We continue our annual tradition of covering legal trends and outlook for this year, focusing this week on employment and labor. Following several years of pandemic-focused legislation, we are now seeing a significant uptick in new employment legislation and emerging work-related trends across the country. The following are a few of the issues and trends that might impact manufacturers in 2023:
- Restrictions on Noncompete Agreements: The Federal Trade Commission (FTC) has become increasingly focused on noncompete agreements, having recently proposed a federal regulation that would broadly prohibit employers from requiring employees to execute such agreements. The FTC has also taken legal action recently against companies, including two manufacturers, for their use of “harmful” noncompete agreements. States are also continuing to pass laws curbing the right of employers to use such post-employment restrictions. In 2023, we expect this will be a hot topic and will prove to be a serious challenge to manufacturers seeking to protect their business interests.
- Right-Sizing or Rebalancing: Following recent economic and business forecasts and a tumultuous several years, manufacturers may be focusing on right-sizing, restructuring, or rebalancing their operations. Among the critical levers in such discussions are labor allocation, workplace structure, and evaluation of skills and abilities; such discussions may result in layoffs, reductions-in-force, transfers, or redeployment of skills. In 2023, there is likely to be an increased focus on right-sizing and rebalancing, which could necessitate a multi-disciplinary approach involving legal, human resources, and operations.
- Recreational Marijuana’s Impact on Workplace: In 2023, manufacturers will likely continue to face the challenge of managing their employees and workforces in safety-sensitive environments in states in which recreational marijuana is now legal (which includes nearly half of all states). The legalization of recreational marijuana created significant tension for manufacturers across the country that seek to balance employee off-duty rights in light of this societal shift with the critical need to maintain safety in the workplace.
- Transparency in Employment: Over the last year, there have been numerous state and local laws passed that impose pay transparency and disclosure requirements on employers. Such laws impact manufacturers’ strategies around remaining competitive and leveraging pay and benefits, especially in a tight labor market. These laws are part of a larger trend toward greater transparency in the workplace, which has gained traction in the last several years following a focus on closing the wage gap; the #MeToo movement; and the significant impact of social media on the workplace. We expect that in 2023, laws will continue to be passed regarding transparency in pay, limiting the use of non-disclosure provisions following discrimination and harassment claims, and providing employees with greater rights to information, among other legislation consistent with this trend.
- Diversity, Equity, Inclusion & Belonging (DEIB): In 2022, there were numerous new laws passed that expand civil rights protections for employees and which tackle more nuanced and specific issue areas. For example, many states enacted laws protecting hair styles and textures and providing more specific rights for employees who are breastfeeding. Additionally, employers have been focusing on training leadership and employees on sensitivity in the workplace, etiquette, and DEIB, in an effort to foster a stronger and healthier workplace culture, improve communication, and limit legal risks. We expect this trend to continue in 2023.
- Artificial Intelligence in the Workplace: Employers, including manufacturers, are turning toward artificial intelligence and algorithm-based technologies for recruiting, hiring, and other human resources-related functions. Recently, such systems have received more scrutiny from agencies, including the Equal Employment Opportunity Commission, and lawmakers, who seek to ensure that such systems are free of bias. In 2023, we predict these tools will continue to be a primary focus of enforcement agencies and legislatures.
- Union Organizing: Under the Biden Administration, there has been a significant focus on expanding employee rights to engage in union-organizing activity, among other protected activity. There have also been highly-publicized, successful campaigns in the news, including in the manufacturing industry, in facilities across the country. Manufacturers should continue their vigilance in 2023 as it relates to union organizing, including monitoring the issue, training supervisors on labor laws, and seeking counsel if necessary.