Workforce Bulletin

As featured in #WorkforceWednesday: This week, on our Spilling Secrets podcast series, our panelists discuss the current state of the Federal Trade Commission’s (FTC’s) nationwide non-compete ban amid ongoing legal challenges:

The FTC’s ban on non-competes will go into effect on September 4, 2024, but legal challenges remain. So, how can employers prepare?

In this episode of Spilling Secrets, Epstein Becker Green attorneys Peter A. Steinmeyer, Erik W. Weibust, and Paul DeCamp tell us more about how the U.S. Supreme Court’s overruling of the Chevron doctrine might affect the FTC’s ability to regulate non-competes. They also discuss a Texas court’s preliminary injunction against the FTC’s non-compete ban* and how various legal challenges have led to a somewhat anticlimactic atmosphere in the employment landscape related to the ban.

*On Tuesday, July 23, after this episode was recorded, a federal judge in Pennsylvania reached the opposite conclusion and declined to temporarily halt the FTC’s non-compete ban.

As featured in #WorkforceWednesday®: This week, we’re delving into the U.S. Supreme Court’s recent overturning of the Chevron doctrine and how this landmark decision is opening the floodgates for challenges against federal agencies.

On July 12, 2024, in a keenly awaited decision, the U.S. District Court for the Northern District of California determined that Workday, Inc. (“Workday”), a provider of AI-infused human resources (HR) software, can be held liable under Title VII of the Civil Rights Act of 1964 (Title VII), the Age Discrimination in Employment Act of 1967 (ADEA), and the Americans with Disabilities Act (ADA) (collectively the “Anti-Discrimination Laws”) as an agent of the corporate clients that hire Workday to screen and source candidates for employment by utilizing its AI-infused decision-making tools.  In noting that “[d]rawing an artificial distinction between software decisionmakers and human decisionmakers would potentially gut anti-discrimination laws in the modern era,” the court underscored the EEOC’s admonition, which we discussed in our previous post, that employers delegating their hiring protocols to AI must do so cognizant of the potential discriminatory impacts of such use.  See Opinion at 10.  Thus, the court allowed plaintiff Derek Mobley’s disparate impact claim to proceed, finding that Mobley’s allegations supported a plausible inference that Workday’s screening algorithms automatically rejected his applications based on protected characteristics rather than his qualifications.

Prior Proceedings

Mobley filed his initial complaint as a putative class action on February 21, 2023, alleging claims against Workday as an “employment agency” for disparate impact and intentional discrimination under the Anti-Discrimination Laws.  His complaint centered on his allegation that he applied for “at least 80-100 positions that upon information and belief use Workday, Inc. as a screening tool for talent acquisition and/or hiring” and “has been denied employment each and every time.”  Complaint at 10.

The past several years have witnessed a notable uptick in workplace artificial intelligence related legislation and agency enforcement attention, specifically focused on the infusion of AI or so-called automated decision-making tools. Colorado’s new Artificial Intelligence Act, for example, designates employment as a “high-risk” sector of AI applications and has heightened concerns of lawmakers and corporate executives. Lawsuits, such as Mobley v. Workday and Moffatt v. Air Canada, underscore the concerns of employment candidate screening, recruitment and conversational AI. Most recently, the US Equal Employment Opportunity Commission issued a Determination finding cause to believe the employer violated the Older Workers Benefit Act by using AI in a reduction in force that adversely impacted older workers. A complaint in the Southern District of New York against IBM and its spinoff technology company, Kyndryl, promptly followed.

Perhaps not surprisingly, over the past few years, the State of New York (“NYS”), following the lead of New York City, has introduced several bills that would regulate the use of AI infused decision-making tools.  One such bill, called New York Workforce Stabilization Act (“NYWFSA”) was introduced in May 2024 by Senators Michelle Hinchey and Kristen Gonzalez. They will likely re-introduce the NYWFSA during the upcoming January 2025 legislative session intending to “stabilize” New York’s labor market at a time when the deployment of AI may fundamentally alter the New York industrial landscape.

As featured in #WorkforceWednesday®: This week, we’re examining California Governor Gavin Newsom’s new deal that was brokered to amend the Private Attorneys General Act of 2004 (PAGA).  

Last week, Governor Newsom announced that California’s business and labor groups had come to an agreement to reform PAGA. Two legislative bills encompassing the agreed-upon PAGA reforms (AB 2288 and SB 92) were signed into law by Governor Newsom on July 1, 2024. Epstein Becker Green attorney Kevin Sullivan tells us more about the PAGA reforms, their potential impact on California employers, and who the likely winners and losers are.

New York State has long required employers to support working mothers by providing certain accommodations for nursing employees. Last year, the State imposed a written lactation accommodation policy requirement on all employers, following the lead of New York City and California (among other jurisdictions) [see our Insight on the lactation accommodation legislation here]. As of June 19, 2024, employers’ obligations have again expanded: all New York State employers must provide 30 minutes of paid break time for employees to express breast milk for their nursing child for up to three years following the child’s birth.

The obligations are prescribed by an amendment to the State’s breastmilk expression law, New York Labor Law § 206-C (the “Law”), which was enacted as part of a package of legislation accompanying the New York State Budget for Fiscal Year 2024-2025, signed into law on April 20, 2024 by New York Governor Kathy Hochul. Shortly before the Law took effect, the New York State Department of Labor (NYSDOL) published new materials under the headline “Breast Milk Expression in the Workplace,” including general information about the Law, a policy statement, information sheets for employees and employers, and frequently asked questions (FAQs).

The Supreme Court’s June 28 decision to overrule the 40-year-old case of Chevron U.S.A. v. Natural Resources Defense Council should not be cause for alarm. It is, however, likely to have implications for employers that are subject to the myriad of workplace laws administered by the United States Department of Labor, the National Labor Relations Board and other executive branch bodies.

Why the Buzz About Chevron?

For decades, courts have relied on the so-called Chevron doctrine—a mandate by which judges were required to defer to agency expertise when handling controversies surrounding Executive Branch policy, but that rule ended with Loper Bright Enterprises et al., v. Raimondo. While the categorical rejection of Chevron—as inconsistent with the responsibility of courts defined in the APA—went farther than most analysts expected, it should be noted, as Justice Neil Gorsuch’s concurrence makes clear, that the Supreme Court hasn’t decided a case on the basis of Chevron since 2016.

Recently, in Lewis v. Crochet et al., the United States Court of Appeals for the Fifth Circuit rejected an attempt by a plaintiff to use the crime-fraud exception to the attorney-client privilege to compel two lawyers’ production of attorney-client privileged documents and information, which they obtained during the course of an investigation they conducted for Louisiana State University in 2013.

Lewis arose out of a lawsuit filed by the plaintiff, an African American woman formerly employed as an assistant athletic director for LSU, claiming that LSU and individual LSU board members discriminated and retaliated against her after she experienced and witnessed numerous instances of racist and sexist misconduct from LSU’s then-head football coach. The privilege dispute came to a head when plaintiff sought to compel LSU’s production of information from the 2013 Title IX investigation into sexual harassment allegations by LSU students against the then-head coach. Those documents remained in the possession of the law firm that conducted the investigation. Attempting to overcome LSU’s assertion of the attorney-client privilege, plaintiff invoked the crime-fraud exception arguing that LSU sought to use its lawyers to fraudulently conceal the documents in violation of Louisiana law prohibiting, among other things, the concealment of public records. The trial court agreed and ordered disclosure, but on an appeal filed by the two lawyers that conducted the 2013 investigation, the Fifth Circuit reversed.

The Massachusetts appellate court decision in Tran v. Jennings Road Management, Corp., et al, gave the green light to an employee to pursue class action claims against her direct employer as well as a separate management company based on a finding that the two entities were “joint” employers. This decision, together with the 2021 Supreme Judicial Court case on which the appellate court relied, serves as a warning to employers that sharing administrative and human resources duties with “outside” consultants or other companies may expose both companies to unforeseen liability.

After granting the parties’ request to decide the sole issue of whether the management company could face potential liability, the trial court concluded that the plaintiff, Sakiroh Tran, was jointly employed by Herb Chambers BMW car dealership, her direct employer, as well as Jennings Road Management Corp., a management company owned and controlled by Herb Chambers himself. Late last week, the Massachusetts Appeals Court affirmed the trial court’s decision citing the “totality of the circumstances” test set forth in Jinks v. Credico (USA) LLC, 488 Mass. 691, 692 (2021). This ruling paves the way for plaintiff to litigate her class action claims against multiple defendants.

For employers doing business in New York, the “Freelance Isn’t Free” Act (the “Act”) signed into law by Governor Kathy Hochul in March of this year may have stirred up memories of the New York City ordinance enacted just a few years ago by the same name. Both laws establish protections for freelance workers that aim to ensure that they receive timely compensation for all services performed. The namesake state law, however, does not impose obligations identical to those required by the city-level ordinance. Moreover, some not well-publicized legislative shuffling has caused confusion about the Act and its applicability statewide.

Wait, Didn’t This Happen Already?

Earlier this year, we wrote about the Act, anticipating an effective date of May 20, 2024. However, two days after our publication, the New York State Senate took up a bill to amend the Act by removing its provisions from the New York Labor Law— which is enforced by the New York State Department of Labor (“NYSDOL”)—and codifying it instead as Article 44-A of the New York General Business Law—which is enforced by the state’s Attorney General. The governor signed this legislation on March 1, thereby bumping the Act’s effective date to August 28, 2024.