Companies are increasingly using automation and artificial intelligence (“AI”) to identify and hire qualified candidates more efficiently, accurately, and objectively. In response, regulators and legislators are beginning to enact laws that address AI’s potential for bias and perceived lack of transparency and accountability. New York City Council enacted Local Law 144 of 2021 (“LL 144”) in December 2021, and similar local, state, and federal efforts are on the horizon.
On September 27, 2022, California joined several other states, cities, and local governments that require increased pay transparency in the workplace. Under the new law (Senate Bill 1162) which takes effect on January 1, 2023, companies with any California-based employees (“California employers”) must share salary range information with current and prospective employees, include salary information in job postings, and maintain significant records and data relating to workforce demographics and salaries.
The U.S. Securities and Exchange Commission (SEC) recently adopted final rules that require public companies to disclose, in both tabular and narrative format, information about the relationship between the compensation they pay executives and their financial performance for up to five fiscal years in proxy or information statements in which executive compensation disclosures are required. More than a decade in the making, the new rules implement the so-called pay-versus-performance disclosure requirements mandated by the Dodd-Frank Act in the aftermath of the 2008 financial crisis.
On October 7, 2022, President Biden signed a highly-anticipated Executive Order implementing commitments the U.S. made under the new European Union-U.S. Data Privacy Framework (the “Framework”) announced earlier this year. The Framework is viewed as a successor to the European Union-U.S. Privacy Shield Framework (“Privacy Shield”), which was invalidated by the European Court of Justice in 2020. If ratified by the appropriate European Union (“EU”) entities, the Framework would provide qualifying companies with a legal basis to transfer personal data from the EU to the U.S. The Executive Order lays the groundwork for the European Commission (“EC”) to provide an adequacy determination for the Framework, which is expected to occur in 2023.
On October 5, Uber's former Chief Security Officer (“CSO”) was convicted of criminal felony charges for obstruction of justice and misprision (i.e. concealing) of a felony relating to his handling of a 2016 data breach that exposed the personal data of millions of Uber drivers and users. This case marks the first time a company executive has been held criminally liable for handling of a data breach in the United States and the CSO could face up to eight years in prison. In a press release announcing the verdict, the Department of Justice warned that the FBI and its government partners “will not allow rogue technology company executives to put American consumers’ personal information at risk for their own gain.”
Effective October 1, 2022, employers will face significant limitations in their ability to use non-compete agreements with employees based in Washington, D.C. (the “District”).
The office of the California Attorney General (“AG”) has sent a clear message that it is serious about enforcing the California Consumer Privacy Act (“CCPA”) and that “the kid gloves are coming off” with respect to businesses that fail to comply with the law.
On September 15, 2022, Governor Newsom of California approved the California Age-Appropriate Design Code Act (the “Act”), marking a significant shift in the regulation of children’s personal data.
Under the EU and UK General Data Protection Regulation (collectively, “GDPR”), companies that transfer personal data out of the EU to other countries must ensure appropriate safeguards are in place.
Employers face new restrictions on the use of non-compete and non-solicit agreements, and may be hit with a $5,000 penalty, injunctive relief, actual damages, and attorneys’ fees for every Colorado worker harmed by a faulty agreement.
Proposed Amendments Would Make It Harder for Public Companies to Argue for Exclusion of Shareholder Proposals That They Have Substantially Implemented, Are Duplicative of Other Proposals or Are Resubmissions of Prior Failed Proposals, Resulting in a Potentially Significant Increase in the Number of Proposals Submitted and Proceeding to a Shareholder Vote
In a ruling dated May 13, 2022, and publicly released last week, Judge Maureen Duffy-Lewis of the Superior Court of California in Los Angeles County enjoined the 2018 state law known as SB 826—the first in the nation to legally compel the representation of women on public company boards—after determining the statute was unconstitutional because it violated the Equal Protection Clause of the California Constitution. The decision followed a nearly monthlong non-jury trial that concluded in February.
April 29, 2022 Update: On Thursday, April 28, 2022 the New York City Council approved legislation that will push back the implementation of the salary transparency law by six months. The new law was supposed to go into effect May 15, 2022 and is now pushed back to November 1, 2022.
Starting May 15, 2022, employers advertising jobs in NYC must include a good faith salary range for every job, promotion, and transfer opportunity advertised.
Proposed Extension of Traditional IPO Investor Protections to SPAC Transactions Would Significantly Increase Costs, Complexity and Potential Liability for Market Participants Throughout the SPAC Lifecycle
In a landscape-shifting, pro-employee decision, Massachusetts’ highest court has ruled that employers are strictly liable under the Massachusetts Wage Act for treble damages and attorneys’ fees the very minute the employer fails to pay wages, even if the nonpayment is rectified before the employee brings a claim.
Comprehensive Suite of Proposals Would Require Enhanced and Standardized Disclosures Regarding Cybersecurity Risk Management, Strategy, Governance and Incident Reporting, Including Form 8-K Disclosure of Material Cybersecurity Incidents Within Four Business Days
On April 1, 2022, in the first decision to be handed down in several state and federal lawsuits underway challenging California’s gender and racial board diversity mandates, Judge Terry Green of Los Angeles County Superior Court declared the state’s board diversity mandate for “underrepresented communities” (racial/ethnic/LGBT) unconstitutional. The judge did not explain the reasoning for his decision, and it is currently unclear whether the state will appeal the ruling.
In light of the dramatic expansion of the number of persons and entities subject to sanction by the U.S. Treasury’s Office of Foreign Asset Controls (“OFAC”) in response to the Russian invasion of Ukraine, we wanted to send out a brief alert that you should periodically check the status of investors in your funds to determine whether they have become subject to these sanctions and, if any investors have become subject to sanctions, ensure that you are taking the appropriate actions.
Effective March 1, 2022, employers who violate Colorado’s restrictions on post-job non-compete provisions may face criminal penalties, including up to 120 days in jail. In light of these new penalties, GD clients who wish to include these non-compete provisions in their Colorado employment agreements, or wish to enforce an existing version of these non-compete provisions in Colorado, should first reach out to their GD attorney.
Black-owned and led companies raised more capital in 2021 than ever before, and with a push for more ESG and DE&I-focused initiatives, many organizations have taken an increase in steps towards equity and progress. However, opportunity gaps remain an obstacle for Black founders and entrepreneurs.
Changes to state-specific Automatic Renewal Laws (ARLs) impose enhanced consumer notice, consent, and cancellation requirements on companies offering goods and services under automatic billing plans
This client alert covers best practices with respect to compliance with most state ARLs but note that, while there are similarities across state ARLs, some states impose additional or different requirements. B2C companies are advised to implement and maintain a multi-state ARL compliance strategy to account for variances across state ARLs.
UPDATE: On January 13, 2022, the U.S. Supreme Court found that the Federal OSHA’s COVID vaccine ETS, targeting nearly all large U.S. employers and imposing significant penalties on noncompliant employees and employers, is a “broad public health measure” outside of OSHA’s purview.
This is an update to our October 1, 2021 Preparing for a Return to the Workplace, Employers Are Making Big Decisions (UPDATED) article.
We are writing to our venture capital and private equity fund clients to remind you of several important deadlines that are approaching. The annual deadline for filing certain initial Schedules 13G, an amendment to a previously filed Schedule 13G, an initial Form 13F filing, and an annual update to a previously filed Form 13H with the Securities and Exchange Commission (the “SEC”) for the year ended December 31, 2021 is Monday, February 14th. As you may remember from prior years, all Schedule 13G and Form 13F filings, including amendments, and Form 13H filings, including annual updates, must be filed electronically through EDGAR. As a result, we will be working with a financial printer in connection with these Section 13 filings. We are also using this opportunity to remind you that if you are subject to the California Consumer Privacy Act (“CCPA”), which went into effect on January 1, 2020, you are required to review and update your firm privacy policies and provide an annual privacy notice to your employees, contractors and investors that are California resident natural persons. Finally, we would like to give our clients who have previously filed a Form ADV with the SEC a reminder that generally your firm will be required to file an annual updating amendment to such Form ADV by the deadline of Thursday, March 31, 2022.
Employers must file information returns with the Internal Revenue Service and provide employees with information statements related to incentive stock option exercises that occurred during calendar year 2021. Similarly, employers (typically relevant only for public companies) must file information returns with the IRS and provide employees with information statements related to initial transfers of stock acquired during 2021 under an employee stock purchase plan that complies with Internal Revenue Code Section 423.
On December 15, 2021, the Securities and Exchange Commission (“SEC” or “Commission”) voted to adopt two sets of rule proposals designed to address the agency’s stated concerns about the prevalence of certain trading practices by issuers and corporate insiders that the SEC believes may harm investors and undermine the integrity of the securities markets, including through the misuse of material nonpublic information (“MNPI”).
On November 3, the staff of the Division of Corporation Finance (the “staff”) of the U.S. Securities and Exchange Commission (the “SEC” or “Commission”) issued new Staff Legal Bulletin No. 14L (“SLB 14L”) relating to shareholder proposals under Rule 14a-8 of the Securities Exchange Act of 1934 (“Rule 14a-8”). SLB 14L rescinds three previously issued legal bulletins and expressly states that the staff may no longer permit companies to exclude from their proxy statements certain shareholder proposals that raise significant environmental or social issues that would have been excludable in the past.
Gunderson Dettmer is pleased to announce its Returning to the Workplace Survey Report. This report summarizes the data gathered from over 250 VC firms.
On October 14, the U.S. Securities and Exchange Commission (SEC or Commission) announced the reopening of the comment period on its executive compensation clawback rule, initially proposed in 2015 to implement Section 954 of the Dodd-Frank Act, which calls for the Commission to direct the U.S. stock exchanges to establish listing standards requiring listed companies to adopt, comply with and provide disclosure about a compensation recovery (or “clawback”) policy applicable to incentive-based compensation received by current and former executive officers in the event of certain financial restatements.
Gunderson Dettmer is pleased to announce its Returning to the Workplace Survey Report. This Report summarizes the data gathered from over 230 companies in the venture-backed startup ecosystem. The results were presented at the National Venture Capital Association, Strategic Operations and Policy Summit Return to the Workplace panel on Thursday, October 21, 2021.
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