Workforce Bulletin

On July 11, 2024, after considering comments from insurers, trade associations, advisory firms, universities, and other stakeholders, the New York State Department of Financial Services (NYSDFS) issued its Final Circular Letter regarding the “Use of Artificial Intelligence Systems and External Consumer Data and Information Sources in Insurance Underwriting and Pricing” (“Final Letter.”) By way of background, NYSDFS published its Proposed Circular Letter (“Proposed Letter”) on the subject in January 2024. As we noted in our February blog, the Proposed Letter called on insurers and others in the state of New York, using external consumer data and information sources (“ECDIS”) and artificial intelligence systems (“AIS”), to assess and mitigate bias, inequality, and discriminatory decision making or other adverse effects in the underwriting and pricing of insurance policies. While NYSDFS recognized the value of ECDIS and AI in simplifying and expediting the insurance underwriting process, the agency—following current trends—wanted to mitigate the potential for harm. 

And if the opening section of the Final Letter is any indication, the agency did not back down. It continued to insist, for example, that senior management and boards of directors “have a responsibility for the overall outcomes of the use of ECDIS and AIS”; and that insurers should conduct “appropriate due diligence and oversight” with respect to third-party vendors. NYSDFS declined to define “unfair discrimination” or “unlawful discrimination,” noting that those definitions may be found in various state and federal laws dealing with insurance and insurers.

The New York City Council recently amended Sections 8-109 and 8-502 of the New York City Administrative Code, directly affecting employment agreements.  

Under the New York City Human Rights Law (NYCHRL), employees have one year to file a complaint or claim with the New York City Commission on Human Rights (NYCCHR) for unlawful discriminatory practices or acts of discriminatory harassment or violence. Employees have three years to file a claim of gender-based harassment. The statute of limitations for commencing a civil action under the NYCHRL is three years.

Effective May 11, 2024, the amendments to Sections 8-109 and 8-502 of the NYCHRL prohibit provisions in employment agreements that shorten these statutory periods for filing complaints or claims with the NYCCHR or commencing civil actions under the NYCHRL. Below we outline the key implications of this new law for employers.

As featured in #WorkforceWednesday®: This week, we’re examining a Texas court's recent decision that questions the constitutional authority of the National Labor Relations Board (NLRB):

Last week, a Texas district judge challenged the constitutionality of the NLRB’s structure. Judge Albright of the U.S. District Court for the Western District of Texas issued a preliminary injunction in favor of SpaceX, suggesting that the president’s inability to dismiss NLRB administrative law judges and board members could be unconstitutional. Epstein Becker Green attorneys Steve Swirsky and Erin Schaefer provide their analysis of this ruling, its implications for employers, and the potential for similar challenges to arise across other jurisdictions.

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.