Dorsey Work Watch

https://dorsey.gjassets.com/content/uploads/2026/04/WorkWatch-Nisha-5.mp4 Following his inauguration in January 2025, President Trump signed a flurry of executive orders affecting diversity, equity, and inclusion (“DEI”) policies across the public and private sector. Particularly concerning for private employers who are federal contractors, Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” addresses “illegal” private DEI and diversity, equity, inclusion, and accessibility (“DEIA”) policies by directing agencies, such as the Equal Employment Opportunity Commission (“EEOC”), to “combat illegal private-sector DEI preferences, mandates, policies, programs, and activities.” Additional information about the EEOC and its guidance is available here and here. Private employers have also been taking note and updating their policies. However, the EEOC’s ability to enact this directive was hindered until it gained a quorum in October 2025. Now that it is operating at full capacity, emplhoyers have some visibility into the agency’s priorities. After a slow start, the EEOC initiated litigation against an employer for sponsoring a female-only networking event. The EEOC filed suit on February 17, 2026, against Coca-Cola Beverages Northeast, Inc., over its DEI initiatives, alleging that by sponsoring a two-day networking event at a casino for only female employees, Coca-Cola had discriminated against male employees on the basis of their sex. Female attendees were excused from their work duties, received their regular pay, and reimbursement for food and lodging expenses. The EEOC claims that the exclusion of male employees from attending the event was a denial of equal compensation, terms, conditions, or privileges of employment on the basis of sex. The EEOC’s subpoena and enforcement authority has become a preferred investigative and enforcement tool in reviewing private employers. Although the EEOC has always had broad authority to subpoena private employer records while an investigation is pending, the agency has demonstrably increased its use of this authority. Just a month after obtaining a quorum, the EEOC sought an enforcement action against Northwestern Mutual Life Insurance Co. in Wisconsin. While investigating a claim that an employee had been discriminated against based on his sex (male), race (white), and national origin (American-Irish) in violation of Title VII, the agency sought extensive information pertaining to Northwestern’s training, development, and promotion policies and initiatives over a three-year period. When Northwestern objected, the EEOC brought the lawsuit to compel compliance. The EEOC specifically demanded the following information:• Employee records from 2022 to 2025 for any training where race, national origin, sex, or sexual orientation was a criterion considered for participation in any employer-sponsored advisor or mentorship program.• All reports or summary documents from 2022 to 2025 that consolidated information about diversity and inclusion at Northwestern.• Based on a racial-equity initiative published on the company’s website, documents reflecting the structure, function, budget, staffing, programs, and participation in that initiative. • A list of employee names and contact information for anyone who had either received a “Diversity & Inclusion Champion Award,” and each woman or person of color retained, promoted, or sponsored, for whom another manager received “credit” or “positive feedback.”• Documentation of Northwestern’s performance management metrics and systems, including any systems used to track DEI goals and progress. The Wisconsin court has not yet decided whether to limit the EEOC’s inquiries. Other courts have found that the EEOC has broad statutory authority to investigate and request any company information relevant to a charge, which could include company-wide data and policies. For instance, in December, a California court ordered a supermarket chain operated by Vallarta Food Enterprises, Inc., to comply with an EEOC subpoena. The agency, investigating whether the company had excluded non-Hispanic individuals from employment, requested: extensive applicant and employee data (including demographic and contact information); screening questions used during the hiring process; job descriptions; and information about other race and national origin complaints. External advocacy efforts may be contributing to EEOC-led investigations into employer DEI practices. Although EEOC investigations are typically triggered by an individual complaint filed by a current or former employee or applicant, the EEOC can initiate investigations based on other information as well. Recent filings in the EEOC’s enforcement action against Nike, Inc. reveal that the EEOC’s now-Chair Andrea R. Lucas issued a Commissioner Charge against Nike in 2024 following receipt of more than 30 letters by America First Legal (“AFL”) urging the agency to investigate major corporations’ DEI programs. AFL is a nonprofit organization that litigates social and corporate issues and prioritizes (among other things) “Dismantling Diversity, Equity, and Inclusion.” Nike’s campaigns and public documents commenting on social justice and inequity had previously drawn attention from policymakers. The EEOC issued wide-ranging requests for information, including:• Nike’s organizational structure• Programs used to increase racial and minority representation in its U.S. workforce• The effect of minority representation on executive compensation• Employee layoffs in 2024• Racial and ethnic minority employee data• Consideration, application, and selection materials and information for 16 employment-related programs The court has not yet decided whether Nike must comply with all of the EEOC’s requests. Employers continue to settle discrimination claims investigated by the EEOC. Over the past few months, the EEOC has announced several settlements with employers over discrimination claims. A few notable examples include:• A $1.4 million settlement with LeoPalace Resort in Guam over allegations that it treated Japanese employees more favorably than non-Japanese (including those of American national origin) employees.• A $1.1 million settlement with Battleground Restaurants Group, Inc., which owns and operates several Kickback Jack’s restaurants in North Carolina. The lawsuit alleged the restaurants violated Title VII by intentionally failing to hire male applicants for host, bartender, and server positions.• A $150,000 settlement with Seward & Son, a large farming operation in Missouri accused of discriminating against American (and primarily Black) farm workers by providing foreign workers with preferential job assignments and other fringe benefits. However, a recent decision in Missouri suggests employers may be able to limit certain legal challenges to DEI programs. The state of Missouri sued Starbucks last February for its hiring, mentorship, and promotion policies and programs, claiming that its initiatives placed non-white, non-male, and “other preferred minorities” in an unlawful position of advantage over others in the workforce, in violation of state and federal laws. The heart of the allegations rested on Starbucks’ mentorship and employee-led affinity groups, which for a time were limited to specific employee populations. However, on February 5, 2026, the lawsuit was dismissed because the state had failed to allege its own specific injury or that of any individual or group of employees. Other EEOC actions demonstrate continued investigations of traditional discrimination claims. Based on these recent developments, employers might assume that the EEOC’s priorities have shifted. However, the agency continues to pursue allegations of race, sex, disability, and pregnancy discrimination and retaliation. Recent lawsuits include a Tennessee employer accused of restricting Black employees from a breakroom reserved for white employees and firing a supervisor who “failed to restrain” one of his direct reports from making internal and external complaints of discrimination. Another involves a Michigan-based in-home health care provider who refused to assign home visits based on a nurse’s race because it believed that some residents would prefer to be cared for by a non-Black nurse. Recent settlements also involved:• $100,000 settlement of a former employee’s religious discrimination claim against the Young Men and Women’s Hebrew Association. The EEOC found that the employer failed to accommodate a Christian employee’s request to attend Sunday church services and retaliated against her, forcing her to resign.• $95,000 settlement with JACO Coach Company, LLC following an employee’s report of sexual harassment and unwanted touching by a male coworker.• $75,000 settlement of age discrimination and retaliation claims by workers in a long-term care facility who were mocked because of their age and treated less favorably than younger workers. The EEOC’s focus on DEI-related enforcement is likely to continue. Employers can expect that the EEOC’s pursuit of Title VII discrimination and retaliation claims will continue. On February 26, Chair Andrea Lucas issued a letter to 500 of the largest employers in the U.S., urging chief executive officers, general counsel, and board chairs to “reject identity politics” and hire and promote individuals based on merit rather than protected characteristics. The EEOC appears committed to this approach through education, compliance efforts, and enforcement actions. Employers facing discrimination charges or agency information requests should engage legal counsel early to evaluate and preserve potential defenses. Employers who value and promote diversity may also wish to review programs, policies, and public-facing information to assess potential risks while fostering an inclusive, respectful workplace. Dorsey’s labor and employment attorneys are well-prepared to provide guidance as employers navigate the evolving DEI landscape. [1] Ending Illegal Discrimination And Restoring Merit-Based Opportunity – The White House [2] https://aflegal.org/priorities/

Sweeping amendments to New York City’s Earned Safe and Sick Time Act (“ESSTA”), N.Y. C. Admin. Code. 20-911 et seq. recently took effect on February 22, 2026.  ESSTA requires employers to provide employees in New York City with paid and unpaid time off for a variety of reasons related to health, safety, childcare, legal proceedings for public benefits and housing, and public disasters. Originally enacted in April 2014, the law has been amended several times to expand employee rights to protected time off.  Last year, the New York City Council enacted the most significant changes yet to ESSTA.  As part of these amendments, the City has also begun referring to ESSTA as the “Paid Time Off Law.”  ESSTA now requires private sector employers to provide three different forms of job-protected leave: paid safe and sick leave, unpaid sick and safe leave, and paid prenatal leave.  The recent amendments to the law provide important protections to employees, but they also impose significant new compliance obligations on employers amid an increasingly complex landscape of leave administration. Multistate employers face a growing patchwork of state and local sick leave laws across the country.  In recent years, numerous states and municipalities have passed laws mandating job-protected sick leave for private sector employees.  At least seventeen states, the District of Columbia and numerous municipalities require employers to provide job-protected sick leave to their employees.  In this article, we will summarize the new requirements imposed by ESSTA. Amendments to ESSTA In 2025, the New York City Counsel amended ESSTA to require employers to provide employees with 20 hours of paid prenatal leave, 32 hours of unpaid safe and sick leave (in addition to up to 56 hours paid safe and sick leave), and to provide for expanded uses of safe and sick leave, including to care for a minor child or attend a legal proceeding for subsistence benefits.  New York City Mayor Zohran Mamdani’s office recently issued a press release announcing an enforcement blitz by the Department of Consumer and Worker Protection (“DCWP”), the agency responsible for enforcing ESSTA.  DCWP sent out compliance warnings to more than 56,000 employers, and announced a new data-driven enforcement strategy to compare paid sick leave use in employer records with national data from the U.S. Centers for Disease Control and Prevention for evidence of likely noncompliance.[1] Scope of ESSTA.  The law applies to private sector employees who work in New York City, with the exception of certain employees covered by collective bargaining agreements and certain hourly professionals licensed by the New York State Education Department. Employers located outside of New York City must provide ESSTA leave to any of their employees who work in New York City, including employees who work remotely in New York City or who live outside of the City. Paid Safe and Sick Leave Employers with fewer than 100 employees in the U.S. must provide employees with 40 hours of paid sick and safe leave per year.  However, if an employer has fewer than five employees and a net income of less than $1 million in the previous tax year, it may provide this 40-hour allotment of safe and sick leave as unpaid time off.  Employers with 100 or more employees in the U.S. must provide employees with 56 hours of paid safe and sick leave per year. Employers may calculate safe and sick leave time based on the calendar year, a benefits year, or some other 12-month period. Paid safe and sick leave accrues at the rate of one hour for every 30 hours worked.  For purposes of accrual, most exempt employees are assumed to work 40 hours per week.  Employers have the option to frontload paid safe and sick time by making it available at the beginning of each year, rather than requiring employees to accrue it over time.  Frontloading the full amount of paid safe and sick time at the beginning of the year relieves employers of the obligation to track and note accruals on pay statements.  However, it does not relieve them of the obligation to track and note an employee’s use and balance of safe and sick leave on pay statements, as described in more detail below. Pursuant to ESSTA, employees may carryover from one year to the next up to 40 hours (for employers with fewer than 100 employees) or 56 hours (for employers with 100 or more employees) of accrued, unused paid safe and sick leave.  However, employers may cap the use of paid safe and sick leave at 40 or 56 hours per year (depending on employer size).  The ability to carryover paid safe and sick time from one year to the next is beneficial for employees who may need to use such time early in the year, before they have accrued sufficient paid leave in that year.  Employers who both frontload the full amount of paid sick and safe time at the beginning of each year and pay employees for any unused time at the end of the year do not need to permit carryover. Unpaid Safe and Sick Time All employers, regardless of size and net income, also must provide employees with 32 hours of unpaid safe and sick leave as of February 22, 2026, upon hire and on the first day of each year.  The annual 32 hours of unpaid safe and sick time may not be prorated, including for employees who commence employment mid-way through the year. Unlike paid safe and sick time, these 32 hours of unpaid leave do not accrue, and are available for immediate use on the first day of each year or upon hire.  Employers are not required to allow employees to carryover unused unpaid safe and sick leave from one year to the next.  Employers must, however, allow employees to exhaust their paid safe and sick leave before using any unpaid safe and sick time. Permitted Uses of Safe and Sick Leave Both paid and unpaid safe and sick leave may be used for a number of reasons, including (i) to care for an employee’s own health needs or that of a family member, (ii) during a business, school or daycare closure for a public health emergency, (iii) to seek assistance or take safety measures if an employee or a family member is the victim of domestic violence, unwanted sexual contact, stalking, human trafficking or workplace violence, (iv) to care for a child or for a family or household member with a disability, (v) to attend housing and public benefits appointments and hearings, and (iv) to stay home when the government declares a public disaster (e.g., fires, hurricanes, terrorist attacks). Paid Prenatal Leave In addition to safe and sick leave, ESSTA also requires employers, regardless of size and net income, to provide employees with 20 hours of paid prenatal leave.  Employers must provide employees with a separate bank of paid prenatal leave that is distinct from, and cannot be combined with, any other leave including safe and sick leave. Paid prenatal leave does not accrue and is immediately available for use upon hire and on the first day of every 52-week period.  For purposes of calculating paid prenatal leave, a 52-week period for a particular employee will begin on the first day that the employee uses paid prenatal leave.  Employees may use paid prenatal leave to receive health care during pregnancy or related to pregnancy, including fertility treatment.  Only employees who are directly receiving health care for their pregnancy may use paid prenatal leave, and such leave may not be used after childbirth. Additional Requirements ESSTA imposes several additional obligations and restrictions on employers. First, employers must note on an employee’s pay statement or other form of written documentation provided each pay period: (i) the amount of paid safe and sick time the employee has accrued during a pay period; (ii) the amount of paid and unpaid safe and sick time the employee used during a pay period; and (iii) the amount of paid and unpaid safe and sick time the employee has available for immediate use. Additionally, for each pay period in which an employee uses paid prenatal leave, an employer must note on the employee’s pay statement or in other written documentation provided to the employee, both the amount of paid prenatal leave used during the pay period and the amount of paid prenatal leave available for immediate use. Second, ESSTA only permits employers to require reasonable documentation from an employee that their use of leave was for an authorized purpose when the employee takes leave for more than three consecutive workdays.  The law also circumscribes the types of documentation that employers may require, and prohibits employers from requiring employees to disclose the nature of the employee’s or family member’s medical condition or care, or the underlying reason for using safe time. Third, employers may require reasonable advance notice of an employee’s need for leave.  When the need for leave is foreseeable, an employer may require notice up to seven days in advance.  However, when the need for leave is not foreseeable, an employer may only require notice as soon as practicable, including upon the employee’s return from leave. Fourth, employers must provide employees with a written notice of rights under ESSTA upon hire and within 30 days of any change to such rights.  Employers also must post a notice of rights in the workplace.  The DCWP published a model notice of employee rights on its website that employers may use. Finally, employers must maintain a written policy on ESSTA leave that addresses several issues including accrual, frontloading and carryover of safe and sick time,  the amount of safe and sick leave that is immediately available for use, the availability of a separate bank of paid prenatal leave, any advance notice requirements and procedures, requirements regarding written documentation of leave and consequences for failing to provide such documentation, minimum increments for use, any policy regarding misuse of leave, and a statement that the employer will not ask employees for details about the reason for use of ESSTA leave and that the employer will treat any information it receives as confidential.  Employers should update their policies as necessary to reflect the recent amendments to ESSTA. Employers who fail to comply with their obligations under ESSTA may be subject to progressive civil penalties assessed on a per employee and per instance basis as well as private rights of action by employees to recover compensatory damages, injunctive and declaratory relief, and attorneys’ fees and costs.   [1] New York City Mayor’s Office, Mayor Mandani Announces Major Expansion of Protected Time Off for 4.3 Million Workers and New Data-Driven Enforcement strategy (February 20, 2026): https://www.nyc.gov/mayors-office/news/2026/02/mayor-mamdani-announces-major-expansion-of-protected-time-off-fo; New York City Department of Consumer and Worker Protection, Benchmarks for Evaluating Compliance with NYC’s Protected Time Off Law: https://www.nyc.gov/assets/dca/downloads/pdf/media/Protected-Time-Off-Report.pdf. Reprinted with permission from the April 6, 2026 edition of the New York Law Journal © 2026 ALM Global Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or asset-and-logo-licensing@alm.com.

https://dorsey.gjassets.com/content/uploads/2026/04/Illinois-Law-Changes-5.mp4 Illinois lawmakers were busy in 2025, passing laws and amendments to existing laws that impact Illinois employers as of January 1, 2026. First, Illinois amended the Illinois Human Rights Act (“IHRA”), which prohibits discrimination, harassment, sexual harassment, and retaliation against individuals in connection with employment. The Illinois Department of Human Rights (“IDHR”) administers the IHRA and is the agency to which employees submit complaints when they believe an employer has engaged in conduct that violates the IHRA. Effective January 1, 2026, it is now discretionary, rather than mandatory, for the IDHR to bring employee complaints to a fact-finding conference. This means the IDHR now has discretion to investigate employee complaints based on written submissions by the parties alone. Further, a previously passed IHRA amendment making it a civil rights violation for an employer to use AI in a manner that subjects employees to discrimination went into effect on January 1, 2026. Illinois employers must now ensure that AI used or relied upon to make employment decisions does not have a discriminatory effect on employees based on a protected class. Failure to notify employees of the employer’s use of AI is also now a civil rights violation. Third, Illinois’ VESSA law was amended and expanded as of January 1 to prohibit employers from firing, refusing to hire, discriminating against, or otherwise retaliating against an empl oyee who uses employer-issued devices to record a crime of violence, including domestic violence or sexual violence, committed against the employee or their family or household member. Next, the legislature amended the Illinois Workplace Transparency Act (“IWTA”). First enacted in 2019 in the midst of the #MeToo era, the IWTA restricted nondisclosure and nondisparagement language in employment, separation, and settlement agreements unless the clauses were mutual; limited the use of mandatory arbitration for sexual harassment or other discrimination claims; required annual sexual harassment training for all employees; and mandated that employers report settlements and adverse judgments to the Illinois Department of Human Rights. As of January 1, 2026, the IWTA has been amended to expand its scope and impact on employment, separation, and settlement agreements. For example, the definition of “unlawful employment practice” has been expanded to include most employment claims, including wage and occupational safety claims. The law also now includes a definition of “concerted activity” and provides that agreements may not prohibit, prevent, or restrict an employee from reporting allegations of unlawful conduct to government officials or engaging in concerted activity to address work-related issues. Perhaps most consequentially, the amendments address several technical provisions. The IWTA now provides that employers may not condition employment or continued employment on an agreement to shorten the applicable statute of limitations, apply non-Illinois law to an Illinois employee’s claim, state that confidentiality is the employee’s preference, or require a venue outside of Illinois to adjudicate an Illinois employee’s claim. Finally, confidentiality provisions related to alleged unlawful employment practices must be supported by distinct, bargained-for consideration separate from the consideration provided in exchange for a general release of claims. This may be accomplished by explicitly allocating a portion of the consideration payment to the confidentiality provision within the agreement. Other Illinois employment laws that went into effect on January 1, 2026, include:• Employee Blood and Organ Donation Leave Act: amended to apply to part-time employees• Nursing Mothers in the Workplace Act: requires employers to provide nursing mothers with reasonable paid break time to express milk• Family Neonatal Intensive Care Leave Act: requires employers to provide unpaid leave if an employee’s child is in the NICU In light of these changes to Illinois employment laws, now is a good time to review employment policies and agreements to ensure compliance with these acts and amendments.

On March 23, 2026, Washington’s Governor Bob Ferguson signed a law that eliminates non-compete agreements, severely restricts non-solicitation agreements, and imposes other requirements related to all Washington employees. Who is covered? This law applies to all employees in Washington, even if their employer is based elsewhere. My company is based outside Washington state, and we have only one employee there. Does the law apply to us? This law applies to all employees in Washington, even if their employer is based elsewhere. We’re a really small company, does it apply to us? Yes. The Act includes all entities employing one or more people and which has business activity in Washington. Even if the company is small, and even if it is based elsewhere. What is prohibited? The law defines a non-compete agreement to include any written or oral covenant, agreement or contract that “prohibits or restrains” a worker (employee or independent contractor) from engaging in a lawful business. The phrase is to be liberally construed against enforcement of a noncompetition covenant. The law gives several examples, including contracts that “directly or indirectly prohibits the acceptance or transaction of business with a customer,” or between performers and locations. How about retention incentive agreements or training benefits? The law expressly prohibits any threat or demand that an employee repay or return any compensation or benefit as a consequence of engaging in a lawful profession. This arguably includes stay incentives, training benefits conditioned on continued employment, and the like. There is a limited exception for educational expenses, so long as the covenant expires within 18 months of the start of employment (not the start of the educational program), it is limited to pro rata repayment and releases the obligation if the employee is separated based on “good cause” (a defined term). Are there exceptions? Yes, but narrow ones. Nonsolicitation agreements are allowed, but not if they ““directly or indirectly” prohibit the acceptance or transaction of business with a customer. This language is intentionally very broad. Restrictions on confidentiality, trade-secret protections, and sale of goodwill of a business are allowed (but then only if the person signing the covenant owns 1% or more of the business), and some franchisee agreements. What if I have an existing noncompete agreement with an employee who moves to Washington from out of state? The new law would apply to that employee and the noncompete agreement would be unenforceable. Does the law require me to do anything? Yes. By October 1, 2027, employers must make reasonable efforts to provide written notice to all current and former employees and independent contractors whose noncompetition covenant is still within its effective time period that their noncompetition covenant is void and unenforceable. When does this law start? The Act generally takes effect June 30, 2027. The written notice must be sent by October 1, 2027. What should I do now? Employers should review all noncompetition, nonsolicitation, and confidentiality agreements now to ensure either compliance or an orderly transition of agreements. This includes handbooks, policies, and other documents which could directly or indirectly impose an unlawful restraint. Employers should also begin planning for the employee notice (due on October 1, 2027). Experience in other states cautions that this process can be more complicated and time-consuming than expected.

It is safe to say that the use of artificial intelligence (AI) went mainstream in 2023. With the widening acceptance of AI, dozens of industries have raced to adopt the technology into various operations at a staggering pace – including adopting AI in human resources (HR) processes in the workplace. But, employers and HR departments should keep pace with federal agencies seeking to mitigate risks associated with AI in the workplace. AI in the Workplace AI in the workplace is moving at a fast clip. According to the Equal Employment Opportunity Commission (EEOC), as many as 83% of employers, and as many as up to 99% among Fortune 500 companies, are using some form of AI to screen or rank candidates for hiring. The use of AI in the workplace is not new from an HR perspective. Employers have long been able to use AI to perform certain HR functions in the recruiting process, such as resume screening. But now, employers can use AI for other recruitment functions, such as administering personality and aptitude tests or analyzing video interviews. Once workers are on-boarded, employers can use AI to help with worker safety, protection, management, and productivity through real-time locating systems and other technologies. Federal Agencies’ Guidance With the introduction of AI comes great benefits, several federal agencies seek to cut in on potential consequences by issuing guidance, requesting information, and devising plans for AI in the workplace in the following ways: On January 26, 2022, the federal Occupational Safety and Health Administration (OSHA) issued a trade release announcing an update and expansion of a chapter in the OSHA Technical Manual on Industrial Robot Systems and Industrial Robot System Safety. The update notes that advances in AI boost the abilities and uses of robot systems in industrial applications. The revisions add current “technical information on the hazards associated with industrial and emergent robot applications, safety considerations for employers and workers, and risk assessments and risk reduction measures.” On May 12, 2022, the EEOC issued its guidance on AI “discuss[ing] how existing ADA requirements may apply to the use of [AI] in employment-related decision making and offers promising practices for employers to help with ADA compliance when using AI decision making tools.” The same day, on May 12, 2022, the Department of Justice reported issued guidance that “outlines issues that employers should consider to ensure that the use of software tools in employment does not disadvantage workers or applicants with disabilities in ways that violate the ADA.” On October 31, 2022, the National Labor Relations Board (NLRB) General Counsel issued a memorandum recommending that the NLRB “apply the Act to protect employees, to the greatest extent possible, from intrusive or abusive electronic monitoring and automated management practices that would have a tendency to” interfere with protected concerted activity. On January 10, 2023, the EEOC issued a draft strategic enforcement plan which announced that the agency would focus “on employment decisions, practices, or policies in which covered entities' use of technology contributes to discrimination based on a protected characteristic. These may include, for example, the use of software that incorporates algorithmic decision-making or machine learning, including artificial intelligence; use of automated recruitment, selection, or production and performance management tools; or other existing or emerging technological tools used in employment decisions.” On May 1, 2023, the White House Office of Science and Technology Policy (OSTP) announced that it will be releasing a public request for information (RFI) “to learn more about the automated tools used by employers to surveil, monitor, evaluate, and manage workers.” The OSTP states that responses to the RFI “will be used to inform new policy responses, share relevant research, data, and findings with the public, and amplify best practices among employers, worker organizations, technology vendors, developers, and others in civil society.” On May 18, 2023, the EEOC issued its guidance explaining the application of Title VII to an employer’s use of automated systems, including AI, noting that the scope of the guidance “is limited to the assessment of whether an employer’s ‘selection procedures’—the procedures it uses to make employment decisions such as hiring, promotion, and firing—have a disproportionately large negative effect on a basis that is prohibited by Title VII.” Employers should expect to see more federal guidance on AI as technologies continue to develop. What Employers Can Do to Stay in the AI Race With federal agencies’ guidance in mind and an expectation of more regulation to come, employers should take proactive steps to ensure the use of AI in the workplace keeps pace with developing law. These steps include: Understanding that AI in the workplace is governed by several different laws, including privacy laws, data security laws, and anti-discrimination laws at the state and federal levels. Considering including references to the use of AI in the recruiting, hiring, and employment process in employment policies and notices. Partnering with HR, IT, and legal counsel to ensure that AI practices remain competitive while compliant with local and federal law. For additional information on employer considerations before using AI and automated decision-making systems in the workplace, check out a previous Quirky Questions article on the topic. The idea that AI can create numerous benefits in the workplace seems to be gaining traction. Federal guidance issued in 2022 and 2023 signal that regulation of AI in the workplace will strive to keep up with the strides made in technological advances. Employers and HR can stay ahead of the curve by keeping abreast of, and following, regulations applicable to their company.

Employee reductions and terminations are an unfortunate result of economic downturns. Even during good economic times, many companies face the need to reduce their workforce or terminate the employment of individual employees. In such circumstances, employers may seek to offer severance pay in exchange for certain releases and promises by the departing employee requiring a severance agreement. The drafting of severance agreements can be complex, given that there are various federal and state laws that prohibit or narrow the provisions that can be included in the severance agreement. The use of confidentiality and non-disparagement provisions has recently come under scrutiny again.  This article summarizes the legal issues that an employer must consider when deciding whether to include such provisions in a severance agreement. What is the impact of the National Labor Relations Board’s decision in McLaren On February 21, 2023, the National Labor Relations Board (“NLRB”) issued a decision, McLaren Macomb, 372 N.L.R.B. No. 58 (2023), finding that an employer violated Section 7 of the National Labor Relations Act (“NLRA”) by offering employees a severance agreement containing provisions stating that the terms of the agreement were confidential and prohibiting the employee from making any disparaging statements about the employer.  Even if the employee ultimately did not sign the agreement, the NLRB found that the mere proffer of these terms to the employees as part of a severance package could be a violation of the NLRA.  Communications by covered employees are protected by Section 7 even if they contain comments that would be considered “disparaging” towards the employer. Does McLaren apply to non-union workplaces? Yes.  Section 7 of the NLRA protects employees’ right to engage in concerted activity for “mutual aid and protection,” which includes discussing the terms and conditions of their employment.  Section 7 applies in union and non-union workplaces. Does McLaren apply to all severance or separation agreements?? No. Only individuals who meet the statutory definition of “employees” – which does not include executives, supervisors, and most managers – have rights under Section 7 of the NLRA. Does the NLRB’s decision mean confidentiality and non-disparagement provisions can no longer be included in severance agreements? Not necessarily.  Employers will now, however, have to engage in a risk assessment in determining whether to include such provisions. For example, in reductions in force (“RIFs”) where the severance is formula-based, the need to include a confidentiality provision is diminished by the fact that there will be many departing employees. Therefore, prohibiting the departing employees from discussing their severance agreements with fellow co-workers who were selected for the RIF adds very little value to the employer. In contrast, where a severance agreement is presented to an individual employee as a compromise, employers may include a confidentiality provision with a definition of “Confidential Information” that is tailored to avoid implicating the terms and conditions of employment that are the core protections of Section 7 of the NLRA. Similarly, following the McLaren decision, employers that want to continue to include non-disparagement provisions in severance agreements could  do so only with specific language. Non-disparagement provisions should, for example, be narrowly tailored to prohibit defamatory statements in accordance with the defamation laws in the applicable jurisdiction to be permissible under McLaren. Is this the first time a federal agency has taken action with regard to provisions in these types of agreements?   No.  The Equal Employment Opportunity Commission (“EEOC”) is another federal agency keeping an eye on confidentiality and non-disparagement provisions in severance agreements.  The EEOC has taken the position that no agreement between a departing employee and an employer can limit the departing employee’s right to testify, assist, or participate in an investigation, hearing, or proceeding conducted by the EEOC.  In addition, the EEOC has stated that limiting an individual’s ability to file a charge or participate in an investigation constitutes retaliation in violation of federal employment law.  Any confidentiality or non-disparagement provision in a severance agreement that attempts to waive these rights is subject to challenge by the EEOC. Similarly, the Securities and Exchange Commission (“SEC”) prohibits employers from taking any action that impinges upon an employee’s ability to bring complaints to the SEC.  SEC Rule 21F-17, enacted under the Dodd-Frank Act, prohibits any action that would “impede an individual from communicating directly with the [SEC] staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement. . .with respect to such communications.” Indeed, the SEC has fined employers for using language that prohibits employees from speaking with the SEC without prior approval from the employer. Thus, employers may not use severance agreements with departing employees that prohibit or discourage departing employees from reporting alleged violations to the SEC. It is important to include language in each severance agreement, even for employers that are not publically traded, that states that the departing employee may speak freely with federal agencies such as the SEC without first seeking approval from the employer. Aren’t there also restrictions related to settlements of claims involving sexual harassment? Yes.  In response to #metoo, various states introduced or enacted legislation restricting the use of confidentiality provisions in agreements settling sexual harassment-related claims.  Each piece of legislation has its own nuances regarding the types of language which are prohibited and the consequences of violating the restrictions. These are just a few of the key issues to consider when drafting a severance or settlement agreement. It is always best practice to speak with an employment attorney when drafting severance agreements to ensure compliance with federal, state, and local laws.

Dear QQ: I am the HR Director for a technology company.  We have offices in three states and hire employees from all over the country.  Since 2020 we have let employees work remotely from the state of their choice.  I’ve been hearing a lot about pay equity, but am not clear on the different types of laws and where they apply.  Are they all basically the same thing?  Because of them, I’ve been advising senior management that we should conduct a pay equity study, but I’m not sure how to conduct one.  Pay equity is a hot topic for employers in 2022.  There have been high profile developments, such as the preliminary court approval of a $24 million settlement payment by U.S. Soccer to the U.S. Women’s players, as well as a number of new requirements issued by President Biden and state and local legislatures. The current push for new tools to achieve pay equity is in large part a response to inequities exposed by the COVID-19 pandemic and recent social movements including Black Lives Matter and #MeToo, because despite the non-discrimination requirements on the books, pay inequity persists. Women and people of color still earn less than white men do, and the disparity is even greater for women of color. New requirements aim to increase the likelihood that traditionally underpaid groups earn as much as their historically advantaged counterparts and to decrease historical power imbalances between employers and employees. These developments have occurred in three main areas: salary transparency requirements in the hiring process, protections for employees who discuss their—or their colleagues’—wages, and bans on asking applicants their salary histories. Pay transparency laws and protections for employee wage disclosures seek to reduce or eliminate secrecy surrounding compensation with the aim of putting all candidates on equal footing. Pay history bans help to equal the playing field in new hire salary negotiations and to support equitable pay for longer-term employees by forcing employers to set compensation based on the position rather than building on a candidate’s prior, potentially discriminatory, compensation. Many employers are conducting or plan to conduct pay equity studies to ensure pay fairness in their organization and to limit exposure to pay discrimination claims. New state and local laws of these types are being enacted with some frequency, so employers are advised to check on requirements prior to posting advertisements for positions. Salary Transparency Laws Colorado led the salary transparency charge in 2021. Its law requires, among other things, that any employer with at least one employee in the state, when posting for a position which could be potentially filled by a Colorado resident (whether working onsite or remotely), include compensation information in the job posting, notify existing employees of promotional opportunities, and maintain records of job descriptions and applicable wage rates. Connecticut; certain localities, for example, in New York State: Ithaca, Westchester County, and New York City (eff. Nov. 2022); Maryland; Nevada; Rhode Island (eff. 2023); and Washington also have salary transparency laws in effect. Among other requirements, the laws generally require employers to provide compensation information to job applicants either proactively or upon request. The state legislatures in California and New York recently passed similar broad-based salary transparency bills that await their respective governors’ signatures. State legislatures in Alaska, Massachusetts, Michigan, South Carolina, and Vermont have proposed comparable legislation. The laws vary as to which job postings are covered and the scope of requirements.  The Colorado law, for example, requires covered employers to list Colorado compensation ranges in ads for positions that are linked to a Colorado location or may be performed remotely from Colorado. The California bill does not appear to limit coverage to employees in California and so it would seem to apply to covered employers’ postings for remote positions. The New York bill would apply to covered employers’ postings for all jobs which “can or will be performed, at least in part, in the State of New York” and so would seem to also apply to remote positions. Requirements range from requiring employers to publish salary information in advertisements to notifying current employees of a new position’s salary range to providing pay scales upon request (as is already required of some California employers). Employers who will be subject to salary transparency laws should think carefully about how the required disclosures could affect current employees. Employers should make sure pay bands are current and positions are appropriately placed in them. Then they should analyze how current employees’ compensation stacks up to the disclosed compensation and how current employees may react when they see posted salary information.  Employees earning less than publicized rates may allege that the difference is based on discrimination unless employers are prepared to articulate legitimate reasons for the differences. Wage Disclosure Protections California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Hampshire, New Jersey, New York, Oregon, Puerto Rico, Rhode Island (eff. 2023), Vermont, Virginia, Washington, and the federal National Labor Relations Act provide employees with wage disclosure protections. The laws generally prohibit employers from limiting employees’ right to disclose their own wages and from taking adverse action against employees who disclose their own wages or discuss the voluntarily-disclosed wages of another employee. As with pay transparency laws, employers subject to wage disclosure laws should consider the potential impact of employee compensation becoming more widely known among employees. Salary History Bans Many of the states and localities noted above, and others, such as Alabama and Wisconsin, restrict employers from asking job applicants about their current and/or past compensation history and impose other limitations on the way applicants’ wage or salary history may be used.  Additionally, in March 2022, President Biden issued an executive order instructing the FAR Council to consider whether rules should limit or prohibit Federal contractors and subcontractors from seeking and considering information about job applicants’ and employees’ existing or past compensation when making employment decisions. The Office of Personnel Management anticipates issuing a proposed regulation that will bar the use of prior salary history in the hiring and pay-setting processes for federal employees. For example, New York’s law prohibits employers from: relying on applicants’ wage or salary history in deciding whether to offer employment or in determining wages; seeking, requesting, or requiring applicants or employees to provide their salary history as a condition of being interviewed, employed, or promoted; or refusing to interview, employ, or promote, or otherwise retaliating against applicants or employees based on their prior wage or salary history or their refusal to provide it. Pay Equity Studies With all of this in mind, many employers are conducting or considering pay equity studies.  Pay equity studies are a great way for employers to understand whether their employees are paid fairly and can be a strong defense against claims of system-wide or disparate impact discrimination.  But employers should proceed thoughtfully, because a poorly planned or executed pay equity study could end up causing more harm than good and open the door to discrimination claims. Best practices when conducting a pay equity study include the following: Obtain leadership buy-in before beginning the pay equity study. You don’t want to find problematic compensation and then have no tools to correct it. Evaluate position placement in pay bands, as well as rates in position, before you begin. You want to use good data. Conduct the study under attorney-client privilege. While the underlying salaries are not privileged, you want the study itself to be. Determine appropriate segmentation of positions. If these are not appropriately selected, you may end up comparing apples to oranges. Conduct a statistical analysis. Many employers hire consultants with this expertise to “do the math,” but there are also companies that provide software to allow employers to perform the comparisons in-house. Determine whether legitimate job differences or compensation philosophies and practices explain discrepancies. Determine salary adjustments to make, perhaps over time, and think through the best way to present any adjustments to employees. If you find structural pay disparities, identify and change pay practices that may create or continue them.

When the subject of the National Labor Relations Act (the “NLRA,” or, more succinctly, the “Act”) is broached, employment lawyers often hear a familiar refrain: “The Act doesn’t apply to me because my employees are not unionized.” This widespread belief is incorrect. In actuality, all employers in the United States are subject to the Act in an important way that carries even greater significance when political and polarized societal issues find their way into the workplace. For those of you who may not have paid much attention to the NLRA before receiving this surprising news, Section 7 of the Act protects an employee’s right to self-organization, including to join a labor organization. Section 7 also shields an employee’s right “to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”  Concerted activity (activity involving two or more employees or by one on behalf of others) that is for “mutual aid or protection” is interpreted broadly. It can range from an employee strike to potentially more nuanced instances, such as where employees post complaints on social media relating to their employment benefits, a conversation involving one speaker and one listener on a subject that relates to group action in the interest of employees, or even where multiple employees individually refuse to work overtime for the same reasons without group discussion, where their actions imply a common goal.  In tandem with Section 7, it is an unfair labor practice under Section 8(a)(1) for an employer to “interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in Section 7” of the Act. In other words, an employer violates the Act if it interferes with an employee’s ability to exercise their Section 7 rights, even if that employee is not currently a member of a labor union. But the question remains: What does it mean for an employer to impermissibly interfere with an employee’s Section 7 rights? The applicable legal standard is complicated and was formed in a long string of cases by the National Labor Relations Board (“NLRB”) dating back nearly two decades. Beginning in 2004, the NLRB applied the standard set forth in Lutheran Heritage, under which an employer’s policy is unlawful if an employee would “reasonably construe” the policy as restrictive of their Section 7 rights or if the policy would “reasonably tend to chill” Section 7’s protected activities. Examples of where an employer may infringe on protected activities include, but are not limited to, threatening employees if they support a union or engage in concerted activity enforcing work rules that reasonably tend to inhibit employees from exercising their rights under the Act, and retaliating or taking adverse actions against employees who engage in protected or concerted activities. In 2017, under the Trump Administration, the NLRB articulated a more employer-friendly standard in Boeing Company. The Boeing Co. standard requires not only assessing the legality under Section 7, but also evaluating the employer’s justification for the policy or conduct. Now, the Biden Administration is poised to revert the NLRB to the pre-Boeing Co. standard. The NLRB’s General Counsel, Jennifer Abruzzo, issued a memorandum instructing regional offices to send cases to her office for consideration relating to certain issues, notably including cases addressing the Boeing Co. standard. And in early 2022, Abruzzo filed a brief in the Stericycle, Inc. case before the NLRB in which she advocated for a return to the Lutheran Heritage standard. This issue often rears its head in two contexts. First, employers should be careful when drafting or enforcing policies or handbooks that constrain an employee’s ability to discuss the terms and conditions of their employment. For example, if an employer adopts a social media policy that contains content-based restrictions, or a policy that prohibits employees from making negative or disparaging statements about the company, those actions may be seen by the NLRB as prohibited by the Act. Second, employers should take Section 8 of the Act into account when considering whether and how to discipline an employee for verbal comments, violation of the company dress code, or other conduct related to an employee’s exercise of Section 7 rights. Since workplaces have existed, employees have been making statements that cause offense or discomfort to other employees. It can be hard to distinguish between statements that may implicate Section 7 rights and those that do not. As a recent example, although an employee’s comment to a co-worker about their personal views on abortion or the recent Supreme Court decision in Dobbs may not raise Section 7 rights, that employee’s comment about the company’s policy related to reimbursement of abortion-related expenses post-Dobbs is likely protected. Other topics, such as co-worker pay, are so closely related to the terms and conditions of employment that any action by the employer to restrict discussion may be considered by the NLRB to reasonably tend to chill concerted activity. If you are learning for the first time that you may be subject to the NLRA, or if you have policies in place that limit an employee’s speech or conduct in the office, now is the time to consult with your local Dorsey attorney. The NLRB has identified this as an enforcement priority, and employers would be wise to anticipate and fix any issues before the NLRB becomes involved.