The employment law landscape can shift quickly to keep up with our rapidly evolving world of work. You can be better prepared by anticipating changes that could impact your business. Below are three areas in which legal experts predict policy changes in coming months and years.
Artificial Intelligence Looms Large
Artificial Intelligence (“AI”), including the use of ChatGPT (an AI “chatbot”) has been a hot topic across all industries. With a few keystrokes, ChatGPT can recommend a list of films within particular parameters (e.g., year, genre, actor, director), develop a gluten-free meal plan, or write an essay on Moby Dick. The technology’s uses seem limitless, and businesses are beginning to adopt these AI tools to increase productivity and efficiency.
However, employers should be alert to legal guidance around the use of AI in the workplace, especially around personnel actions such as hiring and firing. In 2021, the U.S. Equal Employment Opportunity Commission (EEOC) launched an agency-wide initiative to ensure that the use of AI and other emerging technologies used in hiring and other employment decisions comply with the federal civil rights laws that the EEOC enforces. In May 2023, the EEOC released a technical assistance document warning employers that, if they use technology such as resume scanners, chatbots, and video interviewing, they must ensure the software does not have an adverse impact on individuals of a particular race, color, religion, sex, or national origin (or a combination of these protected traits). If such an adverse impact occurs, then use of the technology would violate federal anti-discrimination law.
In addition to these concerns addressed by the EEOC, AI tools also present privacy risks to businesses, and may give employees a false sense of security about the reliability of the information generated by AI (e.g., complex legal or scientific analysis). Businesses venturing into this rapidly evolving world of AI would be wise to proceed with caution, and stay abreast of technological and legislative developments to mitigate risk.
Pay Transparency Laws – A Growing Trend
As of July 1, 2018, the Massachusetts Equal Pay Act (MEPA) aimed to increase transparency around wages, to help ensure that all Massachusetts employees earned equal pay for comparable work. this As such, employers may no longer ask job applicants about their salary history, and can no longer prevent employees from discussing wage information amongst each other.
In recent years, a number of cities and states have passed “pay transparency” laws. These laws take the spirit of MEPA a step further by requiring employers to provide job applicants with the compensation range for the position for which they are applying. Some of these laws require employers to furnish the compensation range during the application process (e.g., Connecticut, Rhode Island, Maryland), while others require employers to affirmatively publish the compensation range in the advertised job posting (e.g., California, Colorado, Washington, New York City). Massachusetts employers who presently do business and recruit employees in other states should be cognizant of these requirements.
The Massachusetts legislature has introduced similar pay transparency laws in multiple sessions over the last several years. Several bills (HD.2814 and SD.1521) that would add to current MEPA requirements are currently pending. Given the trends in other states (eight states have enacted legislation, and 15 states are considering legislation, including Vermont and Maine), it seems likely that Massachusetts will enact a version of a pay transparency law in the not-so-distant future.
Federal Overtime Exemption Minimum Salary Threshold
Under the federal Fair Labor Standards Act (FLSA), unless the employees qualify for an exemption, most employees must be paid at least minimum wage for all hours worked and overtime pay of one and one-half times their regular rate of pay for all hours worked beyond 40 in a workweek. To qualify for the most common exemptions (executive, administrative, and professional jobs) employees must be paid on a salary basis of not less than $684/week ($35,568 annualized). This $684/week rate has not been increased since January 2020.
The Department of Labor is currently reviewing these regulations, and most recently projected that it would issue a proposed rule in August 2023. Any proposed rule would be subject to public comment before implementation, and any implementation of a significant change would likely trigger some legal challenges. However, the expectation among industry experts is that the threshold will ultimately increase. The threshold has increased since the first iteration of these rules were implemented in the 1930s, though the change has been slow. Since 1975, the threshold has only increased twice: once in 2004, and once in 2020.
Were the threshold to increase, employers would need to assess the compensation of any exempt employee whose compensation fell below the updated threshold, and weigh several options:
- Raise the impacted employee’s salary to the new, higher minimum amount to retain the exemption;
- Convert the employee from exempt to non-exempt status; and/or
- Make other workforce adjustments to accommodate the updated threshold.
Although this change has not yet taken place, it may be prudent for employers whose exempt employees earn in the range of roughly $35,568 to $50,000 annually to be alert to this potential threshold increase.
As always, employers are advised to work with their employment counsel to stay on top of these evolving issues.
Kathleen R. O’Toole and Brendan P. Kelley are attorneys at the Boston law firm of Conn Kavanaugh Rosenthal Peisch & Ford LLP. Feel free to send questions to kotoole@connkavanaugh.com or bkelley@connkavanaugh.com.
This column, which may be considered advertising under the ethical rules of certain jurisdictions, is intended as a general discussion of the topics covered, and does not constitute the rendering of legal advice or other professional advice by Conn Kavanaugh Rosenthal Peisch & Ford LLP or its attorneys.
