Insights

The first day of the Trump Administration included the issuance of 26 executive orders(“EOs”), the most in modern presidential history. Among these EOs, President Trump signed the Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government Executive Order (the “EO” or “Order”). While focused on federal policy, the Order has broad implications for private sector employers.

As of July 1, Utah’s “Equal Opportunity Initiatives” law is in effect.  This law prohibits “discriminatory practices” at higher education institutions, public education systems, and government employers within Utah.  In response to the law, colleges and universities like the University of Utah, Southern Utah University, Utah State University, and Weber State University have reportedly already closed DEI offices and cultural centers.

On August 1, 2024, Nondiscrimination on the Basis of Sex in Education Programs or Activities Receiving Federal Financial Assistance, one of the final Title IX regulations of the U.S. Department of Education released on April 19, 2024, will go into effect. The new regulations address the previous administration’s rollback of Title IX protections, and include, among other things, an expanded definition of sex discrimination that provides new protections for LGBTQ+ individuals against discrimination on the basis of sexual orientation and gender identity. For example, the new rules prohibit schools that receive federal funding from barring transgender students’ use of pronouns that correspond to their gender identities, or denying transgender students access to facilities, like locker rooms and restrooms, that match their gender identities. Other notable changes in the new regulations include the following: (1) protection from all sex-based harassment and discrimination, including that based on sex stereotypes, sexual orientation, gender identity, or pregnancy or related conditions; (2) broadening the definition of “hostile environment” harassment to include conduct that is so severe or pervasive that it limits or denies a person’s ability to participate in the education program or activity; (3) increased accountability by requiring schools to take prompt and effective action to end any sex discrimination in their education programs or activities, prevent reoccurrence, and remedy its effects; and (4) protection against retaliation for students, employees, and others who exercise their Title IX rights.

On April 26, 2024, the Department of Labor (“DOL”) published the Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees Rule (“Final Rule”), which will increase the minimum salary thresholds for bona fide executive, administrative, and professional exemptions under the FLSA.  Effective July 1, 2024, the annual salary thresholds for these “white collar” exemptions will increase to $43,888 (from $35,568) and increase again on January 1, 2025 to $58,656 and the threshold for highly-compensated employees will also increase from $107,432 to $132,964.  Effective July 1, 2025, the methodology will change and these thresholds will increase again (to $58,656 and $151,164, respectively).

On April 17, 2024, the Supreme Court handed down a unanimous decision in Muldrow v. City of St. Louis, Missouri, No. 22-193, holding that transferees alleging discrimination under Title VII of the Civil Rights Act of 1964 need only show that a transfer caused harm with respect to an identifiable term or condition of employment.  The Court’s decision upends decades of lower court precedent applying a “significant harm” standard to Title VII discrimination cases.  As a result, plaintiffs claiming discrimination under Title VII will likely more easily advance beyond motions to dismiss or motions for summary judgment. In the wake of the Court’s decisions in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College (6-2), No. 20-1199, and Students for Fair Admissions, Inc. v. Univ. of North Carolina (6-3), No. 21-707 (June 29, 2023), Muldrow will also likely continue to reshape how employers conceive of, implement, and communicate workplace Diversity, Equity and Inclusion (“DEI”) efforts.  The decision may be used by future plaintiffs in “reverse” discrimination actions to challenge DEI or affinity programs that provide non-economic benefits to some – but not all – employees.  For example, DEI programs focused on mentoring or access to leadership open only to members of a certain protected class could be challenged under Muldrow by an employee positing that exclusion from such programs clears this new, lower standard of harm. 

On June 29, 2023, the Supreme Court held that it is unconstitutional (under the Constitution’s Equal Protection Clause, as to public institutions) and a violation of Title VI of the Civil Rights Act of 1964 (as applicable to private institutions accepting federal financial assistance) for colleges and universities to consider race as a factor in the admissions process. See Students for Fair Admissions, Inc. v. President & Fellows of Harvard Coll., No. 20-1199, 2023 WL 4239254 (U.S. June 29, 2023) (“Harvard”), a summary of which can be found here. This decision upended decades of precedent and has caused employers in the private sector to ask how the decision will impact diversity, equity, and inclusion (“DE&I”) initiatives and employment decisions. This article addresses the impact of Harvard, eight months later.

Governor Hochul vetoed a bill passed by the New York State legislature that would have effectively banned all non-compete agreements.  In her December 26, 2023 veto message, Governor Hochul cited New York’s “highly competitive economic climate” and the “legitimate interests” of companies to “retain highly compensated talent,” while stating that she has “long supported limits on non-compete agreements for middle-class and low-wage workers.” The Governor observed as well that she had “proposed banning non-compete agreements for anyone making below the median wage in New York” in her first Executive Budget. Governor Hochul stated that she remains open to “future legislation that achieves the right balance.”

Effective January 1, 2024, California employees will be entitled to accrue and use more paid sick leave per year.  On October 4, 2023, California Governor Gavin Newsom signed SB 616 into law, which amends the Healthy Workplaces, Healthy Families Act of 2014 (“HWHFA”) and significantly expands paid sick leave requirements for employers in California.  Further, non-construction industry employees covered by a collective bargaining agreement (“CBA”), previously excluded from coverage, will now be entitled to certain benefits and protections under the HWHFA.  The amendment also preempts local ordinances that are contrary to the HWHFA with respect to certain issues, for example, rate and timing of pay, and advance leave and notice.

Chicago and Illinois will soon join the growing number of states that require employers to provide employees with paid all-purpose leave, rather than, for example, leave that can only be used as paid sick or safe leave. The new laws are Chicago’s Paid Leave and Paid Sick and Safe Leave Ordinance (“Ordinance”) and the Illinois Paid Leave for All Workers Act (“Act”). Under the new Ordinance, Chicago-based employees may accrue twice as much paid leave (including, now, all-purpose leave and paid sick and safe leave) than under the City’s prior ordinance. And for the first time, Illinois employers outside of Chicago will be required to provide their employees with up to 40 hours of all-purpose paid leave each year.

On September 13, 2023, the New York State Department of Labor released proposed regulations aimed at clarifying employer obligations under New York State’s pay transparency law (“Law”).  The Law, effective September 17, 2023, requires employers in New York State to disclose compensation or compensation ranges and existing job descriptions for all advertised jobs, promotions, and transfer opportunities. Crowell & Moring LLP previously reported on the Law, issued on December 21, 2022, and on its subsequent amendments, signed into law on March 3, 2023.

Illinois is poised to become the latest state to require employers to provide salary information in job postings.  Governor J.B. Pritzker is expected to sign House Bill 3129, which amends the Illinois Equal Pay Act (IEPA) and requires employers to include pay scale and benefits information in job postings.  If the Bill is enacted, its requirements will go into effect on January 1, 2025, and will apply to employers with 15 or more employees and to positions that are (i) physically performed, in whole or in part, in Illinois or (ii) physically performed outside of Illinois where the employee reports to a supervisor, office or other work site in Illinois. 

On June 20, 2023, the New York State Assembly passed a sweeping bill that, if signed into law by Governor Hochul, will effectively ban future non-compete agreements.  If enacted, New York would join California, North Dakota, Oklahoma, and Minnesota in implementing a complete prohibition on non-compete agreements.  As of this writing, the bill has not yet been delivered to the Governor.

In Clark v. A&L Homecare and Training Center, LLC, Nos. 22-3101/3102, a split three-judge panel for the U.S. Court of Appeals for the Sixth Circuit held that notice to potential plaintiffs should only be issued if lead plaintiffs show a “strong likelihood” that such absent employees are “‘similarly situated’ to the plaintiffs themselves.” In so holding, the Sixth Circuit joined the Fifth Circuit in rejecting the long-standing “lenient” two-step collective action certification process.  The Sixth Circuit declined, however, to apply the Fifth Circuit’s approach and adopted a “strong likelihood” standard.  The Clark decision, issued on May 19, 2023, will significantly impact FLSA collective action litigation in favor of employers in federal district courts in Ohio, Michigan, Kentucky, and Tennessee.  The widening Circuit split ripens this issue for review by the Supreme Court of the United States.

On March 3, 2023, New York Governor Kathy Hochul signed into law A999 / S1326 (the “Amended Law”), which includes amendments to New York State’s pay transparency law (“Law”) that both broaden and lessen obligations on employers. Specifically, the Amended Law modifies the scope of covered jobs, eliminates the recordkeeping requirement, and clarifies the definition of “advertise.” What remains unchanged, however, is the September 17, 2023, effective date and the requirement to include the job description in an advertisement, if one exists. Crowell & Moring LLP (“Crowell”) previously reported on the originally-enacted Law, which can be found here.

On December 21, 2022, Governor Hochul signed Bill A10477/S9427A, New York’s first statewide pay transparency statute, into law. When the statute goes into effect on September 18, 2023, New York State will join a growing number of jurisdictions that have adopted pay transparency laws. The New York State pay transparency law (“Law”) requires employers to list compensation or compensation ranges and job descriptions for all advertised jobs, promotions, and transfer opportunities that can or will be performed in New York State, including positions that are fully remote. According to Governor Hochul, the Law seeks to “usher in a new era of transparency for New York’s workforce” and tackle “pervasive pay gaps for women and people of color.” The Law will not preempt or supersede its New York City counterpart or any other local pay transparency statutes.

On November 1, 2022, the New York City Pay Transparency Law, Int. 134-A, went into effect, requiring employers to include the minimum and maximum salary in job advertisements. With Int. No. 134-A, NYC joins Colorado, Washington State, and California in requiring employers to disclose pay scale information in job postings. Washington State’s and California’s laws go into effect January 1, 2023. The New York State Legislature passed a similar law in June 2022 that has not been signed by the governor. If the bill is signed, it would go into effect 270 days after it becomes law.

On October 11, 2022, the United States Department of Labor (“DOL”) announced that it is seeking public comment on a proposed rule, which modifies the legal framework for determining whether a worker is an employee or independent contractor under the Fair Labor Standards Act (“FLSA”).  The proposed rule would rescind the current independent contractor rule (adopted by the Trump Administration in 2021), which simplified the multi-factor test, and heavily weighted two “core” factors—workers’ control over their work and opportunity for profit or loss—in determining the status of workers.  The new rule returns to a “totality-of-the-circumstances” analysis, which balances all factors equally.  While the current rule is perceived as more favorable to respecting a worker’s independent contractor status, this shift in legal framework is expected to lead to more determinations that workers are employees, most particularly, gig workers.

On August 10, 2022, an amendment to Colorado’s non-compete law, which sets stricter limits on employers and the potential for higher penalties, went into effect. H.B. 22-1317 amends Colorado’s existing law, following a recent trend to prohibit non-compete agreements for workers earning less than a certain salary threshold. Notable changes include increasing the penalty for violations to $5,000, prohibiting non-compete agreements for all employees who are not “highly compensated,” and prohibiting customer non-solicitation agreements for all employees making under a certain yearly salary. 

On July 27, 2022, Mayor Muriel Bowser signed the Non-Compete Clarification Amendment Act of 2022, which will become effective following a 30-day congressional review period. The Act will substantially amend D.C.’s ban on non-compete agreements, first passed by the City Council in early 2021 but delayed significantly since it was first enacted. 

On April 27, 2022, the Chicago City Council passed amendments (“Amendments”) to its Human Rights Ordinance (“Ordinance”) adding significant sexual harassment prevention requirements for employers, including new employer policy, notice, and training obligations, expanded recordkeeping requirements, and stricter penalties for violations. The Amendments also expand the definition of “sexual harassment” and “sexual orientation.” The Amendments, which apply to all employers with at least one employee working within the geographical boundaries of the city of Chicago, took effect on June 4, 2022. Chicago employers, however, have until July 1, 2022 to implement the amended sexual harassment prevention requirements.