Category Archives: Regulatory & Compliance

FTC PROPOSING EXPANSIVE BAN ON NON-COMPETE AGREEMENTS

By:       Sally A. Piefer

January 5, 2023

Non-compete and non-solicitation agreements have become relatively commonplace. However, these agreements have been under increasing attack by state legislatures across the country. President Biden also expressed that one of the items on his regulatory agenda is to eliminate all non-compete agreements except for those necessary to protect trade secrets.

Back in 2021, President Biden issued an Executive Order on Promoting Competition in the American Economy, which encouraged the Federal Trade Commission (FTC) to ban or limit non-compete agreements. Later that year, the FTC and Department of Justice (DOJ) held a virtual workshop on competition. The FTC believes that non-compete agreements constitute an unfair method of limiting competition and violate Section 5 of the Federal Trade Commission Act.

Earlier this week, the FTC announced that it took legal action against three companies, suing the companies to prevent them from using what the FTC described as unlawful non-compete restrictions. See https://www.ftc.gov/news-events/news/press-releases/2023/01/ftc-cracks-down-companies-impose-harmful-noncompete-restrictions-thousands-workers.

Today, the FTC released a proposed rule that would prohibit all non-compete agreements – except for those entered into between buyers and sellers of a business. The proposed rule, available from https://www.ftc.gov/legal-library/browse/federal-register-notices/non-compete-clause-rulemaking, spans some 200+ pages, and proposes to:

  1. Find that all non-compete clauses are an unfair method of competition and would ban employers from entering into such agreements with employees and independent contractors; and
  2. Require employers to rescind existing non-compete clauses and affirmatively notify employees the contracts are no longer valid.

While the proposed rule states that customer non-solicitation agreements or confidentiality or non-disclosure agreements would not be impacted, the proposed rule also clarifies that these covenants “would be considered non-compete clauses where they are so unusually broad in scope that they function as such.”

If approved, the proposed rule would supersede any state law, regulation or order which is inconsistent with the FTC’s regulation. Public comment on the proposed rule is available for the next 60 days. Employers and other interested individuals can submit comments online at https://www.regulations.gov.

If you have questions about the proposed rule, or any questions about non-compete, non-solicitation and/or confidentiality agreements, please contact Sally Piefer at 414-226-4818 or spiefer@lindner-marsack.com, or contact your regular Lindner & Marsack attorney.

EMPLOYERS WITH OPERATIONS IN ILLINOIS BEWARE OF NEW LAWS

By: Sally A. Piefer

Last week, the Illinois Governor signed legislation which amends three Illinois laws which will impact employers with operations in Illinois.

Criminal Conviction Information

As of March 23, 2021, employers in Illinois may not use a criminal conviction (felony, misdemeanor, probation, or imprisonment) as a basis for making employment decisions—unless (1) there is a “substantial relationship” between the conviction and the job, or (2) where the conviction poses an “unreasonable risk” to property, or to the safety or welfare of specific individuals, or the general public. Employers who are contemplating employment decisions using these exceptions must consider the following six factors:

  • The length of time since the conviction;
  • The number of convictions in total the individual has;
  • The nature and severity of the conviction, and its relationship to the safety and security of others;
  • The facts or circumstances surrounding the conviction;
  • The age of the individual at the time of the conviction; and
  • Evidence of rehabilitation efforts.

Employers must document their efforts to evaluate each factor before making an employment decision.

In addition, if you intend to use a conviction record to make an employment decision, the law requires that you engage in an “interactive assessment” by notifying the individual in writing of the potential use of the conviction record. This written notice must provide detailed information about the potential employment decision being contemplated due to the conviction and must further give the applicant or employee an opportunity to respond and provide additional information before the employer makes a final decision. The employee (or applicant) has 5 business days to provide the response. If the employer still decides to take adverse employment action, the employer has to provide a second notice which describes the employer’s reasoning for the employment decision and it must notify the individual of his/her right to file a complaint with the Illinois Department of Human Rights (IDHR) if the individual disagrees with the employer’s use of the conviction record.

The requirements of the new law are very similar to the requirements employers must follow under the Fair Credit Reporting Act (FCRA). Employers who have operations in Illinois should analyze their policies and procedures and should make sure they are following the law and seeking counsel before withdrawing an employment offer or otherwise taking adverse action against an employee because of a criminal conviction.

Expanded Whistleblower Retaliation Protections for Employees

Effective March 23, 2021, the new law also allows employees to sue employers for certain whistleblowing activities. Specifically, the law, which amends the Illinois Equal Pay Act, prevents employers from retaliating against an employee who engages in the following:

  1. discloses or threatens to disclose to a supervisor or to a public body any activity, inaction, policy, or practice the employee reasonably believes violates a law, rule, or regulation, or
  2. assists or participates in a proceeding to enforce the Equal Pay Act.

Retaliation is defined broadly in the new law and includes simply issuing a “reprimand” to the employee.

Furthermore, to prevail on a claim, the employee (or former employee) need only establish that his/her whistleblowing activity was a “contributing factor” to the employment decision. An employer may defend against such a claim by showing through “clear and convincing evidence” that it would have made the same decision in the absence of the employee’s protected activity. A prevailing employee can obtain reinstatement, double back pay (with interest), and attorney’s fees and costs.

Equal Pay Certification

Employers with 100 or more employees in Illinois must now obtain an “equal pay registration certificate” from the state and provide EEO-1 type reporting to the state (or certify that it is exempt).

Employers will have until March 2024 to obtain the equal pay registration certificate from the Department of Labor (DOL). The certificate has a $150 filing fee, and renewals will be required every 2 years. The certificate requires the following acknowledgements:

  • The employer is in compliance with Title VII of the Civil Rights Act of 1964, the federal Equal Pay Act, the Illinois Human Rights Act, the Illinois Equal Wage Act, and the Illinois Equal Pay Act;
  • The employer’s average compensation for female and minority employees is not “consistently below” the average compensation for male and non-minority employees within each major job category in the employer’s EEO-1 report;
  • The employer does not restrict employees of one sex to certain job classifications and makes retention and promotion decisions without regard to sex;
  • Wage and benefit disparities are corrected when identified to ensure compliance with the state and federal law;
  • How often wages and benefits are evaluated to ensure compliance with applicable state and federal laws; and
  • Whether the employer, in establishing wages and benefits, uses any of the following: (a) a market pricing approach; (b) state prevailing wage or union contract requirements; (c) a performance pay system; (d) an internal analysis; or (e) another approach used to determine what level of wages and benefits are paid to employees (if another approach is used the employer must describe the approach).

Employers who do not obtain an equal pay registration certificate, or in cases where the certificate is revoked or suspended following an investigation or audit, will be assessed a penalty of 1% of the employer’s gross profits.

Employers should begin evaluating now whether they could obtain an equal pay registration certificate and, if not, what steps will be necessary to obtain the certificate prior to March 2024.

New EEO Reporting Requirements

Finally, employers who are currently required to file federal EEO-1 reports will be required, as of January 1, 2023, to also file with the Illinois Secretary of State “substantially similar” data relating to employees’ gender, race, and ethnicity. Be advised that the Secretary of State intends to publish data on gender, race and ethnicity of each employer’s employees on its website.

Next Steps

With all of these changes, employers should begin evaluating policies and procedures currently being used and determine whether changes must be made. Employers will also need to determine whether HR and supervisors or managers need to be trained in connection with the new whistleblower and criminal conviction laws in order to minimize unnecessary lawsuits.

If you have questions about these new laws, please contact Sally Piefer at 414-226-4818 or spiefer@lindner-marsack.com, or contact your regular Lindner & Marsack attorney.

GOVERNOR WALKER PROPOSES TO ELIMINATE THE LABOR AND INDUSTRY REVIEW COMMISSION

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By:  Jonathan T. Swain

February 13, 2017

In his recently published proposed biennial budget for fiscal years 2018 and 2019, Governor Walker has proposed to eliminate the Wisconsin Labor and Industry Review Commission (LIRC).  LIRC is an independent three member commission appointed by the Governor that currently handles all appeals of Administrative Law Judge (ALJ) decisions for unemployment compensation cases, worker compensation claims, as well as state fair labor standards cases and fair employment cases in the Equal Rights Division and public accommodation cases.  LIRC would be phased out over the next three fiscal years.

Presently, LIRC has the authority to affirm, overturn and remand ALJ decision in these areas.  LIRC decisions are appealable to the State’s circuit courts.

Under Governor Walker’s proposal, Worker Compensation ALJ decisions will be reviewable by the State Department of Administration, while jobless claims and Equal Right Division decisions will be Agency administrators.  In his budget statement, Governor Walker stated that the proposed elimination of LIRC will eliminate “an unnecessary layer of government” and will make this second layer of review decisions occur much more quickly.

Of course, this is a proposed budget and, as such, is subject to negotiation with the legislature and subsequent amendment.  Further, stakeholders in the business, labor and legal community have yet to weigh-in on the Governor’s proposal.  As this issue advances, we will keep you up to date and informed.

Employers Must Now Use New Form I-9

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NEW I-9 FORM AVAILABLE: As of January 22, 2017, employers must use the NEW version of the Form I-9 — whether for new employees or for the reverification of expiring authorizations for existing employees. Prior versions of the Form I-9 should no longer be used. Employers who do not use the new Form I-9 are considered to be in technical violation of the law and can expose themselves to penalties for each occasion they have failed to use the new form.

If you have questions or concerns about I-9 compliance or need assistance in conducting an I-9 compliance audit, please contact Sally Piefer at spiefer@lindner-marsack.com or at 414.226.4818, or any other attorney you have been working with here at Lindner & Marsack, S.C.

Final Rule Implementing Executive Order Mandating Paid Sick Leave by Federal Contractors Published

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By Jerilyn Jacobs

Last week, the Department of Labor published a Final Rule regarding implementation of Executive Order 13706, which requires certain federal contractors to provide paid sick leave to their employees.  The Final Rule applies to contracts where the solicitation was issued or the contract was awarded on or after January 1, 2017.

Under the Final Rule, applicable federal contractors will be required to provide employees with one hour of paid sick leave for every 30 hours worked on or in connection with a covered federal contract, up to 56 hours.  Employees may use paid sick leave for the following reasons:

  • To care for the employee’s own illness and other health care needs, including preventative health care;
  • To care for a family member who is ill or needs health care, including preventative health care (the Final Rule takes an expansive view of the types of family relationships that are covered, extending beyond individuals with biological or legal ties to the employee); and
  • For purposes related to being the victim of domestic violence, sexual assault or stalking, or assisting a family member or loved one who is such a victim.

The four major types of federal contracts that fall under the Final Rule are procurement contracts for construction covered by the Davis-Bacon Act (DBA), service contracts covered by the McNamara-O’Hara Service Contract Act (SCA), concessions contracts, including any concessions contracts excluded from the SCA by the Department of Labor’s regulations at 29 CFR 4.133(b), and contracts in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public.

The Executive Order and Final Rule do not apply to contracts for the manufacturing or furnishing of materials, supplies, articles, or equipment to the federal government that are subject to the Walsh-Healy Public Contracts Act (PCA).  However, where a PCA-covered contract involves a substantial and segregable amount of construction work that is subject to the DBA, employees whose wages are governed by the DBA or the Fair Labor Standards Act (FLSA), including those who qualify for an exemption from the FLSA’s minimum wage and overtime provisions, are covered for the hours spent performing work on or in connection with such DBA-covered construction work.

As to employees working on contracts covered by a collective bargaining agreement (CBA), if the CBA already provided the employee with at least 56 hours of paid sick time per year, then the other requirements of the Executive Order and the Final Rule do not apply to the employee until the date the CBA terminates or January 1, 2020, whichever is first.  If the CBA provides less than 56 hours or seven days, in cases where the CBA refers to days rather than hours, the contractor must provide covered employees with the difference between the amount provided under the CBA and 56 hours in a manner consistent with the Executive Order and Final Rule or the terms and conditions of the CBA.

The Final Rule also provides that employees can carry over up to 56 hours of unused paid sick leave from year to year while they work for the same contractor on covered contracts. Further, contractors are required to reinstate employees’ accrued, unused sick leave if the employee returns to work within 12 months after a job separation, unless the employee was paid for unused sick leave upon separation.

Employees can use as little as an hour of paid sick leave at a time.  An employee’s request to use paid sick leave may be made orally or in writing.  Advance notice can be required where the need for leave is foreseeable, and a contractor can require supporting documentation if the employee is absent three or more consecutive full days.

For further reference, the Final Rule may be found at https://www.federalregister.gov/documents/2016/09/30/2016-22964/establishing-paid-sick-leave-for-federal-contractors

 

NLRB Expands Appropriate Bargaining Unit to Include Temporary Workers

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In a 3-1 decision issued this week, the National Labor Relations Board (“Board”) reversed current precedent that prohibited the inclusion of temporary employees along with permanent, or “solely employed,” employees in a bargaining unit absent employer consent, as it returned to the previous standard under M.B. Sturgis, Inc., 331 NLRB 1298 (2000), where no such consent was required.

In its July 11, 2016 decision, Miller & Anderson, Inc. and Tradesmen International and Sheet Metal Workers International Association, Local Union No. 19, AFL-CIO, the Board expressly overruled the 2004 decision of Oakwood Care Center, 343 NLRB 659 (2004), which had held that the National Labor Relations Act (“NLRA”) did not authorize the Board to direct elections in units encompassing employees of more than one employer, i.e. a company’s employees and other employees placed at the company via a staffing agency.  The Oakwood Board further held that combining such employees would lead to significant conflicts among the various employers and among groups of employees.

With the Miller & Anderson decision, the Board reversed course again, holding that the terms “employer” and “employer unit,” as used within Section 9(b) of the NLRA, were sufficiently broad to encompass temporary employees performing work for another employer.  The Board also reasoned that the Sturgis standard better effectuated the purposes of the NLRA.

Going forward, the Board will apply the traditional “community of interest” factors when determining if a bargaining unit is appropriate.  The Board will determine whether the temporary employees and solely employed employees have the same or substantially similar interests as to wages, hours or other working conditions.

While the Board described its decision as a return to Sturgis, the landscape has changed since 2004, when Sturgis was last the standard.  Last year, the Board issued the highly contentious Browning-Ferris decision, which overruled two other long-standing joint-employer decisions.

Under Browning-Ferris, the Board greatly expanded the joint-employment standard by abandoning the requirement that an employer exercise “direct and immediate” control over an employee’s terms and conditions of employment and instead including relationships where an employer merely exercised “indirect” control or even where an employer has simply reserved the authority to exercise control.   Thus, between 2000 and 2004, when Sturgis was the standard, the law was much clearer as to when a joint-employer relationship existed.  Now those waters are far murkier, and employers will have to navigate them to make best judgments as to whether a joint-employer relationship exists and, if so, whether a group of temporary employees and solely employed employees have sufficient interests in common in order to create an appropriate bargaining unit.

Employers and other amici cautioned that a return to Sturgis would create confusion and hinder meaningful bargaining.  We will see whether those concerns bear out.

SAVE THE DATE FOR OUR ANNUAL COMPLIANCE/BEST PRACTICES SEMINAR!

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Please mark your calendar for Lindner & Marsack, S.C.’s Annual Compliance/Best Practices Seminar!

WHEN:         April 14, 2016

8:00 a.m. – 12:00 p.m.

WHERE:       Sheraton Milwaukee Brookfield Hotel

375 South Moorland Road

Brookfield, WI

This FREE half-day event will address current topics in labor, employment, benefits & worker’s compensation law and provide employers across industries with practical and creative solutions for addressing their toughest workplace legal challenges.

SESSION TOPICS INCLUDE: 

  • Labor Law Update: Including Recent NLRB Decisions, Right to Work and Collective Bargaining Trends
  • 2016 Employment Law Update
  • FMLA Update – A Best Practices Review
  • The Use of Temporary Workers in 2016 – A Panel Discussion
  • Update on Proposed Wisconsin Worker Compensation Act Reform
  • Winning Strategies in Defending Worker Compensation Cases – How to Avoid Early Mistakes in Investigating Claims

Watch your inbox as well as our Facebook, LinkedIn and Twitter pages for more detailed information about session topics and a link to register for this free seminar.

NEW PAY TRANSPARENCY RULES ARE NOW IN EFFECT FOR FEDERAL CONTRACTORS

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By: Laurie A. Petersen and Samantha J. Wood

On January 11, 2016, the final rule implementing Executive Order 13665 went into effect. This rule makes it unlawful for federal contractors to discharge or discriminate in any manner against any employee or job applicant because such employee or applicant has inquired about, discussed, or disclosed his or her compensation information or has inquired about, discussed, or disclosed another employee or applicant’s compensation information.

This rule applies to any business or organization that (1) holds a single federal contract, subcontract, or federally assisted construction contract in excess of $10,000; (2) has federal contracts or subcontracts that have a combined total in excess of $10,000 in any 12-month period; or (3) holds government bills of lading, serves as a depository of federal funds, or is an issuing and paying agency for U.S. savings bonds and notes in any amount. While in effect now, the rule will apply to these employers once they enter into a new covered federal contract or subcontract or modify an existing covered federal contract or subcontract on or after January 11, 2016.

In accordance with this rule, contractors are prohibited from having policies or practices that prohibit or tend to restrict employees or applicants from discussing topics such as: salary, wages, overtime pay, shift differentials, bonuses, commissions, vacation and holiday pay, allowances, insurance and other benefits, stock options and awards, profit sharing, and retirement. Contractors must revise handbooks, confidentiality agreements, employment agreements, or other work rules and policies that restrict discussing compensation information.

The rule also requires federal contractors to do the following:

  1. Post the Pay Transparency Nondiscrimination Provision either electronically or in a conspicuous location in the workplace where it can be seen by employees and applicants. This provision can be found at  http://www.dol.gov/ofccp/PayTransparencyNondiscrimination.html
  2. Incorporate the Pay Transparency Nondiscrimination Provision into existing manuals or .employee handbooks, and disseminate the updated manuals or handbooks.
  3. Post the updated “EEOC is the Law Poster” when it becomes available. In the interim, post the “EEOC is the Law Poster Supplement,” available at http://www.dol.gov/ofccp/regs/compliance/posters/ofccpost.htm
  4. Ensure that all contracts entered into or modified after January 11, 2016, contain a revised equal opportunity clause. If the contract incorporates 41 C.F.R. § 60-1.4, by reference, no changes are necessary.

If you have questions about this material, please contact Laurie A. Petersen or Samantha J. Wood by email at lpetersen@lindner-marsack.com or swood@lindner-marsack.com, or any other attorney you have been working with here at Lindner & Marsack, S.C.

New Regulations Allow Orientation Period Prior To ACA’s Maximum Waiting Period Before Mandatory Health Plan Coverage

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The Affordable Care Act (“ACA”) requires a “large employer” (50 or more full time equivalent employees) to provide health plan coverage to “full time” employees (30 or more hours per week) within 90 days of hire. On June 25, 2014, IRS, DOL, and HHS published final regulations which allow an employee orientation period of up to 30 days to precede that 90-day waiting period.

Specifically, the final regulations provide that being otherwise eligible to enroll in a plan means having met the plan’s substantive eligibility conditions (for example, being in an eligible job classification, achieving job-related licensure requirements specified in the plan’s terms, or satisfying a reasonable and bona fide employment-based orientation period). Under the final regulations, after an individual is determined to be otherwise eligible for coverage under the terms of the plan, any waiting period may not extend beyond 90 days, and all calendar days are counted beginning on the enrollment date, including weekends and holidays.

IRS, 26 CFR Part 54, Reg-122706-12, RIN 1545-BL97, p. 6; DOL EBSA, 29 CFR Part 2590, RIN 1210-AB61; HHS 45 CFR Part 147, RIN 0938-AR77.

Saying that, “the Departments do not intend to call into question the reasonableness of short, bona fide orientation periods,” the Regulation adds that, for fear of abuse, they will apply a “clear maximum” to prevent “mere subterfuge for the passage of time.” If an orientation period for training and evaluation is “longer than one month that precedes a waiting period, the Departments refer back to the general rule, which provides that the 90-day period begins after an individual is otherwise eligible to enroll under the terms of a group health plan.” Id., pp. 6-7.

Two definitional elements should be noted:

  1. “[O]ne month would be determined by adding one calendar month and subtracting one calendar day, measured from an employee’s start date in a position that is otherwise eligible for coverage.” Id.
  2. This rule applies to plan years beginning on or after January 1, 2015. Until then, the proposed regulations will be considered in effect. Under the proposed regulations, an orientation period would be allowed if it “did not exceed one month and the maximum 90-day waiting period would begin on the first day after the orientation period.” Id., p. 5. The final version is not considered to be a “substantive change.”

The concern with possible abuse or misuse of this new rule has led to a “bright line” test which simply counts the relevant days with no attention to the details of job requirements and how the employer determines within 30 days whether the new employee can satisfy them.

If you have any questions about this new regulation, please contact Alan Levy, the Lindner & Marsack attorney who focuses on employee benefits.

PROPOSED OSHA RULE IMPOSING ELECTRONIC SUBMISSIONS TO IMPROVE ILLNESS AND INJURY TRACKING

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By: Laurie A. Petersen and Samantha J. Wood

On Thursday, November 7, 2013, OSHA issued a proposed rule amending 29 C.F.R. § 1904.41 to require certain employers to electronically submit injury and illness information that most employers are required to maintain under § 1904. The only employers unaffected by this rule are those that are exempted from maintaining injury and illness records, which includes companies that had ten or fewer employees at all times during the last calendar year, and companies that have been classified in a specific low-hazard retail, service, finance, insurance, or real estate industry.1

For those employers that are required to maintain injury and illness records under OSHA’s regulations, the rule imposes three new electronic reporting requirements:

(1) Establishments with 250 or more employees at any time during the prior calendar year (including full, temporary, and seasonal workers) will be required to electronically submit information from their injury and illness records (Form 300 and Form 301) to OSHA or OSHA’s designee on a quarterly basis.

(2) Establishments with 20 or more employees at any time during the prior calendar year, that are among certain designated industries, will be required to electronically submit information from the OSHA annual summary form (300A) to OSHA or OSHA’s designee on an annual basis. This submission will replace OSHA’s annual injury and illness survey that employers are required to complete and submit under 1904.41(a). The designated industries will be
those industries covered by Part 1904 with a 2009 Days Away From Work, Job Restrictions, or Job Transfer (DART) rate in the Bureau of Labor Statistics’ Survey of Occupational Injuries and Illnesses of 2.0 or greater. Among others, the designated industries will include: construction, manufacturing, wholesale trade, department and grocery stores, waste collection, nursing care facilities, gambling industries, and dry-cleaning and laundry services.

(3) All employers who receive notice (by mail, announcements on the OSHA website, the OSHA newsletter, and the Federal Register) will be required to electronically submit specified information from their injury and illness records to OSHA or OSHA’s designee.

To submit injury and illness records, employers will be required to register their establishments on OSHA’s data collection website. OSHA intends to scrub the data of personally identifiable information and make the data public. The purpose of publication is to allow employers to benchmark their performance against others in their industry, and encourage employers to improve safety. Information will also be available for researchers to understand and identify emerging health hazards. According to OSHA, this initiative will not result in more OSHA enforcement, but will target employers who are in need of free consultants, educational materials, and health and safety inspections.

The public comment period ends February 6, 2014. Comments can be submitted electronically at http://www.regulations.gov, by fax at (202) 693-1648, or by mail at OSHA Docket Office, Docket Number OSHA-2013-0023, U.S. Department of Labor, Room N-2625, 200 Constitution Avenue NW, Washington, DC 20210. A public meeting will be held Thursday, January 9, 2014 from 9 a.m. to 4:30 p.m. at the U.S. Department of Labor in Washington, D.C. Interested parties must request attendance by Friday, December 13, 2013.

1 To determine whether your business establishment is classified in a specific low-hazard retail, service, finance, insurance, or real estate industry, see 1904 Subpart B, Appendix A at https://www.osha.gov/pls/oshaweb/owadisp.show_document?p_table=STANDARDS&p_id=12791.

If you have questions about this material, contact Laurie A. Petersen at lpetersen@lindner-marsack.com, Samantha J. Wood at swood@lindner-marsack.com, or any other attorney you have been working with here at Lindner & Marsack, S.C.