As summer approaches, most state legislatures have closed up shop for the year. Approximately 14 states are still in session, four of which are scheduled to adjourn in or around the end of June. Those jurisdictions that remain in session are enacting or advancing bills addressing a wide range of labor and employment issues. Some subjects have gained in popularity over the course of 2018, and continue to dominate the legislative calendars. This month's State of the States will focus on these key trending topics: equal pay, paid sick leave, drug testing, harassment, discrimination and accommodation.

Equal Pay

Laws to promote gender pay equity gained momentum in 2018. Since the beginning of 2018, New Jersey and Washington State enacted laws to strengthen their equal pay statutes. Other states have enacted bills to prevent employers from inquiring about or relying on an applicant's salary history in hiring and setting compensation levels. The idea behind this move is to prevent a discriminatory pay decision from following applicants throughout their careers. In May 2018, Connecticut¹ and Vermont² joined this legislative trend by enacting bans on salary history inquiries in their states.

Connecticut's bill, which does not come into force until January 2019, prevents employers from asking job applicants about past wages and compensation histories at any point during the hiring process. Employers can ask applicants whether the previous employer had stock options or other equity incentives, but may not ask them to specify the value of such benefits.

Vermont's law, which takes effect on July 1, 2018, similarly prohibits asking a prospective employee about or seeking information regarding his or her compensation history. Under the new law, compensation includes base compensation, bonuses, benefits, fringe benefits, and equity-based compensation.

To date, six states and several cities have adopted laws or ordinances limiting salary history inquiries.

Similar laws in other states continue to advance. In Illinois, the Senate approved a bill, HB 4163, that would—among other requirements— prevent employers from screening job applicants based on their wage or salary history. The bill would entitle an individual to recover compensatory and special damages, and to seek injunctive relief and reasonable attorneys' fees. A similar measure (SB 3100) under consideration failed to advance out of committee. That bill would have allowed employers that had conducted a self-evaluation of its pay practices and demonstrated efforts toward eliminating any pay differential an affirmative defense to a charge of pay discrimination.

Another pay-related bill, HB 4743, has cleared both of Illinois' legislative chambers. This bill would amend the state's equal pay statute to explicitly prevent employers from paying wages to African-American employee at a rate less than the rate at which the employer pays non-African-American employees who perform the same or substantially similar work on a job that requires equal skill, effort, and responsibility and is performed under similar working conditions.

It is unclear whether Illinois' pending bills will move forward. Although Democratic lawmakers hold a majority in the state's general assembly and senate, the governor, Bruce Rauner, is Republican, and has not yet indicated his position on these bills should they reach his desk. Tellingly, Rauner did veto salary history bill last year.

Paid Leave

In May, New Jersey became the 10th state to enact a paid sick leave mandate for private employers.³ The new law, which is slated to take effect on October 29, 2018, explicitly preempts 13 existing local paid sick leave ordinances. Employees in the Garden States will be able to accrue one hour of paid leave for every 30 hours worked, up to 40 hours in a benefit year.

Duluth, Minnesota could be the next locality to enact paid sick leave obligations. On May 29, the Duluth City Council approved an amended version of the proposed Earned Sick and Safe Time Ordinance that would allow workers to earn an hour of paid time off for every 50 hours worked, up from every 40 hours worked. The ordinance would impact employers with five or more employees in Duluth. Other approved amendments exempt independent contractors, seasonal employees and student interns from coverage.

Rhode Island⁴ adopted, and San Francisco⁵ revised, new rules to implement their paid sick and safe leave laws. Rhode Island's rules clarify business size for coverage purposes and pay rate calculations, among other issues, but leave some questions unanswered, such as whether an employer that already affords sufficient paid time off must provide this paid time “up front” at the beginning of employment.

On May 7, 2018, the San Francisco Office of Labor Standards Enforcement published updated rules concerning the city’s Paid Sick Leave Ordinance, which was amended in 2016. California enacted a state-wide paid sick leave law in 2015. 

By contrast, Vermont's governor vetoed a paid leave insurance program in May. According to his veto message, the governor decided to return H.196, An act relating to paid family leave, without his signature because "it simply is not responsible to impose a new $16.3 million payroll tax on Vermonters—further exacerbating the crisis of affordability—without even contemplating a voluntary option." In addition, the governor claimed the legislature "severely understated" the estimates of start-up and ongoing costs associated with the program.

Marijuana Legalization

Maine continues to tinker with its fledgling recreational marijuana law. Voters in 2016 approved a ballot initiative legalizing the possession, use, and cultivation of limited amounts of marijuana. Since that time, the state legislature has struggled to establish standards for certain issues, including regulation of the anticipated retail market. In May 2018, however, Maine lawmakers overrode Gov. Paul LePage’s veto of a bill (LD 1719), adopting An Act to Implement a Regulatory Structure for Adult Use of Marijuana (“the Adult Use Act”). The Adult Use Act supersedes prior law and took immediate effect.

Of particular interest to employers, the Adult Use Act removed a provision in the previous statutory scheme that precluded employers from refusing to employ or otherwise penalizing workers who consumed marijuana outside work. The Adult Use Act eliminated that specific term but left unchanged an employer’s ability to prohibit the use, possession, or cultivation of marijuana in the workplace. Maine employers are also free to implement workplace policies restricting marijuana use and to discipline employees that are under the influence of marijuana at work. It is unclear whether or how the Maine Department of Labor might change its guidance for employers on pre-employment testing and disciplinary issues following the Adult Use Act’s removal of the antidiscrimination language.

Also in May, the Minnesota house introduced a bill (HF 4541) that would legalize marijuana for adult recreational use. Similarly, the Missouri house referred two measures to committee (HB 1731, HB 1989) that would authorize personal use of marijuana. Rhode Island also introduced a bill (S 2895) to legalize, regulate, and tax recreational marijuana. Existing laws in these states permit only certain medicinal uses for marijuana products.

Harassment

As anticipated, state and local governments have spent much of 2018 exploring various types of legislation aimed at curbing sexual harassment in the workplace.⁶ States are considering proposals such as mandatory sexual harassment training, restrictions on nondisclosure agreements, and added protections for employees from retaliation if they are victims of sexual harassment.

Maryland, for example, recently enacted a bill (SB 1010, HB 1596) that bans and nullifies provisions in employment contracts or agreements by which employees waive any substantive or procedural rights to claims for sexual harassment or retaliation for reporting such harassment. Under the law, which takes effect on October 1, 2018, employers may not take any adverse action against individuals who fail or refuse to sign prohibited agreements. In addition, employers with 50 or more employees must submit a survey to the state civil rights commission, disclosing the number of: (1) settlements made by the employer after an employee alleged sexual harassment; (2) times the employer has paid a settlement to resolve sexual harassment allegations against the same employee over the past 10 years; and (3) settlements made in this context that included a confidentiality provision.

Tennessee adopted a relatively simple proposal on nondisclosure agreements. The new law (H.B. 2613) restricts private and public employers from executing a nondisclosure agreement that relates to sexual harassment as a condition of employment. It further prevents employers from renewing any current nondisclosure agreements that would cover sexual harassment.

Vermont Gov. Phil Scott recently signed a more extensive bill (HB 707) that prevents employers from requiring employees or applicants from signing, as a condition of employment, a waiver that prohibits, prevents, or otherwise restricts them from opposing, disclosing, reporting, or participating in an investigation of sexual harassment, or (except as otherwise provided by state or federal law) purports to waive a substantive or procedural right or remedy available to them regarding sexual harassment claim. The measure includes language encouraging sexual harassment training. Governor Scott also signed HB 707, which prohibits employment agreements from preventing individuals from disclosing sexual harassment.

On May 9, 2018, New York City Mayor Bill de Blasio signed into law a package of sexual harassment-related ordinances. These ordinances substantially overlap with several statewide provisions adopted in April as part of the state’s budget bill.⁷ As in that bill, the city legislation requires interactive workplace anti-harassment training for all employees, within 90 days of their initial hire date, beginning April 1, 2019. New York City also extended its statute of limitations, granting employees up to three years to file a claim of “gender-based harassment” under the City’s Human Rights Law, and that amendment has already taken effect. Finally, as of September 6, 2018, local law will require employers to post an “anti-sexual harassment rights and responsibilities” poster in English and Spanish in a workplace common area. The city will issue an approved poster that employers can download and post. Employers will also be required to distribute an information sheet to all new hires.

Not to be outdone, the New York state legislature is moving forward with another harassment-related bill. AB 10777 (SB 8740) would require covered employers to annually report the number of settlements reached with employees and non-employees (including contractors, temps, and consultants) in resolution of claims of discrimination on the basis of sex, including verbal and physical sexual harassment. Reporting would be required for “any agreement or arrangement where anything of value is conferred to the individual raising the claim in return for such individual declining to further pursue the claim, and any internal mediation or other workplace resolution that results in the individual declining to further pursue the claim.”

In neighboring New Jersey, lawmakers are entertaining two bills addressing harassment. AB 1242 (SR 121) would nullify any nondisclosure language that “has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment.” In addition, the bill states that any such term becomes unenforceable against an employer if the employee publicly reveals enough information about the claim that the employer can be reasonably identified. Language to that effect would need to be prominently placed (in bold) in every settlement agreement involving claims of discrimination, retaliation, or harassment. For its part, AB 3948 would amend the New Jersey Law Against Discrimination to expressly prohibit employers or others “engaged in business” from sexually harassing “an employee, intern, volunteer, client or customer of the business, or any person providing services to the employer or business pursuant to a contract or agreement, including an independent contractor,” or applicants for such positions. The bill would also make it an unlawful employment practice for businesses to fail to implement anti-harassment policies or take other reasonable actions to prevent harassment.

Both chambers of the Illinois legislature passed a bill (HB 4572) that would widen the definition of “employer” under the state’s human rights act. Instead of applying to employers with 15 or more employees, the law, if amended, would cover any person employing one employee within Illinois during 20 or more calendar weeks. It remains to be seen how the bill will fare if it reaches Gov. Bruce Rauner’s desk.

Meanwhile, three bills pending in California have passed the general assembly and have moved to senate committees for consideration.⁸ AB 1867 would require employers to display posters from the Department of Fair Employment and Housing on sexual harassment and to issue specified notices. Under the bill, employers with 50 or more employees would be obligated to provide two hours of interactive training on sexual harassment to all supervisory employees within six months of assuming their supervisory role and every two years thereafter. Additionally, employers would need to retain records of sexual harassment complaints for 10 years. According to proponents, AB 1867 would help expose repeat offenders and ensure that businesses take harassment complaints seriously.

Another California bill, AB 2770, would allow employers—in a reference check, for example—to disclose whether or not they would rehire a current or former employee. Moreover, employers acting without malice could reveal whether a decision not to retain or rehire someone is because that individual engaged in sexual harassment. The intent of this bill also appears to be to expose offenders and perhaps interfere with their ability to transfer their harassing conduct to a new workplace. AB 3109 takes a different approach and would void any contractual provision that purports to waive “a party’s right to testify in an administrative, legislative, or judicial proceeding concerning alleged criminal conduct or alleged sexual harassment on the part of the other party to the contract.”

Along the same lines, California SB 820 would invalidate any provision in a settlement agreement that prevents the disclosure of facts related to claims of sexual assault, sexual harassment, or sex discrimination. Generally, nondisclosure language would be permissible only if requested by the claimant. This bill passed the senate in May and remains under consideration by the general assembly.

Discrimination & Accommodations

Lawmakers in Vermont have been quite busy, as their session draws to a close shortly. The Green Mountain State enacted a law in May (HB 333) requiring that any single-user toilet in any public building or place of public accommodation be identified as gender-free. The legislature also passed a bill (HB 711) that would add “crime victim status” to the list of protected classes under Vermont’s Fair Employment Practices Act, along with race, religion, sexual orientation, ancestry, and other characteristics. The measure would further require an employer to provide unpaid leave to an employee who is a crime victim to enable that individual to attend certain legal proceedings.

Across the Connecticut River, the New Hampshire upper and lower chambers approved a bill (HB 1319) that would prohibit discrimination based on gender identity. Gov. Chris Sununu appears inclined to sign the bill.

Two companion bills in New York would also expand antidiscrimination protections. The bills (AB 10461, SB 8607) would replace the term “sexual harassment” with “discrimination” in various statutes. “Discrimination” would be defined broadly to include “discrimination or harassment based on race, color, sex, national origin, creed, sexual orientation, age, disability, military status, familial status, marital status, predisposing genetic characteristics, or domestic violence victim status.” The proposals would prohibit mandatory arbitration and nondisclosure terms and task the state human rights agencies with creation of a model discrimination prevention policy and training program for mandatory use by covered employers. The measure also seeks to outlaw discrimination against non-employees, including contractors, subcontractors, vendors, and consultants.

On May 17, 2018, South Carolina Gov. Henry McMaster signed one of the most significant new pieces of legislation impacting employers there in recent years.⁹ The South Carolina Pregnancy Accommodations Act (HB 3865) will, among other things, require employers to notify employees of their right to be free from discrimination on the basis of pregnancy, childbirth, or related medical conditions. This notice requirement took immediate effect as to all new employees, and must be satisfied no later than September 14, 2018, for all existing employees. The statute also obligates employers to provide reasonable accommodations due to pregnancy and related medical conditions, including lactation.

Last, but not least, lawmakers in the Golden State also have adopted further antidiscrimination measures. On May 17, 2018, Gov. Jerry Brown signed into law SB 785, which generally precludes attorneys or litigants from disclosing an individual’s immigration status in open court (civil or criminal) without the individual’s consent or the judge’s prior approval.

In addition, the California Fair Employment and Housing Council issued final regulations concerning national origin discrimination, effective July 1, 2018. Among other things, these regulations explain that it is unlawful for an employer to adopt English-only rules, unless certain conditions are satisfied. They also ban discrimination based on an employee’s or applicant’s accent or English proficiency, except as permitted by the rules. Retaliation is prohibited, including threats to report individuals to immigration authorities or other law enforcement about immigration status. The rules restrict immigration-related practices in further detail, including a bar to discovery into immigration status. The regulations also address height or weight requirements that might create a disparate impact, recruitment practices, and harassment.

What's Next?

We will continue to monitor these and other pending bills as several state legislative sessions draw to a close. For an update on wage and hour developments, see the latest edition of WPI's Wage Watch.¹⁰