California Bill to Mandate Women on Boards Faces Challenge From Businesses

California Bill to Mandate Women on Boards Faces Challenge From Businesses

The California legislature is considering a bill that would make it the first state in the US to require women’s representation on the boards of companies headquartered there, but the business community is pushing back, saying the proposed mandate is unconstitutional and counterproductive, Antoinette Siu reports at TechCrunch:

SB 826, which won Senate approval with only Democratic votes and has until the end of August to clear the Assembly, would require publicly held companies headquartered in California to have at least one woman on their boards of directors by end of next year. By 2021, companies with boards of five directors must have at least two women, and companies with six-member boards must have at least three women. Firms failing to comply would face a fine. …

Yet critics of the bill say it violates the federal and state constitutions. Business associations say the rule would require companies to discriminate against men wanting to serve on boards, as well as conflict with corporate law that says the internal affairs of a corporation should be governed by the state law in which it is incorporated. This bill would apply to companies headquartered in California. … Similarly, a legislative analysis of the bill cautioned that it could get challenged on equal protection grounds, and that it would be difficult to defend, requiring the state to prove a compelling government interest in such a quota system for a private corporation.

Legislative mandates or quotas for women on corporate boards are rare, with only a few European countries having adopted them. Norway was the first to do so, introducing a 40 percent quota in 2003, while France, Germany, Iceland, and Spain have since introduced their own mandates. Sweden had an opportunity to join this group but declined it early last year, when the parliament voted down a proposal to fine listed companies where women make up less than 40 percent of directors. In these countries, quotas have proven effective at driving gender equality on boards; critics acknowledge this, but argue that making women’s representation a matter of compliance isn’t changing corporate cultures to really value women in leadership.

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Massachusetts Enacts New Restrictions on Non-Compete Agreements

Massachusetts Enacts New Restrictions on Non-Compete Agreements

After several years of legislative wrangling, Massachusetts Governor Charlie Baker on Friday signed a bill into law that will limit the conditions under which employers in the state can enforce non-compete agreements on their employees. The law goes into effect on October 1 and will apply to all non-compete agreements signed after that date. Lisa Nagele-Piazza outlines the law’s provisions at SHRM:

The Massachusetts law aims to prevent overuse of such agreements by prohibiting noncompetes with employees who are:

  • Nonexempt under the Fair Labor Standards Act.
  • Under age 18.
  • Part-time college or graduate student workers.

For a noncompete to be valid, it must be:

  • Limited to 12 months in duration (with some exceptions).
  • Presented to new hires either with an offer letter or 10 days prior to an employee’s start date, whichever is earlier.
  • Signed by the employer and the worker.

The agreement must also inform employees of their right to consult legal counsel before signing it. If employers want existing staff to sign noncompetes, they will need to offer “fair and reasonable” consideration beyond continued employment for the agreements to be valid.

The new law is also the first in the U.S. to require that employers offer “garden leave” pay to former employees bound by non-competes. The law requires to pay these employees 50 percent of the highest base salary they earned in the prior two years for one year after their departure, or some other “mutually agreed upon consideration.”

That alternative represents a huge loophole in the law, Michael Elkon, an attorney with Fisher Phillips in Atlanta, tells Nagele-Piazza. What sort of “consideration” counts as valid for the purposes of this law will likely be hashed out in court in the coming years, but Elkon notes that employers will expose themselves to a risk of litigation (before an unsympathetic judge) if they attempt to get around this provision by offering an employee a “consideration” that undercuts the law’s guidelines.

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States Experiment with Policy Levers to Help Close Retirement Gap

States Experiment with Policy Levers to Help Close Retirement Gap

Over the past few years, a growing number of US states and cities have enacted legislation to create state-sponsored retirement savings programs for employees of organizations that don’t offer an employer-sponsored plan like a 401(k). Currently, 40 states have considered, studied, or moved toward implementing this type of program, though only 10 states and one major city (Seattle) have yet implemented them, writes Paula Aven Gladych at Employee Benefit News. Not all state and local policies are alike, however: While automatic-enrollment, payroll-deducting IRA programs (“auto-IRAs”) are the most popular policy tool, others include multiple-employer plans and retirement savings marketplaces:

California, Connecticut, Illinois, Maryland, Oregon and the city of Seattle have adopted automatic IRAs. Massachusetts and Vermont have adopted multiple employer plans and New Jersey and Washington State have adopted marketplaces. New York, the latest state to jump into the fray, has adopted a voluntary payroll deduction IRA. …

The states that haven’t made a move yet will be watching closely to see how effective the different tools are in marketing the plans to employers and employees. … These programs are getting bipartisan support. Blue and red states are studying the issue. Every year there’s a handful of states in study mode, considering what their options are, says [Angela Antonelli, executive director for the Center for Retirement Initiatives at Georgetown University].

New York’s new program, adopted in April as part of the state’s budget for fiscal year 2019, is similar to the auto-IRAs adopted in other states, except that it is not compulsory for any employer to participate, as Paychex analyst Jessica Curtin explained at the time. The program, scheduled to begin in April 2020, uses a Roth IRA structure, so contributions are made on a post-tax basis. Employers cannot make direct contributions to the plan, but those that choose to participate must automatically enroll their employees at a contribution rate of 3 percent of their paychecks; employees may then choose to opt out.

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Vermont Enacts Employment Protections for Victims of Domestic Violence, Other Crimes

Vermont Enacts Employment Protections for Victims of Domestic Violence, Other Crimes

A new law enacted in Vermont late last month extends employment protections to victims of crime, specifically targeting victims of domestic abuse and sexual assault. The law, which goes into effect on July 1, makes employees who become victims of crimes a protected class and outlaws discrimination and retaliation against these employees, Jackson Lewis attorneys Martha Van Oot and Samuel V. Maxwell explain at Lexology:

In addition, the new law carves out circumstances upon which “crime victims” are allowed to take unpaid leave from employment. These circumstances … include allowing the employee to attend:

  • A deposition or other court proceeding relating to a criminal proceeding where the employee is a “victim” and the employee has a right or obligation to appear at the proceeding;
  • A relief from abuse hearing pursuant to 15 V.S.A. §1103 [a state domestic relations abuse prevention law] when the employee seeks relief as the plaintiff;
  • A hearing concerning an order against stalking or sexual assault when the employee seeks relief as the plaintiff; or
  • A hearing seeking relief from abuse, neglect, or exploitation when the employee seeks relief as the plaintiff.

The statute allows the employee to use accrued sick, vacation, or any other accrued paid leave in lieu of taking unpaid leave.

In this regard, Vermont’s law is similar to laws recently passed in other states and jurisdictions giving employees a right to use their paid sick leave as “safe leave” for court dates, counseling, or other matters related to addressing or protecting themselves from domestic violence. New York City amended its paid sick leave mandate to that effect last year, while Maryland and New Jersey included safe leave provisions in their new sick leave laws. California, Washington, and Minnesota also give employees the right to use their paid sick leave for these purposes, as do the Canadian provinces of Manitoba and Ontario. The only country that has a statutory safe leave entitlement at the national level is the Philippines, where it is spottily enforced, but Australian lawmakers are proposing to enact one as well.

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Oregon Employers Report Trouble Finding Drug-Free Candidates

Oregon Employers Report Trouble Finding Drug-Free Candidates

In a quarterly forecast released in late May, the Oregon Office of Economic Analysis mentioned almost in passing an issue that could complicate the Pacific Northwest state’s recent track record of robust economic growth:

At least anecdotally, more firms are reporting trouble finding workers who can pass a drug test. Given the tight labor market, and legal recreational marijuana up and down the Left Coast, these reports are a bit surprising. It may be that the pool of available applicants has shifted; that individuals who can pass drug test already have a job. It may be for insurance‐related reasons that employers are ensuring they have a drug‐free workplace, even if it means monitoring their employees behavior on their own time. However it is possible that these anecdotal reports reflect a broader increase in drug usage that would be both an economic and societal problem.

Oregon’s unemployment rate is currently hovering at around 4.1 percent, the report notes, just above the historically low rate nationwide. With such a tight labor market overall, the need for employees who can pass a drug test could be putting some employers in a real bind. Although Oregon’s economists are writing from anecdotal evidence, this is a phenomenon we’ve seen in other parts of the country as well, with many employers rethinking their drug-free workplace policies in light of the labor crunch.

Some organizations simply don’t think drug testing employees outside safety-sensitive roles is worth the cost anymore, especially for relatively benign marijuana use. Even Labor Secretary Alexander Acosta has hinted that it might be appropriate for some employers to stop automatically disqualifying candidates for failing a marijuana test. Cannabis remains highly illegal under federal law, classified as a Schedule I narcotic, and this national policy seems unlikely to change in the near future. The drug has been legalized for medical use in 30 states and for recreational use in eight of those states, plus Washington, DC. This means employers throughout the country are facing a growing population of current and potential employees who now have a legal right at the state level to use marijuana.

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Employment Issues Remain Uncertain as Maine Marijuana Law Moves Forward

Employment Issues Remain Uncertain as Maine Marijuana Law Moves Forward

Maine was one of several US states where voters passed measures to legalize the use of marijuana for recreational purposes in 2016. Republican Governor Paul LePage has sought to stymie legalization by blocking implementing legislation. Last November, LePage successfully vetoed the first version of this legislation, and late last month attempted to veto a second version, but both houses of the state congress voted on May 2 to override his veto, UPI reported. The rules in the final bill are somewhat less permissive than those initially approved by voters with regards to the regulatory mechanisms under which legal marijuana can be grown and distributed in the state.

Other aspects of the voter-approved ballot measure, such as its provision protecting marijuana users against employment discrimination, have already gone into effect. That provision, which went into effect February 1, prohibits employers from refusing to employ or otherwise penalizing anyone over the age of 21 on the basis of their using marijuana, provided they are not using it during working hours or on the employer’s property. That has significant consequences for Maine employers’ drug policies, as a positive test for marijuana would no longer be sufficient cause for terminating an employee (current testing methods can only detect whether an individual has consumed cannabis within the past few weeks, not whether they are currently under the influence).

The implementing legislation, however, contains different language regarding how employers can and cannot treat employees who use marijuana, Seyfarth Shaw attorneys observe at their dedicated marijuana-law blog, The Blunt Truth:

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Connecticut Pay Equity Law Restricts Salary History Inquiries

Connecticut Pay Equity Law Restricts Salary History Inquiries

Connecticut Governor Daniel Malloy signed a bipartisan bill into law on Tuesday that will restrict employers in the state from asking candidates for their salary histories, the CT Post reported:

Called the pay equity bill, the new law prevents employers from asking job candidates about their salary history before extending them an offer. Supporters say that question often results in lower starting pay for women and people of color. In 2016, Connecticut women made 79 cents on the dollar compared to men, according to the National Women’s Law Center. Over a lifetime, women made $529,160 less than their male counterparts, on average.

Connecticut’s new law leaves some questions unanswered for employers, Proskauer attorneys Allan Bloom and Laura Fant note in a more detailed overview of the ramifications for employers. The law permits employers to ask about “other elements of a prospective employee’s compensation structure” than wages, but not the value of those elements. The law does not define the scope of these other elements, however, so Connecticut businesses may seek clarification on this question from the state’s labor department.

With the signing of this law, which goes into effect January 1, Connecticut will becomes the sixth US state to ban salary history inquiries: Massachusetts was the first to do so in 2016 (though the effective date of that law has been delayed until July 1 of this year), followed by California, Delaware, Oregon, and most recently Vermont. New York Governor Andrew Cuomo has also put forward a bill that would ban these inquiries. New Jersey’s recently-enacted equal pay law does not prohibit them, but makes it easier for employees to demonstrate pay discrimination in a lawsuit.

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