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Many thanks to our Franchise, Distribution & Global Brand Expansion colleague Will Woods for co-authoring this post.

On October 25, 2023 the National Labor Relations Board issued a final joint employer rule (accompanied by a fact sheet) making it easier for multiple companies to be deemed “joint employers” under the law. This legal classification can have profound consequence by making independent entities now liable for labor law violations as well as obligations to negotiate with unions.

The new standard casts a wider net for “joint-employer” status

Under the new rule, an entity may be considered a joint employer of a group of employees if the entity shares or codetermines one or more of the employees’ “essential terms and conditions of employment.” The Board defines the essential terms and conditions of employment as:

  1. wages, benefits, and other compensation;
  2. hours of work and scheduling;
  3. the assignment of duties to be performed;
  4. the supervision of the performance of duties;
  5. work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline;
  6. the tenure of employment, including hiring and discharge; and
  7. working conditions related to the safety and health of employees.

How the new rule dramatically shifts away from the 2020 rule

In issuing the final rule, the NLRB rescinded the prior 2020 joint employer rule (a remnant of the Trump-era Board), which provided that a business is a joint employer only if it both possesses and exercises substantial direct and immediate control over one or more essential terms and conditions of employment-with “substantial” meaning control that is not exercised on a “sporadic, isolated, or de minimis basis. ” (For more on the 2020 rule, see our prior blog here.) The 2020 rule’s higher threshold meant a lower likelihood that businesses would be considered joint employers. The new rule’s impact on employers could be wide-ranging, and particularly difficult for non-unionized employers who are not used to navigating typical union activity such as being required to show up at the bargaining table, handling unfair labor practice charges, or dealing with picketing by a vendors’ employees (which would have previously been considered an illegal secondary boycott).

No direct (or even exercised) control required

The new rule rejects the previous rule’s focus on “direct and immediate control.” Instead, now, indirect or reserved control is sufficient to establish joint employer status. Thus, if a company has contractual authority over certain employment terms but never acts on that authority, that may be enough to establish a joint employer relationship. The same goes for a company that exercises authority over another company’s workers through a “go-between” company or intermediary, or a company requiring a vendors’ employees to follow certain health and safety rules while on-premises. In these instances, liability under the National Labor Relations Act, including the requirement to negotiate with a union, could ensue.Continue Reading NLRB Announces Most Expansive Definition of Joint Employment Yet, With Potential Significant Implications for Franchisors, Staffing Agencies and More

New Jersey may have started a trend. As of April 10, covered New Jersey employers must now comply with new requirements under the New Jersey mini-WARN Act (see our blog here). New York and California are giving chase, with proposed amendments to New York State’s WARN Act regulations, New York State’s WARN Act, and California’s WARN Act. And New York employers should take note: New York’s WARN Portal is set to go live this month.

Proposed Amendments to NYS WARN Regulations–And a New NYS WARN Portal

The New York State Department of Labor has proposed amendments to the New York State WARN Act (“NYS WARN”) regulations that are intended to account for the post-pandemic workforce, including clarifying how remote work impacts NYS WARN compliance and simplifying language to ensure employers understand their obligations under the law. The Department of Labor is accepting comments to the proposed regulations until May 30, 2023. 

Key items in the proposed amendments to the NYS WARN regulations include:

  • Remote employees included in threshold count: The employers covered by NYS WARN has been expanded to include any employer who employs 50 or more full-time employees, who work at the single site of employment plus individuals that work remotely but are based at the employment site, which may include remote employees in New York as well as other states.
  • Certain notices must be provided electronically: Notices being sent to the New York State Department of Labor Commissioner (“Commissioner”) must be provided electronically and are no longer required to have original signatures.
  • Notice must include additional information: The notice to the Commissioner must include more detailed information about the affected employees, including telephone numbers, job titles, and whether they are paid on an hourly, salary or commission basis. The notice to affected employees must include any other information relevant to their separation, such as information related to any financial incentives an employee may receive if they remain employed by the employer until the effective date of the employment loss, as well as available dislocated worker information.
  • The exceptions for notice are changing:
    • Faltering company exception reduced: The faltering company exception will apply only to plant closings, and will no longer apply to mass layoffs, relocations or reductions in hours.
    • Unforeseeable business circumstances exception expanded: The unforeseeable business circumstances exception will be expanded to expressly include in certain circumstances a public health emergency (including a pandemic) or a terrorist attack.
    • Exception to notice requires determination by Commissioner: The 90-day notice period can be reduced in limited circumstances (including under the faltering company, unforeseeable business circumstances, and natural disaster exceptions) only if:
      • The employer submits a request for consideration for eligibility of an exception to the Commissioner within 10 business days of providing the required notice under NYS WARN to the Commissioner (unless the Commissioner grants an extension);
      • The employer provides a reason for reducing the notice period in addition to any other documents the Commissioner may require; and
      • The Commissioner determines that the employer has established all of the elements of the claimed exception.
  • The calculation of back pay is being clarified for hourly employees: The calculation to be used to determine the average rate of compensation and final rate of compensation for hourly employees is clarified. Such calculation uses the number of hours worked instead of the number of days worked. The days worked method of calculation should still be used for non-hourly employees.
  • The use of payment in lieu of notice is being clarified: Liability for an employer’s failure to give the required notice to employees under NYS WARN will be reduced by amounts paid to an employee in lieu of notice, except where the following conditions are met (then such payments will be considered wages for the notice period):
    • There is an employment agreement or uniformly applied company policy that requires the employer to give the employee a certain amount of notice before a layoff or separation;
    • The employee is laid off without the required notice; and
    • The employer pays the employee an amount equal to the employee’s wages and any benefits for the required notice period.

Continue Reading Employer WARN-ING: Potential Changes to New York’s and California’s WARN Acts Barreling Down the Turnpike

Effective April 10, covered New Jersey employers must comply with new requirements under the New Jersey mini-WARN Act. New Jersey will join New York and Maine as one of three jurisdictions where employers are required to provide 90 days’ advanced notice to affected employees. (See our prior blog here).

Key changes to NJ-WARN include the following:

  • The employers covered by NJ-WARN has been expanded by the amendments, to include any employer who employs 100 or more employees, whether full-time or not (previously it required employment of 100 or more full-time employees).
  • The threshold for a “mass layoff” triggering NJ-WARN has been reduced significantly. Under the amended law, a “mass layoff” means the termination of 50 or more employees at a covered establishment in a 30-day period. Previously, a mass layoff meant (i) the termination of 50 or more employees comprising 1/3 of the workforce at the establishment, or (ii) the termination of 500 or more employees.
  • The scope of employees that count toward the 50-employee threshold for a “mass layoff” has been expanded:
    • Both employees “at” the establishment and “reporting to” the establishment are counted, which may include remote employees in New Jersey as well as other states. Prior to the amendments, the threshold for a mass layoff included 50 or more employees “at” the establishment.
    • Both part-time and full-time employees must be counted toward the threshold. Previously, only full-time employees counted toward the threshold.
  • The definition of a covered “establishment” has been expanded to include a non-contiguous group of locations / facilities of an employer within the State (previously it applied to contiguous worksites / office parks of an employer). Based on the amendment’s legislative history, this appears to be aimed at retail companies with multiple locations in the State. However, it is unclear how this could apply to largely or entirely remote workforces, and how it “squares” with the inclusion of remote, out of state, employees in the 50 employee threshold.
  • Covered employers will be required to provide at least 90 days’ notice (as opposed to the prior 60 days’ notice) before the first termination of employment occurs in connection with a termination or transfer of operations, or mass layoff. If the employer fails to provide 90 days’ notice, the employer is required to provide the terminated employee with four weeks of pay (which is a new requirement) in addition to statutory severance (see next bullet point).
  • In addition to notice, covered employers will be required to provide severance pay equal to one week of pay for each full year of employment to each terminated employee. (Previously, the law required one week of severance pay for each year worked only if the employer failed to provide the required 60 days’ notice.)

Overall review of NJ-WARN amendments

Here’s a quick review of what will be required once the amendments take effect.

Triggering events

NJ-WARN applies to employers with 100 or more employees anywhere in the US, when:

  • A covered establishment transfers or terminates operations which results, during any continuous period of not more than 30 days, in the termination of 50 or more employees; or
  • An employer conducts a mass layoff (i.e., termination of 50 or more employees in a 30-day period) at a covered establishment.

Terminations for cause or poor performance excluded

Although NJ-WARN’s “termination of employment” definition excludes (1) voluntary departures, (2) retirement, and (3) terminations for misconduct, the statute does not clearly specify whether ordinary terminations for cause or poor performance can trigger its requirements. But our research into NJ-WARN’s legislative history strongly suggests that terminations for cause or poor performance are not covered by NJ-WARN. In the February 27, 2006 New Jersey Assembly Labor Committee hearing, NJ-WARN’s lead senate sponsor clarified that the legislation was not intended to apply to employees terminated for poor performance.

Note on aggregation

Under the new amendments, an employer whose layoff decision affects employees at multiple New Jersey worksites may be subject to NJ-WARN’s notice and severance requirements even if less than 50 employees are terminated at each individual worksite.

To determine whether a termination or transfer of operations or mass layoff is subject to NJ-WARN’s notification requirements, employers generally must aggregate any terminations of employment for two or more groups at a single “establishment” occurring within any 90-day period. If the aggregate number of terminations of all the groups is 50 or more, then the terminations are subject to NJ-WARN’s notice and severance requirements (unless the employer can demonstrate that each group’s cause of terminations is separate and distinct from the other groups’ causes). And since the definition of an “establishment” has been expanded to include an employer’s non-contiguous group of locations / facilities within New Jersey, multi-site employers should consider the aggregate impact of any layoff decision affecting multiple worksites.

Remote workforce

NJ-WARN’s updated “mass layoff” and “establishment” definitions have also created some ambiguity regarding the statute’s application to remote employees. Specifically, a “mass layoff” now includes employees “at or reporting to” the “establishment.” And since “establishment” has been amended to include “a group of locations,” there is an argument that terminated remote employees should be counted for purposes of determining NJ-WARN applicability. But the legislative history of the NJ-WARN amendments suggests the changes were aimed at retail companies with multiple locations in New Jersey, and therefore NJ-WARN’s application to remote employees remains unclear.Continue Reading Next Month NJ Employers Must Comply With New Not-So-Mini Obligations Under Its Mini-WARN Act

It’s been a demanding year in New York for employers. New York employers have had to continuously pivot to meet obligations under new laws and requirements in 2022, with no end in sight as we step into 2023. From New York’s new electronic monitoring law, to New York City’s salary and pay range disclosure requirements, to the newly-delayed enforcement of NYC’s automated employment decision tools law (a brief sigh of relief for employers), new laws are certain to make for a busy 2023 for New York employers. Here are 10 changes employers should know now as we get the ball rolling in 2023.

1. NYC Employers Using Automated Employment Decision Tools Now Have Until April 15, 2023 to Meet New Obligations  

The New York City Department of Consumer and Worker Protection (DCWP) granted New York City employers a happy holiday by announcing a delay of enforcement of its automated employment decision tools law (Local Law 144 of 2021) until April 15, 2023.

Until the announcement, New York City employers who use artificial intelligence in employment decision-making were faced with new requirements beginning January 1, 2023–including a prohibition against using automated employment decision tools (AEDTs) unless they took a number of specific steps prior to doing so, not the least of which would be conducting a bias audit of their AEDTs.

Proposed Rules

On December 15, 2022, DCWP published revised proposed rules for Local Law 144, making several changes to initial proposed rules published by DCWP September 23, 2022.

The initial proposed rules defined or clarified some terms (including “independent auditor,” “candidate for employment,” and “AEDT”), set forth the form and requirements of the bias audit, and provided guidance on notice requirements. 

After comments from the public on the initial proposed rules, and after a November 4, 2022 public hearing, the DCWP modified the proposed rules, with changes including:

  • Modifying the definition of AEDT (according to DCWP, “to ensure it is focused”);
  • Clarifying that an “independent auditor” may not be employed or have a financial interest in an employer or employment agency seeking to use or continue to use an AEDT, or in a vendor that developed or distributed the AEDT;
  • Revising the required calculation to be performed where an AEDT scores candidates;
  • Clarifying that the required “impact ratio” must be calculated separately to compare sex categories, race/ethnicity categories, and intersectional categories;
  • Clarifying the types of data that may be used to conduct a bias audit;
  • Clarifying that multiple employers using the same AEDT can rely upon the same bias audit as long as they provide historical data (if available) for the independent auditor to consider in such bias audit; and
  • Clarifying that an AEDT may not be used if its most recent bias audit is more than one year old.

DCWP will hold a second public hearing on the proposed rules on January 23, 2022.

For more on the law, see our recent blog Happy Holidays! Enforcement of New York City’s Automated Employment Decision Tools Law Delayed to April 15, 2023.

2. New York Employers with “No Fault” Attendance Policies Subject to Penalties for Disciplining Employees Who Take Protected Leave

Beginning February 20, 2023, New York employers with absence control policies who discipline employees for taking protected leave under any federal, state or local law will be subject to penalties.

Signed by Governor Kathy Hochul on November 21, 2022, S1958A (which amends Section 215 of the New York Labor Law (NYLL)) targets employer policies that attempt to control employee absences by assessing points or “demerits” or docking time from a leave bank when an employee is absent, regardless of whether or not the absence is permissible under applicable law. The amendment prohibits employers in New York from taking these actions when employees take a legally protected absence. Though the law does not prohibit attendance policies that include a penalty point system, legally protected absences cannot be used to deduct from these point systems.

Employers are prohibited from retaliating or discriminating against any employee that makes a complaint that the employer violated the law, and violations can come with sizable penalties. In addition to enforcement by the New York State Department of Labor (NYSDOL), NYLL Section 215 provides a private cause of action for current and former employees to recover monetary damages from employers who have violated Section 215. Monetary damages include back pay, liquidated damages and attorneys’ fees in addition to civil penalties that can be issued by NYSDOL of up to $10,000 for the first violation and $20,000 for repeat violations.

Employer Takeaways

  • Employers who currently have policies that assess points or demerits against employees for taking absences under applicable law should review and update the policies to be compliant with the law.
  • Employers should train HR professionals, managers and supervisors on the new law.

3. Employers Must Provide Pay Ranges in Job Postings under New York City Pay Transparency Law Now–and under New York State Pay Transparency Law Beginning September 17, 2023

New York City employers are already feeling the impact of having to meet the requirements of New York City’s new pay transparency law (Local Law 32 and its amendment), which went into effect on November 1, 2022. Now, employers all across New York State will also have to comply with salary transparency requirements. Governor Hochul signed New York State’s salary transparency bill (S9427A) into law on December 21, 2022. Employers should begin to prepare now for the law’s September 17, 2023 effective date.

Covered employers

New York City’s law requires New York City employers with four or more employees (with at least one working in New York City) to disclose salary and hourly ranges in any advertisements for jobs, promotions, or transfer opportunities. (See our prior blogs here and here–and for a deeper look at salary and pay range disclosure requirements in job postings across the US, watch our video Employers: All Eyes on Salary and Pay Range Disclosure in US Job Postings).

Similar to New York City’s law, New York State’s law also requires employers with four or more employees to include a compensation range in all advertisements for new jobs, promotions and transfer opportunities. It’s not clear at this time whether all four employees must be employed within New York State, or whether an employer is covered even if employees are located elsewhere. The New York Department of Labor (NYDOL) is authorized to promulgate regulations to clarify the law, and it is anticipated that guidance will be issued before the law’s effective date.

Employment agencies and recruiters–but not temporary employment agencies–are also covered by each law.

Continue Reading Top 10 New York Employment Law Updates: Closing Out 2022 and Heading Into 2023

New York City employers can breathe a short sigh of relief. On May 12, 2022, New York City Mayor Eric Adams signed a bill into law amending New York City’s pay transparency law (Local Law 32 for 2022, which we previously blogged about here, here, here and here), postponing the…

New York City employers are one step closer to learning the effective date of New York City’s pay transparency law (Local Law 32 for 2022, the “Salary Disclosure Law”). As we blogged about here, the Salary Disclosure Law will have its original May 15, 2022 effective date postponed to November 1, 2022…

New state and federal limits on post-employment restrictive covenants mean employers must stay on top of more than just vaccination policies or the logistics of office reopenings. The swath of new and on-the-horizon legislation aimed at limiting the enforceability of post-employment non-compete agreements deserves employers’ attention too. Part One of our blog post series on restrictive covenants addressed the intersection of remote work and state non-compete laws. Now, in Part Two, we summarize recent updates to state non-compete laws, pending state legislation that could impact non-competes, and new federal-level activity aimed at limiting non-competes.

State Updates

  • Colorado

Colorado recently raised the stakes for violations of its non-compete law. Effective March 1, 2022, under SB 21-271, a person who violates Colorado’s non-compete statute commits a class 2 misdemeanor.

Colorado’s non-compete statute (C.R.S. section 8-2-113) voids agreements that restrict trade, such as non-competition and non-solicitation of customers covenants, unless they fall within a specific statutory exception: (i) a contract for the purchase or sale of a business or its assets; (ii) a contract for protecting trade secrets; (iii) a contract provision recovering education or training expenses associated with an employee who has been with an employer for less than two years; or (iv) a restriction on executive or management personnel or each of their professional staff. As of March 1, 2022, a person who violates this statute commits a class 2 misdemeanor punishable by up to 120 days in jail and / or a fine of up to $750.

Many questions remain about the enforcement of this amendment, such as who will face ultimate liability for the employer (e.g., in-house counsel, HR staff, line managers, etc.). And though there is no indication that the new law is retroactive, Colorado employers were subject to criminal penalties for a violation of Colorado’s non-compete law even prior to SB 21-271 being passed, under C.R.S. section 8-2-115. SB 21-271 repealed C.R.S. section 8-2-115 while simultaneously inserting language into the non-compete statute itself making a violation a class 2 misdemeanor. It remains to be seen whether this is simple statutory consolidation, or a signal that Colorado plans to increase enforcement of violations of its non-compete statute. Employers should review their non-compete agreements and internal policies regarding which employees are required to sign such agreements to make sure they are in compliance with this new law.Continue Reading The Only Constant is Change: Recent (and Potential) Changes in State and Federal Non-Compete Legislation

Last week, New York City employers received more clarification on New York City’s new salary disclosure law (Local Law 32 for 2022, the “Salary Disclosure Law,” which we previously blogged about here). The New York City Commission on Human Rights (NYCCHR) released a Fact Sheet providing more details on employers’ obligations under…

The writing is on the wall: remote work is here to stay. According to data collected by Ladders, three million professional jobs in the US went permanently remote in the fourth quarter 2021 alone. By the end of 2021, 18 percent of all professional jobs in the US were remote. Ladders projects that number will be close to 25 percent by the end of 2022. Of course, this leaves employment lawyers and HR professionals wondering — what employment laws apply to our distributed workforce?

One particularly thorny issue facing employers in this context is the permissibility of post-termination non-competition agreements. Non-compete laws and their requirements differ greatly from state to state. For example, in Illinois, one of the requirements is that the employee must earn at least $75,000 annually in order to enter into an enforceable post-termination non-compete, but in Oregon, that minimum annual income threshold increases to $100,533 — and that same employee would be subject to no income threshold if Missouri law applied. On the other hand, in Colorado, where post-termination non-competes are generally unlawful, the employer could soon face misdemeanor criminal liability for seeking to enforce an unlawful post-termination non-compete against any employee, and in California, the employer could be exposed to compensatory and punitive damages if a claim is accompanied by other deemed tortious conduct (e.g., interference with the employee’s future employment prospects by seeking to enforce the unlawful agreement).

In this post, we analyze how remote work further muddles the already complicated landscape of post-termination non-competes and how employers can best navigate this complex backdrop.

What law applies? Guidance from recent case law

One issue arising out of remote work is knowing what state’s law will apply when it comes to the enforceability of non-compete restrictions. With remote work, long gone are the days where an employer can be relatively certain that the state where an employee is located at the beginning of the employment relationship will be the same state that employee is living and working in at the end of the employment relationship. As a result, when the need to enforce non-compete restrictions arises, the parties may dispute what state’s law should apply to the non-compete (e.g., the state where the employee was located when they entered into the contract, the state where the employee began work for the employer, or the state whether the employee was living or working at the end of the employment relationship).Continue Reading Navigating The Intersection Of Remote Work And State-Specific Post-Termination Non-Compete Laws