Policy Matters Newsletter - May 16, 2023

That AI Is So Hot Right Now, But What Is It? As we noted in this podcast, the labor and employment community – nay, most of the world – is struggling to figure out the best way to reap the benefits of AI, while most governments are also struggling to figure out the best way to regulate this exponentially developing technology (note that generally speaking, a more productive workforce is a benefit to our government, and AI should be no different). To that end, in this piece, Seyfarth summarizes the approach to AI outlined by four federal agencies, speaks to regulations abroad and what we could see in the US, and finally transcribes ChatGPT’s own thoughts on potential regulation of . . . itself! Of all things, the current writers’ strike is a nice little microcosm of the disruptions AI has caused in the normal flow of the workplace. Indeed, one of the primary labor demands is the inclusion of a new contractual provision providing that AI cannot provide either literary or source materials. AI, its developments, and its potential effects across industries will remain a salient issue for the foreseeable future. Stay tuned.

Wither The Administrative State. The next SCOTUS term will be a monumental one for the operation of the so-called “administrative state,” though the inception of the frontal assault began some time ago. Indeed, we have had numerous occasions recently in this space to discuss the current composition of SCOTUS’ antipathy toward the administrative state. Well, recently, SCOTUS granted certiorari in a case that could eliminate — or severely undercut — one of the most important legal doctrines currently holding up the weight of the administrative state: so-called Chevron Deference, named after the SCOTUS case bearing the same name. Very simply put, this important legal doctrine provides that a court may not substitute its own interpretation of a statute for a reasonable interpretation made by an administrative agency. The facts of the case are not particularly important, but the ruling could have sea-changing effects if SCOTUS keeps with its recent proclivity of ruling against federal agencies. Stay tuned.

EEOC Public Sector Harassment Guidance. On April 20, 2023, the EEOC issued a technical assistance document entitled “Promising Practices for Preventing Harassment in the Federal Sector,” summarizing practices that federal agencies are encouraged but not required to follow. EEOC Chair Charlotte Burrows stated that the document is intended to help federal agencies prevent and remedy harassment and to update policies and programs in light of workplace changes necessitated by the pandemic. Indeed, the EEOC emphasizes that since fiscal year 2018, more than half of federal sector equal employment opportunity complaints included an allegation of harassment.

The document discusses employment practices required by the Equal Employment Opportunity Management Directive 715 (MD-715) and recommended “promising practices” for federal employers. Although the document does not apply to private employers, the recommendations are also helpful as they provide insight into how the EEOC enforcement efforts are evolving. Three key takeaways from the document include: First, the EEOC recommends that employers employ neutral staff members who conduct investigations within at least ten days of receiving the complaint, and the employer then must disclose to both the complainant and the harasser the investigation findings and what actions will be taken. Second, companies should maintain and regularly disseminate rigorous anti-harassment policies and ensure that they include periodic anti-harassment training for both supervisory and non-supervisory employees. And finally, the EEOC emphasizes that virtual harassment due to remote work cannot be overlooked, noting the importance of retention policies for chat messages between employees. For a more detailed analysis of the document, please see Seyfarth’s insights here.

What Does More Privacy Legislation Mean For Employers As Seyfarth reported last week, Tennessee and Montana are joining Virginia, Colorado, and others to press “omnibus” privacy legislation––that is, privacy legislation which regulates personal information as a broad category, as opposed to data collected by a particular regulated business or for a specific purpose. In Tennessee, HB 1181, which was signed by the governor on May 11, 2023, requires controllers and processers to create, maintain, and comply with a privacy program in writing that reasonably conforms to the National Institute of Standards and Technology’s privacy framework. Montana’s SB 384 follows in line with Tennessee’s new law in terms of the usual set of privacy obligations (notice requirements, rights of access and deletion, restrictions around targeted advertising and online behavioral advertising, et cetera), however we do note that Tennessee has also built into its law specific guidance as to how to develop and deploy a privacy program under the Tennessee Information Protection Act. Stay up to date on more news and insights from Seyfarth in the world of privacy and cybersecurity here.

Four Day Workweek? Here’s Looking At You, California. On March 1, 2023, Democratic representative from California Mark Takano introduced a bill, the Thirty-Two Hour Workweek Act, that would reduce the standard workweek from 40 to 32 hours, effectively ending the five day workweek. The legislation would amend the definition of the workweek currently set forth in federal Fair Labor Standards Act of 1938, and would require that employers pay time-and-a-half to any employee who works more than 32 hours in one week. As written, the proposal applies to non-exempt workers who are paid hourly, but it also includes some salaried employees. Democrat representatives Pramila Jayapal of Washington and Jan Schakowsky of Illinois also endorsed the bill: “For too long, our country has prioritized corporate profits over working people and Americans have been forced to work longer hours, sacrificing time with loved ones.” Representative Takano cites new research allegedly supporting the benefits of a four-day workweek.

The idea of the four-day workweek has received increased attention since February after the largely successful results from a comprehensive pilot study in the UK, which details the world’s largest four-day workweek trial to date, comprising 61 companies from June to December 2022.  Seyfarth’s recent blog post provides a detailed analysis into the study’s results and critical questions that still need answers. This measure faces an uphill battle. Indeed, Republican Virginia Foxx of North Carolina indicated in a statement to Nexstar that she is not a fan of “blanket federal regulations [she contends] often cause more harm than good and do not account for the unique needs of industries, communities, and small business. Main Street America is still recovering from pandemic-era shutdowns – it does not need more top-down federal mandates.”

California has introduced similar legislation (more than once now), which Seyfarth discussed here. Obviously, such a drastic change to our labor system would likely first come in through one of the laboratories of policy, like California. Stay tuned.

NY Minimum Wage Set To Increase, And Continue To Increase. On May 3, 2023, New York Governor Kathy Hochul signed legislation implementing the state’s budget, which calls for an increase in the minimum wage to $16 for the City, Long Island and Westchester, and $15 for the rest of the state by January 1, 2024, then to $17 and $16 respectively by January 1, 2026. The budget also provides that the minimum wage should continue to increase beyond 2026, based on the Consumer Price Index for Urban Wage Earners and Clerical Workers for the Northeast Region. The New York State Department of Labor will be tasked with monitoring New York State adjusting minimum wage rates each January as appropriate based on the index.

Busy Bee That Is The NLRB. Since the beginning of 2023, this space has been occupied by  reporting on various happenings at the NLRB, and those happenings do not appear to be slowing at all.

GC Priorities

As we noted here, the NLRB General Counsel has released a new memo, GC Memo 23-04, identifying 15 different precedents that she believes need to be revisited. This memo came after GC Abruzzo released GC Memo 21-04 in August 2021, which also identified broad priorities. But, in a statement reflecting just how busy the NLRB has been, Abruzzo noted that “the majority of issues identified in GC Memo 21-04 no longer require submission to the Division of Advice.”

Employee Misconduct, Meh… Apparently

In the beginning of this month, the NLRB rendered its decision in Lion Elastomers LLC II —summarized by Seyfarth here — which, according to the NLRB’s press release, “overrul[ed] the prior Board’s decision in General Motors LLC 369 NLRB No. 127 (2020), and return[ed] to the long-established ‘setting-specific’ standards applicable to cases where employees are disciplined or discharged for misconduct that occurs during activity otherwise protected by the National Labor Relations Act.” The decision provides significantly more latitude for employees to utilize, as the dissent in the case calls it, “racist, sexist, and other profane speech or conduct in the context of workplace activism and union-related activity.” This is an unfortunate example of the NLRB bending over backward to construe any workplace conduct, even “racist, sexist, and other profane speech,” as protected concerted activity under the National Labor Relations Act.

OFCCP Releases EEO-1 Reports Of Nearly 20,000 Federal Contractors. The Office of Federal Contract Compliance Programs (OFCCP) has recently released EEO-1 Reports containing demographic data for nearly 20,000 federal contractors in response to a Freedom of Information Act request by the Center for Investigative Reporting (“CIR”). As Seyfarth recently reported, and covered last year, EEO-1 Reports must be filed annually by all employers with 100 or more employees, and by OFCCP-covered federal contractors and first-tier subcontractors with 50 or more employees. There are several types of EEO-1 Reports, depending on the organizational structure of the reporting entity, and the Center For Investigative Reporting’s FOIA request sought only “Type 2” EEO-1 Reports––the Consolidated Reports required of multi-establishment employers that include aggregated data for all employees of the company — at headquarters as well as all establishments — categorized by race/ethnicity, sex, and job category.

The CIR is already reporting on the released information and what the data ostensibly reflects about diversity in American employment. The release of these reports coincides with the EEOC’s issuance of a technical assistance document, Promising Practices for Preventing Harassment in the Federal Sector, which provides practical tips for preventing and addressing workplace harassment. As Seyfarth recently discussed, while the guidance is geared toward federal government employers, it provides helpful recommendations regarding this topic, is generally applicable to the private sector as well, and also provides an important perspective on how EEOC enforcement efforts may be evolving. The EEOC is also reportedly taking a close look at artificial intelligence tools being used in the workplace and offering training to its staff on how to detect discrimination caused by these tools.

Wither UI Modernization. During the negotiations over Build Back Better, we discussed Congress’ attempts to modernize the unemployment insurance (“UI”) system, particularly in light of the ubiquitous UI fraud that occurred often, and without regard to geography, during the pandemic. The GOP in the House of Representatives, however, has passed a bill entitled the “Protecting Taxpayers and Victims of Unemployment Fraud Act,” that would claw back some of those attempts. Specifically, the bill would rescind un-obligated funds Congress approved in a series of emergency spending packages, including the American Rescue Plan, during the pandemic — including roughly $1.5 billion of UI appropriations. The Administration has pledged to veto the measure should it pass. The bill does not have a path forward in the Senate, but it is a clear marker of GOP priority, especially in the House of Representatives.

So Many Rules, So Little Time. Speaking Of The Administrative State… This newsletter has occupied a lot of white space discussing various federal agencies regulating behaviors, as well as the current push against administrative regulation from SCOTUS. One thing we have not discussed, however, is timing. Perhaps the Administration did not account for how strong that push would be, as numerous federal agencies are struggling to finalize a number of important regulations. Focusing solely on the Department of Labor, with only 1.5 years remaining in the current Administration, the following regulations remain unfinalized: (1) updating prevailing wage rates paid to workers on federally funded projects, (2) outlining independent contractor status under federal wage laws, and (3) setting when salaried workers are due overtime pay. And this is all before those regulations see legal challenges, and highlights only one of the numerous federal agencies attempting to promulgate regulations. Notably, any rules that are not finalized by early 2024 could fall prey to the Congressional Review Act. At this point, federal agencies will need to be more nimble in order to effectuate the President’s administrative agenda.

The Department of Labor’s rulemaking processes are further complicated by the controversy surrounding Julie Su’s nomination, which we discussed here. The Administration is currently employing a full-court press strategy to push through Su’s nomination, but it is unclear whether such a strategy will convince moderate senators like  Joe Manchin of West Virginia, Mark Kelly of Arizona, or Jon Tester of Montana, as well as Independents like Sens. Kyrsten Sinema of Arizona and Angus King of Maine. In an increasingly complex working environment, businesses rely on the Department of Labor to provide clarity on a number of issues. Particularly salient right now is the DOL’s handling of classification of independent contractors. As we have noted, the independent contractor rule promulgated during the Trump administration remains the law of the land, but some businesses and legislators are accusing the DOL of ignoring that rule in favor of its own interpretation. In such uncertain times, certainty and stability are good as gold. Here is our note of hope that the next few months bring some additional stability to the “administrative state.”