Insights

New York Department of Labor Issues Guidance Regarding Paid Prenatal Leave, Taking Effect January 1.

Following a multi-million-dollar ruling against it by the National Labor Relations Board (“NLRB”), nursing home operator Care One, LLC, is now challenging the authority of NLRB-appointed Administrative Law Judges (“ALJs”) on constitutional grounds before the Second Circuit Court of Appeals. The Second Circuit’s line of questioning during the November 12, 2024, oral argument revealed the Court’s apparent skepticism towards Care One’s challenges, creating the prospect of a circuit court split on key issues that are likely to make their way to the Supreme Court. Care One’s arguments follow the trend over the past several years of employers increasingly questioning the authority of ALJs to adjudicate their labor and employment claims before administrative agencies.

Effective January 1, 2026, H.B. 3773 amends Article 5, Section 2 of the Illinois Human Rights Act to explicitly prohibit employers from using artificial intelligence (“AI”) for a broad swath of employment decisions, including recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure, or the terms, privileges, or conditions of employment, if such use has the effect of subjecting employees to discrimination on the basis of a protected class.  The amendment also prohibits employers from using zip code as a proxy for protected classes.  H.B. 3773 further provides that employers will be required to provide notice to employees prior to using AI for such employment-related purposes.  The law applies to any employers employing one or more employees within Illinois during 20 or more calendar weeks during the calendar year. 

On June 13, 2024, The Supreme Court ruled in Starbucks v. McKinney that the National Labor Relations Board (“Board”) must meet the same four-part test that other litigants must satisfy in order to obtain a preliminary injunction. This holding resolves a split amongst the circuit courts, some of which have applied a “less exacting” two-factor test to preliminary injunctions under Section 10(j) of the National Labor Relations Act (“NLRA”).

Beginning January 1, 2025, New York employers will be required to provide employees with 20 hours of paid “prenatal personal leave” during any 52-week calendar period to attend prenatal medical appointments during or related to pregnancy. New York is the first state in the country to mandate paid leave specifically for pregnant employees.  “Prenatal personal leave” is included in an amendment to New York’s budget, recently signed into law as Sections 196-b.2 and 4-a of the New York Labor Law by the governor and cleared by the state legislature.

On February 8, 2024, the Supreme Court decided Murray v. UBS Securities, LLC, No. 22-660, holding that a whistleblower must prove that his or her protected activity was a contributing factor in the unfavorable personnel action but does not need to prove that his or her employer acted with “retaliatory intent.”

On October 27, the National Labor Relations Board (“NLRB”) issued a long-awaited Final Rule (“Final Rule”) that will dramatically alter the test for joint-employer status. As proposed,  the Final Rule rescinds the NLRB’s 2020 Final Rule, with the NLRB claiming that the new rule “more faithfully grounds the joint-employer standard in established common-law agency principles.”   In effect, the Final Rule will make it easier for employees of franchises, staffing agencies, and potentially a broad swath of contractors to show that two entities are joint employers. If an entity is found to be a joint employer with the direct employer of unionized employees, “under common-law agency principles,” the entity can be liable for the unfair labor practices of the co-employer and can be required to negotiate with the union representing the workers under the National Labor Relations Act (“NLRA”).  The NLRB’s new rule will take effect on December 26, 2023 and is not retroactive.

The NLRB recently effected two significant, pro-union changes to the way in which future union organizing and representation cases proceed.  First, abandoning more than 50 years of settled law, the National Labor Relations Board’s recent decision in Cemex Construction Materials Pacific (372 NLRB No. 130), changed the way in which unions will likely organize private sector employers in the United States.  Pursuant to Cemex, if a union claims to have majority support and demands recognition, an employer must either (1) grant recognition without the benefit of an NLRB election, or (2) file its own NLRB petition seeking an election.  If the employer fails to take either step, the union can file an unfair labor practice charge, and the NLRB will find a violation and order mandatory union recognition unless the employer proves the union did not have majority support in an appropriate bargaining unit.  And even if the employer files a petition for election (an “RM petition”), the NLRB may cancel the election and issue a bargaining order if the employer commits virtually any unfair labor practice during the period preceding the election.

On May 30, 2023, the General Counsel of the National Labor Relations Board, Jennifer Abruzzo, issued a memorandum stating broadly that the proffer, maintenance, and enforcement of non-compete agreements between employers and employees tend to infringe on employees’ exercise of rights under Section 7 of the National Labor Relations Act (the “Act”). General Counsel Abruzzo opines that non-competes are therefore unlawful under the Act (as to non-supervisory employees), unless “narrowly tailored” to a special circumstance justifying the infringement on employee rights. This memorandum comes on the heels of her prior memo, taking the position that confidentiality and non-disparagement provisions in employee severance agreements are invalid, as Crowell reported in late March.

On Friday, April 28, 2023, the Fifth Circuit in Rest. Law Center v. United States Department of Labor, No. 22-50145, 2023 WL 3139900 (5th Cir. Apr. 28, 2023), reversed a decision from the Northern District of Texas (the “District Court”) that refused to enjoin the Department of Labor’s tip credit regulations amendment in effect since December 28, 2021. The amendment requires employers to pay tipped employees the full minimum wage for nontipped work directly supporting tipped work if it: 1) amounts to more than 20% of the employee’s total weekly time paid at the tipped minimum wage rate, or 2) exceeds 30 continuous minutes. The Fifth Circuit concluded in a 2-1 panel decision that the plaintiffs demonstrated that the ongoing management costs imposed on employers by the new “continuous 30-minute rule” in the form of additional timekeeping requirements results in irreparable harm.

On May 1, 2023, the National Labor Relations Board issued a decision in Lion Elastomers LLC II, which overruled the Board’s earlier decision in General Motors LLC, 369 NLRB No. 127 (2020), and rejected Trump-era precedent that had made it easier for employers to discipline workers who make profane, harassing or discriminatory comments in the course of a workplace dispute.  In its statement, the NLRB described its decision as “returning to the long-established ‘setting-specific’ standards applicable to cases where employees are disciplined or discharged for misconduct that occurs during activity otherwise protected by the National Labor Relations Act” (the “NLRA” or the “Act”).  

On February 21, 2023, the National Labor Relations Board (“NLRB” or the “Board”) issued a decision, McLaren Macomb, 372 NLRB No. 58 (2023), holding that employers may not offer employees severance agreements that contain what might otherwise be considered standard confidentiality or non-disparagement provisions because they arguably impinge upon rights provided under the National Labor Relations Act (“NLRA”). This decision reverses the previous Board’s decisions issued in 2020, holding that offering severance agreements with such provisions was not, standing alone, unlawful.

On December 30, 2022, New York Governor signed into law Labor Law Section 240-i, establishing a registration system for contractors and subcontractors engaged in public work and covered private projects in New York. This law will require contractors to register with the New York State Department of Labor (the “Department of Labor”) every two years, by submitting various disclosures about their businesses, in order to ensure that contractors do not have previous labor law violations, and will abide by New York labor laws and regulations, including prevailing wage requirements. The Department of Labor will establish and maintain a public on-line system where registrations and disclosures are available.

Employers in the District of Columbia should be aware that, effective October 1, 2022, the Human Rights Enhancement Amendment Act expanded the D.C. Human Rights Act (“DCHRA”) in several significant ways. Specifically, pursuant to the amendment, the definition of “employees” protected from discrimination under the DCHRA now includes independent contractors and unpaid interns. The amendment also protects individuals experiencing homelessness from discrimination, and codifies protections against workplace harassment.

On May 23, 2022, the Supreme Court of the United States ruled in a unanimous opinion in Morgan v. Sundance, No. 21-328 that the Federal Arbitration Act (“FAA”) serves to make arbitration agreements as enforceable as other contracts; it does not permit the courts to “devise novel procedural rules” to foster arbitration. Specifically, prior to this ruling, almost all federal circuits used an arbitration-specific waiver rule requiring a showing of prejudice to one party in order to demonstrate that the opposing party waived its right to compel arbitration. Under this new ruling, a party seeking to demonstrate that the opposing party waived its right to compel arbitration by litigating for too long need not make a showing that it was prejudiced, which is consistent with federal waiver law.

On May 12, 2022, New York City Mayor Eric Adams signed into law the Amended New York City Pay Transparency Law, Int. 134-A, extending the effective date of that statute from May 15, 2022 to November 1, 2022.  The pay transparency law (“Law”) requires New York City employers and employment agencies with four or more employees, or employees or agents thereof (“Covered Employers”), to include compensation information in postings for new employment opportunities, internal promotions and transfers that they choose to post. The amendments clarify that (1) positions “that cannot or will not be performed, at least in part, in” New York City are exempt from the pay posting requirement; (2) either annual salary or hourly wage information must be disclosed in the posting; (3) a Covered Employer has a 30-day opportunity to cure, with no penalty, in response to a first administrative complaint of non-compliance; and (4) only current employees have a private right of action against their employers. The New York City Commission on Human Rights (“Commission”) recently issued updated guidance to assist Covered Employers with the recent amendments.