FEDERAL UPDATES

Federal Agency Powers/”Chevron” Deference Yields to “Loper” – The US Constitution requires Congress to make laws, judges to interpret them, and federal agencies (such as OSHA, DOL, EEOC, etc.) to implement and sometimes enforce them.  Congress is not permitted to delegate its lawmaking authority, but 40 years ago in a case involving Chevron the Supreme Court acknowledged that Congress lacks the time or technical expertise to thoroughly cover every minute detail necessary to implement its intent fully.  As a result, it ruled that federal agencies could fill in the gaps when a statute is ambiguous and that courts should defer to the agency’s expertise and reasonable interpretation when deciding cases.

All of that was upended in June when the Supreme Court overturned the Chevron case, holding that courts must exercise their independent judgment when interpreting the meaning of statutes rather than deferring to an agency’s interpretation.  This is expected to weaken (but not eliminate) agency authority and will probably make agencies less willing to issue comprehensive or controversial guidelines and regulations without direct Congressional authority.  It will also likely increase litigation and uncertainty since it is now easier to challenge certain agency rules and could result in different rules in various jurisdictions (especially when political issues). However, some experts also argue that courts rarely defer to agencies anyway and that agency interpretations will continue to be persuasive due to the agency’s technical expertise and resources.

We can expect many agency requirements to come under attack in the coming days, such as the overtime salary threshold, tip pooling/credit rules, NLRA-protected concerted activity holdings, ADA and ADEA regulations, non-compete bans, OSHA rules (federal only), ERISA, EEOC pay equity requirements, OFCCP audit scheduling letters, and any other action taken by a federal agency absent direct Congressional authority.

FTC Noncompete Ban (9/4/24) – The FTC’s ban on noncompete agreements as an illegal restraint on trade is on shaky ground.  Several lawsuits are in process, and one federal judge in Texas just issued a preliminary (non-national) injunction in favor of one plaintiff, with the possibility of expanding it nationally as the case proceeds.  The judge cited the Loper decision that overturned Chevron’s deference just a few days before the ruling, and other courts are likely to do the same.  Nonetheless, even if a nationwide injunction is granted employers should remember that judges carefully scrutinize noncomplete agreements, the NLRB has also indicated that it will find them to be a violation of the NLRA, and many state and local governments have enacted or are considering bans on noncompete agreements so extreme caution and legal advice is recommended.

OSHA – Proposed Heat Standard.  While some states have already implemented heat exposure regulations in the workplace, there is currently no specific federal regulation (other than OSHA’s General Duty Clause).  OSHA wants to change that and recently issued a Notice of Proposed Rulemaking targeting heat exposure.

The rule would apply to both indoor and outdoor workplaces where workers are likely to be exposed to a heat index of 80+ degrees, and would require covered employers to develop and implement a Heat Injury and Illness Prevention Plan that includes controls such as providing drinking water, cool break areas, and paid rest breaks as needed, and allowing for gradual acclimatization for new and returning employees.  At 90+ degrees, employers would be required to monitor employees for signs of heat-related illness, and provide paid rest breaks every two hours.

There are still several hurdles before the rule becomes final, including a possible change in the White House as well as potential litigation that will benefit from recent Supreme Court decisions regarding the power of federal agencies.  However, it is a signal that OSHA is focused on heat safety and may target workplaces where heat-related injuries or illnesses are likely to be an issue.

Exempt Salary Threshold.  The first increase is now in effect and many employers are carefully monitoring the progress of litigation, especially considering recent Supreme Court decisions.  Although one judge in the Eastern District of Texas issued a preliminary injunction, its scope was limited to the State of Texas as an employer, and it does not apply to other states or private employers.

STATE/LOCAL UPDATES

California

PAGA Reform.  The Private Attorneys General Act has long been a thorn in the side of California employers, allowing individual employees to step into the shoes of the State and sue employers on behalf of all affected employees, thereby greatly increasing litigation, penalties, and settlement costs.  California voters were set to vote on repealing the act in November, but the government and business groups have reached a deal to instead amend PAGA and remove the issue from the ballot.

The reforms make it easier to dismiss meritless claims early in the process, strengthen the right to cure violations, reduce some penalties, reduce the amount allocated to attorney’s fees (to reduce the incentive for attorneys to chase PAGA claims), and mandate that employees must personally experience a violation to bring a claim.  While not as beneficial as eliminating the act, it should at least reduce the burden on employers.

For now, employers can significantly reduce their liability by taking “all reasonable steps” to address compliance before a PAGA claim is filed, and to a lesser extent within 60 days after a claim is filed.  “All reasonable steps” include:

• Disseminating lawful written policies;
• Training supervisors on the applicable law;
• Taking appropriate corrective action with supervisors; and
• Conducting periodic payroll audits and acting in response.

This means that now is a great time to create and review policies and conduct training and audits to ensure compliance with California employment laws. And if a claim if filed, don’t wait to consult with an attorney and address any potential violations within 60 days.

Cal/OSHA Indoor Heat Illness Prevention Plan (eff. sometime between August 1 and October 1).  After years of delay, Cal/OSHA unanimously adopted an indoor (including vehicles) heat illness prevention standard and published various guidance documents that include a model written program and FAQs.  The new rule applies to most indoor work areas where the temperature may reach 82+ degrees when workers are present.  There are some very limited exceptions such as in prisons, temporary and incidental exposure, and emergency operations, but otherwise, employers will be required to implement engineering and administrative controls when:

• The temperature or heat index indoors is at least 87°F when workers are present.
• Workers wear clothing that restricts heat removal, and the temperature is at least 82°F; or
• Workers work in a high radiant heat area and the temperature is at least 82°F.

Engineering controls generally consist of cooling fans or air conditioning, ventilation, or cooled benches.  Administrative controls may include modifying work schedules, and requiring mandatory rest breaks. Availability of cool drinking water, training, specific types of cool-down areas, observation and acclimatization protocols, and effective emergency response procedures are required.

“Hidden Fee” Ban Excludes Restaurants.  The recently passed SB 478 prohibits businesses from failing to include all required fees or charges in listed prices and would have prohibited restaurants from charging separate service fees or other surcharges (such as a surcharge for employee health care).  After some backlash, the state quickly backtracked by passing SB 1524, which states that the new law does not apply to restaurants, bars, food concessions, grocery stores, or grocery delivery services.  Instead, they only need to “clearly and conspicuously” display all mandatory fees wherever food or beverage items are displayed, such as on a menu or advertisement. This “clear and conspicuous” display must include an explanation of the purpose of each mandatory fee.

Minimum Wage (Prop 32).  California voters will decide on November 5 whether to increase California’s minimum wage in January 2025, starting at $18.00/hour for 26+ employees and $17.00/hour for under 26 employees.  The minimum wage would then be $18.00/hour for all employers in 2026 and increase by CPI-W thereafter.  It wouldn’t affect the higher wages in effect for certain fast food and health care workers, or local minimum wages.  The intention was to vote on it last November, but due to a missed deadline, it was delayed until this year.

Colorado – In a new twist to the standard Crown Act laws, Colorado amended its existing law o also include discrimination based on hair length (eff 6/3/24).  Advocates of the bill suggest that the change was needed to protect those facing discrimination based on their ethnic appearance, such as “Native American men with long hair or Black Americans with dreadlocks”.

Illinois – Paid Leave.  After many changes and delays over the past year, the state of Illinois and Cook County require employers to provide employees with up to 40 hours of paid leave that can be used for any reason, and Chicago now requires both paid leave for any reason and paid sick leave (eff 7/1/24).  Some municipalities within Cook County have the option to follow either the Cook County or state ordinance (although they are very similar at this point).  Illinois employers should be updating handbooks and payroll systems to reflect the appropriate leave accruals for their business and location.

Oregon –

Workplace Harassment – BOLI recently provided a notice of proposed rules that are intended to “clarify” the requirements for employers responding to allegations of harassment. Unfortunately, the proposed rules appear to add significant ambiguity and subjective standards that would make it more difficult for employers to determine what their obligations are when investigating and responding to harassment complaints and open the door to arguments over terms such as “avoidable delay”, “adequately investigate”, or “appropriate disciplinary measures”. Currently, employers are fairly well protected as long as they take prompt action, and the harassment stops.  BOLI’s new rule would impose vague but strict criteria to evaluate whether an employer has met the current standards, including:

• Intervenes without “avoidable delay” to effectively halt harassing behavior;
• “Adequately” investigates and ascertains the extent of harassing behavior;
• Takes “appropriate” disciplinary measures “proportionate to the seriousness of the offense”.
• Does not “penalize” the reporting employee or make the aggrieved party worse off; and
• “Effectively” acts to prevent further harassment or retaliation against the reporting employee or aggrieved party for reporting or exercising rights concerning harassing behavior.

In addition, the new rules could strip employers of protection if the behavior stops, stating that the success or failure of corrective action in stopping harassment is relevant, but not dispositive, as to employer liability in determining whether corrective action was reasonably likely to prevent the harassment from recurring.

Minnesota – Staffing Agency Nonsolicitation Ban (eff 7/1/24).  A new law bans the use of nonsolicitation agreements by staffing agencies and other service providers to prevent their customers, or the companies that contract for the staffing agency’s services, from soliciting or hiring the staffing agency’s employees who provide the contracted temporary services.

New York City – Reminder that as of July 1 employers in NYC must have posted the Know Your Rights at Work poster in a conspicuous place, as well as on any intranet or mobile application.  A copy of the poster must also have been distributed to all current employees and must be distributed to each new employee on or before their first day of work.  Failure to do so may result in fines of $500 per violation.

Utah – Religious Accommodations (eff. 5/1/24) Utah now prohibits employers from forcing an employee to act in a way the employee believes would burden or offend their sincerely held religious beliefs, absent an undue burden that would substantially interfere with the employer’s mission, ability to conduct business in a financially or effective manner, or ability to provide training and safety instruction for the job.

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.