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In Raines v. U.S. Healthworks Medical Group, the California Supreme Court expanded the definition of an “employer” under the state’s discrimination statute to include certain third-party business entities that perform employment-related functions on behalf of employers. These agents may now be deemed “employers” such that they can be directly liable for employment discrimination under the Fair Employment and Housing Act for certain activities that they carry out on behalf of employers.

Overview of Raines

The Raines‘ plaintiffs were job applicants who received offers of employment that were conditioned on the successful completion of pre-employment medical screenings conducted by a third-party company that used automated decision-making. Plaintiffs alleged that the screening form contained intrusive questions regarding their medical history that violated FEHA. They brought claims against their employers, as well as the third-party provider that conducted the medical screening. The question for the Court was whether business entities acting as agents of an employer, can be considered “employers” under FEHA and held directly liable for FEHA violations caused by their actions.

The Court examined the plain language in FEHA’s definition of “employer” and concluded that the definition did indeed encompass third-party corporate agents like the medical provider in his case. FEHA defines an employer as “any person regularly employing five or more persons, or any person acting as an agent of an employer, directly or indirectly.” Here, the Court reasoned, recognizing the medical provider as an agent of the employer extended liability to the company most directly responsible for the FEHA violation.

Continue Reading Automated Decision-Making and AI: California Expands FEHA Liability to Include Third-Party Business Agents of Employers
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Special thanks to our Baker McKenzie speakers Danielle Benecke and Ben Allgrove, and Industry Experts Ashley Pantuliano, Associate General Counsel, OpenAI, Julian Tsisin, Global Legal & Compliance Technology, Meta, Janel Thamkul, Deputy General Counsel, Anthropic, and Suneil Thomas, Managing Counsel, Google Cloud AI.

Baker McKenzie is pleased to invite you to an afternoon exploring the legal ramifications of the AI Revolution on October 10.
  
Following an interactive keynote discussion with our in-house panelists, leading Baker McKenzie AI lawyers will address the cutting edge legal and regulatory issues impacting companies now. 

After our substantive discussions, we invite you to join us for a cocktail reception on the patio from 5:00 – 6:00 pm.

Date:

Tuesday, October 10

Time:
Program 3:00 to 5:00 pm
Cocktails 5:00 to 6:00 pm

NEW Location:
El Prado Hotel
520 Cowper St
Palo Alto, CA

View the invitation and click here to register.

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Effective September 17, employers with four or more employees in New York state must include a compensation range in all advertisements for new jobs, promotions and transfer opportunities. A pay transparency fact sheet and FAQ document are available on the NYSDOL website with additional information and guidance on the new law. 

Overlap and City vs. State

Since November 1, 2022, per Local Law 32, New York City employers with four or more employees have been required to disclose in job postings – including those for promotion or transfer opportunities – the minimum and maximum salary offered for any position located within New York City or that “can or will be performed, in whole or in part, in New York City.”

The New York state law differs from the existing city law in several ways.

  • With the state law, companies are required to include a job description in the advertisement, if such a description exists. If a position will be paid solely in commissions, the advertisement must include a general statement to that effect.
  • The state law has a further reach, and applies to jobs that will “physically be performed” in New York as well as jobs performed outside of the state “report[ing] to a supervisor, office, or other work site in New York.” Thus, unlike the city law, the state law sweeps remote roles reporting into the state into its coverage.

Staying on Top of the Pay Transparency Trend

New York joins Colorado, Washington, California and Hawaii in requiring pay transparency. Illinois will join in 2025. A number of US cities and counties also have pay transparency legislation, and federal legislation is pending.

Outside the US, members states of the European Union must implement the EU Pay Transparency Directive by 2026, and we are tracking development on this significant obligation closely.

For a quick and easy way to stay on top of pay transparency obligations globally, we offer a fixed fee Global Pay Equity Compliance Compendium that monitors the legal pay equity requirements and forthcoming developments across 70+ jurisdictions (of which over 40 currently have transparency or reporting requirements). Please contact a member of our team for more information.

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On September 8, 2023, the Department of Labor announced publication of a Notice of Proposed Rulemaking Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees.

The DOL’s Wage and Hour Division is proposing to update and revise the Fair Labor Standards Act regulations implementing the minimum wage and overtime pay exemptions for executive, administrative, and professional employees. The proposed revisions include increasing the minimum salaries required to meet the “salary basis” and the highly compensated employee thresholds, as well as providing for automatic increases tied to national earnings data. Specifically, the proposed rules will increase the minimum salary for white collar exemptions from $35,568 to $55,068, and from $107,432 to $143,988 for the highly compensated employee exemption. 

The DOL believes these changes will make an additional 3.6 million workers eligible for overtime.

Timing and Next Steps

Publication of the Notice triggered the start of a 60-day public comment period. When the comment period ends on November 7, the DOL will take any comments received into account and publish final rules that should become effective 60-days after publication. As with the last proposed DOL rule implementing similar increases, we anticipate the DOL’s proposed rule will be challenged in court by business groups.

While the road to a Final Rule will take several months and faces the uncertainty of litigation, employers are nevertheless advised to evaluate the impact of the proposed changes on their US workforce and pay practices. In the meantime, we will continue to monitor developments and issue further updates on the proposed rule.

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Our colleagues in Latin America prepared a succinct briefing of the most impactful recent employment law changes in Mexico, Brazil, Argentina, Chile, Colombia, Venezuela and Peru. From changes to teleworking rules to greater obligations related to family leave, outsourcing and more, there’s a lot to keep up with.

Click here to access our heat map of the regional regulatory landscape.

Special thanks to Carlos Felce, Tatiana Garces, Alberto Jose Gonzalez Torres, Rosario Lombera, Monica Pizarro, Leticia Ribeiro* and Andres Valdes for this information.

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

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We are pleased to share with you The Global Employer – Global Immigration & Mobility Quarterly Update, a collection of immigration and mobility alerts from around the world.

Please click here to view.

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The EEOC just announced an updated filing deadline for US employers to submit their demographic data. The EEO-1 Component 1 data collection for 2022 begins October 31 and the deadline to file is December 5. The federal agency posted instructions and other information (here), and will post the data file specifications on September 13.

By way of reminder, all private employers that have at least 100 employees are required to file the EEO-1 form annually, detailing the racial, ethnic and gender composition of their workforce by specific job categories. Likewise, federal government contractors and first-tier subcontractors with 50 or more employees and at least $50,000 in contracts must file EEO-1 reports. The form does not currently include pay data, though some states (like California) have added that requirement.

For support with your filing obligations, please contact a member of our team.

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The National Labor Relations Board has continued its recent spate of employee-friendly decisions with a new one that will require employers to think through work rules, policies and handbook provisions to determine whether they could–hypothetically, from an employee’s perspective–restrict an employee’s Section 7 rights. 

On August 2, 2023, the National Labor Relations Board (“NLRB” or “the Board”) issued a 3-1 split decision in Stericycle, Inc., bringing back and modifying a prior standard for assessing whether an employer’s facially neutral work rules and policies unlawfully “chill” an employee’s Section 7 rights. Under the new standard, the NLRB will peer through the lens of a “reasonable employee” (more on that below) to determine whether an employer’s work rules and policies have a tendency to restrict Section 7 rights. For employers, this means a complete reassessment of their workplace rules and policies–and the handbooks that those rules and policies are housed in.

The new standard: reasonable tendency to “chill” Section 7 rights, from the employee’s perspective

The new standard (which is the Board’s prior Lutheran Heritage standard, brought back to life and modified) requires the NLRB General Counsel to prove that a challenged work rule has a reasonable tendency to “chill” employees from exercising their Section 7 rights. (Quick reminder: Section 8(a)(1) of the National Labor Relations Act (NLRA) makes it an unfair labor practice for an employer “to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in Section 7” of the Act, including the right to form, join or assist labor unions, to bargain collectively and to engage in other concerted activities for the purpose of collective bargaining.)

How is this done? That’s the rub for employers.

As an initial matter, the Board will interpret the challenged work rule from the perspective of an employee who is (i) subject to the rule, (ii) economically dependent on the employer, and (iii) also contemplates engaging in a protected concerted activity.

In addition:

  • The employer’s intent in maintaining the rule in question is immaterial. (So even if the employer had no  intent to restrict an employee’s Section 7 rights when developing the work rule or policy–which we suspect will usually be the case–it isn’t material.)
  • The General Counsel will carry her burden if an employee (that same employee described above) could reasonably interpret the rule to have a coercive meaning–even if a contrary, non-coercive interpretation of the rule is also reasonable. All emphasis is ours here, to highlight that the General Counsel’s burden is extraordinarily low. If the General Counsel carries her burden, the challenged work rule is presumptively unlawful.
  • BUT, employers have a chance at rebutting the presumption. The presumption can be rebutted if the employer can prove that the rule advances a legitimate and substantial business interest and that the employer cannot advance that interest with a more narrowly tailored rule. If the employer proves this, the work rule will be found lawful.

What does this mean for employers?

The Stericycle standard has the potential to render a multitude of employment policies and workplace rules unlawful, and will be applied retroactively. Employers should review existing (or new) employee work rules, policies, and handbook provisions to ensure:

  • They are tailored as narrowly as possible to advance the employer’s interest, and to refrain from restricting an employee’s Section 7 rights
  • They explicitly state employees have the right to engage in concerted activities under Section 7
  • Where necessary, they provide an explanation of how the rule or policy does not preclude employees from exercising their Section 7 rights
  • Where possible, they include a list of specific rights the employer is not intending to restrict. Talk to us for recommended language.
Continue Reading Handbook Review Takes on a New Meaning: NLRB Adopts “Employee-Friendly” Standard for Evaluating Workplace Rules
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As forecasted in our recent blog Illinois Employer Midsummer “Roundup”: Eight to Know and Two to Watch, our two bills “to watch” are now law. On August 4, Governor Pritzker signed HB 2862 into law, effective immediately, imposing new obligations on employers who use temporary employees, including providing information on their regular employees’ compensation to staffing companies and documenting and keeping records of training provided to the staffing company employee.

And on August 11, Governor Pritzker signed HB 3129 into law, meaning Illinois employers with 15 or more employees have to include the “pay scale and benefits” in any job posting starting January 1, 2025.

We highlight a few key points of each new law below, and for more details, check out our Illinois Midsummer “Roundup” blog.

Continue Reading Illinois Employers: Two Bills We Told You to Watch Are Now Law
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New York may soon restrict employers and employment agencies from using fully-automated decision making tools to screen job candidates or make other employment decisions that impact the compensation, benefits, work schedule, performance evaluations, or other terms of employment of employees or independent contractors. Draft Senate Bill 7623, introduced August 4, aims to limit the use of such tools and requires human oversight of certain final decisions regarding hiring, promotion, termination, disciplinary, or compensation decisions. Senate Bill 7623 also significantly regulates the use of certain workplace monitoring technologies, going beyond the notice requirements for workplace monitoring operative in New York since May 2022 and introducing data minimization and proportionality requirements that are becoming increasingly common in US state privacy laws.

While there is not yet a federal law focused on AI (the Biden administration and federal agencies have issued guidance documents on AI use and are actively studying the issue), a number of cities and states have introduced bills or resolutions relating to AI in the workplace. These state and local efforts are all at different stages of the legislative process, with some paving the path for others. For example, New York City’s Local Law 144 took effect on July 5, prohibiting employers and employment agencies from using certain automated employment decision tools unless the tools have undergone a bias audit within one year of the use of the tools, information about the bias audit is publicly available, and certain notices have been provided to employees or job candidates (read more here).

If enacted, Senate Bill 7623 would take things much further. Here are some of the most significant implications of the draft legislation:

Continue Reading Check Yourself Before You Wreck Yourself: New York and Other States Have Big Plans For Employer Use of AI and Other Workplace Monitoring Tools