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?

DC is the first jurisdiction in 2024 to join the likes of many states (including California, Colorado, Connecticut, DC, Hawaii, Illinois, Maryland, Nevada, New York, Rhode Island and Washington) in requiring pay transparency in job postings. 

On January 12, 2024, Mayor Muriel Bowser signed the Wage Transparency Omnibus Amendment Act of 2023. If the Act survives the 30-day period of review by Congress (as required under the District of Columbia Home Rule Act), it will go into effect June 30, 2024. 

The Act will apply to employers with at least one employee in DC.

New Requirements

Covered employers must provide the minimum and maximum projected hourly or salary pay in all job listings, as well as a description of the position. Employers will also be required to disclose the existence of healthcare benefits to prospective employees before the first interview. Further, in line with several states that have passed salary history ban laws, employers will be prohibited from screening applicants based on their wage history, or seeking the wage history of a candidate from a former employer.  Finally, employers will also be required to post a notice in their workplaces notifying employees of their rights under the Act. This notice must be posted in a conspicuous place, in at least one location where employees congregate.  Continue Reading New Year, New Rules in DC: This January the District of Columbia Joins the Pay Transparency Club

In late breaking news out of New York, Governor Kathy Hochul has vetoed legislation that would have imposed the most restrictive state-level ban on employee non-competes in the United States. Last June, the New York State Assembly passed S3100, which if signed by Governor Hochul, would have voided any contract restraining anyone from engaging in a

Roses are red,
Violets are blue,
You signed a noncompete,
That may not be true.

Last year, California lawmakers double-downed on the state’s hostility to noncompete agreements. One of the new provisions requires written notice to current and former employees that their noncompete is void – unless an exception applies – by Valentine’s Day (February 14, 2024).

Two New Bills Restricting Noncompetes in California

First, as covered in our Legislative Reference Guide, SB 699 extends the reach of the state’s ban on noncompetes to contracts signed out of state; creates a private right of action for employees whose agreements include restrictive covenants and provides for attorney fees for any current, former, or even prospective employee who successfully brings suit against an employer’s use of those restrictive covenants.

Second, AB 1076, codifies the 2008 Edward v. Arthur Andersen decision that invalidated all employment noncompetes, including narrowly tailored ones, unless they satisfy a statutory exception. In addition, impacting your Valentine’s Day plans, the legislation requires California employers to individually notify current and former employees employed since January 1, 2022 in writing by February 14, 2024 that their noncompete clauses are void. Individualized notice is required to the employee’s last known mailing and email addresses.Continue Reading No Love Lost: California’s Continued Crackdown on Noncompetes Requires Breakup Letters Sent Before Valentine’s Day

In 2023, we helped US employers overcome a host of new challenges across the employment law landscape. Many companies started the year with difficult cost-cutting decisions and hybrid work challenges. More recently, employers faced challenges around intense political discourse boiling over in the workplace. We’ve worked hard to keep our clients ahead of the curve on these

Recent and rapid artificial intelligence developments have captured public attention and much has been discussed around how organizations will need to prepare.

From an employment standpoint, the increasingly sophisticated potential for AI applications spans the entire employee lifecycle, from recruitment to onboarding, training and more.  
 
In the second report in our Workforce Redesign: Outlooks

In many cases, when a candidate is recruited, they offered a new hire grant of equity awards and (possibly) subsequent “refresh” grants. Depending on the company, this can be a significant component of the employee’s total compensation and may be the most important piece to get the candidate to accept the offer. 

So, naturally, companies tend to include information about the equity awards in the offer letter provided to the candidate, together with information about the employment terms (e.g., base pay, bonus eligibility, etc.). 

If the candidate is to be employed by an entity outside the United States that is different/separate from the company that will be granting the equity awards (typically the parent company), we strongly recommend changing this practice. In a nutshell, we would advise to delete any references to the equity awards from the offer letter (as well as from any employment agreement that may be provided later or at the same time) and to communicate information regarding the equity awards in a separate equity award side letter that is provided by the granting company. Continue Reading The Case for Not Mentioning Equity Awards in Offer Letters

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

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

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. 

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