In addition to the recent updates to New York State’s sexual harassment policy and training requirements (as discussed here), there are several other recently enacted or upcoming employment law requirements and developments for employers to keep in mind for the remainder of 2023 relating to automated employment decision tools, non-compete provisions both in New York and nationwide, protected characteristics, wage transparency, lactation and pregnancy, COVID-19 and new limits to confidentiality and non-disparagement provisions in severance agreements.
Automated Employment Decision Tools
Beginning July 5, 2023, employers in New York City will not be permitted to use automated employment decision tools (“AEDT”) to screen job candidates unless the technology has been subject to an annual “bias audit.” The required bias audit must: (i) be an impartial evaluation by an independent auditor; (ii) be able to evaluate the AEDT for its disparate impact on the basis of race, ethnicity, and sex; and (iii) be conducted no more than one (1) year prior to the use of the AEDT. Employers will also be required to publish a summary of the results of the audit, and the distribution date of the AEDT subject to the audit, on the employer’s public website before the AEDT can be used. Further, at least ten (10) business days before the AEDT’s use employers must: (i) disclose to candidates who reside in New York City whether an AEDT will be used in their assessment; (ii) allow the candidates to request an alternative selection process or accommodation; and (iii) notify candidates who reside in New York City about the job qualifications and characteristics that the AEDT will assess. Moreover, candidates who reside in New York City are entitled to, within thirty (30) days of written request and if not already disclosed on the employer’s or agency’s website, request information about the type of data collected for the AEDT, the source of such data and the employer retention policy, unless disclosure of this information would violate the law or interfere with a law enforcement investigation.
The New York City Department of Consumer and Worker Protection (“DCWP”) has clarified that in order for an AEDT to “substantially assist or replace” employers’ decisions, and thus fall within the purview of this new law and its requirements, the employer must be: (i) relying solely on a simplified output (e.g., a score, tag, classification, ranking) with no other factors considered; (ii) using the output as one set of criteria that is weighted more than any other; or (iii) using the output to overrule or modify conclusions derived from other factors like human decision-making. DCWP has also clarified that employers can comply with the law’s notice requirements by posting that they use an AEDT on their careers or jobs website, in a job posting, or by mail. DCWP’s final rules and regulations regarding this new and very novel law are available here.
New York Potential Ban on Non-Competes
Just last week, the New York State Legislature passed a bill that seeks to ban all non-compete agreements going forward (but not retroactively). If signed by the Governor, this would become effective thirty (30) days thereafter.
The bill arguably covers independent contractors and employees. In its current pending form, the bill does not contain an exception related to the worker’s seniority or level of compensation. There are some limited exceptions, however. The proposed law would not ban non-solicitation of client agreements (as long as the worker learned of those customers during his or her employment) or protections with respect to trade secrets or confidential information. Further, it will not apply to agreements that are for a “fixed term of service” (i.e., for a specific duration) although the contours of this exception remain unclear.
Not only would the bill render new non-competes going forward as void, but it also creates a private right of action that would allow recovery of lost compensation, attorneys’ fees and costs, and even liquidated damages up to $10,000.
Given the expansiveness of the bill as presently worded, we are not certain that the Governor will actually sign its current iteration, especially given her prior support for a more limited restriction (i.e., a restriction on non-competes only for employees below the state’s median earnings line). The current bill also leaves several important questions unanswered. For example, it raises significant issues with respect to sale-of-business non-competes (which are not expressly carved out in New York’s proposed ban), as well as non-solicitation of employees provisions, paid notice and/or garden leave periods, “forfeiture-for-competition” provisions, or non-competes related to post-employment severance agreements (none of which are expressly addressed in the ban).
Regardless of whether the ban is signed by the Governor in its current form, employers should still take note of the growing nationwide trend to restrict the use of non-competes. In addition to the FTC’s proposed ban (see below), Minnesota recently joined states such as California, North Dakota and Oklahoma in generally prohibiting non-compete agreements. And the General Counsel of the National Labor Relations Board recently asserted in a memo that, except in certain limited circumstances, non-compete agreements violate the National Labor Relations Act.
