Workforce Bulletin

A growing number of states and municipalities have passed “fair chance” laws that, to varying degrees, prohibit employers from inquiring into a job applicant’s criminal background during the hiring process or restrict employers from using certain criminal conviction information in connection with their hiring decisions. Recently, Los Angeles County joined this group and New York City is posed to again amend the rules for its existing law. The Los Angeles developments create new intricacies for employers, while the New York actions may be best understood as clarification of existing law. In either case, keeping up with the changes is important for employers who are hiring in those locations. 

Los Angeles County’s New Law

The Los Angeles County Fair Chance Ordinance for Employers (“FCO”) was adopted by the Los Angeles County Board of Supervisors on February 7, 2024, and becomes operative on September 3, 2024. The FCO was designed to complement California’s “Ban-the Box” law, called the Fair Chance Act (“FCA”), and introduces additional compliance requirements for covered employers, including, but not limited to, mandatory language for job postings and solicitations, and written notice requirements in connection with the extension of a conditional offer of employment.

On August 22, 2024, the Michigan Department of Labor & Economic Opportunity (LEO) issued a press release on the heels of the Mothering Justice decision, about which we previously wrote, and which will drastically change the minimum wage, tip credit, and paid sick leave obligations for Michigan employers.

With respect to paid sick leave, LEO announced that it issued new guidance and FAQs on the Earned Sick Time Act, which goes into effect on February 21, 2025. We will be publishing an Insight shortly detailing all the mandatory changes.

With respect to the minimum wage and tip credit changes, on August 21, the state of Michigan’s Attorney General, LEO, and the Department of Treasury asked the Michigan Supreme Court for clarification on how the Treasurer should calculate adjustments for inflation to set new minimum wage rates, as directed by the July 31 decision. The motion outlines a proposed schedule of new minimum wages based on one interpretation of the Supreme Court’s order, but suggests that ambiguity in the order leaves room for interpretation and therefore lays out five options:

The U.S. Departments of Labor (DOL), Health and Human Services, and the Treasury (collectively, the “Tri-Departments”) published a Notice of Proposed Rulemaking (NPRM) on August 3, 2023, to propose new regulations for the Mental Health Parity and Addiction Equity Act (MHPAEA). In particular, the proposed rules would implement amendments to MHPAEA that were passed under the Consolidated Appropriations Act of 2021 (CAA) to require documentation of comparative analyses for Non-Quantitative Treatment Limits (NQTLs). We anticipate that the Tri-Departments will publish new regulations for MHPAEA that will finalize most provisions of the NPRM in the coming days or weeks.

We anticipate that most provisions of the new regulations will finalize the proposed requirements without significant modifications. However, robust public comments were submitted with regard to several key provisions that may cause the Tri-Departments to modify or rescind the proposed rules.

Three of the most controversial provisions from the proposed rules to watch for in the final rules are:

• Quantitative testing for Non-Quantitative Treatment Limits

  • Current guidance: Health plans must ensure that financial requirements (such as copays and coinsurance) and quantitative treatment limits (such as day or visit limits) that apply to benefits for the treatment of mental health and substance use disorders (MH/SUDs) are no more stringent than the predominant level of the financial requirement or treatment limit that applies to substantially all medical and surgical benefits. This is a mathematical test that has been well-established for these numerical limits since the first MHPAEA regulations were published in 2011.
  • Potential Change: The 2023 NPRM also proposed to apply this mathematical test to NQTLs. If finalized, this new requirement may effectively prohibit most applications of prior authorization, step therapy, and other forms of utilization management for outpatient and prescription drug benefits for MH/SUD conditions.

As featured in #WorkforceWednesday®: This week, we’re analyzing the U.S. Department of Justice’s (DOJ’s) new Corporate Whistleblower Awards Pilot Program and its impact on employers:

The DOJ’s new Corporate Whistleblower Awards Pilot Program introduces significant changes for employers, particularly those in private health care and financial institutions. So, what details do employers need to be aware of?

Epstein Becker Green attorney Gregory Keating describes how employers can protect their businesses and stay ahead of potential legal challenges.

As featured in #WorkforceWednesday®: This week, we’re looking at recent state-level changes and legal trends that have varying degrees of impact on employers.

On August 9, 2024, Illinois Governor J.B. Pritzker signed HB 3773 into law, amending the Illinois Human Rights Act (IHRA) to expressly regulate the use of artificial intelligence (AI) for employment decisions. HB 3773 is the second Illinois law that regulates workplace AI.  As we previously reported, in August 2019, Illinois enacted the first of its kind statute, the Artificial Intelligence Video Interview Act (AIVIA), which requires employers who use AI-enabled video interviewing technology to provide applicants advanced notice of the use of the AI, information regarding how the AI works and the characteristics evaluated, and obtain prior consent from applicants. And, while not necessarily directed exclusively at workplace AI tools, as we also previously reported, an employer’s use of AI-powered facial expression and screening technology could also implicate the requirements of the Illinois Biometric Information Privacy Act (BIPA).  

HB 3773 has a potentially broader application than either AIVIA or BIPA.  HB 3773 provides two new definitions:

Artificial Intelligence                      

A machine-based system that, for explicit or implicit objectives, infers, from the input it receives, how to generate outputs such as predictions, content, recommendations, or decisions that can influence physical or virtual environments.

Artificial intelligence also includes generative artificial intelligence.

Generative Artificial Intelligence   

An automated computing system that, when prompted with human prompts, descriptions, or queries, can produce outputs that simulate human-produced content, including, but not limited to, the following:

To honor the 34th anniversary of the Americans with Disabilities Act (ADA), on July 26, 2024, the U.S. Department of Justice (DOJ) signed a long-awaited final rule to improve access to medical diagnostic equipment (MDE) for people with disabilities (the “MDE Regulations”). Stressing that accessible MDE is essential for people with disabilities to have equal access to medical care and avoid poor health outcomes, the MDE Regulations, which were published by the Federal Register on August 9, 2024, amend Title II of the ADA (“Title II”) and apply to hospitals and health care clinics operated by state or local governments. The MDE Regulations create enforceable minimum standards for accessible design (as initially issued by the U.S. Access Board) covering MDE, including examination tables, weight scales, dental chairs, x-ray machines, mammography machines, and other radiological equipment commonly used for diagnostic purposes by health care professionals.

In full, the MDE Regulations and the accessibility standards they incorporate stand well in excess of 100 pages. To help our clients more readily understand what the MDE Regulations do and do not require, we are answering some of the most commonly asked questions here.

The Michigan Supreme Court has written the latest, and perhaps last, chapter of an ongoing saga affecting most Michigan employers. In Mothering Justice v. Attorney General, the Michigan Supreme Court fully restored sweeping minimum wage and paid sick leave laws, bringing finality to a legal controversy that has been churning since the laws were first proposed in 2018. Pursuant to that decision, the laws will take full effect in their original form, about six months from now, on February 21, 2025.

How We Got Here

In 2018, labor advocacy groups presented the Michigan legislature with two voter initiatives related to minimum wage (the Improved Workforce Opportunity Wage Act (IWOWA)) and paid sick leave (the Earned Sick Time Act (ESTA)) through the state’s citizen initiative process. Michigan’s constitution allows voter initiatives to propose legislation, and the legislature may take one of these three actions: (1) adopt “without change or amendment”; (2) reject and place the proposed legislation on the ballot; or (3) reject and propose an amendment, placing both on the ballot. As we previously explained, the Legislature quickly enacted amended versions of the IWOWA (2018 PA 368) and the ESTA, which was renamed the Paid Medical Leave Act (PMLA) (2018 PA 369), with significant changes. As we detailed here, the amended versions of these laws were less burdensome to employers.

The legislature’s actions led the initiatives’ advocates to file a legal action challenging the lawmakers’ authority to modify a voter initiative so quickly and dramatically through a process labeled “adopt and amend.”  That lawsuit has wended its way through Michigan’s courts, with the final outcome decided on July 31, 2024, echoing that of the initial holding issued in 2022: the Michigan legislature’s adoption-and-amendment of the two initiatives violated the State constitution’s provision on voter initiatives. Hence, those amendments are void as unconstitutional and the laws as originally conceived should take effect.

As featured in #WorkforceWednesday: This week, on our Spilling Secrets podcast series, our panelists discuss the ongoing legal challenges to the Federal Trade Commission’s (FTC’s) nationwide non-compete ban and what the future may hold for employers:

On July 23, 2024, a federal judge in Pennsylvania denied a motion to enjoin the FTC’s non-compete ban. This ruling is in direct opposition to one by a district court in Texas that enjoined the ban in early July.

In this episode of Spilling Secrets, Epstein Becker Green attorneys Peter A. Steinmeyer, A. Millie Warner, and Paul DeCamp look into their crystal ball and make their own predictions for how the FTC’s non-compete ban may or may not survive in the courts.

On July 11, 2024, after considering comments from insurers, trade associations, advisory firms, universities, and other stakeholders, the New York State Department of Financial Services (NYSDFS) issued its Final Circular Letter regarding the “Use of Artificial Intelligence Systems and External Consumer Data and Information Sources in Insurance Underwriting and Pricing” (“Final Letter.”) By way of background, NYSDFS published its Proposed Circular Letter (“Proposed Letter”) on the subject in January 2024. As we noted in our February blog, the Proposed Letter called on insurers and others in the state of New York, using external consumer data and information sources (“ECDIS”) and artificial intelligence systems (“AIS”), to assess and mitigate bias, inequality, and discriminatory decision making or other adverse effects in the underwriting and pricing of insurance policies. While NYSDFS recognized the value of ECDIS and AI in simplifying and expediting the insurance underwriting process, the agency—following current trends—wanted to mitigate the potential for harm. 

And if the opening section of the Final Letter is any indication, the agency did not back down. It continued to insist, for example, that senior management and boards of directors “have a responsibility for the overall outcomes of the use of ECDIS and AIS”; and that insurers should conduct “appropriate due diligence and oversight” with respect to third-party vendors. NYSDFS declined to define “unfair discrimination” or “unlawful discrimination,” noting that those definitions may be found in various state and federal laws dealing with insurance and insurers.