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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 issues, as well as crafting enforceable noncompetes, developing nationwide strategies for pay transparency compliance, and preparing for federal and state leave law changes.

Our year-end employment update webinars and seminars will cover these and other critical topics that multistate employers need to know, including the key legislative changes taking effect in 2024.

Join us for one session or join all — it’s entirely up to you.

CALIFORNIA 2023–2024 EMPLOYMENT LAW UPDATE 
Wednesday, December 13, 2023
1 pm PT / 3 pm CT / 4 pm ET
75 minutes (Webinar)
Click here to register.

ILLINOIS 2023 –2024 EMPLOYMENT & COMPENSATION UPDATE
IN-PERSON CO-HOSTED BY THE NORTH SHORE LABOR COUNSEL
Thursday, January 11, 2024
8:00 am CT | Breakfast, Registration & Networking
8:30 am CT – 10:00 am CT | Legal Update
90 minutes (This session will not be recorded.)
Chicago Botanic Garden
1000 Lake Cook Rd, Glencoe, IL 60022
Click here to register.

NEW YORK 2023–2024 EMPLOYMENT LAW UPDATE 
Tuesday, February 13, 2024
10 am PT / 12 pm CT / 1 pm ET
60 minutes (Webinar)
Click here to register.

Click here to view the program invitation and additional program details.

To view these programs in a different time zone, click here. 
If you are unable to attend during the live programming, please “register” for a copy of the webinar recording and materials.

Each program is pending CLE accreditation.

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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
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On October 30, 2023, President Biden issued a 63-page Executive Order to define the trajectory of artificial intelligence adoption, governance and usage within the United States government. The Executive Order outlines eight guiding principles and priorities for US federal agencies to adhere to as they adopt, govern and use AI. While safety and security are predictably high on the list, so too is a desire to make America a leader in the AI industry including AI development by the federal government. While executive orders are not a statute or regulation and do not require confirmation by Congress, they are binding and can have the force of law, usually based on existing statutory powers.

Instruction to Federal Agencies and Impact on Non-Governmental Entities

The Order directs a majority of federal agencies to address AI’s specific implications for their sectors, setting varied timelines ranging from 30 to 365 days for each applicable agency to implement specific requirements set forth in the Order.

The actions required of the federal agencies will impact non-government entities in a number of ways, because agencies will seek to impose contractual obligations to implement provisions of the Order or invoke statutory powers under the Defense Production Act for the national defense and the protection of critical infrastructure, including: (i) introducing reporting and other obligations for technology providers (both foundational model providers and IaaS providers); (ii) adding requirements for entities that work with the federal government in a contracting capacity; and (iii) influencing overall AI policy development.

Continue Reading Biden’s Wide-Ranging Executive Order on Artificial Intelligence Sets Stage For Regulation, Investment, Oversight and Accountability
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Happy Halloween from the EEOC! The federal agency’s 2022 EEO-1 Component 1 data collection is now open.

  • The deadline for submitting and certifying 2022 data is December 5, 2023

Covered employers

By way of reminder, all private employers that have at least 100 employees are required to file the EEO-1 form annually, detailing the racial, ethnic and gender composition of their workforce by specific job categories. Likewise, federal government contractors and first-tier subcontractors with 50 or more employees and at least $50,000 in contracts must file EEO-1 reports. The form does not currently include pay data, though some states (like California) have added that requirement. 

Non-binary employees

The updated instruction booklet provides more detail on reporting the sex of employees who self-identify as non-binary. Because the EEO-1 Component 1 data collection form still provides only binary options (i.e., male or female) for reporting employee counts by sex, job category, and race or ethnicity, the booklet states that employers may voluntarily choose to report employee demographic data for non-binary employees in the “comments” section of the report. Employers that voluntarily choose to report non-binary employees in the “comments” section should not assign such employees to the male or female categories or any other categories (i.e., job category and race or ethnicity) within the report.

For support with your filing obligations, please contact a member of our team.

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With special thanks to Danielle Benecke and Ben Allgrove for their contributions.

Baker McKenzie recently hosted industry leaders from Anthropic, Google Cloud and OpenAI in Palo Alto to discuss how in-house legal counsel can best reckon with the transformative power of GenAI.

Baker McKenzie partners joined the panel, sharing insights from their vantage point both advising clients on deploying GenAI and our own experience of using it within one of the largest legal businesses in the world.

The discussion was conducted under Chatham House rules, but read our 5 strongest recommendations for in-house counsel here.

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Special thanks to co-authors Andrew Shaw, Dave Bushuev and our articling student Ravneet Minhas for sharing this update from Canada.

In the United States, there have been many union-friendly changes at the NLRB and a number of high profile strikes making headlines in 2023. Our neighbors to the north are also experiencing an uptick in union activity.

With pervasive inflation and an uncertain job market, many Canadians are emerging from the pandemic with bolder workforce demands. For example, in the spring of 2023, federal public servants made headlines with the largest strike in Canadian history. More recently, 3,000 Metro grocery store workers went on strike across Toronto, demanding higher wages. In mid-October 2023, GM narrowly averted significant disruptions to its operations by reaching a deal with Unifor, which represents 4,300 workers in Ontario.

Employers are rightly concerned about the potential for increased union activity, which can cause significant disruptions to operations. There are many things employers can do to stay union free, but it requires treading carefully because labour laws offer extensive protections to employees’ right to unionize. One wrong step by an employer can lead to penalties, fines, and potentially automatic certification.

Understanding how quickly the 3-step certification process unfolds

The certification process formalizes the collective bargaining relationship. And, understanding how this process works and appreciating how quickly it can move forward is essential for developing an effective union avoidance strategy.

Generally speaking, the process for certification in Ontario involves three steps:

1. The Organizing Drive

In this first step, to the extent possible, the union will try to keep the organizing drive a secret. During this period, the union will typically attempt to gauge employee interest by having union representatives approach them inside or outside the workplace, as well as online, talking to them about any issues they may have with the workplace, and sharing union information with them. Most union organizing campaigns involve signing up employees as union members and collecting union membership cards. One way that unions target employers for a union drive is by obtaining the names, contact information, and/or home addresses of the employees of a certain workforce, which they use to send them propaganda.

Employers are often unaware that this step is occurring even though a union organizing drive can last for months (or, in some cases, even longer). It is important for management to have reliable sources in the workforce to advise them when a union drive is happening. Timing is critical here.

Continue Reading Best Practices for Employers Amidst Signs of a Labor Union Resurgence in Canada
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Employee handbooks are at the top of employers’ key priorities.

Why? The NLRB’s recent decision in Stericycle adopted a retroactive “employee friendly” standard for workplace rules, including those often included in handbooks. In addition, the new year often rings in new laws requiring changes to workplace policies often included in handbooks. And, the US Supreme Court decision banning affirmative action in higher education has led employers to take a closer look at their inclusion, diversity and equity (ID&E) related policies and statements in employee handbooks. 

What does this mean? There’s some urgency for employers to get a handle on how they may need to revise their handbooks, in response to both the current landscape and new laws taking effect soon.

In this video, our Labor & Employment lawyers discuss the practicalities of what the Stericycle case means for handbooks, the latest and projected legislative changes affecting workplace policies, and how (and why) employers may wish to give their ID&E-related policies in handbooks a refresh.

Now is the perfect time for employers to get their arms around what’s coming down the pike that may require them to make changes to their handbooks — and we’re here to help.

Click here to watch the video.

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In first-of-its-kind legislation, under SB 54, California will require venture capital companies to collect and report diversity data from portfolio company founders as soon as March 1, 2025. The new Fair Investment Practices by Investment Advisers law intends to increase transparency regarding the diversity of founding teams receiving venture funds from covered entities in California.

Covered Entities

Venture capital companies are covered by the new requirements if they:

  1. Primarily engage in the business of investing in, or providing financing to, startup, early-stage, or emerging growth companies, or manage assets on behalf of third-party investors, including, but not limited to, investments made on behalf of a state or local retirement or pension system; and
  2. Have a nexus to California, by:
    • Being headquartered in California;
    • Having a significant presence or operational office in California;
    • Making venture capital investments in businesses that are located in, or have significant operations in, California; or
    • Soliciting or receiving investments from a person who is a resident of California.

Key Reporting Requirements

Starting March 1, 2025, and annually thereafter, covered entities must report specified information about the founding teams of all businesses in which the covered entity made a VC investment in the prior calendar year and certain other investment information to the California Civil Rights Department. (CRD is the government agency that collects pay and demographic data from private employers of 100 or more employees in California.)

  • Founder Demographic Data

Covered entities must report, at an aggregated level, for each member of the founding team (to the extent information was provided, as disclosing information by founding team members is voluntary and they will not be penalized for declining to answer), such person’s gender identity, race, ethnicity, disability status, sexual orientation, veteran status, and whether such person has California residency. Data must be provided to CRD on an aggregated level and anonymized basis.

  • Investment in Diverse Funding Teams Data

Covered entities must also report the total number and dollar amount (each, as a percentage of total VC investments made) of VC investments to businesses primarily founded by diverse founding team members, aggregated and broken down by each of the above categories.

“Primarily founded by diverse founding team members” means more than half of the founding team members responded to the annual survey, and at least half of the founding team members self-identify as a woman, nonbinary, Black, African American, Hispanic, Latino-Latina, Asian, Pacific Islander, Native American, Native Hawaiian, Alaskan Native, disabled, veteran or disabled veteran, lesbian, gay, bisexual, transgender, or queer.

Further, covered entities must disclose the total amount of money in VC investments the covered entity invested in each business during the prior calendar year and the principal place of business of each company in which the covered entity made a VC investment during the prior calendar year.

Privacy Notice

VC companies that are subject to the California Consumer Privacy Act (CCPA) are required to provide a privacy notice at or before the point of collection of personal information to California resident founders and account for the new data processing in its online CCPA privacy policy.

Information on racial or ethnic origin and sexual orientation are categories of “sensitive personal information” that receive additional protections under the CCPA. Businesses are allowed under the CCPA to use sensitive personal information as necessary to comply with applicable law (such as this one). And VC companies remain free to use sensitive personal information without inferring characteristics, which should cover most legitimate use cases to satisfy the reporting requirement. VC companies that do infer characteristics based on racial or ethnic origin or sexual orientation information of a California resident would have to carefully analyze restrictions, compliance requirements, and risks under existing civil rights and anti-discrimination laws.

Failing to Report

Failure to timely file a report will prompt the CRD to notify the covered entity that it must submit a report within 60 days of the notification. Further failure may result in an enforcement action by the CRD.

The legislation empowers the CRD to seek court orders to compel compliance, impose penalties to deter future non-compliance, recover its attorney’s fees, and grant other relief as deemed appropriate.

What’s Next

SB 54 was adopted in the context of increased scrutiny of ID&E efforts.

Earlier this year, the U.S. Supreme Court banned the use of race-conscious admission policies in higher education (see our prior article HERE), and last year, a California court found that a prior bill, AB 979, requiring publicly held corporations with a principal executive office in California to include at least one director from an underrepresented community (including individuals who self-identify as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identify as gay, lesbian, bisexual, or transgender) was unconstitutional (see our prior article HERE).

On October 18, 2023, the Court of Appeals for the Fifth Circuit decided against plaintiffs who challenged a Nasdaq stock market rule that requires listed companies to disclose board diversity data, Alliance for Fair Board Recruitment et al. v. SEC, case number 21-60626. Plaintiffs asserted that the Nasdaq rule would cause unconstitutional discrimination, but the court ruled that the SEC only accepted and did not propose the rule and that Nasdaq is a private entity not subject to constitutional scrutiny.

SB 54 may become subject to similar legal challenges that may delay implementation. However, the VC companies should assess their internal capabilities to prepare for collecting the required information for investments made during calendar year 2024 in order to comply with the reporting obligations and meet the expected March 1, 2025 reporting deadline.

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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 for Business Leaders series, we explore how businesses can responsibly address evolving AI risk in the context of recruitment and empower a more diverse and engaged workforce. Key considerations include:

  • Critical blind spots in HR and hiring tools oversight as it relates to the use AI.
  • Discrimination and data privacy concerns in the application of AI throughout the recruitment process.
  • The importance of establishing your “AI mindset” across initiatives to withstand rapid change and addressing AI-specific risk areas.

Read the article today to confidently plan for what’s next for your workforce.

More articles coming soon! Our Workforce Redesign: Outlooks for Business Leaders series spans the key areas of change that are shaping the modern workforce, including: responsible AI in HR, the future of flexible work and the war for talent. Visit our hub for all of the insights on this topic to date, with more content coming soon!

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Presented by the Institute for Technology Law & Policy at Georgetown Law in collaboration with Baker McKenzie.

On November 8, join thought leaders from government, the judiciary, academia, and private practice for this timely gathering on the Georgetown Law campus in Washington, DC. Laws and policy surrounding the protection of trade secrets are changing as technology evolves.

In this first-of-its-kind event at Georgetown, intellectual property experts will discuss the following topics:

  • How generative AI is transforming the trade secret landscape
  • The role of non-competes
  • Protecting against leaks of confidential information
  • The impact of China’s emerging trade secret protection landscape on global commerce
  • The future of trade secrets in the US and abroad 

Date: Wednesday, November 8, 2023

Time: 9:00 am to 6:00 pm EST

Location: 500 1st Street Northwest, Washington, DC 20001

Click here to indicate your interest in attending this in-person event.
Click to view the complete agenda.