Workforce Bulletin

In an increasingly cashless society, many employers are considering moving to payroll debit cards to provide workers with greater flexibility and convenience. However, employers considering offering payroll debit cards should be aware of a number of potential pitfalls associated with the technology, ensuring that their payroll debit card plan is compliant with relevant state laws.

Why Use a Payroll Debit Card?

There a number of benefits associated with payroll debit cards both for employers and employees. Employers can benefit from payroll debit cards by avoiding the cost of printing and mailing paychecks for all participating employees. Payroll debit cards are helpful for employees who do not have bank accounts and wish to avoid check cashing fees or other fees associated with maintaining a bank account. Additionally, payroll debit cards may provide a nimbler mechanism for employers who desire to offer a more flexible pay period option for employees, such as daily or instant pay.

On July 25, 2024, the California Supreme Court issued its long-awaited ruling in Castellanos et al., v. State of California and Protect App-Based Drivers and Services, et al., upholding the 2020 voter initiative known as Proposition 22 the allows certain gig economy companies to classify drivers as independent contractors.

In 2019, California Assembly Bill 5, also known as AB5, expanded the landmark California Supreme Court decision in Dynamex Operations West, Inc. v. Superior Court, and made the "ABC" test law. 

In an action brought by Space Exploration Technologies Corporation, commonly known as SpaceX, a U.S. District Court Judge in the Western District of Texas, Waco Division, has declared that the structure of the National Labor Relations Board (“NLRB” or the “Board”) is unconstitutional.

The determination is the basis for an Order granting SpaceX’s motion for a preliminary injunction and enjoining the NLRB General Counsel, as well as the presidentially appointed, Senate-confirmed Board Members and NLRB staff, from proceeding with a scheduled unfair labor practice ...

Much has been made about the recent, hurried legislation to amend the Private Attorneys General Act (“PAGA”) in order to take the Fair Pay and Employer Accountability Act (“FPEAA”) off the California ballot this November.  

If passed by California voters, the FPEAA would have repealed PAGA and replaced it with a new statute and a new process that were more employer-friendly -- and more employee friendly. 

(The idea of a ballot initiative to repeal or create laws may sound very unusual to anyone outside of California.  But California permits this kind of mob rule, for better or worse, so long as enough signatures are gathered and verified to qualify to be placed on the ballot.)

For all of the celebration about how these PAGA amendments will benefit employers, the PAGA amendments remind me of nothing so much as New Coke. 

You don’t know about New Coke, do you? 

You see, back in 1985, Coca-Cola announced that it was changing the longtime formula for its soda and replacing it with a new formula that everyone would love even more. There was much excitement about it.  (Keep in mind that this was before the internet, smartphones, texting, streaming, etc.)  The launch of the new version of the soda was covered in the mainstream media, and people just couldn’t wait. They actually lined up outside stores to be the first to get their hands on it.

And then New Coke was launched.

As featured in #WorkforceWednesday: This week, on our Spilling Secrets podcast series, our panelists discuss the current state of the Federal Trade Commission’s (FTC’s) nationwide non-compete ban amid ongoing legal challenges:

The FTC’s ban on non-competes will go into effect on September 4, 2024, but legal challenges remain. So, how can employers prepare?

In this episode of Spilling Secrets, Epstein Becker Green attorneys Peter A. Steinmeyer, Erik W. Weibust, and Paul DeCamp tell us more about how the U.S. Supreme Court’s overruling of the Chevron doctrine might affect the FTC’s ability to regulate non-competes. They also discuss a Texas court’s preliminary injunction against the FTC’s non-compete ban* and how various legal challenges have led to a somewhat anticlimactic atmosphere in the employment landscape related to the ban.

*On Tuesday, July 23, after this episode was recorded, a federal judge in Pennsylvania reached the opposite conclusion and declined to temporarily halt the FTC’s non-compete ban.

As featured in #WorkforceWednesday®: This week, we’re delving into the U.S. Supreme Court’s recent overturning of the Chevron doctrine and how this landmark decision is opening the floodgates for challenges against federal agencies.

On July 12, 2024, in a keenly awaited decision, the U.S. District Court for the Northern District of California determined that Workday, Inc. (“Workday”), a provider of AI-infused human resources (HR) software, can be held liable under Title VII of the Civil Rights Act of 1964 (Title VII), the Age Discrimination in Employment Act of 1967 (ADEA), and the Americans with Disabilities Act (ADA) (collectively the “Anti-Discrimination Laws”) as an agent of the corporate clients that hire Workday to screen and source candidates for employment by utilizing its AI-infused decision-making tools.  In noting that “[d]rawing an artificial distinction between software decisionmakers and human decisionmakers would potentially gut anti-discrimination laws in the modern era,” the court underscored the EEOC’s admonition, which we discussed in our previous post, that employers delegating their hiring protocols to AI must do so cognizant of the potential discriminatory impacts of such use.  See Opinion at 10.  Thus, the court allowed plaintiff Derek Mobley’s disparate impact claim to proceed, finding that Mobley’s allegations supported a plausible inference that Workday’s screening algorithms automatically rejected his applications based on protected characteristics rather than his qualifications.

Prior Proceedings

Mobley filed his initial complaint as a putative class action on February 21, 2023, alleging claims against Workday as an “employment agency” for disparate impact and intentional discrimination under the Anti-Discrimination Laws.  His complaint centered on his allegation that he applied for “at least 80-100 positions that upon information and belief use Workday, Inc. as a screening tool for talent acquisition and/or hiring” and “has been denied employment each and every time.”  Complaint at 10.

The past several years have witnessed a notable uptick in workplace artificial intelligence related legislation and agency enforcement attention, specifically focused on the infusion of AI or so-called automated decision-making tools. Colorado’s new Artificial Intelligence Act, for example, designates employment as a “high-risk” sector of AI applications and has heightened concerns of lawmakers and corporate executives. Lawsuits, such as Mobley v. Workday and Moffatt v. Air Canada, underscore the concerns of employment candidate screening, recruitment and conversational AI. Most recently, the US Equal Employment Opportunity Commission issued a Determination finding cause to believe the employer violated the Older Workers Benefit Act by using AI in a reduction in force that adversely impacted older workers. A complaint in the Southern District of New York against IBM and its spinoff technology company, Kyndryl, promptly followed.

Perhaps not surprisingly, over the past few years, the State of New York (“NYS”), following the lead of New York City, has introduced several bills that would regulate the use of AI infused decision-making tools.  One such bill, called New York Workforce Stabilization Act (“NYWFSA”) was introduced in May 2024 by Senators Michelle Hinchey and Kristen Gonzalez. They will likely re-introduce the NYWFSA during the upcoming January 2025 legislative session intending to “stabilize” New York’s labor market at a time when the deployment of AI may fundamentally alter the New York industrial landscape.

As we previously reported, the U.S. Department of Labor (DOL) issued a new final rule increasing the minimum salary amounts for the executive, administrative, and professional (EAP) and highly compensated employee exemptions. Shortly after the DOL announced its final rule, three lawsuits were filed in federal district courts in Texas challenging the DOL’s authority to increase the salary thresholds. However, despite these challenges, the first increase took effect on July 1, 2024 for all employers, except for the State of Texas as an employer.

State of Texas v. DOL

On May 22, 2024, a group of national business associations filed a complaint in the United States District Court for the Eastern District of Texas against the DOL challenging the final rule.[1] This lawsuit was later consolidated with a complaint filed in the same court by the State of Texas similarly challenging the final rule.[2] Notably, the consolidated action alleges that the final rule exceeds the DOL’s statutory authority under the Fair Labor Standards Act (“FLSA”) and the Administrative Procedure Act (“APA”), and that the final rule is arbitrary and capricious, in violation of the APA.

In Elijah Baer, et al. v. Tesla Motors, Inc., fifteen plaintiffs filed a putative class and Private Attorneys General Act (“PAGA”) representative action lawsuit against Tesla, Inc. (“Tesla”) alleging wage-hour violations of California law. Two of the plaintiffs were employed by Staffmark Investment LLC (“Staffmark”) – a non-party staffing agency – and assigned to work at Tesla for a period in 2020. The other plaintiffs were direct former or current employees of Tesla going back to 2017. After Tesla removed the action to federal court, it moved to compel arbitration.

The plaintiffs signed various arbitration agreements throughout their employment. From the fall of 2018 to May 2022, Tesla utilized a recruiting software called Averture. According to Tesla, Averture required applicants to create a secure online profile with their own personal information. Eight of the plaintiffs signed offer letters with Tesla through Averture containing an arbitration provision. These plaintiffs did not dispute that they signed, and Tesla countersigned, the offer letters.

At some point in 2022, Tesla stopped using Averture and started using a system called Inside Tesla. The security measures applicable to Averture were largely the same as those employed by Inside Tesla; however, applicants who were offered employment under Inside Tesla signed an offer letter and a standalone arbitration agreement. Four of the plaintiffs signed arbitration agreements through the Inside Tesla system.