As we near the end of 2019’s third quarter, we reflect upon recent changes to employment laws across the country. From legalizing marijuana to restrictions on independent contractors, employment laws are ever changing. Below you will find a comprehensive review of recently enacted laws (by state) which may impact your work environment.
National Labor Relations Board Invalidates Employer Arbitration Agreements
On June 18, 2019, the National Labor Relations Board (NLRB) invalidated employer-mandated arbitration agreements that could be interpreted as a way to prevent employees from filing claims with the Board. The Board held arbitration agreements with sweeping language requiring employees to bring to arbitration “all claims or controversies for which a federal or state court would be authorized to grant relief,” i.e. any claim an employee could bring against his or her employer could be construed as preventing an employee from bringing a claim to the Board. Furthermore, a general disclaimer stating the arbitration agreement is not intended to interfere with an employee’s rights or to violate state or federal law may be insufficient to bypass the NLRB’s new restrictions.
As a result, employers should look at their existing arbitration agreements with employees to make sure they comply with this new NLRB holding.
Equal Employment Opportunity Commission and Title VII Claim—Processing Procedures Are Not Jurisdictional
On June 3, 2019, in Fort Bend County v. Davis, the United States Supreme Court held that the Equal Employment Opportunity Commission (EEOC) and Title VII claim-processing procedures are not jurisdictional. If an employee does not bring a claim for a particular form of discrimination under Title VII in his or her EEOC (or state administrative agency equivalent) complaint, and if the employer does not assert that the employee did not raise such a claim in the administrative complaint, the employer may waive its right to raise this discrepancy as an affirmative defense.
As a result, if an employer receives an employee’s complaint from the EEOC (or state-equivalent administrative agency), the employer should verify that the claims raised in the administrative complaint match those raised in the court-filed complaint. If not, the employer may waive its right to assert the employee did not assert his or her claim as an affirmative defense.
Employers Can Limit Union-Related Activities on Its Premises
In a recent decision involving the University of Pittsburgh Medical School, employers now have a greater say over whether unions can have access to employees on the employers’ premises. Previously, employers were required to grant nonemployee union representatives access to public areas on the employer’s property to hold union-related activities and events. Now, as long as (1) the union has other means of communicating with union employees, and (2) the employer does not grant other organizations access to its public spaces, while prohibiting the union’s access, employers no longer have to grant union representatives access to its public spaces.
As a result, if nonemployee union representatives appear on an employer’s property for solicitation purposes related to union activities, as long as the two above-outlined exceptions are met, employers now have a right to demand the union representatives leave the premises.
New York Passes New Employment Laws—Salary History and Equal Pay
The New York State Senate and Assembly recently passed a law stating that employers are not permitted to ask prospective or current employees for their pay (salary or wage) histories as a prerequisite to obtain an interview with the employer, to receive an offer of employment, to be paid a certain salary or wage after being hired, or to be promoted. However, an employee may still voluntarily use his or her pay history when negotiating his or her salary, wage or a raise. The law also provides prospective and current employees with a private right of action if an employer requests the employee’s pay history.
In addition, employers must ensure all employees who perform “substantially similar work” be paid equally. However, other factors, such as seniority, merit, education, or quality of work may still play a role in paying some employees higher salaries. The employer simply cannot be motivated by a factor that separates members of a protected class from the rest of the employer’s workforce.
As a result, employers should be proactive in ensuring they comply with these new laws.
Illinois Marijuana Legislation’s Impact on the Workplace
Recently, Illinois legalized recreational marijuana, the sale of which will begin on January 1, 2020. As Illinois law (the Right to Privacy in the Workplace Act) currently stands, employers cannot refuse to hire, terminate or take any other action to an employee’s detriment because the employee “uses lawful products off the premises of the employer during nonworking hours,” i.e. the law does not prohibit employers taking action due to the employee’s use of the substance while working and on the employer’s premises. Employers can also still prevent the use of recreational marijuana on their premises. On January 1, 2020, marijuana will be a “lawful product” under Illinois law. However, federal law still prohibits any use of recreational marijuana, calling it unlawful. This leaves the question of whether recreational marijuana use truly is “lawful” under Illinois law.
As a result, employers should be wary about this law which makes recreational marijuana lawful under the Right to Privacy in the Workplace Act, as it will likely make its way through the Illinois court system to be determined constitutional or not. Furthermore, while on January 1, 2020, this new law will essentially expunge prospective and current employees’ criminal histories and arrest records related to marijuana possession (of between 30 and 500 grams), if petitioned by the individual, employers should be careful not to take adverse employment actions against a prospective or current employee for such records.
Employers in Dallas Must Pay Employees’ Sick Leave
On August 2, 2019, Dallas employers were the first employers in Texas to be required to pay employees’ sick leave. This local ordinance applies to all employers – public and private, with the exception of the United States, Texas, and city governments. It currently applies to all employers with five or more employees. Dallas employers with five or fewer employees have until August 1, 2021 to comply. Dallas employers with fewer than 15 employees are only required to pay 48 hours of paid sick leave (i.e. six days). Employers with more than 15 employees are required to pay 64 hours of paid sick leave (i.e. eight days). Any employee, whose circumstances meet the respective criteria, and who works 80 or more hours each year for the employer is eligible for paid sick leave.
As of now, Dallas is the only city in Texas with such an ordinance. However, in the near future, it is likely that both San Antonio and Austin will also have similar ordinances up and running. We advise employers to make sure they are in compliance with these new local ordinances. Employers must also include information about their new employee paid sick leave policies in their employee handbooks. After August 1, 2019, as a new handbook may not be printed until January 2020, employers should consider circulating to employees an addendum with its new paid sick leave policy.
ADA Does Not Cover Extreme Obesity
In Richardson v. Chicago Transit Authority, a federal circuit court of appeals recently held that extreme obesity does not qualify as an impairment under the ADA. Following the EEOC’s definition of “physical impairment,” which is “any physiological disorder or condition . . . affecting one or more body systems . . .,” the court held extreme obesity does not meet this criteria, because the plaintiff did not bring forth evidence that his “extreme obesity was caused by a physiological disorder or condition . . . under the plain language of the EEOC regulation.”
As a result, plaintiffs have a higher burden of proof in ADA cases if they want to argue their extreme obesity is covered as a disability by the ADA in their respective jurisdictions. Since some employees with extreme obesity may still be covered by the ADA, employers should still make reasonable accommodations for these employees.
New Oregon Law Promotes Noncompetition Agreements
Recently Oregon passed a bill requiring that, on and after January 1, 2020, “within 30 days after the date of the termination of the employee’s employment, the employer [must] provide a signed, written copy of the terms of the noncompetition agreement to the employee.” This law is meant to ensure that employees have a copy of their noncompetition agreement post-employment, as they may have lost their original copy from when they were hired. The Oregon legislature wants to ensure that all employees comply with their respective noncompetition agreements post-employment.
Under Oregon law, a noncompetition agreement is valid if (1) two weeks before employment begins, the employer tells the employee in a written job offer that the noncompetition agreement is required; (2) the employee is exempt from Oregon’s minimum wage and overtime laws; (3) the employer has access to trade secretes or other confidential information; (4) the employee earns more than the median family income for a family of four (per the Census Bureau); (5) the agreement does not extend beyond 18 months post-employment; and (6) the employer provides the employee with a copy of the agreement within 30 days post-employment.
As a result, Oregon employers should make sure their non-compete agreements are valid under this new law.
California’s Legislature Seeks to Enact Legislation Narrowly Restricting the Use of Independent Contractors
Existing California law, as established in the landmark 2018 case Dynamex Operations West, Inc. v. Superior Court of Los Angeles ("Dynamex"), creates a presumption that a worker who performs services for a “hirer” is an employee rather than an independent contractor. This ruling, in essence, asserted that only those contractors who truly perform services separate and apart from the principal’s business can be considered an independent contractor. Dynamex dramatically increased the risk of misclassifying individuals as independent contractors.
Much to the chagrin of companies like Uber and Lyft whose business models are predicated on the use of independent contractors, the California State Assembly passed a bill, known as AB5 which codifies and expands the Dynamex decision. The ruling and the bill instruct businesses to use the so-called “ABC test” to figure out whether a worker is an employee. To hire an independent contractor, businesses must prove that the worker (a) is free from the company’s control, (b) is doing work that isn’t central to the company’s business, and (c) has an independent business in that industry. If they don’t meet all three of those conditions, then they have to be classified as employees. While AB 5 must pass in the California State Senate and avoid a potential veto by the Governor, its potential impact is far reaching.
Unfortunately, failing to properly classify employees comes with a host of legal and tax issues. Employers would be wise reevaluate their independent contractor relationships before AB5 becomes law.
Uber and Lyft Work Together to Give Drivers Better Pay, Benefits, and Rights
On June 12, 2019, Uber CEO Dara Khosrowshahi, and Lyft CEO Logan Green and President John Zimmer launched a public campaign to pressure California lawmakers on pending legislation known as Assembly Bill 5 (“AB5”) (see above) that would effectively classify their drivers as employees instead of independent contractors. They argue that their drivers do not want to be considered employees, because they enjoy having flexibility in their schedules as independent contractors.
The company leaders stated in a San Francisco Chronicle op-ed that they want to give their drivers benefits, while maintaining their independent contractor-like statuses. The leaders propose legislation where short-term workers and workers who have control over their schedules would be made exempt from AB5 (which addresses employee/independent contractor status under Dynamex). In exchange, Uber and Lyft will provide their drivers with benefits, increased wages and earnings transparency, and a drivers’ association to give drivers a greater say in company decisions.
As a result, this program could further blur the line between employee and independent contractor, particularly in the gig economy workforce, and employers of such employees should be aware of the programs and proposed legislation developments.
Gordon Rees Scully Mansukhani's Employment practice group is uniquely poised to assist your company with any of the employment laws in this advisory. Please contact the authors with any questions. Law Clerk Emma Horner contributed to this advisory.