Introduction

In 2023, after three years of facing various restrictions and reactions due to COVID-19, transformations are underway in terms of the nature of work and the workplace – and how HR, decision-makers and organizations worldwide are navigating and leading this change. Along with these transformations comes a series of changes in legal decisions, legislative news, and regulatory updates.

With these shifts in mind, this overview of labor and employment trends and developments will highlight the latest updates on workplace violence, the Federal Trade Commission (FTC)’s proposed ban on non-compete agreements, and the Pregnant Workers Fairness Act (PWFA) and the Providing Urgent Maternal Protections for Nursing Mothers Act (the “Pump Act”).

Employer Obligations Amid Nationwide Rise in Workplace Violence

Reports of mass shootings and other acts of violence are emerging more and more frequently in the USA. Although such acts may occur anywhere, these incidents are becoming more prevalent in the workplace. In addition to these more notable instances of violence, everyday acts of workplace violence affect millions of Americans each year.

The Bureau of Justice Statistics, the Bureau of Labor Statistics and the National Institute for Occupational Safety and Health published a study estimating an annual average of 1.3 million workplace violence incidents each year between 2015 and 2019. During that same period, workplace homicides increased by 11%.

In its most recently published data, the Bureau of Labor Statistics found that there were 392 homicides and more than 37,000 injuries in the workplace resulting from intentional violence in 2020. It further found that sales, transportation, management, construction and production are the five occupational groups with the highest rates of workplace homicide.

In response to these growing rates of violence and homicide in the workplace, the Occupational Safety and Health Administration (OSHA) is placing greater emphasis on employers’ efforts to prevent violence in the workplace. OSHA defines “workplace violence” as “any act or threat of physical violence, harassment, intimidation, or other threatening disruptive behavior that occurs at the work site”. Workplace violence may range from simple threats and verbal abuse to more serious violations such as physical assault and homicide. Such acts of violence may come from co-workers and/or third parties.

Although OSHA does not have a specific standard on workplace violence for all employers, the OSHA Act’s General Duty Clause requires employers to provide a safe workplace for employees, which OSHA argues includes taking necessary steps to minimize the threat of workplace violence. The agency takes the position that every employer is required to comply with this obligation and do what they can to keep employees safe from workplace violence.

OSHA’s recent emphasis on violence reduction in the healthcare setting can serve as a guide to what is expected from employers in all other fields. In March 2023, OSHA convened a panel of leaders in the healthcare industry to begin developing a specific standard for the prevention of workplace violence in the healthcare setting.

In the spring of 2023, OSHA issued a citation and penalty to a hospital following a workplace violence incident. OSHA’s Houston South area director, Mark Briggs, commented: “Employers must have certain effective policies and procedures in place so employees do not have to work in fear of their safety.” OSHA is looking to expand its emphasis on reducing workplace violence to other industries in which the government has noted high rates of workplace violence.

In addition to increased federal oversight, states around the country are beginning to enact specific legislation targeted at workplace violence reduction. In Texas, Governor Greg Abbott signed a bill requiring hospitals and other healthcare providers to enact specific workplace violence prevention policies by September 2024. The bill will require all employers to post a notice to employees containing contact information for the Texas Department of Public Safety’s Workplace Violence Hotline.

Similarly, the California State Senate passed a bill targeting the retail industry. SB 553 requires employers to provide employees with active shooter training and keep a log of workplace violence incidents. The bill also allows them to petition for “workplace violence restraining orders” on behalf of employees.

Following this uptick in state regulatory activity, now is the time for employers to review and update their workplace violence prevention policies with the aim of improving employee safety. In doing so, employers can work to prevent these incidents before they occur.

Employers should have a zero-tolerance policy for violence in the workplace. The policy should lay out the steps the employer is taking to reduce the threat of violence. Of course, it is impossible to fully prevent violence in the workplace, but the efforts the employer makes to reduce the risk are crucial. It is important for employers to train their employees on violence prevention and have plans in place for common workplace violence scenarios. OSHA recommends a number of steps an employer should consider in order to decrease the threat of workplace violence and maintain a safe and secure workplace in the Workplace Violence Factsheet available on its website.

If an employee becomes the victim of workplace violence despite the steps the employer takes to prevent it, it is important to document the incident, provide prompt medical attention to the employee if necessary, and report the incident to the police immediately (and OSHA if applicable).

Where there are concerns about a company’s workplace violence prevention program, it is advisable to consult an attorney with experience of drafting workplace violence reduction policies.

Potential Consequences of FTC’s Proposed Non-compete Ban

On 5 January 2023, the FTC released a Notice of Proposed Rule that would essentially ban all non-compete agreements. If the proposed rule or a similar rule is adopted by the FTC, it would have a profound impact on all US businesses, especially those that utilize non-compete agreements to protect their trade secrets and confidential business information.

The proposed rule would ban non-compete agreements between employers and employees for all US private employers, regardless of the size of the employer (ie, the number of employees or amount of revenue), the position or title of the employee (from general laborers all the way to the CEO), or the business of the employer (eg, sandwich shop, hospital, insurance broker, tech firm). The proposed rule does not apply to franchiser/franchisee relationships or between two businesses (ie, in the contractor/subcontractor context).

Ability to contract and negotiate

The proposed rule would take away the right of individuals to bargain for restrictive covenants, such as non-competes, in return for a form of compensation or job security. Both employers and employees benefit from this arrangement, as employers are able to protect confidential information and company goodwill while employees have the opportunity to receive increased salaries and/or severance packages upon their departure from former employers. The proposed rule would strip away this exchange, leaving both employers and employees vulnerable.

Additionally, employers and workers would have to renegotiate their prior agreements, as the proposed rule prohibits not only the creation of non-compete agreements but also the maintenance of existing agreements. The employer has the burden of providing notice to workers in an individualized communication that the agreement is no longer valid; this burden also extends to notifying workers who formerly worked for the employer. As such, businesses will want to consider the effect the proposed rule would have on their ability to contract and bargain with workers, as well as the obligations the rule will place on them if enacted.

Buying and selling businesses

An additional concern is the rule’s proposed exception for sellers and buyers, whereby only a substantial owner or member of a business could enter into a non-compete agreement. “Substantial owner” is defined as an owner, member or partner holding at least a 25% ownership interest in a business entity. Consequently, those who hold a 15% or 20% interest would be prohibited from entering into a non-compete agreement with the prospective buyer. As such, the business entity may struggle to sell itself because buyers may not want to purchase an entity where a 20% interest-holding owner could essentially leave the company and open up a competing company the next day. Thus, this proposed rule would likely affect the marketability of businesses.

Alternatives to the proposed rule

The FTC requested public comment regarding potential alternatives to the proposed rule, including matters such as:

• whether the ban should be a rebuttable presumption rather than a categorical ban; and
• whether the rule should apply to all workers or whether there should be exemptions or different standards for some workers.

Under the first alternative, it would be presumptively unlawful for an employer to use non-compete agreements; however, the non-compete would be permissible if the employer met a certain evidentiary standard, which has yet to be articulated. Employers would have to prove that the non-compete is unlikely to harm consumers or else be able to identify some competitive benefit that offsets the apparent or anticipated harm.

Under the second alternative, there would be a more lenient standard – such as a rebuttable presumption or a total exemption – for workers who meet an existing exemption under the Fair Labor Standards Act or whose earnings are above a certain threshold, etc. More variations of the standard could be based on a worker’s job function or occupation, a worker’s earnings, or a combination of job function/occupation and earnings.

Further alternatives

The proposed rule does not expressly prohibit what are known as non-solicit and/or non-service provisions – ie, those provisions that do not prohibit an employee from working for a competitor but do prohibit that employee from soliciting and/or servicing the employer’s customers on behalf of a competitor. The proposed rule also specifically states that a non-disclosure agreement would be banned if it is “written so broadly that it effectively precludes the worker from working in the same field after the conclusion of the worker’s employment with the employer”.

The proposed rule is also penal in nature. Employers that enter into (or attempt to enter into) covered agreements with employees could be found to be engaged in unfair competition. Moreover, if an employer entered into a non-compete agreement with an employee in the past, it is obligated to rescind the agreement and individually notify that employee that the non-compete is no longer valid. If it does not, the employer may be found to be engaged in unfair competition.

Legal challenges faced by the FTC in light of the proposed ban on non-competes

The FTC voted 3-1 in favor of this proposed rule, with then-commissioner Christine Wilson the lone dissenter. She noted that the FTC’s rulemaking authority for non-compete clauses is vulnerable to several legal challenges. The majority argued that non-compete clauses are exploitative and coercive, thus making them unfair.

Some of the legal challenges addressed include the following:

• the FTC lacks authority to engage in “unfair methods of competition” rulemaking;
• the major questions doctrine applies and the FTC lacks clear congressional authorization to undertake this initiative; and
• assuming the agency does possess the authority to engage in this rulemaking, it is an impermissible delegation of legislative authority under the non-delegation doctrine.

Authority to engage in unfair methods of competition rulemaking

Under Section 6(g) of the FTC Act, the FTC is authorized to “make rules and regulations for the purpose of carrying out the provisions of the subchapter”. The FTC has consumer protection rulemaking authority under the Magnuson-Moss Act; however, there is a lack of clarity as to whether it can engage in substantive competition rulemaking since the FTC Act expressly excluded rulemaking for unfair methods of competition.

Major questions doctrine

The major questions doctrine has been applied when questioning the authority given to an agency, as well as whether Congress meant to confer the power the agency has asserted. The FTC’s action will trigger the application of the doctrine if the FTC claims to:

• resolve a matter of political significance;
• regulate a significant portion of the American economy; or
• intrude in an area that is the particular domain of state law.

Wilson argued that the proposed rule banning non-compete provisions implicates all these claims, given that:

• Congress has already rejected bills proposing to ban non-compete clauses;
• approximately 30 million workers are bound by non-compete clauses; and
• regulation of non-compete clauses has historically been in the domain of state law, with 47 states permitting non-compete clauses in some capacity.

If a court determines that the non-compete clause rule is a major question, the FTC would have to show clear congressional authorization to impose a regulation banning non-compete clauses (which, as addressed previously, is not clearly authorized).

Non-delegation doctrine

The non-delegation doctrine proposes that Congress cannot delegate its legislative power to another branch of government, including agencies. While the US Supreme Court has approved congressional authorization for the FTC to prohibit unfair methods of competition, it was under the guise of the FTC acting as a quasi-judicial body rather than using its legislative power to promote fair competition.

There are additional legal hurdles that the FTC may face as it attempts to regulate competition, all of which remain to be seen until a final ruling is issued in 2024. Nevertheless, it is clear that employers that utilize non-compete agreements must monitor this issue closely – given that, if any rule is enacted, it will likely require action to contest or ensure compliance with the rule.

Equal Employment Opportunity Commission Issues Proposed Regulations and Accommodations for Pump Act and PWFA

At the end of 2022, President Biden enacted two laws providing protections to pregnant women and nursing mothers in the workplace – namely, the PUMP Act and the PWFA.

Effective June 27, 2023, the PWFA requires employers nationwide with at least 15 employees to provide reasonable accommodations to employees affected by a physical or mental condition due to pregnancy, childbirth, or related medical conditions – unless the employer can show that doing so would impose an undue hardship.

The PWFA expanded protections against pregnancy discrimination under Title VII of the Civil Rights Act and access to reasonable accommodations under the Americans with Disabilities Act (ADA) for expecting and postpartum employees by requiring that employers offer reasonable accommodations to employees who are pregnant or who have a condition related to pregnancy or childbirth.

In addition to requiring employers to make accommodations, the law bars employers from:

• denying employment opportunities to women based on their need for reasonable accommodations related to pregnancy, childbirth, or related medical conditions;
• forcing a qualified employee to accept an accommodation other than any reasonable accommodation arrived at through an interactive process;
• requiring such employees to take paid or unpaid leave if another reasonable accommodation can be provided (or taking adverse action in terms, conditions, or privileges of employment against a qualified employee requesting or using such reasonable accommodations); and
• taking adverse employment action against a qualified employee who requests or uses a reasonable accommodation needed for pregnancy, childbirth, or related medical conditions.

Proposed regulations for the PWFA

On August 11, 2023, the Equal Employment Opportunity Commission (EEOC) published its proposed regulations on the implementation of the PWFA. The public may comment on the proposed regulations until October 10. Although the regulations are subject to change based on public comment, the proposed regulations cover a wide variety of topics that employers should be prepared to address. The regulations adopt many terms that employers will already be familiar with from their compliance with the ADA, such as “qualified individual”, “reasonable accommodation”, “essential function”, “interactive process” and “undue hardship”.

However, there is one major difference worth noting. In a departure from the meaning of “qualified individual” in the ADA context, an individual under the PWFA may be “qualified” (and entitled to accommodation and non-discrimination) even if the individual cannot perform one or more essential functions of the job, as long as:

• the pregnancy-related condition that causes the inability to do the essential function(s) is “temporary”;
• the individual can perform the essential function(s) “in the near future”; and
• the employer can reasonably accommodate the employee’s inability to perform the essential function(s) of the job.

The proposed regulations define “in the near future” as 40 weeks from the employee not being able to perform the essential job function(s).

Covered conditions

The proposed regulations provide additional clarity that the PWFA is intended not only to cover pregnancy but also a broad range of pregnancy-related conditions, including:

• abortion;
• current, past, or potential pregnancy;
• miscarriage;
• stillbirth;
• menstruation;
• lactation;
• birth control usage;
• infertility and fertility treatments; and
• endometriosis.

In addition, the PWFA also protects employees with related conditions such as nausea, postpartum depression, carpal tunnel syndrome and migraines.

Reasonable accommodations, predictable assessments, and supporting documentation

The EEOC proposes that the following accommodations should be considered “predictable assessments” under the PWFA and granted to pregnant and postpartum employees in almost all circumstances, without requiring supporting documentation or thorough individualized assessments:

• allowing an employee to take additional restroom breaks;
• allowing an employee whose work requires standing to sit and vice versa; and
• allowing an employee to keep water in the work area and drink as needed.

Allowing an employee to take breaks to eat and drink

Under the proposed regulations, employers are encouraged to grant interim accommodations before receiving documentation in some instances. The EEOC also proposes providing certain accommodations – such as later start times and breaks or telework for morning sickness and nausea during the first trimester – before an employee might have begun seeing a medical provider for their pregnancy.

Under the proposed regulations, an employer is not required to seek documentation, but may – if reasonable under the circumstances – do so in order to determine whether to grant the accommodation. Employers may not seek supporting documentation if:

• “the limitation and the need for reasonable accommodation are obvious” and the employee/applicant self-attests;
• the employee/applicant has provided the employer with enough information to substantiate the known limitation and need for an accommodation;
• the accommodation is one of the four listed as a “predictable assessment” and the employee/applicant self-attests; or
• the accommodation is related to lactation or pumping and the employee/applicant self-attests.

In other circumstances, documentation would be limited to “documentation that is sufficient to describe or confirm the physical or mental condition; that it is related to, affected by, or arising out of pregnancy, childbirth, or related medical condition; and that a change or adjustment at work is needed”.

Lactation accommodations

The EEOC’s proposed regulations also expand upon the PUMP Act by requiring that employers provide support for lactating employees. The PUMP Act strengthens prior protections by expanding coverage to all employees, not just hourly workers. The law requires covered employers to provide a reasonable break time for nursing employees to express breast milk for a nursing child each time the employee has a need to express the milk. The law also requires the employer to provide a place – other than a bathroom – that is shielded from view and free from intrusion by co-workers and the public to be used to express breast milk.

In the proposed regulations, the EEOC requires accommodations for pumping that exceed the requirements of the PUMP Act – for example, ensuring that the area for lactation:

• is in reasonable proximity to the employee’s usual work area;
• is regularly cleaned;
• has electricity, appropriate seating, and a surface sufficient to place a breast pump; and
• is in reasonable proximity to a sink, running water, and a refrigerator for storing the milk.

Employer action items for compliance include:

• identifying available spaces in the workplace for nursing mothers to express breast milk (and ensuring the spaces meet the above-listed EEOC requirements);
• training managers and supervisors that break time to express breast milk as many times a day as needed is a protected right and that disparaging comments will not be tolerated;
• training managers, supervisors, and the payroll department that break time to express breast milk may be compensable work time if the employee is doing work, such as taking work-related calls and responding to emails; and
• checking the law for each state where employees are located to determine whether the state provides more generous protections and – as the PWFA and the Pump Act do not preempt more generous state and local laws – following that law.