The U.S. Department of Commerce’s National Institute of Standards and Technology (“NIST”) last week released an Artificial Intelligence Risk Management Framework (“AI RMF 1.0”). Calling it a guidance document for voluntary use by organizations in designing, developing, deploying, or using AI systems, the framework can be used to contextualize and manage the potential risks of harm posed by AI systems, technologies, and practices in all areas where they may be used.
AI-related risk management is an increasingly important issue. Documented harms traceable to AI technologies have been widely reported and threaten to undermine people’s trust in AI. Companies that make AI systems, and those that use AI to automate decisions across their organizations or enterprises, may have policies and procedures for evaluating general corporate risks from AI. But with several states and localities implementing laws requiring data-centric risk assessments, data privacy impact assessments, and bias audits around data-based technologies like AI (including New York City’s Law No. 144 that requires audits by those who use automated employment decision tools), and with Congress poised to consider national data privacy legislation containing economy-wide risk provisions, it is important for companies and organizations that make or use AI to review to ensure their approaches to risk management around AI are comprehensive and comply with applicable laws and regulations.
In case you have not been following this development, the Office of Federal Contract Compliance (“OFCCP”) intends to release certain EEO-1 data in response to a FOIA request. Specifically, OFCCP intends to release EEO-1 Type 2 Reports submitted by federal contractors from 2016 to 2022. All multi-establishment companies (i.e., any corporation that does business out of multiple physical locations) are required to submit Type 2 Reports. These reports must include data for all employees of the company (i.e., all employees at headquarters as well as at all establishments) categorized by race/ethnicity, sex, and job category.
OFCCP is notifying contractors who have not objected that it intends to release the requested EEO-1 Data after the start of the new year. In e-mails sent to contractors at the end of November 2022, OFCCP stated:
The objection period is now closed, and we are sending this message to confirm we have not received an objection from your organization regarding release of the requested data. Because we have received no objection, we are providing your organization with notice that its Type 2 EEO-1 data is subject to release under FOIA, and OFCCP intends to release this data after January 2, 2023.
The e-mail notice instructs companies to contact OFCCP “as soon as possible but no later than January 2, 2023” if OFCCP has erred and the company did timely object to release of its data or the company was not a federal contractor during the applicable time period.
Starting January 1, 2023, New York City employers that utilize artificial intelligence (“AI”) decision-making tools in their hiring practices will need to provide notice to applicants of the technology and conduct independent bias audits to ensure that these tools do not have a discriminatory impact on candidates. This new law, which is aimed at eliminating bias in automated employment decisions, is the first of its type in the United States.
The New York City Department of Consumer and Worker Protection (“DCWP”) has issued proposed regulations in connection with the law, and the DCWP will be holding a public forum to discuss the proposed regulations on October 24, 2022.
Employers and employment agencies should not wait until the regulations are finalized to develop a catalog of AI-driven tools they use for assisting in hiring and promotion decisions and working with vendors and technology stakeholders to develop the means for independent audits that are sufficiently linked to the jobs and job classes for which the organization anticipates hiring.
To read the full client alert, please visit our website.
The Ban on Non-Compete Agreements Amendment Act of 2020 (the “Act”) passed by the D.C. Council over the summer will take effect on October 1, 2022, imposing new substantive and procedural restrictions on D.C. employers’ use of noncompetes, new compensation thresholds below which such noncompetes are now banned, and creating new administrative and civil enforcement measures, including administrative penalties for noncompliance.
The New Law in a Nutshell
The Act defines “noncompete provision” as “a provision in a written agreement or a workplace policy that prohibits an employee from performing work for another for pay or from operating the employee’s own business.” Consequently, the law covers both agreements containing noncompetes and workplace policies restricting employee’s competitive or outside activities, subject to several exceptions summarized below.
Most notably, the Act imposes two new income thresholds for “noncompete provisions” with “highly compensated employees”—those who earn at least $150,000—and “medical specialists”—licensed physicians earning at least $250,000. Both thresholds are subject to adjustments in accordance with increases in the Consumer Price Index beginning in 2024, and any “noncompete provisions” with employees below those levels are effectively banned by the Act.
The Act clarifies that wages, salary, bonuses or other cash incentives, commissions, overtime premiums, vested stock and restricted stock units, and other payments provided on a regular or irregular basis may all be included in determining who qualifies as a “highly compensated employee.” The Act excludes the value of noncash fringe benefits, but because it does not define “fringe benefits,” there is uncertainty as to what noncash benefits may constitute “other payments provided on a regular or irregular basis.”
To read the full client alert, please visit our website.
As our team has previously reported, California currently requires private employers with 100 or more employees, and who are required to file an annual EEO-1 report, to submit certain employee pay data to the state’s Civil Rights Department, formerly known as the Department of Fair Employment and Housing (“DFEH”), including pay data on the number of employees by race, ethnicity, and sex, in each of the 10 EEO-1 specified job categories.
As pay transparency rules continue to sweep the nation, the California legislature—never to be outdone—has passed its own amendments which will significantly expand employers’ current pay data reporting requirements and wage range disclosure obligations. The newly passed bill, “SB 1162,” is currently sitting on Governor Newsom’s desk for signature (or veto). With a potential compliance date of May 10, 2023 (and reporting due each year thereafter on or before the “second Wednesday of May”), Golden State employers are advised to take inventory now of additional steps they need to take in order to adequately prepare for and timely comply with SB 1162, including:
Gathering median and mean hourly rate data for specific job categories, further categorized by their race, ethnicity, and sex;
For employers with multiple establishments, preparing a separate pay data report for each establishment, doing away with the current requirement of a consolidated report;
Gathering pay scale information by position, which would need to be provided to applicants and current employees upon request;
For employers with 15 or more employees, preparing pay scale information to be added to current job postings and shared in any new job postings, including postings by third parties (not just upon request); and
For employers with 100 or more employees hired through labor contractors, submitting a separate pay data report for those employees, so long as one employee is in California.
If enacted, SB 1162 also allows courts to impose civil penalties “not to exceed one hundred dollars ($100) per employee upon any employer who fails to file the required report and not to exceed two hundred dollars ($200) per employee upon any employer for a subsequent failure to file the required report.”
Governor Newsom has until September 30, 2022, to sign the bill, which would trigger a January 1, 2023, effective date and have massive impacts across the state. As we learned earlier this year, an ounce of prevention is worth a pound of cure. Blank Rome’s employment team stands by ready to assist.
Florida’s Individual Freedom Act (“IFA”), also referred to as the “Stop W.O.K.E. Act,” went into effect July 1, 2022, and, among other things, amended the state’s Civil Right Act of 1992 to make it unlawful for an employer to require its employees to attend mandatory trainings or instruction that “espouses or promotes” any of the following eight prohibited concepts:
That members of one race, color, sex, or national origin are morally superior to members of another race, color, sex, or national origin.
An individual, by virtue of his or her race, color, sex, or national origin, is inherently racist, sexist, or oppressive, whether consciously or unconsciously
An individual’s moral character or status as either privileged or oppressed is necessarily determined by his or her race, color, sex, or national origin
Members of one race, color, sex, or national origin cannot and should not attempt to treat others without respect to race, color, sex, or national origin
An individual, by virtue of his or her race, color, sex, or national origin, bears responsibility for, or should be discriminated against or receive adverse treatment because of, actions committed in the past by other members of the same race, color, sex, or national origin
An individual, by virtue of his or her race, color, sex, or national origin, should be discriminated against or receive adverse treatment to achieve diversity, equity, or inclusion
An individual, by virtue of his or her race, color, sex, or national origin, bears personal responsibility for and must feel guilt, anguish, or other forms of psychological distress because of actions, in which the individual played no part, committed in the past by other members of the same race, color, sex, or national origin
Such virtues as merit, excellence, hard work, fairness, neutrality, objectivity, and racial colorblindness are racist or sexist, or were created by members of a particular race, color, sex, or national origin to oppress members of another race, color, sex, or national origin.
Last week, the United States Supreme Court issued its long-awaited decision in Viking River Cruises, Inc. v. Moriana (US 20–1573 6/15/22) (“Moriana”). The singular question presented to the Court was whether the Federal Arbitration Act (“FAA”) requires enforcement of arbitration agreements waiving an employee’s right to assert “representative” claims under California’s Private Attorneys General Act (“PAGA”). In response, the Court provided two answers: (1) wholesale waivers of an employee’s right to bring any PAGA claims in any forum will not be enforced; yet (2) arbitration agreements can require an employee to arbitrate their own individual PAGA claims, leaving the absent employees’ claims subject to dismissal.
For context, PAGA is a decades-old law that allows private citizens to step into the shoes of the Labor Commissioner, essentially turning “aggrieved” employees into bounty-hunters for the State’s Labor and Workforce Development Agency (“LWDA”). Specifically, PAGA litigants are authorized to recover civil penalties on behalf of the State for certain Labor Code violations, which would otherwise be recoverable only by the Labor Commissioner. If successful, employees receive a 25 percent share of civil penalties recovered, with the remaining 75 percent going to the LWDA. And another thing, PAGA allows for the recovery of attorneys’ fees and costs, which are often exponentially larger than the underlying civil penalties and statutory damages recovered—leaving no surprise as to why PAGA has become such a popular vehicle for plaintiffs’ attorneys.
California is infamous for its hostility towards employers. On May 23, the California Supreme Court continued on its unwavering mission to solidify that well-earned reputation by issuing a 45-page decision in Naranjo et al. v. Spectrum Security Services, Inc., a case we have been closely monitoring at Blank Rome.
For context, the failure to pay wages in California triggers not only an award of those unpaid wages, but potentially steep and costly statutory and civil penalties as well, including so-called: (1) “waiting time penalties”—up to 30 days’ wages for former employees; and (2) “wage statement penalties” when the unpaid wages render the employee’s pay stub inaccurate. Wage statement penalties start at $50 for the first violation and rise to $100 for subsequent violations. When claims are brought on a classwide basis, these penalties can become astronomical, as they are all assessed on a per-employee, per-pay-period basis.
As previewed in our April 5, 2022, client alert (New York Employers, Take Note! Two New Laws Effective in May | Blank Rome LLP), New York City has rolled back to November 1, 2022, the effective date of its amendment to the New York City Human Rights Law (“NYCHRL”) that will require the City’s private employers to provide a minimum and maximum salary range for jobs when advertising employment opportunities.
The City delayed the effective date in order to give employers a six-month extension of time to come into compliance. The amendment will require employers that are advertising job openings for positions performed in New York City to include the salary range (both a minimum and maximum amount) being offered for the position in the advertisement.