HR pros must anticipate changes that affect hiring, because they’ll come at you whether you’re ready or not. From a federal law standpoint, significant changes have either recently happened or are coming down the pike in the next couple of years. Here’s a rundown of some federal-level changes we recommend watching.
Non-Compete Clauses
What it is: Almost everyone was shocked when the Federal Trade Commission (FTC) banned non-competes in April. And with good cause. Non-compete clauses (which block employees from seeking work in similar companies or industries within pre-set time frames) have been integral parts of many company employee agreements for decades. At the time of the ruling, one in five Americans were subject to a non-compete agreement.
Federal stance: The Commission determined non-competes were unfair methods of competition. According to the FTC, when job seekers can move freely from company to company, they enjoy wider opportunities. Under the new FTC rule, current non-competes are no longer enforceable by employers. It also bans new non-competes from being created or enforced. (Senior executives may still be required to follow current non-compete agreements).
When will this happen? The FTC proposed the rule in January 2023 and issued the final rule on April 23, 2024. Read more here.
Salary History Ban
What it is: Asking about salary history has recently fallen out of favor. The question can cause unfair and discriminatory hiring decisions. Several states have already passed laws making it illegal to ask about a job applicant’s salary history during the hiring process.
Federal stance: In January 2024, the Biden Administration proposed a rule (the Salary Rule) that would amend the Federal Acquisition Regulation (FAR) to “prohibit contractors and subcontractors from seeking and considering information about a job applicant’s compensation history when making employment decisions for certain positions.” The new rule would also require contractors and subcontractors to disclose compensation information publicly for open positions.
When will this happen? By an Executive Order, the Salary Rule is set to go into effect on October 1, 2024. Read more here.
The Word on Weed
What it is: Marijuana is more widely accepted than in years past. Many states have enacted laws loosening restrictions on cannabis use and even legalizing the drug for medical and/or recreational purposes.
Federal stance: Right now, cannabis is still illegal under federal law. This isn’t expected to change. However, the Biden Administration plans to remove marijuana from a list of the most dangerous and highly regulated drugs. In addition, U.S. Attorney General Merrick Garland has illegal status of marijuana at the federal level. Senate Majority Leader Chuck Schumer, Cory Booker of New Jersey and Ron Wyden of Oregon recently introduced a bill to de-schedule the drug altogether.
When will this happen? The federal change toward cannabis is an evolving matter with no set date yet. Some expect to see the government address these changes before the November election. Read more here.
AI in Hiring Regulations
What it is: While AI sounds like it could be the next best tool for maintaining a fair, inclusive hiring process, there are doubts. Does AI favor or rule out applicants by their names, race, gender, or in other discriminatory, biased ways?
Federal stance: On October 30, 2023, President Biden issued an Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence. It requires that “within 365 days of the date of this order, to prevent unlawful discrimination from AI used for hiring, the Secretary of Labor shall publish guidance for Federal contractors regarding nondiscrimination in hiring involving AI and other technology-based hiring systems.”
When will this happen? Based on the Executive Order, we should see some guidance in late 2024. Read more here.
How Employers Can Prepare for These Changes
Some proactive steps to tackle now are:
- Deal with your company’s non-compete agreements. If your company has used non-competes, work with your legal counsel to review, revise, and remove (as needed) them immediately. Ask your counsel for advice on handling your senior executive non-competes.
- Exclude salary history from your hiring process. Even if your state or industry doesn’t require it yet, consider removing the salary history question from your job applications and interviews. Also, add salary ranges into job descriptions to increase transparency and equity.
- Closely follow federal cannabis policy changes. Monitor upcoming changes regarding cannabis usage to ensure your drug screening policy is legal and compliant. Consider removing marijuana testing from your pre-employment drug screening process.
- Monitor how your hiring process implements AI. If your company uses AI to make hiring decisions, closely audit its results and address any unfair or discriminatory results immediately. Ask your AI vendors how their specific algorithms avoid biases and produce fair results.
- Partner with a trusted background screening partner. As always, a third-party background screening partner is crucial for maintaining a fair, compliant, and effective hiring process. Choose a partner who is PBSA-certified and who regularly shares fresh information about industry changes, laws, and trends.
Change Is on the Menu in 2024
Federal laws and regulations are closely focusing on hiring issues in 2024. By understanding the background of each change, HR can proactively adapt, so your company is ready for them. Doing this keeps chaos to a minimum and preserves the effectiveness of your hiring process.
