Employment Law Trends to Watch in 2023
January 9, 2023
With election dust settled, the new year brings new employment law trends for employers to watch carefully. The following list and short description of compliance topics are intended as a helpful reminder to be sure employers are starting 2023 on a solid legal footing.
1. Non-compete and non-disclosure agreements under scrutiny nationally and in the Pacific Northwest: On January 6, 2023, the Federal Trade Commission proposed a new rule prohibiting non-compete agreements. While a total national ban is unlikely, 2023 will certainly see more scrutiny of non-compete agreements, especially with the still-tight labor market. Oregon and Washington also implemented new restrictions on non-compete agreements in 2022. Additionally, Oregon and Washington now have bans on the use of non-disclosure or confidentiality provisions in separation agreements or relating to certain complaints such as sexual harassment. If employers have new or existing employees with non-compete or non-disclosure agreements or policy provisions, now is a good time to be sure they are legally compliant.
2. Continued skepticism for independent contractor determinations: The tight labor market and Biden administration priorities are also contributing to heavy state and federal skepticism of employer independent contractor determinations. Lawsuits nationwide are also seeking to overturn these determinations, including broad class actions for wages, overtime, and meal and break periods owed to persons who are truly employees and not independent contractors. If employers have any independent contractors, be sure to double-check each independent contractor’s situation against the factors to be considered a true independent contractor. Hint, if the independent contractor only works for one employer, the person is probably an employee! Bullard Law is available to assist with these determinations, which must be done on a case-by-case basis.
3. Overtime rules are being revised: In 2022, Oregon revised overtime rules for bakers, tortillerias, and farmworkers (SB 1513), including new notice requirements. Additionally, Oregon removed the agricultural exemption for overtime, with the changes phased in from 2023 to 2027 (HB 4002). These changes heavily impact the agricultural and bakery industries, including increased costs and administrative burdens. Employers in these industries should ensure compliance with the new laws. Additionally, all employers should be aware that agency scrutiny and wage lawsuits for unpaid overtime are on the rise. Compliance with the federal Fair Labor Standards Act, as well as state and local wage laws, will continue to be an issue in 2023.
4. Heat and smoke and HVAC rules fully enforced in 2023: New state and federal OSHA heat and smoke rules came into effect in 2022 and are expected to receive heavy attention in 2023. While these rules are typically thought of as applying to farm workers, they are not so strictly limited. Breaks, access to shade and water, and other protections for outdoor workers should be fully incorporated into employer practices for 2023. Additionally, indoor workers in buildings without working air conditioning may also be protected by these rules. At least one Oregon employer received a complaint about a lack of indoor air conditioning during a 2022 heat wave. Ongoing COVID rules and guidelines also require employers to inspect and maintain HVAC systems, including regularly changing air filters and ensuring proper operation. Bullard Law can assist all employers with determining how best to comply with all these rules.
5. 2023 wage revisions applicable now: Many states and localities, including counties and cities, have revised minimum wage and overtime laws that came into effect on January 1, 2023. Before employers’ first paychecks roll out in the new year, be sure to check all applicable wage and overtime laws, including county and city laws, to ensure compliance and avoid any wage complaints or lawsuits, including class action lawsuits. Wage lawsuits are some of the most expensive and difficult for employers to defend due to penalties and attorney fees.
6. Time rounding and “start of day” procedures heavily litigated in 2023: Employers with hourly employees who have time-keeping systems that round time to the nearest whole figure, such as ten minutes, five minutes, or even one minute, should review their time-keeping systems to ensure compliance with wage laws. Home Depot in California is facing heavy scrutiny of its time-keeping system that uses rounding, and other employers are expected to face similar class action wage lawsuits. Similarly, employers across the country are facing class action wage lawsuits based on mandatory employer procedures before “clocking in,” such as the time it takes for computers to start up to clock in, the time it takes to get into mandatory uniforms or safety equipment, the time it takes to get through security before clocking in, or even the time it takes to park a car and walk into the building to clock in. Employers should ensure that any mandatory, time-consuming procedures for the start or end of the workday are compensated time.
7. Pay equity and transparency is hot news in 2023: Pay equity is receiving increasing attention nationally, and the Pacific Northwest has been leading the charge with pay equity laws. The OFCCP is expected to do more pay equity audits and plans to contest attorney-client privileges on employer self-audits that are aided by in-house or outside counsel. Oregon added to its pay equity laws by requiring equity analyses before bonuses (SB 1514). Washington state also enacted pay transparency requirements (SB 5761), requiring employers to disclose salary ranges in job postings. Oregon and other states are expected to follow, and pay equity and transparency laws are expected on a national basis in coming years. 2023 may be a good time for all employers to add salary ranges to job postings and conduct pay equity analyses.
8. Paid Family Medical Leave across the PNW: Oregon’s new paid family medical leave law began on January 1, 2023, with employee and employer contributions beginning on this date. Employees may begin to apply for and take leave starting September 3, 2023. Small employers with less than 25 employees nationally do not need to pay the employer contribution portion. ALL OREGON EMPLOYERS must withhold and pay the employee contribution starting now (see our prior alerts for details here and here). Washington state previously enacted Paid Family Medical Leave and made changes, including revised contribution rates for 2023 due to ongoing financial shortfalls in the program. All Pacific Northwest employers should immediately ensure compliance with employee withholdings, employer contributions if applicable, using the new contribution rates, and posting information notices for employees.
9. Small employers are required to comply with the Oregon Retirement Savings Law effective on March 1, 2023: Oregon implemented a mandatory retirement savings plan in 2017, but the law exempted employers with fewer than 5 employees. Called “Oregon Saves,” this program does not require employer contributions but does require Oregon employers to register into the Oregon Saves program or obtain an exemption. Employers with 3 or 4 employees must register by March 1, 2023. Employers with only 1 or 2 employees have until July 31, 2023. Oregon employers that offer retirement programs are eligible for exemption. Oregon employers that do not offer workplace retirement plans must register with Oregon Saves and allow employees to start an Individual Retirement Account (IRA) through Oregon Saves, with the employer collecting the IRA contributions and paying them to Oregon Saves for the employees. For more information and to register or obtain an exemption, go to www.oregonsaves.com
10. Federal I-9 Forms updating in 2023: The federal I-9 forms used for ensuring employees are legally permitted to work in the United States are being updated, but the update is taking longer than anticipated. For now, the old forms should continue to be used even though they have a 10/31/2022 expiration date. It is anticipated that the forms update will eventually include permanent remote inspection of I-9 supporting documents, although this remains under discussion. The COVID-era rules permitting remote inspection of I-9 supporting documents remain in place through July 31, 2023. Look for more changes to the I-9 form and document inspection process in 2023.
The content of this Alert is provided for general information purposes only. It should not be considered legal advice or financial advice or used as a substitute for consulting an attorney for legal advice.
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