The Supreme Court of the United States began its new term on October 7, 2024, with a growing docket filled with cases that employers need to keep track of as having potential implications on the workplace.  Currently, five cases present employment related issues that include wage and hour matters, ADA interplay with former employees, cannabis company liability in the employment arena, the application of federal civil rights law in conjunction with state administrative remedies, and the determination of “prevailing party” for attorney fee award provisions.

At the top of most employer’s list is E.M.D. Sales Inc. v. Carrera, wherein the Supreme Court will navigate disagreements between federal appeals court decisions involving matters of employee classification exemption status from minimum wage and overtime provisions of the Fair Labor Standards Act.  At issue is the question of how much proof employers need to offer in supporting efforts to properly classify employees when claims of misclassification and unpaid wages are made.  Specifically, the question before the court is whether an employer claiming an overtime exemption will have to show their supporting evaluation criteria by the higher standard of clear and convincing proof or meet the lesser criteria of a preponderance of the evidence standard.

The facts of E.M.D. Sales Inc. involve several employees of a grocery food distribution company who claim misclassification as outside sale exempt status and demanded overtime wages, for which they would not otherwise be eligible under the outside sales classification.  The Fourth Circuit Court of Appeals found in the employees’ favor, requiring the heightened burden of clear and convincing evidence as proof from their employers as to the outside sales classification.  This heightened standard deviates from the standard already set forth in six other Circuit Court of Appeals who all agree that the mere preponderance of the evidence is the standard burden for employers to meet.  While the outside sales exemption is at issue in this specific matter, the Court’s ruling will likely impact all 34 of exemptions under the FLSA.  Oral arguments are slated for November 5^th, and we will keep you updated as to the outcome.

Another case before the Court involves a former employee’s claim of violations of the American with Disability Act, when her employer changed health insurance coverage from free coverage until the age of 65 to only 24 months of coverage for employees that retired because of a qualifying disability.  In Stanley v. City of Sanford, FL, the 11^th Circuit ruled that the former firefighter, who retired due to a qualifying disability under the health insurance coverage carveout, could not bring a claim of discrimination in violation of the ADA, because the right to sue is limited to current employees and job applicants, not retirees, despite the change in benefits claimed to be owed to this former employee. The Supreme Court is set to make a determination on this distinction between current and former employee standing, this term.

A third matter before the Court highlights the evolving laws surrounding cannabis in the employment context.  In Medical Marijuana, Inc. v. Horn, a commercial truck driver, responsible for passing periodic drug screens, was terminated when he failed a drug screen due to the presence of illegal THC.  The driver claims that he was only aware of the presence of CBD, the generally legal non-psychoactive component in cannabis, and in an unprecedented move, sued the cannabis distributor under the Racketeer Influenced and Corrupt Organizations Act (RICO), claiming RICO violations and monetary damages for personal injuries.  The cannabis distributor argues for dismissal of the RICO claim asserting a products liability claim instead.  The Court is set to weigh in on this matter which will inevitably impact cannabis regulations in the workplace moving forward.

The fourth case for employers to keep an eye out on involves the question of whether employees need to exhaust all state administrative remedies prior to bringing a claim under federal civil rights laws.  In Williams v. Washington, Alabama workers who applied for unemployment insurance benefits during Covid-19 sued state government officials for violations of the Social Security Act of 1935, claiming that the state’s policies, practices, and procedures related to unemployment compensation applications violated federal civil rights laws under 42 U.S.C. Section 1983 and constitutional due process rights.  The Alabama Supreme Court held that state law requires the plaintiffs to first bring these types of claims to the state’s Department of Labor, further requiring plaintiffs to exhaust all administrative remedies prior to filing claims of federal civil rights violations.  At issue for the Supreme Court is whether or not these federal civil rights violation claims need to be heard through the state administrative remedies process prior to bringing a federal action.

The final matter currently on the Court’s docket, while not arising in an employment law context, will have possible implications on employment law claims that arise under assertions of civil rights violations and ultimately who shall be considered the “prevailing party” for purposes of awarding attorney fees.  Under the provisions of 42 U.S.C. Section 1988, a “prevailing party” in certain civil rights actions can recover their reasonable attorney fees.  In the matter of Lackey v. Stinnie, the Supreme Court will consider whether a party that prevails under a preliminary injunction without ultimately prevailing on the merits of the claim shall be considered a “prevailing party” for purposes of seeking a fee award.

As the new Supreme Court term is well underway, PrestigePEO is here to help and will be tracking and reporting on the outcome of the Court’s decisions, as they become available. If you have any questions, please contact your HRBP.

In recent years, a number of states have passed wage transparency legislation and soon, New Jersey is likely to become a part of this growing trend.  In September 2024, the New Jersey Legislature passed Senate Bill 2310, which if signed by the governor, will require employers to now provide specific compensation and benefits related information in both external and internal job postings as well as any transfer and promotional opportunities. The governor has 45 days, or until November 10, 2024, to sign this new legislation, which Governor Murphy is expected to do.  Once signed, the legislation will become effective seven months after the date of signing, approximately June 2025.

This new law will apply to all employers with 10 or more employees doing business in New Jersey, as well as those that either employ workers in New Jersey or accept job applications in New Jersey, regardless of where the employee or potential employee resides.

This new law will require employers to include in job postings, both internal and external, the exact wage, salary, or pay range for each advertised position. There must also be a general description of benefits and other compensation for which the employee will be eligible in the 12 months following the employment start date.  Important to note, the new legislation will also require employers to make “reasonable efforts” to notify current employees of promotion opportunities, within the impacted department prior to making any promotion decisions.  The law is silent as to what constitutes “reasonable efforts.”

Failure to comply with the Wage Transparency requirements may result in civil penalties of up to $300 for the initial violation and up to $600 for each subsequent violation, owed to the New Jersey Commissioner of Labor and Workforce Development.  We will continue to monitor this pending legislature and will provide updates as they become available.

PrestigePEO is here to help. If you have any questions concerning your compliance with New Jersey’s Wage Transparency Law, please contact your HRBP.

Safe Hotels Act

Two pioneering regulations are making waves in New York City.  The first of which is called the Safe Hotels Act, which has already passed City Council and is awaiting Mayor Adams’ signature.  This new law outlines a number of regulations aimed at the safety and cleanliness of New York City hotels.  Originating in efforts to address crime and human trafficking within the city, critics suggest that the regulations go beyond that which was initially intended, and instead place heavy restrictions on how hotels operate and appear to be encouraging union activity among employees.

The Safe Hotels Act is comprised of three basic requirements that include: human trafficking training for all employees, new safety standards that will be outlined below, and new requirements that all hotel operators obtain a license to operate from The Department of Consumer and Worker Protection (DCWP).

The safety standards require that:

• There is continuous coverage at the hotel front desk, including overnight shifts, by at least one employee who has undergone human trafficking training and can confirm the identity of all guests.
• The hotel is required to maintain safe conditions on the property for all guests and hotel workers, however the act does not define what safe conditions involve.
• The hotel is also required to maintain cleanliness of all guest rooms, sanitary facilities, and common areas, but again is unclear as to any specific standard for the cleanliness requirement.
• Guest requests for new towels and linens must be honored.
• All guest rooms must be cleaned, and trash removed daily, unless a guest proactively declines the hotel cleaning service. No additional fees may be required by the hotel for daily cleaning, nor can a hotel offer a discount for allowing guests to decline the daily cleaning.
• All employees who are required to enter occupied hotel rooms will be required to be provided a panic button.
• All hotels, except for those within one mile of either LaGuardia or John F. Kenndy airports, are prohibited from taking hotel reservations for less than four hours.

Furthermore, hotels will now be required to obtain a license to operate within the city, which will cost $350 and be valid for a period of two years.  There is very little information available as to what criteria will be used for the licensing process, but the act allows for the licensing requirement to be “satisfied by a collective bargaining agreement that expressly incorporates the requirements of” this Safe Hotels Act.  The act places further restrictions on the use of certain types of employees by limiting the use of subcontractors for hotels with 100 or more guest rooms and requiring larger hotels to directly employee all core employees, with limited exceptions.

While there is a vast amount of ambiguity surrounding this new law, as it awaits Mayor Adams decision, PrestigePEO is here to help and will continue to monitor and provide updates as they become available.

Time Off to Care for Pets

In a first of its kind, a bill recently proposed in the New York City Council would allow employees to take time off to care for their pets.  This proposed regulation would expand the provisions that currently exist under the City’s Earned Safe and Sick Time Act to include time off for pet-related medical care needs.

Under the existing Earned Safe and Sick Time Act, employees of larger companies employing 100 or more workers are provided up to 56 hours of paid leave per year, while employees at smaller companies are provided up to 40 hours of paid sick leave, for purposes of caring for themselves or an ill family member.  These proposed changes would now allow for employees to use this existing paid leave for the care of their pets, including diagnosing and treating illnesses as well as preventive care appointments.   If passed, this law would be a first of its kind and could very well become part of a nationwide trend towards acknowledging the role pets play in the lives of their humans and the positive mental health impacts associated with pet ownership.

PrestigePEO is here to help and will continue to monitor these proposed changes. If you have any questions, please contact your HRBP.

As employers wrap up the year and plan compensation strategies, an essential compliance update from the Department of Labor (DOL) is on the horizon. As a reminder, on January 1, 2025, the DOL will implement the second stage of its minimum wage increase and raise the salary thresholds for exempt employees under the Fair Labor Standards Act (FLSA).

In addition to the new threshold of $58,656 annually per year ($1,128 per week) for general white-collar exemptions, the threshold for highly compensated employees will also rise. Starting in 2025, employees earning over $151,164 annually may qualify as exempt if they meet a less stringent duties test under the FLSA. For employers, this presents an opportunity to reassess compensation for higher-earning employees, especially those currently exempt under the highly compensated category, and determine if their compensation or duties need adjustment to remain compliant.

Employers with exempt employees currently earning below these thresholds should prepare to either adjust salaries to meet the new standards or reclassify these roles as non-exempt. Reclassification will require tracking actual hours worked, given the FLSA’s overtime mandate of 1.5 times the regular pay rate for hours over 40 in a workweek.

The DOL’s new thresholds are subject to ongoing legal challenges, and there is a possibility of delay or adjustment. However, considering the anticipated effective date of January 1, proactive planning is recommended to manage these changes’ financial and operational impact. Evaluating whether current employees meet the updated standards will ensure compliance and minimize disruption as new wage regulations take effect.

PrestigePEO is here to help.

PrestigePEO is focused on supporting your business and will continue to monitor and provide updates as additional information on these changes becomes available.

Starting January 1, 2025, Illinois will enforce new wage transparency and job opportunity notice requirements that will impact employers statewide. These requirements amend the Illinois Equal Pay Act to mandate that employers disclose salary ranges, benefits, and any additional compensation in all job postings and inform current employees about job openings. Noncompliance with these requirements could lead to substantial fines, making it essential for employers to prepare well in advance.

Under the new law, all job postings in Illinois, internal, external, or managed through third parties, must clearly show the wage or salary range, a general description of benefits, and any additional compensation. If the pay and benefits information is missing from a posting, employers must provide it to applicants before discussing compensation and upon request. This requirement applies to positions that are physically performed, at least in part, in Illinois and to remote roles filled by Illinois residents, even if the company is headquartered outside the state. It also applies to employees outside Illinois but reporting to an Illinois-based supervisor. If a posting omits this pay and benefits information, employers must provide it to applicants before discussing compensation and upon request.

Illinois employers must notify current employees of new job opportunities when the position is publicly posted. Though the law does not require the creation of new postings, it mandates that employers share pay and benefits information with candidates if a position is discussed. Additionally, employers must retain job posting details, including pay scale and benefits, for at least five years or until any investigation concludes.

The Illinois Department of Labor will impose a tiered penalty structure for violations, with no grace period to remedy the violation for third and subsequent offenses. The tiered penalty system calls for fines ranging from $250 to $2,500 per violation. A first offense allows a 14-day correction period, while a second offense allows seven days. However, third and subsequent offenses permit no cure period, leading to immediate penalties.

To prepare for the January 1 effective date, Illinois employers should review and update job postings to ensure compliance with the new transparency requirements. Training HR and hiring teams on these standards are crucial to prevent inadvertent violations. Establishing a systematic recordkeeping process will help ensure accurate documentation of pay scales, benefits, and job postings. Companies using third-party recruiters should communicate pay information requirements clearly to avoid compliance issues. Employers may also benefit from conducting a privileged pay audit with legal counsel to confirm adherence to state and federal equal pay laws. Adopting a consistent job posting format across locations for companies with multi-state operations can help streamline practices and promote transparency.

By preparing ahead of this January 2025 deadline, Illinois employers can strengthen their legal compliance, enhance hiring transparency, and foster fair pay practices within their organizations.

PrestigePEO is here to help.

PrestigePEO is focused on supporting your business and will continue to monitor and provide updates as additional information on these changes becomes available.

California Governor Gavin Newsome recently signed a bill into law that will prohibit employers from conducting mandatory, employer-sponsored meetings that discuss religious and political matters, including discussions about union representation.  Under Senate Bill 399, or California Worker Freedom from Employer Intimidation Act, employers can now face civil penalties or civil action in California for failure to follow these new regulations correctly. Beginning January 1, 2025, the new law will ban employees from discharging, discriminating, retaliating, or taking any other adverse employment actions against employees who choose to decline to participate in or listen to employers’ communication related to political or religious topics.

According to the California Labor Code, section 1137:

• “Political matters” means matters relating to elections for political office, political parties, legislation, regulation, and the decision to join or support any political party or political or labor organization.
• “Religious matters” means matters relating to religious affiliation and practice and the decision to join or support any religious organization or association.

The Act may be enforced by private court action or by the California Labor Commissioner. In addition to damages and remedies, the statute specifies that an employer who violates this section will be subject to a civil penalty of five hundred dollars ($500) per employee for each violation.

What should employers do?

Employers should update employee handbooks and train supervisors on the framework strategies and responses that should be followed as related to these meetings. Employers should further communicate to employees that when a meeting is held where political or religious content is discussed, it is voluntary. The voluntary nature of the meetings should be clearly published to employees in writing.

PrestigePEO is here to help.

PrestigePEO is focused on supporting your business. If you have questions, please contact your HRBP for assistance.

As the California legislative session comes to close, Governor Gavin Newsome has approved several bills that were passed by the legislature.  Many of these new laws will become effective on January 1, 2025. In addition to the passed bills, there were some bills that were also vetoed as outlined below.

PASSED BILLS

1. Ban on Captive Audience Meetings
   Governor Newsome signed Senate Bill 399 into law that will prohibit employers from carrying out required meetings that discuss religious and political matters including conversations about union representation. The employer will be prohibited from discriminating against, terminating, retaliating, or otherwise taking any adverse employment action against the employees for refusal to attend. Employees are allowed a private cause of action for alleged violations as well as the recovery of punitive damages.  This law goes into effect on January 1, 2025.
2. Victims of Violence
   The Governor signed Assembly Bill 2499 into law which affords employees time off when they are affected by certain crimes or are victims of abuse, and also allow employees to take time off to assist family members who are victims of specified crimes. This law updates the existing law by expanding not only who is entitled to protections under the law, but also the reasons for necessitating use of the Victim-of-Violence leave. Enforcement of this law is will now by maintained by California’s Civil Rights Department and goes into effect on January 1, 2025.
3. Private Attorneys General Act (PAGA) Exemption Expanded
   Governor Gavin Newsome signed Assembly Bill 1034 into law that will ensure that unionized construction industry employers who meet specified criteria continue to be exempt from PAGA lawsuits for the next 14 years. The exemption applies to employers of unionized construction employees who pay workers at least 30% more than minimum wage, among other requirements, and when initially passed, was intended to be temporary, sunsetting on or before January 1, 2028.  The new law will go into effect on January 1, 2025, and extends the exemption period to January 1, 2038.
4. Employment Discrimination and Driver’s License Requirements
   Governor Gavin Newsome signed Senate Bill 1100 into law that will prohibit employers from informing job seekers they need to have a driver’s license for an open position unless the position satisfies a two prong test: (1) the employer reasonably expects driving to be one of the job functions, and (2) the employer believes that satisfying the job function using an alternative form of transportation would not be comparable in travel time or cost to their business.  The alternative forms of transportation may include options such as public transportation, taxi, carpooling, bicycling, or walking. This goes into effect on January 1, 2025.
5. Expanded Protections for Freelance Workers
   Governor Gavin Newsome signed Senate Bill 988 into law which will increase protections for Freelance Workers/Independent Contractors. Private employers who hire freelancers will be required to provide a written agreement identifying certain terms, that otherwise give freelance workers “basic worker protections” and indicate a deadline of when their compensation is due. These expanded protections go into effect on January 1, 2025.
6. Local Enforcement of Employment Discrimination Law Governor Newsome signed Senate Bill 1340 into law which allows local agencies to enforce both the state’s employment discrimination laws as well as local employment anti-discrimination laws that are more stringent than those of the state, when employees bring a right-to-sue from the Civil Rights Department (CRD). The new law will go into effect on January 1, 2025.
7. New Requirements for Employers Conducting Social Compliance Audits
   Governor Newsome signed Assembly Bill 3234 into law, which will require businesses to share results of voluntary social compliance audits and post a link of the finding on its website related to wage and hour requirements, health and safety regulations, and regulations related to child labor. While the decision whether to conduct a social compliance audit are voluntary, if conducted, businesses will now be required to report results by posting to a conspicuous link on their website.  The law will go into effect on January 1, 2025.

VETOED BILLS

1. SB 1047–Artificial Intelligence Safety bill
   Governor Gavin Newsom has vetoed Senate Bill 1047, that sought to add new requirements to developments of large AI models, which could impact resources used by employers. This bill was vetoed due to opposition from tech industry and policy makers.
2. SB 1022- Enforcement of Civil Rights
   Governor Gavin Newsom has vetoed Senate Bill 1022. This bill would have increased the statute of limitations for “group or class complaints” brought with the California Civil Rights Department to seven years. Governor Newsome had asked the lawmakers to propose a bill with a more reasonable period of time.

3. SB 1299- Farmer’s and Worker’s Compensation
   Governor Gavin Newsome has vetoed Senate Bill 1299. The proposed bill would create a “disputable presumption” that a heat-related injury that develops within a specified timeframe after an employee was working outdoors for an employer in the agriculture industry that fails to comply with heat illness prevention standards, as defined, arose out of and came in the course of employment.

PrestigePEO is here to help.

PrestigePEO is focused on supporting your business. If you have questions, please contact your HRBP for assistance.

Minimum Wage Increases

Minimum wage in Michigan will increase twice in 2025. On January 1, 2025, minimum wage will increase to $10.56 per hour for regular workers and shall also increase to $4.01 per hour for tipped workers. Then it will increase again on February 21, 2025, to $12.48 per hour for regular workers and $5.99 per hour for tipped workers. Michigan workers will then see yearly increases to minimum wage that will go into effect on February 21^st of the respective year. In 2026, the minimum wage for regular workers will increase to $13.29 per hour and for tipped workers will increase to $7.97 per hour. In 2027, the minimum wage for regular workers will increase to $14.16 per hour and for tipped workers will increase to $9.91 per hour. In 2028, the minimum wage for regular workers will increase to $14.97 per hour and for tipped workers to $11.98 per hour. Michigan has not yet announced specific increases past February 2028, but as of 2029, minimum wage in the state will increase based on inflation on a yearly basis.

Changes to Sick Leave – Earned Sick Time Act

The Earned Sick Time Act (“ESTA”) was originally passed in 2018 but was quickly amended and replaced by Paid Medical Leave Act (“PMLA”) in 2019. Recently, the Michigan Supreme Court ruled on the case Mothering Justice v. Attorney General, which effectively reinstated the ESTA. The ESTA will go into effect on February 21, 2025, giving employers adequate time to review their current policies and procedures and make updates where necessary.

The ESTA expands upon the scope of the PMLA as it is applicable to all employers, except for the United States Government, that have one or more employees. However, the ESTA does distinguish between small and large businesses. Under the ESTA, a small business is defined as one that has less than 10 employees – for the purposes of the act an employee is an individual who is on the employer’s payroll and considers those who are part-time, full-time, or temporary as employees for purposes of the statute. A business does not qualify as a small business under the ESTA if it has over 10 employees during 20 or more weeks of the prior or current calendar year. While the ESTA does not explicitly state if the employee count is for employees based only in Michigan or if it is a nationwide employee count, guidance provided by the state signals that it is a nationwide employee count. The Michigan Department of Labor and Economic Opportunity has provided some further guidance on the qualification of employees who working remotely in Michigan for an employer based outside of the state with no other ties to Michigan beyond the remote worker(s); such remote workers are considered to be covered by the ESTA.

The definition of “family members” is expanded under the ESTA compared to how it was previously defined under the PMLA. This expansion now includes domestic partners, which is defined as “an adult in a committed relationship with another adult” and it includes both same-sex and different sex relationships. It also includes other individuals not already classified that fall into the definition of individuals who are “related by blood or affinity whose close association with the employee is the equivalent of a family relationship.”

The ESTA has a posting requirement for employers to notify employees of their rights under the ESTA, which can be found here.

Accrual of Earned Sick Time

Small Businesses:

• For every 30-hours worked, employees accrue 1 hour of earned sick time.
• Employees are entitled to use up to 40-hours of paid earned sick time a year.
• Should an employee accrue more than 40-hours a year, the employee is entitled to 32 hours of unpaid earned sick time a year.
• Employers may choose to allow higher limits for paid earned sick time and unpaid earned sick time than afforded to employees under the ESTA.
• Accrued but unused earned sick time balances carry over each year.
• It is not required by the ESTA to pay out earned sick time balances accrued pursuant to the ESTA that are unused at the time an employee’s employment is terminated.

Businesses with 10 or More Employees:

• For every 30-hours worked, employees accrue 1 hour of earned sick time.
• Employees are entitled to use up to 72-hours of paid earned sick time a year.
• Employers may choose to allow higher limits for paid earned sick time than afforded to employees under the ESTA.
• Accrued but unused earned sick time balances carry over each year.
• It is not required by the ESTA to pay out earned sick time balances accrued pursuant to the ESTA that are unused at the time an employee’s employment is terminated.

Permitted Reasons to for Employee’s to use Earned Sick Time

The ESTA outlines five (5) categories of permitted reasons for earned sick time use. Those reasons are as follows:

• An employee’s own:
  • illness (mental or physical), health condition, or injury;
  • medical diagnosis, treatment, or care of that illness, injury, or health condition; or
  • preventative medical care.
• An employee’s family member’s:
  • illness (mental or physical), health condition, or injury;
  • medical diagnosis, treatment, or care of that illness, injury, or health condition; or
  • preventative medical care.
• If an employee or their family member is:
  • a victim of sexual assault or domestic violence;
  • medical care, psychological, or other available counseling for such physical or psychological or other related disability;
  • to relocate due to sexual assault or domestic violence;
  • to attain services from a victim services organization;
  • to attain legal services; or
  • to participate in criminal or civil proceedings related to the or stemming from the sexual assault or domestic violence.
• An employee’s meeting at a child’s school or other place of childcare that pertains to the health or disability of the child, or the effects of sexual assault or domestic violence on the child.
• Public Health Emergency
  • When there is a closure of an employee’s place of business due to an order of a public official because of a public health emergency;
  • When there is a closure of an employee’s child’s school or place of childcare is closed due to an order of a public official because of a public health emergency and the employee needs to care for the child;
  • When a health care provider or health authorities determine that an employee or an employee’s family member’s presence would jeopardize the health of others based on that person’s exposure to a communicable disease – the employee or their family member do not need to have contracted it themselves.

Employee Use of Earned Sick Time

• If an employee’s leave is foreseeable, employers may require the employee to provide advance notice, up to seven (7) days prior notice.
• If an employee’s leave is not foreseeable, employers may only require their employees to provide notice as soon as practicable under the specific set of circumstances surrounding the employee’s need for leave.
• Employers are allowed to request “reasonable documentation” should an employee use earned sick time for more than three (3) consecutive days. If such documentation is required by an employer, the employer is responsible for the out-of-pocket expenses incurred by the employee to obtain the requisite documentation.

Next Steps:

PrestigePEO is here to help. Employers should review their current leave policies and update them where necessary prior to February 21, 2025.  Your HR Business Partner will be happy to assist you with any updates your business may need.

PrestigePEO is focused on supporting your business and will continue to monitor and provide updates as additional information on these changes becomes available.