Category: Labor & Employment

Be Prepared for Significant Employment Law Changes in 2024

The year 2023 brought many changes to Illinois labor and employment law. As the year ends, it is important to make sure you are ready for the laws that go into effect January 1, 2024. Taking the time to review your policies and procedures before the start of the New Year mitigates the chance of a surprise violation. When updating your policies and procedures for your business, consider the following:

  • The Chicago Paid Leave and Paid Sick and Safe Leave Ordinance will require covered employers to provide minimum paid leave for employees in Chicago;
  • The Paid Leave for All Workers Act implements minimum paid leave for workers in Illinois;
  • The Illinois Transportation Benefits Program Act will mandate certain pre-tax commuter benefits;
  • Amendments to the Equal Pay Act of 2003 with HB 4604 and HB 3129 will require covered employers to submit a filing with the Illinois Department of Labor;
  • Amendment to the Day and Temporary Labor Services Act with HB 2862 imposes certain equal pay and benefits requirements on covered temporary laborers; and
  • The Annual Illinois Minimum Wage Increase will increase the state minimum wage rates.
© 2023 Chuhak & Tecson P.C.
For more news on Illinois labor and employment laws, visit the NLR Labor & Employment section.

What Are the Top 3 Labor Law Developments of 2023 (So Far)?

It’s hard to believe the end of 2023 is upon us. This year is one for the history books on the labor law and labor relations fronts. In a year packed with significant legal landscape changes and high-profile labor disputes, it’s worth a quick recap of what are – in my view – the top 3 developments.

1. NLRB Revamps the Union Organizing Process

At the top of my list are changes the National Labor Relations Board (NLRB) made to the union organizing process. The board did several things in this regard. First, the NLRB reinstated the Obama-era “ambush” election rules that accelerate the union election timetable. Specifically, these rules truncate the amount of time between an election petition being filed and a vote being held (i.e., shorten the amount of time a company has to campaign).

Second, the agency issued arguably one of its most groundbreaking decisions in decades in Cemex. In that case, the NLRB altered the framework for how unions can and will be recognized and significantly loosened the standard for Draconian bargaining orders in some cases. Bottom line: The legal landscape, relatively speaking, makes it exponentially easier for workers to vote in unions now.

2. UAW Strikes at the Big 3

Labor relations issues haven’t been top headlines in recent decades. That changed this year. The ongoing nationwide union push at Starbucks over the last two years has garnered much attention, along with some other high-profile union pushes and disputes. But the United Auto Workers’ (UAW) coordinated strike efforts at Detroit’s “Big Three” automakers truly was remarkable in terms of the national attention it garnered. For the first time, the UAW struck General Motors, Ford, and Stellantis (aka Chrysler) at once.

The UAW took a creative approach: it targeted specific plants for work stoppages while leaving others operational. This approach had two primary benefits to the union: 1) it allowed it to slow the cash burn on their strike pay bank (estimated to be north of $800 million at one point) and 2) it allowed the union to keep the companies guessing as to which plants the UAW may bring offline next – creating operational inefficiencies and uncertainty. Ultimately, this strategy resulted in deals with each of the Big 3, and most view the UAW as having come out on top in these negotiations.

3. NLRB Starts to Scrutinize Non-competes

On May 30, the NLRB’s top lawyer, Jennifer Abruzzo, turned heads when she issued a memo signaling that her office was taking the view that non-compete agreements, in some circumstances, violate the National Labor Relations Act (NLRA). This development was somewhat surprising to some given that the NLRA was passed nearly 100 years ago and was not cited previously as a basis to invalidate standard restrictive covenants found in countless employment agreements around the country.

Abruzzo further announced the NLRB will be coordinating enforcement and a potential crackdown on non-competes with the other agencies, including the Federal Trade Commission – which this year also signaled an emphasis on these agreements – and the Department of Justice.

Given there’s a month left to go before the end of 2023, there may be other significant developments to come, but, for now, these are my top three. Happy Holidays!

© 2023 BARNES & THORNBURG LLP
For more news on 2023 Labor Law Updates, visit the NLR Labor & Employment section.

Chicago Employers: Prepare for New Paid Leave Ordinance Effective 31 December 2023

On 9 November 2023, the Chicago City Council passed the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance1(the Ordinance). The Ordinance takes effect on 31 December 2023, and replaces Chicago’s current paid sick leave ordinance.2 Under the Ordinance, starting 1 January 2024, Chicago employees are entitled to up to 80 hours of paid time off in a 12-month period, with 40 hours allocated to paid sick leave and 40 hours allocated to general paid leave.

The Ordinance comes eight months after the Illinois legislature’s enactment of the Illinois Paid Leave for All Workers Act (PLAWA),3 which goes into effect on 1 January 2024 and guarantees that Illinois workers can earn or accrue up to 40 hours of paid leave per year that may be used for any reason. Although employers covered by the Ordinance are exempt from PLAWA,4 the Ordinance adopts PLAWA’s purpose of providing general paid leave to employees in addition to paid sick leave.

METHOD FOR ACCRUAL, CARRYOVER, AND FRONTLOADING

The Ordinance provides that a covered employee5 will accrue one hour of general paid leave and one hour of paid sick leave for every 35 hours worked. Both general paid leave and paid sick leave are accrued in hourly increments and the total accrual for both forms of leave is capped at 40 hours in a 12-month period. At the end of the 12-month period, covered employees are allowed to carryover up to 16 hours of general paid leave and up to 80 hours of paid sick leave to the subsequent 12-month period. Chicago employers may also choose to “front-load,” or grant, 40 hours of paid leave or 40 hours of paid sick leave (or both) on the first day of employment or on the first day of the 12-month period.  If an employer elects to front-load general paid leave hours, the employer is not required to allow employees to carry over unused general paid leave hours to the following 12-month period. However, employers must allow employees to carry over up to 80 hours of paid sick leave into the next 12-month period even if the leave is front-loaded.

USE OF LEAVE

Employers must allow covered employees to use accrued paid sick leave after completing 30 days of employment, and use accrued general paid leave after completing 90 days of employment. An employer may set a reasonable usage minimum increment, not to exceed four hours per day for paid leave or two hours per day for paid sick leave. If a covered employee’s scheduled workday is less than such minimum increments, then the minimum increment of time cannot exceed the covered employee’s regular scheduled workday.

Similar to the PLAWA, general paid leave under the Ordinance may be used for any reason and employees cannot be required to provide a reason for or documentation to support the leave. Paid sick leave may be used for the same reasons set forth under the current Chicago paid sick leave ordinance, including:

  • For illness or injury, or for the purpose of receiving professional care, which includes preventive care, diagnosis, or treatment for medical, mental, or behavioral issues, including substance use disorders;
  • For a family member’s illness, injury, or order to quarantine, or to care for a family member receiving professional care;
  • For domestic violence, or if a covered employee’s family is the victim of domestic violence;
  • If the covered employee’s place of business is closed by order of a public official due to a public health emergency, or the employee needs to care for a family member whose school, class, or place of care has been closed; or
  • For the covered employee to obey an order issued by the mayor, the governor of Illinois, the Chicago Department of Public Health, or a treating healthcare provider requiring the employee to stay at home to minimize the transmission of a communicable disease; to remain at home while experiencing symptoms or sick with a communicable disease; and to obey a quarantine order or an isolation order issued to the employee.

REQUESTING LEAVE

For general paid leave, an employer may require a covered employee to provide reasonable notice not to exceed seven days prior to the need for leave and may require preapproval to ensure continuity of business operations. An employer may also require seven days’ notice for paid sick leave. If the need for paid sick leave is not reasonably foreseeable, an employer may require a covered employee to give notice as soon as is practicable by notifying the employer by phone, email, or other means. The Ordinance defines “reasonably foreseeable” as including, but not limited to, prescheduled appointments with health care providers and court dates in domestic violence cases.

If a covered employee uses paid sick leave to be absent for more than three consecutive work days, the employer may require certification that the paid sick leave was used for a qualifying purpose. For health-related paid sick leave, this certification can be documentation signed by a licensed health care provider. For domestic violence-related paid sick leave this certification can be a police report, court document, or a signed statement from an attorney, a member of the clergy, or a victim services advocate. An employer may not delay the commencement of paid sick leave or delay payment of wages based on not receiving the required documentation or certification. However, an employer can take disciplinary action, up to and including termination, against a covered employee who uses paid sick leave for purposes other than those described in the Ordinance.

PAYMENT OF PAID LEAVE AND PAID SICK LEAVE

The Ordinance sets forth general requirements relating to the payment of general paid leave and paid sick leave. General paid leave and paid sick leave must be compensated at the employee’s regular rate of pay, including health care benefits. The regular rate of pay for nonexempt or hourly employees is calculated by dividing the employee’s total wages by total hours worked in full pay periods of the prior 90 days of employment.  Wages do not include overtime pay, premium pay, gratuities, or commissions. Employers must pay an employee for their general paid leave and paid sick leave by the next regular payroll period after the time off was taken.

PAYMENT OF PAID LEAVE UPON TERMINATION

Under the Ordinance, an employer with 50 covered employees or less is not required to pay out any accrued, unused general paid leave upon termination. An employer with 51 to 100 covered employees (Medium Employer) must pay out accrued, unused general paid leave, up to 16 hours, until 31 December 2024. On or after 1 January 2025, a Medium Employer must pay all accrued, unused paid general leave upon an employee’s termination for any reason. Unless otherwise provided in a collective bargaining agreement, an employer cannot enforce a contract or a policy that requires the employee to forfeit any earned general paid leave upon separation from employment. Employers are not required to pay out accrued, unused paid sick leave.

Further, all unused paid sick leave and paid general leave is retained by the covered employee if the employer sells, transfers, or assigns the business to another employer and the employee continues to work in the City of Chicago.

EXISTING LEAVE POLICIES AND UNLIMITED PAID TIME OFF PROGRAMS

If a covered employee accrues paid sick leave before 1 January 2024 and the employer’s existing paid time off policy does not comply with the Ordinance, then on 1 January 2024, any paid sick leave that the covered employee is entitled to will rollover to the next 12-month period.

For employers that have recently adopted “unlimited paid time off policies,” the Ordinance provides that employers may offer unlimited paid time off policies and so long as the covered employer provides unlimited paid time off at the beginning of employment or the start of a 12-month period, there is no requirement to permit carryover of unused general paid leave to the next year. However, employees must still be allowed to carry over up to 80 hours of paid sick leave. Although the covered employer may still require reasonable notice for both foreseeable and unforeseeable reasons for leave, it may not require preapproval for such leave. Further, if the employer has an unlimited paid time off policy, upon separation from employment (or transfer outside of the City of Chicago’s boundaries), employers must pay the monetary equivalent of 40 hours of general paid leave less the amount of general paid leave used by the covered employee during the prior 12-month period preceding separation of employment (or transfer outside of the City of Chicago’s boundaries). Finally, employers must still comply with the other requirements in the Ordinance related to the administration of general paid leave and paid sick leave.

NOTICE AND POSTING

Similar to the current Chicago paid sick leave ordinance, a covered employer must post in a conspicuous place a notice advising covered employees of their right to paid time off. The Ordinance also sets the following requirements:

  1. The employer must provide the same notice to the covered employee with the first paycheck issued to the employee, as well as on an annual basis with a paycheck issued within 30 days of 1 July.
  2. In every pay stub or wage statement to the covered employee, the employer must provide a written notification stating the updated amount of paid leave and paid sick leave available to the employee.
  3. The employer must notify employees at least five calendar days before any changes to the employer’s paid time off policy are made.
  4. The employer must provide employees with a 14-day written notice of changes to its paid time off policies that affect the employees’ final wages.
  5. The employer must notify the covered employee in writing that the employee may request payout of their accrued, unused paid leave time when the employee has not been offered a work assignment for 60 days.

PENALTIES FOR VIOLATION, DAMAGES, AND PRIVATE CAUSE OF ACTION

Any employer who violates the Ordinance may be subject to fines between US$1,000 and US$3,000 for each separate offense. If the employer violates the notice requirements, then the employer may be fined US$500 for the first violation and US$1,000 for any subsequent violation. Each day a violation occurs constitutes a separate and distinct offense.

Further, an employer who violates the Ordinance may be liable to the affected employee for damages equal to three times the full amount of any leave denied or lost by reason of the violation, plus interest, costs, and reasonable attorney’s fees paid by the employer to the covered employee. The Ordinance also provides for a private right of action, which is available to covered employees on 31 December 2023 for violations related to paid sick leave and 1 January 2025 for violations related to general paid leave.

Chicago employers should review their current paid time off policies and payroll systems for compliance and should consider consulting their labor and employment attorneys for assistance in developing a policy that meets the requirements of the Ordinance. The lawyers of our Labor, Employment, and Workplace Safety practice regularly counsel clients on a wide variety of issues related to paid leave policies and are well positioned to provide guidance and assistance to clients on this significant development in Illinois.

FOOTNOTES

1 Chi., Ill., Mun. C. Chi. § 6-130 (2023).

2 Chi, Ill., Mun. C. Chi. § 6-105 (2023).

3 Paid Leave for All Workers Act, Pub. Act No. 102-1143 (Jan. 1, 2024).

4 See Sang-yul Lee, et al., Illinois Guarantees One Week of Paid Leave for All Workers, K&L Gates (Mar. 15, 2023), https://www.klgates.com/Illinois-Guarantees-One-Week-of-Paid-Leave-for-All-Workers-3-15-2023. Employers covered by local paid sick leave ordinances, such as the Ordinance, are exempt from PLAWA so long as such municipality has an ordinance in place on January 1, 2024. See 820 ILCS § 192/15(p).

5 A “covered employee” is defined as an Employee who works at least two hours for a Chicago employer in any particular two week period. See Chi., Ill., Mun. C. Chi. § 6-130-010 (2023).

Copyright 2023 K & L Gates
For more news on Chicago Paid Leave Policy, visit the NLR Labor & Employment section.

A Time for Clauses – Santa and No Gag

As we approach December, the impending arrival of Santa Claus is no doubt dominating discussions in many households.  However, there is another, perhaps lesser known, “clause”-related item that health plan sponsors need to keep top of mind in the coming month.

Specifically, as discussed in our blog found here, health plan sponsors must remember to file their first annual “no gag clause” attestation on December 31, covering the period from December 27, 2020 through the attestation date.

Here are some quick reminders about the requirement, along with some next steps for plans that are catching up:

  • What is the “No Gag Clause” Attestation?

The “no gag clause” attestation, which must be filed annually by December 31, requires group health plans and issuers to certify that they are not subject to agreements that directly or indirectly restrict them from disclosing provider-specific cost or quality-of-care information to certain parties, electronic accessing de-identified claims and encounter information (consistent with privacy laws) or sharing this information with a business associate.

  • How to File an Attestation

The attestation is filed electronically on CMS’s dedicated website, found here.  Instructions, frequently asked questions and a user manual can be found on CMS’s website here.

  • Who is Responsible for the Attestation?

While self-insured plans retain the ultimate responsibility for ensuring that the attestation is submitted, they can contract with their third-party administrators to file on their behalf.

For fully-insured plans, the insurance issuer’s submission of an attestation will satisfy the attestation requirement for both the plan and the issuer.

  • What Should Plan Sponsors Do Now?

For plans that have not yet begun to address the attestation, there is still time to take the necessary steps as follows:

  • If they have not already done so, plans should review their service agreement(s) to ensure that they do not contain any gag clauses.
  • Plans may also wish to obtain written confirmation from their administrators that no prohibited gag clauses are included in their applicable contracts (and, if any are, that the contracts are amended to remove them effective December 27, 2020).
  • Self-insured plans should contact their administrator(s) to coordinate who will be filing the submission.  At this stage, many administrators already have their processes in place and may not wish to file on the behalf of the plan, in which case the plan will need to do the filing.  This will make accomplishing the first two steps more important.

Getting these tasks accomplished as soon as possible will allow plan sponsors to put these prohibited clauses behind them and focus on the good Clauses of the season—Santa and Mrs.

© 2023 Proskauer Rose LLP.
For more news on No Gag Clauses, visit the NLR Health Law & Managed Care section.

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.