June 2024 Screening Compliance Update

JUNE 2024 SCREENING COMPLIANCE UPDATE

ClearStar is happy to share the below industry related articles written by subject matter experts and published on the internet in order to assist you in establishing and keeping a compliant background screening program. To subscribe to the Screening Compliance Update or to view past updates, please visit www.clearstar.net/category/screening-compliance-update/.

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EXECUTIVE SUMMARY

The screening compliance landscape recently witnessed some major changes that have been documented in the JUNE 2024 SCREENING COMPLIANCE UPDATE. Below is an EXECUTIVE SUMMARY of some of the new developments at the FEDERAL, STATE, and INTERNATIONAL levels.

• FEDERAL DEVELOPMENTS: The U.S. Equal Employment Opportunity Commission (EEOC) issued its “Promising Practices for Preventing Harassment in the Construction Industry” guidance which provides key recommendations that construction-industry leaders and employers should consider implementing to prevent and address harassment in the workplace so they avoid being the target of the EEOC’s enforcement efforts.
• STATE DEVELOPMENTS: Minnesota is the latest state to enact a pay transparency law, joining other localities such as California, Colorado, Illinois, Maryland, and Washington that are taking steps to address pay disparity concerns. Minnesota will also amend its drug testing law to permit oral fluid testing for drugs, cannabis, and alcohol, effective August 1, 2024.
• INTERNATIONAL DEVELOPMENTS: Hong Kong employers will be able to check whether self-employed tutors and coaches have been convicted of any sexual offenses before they are hired, under a voluntary government scheme in the fourth quarter of this year. The “Sexual Conviction Record Check Scheme” that will better protect children and the mentally disabled will be expanded to cover volunteers overseeing the vulnerable by the end of 2025.

I hope you find the JUNE 2024 SCREENING COMPLIANCE UPDATE both informative and helpful in keeping up with establishing and maintaining a compliant background screening program.

Nicolas S. Dufour
ClearStar Executive Vice President, General Counsel & Corporate Secretary

FEDERAL DEVELOPMENTS

EEOC issues anti-harassment guidance to construction-industry employers

Seyfarth Synopsis. The Equal Employment Opportunity Commission (“EEOC”) has issued guidance tailored to the construction industry regarding compliance with anti-harassment laws. This lines up with our prediction in early 2024 that the EEOC had put the construction industry squarely in its sights. The guidance is important for construction-industry leaders and employers to understand to prevent and remedy workplace harassment, and to avoid potential harassment liability.

On June 18, 2024, the EEOC issued its Promising Practices for Preventing Harassment in the Construction Industry. This guidance provides key recommendations that construction-industry leaders and employers should consider implementing to prevent and address harassment in the workplace, and avoid being the target of the EEOC’s enforcement efforts. The guidance is intended to supplement the EEOC’s Strategic Enforcement Plan (“SEP”) for fiscal years 2024-2028, which provides direction on the EEOC’s current objectives, principles, and enforcement efforts – among them, increasing diversity in the construction industry and remedying harassment. (We’ve written previously about the proposed and final SEP.)

The guidance emphasizes several core principles to prevent and address harassment in the construction industry, including a committed and engaged leadership, consistent and demonstrated accountability, strong and comprehensive anti-harassment policies, trusted and accessible complaint procedures, and regular, interactive training tailored to the appropriate audience. In support of these principles, the guidance makes several overarching recommendations to help construction-industry employers remain in compliance with federal laws, and off the EEOC’s enforcement radar.

1. Leadership and Accountability

The EEOC is looking for leaders who are vocal about non-harassment. To that end, the Agency recommends that worksite leaders—project owners, general contractors, crew leaders, and union stewards—clearly, frequently, and unequivocally message and demonstrate that harassment is prohibited. Since there are often multiple entities and types of workers on a jobsite, the EEOC advises that project leaders and general contractors focus on preventing harassment against all workers on the site, regardless of whether or not those workers are covered by anti-discrimination laws. The EEOC also recommends that general contractors assist smaller subcontractors and staffing agencies with their legal obligations under federal anti-discrimination laws by referring them to the EEOC’s Small Business Resource Center.

The EEOC also recommends that project owners provide or coordinate anti-harassment training, monitor the workforce for anti-harassment compliance, require that contract bids include a plan to prevent and address workplace harassment; and seek feedback from workers about anti-harassment efforts and whether harassment may be occurring.

• Comprehensive and Clear Harassment Policies

The EEOC also expects construction industry employers to maintain and provide to employees a clear and comprehensive anti-harassment policy. (This expectation is true no matter the industry of the employer.) The policy should provide a description of who is covered under the policy, what conduct is prohibited, and complaint and reporting procedures. The policy should also indicate the employer’s commitment to conduct a prompt and thorough investigation of any reported harassment, and to keep any reports of workplace harassment confidential. Anti-harassment policies should be regularly updated, understandable to all employees, and posted in easy-to-find places, such as in the breakroom, or near the timeclock.

• Effective and Accessible Harassment Complaint System

The EEOC reiterated the importance of an effective harassment complaint system, with points specific to the construction industry. in particular, in light of the often complex overlap of multiple employers and entities engaged in construction projects, the EEOC recommends that onsite employers and leaders work together to provide a “no wrong door” environment to workers. The harassment complaint system should be easy to understand, including in languages commonly used by workers, and should include both formal and informal methods of reporting harassment, among other measures.

• Effective Harassment Training

Finally, the EEOC emphasized the importance of regular, interactive, and comprehensive training of all workers on a construction site. According to the EEOC, harassment prevention training should be clear, easy to understand, and offered in languages commonly used by onsite workers. It should also be tailored to the specific workforce and work environment. The EEOC recommends interactive trainings, but given the dynamic nature of construction workforces, alternative options include providing training through an interactive module accessible via mobile phone, or watching a series of short video clips, followed by a guided discussion about the clips.

Anti-harassment training should include a description of prohibited harassment, with examples specific to the construction industry, and workers should be provided with the complaint procedure, and encouraged to report any harassment they observe.

Implications for Employers

Employers in the construction industry must remain on high alert when it comes to the EEOC. The EEOC announced in the SEP that it intended to focus its enforcement efforts on the industry, and less than a year into the SEP it has backed up its words with complaints filed in federal court and guidance pointed straight at the industry.

No anti-harassment program can prevent all claims. However, adopting the EEOC’s recommendations for the construction industry may help to reduce that number while also bolstering an employer’s defense if a charge is filed. Because construction worksites often include groups of workers employed by multiple entities, the EEOC stresses the importance of a committed leadership onsite to prevent, address, and remedy harassment. Construction-industry employers should be aware of the EEOC’s guidance, and should take steps to come into compliance with the key recommendations, including by establishing clear and widely disseminated anti-harassment policies, developing channels for worker complaints, promptly investigating those complaints, and taking steps to prevent future harassment.

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STATE, CITY, COUNTY AND MUNICIPAL DEVELOPMENTS

Colorado Privacy Act Amended To Include Biometric Data Provisions

On May 31, 2024, Colorado Governor Jared Polis signed HB 1130 into law. This legislation amends the Colorado Privacy Act to add specific requirements for the processing of an individual’s biometric data. This law does not have a private right of action.

Similarly to the Illinois Biometric Information Privacy Act (BIPA), this law requires controllers to provide notice and obtain consent prior to the collection or processing of a biometric identifier. The law also prohibits controllers from selling or disclosing biometric identifiers unless the customer consents or unless disclosure is necessary to fulfill the purpose of collection, to complete a financial transaction, or is required by law.

The law contains several novel requirements. For instance, it prevents a controller from purchasing a biometric identifier unless: (a) they pay the consumer, (b) they obtain the consumer’s consent, and (c) the purchase is unrelated to the provision of a product or service to the customer. Additionally, it requires companies meeting certain thresholds to disclose detailed information about their biometric data collection and use upon consumer request, including the source from which the controller access the data and the purpose for which it was processed.

The law also sets forth retention requirements that differ from those of BIPA. Specifically, controllers processing biometric data must adopt written guidelines that require the permanent destruction of a biometric identifier by the earliest of: (a) the date upon which the initial purpose for collecting the biometric identifier has been satisfied; (b) 24 months after the consumer last interacted with the controller; or (c) the earliest reasonably feasible date. The earliest reasonably feasible date must be no more than 45 days after a controller determines that storing the biometric identifier is no longer necessary or relevant to the express processing purpose, as identified by an annual review. The controller may extend the 45 day period by up to 45 additional days if necessary given the complexity and amount of biometric identifiers to be deleted. The written policy must also establish a retention schedule for biometric identifiers and include a protocol for responding to a breach of security involving biometric data. Note that the controller need not publish policies applying only to current employees or internal protocols for responding to security incidents.

Lastly, the law contains guidance on the use of biometric systems by employers. It specifies that employers may collect biometric identifiers as a condition of employment, but only to: permit access to secure physical locations or hardware (and not to track a current employee’s location or how much time they spend using an application); to record the start and end of a work day; and to improve workplace and public safety. The collection of biometric identifiers from employees for other reasons may not be a condition of employment and may occur only with consent. The law contains a broad statement that employers may still collect and process employees’ biometric identifiers for uses aligned with the employee’s reasonable expectations based on the role.

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Minnesota Passes New Job Posting Transparency Law

Minnesota is the latest jurisdiction to enact a pay transparency law, joining other localities such as California, Colorado, Illinois, Maryland and Washington, D.C., New York, and Washington state that are taking steps to address pay disparity concerns.

On May 17, 2024, Minnesota Gov. Walz signed the Omnibus Labor and Industry policy bill, including new job posting requirements. This law is in addition to existing Minnesota wage disclosure protections for employees.

The new law takes effect Jan. 1, 2025.

Pay Transparency Disclosures

The law applies to employers that employ 30 or more employees at one or more sites in Minnesota. The law does not address whether it applies to positions that could be filled by an employee working remotely.

Under the law, in each posting for a job opening, a covered employer must disclose the starting salary range or fixed pay rate and a general description of all benefits and other compensation to be offered to a selected job applicant. The description of benefits and other compensation must include, at a minimum, any health benefits, retirement benefits, and other financial perks associated with the position.

Employers must set the salary range in good faith. Salary range is defined as the “minimum and maximum annual salary or hourly range of compensation” anticipated “at the time of the posting of an advertisement for such opportunity.” The range cannot be open-ended. Alternatively, if the employer does not want to provide a wage range, the employer must list a “fixed pay rate,” meaning the exact salary or hourly rate the employer intends to pay a successful applicant.

Under the law, a job posting encompasses (1) any solicitation intended to recruit job applicants for a specific available position, (2) recruitment performed by an employer directly or by a third party, such as job sites, and (3) electronic or hard-copy job postings that list qualifications for desired applicants.

Enforcement

The Department of Labor and Industry or the Minnesota Attorney General may enforce violations of this law, which does not specify penalties for noncompliance.

Practical Considerations

Before the Jan. 1, 2025 effective date, covered employers should consider reviewing all job postings to ensure they include the required information.

Employers also should consider implementing policies to ensure recruiters and others involved in the hiring process know how to respond to prospective employee inquiries about pay and benefits. Employers also should train all personnel involved with hiring and managing employees on the new requirements.

Finally, multistate employers may consider evaluating if the company is in compliance with pay transparency laws in other states and localities.

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Minnesota Will Allow Oral Fluid Testing For Drugs, Cannabis and Alcohol

Minnesota will amend its drug testing law to permit oral fluid testing for drugs, cannabis and alcohol, effective August 1, 2024.

The Drug and Alcohol Testing in the Workplace Act (“DATWA”) currently requires employers who conduct drug and alcohol testing to use specific certified laboratories and to permit confirmatory re-testing after an applicant or employee tests positive. Under the new provision, oral fluid testing will be permitted for drugs, cannabis, and alcohol, and will not require the services of a testing laboratory. Moreover, employers will not be required to follow the written notice requirements for positive and negative test results and the right to confirmatory re-testing that DATWA requires for other types of drug and alcohol tests.

“Oral fluid test” means analysis of saliva at threshold detection levels contained in the standards of one of the programs listed in DATWA (i.e., for drugs and cannabis: the National Institute on Drug Abuse, the College of American Pathologists, and the New York Department of Health; or for alcohol: the College of American Pathologists and the New York Department of Health).

Employees and applicants must be informed of the test result at the time of the oral fluid test. Within 48 hours of an oral fluid test that is positive, inconclusive or invalid, the employee or applicant may request drug, alcohol or cannabis testing at no cost to the employee or applicant using the services of a testing laboratory specified by DATWA. All of DATWA’s existing written notice requirements and rights to a confirmatory re-test will apply to such testing.

Minnesota employers should consider whether oral fluid testing is right for their workplace. Employers will need to revise their written drug, cannabis and alcohol testing policies to incorporate the requirements for oral fluid testing.

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New Jersey Division on Civil Rights Publishes Guidance on Discrimination and Out-of-State Remote Workers

On May 14, 2024, the New Jersey Office of the Attorney General and the Division on Civil Rights (DCR) published guidance on Discrimination and Out-of-State Remote Workers. This guidance, which is not legally binding, aims to clarify the DCR’s position on how the New Jersey Law Against Discrimination (LAD) applies to all workers who are employed by New Jersey-based companies, including remote workers.

The LAD prohibits New Jersey employers from discriminating based on actual or perceived sexual orientation, gender, gender identity, gender expression, age, race, color, national origin, ancestry, religion, disability, and other protected characteristics. While the general protections and prohibitions under the LAD have long existed, the COVID-19 pandemic and related rise in hybrid and remote working arrangements raised questions as to how the LAD applies to remote workers.

Most notably, the guidance highlights that the definitions of a covered “person” under the LAD and the LAD’s substantive protections include no geographic restrictions. As such, under the guidance any employee working for a New Jersey employer can seek remedies for LAD violations, regardless of where the employee resides or where they physically work. This differs from how other jurisdictions approach the scope of state anti-discrimination law protections. For example, New York utilizes an “impact test” and looks to whether New York is the place where the impact of the alleged discriminatory conduct is felt for purposes of coverage under the New York State Human Rights Law.

The NJ guidance notes that this interpretation is supported by case law precedent from both state and federal courts interpreting the reach of the LAD. It also reiterates that the LAD is intended to be liberally construed to achieve its purpose of eliminating discrimination. That being said, the guidance recognizes that the protections under the LAD do not automatically extend to individuals who work for a company based in a state other than New Jersey. For example, the LAD may not apply to employees who work remotely in New Jersey for an employer in another state, or to employees who commute from New Jersey to work for an employer in another state. Rather, such employees would need to establish a nexus between their employer and New Jersey for the LAD to apply.

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Maryland’s New Pay Transparency Law Effective October 1, 2024

On October 1, 2024, Maryland’s House Bill 649 law takes effect, extending pay transparency requirements for Maryland employers. The law applies to all employers “engaged in a business, industry, profession, trade, or other enterprise” in Maryland, regardless of size. The law expands the state’s Equal Pay for Equal Work Act, which already requires employers to disclose wage ranges to job applicants upon request. We’ve described the main requirements of the law below.

Disclosure requirements

Covered employers must disclose a wage range and a general description of benefits and “any other compensation offered for the position,” for all public or internal job postings. The disclosure requirements apply to all positions that will be “physically performed at least in part in the state.” The state has not yet provided guidance on the law, including how to interpret this requirement. Thus, it remains unclear at this time whether the law applies to employers located outside of Maryland that employ remote workers in Maryland, or whether the law covers positions that are based in a different state but include remote work in Maryland on occasion. It also is unclear what other forms of compensation could be required under the broad disclosure requirement of “any other compensation,” which could include bonuses or equity.

Similar to other pay transparency laws, this law requires employers set wage ranges in good faith. The “wage range” must be set “in reference to” any of the following:

1. Any applicable pay scale.
2. Any previously set minimum and maximum salary or hourly rate for the position.
3. The minimum and maximum salary or hourly rate of any individual holding a comparable position at the time of the posting.
4. The budgeted amount for the position.

The disclosure requirements apply to any “posting,” defined as “a solicitation intended to recruit applicants for a specific available position.” Indirect solicitation efforts, including through third parties (such as recruiting agencies) also must follow the disclosure requirements. Should no posting for a certain position exist, employers still must disclose the required information upon an applicant’s request and prior to having any discussions on compensation with an applicant.

The law requires Maryland’s commissioner of labor and industry to develop a form that employers can use to integrate into public and internal job postings and otherwise provide the completed form to applicants as required.

Expanded wage history protections

Currently, employers are prohibited from refusing to interview, hire, or employ an applicant who refuses to provide their wage history or who requests the wage range for a position from the employer. The amended law now extends these same protections to current employees. Further, employers cannot retaliate against or refuse to promote or transfer employees who choose not to disclose their wage history or request the wage range for a position. Employers are prohibited from retaliating against any applicants or current employees for exercising any rights under the law.

Recordkeeping, enforcement and penalties

Employers are required to retain records demonstrating compliance with the law for each position for at least three years after the position is filled or the position was initially posted, if not filled.

Notably, the law does not include a private right of action for noncompliance. Instead, employees and applicants must file complaints with Maryland’s labor and industry commissioner. The Maryland Division of Labor and Industry is authorized to issue orders compelling compliance and impose the following penalties for violations, after considering factors such as the employer’s size and history of related violations:

• First violation: A letter to the employer compelling compliance.
• Second violation: A civil penalty of up to $300 for each employee/applicant for whom the employer is not in compliance.
• Third and any subsequent violations: A civil penalty of up to $600 for each employee/applicant for whom the employer is not in compliance if the violation occurred within three years after a prior finding that a violation occurred.

Next steps

Maryland joins the growing number of jurisdictions requiring pay transparency in job postings – and this trend shows no signs of slowing down. Shortly after Maryland’s law was enacted, Minnesota enacted its own pay transparency law, effective January 1, 2025. The law requires employers with 30 or more employees at one or more sites in Minnesota to list salary ranges, fixed pay rates, and a description of benefits and other compensation offered in all job position postings. Vermont also enacted a pay transparency law, which beginning July 1, 2025, will require employers with five or more employees to disclose the compensation or range of compensation to employees and applicants, with certain exceptions. The law applies to “Vermont job openings,” which does not include positions physically located outside the state and that perform work predominantly for one or more offices or worksites physically located outside the state.

Maryland employers can prepare to comply with the state’s law by reviewing their current pay transparency and pay equity practices. Employers should examine all public and internal job postings and advertisements to ensure these postings disclose the wage ranges and compensation and benefits information required under the law. Employers should carefully examine and note which positions can be “performed, at least in part” in the state. Employers also should review recordkeeping practices to ensure there are procedures in place to retain the pay disclosure compliance records for at least three years. Employers should consider conducting a pay equity audit in conjunction with counsel, to ensure that all pay practices and job postings are in compliance with applicable law and address any disparities. In addition to Maryland, Minnesota and Vermont’s laws, multistate employers should note upcoming pay transparency obligations in Washington, DC, (effective June 30, 2024) and Illinois (effective July 1, 2025).

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California’s New Drug Testing Rules Protect Employees’ Off-Duty Cannabis Use

With expanding legalization and commercialization—including several state initiatives in 2024 and perhaps even federal legislation—the chances are good that your California business has at least a few employees who consume recreational cannabis in their free time. A new California law, Assembly Bill 2188, shields these employees from consequences at work for using cannabis away from work. Among other things, AB 2188 prohibits employers from taking adverse action against employees for off-the-job cannabis consumption and limits employers from testing for cannabis with methods which are unable to identify active chemical cannabis compounds. Here’s what California employers can (and should) do about it.

Recent Trends in Cannabis Use

Despite its current federal legal status as a prohibited Schedule I substance, cannabis use has increased substantially across the country as nearly half the states have legalized its recreational use. As of January 2024, recreational cannabis use is legal for individuals over age 21 in 24 states and the District of Columbia, and medicinal use is legal in 40 states. Recent polling shows 70% of Americans support legalization. Federal lawmakers have taken notice, with several Senators issuing a letter on April 8, 2024, seeking cosponsors for a comprehensive federal bill to decriminalize, regulate, and tax cannabis. Even more recently, on May 21, 2024, the U.S. Department of Justice (DOJ), published a notice of proposed rulemaking (NPRM) to reschedule marijuana to a Schedule III controlled substance, based upon an evaluation that the drug has a relatively lower level of abuse and moderate or low physical dependence and low likelihood of psychic dependence than Schedule I and II substances.

Proof of the growing prevalence of cannabis use throughout the country and in California is in the numbers:

Nationwide Statistics:

• 17% or 55 million Americans use cannabis.
• 54% of Americans live in states where recreational cannabis use is legal (under state law).
• 74% of Americans live in states where recreational or medicinal cannabis use is legal (again, under state law).
• The cannabis industry is expected to generate nearly $40 billion in revenue in 2024.

California Statistics:

• 20% or 8 million Californians use cannabis.
• 99.5% of Californians live in a county with a cannabis dispensary.
• There are more cannabis dispensaries in Los Angeles County alone (1,481) than in any other state.

As the statistics above show, employers can expect a growing number of their employees to use cannabis at least once or twice a week, but only recently, have the implications of such growing use with respect to employers become clearer.

Cannabis & the Workplace

Although California voters legalized recreational cannabis in 2016, the legislature generally allows California employers to maintain policies regarding drug free workplaces or otherwise keep cannabis out of the workplace. (See Health & Safety Code section 11362.45(f).) The increasing popularity of recreational cannabis use sparks understandable concerns about safety as well as work performance quality and competency. But California employers should be cautious when considering how to address these issues. Extreme measures, like zero tolerance policies and drug testing protocols, may run afoul of California law, which requires, for example, reasonable suspicion for drug testing and the interactive process to determine reasonable accommodations for medical conditions (even though California employers are not required to allow on-duty medicinal marijuana use as an accommodation).

New California Law Protects Employees’ Off-Duty Use of Cannabis

While California employers can prohibit cannabis use in the workplace, enforcing such policies has posed additional challenges. Cannabis contains non-psychoactive metabolites that remain in the body for weeks after the effects have worn off. This means that standard drug testing methods cannot reliably determine whether an individual is under the influence at the time of testing or has simply consumed cannabis in prior days or weeks.

AB 2188, which took effect January 1, 2024, now imposes new requirements to ensure that California employers do not make adverse employment decisions based on an employee’s off-duty use of cannabis. In passing the law, the California legislature emphasized the importance of testing for active cannabis compounds to determine impairment, as opposed to inactive ones which do not indicate impairment and remain in the body for several weeks after cannabis consumption. As recognized in AB 2188, there remains a consensus that employees should not arrive at a worksite high or impaired; however, drug test results showing only the presence of non-psychoactive cannabis metabolites may have little to no correlation to an employee’s actual impairment on the job.

Accordingly, the law prohibits employers from discriminating against applicants and employees in hiring, termination, or any term of condition, or otherwise penalizing a person based on:

(i) cannabis use that occurs off-the-job and away from the worksite; and

(ii) a drug test that returns a positive result for non-psychoactive cannabis metabolites.

There are a few important exemptions—as the law does not apply to employees in the building or construction trades or to employees hired for positions that require federal government background investigation or security clearance.

Separately, the California legislature also amended existing law to prohibit employers from requesting or relying upon information regarding prior cannabis use obtained through a criminal history or background check (unless otherwise permitted by state/federal law).

Practical Steps for Employers

With AB 2188 now in effect in California, and more states likely to follow suit, there are several things you can do to ensure compliance:

• Update Drug Policies: Update employee handbooks and drug-free workplace policies to reflect the new requirements of AB 2188 to make clear that employment decisions will not be made based on off-duty cannabis use or the existence of non-psychoactive metabolites.
• Update Recruiting/Hiring Practices:Advise recruiting and hiring personnel to refrain from discussing and/or collecting information regarding off-duty conduct and review employment applications for any questions that could illicit such information.
• Review Background Check Practices:Work with background check agencies on procedures to remove/shield information related to prior cannabis use (e.g., cannabis-related criminal history) to the extent it is part of your background screening process.
• Contact Your Drug Testing Vendor: Confirm that your vendor does not test for or report on non-psychoactive cannabis metabolites when conducting pre-employment or “good cause” drug tests on applicants and employees and identify alternative tests for cannabis impairment.

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INTERNATIONAL DEVELOPMENTS

Hong Kong to allow employers to check self-employed tutors, coaches for record of sexual offences before hiring

• Secretary for Security Chris Tang says enhancement to the Sexual Conviction Record Check Scheme will better protect children and the mentally disabled
• Tang also says scheme will be expanded to cover volunteers overseeing the vulnerable by end 2025

Hong Kong employers will be able to check whether self-employed tutors and coaches have been convicted of any sexual offences before they are hired, under a voluntary government scheme in the fourth quarter of this year.

Secretary for Security Chris Tang Ping-keung said on Tuesday the change to the Sexual Conviction Record Check Scheme will enhance the protection of children and the mentally disabled. Tang also said the Sexual Conviction Record Check Scheme would be expanded to cover volunteers who have regular contact with children and mentally disabled people by the end of 2025.

The expansion would mean individuals such as parents and guardians are also eligible as employers under the scheme, he said. “Self-employed persons, for example, private tutors, tend to have more opportunities of having unsupervised individual contact with children … so a relatively higher risk may be involved,” Tang said on the panel on security at the Legislative Council. “Thus, we will expand the scheme to prospective self-employed persons in the first phase in the fourth quarter of 2024,” he added.

“Some volunteers will interact with children and mentally incapacitated people on a regular basis and some activities may involve high-risk situations such as voluntary teaching services and overnight exchange programmes,” he said. “Voluntary groups may not be familiar with all the volunteers.”

Tang said pending the results of the scheme’s first covering the self-employed and second phase involving volunteers, the scheme would be extended to all existing employees and self-employed people in jobs which have regular contact with children and mentally disabled. He stressed that the scheme was voluntary-based, which means employers or voluntary groups can decide whether to conduct the check according to their own risk assessment. The Sexual Conviction Record Check Scheme was launched in 2011 to allow employers of people undertaking works related to children or mentally disabled people to check whether potential employees have any criminal conviction for sexual offences such as rape, indecent assault, and voyeurism. The scheme currently covers prospective employees, contract renewal staff, and staff assigned by outsourced service providers to other organisations. Employers currently allowed to use the scheme are limited to organisations or enterprises. Police had received over 619,000 new applications and 136,000 renewal applications since the scheme’s launch until up to April this year, Tang said.The auto-telephone answering system has also received more than 720,000 inquiries regarding the outcome of the checks.

Chris Tang also says the scheme will be expanded to cover volunteers overseeing the vulnerable by end 2025. Photo: Jonathan Wong

Tang said police would launch an online registration platform in the fourth quarter of this year to allow the public to submit documents and inquire about their applications.

A 24-hour fingerprint-taking service would be set up in six designated police stations across the city, he said, while self-service kiosks with fingerprint-taking functions would also be introduced by the end of 2025.

“The validity period of the check results will be extended from 18 months to 36 months, so as to increase the efficiency and capacity of handling applications,” he said.

“At present, the system is capable of handling about 60,000 applications each year. We expect that starting from the fourth quarter of 2024, the system will be able to process at least 210,000 new applications annually.”

When asked why some sexual offences such as bestiality were not include in the specified list of the scheme, Tang said the bureau would review the list from time to time and consider suggestions by the Law Reform Commission of Hong Kong.

Lawmaker Elizabeth Quat said even with the list, there might not be enough protection for the children as the definitions of sexual offences are “outdated”.

“For rape as an example, it can only be committed by a man upon a woman. The definition of sexual intercourse under rape does not include other manners of penetration,” she said.

Quat also expressed concerns that spent conviction is not included in the scheme.

Convictions are considered as a spent conviction when an individual is not sentenced to imprisonment exceeding three months or to a fine over HK$10,000, has not been convicted in Hong Kong before, and has not been convicted again after three years.

Other lawmakers also raised questions on whether employers are able to check the overseas criminal conviction records if the potential employees had lived in foreign places before.

But Tang said the scheme only applies to records within Hong Kong, adding that employers can individually ask the employees to present overseas records without using the scheme.

Asked if the bureau would disclose information about all sex offenders to the public, Tang defended the scheme’s current arrangement as “ideal”, saying that societal views on privacy might vary and authorities need to consider those who were rehabilitated.

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Cannabis Legalization and Positive Drug Test in Canada

More than five years have passed since cannabis legalization in Canada, yet employers are still grappling with managing this now-legal substance in the workplace. In many safety-sensitive workplaces across the country, testing for tetrahydrocannabinol (THC) remains standard practice. Despite legalization, the risks associated with cannabis impairment have not disappeared; in fact, not only does there appear to be high rates of cannabis use amount Canadian adults, but studies also indicate that there continues to be the use of cannabis hours before or during work, escalating the risk of impairment and safety concerns.

How to manage positive THC drug tests in the workplace

Although cannabis and alcohol differ significantly, both are legal substances in Canada and can lead to impairment, particularly for those in safety-sensitive workplaces or positions. Following legalization, one of the foremost challenges for many employers remains the management of positive drug tests for THC. Below are considerations and insights to aid employers in navigating positive drug tests for legal substances.

1. Ensure that your policy, employee education, and training clearly outline the expectations for substance use, encompassing the two legal substances, alcohol and cannabis.
   • Companies should understand the difference between acute intoxication and impairment from cannabis use. Equipped with this knowledge, decisions can be made regarding the balance between permitting individuals to use a legal substance outside of work, and maintaining workplace safety.
   • Different industries and companies may have varying risk tolerance levels, leading to differences in the timeframe for abstaining from cannabis use.
   • Employee education is paramount. Ensuring employees have a deep understanding of the risks of cannabis use, despite its acceptance and legal status is imperative to reducing risks in the workplace.
2. Understand the tests you are ordering and what the results can tell you.
   • There are options for drug testing for THC, including urine and oral fluid testing each providing different information with a positive result. It is essential that companies conducting drug testing use a method that answers their specific questions, such as whether the individual used cannabis on the day of the test, or in the 24 hours prior to the test.
   • Urine tests are for the inactive metabolite which can stay positive for days to weeks after the use of cannabis depending on several factors.
   • Oral fluid testing detects the presence of active THC left in the oral cavity after smoking, vaporizing or ingesting cannabis. Results indicate recent use of cannabis (within hours of the collection depending on the cut-off level utilized).
   • The quantitative levels of certain testing methods can offer a more precise timeframe of cannabis use, potentially influencing the determination of impairment risk.
3. Consider the implications of fitness for duty on the day of the test.
   • Testing is often conducted after an incident (post-incident testing) or upon suspicion of substance use (reasonable cause testing). However, there may be a delay between the indication for a test and the testing collection. Understanding potential risks at the start of the shift and at the time of the incident is equally important as the quantitative levels and risks at the time of collection, although this may only be feasible with certain testing methods.
4. After a positive drug test, it is important to consider assessing employees for a substance use disorder.
   • There are professionals who can assess employees to ensure they are not suffering from a substance use disorder, which would require treatment.
   • Some individuals may not seek help for an underlying substance use disorder unless required to be assessed after a positive workplace drug test.
   • Those diagnosed with a substance use disorder require treatment to address their medical condition, which is a crucial component of a workplace alcohol and drug testing program. Addressing their condition can have a positive impact on the employee’s future health and wellness.
5. The implications of a positive drug test for THC depend on all the aforementioned factors.
   • Utilizing information from the policy, interpreting the results of the drug test, considering the timeframe of the test in relation to the start of the shift and the time of the indication for the drug test, and determining if an employee requires help with a substance use disorder can collectively determine the next steps.

Want more information on positive drug tests in the workplace?

While every case presents unique challenges, the aforementioned considerations serve to break down the necessary steps and factors required to effectively manage a positive drug test.

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Occupational Health and Safety Act

Employers may become subject to an Occupational Health and Safety (OHS) investigation where an injury or accident occurs at their worksite. The OHS officer’s investigative authority is granted by the Occupational Health and Safety Act (Alberta) (the OHSA), which empowers them to (among other things):

• Attend the worksite and scene of the injury or accident;
• Interview any witnesses or any other person relevant to the investigation;
• Request the production of any records that may be relevant to the investigation; and
• Take any interim steps the OHS officer believes is necessary to complete the investigation or otherwise ensure the health and safety of the worksite.

The OHSA does not explicitly address whether legal counsel can be excluded from OHS investigation interviews, but adjudicators have considered this issue.

In Ebsworth v Alberta (Human Resources and Employment), 2005 ABQB 976, OHS assigned officers to conduct an investigation of a fatal accident at the employer’s worksite. One of the witnesses to the accident refused to be interviewed without the presence of his legal counsel, which was contrary to OHS’ investigation procedure. Upon being presented with this issue, the court determined that a “statutory delegate has the implied authority to determine its own procedure as necessary to carry out its function.” As a result, the court found that “[a]lthough it may be desirable and perhaps even advantageous to permit the presence of legal counsel during an interview,” OHS had the jurisdiction to choose, as part of its investigation procedure, to exclude legal counsel from attending the investigation interviews.

This finding was confirmed in Neustaedter v Alberta Relations Board, 2023 ABKB 294. Similar to the situation in Ebsworth, OHS proceeded to conduct an investigation into a fatal accident. The employer’s representative and some of the employees refused to participate in interviews about the accident without the presence of legal counsel. In response, OHS issued various administrative penalties for hindering the investigation process and failing to comply with OHS directives. These penalties were upheld on appeal first by the Alberta Labour Relations Board and then the Alberta Court of King’s Bench, both referencing the decision in Ebsworth. The court held that Ebsworth correctly decided that OHS investigators are under no legal obligation, whether under the Charter or otherwise, to permit legal counsel to be present during an interview for the purpose of obtaining a statement as authorized by the OHSA.

Takeaway

Being subject to an OHS investigation can be a challenging experience, but we have compiled some dos and don’ts that can assist you in navigating the process more smoothly, demonstrating your commitment to a safe workplace and potentially improving your workplace health and safety in the long run.

Dos

1. Do provide access and be transparent: Allow the OHS officer access to the workplace, relevant documents and requested information. Answer questions honestly and thoroughly. Transparency can build trust and demonstrate a commitment to safety.
2. Do keep records and take notes: Maintain detailed records of safety measures, training sessions and incident reports. Document all interactions with the OHS officer, noting all requests made.
3. Do inform employees and clarify procedures: Notify employees about the investigation and what it entails. Explain the investigation process to your employees and encourage them to cooperate and provide truthful information.
4. Do conduct internal audits and implement improvements: Before and during the OHS investigation, review your safety protocols to ensure they meet regulatory standards. If any issues are identified, take immediate steps to address and rectify them.
5. Do consult legal counsel: Experienced counsel can help guide you through the investigation process and help ensure your rights are protected. Even if counsel is not permitted in the interview, they can assist in the process.

Don’ts

1. Don’t withhold information and restrict access: The employer is obligated to cooperate with the investigation and failing to do so can lead to further scrutiny and potential penalties. However, OHS is not entitled to information that is subject to legal privilege. If you are unsure whether a document may be privileged, check with legal counsel before producing it.
2. Don’t tamper with documents or instruct employees to lie: These acts are illegal and doing so can lead to legal repercussions for both you and your employees.
3. Don’t overreact or make rush decisions: Stay calm and professional throughout the investigation and take time to consider any requests or recommendations from the OHS officer before taking action.
4. Don’t neglect immediate issues and disregard feedback: Address urgent safety concerns immediately even if they are outside the scope of the investigation and use the OHS investigation as an opportunity to improve your workplace safety culture and protocols.
5. Don’t retaliate against employees or create a hostile work environment: Ensure that no employee faces retaliation for participating in the investigation or raising safety concerns. This will lead to a more open environment where employees are comfortable raising issues before they lead to an injury or accident.

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Pay Transparency, Pay Equity and Pay Gap Reporting – are you ready?

One of the key HR trends for 2024 and beyond is increased pay transparency, being driven by regulatory changes across the US, Canada, the EU, Australia and a number of other jurisdictions.

New measures in the EU will require employers with employees in an EU member state to undertake gender pay gap reporting across the EU for the first time and to adopt other pay transparency measures. Although EU member states have until June 2026 to implement the EU Pay Transparency Directive, employers should be starting preparations now, given the wide-ranging nature of the Directive, its cross-over with the Corporate Sustainability Reporting Directive and its impact on a series of key strategic areas for HR.

1. What is the EU Pay Transparency Directive (the “Directive”)?

The Directive is intended to bolster existing laws on equal pay and help reduce the gender pay gap across Europe.

Key measures include:

• Job seekers will have the right to receive information about the pay band for their role prior to interview.
• Candidates cannot be asked about pay history.
• Existing workers will have the right to information on their individual pay level and the average pay levels, broken down by sex, for categories of workers performing the same work as them or work of equal value to theirs.
• Pay secrecy will be banned.
• Employers must ensure that female and male workers are paid equally for the same work or work of equal value. Pay structures should use objective and gender-neutral criteria agreed with workers’ representatives.
• Employers with at least 100 workers must report on the company’s gender pay gap by categories of workers who perform like work or work of equal value (employers must report on variable pay elements and benefits in kind as well as basic pay).

While the Directive is not applicable in relation to UK workers following Brexit, it is relevant for employers in the UK which have workers in an EU member state. In addition, UK employers may wish to align with the EU requirements as a matter of best practice. Finally, the Labour Party has indicated that it would introduce pay transparency laws in the UK in the event that it wins the next election and this is certainly a growing global trend.

2. What can employers be doing now?

This depends on the employer’s current maturity in this area.

• Job architecture: A consistent job architecture or job evaluation scheme across EU operations is essential as both the pay gap reporting by categories of worker and the publication of pay bands during recruitment are reliant on a sound job architecture.
• Pay gap reporting: Ensure you have appropriate processes, systems and governance in place to gather all the data required to undertake gender pay gap reporting. Begin to understand the drivers of pay within your organisation, using the “Adjusted Pay Gap” and a regression analysis.
• Pay Equity audit: If you are concerned that you may have a pay gap of 5%+ for a category of worker, consider undertaking a “dummy run” of your gender pay gap report before you are required to do so by the Directive. This can be done under “legal privilege”, meaning that the results would not be disclosable, allowing you to remedy any equal pay issues prior to the introduction of the Directive and to start to reduce any pay gaps identified (which can take time).
• Reward strategy and pay bands: Consider the impact of the Directive on your Reward strategy – is the organisation ready for greater transparency on pay and progression?
• Recruitment / Talent Acquisition strategy and processes: How will the requirement to publish pay bands on job vacancies and the salary history ban impact your talent acquisition strategy and processes?

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Germans celebrate as recreational cannabis use becomes legal

Last month, Germany’s lower house of parliament voted to legalize cannabis for limited recreational use following a controversial national debate about the pros and cons of allowing easier access to the drug.

The new rules mean adults can possess small amounts for personal use but the drug remains banned for under 18s.

Under the new legislation, put forward by Germany’s ruling coalition party, adults can cultivate up to three plants for private consumption and be allowed to possess 50g at one time at home, and 25g in public, starting from April 1.

From July 1, cannabis will be available in licensed not-for-profit clubs with no more than 500 members – all of whom would have to be adults. Only club members would be allowed to consume their output.

The German government said that cannabis would remain illegal for minors and highly restricted for young adults, adding that consuming the drug near schools and playgrounds would be illegal.

The move makes Germany the third country in Europe – after Malta and Luxembourg – to legalize the drug for recreational use, removing cannabis from the official list of banned substances.

The Netherlands bans possession of drugs but some municipalities permit them to be sold in coffee shops under its so-called policy of toleration.

In other countries, like Australia and the US, rules vary in different localities.

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MISCELLANEOUS DEVELOPMENTS

It’s An Election Year: Understanding Restrictions on Employer Actions Regarding Employee Political Activity

Seyfarth Synopsis: In six months, the U.S. presidential election will take place and inevitably employee views on the elections and election issues will make their way into the workplace. In today’s highly polarized socio-political landscape, the intersection of workplace dynamics and individual politics often causes disruptions in the workplace. When confronted with these issues, employers must tread carefully when considering how to respond, if at all, to the political activities of their employees. While navigating this terrain, it is crucial to understand the state laws that restrict an employer’s ability to take action against an employee based solely on their political activity.

The United States has a patchwork of laws governing an employer’s ability to restrict or regulate employee political expression. At the federal level, the First Amendment guarantees individuals the right to freedom of speech. However, such constitutional protections generally do not apply in private-sector workplaces. In light of this lack of federal protection for political speech in a private workplace, several states have enacted laws to safeguard private employees from adverse employment actions based on their political beliefs or activities.

For example, some states have laws that explicitly prohibit employers from taking adverse employment actions against employees based on their political activities outside of work. These statutes vary in scope and application. Some states provide broad protections for employees’ political activities, like California, and others offer more limited safeguards or none at all, like New York. Additionally, some laws concerning employer action in response to employee political activity allow for certain exceptions, such as when an employee’s political activities are a bona fide occupational qualification or interfere with an employee’s job performance.

There are also a handful of states with laws that generally prohibit taking adverse action against employees based on lawful off duty conduct, which could also apply to political activity. In these states, even if there is a question as to whether or not the employee’s conduct was “political” in nature, there would still be a restriction on the employer’s ability to take action against the employee because of it. Some states, such as California, Colorado and New York, have both lawful off duty conduct law and laws restricting employer action in response to employee political activity.

In terms of laws restricting adverse employment action in response to employee political activity, unsurprisingly, California provides arguably the strongest statutory protections for engaging in political activity. California Labor Code section 1101 provides that “No employer shall make, adopt, or enforce any rule, regulation, or policy: (a) Forbidding or preventing employees from engaging or participating in politics. . . . (b) Controlling or directing, or tending to control or direct the political activities of affiliations of employees.” Similarly, section 1102 of the same Code states that “[n]o employer shall coerce or influence . . . his employees . . . to adopt or follow or refrain from adopting or following any particular course or line of political action or political activity.” California courts have adopted a broad interpretation of what constitutes “political activity” for purposes of the statute.

Colorado and New York have prohibitions that are more narrowly drawn when it comes to an employer’s ability to regulate employee political activity. Colorado law prohibits employers from regulating off-duty conduct, including “preventing any of his or her employees from engaging or participating in politics or from becoming a candidate for public office or being elected to and entering upon the duties of any public office.” Colorado courts have not had much occasion to analyze this statute. New York’s statutory protections for engaging in off-duty political activities is drawn even narrower than the Colorado statute. Specifically, New York Labor Law section 201-d(2)(a) provides that it “shall be unlawful for any employer or employment agency to . . . discriminate against an individual in compensation, promotion or terms, conditions or privilege because of an individual’s political activities outside of working hours. But the statutes express definition of political activity limits the statute’s protections to “(i) running for public office, (ii) campaigning for a candidate for public office, or (iii) participating in fund-raising activities for the benefit of a candidate, political party or political advocacy group. N.Y. Lab. Law § 201-d(1)(a).

In addition, state anti-discrimination laws may intersect with political speech in a number of ways. Some jurisdictions, like the District of Columbia, prohibit discrimination based on political affiliation. Employers cannot allow speech and expression to create a hostile work environment. Of course, harassment can arise based on what individuals say, but are based on displays of symbols that are considered offensive, harassing, or intimidating. For example, the EEOC and some courts have found that displays of the confederate flag may contribute to a “hostile work environment” that can be demeaning, intimidating, or harassing toward employees on the basis of their race. To the extent an employer has workplace policies in effect that touch on political activity, it is important that they are uniformly enforced, regardless of an employee’s protected characteristics. Selective enforcement of workplace policies against some political speech risks claims of discrimination or harassment even in those states where political affiliation is not a protected classification.

Employers operating in multiple states or with remote employees must be cognizant of the differing legal landscapes across the states in which they have employees and tailor their actions accordingly. A thorough understanding of the relevant state laws is crucial for crafting compliant employment policies and avoiding potential legal pitfalls. State laws play a significant role in shaping the relationship between employers and employees concerning political expression in the workplace. Employers must stay informed about the specific regulations applicable in their jurisdiction and proactively address any compliance issues.

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Canada’s Privacy Regulator Launches New Tools for Data Breach Reporting

On May 24, 2024, the Office of the Information and Privacy Commissioner of Canada (OPC) issued new guidance relating to data breach reporting for federal institutions and businesses. The OPC has launched a new online breach reporting form for federal institutions subject to the Privacy Act and has also updated its online breach reporting form for businesses subject to the Personal Information Protection and Electronic Documents Act (PIPEDA).

These forms are intended to make the process more seamless and efficient. The new system also permits businesses with the ability to update existing reports.

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Artificial Intelligence (AI) Employment Discrimination Laws Proposed in Six States: What Employers Need to Know (US)

We recently wrote about Colorado’s historic law aimed at protecting, among others, employees and employment applicants from harm arising out of the use of artificial intelligence (AI) systems. Although Colorado is the first state to pass legislation addressing AI-based discrimination, similar bills have been proposed in at least six other states as well as at the federal level, with a recent Executive Order discussing a wide range of issues arising from the private-sector use of AI systems, including discrimination in the employment context. All US employers should take note of this trend and prepare for the possibility of new compliance obligations resulting from employer use of AI systems.

States with proposed legislation addressing algorithmic discrimination

In 2024, legislators in California, Georgia, Hawaii, Illinois, and Washington proposed bills aimed at regulating the use of AI systems to make, or to assist an employer in making, employment decisions. More specifically, these bills seek to mitigate the risk of algorithmic discrimination arising from an employer’s use of an AI system.

“Algorithmic discrimination” means any condition in which the use of an AI system results in differential treatment or impact that disfavors an individual on the basis of protected characteristics (e.g., age, color, ethnicity, disability, national origin, race, religion, veteran status, and sex).

Each of the proposed bills would impose similar obligations onto employers that use an AI system or an automated decision tool (ADT) in making employment-related decisions. ADT means a system that uses AI and has been specifically developed to make, or contribute to making, consequential decisions, including employment decisions.

In general, these proposed bills impose a duty of reasonable care on employers to mitigate and assess the risk of algorithmic discrimination arising from their use of AI systems. There are significant affirmative reporting requirements, including direct notifications to individuals who are the subject of a decision made by an AI system. In some cases, the bills also provide individuals with the chance to correct data input into the AI system and appeal adverse consequential decisions, which may require human review. The specifics of each state’s proposed bill are discussed further below.

California: AB 2930

• The bill would (i) prohibit employers from using ADTs in a discriminatory manner; (ii) require employers to perform annual impact assessments of its use of an ADT; and (iii) require employers to provide notice to applicants and employees that are subject to the use of an ADT.
• The law provides a narrow exception for employers with fewer than 25 employees.
• If passed, the bill will go into effect on January 1, 2026.

Georgia: H.B. 890

• The bill would (i) expand existing anti-discrimination laws to prohibit discrimination resulting from the use of or reliance upon AI or ADTs, and (ii) preclude employers from relying upon the use of AI or ADTs as a defense to an allegation of discrimination.
• The proposed bill does not provide an effective date.

Hawaii: H.B. 1607

• The bill would (i) prohibit employers from using ADTs in a discriminatory manner; (ii) require employers to perform annual impact assessments of its use of an ADT; and (iii) require employers to provide notice to applicants and employees that are subject to the use of an ADT.
• The law provides a narrow exception for employers with fewer than 50 employees.
• The proposed bill does not provide an effective date.

Illinois: H.B. 5322

• The Illinois Commercial Algorithmic Impact Assessments Act would require annual impact assessments by employers that use AI systems.
• The law provides a narrow exception for employers with fewer than 50 employees.
• If passed, the bill will go into effect on January 1, 2026.

Washington: H.B. 1951

• The bill would (i) prohibit employers from using ADTs in a discriminatory manner; (ii) require employers to perform annual impact assessments of its use of an ADT; and (iii) require employers to provide notice to applicants and employees that are subject to the use of an ADT.
• The law provides a narrow exception for employers with fewer than 50 employees.
• If passed, the bill will go into effect on January 1, 2025.

In California and Washington, legislation aimed at addressing algorithmic discrimination previously failed in 2023. However, in both states, the currently-proposed bills now carry the support of several large, influential technology-based employers.

What federal regulations addressing algorithmic discrimination could contain

No federal legislation addressing AI-based discrimination in employment has been proposed at this time. That said, however, the President’s recent Executive Order indicates that issues arising from the use of AI systems also are being considered at the federal level. When Colorado Governor Jared Polis signed the Colorado Artificial Intelligence Act (“CAIA”) into law, he expressed his opinion that “the important work of protecting consumers from discrimination” arising from the use of AI systems “is better considered and applied by the federal government[.]”[1] Governor Polis also suggested that there is a chance that the federal government preempts CAIA “with a needed cohesive federal approach.”[2]

In his Executive Order, President Biden directs the federal government to “enforce existing consumer protection laws and principles and enact appropriate safeguards against…unintended bias, discrimination…and other harms from AI.” In addition, the Assistant Attorney General in charge of the Department of Justice’s Civil Rights Division was required to meet with the head of the federal government’s civil rights office to discuss comprehensive use of their respective authorities to prevent and address algorithmic discrimination in the use of AI systems.

Should the federal government pass regulations on employers’ use of AI systems, the requirements will likely mirror legislation addressing the same issue at a state level. Thus, federal regulation could impose on employers affirmative reporting requirements related to the use of an AI system and a duty of reasonable care to mitigate the risk of algorithmic discrimination when using AI systems to make employment decisions.

What all US employers need to know

Although state legislatures and the federal government only recently began to tackle issues arising from the use of AI, including by employers to make employment related decisions, the sheer number of proposals addressing the issue suggests that the trend towards regulation of AI systems will continue moving forward and moving fast. Beyond the scope of this blog, legislators across the nation have also proposed various bills addressing other issues arising from the use of AI, such as pornographic deepfakes and the use of AI chat bots.

Colorado still is the only US jurisdiction that currently regulates an employer’s use of AI systems. However, employers outside of Colorado should take note of how regulation at the federal level and at the state level could impact their use of an AI system or ADTs.

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New Salary Level is Generally Coming for Exempt White-Collar Employees

The new salary level regulations issued by the U.S. Department of Labor will take effect July 1. On that date, the salary threshold for white-collar exemptions from the overtime requirements of the Fair Labor Standards Act will increase to $844 a week, or $43,888 a year. Six months later, on January 1, the salary threshold will increase again to $1,128 a week, or $58,656 per year.

In addition, the annual salary level required to claim the “highly compensated employee” exemption will increase to $132,964 on July 1, and to $151,164 on January 1.

But the courts may intervene and stop one or both updates with an injunction. If so, the new regulations would suffer the same fate as regulations issued by the Obama Administration in 2016. A federal court in Texas permanently enjoined those regulations only days before they were to take effect.

There are three lawsuits pending in Texas that are challenging the new regulations. The one that is most likely to have an early ruling is Texas v. U.S. Department of Labor, which was filed on June 3 in the U.S. District Court in Eastern Texas. This is the same court that ruled against the Obama regulations in 2016. The lawsuit alleges that the 2024 regulations have the same problems as the 2016 regulations. That is, on July 1, 2024, the Final Rule will classify approximately one million employees who are “employed in a bona fide executive, administrative, or professional capacity” as non-exempt based on their salary, not their bona fide job duties…. [A]nd on January 1, 2025, the Final Rule will classify approximately three million more employees who are “employed in a bona fide executive, administrative, or professional capacity” as non-exempt based on their salary, not their bona fide job duties.

Texas asked the court to set aside the minimum salary levels in the 2024 regulations because, like the levels in the 2016 regulations, they “would exclude so many employees who perform exempt duties, [that they fail] to carry out Congress’s unambiguous intent.”

Both parties have filed briefs, and a hearing is scheduled for Monday, June 24. This gives the court six days to enjoin the regulations before they take effect. We will provide an update once the court issues its ruling.

Two other cases have been filed in Texas challenging the 2024 regulations. In Plano Chamber of Commerce v. U.S. Department of Labor, also filed in the Eastern District of Texas, the plaintiffs argued that because the Eastern District entered a permanent injunction against the 2016 regulations, it still had jurisdiction to enforce it and should block the 2024 regulations.

The other case, Flint Avenue LLC v. U.S. Department of Labor, was filed in the U.S. District Court in the Northern District of Texas. That suit alleges that the FLSA does not permit the DOL to consider a salary level test when drafting regulations to determine whether an employee is exempt from overtime. The plaintiff moved for a preliminary injunction on June 12, but to date no hearing has been set.

In addition to these lawsuits, Congress has passed Joint Resolutions in both the House and Senate seeking to eliminate the 2024 regulations. The Congressional Review Act allows Congress to eliminate an agency regulation if the resolution gets a majority vote in each house, and if the President signs it. However, the Congressional Review Act has a look-back provision under which Congress can eliminate regulations only if the regulations were finalized in the final 60 legislative days of a two-year session. The actual cut-off date cannot be calculated until the current session adjourns, but experts have estimated that any regulations finalized before May 22 are likely to be beyond Congress’ reach. Moreover, it is a near certainty that President Biden would refuse to sign such a resolution.

Finally, there is a potential indirect threat to the 2024 regulations. In 2019, a lawsuit was filed against regulations issued by the Trump Administration, which set $684/week as the required weekly salary for white-collar exemptions. Mayfield v. U.S. Department of Labor challenged the Trump regulations arguing, as does the plaintiff in the Flint Avenue case, that the DOL does not have the authority to set a salary threshold in its white-collar regulations. The plaintiff lost in the district court, but he has appealed to the U.S. Court of Appeals for the Fifth Circuit. Oral argument is scheduled for August 5. The plaintiff argues that even if a court were to find that the DOL had the authority to adopt a salary level test, because the FLSA does not clearly define the limits of the DOL’s power, any regulations incorporating such a test have “flimsy legal support.”

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