Labor and Employment Alert

May 3, 2024

The Biden Administration has had a busy few weeks, cementing President Biden’s reputation as the most pro-labor president since FDR.  Specifically, the Biden Administration has enacted several impactful changes to labor and employment laws, which include expanding the definition of workplace harassment to include LGBTQ workers and remote workplace scenarios, banning most non-compete agreements nationwide, releasing expansive pregnancy accommodation rules, and expanding the reach of overtime requirements.  Although many of these changes are subject to legal challenge, employers should take note of the latest changes and updates and consider revising their policies accordingly.  As always, reach out to Lock Gordon Law Group attorneys for assistance with understanding and implementing these major changes.

EEOC Updates Workplace Harassment Guidance For First Time In 25 Years

What Changed:  Earlier this week, the U.S. Equal Employment Opportunity Commission (“EEOC”) updated its enforcement guidance on workplace harassment for the first time in 25 years after an earlier attempt stalled during the Trump administration.  The updated guidance includes changes to reflect a landmark U.S. Supreme Court ruling in Bostock v. Clayton County that anti-bias laws cover LGBTQ workers. 

What Does This Mean For Employers:  While the guidance does not have the force and effect of law, it serves as a legal standard and will be relied upon by EEOC staff, plaintiffs’ employment attorneys and courts.  The new guidance “updates consolidates and replaces” previous guidance documents, reflecting both emerging issues and recent legal developments.  Key points of the new guidance include:

  • Sex based harassment includes harassment based on sexual orientation or gender identity, including how that identity is expressed.  Harassing conduct includes intentionally misgendering an individual or denying bathroom access “consistent with the individual’s gender identity.”
  • Sex based harassment also includes discrimination against employees that choose to have, or not have, an abortion.
  • The new guidance addresses “the growth of virtual work environments and the increasing impact of digital technology and social media on how harassment occurs in the work environment.”  Examples include sexist or ageist comments in a group chat or “racist imagery” visible in the background of an employee’s workspace during a virtual meeting.

What Should Employers Do Now:  Although legal challenges to the guidance are anticipated, employers should ensure their policies are compliant, their managers are trained on preventing workplace harassment, and complaints are properly investigated.

FTC Bans Most New Noncompete Agreements Nationwide

What Changed:  On April 23rd, the U.S. Federal Trade Commission (“FTC”) approved a sweeping final rule banning most new noncompete clauses in employment contracts.  This rule will affect millions of workers, as it is estimated that about 20% of all workers are bound by a noncompete agreement.  While the rule is slated to take effect in early September, it is already subject to legal challenges.

What Does This Mean for Employers:  The rule defines “non-competition agreements” as any term or condition of employment that prohibits a worker from, penalizes a worker for, or functions to prevent a worker from seeking or accepting employment with another business or operating a business.  The rule allows employers to maintain and enforce existing non-compete agreements with “senior executives,” defined as workers who earn more than $151,164 annually and are in policy-making positions.  New non-compete agreements with senior executives will be prohibited.  Before the effective date, employers must provide notice to workers that their non-compete is no longer in effect and, unless they are senior executives, may not be enforced against then.  The FTC’s rule does not ban other forms of protection for employers, such as customer or employee non-solicitation agreements, confidentiality or non-disclosure provisions.  Rather, the FTC said those provisions are valid as long as they don’t have the effect of preventing someone from getting a job, but the determination will be made on a case-by-case basis. 

What Should Employers Do Now?  Although legal challenges are underway which may ultimately delay or block the enactment of this rule, employers should begin preparations to comply, including:

  1. Work with legal counsel to develop a personalized compliance plan, taking into account such factors as the size of your business, the number of non-competes in effect, and the importance of non-competes to your business, among other factors.
  2. Take stock of your agreements.  Begin to take an inventory of all existing non-compete agreements, determine which workers fall under the “senior executive” category, and track all new non-competes that are entered moving forward.
  3. Start to consider alternatives.  Discuss within your company and with legal counsel whether there are less burdensome restrictive covenants that could protect your interests. 
  4. Update your trade secret protection and policies.  The FTC cites the availability of trade secret protection as potentially mitigating the effect of its non-compete ban.  To maximize trade secret protection, identify your trade secrets and ensure the proper policies and procedures are in place to protect them. 

EEOC Releases Expansive Final Pregnancy Accommodation Rule

What Changed:  The Pregnant Workers Fairness Act (“PWFA”), which has been in force since June 27, 2023, expands protections for qualified individuals in the workplace by requiring employers with 15 or more employees to make reasonable accommodations for known limitations of employees and applicants related to pregnancy, childbirth, or related medical conditions.  When it passed the PWFA, Congress directed the EEOC to issue implementing regulations and to provide examples of reasonable accommodations.  On April 15, 2024, the EEOC released its 408-page final rule and interpretive guidance implementing the PWFA.  The final rule will take effect on June 18, 2024.

What Does This Mean for Employers:  The following are some of the key points of the EEOC’s expansive guidance:

  1. Broad Definition of “Pregnancy, Childbirth or Related Conditions” – This includes current, past, or potential pregnancy, lactation, use of contraception, menstruation, infertility or fertility treatments, endometriosis, miscarriage, stillbirth and abortion.  The EEOC also clarified that “related medical conditions” can include not only new physical and mental conditions originating during pregnancy, but also pre-existing conditions that are exacerbated by pregnancy or childbirth.
  2. No Level of Severity Required – The condition that leads an employee or applicant to request an accommodation may be modest, minor, or episodic and does not need to rise to a specific severity threshold.
  3. Temporarily Eliminating an Essential Function of the Job – Upon an employee’s request, an employer will need to consider eliminating one or more essential functions of a job for up to 40 weeks during an employee’s pregnancy and for an additional amount of time after its conclusion, unless doing so poses an undue hardship. 
  4. Notice of Need for Accommodation and Interactive Process – As under the ADA, notice of the need for a PWFA accommodation can be conveyed verbally or in writing, can be expressed in plain language, and can come from a representative of the employee or applicant.  The EEOC emphasizes that these should be “simple processes” and also encourages employers to respond expeditiously and consider granting an accommodation request on an interim basis, given the temporary nature of pregnancy-related conditions.
  5. Non-Exhaustive List of Potential Reasonable Accommodations –
    1. Frequent breaks
    1. Sitting/standing
    1. Schedule changes, part-time work and paid and unpaid leave
    1. Telework or remote work
    1. Reserved parking
    1. Light duty
    1. Making existing facilities accessible or modifying work environment
    1. Job restructuring
    1. Temporarily suspending one or more essential functions
    1. Acquiring or modifying equipment, uniforms or devices
    1. Adjusting or modifying examinations or policies
  6. Four De Facto Reasonable Accommodations or “Predictable Assessments” –
    1. Allowing an employee to carry or keep water and drink, as needed, in or nearby the employee’s work area
    1. Allowing an employee to take additional restroom breaks, as needed
    1. Allowing an employee whose work requires standing to sit, and vice versa, as needed
    1. Allowing an employee to take breaks, as needed, to eat and drink

An employer’s delay in providing the predictable assessments “will virtually always result in a finding of unnecessary delay” and a violation of the PWFA.

  • Limits on Requesting Documentation – The PWFA discourages employers from seeking documentation simply to establish a pregnancy.  Instead, the final rule states that an employer may obtain medical documentation only if it is reasonable under the circumstances to determine if the employee has a qualifying condition and needs an adjustment or change at work due to the limitation.  In certain circumstances (i.e., when the need for an accommodation is obvious), employers are prohibited from requesting supporting documentation.
  • Five Prohibited Practices – The EEOC outlines the five prohibited practices under the PWFA:
    • Failure to provide reasonable accommodations
    • Requiring an employee or applicant to accept an accommodation
    • Denying equal employment opportunities
    • Requiring the employee to take leave when other accommodations are available
    • Taking adverse action against a worker for seeking or using a reasonable accommodation

What Should Employers Do Now:  The effective date of the final rule is expected to be June 18, 2024.  Employers should become familiar with the final regulations and interpretive guidance to better understand their obligations under the PWFA.  Employers may also want to consult legal counsel to update any pregnancy accommodation policies and forms to ensure they comply with the final regulations.

DOL Expands Reach of Overtime Requirements By Increasing Salary Threshold

What Changed:  Effective July 1, 2024, the Fair Labor Standard Act’s (“FLSA’s”) annual salary-level threshold for white-collar exemptions to overtime requirements will increase from $35,568 to $43,888.  As of January 1, 2025, the annual salary threshold will rise to $58,656.  Starting July 1, 2027, the U.S. Department of Labor (“DOL”) will automatically increase the overtime threshold every three years.

What Does This Mean For Employers:  The FLSA generally requires employers to pay all covered nonexempt employees the statutory minimum wage and overtime pay of at least one and one-half times their regular rates of pay for hours worked in excess of 40 hours in a workweek.  Employees who meet the white-collar exemptions set forth in FLSA Section 13(a)(1) are not entitled to overtime.  To meet the white-collar exemptions, a position must meet the following three criteria:

  1. A minimum salary threshold (currently $35,568 but increasing to $58,656 by 1/25).
  2. Payment on a salary basis as defined by the regulations.
  3. A primary duty test that is specific to each exemption.

What Should Employers Do Now:  There will be legal challenges to the new rule, which may ultimately be heard by the U.S. Supreme Court.  Employers should not wait to see what litigation may bring but should begin planning now for the new salary thresholds.  Employers should decide whether to raise the salaries of certain exempt employees above the new threshold so they will remain exempt.  Employers who choose not to raise salaries should be prepared to pay overtime to these employees when they work more than 40 hours in a workweek.  Schedules for those employees whose salaries do not exceed the threshold may need to be adjusted to limit overtime costs.  Employers must carefully communicate why employees who were formerly categorized as exempt are now nonexempt.

Please contact Melissa R. Lock, Esquire, of Lock Gordon Law Group’s Labor and Employment Law practice group with questions about any of these changes or any aspect of employment law.

Related Posts

Leave a Reply