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Employers across the country have been relieved of the obligation to comply with the Federal Trade Commission’s rule banning most postemployment noncompetes — for now. On August 20, U.S. District Judge Ada Brown of the U.S. District Court for the Northern District of Texas granted summary judgment for plaintiffs in Ryan LLC v. FTC.

Judge Brown set aside the rule just two weeks before it was scheduled to go into effect on September 4 and ordered that it cannot be enforced nationwide.

As a result, employers do not need to comply with the rule’s notice and other requirements at this time. Employers can continue to maintain and enforce their current noncompetes pending resolution of the outstanding challenges to the rule.

Click here to continue reading this article.

Original article published in Law360.

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SHRM reports that one in four organizations currently use AI to support HR-related activities, with adoption of the technology expanding rapidly. The compliance risks arising from generative AI use also are intensifying, with an increasing number of state and local laws restricting employer use of AI tools in the United States. And not to be outdone, substantial regulation impacting multinational employers’ use of AI is emerging in other parts of the world (e.g., the EU AI Act).

One rapidly growing use case is applicant recruiting and screening, a trend likely to continue given recent increases in remote hiring and hybrid work arrangements. AI tools can streamline talent acquisition tasks by automatically sorting, ranking, and eliminating candidates, as well as potentially drawing from a broader and more diverse pool of candidates.

Employers who use AI tools must comply with significant new (and existing) laws that focus on data protection, privacy, information security, wage and hour, and other issues. The focus of this blog, however, is the legislative efforts in the US to protect against algorithmic bias and discrimination in the workplace stemming from the use of AI tools to either replace or augment traditional HR tasks.

IL Becomes the Second State (After CO) to Target Workplace Algorithmic Discrimination

On August 9, 2024, Gov. Pritzker signed H.B. 3773, making it unlawful for employers to use AI that has the effect of discriminating against employees on the basis of protected class in recruitment, hiring, promotion, discipline, termination and other terms, privileges or conditions of employment. The law, effective January 1, 2026, also prohibits employers from using ZIP codes as a stand-in or proxy for protected classes.

Like Colorado, Illinois’ new law also contains a notice requirement: employers must notify applicants and employees when using AI with respect to “recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure, or the terms, privileges, or conditions of employment.”

Continue Reading Illinois Joins Colorado and NYC in Restricting Generative AI in HR (Plus a Quick Survey of the Legal Landscape Across the US and Globally)
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This summer SCOTUS published three major decisions impacting workplace immigration decisions. Two of the decisions may require employers to shift their strategies for managing foreign-national talent, and the third essentially preserves the status quo.

Below we outline the impact of the decisions on US-based employers:

1. SCOTUS strengthens the doctrine of consular nonreviewability limiting options for employers and visa applicants who receive unfavorable denial

      In Department of State v. Munoz (July 21, 2024), SCOTUS ruled that US citizens do not have a fundamental liberty interest in their noncitizen spouses’ ability to come to the US.

      In Munoz, the spouse of a US citizen was denied an immigrant visa by a US consulate on ground that the consulate had “reason to believe” the spouse would participate in illicit activity if admitted to the US. The consular denial provided limited explanation for the decision – simply citing the “reason to believe” statute (a legal standard under which foreign nationals can be barred from entering the country if USCIS has a “reason to believe” the individual has been involved in illicit or illegal conduct) – and was extremely slow in providing this basis for its decision. The US citizen petitioning spouse sought judicial review and argued that she had a liberty interest in the matter given her US citizenship and that the impact of the consular decision deprived her of the fundamental right to marriage. But after receiving a favorable decision by the Ninth Circuit Court of Appeals, the Supreme Court reversed and held that no such liberty interest exists in this context.

      While the facts of Munoz did not involve a US employer, the underlying doctrine at issue – the ability to challenge a consulate’s decision on a visa – has direct implications to US employers who seek employment-based visas for employees. In reversing the Ninth Circuit’s decision, the Court upheld and arguably expanded the doctrine of “consular nonreviewability” – i.e. the inability to challenge the decision of a consular officer in US federal court.

      Takeaway:

      Munoz leaves employers and visa applicants with limited, if any, means for judicial redress in the event of an incorrect or unjust consular decision. Other avenues for challenging an unfavorable decision exist – including requesting supervisory review, review from the State Department’s Legal Net, or re-filing the application – but these fall short of and lack the teeth of formal judicial review.

      Continue Reading Triple Feature: SCOTUS Issues 3 Blockbuster Immigration Decisions This Summer Impacting Employers and Foreign National Employers
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      Last month the UK voted for a new government. The Labour party promised sweeping changes to UK employment law in its manifesto, and the King’s Speech confirmed the new government’s proposals to pursue numerous employment law reforms. Immediately following these announcements, Baker McKenzie employment partners Julia Wilson, Kim Sartin, Stephen Ratcliffe and Jonathan Tuck, and pensions partner Tom McNaughton discussed the implications of the new government’s proposals on employment and pensions law during our New Government, new law? webinar.

      The government intends to make changes impacting “exploitative contracts,” unfair dismissal law, parental leave, statutory sick pay and industrial action laws. Our key takeaways document outlining steps UK employers can take now is available HERE.

      And, for a deeper dive on the government’s proposals in relation to trade unions, industrial relations and collective rights, and how they might impact businesses, watch our quick chat HERE. Jon Tuck and Jess Bowden discuss Labour’s proposals in relation to trade union recognition and trade union access in the workplace and provide insights into what organizations can start thinking about before consultations open, as well as some useful tips on how you can develop your key stakeholder’s knowledge and approach when looking at your industrial relation strategy.

      For more, reach out to your Baker McKenzie employment attorney.

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      In June, we offered our annual Global Employment Law webinar series sharing expert insights on the business climate in major markets around the world for US multinational employers. Baker McKenzie attorneys from over 20 jurisdictions outlined the key new employment law developments and trends that multinationals need to know in four 60-minute sessions.

      ICYMI: click below to hear updates for the Americas, Asia Pacific, Europe and the Middle East and Africa and contact a member of our team for a deeper dive on any of the information discussed.

      Session 1: The Americas 

      Presenters: Andrew Shaw, Clarissa Lehmen*, Daniela Liévano Bahamón, Benjamin Ho, Liliana Hernandez-Salgado and Matías Gabriel Herrero

      Click here to watch the video.

      *Trench Rossi Watanabe and Baker McKenzie have executed a strategic cooperation agreement for consulting on foreign law.

      Continue Reading Summer Replay: Tune In To Our Global Employment Law Update Series (Recordings Linked!)
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      On July 1, 2024 California Governor Newsom signed “compromise” PAGA reform bills into law (AB 2282 and SB 92) (PAGA Reform), which took the PAGA repeal initiative we told you about in May (see here) off the November 5, 2024 ballot.  

      On the bright side for employers, the new law shows leniency toward employers who can show they have taken reasonable steps toward PAGA compliance, through (among other things) caps on damages and expanded cure provisions. That said, employers will still need to be diligent to avoid wage and hour violations. One reason: while the ballot initiative (if passed) would have prevented plaintiffs’ attorneys from recovering fees, the PAGA Reform still allows plaintiffs to collect reasonable attorneys’ fees and costs. In addition, the PAGA Reform allows employees to keep a greater percentage of the recovery than before, meaning there is still plenty of incentive for employees to file PAGA claims–even with the employer-friendly changes.

      We hit the highlights of the PAGA Reform here.

      Effective date

      The PAGA Reform applies to PAGA civil complaints and notices of PAGA claims provided to the California Labor & Workforce Development Agency (LWDA) on or after June 19, 2024. Prior PAGA rules will apply to claims pending on or before June 19 or based on notices sent prior to June 19. (Though note that certain cure provisions do not take effect until October 1, 2024–see more below.)

      Stricter standing requirements, and statute of limitations questions clarified

      Under PAGA Reform, employees are now required to show they “personally suffered” each of the violations of the Labor Code they seek to pursue in a representative capacity under PAGA. Before the new law, if an employee could prove a single Labor Code violation, the employee could sue in a representative capacity on the same or any other Labor Code violation–even if the employee had not been personally affected by the other violations. (Note, the new standing requirement does not apply to certain nonprofit legal aid organizations that have served as counsel of record for PAGA civil actions for at least 5 years prior to January 1, 2025.)

      In addition, PAGA Reform clarifies that the statute of limitations to bring a PAGA claim is one year (the period prescribed under Section 340 of the Code of Civil Procedure)–dismissing interpretations that stemmed from the California Court of Appeals decision in Johnson v. Maxim Healthcare Services, Inc. that the PAGA statute of limitations defines the liability period for a PAGA claim, but otherwise places no time restriction on who may pursue a PAGA claim.

      However, even if an employee meets the statute of limitations under PAGA, if the LWDA (or any of its departments, divisions, commissions, boards, agencies or employees) has already–on the “same facts and theories”–timely cited an employer for violation of the same section of the Labor Code under which the employee is attempting to recover a civil penalty, or initiated a proceeding under Section 98.3 (allowing the Labor Commissioner to prosecute certain violations, including wage-related violations), the employee is barred from pursing that civil penalty. This restriction remains from prior PAGA rules, and helps to ensure employers are not penalized twice for the same conduct.

      Courts’ power to manage PAGA claims clarified

      Under PAGA Reform, courts have specified power to manage PAGA claims, including by limiting the scope of any claim to ensure it can be effectively tried, and limiting the evidence presented at trial–following the lead of the California Supreme Court decision Estrada v. Royal Carpet Mills, Inc., which held that though trial courts do not have inherent authority to strike PAGA claims on manageability grounds, a trial court can use its case management procedures to ensure that PAGA claims can be tried effectively.

      Injunctive relief and attorneys’ fees

      PAGA plaintiffs can now seek injunctive relief in any circumstances under which the LWDA could seek injunctive relief–in addition to the civil penalties and reasonable attorneys’ fees and costs PAGA plaintiffs can seek. However, injunctive relief is not available for violation of a posting, notice, agency reporting or filing requirement, unless the filing or reporting requirement involves mandatory payroll or workplace injury reporting.

      Continue Reading PAGA Reform: A Breath of (Some?) Fresh Air for Employers
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      More than ever, organizations are feeling the pressure to disclose information from all sides – consumers, employees and regulators

      Underlying this trend toward organizational transparency is a desire from stakeholders for accountability and meaningful change. But while transparency is undoubtedly a tool to achieving this, organizations will need to back information disclosure with effective governance and a strategy to drive real progress.  
       
      In the latest article of our Workforce Redesign: Outlooks for Business Leaders series, we explore how increased demands for transparency are shaping the workforce landscape across key areas such as inclusion, diversity and equity (ID&E) and environmental, social and governance (ESG) efforts and how organizations can ensure their information disclosure is intentional, impactful and legally compliant.

      Read the article today to confidently plan for what’s next for your workforce.

      More articles coming soon! Our Workforce Redesign: Outlooks for Business Leaders series spans the key areas of change that are shaping the modern workforce, including: responsible AI in HR, the future of flexible work and the war for talent. Visit our hub for all of the insights on this topic to date, with more content coming soon!

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      On the eve of the Fourth of July, the FTC rule banning most noncompetes is going up in smoke after a federal court in Texas held the US Chamber of Commerce and a tax firm are likely to prevail on their argument that the agency overstepped its authority to adopt the nationwide prohibition.

      The decision, on the heels of the US Supreme Court’s ruling reining in federal agency power under the Chevron doctrine, demonstrates the challenge the FTC faces in promulgating substantive regulations dealing with competition in the economy.

      Continue Reading Red, White and Blocked: Federal Judge Pauses FTC’s Ban on Employment Noncompetes
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      Enforcement against restrictive labor market agreements has become a priority for many competition authorities worldwide.

      As a result, certain HR practices are in the spotlight of antitrust enforcers and companies and staff who agree not to poach employees from others, or who agree to fix wages, are in clear and present danger of serious financial and even criminal penalties.

      It is therefore crucial to know where the boundary lies between legitimate and risky HR practices and how to avoid crossing it.

      Find out more and access valuable tips in International antitrust onslaught against HR practices: act now to stay ahead of the game, which includes: 

      • The global tipping point for competition enforcement in relation to HR practices
      • Compliance pitfalls when it comes to HR practices
      • Compliance pitfalls when it comes to HR practices

      Click here to continue reading.

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      When companies expand to new countries, they need to prioritize different legal and tax topics depending on whether they are just accepting orders from abroad (B2B or B2C), engaging with distributors, hiring contractors, or setting up formal presences. In this webinar, Baker McKenzie partners provide practical guidance on how to make decisions on going or staying global, and address topics that should be top of mind before expanding into new jurisdictions. You will receive roadmaps, checklists, suggestions for issue spotting, an introduction to Baker McKenzie’s Field Guide to Going Global publication and 1 hour of CLE credit. We will share guidance relevant to start-up companies and established multinationals that are broaching new frontiers. Join us to hear from our Firm’s practice experts on key considerations when expanding your business.

      Date: Thursday, June 27, 2024

      Time: 12:00 pm – 1:00 pm PT, 2:00 pm – 3:00 pm CT, 3:00 pm – 4:00 pm ET

      Click here to register.