the economic reality test; instead, it looks at the totality of the circumstances. No single factor is determinative, and each is considered in connection with the economic reality of the worker’s entire activity. Factors do not have a predetermined weight.

When determining whether a worker is an employee or independent contractor, the assessment’s focus is “the economic dependence” of the worker. In other words, as stated in the final rule, the “statutory language thus frames the central question that the economic reality test asks—whether the worker is economically dependent on an employer who suffers or permits the work or whether the worker is in business for themself.”

In its final rule, the DOL clarified that economic dependence focuses on whether the worker is in business for themselves and does not focus on the amount of money the worker earns or whether they have other sources of income.

How Does the New Rule Differ from the 2021 Independent Contractor Rule?

This new rule replaces and updates the guidance in the 2021 Independent Contactor Rule. In seeking to align with judicial precedent, the updated rule makes the following key changes:

  • Returns to a totality-of-the-circumstances economic reality test, with no single factor or group of factors having predetermined weight;
  • Looks to six factors (instead of five), including any investments made by the worker and the potential employer;
  • Provides an additional analysis of the control factor, with a detailed discussion of how scheduling, supervision, pricing, and the ability to work for others should be considered;
  • Returns to the DOL’s consideration of whether the work is integral to the employer’s business versus the work being exclusively part of an “integrated unit of production”;
  • Provides additional context to some factors; and
  • Removes a provision from the 2021 Independent Contractor Rule that had minimized the relevance of an employer’s reserved but unexercised rights to control a worker.

Legal Challenges and What Employers Should Do Now?

Unsurprisingly, after the DOL announced that the New Rule would go into effect March 11, 2024, the DOL was met with legal action challenging the new rule. Large organizations, small businesses, and even individuals have challenged the new rule, claiming it lacks predictability and negatively impacts several industries. It appears that for many, this new rule is not as clear cut as the DOL hoped and makes it more difficult to categorize workers as independent contractors. We will watch closely as the DOL responds to the nationwide claims challenging the new rule and how it will affect implementation.

Employers should review their census of employees and independent contractors in light of the updated analysis and ensure individuals are classified appropriately for purposes of wage and hour requirements, paying special attention to individuals classified as independent contractors. Employers also should keep in mind that workers classified as independent contractors must pass the test explained above under federal law as well as any tests that may be required by state laws.   

If you have questions about the proposed rule, independent contractor classification, or other labor and employment matter, do not hesitate to reach out to the Employment & Executive Compensation Group at Levenfeld Pearlstein.

For additional information on the updated rule, please see the DOL’s resource with FAQs: Frequently Asked Questions – Final Rule: Employee or Independent Contractor Classification Under the FLSA | U.S. Department of Labor (dol.gov)

EEOC Announces Its OutREACH Initiatives with a Focus on Employers’ Recruitment and Hiring Practices

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Author Saman Haque

The Equal Employment Opportunity Commission (EEOC) started the year off focused on getting to work. The EEOC released its Outreach Initiative on January 29, 2024, following its Strategic Enforcement Plan for Fiscal Years 2024 – 2028, which was released in September 2023. The Strategic Enforcement Plan focuses on the EEOC’s commitment to combating employment discrimination, promoting inclusive workplaces, and responding to the national call for racial and economic justice.

The EEOC’s Strategic Enforcement Plan is focused on employers’ recruitment and hiring practices. The EEOC has prioritized addressing “policies and practices that limit access to on-the-job training, pre-apprenticeship or apprenticeship programs, temp-to-hire positions, internships, or other job training or advancement opportunities based on protected status.”

The EEOC indicated that it will focus on recruitment and hiring practices that unlawfully discriminate through the following systems and practices:

  • Technology. This includes artificial intelligence and machine learning in job advertisements, recruiting, or making/assisting in hiring decisions where technology intentionally excludes or adversely impacts protected groups. The Equal Employment Opportunity Commission (EEOC) recently issued a technical assistance document on assessing adverse impacts when using AI, which built on previous guidance from the EEOC on AI and the Americans with Disabilities Act. You can read more here.
  • Job advertisements. The EEOC will focus on discrimination via job advertisements that exclude or discourage certain protected groups from applying for the open position.
  • Job isolation. This includes channeling, steering, or segregating individuals into specific jobs based on protected characteristics.
  • Training. The EEOC will focus on enforcing discrimination via policies and practices that limit access to on-the-job training, pre-apprenticeship or apprenticeship programs, temp-to-hire positions, internships, or other job training or advancement opportunities based on protected characteristics.
  • Temporary work. The EEOC will focus on policies and practices that “limit employees exclusively to temporary work on a basis prohibited by federal employment laws when permanent positions are available for which they are qualified.”
  • Application process. This includes relying on restrictive application processes or systems, including online systems that are difficult to access for individuals with disabilities or other protected groups.
  • Screening. The EEOC will focus on screening tools or requirements that disproportionately impact workers on a protected basis, including tools facilitated by artificial intelligence or other automated systems, pre-employment tests, and background checks.

Employers should be mindful of the practices that their Human Resources Departments use to process applications, how they advertise job openings, methods of providing internal growth opportunities to employees, and the parameters used to categorize employees as temporary employees instead of full- or part-time.

Accessibility continues to be a focus of the EEOC, and employers should be conscious of how user-friendly their applications are to those that are protected under the ADA.

The EEOC is also focused on the continued underrepresentation of women and workers of color in certain industries and sectors, such as construction and manufacturing, high tech, STEM, and finance. In launching its REACH initiative, the EEOC committed to outreach to vulnerable workers and underserved communications by:

  • Holding in-person and virtual listening sessions with a broad range of stakeholders in different areas around the country to examine how the EEOC can bolster its efforts to reach vulnerable and underserved communities by identifying existing barriers to reporting discrimination and soliciting recommendations on how to serve these populations better.
  • Reviewing and evaluating existing research and recommendations on effective outreach strategies, tools, and methods to inform the initiative’s work.
  • Identifying best practices for reaching vulnerable and underserved communities and considering how to develop an increased presence in rural areas and areas far from physical EEOC office locations.
  • Developing recommendations to present to the EEOC Chair for enhancing outreach efforts.

We will continue to monitor and stay abreast of developments related to EEOC enforcement initiatives as necessary. If you have any questions about the EEOC’s stated priorities, including using AI or algorithmic decision-making tools in your workplace, please don’t hesitate to reach out. 

2024 Employment Law Checklist

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Each year, LP’s Employment & Executive Compensation 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 you find our 2024 Employment Law Checklist a helpful guide to best practices for the year ahead.

Click here to download a PDF guide.

❒     Refresh, Recharge, and Revamp Paid Time Off and Sick Time Policies. Illinois jurisdictions have been very busy implementing new paid leave requirements. The Illinois Paid Leave for All Workers Act took effect January 1, 2024 and requires all Illinois employers to provide 40 hours of paid time off to use for “any reason,” and Cook County joined in with a new Ordinance setting out similar requirements. Pre-existing policies may meet the requirements under this law; however, employers should revise these policies to ensure they are inclusive of all the requirements under this law. The City of Chicago raised the bar even further by requiring 40 hours of paid leave and an additional 40 hours of paid sick leave for Chicago employees beginning July 1, 2024. Not surprisingly, Illinois is not alone in this activity. California, Colorado, and Minnesota (and a number of localities) have also updated their paid leave laws. Employers need to review their policies and applicable requirements to make sure that the amount of time provided, how it’s accrued, how it’s used, whether it carries over and how it’s handed on termination are both workable for the company and legally compliant.

❒      Revisit Bereavement Policies.  Under amendments to the Illinois Victims’ Economic Security and Safety Act (VESSA) and the Illinois Bereavement Law effective January 1, 2024, employees are permitted up to two weeks of unpaid, job-protected leave to attend a funeral, arrange a funeral, or grieve if a family or household member is killed in a crime of violence. Illinois also created a new requirement that employers with 250 or more employees offer 12 weeks of unpaid bereavement leave for the loss of a child due to suicide or homicide, while employers with 50-249 employees must provide six weeks of unpaid leave in those circumstances. It’s important that employers update their policies to reflect these new requirements and coordinate them with other paid leave offerings.

❒      Understand New Safety in the Workplace Requirements. California employers are now subject to the first proactive workplace violence prevention plan requirements in the US. Under the new requirements, employers must establish, implement, and maintain an effective, written Workplace Violence Prevention Plan, log information for every workplace violence incident, maintain up-to-date records, and meet training obligations, among other requirements. But it’s not just California employers who should take note. Amendments to the Illinois Gender Violence Act permit victims to sue employers whose employees or agents commit gender-related violence in the workplace if the violence arises “out of and in the course of employment with the employer.” To minimize liability, it’s important that employers conduct regular anti-harassment training (which should include that violence against employees is prohibited) and stay on top of allegations of harassment or violence in the workplace.

❒     Confirm Compliance with Pay Transparency and Equity Laws. Transparency in the workplace continues to be a legislative priority across the country. Beginning in 2025, Illinois employers with at least 15 employees will need to include the wage or salary range and a general description of benefits in job postings, so it’s important the HR and recruiting teams start thinking about how they will gather and provide this information. Also in Illinois, the deadline for employers with 100+ employees to submit for their Equal Pay Certification is March 23, 2024.  Covered employers that haven’t already submitted should move quickly to prepare this detailed, information-intensive application by the deadline. Employers with Colorado employees should also be aware of amendments to the Colorado Equal Pay for Equal Work Act which make some requirements more reasonable while creating new obligations around pay transparency.

❒     Revise Handbooks and Template Agreements that include Confidentiality or Non-Disparagement Provisions to Avoid Liability Under New Standards. A decision from the National Labor Relations Board in February 2023 means that employers need to ensure that standard employment covenants – such as confidentiality, non-disclosure and non-disparagement – cannot be read to limit non-supervisory employees’ right to make complaints or discuss them with fellow employees, former colleagues, unions, attorneys, the NLRB or others. This development is noteworthy because the language itself creates risk, even if it is never used.  It is critical that employers update employee handbooks and other employment-related documents to either include a clear statement that the provision does not limit employees’ exercise of protected rights. 

❒     Make Sure Temporary Employee Engagements Meet Strict New Standards. Both staffing firms and the companies that use their non-professional, non-clerical workers have new obligations under amendments to Illinois’ Day and Temporary Labor Services Act (“DTLSA”). Among other requirements, staffing companies are now required to provide long-term workers (those who are assigned to the same client for more than 90 days in a 12-month period) with pay and benefits not less than what is provided to the client’s lowest-paid directly-hired employees.  Companies using staffing company workers are required to confirm that the agency is registered with the Department of Labor at the time it enters into the contract and are required to provide staffing firms with the information necessary to meet the DTLSA’s compensation requirements. Staffing firms should already be aware of and complying with the DTLSA, but companies that use non-professional, non-clerical workers assigned by temporary companies need to make sure they understand and adhere to these new requirements.

❒     Ensure Independent Contractor Agreements Meet New Requirements. Effective July 1, 2024, companies that engage independent contractors or freelancers in Illinois will be required to have a written agreement with each independent contractor or freelancer that includes very specific information, including an itemization of the products and services to be provided and payment details. Companies that use independent contractors or freelancers need to review and revise contracts to make sure they include all required information and implement new agreements as necessary.

❒      Stay Abreast of New Limitations and Requirements around Restrictive Covenants – and Liability for Implementing Unenforceable Ones. On the national level, 2023 saw the NLRB taking the position that requiring a non-supervisory employees to sign a non-compete was an unfair labor practice (regardless of whether it was ever enforced) and the Federal Trade Commission issuing a proposed rule that would drastically limit non-competes (even in the sale of business context). While a bill in New York that would have prohibited all non-competes was ultimately vetoed, California took steps to give additional teeth to its prohibition on non-competes and customer non-solicits, amending the law to make clear that such provisions aren’t only void, they are also “unlawful,” and requiring employers to notify employees who signed any such provision about the new law by February 14, 2024.

If you found this checklist helpful, subscribe to LP3. If you have questions, do not hesitate to reach out to LP’s Employment & Executive Compensation Group.

Chicago City Council Delays Effective Date for New Paid Leave Requirements

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Author Saman Haque

On December 13, 2023, the Chicago City Council passed an amendment, extending the effective date of the Paid Leave and Paid Sick and Safe Leave Ordinance (“Paid Leave Ordinance”), which it had recently passed on November 9, 2023. In addition to extending the effective date from January 1, 2024 to July 1, 2024, the amended ordinance updated provisions regarding covered employees. Although the effective date has been delayed six months, employers should take steps now to ensure compliance.

Illinois employers outside of Chicago must comply with the Illinois Paid Leave for All Workers Act, which takes effect on January 1, 2024. The new Illinois law does not apply in Chicago or any other jurisdiction with an existing paid time off requirement. 

As described in our previous article, the new Paid Leave Ordinance allows employees to earn up to 35 hours of paid leave for any purpose in a 12-month period (“PTO”) and up to 40 hours of paid sick leave in a 12-month period “(Paid Sick Leave”). Under the Paid Leave Ordinance, employees will accrue both PTO and Paid Sick Leave at a rate of at least one hour for every 35 hours worked.

What happens between now and July 1, 2024?

PTO accrual for Paid Leave and Paid Sick Leave under the new ordinance will begin on July 1, 2024, instead of January 1, 2024. With a delayed effective date of the new ordinance, the current Chicago Sick Leave Ordinance accrual rate of one hour for every 40 hours worked remains effective through June 30, 2024. The Paid Leave Ordinance requires that employers allow employees to carry over up to 16 hours of PTO and up to 80 hours of Paid Sick Leave each year, but the amending ordinance delayed the carryover requirements for Paid Sick Leave to July 1, 2024.

Are the pay-out requirements delayed?

Yes, the Paid Leave Ordinance required medium employers (51-100 covered employees) to pay out up to 16 hours of PTO in 2024 and all accrued and unused PTO beginning in 2025. Most large employers (those with over 100 employees) must pay out accrued and unused paid leave upon termination (or if an employee leaves Chicago). The amending ordinance delayed the pay-out requirements to July 1, 2025.

Did the amending ordinance change the definition of “covered employee”?

Yes, the original ordinance included employees who work at least two hours in a two-week period for the employer while physically present in Chicago. The future amended ordinance changed the definition to include employees who work at least 80 hours in Chicago during a 120-day period. Once an employee meets that threshold, they are deemed a “covered employee” for the duration of their employment with that employer. The Paid Leave Ordinance continues to include domestic workers (regardless of whether they are employees or independent contractors).

Do any Paid Leave Ordinance requirements take effect before July 2024?

Under the Paid Leave Ordinance, employers must: (1) post a notice of the new requirements, (2) adopt a written policy explaining PTO and Paid Sick Leave rights and responsibilities and share the policy with employees when they are hired, and (3) provide employees with PTO and Paid Sick Leave accrual and use information each pay period. The amending ordinance requires that employers provide their employment policies to workers with regular work duties within the geographical boundaries of Chicago in the primary language of each worker. Employers must also give employees 14 days’ notice of any changes to employment policies.

How should Chicago employers prepare?

Chicago employers should take the following steps immediately to make sure that they comply:

  • Determine whether you will frontload or accrue for PTO and Paid Sick Leave (you can create one uniform policy to address both leaves or separate them depending on what best serves your business).
  • Review existing policies to ensure compliance with the new ordinance and clearly explain how PTO and Paid Sick Leave will be handled.
  • Make sure payroll systems are set up to track and document time off availability and usage properly.
  • Determine whether any remote employees are physically present in the City of Chicago for work at least 80 hours in a 120-day period, and if so, make sure they’re included in the new policy.
  • Update template separation letters to reflect new payment upon termination requirements and ensure your human resources team knows when and how time needs to paid out.

We will be continuing to monitor the City’s changes to the Paid Leave Ordinance. If you have any questions regarding Chicago’s new Paid Leave Ordinance or the Illinois Paid Leave for All Workers Act, please do not hesitate to reach out with any questions.

Chicago Passes Sweeping New Paid Leave Ordinance

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Author Laura Friedel

Chicago recently passed one of the most expansive paid time off laws in the country, with significant changes and severe penalties for violations. Passed by the Chicago City Council on November 9, 2023, the Paid Leave and Paid Sick and Safe Leave Ordinance (“Paid Leave Ordinance”) takes effect on December 31, 2023, and significantly amends the current paid leave requirements.

The new Paid Leave Ordinance allows employees to earn up to 40 hours of paid leave for any purpose in a 12-month period (“PTO”) and up to 40 hours of paid sick leave in a 12-month period “(Paid Sick Leave”). Additionally, employers that accrue the time off (rather than frontloading it) must carry time over from year to year, and employers with more than 50 employees are required to pay employees out for unused PTO on termination – even if they use a flexible time off model. The new ordinance also imposes strict penalties for violations.

Who is covered by the new ordinance?

The Paid Leave Ordinance applies to any employer with at least one employee, though the requirement to pay for unused PTO on termination only applies to employers with more than 50 employees. “Covered employees” include domestic workers (regardless of whether they are employees or independent contractors) and any employees who work at least two hours in a two-week period for the employer while physically present in Chicago. Accordingly, the law may apply to remote workers who are physically present for work in Chicago occasionally.

If an employer is subject to a collective bargaining agreement with more generous paid time off provisions, the collective bargaining agreement continues to apply.

How does the Paid Leave Ordinance impact accrual and frontloading systems?

If an employer uses an accrual system, as of January 1, 2024, its employees will need to accrue both PTO and Paid Sick Leave at a rate of at least one hour for each 35 hours worked. Employers may cap accruals at 40 hours for each kind of leave in a 12-month period. Employers that use an accrual system must allow employees to carry over up to 16 hours of PTO and up to 80 hours of Paid Sick Leave each year (unused time off above those thresholds can be forfeited. Employers that use an accrual system must adopt a policy that explains the accrual rate.

Employers also have the option of frontloading PTO and Paid Sick Leave but providing at least 40 hours of PTO and 40 hours of Paid Sick Leave at the beginning of each 12-month period. While employers who front load don’t need to allow carryover of PTO into the new year, they must allow carryover of up to 80 hours of unused Paid Sick Leave. The downside of frontloading is that employees who quit in early January would be entitled to payout for the full year’s allotment, but we expect many employers will still use this approach to avoid the carryover requirement for PTO.

It’s important to note that with the December 31st effective date, employers that are not frontloading PTO and Paid Sick Leave on January 1, 2024 will need to carryover remaining balances from 2023 into 2024.

When can employees begin using their PTO and Paid Sick Leave?

Employers can require that new employees wait 30 days before they can begin using their accrued Paid Sick Leave and 90 days before using PTO. 

Can employers impose any advance notice requirements?

Employers subject to the Paid Leave Ordinance can still require employees to provide up to seven days’ advance notice for the use of PTO. They can also require seven days’ advance notice for any Paid Sick Leave that is foreseeable. Additionally, employers may require preapproval, within reason, for the use of PTO and documentation for Paid Sick Leave of more than three consecutive days.

Do employers need to pay out unused PTO and Paid Sick Leave when employment is terminated?

Employers are not required to pay out unused Paid Sick Leave upon termination, resignation, retirement, or other employment separation.

The payout rules for unused PTO differ depending on the size of the employer. Small employers (50 or fewer employees) are not required to pay out unused PTO, but medium employers (51-100 employees) must pay out 16 hours of PTO in 2024 and all accrued and unused PTO beginning in 2025. Most large employers (those with more than 100 employees) must pay out accrued and unused paid leave upon termination (or if an employee leaves Chicago).

If a Chicago employer has “unlimited” or “flexible” paid time off, the Paid Leave Ordinance now requires that, at termination, they pay out at least 40 hours of PTO less any PTO the employee has used over the course of the previous 12 months. Employers with unlimited or flexible paid leave policies should make sure to accurately track the use of paid time off by employees.

What notice requirements to employers have?

Employers must notify employees of the new law by doing the following:

  • Post a notice of employee rights in a conspicuous place at each facility and distribute the notice with the employee’s first paycheck (and annually in July after that).
  • Adopt a written policy explaining PTO and Paid Sick Leave rights and responsibilities and share the policy with employees when they are hired.
  • Provide employees with PTO and Paid Sick Leave accrual and use information each pay period.

Chicago employers must also maintain accurate records of each employee’s PTO and Paid Sick Leave use, among other information. The failure to keep these records creates a rebuttable presumption of a violation.

What are the penalties for violating the Paid Leave Ordinance?

Employers who violate the ordinance could face fines between $1,000-$3,000 for each offense, with each day of noncompliance deemed a separate offense. The penalties for notice violations are $500-$1,000 per violation.

Additionally, employees may pursue a private cause of action for violations, with possible damages of up to three times the amount of leave denied or lost, plus interest, costs, and attorney’s fees. However, private claims for PTO violations may not be brought until January beginning January 1, 2025. Employees can pursue private causes of action for Paid Sick Leave violations as soon as the ordinance takes effect on December 31.

How does the Paid Leave Ordinance align with the Illinois Paid Leave for All Workers Act?

Earlier this year, Illinois enacted the Illinois Paid Leave for All Workers Act, effective January 1, 2024. However, the new Illinois law does not apply in Chicago or in any other jurisdiction that had an existing paid time off requirement. 

What should Chicago employers do before the end of 2023?

Chicago employers should take the following steps immediately to make sure that they are in compliance by December 31st:

  • Determine whether you are going to frontload or accrue for PTO and Paid Sick Leave (you can treat them differently if you prefer) and if accruing, prepare for carryover from 2023 to 2024.
  • Review existing policies to ensure compliance with the new ordinance and clearly explain how PTO and Paid Sick Leave will be handled..
  • Make sure that their payroll systems are set up to properly track and document time off availability and usage.
  • Determine whether any remote employees are physically present in the City of Chicago for work at least two hours in a two-week period and, if so, make sure they’re included in the new policy.
  • Update template separation letters to reflect new payment on termination requirements and make sure team is aware that this needs to be paid out.

If you have any questions regarding Chicago’s new Paid Leave Ordinance or the Illinois Paid Leave for All Workers Act, please do not hesitate to reach out with any questions.

Chicago Eliminates Subminimum Wages for Tipped Workers

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Author Laura Friedel

On Friday, October 6, 2023, the Chicago City Council approved the One Fair Wage ordinance, eliminating subminimum wages for tipped workers. The ordinance takes a phased approach to bringing tipped workers’ wages up to the full minimum wage by 2028. Currently, in Chicago the minimum wage for most workers is $15.80 per hour. The minimum wage for tipped workers will increase 8% starting July 1, 2024, and an additional 8% every year until 2028.

The final approved ordinance resulted from a compromise between city officials and the Illinois Restaurant Association, which ultimately agreed to the changes with the five-year phase-in period.

Currently, the subminimum wage for tipped workers in Chicago is $9.00-9.48 per hour plus tips. The Fair Labor Standards Act requires employers to pay tipped workers at least $2.13 per hour, but many states require a higher wage.

Chicago is the largest city to have eliminated subminimum wages for tipped workers. Last year, Washington, D.C. approved an initiative to eliminate subminimum wages by 2027, and several states – including California, Washington, Oregon, Nevada, Montana, Alaska, and Minnesota – require employers to pay workers full minimum wage, even if they receive tips.

LP’s Employment & Executive Compensation Group is available to answer any questions about the new ordinance or other employment matter.

EEOC Issues Long-Awaited Updates to Guidance on Workplace Harassment

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Author Laura Friedel

Nearly six years after previous attempts to issue guidance stalled, on September 29, 2023, the Equal Employment Opportunity Commission announced long-awaited draft guidance on workplace harassment. The EEOC is acting under its authorization to enforce federal employment discrimination laws that protect employees from harassment based on race, color, religion, sex (including sexual orientation, transgender status, and pregnancy), national origin, disability, age (40 and older), or genetic information.

Most notably, the draft guidance:

  • Specifically protects LGBTQ+ employees’ rights in the workplace;
  • Confirms that sex-based harassment includes harassment based on pregnancy, childbirth, or reproductive decisions (including decisions about abortion);
  • Provides updated examples to reflect a broad scope of workplace scenarios;
  • Includes updates based on current case law; and
  • Addresses the impact of evolving and expanding digital technology, including social media, on the work environment.

The guidance requires employers to provide adequate anti-harassment policies and trainings, including those designed to help supervisors recognize and report occurrences of harassment.

“Preventing and addressing harassment in America’s workplaces has long been a key priority for the EEOC, and this guidance will provide clarity on new developments in the law and build on the commission’s previous work,” EEOC Chair Charlotte A. Burrows said in the announcement. “The commission looks forward to receiving public input on the proposed enforcement guidance.”

The EEOC’s draft guidance follows the U.S. Supreme Court’s decision in Bostock v. Clayton County, Ga. in 2020, which held that the prohibition on sex discrimination in Title VII of the 1964 Civil Rights Act applies to bias based on sexual orientation and gender identity.

The draft guidance was published in the Federal Register on October 2, with public comments open until November 1. If finalized, the guidance will replace decades-old guidance documents the agency released in the 1980s and 1990s. The EEOC had unanimously approved updated guidance in 2017, but those measures were never finalized.

As a reminder, employers may also be subject to state and local anti-harassment laws. For instance, a recently amended Chicago Human Rights Ordinance requires all Chicago employers to provide the anti-harassment trainings yearly. Additionally, the Illinois Workplace Transparency Act requires all employees to complete sexual harassment prevention training on an annual basis. LP offers a training program that meets Chicago and Illinois requirements. If you would like to schedule a training, please reach out. A member of our Employment & Executive Compensation team would be happy to speak with you.

ICYMI: Annual Employment Law Update Video Available

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LP’s Employment & Executive Compensation Group recently hosted its annual complimentary webinar, during which the group reviewed developments over the past year and discussed tips to keep your workplace practices moving forward.

Topics included, among others:

  • New job posting and pay disclosure requirements
  • Illinois’ new PTO requirements and other PTO/leave-related developments
  • Increased scrutiny of non-competes and non-solicits
  • Employment law implications of data privacy and AI
  • Required changes to standard policies and documents to comply with new NLRB standards
  • Changing independent contractor classification standards
  • Supreme Court’s religious accommodation and affirmative action decisions
  • State law developments that will impact your business, including new non-discrimination, expense reimbursement, and marijuana laws

Watch the Full Presentation

You can also view clips on the following topics:

Invitation: How Non-Traditional Relationships with Outside Lawyers Can Elevate Your Team

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LP Partner Laura Friedel and Christine Binotti of Motorola Solutions will share their non-traditional approach to supporting the HR and M&A deal teams and how it’s benefited their teams during a lunch program sponsored by the Association of Corporate Counsel (ACC) on September 27, 2023, from 11:30-1:00 p.m. CST. LP will be hosting the event in our Chicago office.

For more information and to register click here.

Amendments to the Illinois Day and Temporary Labor Services Act Take Effect – What Temp Agencies and Contracting Companies Need to Know

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Author Laura Friedel

On August 4, 2023, Illinois Governor JB Pritzker signed into law HB 2862, which significantly amends the Illinois Day and Temporary Labor Services Act (the “Act”). The amendments, which took effect immediately, provide most temporary workers with increased equal pay rights and include new safety and training requirements. Shortly thereafter, on August 7, 2023, the Illinois Department of Labor (“IDOL”) adopted emergency rules to provide additional details and clarifications regarding the amendments. It is important to note that the Act does not apply to professional and clerical temporary workers.

Among the most notable changes in HB 2862 and IDOL’s related guidance are:

  • Equal pay and benefits. Temporary laborers assigned to work at a third-party company for more than 90 calendar days (whether consecutively or intermittently) within any 12-month period must be paid at least the same wage as the lowest-paid comparable direct-hire employee and must receive equivalent benefits as comparable direct-hire employees. If there is no comparable direct-hire employee, the temporary laborer must be paid at least the same wage and equivalent benefits as the lowest-paid direct-hire employee of the third-party client.

IDOL guidance clarified that the 90-day clock starts to run after HB 2862’s effective date of August 4, 2023. If compensation increases are required to comply with the Act’s requirements, the increased wage will apply as of the temporary laborer’s 91st day working at the third-party client.

  • Cash in lieu of benefits. Temp agencies may choose to pay the temporary laborer the cash equivalent of the actual cost of the benefits rather than providing the benefits. IDOL clarified that “benefits” means health care, vision, dental, life insurance, retirement, paid and unpaid leave, other similar employee benefits, and employee benefits as required by state and federal law.
  • Information to be provided by third-party clients. Businesses that use a temporary laborer for more than 90 days must provide the agency with the necessary information related to job duties, pay, and benefits of direct-hire employees to enable the agency to meet its obligations related to equal pay and benefits.
  • Right to refuse assignments. Temporary agencies cannot send temporary laborers to third-party clients engaged in a strike, lock-out, or similar labor dispute without notifying the temporary laborer, in writing, of the labor dispute and the laborer’s right to refuse the assignment. IDOL guidance confirms that the right to refuse must be honored without prejudice.

IDOL guidance provides that the temporary agency must ask the third-party client whether a strike, lock-out, or other labor dispute exists at the client’s business before sending a temporary laborer to work there.

  • Workplace safety requirements. Before assigning a temporary laborer to a third-party company, the agency must inquire about safety and health practices at the worksite, provide training on general safety and recognized industry hazards, transmit a general description of the safety program at the start of the contract with the third-party client, provide IDOL’s safety hotline number to the temporary laborer, and inform the temporary laborer of how to report safety concerns.

The third-party company utilizing temporary laborers must document and inform temporary laborers about potential workplace hazards, review the agency’s safety training program to confirm it addresses recognized hazards, provide specific safety training for the worksite, and document and maintain safety training records.

IDOL guidance confirms that the safety training must be provided at no cost to the temporary laborer.

  • Expanded enforcement and penalties. The amendments allow any “interested party” to report violations and bring an action against the agency or client company. An interested party may include organizations that monitor compliance with worker safety, wage and hour laws, and other statutory requirements. Violations of the Act may result in penalties up to $18,000 per violation.

Proponents of the amendments to the Act indicate that it is intended to bolster workplace safety and compensation for temporary laborers, in addition to enhancing communication between agencies and their clients. Both agencies and contracting companies should review their policies and procedures related to temporary work to ensure compliance.

Attorneys in LP’s Employment & Executive Compensation Group will share additional information on the new requirements – for both temporary agencies and the company clients that use temporary laborers – at our upcoming Annual Employment Law Webinar.

Register for our complimentary Annual Employment Law Webinar.