Compliance cheat sheet: 9 big legal updates you might’ve missed this summer

It’s officially back-to-school season! For HR, that means it’s time to get your ducks in a row and fall back into an efficient routine before open enrollment starts.

We hope you enjoyed some well-deserved R&R this summer, whether you managed to take an extended (and, fingers crossed, unplugged) vacation or squeezed in a quick hush trip.

But back in the real world, the feds stayed busy — all summer long. Based on the slew of legal developments between June and August, we’re guessing federal agencies didn’t give the OK for Summer Fridays.

HR’s compliance cheat sheet: What you need to know

But we’ve got you covered. This compliance cheat sheet will help you get up to speed on the most important legal updates of the summer. In no particular order, here’s what you might’ve missed while you were trying to beat the heat:

1. DOL proposes new FLSA salary threshold for exempt employees

On Aug. 30, the U.S. Department of Labor (DOL) announced a long-awaited proposed rule that would increase the annual salary threshold for exempt employees. Specifically, the proposed rule would:   

• Increase the FLSA regulations’ standard salary level from $684 per week ($35,568 per year) to $1,059 per week ($55,068 per year) 
• Increase the total annual compensation requirement for highly compensated employees from $107,432 per year to $143,988 per year 
• Restore overtime protections for U.S. territories, ensuring workers in those territories where the FLSA minimum wage applies have the same overtime protections as other U.S. workers, and
• Automatically update earnings thresholds every three years so they keep pace with changes in worker salaries, ensuring that employers could adapt more easily because they would know when salary updates would happen and how they would be calculated.

Once the proposed rule is published in the Federal Register, the public will be able to submit comments. We’ll keep you posted.

2. EEOC settles first-ever AI discrimination suit

In early August, the EEOC and iTutorGroup, Inc. reached a six-figure settlement to resolve the first AI discrimination suit. The groundbreaking agreement showcases the EEOC’s commitment to seek remedies when employees face discrimination due to an employer’s use of technology.

In this case, the EEOC alleged the company’s use of a hiring program software rejected “female applicants age[d] 55 or older and male applicants age[d] 60 or older,” effectively screening out more than 200 applicants.

What it means for HR: As you may recall, the agency launched its Artificial Intelligence and Algorithmic Fairness Initiative in January. And in May, it issued a new resource that outlines important considerations when incorporating AI tools into employment decisions, which we covered as soon as it was released. And of course, you’ll want to come up with a plan to future-proof your HR career as AI models evolve and improve.

3. SCOTUS raises the bar on religious accommodation duty

Toward the end of June, the Supreme Court expanded employers’ duty under Title VII to provide religious accommodations to employees, issuing a unanimous decision that essentially redefines the concept of “undue hardship” in cases involving religious accommodation. The case is Groff v. DeJoy.

The Groff case involves a postal worker who sought a religious accommodation: having Sundays off. His request was initially granted. But when Amazon began Sunday deliveries, that created problems, the postal service said. Ultimately, the postal worker resigned and filed a lawsuit that reached the high Court.

In a nutshell, the Court’s employee-friendly ruling explains that an undue hardship exists when granting an accommodation “would result in substantial increased costs in relation to the conduct of [the employer’s] particular business.”

The Court remanded the case for further development in light of the newly clarified standard. We’ll keep you posted.

What it means for HR: The key takeaway is that employers must now do more when employees seek religious accommodation. Precisely how much more remains to be seen. In the meantime, establish a clear procedure for employees who need religious accommodation – and then communicate it to your staff so they know how to submit requests. And of course, training for frontline managers is crucial. They need to know what to do if an employee comes to them to ask for accommodation.

4. DHS announces HR-friendly I-9 changes

Good news: On Aug. 1, the Department of Homeland Security (DHS) announced that employers may remotely examine employees’ I-9 forms — so long as the company is enrolled in E-Verify.

In response to the COVID pandemic, the feds allowed flexibility in the remote filing of I-9 forms. That flexibility, which allowed employers to delay physical inspections of Employment Eligibility Verification docs for workers hired remotely, was set to end on July 31 of this year.

The uptick in remote hiring and remote work that started during the pandemic has become “the new normal.” Because of this, the end of I-9 flexibility meant employers would face a significant compliance hurdle: How could they possibly comply with I-9 inspection requirements for remote employees, especially those who live and work out of state?

What it means for HR: Importantly, this benefit is available only to employers enrolled in E-Verify, so if your company isn’t enrolled in the program, that’s the first step. Plus, check out our complete coverage of the big changes to Form I-9 for more.

5. EEOC proposes regs for PWFA

Protecting the rights of pregnant employees has been a focal point since the start of 2023. And that momentum has continued throughout the summer.

Most recently, the Pregnant Workers Fairness Act (PWFA) took effect on June 27. As a reminder, the narrow legislation focuses on accommodations for pregnant employees.

In July, the EEOC released guidance to help employers comply with the law and also issued proposed regulations. Public comments on the proposed regs are being accepted through Oct. 11, and the EEOC is expected to release the final rule by Dec. 29. We’ll keep you posted.

What it means for HR: This is another evolving situation that’s not quite settled. Even so, the EEOC has provided guidance to help employers in the meantime. One very quick, easy-to-implement tip for HR: The EEOC’s proposed rule includes plenty of accommodation examples. Plus, it lists four accommodations that the agency says are almost always reasonable. A best practice would be to follow the proposed regs until the final rule is published.

6. SCOTUS ruling raises vital question: Is DEI in jeopardy?

In late June, the Supreme Court issued a bombshell ruling, striking down affirmative action in higher education. The decision is not directly related to employment law but appears likely to reverberate into the workplace.

For context, this ruling stems from two education cases that challenged the use of race in admissions decisions. The Court ultimately determined race-based admissions systems in higher education are unconstitutional – and thus prohibited.

The ruling immediately raised a question for employers: What – if anything – does it mean for DEI initiatives?

After the decision was announced, EEOC Commissioner Andrea Lucas said the ruling should be a “wake-up call for employers … to take a hard look at the lawfulness of their corporate diversity programs.” In an interview with Fox News, Lucas also confirmed her belief that the ruling would increase the number of challenges to companies’ DEI programs.

By mid-July, attorneys general of 13 states sent a letter, warning Fortune 100 CEOs that they “will face serious legal consequences” if they take their DEI efforts too far by discriminating based on race.

What it means for HR: How will this affect corporate DEI programs? It’s too soon to tell, Lucas posted on LinkedIn. During the Fox interview, Lucas clarified that she wasn’t criticizing all diversity programs. What matters, Lucas explained, is how DEI programs are structured. She listed red flags in DEI programs, like “race-restricted internships, race-restricted mentoring, race-focused promotion decisions, etc.” The key is to not use race as a factor in employment decisions, Lucas said. This is an area to watch, so stay tuned.

7. NLRB ruling adopts new standard for assessing ‘lawfulness’ of work rules

Earlier this year, we predicted that litigation focusing on labor and management relations would be an evolving area of employment law to watch in 2023.

In early August, the NLRB issued an employee-friendly decision in Stericycle Inc., adopting a new legal standard for evaluating workplace rules challenged as facially unlawful under Section 8(a)(1) of the National Labor Relations Act.  

Under the new standard, employers must narrowly tailor workplace rules so they don’t interfere with employees’ rights under the NLRA. Our recent coverage of the decision provides background info about the previous standard and also explains the new standard that more quickly presumes workplace rules to be unlawful.

What it means for HR: Bump “review and revise employee handbooks” to the top of your to-do list. Employers are going to need to take a magnifying glass to workplace rules expressed in employee handbooks to examine whether they may reasonably be interpreted as unduly coercive, and thus illegal, under the NLRA. For even more help assessing your handbook, this helpful resource from the NLRB contains a checklist highlighting what employers CAN’T do under Section 8(a)(1) of the NLRA.

8. NLRB leader issues memo targeting non-competes

On June 1, Jennifer Abruzzo, general counsel at the NLRB, issued a memo that said overbroad non-compete agreements are unlawful because they chill employees’ rights under Section 7 of the NLRA in five different ways.

Non-competes are becoming increasingly frowned upon – and this is just another step in the process. As you may recall, in 2021, President Biden took measures to discourage the use of non-competes by the Federal Trade Commission, which issued a proposed rule earlier this year.

What it means for HR: For practical purposes, at this point, if you’re considering a non-compete agreement, it’s probably a good idea to reach out to counsel. An employment and labor law attorney can assess whether a non-compete is appropriate under your specific circumstances, and if so, can help you dot the i’s and cross the t’s to help you stay on the right side of the law.

9. OSHA adds new reporting requirements

In mid-July, the DOL announced a long-awaited final rule that will require certain employers in high-hazard industries to electronically submit injury and illness information to OSHA. The rule will take effect on Jan. 1, 2024.

What it means for HR: This narrow rule is industry-specific, so you’ll need to check whether it applies to you. For your convenience, our coverage of the announcement includes a non-exhaustive list of covered industries.