New Year’s Resolutions Aplenty for Illinois Employers

By Aaron R. Gelb

shutterstock_checklistWhile many employers view California as a particularly challenging state in which to do business due to the variety of “unique” workplace laws and regulations, Illinois is not very far behind after a rather busy legislative session during the first year of Governor JB Pritzker’s term.  Whether or not you plan to hit the gym in 2020 or eat more vegetables next year, here is a list of New Year’s resolutions every organization should adopt if it has employees in Illinois:

□          Make sure you are not asking applicants about their salary history.

Hopefully, this is not on your list of New Year’s resolutions because the bill went into effect on September 29, 2019 after being signed into law by Governor Pritzker over the summer.  Under this new law, the Illinois Equal Pay Act has been amended to bar employers from asking a job applicant about their salary history.  Illinois employers may no longer screen or disqualify applicants because of their current or prior salary, nor can they insist that an applicant disclose his or her salary history in order to be interviewed, considered for or offered employment.  Forget about going straight to the source as the law also prohibits seeking such information from the applicant’s former employer.  Perhaps most significantly, the amendment also prohibits employers from factoring salary history information into compensation or hiring decisions even if an applicant provides the information voluntarily without prompting

□          Allow your employees to discuss their wages or other compensation issues with each other.

While Illinois employers can still prohibit select employees—human resources, for example—from disclosing confidential wage and salary information, they cannot otherwise place such restrictions on other employees.  The ability to discuss compensation has long been protected by federal law, so this new Illinois law should not pose any particularly unique challenges for Illinois employers.  That said, employers should take steps to ensure their managers understand the extent of the rights afforded their employees to openly discuss such issues, even if it has the potential to cause waves with their coworkers.

□          Schedule sexual harassment training in the latter part of the year.

Beginning July 1, 2020, Illinois employers will be expected to provide annual workplace sexual harassment training to employees and managers.  While the IDHR will be required to develop and make available a model sexual harassment prevention training to the public at no charge, it is not clear at this time when that will take place.  In the meantime, employers may develop their own program or wait for the free model program to be released.  Those employers that opt to create their own program must ensure that it includes an explanation of sexual harassment, examples of unlawful sexual harassment, a summary of relevant federal and state statutory provisions, and a summary of the employer’s responsibilities under the law.

□          Update your EEO policies.

There have been several amendments to the Human Rights Act, which will become effective July 1, 2020. Importantly, with a few limited exceptions, the amendments make the Illinois Human Rights Act (“HRA”) applicable to all Illinois employers, not just employers with 15 or more employees.  The HRA will now also apply to working environments beyond the physical location at which employees perform their assigned duties, which means that remote workers who claim to have been harassed online may presumably bring a claim against their employer; whether that will apply to individuals employed outside of Illinois but work for an Illinois company or report to an office in Illinois, remains to be seen.  This also means that employers would be well-advised to pay closer attention to off-site events such as holiday parties and ensure that any off-site incidents that are brought to the company’s attention are addressed as if they had occurred in the workplace.  EEO policies should also be revised to reflect the fact that the HRA now protects against discrimination or harassment on the basis of an individual’s “perceived” status; meaning that an employee may now bring a claim that they were discriminated against or harassed because they were perceived to be from a certain country or of a certain sexual orientation, for example, even if that is not the case.

Employers that operate a restaurant, bar or casino will face additional requirements intended to protect their employees from sexual harassment, including the need to (1) provide certain employees with personal safety and notification devices that may be used to summon help if they are the victim of or are witnessing sexual harassment or a crime; (2) expressly inform each of their employees about the protections against sexual harassment and discrimination as provided by state and federal law (by giving them a copy of a harassment-free workplace policy); and (3) to take measures to separate employees from offending guests and accommodate employees who seek legal protection against offending guests.

□          Reevaluate your drug testing policy and procedures.

The Cannabis Regulation and Tax Act (“CRTA”), which goes into effect January 1, 2020, allows individuals 21 years of age and over to consume, possess and purchase cannabis. Unlike most of the other states that now allow recreational cannabis use, Illinois took the additional step of amending the Illinois Right to Privacy Act to include cannabis within the definition of lawful products.  The Right to Privacy Act, often referred to as a smokers’ rights law, prohibits employers from taking adverse actions (refusing to hire, terminating, demoting) against employees because they use a lawful product while not at work.  While the CRTA does not prohibit employers from adopting policies concerning drug testing, use, or storage while at work or on call, an employer must—in order to discipline or discharge an employee—have a good faith belief that the employee manifests specific, articulable symptoms while working that decrease or lessen the employee’s performance of the duties or tasks of employee’s job.  The statute sets forth a number of factors that may be considered, such as disregard for the safety of the employee or others, carelessness, physical dexterity, agility, speech and irrational or unusual behavior, among others.  If an employer elects to discipline any employee on the basis that the employee was under the influence or impaired by cannabis, the employer must afford the employee a reasonable opportunity to contest the basis of the determination.  The State has yet to issue regulations that provide guidance regarding what constitutes a “reasonable opportunity” to challenge such a finding; for now, employers would be wise to adopt a specific process that can be used to document the explanation offered by the employee and the company’s ultimate conclusion.  Given these requirements, employers will likely be unable to justify taking an adverse action against an employee because of a positive random test result or against an applicant due to a pre-employment test.

□          Prepare the necessary disclosures regarding adverse judgments.

The amendments to the Human Rights Act also require employers to make certain disclosures to the Illinois Department of Human Rights.  Beginning July 1, 2020, employers must make annual disclosures to the IDHR with information about adverse judgments or administrative rulings against them in the prior year.  The required disclosures cover the number of adverse judgments or administrative rulings, whether an employee obtained equitable relief, and a breakdown of the judgments and rulings by unlawful employment practice including sexual harassment and discrimination on the basis of sex, race, color, national origin, age, religion, disability, military status or unfavorable discharge from military status; sexual orientation or gender identity; and any other characteristic protected under the Human Rights Act. It is not yet clear—as no regulations have issued to date—the means by which these disclosures must be made.  The IDHR will compile the reported information about adverse judgments and administrative rulings for publication in an annual report, but it will aggregate individual data to avoid exposing personal information.  Note, also, that the IDHR while investigating a charge filed under the Illinois Human Rights Act, may request similar information about an employer’s settlements in the preceding five years that involved allegations of sexual harassment or unlawful discrimination occurring in the workplace or involving an employee or corporate executive.

□          Reassess your arbitration agreements.

Beginning in January 2020, the Workplace Transparency Act (“WTA”) bars employers from unilaterally requiring that a current or prospective employee waive, arbitrate, “or otherwise diminish” existing or future claims, rights, or benefits related to unlawful discrimination, harassment, or retaliation.  Unilateral arbitration provisions or “agreements” are quite common and often presented as a condition of employment, so there are many employers that will be impacted by this new law.  However, provisions that would be void in a unilateral agreement under the WTA may be allowed if an employer and the current or prospective employee mutually agree to it in writing, and the agreement reflects “actual, knowing, and bargained-for consideration” from both parties. To comply with the WTA, the agreement must acknowledge the employee’s right to: (1) report a good-faith belief of an unlawful employment practice or criminal conduct to the appropriate governmental authorities; (2) participate in governmental proceedings; (3) make truthful statements or disclosures as required by law, regulation, or legal process; and (4) seek or receive legal advice.  If an employer does not comply with these requirements, the WTA establishes a rebuttable presumption that the condition is unilateral and void as against public policy.

Potential and Pending Requirements for D.C. Employers of Tipped Employees

shutterstock_waiterIn October 2018, the District of Columbia (“D.C.”) Council passed a law called the “Tipped Wage Workers Fairness Amendment Act of 2018” (the “Act”), which had the immediate impact of repealing legislation (“Ballot Initiative 77”) that eliminated the use of a tip credit in D.C.  Because the D.C. Council repealed Ballot Initiative 77 through passage of the Act, employers with tipped employees are still permitted to take a tip credit toward meeting minimum hourly wage requirements.  However, the Act also imposes certain training, reporting, and notice requirements for all employers of tipped employees.  Some of these requirements have already gone into effect, while others require budgetary approval before they will kick in. We review some of the more significant requirements below.

Under the Act, all employers of tipped employees will have to provide sexual harassment prevention training to employees, as well as managers, owners, and operators of the business.  Specifically, the D.C. Office of Human Rights (“OHR”) will make available a sexual harassment training course, or will certify a list of providers to give the training, that covers how to respond to and prevent sexual harassment by co-workers, management, or patrons/guests.  The Act mandates that employers provide the training to new hires within 90 days of hire unless they received the training within the last two years.  All other workers already employed must receive training within two years.  Managers, owners, and operators must then receive training every 2 years and all training should be given in-person or online.  If the training is given by a certified provider, the employer must submit a certification to the OHR that the training has been completed.  Certification is required within 30 business days after completion. Continue reading

California Employers Should Think Twice Before Inserting No Rehire Language in Settlement Agreements

AB 749California has just passed Assembly Bill (AB) 749 resolving an ambiguity under current case law by generally prohibiting an employer from requiring, in settling an employment dispute, that a current or former employee agree not to obtain future employment with that employer.

A similar issue arose last year in Golden v. Cal. Emergency Physicians Med. Grp., in which the Ninth Circuit Court of Appeals ruled that the no hire provision contained in a settlement agreement between a physician and his former employer, a physician medical group, constituted a “restraint of a substantial character” on the physician’s medical practice and therefore violated California’s non-compete law, Business and Professions Code section 16600.  Specifically, the Ninth Circuit found that the agreement’s preclusion of the physician from working at “any facility owned or managed by” the employer was lawful but that it violated Section 16600 to the extent that it permitted the employer to terminate the physician from employment with any medical facility where the employer contracts or may later contract for services.

AB 749 expands on this Ninth Circuit ruling by barring any agreement to settle an employment dispute from containing a provision “prohibiting, preventing or otherwise restricting” the employee from obtaining employment with the employer or “any parent company, subsidiary, division, affiliate or contractor of the employer.”  Significantly, the law only applies in circumstances where Continue reading

California’s Expansion of Dynamex’s ABC Test Severely Restricts When Employers May Properly Classify Workers as Independent Contractors

Last month, California Governor Gavin Newsom signed Assembly Bill 5 into law.  This lengthy bill generally codifies and expands the applicability of the three-part ABC test from the Dynamex decision in determining whether a worker is an employee or independent contractor for purposes of California Labor Code, Unemployment Insurance Code, and the Wage Orders.

Continue reading

California Legislature Embraces the Dynamex Standard for Evaluating Independent Contractor Arrangements

The California legislature is considering a bill that would codify in the Labor Code and Unemployment Insurance Code the California Supreme Court’s decision in Dynamexshutterstock_litigationwhich adopted a standard that made it significantly more difficult for employers to classify workers as independent contractors, ignoring the realities of the modern workplace and gig economy.  Assembly Bill 5 was introduced back in December 2018, and has passed the Assembly and is making its way through the Senate. 

As this blog previously noted, last year the Supreme Court in Dynamex interpreted the definition of “employee” under the California Wage Orders as placing the burden on the hiring entity seeking to characterize a worker as an independent contractor to establish each of these three factors: (A) that the worker is free from the control and direction of the hiring entity in performing the work; (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (C) that the worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed.  This is known as the “ABC test.”

For years prior to the Dynamex decision, the California courts Continue reading

Grab Your Wallet Before the PBGC Does – Their Proposed Regulation Could Cost Employers Greatly

shutterstock_pensionIn December 2014, Congress passed and President Obama signed the Multiemployer Pension Reform Act of 2014 (“MPRA”). The objective of the MPRA was to shore up struggling multiemployer pension plans, many of which are severely underfunded and getting worse. Among other things, the MPRA provided employers an incentive to continue participation in “endangered” or “critical” status plans by mandating that any increases to the employer’s contribution rate after 2014 will not count against the employer for purposes of determining withdrawal liability.

Because the funded status of many of these plans is so low, this provision can mean significant savings for employers who withdraw from plans in critical or endangered status. The rehabilitation plans of typical critical status multiemployer plans have called for contribution rate increases anywhere from 4-8% or more annually so, in the five years since 2014, many employers have seen cumulative rate increases of from 20-25%, or more. But because Continue reading

D.C. Paid Family Leave Law Advances Towards Implementation

D.C. is moving forward with proposed final regulations to implement its Paid Family Leave law, the Universal Paid Leave Amendment Act of 2016, effective April 7, 2017 (D.C. Official Code 32-541.02(b)(2)).  The Rules are intended to create a regulatory framework for employers to register, opt-in, and opt-out for D.C.’s Paid Family Leave program.

As discussed in a prior blog post, all D.C. employers need to begin to prepare for the implementation of the program because starting July 1, 2019, the District will begin to collect quarterly taxes to fund the Paid Family Leave benefit, in the amount of .62 percent of the wages of its covered employees, based on wages beginning April 1, 2019.  The payroll tax will apply even if employers already provide paid leave benefits to its workers.

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Our firm has received several questions about the new rules, and below are some frequently asked questions about the Paid Family Leave law:

  1. Does the law apply to all employers in D.C.?

Yes.  Any sized employer doing business in D.C. is covered by this law, including small businesses, non-profit organizations, and self-employed individuals who opt into the program.

  1. I have employees who work in D.C. and other states outside of D.C., which employees are covered by this law?

Any employee who spends more than 50% of their work time in D.C. will be covered, and the employer must count their wages as subject to the payroll tax.

  1. Do wages include tips, commissions and other types of pay?

Wages will have the same meaning as provided for in D.C.’s unemployment compensation act, so all income will be counted as wages.

  1. Is there a minimum number of hours an employee must work before they are eligible for paid leave?

An employee is eligible for paid leave benefits as soon as they are hired, regardless of the number of hours worked for the employer, subject to a one week waiting period before benefits are paid.

  1. How much of paid leave is an employee entitled?

Starting on July 1, 2020, employees are entitled to paid leave benefits in the amount of eight (8) weeks for parental leave, six (6) weeks for those taking care of sick family members; and two (2) weeks for medical leave.  An employee can receive benefits under any one or a combination of paid leave provided under the Act.  However, employees are only entitled to receive payment for a maximum of 8 workweeks in a 52-workweek period, regardless of the number of qualifying leave events that occurred during that period.

For example, if an employee receives parental leave following the birth of twins, the employee is only entitled to 8 weeks of paid leave, not 16.  Also, if an employee receives 4 weeks of paid medical leave to care for a sick family member, and then takes parental leave a few months later, the employee is only entitled to an additional 4 weeks of paid leave within the 52-workweek period.

  1. Are there notice and record-keeping requirements?

Yes, employers are required to provide employees a notice (1) at the time of hiring; (2) annually; and (3) at the time the employer is aware that the leave is needed.  The notice must explain the employees’ right to paid leave benefits under the Act and the terms under which such leave may be used; that retaliation for requesting, applying for, or using paid leave benefits is prohibited; that an employee who works for an employer with under 20 employees shall not be entitled to job protection if he or she decides to take paid leave pursuant to the Act; and that the covered employee has a right to file a complaint and the complaint procedures established by the Mayor for filing a complaint.

Covered employers are also required to develop and maintain records pertaining to their obligations under the Act for no less then three years.

An employer that violates the notice requirement may be subject to a $100 civil penalty for each covered employee to whom individual notice is not delivered and $100 for each day that the covered employer fails to post notice in a conspicuous place.

  1. How does the Paid Family Leave law interact with the DCFMLA and existing employer paid leave policies?

The DC Family Medical Leave Act (DCFMLA), which provides for 16 weeks of unpaid leave, remains unchanged under the Act.  Therefore, employees are still eligible to take unpaid leave under DCFMLA.  When paid leave taken pursuant to the Act also qualifies for leave under the DCFMLA, the paid leave taken under the Act will run concurrently with, not in addition to, leave taken under other acts such as DCFMLA.  Nothing in the act provides job protection to any eligible individual beyond that to which an individual is entitled to under DCFMLA.

Eligible employers are not prohibited from providing individuals with leave benefits in addition to those provided under the Act but employers are still required to provide the paid leave benefits under the Act.  The provision of supplemental or greater paid leave benefits does not exempt the covered employer from providing or prevent an eligible employee from receiving benefits under the Act.

 

If your company employs workers in the District of Columbia, you should begin preparing for the tax collection now.  If you have any questions about this new law, contact one of our labor & employment attorneys in D.C.