April 24, 2018

Utah 2018 Legislative Report: Employment Law Developments

The 2018 General Session of the Utah Legislature saw significant developments in some areas of employment law, while in other areas Salt Lake City or other states implemented changes that may point to further action in future legislative sessions. The following topics are covered in this article:

Discrimination Claims: 2017 UALD Audit and Legislative Response

A Legislative Audit of the Utah Anti-Discrimination and Labor Division issued in January of 2017 found that the UALD ruled in favor of employees in only 0.7% of its rulings over the last five fiscal years.  By comparison, the federal Equal Employment Opportunity Commission and agencies in neighboring states issued favorable opinions much more often:

  • EEOC 3.6 percent.
  • Arizona: 5 percent to 6 percent.
  • Colorado: 3 percent.
  • New Mexico: 7-8 percent.
  • Wyoming: 6 percent.

During 2017, the UALD increased the number of accusations of discrimination against employers by 33%, to 1,831, and awarded $1 million to discrimination claimants.  The largest increase came in retaliation complaints: 519 retaliation charges were filed in 2017, a 66% increase from 2016.  UALD received 605 inquiries in November 2017 alone — more than previous two months combined, and a significant increase from 228 inquiries in November 2016.

On March 20, 2018, Governor Herbert signed HB 30, Utah Antidiscrimination Act Amendments.  This bill increases the UALD’s power to investigate and resolve discrimination and harassment complaints:

  • Grants the UALD subpoena power during an investigation;
  • Permits the Career Service Review Office to request an investigation by UALD;
  • Instructs the UALD to assign a mediator to offer mediation services between parties before an investigation begins;
  • Requires notification to parties regarding the right to request an evidentiary hearing;
  • Removes a provision requiring a finding before an investigation begins.

Another bill introduced in the 2018 legislative session, HB 283,would have expanded the jurisdiction of the UALD by eliminating the 15-employee threshold for coverage of employers.  This bill failed to pass either the House or Senate.

Taking action: The UALD is taking action to scrutinize employers more closely for evidence of discrimination, and the Legislature has provided the Agency with enhanced tools to do so.  Employers should be careful to promptly and effectively review any claim of discrimination, engaging counsel when questions arise, and should carefully and thoroughly respond to any claim filed with the UALD.

Gender Pay Equity: Salt Lake City Ordinance and Utah Legislative Efforts

Salt Lake City Mayor Biskupski signed the Gender Pay Equity Ordinance (3.01.09) on March 1, 2018.  The Ordinance prohibits individuals participating in Salt Lake City’s hiring processes from asking an applicant about current or past salary history, in line with California and several other states.  Mayor Biskupski cited recent research on gender pay gaps:  a 2017 report by the National Partnership for Women and Families, based on 2015 US Census data, found that women earned 71% of men, which amounts to almost $15,000 annually in Salt Lake City.

A bill introduced in the Utah Legislature in 2017, “Equal Pay Amendments” (SB210)would have required the Utah Department of Workforce Services to (1) conduct a study to determine whether there is a difference in pay between men and women in Utah, and (2) create and maintain pay indices for certain occupations, stating the current pay range in the state for each occupation, controlling for variables including education, years of experience, occupation, and industry. The bill also would have required Utah businesses with at least fifteen full-time employees to adopt and disclose to each employee the written criteria used to determine whether to change an employee’s compensation or benefits based on the employee’s performance.  However, the bill was not passed out of Committee, and was not introduced in 2018.

In 2018, the Business and Labor Committee considered SB152, a more limited bill sponsored by Sen. Escamilla which would have studied any pay disparity between men and women employed by the State of Utah, and recommended options for resolving any gender-based wage disparity by policy, practice, or funding.  The bill was not passed out of Committee, but some legislators suggested considering the bill during the interim legislative session.

Taking action: Although recent bills have not been passed at the state level, legislative efforts reflect an ongoing concern about gender equity in compensation that will likely continue to generate litigation and legislation.  Utah employers are advised to:

  • ensure that job positions and criteria for raises and bonuses are clearly defined, applying objective criteria to deter managers from using considerations that favor one gender over another,
  • review policies and practices to ensure that managers and supervisors with authority to hire and promote are aware of the company’s anti-discrimination policies, and
  • review the scale of compensation within positions and between similar positions, to determine whether there are gender disparities that cannot be explained by the type of objective criteria considered by this bill, including education, years of experience, occupation, and industry.

Sexual Orientation / Transgendered Rights

The “Utah Compromise” legislation passed in 2015 prohibits employment and housing discrimination against gays, lesbians, and transgender individuals, while exempting religious leaders, churches, religious schools, and other religious organizations.

In 2018 the Transgender Identity Bill, SB 138, would have allowed transgender individuals over 18 years of age to legally change their gender identity, by filing a petition showing that he petitioner is not on probation or parole, that the petitioner is not changing the petitioner’s legal sex to avoid creditors or anyone else with a claim against the petitioner, that the change in legal sex will not affect any right, title, or interest of anyone else, and that the change in legal sex is not being done for any illegal, fraudulent, or wrongful purpose.  The bill failed to pass the Senate.

The Utah Supreme Court is currently reviewing cases in which judges have refused to grant changes to a birth certificate, which other judges have allowed.

Taking action:  Attitudes toward transgender discrimination have undergone many changes in recent years, including President Trump’s decision to overturn the Obama administration’s guidance on transgender stu­dents’ restroom use in public schools. In light of the uncertainty in the law, and Utah’s prohibition of employment discrimination based on gender identity, the best practice is to ensure that there is no discrimination against transgender individuals in the workplace, and to consult with counsel on difficult questions of accommodation as the law continues to develop.

Non-Competition Agreements

In 2016, the Utah Legislature considered a bill that would have effectively made non-competition agreements unlawful. The compromise bill that was passed limited non-competes to one year, and provided for recovery of attorney fees against companies attempting to enforce unlawful agreements.  A bill proposed in the 2017 Legislative Session would have required employers to pay additional “consideration” (such as a wage increase or promotion) to enter a non-compete agreement with an existing employee.  Sponsors argued that some employers have used non-compete agreements to tie up employee-developers during slow periods without having to pay them.  Business and legal groups pushed for further study before proceeding.  A subsequent study by the Cicero Group found support for targeted limitations on non-competes, including notice requirements, prohibitions against non-competes for low-wage workers, definitions for protectable goodwill, and restrictions on enforcing non-competes when employees have been terminated without cause.

In the 2018 Legislative Session, “Post-employment Restrictions Amendments” (SB 241) was signed on March 7, 2018.  The new bill limits use of non-competes only in broadcast media, defined aspersions engaged in preparing, developing, or creating one or more programs or messages for distribution or transmission by television, cable, or radio.  Although the bill affects only the broadcast industry, the Legislature’s balancing of competing positions may be a reliable predictor of future legislation.

  • Restricts use of non-competes to employees earning more than $47,500 a year, or the rate at which employee qualifies as exempt under FLSA on salary basis.
  • Noncompete must be part of a written contract with a term of no more than four years.
  • Enforceable for no longer than the earlier of: (i) one year from the employee’s separation; or (ii) the day on which the original term of the contract containing the non-compete ends.
  • Contract cannot be enforced if employer fires employee without cause, or does not renew employment contract; can only be enforced if employee is fired “for cause” (including breach of employment agreement) or quits.

Opponents contended that the bill opens the door for the Legislature to target other industries.  Governor Herbert stated that HB241 strengthens Utah’s policy by striking a delicate balance between business interests and employee interests, but indicated that further restrictions on non-competes are not necessary and “will be met with a veto.“  The sponsor of the bill likewise indicated that he does not intend to target other businesses.  However, several states have recently passed limitations similar to those considered in 2017, including restricting non-competes to highly-paid or key employees, requiring additional payment in exchange for a non-compete, limiting the scope of clients the employee can be prohibited from contacting, and allowing non-competes only to protect provable employer interests.

Taking action:  In the wake of 2016’s non-compete bill, employers should ensure that any new non-compete agreement is limited to one year, and avoid attempting to enforce unlawful agreements.  Although the 2018 bill was limited to the broadcast industry, employers should be aware that there is significant support for targeted limits on non-compete agreements, and use them carefully.

Paid Family Leave

In 2017, Salt Lake City Mayor Biskupski instituted a new family leave policy, providing City employees six weeks of paid leave regardless of gender or length of service.  Almost 100 employees have utilized the benefit, including new fathers, many with the City’s Police and Fire departments.

In the 2018 Legislative Session, the Paid Family and Medical Leave Tax Credit bill (HB 278) was introduced, but the bill failed to pass the Senate.  The bill would have established an opt-in program, giving business owners a nonrefundable tax credit equal to 25% of the amount claimed under the federal employer tax credit for paid family and medical leave, if they provided up to two weeks of paid leave for family emergencies.  The Salt Lake Chamber of Commerce designated the bill as one of its top priorities for the 2018 session, and the sponsor argued that the bill would help more Utah women get back into the workforce.  Opposition to the bill focused on its $4 million fiscal note, and questioned whether it would further the general legislative objective of broadening the tax base and lowering the rate.

Several states have recently passed paid family or medical leave laws, including:  California (six weeks for family leave, 52 weeks for own disability, see Cal. Unemp. Ins. Code §§ 2653, 3301(c)); New Jersey (six weeks for family leave, 26 weeks for own disability, see N.J. Stat. Ann. § 43:21-38); Rhode Island (four weeks for family leave, 30 weeks for own disability; up to 30 weeks combined, see R.I. Gen. Laws §§ 28-41-7, 28-41-35(e)), 28-41-35(d)(1)); New York (eight weeks for family leave in 2018, 26 weeks for own disability, see N.Y. Workers’ Comp. Law §§ 204(2)(A), 205(1)(A)); District of Columbia (eight weeks for parental leave, six weeks for family care, two weeks for own serious health condition), and Washington (12 weeks for family leave, 12-14 weeks for own serious health condition, 16-18 combined.

Taking action:  Employers should be aware that the national trend is moving toward some form of paid family leave, and while Utah is not likely to take an aggressive position, a narrowly tailored bill may pass in the near future.  Existing unpaid leave laws must be carefully followed to avoid liability.

Utah Workers Compensation

Two Workers Compensation bills were passed in 2018, one imposing new penalties and one allowing companies to avoid penalties by a showing of good faith.

House Bill 288, titled “Workers’ Compensation Claims Amendments,” makes it unlawful for employer to interfere with an employee’s ability to seek workers’ compensation benefits, or to retaliate against employee for seeking benefits.  The Division of Industrial Accidents may impose a fine up to $5,000 for each violation.

Senate Bill 75, titled “Labor Code Amendments – Workers Compensation,” authorizes the Division of Industrial Accidents to waive the statutory penalty for failure to procure workers’ compensation insurance if: (A) the violation is the employer’s first violation; (B) the period of noncompliance was less than 180 days; (C) the employer has since remedied the failure to comply; and (D) no injury was reported to the Division during the period of noncompliance.

The Division may reduce the statutory penalty if (A) the violation is the employer’s first violation; (B) the employer has since remedied the failure to comply;  (C) no employee reported an injury during the period of noncompliance; and the (D) employer submits payroll records for period of noncompliance. If a reduction is granted, the penalty will be reduced by the “amount equal to the premium the employer would have paid for workers’ compensation insurance” based on the supplied payroll records.

Taking action:  Retaliation claims are increasing in all areas of employment law; employers must now take care to train their managers not to take any retaliatory action against employees who file workers’ compensation claims or report workplace injuries.