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.

ALERT! PA Increases White Collar Exemption Salary Thresholds

Jason E. Reisman

Finally, the Pennsylvania Department of Labor and Industry (“Department”) formalized its leap to modernize and streamline its regulation governing the executive, administrative, and professional (“EAP”) exemptions (and the outside sales exemption) from the minimum wage and overtime requirements of the Pennsylvania Minimum Wage Act. To confirm, yes, the Commonwealth is leaving the U.S. Department of Labor’s recent rule in the dust! See our last blog post on this from February here, as well as the ones from July 2018 and January 2018.

Although the Department took great pains to better—but not fully—align its requirements with those under the Fair Labor Standards Act (“FLSA”), the hallmarks of this new regulation are the new salary threshold increases:

      • $35,568 ($684 per week) effective 10/3/2020 (which matches the FLSA threshold that was effective 1/1/2020—see our prior post here);
      • $40,560 ($780 per week) effective 10/3/2021;
      • $45,500 ($875 per week) effective 10/3/2022; and
      • On 10/3/2023, and every third year thereafter, the minimum salary will change to match the 10th percentile of wages for Pennsylvania workers who work in exempt EAP positions.

Continue reading “ALERT! PA Increases White Collar Exemption Salary Thresholds”

New York City Matches New York State’s Sick Leave Requirements, and Adds More

Jacob W.E. KearneyStephen E. TismanAnthony A. Mingione, and Mara B. Levin

New York City recently amended its Earned Safe and Sick Time Act (the “Act”) to match New York State’s recent changes to the Labor Law requiring all employers to provide sick leave to employees as discussed in our prior posts (Empire State Requires All Employers to Provide Sick Leave; Act Now! Changes to New York Sick Leave Are Here). New York City’s Act now matches the New York State requirements that employers must allow employees to accrue safe/sick time of between 40 to 56 hours per year (depending on employer size and net income). Although effective September 30, employees may be restricted from using any additional accrued paid time under the new legislation until January 1, 2021. New York City employers are also required to provide notice of the changes to their employees by October 30, 2020.

Mirroring the new Labor Law requirements, the New York City Act provides that:

    • Employers with 100 or more employees must allow employees to accrue at least 56 hours of paid safe/sick time each calendar year;
    • Employers with between five and 99 employees must allow employees to accrue at least 40 hours of paid safe/sick time each calendar year;
    • Employers with fewer than five employees but having a net income greater than one million dollars in the previous tax year must allow employees to accrue at least 40 hours of paid safe/sick time each calendar year; and
    • Employers with fewer than five employees and having a net income less than one million dollars in the previous tax year must allow employees to accrue at least 40 hours of unpaid safe/sick time each calendar year.

Continue reading “New York City Matches New York State’s Sick Leave Requirements, and Adds More”

Act Now! Changes to New York Sick Leave Are Here

Jacob W.E. Kearney, Stephen E. Tisman, Mara B. Levin, and Anthony A. Mingione

New York State’s amendments to its Labor Law requiring all employers to provide sick leave to employees are effective on Wednesday, September 30, 2020. Signed into law by Governor Cuomo in April as part of the State Budget (Senate Bill S7506B), our prior post detailed that the new amendments require employers to provide between 40 and 56 hours of guaranteed sick leave depending on employer size and net income. Starting Wednesday, covered employees will be entitled to accrue sick leave although the employees may be restricted from using that accrued leave until January 1, 2021.

Under New York’s Labor Law’s new requirements:

      • Employers with 100 or more employees must allow employees to accrue at least 56 hours of paid sick leave each calendar year;
      • Employers with between five and 99 employees must allow employees to accrue at least 40 hours of paid sick leave each calendar year;
      • Employers with fewer than five employees but having a net income greater than one million dollars in the previous tax year must allow employees to accrue at least 40 hours of paid sick leave each calendar year; and
      • Employers with fewer than five employees but having a net income less than one million dollars in the previous tax year must allow employees to accrue at least 40 hours of unpaid sick leave each calendar year.

Continue reading “Act Now! Changes to New York Sick Leave Are Here”

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”

Strident DOL Revises FFCRA Reg, Thumbs Its Nose at NY Federal Court Decision

Jason E. Reisman

On August 3, 2020, at the urging of the State of New York, U.S. District Judge Paul Oetken of the Southern District of New York struck down four different provisions of the U.S. Department of Labor’s (“DOL”) implementing regulation for the Families First Coronavirus Response Act (“FFCRA”): (1) the “work availability” requirement, under which paid leave is only available if an employee has work from which to take leave; (2) the requirement of employer permission to take leave intermittently; (3) the definition of “health care provider” for purposes of exclusion from paid leave benefits; and (4) the requirement for an employee to provide certain documentation before taking leave. New York v. U.S. Dep’t of Labor, 2020 WL 4462260 (S.D.N.Y. Aug. 3, 2020).

Although the judge did not issue a “nationwide” injunction, the mere fact that there was a decision by a federal judge striking certain important provisions of the FFCRA regulation left employers (or maybe just their counsel) in a panic about the implications outside of New York. Would this decision impact eligible employees in California? Would the decision be retroactive? Would the DOL appeal? Would it seek a stay of the decision while the appeal was pending? Continue reading “Strident DOL Revises FFCRA Reg, Thumbs Its Nose at NY Federal Court Decision”

Philly’s Salary History Ban to Be Enforced Starting in September

Asima J. Ahmad

As outlined in a previous post, the Philadelphia Wage Equity Ordinance is back in play. And now that the litigation dust has settled, the city announced that the Philadelphia Commission on Human Relations (“PCHR”) will begin enforcing the ordinance on September 1, 2020.

As a reminder, the Ordinance prohibits all employers, employment agencies, or their agents from asking about a job applicant’s current or prior salary history during the application or hiring process if the position is located in Philadelphia. Shortly after the salary history ban was announced, the Chamber of Commerce for Greater Philadelphia sued to block it from going into effect on free speech grounds. The case proceeded to the Third Circuit, which ultimately held that the ordinance was constitutional in a unanimous decision issued this February.

The PCHR recently issued a set of FAQs which provide some useful information for employers, including whether the ordinance applies to internal candidates (no), whether an employer can rely on market data for salaries (yes), and whether an employer can ask a job applicant about their salary expectations (yes, but employers should not ask candidates if their salary “expectation” is tied to their current or prior salary history). The FAQs also outline suggested best practices for compliance, including:

    • Focusing questions on the applicant’s salary demands, experience, skills, and qualifications during the interview process;
    • Establishing salary ranges or pay scales for open positions;
    • Creating or modifying written policies to reflect compliance with the ordinance;
    • Training interviewers, hiring staff, and other applicable staff regarding compliance;
    • Refraining from seeking prior salary history from other sources, including a former employer or public records;
    • Instructing background reporting agencies to exclude information found regarding an applicant’s salary history; and
    • Developing protocols for discarding or isolating salary information that employers inadvertently receive but are prohibited from considering.

Job applicants who are asked about their salary history in violation of the ordinance can file a complaint with the PCHR and may be awarded compensatory damages, punitive damages, reasonable attorneys’ fees, costs, injunctive relief, or other relief. Employers are prohibited from retaliating against applicants who refuse to provide their salary history.

We recommend contacting a member of Blank Rome’s Labor & Employment team as soon as possible to ensure that your hiring process and practices follow the ordinance’s requirements, and that your staff understands the do’s and don’ts of the new law. We are happy to answer any questions about compliance or updating your policies and procedures, or to schedule a training.

Button Up Restrictive Covenants before Employees Start in New Positions

Kevin M. Passerini and Oliver R. Katz

Pennsylvania law has long required that a restrictive covenant agreement be signed prior to or at the start of employment for it to be enforceable. By extension, Pennsylvania law has also required consideration beyond continued employment—a promotion, bonuses or stock options, severance, or other meaningful consideration—to support a restrictive covenant agreement with an existing employee. Those requirements left a somewhat gray area where a newly hired employee (or an internal employee elevated to a new position) does not sign a restrictive covenant agreement until shortly after starting in the new role and does so without receiving any consideration distinct from the new employment position itself.

In its June 16, 2020 decision in Rullex Co., LLC v. Tel-Stream, Inc., 27 EAP 2019 (Pa. 2020), the Pennsylvania Supreme Court waded into that gray area to consider whether new or “fresh” consideration must be provided any time a restrictive covenant agreement is executed after an employee’s first day in a new role. The court rejected the exclusive use of a bright-line rule requiring execution at or prior to the commencement of employment. Instead, relying in part on a decision from 50 years ago, it left the door slightly open so that restrictive covenants signed after employment has already commenced may be enforced where there was a meeting of the minds on the substance of the restrictive covenants at or prior to the start of employment. As the court noted, the critical inquiry is whether the parties had agreed to the “essential provisions” when the relationship began, such that the restrictive covenant agreement was ancillary to the taking of employment, or whether there was no meeting of the minds such that the restrictive covenants were a “belated addition” to their relationship, requiring additional consideration. In applying its standard to the facts of the case, the court held that there was no meeting of the minds at the start of the relationship based on the delay of at least two months before the signing of the agreement and Rullex’s willingness to consider and accommodate revisions to the original draft.

With the clarity provided in Rullex, employers likely cannot rely on the mere circulation of a restrictive covenant agreement prior to the start of a new employment position to ensure its enforceability. And employers must also be wary of continued negotiations with prospective employees (or existing employees who are candidates for promotions) after having presented an agreement containing restrictive covenants.

Going forward, the most obvious (and best) way to avoid a dispute over whether the parties had a “meeting of the minds” is to have a restrictive covenant agreement signed before a new employee commences work in the new role and before an existing employee assumes a new role within the company. Another good option is for an employer to attach the restrictive covenant agreement to an offer letter that conditions employment (or any promotion or other new position) on the execution of the agreement and to require the individual to sign that offer letter in advance of starting in the new position with an acknowledgment that he or she has received and reviewed the agreement and accepted all of the terms of the offer. Anything less is likely to leave employers in the gray area, fighting it out in court or in arbitration.

No More Double the Trouble: DOL Relents on “Automatic” Liquidated Damages

Jason E. Reisman

After enduring a decade or so of the U.S. Department of Labor (“DOL”) “automatically” demanding double the amount of back pay in virtually every settlement of a wage and hour investigation under the Fair Labor Standards Act (“FLSA”), employers around the country can now breathe a heavy sigh of relief. In a Field Assistance Bulletin (“FAB”) dated June 24, 2020, the DOL said it “will no longer pursue pre-litigation liquidated damages as its default policy from employers in addition to any back wages found due in its administratively resolved investigations.”

First, it is somewhat amazing that the DOL admitted that liquidated damages was its “default policy.” While the FLSA clearly allows the recovery of liquidated damages in an amount equal to 100 percent of the back wages due, nowhere does the statute authorize the DOL to impose such damages in an investigation. Though arguably beyond the DOL’s authority in pre-litigation proceedings—that good old ultra vires concept—the lack of explicit statutory authority did not stop the agency from imposing liquidated damages in nearly every case without regard to whether any evidence of bad faith or willfulness existed. Not only did the DOL impose them as a penalty, but it also leveraged the threat of litigation to “persuade” employers to settle and accept the imposition of liquidated damages—remember, it almost never makes sense to fight the government in litigation, as it can outspend just about anyone, while doing so using “your” tax money.

Now, according to the FAB, effective July 1, 2020, the DOL will not assess these double damages if, for example, there is no evidence of bad faith or willfulness or the employer has no previous history of violations or the matter involves complex “white collar” exemption issues. Importantly, seeking pre-litigation damages will require approval from two top DOL officials: the Wage & Hour Division Administrator and the Solicitor of Labor. More hurdles for the DOL—a plus for employers doing their best to comply with a complex, nuanced, and at times tedious statute and regulations.

But, alas, this “practice” change may be short-lived if a new administration takes the White House in 2021. Stay tuned and enjoy it while it lasts!

“Supremes” Validate Title VII Protection for LGBTQ Workers

Jason E. Reisman     

Yesterday, the United States Supreme Court issued a long-awaited, watershed decision confirming that Title VII of the Civil Rights Act of 1964 does protect against discrimination in employment based on gender identity and sexual orientation. It may be the most significant employment-related decision in more than 20 years. The decision addresses a connected trio of separate cases that were argued in the fall before the Court: Bostock v. Clayton County, Georgia (on appeal from the 11th Circuit), Altitude Express, Inc. v. Zarda (on appeal from the 2d Circuit), and R.G. & G.R. Harris Funeral Homes, Inc. v. EEOC (on appeal from the 6th Circuit). For a little background, see our prior blog here.

With a 6-3 majority, the four “liberal” justices joined with two “conservative” justices to reach this momentous decision—in fact, Justice Gorsuch penned the decision. Clearly finding that the word “sex” in Title VII encompasses employment actions based on gender identity or sexual orientation, Justice Gorsuch admitted that the original legislators who drafted Title VII “might not have anticipated their work would lead to this particular result.” The focus on interpreting the text of the law, which was often championed by the late Justice Antonin Scalia, carried the day—leading to “new” protections that will enhance the rights of the LGBTQ worker community throughout the country, especially in numerous states and locales that do not otherwise provide such protection. The decision also ensures that the “paradoxical legal landscape in which a person can be married [to a same sex partner] on Saturday and then fired on Monday for just that act” (raised in 2017, by a panel of the Seventh Circuit Court of Appeals in Hively v. Ivy Tech. Community College) has drifted off into the sunset.

Simply put, the Supreme Court said, “Because discrimination on the basis of homosexuality or transgender status requires an employer to intentionally treat individual employees differently because of their sex, an employer who intentionally penalizes an employee for being homosexual or transgender also violates Title VII.”

For employers across the country, the uniformity created by this decision will impact millions of workers in states where there was no similar protection for such discrimination—which is more than 50 percent of the states. There is much to consider. For example, if an employer employs 15 or more employees and does not have a policy prohibiting gender identity and sexual orientation discrimination, it is time for a handbook update…as the immediate first step, with a corresponding move to update and implement new workforce training. As important, employers should take this valuable opportunity to engage with all employees. Be mindful of, and creative in, bringing positive and productive communication and, where needed, change to the workplace—culture emanates from the top and cannot be overestimated as to its impact on the effectiveness and health of the workforce.

It is inevitable that there will be additional questions as this decision filters out into the workplace and the lower courts interpret it. Cases down the line will likely force the courts to address issues relating to the interplay of this decision with the exercise of religious freedom.  Also, as the dissent from Justice Alito noted, the ruling could have unforeseen consequences, leaving courts to address its implications in athletics, bathroom and locker room access, university housing, and other contexts. Though undoubtedly putting to bed one of the most substantive issues in employment law in the 21st century so far, as with all significant decisions of the highest court, the ripple effects will engender further battles and be felt for decades to come.