In legislative terms, the month of March came in like a lion and went out (almost) like a lamb, as the pace of new bills introduced at the state level slowed considerably. Roughly 300 new labor and employment-related bills were introduced across the country in March, versus about 600 new bills in February. State lawmakers have begun actively considering those pending bills, however, as nearly 200 cleared at least one legislative house. Approximately 50 new state labor and employment laws were enacted during this time. Bills addressing nondisclosure agreements, arbitration of sexual harassment claims, noncompete agreements, equal pay, and background checks, among other trending areas, continue to remain a legislative priority at the state and local levels. This month’s State of the States will focus on those bills in these key legislative areas that have advanced through at least one state house.

Sexual Harassment

Bills addressing sexual harassment continue to be popular at the state level. A relatively new legislative trend employers have encountered over the past couple of years is the attempt to ban or significantly restrict the use of nondisclosure agreements (NDAs) and mandatory arbitration agreements regarding sexual harassment claims.

In March, New Jersey enacted an expansive bill (S. 121) that voids any provision in an employment agreement that prospectively “waives a substantive or procedural right or remedy related to a claim of discrimination, retaliation, or harassment.”¹ The measure also bans NDAs covering these issues.

Hawaii senate and house committees advanced measures with similar aims. The state senate passed one bill, SB 1048, that would render unenforceable NDAs related to sexual harassment, and would prohibit mandatory arbitration of sexual harassment claims. In addition, the state house and senate cleared HB 488 and SB 1041, respectively, bills that would similarly restrict employers’ efforts to prevent employees from disclosing sexual harassment or assault via employment contracts or by mandating agreements that ban discussion of harassment.

On the other hand, Kentucky acted swiftly this spring to craft and pass SB 7 to clarify that the state does allow employers to require arbitration agreements and to mandate that a prior employee waive existing claims against the employer as a precondition of rehiring.² This legislation came in response to the Kentucky Supreme Court decision Northern Kentucky Area Development District v. Snyder, which barred government agencies from requiring arbitration as a condition of employment.

Discrimination

Several states and cities have introduced bills that would expand existing anti-discrimination protections to additional categories. For example, a bill (SB 18) awaiting the Kentucky governor’s signature or veto would provide anti-discrimination protections on the basis of pregnancy. This measure generally would require employers to make reasonable accommodations for employees related to pregnancy and childbirth, and ban employers from refusing to hire, promote, or provide employment privileges on the basis of pregnancy. In addition, Kentucky’s bill would provide that pregnant workers may need more frequent breaks and would require a non-bathroom private space for expressing breast milk.

Pittsburgh, Pennsylvania also has adopted protections from employment discrimination for employees on the basis of pregnancy, childbirth and related medical conditions. Ordinance No. 2019-1425 includes protections for childbirth, whether or not it results in a live birth, and extends protections to the partner of the pregnant employee—regardless of marital status or gender. The city also issued extensive guidance on pregnancy discrimination, accommodation, and harassment. Under this guidance, examples of prohibited pregnancy harassment include comments regarding body size, what the person should eat or drink, and whether the pregnant employee lacks focus or intends to continue working after childbirth. 

New Mexico enacted a bill, SB 227, which extends current anti-discrimination employment protections on the basis of sexual orientation and gender identity to all employers. Previously, the law covered only those employers with 15 or more employees.

Another characteristic where protection from discrimination may be extended is citizenship or immigration status. Washington SB 5165, which has passed the senate and a house committee, would amend the state’s broad protections against discrimination in employment, credit practices, real estate, or labor organization to immigrants or non-citizens.

Finally, the Vermont senate passed S 83, which would ban discrimination-related settlement agreements that bar employees from working for the employer or its subsidiaries in the future.

Equal Pay

As in past months, legislative activity related to equal pay has been a hot topic. Cincinnati, Ohio has enacted Ordinance No. 83-2019 banning salary history questions.³ This “Prohibited Salary History Inquiry and Use” provision of the city code makes it an illegal discriminatory practice for a company within the city to ask applicants about their past or current salary, screen applicants based on wages or benefits, rely on salary history in hiring decisions or in determining compensation, or refuse to hire or otherwise retaliate against an applicant who refuses to provide his or her salary history.

Several states have been moving toward similar restrictions regarding past salary inquiries. Bills have cleared at least one legislative chamber in Hawaii (HB 1192), Illinois (HB 834), New Hampshire (HB 211), New Jersey (AB 1094), Maine (LD 278), Montana (HB 547) and Washington (HB 1696). The Illinois bill further includes a ban for employment agreements that would keep employees from discussing compensation, as does Montana’s.

There are also two bills in Oklahoma related to equal pay, SB 645 and SB 649, which would prohibit gender pay discrimination and increase fines for violations from $25-$100 per pay period to $100-$200, respectively. These measures have both passed in the Oklahoma senate and are in committee in the state house.

Background Checks

Another trend in state legislatures has been to shield applicants from discrimination based on criminal history. At least nine states have such legislation that has progressed through one or both houses of the state legislature. Most of these measures contain provisions to “ban the box,” or prohibit employers from asking applicants to disclose previous criminal history on an initial application or intake form, although most proposals also exclude verbal discussions about criminal convictions during the interviewing process or discussions arising after background checks during screening. The bills further provide for checks of criminal convictions where federal law requires the position to be screened, such as in the case of law enforcement employees.

Utah HB 212 has already been enacted, providing that a public employer cannot require an applicant to disclose any criminal background prior to an interview. The law also precludes public or private employers from requesting information about an applicant’s expunged criminal history.

West Virginia SB 152 was also enacted in March, but it focuses more on clarifying and expanding which types of criminal convictions can be expunged.

Many of the pending state bills, however, would go further than West Virginia’s in helping those with criminal charges or convictions to find employment. Bills in Maryland (HB 994) and Montana (SB 168), for example, are very similar in that they would ban the box by disallowing employers to ask applicants for criminal background information on electronic or written application forms. However, these measures would not preclude all discussion of past criminal activities during interviews or after the initial application form has been processed. In Arizona, SB 1437 would limit any inquiries about criminal history to the past seven years where it would be relevant to the position. It exempts from this ban employers with fewer than 15 employees.

Colorado’s HB 1025 would go a bit further, not only banning inquiries about criminal background but also precluding employers from advertising job openings by saying that people with a criminal history may not apply. The Chance to Compete Act states that employers with 11 or more employees may not inquire about applicants’ criminal backgrounds during the initial application process, but may obtain a criminal background check for an applicant at any time.

Meanwhile, New Hampshire is moving to ban employers from inquiring into an applicant’s credit history if HB 293 becomes law. It has passed in the house but still must be reviewed by the state senate. The New Hampshire bill sets out several exceptions to the proposed ban on credit history investigations, including positions in management, jobs with expense accounts or access to financial or client information, or jobs with fiduciary responsibilities to the employer.

Drug Testing

Oklahoma recently passed the Medical Marijuana Use and Patient Protection Act. The act, better known as the medical marijuana “Unity Bill,” amends the state’s medical marijuana law to create a system for implementing dispensary licenses and to amend and clarify who must be accommodated in the employment context if they are medical marijuana users. The Unity Bill also prohibits Oklahoma employers from taking adverse employment actions against employees who are licensed to use medical marijuana, as long as they are not in “safety sensitive” positions, such as those requiring the operation of motor vehicles or heavy equipment, working with hazardous chemicals or pharmaceuticals, providing patient or child care, or firefighters or those who carry firearms.⁴ However, the Unity Bill also allows employers to prohibit use and possession of marijuana at work and to discipline employees who are impaired on the premises or during work hours. The Unity Bill allows employers to maintain a marijuana-free workplace or ban employees from using marijuana if they would lose federal contracts or funding otherwise.

Conversely, in New Jersey, a wide-ranging bill (S 2703) that would have legalized the recreational use of marijuana and included employment protections for off-duty users, has stalled. The New Jersey Cannabis Regulatory and Expungement Aid Modernization Act would have been the first recreational marijuana law in the nation to explicitly protect individuals from “discrimination” on the basis of such use.⁵ Several New Jersey lawmakers who campaigned on legalizing marijuana for recreational use—including Governor Phil Murphy—vowed to revisit the legalization effort after the November 2019 elections if the measure failed, so this bill may resurface.

Noncompete Agreements

Several states are trying to more carefully regulate noncompete agreements, especially for lower-wage earners. A Hawaii bill (HB 1059) would ban noncompete agreements for low-wage workers. The bill defines low-wage earners as those who make $15 per hour or less. The measure has passed the house and is currently in a senate committee. New Hampshire SB 197, which has cleared the state senate, is a similar measure prohibiting noncompete agreements with lower-wage workers. New Hampshire’s bill defines “low-wage employee” as a worker earning less than 200% of the hourly federal minimum wage or 200% of the hourly tipped minimum wage. 

Washington also has put forward legislation (HB 1450, SB 5478) to limit agreements. A version of each bill has cleared its respective chamber. This legislation would institute wide-ranging restrictions on noncompete agreements if passed. For example, any noncompete agreement would be required to be presented in writing at the time of the agreement, whether at the time of an offer or upon a promotion. Noncompete agreement enforcement would be limited to no more than 18 months, but employers could rebut this limitation “by proving by clear and convincing evidence that a duration longer than eighteen months is necessary to protect the . . . business or goodwill.” An employee covered by the noncompete would also have to be paid at his or her base salary for the entirety of the enforcement period if the employee is terminated through a layoff. This bill would greatly expand the pool of workers who would be covered under such a ban, as it would disallow enforcement of noncompete agreements for any employee earning less than $100,000 per year or any independent contractor earning less than $250,000 per year. The bill would prevent employers from restricting employees making less than twice the state minimum hourly wage from taking additional jobs or self-employment, unless there is a safety concern or a conflict of interest.

Labor Relations

Two substantially similar bills have focused on allowing labor organizations and employers to require membership in a union. A new law (HB 85) in New Mexico prevents cities and localities from enacting right-to-work laws. In essence, the law affirms that under 14(b) of the National Labor Relations Act (NLRA), the state has the authority to dictate whether employees are required to be members in a labor organization as a requirement of employment. The statute grants exclusive jurisdiction to the state to mandate or negotiate labor agreements and prohibits cities and localities from making or continuing to enforce any ordinance or rule that would disallow agreements that employees must be a member of a union as a condition of employment.

Related legislation in Illinois, SB 1474 – the Collective Bargaining Freedom Act – has passed the senate and is in a house committee. The Illinois bill states that an employer or labor organization under the NLRA may “execute and apply agreements requiring membership in a labor organization as a condition of employment to the full extent authorized by the National Labor Relations Act.” The measure similarly claims statewide authority for legislating such agreements and bans localities and cities from limiting this ability.

Franchise Industry

Iowa HB 327 and Missouri SB 38 would both specify that franchisees and their employees shall not be considered employees of the franchisor. The Iowa bill has passed both chambers of the state legislature, and the Missouri bill has passed the senate and is in a house committee. Both measures would presume franchisees and franchisee employees are not employees of the franchisor, except in very limited circumstances. The exceptions to this presumption are that either: the franchisee and franchisor have agreed to an employer-employee relationship (the Missouri bill specifies this agreement must be in writing) or there is a very significant level of control by the franchisor over the franchisee not usually found in this relationship. The Missouri bill specifies a few examples of this heightened control, such as hiring, termination, discipline, and direction of a franchisee’s employees.

In other news…

Two other interesting state bills have made headway in the middle of the country. In Arkansas, a new law (HB 1177) will prevent employers from microchipping their employees as a condition of employment. The law gives detailed prohibitions about microchipping employees, bans employers from asking for consent to microchip employees on applications or during interviews, and precludes employers from coercing or retaliating against employees who do not wish to have tracking technology inserted into their bodies. The Act To Protect Employees From Forced Human Microchip Implantation also requires that employers provide alternative reasonable accommodations for employees who do not consent to implantation of a microchip. If an employee does consent to have a microchip implanted, however, all costs and medical upkeep of the implantation and the device would be the employer’s responsibility. Employers are also responsible for informing employees about what data is to be collected and how such data would be used. The statute clarifies that employers may use other non-invasive technology to track the movements of its employees.

In other privacy-related employment legislative news, Illinois HB 2557 would provide that an employer requesting applicants to record video interviews and using an artificial intelligence analysis of applicant-submitted videos must notify each applicant in writing before the interview. The Artificial Intelligence Video Interview Act would mandate that applicants be provided with an information sheet explaining the artificial intelligence process and what characteristics would be used to evaluate the application, such as facial expressions. Prospective employees would need to consent to this evaluation process in writing before the artificial intelligence evaluation. House Bill 2557 has passed the house and is in a senate committee.

What’s Next?

Some state legislatures are already starting to adjourn, although the majority of states will remain in session through the spring. Expect to see more committee actions and fine-tuning of those bills that have been already introduced. For a roundup of state wage and hour developments, see this month’s edition of Wage Watch.⁶