FEDERAL UPDATES

FTC Noncompete Ban Blocked Nationwide.  A federal judge in Texas issued a strongly-worded final opinion blocking (nationwide) the FTC’s expansive ban on nearly all noncompete agreements.  Employers preparing to send notices to current and former employees by the September 4th effective date can now put a hold on them while we see if the FTC appeals the ruling to the 5th Circuit federal court, and possibly the U.S. Supreme Court.  For now, the FTC responds that it is “seriously considering” an appeal, and in the meantime reserves the right to bring enforcement actions against individual companies.  Given the recent focus on noncompetes at the state and federal (and sometimes local) level, this is still a great time to collect and review existing agreements, and to have a local attorney review form contracts to ensure compliance with state or local court-imposed common laws.

E-Verify:  USCIS will enhance security for E-verify accounts later this year. Like many online sites that are upgrading security, the system will require multifactor authentication such that in addition to a password, users will need to enter a code sent to their email or phone.  This type of enhanced security will continue to increase, so employers may want to set up a designated secure phone number or email address to use for all accounts so they avoid individual employees leaving the company and making it difficult to access critical accounts.

STATE/LOCAL UPDATES

California:  Harassment.  The CA Supreme Court just affirmed that a co-worker’s single use of a racial epithet can be severe enough to qualify as harassment.  While the outcome isn’t new in California, it’s worth noting the incident occurred in January 2015, the complaint then worked its way through two lower courts, and the state Supreme Court sent it back down to the trial court for a jury trial nearly a decade later.  Cases like this are a good reminder to stay on top of harassment and discrimination training, provide multiple reporting mechanisms, and investigate complaints promptly and thoroughly.  Not only does this help prevent harassment, but it can also save businesses from prolonged litigation and substantial attorney’s fees.

Illinois:

AI and Employment:  Illinois joined Colorado in passing a new law regulating the use of artificial intelligence when making employment decisions.  HB 3773 prohibits all employers from using AI if it has the “effect” of subjecting applicants or employees to discrimination based on a protected class concerning employment (defined very broadly as recruitment, hiring, promotion, discharge, discipline, or any other terms, privileges, or conditions of employment). It also prohibits employers from using zip codes as a proxy for protected classes and affirmatively requires Illinois employers to notify applicants/employees if they use AI to make or aid in making employment-related decisions.

The Illinois Human Rights Department is charged with creating rules regarding implementation and enforcement and is expected to outline the circumstances and conditions that require notice, the period for providing it, and the “means” for providing notice.

Personnel Records.  After amending the rules for reviewing personnel records last year, Illinois is again making changes.  The new Personnel Records Review Act (eff 1/1/25) adds several new requirements.

• Requests for records must be in writing (email and text are expressly sufficient);
• Employees are entitled to “inspect, copy, and receive” the documents;
• New categories of information that can be requested include benefits information, employment-related contracts or agreements, employee handbooks, and “any written employer policies or procedures that the employer contends the employee was subject to and that concern qualifications for employment, promotion, transfer, compensation, benefits, discharge, or other disciplinary action”.
• Certain exclusions still exist (confidential information, pending claims, security, etc.), and a new category for trade secrets, client lists, sales projections, and financial data has been added.
• Requests must be made to a person responsible for maintaining the records (human resources, payroll, supervisor/manager, or as directed in a written handbook or policy);
• The request must identify what records are requested (“all records” is still a valid request);
• The employee must specify whether they are asking to inspect, copy, or receive copies, and if requesting copies they must specify whether they are requesting a hard copy or a reasonable and commercially available electronic format;
• The employee must specify “whether inspection, copying, or receipt of copies will be performed by their representative, including family members, lawyers, union stewards, other union officials, or translators”;
• If medical records are requested, the employee must automatically include a signed waiver to release medical information and medical records to that employee’s specific representative.
• A fee for actual duplication costs is permitted, but not fees for the time or other expenses.

Given the extensive attention the legislature has placed on employment records, the detailed requirements, and the potential for monetary damages and a charge of “petty offense”, Illinois employers should review their personnel records policies and be prepared to respond to a written request quickly and in careful accordance with the law.

Discrimination/Harassment Statute of Limitations (eff 1/1/25).  Illinois extended the time limit for filing an administrative charge with the Illinois Department of Human Rights based on discrimination, harassment, or retaliation, from 300 days to two years. This is one of the longest statutes of limitations for state employment discrimination claims.  It does not affect federal EEOC claims, which still have a 300-day deadline.  Employers may want to extend their document retention policies to ensure they have files available in the event of a state claim up to two years after an alleged violation.

“Family Responsibilities” (eff 1/1/25).  The Illinois Human Rights Act will add a new protected class for Family Responsibilities, defined as an employee’s actual or perceived provision of “personal care” to a family member. It doesn’t require leave or accommodation, but employers should be sure they can show a legitimate non-family caregiving reason for any termination or other employment-related decision.

Reproductive Health Decisions (eff. 1/1/25).  Illinois will add “reproductive health decisions” as a new protected class.  These are defined as “a person’s decisions regarding the person’s use of contraception; fertility or sterilization care; assisted reproductive technologies; miscarriage management care; health care related to the continuation or termination of pregnancy; or prenatal, intranasal or postnatal care”.  It does not include any particular leave or accommodation requirements, but employers should be cautious about employment actions that could be attributed to these decisions, and proactively address discrimination and harassment claims based on an employee’s stance on abortion, IVF, or any other reproductive rights issues.

New York State:  Freelance Isn’t Free Act (eff. 8/28/24).  A reminder that the new state law regulating freelance (solo independent contractor) work is going into effect shortly.  It covers virtually every kind of service (i.e. cleaning, landscaping, IT, graphic design, event bartenders, marketing, accounting) and protects freelance workers from non-payment, late payment, and retaliation.  It requires a written contract, timely payment, and recordkeeping.  Under state law (but not a similar NYC law) there are some exclusions for sales representatives, attorneys, licensed medical professionals, and construction contractors.

If an NYS employer hires an individual or single member organization for services of at least $800 (aggregated over 120 days), they must enter into a compliant written contract, and retain a copy for at least 6 years.  In addition, they must pay for the services by the date specified in the contract, or if no date is specified within 30 days of completion of services.  The written contracts must include, at a minimum:

• the name and mailing addresses of both parties;
• an itemization of all services to be provided;
• the value of the services to be provided;
• the rate and method of compensation;
• the payment date or the mechanism to determine it; and
• the date by which the freelance worker must submit a list of services rendered.

The NYDOL is expected to publish a compliant form contract.  It is expected to be similar to the model contract published by the NYC DCWP on its website.

If you’d like to speak to an Asure HR expert about your business, connect with us.

Asure Software provides this information for general information purposes only.  We are not attorneys, and the information in this update should not be relied upon or regarded as legal advice.  This information may not be accurate or complete as it relates to a particular company or situation and does not reflect all developments or laws in all jurisdictions.