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2023 HIGHLIGHTS

2023 was the first full year of publication for Staffing Legal News, and I am gratified by the response, especially the encouragement and positive comments from subscribers. Here are the biggest stories from the year we left behind.

Salary Transparency

Effective January 1, California and Washington joined Colorado in enacting laws requiring salary ranges and benefits to be disclosed in job postings. Since then, other states, such as Illinois and New York, have joined the parade. Washington's law purportedly applies whether or not you have a physical presence there - posting of a non-compliant job on the Internet may be all it takes to be subject to significant damages. Needless to say, the class actions have begun!

If you are not including salary ranges and a general description of benefits in all of your postings, you should consider starting now.

Coverage of New Salary Posting Laws - How Broad?
Coverage of New Salary Posting Laws - How Broad? California and Washington Regulators Take an Expansive View

Two States Declare War on Industrial Staffing

New Jersey and Illinois passed laws that are blatantly hostile to the industrial staffing sector. Legal challenges in each state have so far have failed.

The bills impose burdensome administrative requirements, but the heart of each law is the requirement for staffing agencies to match the temporary worker pay with that the client is giving its equivalent workers. This requires: (1.) Getting the clients to agree to supply their employee pay data, and (2.) Getting the clients to agree to pay more for temp workers than their own workers, because the staffing firm will need to markup its pay rates. It's too soon to see the overall impact, but it can't be good.

The real question now is: "Will the contagion stop?" Lawmakers in other states have proposed similar bills, which have yet to gain traction but are still a real possibility.

In the meantime, Texas and Florida are busy building new infrastructure to accommodate all the businesses (and their employees) moving from business-hostile states.

Illinois Set to Join New Jersey in the War on Staffing
Manufacturers ask Governor to veto House Bill (HB) 2862 before August 15 effective date
New Jersey Declares War on Blue Collar Staffing
“New Jersey Temp Worker Bill of Rights” creates extraordinary regulatory burdens on staffing firms and clients.

Independent Contractor Model Under Attack

There is an expanding state and federal war on the use of independent contractors. Witness this massive Department of Labor judgement against a healthcare staffing and its owner:

US DEPARTMENT OF LABOR OBTAINS JUDGMENT TO RECOVER $9.3M IN BACK WAGES FOR 1,756 WORKERS MISCLASSIFIED BY PHILADELPHIA STAFFING COMPANY
US Healthcare and its owner admit to not paying overtime to healthcare workers and agree to Consent Judgement

Here are three more recent examples:

Staffing Firm Sued for Dodging Overtime by Paying Employees as Independent Contractors
A class action was just filed in Texas federal court alleging that Presidential Staffing Solutions routinely avoids paying overtime by classifying assigned healthcare personnel as independent contractors.
The Perils of Using Independent Contractors in California
Independent Contractor decides he is an employee after fee dispute arises. Sues end client and staffing firm for wages. Wins settlement.
U.S. Department of Labor Takes on Questionable Independent Contracting Practices
The traditional risk of using independent contractors, a/k/a “1099’s,” is an audit by the IRS or state taxing authorities. In recent years, state auditors have been more aggressive than the IRS because of manpower limitations at the IRS. This may change in the future because of better IRS

Noncompetition and Trade Secret Cases

Allegis vs. Jobot

In Allegis' ongoing talent war with Jobot, a Federal Judge declared unenforceable parts of a non-compete and trade secret agreement signed by an employee of subsidiaries Aerotek and later Aston Carter. Not a good precedent, especially if there are thousands of similar agreements in effect around the organization.

Staffing Giant Allegis Takes a Hit in Restrictive Covenant Lawsuit
Federal court invalidates non-solicitation and non-disclosure contract provisions in proxy war with Jobot

Another pending case provides background details to the Allegis-Jobot dispute. According to Allegis filings in the case, "Jobot, in some instances, has offered almost double the compensation Aerotek employees earned at the Company":

Allegis Group vs Jobot: the War Continues
Last year I wrote about an unusual case in which Allegis Group subsidiary Aerotek sued a former employee and his new employer Jobot for trademark infringement.

Biopoint vs. Catapult Solutions

Here's another wild one. one of Catapult's Managing Directors misappropriated proprietary information from a competitor with the assistance his fiancé who worked inside the competitor. Just to make sure it looked really bad, when she got caught and fired by Biopoint, Catapult hired her into the same role. The result was one of the largest unfair competition awards in staffing history.

BIOPOINT VS CATAPULT SOLUTIONS GROUP: NONCOMPETE CASE OF THE YEAR
Inside job yields a $5,061,444 damage award - ruling pending on $2,503,457 attorneys’ fee claim.
BIOPOINT VS CATAPULT SOLUTIONS: $2,503,457 IN ATTORNEYS’ FEES ADDED TO $5,061,444 DAMAGE AWARD
The US District Court for Massachusetts has added $2,503,457 in attorneys’ fees to the massive damage award that I wrote about last week.

Allegis Wins - Not

Here a case that an Allegis affiliated company won on paper but is the definition of a Pyric victory. This one is wild - 14 years, three courts, one bankruptcy, and at the end Allegis finds itself defending a sexual misconduct claim brought by the Bankruptcy Trustee on behalf of the employee's bankruptcy estate for events that allegedly occurred 17 years ago. Can't make this up.

14 Year Battle Between Recruiter and Major, Lindsey & Africa Not Over Yet
What is it about legal search recruiters? This is my second story in a year about a massive damage award against a legal search recruiter for engaging in unfair competition, only this one has a twist

Federal Non-Compete Ban Proposed

In January, the FTC issued a proposed regulation banning enforcement of all non-compete agreements in the U.S, including existing agreements. This of course received a strong negative reaction from the business community, and consideration of the regulation has been extended to April 2024.

My take was, and still is, that the regulation will not hold up legally because such a sweeping re-writing of the law is beyond the FTC's authority. But state laws are being passed in places like Illinois and Minnesota that are without doubt enforceable. In any event, geographic non-competes are becoming ineffective in the modern business world, where geography often does not matter. The best way to protect your business from unfair competition is to use trade secret, non-solicitation and non-dealing agreements. But even some of these can be problematic if not written carefully (see Allegis vs. Jobot, above).

FTC’s Non-Compete Ban and the Staffing Industry
On January 5, 2023, the Federal Trade Commission published a proposed regulation flatly banning all employee noncompete agreements
New York Set to Ban Noncompete Agreements; Illinois Set to Crush Industrial Staffing
Acts awaiting Governors’ signatures signal ongoing anti-business sentiment in states that need business the most
Minnesota Bans Non-Competes
Minnesota Governor Tim Walz just signed a law banning noncompete agreements in the state. Unlike restrictions in some other states, the ban is not limited in scope to certain wage groups or occupations. It is universal, the only exception applying to business owners when the business is sold.

Remote I-9's Made Permanent

The best thing to come out of COVID (besides remote work).

NEWS FLASH - USCIS TO ALLOW REMOTELY VERIFIED I-9’s IF EMPLOYER USES E-VERIFY AND FOLLOWS PROCEDURES
REMOTE RE-VERIFICATION ALSO ALLOWED FOR COVID-ERA “CATCH UP” VERIFICATIONS IF THE EMPLOYER USED E-VERIFY AT THE TIME OF ORIGINAL REMOTE DOCUMENT VERIFICATION In my last post I alerted readers to the potential for USCIS to allow remote verification of I-9 documentation to continue after expiration of the COVID emergency rule

California Insanity

Watching a state commit economic suicide is not pretty. But even worse is being on the receiving end of the regulatory attacks on employers that are contributing to the Golden State's demise. Where do they think the jobs come from?

California Legislature Gives Employers More Reasons to Avoid the State
The 2023 California legislature has completed its work, and as usual the lawmakers continue to burden employers with new obligations that go far beyond all other states.
This Just in - It is Now Illegal to be an Employer in California
At least that is the witticism circulating among the labor and employment defense bar these days. And like any good joke, it has an element of truth. Approximately 50% of all court cases filed in the Golden State today are employment claims.

New Religious Accommodation Rules for Employers

In a surprising ruling, the U.S., Supreme Court expanded employers' obligation to accommodate employees' religious needs. Employers now must grant a religious accommodation unless they can demonstrate that the accommodation would result in “substantial increased costs in relation to the conduct of the employer’s particular business." That means employers must accept a fair amount of cost and even disruption to their business when an employee requests a religious accommodation. This is going to create real problems when staffing agencies get sued for their clients' refusal to accommodate temporary workers, as already happens in disability cases.

Recent Supreme Court Ruling Adds New Religious Accommodation Duty
Decision is a game-changer likely to encourage litigation I have often written about staffing firms that get caught in lawsuits because their client failed to “reasonably accommodate” a temporary worker’s disability under the Americans with Disabilities Act. I have not written about the duty to accommodate religious beliefs and practices
Another Staffing Firm Dragged into an ADA Lawsuit Because of Client’s Actions
It seems that even some very large, and presumably sophisticated, clients of staffing firms do not understand that they have the same non-discrimination obligations to temp workers as they do to their direct employees.

Happy New Year and here's to good staffing in 2024!