The Federal Trade Commission’s (“FTC”) proposed rule banning the use of non-competes with employees and workers could regulate almost all employers in the nation. If this proposal becomes final it could also prohibit non-disclosure, non-solicitation, and non-recruitment agreements that prevent employees from jumping to rivals.
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The FTC’s proposal to ban noncompete clauses is vulnerable to challenge. Kelley Drye’s Antitrust and Competition attorneys (who are also former FTC officials) share their thoughts on the most significant concerns. Read more on the agency’s authority to propose this ban, how to engage in the rulemaking, and what challenges we’re likely to see in
When the FTC proposes a rule that could regulate nearly every employer in the nation, we take notice. In this second installment of our series on the FTC’s proposed rule to ban noncompete agreements, we provide a pragmatic look at the road ahead.
What has the FTC actually proposed? How can individual firms and industry groups alike weigh in on one of the most substantial regulatory actions facing employers right now? And what should businesses do to prepare? Here’s your deep dive.
Continue Reading FTC Insights: How Employers Can Prepare for a World Without Noncompetes
On January 5, 2023, the Federal Trade Commission announced a sweeping proposal to regulate virtually every labor and service relationship in the United States, and make it more lucrative for people to quit. leave their current jobs by removing the enforceability of non-compete clauses. If a final rule emerges from this proposal, virtually every employer
In a notable victory for the #MeToo movement, President Biden recently signed the “Speak Out Act” into law. It became effective December 7, 2022.
This bipartisan legislation targets and effectively prohibits the use of pre-dispute nondisclosure agreements, which would cover claims of sexual harassment or assault in the workplace. The law only prohibits enforcement of pre-dispute agreements, which means employers can still utilize NDAs in post-dispute agreements, such as settlements.
Many states, like New York, have already passed laws restricting the use of NDA’s in settlement agreements, so depending on the state where you are located, this may not be a major change. But for employment attorneys and HR professionals, this should be a signal to review all new employment contracts. In a broader sense, you may have to revisit how your company responds to workplace sexual harassment and assault allegations now that it has become more difficult to quietly resolve.
Here’s what you need to know:
What does the Speak Out Act do, exactly?
Under the Act:
Throughout the #MeToo era, NDAs have come under fire for preventing victims from speaking publicly but remain commonly used in hiring, promotion, and severance contracts. In fact, approximately one third of workers have signed broader agreements not to disparage their employers or disclose details of their employment.
Despite its seemingly clear purpose, the Act’s ambiguities are likely fodder for future court challenges. For instance, the law targets only “pre-dispute” agreements but does not define the term. This means courts may interpret a “dispute” to include a narrow set of actions (such as a formal complaint or even litigation) or broader swath (say an informal HR complaint).
Also, the law does not specify what a company must do to address existing employment agreements which may contain clauses that violate the new law. We would advise leaving those agreements in place, as trying to get new agreements signed again could be impossible. Just be aware that a requirement of an NDA could be unenforceable.
The Act also looks to other federal, tribal, or state law in defining the terms “sexual assault” and “sexual harassment. ” Notably, in 2020, the Supreme Court interpreted Title VII’s sex protections to include protection against discrimination based sexual orientation and gender identity. The scope of these definitions may be contended. And while the law does not prohibit the use of NDAs in other contexts, such racial bias or disability, discrimination claims are often intersectional and contain several allegations. For now, employers may be wise to interpret the Act broadly.
How does this compare to state law trends?
The federal law creates a floor, not a ceiling. More than a dozen states have already passed legislation limiting employee NDAs, including California and New York.
California: California has severely limited NDA enforcement for all forms of workplace harassment and discrimination. The state prohibits confidentiality agreements as a condition of employment that prevent an employee from disclosing most unlawful workplace conduct. And unlike the federal law, California’s law also bans confidentiality provisions in settlement agreements that prohibit an employee from discussing the underlying facts of the case. Agreements to protect the worker’s identity or safeguard the amount paid are permitted. Again, California law applies to all forms of harassment and discrimination, including sex, religion, color, national origin, disability, familial status, gender, age and others.
New York: The Empire State has similarly outlawed agreements that prevent the employee from disclosing the underlying facts and circumstances related to an employment discrimination claim. Like California, the legislation originally applied only to sex discrimination, but was expanded in subsequent iterations. New York lawmakers have also introduced legislation that would ban most NDA and nondisparagement clauses that prevent disclosure of harassment or discrimination in employment contracts.
What should employers do now?
The Speak Out Act is hardly the first of its kind. Last March, Congress passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, prohibiting enforcement of any pre-dispute arbitration agreement in these types of cases. With these trends in federal and state law, employers must take action:
We’re monitoring employment law trends on Capitol Hill and across the nation. Subscribe to stay up-to-date with the legal developments that will most impact your company in the months to come.
Continue Reading The Fall of the NDA: Compliance and Litigation Following the Speak Out Act
The Illinois Biometric Information Privacy Act (BIPA) has been on the books as one of the nation’s most protective biometric privacy statutes since 2008. It was also one of the first to give individuals a cause of action for monetary damages against individuals or companies that violate the law. For the first time in the Act’s 14 year history, however, a case has been tried before a jury to a verdict. The Rogers v. BNSF trial recently wrapped up in the U.S. District Court for the Northern District of Illinois, with Judge Matthew Kennelly presiding and the $228 million verdict stunning, but not surprising, many who have been following BIPA developments.
Despite BIPA’s relatively maturity, basic questions still remain as to the scope of the statute. Most pressingly, the applicable statute of limitations for violations of the Act (how many years a plaintiff has to file a lawsuit after a violation), and the number of BIPA violations that may accrue have not been decided.
Continue Reading BIPA Goes on Trial
The NYC Pay Transparency Law will go into effect this week. Starting November 1, 2022, employers with four or more employees advertising jobs in NYC must include the minimum and maximum salary that the employer believes in good faith at the time of the posting they are willing to pay for the advertised job, promotion, or transfer opportunity.
Employers can access the City’s most recent and complete guidance here, but below are a few highlights:
Continue Reading Compliance Reminder – NYC Pay Transparency Law Takes Effect November 1, 2022
The Great Resignation of 2021 and 2022 has spawned what we are calling “The Great Rehire.” To sort through the deluge of new applicants, many employers have become more reliant on technology such as artificial intelligence and automated employment decision tools (AEDT).
If you are using AI and/or AEDT, beware. Starting January 1, 2023, New York City employers will be subject to one of the most sweeping regulations governing AEDT to date.
Local Law 144 prohibits employers from using AEDT in hiring or promotion decisions unless they have taken several affirmative steps, including conducting a bias audit. This may include tools like resume-scanning software and more advanced “chatbots” and “job-fit” algorithms.
Continue Reading An Employer’s Guide to NYC’s New AI Law – Are You in Compliance?
With the recent expansion of pay transparency laws in Colorado, New York City, and Washington, it should come as no surprise to employers that California has also opted to expand its existing pay transparency laws.
On September 27, 2022, California Governor Gavin Newsom signed SB 1162, which broadens the state’s pay transparency laws by requiring employers to provide pay scale information and expanding pay data reporting obligations for certain employers.
The earliest of the law’s changes go into effect on January 1, 2023, but employers should now begin the process of updating their existing organizational policies and procedures to ensure timely compliance with the new regulation when it takes effect. Here’s a brief overview of existing law and the new requirements set forth in SB 1162.
Pay Transparency
Prior to the enactment of SB 1162, under the current law, employers are required to provide an applicant for employment with the pay scale information for the position the applicant is seeking, upon reasonable request. Current law does not require employers to provide existing employees pay scale information for their current positions. SB 1162 now affords California employees the right to request pay scale information and adds the additional mandate that employers must include pay scale information in job postings. The term “pay scale” is defined as “the salary or hourly wage range that the employer reasonably expects to pay for the position.” Effective January 1, 2023, California employers must comply with the following requirements:
On November 24, 2022, New York will open a one-year “lookback” window that will revive older sexual abuse claims that were previously barred by applicable statues of limitations and allow victims to file suit against responsible parties regardless of when the abuse occurred. The lookback window is the result of the recently-enacted Adult Survivors Act (“ASA”). The ASA is an analogue to New York’s Child Victims Act (“CVA”) of 2019. The CVA revived the claims of victims who were under eighteen at the time of abuse. In contrast, the ASA applies to victims who were eighteen or older when the abuse occurred.
Like the CVA, the ASA revives otherwise time-barred claims based on both intentional and negligence theories of relief. This means that companies that formerly employed abusers may be sued and held liable under vicarious liability theories – such as negligent hiring, training and retention – even where the employer had no direct knowledge or involvement in the abuse.
Continue Reading New York Employers Must Take Action to Secure Insurance Coverage for the Coming Wave of Sexual Abuse Claims Under the Adult Survivors Act
