US Regional Employment 2023

As any worthwhile annual legal review should, this guide takes the opportunity to look back on the year that was in employment law and to look ahead at the future of the workplace. As the country finally settles into what seems like a return to “business as usual” following the heights of the global COVID-19 pandemic, many aspects of the traditional workplace and employment law have evolved, and continue to evolve.

The “New” Work Environment

In large part owing to COVID-19, the physical work environment itself remains at the forefront of employment law developments in 2023. Although many employers have prioritized a renewed focus on bringing workers back to the office, remote and hybrid work arrangements have become increasingly prevalent. In many ways, the changing of the physical work environment has shifted the legal paradigm on many issues, and it is therefore important for the conscientious employer to understand how this new reality affects their potential exposure. Wage and hour issues may be the most relevant, but underappreciated, aspect of the shifting paradigm. With employees working from home, employers have less insight into, and control over, the physical working space, which means tracking time worked, breaks, expenses, and considerations regarding “off the clock” work all become more difficult to address.

Social Media Activity

Employees’ social media activity also continues to be an area of concern for employers, whether their workforce is in-person or remote. Social media platforms are powerful vehicles for employees to share their opinions on political issues, express workplace complaints, and discuss other work-related issues instead of reporting those issues through traditional channels. Employers must be familiar with the protections extended to employees by statutes and/or case law and be mindful of the potential legal pitfalls of monitoring employees’ online activity.

New Approaches to Anti-discrimination and Anti-harassment

Other work environment considerations should remain top of mind for the 2023 employer. Five years since the “Me Too” movement began, the trend toward more thoughtful and robust protections of employees in the workplace continues to shoot upward. Employers are taking new approaches to anti-discrimination and anti-harassment trainings, and new theories regarding discrimination and harassment continue to emerge. Meanwhile, legislative action on the federal, state and local levels has prompted legal changes targeting sexual harassment in the workplace. This effect has extended even to the termination phase of the employment relationship, as new laws seek to prohibit employers from enforcing arbitration and nondisclosure provisions in agreements bearing on claims of harassment and discrimination. It remains unclear whether the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2023 only allows sexual harassment/assault claims to be exempt from arbitration or whether courts can also exempt other non-sexual harassment claims that are asserted in the action from arbitration and submit them to jury.

More protected characteristics

New anti-hair and body discrimination laws are also noteworthy for employers in this new era. Today, 23 US states and territories have enacted legislation that prohibits race-based hair discrimination, and six jurisdictions have enacted legislation protecting employees from discrimination based on their height and weight. As state legislatures push toward adding hair, height and weight to the protected characteristics list, employers should be aware of any anti-body discrimination laws in the jurisdictions where they conduct business and where their employees are located, along with reviewing their handbooks to ensure they comply with governing law.

Hair and body are by no means alone in terms of newly recognized protected classes. In the last several years, numerous jurisdictions, including California, DC, Delaware, Hawaii and New York City have enacted protections for employees’ reproductive health decisions – an issue that has become increasingly salient following last year’s landmark US Supreme Court decision in Dobbs v Jackson Women’s Health Organization. Likewise, California, Connecticut, Montana, New Jersey, New York, Nevada and Rhode Island have all recently enacted laws prohibiting discrimination based on lawful off-duty cannabis use; yet because marijuana remains a Schedule I Controlled Substance (and has mind-altering effects), employers may face challenges navigating these new protections. Earlier this year, California became the first state to recognize caste among protected characteristics, and more jurisdictions may follow. 

Whistle-Blowing

In the whistle-blower arena, the US Securities and Exchange Commission (SEC) continues to issue sizable awards for whistle-blowers who report their employers for violating the SEC’s rules and regulations or federal law. The magnitude of these awards incentivizes whistle-blowers to come forward and report any violations, making it necessary for employers to be familiar with the protections afforded under whistle-blower provisions, such as the Sarbanes-Oxley Act (SOX), to avoid legal and financial risks.

NLRB Activity

This past year also served as an important reminder that the National Labor Relations Act applies to all employees, and even employers with non-unionized workforces cannot ignore the many recent and important decisions of the National Labor Relations Board (NLRB). The shifting political tide of the agency’s composition – often changing when the Presidency changes hands between the two major political parties – puts traditional labor law precedents at particular risk of upheaval. The past few years have seen many key decisions overturned, especially as General Counsel Jennifer Abruzzo has taken a strong, pro-employee approach to enforcement. The most consequential recent NLRB decision virtually prohibits non-disparagement and confidentiality provisions in severance agreements, but the NLRB has also aggressively targeted standards concerning bargaining unit determinations, make-whole remedies for unfair labor practices, dress codes, workplace rules, employee/independent contractor classification, union recognition, unilateral employer changes, and employee protected activity. The active NLRB has been joined by an active environment of worker organizing that has seen unions continue to win increasing numbers of representation elections.

DEI Comes Under Scrutiny

The upswing in union organizing efforts serves as a reminder that the workplace, and the legal context in which it exists, is deeply tied to wider social, cultural and economic developments. Perhaps the biggest effect on employment law will result not from a pure employment law issue at all, but from a major decision in the higher education context. In Students for Fair Admissions v Presidents & Fellows of Harvard College, the US Supreme Court held that the race-conscious admissions programs at Harvard and the University of North Carolina violated the Equal Protection Clause of the 14th Amendment. Although the decision has no immediate, direct effects on private employment, employers are still likely to feel ripple effects as hiring strategies and diversity, equity and inclusion (DEI) programs come under increasing scrutiny.

Use of AI

Changes to the law with respect to the point of hire are expected in other ways too. As artificial intelligence (AI) tools become more prevalent, their use in the employment context, and the hiring process in particular, poses legal risks. Federal, state and local governments have begun scrutinizing these AI tools because of their potential ability to perpetuate bias or discrimination on the basis of protected characteristics. Thus, before employing such tools in the workplace, the Equal Employment Opportunity Commission is encouraging employers to determine if any selection procedures that use AI tools discriminate on a basis prohibited by Title VII, even if the tools are designed or administered by other entities. Meanwhile, states and localities have introduced sweeping pay transparency laws with which employers must comply when advertising open positions. Who and how employers hire is as central to employment law as ever.

This practice guide seeks to inform employers about the ever-changing employment law landscape and to explain how new cases, legislation, and employment dynamics impact employers’ practices and legal risks across a variety of jurisdictions.