Employment 2020

Last Updated September 08, 2020

USA

Law and Practice

Authors



Ogletree Deakins is a labour and employment law firm representing management in all types of employment-related legal matters. Ogletree Deakins has more than 900 attorneys located in 53 offices across the United States and in Europe, Canada, and Mexico. The firm represents a diverse range of clients, from small businesses to Fortune 50 companies. The firm has been recognised for its expertise, achieving exceptional rankings year-on-year.

New Salary Threshold for Employees Exempt from Federal Minimum Wage and Overtime Requirements

Effective 1 January 2020, the US Department of Labor (DOL) Wage and Hour Division set the new salary level or amount test at USD684/week or USD35,568/year for exempt executive, administrative, and professional employees under the Fair Labor Standards Act (FLSA)(the thresholds were last increased in 2004). The total annual compensation for a “highly compensated employee” is USD107,432. The new thresholds impact whether an employee is exempt from the FLSA’s minimum wage and overtime requirements, if they otherwise meet the job duties tests applicable to the specific exemption.

Definition of “Sex” for Federal Sex Discrimination Claims

On 15 June 2020, the United States Supreme Court held in Bostock v Clayton County, Georgia, that employers covered by Title VII of the Civil Rights Acts of 1964 may not discriminate against applicants or employees on the basis of sexual orientation or gender identity. While some federal jurisdictions had already held similarly, the Bostock decision established the law of the land. Numerous state and local laws also provided similar protections based on sexual orientation and gender identity. The Bostock decision is also expected to impact employers’ consideration of other workplace issues, including policies regarding sex-segregated facilities, dress codes and grooming standards, and use of pronouns and honorifics.

Changing Rules for Disciplining Employees for Abusive Conduct in the Context of Union or Other Protected Concerted Activity

On 21 July 2020, in General Motors LLC, 369 NLRB No 127 (2020), the National Labor Relations Board overruled longstanding precedent allowing employees to engage in offensive or even abusive conduct in the workplace, without discipline, under the protection of the National Labor Relations Act (NLRA), as such conduct was often deemed “protected concerted activity” under the NLRA. The Board’s new standard requires a burden-shifting analysis. First, the Board’s counsel must initially show the discipline or discharge was motivated by protected activity by showing: “(1) the employee engaged in protected activity, (2) the employer knew of the activity, and (3) the employer had animus against the protected activity.” If the employer can then show it would have taken the same action even in the absence of protected activity, the burden shifts back to the Board’s counsel to prove the employer’s reason for the discipline or discharge is false or pretextual. General Motors continues the trend of NLRB decisions that provide employers with more discretion to control the workplace.

State and Local Law Changes

The past year saw significant employment-related legislative activity by states and localities, particularly in the areas of salary history bans, drug legalisation/testing, and leave (including paid leave) entitlements.

Key Temporary Measures to Mitigate the Effects of COVID-19

FFCRA

The federal Families First Coronavirus Response Act (FFCRA) applies to employers with fewer than 500 employees:

  • until 31 December 2020, expands FMLA to cover leave and loss of income when an employee needs to care for children because school or day care closures due to COVID-19;
  • creates 2 weeks of paid sick leave for childcare and other leave related to COVID-19; and
  • provides tax credits for employers related to the paid leave.

CARES Act

Along with providing various tax benefits and business loans, CARES:

  • provides unemployment compensation for COVID-19 reasons for those not eligible for traditional unemployment (such as individuals who are self-employed, gig workforce, etc);
  • extends unemployment benefits to 39 weeks (up to 31 December 2020);
  • provides additional USD600 per week for up to 16 weeks if unemployed because of COVID-19 [note: this benefit expired 31 July 2020]; and
  • provides funding to states to waive the “waiting week” before unemployment benefits begin.

EEOC Guidance

As long as COVID-19 is deemed a pandemic, employers may:

  • take an employee’s temperature as a screening method; if the employee refuses, the employer can refuse to allow the employee in the workplace;
  • ask in-person employees if they have symptoms related to COVID-19, relying on the latest CDC guidance; and
  • require employees to be tested for COVID-19.

State and local governments have also enacted laws to mitigate COVID-19, including face covering orders, and screening and closure orders which impact workplaces.

The Fair Labor Standards Act (FLSA) exempts certain white-collar workers from the statute’s minimum wage and overtime requirements. Employers are not required to pay minimum wages or overtime pay to executive, administrative and professional employees who satisfy the salary level and other requirements to meet one of the white-collar exemptions. Employees who do not meet the FLSA exemptions (generally blue-collar workers) are entitled to minimum wage and overtime under the FLSA, as well as any state or local minimum wage or overtime requirements.

Employment contracts are not required. Where a written contract does not exist, courts may imply terms governing the employment relationship from statements made in employee handbooks, offer letters and/or oral representations.

In the American workplace, employment is generally assumed to be at-will, meaning either the employee or the employer can end the employment relationship at any time. For those employment relationships that are under contract, most are in writing. However, depending on applicable state law, the employment contract need not be in writing to be enforceable, but state law may prescribe what an employment contract must include.

There is no federal law that requires employers to provide specific written information to employees at the time of hire, but some states require employers to disclose information such as the employee’s wages or regular payday at the outset of employment.

Maximum working hours are imposed by federal and state laws. Under the federal FLSA, most employers are required to pay overtime – at a rate of time and one half of the employee’s regular pay – for each hour worked over 40 hours per week, unless the employee is statutorily exempt. Some states expand these terms and conditions to include overtime in excess of eight hours in one day or overtime for work performed on weekends. The FLSA limits the types of flexible scheduling arrangements available.

Minimum wage requirements are imposed by federal and state laws. The federal minimum wage for employees covered by the FLSA is currently USD7.25 per hour. States and localities may impose minimum wages above the federal minimum wage. The federal government does not otherwise intervene in decisions regarding increases, bonuses, or other types of compensation. State laws regulate the timing of compensation payments.

Vacation Pay

Vacation and vacation pay are subject to very few regulations and are not required under federal law. However, most employers do provide some paid vacation leave, which is regulated by state and/or local law.

Family/Medical Leave

The federal Family and Medical Leave Act (FMLA) requires employers of a certain size to provide unpaid leave for maternity, to take care of a medical condition, or to care for family members. Under the FMLA, an employee is eligible for unpaid leave if the employee has been employed for at least 12 months by the employer and for at least 1,250 hours of service during the previous 12-month period. An eligible employee is entitled to:

  • up to 12 weeks of unpaid leave per year;
  • continuing health insurance benefits during leave (if already provided by the employer); and
  • job protection (an employee is guaranteed to return to the same job or its equivalent).

Leave related to a serious health condition may be taken intermittently or on a reduced leave schedule when medically necessary.

Some state and local family leave laws provide more generous leave benefits than the FMLA by covering smaller employers, extending the time for unpaid leave for up to 16 weeks, and permitting intermittent leave for maternity.

Workplace Accommodations

Additionally, the federal Americans with Disabilities Act (ADA) requires an employer to provide reasonable accommodations to a disabled person unless they would impose an undue hardship on the employer. Reasonable accommodation can include a paid leave of absence, a modified work schedule, or, in some instances, unpaid leave beyond the 12 weeks provided under the FMLA.

Confidentiality/Non-disparagement

Traditionally, there have not been limitations on confidentiality and non-disparagement requirements. Increasingly, though, there are concerns regarding such requirements in the employment arena, particularly to the extent they would prevent disclosure of harassment allegations. This is an area that is still evolving under US law.

Employee/Employer Liability

In general, employees may be held liable for their actions depending on the nature of the act and the context in which the act occurred. Under the American doctrine of respondeat superior, an employer may be held vicariously liable for an employee’s acts that are committed within the scope of employment, or liable for negligence in hiring, supervision or retention of an employee, as determined by state law.

The enforceability of restrictive covenants, including non-competition and non-solicitation agreements, vary considerably state to state. A covenant that is enforceable in one state may well be unenforceable in another. Most states follow the general rule that restrictive covenants are enforceable, provided they are necessary to protect a legitimate interest of the employer and are reasonably limited in time, geographic scope and the restrictions placed on the employee.

A growing number of states have substantially limited the circumstances under which covenants are enforceable. In California, for example, non-competition agreements are invalid unless otherwise covered by an express statutory exception.

An employer can enforce a restrictive covenant by filing a civil lawsuit seeking an injunction to prevent the employee from violating the covenant and/or damages to compensate the employer for the violation.

Whether a court will enforce or rewrite an overbroad agreement also varies by state. Some states permit courts to rewrite overbroad provisions through a process called reformation. Some states permit “blue pencilling,” which allows the court to erase overbroad terms and enforce the remaining provisions. Still, other states do not permit either approach, and in those states, courts will not enforce an overbroad agreement at all.

See 3.1 Non-competition Clauses.

Employee data protection laws in other countries are often much more restrictive, although the USA is trending towards more data protection obligations with an assortment of data protection laws that regulate the collection, use and transfer of employees’ personally identifiable information (PII) and personal health information (PHI). These laws are not limited to protecting active employee information, so employers’ obligations extend to former employees, job applicants, independent contractors and other non-employee groups whose personal information they may obtain (such as customers).

There are a number of federal data protection laws that impact the employment relationship, including:

  • the Heath Insurance Portability and Accountability Act (HIPAA), which dictates under what circumstances and to whom PHI may be released;
  • the Genetic Information Nondiscrimination Act (GINA), which covers genetic information;
  • the Americans with Disabilities Act (ADA), which limits when an employer may obtain medical information, how such information may be used and disclosure of such information;
  • the Family and Medical Leave Act (FMLA), which limits the use and disclosure of medical information collected to administer leaves under the law;
  • the National Labor Relations Act (NLRA), which prohibits employers from interfering with workers’ rights to engage in concerted activity, including such activity through social media; and
  • the Fair Credit Reporting Act (FCRA), which applies to those who use consumer reports, including background checks conducted on applicants and employees.

Another federal law, the Privacy Act of 1974, limits the type of information that federal government employers may keep on their employees.

Personal Information and Data Protection

Additionally, most US states impose a wide range of requirements related to personal information. Every state has enacted laws defining PII and requiring notification of security breaches involving PII, and many have enacted laws requiring companies to keep PII secure and destroy, dispose of, or otherwise make PII unreadable or undecipherable once they are finished with PII they hold. Many states have also enacted laws to protect social security numbers, with limited exceptions for employers, and some have laws providing expanded protections to PHI or other health information. A significant number of states have also enacted employee social media privacy laws, limiting when and how employers may use social media information about their employees.

Certain states have laws that represent new approaches to data protection and have become a model for similar legislation across the nation. Illinois imposes requirements on the collection and use of biometric information, including fingerprints, retina scans and facial geometry scans (which could include identifying individuals through photographs). The Illinois Biometric Privacy Act (BIPA) has a number of requirements, including written consent and disclosure of policies related to biometric data collection and usage. The BIPA also allows private individuals to bring suit and recover damages for violations. The California Consumer Privacy Act (CCPA) has introduced new rights for California residents, including notice obligations for employers on the information they hold on employees, applicants, and contractors. Laws on data protection are rapidly changing, with new rights and duties expected in a number of states for employers in coming years.

US employers are prohibited from hiring or continuing the employment of a worker who is not authorised to work in the USA. The Immigration Reform and Control Act of 1986 (IRCA) places the burden of immigration compliance on employers and prohibits hiring, or recruiting, or referring for a fee, individuals who are not authorised to work in the USA. It also requires that employers confirm the identity and employment eligibility of new employees.

Subject to very few exceptions, in order to work in the USA, a foreign national must be the beneficiary of a visa that permits them to work in the USA. Employers have the option of participating in the immigration sponsorship process. Employers may not, however, directly ask about a candidate’s national origin, citizenship, or immigration status during the hiring process. Instead, they must use neutral questions to determine whether the applicant requires immigration sponsorship to begin working or to continue employment in the future. Those questions include:

  • are you legally authorised to work in the United States; and
  • do you now, or will you in the future, require immigration sponsorship for work authorisation?

When a candidate answers affirmatively to the second question, the employer may ask more direct questions about the applicant’s immigration status and work authorisation to make an informed hiring decision.

More recently, the US government has placed restrictions on certain foreign nationals entering the USA in response to COVID-19. These measures are temporary and subject to abrupt changes, but generally do not impact foreign nationals that are already residing or legally working within the USA.

Foreign nationals can obtain non-immigrant (temporary) visas and immigrant (permanent) visas in the USA. Most foreign nationals initially enter the USA with a non-immigrant visa. US employers may sponsor a foreign worker by filing an employer-sponsored petition with the United States Citizenship and Immigration Services (USCIS). USCIS reserves the right to perform site visits to ensure that any foreign worker is working pursuant to the petition filed on their behalf. The most common employer-sponsored non-immigrant visas include the H-1B, L-1, and TN.

H-1B Visa

H-1B visa status is available for foreign nationals coming to the USA to work temporarily for a specific US employer in a specialty occupation (ie, one that requires theoretical and practical application of a body of highly specialised knowledge and the attainment of a bachelor’s degree or higher in the specific specialty, or its equivalent in work experience, as a minimum for entry into the job). The H-1B is subject to an annual quota, often referred to as the “H-1B Lottery”). In 2020, USCIS implemented a new pre-registration process for this lottery selection process.

The pre-registration process is now required before an employer can file an H-1B petition with USCIS. The pre-registration process begins in March of each year, with the earliest possible H-1B employee start date of October 1st. Generally, once a foreign national is selected in the H-1B lottery, they will not need to enter the H-1B lottery again, even if they depart their H-1B sponsoring employer. If a foreign national has already been selected in the lottery and is currently working pursuant to their H-1B visa, they are eligible to “port” the H-1B status to a new employer at any time upon the filing of a new H-1B petition.

L-1 Visa

L-1 visa status is available for employees of foreign companies who are coming to the USA to work temporarily for a qualifying organisation related to the foreign company that is either the same company, the parent company, a branch office, an affiliate, or a subsidiary. The employee must have worked for the related entity abroad for at least one year in the previous three, and must be coming to the USA to work in an executive, managerial, or specialised knowledge capacity.

TN Visa

TN visa status was created under the North American Free Trade Agreement (NAFTA) and is only available to citizens of Canada and Mexico. Canadian and Mexican nationals may qualify for TN classification if they possess the necessary credentials for an occupation on the approved list of NAFTA occupations.

The National Labor Relations Act (NLRA), enacted in 1935, was designed to provide rules to limit “industrial warfare” after a period of violence and unrest between employers and employees. The NLRA protects employees’ rights to engage in “protected, concerted activity” in the workplace regarding the terms and conditions of their employment and, if they choose, to organise a union.

Although 29.5% of American employees belonged to unions in the 1960s, union membership in the private sector has declined steadily since then, and currently stands at just 6.2%. In contrast, the percentage of union employees in the public sector has grown markedly over the past 20 years and currently stands at 33.6%. 

The NLRA prohibits private sector employers from interfering with, restraining, or coercing employees in the exercise of their rights to organise a union. The NLRA also protects employees’ right not to organise a union.

Section 9 of the NLRA prescribes general rules concerning the election process, and the National Labor Relations Board (NLRB) and the courts have developed processes through which employees have the opportunity to cast an informed vote in an election to determine a union’s representation status. In December 2019, the NLRB issued new guidelines on the conduct of representation elections, revising rules implemented under the prior administration that were considered by employers to have tilted the process to favour unions. The newly revised rules seek to restore a balance of employer, union, and employee interests in the election process.

Once elected, the role of the Union is to represent fairly the interests of the employees in the bargaining unit and negotiate the terms and conditions of employment with the Company, including wages, benefits, and other terms and conditions such as seniority, overtime, and work schedules. Under the NLRA, there are “mandatory” subjects of bargaining, issues about which the parties must negotiate, and “permissive” subjects of bargaining, about which neither party can be forced to negotiate.

When employees choose a union to represent them, the employer and the union are required to meet at reasonable times and places to negotiate in good faith to reach a binding agreement setting forth terms and conditions of employment. The employer and union are not required to adopt any proposal made by the other, but they are required to bargain in good faith to try to reach an agreement. Failure to reach an agreement may result in a strike, lockout, or resort to other economic weapons.

If, notwithstanding good faith bargaining, the parties do not reach agreement, the employer may declare an impasse and unilaterally implement its bargaining proposals. The union may, however, file an unfair labour practice charge with the NLRB if it contends the employer failed to bargain in good faith. The NLRB can order the employer back to the bargaining table and to rescind any unilateral changes it may have made based on a claim of impasse.

For workforces that are organised, bargaining typically takes place at the company level. But, some employers bargain with unions through associations that may result in a uniform agreement for certain types of work performed by numerous different employers, eg, across an industry such as construction.

Employment is generally presumed to be at-will, meaning either the employee or the employer can end the employment relationship at any time for any reason (good reason, bad reason, or no reason at all), without notice. There are four major exceptions to the employment at-will doctrine:

  • dismissal due to discrimination or retaliation in violation of a federal, state, or local law;
  • an express or implied contract, including a collective bargaining agreement;
  • an implied covenant of good faith and fair dealing; and
  • a public policy exception prohibiting discharge if it would violate the state’s public policy, ie, firing an employee for seeking worker’s compensation benefits following a work-related injury.

The law surrounding these exceptions varies considerably by state.

Unless provided for by the terms of an employment contract or collective bargaining agreement, there are not different procedures depending on grounds for dismissal.

Layoffs

In the United States, the term “layoff” is often used for instances in which an employer eliminates a number of jobs for economic reasons or due to the employer’s business need to restructure.

While a group of at-will employees may generally be dismissed by an employer at any time, the federal WARN Act and certain state law equivalents require employers to provide employees advance notice of a layoff or plant closing in some circumstances. In addition, if an employer seeks a release of federal age discrimination claims in connection with an exit incentive program or other group employment termination, the employer must provide certain disclosures to the employees being separated. Lastly, an employer may have additional obligations when dismissing a group of employees under a collective bargaining agreement or, in some cases, if the employee works in the public sector.

Unless specified in an employment contract or collective bargaining agreement, there generally are no notice requirements. There is a caveat: in some circumstances involving a plant closing or mass layoff, an employer may have to provide employees 60 days’ notice of the layoff under the WARN Act or an applicable state law equivalent. Some of these analogous state laws are more expansive in terms of coverage and employee rights.

Similarly, except as provided for by an employment contract, severance pay is not required. Employees are generally not entitled to compensation on dismissal beyond pay through their final day of employment and any other business expenses owed to them at the time of dismissal. Depending on the law of the state in which the employee works, an employee may be entitled to receive temporary and partial wage replacement called “unemployment compensation,” which is generated by the state government from a special tax paid by employers.

Because employment is generally presumed to be at-will, an employer may dismiss an employee for any reason, with or without cause, or notice, except as otherwise provided for by any applicable employment contract, collective bargaining agreement, or for a reason proscribed by federal, state, or local law, ie, an employee’s age, disability, national origin, race or sex.

In a collective bargaining relationship, there are recognised principles of just cause. The employee must have notice of the rule that is the subject of dismissal, the rule must be reasonable, the employer must have conducted a fair investigation and ascertained evidence of the violation, and the penalty must fit the “crime,” which includes an assessment of the prior points and also the employee’s seniority and work record.

Termination agreements are permissible. In general, there are no specific procedures or formalities required for termination agreements.

The Older Worker Benefit Protection Act (OWBPA) provides procedural safeguards where an employer seeks a paid release of federal age discrimination claims. Additionally, special rules exist for the release of claims based on violations of the Fair Labor Standards Act, which requires minimum wage and overtime pay for most employees. Several federal agencies, such as the Securities and Exchange Commission (SEC) and the National Labor Relations Board (NLRB), have also brought enforcement actions against employers whose release agreements impede an individual from exercising his or her right to provide truthful information to governmental or regulatory bodies.

There is no specific protection against dismissal for particular categories of employees, except as provided for by the anti-discrimination laws, the NLRA, or other federal or state statutes.

Employment is generally assumed to be at-will, meaning either the employee or the employer can end the employment relationship at any time for any reason (good reason, bad reason, or no reason at all); this is determined by state law. Typical exceptions to the employment at-will doctrine include:

  • dismissal due to discrimination or retaliation in violation of a federal, state, or local statute;
  • an express or implied contract, including a collective bargaining agreement;
  • an implied covenant of good faith and fair dealing; and
  • a public policy exception prohibiting discharge if it would violate the state’s public policy.

The law surrounding these exceptions varies considerably by state, and may include dismissals because of whistle-blowing, filing a worker’s compensation claim, or refusing to engage in unlawful conduct.

The remedies available depend on the law under which those claims are asserted, but generally include some combination of back pay, lost benefits, front pay, liquidated damages, compensatory damages (which include emotional distress damages), punitive damages, and attorneys’ fees and costs, as well as equitable relief such as reinstatement.

Discrimination

Employment discrimination is prohibited by a variety of federal, state and local laws. Federal law prohibits employment discrimination based on the protected characteristics of race, colour, national origin, sex (which includes sexual orientation), pregnancy, religion, age, disability, citizenship status, genetic information and military affiliation. Federal law also prohibits retaliation against employees who oppose unlawful discrimination or who participate in proceedings challenging unlawful discrimination.

Most state and some local laws contain analogous prohibitions, with certain jurisdictions expanding the list of protected categories to include such characteristics as marital and/or familial status, sexual orientation, gender identity, political affiliation, language abilities, use of tobacco products, public assistance status, height, weight and personal appearance.

Prohibited Practices

Prohibited discriminatory practices generally include bias in all terms, conditions and privileges of employment, including hiring, promotion, evaluation, training, discipline, compensation, classification, transfer, assignment, layoff and discharge. These activities are often referred to as “adverse actions”. To demonstrate discrimination, an employee must establish a connection between the protected characteristic and the adverse action or condition.

Harassment

Workplace harassment is also unlawful. While many harassment cases involve allegations of sexual harassment, harassment based on other protected categories is also actionable. Employer liability in harassment cases depends on who engaged in the harassment, whether the harassment resulted in a tangible employment action and the employer’s efforts to prevent and correct the harassment.

Retaliation

Finally, it is unlawful to retaliate against employees who raise concerns about unlawful discrimination or harassment. An employee need not prove that discrimination occurred in order to prove that an employer’s response to the employee’s complaints constituted unlawful retaliation. Rather, an employee simply needs to prove a causal connection between the complaints and the adverse action.

Proving Discrimination

Generally, the employee first must prove that she is a member of the protected class, she was qualified for the job and/or satisfactorily performed the job, she was subjected to an adverse employment action and the adverse employment action occurred under circumstances giving rise to an inference of discrimination. The employer must then establish that the adverse employment action was taken for a legitimate, non-discriminatory reason. If the employer does so, the employee must prove that the reason offered by the employer was a cover-up (or pretext) for discrimination.

There are also affirmative defences to discrimination claims that may apply in limited circumstances and depending on the nature of the claim. For example, employers are generally allowed to discriminate on the basis of sex, age, religion, or national origin because of a bona fide occupational qualification (BFOQ). A BFOQ exists when a specific characteristic is necessary for the performance of the job. Gender may be a relevant factor, for example, in job performance for a model of women’s clothing. The BFOQ defence is very narrowly restricted and should not be relied on in most situations.

Remedies available for discrimination claims depend on the law under which those claims are asserted, but generally include some combination of back pay, lost benefits, front pay, liquidated damages, compensatory damages (which include emotional distress damages), punitive damages, and attorneys’ fees and costs, as well as equitable relief such as reinstatement.

Federal employment agencies such as the EEOC and DOL have authority to investigate certain employment claims and even litigate those claims in federal court on behalf of employees. These agencies also have authority to hear such employment claims through an administrative law judge.

Litigation

American employment litigation in the courts is handled by attorneys on behalf of their clients. There is a well-established plaintiffs’ bar that represents individuals and classes, typically on a contingency fee basis. For employer and company defendants, there is also a well-established defence bar. Cases are resolved through the representation of counsel, either by dispositive motion, settlement, or jury verdict.

Depending on the nature of the claims and the parties, employment disputes may be litigated in either federal or state court. Federal courts have jurisdiction to hear cases arising out of the federal employment laws, employment cases in which the USA is a party and employment cases between citizens of different states when there is more than USD75,000 in controversy. The federal court system is comprised of 12 judicial circuits that are geographically divided across the country. Each circuit is divided into a number of geographic districts, with a trial court in each district. Decisions of these trial courts may be appealed to the district’s corresponding circuit court of appeals, and ultimately to the Supreme Court. State courts have jurisdiction to hear cases arising out of state employment laws. Each state has a court system that is comprised of trial courts, courts of appeals, and a state supreme court.

Class Action Claims

Class action claims are available in employment disputes, unless the employee has waived the right to participate in such claims, such as by signing an employment contract that prevents the employee from pursuing class claims. The United States Supreme Court decision in Wal-Mart Stores, Inc. v Dukes, 564 US 338 (2011) was a landmark decision interpreting the class action commonality requirement as a requirement that the class present the capacity to generate common answers apt to drive the resolution of the litigation. More recently, the Supreme Court’s Epic Systems Corp. v Lewis decision (138 S. Ct. 1612 (2018)) permits employers to implement and enforce arbitration agreements with class action waivers.

These are matters that on occasion are addressed by the legislative body, and the current legal landscape could change with respect to enforcement of arbitration provisions through the legislative process.

Employment disputes may be submitted to arbitration. Many employers prefer arbitration because the proceedings are less public and generally less expensive. 

Pre-dispute arbitration agreements are generally enforceable. The United States Supreme Court has recognised a liberal federal policy favouring arbitration and has permitted employers to require employees to submit all employment-related claims to arbitration on an individual basis (and not as part of a class action).

Attorneys’ fees and costs are available under some employment statutes. For instance, Title VII and other federal anti-discrimination statutes permit the prevailing party to recover attorneys’ fees.

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Trends and Developments


Authors



Shawe Rosenthal LLP was one of the first law firms in the country devoted exclusively to the representation of management in labour and employment matters, and represents employers throughout the United States in federal and state courts and arbitral forums, as well as before the Equal Employment Opportunity Commission, the National Labor Relations Board, the Department of Labor and other administrative agencies. The firm's 15 attorneys have prior experience in judicial clerkships and federal agencies, as well as large and small firms, bringing a wealth of practical experience on labor and employment matters. Shawe Rosenthal belongs to two major alliances of management labour and employment lawyers: The Employment Law Alliance and Worklaw Network. These alliances afford Shawe Rosenthal access to resources of the highest calibre across the country and around the world to better serve its clients, wherever they may be.

Employers in the United States must comply not only with federal law, but also with the laws of the states, and even municipalities, in which they operate. Given the highly partisan environment in the current US Congress, many states and municipalities have taken the initiative to pass employment-related legislation that has foundered at the federal level.

Over the past several years, we have seen certain trends in the types of laws that have been widely considered and enacted at the state and local level, including minimum wage, paid sick and safe leave, medical and recreational marijuana, pay equity, sexual orientation and gender identity discrimination, sexual harassment, worker misclassification, and non-competition agreements. Furthermore, in light of the COVID-19 pandemic, state and local jurisdictions have also implemented laws, ordinances, orders, and other guidance applicable to the workplace.

COVID-19 Laws and Ordinances

The COVID-19 pandemic has had a devastating impact in the workplace. State and local jurisdictions have moved to fill in gaps in the federal Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security Act. At the state and local levels, these initiatives have taken many forms, including the following: shut-down orders for non-essential businesses and gradual reopening restrictions, face covering/mask requirements, emergency paid leave for COVID-19-related reasons, workers’ compensation presumptions, enhanced unemployment benefits, business liability immunity, travel restrictions and quarantine orders. As of the end of July 2020, however, only the state of Virginia has issued mandatory workplace safety standards related to COVID-19.

Because these efforts are specific to each state and local jurisdiction, and because this is a fast-changing situation, employers must be careful to check the current applicable requirements and restrictions in the jurisdictions in which they do business – including for newly-remote workers in another state.

Minimum Wage

Since 2009, the federal minimum hourly wage has been USD7.25. A full-time worker making minimum wage will earn USD15,080 a year, which is slightly above the current federal poverty level for a one-person household (USD12,140) and below that of a two-person household (USD16,460). For many years, workers' advocacy organisations have sought to increase the minimum wage, and their efforts found momentum in the “Fight for USD15,” a labor union-driven campaign to raise the minimum wage to USD15/hour. 

Although an increase in the federal rate does not seem likely any time soon, 30 states and the District of Columbia currently have minimum wage rates that are higher than the federal rate. A large number of municipalities have also increased their rates. Many of those rates are subject to additional scheduled increases over the next several years.

However, even in those states with higher minimum wage rates, there has been a push to increase wages even further, to the USD15 mark. In the past year, the number of states scheduled to hit the USD15 rate has increased from three to seven: California (by 2022), Connecticut (by 2023), Illinois (by 2025), Maryland (by 2025), Massachusetts (by 2025), New Jersey (by 2024), and New York (increases tied to inflation rate, capped at USD15). In addition, the District of Columbia has also implemented a USD15 wage (by 2020).

Family and Medical Leave Laws, Including Paid Sick Leave

The United States is the only advanced economy without a federal law requiring employers to provide paid sick leave. States and municipalities have sought to fill that void, with paid sick and safe leave legislation finding increasing success at that level, but creating a patchwork of requirements for multi-state employers.

Thus far, thirteen states (Arizona, California, Colorado, Connecticut, Maryland, Massachusetts, Michigan, New Jersey, New York, Oregon, Rhode Island, Vermont, Washington) and the District of Columbia have passed laws requiring private employers to provide paid sick and safe leave to employees. Sick leave legislation has been proposed in many other states. In addition, numerous local municipalities have enacted such laws. Of particular interest, in 2019, Maine and Nevada passed laws mandating paid leave that may be used for any purpose, including sick and safe reasons. These most recent laws may herald a new and dramatic expansion of paid leave rights for employees.

Sick and safe leave

In general, the sick and safe leave laws specify that the leave may be used for multiple reasons, including for needs arising from domestic violence (ie, “safe” leave), to care for an employee’s or family member’s illness or injury, and for preventative care. Some of the laws provide for additional reasons, such as parental leave following the birth/adoption/foster placement of a child, closure of the workplace or a child’s school due to a public health emergency, household quarantine, and even leave to attend school conferences or meetings. The family members covered by the laws encompass a wide range of individuals, typically including a spouse, child, parent, grandparent, grandchild, and sibling, by blood or adoption, and sometimes in-law relationships.

Some of the laws include legal guardians and those standing in loco parentis, and even unrelated individuals with a close personal relationship to the employee. Most of the laws specifically allow employers to verify the need for leave, although the conditions under which verification may be required differ. Most, but not all, do not require payout of unused leave.

The laws vary greatly with regard to the size of employers covered – some laws ease the burden on smaller employers by reducing the amount of leave that must be granted or requiring only the provision of unpaid leave. They also vary in the amounts of leave granted overall, ranging from 24 to 80 hours a year, as well as whether and how much leave must be carried over to the next year, and how much leave may be used in a year. In addition, notice provisions differ amongst the various laws.

State-run benefits programme

A related type of legislation that has been receiving increased interest sets up a state-run benefits programme, through which employees may receive benefits during certain family and medical leaves. Thus far, eight states (California, Connecticut, Massachusetts, New Jersey, New York, Oregon, Rhode Island, and Washington) and the District of Columbia have enacted such benefits programmes, and similar legislation is pending in a number of other states. 

Depending on the state, the benefits are funded through employer contributions, employee contributions, or a combination of the two. Employees may receive benefits during parental leave and leave for personal or family illness and injury. Some states also include other qualifying reasons, such as qualifying exigencies arising from a family member’s call to active duty, bone or organ marrow donation, or domestic violence. The definition of family member also varies from state to state, with some laws taking an expansive view of the term. In addition, the period of paid leave benefits ranges widely, from four weeks up to 52 weeks. Benefit amounts also vary.

Medical and Recreational Marijuana

Medical marijuana use has been legalised in 33 states and the District of Columbia. Recreational marijuana use has been legalised in 11 states, as well as the District of Columbia. Yet, marijuana is still illegal under the federal Controlled Substances Act, while regulations applicable to Department of Transportation-covered employers prohibit the use of marijuana by covered employees. This, along with varying and sometimes contradictory statements of policy by the federal government, has led to some tension and confusion with regard to the use of marijuana by employees.

Under federal and state disability laws, employers are required to provide reasonable accommodations to disabled employees that enable them to perform the essential functions of their jobs. The federal Americans with Disabilities Act expressly excludes illegal drug use from the definition of a qualified individual with a disability. It is silent on whether permitting the use of medical marijuana is a reasonable accommodation for an otherwise disabled employee; the fact that marijuana is still illegal under federal law suggests that it would not. The answer may be different, however, under state law.

At least one state’s law (Nevada) specifically requires employers to attempt to make reasonable accommodations for the medical needs of an employee who uses medical marijuana. On the other hand, many states’ laws expressly state that employers are not required to “accommodate” the use of medical marijuana during work hours or on work premises. The remaining states’ laws are silent on accommodations. Under all these laws, employers may prohibit the use or being under the influence of marijuana while at work – the only question is whether off-duty use must be permitted.

Court decisions

Several court decisions have examined the interplay of state law and federal law, examining closely the language of the state law, while noting that the Controlled Substances Act does not regulate the employment relationship or expose employers to liability, and that state law may thereby require employers to tolerate the off-duty use of medical marijuana. See Noffsinger v SSC Niantic Operating Co., LLC, 2018 U.S. Dist. LEXIS 150453 (D. Conn. Sept. 5, 2018); Barbuto v Advantage Sales & Mktg., LLC, 78 N.E.3d 37 (Mass. 2017); Callaghan v Darlington Fabrics Corp., No. PC-2014-5680 (R.I. Super. Ct., May 23, 2017). On the other hand, a Maine state court found the CSA to preempt state law. Bourgoin v Twin Rivers Paper Co., 187 A.3d 10, 14 (Me. June 14, 2018). Other court decisions have offered protections to medical marijuana users under state discrimination law without reference to federal law. See Whitmire v Wal-Mart Stores, Inc., 2018 U.S. Dist. LEXIS 198407 (D. Ariz. Nov. 21, 2018); Gordon v Consolidated Edison, Inc., 2018 N.Y. Misc. LEXIS 2105 (N.Y. Sup. Ct. May 29, 2018). Thus, employers will need to pay close attention to both the language of the particular state law at issue, as well as how courts in those states react to this issue.

Recreational marijuana

A different analysis applies in the context of the recreational use of marijuana. None of the recreational use statutes requires employers to allow such use, whether at work or off-duty. Some states have statutes that prohibit an employer from taking adverse action against employee for legal off-duty conduct. Thus far, however, the argument that recreational or even medical marijuana use is legal under state law has not been successful, with the only court to address the issue noting that such use is still illegal under federal law. See Coats v Dish Network, LLC, 350 P.2d 849 (Colo. 2015).

2019 saw the introduction of another aspect of marijuana testing legislation. First New York City, and then Nevada, banned the pre-employment testing for marijuana use. This type of legislation is likely to find traction in other states as our society grows increasingly tolerant of marijuana use, despite the continued federal prohibition.

Pay Equity

Although Congress passed the Equal Pay Act in 1963, women’s earnings continue to lag behind those of their male counterparts. According to a Pew Research Center analysis of US median earnings, women earned 85% of what men earned in 2018 (a slight improvement over 2017, when women earned 82%). Thus, recent state and local laws have targeted this pay gap through different approaches.

Almost all states have also passed equal pay laws, requiring equal pay for equal work regardless of sex, or laws that prohibit discrimination in wages based on sex. Recently, however, states have taken measures to strengthen these laws. Some have added protected characteristics, such as race or gender identity. They also have extended the time period in which employees may sue, or more specifically defined factors that may be taken into account in establishing legitimate wage differentials.

In addition, an increasing number of states have added pay transparency provisions to their equal pay laws or passed separate pay transparency laws. These laws protect workers’ ability to freely discuss their pay, with the thought that the transparency will encourage equity in compensation. Interestingly, this right already existed for non-management employees under the National Labor Relations Act, regardless of union or non-union status. Additionally, President Obama signed Executive Order 13665 in 2015, providing these protections for employees of government contractors.

Another approach that has been taken by at least 16 states and eight municipalities is a salary history ban, under which private employers are prohibited from asking about an applicant’s compensation history. The premise behind such laws is that compensation is often based on prior earnings, and since women traditionally have been underpaid or arguably are less assertive in negotiating pay than men, this reliance on past salary perpetuates the wage gap.

Sexual Orientation and Gender Identity Discrimination

Although Title VII, the primary federal anti-discrimination laws prohibiting discrimination based on “sex,” does not specifically address sexual orientation or gender identity, the US Supreme Court found that “sex” incorporates sexual orientation and transgender status. Prior to the Supreme Court’s landmark ruling in mid-2020, however, at least 21 states and the District of Columbia passed laws specifically prohibiting discrimination based on sexual orientation and gender identity discrimination, while one state prohibits only sexual orientation discrimination.

Sexual Harassment

The #MeToo movement, starting in 2017, brought about a rapid wave of legislation at the state level, covering a wide range of measures intended to combat sexual harassment. These laws have three primary areas of focus:

  • non-disclosure or confidentiality provisions in settlement agreements;
  • mandatory arbitration or “waiver of rights” agreements; and
  • training and policies.

Non-disclosure and confidentiality agreements

The concern about non-disclosure or confidentiality provisions is that they may protect the identity of alleged harassers, thereby enabling them to continue harassing others. On the other hand, such provisions may be desired by victims in order to protect their privacy. Additionally, some employers may be loath to enter into settlements without some guarantee of confidentiality. At the federal level, Congress included a provision in the Tax Cuts and Jobs Act of 2017 that eliminated tax deductions for payments made by a company or organisation in connection with the settlement of sexual harassment or abuse claims, if the settlement agreement contained a non-disclosure or confidentiality provision that prevents the disclosure of the terms of the agreement. Several states have also enacted laws that restrict – although they do not ban outright – the use of such provisions in sexual harassment settlement agreements.

A variation on these non-disclosure laws arises outside of the settlement agreement context, and more broadly prohibits employment agreements that would prevent employees from discussing sexual harassment in the workplace. It is worth noting that the ability of non-management employees to engage in this conduct is already protected by the National Labor Relations Act.

Arbitration and waiver of rights agreements

Another primary area of focus in this type of state legislation is mandatory arbitration and “waiver of rights” agreements. Many employers require employees to sign an agreement at the time of hire that binds the parties to arbitrate any disputes that arise in the course of the employment relationship. Other agreements may require employees to waive certain substantive rights or remedies, which may include the right to a jury trial. The concern that has been expressed about such agreements are that they force employees to give up their right to go to court and that they may protect the identity of harassers. The laws that have been enacted and that are being considered in many other states prohibit such agreements with regard to sexual harassment claims. At least one court, in New York, has found that the state’s mandatory arbitration ban is preempted by the Federal Arbitration Act; whether other courts will agree is an issue that has yet to be resolved.

Training and policies

The last primary area of focus is training and policies. Prior to 2018, three states – California, Connecticut and Maine – required employers to provide certain employees with sexual harassment prevention training. Since then, several other states – Delaware, Illinois, and New York – have also passed mandatory training laws, and a number of other states are considering similar legislation. With regard to policies, a number of the recently enacted laws mandate the development of a written anti-harassment policy that meets certain specified requirements.

The individual laws may also contain other provisions aimed at strengthening sexual harassment protections, ranging from reporting to the state, loosening the definition of “harassment,” bans on settlement agreement no-rehire provisions, as well as expanding both remedies and statutes of limitations on sexual harassment claims.

Worker Misclassification

Particularly with the rapidly expanding “gig” economy, there has been heightened interest in the issue of worker misclassification – where employees are improperly classified as independent contractors who are not entitled to the benefits and protections granted to employees. Employers additionally avoid employment taxes on compensation paid to independent contractors, which may be a significant cost saving. While many individuals may be called “independent contractors,” the reality is that the employing entity may exercise such control over aspects of the relationship to render the worker an employee.

Consequently, there have been a number of state laws enacted to address worker misclassification. These laws typically set forth stringent criteria that must be met in order to be deemed an independent contractor. They may require that the independent contractor be certified or given specific mandatory forms. They also typically impose civil or even criminal penalties, monetary and otherwise, on employers who engage in misclassification. Other states have set up task forces to study the issue for future action.

In addition, state courts have weighed in on the issue. For example, the California Supreme Court issued a landmark decision, Dynamex Operations West, Inc. v Superior Court of Los Angeles, 4 Cal. 5th 903 (Cal. Sup. Ct. 2018), announcing a new “ABC” test for determining whether a worker is an employee or an independent contractor. Under the test, which has been adopted by statute in other states, the individual will be presumed to be an employee unless the employer can show each of the following:

  • that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the work contract and in fact;
  • that the worker performs work that is outside the usual course of the hiring entity's business; and
  • that the worker is customarily engaged in an independently established trade, occupation or business.

Non-competition Agreements/Covenants Not to Compete

The validity of non-competition agreements that restrict an employee’s ability to be employed in the same line of work is a matter of state law, and it is an issue that has come under increasing attack from state legislatures. States are taking an aggressive approach to limiting the use of non-competition agreements, particularly with regard to low-wage workers. In the past year or so, Illinois, Maine, Maryland, New Hampshire, and Washington have banned such non-competition agreements altogether, while Massachusetts has significantly weakened non-competition agreements generally. Similar legislation has been proposed in other states.

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Ogletree Deakins is a labour and employment law firm representing management in all types of employment-related legal matters. Ogletree Deakins has more than 900 attorneys located in 53 offices across the United States and in Europe, Canada, and Mexico. The firm represents a diverse range of clients, from small businesses to Fortune 50 companies. The firm has been recognised for its expertise, achieving exceptional rankings year-on-year.

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Shawe Rosenthal LLP was one of the first law firms in the country devoted exclusively to the representation of management in labour and employment matters, and represents employers throughout the United States in federal and state courts and arbitral forums, as well as before the Equal Employment Opportunity Commission, the National Labor Relations Board, the Department of Labor and other administrative agencies. The firm's 15 attorneys have prior experience in judicial clerkships and federal agencies, as well as large and small firms, bringing a wealth of practical experience on labor and employment matters. Shawe Rosenthal belongs to two major alliances of management labour and employment lawyers: The Employment Law Alliance and Worklaw Network. These alliances afford Shawe Rosenthal access to resources of the highest calibre across the country and around the world to better serve its clients, wherever they may be.

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