Category: Employment litigation

Texas Expands Employer—and Individual—Liability for Sexual Harassment Claims

Nikki D. Kessling


Effective September 1, 2021, new provisions in the Texas Commission on Human Rights Act (“TCHRA”) provide greater protections and remedies for employees alleging sexual harassment. Key changes include the following:

    • The new provisions set a heightened standard for an employer’s response to a sexual harassment complaint. An employer now “commits an unlawful employment practice if sexual harassment of an employee occurs and the employer or the employer’s agents or supervisors: (1) know or should have known that the conduct constituting sexual harassment was occurring; and (2) fail to take immediate and appropriate corrective action.” This language somewhat (but not exactly) mirrors the Title VII analysis for coworker harassment claims, which considers whether the employer took “prompt” and effective remedial action. The amendments to the TCHRA do not define what amounts to “immediate and appropriate corrective action,” or to what degree “prompt” differs from “immediate,” and this is likely to be a disputed and litigated issue in Texas courts. Additionally, this new standard of proof does not differentiate between coworker and supervisor harassment claims—another potentially significant departure from Title VII, which generally holds employers liable for supervisor harassment unless they are able to establish an affirmative defense.
    • Unlike the remainder of the TCHRA, which applies to employers with 15 or more employees, the new sexual harassment provisions essentially cover all employers (anyone who “employs one or more employees”) and further opens the door to potential individual liability for managers, coworkers, or HR (someone who “acts directly in an interests of the employer in relation to an employee”). As a result, Texas plaintiffs may begin naming supervisors, HR professionals, and other involved employees as defendants in sexual harassment lawsuits—and those individuals may be held personally liable for damages if the plaintiff is successful.

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D.C. Moves Back Applicability Date of New Non-Compete Law

Daniel L. Morgan and Kevin M. Passerini

Earlier this year, Washington, D.C.’s mayor signed legislation, the “Ban on Non-Compete Agreements Amendment Act of 2020” (the “Act”), which imposes sweeping limitations on during-employment and post-employment non-compete agreements for employees in the District of Columbia. We previously reported on this legislation.           

Although the Act stated that it was to take effect following its publication in the District of Columbia Register, it also included the following provision: “This act shall apply upon the date of inclusion of its fiscal effect in an approved budget and financial plan.”

In other words, notwithstanding the Act’s definition of an earlier effective date, the Act was not slated to go into effect until the date it was included in D.C.’s 2022 budget—referred to as the “applicability date”—which most expected to occur by October 1, 2021. Shortly after passage, there were rumblings that Council members were considering amendments to the law—ranging from, among other things, a delay in the applicability date to exemptions for bona fide conflict of interest policies to income thresholds for the ban on non-competes, as opposed to an outright ban.

On August 10, 2021, the D.C. Council approved a budget—signed by D.C.’s mayor on August 23, 2021—that delays the applicability date of the Act until April 1, 2022. This postponement is significant because the Act’s limitations on non-competes is not retroactive, which provides employers with more time to continue to enter into non-compete agreements that satisfy the existing standards for determining the enforceability of non-compete restrictions rather than the far more limiting standards included in the Act.

Time will tell whether any substantive amendments materialize and modify the Act’s limitations prior to April 1, 2022.

California Supreme Court Requires That All Non-Discretionary Payments Must Be Included in Meal and Rest Period Premiums

Meal and Rest Period Premiums Must Include All “Non-Discretionary Payments” and Not Just Hourly Wages

Michael L. Ludwig

If an employer does not provide an employee with a compliant meal or rest period, Labor Code section 226.7(c) requires the employer to “pay the employee one additional hour of pay at the employee’s regular rate of compensation.” In Ferra v. Loews Hollywood Hotel, LLC, the California Supreme Court held that the “additional hour of pay” for meal or rest period violations must encompass all non-discretionary payments, as well as hourly wages. Thus, if an employer pays an employee non-discretionary incentive pay or bonuses, or commissions, those amounts must be included in determining the “hour of pay” the employer owes to the employee for a meal or rest period violation. (Note: The same rule applies to a “recovery” period, which is less common and refers to a cooldown period afforded an employee to prevent heat illness.)

Many employers have initiated practices of monitoring time records for apparent meal period violations and automatically paying an hour of pay accordingly. If the hour of pay was paid at an employee’s base hourly rate that did not include non-discretionary payments, then additional amounts may now be owed to the employee. Also, given the increased cost to an employer of a meal period premium, employers who provide employees flexibility regarding the scheduling of their meal periods may want to reconsider that flexibility and instead insist on strict meal period scheduling and reporting to avoid potential exposure.

Continue reading “California Supreme Court Requires That All Non-Discretionary Payments Must Be Included in Meal and Rest Period Premiums”

With an Eye Towards Pay Equity Illinois Enters the Wage Data Collection Game

Blair A. Gerold

On March 23, 2021, Illinois amended the state’s Equal Pay Act of 2003 to include additional reporting requirements targeted at identifying gender and racial pay disparities.

Under the newly enacted Section 11 of the Equal Pay Act, any private employer with more than 100 employees in Illinois must obtain an “equal pay registration certificate” from the Illinois Department of Labor. Employers must obtain this certificate within three years of the amendment’s effective date—i.e., by March 23, 2024—and then every two years thereafter.

To apply for this certificate, the employer must submit a $150 filing fee, the employer’s most recent EEO-1 report, and a report of all employees from the past calendar year “separated by gender and the race and ethnicity categories as reported in the business’s most recently filed Employer Information Report EEO-1, and report the total wages . . . paid to each employee during the past calendar year.”

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Will Federal Contractors Be Required to Certify Employee COVID Vaccinations?

Brooke T. Iley and Albert B. Krachman

Do not be surprised if, before the end of 2021, the federal government begins requiring contractors to certify or represent that their employees have received COVID vaccinations. The federal government has long conditioned contract awards on contractor compliance with emerging social policy mandates. This practice dates backs to the 1960s, when collateral social policy clauses began appearing in federal contracts. The National Emergency created by COVID-19 would appear ripe for a similar federal government action in federal contracting.

Several factors are converging in the United States which signal the potential for a COVID vaccine Certification or Representation. First, the supply issue should be mostly resolved by June 30, 2021. The Biden administration has committed to make enough vaccines available for every adult in the country by the end of May 2021. Second, the administration has been extremely active in making procurement law changes to conform to its policy objectives. Crafting an Executive Order on COVID Vaccines for federal contractor employees is clearly within the administration’s wheelhouse and target zone. Third, as reported in the March 8, 2021, Wall Street Journal, the largest employers in the country, across all sectors, are already engaged in large scale efforts to vaccinate their own employees. Fourth, while the law in this area is still evolving, the prevailing view is that, with certain exceptions, private employers are legally permitted to mandate their employees receive COVID vaccinations as a condition of continuing employment, subject to a variety of considerations related to employee legal, medical, and workplace accommodations. Finally, the federal government might find a federal contractor vaccine mandate a helpful leverage point in the evolving conflict with those states choosing to disregard COVID protections. Continue reading “Will Federal Contractors Be Required to Certify Employee COVID Vaccinations?”

Delaware Court Preserves McDonald’s Right to Seek Clawback of Ex-CEO’s Severance Benefits

Daniel L. Morgan

A recent decision by the Delaware Chancery Court in the clawback litigation between McDonald’s Corporation and its former CEO highlights the meaning and impact of a common contractual provision: the “integration clause.” Such provisions (sometimes also called “entire agreement” clauses) state that the contract at issue embodies the entire agreement of the parties and supersedes all prior agreements and understandings between them. The Delaware court rebuffed an effort by the former CEO to argue that the integration clause in his separation agreement precludes McDonald’s from asserting that the CEO’s false statements made while negotiating that agreement provide a basis for seeking repayment of severance benefits he received. The court’s opinion lays out the requirements that a contract must satisfy in order to prevent a party from using the other party’s deceptive or fraudulent statements made prior to entering the contract to seek repayment of the consideration provided. The case is McDonald’s Corporation v. Stephen J. Easterbrook.

Background of the McDonald’s Litigation

In 2019, McDonald’s Corporation parted company with its then-CEO, Stephen Easterbrook, finding that he had engaged in an inappropriate relationship with an employee. McDonald’s and Mr. Easterbrook negotiated and entered into an agreement that treated his separation as “without cause” and paid him significant severance benefits. Several months after Mr. Easterbrook’s departure, additional improprieties were brought to the attention of McDonald’s Board, resulting in McDonald’s filing a lawsuit to claw back the severance benefits previously paid. McDonald’s argues that it would not have agreed to the terms of the separation agreement if Mr. Easterbrook had not covered up the extent of his indiscretions.

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New! California Provides Additional Guidance on “Big Brother” Pay Data Reporting Requirements

Caroline Powell Donelan and Howard M. Knee

As a reminder, California’s new pay data reporting for employers with 100 or more employees (and at least one employee in California) is due on or by March 31, 2021. You can read more about these new requirements here. California’s Department of Fair Employment and Housing (“DFEH”) has released helpful FAQs to walk employers through the filing requirements and required content. On February 1, 2021, the DFEH also published a 67-page California Pay Data Reporting Portal User Guide. While the portal itself will not be available until February 16, 2021, the user guide contains helpful information on pay data report content, differences and similarities between the California report and the EEO-1 report, and navigating the Pay Data Reporting Portal (once available), as well as sample reports. Please contact us with any questions.

D.C. Mayor Signs Non-Compete Ban, Dramatically Alters Competitive Landscape

Kevin M. Passerini and Daniel L. Morgan

Late in December 2020, the District of Columbia Council passed legislation titled, “Ban on Non-Compete Agreements Amendment Act of 2020” (the “Act”), barring the use of non-compete agreements and workplace policies that restrict D.C. employees from competing with their employers after, and even during, employment. This week, the Mayor signed the law. Barring an unlikely intervention by Congress (which has authority to review legislation passed by the D.C. Council), the law will take effect after the 30-day Congressional review period.

This Act follows a recent, growing trend to limit the use of non-competes, but it goes further than other recent legislative efforts: it applies to employees at all income levels and even bars the use of “during-employment” non-competes and workplace policies such as those aimed at preventing disloyalty and abuse of company resources. Several key areas warrant emphasis.

Ban Applies to Employees Performing Work in D.C. for Employers that Operate in D.C.

The Act applies to “employees,” defined as any “individual who performs work in the [District of Columbia] on behalf of an employer and any prospective employee who an employer reasonably anticipates will perform work on behalf of the employer in the [District of Columbia].” The term “employer” is defined as “an individual, partnership, general contractor, subcontractor, association, corporation, or business trust operating in the District, or any person or group of persons acting directly or indirectly in the interest of an employer operating in the District in relation to an employee, including a prospective employer.”

Continue reading “D.C. Mayor Signs Non-Compete Ban, Dramatically Alters Competitive Landscape”

Large Employers Beware: California’s New Pay Reporting Requirements Will Have the State Looking over Your Shoulder for Years to Come

Caroline Powell Donelan and Howard M. Knee

On or by March 31, 2021, (and each March 31 thereafter), private employers in California with more than 100 full-time and part-time employees that are required to file employer information reports with the federal government (“EEO-1” reports) will be required to submit detailed data to California’s Department of Fair Employment and Housing (“DFEH”) regarding the race, ethnicity, and gender of employees in the 10 job categories used in the federal EEO-1 form. Specifically, SB 973 requires employers to report: (1) the number of employees by race, ethnicity, and gender in each of these job categories (looking at any single pay period between October 1 and December 31 of the preceding year); (2) the number of employees by race, ethnicity, and gender whose annual earnings fall within each of the pay bands used by the Bureau of Labor Statistics; (3) the total number of hours worked by each employee counted in each pay band (despite the fact that this information is not commonly kept for exempt workers); and (4) the employer’s North American Industry Classification System (“NAICS”) code. If an employer has more than one establishment in California, it is required to submit a report for each establishment, as well as a consolidated report that includes all employees.

And, what will the government do with this data? The stated intent of the law is to identify and remedy pay inequities and strengthen current equal pay laws. The new legislation permits the DFEH to use the data collected to prosecute complaints alleging discriminatory wage practices under the Equal Pay Act (California Labor Code § 1197.5). Moreover, the DFEH is authorized to share the reports with the Division of Labor Standards Enforcement (“DLSE”), so the DLSE can identify wage patterns and institute litigation to challenge suspected discriminatory practices. In other words, rather than the government responding to complaints from employees, or investigating targeted industries, it will now evaluate all data submitted by large employers and decide whether enforcement action is warranted.

The legislation provides that reported data will be kept confidential and not subject to disclosure under the Public Records Act. The DFEH, however, may compile, publish, and publicize aggregate reports based on the data it receives, so long as the aggregate reports are reasonably calculated to prevent the association of any data with any individual business or person. The data may be used for investigation and enforcement proceedings by the DFEH and the DLSE under the Fair Employment and Housing Act and Labor Code, respectively. Of course, parties to private litigation will likely seek discovery of reported data as well.

SB 973 essentially mirrors an Obama-era pay data collection rule issued by the Equal Employment Opportunity Commission, which was later stayed by the Trump administration. Of course, it remains to be seen whether our new administration will revive these collection efforts at the federal level, but for now, California remains willing to carry the torch.

If you have any questions about your pay practices or these new California reporting requirements under SB 973, please contact a member of our Labor & Employment team.

Trump Administration Bans Contractors from Providing Certain Types of Diversity Training

Brooke T. Iley, Dominique L. Casimir, and Tjasse L. Fritz







On Tuesday evening, the Trump administration surprised the federal contracting community by issuing an Executive Order (“EO”) titled “Combating Race and Sex Stereotyping” that will ban federal contractors from conducting certain types of anti-discrimination training. In particular, the EO prohibits workplace racial sensitivity and diversity and inclusion (“D&I”) training programs that contain so-called “divisive content,” defined in the EO as instilling a belief in the existence of systemic racism and inherent bias. The EO expands an earlier ban issued in a September 4, 2020, memorandum that prohibits certain anti-discrimination training from being conducted within federal agencies.

The EO comes on the heels of a widespread social and racial justice movement that dominated much of the summer of 2020, in response to which corporate America has taken a stand, with companies pledging millions to social justice reform movements. An overwhelming number of employers either have offered or plan to offer some form of diversity training to their employees. This latest EO leaves many federal contractors and subcontractors wondering whether and how to proceed, and what penalties they may face if they offer such training. Continue reading “Trump Administration Bans Contractors from Providing Certain Types of Diversity Training”