By Robert B. MilliganKatherine PerrelliMichael WexlerKevin MahoneyJesse M. Coleman , and Dawn Mertineit 

Seyfarth Synopsis: This week, the FTC voted to adopt a proposed final rule banning most non-competes with workers in the United States. The final rule provides that it is an unfair method of competition—and therefore a violation of Section 5 of the FTC Act—for employers to enter into non-competes with workers. The Commission found that non-competes tend to negatively affect competitive conditions in labor markets by inhibiting efficient matching between workers and employers. The Commission also found that non-competes tend to negatively affect competitive conditions in product and service markets, inhibiting new business formation and innovation. It also found that there is evidence that non-competes lead to increased market concentration and higher prices for consumers.

The final rule is available here, along with a fact sheet, and press release on the rule. Existing non-competes may remain in effect for senior executives (those with over $151,164 annual compensation and in policy making position for the business similar to an officer), but will be ineffective for all other workers after the effective date and cannot be imposed upon senior executives in new agreements. Fewer than 1% of workers are estimated by the FTC to be senior executives under the final rule.

There are limited exceptions to the rule based on specific industries, and a general exception for the bona fide sale of a business. The rule does not invalidate other restrictions like a non-solicit or confidentiality restriction, but overbroad restrictions that function to prevent employment and operate as a de facto non-compete will be invalidated. The proposed final rule must first be published in the Federal Register, and would not be effective until 120 days after publication. Barring an injunction, employers will be required to affirmatively provide notice to employees with existing non-competes that their non-competes will not be and cannot be enforced against them by the rule’s effective date.

The U.S. Chamber of Commerce announced that it intends to file suit tomorrow to enjoin the rule from becoming effective. Based on recent Supreme Court guidance on the “major questions” doctrine and limits of agency authority, there is a decent chance that the rule is ultimately invalidated. The rule and commentary is over 500 pages long – we are analyzing the final language and actively monitoring the situation, and will provide further reports on this highly significant action.

By Ariel D. Fenster, A. Scott Hecker, and Kevin M. Young

Seyfarth synopsis: Yesterday, the U.S. DOL unveiled its final overtime rule. The rule significantly increases the minimum salary for so-called “white collar” employees to be exempt from the federal FLSA’s overtime pay requirements. This development requires attention from virtually all employers.

The DOL’s final overtime rule, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees, revises the Fair Labor Standard Act’s overtime exemptions for executive, administrative, professional, and highly compensated employees. Effective July 1, 2024, an  executive, administrative, or professional employee must receive a salary equivalent to $43,888 per year in order to be classified as exempt. This will increase to $58,656 on January 1, 2025. Meanwhile, the annual compensation threshold for the highly compensated employee exemption will increase to $132,964 on July 1, 2024, and then again to $151,164 on January 1, 2025.

These numbers are higher than what the DOL previewed in its August 2023 proposed rule. And they represent a significant jump from the current $35,568 salary level for executive, administrative, and professional employees, and the $107,432 minimum compensation level for highly compensated employees.

These significant increases will have substantial implications and impacts across industries and command employers’ attention.

The Changes

The final rule presents three core changes to the rules framing whether and when an employee may be classified as exempt from the FLSA’s overtime pay requirements:

  1. Increased salary for “white collar” employees:The proposed rule increases the minimum salary level from $684 per week ($35,568 per year) to $844 per week ($43,888) effective July 1, 2024, and to $1,128 ($58,656) effective January 1, 2025.
  2. Increased total compensation threshold for the “HCE” exemption:The rule raises the total annual compensation requirement for the highly compensated employee exemption from $107,432 to $132,964 by July 1, 2024, and to $151,164 by January 1, 2025.
  3. Automatic updating every three years:The rule implements a triennial automatic update to these thresholds, designed, the DOL says, to align with shifts in worker salaries and provide employers with a predictable timetable for future adjustments. The updates will begin on July 1, 2027, and then occur every three years thereafter.

As expected, the changes leave the “duties” tests for the exemptions untouched. So, as before, an employee generally must meet both the duties and pay requirements of at least one exemption in order to be classified as exempt.

The Rule’s Road Ahead

The final rule will go up on the Federal Register for public inspection before formal publication, likely in the next few days.

The rule will face challenges in courts and potential scrutiny in the event of presidential administration turnover following the November 2024 election. It is worth remembering that the Obama Administration’s 2016 rule revising the FLSA exemptions in a similar fashion—i.e., an increased salary threshold with automatic, inflation-based increases—was stymied by legal challenges and a new administration and never came into effect.

The DOL’s new rule is not immune to similar challenges, particularly as we approach another election cycle where compensation issues often become political footballs. Depending on Congress’s make up, the rule might also face challenges under the Congressional Review Act.

Next Steps for Employers

Despite likely legal challenges, employers cannot and should not bank on their success. Businesses must prepare for a final rule that takes effect on July 1, 2024, with a more pronounced change on January 1, 2025. While there are major variables in the upcoming presidential election, employers need to prepare for the current finalized rule.

Employers should promptly develop an accurate picture and understanding of their exempt workforce—i.e., what roles it comprises, how many incumbents occupy the roles, where they are located, what functions they perform, and, of course, how much they are paid. Understanding the contours of the exempt population will allow employers to begin thinking strategically to identify and triage the roles that are most impacted by the new rule or that otherwise command attention during this time of change.

Employers should partner with their attorneys internally and externally to understand how these changes affect their workforce. Seyfarth is on the cutting edge of these changes, with its comment on the proposed rule having been cited by DOL 17 times in the preamble to the final version. With the new rule, many exempt employees will become non-exempt, implicating a new set of state-by-state laws with which to comply. Employers may need to consider other workforce changes, as well as important training and communication strategies.

Seyfarth Synopsis: In today’s ever-evolving and interconnected world, trade secret protection demands proactive measures against both technological vulnerabilities and human threats. Join us for the fourth installment of our 2024 Trade Secrets Webinar Series, where our panel of seasoned trade secrets and cybersecurity attorneys will equip you with practical strategies to bolster your defenses.

Cost – There is no cost to attend, but registration is required.

REGISTER HERE

Key topics to be addressed include:

  • The current cybersecurity and data privacy landscape: new threats and opportunities posed by emerging technologies.
  • The importance of implementing reasonable precautions to safeguard trade secrets.
  • Real-world case studies exemplifying effective trade secret protection strategies.
  • Identification and mitigation of the evolving vulnerabilities associated with trade secret theft.
  • Implementing best practices for securing confidential information in the digital domain.
  • Leveraging industry-standard cybersecurity protocols to fortify your organization’s security posture.

In today’s ever-evolving and interconnected world, trade secret protection demands proactive measures against both technological vulnerabilities and human threats. Join us for the fourth installment of our 2024 Trade Secrets Webinar Series, where our panel of seasoned trade secrets and cybersecurity attorneys will equip you with practical strategies to bolster your defenses.

Key topics to be addressed include:

  • The current cybersecurity and data privacy landscape: new threats and opportunities posed by emerging technologies.
  • The importance of implementing reasonable precautions to safeguard trade secrets.
  • Real-world case studies exemplifying effective trade secret protection strategies.
  • Identification and mitigation of the evolving vulnerabilities associated with trade secret theft.
  • Implementing best practices for securing confidential information in the digital domain.
  • Leveraging industry-standard cybersecurity protocols to fortify your organization’s security posture.

Speakers

Jesse Coleman, Partner, Seyfarth Shaw LLP
Kevin Mahoney, Partner, Seyfarth Shaw LLP
Kathleen McConnell, Partner, Seyfarth Shaw LLP

If you have any questions, please contact Joan Gwak at jgwak@seyfarth.com and reference this event.

Learn more about our Trade Secrets, Computer Fraud & Non-Competes practice.

Our program is accredited for CLE in CA, IL, and NY. Credit will be applied as requested but cannot be guaranteed for TX, NJ, GA, NC and WA. The following jurisdictions may accept reciprocal credit with our accredited states, and individuals can use the certificate they receive to gain CLE credit therein: AZ, AR, CT, HI and ME. The following jurisdictions do not require CLE, but attendees will receive general certificates of attendance: DC, MA, MD, MI, SD. For all other jurisdictions, a general certificate of attendance and the necessary materials will be issued that can be used for self-application. Please note that attendance must be submitted within 10 business days of the program taking place. CLE decisions are made by each local board and can take up to 12 weeks to process. If you have questions about jurisdictions, please email CLE@seyfarth.com..

Please note that programming under 60 minutes of CLE content is not eligible for credit in GA. Programs that are not open to the public are not eligible for credit in NC.If you have any questions, please contact Joan Gwak at jgwak@seyfarth.com and reference this event.

Learn more about our Trade Secrets, Computer Fraud & Non-Competes practice.

Please note that programming under 60 minutes of CLE content is not eligible for credit in GA. Programs that are not open to the public are not eligible for credit in NC.

By Brian B. Gillis and Joshua A. Rodine

Seyfarth Synopsis: On April 12, 2024, the United States Supreme Court ruled that an individual does not need to work directly in the transportation industry to be within the scope of the Federal Arbitration Act (FAA) exemption for transportation industry workers. The Court held that the work performed, rather than the industry of the employer, determines whether the FAA’s exemption applies. Bissonnette et al. v. Lepage Bakeries Park St., LLC, et al.

Facts

Neal Bissonnette and Tyler Wojnarowski were franchisees who owned the right to distribute packaged bakery foods for Flowers Foods, Inc. (Flowers). They brought a putative class action against Flowers, alleging violations of state and federal wage laws. Flowers moved to compel arbitration based on the contracts the distributors had signed with the bakeries, which required any disputes to be arbitrated under section 1 of the FAA. The District Court granted the motion ordering the case to arbitration. 

The Second Circuit Decision

The Second Circuit Court of Appeals affirmed the District Court’s order. The Second Circuit concluded that the exemption in the FAA for the “class of workers engaged in foreign or interstate commerce” (the “residual clause”) only applied to workers in the transportation industry—Bissonnette and Wojnarowski, however, were in the “bakery industry.”

The United States Supreme Court’s Decision

The question before the Supreme Court was whether the FAA transportation exemption is limited to workers in the transportation industry itself. In answering this question, the Supreme Court emphasized that the focus should be on the work performed by the individual, rather than the industry of the employer.

Relying on its decision in Southwest Airlines Co. v. Saxon, 596 U.S. 450, 455 (2022), the Supreme Court determined that an individual does not need to work in the transportation industry to be exempt from coverage under the FAA. The Supreme Court’s interpretation of the residual clause of section 1 was crucial to its determination. In its prior rulings, the Supreme Court concluded that the residual clause should be read in conjunction with the specific categories of “seamen” and “railroad employees” that precede it, and that the common attribute shared by these specific categories is that they are both performing transportation related work. Therefore, the residual clause is limited to transportation workers, but does not require that they work in the transportation industry in order to be exempt from the FAA.

The Supreme Court rejected the Second Circuit’s “transportation-industry” test, which focused on whether an entity’s prices were chiefly pegged to the movement of goods or passengers, and if these predominant source of commercial revenue was generated by that movement. The Supreme Court rejected this approach because it would require extensive discovery, and could lead to additional litigation, adding expense and delay to arbitration cases.

What Bissonnette Means for Employers

This decision clears the way for myriad workers to argue (not necessarily persuasively) that they fall within the exemption for transportation workers under the FAA even if their employers are not engaged in the transportation industry. As the Supreme Court puts it, an exempt worker “must at least play a direct and necessary role in the free flow of goods across borders.” However, since this exemption applies only to arbitration agreements subject to the FAA, some employers may still be able to compel arbitration under state arbitration laws.

By Annette Tyman, Matthew J. Gagnon, Brandon L. Dixon, and Taylor Iaculla

Seyfarth Synopsis: The United States Supreme Court issued its opinion in one of the most anticipated employment cases of this term. In Muldrow v. City of St. Louis, the Court considered whether Title VII of the Civil Rights Act of 1964 prohibits discrimination in transfer decisions absent a separate showing that the transfer caused a “significant” harm. In its opinion, the Court rejected this heightened harm requirement, which will have profound effects on Title VII litigation, and on the way employers think about related areas such as their DEI programming.

Background

Plaintiff Jatonya Muldrow is a sergeant in the St. Louis Police Department. She was promoted to the Department’s Intelligence Division, where her work included at various times public corruption and human trafficking cases, serving as head of the Gun Crimes Intelligence Unit, and overseeing the Gang Unit. At one point, she also was deputized as a Task Force Officer to work with the Federal Bureau of Investigation (FBI) with the same privileges as an FBI agent. In 2017, an interim police commissioner implemented various personnel changes and Muldrow was laterally transferred to a supervisory position outside of the Intelligence Division. While the lateral transfer resulted in changes to her schedule, uniform, vehicle and included more administrative responsibilities, she did not claim that the changes themselves caused her a significant disadvantage. Less than two weeks after her transfer, Sergeant Muldrow filed a charge with the EEOC, alleging the transfer was motivated by sex discrimination.

The Lower Court Decisions

The City moved for, and was granted, summary judgment by the district court. The court found that Muldrow failed to show an element of her prima facie claim: that her involuntary transfer was not an “adverse employment action” because it did not result in salary or benefit changes, nor did her responsibilities significantly change. Her criticisms that the new role included less networking opportunities, required her to work in uniform, and sometimes required weekend shifts were unavailing. This simply amounted to a preference for one job over another, rather than showing how she was materially disadvantaged by the transfer. 

Muldrow appealed. The Eighth Circuit Court of Appeals affirmed the lower court’s decision noting that:

  • Lateral transfers, without proof of related harm, is not actionable under Title VII; and
  • A contrary holding would otherwise permit minor personnel decisions to form the basis of discrimination suits.

Muldrow then petitioned the U.S. Supreme Court for review. The Court agreed to hear the case for the narrow purpose of answering whether Title VII prohibits discrimination in transfer decisions absent a separate court determination that the transfer decision caused a significant disadvantage?

The Supreme Court’s Opinion

The Supreme Court held that a plaintiff need only show that their transfer brought about “some” harm with respect to a term or condition of employment. The Court focused on Title VII’s language prohibiting “discriminat[ing] against” an individual with respect to the “terms [or] conditions” of employment because of that individual’s sex. Because discrimination requires differential treatment that injures, Title VII still requires evidence of harm. However, the Court expressly rejected that the harm suffered must have been “significant or otherwise exceeded some heightened bar.” In other words, to discriminate simply means to treat worse. Other key takeaways from the Court’s opinions include:

  • Applying its reasoning to transfer decisions, the majority noted in its opinion that “[m]any forced transfers leave workers worse off” with respect to the terms or conditions of employment. And even in the absence of changes in pay or title that did not affect future career prospects, a transfer decision may still be actionable under Title VII. As such, the Court vacated the circuit court’s judgment and remanded the case for further proceedings consistent with its opinion.
  • Justices Thomas, Alito, and Kavanaugh each filed concurring opinions to the judgment. Justice Thomas agreed with the Court’s description of the standard plaintiffs must satisfy when alleging violations of Title VII. However, he suggested that even under this standard, Muldrow’s claim should fail. In his view, Muldrow failed to prove there was anything harmful about her transfer, as she only complained that the position was more administrative and lacked prestige.
  • Justice Alito also issued a concurrence, characterizing the Court’s opinion as “unhelpful” and shared that he has “no idea” how the guidance will be interpreted by lower court judges. Instead, he believes lower court judges will simply be mindful of their verbiage and continue their normal practices.
  • Justice Kavanaugh expressed concern with the Court’s requirement for plaintiffs to show “some” harm. The Justice noted that any transfer decision based on a protected characteristic violates Title VII and requiring a showing of some harm goes too far.
  • The Court appeared unconcerned that courts might now be burdened with meritless claims, noting that the “injury” requirement itself is a sufficient barrier to exclude such claims.

What This Means for Employers

It has long been recognized that Title VII is not intended to regulate morality, nor does it even proscribe all discrimination; rather, it prohibits discrimination only as to compensation, terms, conditions, or privileges of employment. Most courts have interpreted this limitation to mean that actionable discrimination requires a materially adverse employment action. The Muldrow decision lowers the bar to establish such adversity, which will only increase the scope of activity prohibited by Title VII. The import of this decision is therefore not limited to transfers, which was Muldrow’s subject matter. It will impact all questions of material adversity going forward.  But at least this decision does not eliminate that requirement altogether, as some plaintiffs’ counsel and the EEOC have argued for. Whatever new line of “adversity” was drawn by this decision—i.e., something material, but not necessarily significant; a non-trifling harm, but not a substantial one—will undoubtedly be difficult to discern. But at least it keeps the focus on employees’ conduct, rather than the unpoliceable zone of their thoughts and intentions.

In addition, the Muldrow decision exposes employer DEI programming to greater legal risk. Employer DEI initiatives often involve programming geared towards certain demographics of employee populations and applicant pools. Before the Muldrow decision, such programming could more easily withstand legal challenge because while many DEI initiatives typically involve a “term or condition of employment,” a plaintiff proving “significant” harm or disadvantage due to non-selection or lack of access to a DEI-related program presented a considerable hurdle to a successful “reverse” discrimination claim. But the lowered threshold—i.e., that plaintiffs now simply must show they were harmed by non-selection into the DEI-focused opportunity—could make it easier for plaintiffs opposing such programs to challenge employers’ DEI-related decisionmaking. Of course, there are a number of other defenses at employers’ disposal regarding their DEI programming selection processes. But it would be wise going forward for businesses to carefully scrutinize their DEI initiatives’ application or selection processes, and any decisions coming from those processes.

In Summary

The Court’s opinion is a marked change to the long-standing framework used by courts across the nation in assessing Title VII’s injury requirement. Employers should be mindful of the increased risk posed by making lateral transfers given this new framework. It also begs the question of whether this opinion will be used by courts—and plaintiffs—outside the transfer context to assert claims that would have previously been considered meritless.

Seyfarth will continue to monitor these developments. Should you have any questions, please contact a Seyfarth attorney.

By Yoon-Woo Nam, Danielle Shapiro, Christina Forte Meddin, Camille A. Olson, Karla Grossenbacher, and Lawrence Z. Lorber

Seyfarth Synopsis: On April 15, 2024, the EEOC issued its final regulation and interpretive guidance (“PWFA Regulations”) for the enforcement of the Pregnant Workers Fairness Act (“PWFA”), a law that took effect in June 2023. The PWFA supplements existing federal anti-discrimination law by requiring covered employers to provide reasonable accommodations to qualified employees or applicants with known limitations related to pregnancy, childbirth, or related medical conditions absent an undue hardship on the employer. The final regulation will go into effect on June 18, 2024 — 60 days from April 19, 2024.

Background

In December 2022, President Biden signed the PWFA into law, which thereafter went into effect on June 27, 2023. As of its effective date, the EEOC started accepting charges of discrimination alleging violations of the PWFA. In August 2023, the EEOC issued proposed PWFA regulations. On April 15, 2024, after considering the numerous comments it received to its proposed regulations, the EEOC issued its final regulation to carry out the PWFA that changed very little from the regulations it proposed in August 2023. While other federal laws may apply to employees or applicants affected by “pregnancy, childbirth or related medical conditions” – Title VII of the Civil Rights Act of 1964 (Title VII), the Pregnancy Discrimination Act of 1978 (“PDA”), and the Americans With Disabilities Act (“ADA”), as well as the Family and Medical Leave Act (FMLA) and the Providing Urgent Maternal Protections for Nursing Mothers Act (“PUMP Act”) – the PWFA is the first federal law enforced by the EEOC that requires employers to provide accommodations for medical conditions relating to a woman’s pregnancy, absent a showing of disability.

Importantly, the PWFA created a floor for the employer to provide reasonable accommodations to qualified employees or applicants; it does not preempt more protective federal, state or local laws. For example, at least 26 states have laws that clearly require employers to provide pregnancy accommodations. To the extent any of these laws overlap, or provide additional employee rights beyond those provided by the PWFA with respect to benefits for covered employees, the employer must follow the provisions of all applicable laws most favorable to the employee.

Important Definitions Under PWFA

In the final regulations, the EEOC did not back off its expansive definition of “related medical conditions” despite numerous comments urging it to do so. Under the PWFA Regulations, “pregnancy” and “childbirth” refer to current pregnancy, past pregnancy or potential and intended pregnancy, e.g., infertility, fertility treatment and contraception use. “Related medical conditions” are defined in the PWFA Regulations as medical conditions relating to pregnancy or childbirth of the specific employee seeking an accommodation. Covered related medical conditions can include complications related to the termination of the pregnancy such as miscarriage, stillbirth, abortion, and post-partum complications like anxiety, depression, incontinence, menstruation and lactation. The PWFA Regulations would also include reproductive health issues that are not directly related to an actual current, or recent pregnancy (although many commentators objected to this broad reading of the definition of “related medical conditions”): menstruation, use of birth control, endometriosis, incontinence, and infertility.

The PWFA coverage definitions for employers, employees, applicants, and former employees mirror those of Title VII. And like the ADA, an employer can limit the damages for a claim under the PWFA if it makes a good faith effort to meet the need for a reasonable accommodation.

Notably, the PWFA Regulations state that the EEOC will follow courts’ longstanding interpretation of the Title VII phrase “pregnancy, childbirth, or related medical conditions” to include abortion. Thus, an employer must engage in the interactive process and ultimately provide an accommodation to an employee with a known limitation related to abortion, unless such accommodation would cause an undue hardship on operations. However, the final rule makes it clear that the PWFA does not require employers to pay for abortions, provide transportation or otherwise cover costs incurred for abortions. This polarizing and politicized issue, along with the EEOC’s expanded interpretation of “related medical condition,” “temporary” and “in the near future” will result in an inevitable collision with state and local laws and be addressed in subsequent legal challenges. Many business and human resource groups who strongly supported the passage of the PWFA on a bi-partisan basis strongly opposed the EEOC’s draft definitions of “related medical condition,” “temporary,” and “in the near future” as contrary to the PWFA and its legislative intent. Those concerns were dismissed by the EEOC in the PWFA Regulations.

Additional Key Provisions of the Final Rule

Employers will also find certain terms and processes in the PWFA, such as “reasonable accommodations,” “interactive process,” and “undue hardship,” that resemble familiar concepts under the federal laws mentioned above. Understanding where the PWFA differs from this familiar terminology, however, is key for compliance moving forward.

Reasonable Accommodation

The accommodation process prescribed by the PWFA bears similarity to the familiar process for providing reasonable accommodations under the ADA. For example, under the PWFA, employers must make reasonable accommodations for “known limitations” of an employee or applicant, unless the accommodation would cause an undue hardship on the employer. According to the final rule issued by the EEOC, a “[l]imitation” under the PWFA constitutes any “physical or mental condition related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions.” The limitations can occur pre, during or post pregnancy and include fertility for and termination of the pregnancy. There is no requirement, however, that such physical or mental condition substantially limit a major life activity, as is the requirement under the ADA. The final rule explicitly states that employers may not require that an employee or applicant communicate the need for accommodation in writing.

“Temporary” and “In the Near Future”

Unlike the ADA, the PWFA Regulations require accommodation of employees who may not be qualified to perform the essential functions of the job, as long as their limitation is “temporary.” The final rule defines “temporary” as lasting for a limited time, not permanent, but may extend beyond “in the near future.” The PWFA Regulations suggest that limitations due to pregnancy will generally qualify as “temporary” as the finite nature of gestation means employees will be able to perform the essential function within approximately 40 weeks or less. In situations other than the actual term of the pregnancy, whether the employees can perform the essential functions in an acceptable timeframe under the PWFA must be determined on a case-by-case basis. The PWFA also requires that a leave of absence be only an accommodation of last resort; in other words, an employer may not require an employee to take a leave of absence if another accommodation is available that allows the employee to continue working.

Predictable Assessments

Employers should be aware that the PWFA Regulations categorize certain modifications to the job, often requested by pregnant employees, as “predictable assessments” of reasonable accommodation. Because employers criticized these predictable assessments as undermining the interactive discussion process, the EEOC added language to the final rule stating that, although entities must conduct case-by-case assessments, the EEOC believes that certain modifications will generally not impose an undue hardship, and therefore, should be granted by employers in virtually all situations. These modifications include: (1) allowing an employee to carry or keep water near and drink, as needed; (2) allowing an employee to take additional restroom breaks, as needed; (3) allowing an employee whose work requires standing to sit and whose work requires sitting to stand, as needed; and (4) allowing an employee to take breaks to eat and drink, as needed.

Documentation

The PWFA Regulations limit when employers may request supporting documentation for an accommodation arising out of pregnancy, childbirth, or related medical conditions. Specifically, the rule indicates that employers may only seek supporting documentation when it is reasonable under the circumstances for the employer to need said documentation to determine whether the employee has a limitation covered by the PWFA. However, when an employee’s pregnancy is obvious or known, and includes self-confirmation of the pregnancy by the employee, the PWFA Regulations suggest that the employer should not request supporting documentation before engaging in the interactive process. Furthermore, where the accommodation requested is one that is “simple, inexpensive, commonly sought” during an uncomplicated pregnancy, and where documentation would not be easily obtained, the PWFA Regulations similarly caution against requesting supporting documentation.

Finally, the final rule states that employers can only require documentation that is “reasonable,” meaning that it is sufficient to describe or confirm: (1) the physical or mental condition; (2) the physical or mental condition is related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions (together with (1) “a limitation”); and (3) the change or adjustment at work needed due to the limitation.

Recommendations

We recommend that employers update their policies and practices to ensure there is a process for accommodating applicants and employees with limitations relating to pregnancy, childbirth, or related medical conditions. We also recommend training for management and human resources teams to ensure awareness of these changes in the law. To stay up-to-date on pregnancy accommodation laws and developments, click here to sign up for General Labor & Employment Issues mailing list. Companies interested in Seyfarth’s paid pregnancy accommodation survey may view it here

Dawn Lurie, Senior Counsel in Seyfarth’s Washington, DC office and member of the firm’s Immigration practice will participate on a panel during the American Staffing Association’s 2024 Staffing Law & Compliance Conference on May 16, 2024 in Washington, DC. The session, titled,  “Top Compliance Issues for Employers and Staffing Firms in 2024,” will address critical compliance concerns for employers and stakeholders in the staffing industry.  Click here to learn more about the conference.

By Matthew J. Gagnon

Seyfarth Synopsis: It has been nearly a decade since some states began enacting changes to their equal pay statutes that appeared to some to differentiate those statues from the federal Equal Pay Act (“EPA”) in significant ways. Although those changes garnered plenty of press and speculation from commentators, the courts themselves have been rather slow to address those differences. Almost a decade on, there are still very few cases that interpret those state-level changes as differing in any meaningful way from the federal standards. A recent decision from the Second Circuit may herald the beginning of a change in this dynamic, albeit still quite incremental, cautious, and slow.

This is the first in a series of posts examining the new and developing trends in equal pay litigation identified in Seyfarth’s yearly publication, Developments in Equal Pay Litigation, 2024 Update

One of the most critical issues facing employers in today’s equal pay litigation landscape is whether and to what extent certain state laws have changed the legal standards governing key provisions of a plaintiff’s prima facie case and an employer’s defenses. Beginning with California in 2015, some states made what looked to some like fairly significant changes to their equal pay statutes (e.g., New York, Illinois, New Jersey, Massachusetts, Washington; the list is ever growing). Some commentators and plaintiffs’ lawyers have argued those changes introduced a different set of standards into equal pay litigation, especially as they relate to determining what counts as “equal” or “substantially similar” work for purposes of identifying appropriate comparators, and the factors employers may rely upon as an affirmative defense.

The courts have generally not gone along. Most decisions that have come out since those changes were enacted continue to interpret the new state statutes in a manner that is consistent with federal law. In 2023, one Appeals Court finally did find a difference between state and federal law, but not in a way that many expected.

Recent Decisions in the Second Circuit

In Eisenhauer v. Culinary Institute of America, 84 F.4th 507 (2d Cir. 2023), which was an important case for several reasons (see here and here), the Second Circuit addressed a relatively narrow distinction between the federal and New York equal pay laws. In that case, a female professor at a college and culinary school alleged she was paid less than a male professor who managed a similar course load. The employer argued that the plaintiff and her comparator had been hired at different salaries, and that that pay disparity increased over time due to the sex-neutral terms of a compensation plan that gave the same percentage increase to professors’ salaries each year. The plaintiff argued that the plan could not be used by the employer as a “factor other than sex” affirmative defense because the resulting pay disparity was not connected to any differences between her and her comparator’s job. The Second Circuit framed this question as asking whether the federal EPA requires an employer to show that the factor is job-related, i.e., related to the job in question.

The Second Circuit acknowledged that it had earlier held that a facially sex-neutral job-classification system alone may only constitute a “factor other than sex,” when it is rooted in legitimate business-related differences in work responsibilities and qualifications for the particular positions at issue. But the Eisenhauer court clarified that this requirement was only applicable to job-classification systems: “[A] job-relatedness requirement is necessary to ensure that a job-classification system is not a pretext for sex discrimination,” because, “Jobs are, after all, the principal feature of job-classification systems.” Id. at 516-17 (emphasis in original). More generally, the Second Circuit concluded that there is no job-relatedness requirement for the “factor other than sex” defense under the federal EPA because that requirement appears nowhere in the EPA’s text and would conflict with the statute’s plain meaning.

But, according to one argument, the same is not true for the New York EPA. The court held that when the New York legislature amended the New York equal pay statute, it added a provision that required a “factor other than sex” to be “job-related with respect to the position in question,” among other things. See N.Y. Lab. Law 194(1)(iv). The Second Circuit remanded the case back to the district court to reconsider its decision in light of the different standards under the federal and New York statutes, despite the fact that the district court had found in favor of the employer even after applying the more stringent job-relatedness standard to the federal EPA. According to the Second Circuit, the district court erred when it applied this same standard to analyze the “factor other than sex” defense under the state and federal statutes.

But in another recent case, which was decided by a court in the Second Circuit after EisenhauerEdelman v. NYU Langone Health System, No. 21-cv-502(LJL), 2023 WL 8892482 (S.D.N.Y. Dec. 26, 2023), the court arguably made no distinction between the state and federal laws with respect to other aspects. In particular, the court appeared to rely on the same analysis to determine whether plaintiff and her comparator performed “equal” (the federal language) or “substantially similar” work (the state language).

The court first acknowledged the change wrought by Eisenhauer, noting that it must now “analyze a plaintiff’s ‘[NY EPA] claim as altogether distinct form her [federal] EPA one.’” Id. at *7 (quoting Eisenhauer, 84 F.4th at 525). And in fact, the court was careful to apply a slightly different standard to analyze the employer’s “factor other than sex” affirmative defense under New York law, noting that “New York law specifies that such a factor must ‘be job-related with respect to the position in question and . . . be consistent with business necessity.’” Id. (quoting NYLL § 194(1)(iv)(B)). But when it considered the plaintiff’s prima facie case, the court arguably made no effort to distinguish between the New York EPA and the federal EPA. After citing a long line of precedent, which mostly predated the New York’s ostensible change to a “substantially similar” standard, the court concluded that “the evidence at trial establishes that Plaintiff did not perform equal work to [comparator] because their positions did not require substantially equal effort.” Id. Notably, the court came to the same conclusion under the NY EPA going so far as to hold that the “equal work inquiry” is “’critical’ for unequal pay claims under the [NY EPA].” Id. at *10 (quoting Woods-Early v. Corning Inc., 2023 WL 4598358, at *4 (W.D.N.Y. July 18, 2023)).

Implications For Employers

When read together, it could be argued that these two cases recognize only the faintest glimmer of daylight between the federal and New York equal pay statutes. If so, they are significant because they are among the very few cases that do. The implications for employers could be profound. If a court were to hold, for example, that “substantially similar” work is somehow different from “equal” work,  plaintiffs’ counsel might use that to argue that some of the new state-level statutes actually lower the burden on a plaintiff to establish a prima facie case.

Many class cases founder on the “equal” work requirement because it is difficult to show, on a class-wide basis, that many different employees all perform the same job. If plaintiffs’ counsel were able to argue successfully that some state statutes have relaxed that standard, that could open the floodgates of equal pay class action litigation. For now, most courts are still arguably interpreting these provisions the same way under either the state or federal statutes. Employers should not take their eye off this ball. Just one errant decision by a court anywhere in the country could have a massive impact on employers with a nationwide footprint.

These and other trends impacting equal pay litigation are discussed in much greater detail in Seyfarth Shaw’s yearly report, Developments in Equal Pay Litigation, 2024 Update. We highly recommend that report to any employer facing equal pay litigation, or to those who just want to know more about it so they can avoid such lawsuits in the future or keep abreast of changes in the law. We look forward to continuing to share our analysis of these issues.

INTRODUCTION

1. OJT is Commonly Used and Poorly Documented

The OSHA regulations governing General Industry and Construction workplaces include hundreds of employee safety training requirements.  Sophisticated safety managers know that many OSHA standards provide specific documentation requirements, such as forklift certifications or lockout-tagout periodic inspections.  Employers often run safety-specific training programs through their safety professionals and keep all required records through their safety department.

But almost every workplace utilizes on-the-job training (OJT) from operations staff, wherein experienced and knowledgeable employees explain the job to employees new to the role or task.  Basic OJT from a senior non-management employee or low-level supervisor typically covers topics such as how to perform the various tasks of the job and the recognized safe practices for doing so. OJT may be combined with a review of Standard Operating Procedures (SOPs), which include written instructions and even photographs of employees completing tasks.

2. Liability From Incomplete or Undocumented OJT

The OSHA standards do not mandate operational OJT of this nature or how it should be performed. OSHA regulations generally do not require written standard operating procedures. Nevertheless, employers face liability under OSHA’s General Duty Clause if they expose employees to a workplace with a recognized hazard that may result in serious injury or death. OSHA also maintains pour-over training regulations that recognize training as part-and-parcel of compliance with OSHA regulations.

Many accidents that OSHA investigates result from an employee failing to follow safety rules that were part of employee training.  During an OSHA inspection, OSHA’s procedures require it to document the elements of employee misconduct, one of which is training on the applicable safety rule. A common employer defense to citations is lack of employer knowledge that an employee would violate the safety rule, and/or employee misconduct.

When an OSHA inspection stems from a serious injury or accident, OSHA faces political pressure to issue citations rather than concluding that an employee knowingly violated a safety rule.  Training-related OSHA citations are extremely common, due to inadequate evidence of employee training and employees’ inability to remember or articulate specific training they received that may be relevant. The specific safety rule or safe practice at issue from the training may have been a quick comment among days or weeks of safety seminars and OJT. 

3. Well-Documented OJT Ensures Quality and Reduces Liability

OSHA is extremely document-driven, and the use of an OJT “checklist” or some digital equivalent can be extremely helpful for the defense of OSHA citations. Written OJT records provide contemporaneous written proof that training occurred.  Fuller documentation can ensure that OSHA knows what topics were covered, what specific safety measures were covered, and that the correct explanation was provided by the trainer.

Of course, a recognized risk in safety is that an OJT trainer does not cover all the topics, or explains them in an incorrect way. OJT documentation ensures that each trainer hits the same required topics each time, and that there is a record of doing so. In an setting where a non-manager is providing the OJT, documentation can be even more vital to ensure that training is consistent and up to management standards.

Because OJT is not required by the OSHA regulations, full documentation of that OJT is similarly not mandated, but a best practice is to document OJT on  safe work practices that have been vetted by operations, safety, and management. Of course, for many functions, such as maintenance, employees may perform thousands of tasks and documentation of OJT of all job tasks would not be possible.  Solutions can be written and digital.  A checklist can include short explanations of the required safe practices, to ensure that each topic is covered.  OJT documentation can also be incorporated into a formal certification and qualification program.  This program would list specific tasks required to be demonstrated by a qualified trainer and completed by the trainee under supervision of the qualified trainer before an employee receives authorization to complete work tasks alone. Many employers have both the qualified trainer and trainee sign off on training acknowledgments or each topic. Tablets and cloud-based acknowledgement systems can be helpful to ensure that the documents are created and retained.

4. OJT Reinforces Traditional Classroom Trainings by Embracing Adult Learning Needs

Successful workplace training programs acknowledge and incorporate learning needs specific to adult learners. Adult learners require practical and relevant learning topics in order to want to learn. OJT provides immediate and practical information and skills that employees can directly use in their working lives, this allows the employee to see that the subject matter and methods are relevant which increases motivation to learn. Adult learners also require involvement and active participation in order to learn more and the opportunity to use and practice their knowledge and skills to retain more information. OJT allows the trainee to put learned principles into practice, allowing trainees the opportunity to actually do what they learned and think through each step of the taught process as well as work through real-life problems. OJT also allows for real-time trainer to trainee feedback and coaching. These opportunities for active participation and direct interaction with the trainer during OJT increases the employee’s knowledge base and information retention. Most importantly, adult learners require reinforcement and repetition to learn best. Proven adult learning techniques includes activity-based learning, such as OJT, to solidify training topics outlined in the traditional classroom setting training.

5. Conclusion

Fuller documentation of OJT can ensure uniform and effective training.  It can reduce the risks of safety rule violations, injuries, and OSHA and other legal liabilities.  All the best written safety programs may still be ineffective at instilling the knowledge and skills needed for employees to do their work safely and avoid creating hazards that could result in accidents or injuries if an employer has not established a method to ensure awareness and understanding of work practices and concepts outlined in the written safety programs.

Adam R. Young is a partner in the Workplace Safety and Environmental Group in the Chicago office of Seyfarth Shaw LLP. Mr. Young focuses on occupational safety and health, OSHA inspection management, employment, and OSHA retaliation. For more information on occupational safety and health and OSHA compliance, please contact Mr. Young at ayoung@seyfarth.com or (312) 460-5538.

Chrisy C. Walsh, MS, CIH, CSP is a Project Manager at Colden Corporation specializing in industrial hygiene, health and safety auditing, litigation support, ergonomic evaluation, and safety program development. She is well versed in occupational hazards and associated controls within numerous industries including the aviation, energy, healthcare, maritime, and manufacturing fields. Chrisy Walsh can be contacted at walsh@colden.com,  (860)-405-5978, or through the Colden Corporation website at www.colden.com.

By Emily Barsamian, Marlin Duro-Martinez, Joshua D. Seidman, and Joseph Vento

What You Need to Know:

  • The New York City Department of Consumer and Worker Protection (“DCWP”) is requiring that all City employers conspicuously post its Know Your Rights at Work poster by July 1, 2024, and also provide a copy to current employees and new hires.
  • The poster contains a QR code that links to the DCWP’s website, which includes an overview of the various laws enforced by the DCWP including earned safe and sick time, temporary schedule changes and fast food worker rights.
  • The new “Know Your Rights at Work” posting and notice requirements are in addition to notice and posting requirements imposed by the DCWP on covered employers under other applicable City laws, such as the Earned Safe and Sick Time Act (“ESSTA”) and Fair Workweek (FWW) Law.

Last month, the DCWP published its Workers’ Bill of Rights website, as required by a NYC Council bill approved last year. With it, the DCWP also published a new poster dubbed “Know Your Rights at Work,” that employers must “conspicuously post” in their worksites “in an area accessible and visible to employees.”  The poster can be accessed here.

The poster is a one page document that contains a QR code, which links to the DCWP’s above-mentioned Workers’ Bill of Rights website.  The website contains an overview of workers’ rights under various New York City and State, as well as federal, laws ranging from earned safe and sick time to paid family leave to pay transparency. As directed by the City Council, the Workers’ Bill of Rights site includes a statement that: “[i]f you work in NYC, you have rights regardless of your immigration status.” The site also contains the contact information for the respective enforcement agencies like the National Labor Relations Board, the New York and U.S. Departments of Labor, and the NYC Commission on Human Rights.   

In addition to displaying this new poster, employers must, by July 1, 2024: (1) provide a copy of the poster to each current employee; (2) provide a copy to workers hired on or after July 1, 2024, on or before their date of hire; and (3) make the poster available through other means the employer typically uses to communicate with employees (e.g., the company intranet). Employers must ensure that any notice given to employees is not only in English, but also “any language spoken as a primary language by at least five percent of employees employed an employer.”  The current form of the Know Your Rights At Work poster is already in English, Bangla, Spanish, Chinese, French, Haitian Creole, Korean, Urdu, Polish, Arabic, and Russian.

A violation of this requirement can result in a civil penalty of $500.  However, the law states that first time violators will be given notice and a chance to correct the violation before any penalty is imposed.

As noted above, the new “Know Your Rights at Work” posting and notice requirements are in addition to other such requirements imposed by the DCWP on covered employers under other applicable City laws. For instance, the Earned Safe and Sick Time Act requires covered employers to both post and provide individual employee notice of the “Notice of Employee Rights: Safe and Sick Leave” model notice.  For more information on NYC employers’ posting and notice obligations under ESSTA, see our prior Legal Updates herehere and here.[1]

Similarly, the City’s FWW law also imposes notice and posting requirements on covered employers, e.g., certain employers in either the retail or fast food industry. For more information on NYC employers’ notice and posting obligations under ESSTA, see our prior Legal Update here.

We will continue to monitor the DCWP’s Workers’ Bill of Rights website and provide additional updates if and when they occur. With the New York City employment law and national paid leave landscape continuing to expand and grow in complexity, we encourage companies to reach out to their Seyfarth contact for solutions and recommendations on addressing compliance with these laws and paid leave requirements more generally.  To stay up to date on paid leave developments, please click here to sign up for Seyfarth’s Paid Leave mailing list.  Companies interested in Seyfarth’s paid sick leave laws survey should reach out to paidleave@seyfarth.com.

[1] This is not the only change coming to NYC ESSTA covered employers in 2024. As previously reported, on March 20, 2024 amendments to ESSTA went into effect that for the first time created a private right of action for alleged violations under the Act.