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Spring Cleaning: Employment Law Compliance and Planning for the Year Ahead

in Employment, News

It may be a little late for New Year’s resolutions and a little early for spring cleaning, but it’s still a great time to take stock of your company’s employment law compliance and plan for what’s ahead in 2023. This may include reviewing and updating employment policies and procedures, assessing hiring practices, auditing wage and hour compliance, and ensuring proper training for human resources and management regarding best practices, among other things. Below are brief summaries of some key employment law issues to keep in mind as 2023 unfolds.

Employment Agreements

On January 5, 2023, the Federal Trade Commission announced a proposed rule largely prohibiting non-compete agreements between employers and employees. Weston Hurd has in-depth analysis of this development available here, along with further analysis of the legal challenges such a ban is likely to face if the rule becomes final, available here. Further, in recent years, a number of states have also enacted prohibitions or substantial limitations on enforcement of employee non-compete agreements. Employers should closely watch developments related to the FTC’s proposed rule and should review existing agreements to ensure compliance with state laws wherever their employees reside.

On December 7, 2022, President Joe Biden signed into law the Speak Out Act, which prohibits enforcement of non-disclosure or non-disparagement agreements related to allegations of sexual harassment, if entered into before the dispute arises (i.e., when sexual harassment allegations are made). This means that employers should review and consider the need for carve-out language for any pre-claim agreements, or post-claim agreements where there is no allegation of sexual harassment, including severance and settlement agreements with former employees.

Equal Employment Protections 

Employers should also review and update policies as appropriate in connection with developing equal employment protections. At the federal level, additional protections for pregnant and nursing parents were recently enacted, and more information is available on that issue from Weston Hurd here. In addition, employee protections on a number of issues under state and local laws are frequently evolving, including those related to employees who lawfully use cannabis under state law, employee rights to pay equity and salary transparency, and protections against race discrimination based on hairstyles pursuant to state and local variations of the CROWN Act.

DOL Independent Contractor Rule

If you’ve followed the U.S. Department of Labor’s position regarding independent contractor status over the last few years, you know that it has been a bit of a rollercoaster. In the final months of the Trump administration, the DOL announced a new rule that would have supplanted the longstanding “economic realities” test, which weighed up to six factors as framed by the DOL during the Obama administration. That proposed rule placed greater weight on two “core factors” in determining whether a worker is an employee or a contractor – the nature and degree of the worker’s control over the work, and the worker’s opportunity for profit or loss based on initiative and/or investment. It was generally perceived as an employer-friendly development, but because of the timing of the proposed rule, it did not become final before Biden came into office and was withdrawn by the new administration. The DOL recently issued a proposed new rule, expected to be made final soon, which reinforces the prior economic realities test and reflects the Biden administration’s more aggressive approach to pursuing employee misclassification issues, as compared with its predecessor. Businesses should be proactive in reviewing classification of workers as independent contractors, since misclassification can result in significant penalties, which may include liability for taxes, wages and overtime, employee benefits, liquidated damages, and even criminal liability for willful violations.

Minimum Wage Increases

Ohio minimum wage, effective January 1, 2023, increased to $10.10 per hour for non-tipped employees and $5.05 per hour for tipped employees. Employers should ensure that employee pay complies with applicable minimum wage requirements wherever their workers reside.

The issues identified above are by no means an exhaustive list, and employers should seek legal counsel in reviewing and maintaining employment law compliance. Weston Hurd attorneys regularly assist employers in all aspects of employment law, including the areas identified above. For further information, please contact Russell Rendall or any of Weston Hurd’s employment attorneys.