HR Regulations Unveiled: A Primer on Recent Changes

Spring Taylor: Good afternoon. Thank you so much for spending this time with us. My name is Spring Taylor, and I'm Employment Counsel with TriNet, and I'm joined today by my esteemed colleague, Jackie Breslin. She's the Executive Director of HR Consulting, Client Consulting. We often work together, Jackie and I, in areas where employment law compliance and HR best practices and guidance really overlap.

Jacqueline Breslin: And it is my favorite topic to talk about: compliance and how that is woven into HR consulting. And I love talking to our clients, entrepreneurs, HR people, leaders, about these great topics. So we're going to talk about restrictive covenants, workplace accommodations and artificial intelligence in the workplace.

Spring: Thanks, Jackie. Employers have historically and frequently used restrictive covenants in the employment relationship, and a few of the common restrictive covenants that you're probably familiar with are non-compete agreements, which are going to limit an employee's ability to work for a competitor. Similarly, you might have heard of non-solicitation agreements. And those are ones that prohibit an employee from working for a competitor or soliciting their customers or prohibiting the recruitment of former employees.

So that's for non-solicitation. A non-disclosure agreement are those that protect confidential information, trade secrets and other proprietary information. The last two I want to talk about are non-disclosure agreements about conduct or information. Those are typically seen in settlement agreements or separation agreements, and then finally, non-disparagement agreements. Those are often used in the settlement and separation agreements as well. And they're to prevent individuals from making negative comments about a situation, a claim, people, etc. Now, historically, regulatory, the regulatory world has looked at these kind of agreements as wondering if they're reasonable.

That's always been the key word in the case law. Is it reasonable? And it's focused on reasonableness in content, geography and scope. However, the tide is shifting tremendously and a lot of new laws that are coming out are really looking at these, really thinking that they're unfair and they really prohibit employees from selling their work freely in the marketplace. At the national level, we're seeing a whole lot of things happening. First is the speak out act. This prevents the enforcement of non-disclosure, restrictive covenants and non-disparagements, agreements in cases where there's sexual harassment or sexual assault. And those happen to be when they are in place prior to the behavior happening.

So this is a prohibition on these types of agreements that are in place before something has happened. Also, I think really interesting is the FTC announced a proposed rule that would ban virtually all non-competes in all employment situations. Now this is really interesting because it would also require employers to rescind any existing non-compete agreements you already have in place.

This is huge. Now, the FTC received over 27,000 comments on this proposed rule and we are expecting that this will not have a final rule until April of 2024. But this is definitely something that employers should have on their radar. Finally, the National Labor Relations Board's general counsel came out and issued a memo. And in that memo, they said, "Offering, maintaining and enforcing a non-compete agreement would violate Section 7 of the National Labor Relations Act." Now, Section 7, as you might be aware of, it's the part of the NLRA that protects an employee's right to engage in concerted, protected activity. The NLRB said two parts of non-competes are really what would violate Section 7, prohibiting employers from concertedly seeking employment with a competitor and also soliciting coworkers to also go work for that competitor—two very common things that employers try to prohibit in a non-competition or a non-solicitation agreement.

States are also getting in on the action. There are four states that have a total prohibition on non-competes. That's California, Minnesota, North Dakota and Oklahoma. Maybe some of those states might have surprised you, maybe they didn't. Other states also have prohibitions when there's a salary threshold, or they're limited to certain professions only. But this is a red-hot area and this year we are seeing more and more legislatures passing laws. In Colorado, most non-competes are already void, but this year they made it a crime and made it a crime to knowingly enforce one. New York just passed a bill that is awaiting the governor's signature, as we speak, that would prohibit non-competes and in Virginia, they ban and limit nondisclosure and non-disparagement agreements in cases of sexual assault and now in cases of sexual harassment. So what's an employer to do? I'm going to turn it over to Jackie for more.

Jackie: Okay, perfect. Thanks, Spring. So, these agreements have been well-intended, right? Employers trying to protect confidential information from competitors, trying to ensure that employees who are exiting are not taking precious information or sharing that information. But, as Spring has described, they're fraught with some risk now. And so, the first step that we recommend is—take an inventory see what you have in place.

What sort of agreements are you providing to employees? Is it part of your new hire process? Then compare that information to federal and state, maybe even some local information, to make sure that you're not creating risk by having employees sign these agreements. And then we see some of our clients really utilizing this as a time to pause and speak together as an executive team about when they're using these agreements, who are they being provided to, looking at title and rank within the organization, the purpose of those roles and making sure that if they continue to use these types of agreements. Again, back to the fact, like, can you be using them? And then really, do you need to be providing them and asking for all employees to sign it, or do you want to really look exclusively within roles within your organization and sort of skinny down what you're doing?

So that evaluation is really important. And then it is really important to work with legal counsel when you're considering this, and it is also a situation that is evolving. Sometimes we see agreements that have been prepared by an attorney many years ago, and a company just repeats and keeps using them and using them. They're out of date. Even riskier, somebody's pulled it off, a web-based something that they've just found in a search and start using them with their employees. It's important to get legal counsel for this guidance and also then continue that guidance consistently so you're not using outdated information.

Okay, workplace accommodations. When we talk about workplace accommodations, your mind may immediately go to the Americans with Disabilities Act, and the ADA says that you need to make an accommodation for employees or applicants to be able to reasonably do, a reasonable accommodation to do their job. So that can look like providing equipment to an employee, that can look like changing a start time if somebody needs to attend medical appointments. I think that's what we're all used to in our heads when we hear about workplace accommodations, but there are so many more reasons for accommodations.

We're going to talk about it. Things like lactation accommodations, some stalking rights in the workplace that we're going to cover those in just a minute. So I'll send it back to you, Spring.

Spring: All right. Great. Thanks, Jackie. Both at the federal and state level, the types of accommodations that employers need to respond to is changing and the PWFA, this law is about pregnancy, childbirth and related treatments. And this law says employers have to treat them the same as any other disability under the ADA. So now this is a codification of some case law that came down not too long ago, but it's now applicable across the board for all employers. It also prohibits requiring employees to take a leave of absence if another reasonable accommodation is an option in the workplace.

And there's no retaliation for taking any accommodations under this act. The Pump Act, now, this is a law that now requires reasonable break time to express milk. And employees are entitled to a break every time they need to pump. Employers cannot set a schedule. It can't be dictated by them. And the law specifically contemplates that an employee's needs may change over time. And that's really critical. It's requiring employers to be flexible with this type of accommodation. Now, both Minnesota and New York also passed pregnancy and lactation related laws this year. What both of them have in common is that they both require employers to provide space for lactation in the workplace.

We also have some new developments at the federal level as well. So now, the EEOC has issued guidance that says leave under the Family Medical Leave Act can be taken indefinitely. That's new. That's kind of a surprise. If an employee is eligible and they have a qualifying reason for the leave, they can continue to take FMLA as long as they don't exhaust. So what does this mean? Take, for example, an employee who works a standard 40-hour work week. If they take one eight-hour day per week, and they take it for 52 weeks, they will never exhaust their FMLA entitlement. Hence the indefinite accommodation.

Also, a new development out of the Supreme Court this year—undue hardship under Title 7, they upended 50 years of precedence. Now, religious accommodation—the standard used to be, if it was a minimal cost to the employer, you didn't have to, that was the standard for an undue hardship, minimal cost. Now, the new standard substantially increased cost in relation to the conduct of the employer's business.

Substantial increased cost. This is new. And again, all accommodation requests have to be evaluated on a case-by-case basis. What I think is really interesting about this opinion of the Supreme Court, they did not apply that restriction to ADA cases. So this is religious accommodation cases only.

Finally, the EEOC came out and said that employers may have an obligation to make reasonable accommodations for applicants with visual disabilities if they're going to rely on AI or algorithms when making employment-related decisions. We are going to talk about AI more in a minute, but I wanted to mention that here because this is also another area of workplace accommodation.

And then we have two more states that have passed state laws regarding accommodations in the workplace. These both have to do with individuals who need leave because they're either a victim of a crime or a domestic situation. In both of these instances, employees are entitled to the leave that they need to handle their situations.

And I'll turn it over to Jackie for more.

Jackie: Perfect. Thanks, Spring. So it continues to be really important to engage in the interactive process when an employee needs an accommodation in the workplace, and that is a conversation with the employee to understand their needs and then working together with them to work through a solution and as the employer, you have to know the law, right? It's your responsibility to encourage and engage the employee with this and to know what laws to compare it to. And so there are a number of different workplace accommodations. So it really depends on what the employee's needs are. So we'll talk some more about that. But, you know, Spring just listed a number of areas.

And so let's just go a little deeper. So lactation accommodations are even important in a remote work environment. So we might forget about a remote, you know, folks, and just think like, they can take a pumping break anytime, but it doesn't, if your responsibility remains the same as far as notifying employees that they have the right to a lactation accommodation for providing notices, and that's a part of a new hire process, but also for an employee who has had a child, adopted a child, any situation. And then there's also the responsibility for making sure that in the workplace, you have the proper lactation area of privacy and there's different, you know, state laws and local laws.

And so if you are a multiple, you know, have employees across the nation and multiple sites, what is one lactation, you know, room requirement may not be the same in another state. So it's important to do that sort of work in comparison there. We've just published a blog on our TriNet website recently about nursing on the move, and it's how to support employees who are traveling in the workplace and some thoughts and ideas because those lactation accommodations are also your responsibility if somebody's traveling for work on a consistent basis or maybe just a weeklong business trip. So, please take a look at that for some great suggestions.

And then accommodations related to domestic violence, sexual assault and stalking, many of this topic is covered under paid sick and safe leave laws. And so that may be the area to start. So if an employee needs time off due to a domestic abuse situation, taking a look at that state or local paid sick leave law can give you some guidance about the amount of time that employee is allowed. It's also really important that your policies match this information. It can be difficult for an employee to come forward and be transparent about the reason they need time off if they're a victim of stalking, as an example. So if you have that information available to them, that can be such a comfortable way for them to know the information and then it's easier for them to bring up the topic.

And a workplace accommodation, you know, in this area, could look like changing somebody's contact information so that they can't be found as easily in the workplace. It could be, security might be an important piece of the puzzle that you would do, that you would put in place for the workplace, for when it comes to domestic violence, sexual assault or stalking.

And then, next, religious accommodation. So, I mean, this got a lot of energy and attention when the topic arose a couple of years ago regarding vaccines in the workplace and whether or not you could require and employees could ask for religious accommodation. So that got a lot of attention. Well, it's continued, as Spring talked about during her piece. And it's also important to assume when an employee brings forward a religious accommodation, that it is something that's held dear and sincere to them. I know we've worked with clients who've gotten really wrapped around like, "Is this a real religion? How much do I need to dig into this?" That's not really the requirement. If an employee's bringing this forward, we need to assume that is something, you know, again, held dear to them. And it can be very non-traditional, but it still is a part in protection for employees in the workplace.

And then another topic that may also creep into the workplace as a reason for accommodation would be caregiver flexibility and then also grief in the workplace. So caregiver responsibility may also, although it's not a direct workplace accommodation, it can get there. So an employee might need time off due to kin care laws, but there also might be other reasons to it that you need to accommodate that person. It might not be covered. Even if they're not eligible for family medical leave or other state equivalents, caregiver responsibilities is another topic that comes up, along with grief in the workplace.

So again, not an explicit rule that employees need to be accommodated, but grief can create depression, it can create other medical challenges that then it gets bundled under time off and accommodation, based on the medical conditions that the grief is causing. We're also seeing a number of states talk about the importance of bereavement leave and making it a requirement. California is an example, that bereavement leave is now required, and it also can be a spot that you might want to get in front of. Like, have you looked at your bereavement leave policy recently? And it can be a way to be more generous, even though the law is not requiring it yet, depending on where you are, but it is something important to look at.

Back to you, Spring.

Spring: All right. Artificial intelligence, AI. Now, this is a top employer concern in the workplace. As we mentioned on the main stage, this is an area of rapidly developing and it's impacting everything we do. We're seeing a rise in AI powered HR, excuse me, HR tools, and those are just popping up all over.

In this rapidly changing field, legislatures and agencies are responding as well. The regulatory response in general has been to counter what a very real perceived concern that the AI will perpetuate—biases that humans possess. And the law is not going to take a back seat in this area. They are actively looking to protect against discrimination or adverse impacts on protected groups.

Now, this is really key. A lot of what we're seeing is that the laws are looking to prohibit or restrict AI in the recruiting, hiring and evaluating processes, especially if they're gonna have any impact on a protected category. The EEOC issued a warning, and this is a bit unusual. It was literally a warning saying that it is going to apply its standard legal principles to look at how AI might be discriminatory under Title 7. This is really key. They are looking for Title 7 violations when AI is involved. The EEOC came out and said very clearly that the improper use of AI would make Title 7 violations.

And they mentioned five specific ways that this might happen. First, resume scanners. These are the ones that are going to prioritize keywords in a resume and reject some just off the top without actually reviewing them. The second one is virtual assistants or chatbots. Again, these are asking questions, and if they don't get these expected response that they're looking for, a predefined response, they're rejecting them as well. The third area is video interviewing software. This is software that evaluates facial expressions during that interview, and the EEOC has said that could also violate Title 7. The fourth one is testing software. These are programs that are gonna say if someone has the fit for the job. And the last one is employee monitoring software. This is what rates employees perhaps on keystrokes or something along those lines.

These are five areas where the EEOC has said, "AI could have a discriminatory impact and warrant Title 7 violations." Two states currently have existing laws when it comes to AI and hiring decisions, but New York City, right here, just joined, and has restricted the use of AI making automatic employment decisions. There's also the increase in proposed bills. This was huge this year, huge. So first, at the federal level, there's the American Data Privacy and Protection Act bill. This one has a set of AI rules across the board, but they're going to apply to hiring data for sure.

And in the states, we're seeing a huge increase in things that are happening. So Illinois, and I will say, the states are really focusing on hiring decisions and any kind of tool that's going to make an automatic decision. All right. So in Illinois, they restrict employers from using race or ZIP code as a proxy for race in automatic employment decisions.

This is really interesting. So the AI is looking at your data that you put in and making that call for you as an employer. In Massachusetts, employers have to provide notice when there's an algorithmic decision in the background and involved in a decision. And employees and applicants are required to be notified if they are having information processed through an algorithm.

New York has two bills. One is about the criteria for automatic decision-making tools and the other one would require a disparate impact analysis on the AI and notice required to applicants if it's being used. Vermont's bill is also really interesting. It's a little bit different. In theirs, they're focused on the electronic monitoring of employees with AI. And that would also lead to employment related decisions. So some really interesting things happening in the states and it's really just the tip of the iceberg of where this is going to go. We are really looking at the start of how AI is going to be impacted in the workplace. And for more, over to Jackie.

Jackie: I feel like we're on a roller coaster the past couple of days about AI, right? It sounds so good and interesting and then we're like, "Oh no," but then I'm not like, "Woo," like you're all on the ride with us. I'm imagining with that. So you do want to take steps though. So Spring's just outlined a number of state issues and this is just going to get more intense.

And so you want to make sure that you're evaluating your recruitment software and services. And this includes really digging in with the vendors that you're working with to find out what they're doing because it is ultimately your responsibility. So even if you choose a software provider, what they're doing or not doing is your responsibility to vet out to make sure that they're up to date and up to speed and understand all the state rules that you are needing to comply with also.

The example about the decisions where you just automatically stop the interviewing process, so it can look something like an employee, or an applicant rather, who's applying, you know, through online and they're asked a question. Let's say they're in a sales role and the person has to travel, and so you're trying to understand in the prescreening process before you speak to them whether or not travel is going to be a challenge for them. And so you might ask a question, like, "Can you stand for two hours?" That applicant is in a wheelchair, may say no, because they can't stand and it would end the interview automatically right there. Well, that would be a problem. Back to our topic before about workplace accommodations.

You already ruled somebody out in what would appear to be a discriminatory way. So it's really important to take a look at your entire process. This would be another area where we recommend a pause to take a look at what you're doing now. Compare it to this federal state local rules to make sure that you're taking the proper steps and also continue to monitor the EEOC for updated guidance. They have the artificial intelligence and algorithmic fairness initiative. So on their website, it's really interesting, a lot of good information. They're updating it frequently. So as the EEOC is watching this closely, that means we need to be doing the same as HR professionals and employers.

Then there's the whole topic about, switching from the recruiting piece, but really about—how are you using AI in your workplace and what's your comfort level with employees using it also? And having a discussion and making sure that they know if they can or can't use it. We saw yesterday, right? It's clever. It's so tempting. Are you going to allow employees to use it to create content either internally or externally. Employees may assume that they can use it, unless you tell them otherwise. And some of the things to consider would be—if they can use it, what can they use it for? What sort of information are you comfortable with them entering into any of those tools? Are you comfortable with them entering confidential information about your company? Cause we're not all sure quite where that goes, right? Once it's there, is it out there? And then how about if they are using it, citing it? Will you require them to let you know that's how they've created that content?

So there would be an expectation, I think, if they were doing a web, just a general web search and found a great quote in Inc. Magazine online, and then they quoted it, you would expect it to be cited. It really works the same thing. You could consider it to be working the same thing when they're using some sort of tool whatever your favorite tool is, or their favorite tool is, as a resource. And so again, like really important to document that. And this is another area where what you decide today on this topic, you may think something differently in 90 days. So you'd want to review in six months, in a year. So stay evolving with this topic.

Spring: All right. So we wanted to open up for any questions that you might have. Oh, I'm sorry. Unfortunately, we are at time. It has been just missed the questions. But thank you so much for your attention today. We hope we brought a few items to your spotlight for you and we're so happy that you're here.

Thank you very much.