Employer Liability Archives - Page 7 of 12

Colorado Increases Its Criminal Penalty for Violations of Its Noncompete Law

On July 6, 2021, the Colorado legislature passed S.B. 21-271 in an effort to reform the sentencing provisions related to a number of petty offenses and misdemeanors. As a result, several Colorado laws related to labor and employment are affected, including Colorado’s statute addressing restrictive covenant and noncompete agreements, C.R.S. § 8-2-113. Under C.R.S. § 8-2-113, it is unlawful to intimidate workers in order to limit their ability to engage in lawful work; and covenants that restrict trade, such as noncompete and nonsolicitation agreements, are void unless the covenants fit within limited exceptions provided under the statute. Effective March 1, 2022, the penalty for violating the noncompete statute will be increased to a class 2 misdemeanor punishable by up to 120 days in jail, or a fine of up to $750, or both.

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Pay Equity Update: New York City’s New Salary Range Disclosure Law

Several states and localities have passed laws that seek to address pay inequity, based on gender, race and other protected categories. While the intent behind these laws is similar, the laws impose different obligations. New York City is the latest locality to impose a salary range disclosure requirement on employers. On January 15, 2022, the New York City Human Rights Law (NYCHRL) was amended to prohibit employers with four or more workers (including independent contractors) from advertising a job, promotion or transfer opportunity without stating the minimum and maximum salary for the position. The range may extend from the lowest to the highest salary the employer in good faith believes at the time of the posting it would pay for the advertised job, promotion or transfer opportunity. New York City’s salary range law is effective May 15, 2022.

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Benefit Plan Descriptions May Create Unilateral Contracts in Pennsylvania

Written descriptions of employee benefits may expose Pennsylvania employers to additional contractual obligations and liabilities. According to a three-judge Pennsylvania Superior Court panel, providing written descriptions to employees regarding various benefits, incentives and rewards may form a binding, unilateral contract creating rights and obligations separate from an employee’s at-will relationship with the employer.

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U.K. Employment Law Update: Confidentiality Breaches, Anonymous Witnesses and the ‘Last Straw’ Doctrine

Breach of Confidentiality Term in a COT3 Settlement Agreement

In the case of Duchy Farm Kennels v. Steels, the High Court considered whether a term of confidentiality in a COT3 settlement agreement was a condition of the agreement, in which case a former employee’s breach of that term would have entitled the employer to withhold payments due under the agreement. Continue reading “U.K. Employment Law Update: Confidentiality Breaches, Anonymous Witnesses and the ‘Last Straw’ Doctrine”

California Enacts AB 1897 Which Means Greater Liability For Employers Who Use Labor Contractors

On September 28, 2014, California Governor Jerry Brown announced the signing of Assembly Bill 1897, which amends California Labor Code section 2810 by creating a new Labor Code section 2810.3.

The new law targets businesses that obtain or are provided “workers to perform labor within its usual course of business from a labor contractor.” The statute’s definition of “labor contractor” excludes bona fide nonprofits, bona fide labor organizations, apprenticeship programs, hiring halls operated pursuant to a collective bargaining agreement, and motion picture payroll services companies.

Once AB 1897 becomes effective, private employers will be unable to deny liability for labor contractor’s failure to pay all required wages[1] or to secure valid workers’ compensation coverage for contract workers. Employers using the labor services will now “share with the labor contractor all civil legal responsibility and civil liability for all workers supplied” to the company. This liability is imposed without consideration for whether the business had knowledge about the purported violations and irrespective of whether the client employer and labor contractor are joint employers. The statute expressly provides that it does not limit any other theories of liability or requirements established by other statutes or common law.

As a result, employers should be especially cautious in selecting a staffing agency. Companies intending to use labor contractors should evaluate the agency before partnering with it to determine whether the contractor complies with all relevant labor laws. Contracts for labor services should now be entered in with an eye towards limiting the risk of retaining non-compliant contractors.

Aside from performing careful due diligence prior to retaining labor services, there are some practical steps a business can take to minimize its exposure under the new law. While the statute provides that any waiver is contrary to public policy and is unenforceable, a company may contract with a staffing agency for indemnification for the agency’s failure to pay required wages or secure valid workers’ compensation coverage. Thus, it will be important for employers to revise labor service contracts to protect their interests against failures of staffing agencies to comply with the Labor Code.

Current law already prohibits employers from entering into a contract for labor or services with a construction, farm labor, garment, janitorial, security guard, or warehouse contractor, if the employer knows or should know that the agreement does not include sufficient funds. However, the new law is designed to extend liability to employers in nearly all industries for a labor contractor’s failure to pay wages or provide adequate workers compensation. The statute exempts the following from coverage:

A business with fewer than 25 workers (which includes “those hired directly by the client employer and those obtained from, or provided by, any labor contractor”);
A business with five or fewer workers supplied by a labor contractor or labor contractors at any given time; and
The state or any political subdivision of the state, including any city, county, city and county, or special district.[2]

AB 1897 goes into effect on January 1, 2015.

If you have any questions concerning this alert, please contact one of the authors listed above or any other member of Drinker Biddle’s Labor &Employment Group.

[1] The statute provides that the term “wages” shall have the same meaning provided by Section 200 and “and all sums payable to an employee or the state based upon any failure to pay wages, as provided by law.” Labor Code section 200 in turn defines “wages” as including “all amounts for labor performed by employees of every description, whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculation.

[2] AB 1897 was revised significantly from when it was originally proposed. All these exemptions were added through revisions. Also, the enacted version removed language that would have created shared liability for “[t]he failure to report and pay all required employer contributions, worker contributions, and personal income tax withholdings as required by the Unemployment Insurance Code.”

“BAN-THE-BOX” Signed Into Law in New Jersey

On August 11, 2014, New Jersey Governor Chris Cristie signed into law “The Opportunity to Compete Act”, commonly referred to as New Jersey’s “ban-the-box” law, which prohibits employers from asking about the applicant’s criminal history prior to the completion of the first interview. New Jersey is the 6th state, in a growing trend, to pass some form of the “ban-the box” law which is intended to remove obstacles to employment for people with criminal records. New Jersey will join Hawaii, Illinois, Massachusetts, Minnesota, and Rhode Island, all of which have similar laws covering private employers.

New Jersey’s law will become effective on March 1, 2015 and covers both public and private employers operating in New Jersey who employ 15 or more employees. After the first interview, New Jersey employers are free to inquire into the applicant’s criminal background and may ultimately refuse to hire the applicant based on his or her background, so long as the refusal is not based on expunged of pardoned records. In addition to the restrictions on inquiries pre-first interview, the law prohibits employers from publishing job postings or ads stating that it automatically excludes applicants with arrest or conviction records.

The Usual Exemptions

Not unlike other laws, New Jersey’s law provides for several exceptions. The law does not apply to those positions that require criminal background checks by law or regulation, including positions in law enforcement, corrections, the judiciary, homeland security, and emergency management. Also excluded are positions where certain convictions would, by law, either automatically disqualify the applicant or restrict the employer from engaging in certain business activities based on its employees’ criminal records.

Penalties and Preemption of Local Ordinances

A positive for employers is that the law will not spur more employment litigation, because it does not create a private right of action for alleged violations. However, employers who violate the law will be met with increasing fines –$1,000 for the first violation, $5,000 for second violations, and $10,000 for each subsequent violation.

Finally, the law will preempt existing or future local laws – including Newark’s local “ban-the-box” law – that regulate private employers’ use of criminal background checks.

Next Steps for New Jersey Employers

Employers operating in New Jersey should begin working with their Labor & Employment counsel now to review their employment applications, job postings, policies, and employee handbooks to ensure compliance prior to March 1, 2015. Employers should also ensure that training is provided to those individuals involved in hiring and interviewing of potential job applicants. Additionally, employers who operate in jurisdictions within and outside of New Jersey should continue to closely monitor the “ban-the-box” legislations in other jurisdictions as these laws remain a growing trend.

Finally, employers should keep in mind that under guidance issued by the EEOC and a number of state laws, an employer may be required to demonstrate the relevance of a given conviction as a basis for excluding an applicant from employment.