Monday morning musings for workplace watchers.
Fiduciary Rule Under Attack Ahead of September Effective Date|Rise in Deepfake Images Creates Workplace Concerns
Ben Miller: The US Labor Department’s fiduciary rule prompted another legal challenge late last month, when the American Council of Life Insurers and eight other trade groups sued the agency arguing the rule is unconstitutional and exceeds regulatory authority.
The second lawsuit to target the DOL’s controversial 401(k) advice standard represents the insurance industry’s most forceful attempt to strike the rule down, given the reach and sizable membership of the organizations that brought the challenge and venue it was filed in, the Northern District of Texas.
That court was where a group led by the US Chamber of Commerce filed similar litigation against the Obama-era iteration of a fiduciary standard, which was ultimately overturned in 2018 after the US Court of Appeals for the Fifth Circuit vacated it.
Insurance industry groups in the latest case seek to undermine the rule’s enforceability before it takes effect on Sept. 23, requesting the court prevent its implementation and suspend the effective date. If the rule and exemptions for compensation go into effect, the lawsuit also alleges that Administrative Procedure Act violations warrant its complete nullification.
The rule would expand fiduciary duties to more investment advice providers, including those recommending one-time rollovers into annuities or IRAs. Life insurance industry stakeholders and independent producers who sell those annuities have been among the most vocal critics of the rule since it was proposed in November.
ACLI’s 273 member companies represent 93% of insurance industry assets and the Insured Retirement Institute’s members account for 90% of annuity assets. Together with the National Association for Fixed Annuities and Finseca, as well as national and local chapters of the National Association of Insurance and Financial Advisors, they comprise a large swath of an industry that relies largely on commission-based sales.
The rule doesn’t aim to decimate their business model entirely and the industry will largely be able to decide whether adapting practices ahead of its implementation is worth the required effort and cost, according to compliance consultants and benefits lawyers.
The life insurance industry groups may not be the last to take a swing at the DOL’s fiduciary rule. The Securities Industry and Financial Markets Association and other Wall Street groups that oppose the final fiduciary standard could also challenge the rulemaking in court on APA grounds, while this case, the Federation of Americans for Consumer Choice lawsuit, and attempts by Congress to overturn the rulemaking are still pending.
Riddhi Setty: An improvement in deepfake imagery amid rapidly developing artificial intelligence technology has heightened worries about its use in the workplace.
“The technology is not just getting better, it’s getting a lot easier to use,” said Rachel See, a labor and employment attorney specializing in AI and emerging technologies.
See posted a variety of deepfakes of herself on her LinkedIn Corp. account in preparation for an AI demonstration at a conference in February. That prompted comments from people who also experimented with deepfake imagery, such as using a LinkedIn photo to make their boss into the Terminator.
“There’s lots of ways that it can be used for very legitimate purposes,” See said about AI technology. “And there’s also these other very dark applications of generating non-consensual, intimate imagery.”
Recent guidance from the US Equal Employment Opportunity Commission on workplace harassment said non-consensual distribution of real or computer-generated, intimate images online could lead to a hostile work environment.
Deepfake pornography constitutes 98% of all deepfake videos online, of which 99% target women, according to a 2023 report from Home Security Heroes, which provides online security services. In 2023, the total number of deepfake videos online was 95,820, up 550% from 2019.
At least 10 states have created laws that address use of deepfakes through name, image, likeness laws or laws relating to non-consensual sexual imagery.
Indiana, Texas, and Virginia have enacted laws that have penalties of up to a year in jail in addition to fines for distribution of deepfake pornography. Some states including New York have added deepfakes to prohibitions on “revenge porn,” and Hawaii and Georgia are among those that have added measures against deepfake porn to their privacy laws.
Though these laws are also applicable within the workplace, attorneys say there’s also an increased need to develop workplace policies tackling use of the fake imagery and to make clear to employees what, if anything, is permitted in terms of creating deepfakes.
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