Photo of Susan F. Eandi

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

We’re bringing the world to you. Join Baker McKenzie for our annual Global Employment Law webinar series.

In the face of intensifying geopolitical risk and continuing economic uncertainty, the challenges for global employers to plan carefully and operate strategically to maintain a thriving workforce is greater than ever. We’ll help employers navigate those challenges in

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’s Details

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

On Tuesday this week, the Federal Trade Commission (FTC) issued its highly anticipated final rule on noncompetes, imposing a near-total ban on worker noncompetes in the United States. Barring injunctive relief from legal challenges (which have already started), the rule will take effect 120 days from publication in the federal register.

Interestingly, the rule exempts noncompete covenants entered into pursuant to a bona fide sale of a business. While “bona fide” is not defined in the final rule, the Supplementary Information for the rule explains that the FTC considered but rejected percentage and dollar minimum thresholds for the sale of business exception to weed out “exploitative and coercive” noncompetes and clarified that excepted noncompetes must be given “pursuant to a bona fide sale.” The Supplementary Information further explains that the FTC considers a bona fide sale to be one that is made between two independent parties at arm’s length, and in which the seller has a reasonable opportunity to negotiate the terms of the sale. In contrast, the FTC specifically calls out as problematic “springing noncompetes,” which apply to employees in the event of a sale and mandatory stock redemption or repurchase programs because the employee has no goodwill to exchange in the sale for the noncompete and no meaningful opportunity to negotiate at the time of contracting.

Nevertheless, the bona fide sale exception is broad and preserves the status quo by allowing buyers in M&A transactions to obtain noncompetes from individual sellers in circumstances where such noncompetes are otherwise permitted currently. While the pending and anticipated legal challenges to the rule are significant and place the entire rule in jeopardy, the sale of business exception is not likely to be narrowed because of these challenges.

So, what does this new regime mean for M&A?

What Type of Noncompetes Are Impacted?

The Supplementary Information confirms that the new rule does not apply to B2B noncompetes or nonsolicits. Instead, the focus of the rule is noncompetes with workers that limit their ability to work for others. So the rule does not impact current B2B agreements.

Second, the FTC repeatedly makes the point that noncompetes must meet existing state and federal law restrictions (e.g., reasonable in scope and duration; limited to the goodwill to be acquired, etc.) to be enforceable, even if they otherwise fall within the sale of business exception in the new rule. This is the case because the FTC rule creates a new floor for noncompetes by preempting more lax state rules, but it does not preempt more stringent state laws or federal antitrust restrictions.Continue Reading Still Going Strong: M&A Noncompetes and the FTC’s Final Rule on Noncompetes

On April 23, the Federal Trade Commission voted 3-2 to issue its final rule on noncompetes, imposing a near-total ban on all employer-employee noncompetes in the US. Barring challenges (the first lawsuits have already been filed), the rule would become effective 120 days from publication.

The rule will be a game-changer for companies operating in the US if it takes effect as issued.

Breaking it Down

What does the rule do?

With only a few exceptions, the FTC’s now-final rule declares employer-employee noncompete clauses an “unfair method of competition,” and a violation of Section 5 of the FTC Act. The rule targets both formal noncompete clauses and “functional noncompete” clauses that have the effect of prohibiting the worker from seeking or accepting employment with a person or operating a business after the conclusion of the worker’s employment with the employer. This can include broad nondisclosure agreements that have the effect of precluding workers from seeking employment opportunities in the same field.Continue Reading Breaking News: The FTC Bans Nearly All Employer-Employee Noncompetes Except Those Given as Part of a ‘Bona Fide’ Sale of Business

Last week, a unanimous US Supreme Court held that an employee need only show “some harm” from a change in the terms and conditions of employment, rather than a “significant” employment disadvantage, to assert a claim for discrimination under Title VII. The decision resolves a circuit split over the showing required for discrimination claims based on changes less drastic than demotions, terminations, or pay reductions, and underscores the continued importance of taking a thoughtful approach to any change in the terms and conditions of an employee’s employment.Continue Reading Less is More: SCOTUS Shifts Title VII Threshold to “Some” Harm (Though Plaintiffs Must Still Show Discriminatory Intent)

With thanks to Jonathan Isaacs, Baker McKenzie’s APAC Chair, Employment & Compensation, China / Hong Kong and Emma Pugh, Knowledge Lawyer, Employment & Compensation, Hong Kong.

The economic effects of the COVID-19 pandemic and the change in geopolitical landscape have forced employers globally to reassess and re-evaluate their business priorities. Our team is working

The US Supreme Court’s SFFA decision ending affirmative action in higher education continues to have ramifications for corporate America. Attacks to workplace DEI are gaining momentum with targeted challenges from a variety of angles, not the least of which are those coming from conservative advocacy groups filing lawsuits, requesting agency investigations and pursuing other complaints. Just last week, as many prepared to watch Taylor Swift’s boyfriend perform in the Super Bowl, America First Legal (a nonprofit founded by a former adviser to Donald Trump) filed an EEOC complaint against the NFL challenging the Rooney Rule, a widely used hiring practice that emanated in the NFL and is followed across corporate America. For in-house counsel, this just further emphasizes the need to continue to diligently monitor the changing DEI landscape for signals warranting targeted audits or adjustments to workplace DEI programming.

When should in-house counsel take action? Let’s start to answer that question by looking at where we are now and the escalation of events in the past 7 months.

Timeline of Recent Material Attacks on Workplace ID&E

July 2023 | Letter to Employers from 13 State AGs

Thirteen attorneys general used SFFA to support their opposition to corporate DEI programs (see letter to Fortune 100 CEOs here). In response, attorneys general from other states wrote to the same CEOs stating that SFFA “does not prohibit, or even impose new limits on, the ability of private employers to pursue diversity, equity, and inclusion.”Continue Reading Is The Risk Calculus Related To Workplace DEI Shifting For US Employers This Election Year?

Does your holiday wish list include CLE credit and a quick tutorial on what to expect in California labor and employment law next year?

Excellent!

Join us for our virtual California 2023-2024 Employment Law Update on Wednesday, December 13 @ 1PM PT.

2023 has been a year of dramatic change for California employers, but have