On August 10, 2022, major changes in Colorado law go into effect for restrictive employment covenants, i.e., covenants not to compete (non-competition covenants) and covenants not to solicit customers of an employee’s former employer (non-solicitation covenants). For many years, Colorado has limited non-competition covenants by statute, Colorado Revised Statutes §8-2-113, which prohibits non-competition covenants with specified exceptions, including when they are part of a contract for sale of a business. The most frequent and heavily litigated exception in the old law permitted an employer to require non-competition covenants for executive and management personnel, and for officers and employees who constitute professional staff to such personnel. Courts and parties frequently wrestled with the question whether an employee had been an “executive” or “management” personnel of the former employer.
Major Changes in Colorado Non-Compete/Non-Solicitation Law Set To Become Effective on August 10, 2022
No Pay Discrimination for Substantially Similar Work, and New Job Posting Rules
On January 1, 2021, the Equal Pay for Equal Work Act (“EPEWA” or “the Act”) becomes effective in Colorado. C.R.S. § 8-5-101 et seq. The Act applies to virtually all employers in the state, regardless of size, and is intended to “close the pay gap” between men and women and “ensure that employees with similar job duties are paid the same wage rate regardless of sex,” which it defines broadly as “gender identity.” The Act has two major parts: (1) Part 1 amends Colorado’s previous equal pay statute by broadening the prohibition against wage discrimination to include paying employees of different sexes less for “substantially similar work”; and (2) Part 2 provides for “transparency in pay and opportunities for promotion and advancement” by requiring employers to announce opportunities for promotion and to disclose wage and benefit information in all job postings.
On July 14, 2020, Governor Jared Polis signed the “Healthy Families and Workplaces Act” (“HFWA”). Last month, we discussed the emergency COVID-19 provisions here. The emergency provisions are effective from July 15 to December 31, 2020. In this Part 2, we will discuss the paid sick leave provisions of HFWA that go into effect January 1, 2021.
On July 14, 2020, Governor Jared Polis signed the “Healthy Families and Workplaces Act” (“HFWA”). Several provisions of this law are effective immediately (July 15, 2020), and require paid sick leave specifically for COVID-19 related issues. Starting January 1, 2021, the HFWA will require that most employers provide their employees with up to 48 hours of paid sick leave per year. This article is Part 1 of a two-part series, and focuses on the immediately effective laws relating to COVID-19. We will discuss the details of the general paid sick leave in Part 2. Governor Polis also recently signed the Public Health Emergency Whistleblower Law (“PHEW”), effective July 11, 2020, which we will discuss briefly below.
On July 8, 2020, the Supreme Court expanded the scope of the “ministerial exception” to employment discrimination statutes. This exception is grounded in the First Amendment’s protections for religious institutions. In Our Lady of Guadalupe School v. Morrissey-Berru, the Court considered two cases involving elementary school teachers in Catholic schools who alleged that they were terminated in violation of federal employment discrimination law. Seven justices joined the majority opinion of the Court, holding that “When a school with a religious mission entrusts a teacher with the responsibility of educating and forming students in the faith, judicial intervention into disputes between the school and the teacher threatens the school’s independence in a way that the First Amendment does not allow.” A link to the full decision of the Court can be found here.
SCOTUS Holds That Title VII Prohibits Discrimination Because of Sexual Orientation and/or Transgender Status
On June 15, 2020, the Supreme Court held that Title VII’s prohibition of “sex” discrimination also prohibits discrimination because of sexual orientation and transgender status. See Bostock v. Clayton County, Case No. 17-1618 (Slip Opinion). Therefore, “an employer who fires an individual merely for being gay or transgender violates Title VII.” Id. at pg. 1.
Last week (April 4-12), several federal agencies issued updated guidance for employers on issues relating to COVID-19, including:
On April 9, the Equal Employment Opportunity Commission (“EEOC”) updated its guidance for employers entitled “What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws,” found here. Previously issued guidance explained that employers may, under pandemic conditions, ask employees about whether they are experiencing certain symptoms. The EEOC further stated that employers may also implement other measures to protect against spread of COVID-19 due to the novel coronavirus in the workplace. The guidance further noted that if employers do receive health information from employees, the information must be maintained confidentially, and consistent with other requirements under the Americans with Disabilities Act (the “ADA”).
The Department of Labor (the “DOL”) issued FAQs regarding the Families First Coronavirus Response Act (the “FFCRA”) and has updated its FAQs multiple times by adding questions to the same document. The FAQs can be found here. The most recent update occurred on March 28, 2020 and addressed many of employers’ questions that were initially left unanswered in the FFCRA and the initial FAQs.
COVID-19 Emergency Paid Sick Leave and Family Medical Leave: An updated notice and more from Department of Labor
As of Friday, March 27, the Department of Labor has issued an updated notice on its website, as well as responses to additional questions about the Families First Coronavirus Response Act (the “Act”). The new notice can be found here: FFCRA Poster. The updated notice clarifies that employees may have a total of up to 12 weeks of leave, paid at 2/3 of pay, to care for a child whose school or place of care is closed (or child care provider is unavailable) due to COVID-19 related reasons.
On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (the “Act”). We outlined the key provisions of this law here. Since the publication of our original article, the Department of Labor Wage and Hour Division, which will enforce the new law, has published updated guidance about the new law. The Department has now clarified that the law will officially take effect on April 1, 2020, and applies to leave taken between April 1, 2020 and December 31, 2020. The new law also requires that employers post notice regarding the new law, and a model notice has been published. It can be found here.
On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act, which goes into effect no later than April 2, 2020. The new law imposes sweeping new emergency paid leave and expanded family medical leave requirements for employers nationwide. Here is a summary of the key provisions affecting employers:
The National Labor Relations Board (“NLRB”) has updated its joint employment rule (the “Final Rule”). The Final Rule, which will be published in the February 26, 2020 Federal Register effectively overturns the joint-employer standard established in the 2015 Browning-Ferris Industries decision, which expanded the definition of joint employer based on indirect or limited control. NLRB Chairman John Ring explained that “[t]his [F]inal [R]ule gives our joint-employer standard the clarity, stability, and predictability that is essential to any successful labor-management relationship and vital to our national economy.”
On November 5, 2019, the Department of Labor (“DOL”) published a proposal to revise regulations governing the fluctuating workweek method of calculating overtime pay under the Fair Labor Standards Act (“FLSA”). This method of calculating overtime may apply if certain conditions are met. These conditions include that the employees paid under this method work fluctuating hours, and they and their employers agree that the employees are paid fixed salary for all hours worked plus an overtime premium. There are very specific requirements for utilizing this method, but utilizing the method in a compliant manner can be complicated due to the need to calculate the regular rate of pay for every week in which the employee works more than 40 hours. Additionally, some state laws prohibit use of this method.
The U.S. Department of Labor/Wage and Hour Division has continued its practice of issuing opinion letters. It recently issued an opinion letter that addresses the question of whether an employee may take FMLA leave to attend a Committee on Special Education (“CSE”) meeting to discuss a child’s Individualized Education Program (“IEP”). See DOL Opinion Letter FMLA2019-2-A.
In the summer of 2019, the Department of Labor (“DOL”) made headlines when Secretary of Labor Alexander Acosta resigned. President Trump then nominated Eugene Scalia for the position, and Mr. Scalia was sworn in as Secretary of Labor on September 30. In recent months, the Senate also confirmed Cheryl Stanton as Administrator of the Wage and Hour Division.
On September 24, 2019, the Department of Labor (“DOL”) issued the final rule (the “New OT Rules”) that updates and revises the regulations which govern the exemptions from minimum wage and overtime pay requirements under the Fair Labor Standards Act (“FLSA”). Employers should carefully review the New OT Rules and the explanatory commentary. See Final Rule Announcement. The New OT Rules are set to become effective on January 1, 2020.
Implementing Individual Arbitration Agreements Does Not Violate NLRA, Even If Done After Collective Action is Filed
As previously discussed on Spencer Fane Human Resource Solutions, an employer can lawfully require its employees to sign individual arbitration agreements with class action waivers as a term and condition of their employment. See Employee Class Action Waivers Held Enforceable (May 22, 2018). However, even if individual arbitration agreements with class action waivers are not, as a general rule, unlawful under the National Labor Relations Act (“NLRA”), can an employer require its employees to sign such an agreement after a collective or class action lawsuit has already been filed against it? The National Labor Relations Board (the “Board”) recently said yes in Cordúa Restaurants, Inc., Case 16-CA-160901 (August 14, 2019).
On June 3, 2019, the Supreme Court held that filing a charge of discrimination is not a “jurisdictional” prerequisite to filing suit under Title VII of the Civil Rights Act of 1964. See Fort Bend County v. Davis, Slip Op. No. 18-525 (June 3, 2019). Although this case deals with what sounds like an obscure legal issue, it is of great practical importance to employers. In short, it means that employers defending against claims of discrimination under Title VII must diligently assert all procedural defenses they may have as early as possible. Otherwise, a failure to assert a defense may allow the plaintiff-employee’s claim to go forward, even if the employee has not technically complied with Title VII’s mandatory charge-filing procedures.
The Supreme Court has further closed the window for employees to pursue class-wide claims against their employers in arbitration. In 2010 the Supreme Court ruled a court may not compel arbitration on a class-wide basis when the arbitration agreement is “silent” on the issue. Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010). Nine years later, presented with an arbitration agreement that, instead of silent, was “ambiguous” regarding the availability of class arbitration, the high court has again demonstrated its preference for individual arbitration. In Lamps Plus, Inc. v. Varela, Case No. 17-988 (slip opinion April 24, 2019), the Court held that ambiguity cannot provide the basis for finding consent to participate in class arbitration.
On April 1, 2019, the Department of Labor (“DOL”) published its third proposal in 30 days to revise regulations interpreting the Fair Labor Standards Act (“FLSA”). The April 1 proposed rule would revise and clarify the test for when multiple employers (known as “joint employment”) can be held responsible for wages under the FLSA. The notice and full text of the rule can be found here.
Under the Fair Labor Standards Act (FLSA), employers must generally pay non-exempt employees overtime at a rate of one and one half times the “regular rate” of pay when they work more than forty hours in a workweek. Overtime cannot be properly calculated unless the employer knows what to include in the regular rate. As benefits, bonuses, reimbursements and other elements of compensation have evolved, greater ambiguity has developed in determining what is included in and excluded from the regular rate. On March 29, 2019, the Department of Labor (“DOL”) published a proposal (found here) to clarify and update several regulations that interpret the regular rate of pay requirement.
On March 7, 2019, the Department of Labor (“DOL”) published a long-awaited proposal for revising the regulations relating to the white-collar exemptions from overtime and minimum wage under the Fair Labor Standards Act (“FLSA”). In the Notice of Proposed Rulemaking (“NPRM”), DOL has proposed increasing the threshold salary amount for certain white-collar exemptions from its current $455 per week (or $23,660 per year) to $679 per week, or ($35,308 per year). In 2015, DOL had proposed increasing this threshold to over $47,000 per year ($913 per week). As we reported here, that proposal was blocked by a federal court in Texas in late 2016.
FAA Not Applicable to Contracts with Transportation Workers, Even If They Are Independent Contractors
In New Prime, Inc. v. Oliveira, the United States Supreme Court held that the Federal Arbitration Act (“FAA”) does not apply to contracts with independent contractors in the transportation industry. This decision is very important for transportation companies because, to the extent a contract with any transportation worker contains a mandatory arbitration provision, the arbitration provision is not covered by, and is no longer enforceable under, the FAA.
As of January 1, 2019, the minimum wage increased in over 20 states. Employers with workers in Arizona, Colorado, and Florida should note the following rates that are effective January 1:
Arizona – $11.00
Colorado – $11.10
Florida – $8.46
On July 17, 2018, the Department of Labor (“DOL”) officially abandoned the “Persuader Rule” by filing a notice of rescission in the Federal Register. The rescission is expected to become effective on or about August 17, 2018 (i.e. 30 days after the rescission notice is published in the Federal Register). This rescission gives employers and certain legal service providers more certainty as to whether their business dealings are subject to the reporting requirements of the Labor Management Reporting and Disclosure Act (“LMRDA”).
On June 27, 2018, the Supreme Court of the United States issued what may be one of its most impactful decisions of the 2017/2018 term in Janus v. American Federation of State County and Municipal Employees, Council 31, Case No. 16–1466. In its opinion, found here, the Court held that laws requiring public sector workers who are not union members to pay union dues would be compelled speech in violation of the First Amendment. This decision reverses nearly forty years of federal precedent, and declares unconstitutional a host of state laws which allow such fee arrangements. It also has significant implications for the manner in which public sector unions collect their dues.
Governor Greitens signed the Missouri Right to Work Bill on February 6, 2017. See Missouri Senate Bill 19. It becomes effective on August 28, 2017 and applies to any new collective bargaining agreements or renewals, extensions, amendments, or modifications after the effective date.