This new year presents a host of compliance and litigation challenges for the employment law practitioner. Perennially, employment law attorneys focus on restrictive covenants and wage-and-hour regulations, and this year is no exception. Other trends reflect new challenges as the law develops to keep up with modern workplace realities.

Salary inquiries for job applicants

Many jurisdictions, like the city of Philadelphia, have enacted legislation prohibiting an inquiry into an applicant's wage or salary history. The Greater Philadelphia Chamber of Commerce challenged the city of Philadelphia's ordinance on First Amendment grounds in Greater Philadelphia Chamber of Commerce v. Philadelphia, U.S. District Court for the Eastern District of Pennsylvania, 17-cv-01548).

Specifically, the Philadelphia ordinance included an inquiry provision, prohibiting an employer from asking about an applicant's wage history, and a "reliance" provision, which prohibits an employer from relying on wage history in making hiring decisions. The district court determined that the inquiry provision constituted an unconstitutional infringement of First Amendment rights, but upheld the reliance provision. The court of appeals reversed the district court in part, upholding the entire ordinance as a proper remedy to address the substantial government interest in addressing the pay gap for minorities and women, see Greater Philadelphia Chamber of Commerce v. Philadelphia, U.S. Court of Appeals for the Third Circuit, No. 18-2175, 18-2176.

The Third Circuit decision paves the way for other courts to uphold salary inquiry statutes, and for other jurisdictions to enact them. Even if a particular jurisdiction does not have salary inquiry rules, the existence of these statutes, and the Third Circuit's approval of them, highlight that employers should use salary inquiries carefully during the application and hiring process. Even if other jurisdictions do not follow suit with regard to litigation, the case law reflects a new best practice in hiring inquiries that employers should consider carefully.

Wage-and-hour regulations

Federal regulators continue to take steps to protect employees from abuse of the overtime regulations and exemptions. The U.S. Department of Labor enacted new overtime regulations increasing the salary requirements for the overtime exemptions to apply to a minimum salary of $35,568. The increase over the old $23,700 threshold is significant. The new regulations also permit employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10% of the standard salary level. Employers will need to review current salaries for exempt employees, as well as which of the various perks and benefits provided to their employers will go into calculating the employee's salary.

Meanwhile, the U.S. Department of Labor (DOL) issued final rules regarding the definition of joint employers. The definition of joint employer is important for many federal employment laws: federal anti-discrimination and harassment laws; the National Labor Relations Act; and the Fair Labor Standards Act, to name a few. The DOL's new rules impose a four-factor test to determine whether businesses jointly employ workers, as follows: whether either the business can hire or fire employees; whether the business controls employees' schedules or the terms and conditions of employment to a substantial degree; whether either the business determines wages; and whether either the business maintains employment records for the employee.

Under the previous test, the employee only needed to show that their work for one business was "not completely disassociated" from the work for the other business. This clarity regarding the definition of joint employer will assist employers in establishing the appropriate terms and conditions to govern joint employer situations. Similar guidance is expected from the NLRB and the EEOC.

Restrictive covenants

While the law and drafting practices are in constant flux with regard to restrictive covenants, this year, the trend to watch is legislative efforts to limit or ban restrictive covenants. Senators proposed a bipartisan bill to limit restrictive covenants, the Workplace Mobility Act of 2019, in November 2019. The bill attempts to ban all noncompetes, except where the agreement is ancillary to the sale of a business or the dissolution or disassociation from a partnership. Pennsylvania has proposed legislation that imposes a similar ban and also requires that noncompete cases involving a Pennsylvania resident shall be heard in a Pennsylvania court and reviewed under Pennsylvania law. This bill still sits in committee in Pennsylvania.

A bill is likewise pending in New Jersey that would require New Jersey employers who wish to impose a restrictive covenant to meet certain requirements set forth in the act, including that the restriction must not exceed one year, and that the employer must pay the employee their salary during the period of the restriction.

Legislative limits on noncompetes would dramatically change the relationship between employers and employees with regard to post-employment restrictions. The proposed legislation, even if not successful, emphasizes a general dissatisfaction with restrictive covenants and the burdens they place on departing employees and compensation in general. Employment law practitioners should draft with these potential changes in mind, and consider the effectiveness of less controversial post-employment restrictions, such as nonsolicitation and confidentiality provisions.

Medical marijuana and drug testing

In the absence of legislative and judicial guidance, employers continue to struggle with employees who are certified medical marijuana users. While Pennsylvania law prohibits discrimination on the basis of an employee's status as a medical marijuana user, it does not require an employer to accommodate medical marijuana use. For some job positions, statutory, safety or contracting requirements behoove an employer to disqualify certified medical marijuana users from certain positions.

Detection of medical marijuana during routine drug testing, when an employer has a policy requiring disclosure, creates its own legal issues regarding termination. If the employer has policies requiring disclosure of medical marijuana certification, the employer has to consider when and whether to terminate the employee who failed to disclose and failed the drug test. Another interesting issue is whether the use of medical marijuana provides notice to an employer that an employee is covered by the Americans with Disabilities Act.

Employees will continue to challenge the failure to accommodate under federal and Pennsylvania disability and family law statutes, and to challenge terminations for safety reasons. Employers will need to draft policies that appropriately address workplace safety, state law protection of certified medical marijuana users, and the ADA. Case law in the future may provide additional guidance.

Protection of LGBTQ rights

In 2019, the U.S. Supreme Court took up three cases regarding LGBTQ rights: Altitude Express v. Zarda; Bostock v. Clayton County, Georgia and R.G. & G.R. Harris Funeral Homes v. Equal Employment Opportunity Commission. In all three cases, the employer terminated the employee, and the employees claimed the termination violated Title VII's prohibition against discrimination "because of sex." Two of the employees in question identified as gay, and the third as transgender. A decision is expected in 2020.

Along with legislative efforts to address protection for LGBT people across the nation, these cases could present new guidance regarding protecting LGBT employees in the workplace. Employment practitioners will watch for these decisions, but, as with the salary inquiry statutes, the cases require reflection on best practices and the risks involved in not protecting LGBT employees from discrimination or harassment.

2020 promises to be another interesting year in employment law developments. Legislative and judicial activities may dramatically change the way that we address overtime exemptions, LGBT employees, certified medical marijuana employers, and post-termination restrictions. Stay tuned.

Patricia Collins is a partner and employment law chair with Antheil Maslow & MacMinn based in Doylestown. Her practice focuses primarily on employment, commercial litigation and health care law. To learn more about the firm or Collins, visit www.ammlaw.com.

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