Category: Labor & Employment

What Employers Need to Know about the White House’s Executive Order on AI

President Joe Biden recently issued an executive order devised to establish minimum risk practices for use of generative artificial intelligence (“AI”) with focus on rights and safety of people, with many consequences for employers. Businesses should be aware of these directives to agencies, especially as they may result in new regulations, agency guidance and enforcements that apply to their workers.

Executive Order Requirements Impacting Employers

Specifically, the executive order requires the Department of Justice and federal civil rights offices to coordinate on ‘best practices’ for investigating and prosecuting civil rights violations related to AI. The ‘best practices’ will address: job displacement; labor standards; workplace equity, health, and safety; and data collection. These principles and ‘best practices’ are focused on benefitting workers and “preventing employers from undercompensating workers, evaluating job applications unfairly, or impinging on workers’ ability to organize.”

The executive order also requested a report on AI’s potential labor-market impacts, and to study and identify options for strengthening federal support for workers facing labor disruptions, including from AI. Specifically, the president has directed the Chairman of the Council of Economic Advisers to “prepare and submit a report to the President on the labor-market effects of AI”. In addition, there is a requirement for the Secretary of Labor to submit “a report analyzing the abilities of agencies to support workers displaced by the adoption of AI and other technological advancements.” This report will include principles and best practices for employers that could be used to mitigate AI’s potential harms to employees’ well-being and maximize its potential benefits. Employers should expect more direction once this report is completed in April 2024.

Increasing International Employment?

Developing and using generative AI inherently requires skilled workers, which President Biden recognizes. One of the goals of his executive order is to “[u]se existing authorities to expand the ability of highly skilled immigrants and nonimmigrants with expertise in critical areas to study, stay, and work in the United States by modernizing and streamlining visa criteria, interviews, and reviews.” While work visas have been historically difficult for employers to navigate, this executive order may make it easier for US employers to access skilled workers from overseas.

Looking Ahead

In light of the focus of this executive order, employers using AI for recruiting or decisions about applicants (and even current employees) must be aware of the consequences of not putting a human check on the potential bias. Working closely with employment lawyers at Sheppard Mullin and having a multiple checks and balances on recruiting practices are essential when using generative AI.

While this executive order is quite limited in scope, it is only a first step. As these actions are implemented in the coming months, be sure to check back for updates.

Copyright © 2023, Sheppard Mullin Richter & Hampton LLP.
By Carina L. Novell of Sheppard, Mullin, Richter & Hampton LLP
For more news on the Impact of the Executive Order on AI for Employers, visit the NLR Communications, Media & Internet section.

Giving Thanks for Thanksgiving

Until President Abraham Lincoln proclaimed a national day of thanksgiving during the Civil War, thanksgiving holidays were a matter of state and local concern.   California mentions Thanksgiving Day in 18 separate statutes, including those in the Code of Civil Procedure, Civil Code, and even the Fish & Game Code.  The last statute, however, has nothing to do with turkeys.  Rather, Fish & Game Code Section 5523 concerns the timing of the opening of the Dungeness crab season.

California may have more than one day of thanksgiving.  Government Code Section 19853 provides that all state employees are entitled to various specified holidays, including  every day appointed by the Governor of this state for a public fast, thanksgiving, or holiday.

© 2010-2023 Allen Matkins Leck Gamble Mallory & Natsis LLP

By  Keith Paul Bishop of Allen Matkins Leck Gamble Mallory & Natsis LLP

For more news on California Holidays for Employees, visit the NLR Labor & Employment section.

IRS Process for Withdrawing Employee Retention Credit Claims

On October 19, 2023, the IRS announced a process which is intended to allow employers who were pressured or misled by marketers or promoters into filing ineligible claims for the Employee Retention Credit (ERC), but who have not yet received a refund, to withdraw their claim. This process permits employers whose ERC claims are still being processed to withdraw their refund claims and avoid the potential that the IRS would deny the claim after the credit is received, thus avoiding the need to repay any refunded amounts, and avoiding potential interest and penalties.

When properly claimed, the ERC is a refundable tax credit designed for employers that were fully shut down or partially suspended due to the COVID-19 pandemic or that had a significant decline in gross receipts during the eligibility periods.

The move to permit the withdrawal of claims comes after the IRS placed abusive ERC promotions on its Dirty Dozen, an annual list aimed at helping raise awareness to protect honest taxpayers from aggressive promoters and con artists. After placing abusive ERC promotions on the Dirty Dozen, on September 14, 2023, the Commissioner of the IRS ordered that processing of any new ERC claims be stopped until December 31, 2023. However, the IRS stated that it would continue to process and pay out previously filed eligible ERC claims, as well as audit ERC claims and pursue criminal investigations of promoters and businesses filing dubious claims.

Who Can Withdraw an ERC Claim
To be eligible to withdraw an ERC claim, an employer must meet all of the following criteria:

  1. The ERC must have been claimed using an adjusted employment return, i.e. Forms 941-X, 943-X, 944-X, or CT-1X
  2. The ERC must be the only adjustment claimed on the return
  3. The employer must withdraw the entire amount of the ERC claim (this refers to each calendar quarter, rather than all calendar quarters, for which an ERC claim was made)
  4. The ERC claim cannot have been paid by the IRS or, if it has been paid, the employer has not yet cashed or deposited the refund check

How to Withdraw an ERC Claim

The notice provides a step-by-step menu for withdrawing a claim.  If the employer filed adjusted returns to claim ERCs for more than one calendar quarter and wishes to withdraw all ERC claims, it must follow the steps below for each calendar quarter for which it is requesting a withdrawal.  The IRS also has a dedicated page with sample form, which can be found here.

Employers that have not received a refund and have not been notified their claim is under audit may request a withdrawal by following these steps:

  1. Make a copy of the adjusted return with the claim you wish to withdraw
  2. In the left margin of the first page, write “Withdrawn”
  3. In the right margin of the first page:
    • Have an authorized person sign and date it
    • Write their name and title next to their signature
  4. Fax the signed copy of your return using your computer or mobile device to the IRS’s ERC claim withdrawal fax line at 855-738-7609.  The employer should keep a copy with its tax records.  The notice even provides a template for a simple claim withdrawal request.

Employers that have not received a refund and have been notified of an audit can still withdraw ERC claims using the above procedure, but must check with their examiner about how to fax or mail the withdrawal request directly to the examiner or, if an examiner has not yet been assigned, should respond to the audit notice with the withdrawal request, using the instructions in the notice for responding.

Special instructions are also included in the notice for employers that have received a refund check but have not cashed or deposited it.

Once a withdrawal is submitted, the employer should expect to receive a letter from the IRS about whether their withdrawal request was accepted or rejected.  A withdrawal is not effective until accepted by the IRS.  If the IRS accepts the withdrawal, the employer may need to amend its income tax return (if it previously amended that return to reflect ERCs that had been claimed).

ERC Refunds Already Received

Employers that are not able use the above withdrawal process may still be able to file another adjusted return if they need to:

  • Reduce the amount of their ERC claim
  • Make other changes to their adjusted return

However, it should be noted that the IRS is also working on separate guidance for ineligible employers that were misled into making ERC claims and have already received the payment.

Continued Risk for Fraudulent Claims

Withdrawn ERC claims will be treated as if they were never filed and the IRS will not impose penalties or interest.  However, ineligible employers should note that withdrawing an ERC claim will not remove the possibility that they or their advisor could be subject to potential criminal investigation or prosecution for filing a fraudulent ERC claim.

Copyright ©2023 Nelson Mullins Riley & Scarborough LLP
For more news on Employee Retention Claims, visit the NLR Labor & Employment section.

Surge in Class Actions Under the Illinois Genetic Information Privacy Act

This year has seen a substantial increase in the number of class action lawsuits filed against employers under the Illinois Genetic Information Privacy Act (GIPA). More than 20 suits have been filed this year, a stark contrast to zero filed in 2022 and only two in 2021.

Like its federal counterpart the Genetic Information Nondiscrimination Act (GINA), GIPA prohibits employers, and agents acting on their behalf, from “directly or indirectly” soliciting, requesting, requiring or purchasing genetic information from a person as a condition of employment or from using genetic information in a discriminatory manner against an employee or applicant. Genetic information is defined to include information from genetic tests or the manifestation of a disease or disorder of an individual or their family members.

Under the claims filed, plaintiffs allege that during the hiring process prospective employers collected family medical history and required pre-employment physicals or health interviews, which sought the protected information. These exams and interviews were often conducted by third-party occupational health services providers. The damages sought included “statutory damages” under the Act of $15,000 for each intentional and/or reckless violation and $2,500 for each negligent violation. In addition, GIPA has no statutory cap on punitive or compensatory damages and no statute of limitations, exposing employers to potentially massive damage awards.

Because these cases are in their infancy and currently only in Illinois, there is little guidance on the scope of GIPA and any exceptions that may exist. This means that we will need to wait and see how courts will interpret the Act and what impact the cases will have beyond Illinois.

In light of these developments, all employers should consider the following:

  • Disclaimer Use on Authorizations and Information Packets: Consider adding a written disclaimer to any authorization and pre-employment questionnaires that requests applicants not to provide any genetic information when responding to requests for medical information. The disclaimer should be provided to the applicant/employee for their information.
  • Review Third-party Provider Practices: Evaluate the practices of third-party medical providers, including documents provided to applicants/employees in their evaluation process, and request that family medical history not be obtained.
  • Assess Contracts/Indemnification Obligations: Review and assess the indemnification provisions of contracts with third-party medical providers. It is important that the hold harmless and indemnification obligations of the provider include reference to GIPA obligations in the scope of protection for the employer.
©2023 von Briesen & Roper, s.c
For more news on the Illinois Genetic Information Privacy Act, visit the NLR Labor & Employment section.

New FEHA Regulations Alter How, When Employers Can Consider Applicant’s Criminal Histories

The California Civil Rights Council (CRD) (formerly the DFEH) has issued new regulations that modify the Fair Employment and Housing Act (FEHA), the law that governs how and when California employers can consider a job applicant’s criminal history when making employment decisions. The new regulations took effect on October 1, 2023, and provide more coverage, prohibitions and requirements for potential employers to consider.

IN DEPTH

THE LAW

Under the FEHA, employers are prohibited from inquiring into a job applicant’s criminal history prior to extending a conditional offer of employment, including through job applications, background checks and internet searches.

The FEHA also requires that if an employer is considering taking an adverse action with respect to a job applicant or employee, the employer must first conduct an individualized assessment of the job applicant’s criminal history—including determining whether the applicant’s criminal history has a “direct and adverse” effect on their ability to perform the functions of the position.

While the thrust of the law remains the same, the new regulations expand the scope of who is covered by the FEHA, the kinds of inquiries the law prohibits, the kinds of evidence employers must accept and consider regarding an applicant’s justification for the past offense in question and the process for recission of a conditional offer of employment.

EXPANDED COVERAGE

First, the new FEHA regulations expand the definitions of “employer” and “applicant.” Previously, an “employer” was defined as “a labor contractor or client employer.” The updated regulations clarify that the definition of employer additionally encompasses any direct or joint employers, agents of the employer, staffing agencies, entities that evaluate the applicant’s criminal history on behalf of an employer, and entities that select or provide workers to an employer from a pool or availability list.

Similarly, the updated regulations clarify that an “applicant” may include, in addition to an individual who has been conditionally offered employment, existing employees who have applied to a different position with their current employer, those who have indicated a specific desire to be considered for a different position with their current employer, and even an existing employee who is subjected to a review and consideration of their criminal history because of a change in ownership, management, policy or practice.

Employers should note that job applicants are still considered “individuals who have been conditionally offered employment” even if they have commenced employment during the post-conditional offer review and criminal background check process. In other words, employers cannot transition an applicant to an employee before beginning the background check process to avoid the FEHA.

EXPANDED PROHIBITIONS

The new regulations make clear that employers are prohibited from including statements in job advertisements, postings, applications or other materials indicating that they will not consider applicants with criminal histories, including statements such as “no felons” or “must have clean record.”

In addition, employers are prohibited from conducting pre-hire internet searches on job applicants, and they cannot consider criminal history even if voluntarily provided by the job applicant during the application or interview process.

Moreover, employers are now barred, at any stage of the hiring process, from the following:

  • Refusing additional evidence voluntarily provided by an applicant contextualizing the offense in question (or another party at the applicant’s request);
  • Requiring an applicant to submit additional evidence, or a specific type of documentary evidence, regarding the offense in question; and
  • Requiring an applicant to disclose their status as a survivor of domestic abuse or comparable statuses, medical records, or the existence of a disability or diagnosis.

EXPANDED ADVERSE EMPLOYMENT ACTION REQUIREMENTS

Currently, employers are required to conduct an individualized assessment of an applicant’s criminal offense and its bearing on the individual’s candidacy before rescinding a conditional offer of employment if the decision is based in whole or in part on the applicant’s criminal history. However, the updated regulations explain that employers must additionally conduct a reassessment after the job applicant has had an opportunity to respond to the pre-adverse action notice and before making a final decision. The result is a four-step process: (1) the initial individualized assessment, (2) the pre-adverse action notice and applicant response, (3) reassessment and (4) the final decision. We discuss each step below.

1 – INITIAL INDIVIDUALIZED ASSESSMENT

The new regulations expand the scope of the employer’s individualized assessment. The regulations require the assessment to be reasoned and evidence-based, take place prior to sending the pre-adverse action letter and consider the following factors:

  • The nature and gravity of the offense or conduct;
  • The time that has passed since the offense or conduct;
  • The nature of the job held or sought; and
  • Evidence of rehabilitation or mitigating circumstances.

2 – THE PRE-ADVERSE ACTION NOTICE AND APPLICANT RESPONSE

If an employer wishes to rescind a conditional offer of employment after conducting an individualized assessment, the employer must notify the applicant in writing. The notice requirements largely remain the same: Employers must identify the conviction(s) they based their decision on, provide a copy of all the reports they utilized (including internet search results), inform the applicant that they have a right to respond before the decision is finalized and explain the kinds of evidence the applicant may provide evidence as part of their response. However, the new regulations do make a few notable changes to the notice requirement:

  • The regulations require the employer to provide the job applicant with notice of their right to respond to a pre-adverse action notice and with a response deadline that is at least five (5) business days from the date the applicant receives the notice.
  • If an applicant timely notifies the employer in writing that additional time is needed to respond, the employer must give the applicant at least five additional business days to respond to the notice before making a final decision. The regulations contain ambiguity regarding what is a “timely” notification.
  • If the pre-adverse action notice is sent to the applicant through email, the notice is deemed received two business days after it is sent, meaning that the five-day response deadline begins to run after the second day post-transmittal.

3 – REASSESSMENT

If the applicant provides evidence related to mitigating circumstances or their rehabilitative efforts since the conviction at issue, the employer must consider the information—a process the new regulations call “reassessment.” The employer must consider factors such as the applicant’s conduct during incarceration, employment history since the conviction or release from incarceration, community service and engagement, and other rehabilitative efforts.

4 – FINAL DECISION

There are no new requirements for employers to consider when making their final decision to rescind a conditional offer of employment.

EMPLOYER LIABILITY IMPOSED BY FEHA

Job applicants may allege violations of the FEHA by arguing that there is a less discriminatory policy or practice that serves the employer’s goals as effectively as its current background check policy or practice without significantly increasing the cost or burden on the employer. These allegations can be lodged through a complaint filed with the CRD or a civil lawsuit for discrimination. A variety of remedies are available for possible violations of the FEHA, such as reinstatement of back pay and benefits, compensatory damages for emotional distress and out-of-pocket losses, injunctive relief and punitive damages. Courts also regularly award attorneys’ fees if job applicants prevail.

PRACTICAL CONSIDERATIONS AND NEXT STEPS

Employers with background check programs can start implementing the following key action items in response to the updated FEHA regulations:

  • Review and update job postings and applications to ensure that they do not include statements suggesting that job applicants are barred from the process because of their criminal history, including “no convicted felons,” “criminal background check required” and language referring to “ex-offenders.”
  • Review background check policies as necessary to ensure compliance with the FEHA’s new requirements, including expanded time periods in communications with job applicants consistent with the four-step process above if considering an adverse action.
  • Ensure detailed and organized documentation of all discussions with job applicants who may be subject to an adverse action in preparation for future challenges to the employer’s hiring process under the new regulations.
  • Consider providing additional or updated trainings to human resources professionals who handle the application and new-hire process, especially to emphasize that internet searches (including social media) of job applicants are strictly prohibited prior to extending a conditional offer of employment. All inquiries should be saved until after a conditional offer of employment has been extended.
© 2023 McDermott Will & Emery
By Marjorie C. Soto Garcia of McDermott Will & Emery 
For more news on Employer Considerations of Criminal History, visit the NLR Labor & Employment section.

Competition for Control of College-Athletes Enters New Playing Field

November 7, 2023, may become a monumental day in the history of the National Collegiate Athletic Association (NCAA). It is the first day of a potentially groundbreaking hearing. Region 21 of the National Labor Relations Board will be hearing a case brought by members of the football, men’s basketball, and women’s basketball teams against the University of Southern California (USC), the PAC-12, and the NCAA. The crux of their argument is that the three major entities should be considered “joint employers” who have systematically misclassified the players as “student-athletes” rather than as employees.

The implications of this Board hearing could have far-reaching implications across the country. The NLRB General Counsel Jennifer Abruzzo has already signaled that, in her opinion, certain players at colleges and universities should qualify as employees of their institutions. If the administrative law judge were to agree with Abruzzo’s opinion, the impact on the national landscape of collegiate athletics would be immediate.

If these players are found to be employees, each player would be entitled to the benefits of traditionally employed individuals, such as compensation, overtime, social security, worker’s compensation, health and safety protections, protections against discrimination and harassment, and a statutory right to unionize and collectively bargain for a share of collegiate sport revenues.

While being found to be employees would be looked at as a major win for the impacted players, such a determination would cause complicated issues for colleges and universities across the country. These issues include compliance with Title IX of the Education Amendments of 1972 and the Immigration Nationality Act, among others. Further, having some teams but not others qualify likely will create a two-tier system throughout the country. This divide would be even further enhanced if the Board finds certain players, but not others, qualify as employees.

Testimony will not be heard until the week of December 18, at the earliest. Higher education institutions, players, and fans alike will be monitoring this hearing as it progresses.

Jackson Lewis P.C. © 2023
For more news on Student Athletes as Employees, visit the NLR Entertainment, Art & Sports section.

Major Changes Proposed to Non-Competes in the UK

Hot on the heels of the Federal Trade Commission (“FTC”) proposal for a complete ban on non-competes, the UK Government has announced its intention to limit the length of non-compete clauses to three months.

Impact of the reforms in the UK

Importantly, the three-month limit will apply only to non-compete clauses.  Thus, it will not affect or limit the use of non-solicitation clauses (which prevent former employees from contacting customers or clients in an attempt to win their business) or non-dealing clauses (which prevent former employees from dealing with customers, even when a customer has approached the employee).  The limit also will apply only in contracts of employment and what are classed as “worker” contracts.  Common law principles on restrictions being drafted no wider than reasonably necessary to protect legitimate business interests will continue to apply.

The limit will not interfere with an employer’s ability to rely on paid notice periods, garden leave, as well as confidentiality obligations.  The Government has ruled out introducing mandatory compensation for the period of non-compete clauses — a concept that is more commonplace in mainland Europe such as Germany, Italy and France.  When it comes to enforcing a three month non-compete, the proposal also will likely increase the time pressure on an employer seeking injunctive relief and the interim stage will likely become determinative of the issue given the difficulties of getting a full trial within three months.

USA influencing a global trend

Whilst the UK’s proposal stops short of a total ban, the FTC’s similar, albeit more extensive, proposal in the United States shares very similar reasoning to that put forward by the UK Government and signals a move in the same direction.  The FTC argues the freedom to change jobs is key to a competitive, thriving economy and that non-competes suppress wages and hinder innovation.  It even suggests that eliminating non-competes would generate jobs for as many as one in five workers currently subject to non-competes, raising wages by $250-$296 billion dollars.

The UK’s subsequent proposal (in addition to the FTC’s) also is likely to encourage debate in other jurisdictions, including the European Union.  The European Commissioner for Competition has indicated that the EU is not just looking to investigate traditional cartels but also anti-competitive conduct in labour markets such as wage-fixing or “no-poach” agreements.

What’s next?

The UK Government has stated that it intends to limit non-competes “when parliamentary time allows”.  Since this has been a debate that has run for a number of years within Government (coupled with the prospect of a general election in 2024), it could be some time before we see any definite change on this issue.

For now, and until the Government brings forward legislation, non-competes of over three months remain enforceable in the UK, provided they are no wider than reasonably necessary. Employers can therefore continue to include longer non-competes in their employment contracts as a means for protecting their business interests, although we anticipate greater pushback from employees asked to sign on to long non-competes.

There are questions left unanswered and in particular around what will happen to existing non-competes that are longer than three months, or to non-competes that come into force between now and when any legislation is enacted.  Will they automatically be treated as unenforceable, or amended to apply for three months only, or will there be a grandfathering provision such that existing provisions continue to apply for a specified period?

We will need to wait to see what the legislation looks like (and any guidance the Government publishes on non-compete clauses).  In the meantime, employers can start to prepare by having employment contracts reviewed to ensure that other restrictive covenants (e.g., non-solicitation/non-dealing, confidentiality obligations) are well-drafted and provide the best possible protection, as well as considering other alternatives like longer notice periods, more active use of garden leave, and tighter enforcement around confidentiality undertakings.

© 2023 Vedder Price
Article by  Daniel Stander of Vedder Price
For more articles on non-competes, visit the NLR Labor & Employment section.

NLRB Issues Final Rule on Joint-Employer Status, Answering a Major Question No One Asked

On October 26, 2023, the National Labor Relations Board (NLRB or “Board”) issued its Final Rule (the “Rule”) on Joint-Employer status under the National Labor Relations Act (NLRA). Slated to take effect on December 26, 2023, the Rule returns to and expands on the Obama era Browning-Ferris test, scrapping the NLRB’s 2020 Joint Employer test for the sole reason that the current Board disagrees with the 2020 test, and setting up a potential showdown with the Supreme Court over the “major questions” doctrine and the scope of the NLRB’s administrative authority.

The Final Rule Summarized

 Under the new Rule, any entity that shares or codetermines one or more of a group of employees’ “essential terms and conditions of employment” will be considered a joint employer of the employees along with any other entity controlling that work, that is their “primary employer.” Those “essential terms and conditions of employment” as listed in a new NLRB Fact Sheet are:

  1. wages, benefits, and other compensation;
  2. hours of work and scheduling;
  3. assignment of duties to be performed;
  4. supervision of the performance of duties;
  5. work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline;
  6. tenure of employment, including hiring and discharge; and
  7. working conditions related to the safety and health of employees.

The Rule is purported to be grounded in common law agency principles and will apply where control – or potential control – over any of the above terms and conditions is reserved to an entity, irrespective of whether or not such control is actually exercised and whether such control is direct or indirect. The Rule is expected to allow the Board to rely on standard contractual terms, such as those typically found in agreements between temporary agencies and other suppliers of labor and their clients, to make sweeping declarations of joint employer status, regardless of the factual circumstances.  Such findings would obligate putative joint employers to engage in collective bargaining with employee representatives over any of those essential terms and conditions of employment over which they potentially exercise control, even if such control is indirect. While the NLRB’s press release about the Rule asserts that, to make a codetermination, the Board will conduct factual analyses on a case-by-case basis, it is clear that the Rule will effectively make it much easier for the Board to designate common business relationships as instances of joint employment.

Potential Concerns and Consequences

An expanded definition of joint employment is the latest indicator of the current NLRB’s efforts to cast a wider net across the nation’s workforce, organized or not. The effects remain to be fully realized but may place more businesses directly under the Board’s jurisdiction. For example, where a non-unionized business has a relationship with an organized shop that the NLRB deems to constitute a joint employment arrangement, that non-unionized business could find itself a responding party to an unfair labor practices charge brought by representatives of the shop workers.

Accordingly, employers and their vendors or other suppliers of services and/or labor must consider how their relationships may be viewed under the Rule. Agreements should be reviewed for any language that could be construed as establishing forms of worker control that would implicate an entity as a joint employer and might benefit from the addition of language explicitly providing that such arrangements do not create an employment relationship.

Legal challenges to the Rule are expected, and the NLRB’s position may be on shaky ground following the Supreme Court’s decision in West Virginia v. EPA, which called into question the validity of agency action that the Court determines to be a “transformative expansion” of administrative authority and an attempt to answer a “major question” that is better left to elected representatives in Congress rather than to the Executive Branch’s administrative agencies. To be sure, if allowed to stand, the NLRB’s efforts to establish a Joint Employer rule will have significant ripples throughout the U.S. economy. We will keep you informed as this issue winds its way through the courts.

©2023 Epstein Becker & Green, P.C. All rights reserved.
For more on NLRB’s Joint Employer Rule, visit the NLR Labor & Employment section.

H-1B Proposal Modernizes H-1B Requirements and Oversight, Provides Limited Flexibility for F-1 Student Visa Program

The White House Office of Management and Budget (OMB) has reviewed and approved a Department of Homeland Security (DHS) proposal to bring oversight of the H-1B visa program to the modern era. This proposal also creates flexibility in the F-1 student visa program for students who are the beneficiaries of timely filed H-1B cap-subject petitions.

Based upon the information published by the Department of Homeland Security, the proposed rule will:

  • Revise the regulations relating to the “employer-employee relationship”
  • Provide flexibility for start-up entrepreneurs
  • Implement new requirements and guidelines for site visits, including those conducted in connection with petitions filed by H-1B dependent employers whose basic business information cannot be validated through commercially available data
  • Provide limited flexibility on the employment start date listed on the petition
  • Address “cap-gap” concerns
  • Bolster the H-1B registration process to reduce the possibility of misuse and fraud in the H-1B registration system
  • Clarify the requirement that an amended or new petition must be filed where there are material changes, including the streamlining notification requirements related to certain worksite changes

Written public comments must be submitted by Dec. 22, 2023, online at regulations.gov. The proposal, particularly the component aimed at reducing fraud and misuse in the H-1B registration system, is expected to be welcomed by H-1B petitioners and employee beneficiaries who have faced extreme challenges in the lottery in recent years.

Following DHS precedent, the proposed rule is expected to have a delayed effective date should it proceed.

With the fiscal year 2025 H-1B registration season fast approaching, employers and potential H-1B registrants should consider this new proposed rule when solidifying plans for the upcoming registration period.

This article was co-authored by Tieranny Cutler.

© 2023 BARNES & THORNBURG LLP
By Sarah J. Hawk of Barnes & Thornburg LLP
For more news on H-1B Oversight Proposal, visit the NLR Immigration section.

Pay Frequency Claims Pass Muster in New York

After avoiding the limelight for decades, New York State’s manual worker pay frequency law has taken center stage.

Specifically, New York Labor Law (NYLL) § 191(1)(a) requires private employers to pay manual workers weekly, rather than semi-monthly. As we have previously reported, the law is broadly applied to cover not only manual laborers in the traditional sense of the term but to a wide range of physical work, including retail, food preparation, home care, and more.

Ever since a New York appellate court equipped manual workers with a private right of action, pay frequency claims have surged, with recent cases proving difficult for employers to dismiss at the outset. Unless and until a different appellate court reverses course, employers can expect these actions to keep rolling in.

Surge in Claims After Vega

Until recently, enforcement of the pay frequency law was left to the New York Department of Labor (NYDOL), which imposed modest penalties for pay frequency violations. In the 2019 case Vega v. CM & Associates Construction Management LLC, however, a New York Appellate Division Court held that § 191 permits employees to seek liquidated damages for the untimely payment of wages, even if the wages are paid in full. The Vega decision equipped manual workers with a private right of action and spawned an influx of litigation in this area.

Employers that violate the pay frequency law must pay the full amount of unpaid wages and may be liable for liquidated damages equal to 100% of untimely-paid wages, as well as interest, costs, and attorneys’ fees. (Certain employers with at least 1,000 workers may request that the NYDOL grant an exemption to the weekly-pay requirement.) For those covered by the law, New York’s six-year statute of limitations means pay frequency claims could continue to mount.

Manual Workers Defined Broadly

While the NYLL defines “manual worker” as “a mechanic, workingman or laborer,” the NYDOL imposes a more contemporary and expansive definition, interpreting “manual workers” to include those who spend at least 25% of their working time engaged in physical labor. Physical labor can include countless tasks, including stocking shelves, standing or walking for long periods of time, preparing food, styling hair, cleaning a workplace, and providing care for others. Therefore, a wide array of jobs, from retail to home care workers, could be covered under the pay frequency law. Courts undertake factual, case-by-case inquiries to determine whether a plaintiff is considered a manual worker.

Federal Courts Follow Suit

Federal courts in New York have uniformly followed the Vega ruling by allowing claims brought under § 191(1)(a) to proceed. They have rejected arguments that were once thought to be potential hurdles, such as a plaintiff’s lack of standing for failure to identify a concrete harm. Unless and until an appellate court retreats from Vega, pay frequency claims will likely continue to advance through the courts.

To avoid costly litigation, covered New York employers are advised to evaluate whether they employ manual workers as the term is defined by the NYDOL and to consider revising their pay frequency practices as applicable.

© 2023 Foley & Lardner LLP
For more articles on labor law, visit the NLR Labor & Employment section.