On November 13, 2024, the National Labor Relations Board issued a decision that overturned a  ruling previously in effect for 76 years, Babcock & Wilcox Co., 77 NLRB 577 (1948), in which the Board had held employers were allowed to conduct “captive-audience meetings” during union organizing campaigns.  

In Amazon.com Services LLC, NLRB Case No. 29-CA-280153 (https://apps.nlrb.gov/link/document.aspx/09031d4583e96e24), the Democratic members of the Board, with the sole Republican member dissenting, voted to reverse seventy plus years of Board law and make it illegal to require employees, under threat of discipline or discharge, to attend meetings in which the employer expresses it views on unionization.

The Board stated that captive-audience speeches, regardless of whether an employer uses them to express support for or opposition to unionization, violate the protections afforded employees under the National Labor Relations Act to freely choose whether or not to participate in the discussion about unionization, and the decision whether or not to unionize:

The employer’s ability to require attendance at the meeting demonstrates the employer’s economic power over the employees and reasonable tends to inhibit them from acting freely.

[W]hen employers compel employees to attend captive-audience meetings under threat of discipline of discharge, they force them to participate, at least as listeners, in the debate concerning union representation…exercising the power to compel attendance is quintessentially conduct by which employers “interfere with” employees’ exercise of their own Sectin 7 rights.  Id. at p. 14.

The Board further explained its action by stating:

An employer can observe employees at these meetings, seeing, among other things, with whom they associate and how they react to what they hear.  An employer can silence, or even banish, employees who would express their own views or even just ask questions.  It should be clear, then, that a captive-audience meeting is an extraordinary exercise and demonstration of employer power over employees in a context where the Act envisions that employees will be free from such domination.  We thus prohibit captive-audience meetings.  Id. at p. 12.

While this ruling may have taken a major tool out of an employer’s arsenal during union organizing campaigns, the Board did provide employers with a “safe harbor”:

[A] employer will not be found to have violated Section 8(a)(1) if, reasonably in advance of the meeting, it informs employees that:

1.   The employer intends to express its views on unionization at a meeting at which attendance is voluntary;

2.   Employees will not be subject to discipline, discharge, or other adverse consequences for failing to attend the meeting or for leaving the meeting; and

3.   The employer will not keep records of which employees attend, fail to attend, or leave the meeting.

Id. at p. 19 (emphasis added).

Although the Board further held that this new standard will only be applied prospectively, the new standard may nevertheless not have a long shelf-life, as it is expected that the new administration will make changes once President Trump is back in office, and likely restore some of the power to employers that they lost under the Biden administration.

If you have questions about the Labor Board’s ruling or captive-audience speeches, or a general labor or employment question, feel free to contact Joel Hlavaty or any member of Frantz Ward’s Labor & Employment Group.

In July 2024, the Equal Employment Opportunity Commission (“EEOC”) filed suit against Cotti Foods Corporation after it allegedly failed to file EEO-1 reports between 2021-2023, despite repeated notice. Last month, the parties entered into a consent decree under which Cotti Foods is required to file three years’ worth of past-due data within 30 days, appoint an EEO-1 reporting monitor to ensure reports are filed on time in the future, and allow the EEOC to monitor its compliance with the decree for the next five years (including inspections of its premises, employee interviews, and production and inspection of its records).

Don’t be naughty like Cotti—use this recent settlement as a cautionary tale to properly collect and file timely EEO-1 reports.

EEO-1 Reporting Basics

Under Title VII, covered employers are required to submit EEO-1 data, which consists of the racial/ethnic and gender composition of their workforce by specific job categories. A company must submit EEO-1 data to the EEOC if it:

  1. Employs more than 100 employees;
  2. Employs less than 100 employees but is owned, affiliated with, or controlled by a company with more than 100 employees overall; or
  3. Employs 50 or more employees AND has a federal contract/subcontract over $50,000.

Full-time and part-time employees should be included in the above employee counts. If a company has more than one establishment, it must submit headquarters, establishment-level, and consolidated reports.

Data Collection and Reporting

A company must include data from a “workforce snapshot period,” which can be any pay period from October 1st through December 31st. Only employees on the payroll during the snapshot period are counted. If an employee was employed during the snapshot period, they must be included, even if they resigned or were terminated during or after this same period.

Filling out the EEO-1 report itself is simple—what employers often find difficult is collecting the data. Covered employers should incorporate the collection of demographics data into their onboarding practices to avoid challenges collecting data during the snapshot period. Organizing each job title into one of the EEO-1 job classifications will also prove helpful. For those companies using third-party vendors to assist with these processes, it important to clearly communicate to employees that the company is legally required to collect and report the data, and that it will be kept confidential. Finally, make sure that EEO-1 data is stored separately from employee records.

The deadline for filing EEO-1 reports in 2025 has yet to be released, but will likely be in the spring. If you have any questions about EEO-1 reporting requirements, please contact one of Frantz Ward’s Labor & Employment attorneys.

On Monday, October 7, 2024, the General Counsel of the National Labor Relations Board (NLRB) published Memorandum GC 25-01, continuing the NLRB’s years-long effort of targeting employment agreements viewed as restricting employee mobility. General Counsel Abruzzo’s previous May 2023 memorandum took the position that the maintenance and enforcement of non-compete provisions violates the National Labor Relations Act (NLRA) due to their “chilling” effect on non-management employees’ Section 7 rights.

The most recent memorandum issued on October 7 expands the NLRB’s position by now including stay-or-pay provisions as similarly violative of the NLRA as well as additional information regarding remedies for unlawful activity. The NLRB’s General Counsel gives employers until December 6, 2024, to bring any existing stay-or-pay provisions into compliance with these new guidelines.

Stay-or-Pay Provisions are Presumptively Unlawful

General Counsel Abruzzo defines “stay-or-pay” as “any contract under which the employee must pay their employer if they separate from employment, whether voluntary or involuntary, within a certain timeframe.” Stay-or-pay provisions often encompass training repayment agreements, education repayment contracts, sign-on bonuses, retention bonuses, or other arrangements where employees must pay their employer if they voluntarily or involuntarily separate from employment. The NLRA and this recent guidance apply to all employers and all non-management employees, regardless of whether there is a union presence.

The memorandum notes that these arrangements interfere with, restrain, or coerce employees in exercising rights guaranteed by Section 7 of the NLRA. General Counsel Abruzzo’s stated concern is that employees are less likely to engage in union organization, collectively advocate for improvements, or concertedly threaten to quit out of fear that termination would trigger a payment obligation. General Counsel Abruzzo urges “the Board to find any provision under which an employee must pay their employer if they separate from employment, whether voluntarily or involuntarily, within a certain timeframe [as] presumptively unlawful.”  (emphasis added)

How to Salvage Stay-or-Pay Provisions To Meet the NLRB’s New Guidelines?

As noted above, the General Counsel urges the NLRB to find these provisions presumptively unlawful. However, General Counsel Abruzzo states that an employer may rebut this presumption by proving the stay-or-pay provision advances a legitimate business interest and is narrowly tailored to avoid infringement, such that the provision: (1) is voluntarily entered into for an exchange for a benefit; (2) contains a reasonable and specific repayment amount; (3) contains a reasonable stay period; and (4) does not require repayment if the employee is terminated without cause.

What are the proposed remedies?

General Counsel Abruzzo’s position is that employees should be made whole for unlawful non-compete and stay-or-pay provisions. Her position is that all an employee must demonstrate is that: (1) there was a vacancy available with a better compensation package; (2) they met minimum qualifications for the job; and (3) they were discouraged from applying for or accepting the job because of the unlawful provision. If an employee can establish these elements, it is the General Counsel’s position that the employee must be compensated for the difference in pay or benefits, regardless of whether the employee was even considered or offered a position.

Next Steps

General Counsel Abruzzo’s memorandum is not binding law, but simply her interpretation of the NLRA.  However, NLRB field offices will likely adopt this guidance in their prosecution efforts.  Legal challenges to the NLRB’s authority to promulgate new enforcement guidelines must wait until the proposed prosecution efforts begin in early December.  Until then, the November elections will provide a significant hurdle for the NLRB, as a new administration will likely replace the leadership and provide a new direction for its prosecutorial aim.

In the meantime, employers are advised to review “stay-or-pay” provisions in current agreements and determine if they include unreasonable stay periods, unreasonable repayment amounts, or require repayment if the employee is terminated without cause.

Please contact an attorney in Frantz Ward’s Labor and Employment Practice Group if you have questions about this or other labor and employment issues.

A federal judge on Tuesday blocked the FTC’s controversial ban on noncompete agreements. The judge’s ruling ends months of speculation and prevents the FTC’s near-total ban on noncompete agreements from taking effect as planned on September 4.

Tuesday’s ruling came from US District Judge Ada Brown in connection with a case filed in Dallas by the US Chamber of Commerce. Judge Brown ruled that the FTC’s ban was “unreasonably overbroad” and that the FTC lacked the authority to enact it.

The FTC may appeal Tuesday’s ruling, but its noncompete ban will almost certainly remain blocked in the meantime.

The Labor and Employment Practice Group at Frantz Ward will continue to monitor this situation closely. If you have questions about this or other labor and employment law issues, contact Brian Kelly or another member of the group.

On April 29, 2024, in response to an Executive Order issued by President Biden last October, the Office of Federal Contract Compliance Programs (“OFCCP”) of the U.S. Department of Labor issued guidance to federal contractors on the use of artificial intelligence (“AI”) in order to address, “AI in the Equal Employment Opportunity (EEO) context.”. This Guidance follows previously reported guidance and actions issued and taken by the U.S. Equal Employment Opportunity Commission (“EEOC”) and the U.S. Department of Justice (“DOJ”) on which Frantz Ward has previously reported:

  • In May of 2022, we reported that the EEOC and DOJ issued guidance to employers, employees and applicants on the use of artificial intelligence tools.
  • In February 2023, we reported that the EEOC had held a public hearing in January 2023 to examine the use of automated systems, including artificial intelligence, in employment decisions.
  • In August 2023, we reported that as part of its aggressive stance against companies that utilize AI software,  the EEOC had reached a tentative settlement of its first discrimination suit based on the use of AI software. EEOC v. iTutorGroup, Inc., E.D.N.Y., No. 22-cv-02565 (2022).

This new OFCCP Guidance, “answers questions and shares promising practices … to clarify federal contractors’ legal obligations, promote EEO, and mitigate the potentially harmful impacts of AI in employment decisions.” While the OFCCP Guidance is directed at federal contractors, it also serves as a roadmap for how the OFCCP is going to address the use of AI in the private sector. For example, in discussing common questions about the use of AI in employment decisions, the Guidance makes it clear that employers need to adhere to OFCCP requirements with respect to maintaining records and confidentiality, as regardless of whether an employer develops its own AI system or uses that of a third-party, the employer is ultimately responsible for meeting their nondiscrimination and affirmative action obligations. The Guidance also emphasizes the need of employers to make reasonable accommodations of applicants and employees with known physical or mental disabilities.

The Guidance additionally discusses at length several “Promising Practices” for the development and use of AI in employment decisions. The OFCCP states that, “while not expressly required [these Promising Practices are] actions contractors may consider to help avoid potential harm to workers…” It further states that the Promising Practices are “not an exhaustive list, but rather an initial framework.” The Promising Practices include:

  • Providing advance notice and appropriate disclosure to applicants of the use of AI and the data to be captured and used, and informing applicants how to request and obtain reasonable accommodation in the hiring process.
  • Standardizing for all applicants any AI system that is used, routinely monitoring such system to ensure there is no disparate impact, and not relying solely on AI to make employment decisions.
  • Vetting and managing any AI vendors that an employer may use.

If you have questions about the OFCCP’s Guidance or the use of artificial intelligence, or a general labor or employment question, feel free to contact Joel Hlavaty or any member of Frantz Ward’s Labor & Employment Group.

Recent decisions and settlements from the National Labor Relations Board should serve as a not-so-friendly reminder to ensure that your severance agreements and employee handbooks do not run afoul of the National Labor Relations Act.

Severance Agreements
In June 2024, the Board held that a company violated the NLRA by including non-disparagement and confidentiality provisions in a severance agreement. Prime Communications LP entered into a severance agreement with former employee Spencer Smith (and entered into similar agreements with at least 3 other employees) that included the following terms:

  • Smith must “refrain from making disparaging, defamatory, negative or other similar remarks concerning Prime” except when required by law or in connection with a legal proceeding;
  • “This non-disparagement provision is intended to be as broad as possible and to include the written publication of any information related to Prime … whether true or untrue”;
  • Smith is “prohibited from calling, making personal contact with or, emailing any employee of Prime Communications at any location”;
  • Smith must “promise[] that he will maintain in confidence the terms and existence of this Agreement and will not disclose the existence of this Agreement or its terms to anyone else” except his spouse, tax advisor, or attorney; and
  • In the event of threatened or actual breach of the agreement, Prime is entitled to $5,000 for each breach, plus attorney fees and costs.

The Board, applying its 2023 McLaren Macomb decision, held that the provisions were potentially coercive and had a “chilling tendency” on Smith’s rights under the NLRA. (Click here for more on McLaren Macomb.) Specifically, the Board noted that the agreement: would preclude Smith from assisting former coworkers who may be interested in challenging similar agreements or involved in any other employment dispute; was not narrowly tailored because it was “intended to be broad as possible;” and could coerce Smith from filing an unfair labor practice charge or assisting with a Board investigation for fear of having to pay $5,000 for each covered disclosure.

As a reminder, the Board has suggested that their reasoning could also extend beyond severance agreements to similar provisions in non-compete agreements, employment agreements, offer letters, and more. This case is a “Prime” example of the Board’s application of McLaren Macomb to invalidate agreements with provisions routinely used by companies.

Handbook Provisions
In March 2024, the Board secured a $297,000 settlement against Hilst Enterprises, Inc. (dba La-Z-Boy Furniture Galleries) based on an unfair labor practice charge filed by a former employee who had been unlawfully laid off in retaliation for engaging in protected concerted activity. This settlement illustrates the Board’s 2023 decision in Stericycle Inc. in action, which prohibits work rules that chill employees’ exercise of their rights under the NLRA unless they are narrowly tailored to promote legitimate business interests. (Click here for more on Stericycle, Inc.)

Here, the Board held that Hilst maintained unlawful work rules prohibiting employees from discussing wages, hours, and working conditions. The employee handbook included “salary information” in its definition of “sensitive company information.” Additionally, an attachment to the employee handbook read: “Your salary is a confidential matter between us and you. Your continued employment is dependent upon that confidentiality; and any discussion of salaries between employees will be reason for dismissal.”

This settlement serves as a powerful reminder to not be a La-Z-Boy, and review employee handbooks and other work rules to ensure that they do not prohibit employees from discussing (with each other or others) their wages or working conditions – which they are entitled to do under the NLRA.

Employers – both union and non-union – are advised to heed the Board’s recent activity as a warning and review existing severance agreements, employee handbooks, and other agreements to ensure that they do not prohibit conduct protected by the NLRA. Please contact one of Frantz Ward’s labor & employment attorneys with any questions.

On Wednesday, July 3, 2024, a federal judge in Texas blocked the Federal Trade Commission’s rule that seeks an almost complete ban of non-compete agreements. In her ruling, Judge Ada Brown of the United States District Court for the Northern District of Texas granted the plaintiffs Motion for a Preliminary Injunction, delaying the effective date of the rule, but only as to the plaintiffs in the case before her. In doing so, Judge Brown noted that the FTC had exceeded its authority in issuing the Rule and that the lawsuit filed by the U.S. Chamber of Commerce and other business groups was “likely to succeed on the merits.”  Notably, the judge refrained from blocking the rule on a nationwide basis, at least for the time being.

The FTC’s rule, which would ban nearly all non-compete agreements and provisions, is currently set to take effect nationwide on September 4, 2024. While the Texas lawsuit will proceed and appeals are likely to follow, the judge’s order certainly calls into question the viability of the FTC’s rule. Judge Brown could still choose to issue a nationwide injunction as the case proceeds and another federal court in Pennsylvania is scheduled to rule on a similar request for an injunction by July 23, 2024. Uncertainty around the FTC’s rule is further underscored by the upcoming presidential election and the possibility of a new administration that may choose to scuttle the FTC’s efforts altogether.

For the time being, employers should continue to monitor developments but avoid taking any drastic actions in response to the FTC rule, as it now appears to be on precarious legal footing. Employers should continue to be mindful, however, of any state and local laws that may limit or prohibit an employer’s use or enforcement of restrictive covenants, including non-compete agreements. Please contact Mike Chesney or any other members of Frantz Ward’s Labor and Employment Practice Group with questions.

The Equal Employment Opportunity Commission’s (“EEOC”) focus on harassment in the workplace – and construction employers specifically – is no secret. The EEOC’s Strategic Enforcement Plan (“SEP”) for 2024-2028 specifically mentions construction as an industry where barriers in recruitment and hiring are of specific concern and includes combatting systemic harassment as one of the EEOC’s enforcement priorities. Among other recent and significant activity on the issue of harassment, the EEOC updated its Enforcement Guidance on harassment in the workplace in April 2024. And just last week, the Commission published “promising practices” specifically directed to construction employers on preventing harassment in the workplace.

The guidance summarizes the EEOC’s rationale for generating this new guidance and highlights the number of charges filed with the EEOC that included allegations of harassment between fiscal years 2019 and 2023 (over one third of all Charges), the egregious incidents of harassment investigated by the EEOC in the construction industry, and the need to frame harassment as a workplace safety issue.  It also identifies a number of risk factors particular to the construction industry that may increase the likelihood of harassment, including “workforces that are primarily male, workplaces where there is pressure to conform to traditional stereotypes, and decentralized workplaces.”  It notes that these risk factors are often “exacerbated by the presence of multiple employers on a worksite and the cyclical, project-based nature of construction.”

The guidance also reiterates “five core principles” to prevent and address harassment that are found in the EEOC’s 2023 guidance directed to federal agencies and provides detailed explanations and recommendations for each: 1) committed and engaged leadership; 2) consistent and demonstrated accountability; 3) strong and comprehensive harassment policies; 4) trusted and accessible complaint procedures; and 5) regular interactive training tailored to the audience and the organization.

The EEOC’s overarching and repeated theme, however, is the “shared responsibility of fostering a harassment-free workplaces” and the need for general contractors to take on “coordination and leadership roles” on harassment issues at job sites. The document is replete with recommendations, including providing site-wide harassment training, monitoring subcontractor and staffing agency adherence to harassment policies, and “review[ing] each [subcontractor/entity’s] policy for content and overall alignment [and consistency]” across the job site.

This guidance has significant implications for construction employers, particularly in light of the National Labor Relation’s Board’s new Joint-Employer Rule under which two entities will be considered joint employers (and jointly liable) if they share or co-determine an employee’s “essential terms and conditions of employment” – defined by the Final Rule to include not only “working conditions related to the safety and health of employees,” but also “work rules and directions governing the manner, means and methods of the performance of duties and the grounds for discipline.”  Construction employers must, therefore, walk the fine line of taking steps to prevent workplace harassment while avoiding policies and practices that might lead to a joint employer finding.

In light of the flurry of recent activity at multiple federal administrative agencies under the Biden Administration, and the corresponding uptick in enforcement anticipated by these agencies, construction employers would be well-advised to review their contracts at multi-employer job sites, ensure comprehensive harassment training is completed, and ensure their harassment policies are reviewed for compliance with the EEOC’s “promising practices” guidance. Please contact Christina E. Niro and Frantz Ward’s Labor & Employment Practice Group with questions or for assistance.

On Tuesday, the Federal Trade Commission (“FTC”) issued its long-awaited final rule regarding non-compete agreements. The FTC determined that non-compete agreements are an unfair method of competition and, therefore, a violation of the FTC Act. Once the rule is effective, employers may not enter new non-compete agreements with employees or enforce existing non-compete agreements against former employees, other than senior executives. The rule only applies to businesses that are subject to the FTC Act, which generally does not include non-profit corporations.

The rule has a few exceptions to the non-compete ban, which are outlined below:

  1. Senior Executives: Existing non-compete agreements with senior executives remain enforceable. However, employers may not enter new non-compete agreements with senior executives. A senior executive is a worker earning more than $151,164 annually who is in a “policy-making position.” The FTC makes clear that this exception is very narrow. The definition is meant to include high-ranking positions such as the President or Chief Executive Officer of an organization, and the FTC estimates that less than 1% of workers in the country meet this definition.
  2. Sale of a Business: The ban on non-competes does not apply to non-compete clauses that are entered as part of a sale of a business entity, a person’s ownership in a business entity, or substantially all of a business entity’s operating assets.
  3. Current Cause of Action: If you have a cause of action currently pending regarding a former employee’s violation of a non-compete agreement, you may still pursue the cause of action.

Prior to the rule’s effective date, employers must provide notice to employees (other than senior executives) who are currently bound by a non-compete provision that the employer will not be enforcing the non-compete provision. The FTC has provided a model notice available here.

The rule is set to go into effect 120 days from its publication in the Federal Register. However, it is expected that various business groups will quickly file suit to challenge the rule, which will delay the effective date.

While non-compete agreements may be in limbo, employers can still use confidentiality agreements, non-solicitation agreements, and federal and state trade secret laws to protect their interests. But do not forget to check for any state-specific restrictions regarding confidentiality and non-solicitation agreements.

The Equal Employment Opportunity Commission (“EEOC”) has finalized its regulations for the Pregnant Workers Fairness Act (“PWFA”), which went into effect last summer. After issuing a Notice of Proposed Rulemaking in August 2023, summarized here, and a notice and comment period, the EEOC published the Final Rule in the Federal Register on April 19, 2024.

As previously reported, the PWFA is modeled after the Americans with Disabilities Act (“ADA”) and requires employers to make reasonable accommodations based on known limitations related to pregnancy, childbirth, or related medical conditions. Employers are not required to grant an accommodation request if it imposes an undue hardship. The terms “reasonable accommodation” and “undue hardship” have the same meaning as under the ADA and employers should follow the same interactive process after receiving a request for an accommodation.

Below are significant points from the final regulations:

  • Lactation, miscarriage, stillbirth, episodic pregnancy-related conditions (such as morning sickness) and “having or choosing not to have an abortion” are readily apparent medical conditions related to pregnancy or childbirth for which employees can seek reasonable accommodations.
  • Reasonable accommodations can include: additional breaks to drink water, eat, or use the restroom; a stool to sit on while working; reserved parking; modification of equipment or uniforms; time off for health care appointments; temporary reassignment; temporary suspension of certain job duties; telework; or time off to recover from childbirth or a miscarriage, among others.
  • Time off is unpaid, unless employers’ policies indicate otherwise.
  • Early and frequent communication between employers and employees is encouraged in order to raise and resolve requests for reasonable accommodation in a timely manner.
  • Employers are not required to seek supporting documentation when an employee asks for a reasonable accommodation under the PWFA and should only do so when it is reasonable under the circumstances.

The regulations also provided further explanation on key issues for employers, including:

  • When an accommodation would impose an undue hardship on an employer and its business; and
  • How employers may assert defenses or exemptions (including those based on religion) to accommodation requirements if an employee files a discrimination charge.

The regulations go into effect on June 18, 2024. If you have any questions about the PWFA, please contact Katie McLaughlin or any member of Frantz Ward’s Labor & Employment Group.