FP’s Workplace Law Forecast 2024
Your workplace law recap for 2023 and predictions for 2024 to help you prepare for the coming year.
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TABLE OF CONTENTS
hen I reflect on the relationship that our firm has with our clients, I’m most proud of the fact that you can always count on us. That often means defending complex litigation, steering you through regulatory threats, navigating a thorny workplace situation, helping you win a difficult negotiation, or preserving a level playing field with competitors. But it also means keeping you up to speed on the flurry of legal developments that occur each year and helping you chart a path for the year ahead. W So of all of the hundreds of thought leadership pieces that our talented attorneys publish each year, this one is my favorite. In the pages that follow, you are going to see the full range of knowledge that our attorneys have when detailing the most significant events that happened in the world of workplace law over the past year. And with each summary, you’ll get a plan of action on how you should respond and keep up with the changes. But perhaps more importantly, you’re going to get predictions on what you can expect in 2024. Our attorneys work hard to anticipate what’s around the corner, and here you’ll get our best predictions all in one place. We’re also providing an “AI Focus” section for each area, highlighting the many ways we see artificial intelligence changing the way we work in the coming year – and beyond. It’s easy to join the crowd by simply saying AI is going to change everything. It is much more challenging to break that general prediction down into specific areas of impact you should be watching – but our attorneys have done that for you here. We hope you enjoy thumbing through this report and that it helps you set the stage for a successful 2024. Our attorneys will continue to be forward-thinking in an effort to be a helpful resource as you navigate the coming year.
John Polson Chairman & Managing Partner Fisher Phillips
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Artificial Intelligence
2023 Recap
Congressman Provides Roadmap For Employers While the Senate kicked around ideas for regulating AI during a September forum, attendees at FP’s AI Conference in Washington, D.C., were treated to an exclusive roadmap for AI compliance by Representative Ted Lieu. Employers React to Generative AI Wave 2023 was defined as the year where ChatGPT and other GenAI tools took center stage. And employers were tasked with adapting to this transformative tech almost overnight. We provided a list of ways that HR should be using AI as well as the 10 most important things that need to be included in any workplace AI policy – not to mention a complimentary sample policy for employers. We also crafted the definitive overview on what employers need to consider before using AI notetakers in their organizations. AI Regulation is Starting to Appear The nation’s first law requiring employers to conduct an independent bias audit when using AI tools to hire and promote workers took effect in NYC this July, starting what appears to be an inevitable cascade of new rules and requirements for employers across the country. The next shoe dropped in October when the president’s executive order set into motion the next wave of activity from federal agencies. And while the EEOC might not issue new AI-related rules anytime soon, the federal agency provided a warning in May that AI actions will be closely scrutinized for possible employment discrimination violations. Hollywood Strikes Reinforced Importance of Introducing AI Carefully AI emerged as a key issue in the strikes waged by screenwriters and actors against television and movie production companies, called an “existential threat” to creative professionals. But these labor disputes serve as a learning lesson for successfully incorporating AI into your business models with minimal disruption – and in a mutually beneficial manner for both you and your workforce.
Erica Wilson Associate Pittsburgh ewilson@fisherphillips.com
David Walton Partner Philadelphia dwalton@fisherphillips.com
What Will 2024 Bring?
Integration Will Lead to New Challenges GenAI tools will not only become more powerful, but will become so seamlessly integrated into existing software platforms that they cannot be treated as just a neat optional add- on (let alone ignored). Employers will need to pay much closer attention to their software vendors’ announcements of new AI features and supporting documentation. Explainability will be a household word, and we’re going to see a lot of growth in “AI management” roles. Resistance is futile. Regulation is Inevitable Federal agencies will continue to issue AI-targeted guidance relying on existing frameworks and as required by the recent executive order, but expect to see something new on the books by the end of the year. The question is which agency will get there first. Grand- sweeping legislation from Congress is unlikely in an election year, but we should at least start seeing some proposals of substance. Watch the state legislatures.
Save The Date AI Strategies @ Work Conference Washington, D.C. June 19-20, 2024 Stay tuned for more information about programming and registration – and for a sneak peek at our popular AI Laboratory!
Litigation and Trials
2023 RECAP
2023 Recap
Blockbuster SCOTUS Rulings Impact Employment Practices The Supreme Court continued to shape the workplace law landscape in 2023 by ruling on an array of issues involving religious accommodations, arbitration, union strike misconduct, overtime pay, and more. Additionally, the Court’s affirmative action decision will surely raise workplace-related questions regarding DEI best practices and compliance with anti- discrimination laws, making it essential for employers to stay updated. EEOC Settles Its First-Ever AI Bias Lawsuit As employers adapted to new technology in 2023, federal regulators made clear that existing rules still apply to evolving technology. The EEOC – which is charged with enforcing federal anti-bias laws – recorded its first-ever settlement in a case involving AI discrimination in the workplace. And this settlement certainly won’t be the last. The agency has also launched a broader initiative to ensure AI workplace tools comply with anti-discrimination laws. Federal Appeals Court Expands Scope of Anti-Bias Law The 5th Circuit Court of Appeals – which oversees cases arising out of Texas, Louisiana, and Mississippi – opened the door for plaintiffs to file more discrimination charges and lawsuits. The court ruled that employees are not limited to bringing Title VII claims only when subjected to “ultimate employment decisions” like terminations or applicant rejections. The decision serves as a good reminder to ensure your anti-bias policies and practices are current and effectively administered.
Suzanne Michael Partner Seattle/Portland Litigation Co-Chair smichael@fisherphillips.com
Todd Ewan Partner Philadelphia/Pittsburgh Litigation Co-Chair tewan@fisherphillips.com
Kristen Nesbit Co-Regional Managing Partner Los Angeles California Litigation Co-Chair knesbit@fisherphillips.com
Karl Lindegren Partner Irvine/Los Angeles
California Litigation Co-Chair klindegren@fisherphillips.com
What Will 2024 Bring?
“Nuclear” Jury Verdicts to Increase Employers have increasingly been on the receiving end of massive verdicts from so-called runaway juries in recent years, and this trend will continue in 2024. A groundbreaking study from the U.S. Chamber of Commerce revealed that the jump in eight-figure jury verdicts over the past decade had far outpaced inflation, and this trend reached its peak this past year for workplace trials. Employers need to take compliance more seriously than ever given the risk of massive emotional distress and punitive damage awards. SCOTUS Watch The Supreme Court’s 2023-2024 term is well underway, and we’re watching several cases that will likely impact the workplace, including these four issues: • ADA Accommodation “Tester” Case: The Supreme Court agreed to weigh in on whether a private citizen can serve as a legal “tester” that goes from business to business looking for – and suing for – alleged violations of the ADA, even if they have no intent of patronizing the business. • Lateral Job Transfer in Gender Bias Case: A female police sergeant brought a sex discrimination suit claiming she was transferred to a lateral position in a different district because new leadership wanted to hire a man for her current role. But can a lateral job transfer with no change in pay or benefits be discriminatory? • Limits on Federal Agencies’ Regulatory Power: A longstanding rule known as “Chevron deference” gives the federal agency that administers and enforces laws the power to interpret ambiguities and fill in the gaps – as long as the interpretation is reasonable. SCOTUS has been asked to strike down this deference, which would have profound implications on administrative agencies, including DOL and NLRB. • Proving Whistleblower Retaliation: SCOTUS also accepted a case this term that may clarify the standard for whistleblowers to prove retaliation under the Sarbanes-Oxley Act.
AI Focus
AI Will Continue to Reshape Litigation Fisher Phillips was the first firm to deploy Casetext’s CoCounsel – the AI legal assistant that performs the tasks most valuable to legal professionals in a single, easy-to-use interface – and it has only scratched the surface on what such technology will soon offer. Beyond legal research, document review and drafting, and summarizing large amounts of data, this tech will continue to revolutionize the way litigators perform in and out of the courtroom. But it is also expected to fuel a boom in the number of new case filings against employers as plaintiffs’ counsel – and pro se plaintiffs – will find it easier and more efficient to competently litigate cases.
Labor Relations
2023 Recap
Controversial New Joint Employer Rule Creates Challenges The NLRB released its final joint employer rule in October which, effective February 26, makes it easier for workers to be considered employees of more than one entity for labor relations purposes – a move that will result in more opportunities for unions to organize not only the workforce but also those workers formerly understood to be independent contractors. Workplace Policies Take a Hit The NLRB’s August decision in Stericycle, Inc. dramatically affected employers across the country by changing the law again on employee handbooks. The ruling will lead many employers to once again modify their handbooks to ensure compliance with the latest NLRB mandates. While some employers already review their handbooks on a yearly basis, it may now be important to do so more frequently. Representation Process Overhauled to Boost Union Organizing The NLRB drastically changed how employers should respond to union recognition demands by imposing a bargaining order if the employer fails to file its own petition to preserve a secret ballot election. Further, potential misconduct during the critical period between demand and election that previously resulted in a re-run election may now result in a bargaining order regardless of the election results. The agency’s new “quickie election” rules, effective December 26, will cause employers to wrestle with these issues within a substantially compressed critical period. Employers Grapple with a Flurry of Additional Activity A flurry of additional NLRB activity is part of an ongoing effort by the current Labor Board to make it easier on unions and their ability to organize employees. But you should note that many of these concerns can be mitigated through a proactive and positive employee relations program that underscores the importance of policy audits and supervisory training.
Joshua Nadreau Partner Boston jnadreau@fisherphillips.com
Steve Bernstein Regional Managing Partner Tampa sbernstein@fisherphillips.com
Todd Lyon Partner
Portland/Los Angeles San Francisco/Seattle tlyon@fisherphillips.com
What Will 2024 Bring?
Legal Battle Over Joint Employer Rule Employer advocacy organizations have already initiated legal action in an attempt to derail or block the joint employer rule, and we can expect similar efforts going forward. In the past several years, this strategy has effectively been used to stop finalized regulations related to all manner of workplace-related (and other) issues from taking effect as scheduled. However, you cannot count on this procedural mechanism to be successful given the uncertainties of litigation. Limits on Agency Power The Supreme Court is likely to strike down (or at least water down) the so-called “Chevron deference” this term, which will have profound implications on administrative agencies — including the NLRB — as well as employers dealing with these agencies. Numerous regulations could face legal challenges and be held invalid because the agencies would lose their interpretation power even if the statutes they administer and enforce appear ambiguous. Expansion of Remedies We predict the NLRB will overturn its Ex-Cell-O Corp. decision, which prohibited the Board from issuing any additional remedies besides make-whole relief (such as compensatory damages) for unfair labor practices concerning failure to bargain, and that it will take the opportunity to uphold the General Counsel’s memo restricting mandatory captive audience meetings.
AI Focus
Predictive Analytics Will Aid Employers’ Efforts AI can enable employers to better predict and prepare for union organizing campaigns by analyzing employee sentiment and communication patterns, helping them to proactively address workplace concerns. Employers can also use AI to analyze factors leading to strikes and predict their potential duration and impact, aiding in contingency planning and in making informed decisions about concessions or negotiations.
Data Security and Workplace Privacy
2023 Recap
California’s CCPA Remains Biggest Hurdle for Businesses Businesses caught a big break in 2023 when it came to the nation’s broadest data privacy law – the California Consumer Privacy Act (CCPA) – but many compliance challenges remained. Regulations that were due to take effect on July 1 were delayed until March 2024 thanks to a June court order recognizing the strain that businesses would have faced. But does that mean you should ease up on your compliance efforts? Not at all – and we’ve provided you six key questions to consider as you gear up for March. This is especially important given the state AG’s July announcement of an investigative sweep of whether and how large employers have complied with data privacy and consumer protection requirements as they relate to employees and job applicants. New Law Will Let Californians Hit “Delete” on Their Data California lawmakers passed a new law in September designed to streamline the ability of consumers to request data brokers to delete their personal information in one simple step. Signed into effect by Governor Newsom in October, the Delete Act will give consumers access to a central place where they can submit a single request for deletion of their data by all roughly 500 registered data brokers by 2026. String of States Beefed Up Data Privacy Laws But just because you aren’t covered by California’s laws doesn’t mean you escaped new consumer privacy obligations in 2023. A string of states passed new laws this past year that will add to your compliance challenges in 2024 and beyond, including Delaware, Connecticut, Florida, Iowa, Montana, Oregon, Tennessee, Texas, and Washington.
Usama Kahf Partner Irvine ukahf@fisherphillips.com
Risa Boerner Partner Philadelphia rboerner@fisherphillips.com
What Will 2024 Bring?
More Consumer Privacy Laws To date, 13 states have passed consumer privacy laws, and we expect more to follow suit in 2024. We expect that these new states will follow the post-CCPA trend of excluding employment-related data from protection under these new laws, unlike California, where such data is subject to the CCPA/CPRA requirements. No Federal Law Preempting State Consumer Privacy Laws Despite bipartisan efforts in recent years to pass a federal consumer privacy law, the prospects for passage of any law in the near future are dim. The primary hurdles to passage of a federal law relate to disagreements over preemption of state laws and whether consumers should have private right of action for violations of a federal law. The parties are unlikely to reach agreement in 2024 in a divided Congress that has shown little appetite for cooperation. Remote Worker Oversight Will Remain a Challenge As employers continue to seek out avenues to more closely monitor remote workers, state legislatures will look to laws like New York’s 2022 electronic monitoring law as a model for requiring advance notice and consent. Cybersecurity Once Again Takes Center Stage Ransomware and other cyberattacks will continue to plague businesses small and large in 2024, with vendors – including payroll vendors, a particular concern for employers – becoming a favorite target because of the vast amount of PII often in their possession. Federal regulators will look to increase reporting obligations to ensure that businesses are sharing information relating to these attacks. This will allow government officials to not only to investigate cybersecurity practices for potential violations of legal obligations, but also to gather data that can be sued collectively to help provide guidance to avert future attacks.
AI Focus AI Privacy Issues Take Center Stage
The vast amount of personal data available to AI systems poses a challenge in terms of protecting the privacy of personal information and preventing potential identity theft. Deepfakes and the relative ease of social engineering could make phishing, ransomware, and other cyberattacks more potent. Cyberbullying through AI is already occurring, and employers may find themselves challenged to determine the scope of their potential obligations when disputes arise among employees. Employers may also find it difficult to distinguish legitimate threats and violations of company policy from those that are fabricated through the use of AI. You may need to revisit existing privacy policies to take into account unique challenges posed by AI.
2023 RECAP International Law
2023 Recap
Opportunities Abound in Mexico Mexico has been transformed into one of the best places for outsourcing and expansion by U.S. businesses. This insight summarizes the major changes that have continued into 2023 and how businesses can capitalize on the labor reforms. And as our September Flash Survey revealed, most employers are not yet aware of the opportunities awaiting them there. E.U. and U.S. Agree to Groundbreaking Data Privacy Deal The European Commission paved the path for companies to transfer data freely across the Atlantic in July, ending several years of confusion and delay. The Data Privacy Framework now serves as a long-awaited facilitator for an easy flow of data between the U.S. and Europe. Our Insight provides a three-step action plan. Foreign Corrupt Practices Risks Higher Than Ever With the push to operate across borders, many employers might not know the nuances of the Foreign Corrupt Practices Act (FCPA), a federal law that criminalizes sometimes-common business behaviors. We reviewed the five best practices to minimize your chances of violating the law. Labor Reforms Swept the Globe 2023 was a banner year for labor reforms around the world. We summarized key events in Australia, Qatar, Saudi Arabia, and Japan.
William Wright Partner
Nan Sato Partner Philadelphia/New York nsoto@fisherphillips.com
Philadelphia/Washington D.C. wwright@fisherphillips.com
AI Focus
What Will 2024 Bring?
Increased Use of PEOs and Employers of Record To keep up with the business needs to hire an ever more global workforce, more companies will turn to professional employer organizations (PEOs) and employers of record (EORs) in foreign countries where they have a relatively small workforce. Data Privacy to Be Key Focus Countries that recently enacted new regulations on data privacy law, such as Brazil and China, are poised to step up their enforcement actions in 2024. They may be joined by other countries whose data privacy commissioner’s offices have been idle for a while, such as Mexico. Enhanced Independent Contractor Scrutiny More countries will take a closer look at the large number of independent contractors in their countries working for foreign employers to capture lost tax revenue and better regulate the labor market.
AI Focus
International Operations Benefit from Smart Automation Artificial intelligence will likely be used to replace many virtual assistants and call coordinators currently hired in international jurisdictions. We’ll increasingly see a rise in companies outsourcing highly skilled jobs in their place – computer programmers, designers, data analysts, engineers, developers, and the like.
2023 RECAP Employee Defection and Trade Secrets
2023 Recap
Bombshell: Federal Government Proposes Non-Compete Ban The year started with a bang back in January when the Federal Trade Commission proposed a rule that would ban most non-compete agreements across the country. We summarized the proposal here and followed up with detailed FAQs. Employers were left to play a painful waiting game for the rest of the year as the news emerged that the rule was not scheduled to be finalized until April 2024. We provide a seven-step guide for employers to follow as we continue to wait. Labor Board Counsel Says Non-Competes Violate Federal Labor Law The hits kept coming in May when NLRB General Counsel Jennifer Abruzzo announced that many non-competes violate federal labor law – regardless of whether you have a unionized workforce. She urged NLRB regional directors to find that many employer-mandated non-compete agreements infringe on employees’ rights under Section 7 of the National Labor Relations Act (NLRA), continuing the federal government’s assault on these restrictive covenants. States Pass New Restrictive Covenant Laws Typically, most restrictive covenant action takes place at the state level. And just because the feds took some dramatic action in 2023 doesn’t mean things remained quiet in states this past year. Minnesota banned non-competes in May, California further clamped down on their use with a pair of new laws finalized this fall, and New York stands on the brink of banning non- competes. Meanwhile, Colorado made it more difficult to use nondisclosure agreements in June, and a court decision from Georgia means that employers might find it more difficult to enforce non-solicitation provisions.
Michael Elkon Partner Atlanta melkon@fisherphillips.com
Robert Yonowitz Partner Irvine ryonowitz@fisherphillips.com
What Will 2024 Bring?
Look for Customer-Based Restrictions More states will continue the trend of limiting broad non-compete agreements with their employees. Customer-based restrictions will probably fare better than territorial-based restrictions. Businesses should aim to refocus their efforts on the types of restrictions likely to be upheld by courts in this era of tight scrutiny. Lower Wage Earners to Receive Greater Protections More states will look to minimum-income requirements for which employees can have restrictive covenants imposed on them. This is consistent with President Biden’s view of non-competes – and we may even see the FTC follow that path when it comes to finalizing its non-compete rule. The real question will be what kinds of restraints will be viewed as non-competes.
AI Focus Automated Monitoring and Detection
AI will enhance employers’ capabilities to monitor and detect potential breaches of non-compete agreements and trade secret violations to a new level in 2024. Advanced algorithms can analyze patterns in employee behavior, communications, and data access, alerting you to unusual activities that may indicate a risk of defection or information leakage. Predictive Analytics for Employee Retention AI tools will increasingly be used to predict employee defection before it occurs. By analyzing factors such as job satisfaction, performance metrics, and personal circumstances, AI can provide employers with insights on which employees are at risk of leaving – and possibly violating non- compete clauses. This allows for proactive measures to retain talent or safeguard sensitive information.
PEO and Staffing
2023 RECAP
2023 Recap
PEOs and Staffing Heard “Will You Delete My Data?” in 2023 One challenge many PEOs and staffing agencies faced in 2023 came from a deceptively critical request: “Will you delete my data?” As more people are armed with information about their data privacy rights, and lawmakers and regulators continue to create additional obligations for businesses, this became a crucial challenge to manage this past year – especially since PEOs and staffing agencies face unique challenges given the amount and types of data they maintain. We provided some steps to consider when preparing and responding to such a question. Pay Transparency Rules Created Unique Challenges Pay transparency remained one of the hottest trends impacting the workforce in 2023, and staffing companies and PEOs needed to keep up with new laws and evolving expectations to stay compliant and competitive this past year. This created significant technology challenges for the industry. Pay transparency affects all aspects of workplace relationships – including hiring, recruitment, and retention efforts; supervision and leadership; and compensation and benefits. We gave you three questions to set you on the right path. Employee Benefits and Payroll Tax Served as a Value Proposition Employee benefits are a major part of the value proposition offered by most PEOs and staffing companies. In addition to unlocking access to Fortune-100-style benefits for the employees of small- and medium-sized businesses, PEOs and staffing companies continue to shoulder the extensive compliance burdens of employees benefits, which increase each year with new legislation, such as SECURE 2.0. However, the silver lining of SECURE 2.0 will be the ability of PEOs and staffing companies to enhance the features of their 401(k) plans in ways that will help to attract and retain clients and talent. Payroll tax services are also a key part of the value proposition for PEOs and staffing companies. With the continued payroll tax complexity driven by remote work and payroll tax credits like the ERTC, PEOs and staffing companies will continue to drive business with payroll tax solutions.
Sheldon Blumling Partner Irvine sblumling@fisherphillips.com
John Polson Chairman & Managing Partner Irvine/Los Angeles jpolson@fisherphillips.com
What Will 2024 Bring?
AI Focus Workforce Management Imagine if a robot could handle the routine and repetitive parts of your job – including the ones that are necessary to ensure compliance with a multitude of employment laws? That day is now here. AI can streamline payroll processing and benefits administration – including automated benefits enrollment, payroll calculations, and tax filings – making these processes more efficient and less prone to errors. Performance Management PEOs and staffing agencies can now use AI to analyze employee performance and provide insights to their clients, identifying areas for employee development, optimal team compositions, and improved overall productivity. At the same time, it can help create personalized employee engagement and retention strategies by analyzing employee feedback and behavior patterns, suggesting tailored engagement to enhance job satisfaction and reduce turnover. AI Compliance and Security Challenges The benefits of AI come at a cost. There are massive compliance and security issues for PEOs and staffing companies utilizing AI in their processes, and customer use of AI may create risk that flows upstream to you. Bias issues are rampant with AI use in HR, and regulation is on its way at both the state and federal level. EEOC Commissioner Keith Sonderling recently offered suggestions for employers at FP’s AI Conference on ways to combat AI bias. Data security is also a major concern, as AI complicates your data privacy compliance by creating new types of data and new entry points for hackers to steal your data. AI notetakers are just one example of a new type of threat to be wary of. New Federal Standards Will Impact Joint Employment The NLRB released its final joint employer rule that makes it easier for workers to be considered employees of more than one entity for labor relations purposes in October – a move that will result in increased union organizing and collective bargaining efforts across the country in 2024 and beyond. The controversial rule establishes joint employment not only when one company has the right to exert control over terms and conditions of another company’s employees, but also when evidence exists of reserved, unexercised, or indirect control over any working conditions. This includes not only obvious situations like hiring and firing but also such other conditions as wages, benefits, scheduling, supervising, directing, and disciplining. While it isn’t slated to take effect until late February and could very well be derailed by litigation or even Congressional action, your organization should review our 10-step plan to respond to this rule as soon as possible. As with many legal developments, the new joint employer rule may warrant customer contract and policy modifications. Other Key Trends Will Shape Industry Three significant trends sweeping through the landscape will require PEOs and staffing agencies to stay nimble in the coming year: • An increasing number of states are enacting data privacy legislation, of particular interest to PEOs and staffing due to the enormous amount of sensitive data in their possession. • The federal government is cracking down on restrictions on competition – and not to be outdone, states like California are also ramping up the pressure. • Companies are increasingly looking south of the border to Mexico for solutions to staffing challenges given the key labor reforms taking place there.
2023 RECAP Mergers and Acquisitions
2023 Recap
Common Deal Points in 2023 While deal pace has not recovered to the volume of 2021, this past year saw an increase in active engagement regarding labor and employment issues in small-to-midsized deals. The recurring themes we saw in those deals included: • Evidence of the continued rising importance of Social & Governance issues in diligence • The harmonization of S&G policies and practices that impact employees, including training, remote work policies, DEI, and pay transparency • In both Representations and Warranties Insurance (RWI) and Escrow deals, a heightened concern about not only active wage and hour litigations but also potential weakness in the pay practices of targets • An increasing interest in practical, “real world” experiences with administrative bodies and investigative agencies, labor unions, plaintiffs’ lawyers, and insurers • Exponential growth in multi-jurisdictional analyses, especially resulting from changes in remote work policies • Willingness of acquirers to explore acquisitions including unionized workforces, and a desire to understand how such acquisitions impact the business and workforce • A growing interest in how to position the resulting workforce to deliver results immediately post-closing
AI Focus AI-Driven Due Diligence
Artificial intelligence can be instrumental in conducting thorough and efficient due diligence during deals, particularly in evaluating employee contracts, benefits, compliance with labor laws, and potential liabilities. Predictive Analysis of Integration Success AI can predict the success of post-merger integration, especially concerning workforce integration. Systems can analyze cultural compatibility, employee sentiment, and potential friction points, providing insights for smoother transitions. Automated Assessment of Redundancies and Synergies AI tools can assist in identifying potential redundancies and synergies in the workforce during a deal. This will help decision-makers in planning workforce integrations or reassignments more effectively.
Stephen Mitchell Regional Managing Partner Columbia smitchell@fisherphillips.com
Michael Marra Co-Regional Managing Partner New York mmarra@fisherphillips.com
2023 RECAP Operating in Mexico
2023 Recap
Fisher Phillips Expands into Mexico In response to Mexico’s growing influence in the global economy, Fisher Phillips announced the launch of its first international offices in Mexico in July. The expansion – an anchor location in Mexico City and satellite offices in Guadalajara and the state of Queretaro – is a reflection of the firm’s commitment to expanding its footprint to better serve its clients with interests in the region. Sweeping Labor Reforms Lead U.S. Employers to Spread Their Wings in Mexico Mexico has gone through such sweeping labor reforms in the past few years that it now ranks as one of the best places for outsourcing and expansion. Some employers were still dissuaded from cross- border operations in 2023 due to old misconceptions or outdated notions about what it’s like to do business down there, especially as an employer. It’s time to rethink everything. We’ve summarized what’s changed and outlined the reasons Mexico is now a more attractive place to operate. Most Employers Still Not Aware of Opportunities Awaiting Them A large majority of American employers are still unaware of the opportunities they could seize by doing business in Mexico, but those that have opened up shop south of the border report positive gains in several key areas. That’s according to the results of our FP Flash Survey which gathered information from employers this Fall. Click here to glean information from the results of our survey and what opportunities might lie in store for your organization if you consider expanding into Mexico.
What Will 2024 Bring?
Proposed Legislative Action The Mexican Congress will discuss, during 2024, several initiatives related to employee rights, including the following: • Increase on the Christmas Bonus payment • Remote work, including works related to Digital Platforms • Increase on the Seniority Premium payment • Equal salary and transparency on salaries during the recruitment process • Employers’ obligation to hire a minimum quota of adults over the age of 60 It is important to mention that these are only proposed initiatives presented before the Congress that will need to work their way through the legislative process to determine if they will be executed.
Andrea Brizio Rivas Partner Mexico abrizio@fisherphillips.mx
Germán de la Garza De Vecchi Regional Managing Partner Mexico gdelagarza@fisherphillips.mx
2023 RECAP Healthcare
What Will 2024 Bring?
Labor Organizing To Continue A key trend that carried throughout 2023 will continue into the new year – union organizing at healthcare organizations across the country. Labor unions made gains in the industry in the past year and workers will no doubt continue to build on this success in 2024. Employers will want to remain proactive when it comes to workforce relations to minimize disruptions. No Relief on Horizon for Staffing Shortages Healthcare facilities of all types continued to experience staffing shortages in 2023. We have not seen the type of rebound we would have expected (and hoped for) coming out of the pandemic, especially when it comes to physicians, nurses, and educators. Unfortunately, consulting firms predict we’ll see further declines leading to hundreds of thousands of unfilled jobs by the end of 2024. Alternative staffing models will ease some of the pain for those employers willing to adjust their practices. Wage and Hour Carveouts Could Roll Through Industry A new California law passed on October will raise the minimum wage for nearly all healthcare employees in the state – hourly and salaried – and also including independent contractors. We expect to see other states follow California’s lead and pass similar measures, buoyed by the support of labor unions and worker advocates.
AI Focus Workforce Optimization
AI tools can bring healthcare employers a new level of staffing efficiency by predicting patient inflow and adjusting scheduling as necessary to comply with local laws and minimize worker burnout. AI systems can also create advanced training programs and simulations to enhance workers’ skills and clinical preparedness.
Hannah Sweiss Partner
Laurel Cornell Regional Managing Partner Louisville lcornell@fisherphillips.com
Woodland Hills/Los Angeles hsweiss@fisherphillips.com
2023 RECAP Hospitality
2023 Recap
Balancing Innovation and Compliance Employers in the hospitality industry have been through it all in recent years – from the devastation of the pandemic to ongoing labor shortages to an impending recession. These challenges and dramatic changes continued to shape policies in 2023 as businesses came up with creative ways to recruit, retain, and reward employees. Here’s a look at the top seven wage and hour mistakes hospitality employers make and how can you avoid them as you continue to fine-tune your policies and practices in 2024. New Tip Credit Rule is Here to Stay … For Now A federal court refused to block the DOL’s infamous 80/20 rule in July, which applies to employers that take the tip credit toward their minimum wage obligation under federal wage and hour law. Here’s a brief background on the rule and a 10-step action plan to ensure your wage and hour practices are up to date. New Obligations for Restaurants and Hotels in the Golden State California has long required food handlers in restaurants to obtain certification — and until now, training and testing has been the employee’s responsibility. A new law Governor Newsom approved in October, however, shifts this burden entirely to employers by requiring them to pay their workers for all costs associated with obtaining a food handler card. Additionally, at the local level in Irvine, hotel employers had to implement additional requirements beginning in May under the city’s new Hotel Worker Protection Ordinance – which includes stringent workload limitations for room attendants.
AI Focus Hospitality in Perfect Position to Benefit From AI
All industries have their early adopters, and hospitality is no exception. AI is being used to guide customer experiences, improve efficiency and profitability, and predict what guests are going to want next. In the year ahead, hotels, resorts, restaurants, cocktail bars, spas, cruise lines, and others in the industry will continue to leverage or experiment with AI, which will require a careful balancing act while showing care for your guests. Here are some of the challenges hospitality employers should consider before deploying an AI solution.
Alden Parker Regional Managing Partner Sacramento/San Francisco aparker@fisherphillips.com
Andria Ryan Partner Atlanta alureryan@fisherphillips.com
Pay Equity
2023 RECAP
2023 Recap
Pay Transparency Creates Patchwork of Rules Pay transparency is one of the hottest trends impacting the workforce today, and it affects all aspects of workplace relationships – including hiring, recruitment, and retention efforts; supervision and leadership; and compensation and benefits. A patchwork of new state laws makes multistate compliance complicated, particularly since the details of each law vary. Colorado was the first state to enact a pay transparency law in 2021 and other jurisdictions followed suit. 2023 brought expanded pay equity rules to workplaces in Rhode Island, and New York State’s salary disclosure law took effect in September. Hawaii and Illinois also enacted pay transparency laws this year, which will take effect in 2024 and 2025, respectively. These developments highlight the importance of staying up to date with state and local trends. Will Massachusetts Be Next? The Massachusetts Legislature has recently considered several bills to address pay transparency and pay data reporting in the state. These bills were ultimately combined, and similar versions have passed by both the Massachusetts House and Senate. Although the details were still being worked out at the time of this publication, the near-unanimous support in each chamber means a finalized version is poised to be sent to the Governor. So, employers should start preparing now for new obligations. California Makes Key Changes to Pay Data Reporting Guidelines California employers with at least 100 employees are likely familiar with the pay data reporting requirements that were enacted in 2020. Recent amendments, however, made some significant changes for 2023 – and covered employers should be familiar with updated FAQs on pay data reporting that were issued earlier this year by the California Civil Rights Department (CRD). Here are the four main pay data reporting changes you should review.
Cheryl Behymer Partner Columbia cbehymer@fisherphillips.com
Kathleen Caminiti Partner New Jersey/New York kcaminiti@fisherphillips.com
Cheryl Pinarchick Regional Managing Partner Boston cpinarchick@fisherphillips.com
What Will 2024 Bring?
Expect EE0-1 Reporting Changes Annual EEO-1 reporting is required for nearly all employers with 100 or more employees and for many federal contractors or subcontractors with at least 50 employees. • We anticipate that the EEOC will soon revise the gender reporting categories to give employees an opportunity to voluntarily self-identify as non-binary or a similar category other than male or female. • In addition, the EEOC may revise race/ethnicity reporting to include a category specifically for employees with origins in Middle Eastern countries who have historically been reported as “White.” • We also continue to hear rumors that the EEOC may resurrect the pay data reporting requirement, which is similar to California’s requirement, and was briefly implemented and discontinued at the federal level. Expect More States to Push Pay Transparency and Pay Reporting States will continue to enact pay transparency requirements in 2024, putting pressure on multistate employers to develop uniform pay disclosures for job postings and advertisements. In addition to Massachusetts, be on the lookout for pay transparency legislation in New Jersey and other states known for robust pay equity and anti-discrimination laws. Meanwhile, other states may soon follow the lead of California and mandate pay reporting. New York, New Jersey, Massachusetts, Illinois, and Washington are the most likely to jump on the bandwagon.
AI Focus
Get Ready for Even Greater Enforcement Efforts As employers explore innovative ways to use Generative AI in the workplace, the EEOC has warned that an improper application of AI could violate federal anti-discrimination laws. In 2024, employers facing discrimination charges may see more requests to provide specific details about any AI or software used to set initial compensation, monitor compensation for existing employees, or ensure that compensation is equitable following a promotion.
Workplace Safety
2023 RECAP
2023 Recap
OSHA Turned Up the Heat in 2023 Right out of the gate, federal workplace safety officials signaled to employers that 2023 was going to be a challenging year. Not only did OSHA announce new enforcement guidance in January to “stop employers from repeatedly exposing workers to life-threatening hazards or fail to comply with certain workplace safety and health requirements,” the agency also boosted maximum penalty amounts for safety violations that same month. End of the COVID State of Emergency It might seem like forever ago, but the COVID-19 national and public health emergencies officially ended in May when two dual emergency declarations expired. You should make sure you have followed our step-by-step plan to make sure your workplace has properly adapted to the current environment. Inter-Agency Cooperation Means Heightened Scrutiny Federal labor and workplace safety officials entered into a partnership to bolster whistleblower protections, which means employers should prepare for increased safety and health enforcement efforts. Specifically, the National Labor Relations Board (NLRB) and OSHA announced in October that they will enhance information sharing and cross-agency consultations, training, outreach, and education to promote safe and healthy workplaces and protect workers who speak out about unsafe working conditions.
Todd Logsdon Partner Louisville tlogsdon@fisherphillips.com
Travis Vance Regional Managing Partner Charlotte tvance@fisherphillips.com
What Will 2024 Bring?
New Electronic Recordkeeping Rule to Take Effect As of January 1, the new electronic recordkeeping rule will take effect – and will change the game for employers across the country. Not only will more employers be considered to be operating in “high-hazard” industries, but the rule will create new obligations for many other employers. Here are our six key points and a three-step action plan to follow. Get Ready for Union Walkthroughs OSHA issued a proposed rule in August that will give a designated union representative the right to accompany an OSHA inspector during a facility walkaround — regardless of whether the representative is your employee or the facility is a union shop. We expect this rule to take effect by the middle of 2024. Here’s what you need to know about this proposed and the seven key steps you can take to prepare. California Employers Need to Develop Workplace Violence Prevention Program California lawmakers passed a new law this past legislative session that will impose significant obligations on almost all non-healthcare employers in the state by July 1. The centerpiece: each employer will need to create and implement a written Workplace Violence Prevention Plan, train employees and supervisors on workplace violence matters, create and maintain a violent incident log, and keep records of all training and violent workplace incidents that occur. Here are the top five steps you should take to comply. Expect Criminal Referrals OSHA has been increasingly aggressive in referring workplace safety matters to the federal Department of Justice or local state criminal prosecutors. This arises most often when a supervisor provides damning testimony about workplace safety concerns to OSHA and the agency provides a copy of the statement or recording of the interview to a prosecutor. Knowing how to defend against such prosecutions will be a crucial skill for employers in 2024 given the current regulatory climate.
AI Focus Workplace Safety to Get Boost from Artificial Intelligence
AI will not only continue to revolutionize risk assessment by analyzing data from equipment sensors, environmental conditions, and historical accident reports to identify potential hazards before they result in accidents, 2024 will see an increase in AI-enabled monitoring systems to provide real-time surveillance of workplace conditions. Modern systems can detect anomalies such as gas leaks, structural weaknesses, or unsafe worker behaviors, and immediately alert relevant personnel to take corrective action.
Wage and Hour
2023 Recap
USDOL Proposes Significant Hike to Exempt Salary Threshold Employers need to review their pay practices and plan for potential changes in light of the Labor Department’s August proposal to raise the salary threshold for exempt employees, which could make more of your employees eligible for overtime premiums. The USDOL intends to raise the exempt salary threshold from $684 per week to at least $1,059, meaning employees would need to earn $55,068 or more per year to be exempt from OT pay. Highly Paid Employees Could Be Entitled to Overtime Pay High-earning workers making more than $200,000 a year might be eligible for overtime pay thanks to a Supreme Court ruling from February. The Justices said an oil rig worker was eligible for overtime pay because he was not paid on a “salary basis.” The decision is a wake- up call for all employers to review their OT exemptions to ensure they are compliant with applicable federal and state requirements. Focus on State Wage Payment Laws State and local wage payment laws continued to challenge employers as they endeavored to comply. Many states have minimum wage requirements that are significantly higher than the federal mandate. Some states also have very particular rules on notice, pay statements, and frequency, which have led to an abundance of litigation, including double and triple damages.
Kathleen Caminiti Partner New Jersey/New York kcaminiti@fisherphillips.com
J. Hagood Tighe Partner Columbia htighe@fisherphillips.com
What Will 2024 Bring?
Get Ready for the New Overtime Rule Although it’s just a proposal at this point, we expect the USDOL to prioritize the revised federal overtime rule and move swiftly to finalize the new exempt salary threshold. We anticipate that business groups or states opposing the proposal will file litigation in business-friendly jurisdictions like Texas or Florida in an attempt to sidetrack or derail the rule completely. But you can’t count on this happening, so you’ll need to prepare as if it the proposal will take effect. Expect More Agency Partnerships The USDOL will continue to partner with other agencies (NLRB and EEOC) in investigations and data sharing. And their counterparts in states with robust wage and hour laws will continue to aggressively enforce these laws. Focus on Child Labor Laws Federal and state enforcement of child labor laws will continue. The USDOL reported a 70% increase in the number of children illegally employed by companies in recent years. Businesses that relied on minors in response to worker shortages that were unaware of or failed to adhere to the strict restrictions on child labor will continue to face hefty penalties. And recently proposed bills in Congress would significantly increase the civil and criminal penalties. Monitor for FLSA Joint Employer Updates During the Trump administration, the USDOL issued a joint employer rule that briefly created a more business-friendly standard making it harder for employees to prove joint employment for the purpose of wage and hour litigation. The current USDOL formally rescinded the rule but has yet to announce any plans to propose a new rule. We’ll be monitoring this area for potential changes in the coming year, as things could move fast once they’re initiated. AI Focus Predictive Analysis Will Change the Game AI tools are capable of predicting periods of high overtime and labor demand, allowing employers to manage staffing levels proactively. Automation Saves the Day AI-driven scheduling tools – taking into account employee preferences, business needs, and applicable laws – can optimize workforce management. AI systems can also track working hours, calculate overtime, and process payroll with precision, reducing human error and ensuring legal compliance. And AI can also assist in accurately classifying employees as exempt or non-exempt under federal and state law, reducing the risk of misclassification.
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