Reprinted from the April 20th edition of The Legal Intelligencer. (c) 2023 ALM Media Properties. Further duplication without permission is prohibited.

In Sharp v. S&S Activewear, LLC, the United States Court of Appeals for the Ninth Circuit tackled the difficult issue of when a generally toxic workplace becomes a hostile environment under Title VII. 42 U.S.C. § 2000e-2(a)(1). The Ninth Circuit’s conclusion that employees’ allegations regarding playing offensive music in the workplace were sufficient to state a claim for a hostile work environment under Title VII relied on recent Supreme Court precedent, in Bostock v. Clayton County, 140 S. Ct. 1731 (2020); and Oncale v. Sundowner Offshore Servs, 523 U.S. 75 (1998).

Reprinted from the April 2023 edition of Business Law Today. Further duplication without permission is prohibited.

By Susan A. Maslow

In the late 2010s and early 2020s, ESG—a wide-capturing acronym standing for “environmental, social and governance”—roared into action, emerging both domestically and abroad as one of the defining trends in investing, regulation, finance, and corporate governance.

ESG’s proponents have long sought a unified framework through which to describe interrelated standards of environmental sustainability and human rights, and bring them into greater alignment with the private sector’s traditional profit-seeking goals. This change in approach arguably gained in prominence after the Business Roundtable’s 2019 declaration on the purpose of the corporation, endorsing a vision of corporations being led for the benefit of all stakeholders, not just shareholders. Though many question the sincerity and commitment of the Roundtable, the ESG movement was super-charged, and it achieved mainstream status during the 2020 protests for racial justice, which spurred companies to integrate new goals for diversity, equity, inclusion, and racial justice into their broader ESG policies. Over the course of the last eighteen months, public company boards have been sued for breaches of fiduciary duty based on alleged failures to react to ESG factor “red flags.”

Reprinted from the April 20th edition of The Legal Intelligencer. (c) 2023 ALM Media Properties. Further duplication without permission is prohibited.

On March 23, 2022, the Pennsylvania Human Relations Commission (“PHRC”) proposed new regulations to expand the definition of certain protected classes. The Amendments will create new Pennsylvania Code Sections at 16 Pa. Code §§ 41.201 – 41.207, and would expand the terms “sex”; “religious creed” and “race” for purposes of the Pennsylvania Humans Relations Act (“PHRA”) and the Pennsylvania Fair Educational Opportunities Act (“PFEOA”). The regulations were approved on December 8, 2022. The regulations are not yet in effect, but will become effective 60 days after publication in the Pennsylvania Bulletin.

The PHRA prohibits discrimination in employment because of race, color, religious creed, ancestry, age, sex, national origin or non-job related handicap or disability. 43 Pa. Stat. § 955(a). The regulations relating to the PHRA previously provided definitions only for the terms “pregnancy” and “disability due to pregnancy or childbirth”. 16 Pa. Code 41.101. The definition of the other protected classes was left to the PHRC’s guidance and cases interpreting the statute.

The amendments to Title 16 of the Pennsylvania Code would add a new subchapter, entitled “Protected Classes”, for the purpose of ensuring that all unlawful discriminatory practices proscribed by the PHRA and PFEOA are “interpreted and applied consistently”, and that all complaints filed with the PHRC “are investigated consistent with the rules outlined herein.” The regulations calls for liberal construction to accomplish the purpose of the PHRA and PFEOA.

Reprinted from the February 10th edition of The Legal Intelligencer. (c) 2022 ALM Media Properties. Further duplication without permission is prohibited.

On January 5, 2023, the Federal Trade Commission (“FTC”) proposed rules imposing a broad restriction on non-competition agreements (“Proposed Rule”). The Proposed Rule would require employers to rescind existing non-compete agreements, and would preempt conflicting state laws. The ban marks a dramatic change not only in the law, but in the relationship between employers and their key employees.

The Proposed Rule defines “non-compete clauses” as follows: any agreement that prevents a worker from seeking or attempting to seek employment with any employer; or, any agreement that is a de facto non-compete clause. A de facto noncompete clause has the “effect of prohibiting the worker from seeking or accepting employment.” The Proposed Rule provides examples of a de facto non-compete clause: a non-disclosure agreement drafted so broadly that it effectively precludes the employee from working in their chosen field; or a contractual term that requires the employee to pay the employer or a third party its training costs if employment terminates within a specified time period, but only where the payment is not reasonably related to the actual costs incurred by the employer.
The Proposed Rule mandates that it is a prohibited unfair method of competition to enter into or “attempt to enter into” a noncompete clause with an employee, or to maintain an existing non-compete agreement, or to represent to an employee that they are subject to a noncompete without a good faith basis to believe they are.

Reprinted with permission from the October 14th edition of The Legal Intelligencer. (c) 2022 ALM Media Properties. Further duplication without permission is prohibited.

Employers eager to recapture the costs of hiring foreign citizens often use damages or repayment provisions in employment agreements. A recent case in the Southern District of New York illustrates a challenge to that strategy. The Southern District’s recent decision in Baldia v. RN Express Staffing Registry LLC to allow a complaint under the federal Trafficking Victims Protection Act (“TVPA”) to proceed, is part of a growing trend in using the TVPA to challenge such agreements.

The plaintiff in the Baldia case, Marie Alexandrine Baldia, is a citizen of the Philippines. RN Express Staffing recruited her from the Philippines and hired her as a registered nurse supervisor after sponsoring her visa to work in the United States. Baldia signed an Employment Agreement for a three-year term, that included a liquidated damages provision. Specifically, the Employment Agreement required that in the event Baldia left the employ of RN Express Staffing, “without cause”, before the end of the three-year term, she would need to repay the costs of “recruiting, training and placement”. The Employment Agreement recited that the “Company Recruitment Costs” totaled $33,320, and that the number would be reduced after her first full year of employment.

On January 1, 2021, Congress enacted the Federal Corporate Transparency Act (the “CTA”), pursuant to which a secure database will be established to assist law enforcement agencies in combatting money laundering, financing of terrorism, and other illegal activities. The objective of the CTA is to prevent bad actors from using shell companies to obscure the provenance of their ill-gotten gains.

The database will be administered by the Financial Crimes Enforcement Network (“FinCEN”), an agency of the U.S. Department of Treasury. Companies will be required to provide information relating to their beneficial owners (generally, individuals owning 25% or more) and persons who are in control (generally, individuals holding significant decision-making authority). There are exceptions, such as publicly traded companies, companies with annual gross receipts exceeding $5 million that have more than 20 full-time U.S. employees and a physical office in the United States, and companies already subject to Federal government oversight (e.g., banks).