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California’s regulators have made employment noncompetes (and knowing which employees are bound by them and how!) a key compliance item.

Effective January 1, 2024, AB 1076 amends Section 16600 of the state’s Business and Professions Code to “void the application of any noncompete agreement in an employment context, or any noncompete clause in an employment contract, no matter how narrowly tailored.” In addition, the law requires employers to notify certain current and former California employees that any agreement containing a noncompete provision is void.

Well, easier said than done! This obligation has sent many employers scrambling to figure out where their noncompete provisions live, whether in employment agreements, PIIAs, or equity and incentive award plans and agreements—and, which employees required notice. 

In this video, our Employment & Compensation lawyers share practical considerations for providing notice (even if late—the deadline was Valentine’s Day!), and tips for reviewing documents to locate potentially unlawful restraints—including in the compensation context where noncompetes often lurk but aren’t always immediately thought of.

Click here to view the video.
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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.

In addition to this report, click here to view the webinar focused on Employment Disputes.

If you are a little short on time, skip ahead to hear about…

  • 02:36 | The big picture: global trends that influenced the global disputes landscape
  • 04:04 | What our survey says: top disputes risks
  • 06:04 | What our survey says: employment disputes
  • 06:42 | Employment disputes on the rise
  • 18:11 | Pay transparency as a growing global trend
  • 34:29 | Restructuring and reorganization
  • 44:30 | Contingent workforce
  • 56:57 | Q&A: How is AI changing the employment disputes landscape
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Earlier this year, many of you tuned into our 2023 – 2024 Employer Update webinars to plant seeds for success for the year ahead.

Now, to ensure your compliance efforts are blooming, we’re sharing detailed checklists to help you ensure you’re ticking all the boxes!

For any additional support, please reach out your Baker McKenzie attorney.

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We may be on the verge of pay equity and transparency requirements for federal contractors and subcontractors. On January 30, 2024 the Federal Acquisition Regulatory Council (FAR Council) issued proposed rulemaking that would, if finalized in its current form, require a significant change in recruiting and hiring practices for some contractors.

The FAR Council’s rule would:

  1. Require covered contractors to implement new compensation disclosure requirements in job announcements for certain positions, and
  2. Prohibit covered contractors from requesting or considering applicants’ compensation history when making employment decisions.

The public has until April 1, 2024 to submit comments. We will be tracking this proposed rule as it continues to develop. 

This is just the most recent development in the nationwide wave of state (e.g. California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, New Jersey, New York, Ohio, Rhode Island and Washington) and local (e.g. Cincinnati, Jersey City, New York City and others) pay transparency regulation our team has chronicled on our blog–see our most recent update on the District of Columbia’s new legislation here. Recently, there has also been litigation in various jurisdictions (e.g. Washington and New York City) seeking to enforce pay transparency regulations that are already on the books. 

Potentially broad application

In its current form, the proposed rule would have broad application, covering both prime contractors and subcontractors performing a government contract or subcontract within the United States (including its outlying areas). The FAR Council states that it contemplated limiting application of the requirements to certain contracts but ultimately did not go that way since “[t]he benefits of the pay equity and transparency requirements in this proposed rule are equally impactful in commercial and noncommercial settings as well as to large or small dollar contracts.”

The proposal defines “work on or in connection with the [government] contract” as “work called for by the contract or work activities necessary to the performance of the contract but not specifically called for by the contract.” The Council “encourages” contractors to apply its provisions “to other positions, including to the recruitment and hiring for any position that the Contractor reasonably believes could eventually perform work on or in connection with the contract.”

Both requirements apply only to “applicants,” defined as a “prospective employee or current employee applying for a position to perform work on or in connection with the [government] contract.”

Continue Reading Federal Contractors May Soon Be Required To Disclose Salary Ranges in Job Postings, And Prohibited From Seeking Applicant Salary History
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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 counsel, recently criticized the caps as too low to dissuade employers from breaking anti-discrimination laws.

However, caps on damages are necessary to rein in juries that allot extraordinarily excessive awards. Click here to read more.

This article was originally published in SHRM.

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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?
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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
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Special thanks to co-authors Thomas Asmar, Victor Flores, Denise Glagau, Christopher Guldberg, Jen Kirk, Maura Ann McBreen, Lindsay Minnis, Kela Shang, Aimee Soodan and Brian Wydajewski.

As many readers likely know, last fall California doubled-down on the state’s hostility to noncompete agreements. Assembly Bill 1076 codified the landmark 2008 Edward v. Arthur Andersen decision that invalidated all employment noncompetes, including narrowly tailored ones, unless they satisfy a statutory exception.
   
AB 1076 also added new Business & Professions Code §16600.1, requiring California employers to notify current (and certain former) employees that any noncompete agreement or clause to which they may be subject is void (unless it falls within one of the limited statutory exceptions).

Individualized written notice must be sent by February 14, 2024 or significant penalties may apply.

Continue Reading Don’t Miss California’s Noncompete Notice Requirement (Deadline 2/14/24) |Review Equity Award Agreements & Other Employment-Related Contracts ASAP
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In this episode, Blair Robinson (Partner, New York) and Lorren Martin (Senior Associate, London) discuss how financial institutions are navigating issues around IDE on both sides of the Atlantic and globally, with Rachel Farr, Senior Knowledge Lawyer.

Click here to tune in.

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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 and data, transactions, AI, and geopolitical risk.

We remain in an era best characterized by uncertainty and volatility. Against the backdrop of economic stagnation and geopolitical conflict, the risk and cost of employment disputes is materially higher. In the year ahead, many companies will face economic and technological pressures to restructure, the wave of labor activity signals a return to prominence for American unions, ever expanding equal pay and transparency laws will encourage a spike in discrimination and bias claims, and more. In-house counsel must prepare not only for a continuance of current threats (such as the resurgence of wage and hour class actions – read more here), but also new threats (such as pattern-or-practice-discrimination lawsuits against companies as AI screening and recruiting tools).

For a deeper dive on our 2024 predictions for employment disputes globally, register here for our Global Disputes Forecast Webinar on February 29 at 9 AM EST.

And, to learn more about how our best-in-class team of US employer litigators can help, have a look here or reach out to one of us to connect