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Employment practices liability 2022 year in review and look ahead to 2023

By Talene M. Carter | November 22, 2022

In this article, we’ll look back at the employment practices liability market in 2022 and discuss what employers can expect in 2023.
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The employment practices liability (EPL) market began to stabilize in 2022 due to increased competition. There was also less uncertainty regarding COVID claims, vaccine mandates and return to office protocols. In addition to COVID, this year employers had to grapple with Supreme Court landmark decisions that could impact the workplace and the passage of significant employment laws that could impact their exposure. In this article we will look back at 2022 and discuss what employers can expect in 2023.

Sexual harassment

One of the issues that was highlighted during the #MeToo movement was that many sexual harassment claims were resolved through arbitration, and therefore, not made public. This is because many employers have employment arbitration agreements that their employees sign. To address that issue, in March 2022 President Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.1 The Act amends the Federal Arbitration Act to give employees who are parties to arbitration agreements with their employers the option of bringing claims of sexual assault or sexual harassment either in arbitration or court.

Pay equity

Pay equity also continues to be top of mind for employers. This year marked a landmark settlement in women’s soccer whereby U.S. Soccer and USWNT reached a settlement following a lawsuit over unequal pay with men’s team players.2 Per the settlement, U.S. Soccer acknowledged past disparities and agreed to equal pay for all future games and tournaments. In addition, many states continued to pass pay equity and pay transparency bills. Earlier this year, Mississippi passed a pay equity law (“Equal Pay for Equal Work Act) that went into effect July 1, 2022.3 Now all states have their own pay equity laws. Many states, like CA and New York City, have passed pay transparency laws as well in an effort to help close the wage gap.4 Pay equity will continue to be a hot topic into 2023 and beyond.

Supreme Court decisions

We previously highlighted two Supreme Court decisions that we were watching – Viking River Cruises v. Moriana and Cummings v. Premier Rehab Keller PLLC. In the Viking River case the Supreme Court held that CA Private Attorney General Act (PAGA) claims can be dismissed and referred to arbitration if certain provisions exist in the arbitration agreement.5 While this was a significant win for CA employers, it is not the end of the road as the decision is a nuanced one, and AB 51 is still pending which may preclude mandatory arbitration agreements in CA. In the Cummings case, the Supreme Court held that emotional distress damages are not recoverable in a private action to enforce either the Rehabilitation Act or the Affordable Care Act.6

The Supreme Court also ruled on abortion rights. In the Dobbs v. Jackson Women’s Health Organization, the Court overturned Roe v. Wade and conferred the right to regulate abortions to the states.7 This has led to a patchwork of laws across the country. The decision could lead to an increase in discrimination (religious, gender, pregnancy, political belief), harassment and invasion of privacy claims.

Looking ahead to 2023

EEOC: The EEOC charges have been on a continuous decline since at least 2016.8 In addition, 2022 saw record low filings from the EEOC itself. However, While FY 2022 was relatively quiet, it is expected that filings will increase in 2023 given the EEOC’s notable budget increase and looming change in leadership (from Republican to Democrat). The EEOC is also set to adopt a new strategic plan for FY 2023, which may mean that a new Democratic-led Commission will implement a new set of priorities and emphasize these priorities through litigation.

Artificial intelligence: Many companies are using software, including artificial intelligence, and other technologies in hiring and other employment decisions. The use of these technologies may be helpful for employers in saving time, but they may also discriminate. In May 2022 the EEOC issued guidance for employers to help ensure that the use of artificial intelligence does not violate the Americans with Disabilities Act.9 In addition, a New York City law will take effect on January 1, 2023, which will require employers to have an independent bias audit conducted on their automated employment decision tools.10 Otherwise, they will face penalties. With the increased use of AI, we anticipate seeing more legislation and potentially claims in the coming years.

ESG: In the employment context, focus on the “S” in ESG will continue into 2023. Specifically, the focus will be on diversity, equity and inclusion initiatives within organizations. In a world where social media has driven movements like #MeToo, Black Lives Matter and more, employees are using social media to also push their organizations to implement ESG policies, particularly around pay equity, gender and racial equality and sexual harassment.

Joint Employer standard: In 2021 the Department of Labor rescinded an earlier version of the joint employer final rule implemented during the previous administration. The “new” rule, which became effective September 28, 2021, is a return to the much broader rule in effect prior to March 2020. Now, the NLRB also proposed a new joint employer standard; the proposal returns to the joint employment standard as it existed in the wake of the 2015 Browning-Ferris decision, which considerably broadened the definition of joint employer for purposes of the NLRA.11 Under Browning-Ferris, two entities were deemed joint employers based on the existence of reserved joint control, indirect control, or control that was limited and routine, as opposed to the previous standard that required “actual” control that was “direct and immediate.” A final rule will likely be issued in the first half of 2023.

Independent contractor rule: The Department of Labor (DOL) proposed a rule on independent contractors, which addresses the distinction between employees and independent contractors under the Fair Labor Standards Act (FLSA).12 The proposed rule would replace the generally employer-friendly test announced by the DOL in January 2021 with a test that is decidedly more likely to result in findings that contractors have been misclassified under the FLSA and are entitled to overtime. This is just a proposed rule. After the comment period closes, if the DOL decides to move forward with a final rule it would be issued sometime in the second half of 2023, or in early 2024.

Footnotes

1 H.R.4445 - Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021
2 U.S. Women’s Soccer Gets Court Approval on Historic Equal Pay Settlement: 3 Steps for Employers to Strengthen Their Pay Policies.
3 Mississippi Legislature
4 SB-1162 Employment: Salaries and Wages; New York City’s Wage Transparency Law to Take Effect November 1, 2022
5 Viking river cruises, inc. V. Moriana
6 Cummings v. Premier rehab keller, p.L.L.C.
7 Dobbs, state health officer of the mississippi department of health, et al. V. Jackson women’s health organization et al
8 Charge Statistics (Charges filed with EEOC) FY 1997 Through FY 2021
9 The Americans with Disabilities Act and the Use of Software, Algorithms, and Artificial Intelligence to Assess Job Applicants and Employees
10 New York City Proposes Rules to Clarify Upcoming Artificial Intelligence Law for Employers
11 NLRB Issues Notice of Proposed Rulemaking on Joint-Employer Standard
12 US department of labor announces proposed rule on classifying employees, independent contractors; seeks to return to longstanding interpretation

Disclaimer

Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).

Author

National Employment Practices Liability Product Leader,
FINEX North America

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