Workforce Bulletin

As featured in #WorkforceWednesday®: This week, we’re examining how recent employer-initiated challenges to the National Labor Relations Board’s (NLRB’s) structure have arisen due to the agency’s broad interpretation of its enforcement authority, leading to significant legal obstacles.

The NLRB is facing significant legal challenges from employers after a series of controversial rulings. Could the NLRB’s structure be at risk?

Epstein Becker Green attorneys Stuart M. Gerson and Laura H. Schuman discuss how the NLRB’s broad interpretation of their enforcement authority under the National Labor Relations Act has invited legal challenges. Additionally, they examine how the U.S. Supreme Court’s Loper Bright decision is perceived to create a more favorable environment for contesting the NLRB’s authority.

We previously reported that the New Jersey Department of Labor and Workforce Development (“NJDOL”) issued proposed regulations to implement New Jersey’s Temporary Workers’ Bill of Rights (the “Act”), including its pay equity requirement. On September 16, 2024, the NJDOL adopted N.J.A.C. 12:72 (the “Regulations”) implementing sections 1 through 7, and 10 of the Act, pertaining to “workplace protections, as well as temporary help service firm and third-party client responsibilities.” The key provisions are summarized below.

Pay Equity Requirement

Significantly, the Regulations provide a formula for calculating the minimum hourly rate of pay for temporary workers, which under the Act is determined by “the average rate of pay and average cost of benefits” of comparator employees, i.e., employees of the third-party client who perform:

the same or substantially similar work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions for the third-party client at the time the temporary laborer is assigned to work at the third-party client.

As more organizations across industry sectors store personal data with cloud storage vendors— including the three largest vendors in the world, Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform—federal regulatory agencies are increasing their scrutiny of data control efforts and vetting the data privacy and security protocols of third-party vendors. AT&T’s recent settlement with the Federal Communications Commission (FCC) serves as a cautionary tale.

What Is the Cloud?

In case your cloud knowledge is, well, nebulous, cloud data storage allows user organizations to store data on remote servers that are maintained by a third party and are located off site. Users then access the data via the internet. This enables seamless collaboration and accessibility by users in disparate locations, without the burden of physical infrastructure.

According to Precedence Research, the cloud computing market will continue to rise, with the global market predicted to surpass $1 trillion by 2028. A 2023 survey of  hospital and health system leaders conducted by Global Healthcare Exchange (GBX) found “cloud-based solutions are quickly becoming a new standard within hospitals and health systems and impact nearly every domain, including supply chain, clinical, finance, and HR teams.” The survey revealed that nearly 70 percent of all hospitals and health systems are likely to adopt a cloud-based approach by 2026.

The benefits of cloud storage include scalability, cost efficiencies, increased user accessibility, and improved operational resiliency. Cloud technology can even lead to increased cybersecurity. Yet the GBX study still emphasizes the importance of selecting the “right cloud partner” to achieve the best outcome and stronger data security.

As featured in #WorkforceWednesday®: This week, we’re spotlighting the Federal Trade Commission’s (FTC’s) decision to withdraw from a federal labor pact; the Equal Employment Opportunity Commission’s (EEOC’s) report on alleged underrepresentation in science, technology, engineering, and mathematics (STEM)-related jobs; and an appellate court’s affirmation of the National Labor Relations Board’s (NLRB’s) McLaren Macomb decision.

In a win for businesses, the Massachusetts Supreme Judicial Court (“SJC”) has ruled that individuals in true franchisor-franchisee relationships are independent contractors. In Patel v. 7-Eleven, Inc., the SJC found that defendant franchisor 7-Eleven, Inc. (“7-Eleven”) did not misclassify certain franchisees in violation of the Commonwealth’s independent contractor statute, M.G.L. c. 149, § 148B, which presumptively considers an individual “performing any service” for a putative employer to be an employee of said putative employer, rather than an independent contractor, unless: (1) the individual is free from control and direction in connection with the performance of the service; (2) the service is performed outside the usual course of the business of the employer; and (3) the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature at that involved in the service performed.

In a long saga to determine whether 7-Eleven properly classified certain franchisees as independent contractors, the United States Court of Appeals for the First Circuit (“First Circuit”) certified two questions to the SJC. On the first question back in 2022, the SJC ruled that where a franchisee is an “individual performing any service” for a franchisor, the independent contractor statute applies to the relationship between the franchisor and the franchisee. The decision here involved a second question that the First Circuit certified to the SJC related to the threshold determination of the independent contractor statute:

Do the plaintiffs perform any service for 7-Eleven within the meaning of the independent contractor statute, where, as here, they perform various contractual obligations under the Franchise Agreement and 7-Eleven receives a percentage of the franchise’s gross profits?

As featured in #WorkforceWednesday®: This week, we’re interpreting the U.S. Department of Labor’s (DOL’s) recently updated cybersecurity guidance for all employee benefit plans covered under the Employee Retirement Income Security Act (ERISA).

The DOL recently clarified that its 2021 cybersecurity guidance applies to all ERISA-covered employee benefit plans, including health and welfare plans. This clarification raises important questions for employers regarding compliance and security.

Epstein Becker Green attorneys Brian G. Cesaratto and Samuel C. Nolan provide their analysis of the key cybersecurity considerations and best practices for risk mitigation that employers should consider in light of the updated guidance.

As featured in #WorkforceWednesday®: This week, we take a closer look at the U.S. Court of Appeals for the Fifth Circuit’s decision to strike down the Department of Labor’s (DOL’s) tip credit rule but to uphold the agency’s authority to set a minimum salary threshold for overtime exemptions.

The Fifth Circuit recently struck down the DOL’s tip credit rule, finding that the agency had exceeded its authority under the Fair Labor Standards Act. However, that same court later upheld the DOL’s authority to set a minimum salary threshold for overtime exemptions.

Epstein Becker Green attorney Paul DeCamp, who represented the restaurant plaintiffs in the tip credit case alongside Kathleen Barrett, offers his interpretation of these significant court decisions and what they mean for employers.

The widespread availability of Artificial Intelligence (AI) tools has enabled the growing use of “deepfakes,” whereby the human voice and likeness can be replicated seamlessly such that impersonations are impossible to detect with the naked eye (or ear). These deepfakes pose substantial new risks for commercial organizations. For example, deepfakes can threaten an organization’s brand, impersonate leaders and financial officers, and enable access to networks, communications, and sensitive information.

In 2023, the National Security Agency (NSA), Federal Bureau of Investigations (FBI), and Cybersecurity and Infrastructure Security Agency (CISA) released a Cybersecurity Information Sheet (the “Joint CSI”) entitled “Contextualizing Deepfake Threats to Organizations,” which outlines the risks to organizations posed by deepfakes and recommends steps that organizations, including national critical infrastructure companies (such as financial services, energy, healthcare and manufacturing organizations), can take to protect themselves. Loosely defining deepfakes as “multimedia that have either been created (fully synthetic) or edited (partially synthetic) using some form of machine/deep learning (artificial intelligence),” the Joint CSI cautioned that the “market is now flooded with free, easily accessible tools” such that “fakes can be produced in a fraction of the time with limited or no technical expertise.” Thus, deepfake perpetrators could be mere amateur mischief makers or savvy, experienced cybercriminals. 

We previously wrote about a Michigan Supreme Court decision to reinstate two voter initiatives – the Wage Act and the Earned Sick Time Act (ESTA) – and state agency responses to that decision (the “Original Order”), which included the filing of a motion asking the court to clarify the Original Order. On September 18, 2024, the Michigan Supreme Court responded, granting the request for immediate consideration and issuing a thirteen-page Order (the “Clarification Order”).

New Details on Coming Adjustments to Michigan Wage Rates

Tip Credit Phase Out

The substantive portion of the Clarification Order re-writes a lengthy and important footnote in the Original Order, including an extension of the gradual phase-out of the tip credit and a clearer definition of the annually increasing percentage amount. Instead of merely saying “The tip credit will be [XX]% of minimum wage,” the Clarification Order provides that “tipped workers’ minimum hourly wage rate must be at least [XX]% of the general minimum wage rate, and the tip credit can be used to satisfy the balance owed to such workers.”

In other words, the Clarification Order spells out that, for example, “80%” means that tipped workers must be paid a base rate that is at least 80% of the general minimum hourly wage rate.

In recent years, advocates and lawmakers have been pushing to expand the reach of “ban-the-box” measures designed to remove job barriers for individuals with criminal convictions. “Ban-the-box” laws, also called “fair chance laws,” are designed to prevent employers from excluding applicants based on their criminal history alone, by prohibiting employers from immediately inquiring into an applicant’s criminal history before evaluating their qualifications.

Ban-the-box laws have been adopted federally (for federal agencies and federal contractors acting on their behalf) and in numerous states and local jurisdictions. These laws generally contain broad carve-outs for employers or positions where background checks are required, including within the financial services industry. Some changes are coming to narrow those exemptions. On December 23, 2022, President Biden signed into law the Fair Hiring in Banking Act (FHBA), which substantially revised Section 19 of the Federal Deposit Insurance Act (FDIA) to reduce hiring barriers within the financial services sector.