By Rachel H. Khedouri, Esq.
*UPDATE on December 21, 2022 – New York Governor Hochul signed S9427A/A10477 establishing a statewide pay transparency law. The new requirements will go into effect in September 2023.
Legislators were busy again this year implementing new and expanded protections for employees and obligations for employers. Employers do not want to find themselves on the “naughty” list with current or former employees, applicants or representatives of federal and state agencies. To help your company stay on the “nice” side, we suggest following this list of nine important employment-related steps as we end 2022 and begin 2023 – and don’t forget to check it twice!
1. Review employment contracts, arbitration agreements, and other employment-related agreements to ensure that they do not act to silence victims of workplace sexual assault and harassment.
In 2022, the federal legislature zeroed in on sexual assault and sexual harassment in the workplace and enacted two significant laws aimed at empowering victims to report and publicly disclose illegal conduct. First, in March 2022, President Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 which prohibits employers from compelling arbitration or avoiding class actions of certain such claims. (Click HERE for our FAQs on this new law.) Then, in early December, the President signed the “Speak Out” Act which prohibits courts from enforcing predispute nondisclosure and nondisparagement clauses regarding sexual harassment and sexual assault claims. The new law is vague in some of its terms but appears to apply to a wide variety of contracts or agreements that could act as a “gag order” on these types of claims for current, former, and prospective employees, as well as independent contractors.
Notably, the Speak Out Act does not prevent employers from entering into separation or settlement agreements imposing confidentiality restrictions on claimants after they have raised sexual harassment or assault allegations (though the laws of certain jurisdictions, such as California, New Jersey and New York, may restrict such provisions). The Act also does not restrict employers from pursuing legitimate interests to protect trade secrets and proprietary information.
Employers should work with counsel to review their template employment agreements, predispute arbitration agreements, confidentiality agreements, independent contractor agreements and other workplace arrangements to ensure that they are in compliance with the new federal legislation, as well as any state or local law. And, stay tuned in 2023 as the Biden Administration has clearly indicated that it intends to pursue broader legislation along these lines, including expanding the arbitration and nondisclosure bans to a wide range of employment claims such as discrimination on the basis of race, wage theft and unfair labor practices.
2. Consider how your company will comply with evolving pay transparency and other laws impacting recruiting across the country.
Those employers who are looking to hire in 2023 should be mindful of the national trend emerging over the past several years of requiring so-called “pay transparency” in job postings. As we have previously reported (HERE), a growing number of states and localities across the country have enacted legislation requiring employers to publicly disclose salary information when hiring, including Colorado, Connecticut, Jersey City, New Jersey, and New York City, Ithaca and Westchester County, New York. California’s new pay transparency and pay data reporting requirements, discussed in more detail HERE, go into effect on New Year’s Day. Rhode Island and Washington likewise have new or expanded requirements as of January 1, 2023.
New York State is poised to join the fray in 2023. Senate Bill 9427A was delivered to Governor Hochul for signature on December 12, 2022, and is anticipated to be signed shortly. Beginning 270 days after the bill is signed, employers with four or more employees must disclose either a minimum and maximum range of annual salary or hourly rate or a fixed level of compensation for any position which can or will be performed, at least in part, in New York State. The New York law also requires employers to provide the job description for the position if one exists. More details of what is required under the new law are expected to be provided by the State in the coming months and employers in New York City will be expected to comply with the New York law as well as the existing New York City law.
Employers should have a plan in place for complying with the varying requirements of pay transparency laws across the country, including making sure existing job descriptions are up to date and job postings, including those for remote workers, are compliant.
For employers hiring New York City residents, the NYC Department of Consumer and Worker Protection recently announced that it is delaying enforcement of the new law (reported HERE) restricting the use of artificial intelligence (“AI”) and similar automated employment decision-making tools until April 15, 2023, while the Department continues to hold public hearings and develop governing regulations. Although the law still technically goes into effect on January 1, employers now have some additional time to consider whether they are using covered AI in hiring or promotion decisions and, if so, how they will comply with the requirements to conduct an impartial bias audit and give 10 days’ advance notice to New York City-resident candidates before using these tools.
3. Evaluate drug testing policies and procedures, particularly in connection with off-duty cannabis use.
Another national trend employers should keep in mind is the legalization of recreational cannabis usage and the corresponding impact on the workplace. Although employers generally are still permitted to maintain drug-free workplaces, they should consider whether any changes are required to their drug-related policies for 2023. In New Jersey, in particular, the NJ Cannabis Regulatory Commission (the “NJ-CRC”) has issued certain guidance for employers on drug testing and when employers may take adverse employment action (as reviewed in our September 21, 2022 eAlert HERE). The NJ-CRC also has issued a sample report for documenting the basis for “reasonable suspicion” that an employee is under the influence of drugs or alcohol in the workplace available HERE.
Employers should reevaluate whether and how to continue testing applicants and employees for cannabis in light of state laws allowing off-duty and off-premises usage, as well as consider implementing an internal procedure – using the NJ-CRC’s Report or the employer’s own form – to document the basis for drug testing employees who may be under the influence during work hours and support adverse employment action taken against those employees.
4. Ensure wages are meeting new thresholds.
Both New Jersey and New York employers are facing minimum wage hikes in 2023. In New Jersey, the minimum wage is re-evaluated annually based on the Consumer Price Index as it marches to $15 per hour by 2024. The rate is scheduled to increase from $13 per hour to $14.13 per hour on January 1, 2023. For New York employers, the minimum wage in New York City, Long Island and Westchester has already reached the statutory top rate at $15 per hour and, therefore, will have no change for 2023; the minimum rate for employees in the rest of the state is slated to increase from $13.20 to $14.20 per hour as of December 31, 2022. The salary threshold for classifying workers as exempt under the New York administrative and executive exemptions for New York City, Long Island and Westchester also will have no change (from $1,125 per week) for 2023 while the rest of the state increases to $1,064.25 (from $990) per week on December 31. New Jersey’s minimum salary level for overtime exemption is tied to the federal threshold which currently is $684 per week.
5. Make sure employee handbooks and other policies are up to date with new laws.
Ringing out the old and ringing in the New Year is always a good time to check in on employee handbooks and other employment policies in light of recent legislative changes. The current best practices on policies for electronic communications systems, social media, anti-discrimination and harassment, and wage and hour are always evolving and employers should make sure these provisions remain current. In addition, new federal and state laws may require changes in other policies. On the federal front, President Biden signed the Respect for Marriage Act on December 13, 2022, which establishes legislative recognition for same-sex and interracial marriages. The Act provides that federal and state governments must fully recognize any marriage between two (and only two) individuals that are legally performed in any state. Although this Act effectively only confirms the current law of the land as set forth in Supreme Court rulings and does not create new rights for employees, its enactment serves as a reminder to employers to confirm that policies and benefit offerings based on marital status comply with the Act and all other policies are up to date under federal, state and local laws.
For New York employers, two laws signed by Governor Hochul after the end of the legislative session create new policy considerations for 2023. First, effective February 19, 2023, the “lawful absence law” amends Section 215 of New York Labor Law to clarify that workers are not to be punished or subjected to discipline by employers for lawful absences. This means that employers cannot take off points or deduct from an allotted bank of time which could subject an employee to disciplinary action, up to and including termination, including “no-fault” attendance policies, or otherwise maintain attendance policies that may discourage employees from taking absences to which they are entitled for fear of being disciplined or fired. Employers who violate this new law could face suit for monetary damages from current or former employees, as well as penalties from the New York State Department of Labor including reinstatement, liquidated damages, back pay, front pay, and civil fines of up to $10,000 for first violations and up to $20,000 for subsequent violations. Employers should check attendance policies to ensure that there is a clear exception for legally protected absences.
Second, effective June 7, 2023, New York State private employers are subject to expanded requirements to accommodate nursing mothers. The new law, which imposes similar requirements to those already in place in New York City and for New York public employees, requires employers to ensure that employees receive breaks whenever they have a reasonable need to express breast milk and that, in the absence of undue hardship, employers provide pumping spaces that are private, in close proximity to the work area and well lit and include a chair, access to running water, a working surface, and an electrical outlet (if the workplace has electricity). New York employers also must develop and distribute a written policy regarding the rights of nursing mothers to express breast milk at work. If you do not already have a compliant policy, NFC would be happy to assist you in drafting one in early 2023.
Employers in all jurisdictions should confirm that their policies are up to date for 2023. Feel free to reach out to NFC if you would like to update your handbook in the new year.
6. Confirm physical and electronic postings are up to date and any required notices are sent before year end.
As we reported in October (HERE), the U.S. Equal Employment Opportunity Commission issued a new poster to be displayed in the workplace by all employers with 15 or more employees. Employers should confirm that they have the “Know Your Rights: Workplace Discrimination is Illegal” poster available physically in a conspicuous location in the workplace as well as electronically.
Employers also should check that they have the most current state or local postings available and are providing such postings in all required manners. For example, in New Jersey, the Division on Civil Rights issued new New Jersey Law Against Discrimination and New Jersey Family Leave Act posters in November 2022 (see our eAlert HERE), and also instituted a requirement for employers to distribute written copies of the posters annually – if you have not already done so for 2022, distribution should be completed by email, in print, or by online posting by December 31. For New York employers, legislation signed by Governor Hochul on December 16, 2022 requires, effective immediately, that all federal and state documents mandated to be physically posted in the workplace must also be made electronically available through the company’s website or by email.
7. Check on “independent contractor” engagements.
In 2022, state agencies once again cracked down on the misclassification of employees as independent contractors. In New Jersey, as in several other states, the test for determining whether a worker is an independent contractor is narrowly interpreted to err on the side of employment as we discussed HERE. The cost of being found to have misclassified workers is steep and employers are encouraged to review “contractor” engagements to ensure that this designation is justified.
8. Review severance policies and be mindful of obligations if large layoffs are planned.
Although it is always good practice for all employers to review severance policies in advance of a planned layoff, in the coming year it will be even more important for New Jersey employers to be mindful of existing severance and notice obligations. Significant revisions to the Millville Dallas Airmotive Plant Job Loss Notification Act – New Jersey’s mass layoff statute, otherwise known as the state’s “mini-WARN Act” – are anticipated to go into effect in 2023. On December 19, 2022, the Legislature passed a bill that, once signed by Governor Murphy, would make the revisions effective in 90 days, following a delay of more than three years. As discussed HERE, the NJ mini-WARN Act as revised will apply to all employers with 100 or more employees who terminate the employment of 50 or more full- or part-time employees during any 30-day period. Employers must provide impacted employees with 90 days’ notice in advance of termination as well as severance in the amount of one week per year of service. Terminated employees who do not receive the full 90 days of notice are entitled to an additional four weeks of severance. Notably, severance under the NJ mini-WARN is considered back pay and cannot be used as consideration for a release of claims from the terminated employees – meaning that employers will need to offer something more than one week of severance to impacted employees if they intend to obtain a release of claims. New Jersey employers should review their severance pay policies and practices, as well as any employment agreements, collective bargaining agreements, and ERISA plans addressing severance before the amendments take effect to ensure compliance with the NJ mini-WARN Act.
All employers contemplating a reduction in force, plant shutdown, merger or sale, or other significant shift in the business in 2023 should seek legal counsel in advance for guidance anticipating and navigating the legal obligations and employee relations issues that may accompany such changes.
9. And, last but certainly not least, don’t forget to schedule trainings for 2023!
No employment-related checklist would be complete without a reminder to schedule trainings for supervisors and managers on any updated company policies. Employers also should consider whether they are subject to any mandatory anti-discrimination and harassment training – for example, New York State and City annual requirements for all employees – and make sure those timelines are met. Moreover, even in those jurisdictions where such training is not required, it still is good practice to train managers to address and avoid any type of discrimination and harassment both to avoid such claims and to provide a defense to any claims raised. NFC has a wide offering of available training that we would love to bring to your organization.
Happy New Year and all the best in 2023 from your NFC Team!
If you have any questions relating to this eAlert or need help getting your workplace ready for 2023, please reach out to the NFC Attorney with whom you typically work or call us at 973.665.9100.