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Clark Hill 2023 Automotive & Manufacturing Industry Outlook: Labor & Employment Update

August 8, 2023

Federal Agencies and lawmakers will continue to be very active throughout 2023. Here are our top 5 tips for companies as we enter the second half of 2023.

  1. Comply with the Pregnant Workers Fairness Act, which took effect on June 27, 2023. Create and implement a process to follow when an employee requests an accommodation due to pregnancy-related limitations, including procedures for requesting, evaluating, and providing reasonable accommodations. This may consist of simply enhancing your current process for reviewing accommodation requests to include requests related to pregnancy, childbirth, and related medical conditions. For more best practices, see Responding to New Federal Employment Protections for Pregnant and Nursing Employees.
  2. Understand the Risks of AI @ Work. Be sure to avoid potential ADA violations when using artificial intelligence (AI) to make decisions about hiring, monitoring, compensation, and other terms/conditions of employment. Alert applicants to your accommodation request process and train staff to identify and process requests for accommodations in a legally compliant manner.  To learn more about the EEOC’s position on AI, see EEOC Has Entered the AI Chat.
  3. Reconsider Restrictive Covenants. Understand that in addition to being on the radar of the Federal Trade Commission, your non-competes may be the subject of an unfair labor practice charge with the National Labor Relations Board (NLRB). The NLRB’s General Counsel issued a memorandum claiming non-competes often “unreasonably chill” an employee’s ability to exercise their rights under the National Labor Relations Act. The Memo notes that a non-compete agreement that is “narrowly tailored to special circumstances justifying the infringement on employee rights” may still be legal. However, the Memo states that “a desire to avoid competition from a former employee” and “business interests in retaining employees or protecting special investments in training employees” do not likely qualify. While the General Counsel’s memo is not law, it is important for employers to consider whether non-competition agreements are appropriate for each job category.  Generally, non-competes for medium to low wage earners are also disfavored by courts. To learn more about the General Counsel’s position on non-compete agreements, see NLRB GC Chills Noncompetes.
  4. Audit Classification of Independent Contractors. On June 9, 2023, the Department of Labor (DOL) announced that it will be publishing rulemaking on independent contractors in October 2023 (originally slated for May 2023). While we won’t know for sure what is in the final rule until it is published, we can be certain that it will be less favorable to manufacturers than the current standard released during the Trump administration. Failure to properly classify your workers as employees can result in violations of federal and state minimum wage and overtime laws. The DOL’s Fact Sheet 13 provides information on the status of the rule and guidance as to how it will likely interpret an employment relationship going forward.
  5. Get Educated on Religious Accommodations. When considering religious accommodation requests, know that on June 29, 2023, the U.S. Supreme Court heightened the standard for employers. The Court rejected the de minimis standard and adopted a more rigorous standard, ruling that Title VII requires an employer to show that granting an accommodation would result in substantially increased costs in relation to a particular business. When analyzing whether an accommodation would be too burdensome, employers should consider all relevant factors, including the accommodation(s) requested and the practical impact in light of the employer’s nature, size, and operating cost. Read this e-alert to learn more, Supreme Court Puts the “Hard” Back in “Undue Hardship”.

The views and opinions expressed in the article represent the view of the author(s) and not necessarily the official view of Clark Hill PLC. Nothing in this article constitutes professional legal advice nor is intended to be a substitute for professional legal advice.

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