- Posted on: Aug 20 2021
By: Philip Schwartz
1. Regulation of Non-Compete Clauses
On July 9, 2021, President Biden signed an executive order supporting limitations on the use of non-compete clauses. Styled as “promoting competition,” the order encourages the Federal Trade Commission to act to limit employee non-compete clauses as well as any “other clauses or agreements that may unfairly limit worker mobility.” While this order doesn’t effectuate any immediate changes in the law, it comes after an FTC examination of non-competes last year and after the Obama administration issued similar criticisms of such clauses years ago. In the intervening time, several states have changed their laws on regulating them, and it remains to be seen how this most recent Order will impact the legal landscape.
Regulation of non-compete and other related clauses is not without criticism. It is unclear how the FTC may act in response to this order, and the scope of their power to regulate non-competes will certainly be the subject of litigation. The FTC may engage in rulemaking to restrict these clauses in response to the administration’s vow to ban them altogether, and it is unknown as to whether the agency will seek a total ban, or something more narrowly tailored as many states have enacted. In addition, as the language of the executive order is broader than just non-competes, the FTC may seek to regulate other contract provisions like non-solicitation, no-rehire, and other restrictive covenants. As such provisions affect over half of American businesses, this changing area of the law may have broad-ranging consequences for employers.
2. Civil Rights and Sexual Orientation
On June 15, 2020, the Supreme Court decided Bostock v. Clayton County, GA, a case involving plaintiffs who had been fired for being homosexual or transgender. Prior to Bostock, sexual identity and orientation had not been found by the Supreme Court to be Title VII protected classes in terms of employment discrimination. The court in Bostock explicitly held that Title VII’s prohibition of “an employer to fail or refuse to hire or to discharge any individual, or to otherwise discriminate against any individual…on the basis of…sex” included sexual orientation and gender expression. They went further to explain that “a statutory violation occurs if an employer intentionally relies in part on an individual employee’s sex when deciding to discharge the employee.”
This ruling sets a federal standard where state law had previously been a patchwork of regulation. Prior to this decision, local municipalities across the country had enacted such protection when states had not; this action prompted states to enact subsequent legislation taking regulatory power away from local government. Now, policy experts expect that Bostock will eventually be applied to discrimination claims in other arenas, like education, healthcare, and housing, and anticipate an expansion of protection for the LGBT community in many sectors. The specific discussion in Bostock also paves the way for additional gender-based claims if sex played any role in discipline or termination.
However, Bostock also addressed the intersection of religion and civil rights and specifically indicated that future legal claims may involve pitting the two rights against each other. Subsequent to the Bostock decision, SCOTUS decided two cases involving religious institutions and discrimination claims, and in each instance, sided with the employer. Future litigation involving civil liberties and religion is a near guarantee based on these recent rulings.
3. Covid-19 Vaccination Protocol
As of summer 2021, we are approaching vaccination for Covid-19 in nearly half of the adult population. As we navigate the reduction of many restrictions and the loosening of CDC guidelines for business, some corporations are starting to require Covid-19 vaccination as a condition of employment. In the summer of 2021, Indiana University mulled requiring vaccinations for faculty, staff, and students. After significant legislative pressure, the college reexamined their policy, but on July 19, 2021, a federal judge ruled that the university had the legal authority to require vaccines. Similar lawsuits are pending in federal courts in California and Connecticut.
Meanwhile, healthcare facilities nationwide are also considering vaccination requirements. St. Jude Children’s Research Hospital recently joined several other hospital systems across the country in requiring Covid-19 vaccinations for employees, like those in Texas, Louisiana, Pennsylvania, Maryland, and New Jersey. By and large, courts have been siding with employers who require vaccinations, leaving employees the choice between the vaccine and their job.
Not only are the legal ramifications of requiring vaccinations fairly clear, with the courts largely upholding such requirements, but the alternatives may be risky for businesses. While there has not yet been much litigation on the issue, if a patient in a healthcare system contracts Covid-19 from an unvaccinated employee, the hospital risks liability in the face of legal precedent that supports pro-vaccine policies. It would seem most likely in the healthcare setting, but other examples like hospitality and spa services seem logical targets as well. In response to this issue, six states have passed legislation limiting mandatory Covid-19 vaccinations—and all but one exempt healthcare from the limitations.
4. “Fair-Chance” Policies in Hiring (Ban-The-Box)
For decades, many job applications have inquired as to the criminal record of applicants. The “Ban-The-Box” movement seeks to change that by requiring employers to look at a candidate’s qualifications before their criminal past—if they ever do at all. In all, over 36 states and 150 cities have removed criminal history inquiries from applications for public employment, and some states and localities bar most employers from such an inquiry. In 2019, Congress passed the Fair Chance Act, which takes effect on December 20, 2021. Under this law, federal contractors may not request information relating to criminal history, verbally or in writing, for positions “related to work under [the] contract” before the contractor extends any conditional offers to an applicant. In addition, the Biden administration supports Ban-The-Box policies, and this may be a source of legislative action or executive order in the future as the current administration seeks to expand this requirement to more states and municipalities.
5. Remote Work Policies
Businesses across the country instituted work from home policies during the Covid-19 pandemic. For most, that was a decision made out of necessity and not desire. However, this decision may have had some long-ranging legal consequences. Now, as employers decide when and whether to require employees to return to the office, they must concern themselves not only with retention but with legal challenges. The Equal Employment Opportunity Commission already views working from home as a reasonable accommodation under certain circumstances, and that position is supported by court precedent. However, a business that was forced to allow telecommuting over the past 18 months is in a tough position to argue that the practice would be an undue hardship now—especially if their business thrived with employees at home. While each case is unique and fact-specific, it is far more possible for permanent work-from-home situations to be viewed as reasonable accommodations now than pre-pandemic. This will prove to be the source of litigation as the courts ultimately determine how far the doctrine will go.
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Philip Schwartz is a partner at Dunlap Bennett & Ludwig. Mr. Schwartz represents businesses on a wide variety of employment and general business matters, including preventive counseling and employee training in the employment law field and the defense of employee claims (discrimination, wrongful termination, wage-hour investigations and claims), the drafting and enforcement of employment agreements, including non-compete agreements and employment tax matters.
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Posted in: Employment Law