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A New Year— New Labor and Employment Laws

Updated: Mar 11

Every New Year’s Day brings hangovers, earnest resolutions to get to the gym—and new laws, passed during the preceding legislative session and coming into effect the second the ball drops. This year is no different, and companies should pay attention to important legal changes that might affect their personnel or operations, both at the federal level and in the states.


Feds Expand Overtime Eligibility


The Labor Department has finalized its new rule on the “overtime exemption”—the salary level at which employers are no longer required to pay employees time-and-a-half if they worked more than 40 hours per week—raising it from $455 to $679 per week, or about $35,000 per year, while eliminating some paperwork requirements. The Department estimates that employers will spend an additional $1 billion annually in overtime pay and compliance costs under the new standard.

California Toughens Employment and Discrimination Laws


The Golden State continues to expand its labor and discrimination laws, and 2020 is no exception.


To start, an amendment to the California Fair Employment and Housing Act (FEHA) adds a new definition to the term “race,” effective January 1, to include “traits historically associated with race, including, but not limited to, hair texture and protective hairstyles” such as braids, locks, and twists. Employers will now be subject to suit for discrimination on the basis of these hairstyles.


California has also extended the statute of limitations for filing a claim of discrimination, harassment, or retaliation from one to three years. An outgrowth of the #MeToo movement, this change extends to all forms of discrimination prohibited by FEHA. Former Governor Jerry Brown vetoed the same legislation in 2018, reasoning that the one-year statute of limitations “not only encourages prompt resolution while memories and evidence are fresh, but also ensures that unwelcome behavior is promptly reported and halted.” But new Governor Gavin Newsome has been a fervent supporter of the change.


Finally, California now prohibits employers from requiring employees to agree to mandatory arbitration as a condition of employment. Arbitration agreements entered into knowingly and voluntarily aren’t illegal—the Supreme Court has repeatedly upheld them under federal law—and the new law doesn’t invalidate agreements that took effect before January 1. But it does prohibit companies from refusing to hire applicants who won’t sign mandatory arbitration agreements, or from retaliating against current employees who refuse.

Texas and California Take Aim at Data Privacy


The nation’s two largest states have enacted sweeping data privacy laws that companies should be aware of.


In Texas, HB 4390 requires any company that does business in the Lone Star State and that maintains computerized data that includes sensitive personal information to disclose—without “unreasonable delay” and in no event later than 60 days—any breach of the system’s security to Texas residents whose personal information is compromised. Further, if more than 250 Texas residents are part of the breach, the company has to give notice to the state’s attorney general, including “a detailed description of the nature and circumstances of the breach or the use of sensitive personal information acquired as a result of the breach,” and measures the company intends to take in response.

California’s new law is even more sweeping, permitting consumers to ask for the data a company has collected on them and whom the data has been sold to, as well as opt out of its sale to third parties. As a result, you’re likely to begin to see “Do Not Sell My Information” buttons on many websites, starting on January 1. The bill was passed after just a few hours in the California legislature and signed in a hurry by then-Governor Brown, in order to forestall an even stronger data privacy law that was set to be put before voters in a referendum last fall.


Illinois and New Jersey Outlaw Salary History Questions


Accelerating a trend that’s been gaining steam around the country, lawmakers in two states have banned employers from screening job applicants based on their salary history and from requesting or requiring that applicants disclose their salary history as a condition of being interviewed or hired. They also can’t solicit salary history from an applicant’s former employer (The requirements don’t apply in cases of internal hiring or where an applicant’s salary is a matter of public record).


The laws even prohibit employers from factoring salary history into compensation or hiring if the applicant provides that information voluntarily. In Illinois, violators can be hit with hefty fines and open themselves up to lawsuits for compensatory and special damages. In New Jersey, it’s $1000 for a first violation, ranging up to $10,000 for a third violation. Proponents of these bills argue that they protect women and minority applicants, but opponents are already vowing legal challenges based on free speech grounds.


Washington Cracks Down on Non-Competes


In a law aimed directly at the tech industry, the Evergreen State has barred the enforcement of non-compete provisions as a condition of employment for any employee making under $100,000 (adjusted annually), and decrees that any non-compete that exceeds 18 months is presumptively unreasonable. It also makes it illegal for employers to require employees to file suit in another state to challenge a non-compete, and prohibits non-competes for independent contractors who make less than $250,000 per year. And here’s a crucial change: the law applies retroactively to employment agreements entered into before January 2020. Companies should dust off their employment contracts to search for non-conforming provisions, no matter how old, and adjust accordingly.


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