2024 was a ‘super year’ for elections. Half of the world’s population – some 4.7 billion people – went to the polls in 72 countries. Political shifts often lead to significant changes in employment laws. We’re here to help you prepare for the changes ahead and to stay ahead of the curve on employment law developments
Companies with a US workforce can expect material changes to employment laws under the Trump administration, with impacts felt across their business operations. President-elect Trump’s first term, his campaign platform, and the typical shifts in a Democratic to Republican transition provide clues about what’s to come: federal agencies, policies and rules will become more business-centered and many of the Biden-era worker-focused protections will be rolled back.
The end of the DOL’s 2024 final overtime rule. On November 15, 2024, a federal judge in Texas blocked implementation of the DOL’s final rule in its entirety, thereby preventing the agency from instituting increases to the salary thresholds for the “white collar” overtime exemptions under the Fair Labor Standards Act. While the government may appeal the judge’s order before the change in administration, any such appeal is likely to be short-lived come January 2025.
Accordingly, employers can halt plans to change their compensation levels or exempt classifications in response to the now-blocked rule. If such changes have already been made, employers should consult with counsel on how best to unwind undesirable changes, if any.
A lower burden for employers to classify workers as independent contractors under federal law. Trump will likely reverse Biden’s worker-friendly contractor classification efforts, making it easier for businesses to classify workers as independent contractors, and pivoting away from the Biden administration’s 2024 DOL independent contractor rule.
Notwithstanding this easing at the federal level, employers must remember that, under US and state law, there is no single test for independent contractor classification. Many states have their own tests, which are often more stringent than federal law and that apply to state wage and hour claims. Moreover, even within the same states, different tests will apply to unemployment claims, workers’ compensation, wage and hour, and taxation.Continue Reading Back to Business: Trump’s Second Term and the Four Major Shifts Employers Should Expect
We are clearly (and thankfully) well past the pandemic, and yet demands for flexible and remote work press on. While the overall global trend of transforming the traditional 9-to-5 work model is consistent, laws governing flexible work arrangements can vary significantly by jurisdiction.
We monitor this space closely (see our previous update here) and advise multinational companies on a multitude of issues bearing on remote, hybrid and flexible arrangements, including health & safety rules, working time regulations, tax and employment benefit issues, cybersecurity and data privacy protections, workforce productivity monitoring and more.
Key recent updates around the globe (organized by region) include:
By and large, HR departments are proving to be ground zero for enterprise adoption of artificial intelligence technologies. AI can be used to collect and analyze applicant data, productivity, performance, engagement, and risk to company resources. However, with the recent explosion of attention on AI and the avalanche of new AI technologies, the use of AI is garnering more attention and scrutiny from regulators, and in some cases, employees. At the same time, organizations are anxious to adopt more AI internally to capitalize on productivity and efficiency gains, and often in-house attorneys are under pressure from internal clients to quickly review and sign off on new tools, and new functionalities within existing tools.
This is especially challenging given the onslaught of new regulations, the patchwork of existing data protection and discrimination laws, and heightened regulatory enforcement. For example, there has been a considerable uptick in European data protection authorities investigating how organizations are deploying workforce AI tools in the monitoring space, including time and activity trackers, video surveillance, network and email monitoring, and GPS tracking. Authorities have issued substantial fines for alleged privacy law violations, including for “unlawfully excessive” or “disproportionate” collection. For example, the French data protection authorities recently imposed a USD $34 million fine related to a multinational e-commerce company’s use of a workplace surveillance system.
The AI regulatory landscape is rapidly evolving, and in most places compliance is still voluntary. However, organizations should build their AI governance programs to include key privacy, data protection, intellectual property, anti-discrimination and other concepts – and a good place to start is with these HR tools given their widespread use and the increased scrutiny. Legal Departments should consider these five key actions:Continue Reading The Legal Playbook for AI in HR: Five Practical Steps to Help Mitigate Your Risk
Equal pay is an increasingly high profile issue for employers with a noticeable rise in equal pay claims in the private sector in the UK. This was underscored recently in a high profile case estimated to result in around £30 million in backpay.
With the implementation of the EU Pay Transparency Directive on the horizon
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.
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)
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:
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.
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
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.
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.)
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.
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.
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
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
On May 17, 2024 Colorado Governor Polis signed the landmark Colorado AI Act (Senate Bill 24-205) into law. Colorado is now the first US state with comprehensive AI regulation, adopting a classification system like the European Union’s recent AI Act. The law will take effect February 1, 2026.
The law exempts small employers (fewer than fifty full-time employees) from some of its requirements but otherwise requires companies to take extensive measures to protect Colorado residents against harms such as algorithmic discrimination.
SB 205 requires “developers” and “deployers” of “high-risk artificial intelligence systems” to use “reasonable care” to protect Colorado resident consumers from any known or reasonably foreseeable risks of “algorithmic discrimination.” As written, the law most likely applies to both creators of high-risk AI systems, as well as employers adopting high-risk AI technologies within their organization. Continue Reading From Brussels to Boulder: Colorado Enacts Comprehensive AI Law with Significant Obligations for Employers on the Heels of the EU AI Act
