lockaby-law

Three Things Every Business Owner Should Know About a Department of Labor Investigation

Fri, 02 Jan 2026 13:00:03 GMT

The U.S. Department of Labor (DOL) regularly investigates businesses for compliance with federal employment laws. These investigations often involve questions about employee classification, overtime pay, minimum wage, recordkeeping, and leave requirements.

Some investigations are triggered by employee complaints, while others result from broader enforcement efforts or audits. Regardless of how they begin, DOL investigations can move quickly and require prompt, organized responses from employers.

A DOL Investigation is Not an Accusation, but It Is Serious

A DOL investigation does not automatically mean an employer has violated the law. In many cases, the agency is seeking to understand a business’s pay practices, classifications, and records. However, investigations carry legal consequences. Information provided to the agency can form the basis for back-wage assessments, penalties, or broader enforcement actions.

Recordkeeping and Classification Issues Are Often the Focus

DOL investigations frequently focus on whether employees are properly classified and whether time and pay records are accurate and complete. Missing records, inconsistent timekeeping, or misclassification of employees as exempt or independent contractors can quickly expand the scope of an investigation.

How records are gathered, reviewed, and produced matters. Disorganized or incomplete submissions can raise additional questions and lead to broader requests.

Cooperation Still Requires a Deliberate Strategy

Employers must cooperate with DOL investigations, but cooperation doesn’t mean responding without structure or strategy. Communications with the agency, document production, and employee interviews all have an effect on the investigation.

A coordinated response where points of contact are clearly identified, the scope of requests is understood, and relevant information is preserved can help the investigation proceed while protecting the business’s interests.

Do You Really Need a Shareholder or Operating Agreement?

Wed, 17 Dec 2025 05:00:07 GMT

At first glance, operating agreements (for LLCs) and shareholder agreements (for corporations) feel like optional paperwork. Maybe you put them off as something you'll "get around to" once the business is more established or settled. However, these documents are often the difference between smooth operations and costly disputes. They define how your business will make decisions, allocate ownership, manage conflict, and protect value. So, do you really need a shareholder or operating agreement? The short answer: yes, you really do.

Setting the Rules Before You Need Them

A written agreement establishes how the business runs day to day and how major decisions get made. It gives structure to ownership, management, voting rights, and financial matters. More importantly, it provides clarity before questions or disagreements arise.

This becomes especially important as a business grows, adds partners, needs capital, or faces other unexpected changes.

Reducing Conflict and Protecting Relationships

Even strong business partnerships encounter stress. Stressors could include money decisions, workload imbalance, expansion, or differing visions for the future. When expectations aren't documented, misunderstandings grow, and personal relationships can deteriorate quickly.

A well-drafted agreement provides a roadmap. It outlines roles, responsibilities, and how to resolve disagreements, helping owners stay aligned and focused on the health of the business.

Addressing the "What Ifs"

Every business eventually faces events that require clear rules. A shareholder or operating agreement typically addresses:

Ownership percentages and voting power
How profits and losses are distributed
How new owners are added
What happens if an owner wants out
Buy-sell terms and valuation methods
Restrictions on transferring ownership
What happens in the event of death, disability, or divorce

These situations are hard enough on their own. Having a process in place makes them much more manageable.

Protecting the Business from Default Rules

Without an agreement, the business falls back on state default statutes. Those rules are intentionally generic and rarely reflect what the owners intended.

That could mean:

Equal voting rights when the owners expected something different
Few restrictions on transferring ownership
Unclear roles and authority
Disputes with no built-in resolution process
Potential for unintended ownership changes
Difficulty securing financing or entering into contracts

You lose the ability to control how your own business operates.

LLCs vs Corporations

LLCs rely on operating agreements to define management, member rights, capital contributions, and distributions.

Corporations use shareholder agreements to govern the relationship among shareholders, outline protections for minority owners, and control how shares are transferred.

Both documents serve the same purpose: predictability, stability, and protection.

The Bottom Line

A shareholder or operating agreement is not "extra paperwork." It is a core governance document that reduces risk, preserves relationships, and protects the long-term health of the business.

Whistleblower and Qui Tam Claims: What You Need to Know

Wed, 10 Dec 2025 13:00:06 GMT

Whistleblower and qui tam claims play an important role in helping the United States government uncover fraud and protect taxpayer dollars. Whistleblowers often come forward with legitimate concerns, but many do so without fully understanding their legal protections, the personal risks involved, or what the process actually looks like.

If you are considering a whistleblower or qui tam claim, understanding the structure, timing, and consequences of these cases is critical before taking any next steps.

What is a Qui Tam Claim?

A qui tam lawsuit is a specific type of whistleblower action brought under the federal False Claims Act. It allows a private individual, called a relator, to file a lawsuit on behalf of the United States when they believe a company has knowingly submitted false claims for government funds.

These claims commonly arise in situations involving improper billing, misuse of federal loan or assistance programs, or false certification made to obtain government payments.

Whistleblower Protections and Their Limits

Federal and state whistleblower laws prohibit retaliation against individuals who report suspected wrongdoing. Prohibited retaliation can include termination, demotion, harassment, or any other adverse employment actions taken because a person raised a concern or reported misconduct.

However, these protections are not automatic. Whether they apply often depends on how concerns are reported, what information is disclosed, and when disclosures occur. Missteps early in the process, such as reporting allegations publicly or sharing information improperly, can limit both legal protections and potential recovery.

Timing and Confidentiality are Critical

Qui tam claims must be filed under seal and handled with strict confidentiality. This gives the government time to investigate the allegations without alerting the subject of the investigation.

Public disclosure of information (intentional or otherwise) can disqualify a whistleblower from pursuing a claim altogether. For that reason, speaking with counsel before taking action is one of the most important decisions a whistleblower can make.

What to Expect

Whistleblower cases are rarely quick. They often involve extended periods of investigation, limited communication while a case is under seal, and uncertainty about whether the government will ultimately intervene.

Understanding these realities from the beginning can help a whistleblower remain informed. What to learn more? We've counseled relators, or whistleblowers, in multiple qui tam claims in recent years, including helping the government recoup over $1.7 million and approximately $900 thousand in various actions. Check out our YouTube video all about qui tam claims and the False Claims Act.

Corporate Governance Explained

Wed, 03 Dec 2025 13:01:02 GMT

What is Corporate Governance?

Corporate governance is a set of rules, relationships, and processes that direct how a company is managed. At its core, it balances the interests of an organization's shareholders, leadership, employees, and any other stakeholders. Good governance is a blueprint for long-term stability, effective decision making, and ethical business conduct.

Corporate governance defines who has authority in the business, how major decisions are made, and what obligations management owes to shareholders and stakeholders. It ensures that corporate leaders act transparently, use resources responsibly, and remain accountable for the company's performance.

Principles of Corporate Governance

Approaches across industries vary, but strong governance typically rests on a few key principles.

Accountability - Boards and executives must be made answerable for their decisions. Clear reporting structures help ensure responsibility for outcomes, both good and bad.
Transparency - Accurate and timely disclosure of financial information, risks, and operational decisions builds trust and helps investors and stakeholders make informed assessments.
Fairness - Governance structures should safeguard shareholder rights and protect minority interests. Fairness also extends to how employees and stakeholders are treated.
Responsibility - Leaders must act in the best interests of the company, comply with legal and regulatory standards, and consider the long-term health of the business.
Risk Management - Identifying, evaluating, and mitigating risk is fundamental. Effective governance embeds risk oversight into board duties and management practices.

Models of Corporate Governance

Different jurisdictions rely on different governance frameworks. Some of the most common models include:

The Shareholder Model

Also known as the Anglo-American model, it emphasizes maximizing shareholder value. In this model, a board of directors oversees management, and shareholders elect directors and vote on major issues. This model is common in the United States and the United Kingdom.

The Two-Tier Model

This model involves both a management board and a supervisory board. The management board runs the day-to-day operations, whereas the supervisory board appoints and monitors management.

The Japanese Model

Centered on long-term relationships among shareholders, banks, and business groups, this model emphasizes stability and consensus-driven decision-making. Within this model, there is a strong role for banks and cross-ownership structures.

Why It Matters

Companies with strong, robust governance structures hold a competitive advantage over those that do not. Governance promotes ethical decision-making and sets clear expectations to reduce opportunities for misconduct. They also see an improvement in performance. When boards oversee strategy, risk, and management discipline, organizations are able to grow sustainably.

Good governance builds trust with investors and stakeholders and mitigates legal and regulatory risks. Transparency and accountability increase investor confidence and support long-term financing.

In short, governance keeps companies aligned, resilient, and prepared for the future.

Mergers & Acquisitions Step 4: Negotiating

Tue, 02 Dec 2025 16:09:05 GMT

What Happens When You Call Our Office?

Tue, 25 Nov 2025 16:07:38 GMT

A Guide to Employee Handbooks

Tue, 28 Oct 2025 16:05:55 GMT

Mergers & Acquisitions Step 3: Investigating

Tue, 21 Oct 2025 16:04:44 GMT

Preventing Harassment in the Workplace

Tue, 14 Oct 2025 16:02:58 GMT

An Employer's Guide to Severance Agreements

Wed, 01 Oct 2025 16:01:42 GMT

EEOC Signals Aggressive Action on Religious Liberties Case

Wed, 24 Sep 2025 20:51:10 GMT

In a recent press release, the Equal Employment Opportunity Commission (EEOC) has made it clear that religious accommodations in the workplace are under sharper scrutiny than ever. Through lawsuits, settlements, and public statements, the agency is signaling that employers should expect more aggressive enforcement of Title VII of the Civil Rights Act of 1964, which prohibits workplace discrimination.

In the past 200 days, the EEOC has stepped up its enforcement of Title VII’s religious protections. These actions have spanned over many different contexts.

General Workplace Accommodations

Cases range from Sabbath observance to dress and grooming practices. Employers who denied or retaliated against workers for seeking accommodations have faced significant monetary settlements and consent decrees requiring policy changes and training.

Antisemitism in Higher Education

Columbia University agreed to pay $21 million, one of the largest EEOC employment discrimination resolutions publicly announced in 20 years. The EEOC alleged a pattern of harassment against Jewish employees based on national origin, religion, and/or race. Following this resolution, Acting Chair Andrea Lucas reaffirmed the EEOC’s commitment to holding universities accountable for antisemitism and religious bias.

Federal Workforce Protections

The EEOC’s Office of Federal Operations issued three appellate decisions in August clarifying how federal employers should evaluate religious accommodation requests in light of Groff v. Dejoy (2023). In that Supreme Court case, the Court held that employers may only deny a religious accommodation if it imposes a substantial cost on business operations, which raised the bar for what qualifies as an “undue hardship.”

COVID-19 Vaccine Mandates

More than 10,000 religious accommodation charges related to COVID-19 vaccine mandates. Recent resolutions include a $1 million settlement with Mercyhealth and lawsuits against major healthcare systems and employers.

What Does this Mean for Employers?

The EEOC’s renewed focus means employers should anticipate closer scrutiny of their policies and practices. It’s important for employers to take the time to:

Review policies and handbooks to ensure they allow for religious accommodations.
Train managers and HR teams on how to handle requests consistently and without retaliation.
Engage in the interactive process with employees who seek accommodations and document each step
Evaluate undue hardship carefully. The standard now requires proof of substantial cost or disruption, not just inconvenience.
Be proactive. Common accommodations may include schedule changes for religious observances, prayer breaks, or dress code adjustments.

The bottom line? The EEOC’s recent press release can be viewed as a call to action for employers. Taking proactive steps now to clarify policies, train staff, and respond thoughtfully to requests will reduce legal risk while supporting a more accommodating workplace.

Engineering the Exit: Logan Johnson on ETA, PE, and Financial Advising

Fri, 12 Sep 2025 21:21:15 GMT

Avoiding Litigation for Small Businesses

Fri, 12 Sep 2025 21:16:21 GMT

NLRB Structure Likely Unconstitutional According to Fifth Circuit

Fri, 12 Sep 2025 21:09:40 GMT

Earlier this month, the Fifth Circuit ruled that the National Labor Relations Board’s (NLRB) structure is likely unconstitutional, stating that administrative law judges (ALJs) and Board Members are too insulated from presidential oversight.

The Case

In 2022, a former SpaceX employee filed an unfair labor practice charge with the NLRB. After investigating, the NLRB issued a complaint in March 2024 that SpaceX’s severance agreements violated the NLRA. An administrative hearing was set for October later that year.

Instead of letting the case go forward, SpaceX filed suit in the Western District of Texas, not arguing about the legality of its severance agreements, but rather arguing that the NLRB itself was unconstitutional because both its judges and board members are too protected from presidential removal. The district court agreed and blocked the hearing.

A case that was originally about severance agreements (which, if you want to learn more, check out our YouTube videos ) transformed into a separation-of-powers battle about whether or not the NLRB’s structure violates the Constitution.

The NLRB Challenged

The NLRB is split in a few different ways. There is the General Counsel, the Board, and the Administrative Law Judges. The General Counsel is appointed by the President and later confirmed by the Senate. The GC runs the investigative and prosecutorial arm of the NLRB by deciding whether to issue complaints after charges are filed and overseeing the NLRB’s regional offices.

The Board is a five-member body, also appointed by the President and confirmed by the Senate. It functions as an appellate court for labor cases and reviews decisions made by the ALJs when parties file “exceptions.”

Administrative Law Judges are not part of the Board, but they are employees of the NLRB. They conduct hearings when the General Counsel issues a complaint. Their decisions are final, unless one of the parties appeals to the Board.

This SpaceX case focuses on removal protections for board members and ALJs. Board members can only be removed for neglect of duty or malfeasance, and ALJs can only be removed for “good cause.” This means neither group can be directly removed by the President. This raises a concern about the separation of powers in this case.

The Employers’ Argument

SpaceX, joined by Energy Transfer and Findhelp, argued that ALJs have two layers of protection, thus violating the Constitution. The double layer matters because it cuts the President out of the chain of accountability. If ALJs can’t be removed except by another agency that is also insulated from removal, then no one the voters can hold responsible is really in charge. In this case, the employers argued that due to the double layer of protection, they faced immediate harm.

The NLRB’s Counterargument

The Board claimed that district courts had no authority to step in and stop the hearings because the underlying disputes involved unfair labor practice charges. The Fifth Circuit rejected that argument because there were structural constitutional challenges to the NLRB. This boils down to federal courts can enjoin unconstitutional agency action.

The Board also claimed that employers weren’t actually harmed just by having to go through the hearing, but the Fifth Circuit disagreed. The Fifth Circuit argued that the harm was the process of going through the hearings themselves.

The Fifth Circuit’s Decision

Injunctions for SpaceX, Energy Transfer, and Findhelp were all affirmed. The Fifth Circuit held that ALJs’ double removal protection is unconstitutional. It also held that the NLRB Board Members’ protections were also likely unconstitutional. Lastly, the injury of being subjected to unconstitutional proceedings is irreparable; therefore, injunctions are necessary.

The dissenting opinion by Judge Wiener concurred in part with the majority opinion. They held that ALJ protections were indeed unconstitutional, but thought that the Board Member protections did not justify injunctions because employers hadn’t shown specific causal harm.

The Key Takeaway

For employers, this case isn’t about severance agreements anymore; it’s about whether or not the NLRB itself is Constitutional. The Fifth Circuit clarified that if an agency’s structure is unconstitutional, businesses can challenge not only the agency’s actions, but also its authority to act.

NLRB Structure Likely Unconstitutional According to Fifth Circuit

Thu, 28 Aug 2025 20:36:30 GMT

Earlier this month, the Fifth Circuit ruled that the National Labor Relations Board’s (NLRB) structure is likely unconstitutional, stating that administrative law judges (ALJs) and Board Members are too insulated from presidential oversight.

The Case

The NLRB Challenged

The Employers’ Argument

The NLRB’s Counterargument

The Fifth Circuit’s Decision

The Key Takeaway

Sixth Circuit Narrows Employer Liability for Client Harassment

Mon, 18 Aug 2025 20:24:01 GMT

Dorothy Bivens was an area sales representative for Zep, Inc., a manufacturer and distributor of cleaning products. In Bivens v. Zep, Inc., she alleged that while visiting a client, the client’s manager locked the office door and asked her on a date. Bivens had to ask to be let out of the office after declining the manager’s invitation. Bivens reported the incident to her supervisor, who reassigned the account to a different sales team.

Later, Zep terminated Bivens as part of a planned reduction in headcount, citing her territory’s lower projected revenue. Bivens sued, claiming she was fired in retaliation for complaining about the client’s conduct or because she was Black, alleging violations of Title VII of the Civil Rights Act, including hostile work environment, retaliation, and discrimination.

The district court dismissed her claims, and the 6th Circuit Court of Appeals affirmed. The court held that because the alleged harasser was a client, not a company employee, Zep could only be held liable if it intended for the harassment to occur.

Departure from EEOC Guidance

This ruling diverges from the U.S. Equal Employment Opportunity Commission’s (EEOC) 2023 harassment guidance, which states that employers may be liable for harassment by nonemployees (such as customers or vendors) if the employer was negligent in preventing or addressing the conduct (i.e., knew or should have known of the harassing conduct and failed to take appropriate action to address the conduct.)

So far, the 6th Circuit (covering Kentucky, Michigan, Ohio, and Tennessee) joins the 7th Circuit (covering Illinois, Indiana, and Wisconsin) in rejecting the EEOC’s approach.

The Loper Bright Effect

This decision reflects a broader shift in how courts approach agency interpretations following the U.S. Supreme Court’s 2024 decision in Loper Bright Enterprises v. Raimondo. In Loper Bright, the Court overturned the Chevron doctrine, which had required courts to defer to federal agencies’ interpretations of ambiguous statutes they administer.

The Court ruled that under the Administrative Procedure Act (APA), it is the judiciary, not administrative agencies, that resolves statutory ambiguities. This means:

Courts have more freedom to reject agency interpretations.
Agency guidance, like the EEOC’s harassment standards, will face more legal scrutiny.
Employers may have more success challenging agency positions.

Why Should Employers Pay Attention?

Because federal courts are no longer bound to defer to EEOC interpretations, employers must track how their Circuit Court views agency rules. This ruling narrows liability for client harassment in the 6thCircuit, but other circuits may still follow the EEOC’s negligence standard.

Inconsistent rulings mean multi-state employers could face different legal obligations depending on where they operate. Staying informed is essential.

The Death of the IRS’s Direct File Program

Wed, 13 Aug 2025 20:06:29 GMT

What Happened?

The IRS’s Direct File System, a free, government-run online tax filing tool, will not return for the 2026 tax season. Launched as a pilot in 2024 under the Inflation Reduction Act of 2022, Direct File allowed eligible taxpayers to file federal tax returns online directly with the IRS at no cost.

The pilot was widely considered to be a success. In its first year, taxpayers in 12 states (Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington State, and Wyoming) used Direct File to claim over $90 million in refunds, with a 90% satisfaction rate.

In 2025, the program expanded to 25 states, reaching over 30 million Americans. Users saved time, avoided tax prep fees, and in many cases accessed tax credits they may have otherwise missed.

Despite strong public support, the IRS confirmed in July 2025 that Direct File will not be available going forward. A report published in March by the Economic Security Project found that, “At maturity in five years, Direct File would save the average user $160 in filing fees and hours of their time each year, which saves Americans a total of $11 billion annually between filing fees and time costs. By breaking down barriers to filing, Direct File would also deliver up to $12 billion each year in additional tax credits to low-income families currently missing out.”

What is Direct File?

Direct File was the IRS’s free e-filing platform for certain taxpayers with simple returns. Instead of going through a private company, taxpayers could log into the IRS website, complete their federal return online, and submit it securely, all without paying filing fees.

The system was designed to be simple, fast, and secure, removing barriers to filing and helping more Americans access tax credits they were eligible for.

What led to the end of Direct File?

While the 2024 and 2025 filing seasons demonstrated Direct File’s success, political and industry pushback mounted after the 2024 election.

In December 2024, a group of 29 GOP lawmakers, many with campaign ties to the tax preparation industry, called on then president-elect Donald Trump to shut down the program. When former congressman Billy Long became IRS chairman in early 2025, his leadership aligned with these calls.

In March 2025, Elon Musk’s Department of Government Efficiency ordered mass layoffs at the IRS and dismantled 18F, the agency building Direct File. Work on the system was halted. By July 2025, Long publicly confirmed the program would not return in 2026, with the IRS instead exploring other alternatives.

How Does this Impact Employers and Employees?

For employees, the loss of Direct File means fewer free, straightforward options for filing taxes, particularly for those with simple returns who could have saved both time and money.

For employers, especially those that help their workforce with financial wellness, the program’s end may increase employees’ out-of-pocket costs for filing. This could affect participation in certain employer-sponsored tax assistance programs or increase demand for HR support during tax season.

How to File for Free?

While Direct File is gone, taxpayers still have a few no-cost options:

IRS Free File Program – The IRS partners with third-party tax software providers to offer free filing for those who meet certain requirements, including adjusted gross income and state residence. Use the IRS’s online questionnaire to find the right partner.
Volunteer Income Tax Assistance (VITA) – Offers free in-person tax help for those who made less than $67,000 in 2025, have a disability, or speak limited English.
Free Fillable Forms – For those who are comfortable preparing their own returns, the IRS offers electronic forms that can be completed and filed directly online.

An Employee's Guide to Severance Agreements

Fri, 08 Aug 2025 16:00:38 GMT

Supreme Court Temporarily Backs Trump Administration’s Federal Layoff Plans

Mon, 28 Jul 2025 20:02:06 GMT

On July 8, 2025, the Supreme Court temporarily lifted a lower court’s order that had blocked the Trump administration from moving forward with sweeping federal personnel cuts and agency restructurings. This decision enabled the administration to resume planning layoffs across 14 Cabinet departments and 8 independent agencies, a key component of President Trump’s Executive Order No. 14210, signed earlier this year.

Executive Order 14210

In February earlier this year, President Trump signed Executive Order No. 14210, which called for a massive reduction in force and reorganizations across wide swaths of the federal government. The order also imposed hiring restrictions, requiring agencies to get approval from the Department of Government Efficiency before making new hires, except in law enforcement and immigration-related roles.

The Initial Legal Challenge and Preliminary Injunction

The order quickly faced legal backlash as a coalition of public-sector unions, non-profits, and local governments sued in federal courts. They argued that the president had overstepped his authority, claiming that the order effectively dismantled entire agencies without Congressional approval, violating the separation of powers set forth in the Administrative Procedure Act.

U.S. District Judge Susan Illston agreed, issuing a preliminary injunction to pause the administration’s plan. She ruled that the executive branch could not make such sweeping changes without legislative approval and cooperation, particularly when the changes affect the basic structure of government agencies.

The Supreme Court Steps In

After the Ninth Circuit declined to block the injunction, the Trump administration took the fight to the Supreme Court. It argued that the president has long-standing authority to make personnel decisions within the executive branch and that the unions and local governments lacked standing to sue in federal court. The administration also claimed that challenges should be handled by administrative bodies like the Merit Systems Protection Board, not the courts.

The coalition of plaintiffs pushed back, saying the injunction merely preserved the status quo and prevented irreversible harm. They argued that the administration had not shown any urgent harm, justifying a stay.

Despite this, the Supreme Court sided with the administration. In a brief two-paragraph order, the justices stated that the government was likely to win its case and that the legal standards for issuing a stay were met. Importantly, the Court emphasized that this is not a final ruling; it’s a pause on the injunction, not a full green light for the plan’s legality.

Justice Sotomayor’s Take

Justice Sonia Sotomayor wrote separately to stress that the Court wasn’t ruling on whether the proposed agency restructurings themselves are legal. She pointed out that the executive order only calls for planning reductions in force “consistent with applicable law,” and the actual plans have yet to be reviewed by the courts.

What’s Next?

For now, the Trump administration can proceed with its planning for cuts across a broad range of agencies, including the Departments of Defense, State, Homeland Security, and others, as well as agencies like the EPA, SBA, and Social Security Administration. However, the fight over whether these plans violate constitutional and statutory limits on executive power is far from over.

A separate legal challenge involving layoffs at the Department of Education is still pending before the Court, setting the stage for more legal battles in the months ahead.

From Building a Business to Finding a Calling: A Conversation with Jon Fox

Fri, 25 Jul 2025 19:08:33 GMT

Implications of the “One Big Beautiful Bill” for Employers

Tue, 22 Jul 2025 19:59:18 GMT

The Opportunity, Benefits, and Business Boost Act (OBBB or the One Big, Beautiful Bill) represents one of the most comprehensive overhauls to United States tax, healthcare, and employee benefit laws in recent history. From expanded savings options to revamped business incentives, the OBBB introduces sweeping changes that will affect individuals, employers, and corporations alike.

Expanded Health and Savings Options

Big Changes for Health Savings Accounts (HSAs)

The OBBB dramatically changes HSA accessibility by

Making permanent first-dollar telehealth coverage —High Deductible Health Plans (HDHPs) can pay for telehealth services before the deductible without affecting HSA eligibility.
Automatically treating all Bronze and Catastrophic ACA exchange plans as HSA-compatible —even if they wouldn’t normally qualify as HDHPs.
Allowing Direct Primary Care (DPC) memberships alongside HSAs —as long as monthly fees are under $150 for individuals or $300 for families, and letting participants pay DPC fees tax-free from their HSAs.

Dependent Care Flexible Spending Account (FSA) Limit Increase

Starting in 2026, the Dependent Care FSA limit increases from $5,000 to $7,500 (or $3,750 for married individuals filing separately). However, the limit is still not indexed for inflation, and the challenging 55% Average Benefits Test remains in place.

Paid Family and Medical Leave Tax Credit Extended

The OBBB permanently establishes the tax credit for employers providing paid family and medical leave, first introduced under the Tax Cuts and Jobs Act (TCJA). Employers can offset costs either through a wage-based credit or an insurance premium credit, provided they have a qualifying leave policy.

Student Loan Repayment Assistance Made Permanent

Employers can continue to offer up to $5,250 per year in tax-free student loan repayment assistance, with the limit indexed for inflation starting in 2026.

Worker and Employer Provisions

No Federal Taxes on Overtime and Tips (Temporary)

From 2025-2028, workers earning $150,000 or less ($300,000 for couples) can deduct

Up to $25,000 in tips
Up to $12,500 in overtime pay

Increased Immigration and Customs Enforcement (ICE) Budget and Enforcement

ICE’s budget has tripled to nearly $30 billion allocated over 10 years. Employers, especially in industries like hospitality, agriculture, and construction, should expect increased audits, I-9 inspections, and worksite enforcement.

Tax-Free Bicycle Commuting Reimbursement Permanently Repealed

The OBBB permanently eliminated the $20 per month tax-free bicycle commuter benefit, originally introduced in 2009 and suspended by the 2017 Tax Cuts and Jobs Act (TCJA). This removes an incentive for eco-friendly commuting and could impact workplace sustainability programs.

Tax Cuts and Business Incentives

Business Tax Changes

Incentives for Innovation and Startups

Immediate R&D Expensing : Businesses can now fully deduct domestic R&D costs in the year incurred or amortize over time.
Expanded R&D Tax Credits : Includes more activities like software and engineering. Startups can now receive refundable credits, even without profits.

Capital Investment Boost

100% Bonus Depreciation : Permanent for assets placed in service after January 19, 2025.
New Depreciation for Manufacturing Property : 100% write-off for certain production-related real estate.
Section 179 Expansion : Deduction cap raised to $2.5 million (phase-outs begin at $4 million).

Small Business and Pass-Through Relief

QBI Deduction Made Permanent : 20% deduction for pass-through income stays in place indefinitely.
Higher Income Limits : Phase-ins raised to $75,000 (single) and $175,000 (joint).

Financing and Loss Provisions

Expanded Business Interest Deduction : Businesses can deduct more borrowing costs by excluding depreciation and amortization from ATI calculations.
Permanent Excess Business Loss Limits : Tightens restrictions on using business losses to offset other income, with stricter calculations starting in 2025.

Opportunity Zones and Small Business Expansion

The Qualified Opportunity Zone (QOZ) program is permanently extended with a new rolling 10-year designation system, allowing governors to refresh QOZ designations every decade. New incentives include a 30% basis boost for rural QOZ investments and stricter reporting requirements for Qualified Opportunity Funds (QOFs).

The Qualified Small Business Stock (QSBS) rules are expanded, reducing the required holding period from 5 to 3 years (with phased benefits) and increasing the tax-free gain cap from $10 million to $15 million. The gross asset threshold for qualifying companies rises to $75 million, broadening access to this tax break.

The New Markets Tax Credit (NMTC) is also made permanent, continuing to incentivize investments in Community Development Entities that fund projects in low-income communities.

COVID-Related ERC Enforcement

The OBBB disallows any new Employee Retention Credit (ERC) claims filed after January 31, 2024, regardless of their prior eligibility. It also extends the IRS statute of limitations to six years for ERC-related audits, increasing the enforcement window for both timely and amended claims.

The OBBB creates a more innovation-friendly tax environment while tightening compliance. Permanent incentives like expanded R&D credits, bonus depreciation, and the QBI deduction support long-term growth, but new limits on losses and stricter enforcement raise the stakes for tax planning.

Businesses should review their strategies now to capitalize on new opportunities and avoid pitfalls.

Congress Reintroduces the Workforce Mobility Act

Tue, 15 Jul 2025 19:53:15 GMT

In 2023, Senators Chris Murphy (D-CT) and Todd Young (R-IN) reintroduced the Workforce Mobility Act for a fourth time. The bill had been previously introduced in 2018, 2019, and 2021, but it was stalled each time, never making it to a committee vote.

The Workforce Mobility Act prohibits individuals from entering into non-compete agreements, and it voids current non-compete agreements. The bill has a couple of agreements, and it voids current non-compete agreements. The bill has a couple of exceptions, including the sale of a business and the dissolution of a partnership.

If enacted, the Workforce Mobility Act would require employers to post and maintain provisions of the act in a conspicuous place where all employees or potential employees can access the information.

The Act would also give the Federal Trade Commission (FTC) and the Department of Labor (DOL) enforcement authority, and it would provide a private right of action for an employee to bring an enforcement action against an employer for a violation of the law. The bill would also allow state attorneys general to bring claims against employers for violations of the Workforce Mobility Act.

In June of 2025, Senators Murphy and Young reintroduced the Act once again—this time, against the backdrop of last year’s FTC Rule banning non-competes, which was ultimately challenged and set aside by a federal court in Texas.

The 2025 version of the Workforce Mobility Act has not yet been released, but Senators Murphy and Young continue to advocate for a federal ban on non-compete agreements.

Senator Murphy emphasized that non-competes trap low-wage workers, suppress wages, and harm entrepreneurship, urging Congress to codify the FTC’s proposed ban. Echoing that sentiment, Senator Young called non-competes a barrier to growth, innovation, and worker freedom and framed the bill as a way to unlock opportunity by letting workers apply their skills where they’re most needed.

John Lettieri, President and CEO of the Economic Innovation Group (EIG), called the Workforce Mobility Act a no-cost, pro-worker, pro-growth reform that removes a major barrier to opportunity. He stated that non-compete clauses suppress wages, block innovation, and limit worker mobility, arguing that ending them will boost entrepreneurship and make the economy more competitive.

EIG’s support is echoed by a broad coalition of medical associations, policy think tanks, business groups, and employers, including the American College of Emergency Physicians, Small Business Majority, and Veeva Systems.

As lawmakers continue to push for a permanent federal ban on non-competes, employers should stay informed on how federal and state-level changes could impact their contracts and hiring practices.

Stay ahead of the curve—evaluate your restrictive covenants and consult counsel to ensure your workforce strategy aligns with emerging legal trends.

A Manager's Guide to Firing Employees

Fri, 20 Jun 2025 15:58:57 GMT

SCOTUS Rejects Higher Bar for Majority-Group Discrimination Claims

Wed, 11 Jun 2025 15:16:49 GMT

In a unanimous ruling, the justices of the Supreme Court of the United States sided with a heterosexual woman in a case about employment discrimination against a majority group, or people who are not part of a historically marginalized group. This decision unifies standards for all discrimination claims under Title VII of the Civil Rights Act.

The case involved an Ohioan named Marlean Ames, who alleged she was passed over for promotions and later demoted in favor of gay colleagues with less experience or education. Ames sued under Title VII of the Civil Rights Act, which prevents employment discrimination based on protected classes like race, color, religion, sex, or national origin.

Lower courts had dismissed her claim under a stricter standard commonly used against majority-group plaintiffs, which required her to show unusual “background circumstances” that would suggest reverse discrimination.

In its ruling, the Supreme Court dismissed the use of the “background circumstances” requirement for majority-group plaintiffs.

Justice Ketanji Brown Jackson wrote for the court, “Title VII’s disparate treatment provision draws no distinctions between majority-group plaintiffs and minority-group plaintiffs.” This means that courts cannot apply a different, or stricter, legal standard for plaintiffs simply because they belong to a majority group. Discrimination protections apply equally to all individuals.

In a concurring opinion for the court, Justice Clarence Thomas discussed how it can be difficult to identify who is a member of the “majority.”

He wrote, “Women, for example, make up the majority in the United States as a whole, but not in some states and counties. Similarly, women make up the majority of employees in certain industries, such as teaching and nursing, but the minority in other industries, such as construction.”

Employers must now apply the same legal standards to all claims, regardless of the plaintiff’s group identity. With the “background circumstance” rule gone, all employees are entitled to the same standard under Title VII of the Civil Rights Act, prohibiting discrimination based on a protected class. Discrimination prevention training for managers and a thorough review of employment decisions and any discrimination claims are critical for remaining compliant under Title VII.

Retaliation Claims are on the Rise in 2025

Fri, 30 May 2025 15:14:46 GMT

Retaliation claims are on the rise in 2025. Just last year, the Equal Employment Opportunity Commission (EEOC) received over 42,000 charges of retaliation, making it the most common legal risk that employers face.

Retaliation claims can carry higher legal exposure than the original complaint. That’s because they imply intentional harm, meaning an employer punished someone even when they were involved in a protected activity. Lawsuits can involve compensatory and punitive damages, and public disputes can harm the business’s brand and morale.

According to the United States Department of Labor , retaliation takes place when an employer fires or takes adverse action against an employee when they are engaged in protected activity.

Protected activities include reporting or resisting discrimination or harassment, participating in investigations, requesting accommodations, and exercising other legal rights.

An adverse action is any action that an employer takes that will have a negative impact on the employee. This can include termination, demotion, pay cuts, or even the denial of a promotion.

Employers can proactively reduce the risk of retaliation claims by taking four simple steps.

Step 1: Training

Ensure that all supervisors and HR professionals are trained to recognize protected activity and understand what retaliation looks like. Clear expectations reduce the risk of impulsive or inconsistent reactions.

Step 2: Documentation

Ensure there is a clear, objective paper trail for any employment action. Documentation should reflect that actions are based on conduct or business need, not protected activity.

Step 3: Investigate every discrimination or harassment claim

No matter how minor a complaint may seem, take it seriously. Conduct timely, impartial investigations and follow through with appropriate responses.

Step 4: Maintain consistency

Remember—prevention is cheaper than defense. Proper training, documentation, and consistency are your strongest defense against retaliation claims, and the time and effort it takes to implement these things costs less than litigation from a disgruntled employee.

Want to learn more about how to avoid litigation for your business? Check out our YouTube Video .

Mergers & Acquisitions Step 2: Locating

Fri, 16 May 2025 15:57:27 GMT

The State of Non-Competes in 2025

Thu, 15 May 2025 15:11:41 GMT

In early 2024, the Federal Trade Commission (FTC) attempted to ban nearly all non-compete agreements. However, in August, a federal court in Texas blocked the rule, leaving the regulation of non-competes to individual states. If you want more information about how non-compete agreements work, check out our YouTube video .

Prior to this year, California, Oklahoma, Minnesota, and North Dakota all had near-total bans on non-compete agreements. Colorado, Illinois, Maine, Maryland, New Hampshire, Oregon, Rhode Island, Virginia, Washington, and Washington D.C. all had specific salary thresholds for non-compete agreements. In just the first four months of this year, several states either enacted new legislation on non-competes or expanded existing laws.

Arkansas

On March 4, 2025, Arkansas amended its non-compete law to prohibit and void non-compete agreements restricting physicians. This law is set to go into effect on August 3, 2025.

Colorado

Earlier this year, Colorado updated the highly compensated employee threshold, meaning only employees earning $127,091 or more can be subject to a non-compete agreement. However, non-solicitation agreements are still valid for employees who earn $76,254 or more.

Last month, the Colorado legislature passed a bill preventing doctors, dentists, and nurses from being subject to non-compete and non-solicitation agreements. There are, however, certain provisions for the recovery of recruiting expenses, such as relocation expenses and signing bonuses, for these individuals. If the Colorado Governor signs the bill, it is set to take effect on August 6, 2025.

Florida

Last month, Florida passed the CHOICE Act, which allows non-compete agreements for “covered employees,” or individuals who earn twice the average annual income of their county of residence or the county of the business’s location. Florida courts are required to issue temporary injunctions if a covered employee is found to violate the Act. Check out our Reel here to learn more about the CHOICE Act.

Louisiana

Louisiana added restrictions to non-compete agreements with physicians. Non-competes with primary care physicians may not exceed three years, or five years for all other physicians. These restrictions must also include qualified parish-specific geographic limitations.

Maryland

Maryland expanded its current non-compete prohibition to include naturopathic physicians, registered nurses, advanced practice nurses, and physician assistants.

Pennsylvania

Effective January 1, 2025, non-competes with healthcare professionals were prohibited.

Washington

Washington added an anti-moonlighting provision to its non-compete law. This provision restricts employers from entering into a non-compete agreement with employees who earn less than twice the state minimum wage. Check out our video for more information about Washington’s anti-moonlighting provision.

Wyoming

Wyoming enacted a law that voids all non-compete agreements entered into on or after July 1, 2025, with exceptions for executive and management personnel, recovering expenses (for relocation, education, and training), the sale of a business, and trade secret protections. Check out our video to learn more about Wyoming’s ban.

Non-compete laws are evolving rapidly, and they vary from state to state. Employers must pay close attention to stay compliant, especially if they have employees across multiple states. Follow Lockaby PLLC for ongoing updates on all things non-compete.

Second Circuit Clarifies ADA: Reasonable Accommodations Include Well-Being

Wed, 23 Apr 2025 15:08:44 GMT

On March 25, the Second Circuit Court of Appeals’ ruling in Tudor v. Whitehall Central School District established that employees with disabilities may be entitled to reasonable accommodations, even if they can complete their jobs without them.

Tudor v. Whitehall Central School District

Angel Tudor, a high school teacher in New York, diagnosed with post-traumatic stress disorder (PTSD), requested brief afternoon breaks as a reasonable accommodation to help manage her condition. However, the school district denied her request, so she filed a lawsuit under the Americans with Disabilities Act (ADA) for failure to accommodate. Since Tudor admitted she could still perform the functions of her job, although under significant stress and harm, the lower court dismissed her claim. The Second Circuit Court of Appeals reversed its decision. The court emphasized that the ADA mandates reasonable accommodations not only to enable job performance but also to promote employee well-being and inclusion in the workplace.

Breaking Down the Second Circuit’s Ruling

The ADA’s Definition Matters

The ADA says a “qualified employee” is someone who can do the main parts of their job, with or without help. The Second Circuit explained that this means employers still need to consider giving accommodations, even if the employee can technically do the job without them. Employers should review and update their ADA policies to ensure that they align with the current legal standards.

Accommodation is About Inclusion, Not Just Enablement

In the past, accommodations were seen as helping disabled employees meet basic job requirements. However, the Second Circuit's opinion shifts the focus to ensuring fair working conditions, addressing issues like stress, emotional safety, or worsened medical symptoms, even if job performance is not directly affected.

Since managers and supervisors often receive accommodation requests first, provide them with training on ADA obligations and effective, empathetic communication. For mid-size to large organizations, a cross-functional team, including HR, legal, facilities, and occupational health representatives, can evaluate complex accommodation requests.

Undue Hardship is the Only Exception

Employers do not have to grant every accommodation request, but they must show a clear "undue hardship,” meaning it would be difficult or expensive to accommodate, considering their size, resources, and operations. This creates a high standard for denying accommodations and places the burden of proof on the employer. Employers should track all accommodation requests, resolutions, and follow-ups to ensure consistency, fairness, and legal defensibility.

The Second Circuit’s ruling is consistent with decisions from other circuit courts, reinforcing the principle that employers must evaluate reasonable accommodation requests even when an employee is technically able to perform their job without them. The Tudor decision confirms that the ADA’s protections do extend to accommodations that improve the overall workplace environment.

Mergers & Acquisitions Step 1: Formulating

Fri, 18 Apr 2025 15:55:48 GMT

D.C. Circuit Panel Rules Trump Can Remove Wilcox from NLRB

Fri, 04 Apr 2025 15:03:50 GMT

A three-judge panel of the U.S. Court of Appeals issued a ruling for President Trump, temporarily halting a recent district court decision that deemed his removal of National Labor Relations Board (NLRB) Member Gwynne Wilcox unlawful. As a result, it appears the Board is once again without quorum, as the National Labor Relations Act (NLRA) mandates at least three members.

Background

In January, President Trump removed Gwynne Wilcox from the NLRB, leaving the Board without enough members to hear cases or quorum. Wilcox challenged her removal, filing a lawsuit that alleged Trump had violated the NLRA by unlawfully terminating her.

U.S. District Judge Beryl A. Howell sided with Wilcox, ruling that her dismissal was illegal. Judge Howell ordered that Wilcox should be allowed to continue with her duties and complete her five-year term, which is set to expire on August 27, 2028.

In response, President Trump immediately appealed the decision to the U.S. Court of Appeals for the District of Columbia.

For more background information, check out our previous blog post .

Current Situation

On March 28, a three-judge panel of the D.C. Circuit granted the stay pending appeal in a 2-1 decision. This stay order has temporarily removed an official necessary for the quorum of the NLRB.

Shortly after the D.C. Circuit's decision, Wilcox filed emergency motions to stay the court's order, seeking to prevent their terminations from taking effect while their cases were reheard en banc (by the full 11-judge D.C. Circuit). However, she did not request an immediate rehearing at that point.

On April 1, Wilcox filed a petition for initial hearing en banc and for rehearing en banc with the full D.C. Circuit.

If the en banc rehearing request is granted, there may be a shift in the case’s outcome. Seven of the D.C. Circuit's active judges are Democrats, while only four are Republicans, which could tip the balance in favor of Wilcox.

The argument before the D.C. Circuit panel is currently scheduled for May 16, though this may change due to the request for an en banc rehearing.

Looking Ahead

As of now, the termination of Wilcox is still in effect, at least temporarily. The motion for stay filed by Wilcox, which would have at least temporarily resulted in their reinstatement, has been denied.

Senate Confirms Lori Chavez-DeRemer as Labor Secretary

Mon, 31 Mar 2025 15:00:09 GMT

On March 10, the Senate confirmed Lori Chavez-DeRemer, a former Republican congresswoman, as the new Secretary of the U.S. Department of Labor with a 67-to-32 vote.

As the head of the Department of Labor, she will oversee the enforcement of laws and policies related to unions, the workplace, and worker rights and protections. The Secretary of Labor is a Cabinet member, holding significant authority over labor matters in the United States

The Senate confirmation process serves as an important check on presidential power, ensuring that nominees for key positions are assessed and qualified for their roles. To be confirmed, a nominee must receive a majority of Senate votes. Once confirmed, the nominee officially assumes their new position.

Chavez-DeRemer’s confirmation was marked by bipartisan support, including votes from Democrats like Amy Klobuchar of Minnesota and Elissa Slotkin of Michigan. However, Republicans, including Mitch McConnell and Rand Paul of Kentucky, voted against her due to her support for labor unions and collective bargaining.

While in Congress, Chavez-DeRemer co-sponsored the Protecting the Right to Organize Act (PRO Act), which strengthens protections for workers trying to organize or join unions and challenges "right-to-work" laws in several states.

McConnell criticized her support for the PRO Act in a statement, arguing that it would force Americans into union membership.

“The American people demand and deserve change after four years of economic heartache under the ‘most pro-union administration in American history.’ Unfortunately, Lori Chavez-DeRemer’s record of pushing policies that force hardworking Americans into union membership suggests more of the same,” McConnell said. “Most Americans believe joining a union should be a personal choice – not a mandate – which is why more than half the states, including Kentucky, have adopted right-to-work laws.”

Despite her past co-sponsorship of the PRO Act, Chavez-DeRemer sought to clarify her stance on the bill during her Senate confirmation hearing and expressed support for President Trump.

Following her confirmation, Chavez-DeRemer posted on X, “I’m deeply honored to be confirmed as the 30th @USDOL Secretary under President @realDonaldTrump. As promised, I’ll work tirelessly to put American Workers First by fighting for good-paying jobs, safe working conditions, and secure retirement benefits.”

Antitrust Guidelines and Bill in Congress

Fri, 28 Mar 2025 15:54:02 GMT

Kentucky House Bill 398: Potential Changes to Workplace Safety Protections

Fri, 07 Mar 2025 14:57:48 GMT

On February 20, Kentucky’s House Bill 398 was introduced, which, if passed, it could impact the state’s workplace safety protections. Kentucky currently manages its own workplace safety programs under the federal Occupational Safety and Health Act (OSHA), ensuring local standards and protections for workers. However, this new bill may reduce the state’s ability to enforce its own safety regulations and affect the ability of workers to have health and safety issues addressed.

In 2021, the Republican-led legislature passed a law to prevent the state from implementing workplace safety rules that are stricter than the federal guidelines. Although this action was resisted by Governor Andy Beshear, the veto was overruled. The current bill now takes it a step further, preventing Kentucky from establishing its own protections and limiting the Kentucky Department of Workplace Standards, which is the department responsible for monitoring most private employers.

What the Bill Does

The current bill limits the state’s ability to create its own protections and alter workers’ rights to have safety and health problems addressed.

State Representative Walker Thomas introduced the bill, explaining that it is “[t]o keep our businesses and attract new economic opportunities, legislators must follow through on the progress they have made in past sessions to ensure worker safety while also creating fair and more transparent rules for employers.”

However, the Secretary of the Kentucky Education and Labor Cabinet, Jamie Link, sent a letter to the committee to share his own concerns about the bill.

“Kentucky’s workforce and industries, including tourism, would lose protections and guidance in areas such as high voltage electrical lines, bulk hazardous liquid unloading, and employee exposures to hazardous materials protections should state-specific Occupational Safety and Health regulations be revoked,” Link wrote.

The bill seeks to limit the authority of the Kentucky Department of Workplace Standards, aligning more closely with federal OSHA standards.

Provision of Kentucky House Bill 398:

Limiting State Regulations : Kentucky cannot adopt stricter workplace safety rules than federal law, and state officials cannot enforce existing state standards that exceed federal OSHA requirements.
Investigation Requests : Only current employees or "qualified representatives" with technical knowledge can request safety investigations, excluding former employees or families of deceased workers.
Investigation Requests Requirements : Requests must include the date of the alleged violation.
Whistleblower Protections : Workers alleging wrongful termination for reporting violations must file claims within 30 days, and the department must rule within six months. Damages are limited to rehiring with back pay.
Employer Presence During Inspections : Employers must be allowed to accompany state officials during workplace safety inspections.
De Minimis Violations : Minor violations, with no immediate safety or health risk, would not carry penalties and would need to be cited within six months.
Appeals and Financial Awards : Businesses winning an appeal of a safety citation in court can request compensation for legal expenses from the state.

Kentucky's workforce may face challenges if House Bill 398 becomes law. The bill shifts the focus toward aligning workplace regulations with federal standards, which could impact the level of safety protections for workers in industries such as tourism, agriculture, and manufacturing. While the bill aims to create a more "business-friendly" environment, some concerns have been raised about its potential effects on worker protection and the enforcement of safety regulations.

As the bill moves through the legislative process, discussions surrounding worker safety are expected to continue. It is important to stay informed, as the outcome could have long-term implications for the state’s workforce and business environment.

Lockaby PLLC will continue to monitor the bill and provide updates along the way. If you have any questions about how this may affect you or your business, please reach out to us today!

Amanda Lockaby Continues to Share Expertise through Lexis Nexis Practical Guidance

Fri, 07 Mar 2025 14:54:20 GMT

At Lockaby PLLC, we take pride in providing clear, strategic, and effective legal representation for businesses and employers. We are excited to share that Amanda Lockaby, has once again contributed to LexisNexis Practical Guidance, where she has been authoring and updating key litigation practice notes over the past several years.

These resources are essential tools for legal professionals navigating Kentucky’s civil litigation process. They offer practical insights and up-to-date legal analysis on critical procedural topics.

Comprehensive Legal Guidance on Civil Litigation

Amanda’s publications offer step-by-step instructions, key procedural considerations, and references to Kentucky’s statutory and case law frameworks on topics including:

Commencing a Civil Action (KY) – Step-by-step guidance on initiating lawsuits in Kentucky, covering jurisdiction, venue, pleadings, and service of process
Responding to a Civil Action (KY) – Explains deadlines, available defenses, and response strategies, including answers, motions, and counterclaims
Litigation Overview (KY ) – A detailed breakdown of Kentucky’s court system, procedural rules, and jurisdictional considerations
Drafting and Issuing Discovery Subpoenas (KY) – Provides guidance on issuing and serving subpoenas, including requirements for non-parties and enforcement procedures
Responding to Discovery Subpoenas (KY) – Covers response deadlines, compliance options, and legal grounds for objecting to subpoenas
Provisional Remedies (KY) – Outlines pretrial remedies such as temporary restraining orders, injunctions, and emergency relief measures
Statute of Limitations (KY) – Clarifies the deadlines for filing various legal claims, including contract disputes, torts, employment actions, and consumer protection cases

For several years, Amanda has been actively updating these resources to reflect the latest developments in Kentucky civil litigation, ensuring attorneys and legal professionals have accurate and reliable guidance when navigating complex procedural issues.

These resources can be accessed through LexisNexis, or by clicking the links above.

For tailored legal guidance in employment law, business disputes, or litigation matters, contact Lockaby PLLC today.

Qui Tam Basics: What is a Qui Tam Lawsuit

Fri, 28 Feb 2025 15:52:24 GMT

Navigating the Changes: Executive Orders Affecting Federal Workforce and Business Compliance

Thu, 27 Feb 2025 14:50:49 GMT

An executive order is a signed, written, and published directive from the President of the United States. Executive orders are not legislation; they do not require approval from Congress, and there is no simple way for Congress to overturn them.

Since his first week in office, President Trump has signed dozens of executive orders, many of which address changes within the federal workforce. Many of the executive orders passed that will affect the federal workforce focus mainly on diversity, equity, and inclusion (DEI) initiatives. While mostly directed toward federal employees, businesses that work closely with the federal government should pay careful attention to these changes.

Today’s blog reviews key Executive Orders and their impact on contractors and businesses.

Executive Order on Restoring Accountability to Policy-Influencing Positions

Key Changes:

This order focuses on increasing accountability in the federal workforce, especially within positions that influence policy decisions. The goal is to ensure that individuals in key policy roles are qualified and held to higher standards. The order also simplifies the dismissal process for those in such positions.

For Contractors and Businesses:

Although this primarily focuses on federal employees, businesses working with the government may be impacted if they have positions involving policy influence or advisory roles. Contractors should be aware that the government may prioritize staffing positions that align with political goals more closely.

Current Legal Action:

The National Treasury Employees Union (NTEU) filed a lawsuit against President Trump’s “Restoring Accountability to Policy-Influencing Positions” executive order. NTEU argues that it violates civil service law and undermines the intent of Congress. The union claims that Trump’s order bypasses the necessary procedures under the Administrative Procedure Act and illegally removes job protections for federal employees.

Executive Order on Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government

Key Changes:

This action affirms that biological sex takes precedence over gender identity in government policies, particularly in areas related to women’s rights and protections. The order aims to ensure that policies maintain a distinction between biological sex and gender identity and that laws or regulations affecting women—such as those in women’s sports, single-sex spaces, and protections against discrimination—are based on biological sex.

For Contractors and Businesses:

While this order does not directly enforce requirements on non-government employers, federal contractors and recipients of federal funding may face new directives. Challenges and litigation regarding its applicability to private-sector companies are likely to arise in the future.

Executive Order on Ending Radical and Wasteful Government DEI Programs and Preferencing

Key Changes:

This order abolishes or reduces DEI programs, including DEI-related performance requirements for federal employees. Federal agencies may need to dismantle their current DEI structures, including removing positions like Chief Diversity Officers. The order states that these programs have been ineffective and too costly, urging the government resources to be reallocated elsewhere.

For Contractors and Businesses:

Private contractors and businesses with federal contracts may see a reduction in DEI-related requirements. They could face less pressure to meet diversity quotas or DEI performance standards when bidding for government contracts, simplifying compliance but potentially changing how DEI initiatives are structured internally.

Executive Order on Reforming the Federal Hiring Process and Restoring Merit to Government Service

Key Changes:

The federal hiring process will focus on hiring “highly skilled Americans dedicated to the furtherance of American ideals, values, and interests.” The Federal Hiring Plan prohibits hiring an individual based on their race, gender, or religion. The goal is to emphasize qualifications, skills, and a commitment to the Constitution, ensuring that government employees are chosen based on merit. To aid in this, modern technology will likely be incorporated during the recruitment and selection process.

For Contractors and Businesses:

Companies working with federal agencies will likely see a shift toward a skills-based approach to hiring. This could impact the types of candidates that contractors will be expected to hire and may lead to greater emphasis on qualification over demographic factors.

Executive Order on Ending Illegal Discrimination and Restoring Merit-Based Opportunity

Key Changes:

This order aims to eliminate race- and sex-based preferences in both government and private sector policies, focusing on merit and individual achievement. Additionally, previous executive orders related to diversity and inclusion are revoked, including Executive Order 11246 (Equal Employment Opportunity), which required affirmative action and prohibited discrimination based on race, religion, sex, gender identity, or national origin.

On February 5, U.S. Attorney General Pam Bondi issued the memorandum titled “Ending Illegal DEI and DEIA Discrimination and Preferences.” The memorandum states that by March 1, 2025, the Civil Rights Division and Office of Legal Policy must submit a report to the Associate Attorney General. This report will contain recommendations on enforcing federal civil laws and other actions to encourage the private sector to end illegal discrimination and preferences, particularly policies related to DEI and DEIA. The memorandum aligns with the plan outlined by this order and signals a serious commitment to enforcement.

For Contractors and Businesses:

The revocation of Executive Order 11246 will primarily impact federal contractors, who will no longer be required to maintain affirmative action programs for women and minorities. However, they are still obligated to uphold such programs for veterans and individuals with disabilities, including the requirement to prepare annual plans.

These executive orders reshape federal employment practices and policies, particularly in areas like diversity, hiring standards, and policy accountability. Contractors and businesses that work with the federal government should stay informed about these changes as they may impact compliance requirements and internal policies.

Lockaby PLLC will continue to follow the ongoing changes and ensure our readers stay informed.

Trump Removes NLRB General Counsel and Democratic Member

Thu, 06 Feb 2025 14:45:52 GMT

On January 27, 2025, President Trump removed National Labor Relations Board (NLRB) general counsel, Jennifer Abruzzo, and Democratic board member, Gwynne Wilcox.

The NLRB is an independent federal agency responsible for protecting employees' rights to organize, form, or join unions, and to choose union representation through elections. It also investigates and addresses unfair labor practices by both employers and unions in the private sector, ensuring fair treatment in labor relations. The general counsel of the NLRB directs the investigation and prosecution of unfair labor practices, oversees legal actions, and ensures the enforcement of labor laws.

Abruzzo’s removal was expected after former President Biden removed her Trump-appointed predecessor. During her term, Abruzzo was a strong advocate for worker protections, pushing policies that made it easier for workers to organize.

One week after President Trump removed Abruzzo, he named William B. Cowen as acting general counsel of the NLRB. Cowen has served as the Regional Director for the NLRB’s Los Angeles Office since 2016. In a statement released by the NLRB announcing Cowen’s appointment as acting general counsel, it was not indicated who President Trump will formally appoint to fill the role of general counsel. The appointment must be confirmed by the United States Senate.

The removal of Wilcox, the first Black woman to serve on the NLRB, has left the five-member board with at most two members, depriving the Board of a quorum. This means the Board cannot make decisions on cases, although it can continue to process them. Furthermore, the general counsel’s office can continue operations through the agency’s regional offices.

Wilcox expressed her disappointment about her removal, stating that she will pursue "all legal avenues to challenge my removal, which violates long-standing Supreme Court precedent." Wilcox’s removal is the first time a president has terminated a member of the Board. Wilcox’s challenge will determine whether statutory tenure protections constitute an unconstitutional infringement on the president’s power.

On Wednesday, February 5, 2025, Wilcox filed a single-count Complaint against President Trump alleging a violation of the NLRA. The suit alleges that Wilcox had a clear legal entitlement to retain her position as a member of the NLRB because the NLRA states that “a member of the Board may be removed by the President, upon notice and hearing, for neglect of duty or malfeasance in office, but for no other cause.” Upon her termination, Wilcox did not get a hearing, nor did her termination letter outline any conduct to support a claim that she neglected her duty or committed malfeasance.

The removal of Wilcox and Abruzzo signals the current administration’s preference for employer-friendly policies. Assuming the president manages to confirm a new Board member through the Senate’s confirmation process, the Board will likely revisit previous precedents established by the Biden administration, such as joint-employer status, worker classification standards, and the use of confidentiality, non-disparagement, and non-compete agreements.

As always, Lockaby PLLC will continue to monitor the situation, and we will keep our readers updated.

An Introduction to Mergers and Acquisitions

Mon, 03 Feb 2025 15:38:03 GMT

FTC Antitrust Updated Guidelines

Thu, 23 Jan 2025 14:42:28 GMT

Antitrust laws seek to promote competition, in part by preventing monopolies and concentrated market power and by prohibiting corporate collusion and price-fixing practices. Antitrust laws are regularly implicated by certain mergers and acquisitions.

Historically, antitrust enforcement has centered on consumer goods and services, with labor market protections emerging more prominently in the past 10 years. This shift reflects a more regulated approach to the economy, emphasizing fairness and equity.

On January 16, 2025, the Federal Trade Commission (FTC) and the Department of Justice Antitrust Division (DOJ) issued joint antitrust guidelines, replacing the guidelines released in 2016.

The new guidelines, issued nearly a week before President Trump took office, outline specific practices that violate antitrust law, including non-compete agreements, no-poach agreements, and other restrictions on worker mobility.

The new guidelines emphasize the following key areas that potentially violate antitrust laws:

Wage-fixing and no-poach agreements may violate antitrust laws and may lead to criminal charges.
No-poach agreements between franchisees and franchisors may violate antitrust laws.
Sharing of sensitive information, such as compensation and terms of employment, between competing companies, especially if it has an anti-competitive effect.
Non-compete clauses that restrict workers from switching jobs or starting a competing business can violate antitrust laws.
Agreements with overbroad non-disclosure agreements, training repayment agreements, non-solicitation agreements, and exit fee or liquidated damages provisions.
False or misleading claims about workers’ potential earnings.

With the new guidelines in place, employers may need to revisit certain workforce management practices, including:

Increased Compliance Obligations: Employers need to ensure that their hiring practices align with competition laws and avoid agreements that unduly and unfairly restrict job mobility. Employers should also review their related HR policies, employee handbooks, and other documents to ensure compliance.
Enhanced Worker Protections: Employees have the right to report the violation of antitrust laws. They are also encouraged to seek transparency in compensation and job opportunities. This, too, is a reason for every employer’s review of its HR policies, employee handbooks, and certain terms and conditions of contracts with employees and independent contractors.
Potential Penalties: Violations can mean heavy fines and reputational damage.

Employers can ensure compliance with the new guidelines by following some practical steps.

Audit policies: Conduct a comprehensive review of hiring and compensation strategies—this will help identify any potential antitrust risks.
Train leadership: Educate HR and management teams on compliant practices.
Consult Legal: Partner with a legal expert to make sure your business is up to date with evolving regulations.

The 2025 guidelines from the FTC and DOJ fall on the heels of the decision from a federal court in Texas striking down the FTC’s Final Rule banning most non-compete agreements. The guidelines make clear that various anti-competitive practices are, at least for now, a top priority for these agencies. Given that the guidelines were issued during the “lame duck period,” the time between the election and the inauguration of President Trump, the new administration may change course. Until then, employers beware.

If you have any questions about the applicability of the new guidelines to your organization, or if you need help reviewing and evaluating non-compete agreements and other restrictive covenants, let’s connect today.

Possible Regulation Shifts in 2025

Tue, 03 Dec 2024 14:39:29 GMT

As President-elect Donald Trump assembles his cabinet for the upcoming term, several key appointments are poised to significantly influence labor and employment policies.

Nominations for President-elect Donald Trump’s cabinet suggest a forthcoming emphasis on deregulation and employer-friendly policies, which could reshape the legal landscape for businesses and workers alike. Changes to various agencies like the Department of Labor, the National Labor Relations Board, and the Equal Employment

Opportunity Commission are likely and have far-reaching implications for employers.

Wage and hour issues, worker classification, paid family leave, and workplace safety have been prominent in the labor and employment landscape over the past few years. What can employers expect to see over the next four years?

Minimum wage

In previous debates, President-elect Donald Trump has mentioned he was open to increasing the federal minimum wage from $7.25, with the caveat that it does not hurt small businesses. However, during the 2024 campaign, he did not mention increasing the federal minimum wage.

Tips

Trump has proposed eliminating federal income taxes on tips. Currently, workers are required to pay individual income taxes and payroll taxes on tips.

Overtime

The Biden administration has tried to expand overtime coverage over the past four years. It is unclear whether or not Trump intends to continue to try to expand overtime coverage or not.

Independent Contractors

Millions of U.S. workers use a gig economy by mixing short-term jobs, freelancing, and contract work to support their lifestyles. Under the Biden Administration, the Department of Labor issued a rule that changed the classification of workers from independent contractors to employees. The incoming Trump administration will likely relax this rule from the Department of Labor for gig-worker classification

Paid Family Leave

Paid family leave is expected to remain an issue for the states. The United States is the only industrialized nation that does not mandate at least some paid leave to manage illness or for the birth of a child. Employers at the moment are still expected to comply with a conglomeration of local and state paid leave regulations.

Relaxed Workplace Safety Measures

Trump’s previous administration saw a record-low number of OSHA inspectors. This decrease in inspectors resulted in an overburdening of inspectors, ultimately reducing OSHA’s ability to find and remediate workplace safety violations. A similar reduction in inspectors can be expected in the next 4 years.

Additionally, OSHA has a proposed heat safety rule that was set to take effect in 2025. However, this rule may be scaled back dramatically or scrapped altogether.

As President Trump’s cabinet nominations take shape, the potential shifts in labor and employment policy signal a transformative period for both employers and employees in 2025. From deregulation efforts to new interpretations of workplace protections, these appointments are poised to reshape the legal framework governing labor relations. Employers should keep a close watch on developments, as changes to regulatory enforcement and compliance requirements could have substantial impacts on their operations and workforce management strategies.

As always, Lockaby PLLC remains dedicated to helping clients navigate these shifts and ensuring they remain compliant. We encourage businesses to stay proactive and informed. Remember, we’re here to support your business as these changes unfold.

Supreme Court Round Up 2023-2024

Tue, 10 Sep 2024 14:35:28 GMT

The United States Supreme Court’s 2023-2024 term proved to be monumental. The Court issued several decisions that will have a long-lasting impact on the practice of employment law and on the power of federal administrative agencies. In today’s blog post, we will take a look at four key rulings from the 2023-2024 term.

Court discards the Chevron doctrine

In Loper Bright Enterprises v. Raimondo , the Court significantly weakened the power of federal agencies by overturning Chevron v. Natural Resources Defense Council, Inc . Under Chevron , courts were required to defer to administrative agencies’ interpretations of the statutes in that they were responsible for overseeing, when statutory ambiguities existed.

In Loper, the Court ruled that the judiciary is responsible for resolving statutory ambiguities and that deferring to an agency’s interpretation was prohibited by the Administrative Procedures Act (APA). As such, the Court determined that the Chevron doctrine was inappropriate under the APA. In the wake of this decision, courts have far greater latitude to strike down agency rules. In addition, an employer will likely have a greater chance of success in challenging an agency’s interpretation. However, determining whether an agency’s interpretation is binding and controlling for a particular employer may prove to be more difficult, as those interpretations will likely face far greater legal scrutiny. As such, employers will need to closely monitor any legal challenges to the regulations that govern their industry and pay particular attention to how specific Circuit Courts view the regulations at issue.

Employers given more time to challenge federal regulations

In Corner Post Inc. v. Board of Governors, the Court issued a decision allowing employers to challenge federal regulations, even after they are finalized. In Comer, the Court ruled that a six-year statute of limitations under the APA starts after someone is actually injured by the regulation. This ultimately stretches the timeframe employers have to file suit and challenge a regulation. Therefore, should a federal agency issue a decision that impacts a particular employer, that employer can challenge the validity of the regulation even though it’s final. This gives employers a powerful tool to challenge an agency’s regulatory authority.

Court weakens NLRB’s authority to impose financial penalties on employers

The Supreme Court sided with Starbucks over the National Labor Relations Board (NLRB) in Starbucks Corp. v. McKinney . The case revolved around Starbucks’ decision to fire some employees hosting media interviews after hours. The fired workers then filed an unfair labor practices claim with the NLRB.

The NLRB convinced a lower court to reinstate employees who had been fired while the legal battle ensued. Under Section 10(j) of the National Labor Relations Act (NLRA), the NLRB may ask a federal district judge to order certain temporary measures, like reinstating fired employees while an unfair labor practice claim is litigated. In Starbucks Corp ., the NLRB convinced the lower court to use a stringent standard to evaluate the board’s request.

When the case was brought to the Supreme Court, it stated that courts must use a traditional and more stringent test to review requests to reinstate employees during a legal battle. Therefore, the Court’s decision makes it more difficult for the NLRB to obtain relief for employees who have brought unfair practices claims before the Board. However, even though the Court’s decision was a win for employers, companies should still review their workplace policies and procedures to ensure that they are complying with the NLRA.

The Court rejects retaliatory intent for retaliation claims under Sarbanes-Oxley

In Murray v. UBS Securities, the Supreme Court unanimously held that a whistleblower does not need to establish that an employer acted with retaliatory intent to prove a retaliation claim under the Sarbanes-Oxley Act (SOX). Under SOX, employees of publicly traded companies are protected from reporting financial wrongdoing. As such, covered businesses cannot fire, demote, suspend, or engage in other similar discriminatory conduct against employees when they engage in protected activity under the SOX.

A circuit split had emerged regarding the level of proof plaintiffs need to establish to prove retaliation under SOX. Specifically, the Court found that the whistleblower only needed to prove that the protected activity was a contributing factor in the employer’s adverse employment decision. The Court also noted that an employee does not need to prove that the employer acted with discriminatory intent to establish his or her whistleblower claim.

Now that the Court has made it easier for whistleblowers to file claims under SOX, employers must take steps to establish that any adverse action was taken for non-discriminatory purposes. The decision stresses the importance of maintaining documentation of the reasons for an employment decision. Also, an employer should consult with counsel before making an adverse employee action against an employee who has engaged in protected activity.

FTC’s Final Rule on Non-Competes

Mon, 29 Apr 2024 14:32:49 GMT

On April 23, 2024, the Federal Trade Commission (“FTC”) issued a Final Rule prohibiting the use of non-compete agreements for most of the American workforce. While the Final Rule will not go into effect until 120 days after its publication in the Federal Register, and is already being challenged in the courts, the Rule has major ramifications for employers across the country.

Non-Competes Generally

Non-competition or non-compete clauses are contractual agreements that restrict an employee’s future employment opportunities in a certain industry, in certain roles, and/or with certain competitors. In Kentucky, the courts have enforced non-compete agreements so long as their purpose was to “prevent unfair competition by the employee or his subsequent employer, and the restraint of trade [was] no greater than reasonably necessary to secure the protection.” Crowell v. Woodruff , 245 S.W.2d 447, 449 (Ky. 1952). In recent years, however, non-compete agreements have come under increasing scrutiny from courts and from various regulatory agencies.

FTC’s Final Rule

In January 2023, the FTC announced a Proposed Rule that would prohibit non-compete agreements for most “workers,” defined to include employees and independent contractors. After an extended notice and comment period, the FTC issued its Final Rule on April 23, 2024.

The Final Rule does the following:

It prohibits employers from entering into new non-competes with all workers after its effective date.
With respect to pre-existing non-compete agreements, it prohibits employers from enforcing them for all workers except for “senior executives,” i.e. , those employees that make more than $151,164.00 per year and who are in “policy-making position[s].”
The Final Rule requires employers to notify workers whose non-competes are no longer enforceable that the agreements are no longer in effect and will not be enforced. The notice must be “clear and conspicuous” and must be in written form and delivered by hand, mail, email, or text message. The rule provides model language for employers to use.
The Final Rule exempts bona fide non-compete agreements that are entered into by a seller as part of the sale of a business entity or the seller’s ownership interest in a business entity.
The Final Rule also exempts non-compete agreements that are entered into between franchisors and franchisees, but it does not exempt non-compete agreements entered into between franchisors or franchisees and their respective workers.

The Final Rule “supersede[s],” or preempts, all state law regarding non-competes that are inconsistent with the requirements imposed by the Final Rule. As such, if the Final Rule survives the various court challenges, the states would only be able to impose restrictions on non-compete agreements that are greater than those provided by the Final Rule.

The Final Rule applies to any person or employer that falls within the FTC’s jurisdiction, which effectively includes most for-profit businesses. However, it is important to note that Section 5 of the FTC Act, upon which the FTC relied in implementing the Final Rule, does not cover banks, federal credit unions, air carriers, common carriers, meatpackers, and poultry dealers.

Challenges to the FTC’s Final Rule

When the FTC first announced its Proposed Rule in January 2023, legal challenges were anticipated and, sure enough, almost immediately after the issuance of the Final Rule, several lawsuits were filed in federal courts in Texas. The primary argument in the lawsuits is that the FTC exceeded its authority under Section 5 and that only Congress has the authority to legislate. The lawsuits also challenge the constitutionality of the FTC Act itself, claiming that it improperly interferes with the President’s right to remove FTC Commissioners.

An injunction staying the implementation of the Final Rule is likely, as are more legal challenges. In addition, given the constitutional implications, the cases are likely to reach the Supreme Court.

What Should Employees and Employers Do?

While the litigation is pending, the status quo remains. Neither employers nor employees should assume pre-existing non-competes are enforceable. Indeed, employees subject to a non-compete who are contemplating other professional opportunities, either with a competitor or within the same industry, are encouraged to seek competent legal counsel experienced with antitrust and competition issues.

Due to the regulatory uncertainty regarding non-compete agreements and the wave of state-level legislation in recent years that has restricted the use of non-compete agreements in one way or another, employers are encouraged to consider other ways to protect their legitimate business interests. Employers can continue to do so through contractual means, such as with non-solicitation agreements and non-disclosure agreements. Employers can also do so through market-competitive means, such as with competitive wages, competitive benefits packages, and other rewards that incentivize employee loyalty, such as with certain kinds of bonuses, deferred compensation plans, and even focused attention on company culture. Regardless, the importance of legal review of non-compete restrictions to ensure they narrowly protect legitimate business interests cannot be overstated.

We are closely monitoring all legal developments and will provide updates every step of the way. If you have any questions, connect with us today.

Biden’s Paid Leave Proposal

Wed, 20 Mar 2024 14:30:32 GMT

President Joe Biden recently revealed his plan for an established national paid family and medical leave program in 2025. This program will be administered by the Social Security Administration.

This program would give eligible employees as many as 12 weeks of leave. Eligible leave includes time to care for and bond with a new child, care for a seriously ill loved one, heal from a serious illness, address any circumstances from a loved one’s military deployment, or find safety from domestic violence, sexual assault, or stalking.

The budget Biden proposed also includes provisions such as an expansion of the Child Tax Credit, strengthening Medicare drug-pricing negotiations, and tackling the issue of child labor.

While a divided Congress makes it unlikely for Biden’s budget items to become law, they are poised to open a larger conversation centered on paid leave. Biden’s paid leave program stands to open a larger conversation surrounding paid leave.

Even though a paid leave program doesn’t exist in the United States, many employers have implemented their own paid leave benefits programs. 27% of private industry workers have access to paid family leave. Almost 40% of employers provide paid parental leave ( Employee Benefits in the United States Summary , U.S. Bureau of Labor Statistics).

Paid medical and parental leave contributes to reduced stress and financial insecurity for families and also improves retention, productivity, and workforce participation for employers.

Federal law, however, does provide for limited unpaid leave. The Family and Medical Leave Act (FMLA) allows employees to balance their work and family life by taking unpaid, job-protected leave for certain medical reasons. Eligible employees can receive up to 12 work weeks of unpaid leave in 12 months. To qualify for FMLA, an employee must work for an employer for at least 12 months; work at least 1,250 hours during the 12 months before the start of FMLA leave, and work at a location with at least 50 employees, or within 75 miles thereof.

Lockaby PLLC will continue to monitor the status of the proposal, and we will keep our readers updated.

Key Components of an Employment Contract

Tue, 19 Mar 2024 14:28:58 GMT

Employment contracts are a key component of business operations and workforce management, as they allow employers to define the terms and conditions of the employment relationship with certain employees. Despite their importance, all too often employers don’t seek legal counsel when cobbling together provisions they think should be included in the contract, and employees are too eager to sign on the dotted line and begin their new job.

Here are several essential elements employers should include in any employment contract , and employees should carefully review and consider before signing:

Job description and responsibilities

A detailed job description is the cornerstone of an effective employment contract. It should clearly state the employee’s job title and outline the essential functions, duties, and responsibilities the employee is expected to perform. A well-drafted job description helps set clear expectations and will become a reference point for future performance evaluations.

Employment duration and status

Specify whether the employment is “at will” or for a fixed term, full-time or part-time, and whether the position is exempt or non-exempt under state and federal wage-and-hour protections. These designations can affect benefits eligibility, among other things.

Compensation and benefits

An employment contract must also detail the compensation package, including salary or hourly wage, commissions, and bonuses. If deferred compensation is part of the total compensation package, the deferred compensation plan (such as an incentive options plan, a restricted stock option plan, or the like) should be referenced in the contract and attached as an exhibit to the contract.

The contract should also outline any benefits to which the employee is or may be entitled or for which the employee is or may become eligible, such as health insurance, retirement plans, life insurance, paid time off, and other perks.

Working hours, overtime, and leave

Define the employee's expected working hours, including start and end times, and any flexibility included in the schedule. Address policies on overtime compensation and specify leave entitlements, including vacation, sick leave, maternity or paternity leave, and any other types of leave your organization offers.

Restrictive Covenants

Include confidentiality and non-disclosure provisions that prohibit the employee from disclosing trade secrets and other confidential and proprietary information during and after employment.

Non-compete and non-solicit covenants can also be included to prevent employees from working for a competitor or starting a competing company, or from soliciting clients, after the employee’s employment ends. However, the scope and enforceability of such restrictions can vary significantly by jurisdiction and must be drafted carefully – to narrowly protect legitimate business interests – to ensure that they can withstand a legal challenge.

Termination conditions

Clearly outline the conditions under which either party can terminate the contract, including any applicable notice periods and any grounds for immediate termination.

Governing Law and Forum Selection

The employment contract should also specify which state’s law will govern the interpretation of the contract and, relatedly, which forum – state court, federal court, or arbitration – will decide any disputes between the parties. There are advantages and disadvantages, pros and cons, to dispute resolution in courts and in arbitration, and which one works best for any particular employer, in any particular industry, with respect to any particular employee or class of employees can vary.

Employment contracts are rarely a one-size-fits-all proposition. Indeed, different industries require different language and provisions. An employment contract for a physician with a private medical group, for instance, will be much different from a contract between a professional services provider and its chief financial officer. Both of these contracts will also be much different from the one prepared for a national or regional sales manager working under a monthly draw and commission schedule.

We help employers and employees alike navigate the careful drafting and negotiation of employment contracts. If you have any questions or just want to connect, call us today or subscribe to our e-newsletter for more information!

Can a Job Transfer Be a Discriminatory Action? Supreme Court Considers New Title VII Case

Mon, 18 Dec 2023 14:26:53 GMT

In employment discrimination cases, employees must prove that they suffered an “adverse employment action.” For years, the courts did not consider an employer’s transfer of an employee to another position, to another shift, an “adverse employment action.” However, the Supreme Court of the United States is considering changing this long-standing standard of interpretation and could expand the scope of discrimination cases.

On December 6, 2023, the Supreme Court heard oral arguments in Muldrow v. City of St. Louis . The plaintiff was a sergeant with the St. Louis Police Department who worked in the intelligence division, investigating public corruption and human trafficking cases. The plaintiff’s position with the intelligence division gave her the ability to earn up to $17,500 in overtime pay because she worked on an FBI task force. The position afforded the plaintiff various other benefits, such as generally working a nine-to-five schedule and the ability to wear plain clothes. Eventually, the plaintiff was involuntarily transferred to the city’s Fifth District, where she supervised police officers on patrol, reviewed and approved arrests, and worked on crimes such as homicides, robberies, and assaults. In this latter position, the plaintiff was ineligible for overtime and was forced to wear a uniform.

After the city denied her request to transfer from the Fifth District, the plaintiff sued the city, alleging gender discrimination and retaliation. She alleged that the city discriminated against her by involuntarily transferring her from her position in the intelligence division, claiming that her supervisor wanted a man in the position.

Both the federal district court and the U.S. Circuit Court of Appeals for the 8th Circuit ruled in favor of the city and dismissed her suit. Both courts reasoned that the plaintiff failed to prove that her transfer amounted to an “adverse employment action” that caused material harm.

Title VII of the Civil Rights Act of 1996 prohibits discrimination on the basis of sex. To prevail under Title VII, plaintiffs alleging discrimination must establish they suffered an adverse employment action. Traditional examples of an adverse employment action include being fired, suspended, demoted, or receiving less pay or benefits. In addition, many federal circuits require plaintiffs to establish that the alleged discriminatory conduct subjected them to a “significant disadvantage” in order to prevail.

In Muldrow , the court of appeals found that the plaintiff failed to establish a significant injury or harm. "To be materially adverse, retaliation cannot be trivial. It must produce some injury or harm," the court noted. Simply being denied a transfer would not rise to this requirement.

The Supreme Court granted the plaintiff’s petition for certiorari . The Supreme Court is not determining whether the plaintiff was discriminated against due to her sex; rather, the Court is set to determine whether an involuntary transfer alone constitutes an adverse employment action under Title VII. Should the Court rule in favor of the plaintiff, this would significantly increase the number of cases that plaintiffs could bring against employers under Title VII, as it would negate the “significant disadvantage” requirement and otherwise upend years of case law on what constitutes an adverse employment action.

Regardless of the outcome, employers should diligently document their decision-making process with respect to transfers and other major employment decisions. Doing so will assist employers in defending against claims premised upon a transfer. This will become especially important if the Court removes the “significant disadvantage” requirement that many courts have recognized for Title VII claims.

Do you have questions about how to establish best practices with respect to documenting employment decisions, such as transfers? Is your business being accused of discriminatory conduct? Do you need insight to ensure your business is protected from legal exposure related to transfers or other significant employment decisions? Let’s connect.

Kentucky Supreme Court Adopts Economic Realities Test for Classifying Employees in Workers’ Compensation Cases

Wed, 15 Nov 2023 14:19:30 GMT

The Supreme Court of Kentucky recently amended its test for determining whether an individual is an employee or an independent contractor under the Kentucky Workers’ Compensation Act. In Oufafa v. Taxi, LLC, a taxi driver was shot by a passenger and suffered permanent paralysis. After the incident, the driver filed a claim for workers’ compensation benefits, but the taxi company denied the claim on the basis that the driver was an independent contractor and not an employee.

In the workers’ compensation proceeding, the administrative law judge (“ALJ”) affirmed the company’s denial of benefits, ruling that the driver was an independent contractor. The ALJ’s decision was reversed by the Workers Compensation Board (“the Board”), which found the driver to be an employee, which was later reversed by the Kentucky Court of Appeals, which held that the driver was an independent contractor.

After reviewing the case’s history and the various and sometimes conflicting factors in determining whether an individual is an employee or independent contractor, the Supreme Court of Kentucky reversed the Court of Appeals and remanded for further review. The Supreme Court determined that a new test was necessary to determine if an individual is an employee or an independent contractor for workers’ compensation cases. Id . at 599-600.

Following its holding in Mouanda v. Jani-King Int'l , in which the Supreme Court adopted the “economic realities” test for wage-and-hour disputes arising under the Kentucky Wages & Hours Act, the Supreme Court likewise adopted the “economic realities” test for determining if an individual is an employee or independent contractor for workers’ compensation cases.

Under the “economic realities” test, which is currently employed by the federal courts when construing wage-and-hour protections under the Fair Labor Standards Act, the Kentucky courts will consider six factors when determining whether a worker is an employee or independent contractor:

The permanency of the relationship between the parties;
The degree of skill required for the rendering of the services;
The worker’s investment in equipment or materials for the task;
The worker’s opportunity for profit or loss, depending upon his skill;
The degree of the alleged employer’s right to control the manner in which the work is performed; and
Whether the service rendered is an integral part of the alleged employer’s business.

Prior to Oufafa , the Kentucky courts utilized a four-factor test to resolve disputes over worker classification. Noting the various difficulties in applying this former test, the Supreme Court announced that the “economic realities” test was the better and more efficient method to discern the actuality of the working relationship.”

While there is significant commonality between the “economic realities” test and the prior standard, the “economic realities” test removes one of the prior factors, the intention of the parties. In addition, the Supreme Court noted that the central inquiry under the “economic realities” test is “the worker's economic dependence upon the business for which he is laboring.” Ultimately, by removing the intent of the parties and by emphasizing a worker’s economic dependence on a business, the Supreme Court has signaled that this trend toward use of the “economic realities” test won’t be limited to wage-and-hour and workers’ compensation matters. Indeed, the Supreme Court stressed that it “did not limit itself when it recently adopted the economic realities test” and that the employee/independent contractor designation determines an individual’s entitlement “to many statutory employment protections.” If the Supreme Court continues to expand the use of the “economic realities” test, likely targets include statutory protections related to unemployment insurance benefits, occupational safety and health protections, and anti-discrimination and anti-retaliation protections under the Kentucky Civil Rights Act, among others.

Do you have questions regarding how the “economic realities” test will impact your organization’s current designations of employees and independent contractors? Do you need actionable insight to ensure your business is protected from legal exposure related to employee and contractor classifications? Let’s connect.

NLRB Issues New Rule Expanding Definition of Joint Employment

Thu, 09 Nov 2023 14:17:22 GMT

On October 26, 2023, the National Labor Relations Board (“the Board”) issued a final rule setting forth the standard by which the Board will determine if two or more employers are considered joint employers under the National Labor Relations Act (“NLRA”). Set to take effect on December 26, 2023, the new Rule will dramatically expand the scope of what is considered joint employment under the NLRA.

New Rule

Under the new Rule, “two or more employers of the same particular employees are joint employers of those employees if the employers share or codetermine those matters governing employees’ essential terms and conditions of employment . ” See 29 C.F.R. §103.40(b). An employer “share[s] or codetermine[s] . . . essential terms and conditions of employment” if it has the authority to control, directly or indirectly, an employee’s essential terms and conditions of employment. Id .

There are seven categories of terms and conditions that will trigger application of the Rule, which include:

Wages, benefits, and other compensation;
Hours of work and scheduling;
The assignment of duties to be performed;
The supervision of the performance of duties;
Work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline;
The tenure of employment, including hiring and discharge; and
Working conditions related to the safety and health of employees.

See 29 C.F.R. §103.40(d).

According to the Board, simply possessing the authority to control the essential terms and conditions of employment is sufficient to be considered a joint employer, regardless of whether such control is ever exercised. Likewise, merely possessing the power to indirectly control only one of the essential terms of employment is enough to establish joint employment, even when that power is not exercised directly.

The Board did not carve out any exceptions or narrow its application to preclude sectors and industries that rely upon indirect methods of employment. Therefore, entities like franchisors, staffing agencies, building and construction companies, and other similarly situated employers are likely to be impacted by the new Rule. Perhaps anticipating concerns by the aforementioned organizations, the Board noted that it was “mindful that applying the final rule will require sensitivity to industry-specific norms and practices” and that it would “take any relevant industry-specific context into consideration when considering whether an entity is a joint employer.” See 88 F.R. 73986.

Prior Rules

The NLRB’s definition of joint employment has changed significantly in recent years, often changing in conjunction with the political control of the Board. In 2015, the Board issued a decision in Browning-Ferris Industries of California, Inc ., 362 NRLB 1599 (2015), which held that, like the new Rule, multiple organizations were joint employers based solely on the right of joint control. Prior to Browning-Ferris , joint employment required proof of actual control over essential employment terms and the level of control needed to be direct and immediate.

In 2020, following litigation and political changes to the Board, a subsequent rule was issued pursuant to which joint-employer status only existed when one company exercised substantial direct and immediate control over the essential terms and conditions of another organization’s employees. The new Rule, of course, significantly expands this former rule and returns to a Browning-Ferris version of joint employment.

Implications for Employers

The implications for employers found to be joint employers are significant. If deemed to be a joint employer, the employer can be held liable for unfair labor practices committed by the co-employer, such as the failure to pay minimum or overtime wages. The new Rule also requires a joint employer to collectively bargain with a union workforce.

Given these substantial implications, employers should assess their relationships with subcontractors, vendors, staffing agencies, and any other organization that could fall within the definition of joint employment. Modification of contractual terms should be considered to explicitly state that a business does not have the right to control any of the seven essential terms and conditions listed in the rule.

Next Steps

The new Rule will not go into effect until December 26, 2023. In the meantime, it is highly likely that the new Rule will be challenged on multiple fronts. Sen. Bill Cassidy of Louisiana and Sen. Joe Manchin of West Virginia have already announced that they will introduce a resolution under the Congressional Review Act to overturn the Rule. The U.S. Chamber of Commerce has indicated that it is examining potential litigation to challenge the new Rule.

Lockaby PLLC will continue to monitor the status of the new Rule and any legal challenges and provide updates to employers on how best to navigate this new regulatory framework.

What Does the Pregnant Workers Fairness Act Mean for Employers?

Wed, 08 Feb 2023 14:11:52 GMT

The Pregnant Workers Fairness Act (PWFA) was recently signed into law by President Biden. The PWFA’s purpose is, essentially, to ensure that pregnant women receive reasonable workplace accommodations when their ability to perform some job functions is limited by pregnancy, childbirth, or a related medical condition.

The law goes into effect on June 27, 2023. However, it will take some time for regulations to be created.

The PWFA covers a perceived gap in existing law. The Pregnancy Discrimination Act prohibits discrimination against pregnant workers but doesn’t specifically require accommodations. At the same time, it is not clear whether the Americans with Disabilities Act, which requires reasonable accommodations for disability, covers pregnancy. The PWFA makes clear that pregnant workers are entitled to reasonable accommodations from covered employers.

The new law requires employers covered by the law to:

Make reasonable accommodations for the known limitations of pregnancy, childbirth, and related medical conditions. An accommodation is considered reasonable if it would not impose “undue hardship” on the operation of the business
Determine reasonable accommodations for each employee through an interactive process

Additionally, it forbids employers from:

Denying employment opportunities to a qualified employee because they would need reasonable accommodations for pregnancy, childbirth, or a related medical condition
Requiring the pregnant worker to take leave (even paid leave) if another reasonable accommodation can be provided
Taking any adverse action against the employee on account of their having requested reasonable accommodations related to pregnancy, childbirth, or a related medical condition

Are we covered by the PWFA?

If your company is covered by other federal civil rights laws, you can expect to be covered by the PFWA. Specifically, you are a covered employer if you are a private-sector company with 15 or more employees, or if you are any state or federal employer. The law covers pregnant employees who would be able to perform the necessary functions of the job if given accommodations.

What kinds of accommodations are needed?

The accommodations necessary for pregnancy, childbirth, and related conditions will be individual, as the PWFA requires you to engage in an interactive process. However, common accommodations include:

Exceptions from certain policies, such as those requiring people to stand during working hours or those which don’t allow them to drink water throughout the day
Temporary changes in duties, such as not requiring certain hazardous or strenuous activities during pregnancy and for a reasonable period of time after birth
More frequent breaks to allow the worker to access medication or simply to rest
Schedule changes to accommodate more frequent medical appointments

A lawyer can help you make a plan to comply with the PWFA.

Kentucky Employers: Avoiding Retaliation Claims

Wed, 25 Jan 2023 14:04:18 GMT

A variety of state and federal laws protect employees from retaliation by their employers for speaking up about certain workplace issues or for exercising certain legal rights related to their employment. For instance, state and federal laws prohibit an employer from retaliating against an employee for engaging in a “protected activity,” such as reporting sexual harassment or other discriminatory treatment based on protected characteristics such as age, gender, disability status, race, religion, and others.

Employers should proceed with caution

Continuing a trend, retaliation claims accounted for more than half of employee discrimination charges filed with the U.S. Equal Employment Opportunity Commission (EEOC) in 2021. While some of these charges were likely unfounded, these numbers are a bellwether for the number of disgruntled workers in the workplace.

Anatomy of a retaliation claim

The classic retaliation scenario is that, after an employee reports something illegal or negative to the employer or otherwise asserts their employment rights, the employer takes unlawful adverse employment action against them. While many may think of wrongful discharge as the usual adverse action, negative employer actions cover a broad range of prohibited conduct.

The U.S. Department of Labor defines an adverse action as one that “would dissuade a reasonable employee from raising a concern about a possible violation or engaging in other related protected activity … [and] … can have a negative impact on overall employee morale.” In other words, retaliation may be designed to provide a warning to other employees to keep their complaints to themselves.

For example, in addition to wrongful termination, an adverse action could also include a demotion, a transfer to a less desirable position or shift, a decision not to promote the employee, undeserved or unwarranted disciplinary action, and a negative or unfair performance evaluation. In other words, while some instances of retaliation or overt forms of retaliation are much more subtle.

Illegal retaliation or reprisals occur when an employer takes materially adverse action against an employee because the worker engaged in work-related protected activities, including:

Reporting to management or human resources a reasonable, good faith belief of unlawful activity in the workplace like discrimination, harassment, unpaid wages, and others
Filing or pursuing a workers’ compensation claim
Cooperating in a government investigation into a co-worker’s claim of illegal treatment at work
Filing a lawsuit against the employer
Requesting or taking leave from work for which the employee is eligible, such as under the federal Family and Medical Leave Act (FMLA)
Requesting lactation breaks allowed by state and federal laws or complaining about noncompliance with legal requirements for breastfeeding in the workplace, such as a clean, private space that is not a bathroom
Requesting job accommodations for religious practices or disabilities
Refusing to follow an order at work that would cause the employee to do something illegal
Discussing salary, wages, or other working conditions with coworkers

But what if there is a valid reason for materially adverse action against the employee?

Retaliation claims are often factually complex, but despite an employee engaging in protected activity, an employer can “discipline or terminate [a] [worker] if motivated by non-retaliatory and non-discriminatory reasons that would otherwise result in such consequences,” according to the U.S. Equal Employment Opportunity Commission (EEOC). In other words, an underperforming employee who sees “the writing on the wall” cannot insulate themselves from an adverse employment action simply because they complained about an illegal practice or reported discrimination or harassment.

Because so much is at stake—not least the costs associated with defending a lawsuit, the opportunity costs associated with management’s time devoted to the lawsuit rather than their essential duties, and a potential hit to employee morale—a Kentucky employer should engage experienced legal counsel straightaway for guidance to preempt potentially complicated situations that could result in charges of retaliation.

Retaining a knowledgeable employment attorney early on can help an employer lower the chances of retaliation charges by articulating expectations to management and creating a safe atmosphere for people to speak up. After all, an employer needs to know if illegal or unethical activity may be happening so it can investigate.

The lawyer can help the employer establish written anti-retaliation policies and procedures as well as set up ongoing anti-retaliation training for management, HR, and non-supervisory employees. A lawyer can provide guidance and representation to the employer about how to respond in a nonretaliatory way when they receive an informal or formal report of a violation of law in the workplace or find themselves defending an employee’s retaliation claim before a government agency or in court.

EEOC Equity Action Plan to Support Underserved Communities

Mon, 27 Jun 2022 14:01:57 GMT

On his first day in office, President Joe Biden signed Executive Order 13985, in which he directed the federal government to increase and enhance equal opportunity and equity among all Americans. The policy of his administration is an “ambitious whole-of-government equity agenda” that includes an effort by each federal agency to analyze inequities in its policies and procedures that prevent the equal opportunity for each person to “reach their full potential.”

Titled Executive Order On Advancing Racial Equity and Support for Underserved Communities Through the Federal Government, the order defines equity as the “consistent and systematic fair, just, and impartial treatment of all individuals …” To advance equity in federal government benefits and services, the president directed each agency to conduct an internal “equity assessment.”

Details of the EEOC plan

Of interest to Kentucky employers and employees alike is the January 2022 equity action plan of the U.S. Equal Employment Opportunity Commission (EEOC), the main federal agency charged with enforcing U.S. anti-discrimination in employment laws. The agency embodies our national efforts to create equal opportunity in the workplace, including the investigation of worker claims of unlawful discrimination as well as the resolution of employer-employee disputes through conciliation or mediation and litigation, if necessary.

EEOC details four goals to enhance DEIA (diversity, equity, inclusion, and access) in access to agency services:

Better agency-public interaction and improved filing processes for discrimination charges
Enhanced resources and information for employers seeking to comply with anti-discrimination law and promote diversity in recruitment, hiring, and promotion
Improved precision in data categorization of discrimination type, and more sophisticated analysis of employment and workforce data to understand trends more effectively
More meaningful access to EEOC materials by addressing issues of internet access, disability, limited English proficiency (LEP) and illiteracy

To be continued

As the EEOC rolls out this plan in concrete steps, both employers and employees are likely to benefit from better access to services, information, and outreach from the agency. We will report back on significant developments in this space.

Coach Brian Flores Sues NFL for Race Discrimination. Will Arbitration Clause be an Issue?

Tue, 03 May 2022 13:59:22 GMT

As football fans know, 2022 has been a turbulent year already for Brian Flores, one of the few Black coaches in the National Football League (NFL). In January, after two winning seasons, the Miami Dolphins dismissed him as head coach two years before his contract was to expire. On Feb. 1, Flores filed a class action lawsuit against the NFL and its teams for racial discrimination in employment.

And on Feb. 19, the Pittsburgh Steelers introduced him as their new senior defensive assistant and linebacker coach, his current job.

In the complaint – filed on the first day of Black History Month – and in public statements, Flores has explained that he hopes the suit will spark a societal discussion, shine a light on the problem, and bring real change.

Substance of the lawsuit

The original complaint , filed in U.S. District Court in the Southern District of New York (SDNY), is comprised of page after page of allegations detailing a history of disturbing discriminatory employment practices and structural racism against Black managers, coordinators, coaches, and applicants for these positions. All this despite Black athletes making up 70% of players.

Flores alleges violations of federal (Section 1981 of the Civil Rights Act of 1866), New Jersey, New York state, and New York City anti-discrimination and civil rights laws . He also intends to file a complaint with the Equal Employment Opportunity Commission (EEOC) and, thereafter, amend the complaint to add a Title VII (of the Civil Rights Act of 1964) claim.

The NFL and its teams have denied the allegations of the suit, some of which include:

The league’s Rooney Rule requires teams to interview “minority candidates” for head coach, coordinator, and other high-level jobs. Flores describes these as “sham” interviews in which management often already has chosen other candidates and only holds the interviews to comply with the rule. Flores alleges he experienced two sham interviews where he believes there was no intention to consider him seriously as a candidate.
The teams engage in discriminatory retention and firing practices. Black coaches receive less favorable terms of employment, including in compensation, and less leeway for growth within their jobs, being fired more quickly for performance issues than their white counterparts.
Flores contends his firing from the Dolphins was in retaliation for his refusal to engage in behavior that would have violated League rules at the request of management.

The suit asks for a jury trial and these remedies:

Punitive damages to punish the defendants for acting with malice
Compensatory damages to reimburse plaintiffs for “economic damages, loss of opportunity, loss of reputation, and mental anguish …”
Injunctive orders that the League take specific actions that would combat racial discrimination in its workplaces
Declaratory relief, in which the court would make official findings and conclusions that the defendants’ conduct was illegal
Certification of the plaintiff class

Recent developments

Several sources report that two additional Black former NFL coaches, Steve Wilks and Ray Horton, have joined Flores’ suit as plaintiffs. The amended complaint contains additional allegations from Flores as well as specific bias allegations from the new plaintiffs, according to The New York Times .

Arbitration clauses in employment contracts

In our last blog post, we wrote about the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, a new federal law that ends mandatory arbitration clauses in sexual harassment and sexual assault disputes. It transforms by operation of law mandatory arbitration clauses into optional ones at the discretion of a person making sexual assault and harassment allegations. It applies to disputes that arise after March 2, 2022, even if the parties executed the agreement previously.

Many question whether this should have applied to all kinds of employment discrimination claims, including those based on race, like Flores’ suit. A bill that would do this for employment, civil rights, consumer, and antitrust disputes has passed the U.S. House of Representatives and is now before the Senate – the FAIR Act (Forced Arbitration Injustice Repeal Act). Brian Flores has spoken out publicly in support of this legislation even though, if passed, it will likely not apply to his dispute with the NFL.

NFL employment contracts use mandatory arbitration clauses widely, including those Flores signed. If the court enforces them in the present lawsuit, it could keep the dispute out of court and send it instead to arbitration. Arbitration is a private dispute resolution model using a private arbitrator (a private person functioning like a judge) and usually keeping the matter confidential and out of the public eye. During the #MeToo movement, these clauses were widely criticized for allowing allegations of sexual harassment and assault to be kept secret, allowing would-be abusers or harassers to stay on the job or within their professions with the opportunity to reoffend.

Flores has publicly urged NFL commissioner Roger Goodell not to enforce it in this case and to let the lawsuit go forward. Flores wants the dispute resolved publicly and transparently before a jury, rather than secretly in arbitration, as he believes it would more likely spur change.

However, according to Pro Football Network on April 21, the NFL and defendant teams have informed the court that they will ask for the entire lawsuit to be arbitrated.

We will continue to monitor this important race discrimination suit with an eye toward how its legal issues could impact Kentucky employers, including issues of forced arbitration.

New Federal Law Ends Forced Arbitration of Sexual Assault or Harassment Claims

Tue, 12 Apr 2022 13:54:19 GMT

Not much in Congress has bipartisan support nowadays, but a new federal law managed to bridge the gap from one side of the aisle to the other. Effective March 3, 2022, a new law provides that mandatory arbitration clauses can no longer require victims of sexual harassment or sexual assault to arbitrate their legal claims.

The new law also allows victims to pursue their claims as or on behalf of a class ( i.e. , a class action), despite the fact that many mandatory arbitration agreements commonly require individuals to pursue all claims on an individual basis only.

President signs a popular bill

President Joe Biden approved the groundbreaking Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 on March 3, and it took immediate effect. At the signing, Pres. Biden noted that “[b]etween half and three quarters of all women [plus some men] report that they have faced some form of sexual harassment in the workplace.” He also said that 60 million U.S. employees are subject to forced arbitration clauses, sometimes without their knowledge.

Public opinion is a factor

The evolution of this law began in the #MeToo movement, an advocacy and support organization established in 2006 and dedicated to those who survive sexual misconduct and violence, especially in the workplace. Public awareness of serial inappropriate and offensive behavior by powerful men toward the women who reported to them or were dependent on them for success and promotion exploded.

One reason this behavior seemed to have gone on in secret, often involving repeat offenders, was because of the fine print in employment contracts. Arbitration clauses required legal claims arising out of the employment relationship to be resolved by private and confidential arbitration, not in court.

The new law is one response to collective outrage at arbitration provisions. The process the law creates is straightforward:

The law applies if the dispute (about sexual assault or sexual harassment) arose or accrued on or after March 3, 2022. The date the parties signed any arbitration agreement if irrelevant, as long as the dispute arose after March 3, 2022.
If the new law applies to the dispute and an arbitration provision applies, the person alleging sexual misconduct has the power to elect whether to proceed with arbitration (the individual may prefer a private, confidential forum) or proceed in a court of law (where the allegations will be made public).
If the parties disagree about whether the new law applies to a dispute, a court must decide the issue under federal law, not an arbitrator (even if the applicable arbitration agreement states that an arbitrator decides various threshold issues).

Key takeaways

Kentucky employers are encouraged to inform their workforces about the new law and take the opportunity to reiterate their anti-harassment policies, confirm their zero tolerance for such inappropriate conduct, and remind employees of their obligation to report any such offensive behavior.

Employers should also consult with legal counsel about the impact of the new law on existing mandatory arbitration agreements and the new law’s interaction with state law. An experienced employment attorney can review existing contracts and recommend helpful modifications that both comply with the law and protect the employer as much as possible.

Emergency Preparedness: A Quick OSHA Primer for Employers

Mon, 10 Jan 2022 22:21:23 GMT

By their very nature, emergencies are unpredictable and can cause chaos and countless hazards. The recent tornadoes that swept through Kentucky—devastating communities, homes, and businesses—were evidence of how suddenly an emergency can present itself. They were also evidence of how important it is for employers to be prepared for an emergency.

The U.S. Occupational Safety and Health Administration (OSHA) requires employers to have an Emergency Action Plan in place for any type of emergency and provides employers with a checklist of action items and considerations. Each Plan, of course, should be specific to the workplace and the potential hazards that could arise.

Man-Made and Natural Hazards.

Emergency Action Plans should address both man-made and natural hazards, as well as the steps an employer will take in the event of any such emergency. These steps will include sounding appropriate alarms, specifying designated meeting areas, taking headcounts of employees, notifying emergency personnel, and—as we witnessed with the recent tornadoes—instructing employees whether to evacuate or shelter in place.

Evacuate or Shelter in Place?

One of the most important and sensitive decisions an employer must make during an emergency is whether to have employees evacuate or shelter in place. Employers should consider several factors when making this decision, such as the recommendations of local authorities, the type of structure in which the employees work, and the type of emergency itself.

For example, in the event of a tornado, employers should follow the local news and authorities to determine whether a tornado watch or tornado warning has been put in place. A tornado “watch” means that the weather conditions make it likely for a tornado to occur in the designated area. A tornado “warning” means that there is an imminent threat, that a tornado has been sighted in the designated area, or indicated by radar.

In the event of a watch, employers must be ready to act quickly and take shelter if needed. Employers should continue monitoring alerts until the watch is declared over or upgraded to a warning. In the event of a warning, employers should advise employees to take shelter immediately.

Consideration of a variety of factors, not just whether a watch or a warning has been put in place, will ultimately determine whether an employer should require its employees to shelter in place or evacuate. In the event of a watch, for instance, it may be more appropriate for employees to evacuate. Employers, however, should also consider the type of structure in which the employees are working, including their age and potential vulnerabilities.

When sheltering in place, employees must be trained on what to do and where to go, such as specific underground areas (like basements or storm cellars) or other small interior rooms, hallways on the lowest possible floor. When possible, employers and employees should avoid auditoriums, cafeterias, gymnasiums, and other areas that have flat, wide-span roofs.

NOTE: Employers can refuse to pay some workers who did not come to work due to severe weather. Employers can also reprimand employees who leave the workplace due to severe weather when they are scheduled to work. Employers, however, cannot force an employee to stay at work during or due to severe weather. Employers, rather, should inform employees of the potential safety risks and take precautions to ensure they are minimizing all hazards.

Delay or Cancel Work?

It may also be appropriate for an employer to delay or cancel work. Ultimately, employers owe a duty to their employees to create and maintain a safe working environment. As part of this duty, employers may exercise their own discretion in deciding whether to remain open. This decision should be made in accordance with their Emergency Action Plan and recommendations of local authorities.

For instance, with respect to severe winter weather, there are some occasions when employers may be required to cancel work due to specific jobs, such as working with heavy machinery, working on scaffolding, and working with electrical equipment. OSHA recommends that employers stay informed by following the National Weather Service and NOAA Weather Radio .

Emergency Preparedness Training

Employers must train their employees on any Emergency Action Plan they’ve put in place, ensuring that employees know what to do and where to go in the event of an emergency. Effective training can reduce panic and chaos and ensure a more orderly emergency response.

* * *

Countless factors can increase the risk of harm during any emergency. Employers must have Emergency Action Plans in place and train their employees on all emergency response protocols and procedures. These Plans will help employers make critical, on-the-spot decisions that, in the worst-case scenario, can help save lives.

Does your organization need an Emergency Action Plan? Give us a call. We can help.

Kentucky Supreme Court Allows Non-Attorney Employees to Appear on Behalf of Employers in UI Proceedings

Mon, 08 Nov 2021 22:00:11 GMT

It has long been a standard practice for most Kentucky employers to have a non-attorney employee, such as a supervisor or HR representative, appear on behalf of the company at unemployment insurance (UI) benefits hearings. It came as quite a shock to the business community when, in April 2019, the Kentucky Court of Appeals held that non-attorney employees, by doing so, engaged in the unauthorized practice of law. The upshot, of course, was that employers would need to retain legal counsel to defend against UI benefits claims—at a cost that, in select cases, could exceed an employee’s benefit entitlement.

On October 28, however, the Supreme Court of Kentucky reversed the Court of Appeals. The Supreme Court, unfortunately, stopped short of determining that non-attorney employees aren’t engaging in the unauthorized practice of law when representing the employer in UI hearings. Instead, the Court found that the employee in question didn’t have standing to claim that the employer’s non-attorney representative engaged in the unauthorized practice of law.

Brief Background

Michael Nichols worked for Norton Healthcare from 2014 to 2015, performing after-hours equipment maintenance and repairs on an on-call basis. It was discovered that Nichols, who was unhappy with his schedule, falsified documents related to annual maintenance and even submitted a purchase order for an outside vendor to perform maintenance work. Nichols was terminated.

He filed a claim for UI benefits, reporting on the application that he was laid off due to a lack of work. Nichols’ claim was denied, but he appealed. During two referee hearings on appeal, a non-attorney supervisor appeared on behalf of Norton, who answered questions posed by the referee. The referee determined that Nichols was not entitled to benefits because he was terminated for misconduct and that, separately, Nichols misrepresented the basis for his separation from the company.

Analysis

Courts can only rule on actual cases or controversies, a critical component of which is standing. That is, a plaintiff only has standing to assert a claim if the alleged injury is fairly traceable to the defendant’s conduct. Because of a variety of other issues relating to the UI benefits proceeding—most notably, Nichols’ misrepresentation on his UI benefits application—Nichols couldn’t establish that a non-attorney employee’s appearance on behalf of Norton actually harmed him in any way. There being no injury or harm stemming directly from the non-attorney employee’s appearance, Nichols did not have standing.

The Final Take-Away

For now, employers may continue to have non-attorney representatives appear in UI hearings. While the Supreme Court signaled that this long-standing practice isn’t likely to be overturned—“[i]f no legal advice is being given or legal rights are being adjudicated, it is unlikely this Court would find that the non-attorney is engaging in the practice of law”—our view is that this issue will be litigated again in the near future, potentially placing this cost-saving custom in doubt once again.

Regardless, whether it is advisable for employers to handle UI hearings in this manner is another question altogether. During referee hearings, employers can provide opening statements, cross-examine the employee, take testimony from other witnesses, introduce exhibits, and give closing arguments. The testimony elicited during these hearings can make or break a benefits determination and result in charges to an employer’s reserve account. In addition, a competent attorney can create a complete record for any further appeals and for any companion civil litigation resulting from an employee’s separation, such as claims for discrimination, retaliation, or harassment. Indeed, in many cases, it makes sense for a number of reasons to involve legal counsel during the UI proceeding.

Does your organization need assistance with defending UI benefits claims? Do you need advice on how you can streamline the handling of these claims to comply with the quick associated deadlines? Let’s connect. We can help.

#MeToo and Sexual Harassment in the Workplace in Recent Years

Tue, 05 Oct 2021 21:58:01 GMT

It has been almost four years since the #MeToo movement gained significant traction in media– a global movement in which survivors of sexual harassment and sexual assault shared their stories to bring attention to gender and sexual discrimination (in and out of the workplace), to start conversations, and to demand change for women, socially and legally.

The #MeToo hashtag was started in 2006 by New York activist Tarana Burke, who wanted to empower women and sexual-violence survivors by showing them that they are not alone, by uniting them with a platform to share their voices. The hashtag gained momentum once again in 2017, when actress Alyssa Milano reintroduced it as part of an anti-sexual harassment movement.

How has sexual harassment in the workplace changed since #MeToo?

According to a Harvard Business Review study of 250 women in the U.S. asking about their experience with sexual harassment in the workplace, 25% of women reported being sexually coerced in some form in 2016. When surveyed again in 2018, that number had declined to 16%. Reports of unwanted sexual attention in the workplace also decreased from 66% in 2016 to 25% in 2018. However, there was an increase in reports of gender harassment–behaviors not aimed at sexual cooperation but that convey insulting, hostile, and degrading attitudes about members of one gender.

What can Employers do?

Since #MeToo, many public and private employees have sought to address and improve their sexual harassment policies in the workplace and implement regular training sessions, like anti-harassment training, and provide more accessible resources for their employees.

Effective policies and regular training, however, may not always prevent harassment from taking place. What is an employer to do when it receives a complaint or report of harassment from an employee? Here’s a model list of best practices.

1. Promptly and thoroughly investigate every complaint.

And when in doubt, investigate. Take all complaints seriously and make each investigation a priority, even when the complaint is lodged by a habitual complainer or when the complaint seems frivolous. Not only does state and federal law require an employer to take action, but an investigation can also serve as an affirmative defense to legal claims that can potentially limit an employer’s liability. In the end, prompt investigations not only can reduce the risk of legal action, they can also help a company identify—and prevent—bigger problems and demonstrate to its workforce that it is committed to a safe and fair workplace.

2. Carefully plan the investigation.

An employer must clearly define the purpose and scope of the investigation. The following questions can help an employer through this initial planning process: What is being investigated? What policies or guidelines apply to this investigation? Who will conduct the investigation? Who will be interviewed, and in what order? What documents should be reviewed or gathered? Is any interim action necessary, such as paid or unpaid leave? What confidentiality issues need to be observed? Should legal counsel be retained?

3. Select an Appropriate Investigator.

Not all investigations are created equally, and an employer has a variety of options in determining who should lead or conduct any particular investigation. Should an employer allow its own HR personnel or in-house counsel to conduct the investigation? Or should it hire an HR consultant or outside legal counsel? An employer should consider the type of misconduct involved and a potential investigator’s experience or expertise with that subject matter. Also critical are the job titles and positions of the employees involved in the misconduct and the relationship the potential investigator had or has with those employees.

4. Basic rules for all interviews.

At the outset of each interview, communicate a planned message that sets forth a brief explanation of the nature of the investigation, the company’s legal obligation (or desire) to conduct the investigation, and a brief summary of the investigation process. The investigator should also inform each interviewee that he or she is protected from retaliation or other adverse actions for participating in the investigation.

In general, the investigator should prepare an outline of questions to ask each employee interviewed. The questions, ideally, are open-ended, seeking to elicit facts, not subjective opinion. The investigator’s demeanor and tone should at all times remain neutral and professional. The investigator should request supporting evidence during each interview – photographs, e-mails, notes, calendar entries, etc.

Equally important to the manner in which the interview is conducted is the physical location and other logistics related to the interview. For instance, conduct interviews in an appropriate private office or, depending on the circumstances, at a secure off-site location. Employers are advised to have two people present for the company during each interview – one to question, one to take notes. Finally, all interviews should be conducted with one employee at a time.

5. Document, document, document.

Aside from the notes an investigator takes during each interview (and the written statements that are obtained), an investigator should also, on a separate document, assess the credibility of each employee and record his or her thoughts, impressions, and objective observations after each interview.

6. Prepare an objective investigation report.

After the interviews are completed, including any necessary follow-up interviews, the investigator should prepare a written report. The report summarizes the individuals involved, all relevant facts uncovered, and all credibility determinations (and the basis for each such determination). The report also sets forth the policies, procedures, or guidelines that were implicated by the complaint and issues, if any, that could not be resolved. Finally, the report should set forth the conclusion reached by the investigator but not the discipline, if any, to be imposed.

After the report has been prepared, the investigator should meet with those individuals who need to be involved in the outcome of the investigation: HR personnel, in-house counsel, appropriate executives, and/or outside counsel. While the investigator should present the report to the appropriate individuals – the decision makers – the investigator should not be involved in making the final employment decision.

Finally, a word about he-said-she-said cases. Although these cases typically present situations that are more difficult to resolve, an investigator should make his or her own credibility determinations, along with an evaluation of all of the other witness statements and physical evidence, to reach a conclusion. Plausibility, demeanor, motive, and corroboration all play an important role in reaching a conclusion.

7. Take prompt action in response to the investigation.

When an investigation yields misconduct of any sort, including sexual harassment, an employer must take immediate remedial action. What remedy is required will depend on the specific facts of each case, but may include termination, suspension, demotion, transfer, counseling, or additional training. Whatever action is taken, it should effectively end the inappropriate conduct and be sufficient to deter similar future conduct.

8. Follow up with the complainant.

After the written investigative report is submitted to the decision-makers, the human resources department should take additional action to follow up with the individuals involved in the investigation. First, a memorandum should also be prepared for the complainant that reports the conclusions of the investigation and confirms what action, if any, will be taken.

Second, a separate memorandum should also be prepared for the alleged wrongdoer that reports the conclusions of the investigation and any action, if any, to be taken. The memorandum, of course, should remind the alleged wrongdoer of the prohibition against harassment and retaliation.

HR personnel can also review the investigation to determine what, if anything, could have been done to prevent the misconduct and can use the investigation to determine what additional training, if any, may have prevented the misconduct. In short, HR personnel should use every investigation as a learning experience and become proactive in their efforts to avoid similar situations from arising in the future.

9. Preserving investigation documentation.

After an investigation is complete, an employer should maintain all investigative materials – interview notes, witness statements, correspondence, documents gathered, etc. – in a separate file, not in any employee’s personnel file. The materials should be marked as investigative materials and kept confidential. Access to the file, of course, should be limited.

Today, the #MeToo movement is still a source of solidarity for victims of sexual harassment. The impact the movement had around the country–and around the world–is undeniable. As an employer, knowing how to address workplace sexual harassment before it occurs is key.

EEOC 2020 Statistics: Retaliation Still Prevalent in the Workplace

Mon, 12 Apr 2021 21:47:18 GMT

While the COVID-19 pandemic posed a variety of new challenges for employers, some things remained the same: discrimination, retaliation, and harassment in the workplace remain prevalent. The U.S. Equal Employment Opportunity Commission—which is tasked with enforcing federal laws like Title VII and the ADA that prohibit workplace discrimination— recently released statistical data for its Fiscal Year 2020.

In the last year, 67,448 charges were filed. Among them, retaliation claims led the way, constituting nearly 56% of all charges filed. The next most common charge was disability discrimination, making up approximately 36% of all charges. Race and sex discrimination followed, making up, respectively, nearly 33% and nearly 32% of all charges. [Note: the percentages add up to more than 100% because many charges allege multiple bases.]

These statistics mostly mirror the 2019 statistics, in which retaliation claims again led the way among the nearly 73,000 charges, followed by disability, race, sex, and age discrimination charges.

Perhaps most alarming, in Fiscal Year 2020, the EEOC recovered over $106 million for discrimination, harassment, and retaliation victims through voluntary resolutions and litigation.

Our takeaway: While a number of the total charges were likely frivolous and some percentage of the total amount recovered reflected a business decision to settle (because the total cost of defense was or would have been more than the value of the claim), employers can’t ignore the message these numbers are sending. Year over year, the number of disgruntled workers remains high, and employers can and should be taking serious and tangible steps toward improving the workplace and company culture. The cost of not doing so, of course, is significant.

Understanding the Basics of Non-Compete Agreements in Kentucky

Fri, 17 Jul 2020 21:43:31 GMT

Employment contracts, as well as severance and separation agreements, frequently contain noncompete agreements. These agreements are designed to protect the business interests of the employer and the investment they make in employees. As a “restraint on trade,” however, noncompete agreements are subject to important limitations.

The reasonableness standard

Kentucky law requires noncompete agreements to be reasonable in scope. The reasonableness requirement applies to three aspects of the restriction:

Duration: Noncompete restrictions typically last anywhere from six months to two years after the employment relationship ends. The total duration, however, might be shorter or longer depending on any employer’s unique needs or interests.
Location: While there are some exceptions, noncompete restrictions generally can’t be unlimited in geographic scope. A good rule of thumb is that, as the geographic restriction gets larger ( g. , from a few miles to nationwide), the heavier the burden becomes for the employer to justify the restriction as a legitimate protection of its interests. ( Contrast this with non-solicitation agreements, which prevent former employees from “stealing away” former customers and coworkers – which can be unlimited in geographic scope.)
Purpose: The noncompete restriction must be narrowly tailored to protect the employer’s interests. It can’t be so broad as to prevent the employee from seeking any realistic employment.

Viewed as a whole, these agreements must be made in good faith. Employers can’t use noncompete agreements to take advantage of an employee or gain an unfair advantage in the marketplace.

When must they be signed?

Noncompete agreements are typically executed as part of an employment contract at the outset of an employer-employee relationship. However, they can also be signed during employment, so long as the employer provides some form of additional consideration beyond continued employment – such as a bonus, salary increase, enhanced benefits, or additional time off, for example. Employers beware: continued employment is no longer sufficient consideration under Kentucky law to compensate the employee for executing an agreement after employment has already begun.

Can courts modify them?

When a former employee challenges a noncompete agreement, Kentucky courts have the power to modify the agreement. However, courts generally will do so only if the original agreement was unreasonable in its scope.

What are employers to do?

Employers who would like their employees to sign a noncompete agreement, or any other type of restrictive covenant, such as a confidentiality or nondisclosure agreement or nonsolicitation agreement, are advised to discuss the specific terms and language with experienced legal counsel. This process requires a deep dive into an employer’s legitimate interests and finding the most effective, and sometimes the most creative, way of protecting those interests in the narrowest way possible. After all, if the noncompete agreement won’t hold up in court, it isn’t worth the paper it’s written on.

Limits to a Kentucky Employer’s Power to Terminate an Employee

Tue, 14 Jul 2020 17:41:21 GMT

In most Kentucky jobs, employers can let employees go for any reason – economic downturn, misbehavior, shoddy work, lateness, or for no reason at all. This is normally legal and within the employer’s discretion under the at-will employment doctrine. In essence, the employee is hired at the employer’s will, and the employer also has the power to terminate the employee without cause.

The at-will employment doctrine applies to most employer-employee relationships, but there are two broad exceptions: limits imposed by private contract or restrictions imposed by law. When an employer discharges someone in violation of a valid agreement or a federal, state or local employment law, the wrongful discharge opens the employer to legal liability for the employee’s losses.

Wrongful termination based on breach of contract

Examples of employment agreements that may limit the at-will doctrine:

A collective bargaining agreement is negotiated between an employer and its unionized employees
Private, written employment agreement – especially for an executive, professional, managerial, or another elite employee – that requires cause (generally or for specific behavior) for dismissal or includes a set termination date
An implied employment agreement that may arise based on an employer’s verbal representations or behavior, or on discharge policies in an employment manual

Wrongful discharge in violation of the law

There are limits on employee discharge based on statutes and regulations, as well as on case law (judge-made law through binding judicial opinions). Some of these legal restrictions include:

Anti-discrimination laws forbidding termination (or other negative employment action) based on protected characteristics in federal law like religion, age, disability, sex, pregnancy, race, color, national origin and genetic information; Kentucky law also covers most of these characteristics; sexual orientation and gender identity may be protected characteristics under local laws; the U.S. Equal Employment Opportunity Commission (EEOC) protects these characteristics as part of gender or sex, but the current administration opposes this
When an employee feels forced to quit because of an illegal, hostile work environment based on any of these protected characteristics or because of a request for a sexual favor in exchange for a promotion or other job perk, this is a form of wrongful termination called constructive discharge
Wrongful discharge includes firing an employee in unlawful retaliation for exercising certain legal rights such as filing for workers’ compensation; reporting illegal or dangerous conditions in the workplace; reporting or cooperating in investigation or prosecution of matters related to discrimination or harassment; taking lawful family or medical leave under federal or Kentucky leave laws; or requesting reasonable workplace accommodation for a disability or for religious reasons

This only introduces a complex topic. For example, particular federal or Kentucky laws only apply to employers of a certain size or type. Any Kentucky employer or employee with questions about wrongful discharge should speak with an experienced lawyer for guidance and representation.

An article in The National Law Review provides a meaningful introduction to this topic for Kentucky employers and employees.

When are Longevity Payments Excludable from the Regular Rate of Pay?

Mon, 13 Jul 2020 21:37:50 GMT

On Jan. 15, new U.S. Department of Labor (DOL) rules became effective that update what an employer must include when it calculates an employee’s regular rate of pay as the basis for determining the proper overtime rate. We recently posted a blog explaining the new regulatory action.

The legacy rules

By way of review, when non-exempt employees (mostly hourly workers) work more than 40 hours in a workweek, they must be paid 1.5 times their regular rate of pay for every overtime hour above 40 worked. The regular rate includes “remuneration for employment paid,” but the regular rate of pay includes more than just the wage or salary amount. For example, you add to the wage or salary amount some bonuses, commissions, shift differential pay, and on-call pay.

The law also excluded certain benefits from the regular rate of pay, like paid time off (PTO), health insurance, discretionary bonuses, and certain gifts.

This rule became problematic when new kinds of employee benefits (think parking, transportation, wellness, technology, and others) evolved. Employers were often unsure whether to include or exclude new benefit types from the rate. They either had to include them and risk paying higher overtime rates than may have been required or exclude them improperly and risk underpaying overtime. To avoid this dilemma, some employers decided not to offer benefits and perks that fell into this gray area.

The new rules and longevity payments

To help resolve this confusion and to encourage employers to offer creative kinds of benefits, the new rules designate a list of benefits as excludable from the regular rate of pay. As a follow-up, on March 26, the Wage and Hour Division (WHD) within the DOL issued three opinion letters to provide further guidance about whether to include certain benefit types in the regular rate of pay.

One opinion letter discusses longevity payments based on employee service. The agency excludes payments that are like a gift on a special occasion to reward service. Excludable longevity payments may not be tied to employee hours worked, productivity, or efficiency. Excludability is dependent on recognition of the length of or appreciation of service.

Certain aspects of such payments can destroy their gift-like nature and excludability:

A payment so large that the employee considers it part of wages
A payment required by a contract
A payment required by law

These WHD clarifications should help employers determine whether longevity payments are properly excludable from the regular rate calculation or whether to restructure payments to comply with excludability requirements.

Preventing Race-Based Harassment in the Workplace During COVID-19

Fri, 10 Jul 2020 21:35:50 GMT

Almost all Kentucky employers are governed by state and federal laws that protect employees and job applicants from illegal discrimination – and harassment – based on protected characteristics that include race, color, and national origin. The media has widely reported that people of Asian descent have been the targets of verbal and even physical abuse because the new coronavirus originated in Wuhan, China.

Unfortunately, this harassment could spill over into the workplace. The Equal Employment Opportunity Commission (EEOC) – the main federal agency responsible for enforcing anti-discrimination laws – released on April 23 updates to its guidance for employers to prevent pandemic-related harassment .

(This link to the technical assistance contains valuable links to a variety of EEOC-provided anti-harassment materials for employers.)

Clear and firm communication is key

Whether a workplace provides essential services and has remained open, or will reopen in the future, communication about the illegality of workplace harassment based on race, color, or national origin directly to employees is important to set expectations and raise awareness of the current coronavirus-related trends. Directly addressing this phenomenon and setting expectations that employees will not engage in such behavior raises collective awareness and acts as a deterrent.

Communication can be in writing or oral, either in individual or group meetings with management. Posters are another way to keep the current concern on everyone’s radar and emphasize that harassment will not be tolerated.

Create a safe anti-harassment culture

Hopefully, a culture that has no tolerance for harassment is already established, but this is a time to reemphasize it or articulate a new effort to emphasize this priority. The anti-harassment policy may already be available to employees either as freestanding, written policies or within employment manuals. Providing examples of what harassment may look like is helpful for increasing understanding of the range of behavior that can be harassing as well as educating employees on what should be reported.

Tell employees what to do

Make it clear how to report harassment to management and that no retaliation will follow. The EEOC suggests designating someone to receive reports who is not in a supervisory position over that employee, or allowing reports to go to anyone in management. Then, the employer should provide clear direction to managers and supervisors about what steps to take in response to a complaint so that it is investigated and receives an appropriate response.

Make disciplinary policies clear

The employer should communicate upfront the potential ramifications of engaging in harassing behavior, depending on the severity. For example, an offender could receive an official reprimand, go through additional training, attend counseling, or even face suspension or termination. Communicating the negative consequences of the behavior to the entire workforce may help to avert acts of harassment.

Preventing harassment at work based on Asian descent, origin, or appearance is particularly important in this stressful time, but employers have many tools to set policy and create a lawful, positive, inclusive culture.

Employment Discrimination Claims in 2019: The Most and Least Common

Mon, 30 Mar 2020 21:33:21 GMT

Workplace discrimination remains a major area of concern for employers and employees alike, as discrimination claims account for a significant percentage of work-related legal disputes. According to data from the EEOC, these were some of the most common types of discrimination claims filed last year:

1. Retaliation

More than half of all discrimination claims included a companion charge for retaliation. That’s no surprise, given that retaliation claims often go along with allegations of discrimination. Typically, an employee alleges that an employer took adverse action against them for reporting allegedly discriminatory treatment or some type of harassment.

Retaliation encompasses a broad range of actions, including termination, suspension, demotion, and unfavorable job assignments. Retaliation claims are also at the root of many wrongful termination lawsuits .

2. Race

One-third of all discrimination claims in 2019 involved race. Race-based claims might allege disparate treatment – that is, treating employees differently because of race, whether that treatment involves job assignments, working conditions, performance metrics, or the like. They might also involve an ongoing pattern of harassment that creates a hostile work environment.

3. Sex

Sex-based claims accounted for another third of employment discrimination filings in 2019. Like race-based discrimination, sex discrimination can involve differing treatment or a hostile work environment, or both.

4. Least common claims

Of all employment discrimination claims filed in 2019, only a handful involved religious discrimination (3.7 percent). And even fewer involved Equal Pay Act violations (1.5 percent). The Equal Pay Act prohibits employers from paying men and women differently, absent adequate justification. However, to raise a successful claim, the employee must show that they’re working the same job in the same location. Numerous factors, such as seniority, merit, and incentive systems, as well as shift differentials, can justify disparate pay.

Claims based on the Genetic Information Nondiscrimination Act of 2008 were also exceedingly rare, as less than one-half of 1% of discrimination claims in 2019 involved genetic information discrimination.

Retaliation: The Most Common Charge Filed with the EEOC in 2019

Thu, 26 Mar 2020 21:31:27 GMT

The U.S. Equal Employment Opportunity Commission (EEOC) has released statistics about charges of employment discrimination, harassment, and retaliation filed with the agency in 2019. Retaliation was the most common charge, both nationally and here in Kentucky.

The EEOC is the federal agency responsible for enforcing federal workplace anti-discrimination laws. Kentuckians alleging illegal employment discrimination may file their charges with the EEOC or with the Kentucky Commission on Human Rights (KCHR), our state counterpart. The EEOC and the KCHR have a cooperative work-sharing agreement so an individual may file their charge with either and request that it be cross-filed with the other agency as well.

2019 EEOC data

Of the 72,675 charges filed with the EEOC in 2019, 39,110 (53.8%) were for, or included, retaliation. An employer retaliates against an employee by taking an adverse, or negative, employment action (such as termination, suspension, or demotion) against an employee after the employee engaged in a “protected activity” (such as complaining of sexual harassment, reporting allegedly discriminatory treatment, or participating as a witness in an EEOC investigation or a co-worker’s discrimination or harassment lawsuit).

Aside from retaliation, disability discrimination, race discrimination, and sex discrimination made up the majority of charges filed with the EEOC:

Disability - 24,238 (33.4%)
Race - 23,976 (33%)
Sex - 23,976 (32.4%)
Age - 15,573 (21.4%)
National origin - 7,009 (9.6%)
Color - 3,415 (4.7%)
Religion - 2,725 (3.7%)
Equal Pay Act - 1,117 (1.5%)
Genetic information - 209 (0.3%)

(Total percentage is greater than 100% because of charges with multiple components.)

Kentucky charges by the numbers

Kentucky employees filed 687 charges with the EEOC in 2019, the second-lowest number in a decade. Kentucky charges were less than 1% of the national total. Consistent with national filings, retaliation charges were the highest at 295 (42.9% of the total Kentucky charges).

Kentuckians filed charge types in similar proportions to filers nationally, with disability, race, and sex discrimination charges leading the way:

Race - 277 (40.3%)
Disability - 247 (36%)
Sex - 203 (29.5%)
Age - 162 (23.6%)
National origin - 42 (6.1%)
Religion - 33 (4.8%)
Color - 31 (4.5%)
Equal Pay Act - 10 (1.5%)
Genetic information - 2 (0.3%)

Any Kentuckian with questions about potential legal remedies for employment discrimination should talk to an experienced lawyer. Similarly, a Kentucky employer should develop a relationship with knowledgeable legal counsel to understand workplace responsibilities to prevent unlawful discrimination, harassment, and retaliation, as well as for guidance and representation in responding to internal complaints, EEOC, and KCHR charges, or state or federal lawsuits.

Can Prior Salary Levels Reflect Underlying Sex Discrimination?

Tue, 03 Mar 2020 21:29:32 GMT

The federal Equal Pay Act (EPA or Act) mandates that employers provide “equal pay for equal work regardless of sex.” The Act has four exceptions, one of which allows unequal pay when the employer bases the disparity on the nonspecific, broad standard of “any other factor other than sex.”

What if prior salary is based on gender?

A hot issue nationally is whether setting a new unequal salary level between the sexes on the new hire’s historical salary level is legitimate because it is “any other factor other than sex.” While it literally is another factor – prior salary – the concern is that if women’s salaries continue to be based on their previous salaries, a historical pay disparity based on discrimination – either for an individual or because of a pattern or practice of lower salaries or wages for female employees as a group – will be perpetuated if future pay is lower than that received by males doing the same work because it is based on past discriminatory pay patterns.

In other words, while it is literally a factor other than sex, in practice, past salary is just a stand-in for a factor that is based on sex.

Salary history disclosure bans

This is enough of a concern that some state and local governments across the country have made inquiries about past salary in a legislative attempt to narrow the pay gap between the genders. For example, most Louisville/Jefferson County Metro Government agencies or departments may not ask job applicants about their salary histories (but there is no statewide Kentucky ban as of this writing).

Federal courts disagree

However, the federal circuit courts are split on the question under the Equal Pay Act, and a California school district employer has asked the U.S. Supreme Court to decide the issue, in which case the decision would apply nationally to Equal Pay Act cases (and likely to unequal pay cases under Title VII’s mandate against sex discrimination).

The Rizo case

In Fresno County Superintendent of Schools v. Rizo, the district hired plaintiff Rizo as a math consultant, for which her starting salary was set 5% higher than her previous salary. The district, in its Supreme Court petition for certiorari, explained that the district considered this practice neutral and objective, and guaranteed a raise to all new workers.

When Rizo learned three years later that she was making less than her male colleagues, she sued the district. Eventually, the suit ended up before the U.S. 9th Circuit Court of Appeals, which held that an employer could never use prior salary to set a new salary under the Act. The defendant school district employer then filed the current petition with the highest court.

Three other circuits say that past salary may always be considered, and four others allow consideration sometimes . For example, the 6th Circuit, which includes Kentucky, says that past salary may only be used to set unequal salary levels if there is a “legitimate business reason.”

The Supreme Court may well decide to grant the petition and take on this important issue. This would provide guidance to employers in developing policy and procedure in setting pay levels that would comply with federal law.

Taylor Swift's Victory in Sexual Assault Case Provides Lessons for the Workplace

Thu, 17 Aug 2017 21:25:35 GMT

Earlier this week, a Colorado jury found in favor of Taylor Swift on her counterclaim for sexual assault against former radio disc jockey, David Mueller, awarding her exactly what she asked for in damages: a symbolic $1.00. Mueller initially claimed that Swift cost him his job after she reported that he lifted her skirt and grabbed her on the buttocks while they posed for a photo in 2013.

Swift's attorney remarked in an opening statement at the trial that "she's not trying to bankrupt this man, she's just trying to tell people out there that you can say 'no' when someone puts their hand on you."

Parallels to the workplace abound. Employees must speak up and report the harassment, whether it's coming from an executive, high performer, member of management, or a co-worker. When employees remain silent about the harassment, there can be no remedy, symbolic or otherwise.

Employers must treat harassment complaints seriously, immediately conduct an investigation, and take appropriate action, including, if necessary, termination of the harasser. An employer's failure to do so could result in liability for the actions of the harasser.

If you've been subjected to sexual harassment at your place of work, give us a call today. We can talk you through the steps for reporting the harassment, protect your rights during the investigation, and we can counsel you on your options for legal action.

If your organization has received a sexual harassment complaint, and you're wondering how you should respond, give us a call today. We can advise you on investigation best practices, perform or oversee the investigation, and defend your interests in the event a lawsuit is filed.

Employee Meal and Rest Breaks: A Kentucky Primer

Fri, 28 Jul 2017 21:22:34 GMT

It's a familiar scenario. The deadline looms. There's a lot of work to be done. There's not enough time to get it all done. May your employer deny you a meal or rest break so that the work can, in fact, get done in time?

In many instances, no.

The Kentucky Wage and Hour Act was enacted, in part, to ensure that employees subject to the Act were treated fairly and with dignity, and employed only under reasonable conditions. In this vein, the Act requires employers to provide employees with meal and rest breaks.

Meal breaks are governed by KRS 337.355, under which employees must be granted "a reasonable period for lunch," or a meal, between the third and fifth hour after their shift started. While Kentucky law does define what constitutes "reasonable," it is commonly accepted to be an unpaid period of 30 minutes or more.

Rest breaks are governed by KRS 337.365, under which an employer must provide employees with a paid 10-minute break every four hours of employment. Opinions from the Kentucky Attorney General suggest that every four-hour working period should include a 10-minute break; thus, for every four hours, an employee should work for 3 hours and 50 minutes and take a 10-minute break.

Employees who are denied their statutorily required meal and rest breaks have two options: they can file a complaint with the Kentucky Labor Cabinet or file a civil lawsuit against their employer. Which option is best is generally a case-by-case decision based upon the particular circumstances.

If you've been denied your meal or rest breaks and want to know more about your rights, call us today for a free consultation.

If your organization wants to implement a lawful meal and rest break policy, needs assistance implementing an existing policy, or simply needs guidance, specifically, on responding to employee complaints of meal and rest break violations or, generally, on the Wage and Hour Act requirements, call us today for a free consultation.

lockaby-law

Three Things Every Business Owner Should Know About a Department of Labor Investigation

A DOL Investigation is Not an Accusation, but It Is Serious

Recordkeeping and Classification Issues Are Often the Focus

Cooperation Still Requires a Deliberate Strategy

Do You Really Need a Shareholder or Operating Agreement?

Setting the Rules Before You Need Them

Reducing Conflict and Protecting Relationships

Addressing the "What Ifs"

Protecting the Business from Default Rules

LLCs vs Corporations

The Bottom Line

Whistleblower and Qui Tam Claims: What You Need to Know

What is a Qui Tam Claim?

Timing and Confidentiality are Critical

What to Expect

Corporate Governance Explained

What is Corporate Governance?

Principles of Corporate Governance

Models of Corporate Governance

The Shareholder Model

The Two-Tier Model

The Japanese Model

Why It Matters

Mergers & Acquisitions Step 4: Negotiating

What Happens When You Call Our Office?

A Guide to Employee Handbooks

Mergers & Acquisitions Step 3: Investigating

Preventing Harassment in the Workplace

An Employer's Guide to Severance Agreements

EEOC Signals Aggressive Action on Religious Liberties Case

In the past 200 days, the EEOC has stepped up its enforcement of Title VII’s religious protections. These actions have spanned over many different contexts.

General Workplace Accommodations

Antisemitism in Higher Education

Federal Workforce Protections

COVID-19 Vaccine Mandates

What Does this Mean for Employers?

Engineering the Exit: Logan Johnson on ETA, PE, and Financial Advising

Avoiding Litigation for Small Businesses

NLRB Structure Likely Unconstitutional According to Fifth Circuit

Earlier this month, the Fifth Circuit ruled that the National Labor Relations Board’s (NLRB) structure is likely unconstitutional, stating that administrative law judges (ALJs) and Board Members are too insulated from presidential oversight.

NLRB Structure Likely Unconstitutional According to Fifth Circuit

Earlier this month, the Fifth Circuit ruled that the National Labor Relations Board’s (NLRB) structure is likely unconstitutional, stating that administrative law judges (ALJs) and Board Members are too insulated from presidential oversight.

The Case

The NLRB Challenged

The Employers’ Argument

The NLRB’s Counterargument

The Fifth Circuit’s Decision

The Key Takeaway

Sixth Circuit Narrows Employer Liability for Client Harassment

Departure from EEOC Guidance

The Loper Bright Effect

Why Should Employers Pay Attention?

The Death of the IRS’s Direct File Program

What Happened?

What is Direct File?

What led to the end of Direct File?

How Does this Impact Employers and Employees?

How to File for Free? ﻿

An Employee's Guide to Severance Agreements

Supreme Court Temporarily Backs Trump Administration’s Federal Layoff Plans

Executive Order 14210

The Initial Legal Challenge and Preliminary Injunction

The Supreme Court Steps In

Justice Sotomayor’s Take

What’s Next?

From Building a Business to Finding a Calling: A Conversation with Jon Fox

Implications of the “One Big Beautiful Bill” for Employers

Expanded Health and Savings Options

Big Changes for Health Savings Accounts (HSAs)

Dependent Care Flexible Spending Account (FSA) Limit Increase

Paid Family and Medical Leave Tax Credit Extended

Student Loan Repayment Assistance Made Permanent

Worker and Employer Provisions

No Federal Taxes on Overtime and Tips (Temporary)

Increased Immigration and Customs Enforcement (ICE) Budget and Enforcement

Tax-Free Bicycle Commuting Reimbursement Permanently Repealed

Tax Cuts and Business Incentives

Business Tax Changes

Opportunity Zones and Small Business Expansion

How to File for Free?

Arkansas

What the Bill Does

Comprehensive Legal Guidance on Civil Litigation