Employment laws change over time. Employers and human resource leaders who follow the latest directives not only avoid lawsuits and fines, but also maintain a healthier, happier workplace.

Over the past year, there has been action on three labor regulations that affect U.S. employers. The Equal Employment Opportunity Commission enacted the Pregnant Workers Fairness Act of 2023 and published a technical assistance document regarding artificial intelligence’s impact on employment discrimination. And the Federal Trade Commission accepted public comments regarding the potential elimination of noncompete agreements.

PREGNANT WORKS FAIRNESS ACT

The Pregnant Workers Fairness Act of 2023 took effect last June. This law requires employers with 15 or more employees to provide reasonable accommodations for qualified employees and job applicants with temporary physical or mental limitations due to pregnancy, childbirth or related conditions.

Brian Bean, executive claims consultant at R&R Insurance in Waukesha, Wisconsin, says the new law builds upon the coverage of the Pregnancy Discrimination Act, which prohibited discrimination based on pregnancy, childbirth or other related medical conditions.

“This act is just a step further and requires an affirmative right for accommodation. It’s not just discrimination but providing reasonable accommodations,” Bean says.

Examples of pregnancy accommodations include flexible work hours; a parking space located close to the work entrance; opportunities to sit down; additional break time to rest, eat, drink water or use the bathroom; appropriately sized safety apparel and uniforms; leave or time off to recover from childbirth; and the ability to be excused from strenuous activities or activities that involve exposure to compounds not safe for pregnancy.

Bean says that many employers were already offering these accommodations, and the 2023 law now simply legalizes these common practices.

“It treats pregnancy like a disability,” he says.

Pregnant workers are subject to the same analysis as an Americans with Disabilities Act reasonable accommodations request.

ARTIFICIAL INTELLIGENCE

Another change in 2023 was the EEOC’s anti-discrimination guidance publication related to the use of software, artificial intelligence and algorithms in employment selection procedures. Current labor law prohibits the use of discriminatory selection procedures and employment tests. The EEOC’s guidance on this matter doesn’t carry the weight of federal law, but employers are smart to take note of it. 

“You better believe, if there are lawsuits, courts are going to look at this document,” Bean says.

AI can streamline the hiring process by more easily advertising jobs, reviewing applications, screening candidates and testing.

“AI is supposed to be an excellent tool to help overworked people narrow down and screen employees,” Bean says. But AI becomes problematic if it disproportionately screens out a protected class, like women, minorities or people with a criminal record.

“If you have a very legitimate business reason for the selection criteria that excludes people that might be discriminatory, it’s OK,” Bean says. For example, recent drunk driving convictions might exclude job candidates from being hired as service technicians if the technicians would be driving a company van or truck.

However, employers without a legitimate reason for using selection criteria that excludes a protected class can get in legal trouble. For example, facial recognition software can be deemed discriminatory if it’s used to analyze job candidates’ emotions for desirable traits and assign more negative emotions to minority candidates.

Bean cautions against implicitly trusting technology and AI shortcuts. He tells employers who want to purchase AI products and services to carefully screen the vendors first. Evaluate all business-operating software before purchasing. He also advises employers to audit their hiring practices or hire a third party to conduct employee selection audits.

“Ultimately, the buck will stop with you, no matter what data you use, what program you use, no matter what,” he says.

Labor laws apply to AI processes just as they apply to traditional employee selection procedures.

“Is AI the savior of HR? Well, maybe,” Bean says. “It’s a great tool in some areas, but it’s going to require some oversight, a lot of audits and a lot of reviews. You better proceed with caution.”

NONCOMPETE AGREEMENTS

A final labor regulation to look at is a proposed, nationwide elimination of noncompete agreements. Noncompete agreements restrict workers who leave a job from starting a competing business or working for a competing employer. Traditionally, state governments have determined the scope of noncompete agreements. Some business leaders argue that noncompete clauses should remain under state governance. They contend that the federal government would overstep its bounds by enacting a U.S. law prohibiting the widely accepted practice.

In a Notice of Proposed Rule Making published in 2023, the FTC says noncompete clauses are an unfair method of competition. The FTC accepted public comment in 2023 on its proposed ban of noncompete clauses. According to the FTC, the clauses significantly reduce workers’ wages, stifle new businesses and ideas, exploit workers and hinder economic liberty.

“The argument is these noncompete agreements have gone too far. They affect workers that they really shouldn’t be used against or restrict where they go or what they do,” Bean says.

Whether the FTC’s proposed rule will take effect remains uncertain.

“Just because they draft it doesn’t mean they’ll enact it,” Bean says.

He encourages employers to submit their comments to the FTC and keep an eye out for what’s happening on the federal level.

“Make sure you’re at least compliant with the state you’re in,” Bean says. 

STAY EDUCATED ON CURRENT LAW

Remaining compliant with labor laws protects workers’ rights and safeguards businesses against legal challenges. When labor law and business practices align, employers save time, money and their reputation.

Some employment law is easy to understand, while other regulations are more complex. Bean says a common mistake employers make is not asking for help in complicated employment matters. He advises employers to check with an attorney or insurance agent for guidance when faced with confusing employment regulations and governmental guidance.

“You want to put procedures in place and learn about discrimination and other employment issues to avoid problems,” he says.

Employers are subject to at least two sets of rules related to fair employment: federal and state laws, and potentially local municipal labor regulations. Education is the key to keeping up with the latest employment rulings and legal precedents, Bean says.