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The Department of Labor’s “new” rule for classifying workers as employees or independent contractors under the Fair Labor Standards Act took effect March 11, 2024. The DOL’s Final Rule returns employers to a familiar pre-Trump administration totality of the circumstances test that focuses on the “economic realities” of the worker’s situation. The practical impact is that it is now harder for businesses to classify workers as independent contractors, and it will likely increase federal wage and hour claims.

There are mounting legal challenges to the Final Rule contesting the DOL’s rulemaking authority. However, to date, none of the suits have been successful at blocking implementation of the Final Rule. So, for now, it stands.

Practice pointer: different legal tests for different laws

Employers new to the US are often baffled to learn that no single test exists to evaluate independent contractor status for all purposes. This means compliance is complicated since different tests may apply depending on the context. And yes, this also means that it’s feasible for a worker to be an independent contractor for some purposes and an employee for others (such as under state and federal law, for example). Continue reading for a summary of the key tests that come up most often for US multinationals.Continue Reading New DOL Rule Makes it Harder to Classify Workers as Independent Contractors (Plus a Quick Recap of the Key Misclassification Standards Across the US)

Special thanks to Celeste Ang and Stephen Ratcliffe.

We launched the seventh annual edition of The Year Ahead: Global Disputes Forecast, a research-based thought leadership surveying 600 senior legal and risk leaders from large organizations around the world and highlights key issues we anticipate to be crucial for disputes for this year.

We are pleased to share a recent SHRM article, “EEOC General Counsel: Anti-Discrimination Damages Caps Are Too Low,” with insights from our own JT Charron. Million-dollar jury verdicts in equal employment opportunity cases sometimes mask large cuts in final judgment due to federal caps on compensatory and punitive damages. Karla Gilbride, the EEOC’s general…

The new year brought some good news for California employers. On January 1, 2024, U.S. District Court Judge Kimberly Mueller issued a decision permanently enjoining California state officials from enforcing AB 51, the contested law that sought to prohibit employers from “forcing” job applicants or employees to enter into pre-dispute employment arbitration agreements covering certain discrimination and retaliation claims. The permanent injunction reaffirmed the ability of employers to mandate arbitration for most employment disputes.

This decision comes less than a year after the Ninth Circuit found that the Federal Arbitration Act (FAA) preempts AB 51 in Chamber of Commerce of the United States v. Bonta. As noted in our blog post on the Bonta decision, the Ninth Circuit ultimately upheld a temporary injunction against AB 51, allowing California employers to continue to use employment arbitration agreements while the matter was litigated, and which—given Judge Mueller’s permanent injunction—now can continue indefinitely.

The Lead Up: Recap of the AB 51 Litigation Battle

Here is a quick summary of the AB 51 litigation leading up to the January 1, 2024 permanent injunction:

  • In December 2019, Judge Mueller issued a temporary restraining order, prohibiting California from enforcing AB 51.
  • In September 2021, the Ninth Circuit struck down Judge Mueller’s decision to temporarily restrain California from enforcing AB 51, holding that AB 51 was not largely preempted by the FAA.
  • In August 2022, the Ninth Circuit withdrew its September 2021 decision and voted to take another look at the case through a panel rehearing.
  • In February 2023, the Ninth Circuit, backtracking on their September 2021 decision, held that AB 51 is preempted by the FAA because the deterring penalties that AB 51 imposes on employers is antithetical to the FAA’s policy of favoring arbitration agreements.

Continue Reading End of the AB 51 Saga: California Employers Can and Should Continue Using Arbitration Agreements

Combining the views of 600 senior in-house lawyers at multinational companies across four continents with the insights of Baker McKenzie experts in tax, employment and antitrust, the 7th Edition of our Global Disputes Forecast helps in-house counsel see around corners as they prepare for 2024. The forecast includes detailed predictions for disputes involving ESG, cybersecurity…

Tracking and complying with federal, state, and local wage and hour requirements has long been top of mind for employer as wage and hour liability continues to be one of the most expense employment law risks. Indeed, in 2022, the 10 largest reported settlements for wage and hour actions totaled $574 million.

Currently, in…

Baker McKenzie is pleased to invite you to an afternoon exploring strategy and risk in the year of the dragon.

Alongside industry leaders from Meta and Dayforce, this will be an interactive discussion exploring how businesses can harness the power and auspiciousness of the mythical dragon in building a comprehensive data, AI and cyber…

Special thanks to co-presenters Nandu Machiraju and William Rowe.

Where the sellers or shareholders in a corporate transaction are individuals (especially where they may continue on as employees of the buyer), noncompetes are a valuable tool in a deal lawyer’s toolbox. However, there is a clear trend of increasing hostility to the use of…

While the US Supreme Court’s June 27 decision striking down race-conscious admissions programs at Harvard and the University of North Carolina does not directly apply to private employers, the decision will reverberate and impact corporate ID&E programs as a practical matter.

The Decision Ends Systematic Consideration of Race in the Admissions Process

Striking down the affirmative action programs at Harvard and UNC, the Court ruled that both programs violate the Equal Protection Clause of the Fourteenth Amendment. In so doing, the Court effectively overturned the 2003 ruling in Grutter v. Bollinger, in which it said race could be considered as a factor in the admissions process because universities had a compelling interest in maintaining diverse campuses.

In his concurring opinion, Justice Clarence Thomas called the programs “rudderless, race-based preferences designed to ensure a particular racial mix in the entering classes.” Both policies “fly in the face of our colorblind Constitution and our nation’s equality ideal,” he added.

In a dissenting opinion, Justice Ketanji Brown Jackson, the Court’s first Black female justice, said: “With let-them-eat-cake obliviousness, today, the majority pulls the ripcord and announces ‘colorblindness for all’ by legal fiat. But deeming race irrelevant in law does not make it so in life.”Continue Reading ID&E in the Workplace After the Supreme Court Guts Affirmative Action in Higher Education