Michigan Court Reinstitutes Higher Minimum Wage and More Generous Paid Sick Time Laws, Effective Immediately

On July 19, 2022, the Michigan Court of Claims ruled that the “adopt-and-amend” strategy the Michigan Legislature used in 2019 to enact minimum wage and paid sick time laws was unconstitutional. Those laws were regarded as more favorable to businesses, but they amended and substantially differed from the voter-initiated laws the Legislature adopted earlier in the same legislative session. For example, the amended laws reduced the increase of the minimum wage from $12 to $10.10 per hour, lowered the required amount of paid sick time from 72 to 40 hours, exempted employers with fewer than 50 employees, and exempted certain employees, such as executive, administrative, professional and outside sales employees. Part-time employees who worked an average of fewer than 25 hours per week were also exempted from the paid sick leave law. The laws are known as the Earned Sick Time Act (ESTA), which the Legislature amended and renamed the Michigan Paid Medical Leave Act (MPMLA), and the Improved Workforce Opportunity Wage Act (IWOWA), which was amended under the same name.

According to the court, the Michigan Legislature has only three options in response to a proposed law initiated by voters: (a) adopt the initiative as presented, (b) reject the petition, or (c) propose an alternative law. The Michigan constitution does not permit the tactic used by the Legislature to amend the voter-initiated laws which, in the court’s review, “effectively thwarted the intent of the People.” As a result, the laws that have governed Michigan employers since 2019 have been “voided,” and the original voter-initiated laws are effective immediately.

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Non-Compete Agreements: Provide Them Ahead of Time – But Don’t Let Them Be Signed

On March 8, 2022, the Fifth Circuit Court of Appeals held that a non-compete agreement was not enforceable because the employer seeking to enforce the agreement had presented it to the employee, and the employee had signed it, before the employee’s first day of work.  A few months later, Colorado Governor Jared Polis signed into law a new statute requiring that notice of a non-compete agreement be provided to prospective employees before they accept an offer of employment.

In finding a non-compete provision must strictly comply with Louisiana law, the court in Rouses Enterprises, L.L.C. v. Clapp, No. 21-30293 (5th Cir. Mar. 8, 2022), found that Louisiana law (LA. REV. STAT. ANN. § 23:921(A)(1)) permits certain non-compete agreements between employers and employees, but not between job applicants and potential employers.  Thus, the court reasoned, a non-compete agreement signed by a prospective employee before her actual date of hire was unenforceable.

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State & Local Employment Law Developments: Q2 2022

Alabama

Leave Benefits for Adoption: Alabama’s Adoption Promotion Act (the Act) takes effect on July 1, 2022 and requires employers with 50 or more employees to provide eligible employees with up to 12 weeks of unpaid family leave for the birth or adoption of a child. The Act also mandates that employers who provide paid leave benefits and additional leave considerations for the birth of a child provide similar benefits for adoption.

Marketplace Contractors: Effective July 1, 2022, marketplace contractors are not considered employees under workers’ compensation and unemployment insurance laws (if certain conditions are met). Marketplace contractors are persons/entities who enter into agreements with marketplace platforms to be connected with third parties seeking services — such as drivers for Uber and Lyft.

Arizona

Expansion of Employer Definition under Sexual Harassment Discrimination: Arizona enacted a change to the sexual harassment provisions of existing employment discrimination law, so that the law applies to any employers or their agents who commit sexual harassment or retaliate against someone for reporting it.

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Supreme Court Clarifies Transportation Worker Exception to Federal Arbitration Act

The Supreme Court unanimously held on June 6, 2022 that airline workers who load and unload cargo from airplanes are exempt from the coverage provided under the Federal Arbitration Act (FAA). Employers commonly use the FAA to compel arbitration where disputes arise under employment agreements containing arbitration provisions. However, Section 1 of the FAA exempts “seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” from the FAA’s coverage. According to the Supreme Court, workers who load and unload cargo onto airplanes fall within that exemption.

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Southwest Airlines Files Challenge to the Colorado Healthy Families and Workplaces Act

Southwest Airlines Co. has filed a complaint for declaratory judgment in the U.S. District Court for the District of Colorado challenging the application of the Colorado Healthy Families and Workplaces Act (HFWA) to its Colorado employees.

The complaint, which names Scott Moss in his capacity as the director of the Colorado Department of Labor and Employment’s Division of Labor and Statistics, along with Philip J. Weiser in his capacity as the attorney general of Colorado, alleges that the application of the HFWA to Southwest employees is preempted by the federal Airline Deregulation Act and the federal Railway Labor Act, and that it violates the Commerce Clause of the U.S. Constitution.

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Supreme Court Decides Viking River Cruises, Inc. v. Moriana

On June 15, 2022, the U.S. Supreme Court decided Viking River Cruises, Inc. v. Moriana, No. 20-1573, holding that the Federal Arbitration Act (FAA) preempts a rule of California law insofar as it precludes agreeing to arbitrate only an employee’s individual claims under California’s Labor Code Private Attorneys General Act (PAGA).

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