International Entrepreneurs: New Proposed Work Authorization for Founders of Start-Ups And a Comparison to Other Visa Options

On August 31, 2016 the Department of Homeland Security (DHS) proposed an “International Entrepreneur” (I.E.) rule that would allow qualifying foreign investors to develop and grow their start-up companies in the United States.  DHS already has the authority to temporarily parole individuals into the United States without a visa for urgent humanitarian reasons or for a significant public benefit.  The proposed rule would invoke this authority and allow foreign investors to enter the country for the purpose of enhancing entrepreneurship, innovation, and job creation.  However, the rule comes with its own set of strict qualifying criteria.

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Illinois Limits Non-Compete Agreements Yet Again

On August 19, 2016, Governor Bruce Rauner officially signed into law the Illinois Freedom to Work Act (the “Act”), with an effective date of January 1, 2017.  The Act, while short and to the point, will have a significant impact on private sector employers who routinely require all employees, regardless of job level or wage, to enter into non-competition agreements.

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Agencies Publish Strict New Reporting Guidelines for Government Contractors

On August 25, 2016, the United States Department of Labor (“DOL”) and Federal Acquisition Regulatory (“FAR”) Council published “Guidance for Executive Order 13673, ‘Fair Pay and Safe Workplaces’” (“final rule”).  Also referred to as the “blacklisting” rule, it imposes strict disclosure guidelines and requires that both prospective and existing contractors – as well as subcontractors – disclose violations of federal labor laws that resulted in administrative merits determinations, civil judgments, or arbitral awards or decisions.  The final rule also requires that contractors and subcontractors disclose specific information to workers each pay period regarding their wages and prohibits contractors from requiring that their workers sign arbitration agreements that encompass Title VII violations and claims of sexual assault or harassment.

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Ninth Circuit Invalidates Arbitration Agreement

On August 22, 2016, the Ninth Circuit joined the Seventh Circuit in the split amongst U.S. Circuit Courts of Appeal on the issue of enforceability of employment arbitration agreements precluding class actions.

The Ninth Circuit, similar to the Seventh Circuit in Lewis v. Epic Sys. Corp., held in 2-1 decision that an employer violates the National Labor Relations Act (NLRA) when it requires employees to sign an agreement precluding them from pursuing, in any forum, wage-and-hour claims against the employer on a collective basis.  To the contrary, the Fifth Circuit has upheld such arbitration agreements in D.R. Horton, Inc. v. NLRB and Murphy Oil USA, Inc. v. NLRB, finding that class action waivers do not violate the NLRA.

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Massachusetts – The Latest Jurisdiction to Update Its Pay Equity Laws

On August 1, 2016, Massachusetts Governor Charles Barker signed the Act to Establish Pay Equity.  The Act, which makes several important changes to Massachusetts wage laws, will go into effect on July 1, 2018.

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Governor Brown Signs Bill Clarifying Wage Statement Requirements for Exempt Employees

On July 22, 2015, Governor Brown signed AB 2535 that clarifies which employees for whom an employer must track hours worked and record those hours on their wage statements.  The bill will become effective January 1, 2017.

Prior to this amendment, Labor Code section 226 required that an employee’s paystub include hours worked for all employees except individuals who are paid “solely” by salary and are “exempt from payment of overtime” under Labor Code section 515(a) or the governing wage order.  As written, this seemed to require hours on the paystub for exempt outside sales people and executives who are not paid solely by salary but receive bonuses and stock options even though these employees do not record hours worked and hours worked is not a relevant figure when calculating their wages.  In fact, in Garnett v. ADT, LLC, 139 F. Supp. 3d 1121 (2015), the district court held that exemption in Labor Code section 226 did not apply to exempt outside salespersons since they were paid solely by commission (and not salary) and, therefore, had to have their total hours worked included on their paystubs.  The Garnett court noted in its decision that, “[w]hile the usefulness of reporting total hours worked for employees paid solely by commission is not entirely clear, it is nonetheless required by Labor Code Section 226 (a).”

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NLRB Finds Increased Use of Joint Employees Justifies Removal of Barriers to Organization

On July 11, 2016, the National Labor Relations Board (the “NLRB” or “the Board”) upended more than a decade of precedent and held that a single bargaining unit may be comprised of an employer’s direct hires and the temporary workers provided by a “joint employer” without prior consent from either employer.  In the case, Miller & Anderson, Inc. (364 NLRB 39), the Board expressly rejected standing precedent and prescribed the return to a standard that makes it easier for unions to organize employees working for joint employers into a single bargaining unit.  The Miller & Anderson decision reflects the NLRB’s increased commitment to expand the joint employer doctrine.  Employers who provide or use temporary workers and/or are in engaged in joint employer relationships should take note.

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New PAGA Amendments Fail to Substantively Address Employers’ Concerns

Governor Brown recently approved Senate Bill No. 836, which amends the Private Attorneys General Act (“PAGA”) in a few minor technical ways, including new filing and notice requirements.  Although employers had hoped for substantive changes following the Governor’s initial budget proposal which expressly acknowledged that “employers are being sued and incurring substantial costs defending against technical or frivolous claims,” the enacted amendments fail to deliver any major gains for employers.  SB 836 amends PAGA in four main ways:

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Legacy and Grandfathered Agreements are Not Subject to Disclosure Requirements Under the Department of Labor’s New “Persuader” Regulations and Interpretation of the “Advice” Exemption

On March 24, 2016, the U.S. Department of Labor’s (“USDOL”) Office of Labor-Management Standards (“OLMS”) published its highly controversial “persuader” regulation, which requires employers and labor relations consultants, including legal counsel, to publicly disclose relationships that have traditionally been permitted to remain confidential under the Labor-Management Reporting and Disclosure Act (“LMRDA”).  Although the new persuader regulations took effect on April 25, 2016, the new rule will not apply to agreements entered into before July 1, 2016.  This presents an invaluable opportunity for employers and their labor consultants to be “grandfathered” out of much of the required reporting under the new regulations.

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Enactment of Los Angeles and San Diego Minimum Wage and Paid Sick Leave Ordinances Requires Employers to Reassess Their Policies

The cities of Los Angeles and San Diego recently approved minimum wage and sick leave ordinances that will apply to all employees who work within those cities’ geographical limits.  Employers with employees who work in these cities will need to comply with those new ordinances, as well as the California state law requirements that already exist.

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