IRS Updates FAQs on Form 1099-K

On February 6, 2024, the IRS updated its guidance for completing Form 1099-K, which is used primarily by “gig” companies providing compensation using payment apps or online marketplaces and for individuals selling goods on online marketplaces. There are a number of changes to the FAQs that expand and clarify the information about when a 1099-K payment may or may not be taxable to recipients. The FAQs make clear that a 1099-K should never be issued for making a purchase of goods or services, but only issued to a person who sells goods or provides services. The guidance also confirms that a 1099-K should not be issued if a 1099-MISC or 1099-NEC is issued for the payment. Some new FAQs were added to address other special circumstances related to “gig” work, including when donations are received through crowdfunding. To avoid penalties, employers should review the guidance to understand requirements for issuance.

 

NLRB Joint Employer Rule Delayed

The National Labor Relations Board’s (NLRB) final rule on joint employment was to go into effect on February 26, 2024. The final rule would have increased the number of employers found to be a joint employer based on the control of certain terms and conditions of a third party’s employees, even if the authority is merely reserved or only exercised indirectly. However, a number of business groups filed a lawsuit seeking to permanently block the final rule due to its adverse effects on the franchise model of businesses and relationships between contractors. A Texas federal district court issued a two-week delay of the final rule to March 11, 2024 pending its ruling on the lawsuit, and additional delays are possible. There are also additional legal challenges against the final rule in other areas of the country. Appeals of any rulings are guaranteed. It is unknown when the final rule will go into effect and in what form.

 

NLRB Finds Dartmouth Basketball Players are Employees

On February 5, 2024, the National Labor Relations Board (NLRB) found Dartmouth’s men’s basketball players are employees under the National Labor Relations Act (NLRA). As such, the players are eligible to vote in a union election for Local 560 of the Service Employees International Union which represents other employee groups at Dartmouth. The NLRB’s decision was based on its common law definition of employment where an employer has the right to control the employee’s work and the work is performed in exchange for compensation. The NLRB found Dartmouth’s requirement for the players to follow strict fitness, practice, and playing regiments constituted employer control. The thousands of dollars’ worth of athletic equipment and apparel, tickets, and other benefits constituted compensation in exchange for the work. This was enough to meet the definition of employment even though the players do not fill out I-9s, receive W-2s, and do not receive wages, salary, scholarships, or institutional financial assistance. This finding is subject to further review and possible appeal. Higher education institutions should continue to monitor this ruling and review their practices for student-athletes with legal counsel pending the outcome of this decision.

 

Fifth Circuit: Six-Month Limitation Period for § 1981 Claims Found Reasonable

On February 1, 2024, in Harris v. FedEx Corporate Services, Inc., the Fifth Circuit Court of Appeals said an employment contract was reasonable when it limited an employee’s right to file 42 U.S.C. § 1981 race discrimination and retaliation claims against the employer. The contract limited claims to six months from the date of the event creating the basis of the lawsuit. In this case, the plaintiff claimed her termination was due to race discrimination and retaliation for filing a discrimination complaint with FedEx’s human resources department and not due to poor performance and failure to meet the terms of two performance improvement plans. The Court stated the § 1981 claim was limited by her employment contract and enforceable because: (1) she knowingly and voluntarily signed the contract and accepted the provision; (2) the provision was broad enough to encompass retaliation and discrimination claims; and (3) the six-month limitation period was not unreasonable as to § 1981 claims because such a period is included in other federal laws and has been found to be reasonable by other courts in the Fifth Circuit. Employers seeking to limit similar claims periods in their employment contracts should review them with legal counsel.

 

Ninth Circuit: SOX Doesn’t Apply Outside of United States

On February 6, 2024, in Daramola v. Oracle America, Inc., the Ninth Circuit Court of Appeals upheld the dismissal of whistleblower claims brought by a former employee against Oracle. The employee initially alleged that the company retaliated against him and unlawfully terminated his employment after the employee blew the whistle on Oracle and NetSuite’s allegedly fraudulent sales practices. Oracle argued that the whistleblower anti-retaliation laws could not be invoked in this case because the employee was a Canadian citizen, was employed by an Oracle Canadian subsidiary, and worked from Canada and not the U.S. The Ninth Circuit said that the employment relationship in this case was between a Canadian employee and a Canadian employer, and therefore governed by Canadian law. The Court noted that the employee’s actions of accessing Oracle servers in California was not enough to establish the needed domestic conduct to extend U.S. whistleblower protections to the foreign employee.

 

California: Recent Pamphlet Updates

The Unemployment Insurance (UI) and Workers’ Compensation Rights and Benefits pamphlets were recently updated. Employers must provide the most current pamphlet versions to their employees. English and Spanish versions must be provided to Spanish-speaking employees.

 

California: Cal/OSHA Penalties Increase

On February 22, 2024, Cal/OSHA posted a notice of its annual penalty increases for 2024. For a Cal/OSHA citation issued on or after January 1, 2024, the maximum penalties are: $15,873 for general and regulatory violations, including posting and recordkeeping violations; and $158,727 for willful and repeat violations (the minimum penalty increases to $11,337). $25,000 for serious violations remains unchanged from last year.

 

New York: Workplace Violence Prevention Law Extends to Public Schools

Since 2006, public employers in New York have been required to implement programs to prevent and minimize workplace violence. Previously, public school employers were exempt from the law; however, effective January 4, 2024, Section 27-b of the Labor Law was amended to extend workplace violence prevention obligations to now include public school employers. Under the amendment, public school employers must have adopted a workplace violence prevention policy statement by February 3, 2024, and must have completed a workplace risk determination by March 4, enact a workplace violence prevention plan by March 19, and ensure full compliance with the law and applicable regulations by May 3, 2024.

 

Texas: Workplace Violence Poster Requirements

Effective January 8, 2024, the Texas Workforce Commission (TWC) updated its requirements for the workplace violence poster required to be posted by employers implementing the Safety at Work program. The notice must provide employees with the contact information for reporting instances of workplace violence or suspicious activity to the Texas Department of Public Safety. Employers must post the notice in a conspicuous place in the employer’s place of business in sufficient locations to be convenient to all employees, and must be in English and Spanish, as appropriate. The TWC has a sample notice included in the Texas Administrative Code.

 

Texas: Enforcement of Pregnant Workers Fairness Act Blocked

On February 27, 2024, a federal court in Texas ruled Congress improperly passed the Consolidated Appropriations Act of 2023 (Act). Among other things, the Act implemented the Pregnant Workers Fairness Act (PWFA) which required employers with at least 15 employees to provide employees and applicants with reasonable accommodations for known limitations related to pregnancy, childbirth, or related medical conditions. In State of Texas v. Department of Justice, et al., the State of Texas filed suit against the federal government challenging the constitutional validity of the Act and Congress’ authority to pass the Act. With this ruling, the Equal Employment Opportunity Commission and the Department of Justice are enjoined from enforcing the PWFA against the State of Texas and its agencies. Note that this ruling does not impact other employers. The federal government is currently appealing the ruling. While we wait for additional developments, public employers in Texas should be aware this ruling does not affect their obligations to pregnant employees or applicants under the Americans with Disabilities Act, Title VII of the Civil Rights Act, and the Pregnancy Discrimination Act.

 

Virginia: State DOL Defines “Low-Wage” Employee for Non-Compete Law

Under section 40.1-28.7:8 of the Virginia Code, employers are prohibited from entering into or enforcing a non-compete agreement or covenant with any “low-wage” employee. On January 16, 2024, the Virginia Department of Labor announced that the term “low-wage employee,” as used under the law, includes all employees who earn an average of less than $1,410 per week. As a result, employers are now prohibited from entering, enforcing, or threatening to enforce a non-compete agreement with an employee who earns less than $73,320 per year. The law does not apply to an employee whose earnings are derived, in whole or in predominant part, from commissions, incentives, or bonuses.

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Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2024 ManagEase