The Labor Laws Employers Need to Pay Attention to in 2023

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It is essential for both employers and employees to stay up to date with new labor laws and regulations to ensure compliance and avoid potential legal issues. Changes in labor laws can impact an organization's policies, practices, and employee relations. Being aware of new laws can also help companies stay competitive by adopting innovative practices that attract and retain talent while complying with legal requirements. Failing to pay attention to new labor laws can lead to negative consequences such as fines, lawsuits, and damage to an organization's reputation.

In today’s article, I share insights from four lawyers who practice at Epstein Becker Green (EBG) and have expertise on some of the most relevant and important U.S. labor laws for 2023. These lawyers include:

• Nancy Gunzenhauser Popper, a member in the Employment, Labor, and Workforce Management Practice, discusses U.S. pay transparency laws.
• Erik Weibust, a member of the Trade Secret and Mobility Practice, and Carter DeLorme, a member in the Employment, Labor, and Workforce Management Practice both discuss non-competes with a focus on the healthcare industry.
• Kevin Sullivan, a member in the Employment, Labor & Workforce Management practice, discusses California employment laws with a focus on wage and hour.

Pay transparency laws

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Inc. named 2022 the Year of Pay Transparency. How have pay transparency laws evolved since last year and what should we expect for 2023?

Nancy Gunzenhauser Popper: 2022 was the year that we saw more and more jurisdictions start to undertake pay transparency laws, and in particular, pay transparency laws that require employers to disclose salary ranges on job postings. There's been federal laws and state laws over the past several years that have promoted equal pay in the workplace, and they've achieved that through a variety of different ways, either by enhancing equal pay protections or by changing the standards they must meet. Some have done so by saying that you can't pay people differently based on other protected categories, not just based on sex or gender.

And we've seen it transition over the years. A couple of years ago, the big trend was salary history laws. Employers couldn't ask employees, "What do you make at your current job?", because that was a common practice. 

2022 saw a lot of legislation being proposed. It passed in some of these big jurisdictions, but there's more and more being proposed, and even in states that we don't typically think about as being the most progressive states to pass employment laws. I think in 2023, we're going to see more and more jurisdictions go in that same direction.

Non-Compete laws in the healthcare industry

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How did the COVID-19 pandemic bring healthcare-specific non-compete laws to the forefront?

Erik Weibust: I don't know that the pandemic brought this area of law to the forefront as much as it brought to the forefront this industry, in particular, frontline healthcare workers. The states had already been legislating around non-competes for about a decade. And they'd been on the forefront of the news because of cases like the Jimmy John's case and other outlier cases of low wage workers being subject to non-competes. But what it did bring to the forefront was the importance of these frontline healthcare workers. And everyone, I'd say rightfully so, wanted to help them in any way possible. One way to do that was for legislators in particular, to focus on non-competes. There was also a pinch on workers because of the COVID 19 pandemic. And so employers were starting to lose frontline healthcare workers and were also thinking about ways to protect their workforce and their trade secrets and their patient relationships.

And they started looking more at non-competes. In 2022, there were about 98 bills proposed in 29 states, 30 of those bills involved the healthcare industry. And this year we've already seen at least 73 bills introduced in 27 states, and 27 of those are related to the healthcare industry. I do think that the COVID 19 pandemic brought focus to that industry, but the issue of non-competes has been the focus of legislatures generally for at least the last decade.

In what ways could non-compete laws impact healthcare differently than other industries?

Carter DeLorme: States are really focused on making sure that their citizens can get healthcare from the providers they want. And creating these non-compete laws that are targeted not just to doctors, not just to nurses, but down the line. In many states, we have nurse practitioners, we have LPNs, we have multiple people in the healthcare structure being freed from the concept of a non-compete so that you, Dan, decide this is the person I want to see.

If they go from hospital A to hospital B, you want to be able to still see that same person for a physical therapy issue or any other kind of continuing treatment. And that's going to be very different than other industries which may come behind it. But I think the strategy for states is to say, let's take a public interest that we know we can garner support around, which is choosing the healthcare provider of your choice, and make sure that if that person wants to, for whatever reason, transition to a different environment, they can still be able to provide care to the people they've provided care to before.

California employment laws with a focus on wage and hour

Watch the full interview

Can you explain what AB5 is and how it's being factored into the Olson v. California decision on independent contractor misclassification?

Kevin Sullivan: AB5 was enacted in response to the California Supreme Court's decision in Dynamex in 2018, which adopted for nearly every claim here under the California Labor Code, a three-factor test, what we know as the ABC test. Specifically, a hiring entity must meet each factor in order to show that a worker is properly classified as an independent contractor rather than an employee.

The A factor, that the worker is free from the control and direction of the hiring entity, in connection with the performance of the work, both under the contract for the performance of the work and, in fact. And the B factor, that the worker performs work that is outside the usual course of the hiring entity's business; And the C factor, that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed. Now, why AB5 is important, it went into effect in January, 2020, and thus AB5 – and that ABC test, that hiring entities must show in order to establish an independent contractor relationship rather than employee – applies to claims arising on or after January 1st, 2020, unless there's an exemption from AB5, and that's where we have Olson.

And so the plaintiffs in Olson alleged that they were not treated equally, or they and similarly situated workers in companies, were not treated equally by the legislature, such that there was an equal protection violation, because, as the Olson plaintiffs allege, there were all these exemptions and very unique exemptions and very many exemptions that were carved out from AB5, and thus that ABC test, that carved out these types of workers or those companies from having to meet that test. Again, the plaintiffs alleged that these sorts of exemptions were sort of lobbied for and reached through backdoor dealings, and that those exemptions really don’t make sense or there’s no legitimate or rational basis for those exemptions.

The best example that they highlighted, considering the app-based type gigs, is that there was an exemption for app-based gig companies that provide errand-type services rather than an exemption for app-based companies that provide delivery or driving services. The Ninth Circuit appeared to get it right, but that doesn't mean that they agreed that the case has merit or that the legislature was wrong. The Ninth Circuit really just said that, yeah – what the plaintiffs are alleging, if it's true, that there were those sorts of backdoor dealings, or that these types of companies over here are being improperly treated, or that there's not equal protection for those companies, that there's no legitimate, rational basis for treating them differently than for other types of workers and companies, then they can state a claim. And so now, the case has gone back to the district court level – the trial court level – where the plaintiffs will continue to litigate that, and we'll see what happens.

Want to read the full article where I ask the below questions? You can access it in the Workplace Intelligence Insider Archives. To receive the new edition every Monday morning, subscribe for free.

Pay transparency laws

• How do managers and employers handle employees who confront them when discovering their pay is far below the advertised one?
• Can employees hold employers accountable for any pay discrepancies?

Non-Compete laws in the healthcare industry

• How do non-compete laws impact the doctor-patient relationship, and should consumers be concerned?
• What do most workers in the healthcare profession get wrong or aren't aware of when it comes to non-compete laws?

California employment laws

• What are the potential outcomes for California-based companies that hire gig and hourly workers?
• Can you compare the differences between how classifying gig workers is being handled differently in other states compared to California?