Several employment laws have shifted significantly in the post-pandemic years, and those changes, combined with a younger generation of employees joining the workforce, bring new demands and expectations.

For employers trying to navigate the landscape of new societal dynamics and legalities, keeping up can feel like a full-time job in and of itself. In this article, we will cover some of the most important recent changes employers should know about.

Non-competes

Non-compete agreements have become far more challenging to implement and enforce. Many states, like Colorado, have enacted legislation significantly curtailing their use. In addition, the Federal Trade Commission (FTC) enacted a comprehensive ban on non-compete agreements, which is the subject of ongoing litigation in federal court over its enforceability. This shift towards protecting employees’ rights over businesses' ability to control them post-employment has significant implications for employers.

The FTC ban, if it survives legal challenge, would prevent employers from enforcing existing non-competes on any workers other than senior executives (i.e., workers earning more than $151,164 annually who are in a “policy-making position”) and ban all new non-compete agreements for all workers, including senior executives.

Misclassifying Independent Contractors

Misclassifying employees as independent contractors can have severe consequences, including substantial back taxes and penalties. Many regulations governing employment status were drafted before the emergence of the gig economy and offer employers only a binary option of either an employee or independent contractor when many workers in the gig economy lie somewhere between.

Exacerbating employers’ frustration is the fact that legislation often differs along political lines. For example, the U.S. Department of Labor recently changed the rules governing independent contractors, undoing regulations it implemented during the Trump era. Similarly, there is a very different test for independent contractor status in a blue state like California compared to a red state like Texas. These differences underscore the challenges businesses that operate in more than one state face when attempting to classify workers correctly.

Legislative reform tailored to the realities of the gig economy is greatly needed, but employers should navigate classifications carefully in the interim.

Paid Leave Laws

Federal law provides qualifying employees with unpaid family and medical leave under the Family and Medical Leave Act (FMLA), but there is no right to paid leave under federal law. However, at least thirteen states have passed laws requiring some form of paid family or medical leave. These state laws can vary significantly, leading to potential inequities for employees of companies operating in multiple states.

In addition, it is crucial to understand how state-paid leave laws interact with the FMLA and a company’s policies on vacation, parental leave, and other paid time off.

For employers with locations nationwide, it is particularly important to verify individual state laws on paid family medical leave requirements and consider potential inequities among employees working in different states.

Pay Transparency Requirements

Pay transparency laws require employers to disclose information about employee compensation to employees or the public. These laws are designed to close the wage gap based on factors like gender, race, and ethnicity. The specific requirements of pay transparency laws can vary depending on the jurisdiction.

Advertising for jobs and complying with pay transparency laws can present a significant challenge for large companies heavily reliant on online advertising and where employees transfer regularly. Consider a scenario where a company needs to fill a position in one of its stores and has identified an existing employee from another location that it would like to hire for the open position. Must they still advertise the open position, even though they intend to fill it internally?

Or, a company wishes to advertise for an open position and wants to post the “normal” salary range, although it employs someone in that position who currently earns more than the “normal” range. What is the appropriate salary for the posting? Engaging an employment law attorney to help navigate legal compliance in this area is highly advisable.

Criminal Record Disclosures for Job Applicants

Legal changes are beginning to reshape opportunities for job applicants with criminal records. In California, Senate Bill 731, enacted in mid-2023, allows individuals with most felony convictions to request the sealing of their records, with exceptions for sex offenses.

Similarly, in late 2023, New York passed its "Clean Slate" legislation, which permits sealing certain criminal records after sentencing or release from incarceration, provided there are no subsequent convictions. Likewise, Colorado’s “Ban the Box” and “Chance to Compete” Acts prohibit employers from inquiring about criminal history on job applications or stating in advertisements or applications that they will not hire people with a criminal history.

These measures aim to provide applicants with a criminal record a pathway to employment and societal reintegration while bolstering workforce diversity and inclusion. As a result, employers should review state laws where they operate and adjust hiring practices accordingly to ensure compliance and equitable hiring for all applicants.

Use of Artificial Intelligence (AI) in Employment

Many employers have begun using AI in the workplace, including recruiting and hiring. However, because AI relies on existing data, it can actually perpetuate existing hiring biases. Employers using AI in human resources should do so carefully. It is inadvisable to rely solely or even heavily on AI at this stage; instead, a combination of AI and human oversight may yield the best results.

In addition to the existing laws that prevent discrimination in the workplace – due to AI or not – federal, state and local lawmakers have begun proposing new legislation specifically directed at the use of AI in the workplace. The Equal Employment Opportunity Commission (EEOC) has issued technical guidance on the use of AI to evaluate employees and applicants. Its recommendation is that employers evaluate the AI software to ensure it does not create a disparate impact on individuals with protected characteristics. In addition, several states have proposed or are considering new legislation to regulate the use of AI in employment.

I urge employers to work with an attorney to establish an AI policy that outlines acceptable use in compliance with these laws and regulations.

Discrimination Based on Height and Weight

In November 2023, New York City implemented groundbreaking legislation aimed at eradicating discrimination based on height, weight, and body size in employment, housing, and public accommodations. Several other states and cities, including Michigan, Washington, D.C., and San Francisco, also have laws explicitly prohibiting discrimination based on height and weight.

As such, companies would be wise to be aware of which states and cities may have legislation in place or forthcoming on these issues and to review hiring practices to eliminate opportunities for implicit bias to creep in.

Summary

Employers can create sound employment policies and processes by closely monitoring new federal, state, and local legislation and societal trends. By staying ahead of these developments and leveraging the guidance of experienced legal counsel, employers can ensure legal compliance, feel confident about equitable hiring, and enhance the job applicant and employee experience.

Author Bio

Christine Lamb is an Equity Partner at Fortis Law Partners and a seasoned employment attorney with over 30 years of experience advising companies—from startups to Fortune 100s—on HR and personnel matters and defending them in employment lawsuits.

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