2023 State Employment Law Updates: From Pay to Hair, Cannabis, and More

The coming new year brings new changes, new goals, and newly amended employment laws. Although some jurisdictions jumped the gun (looking at you, D.C. noncompete law), starting on January 1, many states are implementing new and amending old employment laws.

Minimum Wage Increases

While some states roll out raises at different intervals, all employers should be especially mindful of minimum wage increases around the holidays. States with new non-tipped minimum wage rates starting on January 1 include Arizona ($13.85); California ($15.50); Colorado ($13.65); Delaware ($11.75); Illinois ($13); Maryland ($13.25); Massachusetts ($15); New Jersey ($14.13); New York ($14.20); Rhode Island ($13); Virginia ($12); and Washington ($15.74). While a majority of these updates occur on or near the year end, employers should be mindful that a handful of states will raise minimum wage rates later in the year, including Connecticut ($15) on June 1; Michigan (time and amount depends on pending litigation); Nevada ($11.25/$10.25) on July 1; and Florida ($12) on September 30. Additionally, employers in Oregon ($13.50); Vermont ($12.55); and Washington D.C. ($16.10) should ensure they are in compliance with increases that occurred during 2022. Please note, Washington D.C. will also begin phasing out the tip credit on January 1.

Additionally, because nothing is ever easy, employers should be mindful of intrastate intricacies. For example, employers operating in New York City (“NYC”) always need to check both state and NYC laws and regulations when setting policy due to NYC’s exhaustive list of regulations. This is clearly demonstrated by comparing “Upstate” New York’s minimum wage rate of $14.20 versus New York City’s minimum wage rate of $15. Some wages may also vary by industry or upon other factors (for example, Minnesota sets minimum wage rates based on the employer’s revenue). Other states, like Nevada, set minimum wage rates based on whether the employer offers qualifying health benefits. In California, minimum wage rates are highly dependent on geographic location, and in Chicago, minimum wage rates depend on the number of employees. If that wasn’t enough, states are also adding increasingly punitive measures for wage related claims, such as Colorado, where employees will have the ability to demand wages on behalf of a class of similarly situated employees and available damages have increased for wage actions.

Pay Equity/Transparency

Minimum wage laws are not the only laws that will be changed next year. Following similar action by New York City, whose salary transparency law took effect in November, several states have passed new laws aimed at pay equity and pay transparency. In California, employers will now be required to provide a pay scale for job applicants or current employees if they request it. However, employers with 14 or more employees must include the pay scale for a position in any job posting. Additionally, employers must keep and maintain records that identify the job title and its corresponding wage rate history. Rhode Island’s HB 5261/SB 270 will prohibit an employer from requesting or relying on an applicant’s wage history and it will require an employer to provide a wage range for a job position. Washington SB 5761 will require employers to disclose hourly or salary compensation and a general description of benefits in postings for job openings. Of note as well is Illinois’ Equal Pay Act, which requires covered employers to file an “Equal Pay Registration Certificate”, employee compensation data, and their most recently filed EEO-1 with the Illinois Department of Labor (“IDOL”). The IDOL began issuing notices to employers earlier this year requiring them to file the required documents within 120 days. Existing employers will continue to be served notice on a rolling basis through March 23, 2024. Following initial registration, companies are required to recertify with the IDOL every two years.

Noncompete Law

While not technically a New Year’s addition, the District of Columbia recently passed the “Non-Compete Clarification Amendment Act of 2022” which took effect on November 1. In doing so, D.C. prohibited employers from entering into noncompete agreements with non-highly compensated employees, currently those whose compensation does not exceed $150,000 or $250,000 for medical specialists. The law also exempts broadcast employees from being considered highly compensated and includes requirements relating to geographic scope and temporal restrictions. Similarly, Washington State increased its minimum salary threshold for noncompete enforceability.

Cannabis

Several states have taken an active step in protecting employees’ legal off-duty use of marijuana. Rhode Island recently joined that group in the passage of the Rhode Island Cannabis Act, which legalized the sale of adult-use cannabis in the state and included protections for employees’ off-duty use of cannabis, with some exception. Rhode Island now joins California, Connecticut, Louisiana, Montana, New Jersey, New York, Utah, and the District of Columbia, which all include varying levels of applicant and/or employee protection for lawful use or either medical or adult-use cannabis.

Leave Laws

In addition to coverage under federal requirements regarding employee leaves of absence, states are increasingly moving toward more expansive state sponsored family and medical leave programs. In Colorado, employer and employee contributions toward paid family and medical insurance will commence on January 1. However, employees will have to wait until 2024 to utilize their benefits, which include 12 weeks of paid family and medical leave for qualifying employees, and a further four weeks for employees that experience complications during pregnancy or childbirth. The family leave must be funded before the employee can take leave and must be funded through a payroll tax paid 50/50 by employers and employees. Moreover, family leave is not necessary only for parents, spouses or children, and that is why in New York, workers will be able to take Paid Family Leave to care for siblings with serious health conditions. This includes biological, adopted, and half-siblings. The family members that need to be taken care of do not need to live in New York. Sometimes, family is not blood related and we need to take care of friends who feel like family. That is why in California, the passage of AB 1041 states that a person can take leave for a “designated person” which is defined as any person related by blood or whose association with the employee is equivalent to that of a family relationship. In New Jersey, there will be a reduction in worker and employer contribution rates to the state’s family leave insurance programs. The family leave rate will cut from .14 percent to .06 percent. In Massachusetts, paid family and medical leave contribution rates for employers with 25 or more covered individuals will decrease from 0.68 percent to 0.63 percent of eligible wages. The contribution can be split between covered individuals’ payroll or wage withholdings and employer contributions as described on the Department’s website.

Data Protection and Privacy Laws

Another sector of the law that employers should note is new privacy law. More and more states are passing laws regarding employee privacy. This means that organizations that fall under the scope of new privacy laws should start reviewing and preparing their privacy programs. They may need to make updates to existing privacy policies, may need to add new procedures, review data processing agreements, and train employees. One of these states is California. California has passed the California Privacy Rights Act (CPRA) which will apply to businesses that do business in California and have a gross annual revenue of over $25 million; buy, receive, or sell the personal data of 100,000 or more California residents or households; or derive 50% or more of their annual revenue from selling or sharing California residents’ personal data. Virginia has passed the Consumer Data Protection Act which will apply to businesses in Virginia or businesses that produce products or services that are targeted to residents of Virginia and that: (a) during a calendar year, control or process the personal data of at least 100,000 Virginia residents; or (b) control or process personal data of at least 25,000 Virginia residents and derive over 50% of gross revenue from the sale of personal data. The Colorado Privacy Act applies to organizations that conduct business in Colorado or produce or deliver commercial products or services targeted to residents of Colorado and either (a) control or process the personal data of 100,000 Colorado residents or more during a calendar year; or (b) derive revenue or receive a discount on the price of goods or services from the sale of personal data, and process or control the personal data of 25,000 Colorado residents or more.

Crown Act Legislation

In addition to laws addressing leaves or wages, many states now protect individual expression commonly associated with race or national original based upon hair style and hair texture through Crown Act legislation. States with laws already on the books or passed this year include California, Colorado, Connecticut, Delaware, Illinois, Louisiana, Maine, Maryland, Massachusetts, Nebraska, Nevada, New Jersey, New Mexico, New York, Oregon, Tennessee, Virginia, and Washington. Employers should also be mindful that many major municipalities have passed similar laws such as Miami Beach, which took effect on November 5.

Stocking Stuffers

In addition to national trends, there are several intriguing employment laws being passed. New York will require notification to each candidate if an employer is using an automated employment decision tool to screen them for a decision. New York is also extending its Covid-19 vaccination leave time until December 31, 2023. California’s AB 1949 Bereavement Leave allows for eligible employees to request up to five days of bereavement leave upon the death of a qualifying family member. This kind of leave is unpaid, but employees should be allowed to take vacation days if they have them. Qualifying family members include those who are spouses, children, parents, siblings, grandparents, grandchilden, domestic partners, or parents-in-law. New Jersey is also making some changes in contract law which require contracts for the sale of certain health care entities to preserve employee wages and benefits and to honor collective bargaining agreements. NJ SB 315 (AB3684). Rhode Island SB 2548 will require covered insurers to allow for a special enrollment period for pregnant employees outside of annual enrollment to obtain health insurance coverage at any time after the commencement of the pregnancy.

To end on a more unusual ordinance, Philadelphia will now require covered employers with 50 or more employees to provide, upon request, an “Employee Commuter Transit Benefit” toward mass transit or qualified bicycle expenses.

As a result of all these changes, employers should prepare for a variety of new employment laws in 2023. Employers should take a hard look at their handbooks and policies and revise accordingly.

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