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Special thanks to Bradford Newman and Stephen J. Malone, Fox Corporation.

Companies are turning to artificial intelligence (AI) to assist in recruiting and hiring the best talent in this tight labor market. However, there’s substantial corporate oversight in assessing AI threats, while agencies like the Equal Employment Opportunity Commission (EEOC) in the US are closely examining AI for potential bias and other harms.

In this Quick Chat video Paul Evans and Brad Newman welcome Stephen J. Malone of Fox Corporation to discuss blind spots in using AI in recruitment and hiring, and share to practical tips to help employers alleviate these issues. Join us to continue the discussion in-person at Baker McKenzie’s event, A Conversation with Special Guest Speaker EEOC Commissioner Keith Sonderling, taking place October 27 in Palo Alto.

Click here to watch the video.

Join us for an in-person event with special guest, EEOC Commissioner Keith Sonderling.

Date:
Thursday, October 27, 2022

Venue:
El Prado Hotel, La Terraza Ballroom
Downtown Palo Alto, 520 Cowper Street

Parking:
Complimentary valet parking

Timing:
2:30 pm / Registration
3:00 – 4:00 pm / Interview and Q&A
4:00 – 5:30 pm / Cocktail & Networking Reception

Click here to view the invitation details and to register.

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Effective January 1, 2023, California employers must continue to provide notification to employees of COVID-19 exposure in the workplace through 2023, but will be able to satisfy the notification obligation by displaying a notice in the workplace. On September 29, Governor Gavin Newsom signed AB 2693 into law, revising and extending the existing obligation for employers to notify workers of potential exposure to COVID-19 in the workplace. Here’s what California employers need to know.

Extended sunset date

Although the employer COVID-19 notice requirement was formerly scheduled to expire on January 1, 2023, AB 2693 extends the requirement’s sunset date to January 1, 2024.

Notification can be satisfied through posting

The amendment applies “in each worksite of the employer,” and allows employers to provide the required notification by prominently displaying a notice in all places where notices to employees concerning workplace rules or regulations are customarily posted. The notice must be in English and the language understood by a majority of the employees, and provide:

  • The dates on which an employee, or employee of a subcontracted employer, with a confirmed case of COVID-19 was on the worksite premises within that employee’s infectious period
  • The location of the exposures, including the department, floor, building, or other area (but this information should not be so specific as to allow the infectious individual to be identified)
  • Contact information for employees to receive information regarding COVID-19-related benefits to which they may be entitled under applicable federal, state, or local laws
  • Contact information for employees to receive the cleaning and disinfection plan the employer is implementing under Centers for Disease Control and Prevention and Cal-OSHA COVID-19 Emergency Temporary Standards

If an employer is providing notification through a workplace posting, the notice must be posted within one business day from when the employer learns of the potential exposure and must remain posted for not less than 15 calendar days. And if an employer posts other types of workplace notices on an existing employee portal, the notice must also be posted on the employee portal.

Alternative means of notice

Instead of providing posted notice, employers can revert to prior requirements and provide written notice to all employees, and employers of subcontracted employees, who were on the premises at the same worksite as a confirmed case of COVID-19. As before, this notice must be provided in the manner the employer normally uses to communicate employment-related information (such as personal delivery, email or text message) if it can reasonably be anticipated to be received by the employee within one business day of sending.

Record-keeping

Employers are required to keep a log of all the dates the required notice was posted at each worksite of the employer, and must allow the Labor Commissioner to access these records.

Notice to the exclusive representative

Employers are required to provide a written notice to the exclusive representative, if any, of confirmed cases of COVID-19 and of employees who had close contact with the confirmed cases of COVID-19 within one business day. This notice must contain the same information as would be required in an incident report in a Cal/OSHA Form 300 injury and illness log unless the information is inapplicable or unknown to the employer.

Notification to the public health agencies no longer required

Employers no longer need to notify the local public health agency of a COVID-19 outbreak (as defined by the California Department of Public Health), except in specific circumstances.

Potential Conflict with Proposed Cal/OSHA COVID-19 Non-Emergency Regulation

One wrinkle resulting from AB 2693 is its apparent conflict with Cal/OSHA’s proposed COVID-19 Prevention – Non-Emergency Regulation (“Proposed Cal/OSHA Standard”) which, if adopted, would also take effect on January 1, 2023. Under the Proposed Cal/OSHA Standard, employers who learn of a COVID-19 case at the worksite are required to “notify employees and independent contractors who had a close contact.” Unlike the Proposed Cal/OSHA Standard’s other notification requirements, the employer obligation to notify close contacts does not incorporate Labor Code section 6409.6. In other words, while the new worksite posting option will satisfy employers’ Labor Code section 6409.6 obligation, it remains unclear whether it will also satisfy the Proposed Cal/OSHA Standard’s close contact notification obligation. The California Occupational Safety and Health Standards Board discussed the Proposed Cal/OSHA Standard at its last public hearing on September 15. The Board has not announced whether it will continue those discussions at its upcoming October 20 public hearing.

For help with AB 2693 or any of your other employment needs, contact your Baker McKenzie employment attorney.

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Special thanks to Melissa Allchin and Matthew Gorman.

Federal agencies have renewed their focus on job postings that discriminate against protected groups, even when there is no clear intent to be discriminatory. As evidenced by a significant increase in investigations and fines levied over the past four months, the Department of Justice’s (“DOJ”) Immigrant and Employee Rights Section (“IER”) and the Equal Employment Opportunity Commission (“EEOC”) are actively reviewing external, and often third-party, job postings to determine whether they are unlawfully restrictive.

The Investigations

Compared to a single settlement in all of 2021, the IER has entered into 19 settlements with US employers relating to discriminatory job postings since May 2022. The largest investigation targeted 16 employers who posted job advertisements with unlawful citizenship status restrictions through recruitment platforms used by the Georgia Institute of Technology and other college recruitment platforms. Per the June 2022 DOJ settlements, most of the advertisements restricted job opportunities to US citizens and/or lawful permanent residents. The settlements require the employers to pay civil penalties totaling $832,944, undergo training, and change their recruiting practices.

In a separate settlement in May 2022, the DOJ found that an IT recruitment company improperly emailed job ads with discriminatory preferences for citizenship status that deterred potential candidates from applying as part of a pattern of implementing its clients’ unlawful citizenship or immigration status preferences.

The DOJ’s revived attention on discriminatory job postings is not limited to those expressing a preference for US citizens. In June 2022, the DOJ found that a consulting company’s advertisement was directed only to workers seeking H-1B visa sponsorship. Similarly, in July 2022, DOJ found that a technology company posted job advertisements that deterred asylees, refugees and US nationals from applying, and in at least one instance sought only H-1B visa holders. In both the June and July settlements, the companies were subject to civil fines, required training, and to DOJ monitoring and reporting obligations.

The DOJ is not alone in its enforcement attempts.  In recent years, the EEOC has honed its focus on systemic age discrimination in job postings.  In its 2021 guidance, the EEOC unequivocally stated that job postings seeking candidates with seemingly innocuous traits – such as “recent graduate” and “energetic” – may violate the Age Discrimination in Employment Act (“ADEA”). A July 2022 study by the National Bureau of Economic Research further bolsters the EEOC’s position. The study team created and posted fake job advertisements focused on common age stereotypes: communications skills, physical ability and technology skills. The researchers determined that even when the advertisements lacked obviously discriminatory language, they ultimately discouraged candidates 40 and older from applying.  Examples of such troublesome posts included: “You must be up-to-date with current industry jargon and communicate with a dynamic workforce” and “You must be a digital native and have a background in social media.”

The Law

There are several regulations that prohibit employers from engaging in discriminatory hiring practices, including the ADEA, Title VII of the Civil Rights Act of 1964, and the Americans with Disabilities Act, along with countless state and local laws. 8 USC Section 1324b also prohibits unfair immigration-related employment practices. Specifically, employers are prohibited from discriminating against any individual with respect to “hiring, or recruitment or referral for a fee” due to that individual’s national origin or citizenship status. The individual must be a “protected” person – which includes (i) a citizen or national of the United States, (ii) lawful permanent residents, (iii) refugees and (iv) asylees, with some additional restrictions relating to those who have failed to timely apply for naturalization.

Investigations by the IER and EEOC can be time-consuming and disruptive to a business. Civil penalties  range widely – but can be hefty – depending on the scope of the alleged discriminatory actions. Perhaps of equal importance is the potential reputational harm resulting from an investigation and public announcement of settlement, in addition to required reporting and monitoring from the DOJ.

Employer Takeaways

Given the clear focus and mandate from the DOJ and EEOC regarding discriminatory job postings, employers must take additional care to ensure their job postings do not run afoul of anti-discrimination laws. Critically, this is true not just for the employer’s external website job postings but also those posted by third parties. Employers should consider the following best practices:

  • Conduct a review of current protocols for posting job advertisements on the company website and with external/third-party vendors.
  • Require third-party vendors to provide copies of all job postings for pre-approval before publishing.
  • Ensure those responsible for managing external job postings have undergone anti-discrimination training targeted to avoid incidental discriminatory postings.
  • Except in limited circumstances, never reference citizenship status, immigration status, national origin, age or any other protected category in job postings.
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We are pleased to share with you The Global Employer – Global Immigration & Mobility Quarterly Update, a collection of immigration and mobility alerts from around the world.

Please click here to view.

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It is official.  California has joined Colorado, Washington and New York City in requiring job posting to include pay ranges. Today (September 27, 2022), Governor Newsom signed SB 1162 into law, requiring California employers with 15 or more employees to include the salary or hourly wage range of positions in job listings. SB 1162 also requires employers with 100 or more employees to provide additional detail in the annual pay data reports already mandated under California law.

An earlier version of the bill would have required large employers to post salary data broken out by gender, race and ethnicity online. But those requirements were stripped from the bill in August, after business groups opposed the measure on the basis that sharing such pay data publicly would lead to increased and costly litigation, which in turn would limit the employers’ ability to increase wages. Though large employers may breathe easier given this change, SB 1162 still imposes significant and new pay transparency and disclosure requirements on California employers.

Here is what California employers need to know now.

Pay data reporting: what is required now that SB 1162 is law

The existing requirements (before SB 1162 modifications)

California already requires private employers with 100 or more employees (counting employees located both inside and outside of California) who are required to file an annual Employer Information report (EEO-1) under federal law to submit a “pay data report” to the Civil Rights Department (CRD, formerly known as the DFEH) by March 31 each year for the prior calendar year (“reporting year”). (For more information, see our prior blogs here and here.)

  • The report must include specified information, including the number of employees by race, ethnicity, and sex for 10 job categories, established by creating a “snapshot” that counts all individuals in each job category by race, ethnicity, and sex employed during a single pay period of the employer’s choice between October 1 and December 31 of the reporting year. The 10 job categories include executive or senior level officials and managers; first or mid-level officials and managers; professionals; technicians; sales workers; administrative support workers; craft workers; operatives; laborers and helpers; and service workers.
  • Employers also must report the number of employees by race, ethnicity, and sex whose annual earnings fall within each of the pay bands the US Bureau of Labor Statistics uses in the Occupational Employment Statistics survey (established by calculating the total earnings shown on the IRS Form W-2 for each employee in the “snapshot” for the entire reporting year; the total number of hours worked by each employee counted in each pay band during the reporting year; and the employer’s North American Industry Classification System (NAICS) code).
  • An employer could (pre-SB 1162) comply with the pay data reporting obligation by submitting an EEO-1 report that contains the same or substantially similar pay information. Employers with multiple establishments must submit a report for each establishment and a consolidated report that includes all employees. All employers must provide the data in a format that allows CRD to search and sort the information using readily available software, and employers may, but are not required to, provide clarifying remarks concerning the information in the report.
  • CRD must make the reports available to the Division of Labor Standards Enforcement (DLSE) upon request and maintain the data for at least 10 years. Both CRD and DLSE must keep the data confidential, except as necessary for administrative enforcement or through the normal rules of discovery in a civil action. CRD may seek an order requiring an employer to comply with these requirements and is entitled to recover the costs associated with seeking the order for compliance.

What changes now that SB 1162 is law

No EEO-1 report allowed

SB 1162 eliminates the option of submitting an EEO-1 report in lieu of a pay data report.

Consolidated reports not required

Employers with multiple establishments are no longer required to submit a consolidated report, and instead only need to submit a report covering each establishment.

Median and mean hourly rate required

The new law now requires the pay data report to include the median and mean hourly rate for each combination of race, ethnicity, and sex within each of the 10 job categories.

New deadline for submissions

The bill requires the submission of pay data reports on or before the second Wednesday of May 2023, and for each year thereafter on or before the second Wednesday of May (as opposed to the current March 31 annual deadline).

Employees hired through labor contractors now count

SB 1162 also requires a private employer that has 100 or more employees hired through a labor contractor (an individual or entity that supplies, either with or without a contract, a client employer with workers to perform labor within the client employer’s usual course of business) to submit a separate pay data report for those employees by the submission deadline.

Violations / penalties

The bill authorizes a court to impose a civil penalty not to exceed $100 per employee upon any employer who fails to file the required report, and not to exceed $200 per employee upon any employer for a subsequent failure to file the report.

Pay scale disclosure: what changes now that SB 1162 is law

Pay scale required in job postings

SB 1162 now requires an employer with 15 or more employees to include the pay scale (salary or hourly wage range) for a position in any job posting. SB 1162 also requires employers who engage third parties to announce, post, or publish (or otherwise make known) job postings to provide the third parties with the pay scale information, and requires the third parties to include the pay scale in job postings.

Pay scale disclosure to applicant and current employee

California law previously required employers to provide pay scale disclosures to applicants upon reasonable request.  Now, SB 1162 requires employers to provide current employees with the pay scale for their positions upon request.

Required records

Under SB 1162, employers must maintain records of job titles and wage rate histories for each employee for a specified timeframe, with the records to be open to inspection by the Labor Commissioner.  If an employer fails to keep the required records, the law creates a rebuttable presumption in favor of an employee’s claim.

Violations / penalties

SB 1162 requires the Labor Commissioner to investigate alleged violations of its requirements and authorizes the commissioner to order employers to pay civil penalties upon finding a violation. The bill also authorizes a person aggrieved by a violation to bring a civil action for injunctive and any other appropriate relief.

What should California employers do now?

California employers need to act quickly – SB 1162 requires posting of pay ranges in job listings as of January 1, 2023.  And the revised pay data reports must be submitted by May 10, 2023.

As always, contact your Baker McKenzie employment attorney for help with this new law or any other employment needs.

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Special thanks to guest contributors Bradford Newman, Pamela Church and George Avraam.

New Baker McKenzie Survey of 500 US-Based C-Level Executives Reveals AI Blind Spots

Regulatory and enforcement agencies in the US are taking a closer look at artificial intelligence (AI) and its potential for bias and other harms, but a new Baker McKenzie study has found that many in the C-suite are overconfident in assessing AI threats. Meanwhile, critical blind spots exist in HR and hiring tools oversight.

Our AI and corporate oversight survey report features insights from 500 US-based C-level executives who self-identified as part of the decision-making team responsible for their organization’s adoption, use and management of AI-enabled tools.

Click here to download a copy of our survey results to examine the critical blind spots that exist, key challenges with these gaps and how to address them.

You can also view our press release on the findings here.

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Join us for an in-person event with special guest, EEOC Commissioner Keith Sonderling

Commissioner Sonderling is recognized for his thought leadership on inclusive AI. He is at the forefront of advocating for rational AI enforcement that meets the mandate of equality without disrupting innovation. He has noted the value of learning the perspectives of innovators, and legal and human resource professionals in this space through an open dialogue. A brief introduction video to Commissioner Sonderling can be found here.

Event Details

Date:
Thursday, October 27, 2022

Venue:
EL Prado Hotel, La Terraza Ballroom
Downtown Palo Alto, 520 Cowper Street

Parking:
Complimentary valet parking

Timing:
2:30 pm / Registration
3:00 – 4:00 pm / Interview and Q&A
4:00 – 5:30 pm / Cocktail & Networking Reception

US regulatory and enforcement agencies increasingly are taking a hard look at AI and its potential bias and unintended consequences. Simultaneously, many C-Suite executives are overconfident about the risk of AI-related threats, especially given the critical blind spots that exist in HR and the use of AI hiring tools.

Baker McKenzie, in collaboration with Coleman Parkes, recently surveyed C-Suite level executives on the use and management of AI-enabled hiring and promotion tools. The AI and Corporate Oversight in the US survey illuminated three significant gaps that require C-Suite attention.  A copy of our survey report is available for download here.

To better examine the AI-related challenges identified through our survey and the steps companies should take to address them, we invite legal, compliance, and human resource professionals, along with data scientists and innovators, to join in a conversation with our special guest, EEOC Commissioner Keith Sonderling, during which he will share his insights on key considerations for the use of employment-based AI tools, including best practices for the elimination of bias and the compliant deployment of AI under federal employment law.

Hosted by Baker McKenzie AI partner Bradford Newman, this invitation only event will be followed by a Q&A session and the opportunity to visit with the Commissioner in a casual setting.

We look forward to seeing you.

For more details on this event, click here.

To register click here.

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California employers will need to review and confirm their employees’ exempt status and non-exempt hourly wage rates before the start of the new year because of an unusual change in the statewide minimum wage applicable to all California employees.

On July 27, 2022, the California Director of the Finance Department sent a letter to Governor Gavin Newsom stating that the minimum wage will be raised by $15.50 for all employers, regardless of headcount, on January 1, 2023. This change may take employers by surprise because the new minimum is higher than the scheduled increases published by the California Department of Industrial Relations, and applies regardless of employer size.

Most California employers are likely familiar with the Schedule for the California Minimum Wage rate 2017-2023 (see below) published on the California Department of Industrial Relations website.

However, this schedule is no longer accurate. A little-known provision of the California Labor Code (Cal. Lab. Code Section 1182.12) requires the Director of the Department of Finance to determine, each year, whether the minimum wage must be adjusted because of inflation. The mechanism takes into account the latest Consumer Price Index as set by the Bureau of Labor statistics. When inflation exceeds 7%, the minimum wage becomes the same for all employers, regardless of headcount, effective the following January 1. After determining that the US States Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the 12-month period from July 1, 2021 to June 30, 2022 increased by 7.9 percent compared to the 12-month period from July 1, 2020 to June 30, 2021, the Director certified a new minimum wage of $15.50/hour for all employers starting January 1, 2023.

This change will require California employers to increase the hourly rates paid to minimum-wage employees. It also will impact payments that are tied to the state minimum wage, such as split-shift premiums, certain overtime exemptions for CBA-covered employees, and non-productive time for piece rate workers.

But most importantly, the increase of the minimum wage will impact the minimum base salary required for the so-called “white collar” exemptions:

  • Certain white-collar exemptions in California rely, in part, on the minimum wage: in addition to performing tasks and duties in line with the executive, administrative, and professional exemptions, most white-collar employees must earn at least twice the applicable minimum wage for full-time employment (40 hours per week) (i.e., currently for larger employers, at least $62,400 annually). By contrast, the federal Fair Labor Standards Act requires all exempt employees be paid at least $684 per week (at least $35,568 annually) in order to be exempt from overtime. The increase in the minimum wage to $15.50 next year will raise the minimum salary level to $64,480.
  • Similarly, under California law, commissioned inside salespeople are exempt from overtime if, among other things, they earn more than half of their compensation from commissions (measured over different time periods) and at least 1.5 times the minimum wage (on a workweek-by-workweek basis).

And California is not an anomaly. At least a dozen other states–including Illinois, New Jersey and Virginia–are raising their minimum wage in 2023. Most states have mechanisms to raise their minimum wage based on inflation or other similar indices (such as the cost of living, employment costs, etc.). We expect to see more states and localities raise their minimum wage rates higher or earlier than anticipated.

US employers should prepare for possible increases and conduct a review now to determine whether impending new minimum wage rates may change the exempt status of employees or require raising salary levels. A prompt review will give employers time to decide whether they wish to treat formerly exempt employees as non-exempt employees starting January 1, 2023, or whether they prefer to adjust affected exempt employees’ base compensation to ensure those employees continue to qualify for the applicable exemption. For assistance with California’s new minimum wage rates and their impact on the exempt status of your employees, and for all of your employment needs, contact your Baker McKenzie employment attorney.

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As we pass the 2.5 year mark since many of us were sent to work from home for “two or three weeks” in early 2020, a number of employers are getting closer to having formal policies to address remote work and hybrid work arrangements. One of the more enduring consequences of the pandemic for employers is the focus on providing flexibility in employee work locations. This was confirmed in a recent client survey indicating that the majority of employers offer flexible or fully remote work arrangements to their employees and new candidates (though often limited to certain positions and locations), as job seekers are demanding flexible work arrangements.

Only a small minority of companies are requiring all employees to return to the office on a full-time basis (though almost one fifth of responding employers are still developing their remote work policies, so this number could increase). For most employers, it is critical to not be out of step with their peers in the most difficult employee recruiting and retention environment in a generation. At the same time, employers are aware of the risks that can be created by having an employee working in another jurisdiction. These risks are not limited to corporate tax and payroll withholding considerations, but also implicate immigration compliance, IP confidentiality, various employment issues, data privacy and security, trade compliance, and compensation and benefit consequences.

As a result, we are seeing a general acceptance of remote work for some period, but with limits — either on the jurisdictions where employees can work remotely, which positions are eligible under the policy, or the time period the employee is permitted to work remotely. At this stage, respondents are relying less on location tracking software and more on employee self-reporting.

Looking ahead, for US employers, who have been primarily focused on employees moving locations within the US, we may see cross-border remote work increase as countries continue to eliminate the pandemic travel restrictions which were a barrier during the last few years, and as countries use “digital nomad” type visa programs to attract the remote workforce to their jurisdiction.

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Labor unions seem to be having a resurgence after being on the decline for many years. Employers are concerned with this shift, and are wondering what they can do within the bounds of the law to keep a direct relationship with their workforce.

In this Quick Chat video, our Labor & Employment lawyers discuss the current labor union landscape, what’s causing this wave of union activity, and some steps employers can take to get out in front of the escalation in union organization.

Click here to watch the video.