Legal Alert: New Law Changes for Employers in 2023

The New Year is symbolic to many as the time for new beginnings: new year, new habits, and, for employers, new laws to navigate.  As employers gear up for the year ahead, here are two areas that employers need to focus to remain compliant in 2023:

  • FTC Proposed Ban on Noncompete Clauses

The Federal Trade Commission (the “FTC”) recently proposed a new rule that would ban employers from requiring employees to sign noncompetition agreements as conditions of employment.  Three states already ban the use of noncompetes: California, North Dakota and Oklahoma, while a number of additional states have imposed restrictions on enforcement of such against employees.  The FTC’s proposed new rule would make it illegal for an employer to:

  • Enter into or attempt to enter into a noncompete with a worker;
  • Maintain a noncompete with a worker; or
  • Represent to a worker, under certain circumstances, that the worker is subject to a noncompete.

This proposed ban would have heavy implications for employers as the ban would impact both current and future employees.  Any person currently working for an employer, whether as an employee or an independent contractor and in a paid or unpaid position, that is subject to a noncompete agreement would have such agreement immediately revoked and would no longer be enforceable.  At this time, other employer enforced restrictions such as non-disclosure and confidentiality agreements remain enforceable and are not impacted by this proposed ban.

The FTC expects that with a nationwide ban, the proposed rule could increase wages by nearly $300 Billion annually and expand career opportunities for approximately 30 Million people.  The FTC is seeking public comment on this new ban through March 10, 2023. 

  • The Pregnant Workers Fairness Act and the Providing Urgent Maternal Protections for Nursing Mothers Act

Days before the new year, President Joe Biden signed the $1.7 billion government funding bill, which included both the Pregnant Workers Fairness Act (the “PWFA”) and the Providing Urgent Maternal Protections for Nursing Mothers Act (the “PUMP Act”). 

The PWFA, which becomes effective on June 27, 2023, prohibits employers who have fifteen or more employees from discriminating against employees whose ability to perform their job is temporarily limited due to pregnancy, childbirth, breastfeeding, or other related physical or mental medical conditions.   Under the PWFA, employers will be required to provide “reasonable” accommodations to employees unless it would cause “undue hardship.”  Reasonable accommodations can include but are not limited to:

  • More frequent or longer breaks;
  • Extended time off to recover from childbirth;
  • Purchasing or modifying work equipment;
  • Extra bathroom breaks;
  • Assigning light duty; or
  • Providing private (non-bathroom) space for breastfeeding.

The PWFA also prohibits employers from requiring that an employee take either a paid or unpaid leave of absence if an alternative reasonable accommodation can be provided. In short, the legislation is strikingly similar to the Americans with Disabilities Act of 1990 but with the distinction of protecting pregnant workers on a temporary basis.  

The PUMP Act expands the current employer obligations under the Fair Labor Standards Act (the “FLSA”) to provide non-exempt employees with reasonable break time to pump their breast milk for one year after their child’s birth.  The PUMP Act amends the FLSA to increase those protections by including millions of exempt salaried employees who were previously excluded from such protection and by expanding the existing law to provide for remedies available under the FLSA (e.g., unpaid wages or liquidated damages).  This amendment to the FLSA took effect on December 29, 2022.  Additionally, the new law clarifies when workers must be compensated for time spent pumping. More specifically, time spent pumping also must be counted as hours worked if the employee is not excused from doing their job at the same time.  Changes to available remedies, however, will not take effect until April 28, 2023 to allow employers to make changes to their policies to reflect the requirements in the amendment. 

If you have any questions regarding the new PWFA, the PUMP Act or how the proposed noncompete ban could impact your business, contact us.