Category: Legislation

A Holiday Surprise: New York Governor Vetoes the Proposed Non-Compete Ban

On December 22, New York State Governor Kathy Hochul provided New York State employers with a welcome holiday surprise by announcing her veto to the proposed ban on non-compete agreements. As noted in our prior client alert concerning the New York legislatures’ 2023 passage of its non-compete ban bill, S3100, its restriction was expansive and would have provided a broad ban on non-compete agreements.

The bill sat on Governor Hochul’s desk awaiting her signature for several months, keeping New York State employers in a state of uncertainty. Earlier this month, Governor Hochul publicly commented that she would consider a bill which struck the right balance to protect low and middle-income workers, while she recognized that higher income workers have more negotiating power and are in industries that are an important part of New York’s economy.

In recent weeks, many anticipated that a compromise may be reached behind the scenes. While it is clear that a compromise has not yet been reached with regard to this specific bill, the Governor has stated that she is open to legislation banning agreements that limit workers’ mobility.

We will continue to monitor the situation. Given the debate concerning New York’s law in this area, as well as an evolving patchwork of state legislation nationally and a growing movement to restrict such agreements at the federal level (such as proposed by the Federal Trade Commission and the National Labor Relations Board), we recommend that employers take proactive steps now. Employers should consider evaluating their existing confidential information protections exclusive of restrictive covenants; specifically, their policies, confidentiality agreements, employee handbooks, and employee training in light of the evolving current law, and take action to update those protections.

© Copyright 2023 Sills Cummis & Gross P.C.
For more news on Noncompete Laws, visit the NLR Labor & Employment section.

New Year, New Changes for California Employers in 2024

As 2024 quickly approaches, so, too, do many new obligations and restrictions for employers with California employees.

Below, we summarize significant changes to hiring and workforce management, litigation, wage and hour, and other California employment laws taking effect in the new year.

Unless otherwise noted, all new laws discussed below will be effective as of January 1, 2024.

HIRING & WORKFORCE MANAGEMENT

Restrictive Covenants

California has long been the nation’s leader in limiting employers’ use of restrictive covenants. SB 699 and AB 1076 make the California Business and Professions Code (the “B&P Code”), which generally voids restrictive covenants in California, even stricter.

As we previously reported, SB 699 broadens the B&P Code by adding a new Section 16600.5 that:

  • provides that any agreement void thereunder is also unenforceable in California regardless of where and when the agreement was signed;
  • makes it explicitly unlawful for employers to attempt to enforce or enter into a noncompete agreement (rather than simply voiding such agreements); and
  • grants current, former, and prospective employees a private right of action against employers that attempt to enforce or enter into a noncompete agreement.

AB 1076 further builds on these prohibitions by creating a new Section 16600.1, which makes it unlawful for employers to include noncompete clauses in employment agreements or to require an employee to enter into a noncompete. In addition, as we detailed here. As noted above, prior to these amendments, the B&P Code only voided such restrictive covenants.

AB 1076 also establishes a new notice obligation with which employers must comply by February 14, 2024. Specifically, employers must notify current and former employees who were employed after January 1, 2022, and are subject to an unlawful noncompete, that such agreement or clause is void. This notice requirement also extends to remote employees (current or former) who reside in California, even if the employer has no physical presence in California, as well as former employees who did not work in California during their employment but have since moved there.

Discrimination Protections for Off-Duty Cannabis Use

For the second year in a row, California enacted new employment protections for cannabis users under the state’s Fair Employment and Housing Act (FEHA). As we outlined here, last year’s AB 2188 amended FEHA to prohibit discrimination on the basis of off-duty, off-site use of cannabis, as well as on the basis of testing positive for the presence of non-psychoactive cannabis metabolites in an employee’s or applicant’s hair, blood, or bodily fluids.

SB 700 builds on these protections by further amending FEHA to prohibit employers from inquiring about applicants’ past cannabis use. Importantly, the law exempts from coverage situations in which an employer is permitted under state or federal law to obtain information about an applicant’s prior cannabis use from the person’s criminal history. Moreover, the law does not preempt state or federal laws requiring employers to test applicants or employees for controlled substances. Both SB 700 and AB 2188 will take effect at the start of the new year.

Anti-Retaliation Protections

California law provides applicants and employees who engage in certain protected activities with a variety of anti-retaliation protections. SB 497 further expands these protections by creating a rebuttable presumption of retaliation if an employer disciplines or takes adverse action against an employee or applicant within 90 days of the employee or applicant engaging in conduct protected by California Labor Code §§ 98.6, 1102.5, and 1197.5. This protected conduct includes, but is not limited to:

  • complaining about unpaid wages;
  • complaining about unequal pay violations, including being paid at wage rates less than the rates paid to an employee of the “opposite sex”;
  • disclosing the employee’s own wages;
  • discussing the wages of others;
  • inquiring about another employee’s wages;
  • aiding and encouraging another employee to exercise their rights under the law; and
  • whistleblowing.

Employers may rebut this presumption by establishing that there was a legitimate, non-retaliatory reason for the adverse action.

Paid Sick Leave

As we previously reported, this fall, the California Legislature amended and expanded employers’ paid sick time obligations under the Healthy Workplaces, Healthy Families Act (HWHFA). The overall structure of the HWHFA remains the same, but as of January 1, 2024, SB 616 increases the amount of paid sick time that employers must provide— from three days or 24 hours to five days or 40 hours. Importantly, employers may still choose either to front-load and offer a block grant of paid sick time at the beginning of each year or to use an accrual-based method. As before, with an accrual-based policy, all unused time carries over from year to year.

For accrual-based policies, SB 616 also does the following:

  • increases the cap of paid sick leave that employees can use each year from three days or 24 hours to five days or 40 hours;
  • increases the cap of the total amount of paid leave an employee may accrue from six days or 48 hours to 10 days or 80 hours; and
  • requires that employees accrue paid sick leave at either (1) no less than one hour for every 30 hours worked or (2) an alternative rate under which employees accrue (and are allowed to use) no less than three days or 24 hours of paid sick leave by the employee’s 120th calendar day of employment and no less than the greater of five days or 40 hours of paid sick leave by the employee’s 200th calendar day of employment.

To help employers comply with their new obligations under SB 616, the California Labor Commissioner’s office recently updated its “California Paid Sick Leave: Frequently Asked Questions” guidance and published an updated Paid Sick Leave poster and employee notice.

Leave for a Reproductive Loss

SB 848 creates protected leave for eligible employees who experience a “reproductive loss.” The new law applies to employers with five or more employees, and eligible employees are those who have been employed for at least 30 days prior to the leave. Employers must grant eligible employees up to five days of leave following a reproductive loss. The law broadly defines “reproductive loss” and includes failed adoption, failed surrogacy, miscarriage, stillbirth, and unsuccessful assisted reproduction. Similar to bereavement leave, which the California Legislature enacted in 2023, reproductive leave days must be taken within three months of the loss but do not have to be taken consecutively. Reproductive loss leave is not required to be paid, but it can be paid under the employer’s existing applicable paid time off policies, such as vacation, personal leave, or sick leave.

Workplace Violence Prevention Plans

Current California Division of Occupational Safety and Health (“Cal/OSHA”) regulations require employers to adopt an Injury and Illness Prevention Program (IIPP). SB 553 requires virtually all California employers to have in place by July 1, 2024, a written Workplace Violence Prevention Plan as a stand-alone section in their IIPP or as a separate document. Importantly, employers already covered by Cal/OSHA’s Violence Prevention in Health Care standard (the “Cal/OSHA Health Care Standard”) are excepted from SB 553’s scope, given that the Cal/OSHA Health Care Standard already requires such employers to establish, implement, and maintain workplace violence prevention plans.

SB 553 outlines several specific requirements for the Workplace Violence Prevention Plan, including detailing how the employer responds to any threat or act of violence that occurs in the workplace, procedures to identify and evaluate workplace hazards, and procedures for employees to report violent incidents or threats of violence. Employers must also provide specific training on the Workplace Violence Prevention Plan to employees, including an initial training when the Workplace Violence Prevention Plan is first established and then annually thereafter. Moreover, employers are also required under SB 553 to maintain training records and a violent incident log, which identifies, among other things, where and when a violent incident occurs, the type of violence that occurred, and a description of the incident.

Along with SB 428, beginning January 1, 2025, SB 553 also adds several new protections to the process through which employers may seek temporary restraining orders (TROs) and injunctions on behalf of an employee, including:

  • allowing TROs and injunctions to be sought not only when an employee is subjected to violence or threats of violence but harassment as well, and
  • authorizing collective bargaining representatives to seek TROs and injunctions on behalf of employees.

LITIGATION

No More Automatic Stay During Appeal of Motion to Compel Arbitration

SB 365 amends the California Code of Civil Procedure to state that trial court proceedings will no longer be automatically stayed when a party appeals an order denying a petition to compel arbitration. Under SB 365, beginning in the new year, courts are permitted to exercise discretion as to whether to stay trial court proceedings while an appeal is heard. This is significant because should a court determine that a stay is not warranted, an employer may be forced to continue defending itself in court from claims that may yet ultimately be subject to arbitration if the employer’s appeal is successful.

Privileged Communications Regarding Sexual Assault, Harassment, or Discrimination

Current California law makes certain publications and communications privileged, meaning that individuals who make the communications may be protected from liability for libel and slander. Included among these privileged communications are those related to sexual harassment. As such, if an employee makes a complaint of sexual harassment, without malice, to an employer, California law provides that the employee may not be liable for making such complaints.

AB 933 expands the types of communications that are privileged from liability to include communications regarding:

  • sexual assault;
  • sexual harassment;
  • an act of workplace harassment or discrimination, failure to prevent an act of workplace harassment or discrimination or an act of retaliation against a person for reporting workplace harassment or discrimination; and
  • an act of cybersexual bullying.

Individuals who have made such a communication may assert the privilege to bar liability if they are sued for making defamatory statements based on their own experience as victims of such incidents. In addition, such individuals may recover attorneys’ fees and costs, treble damages, and punitive damages if they prevail in a suit for defamation.

WAGE & HOUR

Wage Theft & Misclassification

AB 594 temporarily authorizes prosecutors through January 1, 2029, to pursue civil or criminal actions against employers that violate California Labor Code provisions related to wage theft and misclassification. Courts can grant prosecutors, including city, county, and state prosecutors, the Attorney General, and district attorneys, money damages (which must first be applied to employee payments), injunctive relief, and reasonable attorneys’ fees and costs that the Labor Commissioner would be entitled to seek. In addition, AB 594 clarifies that with respect to prosecutorial actions, any agreement between an employee and employer that purports to limit representative actions or to mandate private arbitration will not apply.

Minimum Wage

California’s minimum wage rate will increase to $16.00 per hour for all employers, regardless of size. This increase from $15.50 per hour is a result of an inflation adjustment made pursuant to Labor Code § 1182.12, which requires the California Director of Finance to calculate and increase the minimum wage depending upon the U.S. Consumer Price Index for Urban Wage Earners and Clerical Workers.

This increase also affects wage and hour exemptions that are based upon a salary floor that is two times the state minimum wage, such as the administrative, professional, and executive exemptions. As such, beginning January 1, 2024, the minimum salary threshold for these exemptions will increase to $66,560 per year.

Additionally, the minimum compensation threshold for the computer software exemption, which is not tied to the minimum wage rate like the administrative, professional, and executive exemptions, will also increase in 2024. For salaried employees, this threshold will be $115,763.35 per year. For hourly employees, this threshold will be $55.58 per hour. Employees must also continue to meet the applicable duties test to qualify for an exemption.

As a reminder, municipalities also continue to set local minimum wages that are higher than the state requirement.

Wage Notices

AB 636 amends the notice requirements for the Wage Theft Prevention Notices that employers must provide to nonexempt employees in California. In addition to the previously required information, such as rate of pay, regular payday, and right to paid sick leave, AB 636 requires that wage notices also contain information about the existence of a federal or state-declared emergency in the county where the employee is to be employed if it was issued within 30 days before the employee’s first day of work and may affect the employee’s health and safety during employment. The California Department of Industrial Relations has published a template that reflects this newly required information, as well as the amended paid sick leave requirements under SB 616.

In addition, AB 636 adds information required in notices for employees in California under an H-2A agricultural visa. This includes information describing employees’ rights and protections, including the right to meal and rest periods, transportation travel time, and employee housing rights. This new information for agricultural visa workers must be included in the wage notice starting March 15, 2024.

INDUSTRY-SPECIFIC AND OTHER BILLS

Health Care

SB 525 establishes new minimum wage rates for covered health care employees at covered health care facilities as of June 1, 2024. The law defines these terms as follows:

  • “Covered health care facilities” include, but are not limited to, facilities part of an integrated health care delivery system, acute care hospitals, acute psychiatric hospitals, special hospitals, licensed skilled nursing facilities (if owned, operated, or controlled by a hospital, integrated health care delivery system, or health care system), licensed home health agencies, outpatient clinics of hospitals, community clinics, urgent care clinics, physician groups, county correctional facilities that provide health care services, and ambulatory surgical centers certified to participate in Medicare.
  • “Covered health care employees” are those who provide patient care, health care services, or services supporting the provision of health care. They include contracted or subcontracted employees under certain circumstances.

The relevant minimum wage rate varies under the law depending on which of four tiers the covered health care facility falls within. For example, covered health care facilities with at least 10,000 full-time employees fall within the first tier of SB 525, so the minimum wage for these facilities’ covered health care employees is as follows:

  • From June 1, 2024, to May 31, 2025, inclusive, $23 per hour;
  • From June 1, 2025, to May 31, 2026, inclusive, $24 per hour; and
  • From June 1, 2026, and until adjusted below, $25 per hour.

Additional information regarding the four tiers, including which covered health care facilities are included therein and the minimum wage schedule applicable thereto, is available here.

Fast Food

Last year, California revolutionized the fast food industry when it adopted AB 257, also known as the Fast Food Accountability and Standards Recovery Act (the “FAST Recovery Act”). As of January 1, 2023, the FAST Recovery Act was supposed to create, among other things, a Fast Food Council responsible for establishing and implementing binding minimum standards for wages, hours, training, and working conditions. However, a court order stayed the law from taking effect late last year pending the outcome of a voter referendum scheduled for November 2024 (the “Referendum”).

This year, legislators worked with fast food industry and labor union representatives to reach a compromise in the form of AB 1228, which raises the minimum wage for fast food workers and significantly modifies the FAST Recovery Act. Provided that its supporters withdraw the Referendum by January 1, 2024, AB 1288, until January 1, 2029, repeals the FAST Recovery Act and establishes a Fast Food Council with more limited authority to recommend employment regulations. AB 1228 also eliminates provisions in the prior law regarding joint liability for fast food franchisors for their franchisees’ civil liability for employment law violations.

In addition, beginning April 1, 2024, AB 1228 raises the minimum wage rate for fast food workers in the state to $20 per hour. Beginning January 1, 2025, AB 1228 authorizes the Fast Food Council to establish annual minimum wage increases through January 1, 2029, up to 3.5 percent or the rate of change in the U.S. Consumer Price Index for Urban Wage Earners and Clerical Workers, whichever is lower. The law also preempts local municipalities from establishing higher minimum wage rates for fast food restaurant employees specifically; however, local municipalities are still permitted under the law to establish a higher minimum wage that is generally applicable to all industries.

Importantly, AB 1228 applies to “national fast food chains,” which the law defines as limited-service restaurants that share a common brand or are characterized by standard options for décor, marketing, packaging, products, etc., and are primarily engaged in providing food and beverages for immediate or off-premises consumption.

Hospitality and Business Service Providers

In the spring of 2021, California enacted legislation (SB 93) requiring covered employers in the hospitality and business services industry to notify and offer to rehire qualified former employees who were laid off during the COVID-19 pandemic. “Covered employers” include hotels or private clubs with 50 or more guest rooms, airports, airport service providers, event centers, and, in certain situations, retail and commercial buildings. Under SB 93, eligible employees are only entitled to these recall rights through December 31, 2024.

SB 723 broadens the scope of employees’ recall rights under SB 93 in three important ways. First, SB 723 expands the definition of “laid-off employees” who are entitled to recall rights. Under SB 93, “laid-off employees” are those workers: (1) who were employed by their employer for at least six months during the 12-month period before January 1, 2020, and (2) whose most recent separation from active service was due to the pandemic. Under SB 723, “laid-off employees” are those workers: (1) who were employed by their employer for at least six months; (2) whose most recent separation from active employment occurred on or after March 4, 2020; and (3) whose most recent separation from active employment was due to the pandemic.

Second, SB 723 establishes a presumption for determining whether a separation from active employment is “due to the pandemic.” Under the new law, separations due to a lack of business, a reduction in force, or other economic/non-disciplinary reasons will be presumed to be a result of the pandemic.

Finally, SB 723 extends the law’s sunset from December 31, 2024, to December 31, 2025.

WHAT EMPLOYERS SHOULD DO NOW

  • Consult with counsel regarding agreements with current and former employees to determine whether any contain any unlawful restrictive covenants. Revise any such agreements, as necessary, to comply with SB 699 and AB 1076.
  • Identify any current employees or former employees who were employed after January 1, 2022, who may be subject to an unlawful noncompete provision, and send them a compliant notice under AB 1076 by February 14, 2024.
  • Seek advice from counsel before attempting to enforce restrictive covenants against current, former, or prospective employees in California.
  • Review drug-screening policies and practices to ensure that you do not screen for non-psychoactive cannabis metabolites except as explicitly permitted under AB 2188.
  • Review interview, onboarding, and hiring policies and practices to ensure that you do not inquire about an applicant’s past cannabis use unless specifically permitted under SB 700.
  • If not already in place, adopt a compliant Workplace Violence Prevention Plan or update your IIPP to include the same.
  • Train employees regarding the Workplace Violence Prevention Plan and implement a process for maintaining relevant training and compliance records and a violent incident log.
  • Ensure there is a robust system for documenting any disciplinary or other adverse action taken against employees in light of the rebuttable presumption established under SB 497.
  • Review and revise leave of absence policies and practices to add protected time off for reproductive loss, and train managers and human resources personnel to appropriately respond to and track this leave.
  • Update paid sick leave policies to comply with SB 616, post the Labor Commissioner’s updated paid sick leave poster, and distribute the Labor Commissioner’s updated employee notice.
  • Review hourly wage rates for nonexempt employees and salary levels for employees who are exempt under the professional, administrative, and executive exemptions to ensure they continue to meet new wage requirements.
  • Prepare to use the updated Wage Theft Prevention Notice template (or revise your current notice if not using the template) for nonexempt employees hired on or after January 1, 2024.
  • If you are an employer in the health care sector, fast food, or hospitality/business services, review your policies and practices to ensure that they comply with the new industry-specific laws.
©2023 Epstein Becker & Green, P.C. All rights reserved.
For more news on 2024 California Employment Laws, visit the NLR Labor & Employment section.

Key Developments in Environmental Law and Policy in 2023, and What’s Ahead in 2024 [PODCAST]

On this episode of the Bracewell Environmental Law Monitor, we look back at the significant developments in environmental and natural resources law and policy in 2023, as well as look ahead to what’s to come in 2024. Co-hosts Daniel Pope and Taylor Stuart talk with Ann Navaro and Tim Wilkins, partners in Bracewell’s environment, lands and resources practice, about a range of topics, such as climate and environmental justice, renewable energy advancements, regulatory developments and much more.

 

EPISODE HIGHLIGHTS

[01:44] Big Developments in 2023: The Biden administration’s top priorities have been climate and environmental justice. The big development of 2023 on the climate front has been on the methane side rather than the carbon dioxide side. Regarding environmental justice, the Biden administration and NGOs have been really pushing to apply justice factors in enforcement, in cleanups, new rulemaking, permitting, issuance of grants and loans, and the like.

[06:59] A Significant Year for Jurisdiction Under the Clean Water Act: Almost a year ago, the Biden administration issued its definition of “Waters of the United States.” Subsequently, the Supreme Court issued another decision interpreting Waters of the United States in the Sackett case and essentially eviscerated one of the bases for the Biden administration’s Waters of the US rulemaking. Litigation is ongoing.

[09:33] Congress Amended the National Environmental Policy Act and the Fiscal Responsibility Act: This was enormous, as core provisions had never seen substantive amendments. There are mixed reviews of what that amendment to NEPA accomplished.

[13:41] Renewable Energy: There’s been advancement in renewable energy projects and trying to permit those projects and an emphasis on promoting renewable energy. For example, for offshore wind, in this year and in prior years of the Biden administration, there’s been a lot of advancement on leasing.

[21:57] On the Horizon in Environmental Law in 2024: Ann shares that the US Army Corps of Engineers could revise Nationwide Permit 12. Tim shares that the White House is reviewing EPA’s CERCLA hazardous substance listing for two of the leading PFAS chemicals, and the listing will go final sometime early in 2024. In addition, the SEC’s semi-annual rulemaking agenda for April 2024 promises to include proposed climate disclosure rules for publicly traded companies.

© 2023 Bracewell LLP
For more news on Upcoming Environmental Law in 2024, visit the NLR Environmental, Energy & Resources section.

10 Market Predictions for 2024 from a Healthcare Lawyer

As a healthcare lawyer, 2023 was a pretty unusual year with the sudden entrance of a number of new players into the healthcare marketplace and a rapid retrenchment of others. With innovation showing no signs of slowing down in the year ahead, healthcare providers should consider how to adapt to improve the patient experience, increase their bottom line, and remain competitive in an evolving industry. Here are 10 personal observations of the past year that may help you plan for the year ahead.

  1. Health tech will continue to boom. Without a doubt, in my practice, health tech exploded, and understandably. In the face of tight margins, healthcare technology may offer the promise of immediate returns (think revenue cycle). But it is also important to understand the context. Health tech offers the promise of quick implementation relative to construction of clinical space, and it can be accomplished without additional clinical staff or regulatory oversight, potentially resulting in a prompt return on investment. Advancing technologies and AI will enable real-time, data driven surgical algorithms and patient-specific instruments to improve outcomes in a variety of specialties.
  2. Value-based care is here to stay. Everyone is interested in value-based care. In the past, value-based care was simply aspirational. Now, there are significant attempts to implement it on a sustained basis. It is not a coincidence that there has also been significant turnover in healthcare leadership in the past few years, and that has likely led to more receptivity.
  3. Expansion of value-based care models. There has been considerable activity around advanced primary care and single-condition chronic disease management. We are now starting to see broader efforts to manage care up and down the continuum of care, involving multi-specialty care and the gamut of care locations. Increased pressure to lower costs will result in increased volumes in lower cost, ambulatory settings.
  4. Regulatory scrutiny will continue to increase. For most, this is a given. In 2023, we saw increased scrutiny up and down the continuum, whether related to pharmaceutical costs, regulation of pharmacy benefit managers, healthcare transaction laws, or innovations in thinking around healthcare from the Federal Trade Commission. With the impending election, it is likely healthcare will receive considerable attention and scrutiny.
  5. Private equity (“PE”) will resume the march – with discipline. In my practice, PE entities rethought their growth strategies to focus on how to bring acquisitions to profitability quickly, from a “growth at all costs” mind set. Now there appears to be an increasing focus on operations and an emphasis on making realistic assumptions to underly growth. This has led to a more realistic pricing discipline and investment in management teams with operational experience.
  6. Partnerships. There is an increasing trend towards partnerships between PE entities and health systems. Health systems are under considerable financial stress, and while they do not universally welcome PE with open arms, some systems do appear open to targeted partnerships. By the same token, PE entities are beginning to realize that they require clinical assets that are most readily available at health systems. This will continue in 2024.
  7. The rise of independent physician groups. There is increasing activity among freestanding physician groups. Some doctors are leery of PE because they believe it is solely focused on profits. Similarly, many physicians are reluctant to be employed by health systems because they believe they will simply become a referral source. While we are not likely to see a return to 2002, where many PE and health system physician deals were unwound, we will see increasing growth by independent physician groups.
  8. Continued consolidation. The trend towards consolidation in healthcare is nowhere near ending. To assume risk (the ultimate goal of value-based care), providers require scale, both vertically and horizontally. While segments of healthcare slowed in 2023, a resumption of growth is inevitable.
  9. Increased insolvencies. Most healthcare providers have very high fixed costs and low margins. Small swings in accounts receivable collections, wages, and managed care payments can have a large impact on entities that are just squeezing by.
  10. New entrants. Last year saw several new entrants to the healthcare marketplace nationally. Who in 2023 would have thought Best Buy would enter the healthcare marketplace? There is still plenty of room for new models of care, which we will see in 2024.

2024 promises to be an interesting year in the healthcare industry.

© 2023 Blank Rome LLP
For more news on 2024 Healthcare Industry Laws, visit the NLR Health Law & Managed Care section.

U.S. Employment-Based Immigration Year in Review: Many Changes Made, Many Changes Promised

Looking back at 2023, many of the employment-based immigration changes proposed and implemented by various U.S. government agencies focused on increasing efficiency and alleviating strain on our immigration system. There was increased focus on creating consistency in adjudications of benefits, new programs aided in the reduction of processing times across all U.S. government agencies and new programs focused on attracting and retaining talent in STEM, artificial intelligence, and emerging technology fields.

Quick Hits

  • In 2023, we saw program-level changes to the content and format of Form ETA-9089 and Form I-9 employment verification procedure for employers. Significant changes to H-1B and F-1 programing as well as for domestic visa processing are proposed and expected in 2024.
  • Combined policy and processing changes that several agencies implemented confirm prioritization of STEM fields and labor market competitiveness. These changes include designation of additional STEM fields, an executive order on artificial intelligence, updated extraordinary ability and outstanding researcher guidance specific to STEM occupations, and expansion of premium processing for OPT/STEM applicants and national interest waiver filings.
  • USCIS significantly updated processing for certain dependents and EAD holders including a return to bundled dependent adjudication, elimination of biometrics fees, decreased automatic extensions for EAD renewals, increased validity periods, and extension of premium processing.

Program Changes to Streamline and Increase Efficiency

U.S. government agencies have prioritized the modernization of the U.S. immigration framework to enhance efficiency, user experience, and overall program effectiveness.

PERMANENT LABOR CERTIFICATION PROCESS AND NEW ETA-9089

U.S. employers rely heavily on the U.S. Department of Labor’s (DOL) permanent labor certification process to sponsor foreign workers for U.S. permanent residency. The online platform and application form transitioned significantly this year. Effective June 1, 2023, a new version of the Form ETA-9089 became effective via the Foreign Labor Application Gateway (FLAG) platform. The new Form ETA-9089 and the transition to the FLAG platform aim to streamline the permanent labor certification process and increase efficiency with the goal of improving lengthy DOL processing times.

FORM I-9 AND VIRTUAL VERIFICATION

In the United States, employers are required to verify an employee’s identity and work authorization at the time of hire and complete a Form I-9. A new version of Form I-9 became effective on August 1, 2023. At the same time, the U.S. Department of Homeland Security (DHS) introduced a new rule allowing certain qualifying employers to complete the Form I-9 process through an alternative virtual procedure. The changes to the I-9 program aim to increase employer compliance given the abundance of post-pandemic dispersed and remote workforces.

PROPOSED RULE TO MODERNIZE H-1B PROGRAM

On October 23, 2023, DHS published a notice of proposed rulemaking (NPRM) to amend various regulatory sections to update the H-1B program. The proposed changes involve setting policies for providing deference to previously approved cases without change, clarifying the requirements for meeting H-1B standards, allowing certain F-1 students to remain in the United States for a longer period of time by extending cap-gap extensions, ensuring the integrity of the H-1B lottery, and safeguarding against H-1B quota misuse through improved verification procedures. Following the close of the public comment period on December 22, 2023, DHS will likely finalize the various updates through one or more final rules. It is possible the H-1B cap provisions may be finalized in time for the fiscal year (FY) 2025 H-1B cap season.

STATESIDE VISA RENEWAL PILOT PROGRAM

The Federal Register notice from State Department was published on December 21, 2023 confirming the roll out of a stateside visa renewal pilot program. The State Department will begin with H-1B visa holders and will allow 20,000 participants to renew their visa stamps in the United States, without traveling overseas to apply at a U.S. embassy or consulate. This program will run from January 29, 2024 to April 1, 2024. A list of specific criteria is outlined in our recent article, “Stateside Visa Renewal Pilot Program Set to Begin in January 2024.”

PREMIUM PROCESSING PROGRAM

Throughout the year, we have seen substantial expansion of the premium processing program. In January 2023, premium processing became available for I-140 immigrant petition filings for multinational managers or executives and those requesting a national interest waiver. On March 6, 2023, USCIS expanded the premium processing program to include I-765 Applications for Employment Authorization filings for F-1 students requesting pre-completion Optional Practical Training (OPT), post-completion OPT, and STEM OPT extensions. On June 12, 2023, USCIS began phasing in premium processing for change of status filings for F-1, M-1, and J-1 students and their dependents. The expansion of this program demonstrates an overall USCIS commitment to reduce processing times for U.S. immigration filings.

Prioritizing STEM Fields

The U.S. government has emphasized the importance of STEM fields and maintaining U.S. global competitiveness through various initiatives and policy updates.

DESIGNATION OF NEW STEM FIELDS

On July 12, 2023, DHS added eight new fields, including Landscape Architecture, Mechatronics, Robotics, and Geospatial Intelligence, to the STEM Designated Degree Program List. F-1 students completing academic programs in the newly designated fields will be eligible to apply for an additional two years of occupational practical training (OPT) to gain practical work experience in the United States.

EXECUTIVE ORDER ON AI

President Biden signed Executive Order 14110 on October 30, 2023, focused on maintaining U.S. leadership in artificial intelligence (AI) and emerging technologies. The executive order directs the various U.S. government agencies to set policies to globally attract and retain talented individuals in these fields. It instructs the State Department and DHS to streamline visa processing for individuals coming to the United States to work or study in these areas and also encourages DHS to streamline the green card process. The executive order urges DOL to address shortages of workers in STEM fields and AI.

EVIDENTIARY GUIDANCE FOR EB-1 EXTRAORDINARY ABILITY AND OUTSTANDING PROFESSOR AND RESEARCHER IMMIGRANT PETITIONS

On September 12, 2023, USCIS updated its policy guidance on Extraordinary Ability and Outstanding Professor and Researcher classifications. The revisions include new examples of evidence, with a notable emphasis on STEM occupations, reflecting a commitment to facilitating immigration pathways for individuals with expertise in science, technology, engineering, and mathematics.

Processing Changes for Dependent Filings and EAD Applications

CONCURRENT ADJUDICATION

The settlement in Edakunni v. Mayorkas brought significant modifications to USCIS adjudication policies for H-4 and L-2 dependents and associated EADs. Effective January 25, 2023, USCIS reverted to bundled adjudication of principal and dependent applications when concurrently and properly filed with the principal H or L applicant. Reviewing these applications together, whether in regular or premium processing, speeds up the approval process for H-4, L-2, and EAD applications, making things more efficient and predictable for families. In alignment with this change, USCIS eliminated the $85 biometric services fee and attendance at a biometrics services appointment for Form I-539 applications, extending relief to various categories where the required biometrics process delayed USCIS adjudication and its final decision on the requested benefit.

AUTOMATIC EXTENSION OF EADS

On October 27, 2023, USCIS stopped automatically extending certain work permits (EADs) for 540 days and went back to the pre-COVID-19 allotment of 180 days. This affects people renewing their work permits as of October 27, 2023. However, those renewals filed prior to this date, or those that had already received a 540-day extension, will continue to be honored.

VALIDITY PERIOD FOR EADS AND ADVANCE PAROLES

On September 27, 2023, USCIS extended the validity period for initial and renewal EADs to five years for certain foreign nationals including those with pending adjustment of status applications under Immigration and Nationality Act (INA) 245. On December 8, 2023, USCIS updated the Retrogression section of its Employment-Based Adjustment of Status FAQs confirming that USCIS will also approve Advance Parole (AP) applications for a five-year period. These changes aim to reduce strain on the immigration system by reducing the frequency of renewal filings and also provide relief and consistency for those impacted by immigrant visa backlogs.

© 2023, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.
For more news on US Employment-Based Immigration Laws, visit the NLR Labor & Employment section.

New York Further Limits Scope of Non-Disclosure Agreements in Employment Discrimination Cases

On November 17, 2023, New York Governor Hochul signed a bill into law making significant changes to New York’s law on nondisclosure agreements.  The amendments went into effect immediately and apply to agreements entered into on or after the effective date.  There are three key changes that further restrict the use of NDA provisions in certain employment settlement agreements. On the whole, these changes are good for New York employees who have experienced harassment, discrimination, or retaliation in the workplace.

New York’s Non-Disclosure Agreement Laws
First, to provide some background on New York’s Non-Disclosure law: in 2018, in the midst of the #MeToo movement, the New York legislature passed into law budget bill S. 7507–C, which provided for the addition of an entirely new section into the New York General Obligations Law, Section 5-336.  Section 5-366, one of the original #MeToo statutes, was intended to limit the use of confidentiality agreements that prevent victims of sexual harassment from disclosing the harassing conduct in a way that might prevent future harassment.

Originally, Section 5-336 provided that no employer could include a non-disclosure condition in a “settlement, agreement or other resolution of any claim” involving sexual harassment, unless the “condition of confidentiality is the complainant’s preference” and the complainant was provided twenty-one days to consider the condition plus seven days to revoke the agreement after signing it.  In other words, a non-disclosure could only be included in an employment settlement involving claims of sexual harassment if the term was the complainant’s choice, and if the parties complied with the twenty-one day consideration time period, plus the seven-day revocation period.  Bill S. 7507-C also added a new section to New York’s civil practice law, NY CPLR § 5003-b, which applied the same restrictions to non-disclosure agreements included in stipulations, decrees, or settlement agreements for filed claims or causes of action.

In 2019, New York amended the statute with bill A. 8421 to ensure that the law’s non-disclosure restrictions apply to any prohibited discrimination: the 2018 law only applied to claims invol+ving sexual harassment.  The 2019 amendments also required that any such non-disclosure condition must be provided in writing in plain English (and, if applicable, the primary language of the complainant) before the twenty-one day consideration time period could start.

In addition, the 2019 amendments clarified that any such nondisclosure condition is void if it restricts the complainant from participating in several activities, including testifying or complying with a subpoena conducted by the appropriate local, state, or federal agency, or filing or disclosing facts required to receive unemployment insurance or other public benefits to which the complainant is entitled.

Finally, the 2019 amendments expanded the law’s applicability to a “contract or other agreement” between an employer and an employee or potential employee that “prevents the disclosure of factual information related to any future claim of discrimination” unless such provision notifies the employee or potential employee that the provision does not prohibit them from speaking with law enforcement, the Equal Employment Opportunity Commission, the state division on human rights, a local commission on human rights, or an attorney retained by the employee or potential employee.  While not as expansive as the 2018 and 2019 restrictions to nondisclosure conditions included as a part of post-claim settlement agreements, the 2019 amendment importantly extended some boundaries to employment contracts to restrict employers from limiting employees and prospective employees from later speaking out about claims of discrimination under the enumerated circumstances.

Gaps in New York’s Non-Disclosure Agreement Laws Pre-2023
As discussed above, originally, Section 5-336 prohibited employers from requiring a nondisclosure provision in a release agreement involving claims of discrimination, unless confidentiality was the employee’s preference and the employee was given twenty-one days to consider the agreement and then seven days to revoke it.  In practice, this meant that, even if the employee preferred the inclusion of a nondisclosure agreement in the release agreement, the agreement could not go into effect (and the employee could not receive any settlement payment) at least until after the passage of twenty-eight days.  This lengthy delay had little, if any, effect on employees’ desire (or lack thereof) to include a nondisclosure provision in the agreement, and only resulted in considerable delay in finalizing settlements.

Furthermore, originally, employers were permitted to include penalizing liquidated damages and clawback provisions in nondisclosure agreements.  These sometimes required the employee to pay back the entire settlement payment plus exorbitant liquidated damages in the case of breach.  These extreme provisions sometimes spooked employees from settling, fearful that a vindictive employer might accuse them of breach to embroil them in an expensive lawsuit about whether a breach had occurred.

Finally, originally, Section 5-336 applied only to claims involving “discrimination,” but did not specify whether it also applied to claims involving retaliation for reporting discrimination, or for claims involving discriminatory harassment.  This meant that some employees who had experienced discriminatory harassment in the workplace, or who had reported discrimination and were retaliated against for doing so, could be forced into signing nondisclosure agreements without any of the restrictions provided by Section 5-336.

The Key Changes to New York’s Non-Disclosure Agreement Law
Responsive to these shortcomings, New York bill S4516, signed into law and effective immediately on November 17, 2023, amends Section 5-336 of the New York General Obligations Law in three ways.

First, and most prominently, employers settling claims of unlawful discrimination, including discriminatory harassment, or retaliation, may not include a term or condition that requires the employee to:

  1. Pay liquidated damages if they violate the nondisclosure or nondisparagement clause;
  2. Forfeit all or part of the consideration (payment) for the agreement if they violate the nondisclosure or nondisparagement clause; or
  3. Make an affirmative statement, assertion, or disclaimer that the employee was not subject to unlawful discrimination, harassment, or retaliation.

It is not entirely clear whether Section 5-336, as amended, applies to asserted claims that are being resolved by agreement as well as to standard separation agreements where no claim has been asserted.  The newly added Section 5-336(3) states that “no release of any claim” shall be enforceable if the above unlawful provisions are included.  The broad “no release of any claim” language suggests that the legislature intended this section to apply to all release agreements, including standard separation agreements or any agreement before claims have been asserted, such as the employment contracts discussed above.  However, some paragraphs in the statute, including Section 5-336(3), are limited to agreements “resolving such claim[s],” which may indicate that the amended section applies only to agreements resolving asserted claims and not to pre-claim release agreements.  Until a court clarifies whether the requirement applies only to agreements resolving asserted claims, parties might elect to remove these terms from pre-claim release agreements to ensure compliance with the new law.

Note that the 2023 amendments expand Section 5-336 to address the gap mentioned above: now, nondisclosure conditions in settlements resolving claims of discrimination, discriminatory harassment, or retaliation, are all restricted by the same measures.

The second key change added by the recent amendments effective November 17, 2023, is that the previously mandatory twenty-one-day consideration period is now waivable (“the complainant shall have up to twenty-one days to consider [a confidentiality provision]”) pre-litigation.  However, the twenty-one-day consideration period is still mandatory if the discrimination claim has been filed in court, pursuant to N.Y. CPLR § 5003-B.  Furthermore, the amendments do not change the seven-day revocation period.  Therefore, while an employee may choose to waive the twenty-one-day period for a nondisclosure provision in a pre-litigation settlement agreement, the seven-day revocation period is still mandatory.  Hopefully, this will ease up tensions at the end of settlement negotiations and permit employees and employers to resolve their disputes quickly.

Third, in addition to the above key changes, the recent amendments state that Section 5-336 now applies to independent contractors, in addition to employees and potential employees.  As of October 2019, the New York State Human Rights Law (NYSHRL) protects both employees and nonemployees, such as contractors, subcontractors, temporary workers, “gig” workers, and other non-employee persons providing services pursuant to a contract, from discrimination, discriminatory harassment, and retaliation.  With the 2023 amendments to Section 5-336, now independent contractors already protected from discrimination by the NYSHRL can take advantage of the same protections from nondisclosure agreements as employees.

Impact of the Amendment and Implications for Employees
These amendments are sure to have a considerable impact on employees’ settlement negotiations with employers.  New York employers are still able to pursue claims for breach of nondisclosure or nondisparagement clauses, but they are no longer able to set an agreed-upon liquidated damages amount or clawback the consideration provided.  This change therefore places more power in the hands of employees.  However, employers may feel more vulnerable to breach following these amendments, and offer lower settlement amounts because they are less willing to settle absent a liquidated damages or clawback provision.  However, if one goal of amending the law is to equalize the parties’ bargaining power, these amendments are one step towards that goal because they reinforce the principle that employers should not be able to, and now cannot, pressure employees into draconian liquidated damages and clawback provisions.

Importantly, these amendments also forbid the inclusion of an affirmative disclaimer that the employee was not subject to unlawful discrimination, harassment, or retaliation.  While in practice, these disclaimers seem to be of limited practical value, employers have historically pushed for their inclusion in settlements involving these claims.  It is therefore good news for employees that these disclaimers are now unlawful.

Failure to abide by the new law may render nondisclosure provisions with these objectionable terms unenforceable.  Employees and their counsel should carefully review their New York separation, severance, and settlement agreements to ensure compliance with the amended Section 5-336.

Katz Banks Kumin LLP Copyright ©
For more news on New York NDAs in Employment Cases, visit the NLR Labor & Employment sections.

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.

Ohio Legalizes Recreational Use of Marijuana

Earlier this month, Ohio joined the growing number of states to legalize the recreational use of marijuana. The new law, which becomes effective December 7, 2023, allows adults aged 21 and older to (within certain restrictions) use, possess, transfer without renumeration to another adult, grow, purchase, and transport marijuana without being subject to arrest, criminal prosecution, or civil penalties.

A natural question for Ohio employers is whether the new law impacts their drug-free or zero-tolerance workplace policies, e.g., can employment be denied or terminated due to a positive drug test? Although the governor has asked the legislature to make changes (not specifically focused on employer policies) to the new law before it takes effect, the new law expressly states that it does not:

  • Require employers to permit or accommodate an employee’s use, possession, or distribution of adult-use cannabis;
  • Prohibit employers from refusing to hire, discharging, disciplining, or otherwise taking adverse employment action against individuals with respect to hire, tenure, terms, conditions, or privileges of employment because of an individual’s use, possession, or distribution of cannabis that is otherwise in compliance with the law;
  • Prohibit employers from establishing and enforcing drug testing policies, drug-free workplace policies, or zero-tolerance drug policies;
  • Permit individuals to sue employers for refusing to hire, discharging, disciplining, discriminating, retaliating, or otherwise taking an adverse employment action against them with respect to hire, tenure, terms, conditions, or privileges of employment related to their use of cannabis; or
  • Affect the authority of the administrator of workers’ compensation to grant rebates or discounts on premium rates to employers that participate in a drug-free workplace program.

The new law also provides that individuals terminated because of their cannabis use are considered to have been “discharged for just cause” for purposes of eligibility for unemployment benefits if their use violated an employer’s drug-free workplace policy, zero-tolerance policy, or other formal program or policy regulating cannabis use. Thus, the new law makes it clear that employers can still enforce their drug-free and zero-tolerance workplace policies. Ohio employers should consider advising employees that the new law will not impact the enforcement of such policies.

© 2023 Foley & Lardner LLP
By Philip B. Phillips of Foley & Lardner LLP
For more news on Ohio’s Legalization of Recreational Marijuana, visit the NLR Biotech, Food, Drug section.

California Governor Signs a Handful of Tax-Related Bills into Law

This fall, California Governor Gavin Newsom signed several tax-related bills into law on a diverse array of topics ranging from the use tax to the gun tax.

Use tax: On October 7, 2023, Governor Newsom signed a bill into law changing the threshold for a California business to register to pay use tax. Prior to enactment of the new law, a qualified purchaser that had more than $100,000 in annual gross receipts was required to register with the California Department of Tax and Fee Administration (“CDTFA”) to pay use tax on purchases from out-of-state sellers. Under the new law, a qualified purchaser must make more than $10,000 in purchases per year from an out-of-state seller on which use tax has not been paid and remitted by the remote seller in order to be required to register with CDTFA. The bill’s sponsor described the purpose of the bill as to update the “outdated and burdensome” old system which was in effect before the Supreme Court decision in South Dakota v. Wayfair, Inc. generally allowed states to collect use tax from out-of-state sellers. As California adopted a law post-Wayfair that requires out-of-state sellers that sell more than $500,000 in property in California to register to collect and remit use tax, the legislature determined that the old use tax registration requirements should be updated and streamlined.

Gun tax: While the change to the use tax registration did not garner much attention from the press, one bill that did was one signed by Governor Newsom on September 26, 2023, that doubled the taxes on sales of guns and ammunition in California. While federal law already taxes gun and ammunition sales at either 10 or 11 percent depending on the type of gun, the new law adds an additional 11 percent California tax on top of that, making California the only state to impose its own tax on guns and ammunition. The Governor’s office described the legislation as a “first-in-the-nation effort to generate $160 million annually on the sale of bullets to improve school safety and fund a gun violence intervention program.”

Settlement authority of the CDTFA: On October 8, 2023, Governor Newsom signed into law a bill that makes changes to certain tax administration provisions, including a provision giving the CDTFA sole authority to approve settlement agreements reducing a taxpayer’s liability for tax or penalties by up to $11,500, with periodic adjustments to be made to that threshold for inflation. Prior to the enactment of the new law, settlements involving a reduction of tax or penalties of up to $5,000 required joint approval from the executive director of CDTFA and the chief counsel’s office.

Extension of disaster relief deduction: On September 30, 2023, Governor Newsom signed a bill extending the State’s disaster relief loss deduction through December 31, 2028, for both individual and corporate taxpayers. The disaster relief loss deduction allows a taxpayer to declare a loss related to a California disaster declared by the President of the United States or the Governor of California. Prior to the enactment of the new law, the disaster relief loss deduction was scheduled to sunset on December 31, 2023.

© 2023 Blank Rome LLP
For more news on California Tax Bills, visit the NLR Tax section.