Category: Strategic counseling

Oops, the NLRB Does It Again—The Handbook Police Are Back!

Jason E. Reisman ●

Just yesterday, the National Labor Relations Board (“NLRB”) issued a decision (Stericycle Inc.), which overrules its own 2017 Boeing Co. decision and establishes a new standard for evaluating employer handbook policies and rules under the National Labor Relations Act (“NLRA”). Welcome (back) to what is the revolving door decision-making process that is the political machine of the NLRB.

Effectively, the current Biden NLRB has reversed one of the hallmark decisions of the Trump NLRB. When the Trump NLRB decided Boeing Co., it seemed to strike a balance in evaluating workplace rules, weighing the rule’s impact on workers’ NLRA rights against the employer’s legitimate business justification for the rule.

Although the concept of balancing those two potentially competing interests seems rational, the current NLRB Chair, Lauren McFerran, said that “Boeing gave too little consideration to the chilling effect that work rules can have on workers’ Section 7 rights.” NLRB Press Release 8/2/23. Taking that view to the extreme, the NLRB has shifted the bulk of the burden to employers to establish the legitimacy of the work rule. Under Stericycle, the most important consideration in evaluating a workplace rule is how an employee would understand it—not how the employer or a neutral third party might. The NLRB’s new approach is evident in this passage from the decision:

We clarify that the Board will interpret the rule from the perspective of an employee who is subject to the rule and economically dependent on the employer, and who also contemplates engaging in protected concerted activity. Consistent with this perspective, the employer’s intent in maintaining a rule is immaterial. Rather, if an employee could reasonably interpret the rule to have a coercive meaning, the General Counsel will carry her burden, even if a contrary, noncoercive interpretation of the rule is also reasonable.

372 NLRB No. 113, p.2 (emphasis added). Incredibly, if an employee could interpret the rule to chill the exercise of NLRA rights, the rule is presumed unlawful. The only way for an employer to rebut that presumption is “by proving that the rule advances a legitimate and substantial business interest and that the employer is unable to advance that interest with a more narrowly tailored rule.” Id. If the employer can prove both of those, the work rule will be found lawful. Good luck.

The deck is now stacked against employer work rules that have any potential ambiguity in the mind of an employee. Given the energy and zeal demonstrated by the NLRB General Counsel in seeking to hold employers accountable, it is reasonable to presume that the NLRB “handbook police” will return, leaving almost no handbook completely safe from attack. Employers should expect to see more scrutiny given to work rules and policies, especially those particularly sensitive ones such as anti-harassment and workplace conduct policies.

A Tall Order: NYC Prohibits Height and Weight Discrimination in Employment

Anthony A. Mingione  ●

On May 26, 2023, New York City Mayor Eric Adams signed a bill that will prohibit discrimination based on an applicant or employee’s actual or perceived height or weight. This bill amends the New York City Human Rights Law by specifically adding “height” and “weight” to its list of protected classes. These additions will become effective on November 22, 2023.

There are several exemptions, including where height or weight restrictions are:

      • Required by a federal, state, or local law or regulation;
      • Permitted by any regulation adopted by the City Commission on Human Rights that identifies certain jobs or job categories for which height or weight could prevent the person from performing the essential requirements of the job, and for which the Commission finds that no other reasonable alternative is available that would allow the person to perform the essential requirements of the job; or
      • Permitted by any regulation adopted by the Commission that identifies particular categories of jobs for which the use of height or weight as a criteria is reasonably necessary for the normal operations of the business.
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NLRB GC Declares (Virtually) All Non-Compete Agreements Illegal

Jason E. Reisman  ●

Snapshot Summary

Yes, the National Labor Relations Board (“NLRB”) General Counsel (“GC”) says virtually all non-compete agreements are illegal. However, although this is the GC’s strong personal view, she does not directly make the law or establish precedent—NLRB action is still required to start that process. Even if the NLRB acts, the National Labor Relations Act (“NLRA”) only covers non-supervisory employees. This is something to monitor, but not something that should cause you to automatically refrain from strategic and reasonable use of non-compete agreements. And, yes, it coincidentally aligns with the proposed rule from the Federal Trade Commission (see our prior alert here).

Background

Though employers uniformly do not enjoy listening to the ruminations of NLRB GC Jennifer Abruzzo, it is clear that all employers need to pay very close attention to what she says and how she says it. The latest off-the-wall proclamation came in a May 30 memorandum, where she asserted her position that non-compete provisions contained in employment contracts and severance agreements nearly always violate federal labor law by preventing former employees from working for competitors. Notably, she previewed this position in March when she issued another memo providing “guidance” on severance agreement provisions in the wake of the NLRB’s McLaren Macomb decision (see our prior blog post here).

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The DOJ’s Newest Pilot Program on Compensation and Clawbacks: Executives and Employees Should Reap What They Sow

Jennifer L. Achilles, Brooke T. Iley, Anthony A. Mingione, Shawn M. Wright, and Amelia Clegg

Employers will not be able to take full advantage of the DOJ’s new program if their compensation systems do not permit clawbacks from wrongdoer employees. Companies should review their existing compensation systems and consider updating them before problems arise, so that they will be in a position to take full advantage of the DOJ program should it become necessary to do so. In updating compensation systems to permit clawbacks, or expand the scope of existing clawback provisions, employers must also take appropriate steps to maintain compliance with the wage and hour laws in the jurisdictions in which they operate. Navigating these sensitive issues will be complicated and will require more coordination between employment counsel and white-collar counsel than ever before.

The Roman lawyer and orator Cicero phrased personal responsibility thus in his De Oratore: “ut sementem feceris, ita metes”—“just as you sow, so you shall reap”. This turned out to be particularly fitting for Cicero himself–after his death at the hands of Mark Antony, Antony’s wife Fulvia took Cicero’s severed head and stabbed his tongue repeatedly with her hairpin to exact revenge for his barbed attacks on her and her husband. It appears that the Department of Justice (“DOJ”) has taken Cicero’s advice to heart when drafting the revised corporate compliance policies unveiled last week at the ABA White Collar Crime Conference in Miami. The revisions reflect an ethos that corporate employees who engage in misconduct, as well as the supervisors who enable such conduct, should suffer the consequences of their misdeeds. Accordingly, the DOJ will now reward corporations for clawing back compensation from both corporate wrongdoers and their supervisors.

On March 2, Deputy Attorney General Lisa Monaco both cemented the DOJ’s recent amendments to its corporate self-disclosure program (for more detail, please see here) and announced the launch of a novel pilot program on compensation incentives and clawbacks.

Under the pilot program:

      • Every corporate resolution involving the Criminal Division will now include a requirement that the resolving company develop compliance-promoting criteria within its compensation and bonus system. Companies subject to a resolution will need to revise their performance and bonus metrics to include compliance-related components. Companies may implement a system whereby executives and employees are required to forfeit their bonuses if they fail to meet certain compliance-related objectives.
      • The Criminal Division will reduce fines for companies who seek to claw back compensation from corporate wrongdoers. Companies that pursue clawbacks in good faith, but are unsuccessful, may receive a fine reduction of up to 25 percent of the amount of compensation sought.

In other words, companies will be able to reduce criminal fines by clawing back, or attempting in good faith to claw back, compensation from wrongdoers and their supervisors, and the companies will be able to keep any recovered funds.

To read the full client alert, please visit our website.

It’s Not Too Late: Notify OFCCP Now to Prevent Disclosure of EEO-1 Data

Merle M. DeLancey, Jr. ●

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.

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NYC Employers Using AI For Screening Beware

Anthony A. Mingione, Mara B. Levin, and Amelia Clegg


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. 

CA Update: Pay Data Reporting Law Signed!

Caroline Powell Donelan ●

Gov. Newsom signs California’s newest and broadest pay transparency law, SB 1162, requiring California companies to disclose pay data starting next year.

Read more: Big Brother Just Got Bigger: Expanded Pay Data Reporting Expected to Hit the Golden State

As always, Blank Rome’s employment team stands by ready to assist.

Big Brother Just Got Bigger: Expanded Pay Data Reporting Expected to Hit the Golden State

Caroline Powell Donelan ●

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:

      1. Gathering median and mean hourly rate data for specific job categories, further categorized by their race, ethnicity, and sex;
      2. For employers with multiple establishments, preparing a separate pay data report for each establishment, doing away with the current requirement of a consolidated report;
      3. Gathering pay scale information by position, which would need to be provided to applicants and current employees upon request;
      4. 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
      5. 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.

Employer Alert: California Puts Another “Premium” on Meal Period Compliance

Caroline Powell Donelan and Howard M. Knee

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.

Continue reading “Employer Alert: California Puts Another “Premium” on Meal Period Compliance”

New York City Clarifies Pay Transparency Timetable—Delays Effective Date

Mara B. Levin, Stephen E. Tisman, Anthony A. Mingione, and William J. Anthony

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.

Continue reading “New York City Clarifies Pay Transparency Timetable—Delays Effective Date”
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