What might be illegal in my Employment Contract?

We often get the question of, “there’s no way my contract would have anything illegal in it, right?” What we’ve found more common are clauses that fall in the gray area of enforceability (non-solicits, especially). However, the law is always changing, meaning contracts have to play catch-up with clauses that become illegal over time. Some laws apply retroactively, others may not. That’s why we keep tabs on legislation that may affect your contracts, past, present, and future. Let’s take a look at what’s been passed in the last year that likely impacts your contract!

1. Non-Compete Clarification Amendment Act of 2022 (D.C. Law 24-175) - October 2022

   After multiple delays, Washington D.C. finally passed one of the most sweeping bans on non-competes, covering all workers making under $150,000 and medical specialists making under $250,000 for all agreements issued after October. For these exceptions, individuals must receive at least 14 days to review the agreement.

   Notably, New York is also joining this growing movement spearheaded by the Federal Trade Commission, as the State legislature passed S3100A on June 2023 to prohibit non-competes with no exceptions, which could be signed into law by Governor Hochul before the end of the year. Read more about non compete clauses in our previous post.
   
   

2. Speak Out Act (S.4524) - December 2022

   This act was signed into federal law to protect an individual’s ability to speak out about cases of sexual assault or harassment. As a result, all contracts after December 2022 containing non-disclosure or non-disparagement clauses must include an exception as they are rendered unenforceable for such cases.

   This act follows in the vein of the March 2022 Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, which allowed individuals to take these cases to trial as opposed to being forced to arbitration. Employment agreements can no longer have an all-encompassing arbitration requirement.
   
   

3. Pay Transparency in California and Washington (SB-1162 and RCW 49.58.110) - January 2023

   Following in the footsteps of Oregon and NYC, both California and Washington passed laws to require pay scales to be included on job postings. While not directly included in employment contracts, salary transparency has a direct impact on negotiations. This law also allows employees to ask for the salary range of their current job.
   
   

4. National Labor Relations Board: Mclaren Macomb - February 2023

   The Board found that in the case of a severance agreement, enforcing a confidentiality clause that prevented disclosures and disparagement of the company in exchange for benefits violates the National Labor Relations Act.

While we’ve just included a couple of the national and state-level changes from the past year, there were many others: new Leave Laws that expand the conditions and duration of Leave of Absence, the Pregnant Workers Fairness Act which expanded accommodations for pregnant workers, and more. There are also many bills that are waiting to be signed into law, such as the New York State Assembly Bill to protect employee inventions. We encourage you to always check that your contract is in line with the latest law!

For advocacy and beyond,
The Ask Ginkgo Team