Q2 Employment Law Updates: Non-Competes, Religious Accommodation and More

So far, 2023 has been a wild ride for employers, a theme that looks to be continuing into the third quarter of the year. While certain predictions we made during Q1 came true in Q2 (we are looking at you, NLRB), others such as the Supreme Court’s decision in Groff v. DeJoy[1] took us by surprise, with a decision that upended over 40 years of established case law. For Q2, we’ve focused on some major developments in the labor and employment arena.

NLRB Comes for Non-Compete Agreements

Continuing its seemingly orchestrated and systematic attack on both protections related to intellectual property belonging to employers as well as their freedom to contract with their employees, the National Labor Relations Board (the “NLRB”) General Counsel (the “GC”) has issued yet another memorandum taking aim at employers. As the GC hinted back in March, this new memorandum takes aim at the “proffer, maintenance, and enforcement” of noncompete agreements whether in employment or severance agreements. In the memorandum, the GC opines that noncompete provisions violate the National Labor Relations Act (“NLRA”) by interfering with the exercise of covered employees’ Section 7 rights. This was based largely in part to the fact that such agreements prevent employees from exercising their rights to quit due to fear that they will not be able to obtain gainful employment or from seeking or accepting employment with a local competitor of their current employer. While the memorandum takes aim at most noncompete agreements both during and post-employment, the GC does carve out certain exceptions and concludes that not every non-compete agreement will necessarily violate the NLRA.

Employers who utilize non-compete agreements with staff covered by the NLRA should take heed of the GC’s memorandum as the regions have been instructed to seek make-whole relief for employees who allege that they lost opportunities for other employment, even if no action was taken to enforce the non-compete by their employer.

De Minimis No More — Religious Accommodation

In a unanimous decision, the Supreme Court struck down over 40 years of case law regarding religious accommodations in the workplace. Under Title VII of the Civil Rights Act of 1964, employers have always been required to accommodate employees based upon their sincerely held religious beliefs, absent an undue burden. In the Title VII religious accommodation context[2] undue burden has (since 1977) been interpreted by the courts to mean anything greater than a de minimis burden to an employer’s business. However, in the Groff case, the Court determined that the current reading of the standard was not in line with the text of Title VII and that the term undue hardship required a higher burden than the current de minimis standard.

In its opinion, the Court clarified that the proper definition of an undue hardship under Title VII is “substantial increased costs in relation to the conduct of [the employer’s] particular business.” The Court further stated that the fact that an employer may have to pay overtime, standing alone, is not sufficient to demonstrate an undue hardship and that a denial based on impact to coworkers must be bolstered by the demonstration of how such an accommodation would substantially affect the employer’s business.

More States Add Protections for Off-Duty Marijuana Use

The trend towards marijuana use-related protections continues in the Midwest, this time in Minnesota. On August 1, 2023, Minnesota will join Connecticut, Montana, New Jersey, New York, Nevada, and Rhode Island in protecting employees from negative job actions due to lawful off-duty use of marijuana. Similar to other states, there are exceptions for certain safety-sensitive positions, and those where limitations are required pursuant to federal requirements. Despite the similarities to other states, Minnesota has gone one step further and banned any drug testing which includes marijuana on the panel of drugs it tests for unless an exemption exists. While Minnesota is the latest to expand these protections, employers should anticipate similar momentum among additional states in the near future.

NYC Adds Height and Weight

Joining a minority of municipalities along with the State of Michigan, New York City has expanded its anti-discrimination law to cover discrimination based on a person’s height and/or weight. The text of the new bill creates an exemption for those businesses that are required to consider height and/or weight by federal, state, or local laws or regulations or in circumstances where the NYC Commission on Human Rights permitted the same based upon the inability to perform the essential requirements of the position. It should be noted that this protected class has not been embraced at the state level outside of Michigan and is only recognized by a handful of municipalities.

A Small Win for Employers

While most newsworthy labor developments this year have been overwhelmingly union friendly, the Supreme Court handed employers a decent win with its ruling in Glacier Nw., Inc. v. Int’l Bhd. of Teamsters Loc. Union No. 174.[3] Glacier Northwest provides delivery of ready-mix concrete which is highly perishable and can cause significant damage to the rotating drum of their vehicles if not emptied expeditiously. According the Court’s opinion, the union called for a work stoppage on a day that it knew the disruption would cause significant damages to the company which had mixed substantial amounts of concrete and loaded the same on its vehicles. When the drivers returned to the company facility with full loads of concrete, the company immediately moved to salvage the trucks by offloading the concrete which still resulted in significant losses due to the wasted concrete. Thereafter, the company sued the union in a state law tort claim for damages to company property.

While courts generally must defer activity that is arguably subject to the NLRA to the exclusive jurisdiction of the NLRB, the Supreme Court in Glacier Northwest ruled that an employee’s right to strike is not without limit. In its ruling, the Court focused on prior NLRB positions which have held that the NLRA does not “shield strikers who fail to take ‘reasonable precautions’ to protect their employer’s property from foreseeable, aggravated, and imminent danger due to the sudden cessation of work.”[4] The Supreme Court found that the union knew the concrete was perishable and that their coordination of a strike was timed in a way so that it would result in foreseeable and serious damages to the employer’s equipment and concrete. Therefore, the Supreme Court ruled that the union’s actions were not protected under the NLRA and the employer’s state tort claim could move forward.

An Oldie but a Goodie

Ending on an unusual note, we look back to the 2009 decision of the Supreme Court of Virginia in Hyland v. Raytheon Technical Services Co. In Hyland the court reaffirmed, and expanded a bit,  the status quo in Virginia that employers can be held liable for defamation of employees based upon statements made in investigation notes, memos, or performance reviews even if couched in documents as purely individual opinion. We spotlight this decision to reaffirm the need for employers to pay attention to all employee documentation and the need for appropriate supervisor training to ensure that all documentation related to employees is drafted in a manner to prevent future liability.

Conclusion

Employers should continue to diligently track all sources of employment law (federal, state, municipal, common law, and regulatory) to ensure that they are staying up to date on the latest requirements. The last few years have brought a plethora of new requirements for employers whether in the form of new leave laws or pay equity, and as always, ignorance of the law is no excuse.

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[1] No. 22-174 (U.S. June 29, 2023).

[2] In contrast to the ADA context.

[3] 143 S. Ct. 1404 (2023).

[4] Id. at 1407.