Category: Labor and Employment
Clear ResultsLabor and Employment
No Standard, Still Liable: How OSHA Regulates Ergonomics Without an Ergonomics Rule
Ask most employers what OSHA requires on ergonomics, and you will get one of two wrong answers. Some assume there is a detailed federal rulebook governing chair height, lifting limits, and keyboard angles. Others assume that because no such rulebook exists, ergonomics is purely voluntary, a wellness perk, not a legal exposure. Both are mistaken, and the gap between them is exactly where liability lives. Musculoskeletal disorders (MSDs), otherwise known as the strains, sprains, carpal tunnel cases, and back injuries that come from repetition, force, and awkward posture, remain one of the largest single categories of workplace injury, accounting for roughly a third of serious cases and costing employers billions each year in workers’ compensation, lost productivity, and medical expenses. Yet the federal framework governing them is defined more by what is absent than by what is written down. Understanding that absence is the whole game. Ergonomics Program Standard For one decade-spanning moment, federal ergonomics regulation was real. OSHA promulgated a comprehensive Ergonomics Program Standard at the end of 2000, requiring covered employers to identify and control MSD hazards. It survived a matter of weeks. In early 2001, Congress invoked the Congressional Review Act and passed a joint resolution rescinding the rule, which the President signed. The CRA repeal did more than erase the standard. By its terms, the Act bars an agency from reissuing a rule in “substantially the same form” without fresh congressional authorization. That single procedural feature is why, a quarter-century later, there is still no federal ergonomics standard — and why one is unlikely to appear through ordinary rulemaking. OSHA did not decline to regulate ergonomics. It was statutorily disarmed from doing so the conventional way. The General Duty Clause What is left in OSHA’s arsenal is Section 5(a)(1) of the OSH Act, the General Duty Clause, which requires every employer to furnish a workplace “free from recognized hazards that are causing or are likely to cause death or serious physical harm.” The clause is OSHA’s catch-all: it reaches recognized, serious hazards for which no specific standard exists. Ergonomics is the textbook example, sharing that territory with heat illness, workplace violence, and combustible dust. For a labor and employment audience, the operative point is that a General Duty Clause citation is not a free-floating accusation that a workplace felt unsafe. OSHA must establish four elements: A condition or activity in the workplace presented a hazard to employees The employer or its industry recognized that hazard The hazard was causing, or was likely to cause, death or serious physical harm A feasible and useful means existed to materially reduce the hazard Each element is a defense opportunity, and the second and fourth are where ergonomics cases are usually won or lost. “Recognition” can be proven through the employer’s own injury logs, prior complaints, internal ergonomics assessments, or industry consensus materials and NIOSH guidance. “Feasibility” turns on whether a workable engineering or administrative control (i.e., job rotation, lift assists, workstation redesign, or pacing changes) actually existed and was reasonably available. An employer that can show it identified its risks and was implementing reasonable controls in good faith is in a fundamentally different posture than one that did nothing. The Quieter Enforcement Levers The General Duty Clause is the headline mechanism, but it is not the only one, and it is important not to overlook the supporting cast. Recordkeeping obligations under 29 C.F.R. Part 1904 require accurate logging of work-related MSDs. A failure to record can be an independent citation, and an inaccurate log undercuts the credibility of every other defense an employer might raise. The hazard alert letter deserves particular attention because of how it compounds. When OSHA observes ergonomic risk that it is not prepared to cite outright, it may issue a hazard alert letter — a "no-impact" document carrying no fine and no immediate citation history. It is tempting to file and forget. That is a trap. If the agency returns and finds the flagged hazards unaddressed, the prior letter supplies the knowledge element that can elevate a later citation to willful. There is no formal mechanism to contest the letter’s findings, so the practical response is to treat it as a litigation exhibit in waiting: conduct a documented assessment, implement corrective action, and preserve proof of both. What Is Actually Changing in 2025–2026 Two developments make this an unusually live area rather than a settled one. First, in July 2025, OSHA proposed narrowing its own General Duty Clause interpretation, carving out hazards that are “inherent and inseparable from the core nature of a professional activity or performance” —aimed at inherently risky pursuits like certain entertainment and athletic work. The comment period drew enough interest that OSHA extended it and scheduled a public hearing. For ergonomics specifically, the early read from the defense bar is that this changes little: the MSD hazards in warehousing, healthcare, meatpacking, and manufacturing are not “inherent and inseparable” from the core work in the way the proposal contemplates, so robust General Duty Clause enforcement in those sectors is expected to continue. Still, the proposal signals a broader judicial and administrative skepticism toward expansive use of catch-all clauses — a theme worth tracking in any 5(a)(1) defense. Second, and more consequential, the states are filling the federal vacuum. Roughly five states now maintain ergonomics standards of some form, including California, Oregon, Washington, Michigan, and Minnesota, and the recent activity is concentrated in the last two. Minnesota's statute (Minn. Stat. § 182.677) is the one to know. Effective January 1, 2024, it requires covered employers in three high-MSD sectors (warehouse distribution centers, meatpacking and poultry processing sites, and licensed health care facilities), each above defined headcount thresholds, to maintain a written ergonomics program with risk assessments, training, and early-reporting procedures. It layers on a five-year first-aid log requirement and ties enforcement into the state's existing AWAIR safety-program framework, with safety committee obligations triggered above certain incidence rates. This is precisely the kind of prescriptive, documentation-driven mandate the repealed federal rule once contemplated, now operating at the state level. Washington is moving more incrementally but deliberately. Its Department of Labor & Industries regained authority to issue ergonomics rules and may promulgate one rule per year, targeting industries whose workers’ compensation MSD claim rates run at more than twice the statewide average, with effective dates from mid-2026 onward. Multi-state employers can no longer assume a single national compliance posture; the obligations now vary materially by where the work is performed. Enforcement at the federal level, meanwhile, has not gone dormant. OSHA’s high-profile resolution with Amazon, which included committing to facility-wide ergonomic abatement including adjustable workstations, anti-fatigue flooring, and job rotation, demonstrated the agency’s willingness to pursue ergonomic hazards against even the largest employers through the General Duty Clause, and effectively set a reference point for what “feasible controls” look like in high-throughput logistics. The Practical Takeaway The recurring misconception is that “no standard” means “no duty.” It never did. The combination of an active General Duty Clause, recordkeeping obligations, hazard alert letters that ripen into willful-violation predicates, and a growing patchwork of state mandates produces a real and enforceable framework, just one assembled from parts rather than handed down as a single rule. For employers, the defensive posture writes itself: identify ergonomic risks proactively, prefer engineering and administrative controls over PPE, document assessments and corrective action contemporaneously, and respond to hazard alert letters as if they were citations-in-waiting. Good-faith, documented effort is not merely good safety practice: under the four-element test, it is the difference between a defensible record and a willful citation. The federal government may not have written the ergonomics rulebook. But it has built, piece by piece, a regime that holds employers to one all the same.
July 9, 2026
Labor and Employment
Three Jurisdictions, Three Timelines: What the DMV’s Shifting Leave Laws Mean for Employers
For years, employers in the Washington metropolitan area could treat paid family and medical leave as a “somewhere else” problem, an issue for companies with workforces in California, New York, or New Jersey. That era is over. As of this spring, an employer with even a handful of employees spread across Maryland, Virginia, and the District of Columbia is now managing three separate leave regimes, each built on a different funding model, each carrying different obligations, and, perhaps most challenging of all, each operating on its own clock. The result is a compliance puzzle that a single, one-size-fits-all leave policy simply cannot solve. Below is a snapshot of where each jurisdiction stands and what the calendar looks like heading into 2027 and 2028. Washington, D.C. The Established Program You Cannot Put on Autopilot Of the three jurisdictions, the District's program is the most mature, and, for that reason, the one employers are most likely to take for granted. D.C.’s Paid Family Leave program has been paying benefits since 2020 and is administered by the Office of Paid Family Leave within the Department of Employment Services. A few features distinguish it from its neighbors. First, D.C.’s program is funded entirely by employers; there is no employee payroll deduction. The current contribution rate is 0.75% of each covered employee’s gross wages, remitted quarterly through the Employer Self-Service Portal, with payments due at the end of the month following each quarter (April 30, July 31, October 31, and January 31). Second, eligible employees can access up to 12 weeks each of family, medical, and parental leave, plus two weeks of prenatal leave, with partial wage replacement up to a weekly maximum that the District adjusts periodically. The compliance trap here is complacency. The contribution rate has changed more than once in recent years, the maximum weekly benefit is adjusted over time, and the D.C. PFL statute itself does not provide job protection, that has to be layered in through the D.C. and federal FMLA. Employers who set up their payroll years ago and stopped paying attention are the ones most likely to be out of step. Ongoing obligations still require ongoing attention: timely quarterly filings, current rate application, and the required employee notice. Maryland A Long-Delayed Launch That Is Finally on the Horizon Maryland’s Family and Medical Leave Insurance (FAMLI) program has been a moving target in the region. Enacted in 2022, its implementation dates have been repeatedly pushed back; most recently, in response to federal actions affecting the timeline. For employers who tuned out during the delays, now is the moment to tune back in, because the runway is getting short and the final regulations took effect March 30, 2026. Here is the current timeline that matters: Fall 2026: Employer registration opens. Any employer with at least one employee in Maryland will be required to register (there are no exceptions) and will need to designate an Authorized Officer and decide between the State Plan and an approved private plan. January 1, 2027: Payroll contributions begin. The total contribution rate is 0.9% of covered wages, split evenly between employer and employee (0.45% each). Small employers with fewer than 15 employees are exempt from the employer share, but their employees still contribute. January 3, 2028: Benefits become available. Eligible employees (generally those who have worked at least 680 hours in Maryland over the prior four quarters) can receive up to 12 weeks of paid leave (with the possibility of an additional 12 weeks for parental bonding in certain circumstances), capped at $1,000 per week. The practical takeaway for Maryland employers is that the meaningful work happens well before benefits ever get paid. Registration this fall, payroll-system readiness for the January 2027 contribution start, the State-Plan-versus-private-plan decision, and employee notices all land in the next several months (and not in 2028). Virginia The Newcomer That Changes the Regional Calculus The biggest development of 2026 came out of Richmond. In April, Virginia became the first state in the South to enact a statewide paid family and medical leave program, and it paired that with a significant expansion of paid sick leave. Employers who have long viewed Virginia as the “light touch” jurisdiction in the region will need to recalibrate. Paid Family and Medical Leave. Administered by the Virginia Employment Commission, the PFML program will begin collecting payroll contributions on April 1, 2028, and will begin paying benefits on December 1, 2028. When it takes effect, eligible employees may receive up to 12 weeks of leave per year with wage replacement of 80% of average weekly wages, subject to a cap tied to the statewide average weekly wage (roughly $1,500 per week under current figures, adjusted annually). Contributions are shared between employers and employees; employers with 11 or more employees must remit both portions (deducting up to half from employees), while employers with 10 or fewer are not required to pay the employer share. The program includes job-protection and benefit-continuation rights for employees who have been on the job at least 120 days, and it offers a private-plan alternative for employers who prefer to self-administer. Contribution rates have not yet been set—the VEC must finalize regulations and rates before the program launches—so the exact cost remains to be seen, though early estimates put it under 1% of wages. Paid Sick Leave—and this one comes sooner. Just as important for planning purposes, Virginia’s new paid sick leave mandate takes effect July 1, 2027. It expands the state's existing sick-leave requirement (which previously reached only certain home health workers) to nearly all private-sector employees and state and local government employees. Employees will accrue at least one hour of paid sick leave for every 30 hours worked, and the law expressly covers “safe leave” for employees dealing with domestic violence, sexual assault, or stalking. Notably, the enforcement provisions have teeth: aggrieved employees may recover double the amount of any unpaid sick leave plus actual damages, and the law prohibits retaliation. Because the sick-leave obligation arrives in mid-2027 (well before the PFML program goes live), Virginia employers effectively have two distinct deadlines to manage, not one. Why the Differences Are the Whole Point It would be convenient if these three programs converged. They do not. Consider just a few of the fault lines a multi-jurisdiction employer has to navigate: Who pays. D.C. is employer-funded only. Maryland and Virginia split contributions between employer and employee, but with different rates, different small-employer carve-outs (fewer than 15 in Maryland, 10 or fewer in Virginia), and different wage caps. Job protection. Maryland and Virginia build reinstatement rights into their statutes. D.C.'s PFL does not, leaving job protection to the FMLA framework. Timing. An employer running payroll across all three is looking at ongoing quarterly obligations in D.C. right now, Maryland contributions starting January 2027, Virginia sick leave in July 2027, and Virginia PFML contributions in April 2028. State plan versus private plan. Both Maryland and Virginia allow approved private plans as an alternative to the state program. That decision, which carries cost, administrative, and renewal implications, needs to be made deliberately, not by default. Layered on top of all this is the coordination problem: each of these programs interacts with the federal FMLA, with existing employer PTO and short-term disability policies, and with one another. Getting the concurrency and stacking rules wrong is where liability tends to accrue. What Employers Should Be Doing Now The through-line across all three jurisdictions is that the compliance work front-loads. Waiting until benefits start paying is waiting too long. In the coming months, employers with a regional footprint should be inventorying which employees fall under which program, confirming payroll readiness for the Maryland and Virginia contribution start dates, evaluating private-plan options, updating handbooks and leave policies to reflect the new entitlements, preparing the required employee notices, and training HR and managers on the accrual, coordination, and anti-retaliation rules.
July 6, 2026
Labor and Employment
Virginia’s Non-Compete Restrictions Are Now in Effect: What Employers Need to Do Now
Virginia Governor Abigail Spanberger signed Senate Bill 170 on April 13, 2026. In the weeks that followed, however, Virginia’s non-compete landscape shifted even further. On May 14, 2026, Governor Spanberger also signed SB 128, which expands restrictions on non-competes by prohibiting such agreements altogether for healthcare professionals. Both laws took effect on July 1, 2026. What initially appeared to be a targeted modification to enforceability now operates as a broader restructuring of how non-competes function in Virginia. Non-Competes Are Now Conditional Under SB 170, a non-compete is unenforceable if an employer terminates an employee without cause unless the employer provides severance or other monetary consideration that was disclosed at the time the agreement was executed. Notably, the statute does not define “cause” or establish a minimum severance amount. The legislation expands upon Virginia’s existing restrictions on non-competes for low-wage and non-exempt employees. The statute applies broadly to all employers and reflects a continued state-led shift away from treating non-competes as baseline protections for employers. Instead, Virginia employers must plan, price, and document non-competes at the outset of the employment relationship. In practice, employers must determine at the time of hire whether a particular role justifies a post-employment restriction and whether they are prepared to commit financially to preserving that restriction in the event of a no-cause separation. If that determination is not made and documented from the beginning, the restriction may be unenforceable. Termination Decisions Now Control Enforceability One of the most consequential effects of SB 170 is that enforceability is no longer determined solely by the language of an agreement. It is now directly tied to how the employment relationship ends. A without-cause termination without the required pre-disclosed payment will render a non-compete unenforceable. A for-cause termination, by contrast, may preserve enforceability, but it also creates the potential for disputes over whether the termination was properly classified as for cause. This creates a direct connection between contractual terms, defined standards for “cause,” and actual termination practices. As a result, even carefully drafted agreements may fail if operational decisions are not aligned with the terms of the restriction. Healthcare Non-Competes Are Also Eliminated At the same time, SB 128 imposes a near-total prohibition on non-competes for healthcare professionals, broadly defined as “any person licensed, registered, or certified by the Board of Medicine, Nursing, Counseling, Optometry, Psychology, or Social Work.” Employers who violate this prohibition may face civil penalties, fee exposure, and private enforcement risk. While confidentiality agreements and limited non-solicitation provisions remain available, non-competes are no longer a viable tool in this sector. This development reflects a broader willingness to restrict non-competes not only by circumstance, but by industry. A Broader Shift Toward Data Protection These developments build on a broader trend: courts and legislatures are placing less emphasis on where employees work and greater emphasis on whether employers are meaningfully protecting legitimate business interests. Virginia’s framework reflects that shift. While it limits and conditions non-competes, it leaves intact protections for confidential information and trade secrets, making information access, use, and safeguarding the primary battleground. Employers that rely solely on restrictive covenants, without corresponding data protection efforts, may find those agreements increasingly insufficient. Bottom Line Non-competes in Virginia remain viable, but they are no longer passive protections. They must be deliberate, supported, and aligned with business decisions from hiring through separation. At the same time, SB 170 and SB 128 shift the focus toward information governance and fundamentally change how non-competes operate in practice. Employers that pair narrowly tailored agreements with strong data protection practices will remain well-positioned. Those that do not risk discovering that their protections are unenforceable.
July 6, 2026
Labor and Employment
Untrained Managers Create Legal Risk: Federal Training Requirements Every Employer Must Follow
Many employment lawsuits I have handled on behalf of employers had something in common: a manager made a deficient decision or failed to act appropriately because no one had trained them properly. Sometimes the decision was a termination made without documentation. Sometimes it was a failure to recognize a harassment complaint and how to respond. Sometimes it was a well-meaning accommodation conversation that crossed a legal line. The lesson is not complicated. Under federal law, your managers are your company’s legal agents. When they act, or fail to act, the law generally treats it as the company acting. Liability flows upward. Training is the mechanism by which you limit that exposure. Title VII of the Civil Rights Act of 1964, along with the Age Discrimination in Employment Act (ADEA) and the Americans with Disabilities Act (ADA), prohibits workplace harassment based on protected characteristics. The EEOC’s enforcement guidance makes clear that employers are expected to take reasonable steps to prevent and promptly correct harassment. But the most compelling reason to train managers is a practical defense, not a moral one. Under Faragher v. City of Boca Raton (1998) and Burlington Industries v. Ellerth (1998), the Supreme Court held that an employer may avoid vicarious liability for a supervisor’s harassment — if no tangible employment action resulted — by demonstrating two things: (1) that the employer exercised reasonable care to prevent and correct harassing behavior; and (2) that the employee unreasonably failed to use the employer’s preventive or corrective opportunities. You cannot establish the first prong without documented manager training. Courts consistently look for: A written anti-harassment policy that is distributed to all employees A complaint procedure that bypasses the immediate supervisor when that supervisor is the alleged harasser Regular, documented training for managers on recognizing, reporting, and responding to harassment complaints Training that addresses bystander intervention obligations and retaliation prohibitions Practical Tip Managers must understand that their obligation is not merely to avoid harassing behavior themselves, it is to act when they observe or learn of harassment by others. A manager who witnesses harassment and does nothing creates employer liability, regardless of whether there is a reporting policy. Quick Reference: Federal Manager Training Obligations The table below summarizes the primary federal laws that impose manager training requirements and the key compliance obligations in each area. The Bottom Line for Employers Federal employment law does not require perfection. What it requires is a good-faith, documented effort to comply. In practice, that means written policies, a functional reporting structure, and — above all — managers who are trained, periodically re-trained, and held accountable for what they know. When a lawsuit or agency charge arises, one of the first things plaintiff’s counsel and investigators request is documentation of manager training. The question they are asking is simple: did this company do what a reasonable employer would do to prevent this from happening? Training records, or the absence of them, answer that question before the first deposition is taken. If your organization does not have a structured manager training program addressing each of the areas discussed in this article, now is the time to build one. The investment is modest. The cost of the alternative is not.
June 19, 2026
Labor and Employment
Beyond Bostock: Legal Gaps Affecting LGBTQIA+ Workers
In its landmark decision in Bostock v. Clayton County, the Supreme Court held that discrimination based on sexual orientation is illegal under Title VII. This sweeping ruling changed the legal landscape for homosexual and transgender employees, ensuring that key anti-discrimination laws also protect them in the workplace. In it, the Court makes clear, “it is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex.” While Bostock marked a major victory for LGBTQIA+ workers, its reasoning leaves important gaps — particularly for bisexual, asexual, and nonbinary individuals, as well as in areas like healthcare coverage. Bisexuality The Supreme Court could not have been clearer in Bostock that Title VII “works to protect individuals of both sexes from discrimination and does so equally” (emphasis added). As stated above, this clarity extends to homosexual and transgender individuals. Where the waters become murky is in instances where individuals do not fit neatly into the gender binary, or when their sexuality is neither heterosexual nor homosexual. The Sixth Circuit recently posited in Hamm v. Pullman SST, Inc., “Does Bostock’s but-for logic also prohibit employers from discriminating against those who are bisexual?” It then declined to answer that question or address whether bisexual, asexual, or otherwise queer orientations would be covered equally. Taken to its logical limits, Bostock’s but-for framework raises difficult questions about how bisexual or asexual individuals fit within Title VII protections. The Bostock Court explained that “if changing the employee's sex would have yielded a different choice by the employer, a statutory violation has occurred.” In the case of bisexual, asexual, or other orientations, however, changing the employee’s sex may not necessarily change the outcome. The example provided by the Supreme Court is illustrative: The two individuals are, to the employer's mind, materially identical in all respects, except that one is a man and the other a woman. If the employer fires the male employee for no reason other than the fact he is attracted to men, the employer discriminates against him for traits or actions it tolerates in his female colleague. Put differently, the employer intentionally singles out an employee to fire based in part on the employee's sex, and the affected employee's sex is a but-for cause of his discharge. Applying this standard to a bisexual employee, one might imagine a male employee terminated for being attracted to both men and women. If the employer were to terminate a female employee for being attracted to both men and women, the termination would not necessarily be discriminatory under a strict but-for analysis. The same logic could apply to employees who are attracted to neither men nor women. Nonbinary Individuals Courts have not yet squarely addressed whether Bostock extends Title VII protections to nonbinary individuals — those who identify outside of the male/female gender binary. This presents a closer question. On the one hand, the Court’s reasoning in Bostock relies heavily on a binary conception of sex. On the other, nonbinary status is arguably “inextricably bound up with sex,” as an employer who discriminates against a nonbinary individual necessarily treats that employee differently because of sex-based considerations. Gender-Affirming Care Bostock also raises practical questions for employers, particularly with respect to benefits. For example, must employers provide gender-affirming care on equal terms across genders? The Eleventh Circuit addressed part of this issue in September 2025 in Lange v. Houston County, Georgia, holding that employers may categorically deny coverage for gender-affirming surgeries so long as the policy applies “regardless of [the employees’] biological sex.” In reaching this conclusion, the court relied heavily on United States v. Skrmetti, reasoning that classifications based on medical use do not implicate Title VII because “a key aspect of any medical treatment is the underlying medical concern the treatment is intended to address.” This focus on medical reasoning eliminates the gender question, thus allowing employers a broader ability to determine what conditions to cover. Conclusion Bostock was a transformative decision, but it is not the final word. As courts continue to grapple with bisexuality, nonbinary identity, and healthcare benefits, its promise remains uneven in application. For employers, the safest course is to interpret Title VII broadly when reviewing workplace discrimination and benefits policies, while remaining mindful of evolving protections for employees across the LGBTQIA+ spectrum.
June 17, 2026
Labor and Employment
AI in Predictive Analytics for Employee Performance: Risk vs. Reward
Employers are increasingly deploying artificial intelligence (AI) and data-driven tools in performance management in an effort to promote consistency and reduce human bias. Yet these systems inherit the limitations of the data that fuels them, and workplace performance data is rarely neutral. Importantly, AI models are only as reliable as the information on which they are trained, and when that information reflects historical inequities or includes data correlated with protected characteristics, AI-driven performance metrics may perpetuate patterns that have long disadvantaged certain groups of employees. Performance data also frequently lacks critical context. Metrics such as output volume, response times, or client feedback often fail to account for legitimate sources of variation, including disability accommodations, intermittent or protected leave, caregiving responsibilities, or differences in job assignments. AI systems generally struggle to recognize these nuances, even though performance evaluations commonly inform high-stakes decisions involving promotions, compensation, and terminations. When adverse employment actions are grounded in incomplete or misleading data, employers may find it difficult to defend those decisions, particularly where they have a disparate impact on members of protected classes. The takeaway for employers is not to abandon AI, but to deploy it thoughtfully and lawfully. Employers should routinely audit performance data for bias, understand how AI tools weigh and interpret inputs, and train managers to assess AI-generated insights critically rather than accept them at face value. And always remember: human oversight remains essential.
June 16, 2026
Labor and Employment
"The Pitt" is a Hospital Drama. It’s Also a Masterclass in Employment Risk
Like most good TV hospital dramas, "The Pitt" is not really about medicine. It is about pressure. The show captures what happens when employees are overextended, managers are operating in constant crisis mode, and organizational systems begin to strain under the weight of staffing shortages, emotional exhaustion, and impossible expectations. The setting may be a hospital emergency department, but the legal issues are recognizable to virtually every employer. What makes the series especially interesting from a labor and employment perspective is how many of its workplace tensions intersect with real legal obligations. Take burnout. For years, employers treated burnout as a retention problem or a culture issue. Increasingly, however, burnout-related concerns arrive wrapped in legal protections. An employee struggling with anxiety, depression, PTSD, or other mental health conditions may trigger obligations under the ADA. Extended stress-related absences may implicate the FMLA. Complaints about chronic understaffing or unsafe workloads may become protected activity under workplace safety laws or the National Labor Relations Act. The law has not suddenly become more forgiving of operational strain simply because employers are understaffed. If anything, courts and agencies have become more skeptical of workplaces that normalize exhaustion as part of the job. "The Pitt" also illustrates a common but underappreciated source of liability: supervisors under pressure. Employment claims are often shaped less by formal policy and more by how frontline managers respond in moments of stress. A dismissive reaction to a complaint, inconsistent discipline, public criticism, or poorly handled accommodation requests can quickly become evidence in discrimination, retaliation, or hostile work environment litigation. Healthcare settings make this especially visible because the hierarchy is so compressed and the stakes are so immediate. But the broader lesson applies everywhere. Technical excellence is not the same as management training, and many organizations continue to promote high performers into supervisory roles without adequately preparing them for the legal dimensions of people management. The show also reflects the growing legal significance of employee complaints about workplace conditions. Discussions about staffing levels, scheduling, workload, safety, and compensation are often protected under Section 7 of the NLRA, even in non-union workplaces. Employers sometimes frame these issues as morale problems or negativity concerns when, legally, they may constitute protected concerted activity. That distinction matters. Particularly in high-pressure industries, retaliation claims increasingly emerge from situations where employees raised operational concerns, and management responded defensively. Another recurring theme in "The Pitt" is documentation — or, more accurately, the lack of it. In chaotic workplaces, documentation often becomes inconsistent until a complaint arises. By then, employers may attempt to reconstruct performance concerns after the fact, which rarely presents well in litigation. Courts, agencies, and juries tend to view sudden paper trails with suspicion, especially when they appear only after protected activity, leave requests, or accommodation discussions. Perhaps the most modern employment-law lesson embedded in the show is the importance of psychological safety. Employees who fear humiliation, retaliation, or professional consequences for speaking up are less likely to report concerns early, whether those concerns involve discrimination, harassment, or workplace safety. Regulators increasingly expect organizations to create reporting structures that employees actually trust enough to use. Ultimately, "The Pitt" works because it understands something many workplaces still resist acknowledging: prolonged crisis conditions reshape employment risk. Fatigue affects judgment. Stress alters communication. Staffing shortages expose compliance gaps. And cultures built around endurance rather than sustainability tend to create legal vulnerabilities long before litigation begins. The show may be fiction, but the workplace issues are painfully familiar. Just with better lighting and more trauma bays.
May 29, 2026
Labor and Employment
Beyond Attendance: The Legal Duties of Nonprofit Board Members
Serving as an officer or director of a nonprofit organization is both an honor and a serious legal responsibility. Whether your organization is a large regional association or a small community-based nonprofit, the individuals who sit on the board are held to defined legal standards — standards that exist to protect the organization, its members, and the public it serves. This article outlines the core governance obligations that apply to every nonprofit board member, including the three fiduciary duties imposed by state law, the board’s proper role in organizational management, and several practical obligations that are easy to overlook but carry real legal consequences. Modern Governance Demands Active, Informed Leadership Nonprofits today operate in an environment of heightened public scrutiny, legal complexity, and accountability. The days when a board member could fulfill his or her obligations simply by showing up for quarterly meetings and voting on motions are long past. Effective governance now requires directors to be proactive, to engage with the organization between formal meetings, to participate meaningfully in leadership transitions, and to approach every board communication and decision with deliberation. Passive participation is not just ineffective; it can be a legal liability. A director who sits back, defers entirely to others, and casts uninformed votes risks violating the very duties assumed upon joining the board. The Board Governs — It Does Not Manage One of the most important distinctions in nonprofit governance is the line between policy and management. The board of directors is the organization’s governing body, with ultimate responsibility for its mission and direction. But that responsibility does not extend to the day-to-day administration of the organization. Operational decisions —staffing, program delivery, vendor relationships, and the like — are properly delegated to paid staff, designated committees, or empowered officers. This principle holds even for smaller nonprofits that lack a professional staff. The board’s role is to set policy and ensure that results align with the organization’s mission and governing documents. When boards stray into micromanagement, they create confusion, undermine staff authority, and expose themselves to unnecessary risk. The best boards define clear boundaries, delegate appropriately, and hold leadership accountable for outcomes. The Three Fiduciary Duties State law imposes three legally enforceable fiduciary duties on every officer and director of a nonprofit organization: the duty of care, the duty of loyalty, and the duty of obedience. These duties are not optional — they cannot be waived by agreement, and they apply regardless of whether the organization is large or small, well-funded or volunteer-run. Every decision made in the course of board service should be evaluated against all three. Duty of Care: Be Informed and Engaged The duty of care requires directors to exercise the same ordinary and reasonable diligence that a prudent person would apply in similar circumstances. In practice, this means directors must arrive at meetings prepared, ask questions when something is unclear, seek out information independently when necessary, and engage substantively in board deliberations. A director who attends meetings without reviewing materials in advance, who relies entirely on the representations of other board members without independent inquiry, or who votes yes or no simply to go along with the room is not meeting this standard. The duty of care is an individual obligation; each director is personally responsible for being informed. Duty of Loyalty: Put the Organization First The duty of loyalty requires that when a director acts in his or her capacity as a board member, that director’s allegiance must be undivided and directed entirely to the organization’s interests. Personal interests, outside business relationships, and affiliations with other organizations must not influence board decisions. This duty encompasses two related obligations. First, directors must avoid actual conflicts of interest — situations in which personal gain could be derived from an organizational decision. Second, and equally important, directors must avoid even the appearance of conflicts of interest. The credibility of a nonprofit depends in large part on public trust, and that trust is damaged when there is any reasonable basis for questioning whether a board member’s decisions were made for the right reasons. Organizations should have a written conflict-of-interest policy, and directors should be prepared to disclose and recuse themselves where appropriate. Duty of Obedience: Know and Follow Your Governing Documents The duty of obedience requires directors to act in accordance with the organization’s articles of incorporation, bylaws, mission statement, and any other governing documents, as well as applicable federal, state, and local law. This is not a passive obligation. Directors are expected to have read and understood the organization’s governing documents, and to act consistently with them, even when a director might personally have approached a matter differently. If governing documents are outdated, unclear, or inconsistent with current law, the appropriate response is to pursue a proper amendment, not to ignore the documents or work around them. Counsel can assist with reviewing and updating governing documents to ensure they reflect the organization’s current operations and legal obligations. Additional Obligations Individual Accountability for Fellow Directors’ Conduct Board membership is not a passive credential. Directors have an individual obligation to respond when they become aware that a fellow director, or an officer, is engaging in conduct that is illegal, in violation of fiduciary duties, or otherwise contrary to the organization’s interests. Awareness without action can itself give rise to personal liability. What constitutes an adequate response will depend on the circumstances, but in serious cases it may require raising the issue formally at a board meeting, consulting with legal counsel, or escalating the matter through appropriate channels. Directors who simply look away when misconduct is apparent do so at their own legal risk. Confidentiality: An Absolute Obligation Board deliberations are confidential. Information discussed in the course of board business — whether in formal meetings or in communications among directors — may not be shared with individuals who are not part of the board or otherwise properly within the organization’s governance structure. This obligation applies regardless of how a vote came out and regardless of whether the director agreed with the board’s decision. The reason for this rule is practical as well as legal. Open and candid board discussion depends on the mutual understanding that what is said in the boardroom stays there. When confidentiality is breached, even informally, even with good intentions, it chills future deliberation and can seriously damage the organization. Directors should treat all board communications as confidential by default, and should decline to discuss board matters with family members, professional colleagues, or anyone else outside the governance structure. Written Communications: Assume Everything Is Public In litigation and regulatory proceedings, written communications are among the first materials sought in discovery which includes emails, text messages, board messaging platforms, and any other written communication, regardless of how informal the channel. There is, in practical terms, no such thing as a private electronic communication for a nonprofit director. Directors should bring the same care to their written communications that they bring to formal board proceedings. This means avoiding emotional or inflammatory language, refraining from personal attacks, and thinking carefully before committing anything to writing that would be embarrassing, misleading, or legally problematic if it later appeared in a courtroom or regulatory hearing. When in doubt, a phone call is often the better choice. And when written communication is particularly sensitive, having it reviewed by counsel before sending is a worthwhile precaution. Nonprofit Directors Are Accountable to the Public Unlike the directors of a for-profit corporation, who owe their primary duty to shareholders, nonprofit directors operate in a context of broader public accountability. The tax-exempt status and public-benefit mission of a nonprofit organization mean that its governance is, in a meaningful sense, a matter of public interest. This is the foundation of many of the rules that apply to nonprofits and their directors, and it is why the standards for nonprofit governance are taken seriously by regulators, courts, and the communities these organizations serve. Directors who internalize this principle — who understand that their role is not simply to serve the membership but to advance a mission for the broader public good — tend to govern more effectively and with greater integrity. A Final Word The legal obligations of nonprofit board service are real, and they apply from the moment a director takes office. But they are not burdensome for directors who approach the role with the seriousness it deserves. Directors who stay informed, act in the organization’s best interest, follow the governing documents, communicate carefully, and hold themselves and their colleagues accountable will, in virtually every case, meet their legal obligations and serve their organization well.
May 20, 2026
Labor and Employment
New Jersey Finalizes ABC Test Rule: A Measured Retreat, Not a Reset
After more than a year of delay and unusually forceful opposition from the business community, the New Jersey Department of Labor has adopted final regulations implementing the state’s “ABC” test for worker classification. The final rule reflects a meaningful course correction from the proposal first circulated in 2025. It is narrower, more measured in tone, and less overtly targeted at particular industries. But it does not alter the underlying premise. New Jersey continues to place a heavy burden on businesses seeking to classify workers as independent contractors, and these regulations reaffirm that approach with greater clarity rather than greater flexibility. Clarity Arrives — on the State’s Terms The regulations operate across multiple statutory schemes, including the state’s wage-and-hour, wage payment, and unemployment compensation laws. At their core is the familiar but demanding ABC test. A worker is presumed to be an employee, and the hiring entity must establish all three elements to rebut that presumption: that the worker is free from control in both contract and practice; that the work is performed outside the usual course or places of the company’s business; and that the worker is engaged in an independently established trade or business. The significance of the final rule lies less in redefining those elements than in codifying how the Department expects them to be applied. In doing so, the rule closes off ambiguity that had previously allowed employers to rely more heavily on contractual structuring and industry convention. A Noticeable Step Back from the Edge The most notable feature of the final rule is what it no longer says. In several respects, the Department retreated from positions that would have pushed New Jersey’s already stringent framework even further. Most visibly, the rule abandons the proposal’s use of industry‑specific examples. Those examples — focused on rideshare drivers, construction trades, and similar roles — had been criticized as outcome‑driven. Their removal restores a measure of neutrality, even if it also leaves employers with less informal guidance. Equally significant is the Department’s reversal on its approach to legal compliance. The proposed rule suggested that steps taken to comply with other legal obligations (such as training, supervision, or similar controls) could still weigh in favor of employee status. The final rule rejects that approach, making clear that compliance‑driven requirements are not, without more, evidence of control. This change is likely to have practical importance for employers operating in regulated industries. The final rule also abandons several interpretive positions that would have expanded the concept of “control” or “place of business,” including the suggestion that required use of company software is inherently indicative of control, or that off‑site work could nonetheless be treated as occurring at the employer’s place of business based on its importance to the enterprise. Taken together, these deletions suggest a more restrained (and more defensible) regulatory posture. Refinements at the Margins The Department also introduced clarifications that, while modest, are directionally helpful. The rule confirms that existing statutory exemptions remain intact, avoiding any suggestion that the regulatory framework displaces those carve‑outs. It also addresses remote work directly, explaining that a worker’s home is not automatically part of the employer’s place of business; a point that carries particular relevance in a post‑pandemic workforce. These changes do not alter the structure of the ABC test. They do, however, narrow the risk that ordinary, compliance‑driven, or modern workplace practices will be recast as evidence of employment. The Core Framework Remains Firmly in Place Notwithstanding these revisions, the substance of the regime remains unchanged in the respects that matter most for employers. The burden of proof continues to rest entirely with the business. The inquiry remains fact‑driven and cumulative, rather than formalistic. And, critically, the rule reiterates that commonly relied‑upon indicia of independent contractor status (including written agreements, the use of business entities, or even the existence of multiple clients) are not dispositive. In practice, the most difficult element will continue to be the requirement that the work fall outside the company’s usual course of business. Where a worker is performing the same core services that define the enterprise, the final rule offers little comfort. The revisions do not relax that standard; they merely clarify how it will be assessed. A Short Runway to Implementation The rule is expected to be published in June 2026 and to take effect on October 1, 2026. That timeline leaves a limited window for employers to reassess existing classifications. Given New Jersey’s long‑standing focus on misclassification, and its willingness to pursue significant enforcement actions, the expectation should be that the clarified standards will be actively applied. A More Tempered Rule, But No Easier Path In the end, the Department did not abandon its approach; it refined it. The final rule is less aggressive in tone and more attentive to practical business realities than the version initially proposed. It removes several features that had appeared designed to expand the reach of the ABC test at the margins. But the central proposition remains the same. New Jersey is not seeking to make independent contractor classification easier. It is seeking to make the rules clearer and ensure they are consistently enforced. For employers, that clarity is useful, but it also eliminates any remaining doubt about the rigor of the standard they are expected to meet.
May 7, 2026
Labor and Employment
It Ends Quietly: What the Lively-Baldoni Settlement Really Tells Us About Litigation
For nearly two years, this case unfolded the way modern legal disputes often do. Not in a courtroom, but in fragments and narratives. In articles, group chats, comment sections, and carefully curated statements. It felt, at times, like a story in search of an ending. But when the ending finally arrived, it was not a verdict. It was a settlement announced in a handful of sentences, issued jointly, and designed to close the door rather than resolve the conflict. No trial. No jury. No public reckoning of who was right. Instead, something quieter. And in many ways, far more revealing. What does it mean when a case settles right before trial? The timing matters. This case did not settle early, when uncertainty is highest and discovery has yet to sharpen the issues. It settled at the last possible moment, just weeks before a scheduled May trial, after the legal landscape had already shifted in a meaningful way. By that point, the court had done what courts do best. It stripped the case to its essentials. Of the original claims, 10 were dismissed, including the most visible, leaving only a narrow set of theories to be decided by a jury. What remained was not the sweeping narrative the public had been following. It was something much smaller. Something much more technical. Something that would have required jurors to answer precise legal questions about retaliation and contractual obligations rather than broader questions about conduct or character. And then, before any of those questions could be answered, the case ended. That sequence is not unusual. It is, in fact, typical. Once discovery is complete and the court has defined the case, the parties are no longer negotiating in the abstract. They are negotiating in the shadow of a very specific trial. One that now comes with clearer risks and fewer unknowns. In that environment, settlement is not retreat. It is recognition. Why would a high-profile case end without money changing hands? Perhaps the most surprising detail emerging from early reporting is the apparent lack of financial exchange between the parties. Each side reportedly walked away covering its own legal fees. That outcome can feel counterintuitive in a case defined by claims of massive reputational and economic harm. But it aligns with something lawyers understand instinctively, and the public often overlooks. Litigation is not a referendum on harm. It is a method for proving it. At various points in the case, the parties advanced dramatically different accounts of damages. One side spoke in terms of lost opportunities and reputational impact. The other questioned both the methodology and the underlying premise. By the time a case reaches the brink of trial, those claims are no longer theoretical. They have been tested, challenged, constrained by evidentiary rules and expert scrutiny. The result is rarely as expansive as the initial pleadings suggested. A no-payment resolution, in that context, does not mean nothing happened. It means something more specific. It reflects the gap between what could be alleged early and what could ultimately be proven in court. Did the settlement change anything or simply confirm what the court had already signaled? In many ways, the settlement feels less like a turning point and more like a conclusion to a process that had already narrowed the case substantially. The April ruling set the trajectory. It was not an early procedural decision. It was a merits-driven assessment after discovery, focused on what the record could actually support. That ruling reshaped the case in several important ways. It clarified that many of the claims failed for reasons grounded in legal structure rather than public perception. Employment status, jurisdiction, and contract formation all played decisive roles in determining what could proceed. At the same time, the court allowed certain claims to move forward, particularly those tied to retaliation and contractual obligations. Those surviving theories reflected something more subtle. A shift in where legal risk often resides in modern workplace disputes. The settlement did not undo any of that analysis. It accepted it. What does this case reveal about power, proof, and perception? Earlier, this litigation offered a useful lens into how power, proof, and perception interact. The settlement shows how that interaction resolves. Perception drove the public conversation. From the beginning, the case was understood through competing narratives that invited audiences to take sides long before the pleadings had settled. But perception did not determine the legal outcome. It could not expand jurisdiction. It could not convert an unsigned agreement into an enforceable contract. It could not substitute for admissible evidence. Proof did the work that proof always does. It narrowed. It filtered. It transformed broad allegations into discrete questions anchored in documents, communications, and contemporaneous records. By the time the case reached its final stage, what mattered was not how the story felt, but what could be demonstrated. Power remained present throughout, but not in the way it is often imagined. Influence shaped the stakes and the visibility of the dispute, but it did not rewrite the legal standards that governed it. The court applied the same framework it would apply in any workplace case, even if the setting was far from ordinary. The end result reflects that hierarchy. Perception set the stage. Proof controlled the script. Power influenced the audience, not the outcome. What lessons should employers and practitioners take from how this ended? Strip away the names and the attention, and what remains is a fairly familiar legal arc. A workplace dispute arises in a setting that blurs professional and personal boundaries. Allegations are made, both legal and reputational. The case expands quickly, incorporating multiple causes of action and overlapping narratives. Discovery follows, and with it a more disciplined examination of the evidence. The court narrows the issues. What survives is more precise, more technical, and often less satisfying to anyone looking for a sweeping resolution. From there, the incentives shift. The cost of trial becomes concrete. The risks are no longer abstract. And the question becomes less about proving everything and more about resolving what remains. This case also reinforces something increasingly important. Even where underlying misconduct claims fall away, retaliation theories can persist. The alleged harm is not always tied to traditional employment actions. It may instead center on reputation, messaging, and the way narratives are managed in public spaces. That evolution matters because it expands the kinds of conduct that may be examined through a legal lens, even when the original allegations do not move forward. Why does this ending feel so incomplete? Because it is. Settlements are designed to end disputes, not to explain them. They provide closure without resolution, finality without full transparency. They are, by their nature, unsatisfying for anyone seeking a definitive account of what happened. And yet, they are the most common ending to cases like this. In that sense, the conclusion here is entirely consistent with the system in which it unfolded. The case did not fail to deliver an answer. It delivered the answer the legal process is structured to give. A narrowing of claims. A testing of proof. A recalibration of expectations. And, ultimately, a decision to stop litigating before the final question is put to a jury. What is the real takeaway from how this case ended? The title of the film at the center of the dispute suggests a clean conclusion. A moment where something definitively ends. The litigation tells a different story. It suggests that in modern workplace cases, especially those that unfold in public view, resolution rarely comes in the form people expect. It does not arrive with a clear declaration of fault or vindication. It arrives more quietly, shaped by legal constraints, evidentiary realities, and the practical considerations that define every case once it moves from narrative to proof. What began as a story about conduct became a case about law. What felt expansive became precise. What seemed headed toward a dramatic ending instead resolved in silence. Not because the issues disappeared. But because, in the end, litigation only answers the questions it knows how to ask.
May 7, 2026
Labor and Employment
ICE’s Updated Form I‑9 Inspection Guidance: What Employers Need to Know
For more than three decades, Form I‑9 has been a cornerstone of U.S. employment eligibility verification. Every employer—regardless of size, industry, or location—is required to complete and retain a Form I‑9 for each employee hired after November 6, 1986. While the form itself has evolved over the years, the underlying obligation has remained constant: employers must verify identity and work authorization, maintain accurate records, and be prepared for inspection by U.S. Immigration and Customs Enforcement (ICE). But in 2026, ICE issued updated inspection guidance that significantly changes how the agency evaluates Form I‑9 errors. These updates don’t alter the form or the law, but they do reshape the compliance landscape. Many mistakes that were once considered minor or “technical” are now treated as substantive violations, meaning they can trigger immediate fines with no opportunity for correction during an audit. For HR leaders, compliance teams, and hiring managers, understanding these changes, and adjusting internal processes accordingly, is essential. How ICE I‑9 Inspections Work ICE conducts thousands of Form I‑9 inspections each year. When an employer receives a Notice of Inspection (NOI), they typically have three business days to produce their I‑9s and supporting documentation. ICE then reviews the forms for accuracy, completeness, and compliance with federal regulations. Historically, ICE distinguished between technical or procedural violations, which employers could correct within 10 business days, or substantive violations, which were immediately subject to penalties. This distinction mattered. A missing date, an incomplete field, or a minor oversight could often be corrected during the audit window, reducing or eliminating fines. The new guidance changes that calculus. What’s New in ICE’s Updated Fact Sheet ICE’s updated fact sheet expands the list of substantive violations, errors that cannot be corrected once an audit begins. These include many issues that employers previously treated as minor administrative mistakes. Examples of errors now considered substantive: Missing employee date of birth in Section 1 Missing or incomplete employer attestation information in Section 2 Missing date of hire Missing document title, issuing authority, or expiration date—even if a copy of the document is on file Missing rehire date in Supplement B Improper use of the Spanish‑language Form I‑9 outside Puerto Rico Deficiencies in electronic I‑9 systems, such as incomplete audit trails or signature issues These are critical as they cover all parts of the form including areas completed by the employer and employee. ICE also clarified that employers cannot rely on document copies to cure missing information. If the form itself is incomplete, the violation stands. Why This Matters: Increased Penalties and Higher Risk The consequences of these changes are significant. Substantive violations can result in fines ranging from hundreds to thousands of dollars per error. For employers with large workforces or high turnover, cumulative penalties can escalate quickly. Accordingly, industries at heightened risk include: the hospitality business, retail stores, construction companies, various forms of manufacturing businesses, certain healthcare providers, staffing and recruiting agencies, and federal contractors. These sectors often rely on decentralized hiring, multiple onboarding locations, or large volumes of I‑9s, conditions that increase the likelihood of errors. ICE’s updated guidance signals a stricter enforcement posture and a reduced tolerance for administrative mistakes. Employers can no longer assume that routine errors will be fixable during an audit. What Employers Should Do Now Conduct a proactive internal I‑9 audit. Review all existing I‑9s — especially older forms completed under prior guidance — to identify and correct errors before ICE ever requests them. All covered I-9s that could be audited include terminated employees for the last three years, which underscores how critical record keeping is for I-9 compliance. Employers should work with immigration compliance counsel to ensure corrections are made properly. Strengthen onboarding and I‑9 completion procedures. Ensure HR staff and authorized representatives understand the new classifications and the importance of complete, accurate entries in all sections of the form. Real-time review of the completion of form I-9 is recommended as substantive violations are incorporated into sections completed by the employee as well as the employer. Review your electronic I‑9 system. Confirm that your system meets DHS requirements for: Audit trails Electronic signatures Data integrity Proper indexing and retrieval Auto‑population features should be reviewed to ensure they do not create incomplete or inaccurate fields. Retrain all I‑9 preparers. Training should cover: Proper document review Accurate recording of hire dates and document details Correct use of the preparer/translator section Proper reverification procedures Ensure proper use of alternative verification procedures. If your organization uses DHS‑authorized remote verification, confirm that all eligibility requirements, such as E‑Verify participation, are consistently met. The Bottom Line ICE’s updated Form I‑9 inspection guidance represents a meaningful shift in enforcement. Employers now face higher stakes and less flexibility when errors occur. The organizations that invest in strong I‑9 practices today through audits, training, and system improvements will be far better positioned to withstand increased scrutiny. In the current environment, proactive compliance is not optional. It’s essential risk management. For more information visit: Form I-9 Inspection Under Immigration and Nationality Act § 274A | ICE
May 5, 2026
Labor and Employment
Labor and Employment State Law Watch: Key Changes & Trends
Below is a roundup of recent labor and employment law developments, regulatory updates, and notable workplace trends that may affect employers and human resources professionals, with a focus on compliance considerations, risk management, and emerging issues shaping the modern workplace. Maine Paid Family and Medical Leave Benefits Become Available - Effective May 2026 Maine is implementing a comprehensive paid family and medical leave (PFML) program, with employee benefits becoming available beginning in May 2026. The law establishes a statewide system allowing eligible employees to take up to 12 weeks of job-protected, paid leave in a benefit year for specified family, medical, and personal safety reasons. The program is administered by the Maine Department of Labor and funded through employer and employee payroll contributions, which began in January 2025. Eligibility is based on an employee’s earnings during the applicable base period (generally the first four of the five most recently completed calendar quarters), and the law applies broadly to nearly all Maine employers. Covered leave includes an employee’s own serious health condition, bonding with a new child, caring for a family member with a serious health condition, certain military-related needs, and “safe leave” for issues related to domestic violence, sexual assault, or stalking. The 12-week cap applies in the aggregate across all qualifying leave types. The law effectively creates a state-administered wage replacement and job protection framework, requiring employers to integrate PFML into existing leave policies and workforce planning. While the state administers benefits, employers remain responsible for payroll compliance, job restoration obligations, and coordination with other leave laws such as the federal Family and Medical Leave Act. Action Items: Employers should confirm compliance with payroll contribution requirements and ensure systems are properly configured. Leave policies should be updated to incorporate PFML rights and coordination with existing PTO and FMLA policies. Employers should also train HR personnel on eligibility determinations, job protection requirements, and claims coordination, and begin planning for staffing coverage during employee absences once benefits become available. New York Secure Choice Savings Program Registration Deadline - Effective May 15, 2026 New York is advancing its state-facilitated retirement initiative by imposing a firm deadline for mid-sized employers. Under the Secure Choice Savings Program, employers with 15 to 29 employees that do not sponsor a qualified retirement plan must register and participate in the program. The law effectively deputizes employers into facilitating employee retirement savings through payroll deductions, even where the employer has opted not to offer its own plan. While the program does not require employer contributions, it does require administrative coordination and ongoing compliance. Action Items: Employers in scope should promptly register for the program, ensure payroll systems can accommodate required deductions, and prepare employee communications. Employers that prefer greater plan flexibility may wish to consider implementing a private retirement plan instead. Utah Expanded Restrictions on Non-Compete Agreements - Effective May 6, 2026 Utah has enacted targeted legislation significantly limiting the enforceability of non-compete agreements in certain professional sectors. Health Care Workers (HB 270): Employers may no longer require licensed health care workers to enter into non-compete agreements. The law also prohibits non-solicitation provisions that would prevent these workers from informing patients of their current or future place of employment. This represents a notable shift toward prioritizing patient continuity of care over restrictive covenants. Veterinarians (SB 111): Similarly, Utah now restricts the use of non-competes for veterinarians. Such agreements are prohibited unless the veterinarian holds at least a 5% ownership interest in the business. The law reflects a policy judgment that mobility should be the default absent a meaningful ownership stake. Action Items: Employers should review and revise existing restrictive covenant agreements, particularly in the healthcare and veterinary sectors. Template agreements, onboarding materials, and exit procedures should be updated to ensure compliance with the new limitations. Washington Expanded Personnel File Access and Enforcement - Effective May 1, 2026 Washington has finalized amendments to its personnel file regulations through WAC 296-126-050, aligning agency rules with the broader statutory overhaul enacted in 2025. Under the updated framework, employers must provide employees — and certain former employees — with access to a significantly expanded set of personnel records within a defined timeframe. The rule now expressly defines “personnel file” to include not only core payroll and employment records, but also job applications, performance evaluations, disciplinary records (including closed matters), leave and accommodation records, and employment agreements, if maintained. The amendment imposes a 21-calendar-day deadline to provide access following a request and extends coverage to former employees for up to three years post-separation. Importantly, the rule incorporates a private right of action, allowing employees to pursue claims for noncompliance after providing notice. While much of the substantive expansion originates from the 2025 statute, the updated regulation solidifies these obligations and removes prior ambiguity around timing, scope, and enforcement. Action Items: Employers should review and update personnel file policies to reflect the expanded definition and ensure all responsive documents are consistently maintained and retrievable. Internal processes should be implemented to track and respond to requests within the 21-day deadline. Employers should also coordinate with HR and legal teams to identify privileged or sensitive materials before disclosure and assess potential litigation exposure associated with noncompliance.
May 1, 2026
Commercial Litigation
Virginia Moves to Further Restrict Non-Compete Agreements
Virginia continues to restrict non‑compete covenants. On April 13, 2026, Governor Spanberger signed Senate Bill 170 (“SB 170”) SB170 - 2026 Regular Session | LIS, into law. SB 170 will materially limit the enforceability of non‑compete agreements in Virginia moving forward. For years, Virginia courts enforced narrowly tailored non‑compete agreements, and employers adopted non-competes across industries as a risk‑management tool. As of July 1, 2026, any company or employer doing business in Virginia should reexamine the use of non- competes. In many cases, it will no longer make economic or operational sense to use non-compete provisions. Under amended Virginia Code § 40.1‑28.7:8, a non‑compete becomes unenforceable if an employee is terminated without cause and the employer has not provided severance or other disclosed monetary compensation. This rule applies to all employees, regardless of seniority, compensation level, or role. Importantly, the law will not be retroactive, meaning that non-compete agreements in effect, and unmodified, before July 1, 2026, will remain enforceable. For Virginia business owners and HR professionals, the most important takeaway is this: a non‑compete can now be perfectly drafted and still fail entirely based on how the employee’s departure is handled. If your termination process is misaligned with your employment agreements, you may lose the very protection you thought you had purchased. The first practical impact of SB 170 is that termination decisions are now legally intertwined with enforceability. Employers should no longer wait until an employee resigns or is separated to consider whether a non‑compete will achieve the employer’s goals. That analysis needs to happen at the front end, when the employer makes an offer to an employee. Employers should be asking themselves whether they are truly willing to commit, in advance, to paying severance to preserve post‑employment restrictions. Employers should also decide which employees actually present a competitive threat worth that cost, rather than automatically rolling non‑compete language into every offer letter. A second major shift is that SB 170 extends far beyond the “low‑wage employee” focus of earlier Virginia legislation. This law applies just as much to executives, senior managers, sales professionals, and business development employees as it does to entry‑level staff. Employers who assume their leadership team or top performers are insulated from these changes are mistaken. Virginia law no longer treats non‑competes as a default option even at the highest levels of an organization, and employers should revisit every existing assumption about who may be bound by post‑employment restrictions. Unfortunately, SB 170 also leaves critical questions, as key terms in the statute are undefined. For example, SB 170 does not explain what constitutes a “for cause” termination, nor does it specify how much severance—or what type of compensation—is sufficient to preserve enforcement. That ambiguity virtually guarantees litigation. Employers relying on vague termination language, inconsistent cause determinations, or ad hoc severance arrangements are setting themselves up for disputes they are unlikely to win, particularly given that the statute authorizes attorneys’ fees and penalties of up to $10,000 per violation. As a result of SB 170, non‑competes are no longer “free.” Employers who want them to remain enforceable must ensure compliance and planning in all hiring decisions and offer letters. Employers should clearly define what constitutes for cause termination events in employment agreements, commit to severance or other post‑separation compensation in advance, and disclose separation pay or compensation at the time the employee signs the employment agreement and non‑compete. In many cases, once these costs are identified, businesses will decide that a non‑compete no longer makes economic sense for a given role. Between now and July 1, 2026, Virginia employers should take several concrete steps. First, review employment agreements and non‑compete templates for compliance with SB 170. Existing agreements should be inventoried so decision-makers know which employees are subject to post‑employment restrictions and which agreements may be amended or renewed in a way that triggers SB 170. Second, Employers should tighten termination provisions in employment agreements. Consider clearly defining for cause termination events to align with actual business practices and goals. Employers should resist the temptation to automatically renew non‑competes without reevaluating whether they are necessary and sustainable under the new framework. Finally, HR, legal, and management teams should be aligned before any termination decision involving a non‑compete holder is made. If a company intends to rely on a non‑compete provision going forward, it must either have a well‑documented for‑cause termination or pay severance exactly as disclosed in the employment agreement. Deviating from that plan after the fact is likely to render the restriction unenforceable. Beginning July 1, 2026, offer letters and employment agreements must be drafted with SB 170 squarely in mind. Severance obligations should be explicit, termination standards should be unambiguous, and the agreement should integrate cleanly with any separation or release documents the company typically uses. Ambiguity will not benefit the employer under this statute. Finally, as an alternative to non-compete provisions, consider refocusing your post-employment protective strategies. Confidentiality agreements, trade secret protections, data access controls, and narrowly tailored non‑solicitation provisions often provide more reliable and less expensive protection than non‑competes under Virginia’s current legal landscape. For some employers, shifting focus to these tools will reduce litigation risk while still safeguarding key business interests. SB 170 continues Virginia’s clear policy trend favoring employee mobility and limiting post‑employment restraints. Non‑competes are not gone, but they are no longer the default solution they once were. Employers who proactively adjust their agreements and offboarding strategies can still protect themselves effectively. Those who ignore these changes risk expensive disputes, unenforceable contracts, and penalties that could have been avoided with thoughtful planning.
April 28, 2026
Labor and Employment
Substance Use Policies and Legal Cannabis: Balancing Compliance and Judgment in a Rapidly Shifting Landscape
For years, workplace substance use policies were easy to administer and easy to defend. A positive drug test typically ended the analysis. That is no longer true. Legal cannabis has introduced a level of complexity that many employers have not fully absorbed. The issue is not whether employers can maintain drug-free workplaces. They can. The issue is whether their policies reflect the legal distinctions that matter now and whether their decision-making will hold up under scrutiny. In 2026, the risk is not permissiveness. It is imprecision. The instinct to rely on federal law is understandable, but often misplaced. Cannabis remains illegal under the Controlled Substances Act. For certain employers, particularly those subject to the U.S. Department of Transportation, that fact continues to dictate outcomes. Safety-sensitive roles remain tightly regulated, and state law does not override those obligations. But for most employers, federal law does not answer the questions that actually arise in practice. State law increasingly does. The critical mistake is treating federal illegality as a blanket justification for broad policies or reflexive discipline. In many jurisdictions, that approach is no longer defensible. State law has shifted the analysis in a meaningful way. Across the country, legislatures have moved beyond legalization and into regulation of the employment relationship itself. In practical terms, that means employers are now operating within statutory frameworks that protect lawful, off-duty cannabis use and limit how employers can respond to it. The implications are significant. A positive test result, standing alone, is often no longer enough. Hiring decisions based on off-duty use are increasingly restricted. Policies that fail to distinguish between lawful conduct and workplace impairment are becoming harder to defend. This is not a marginal development. It is a structural change in how substance use issues are evaluated. The legal question is no longer “did the employee use cannabis.” Questioning whether an employee used cannabis is no longer valid. It is whether the employee was impaired at work and whether the employer can prove it. That distinction is where many policies break down. Traditional testing methods detect past use, not current impairment. As a result, employers who continue to rely exclusively on test results are often relying on evidence that does not answer the legally relevant question. State guidance is increasingly explicit on this point. Employers are expected to base decisions on observable, contemporaneous indicators of impairment that affect performance or safety. That requires more than suspicion and more than a laboratory result. It requires judgment, documentation, and consistency. Employers who have not trained managers to identify and articulate those indicators are, in effect, delegating critical legal decisions to individuals who are not equipped to make them. These issues rarely exist in isolation. Substance use questions often intersect with obligations under the Americans with Disabilities Act and parallel state laws. That is where the analysis becomes more nuanced. An employee’s conduct may be unprotected. The underlying condition may not be. Treating those as the same issue is a common and costly mistake. Medical cannabis adds another layer. While federal law does not require accommodation of marijuana use, state law may impose obligations that require a more individualized assessment. Employers who default to categorical rules risk overlooking when the law requires a closer look. This is an area where rigid policies tend to create, rather than reduce, exposure. Remote work has made outdated policies harder to defend. The shift to remote and hybrid work has exposed another weakness in legacy substance use policies. Rules that were drafted with a physical workplace in mind do not always translate well to a workforce that operates across locations and, in many cases, from home. The relevant inquiry is no longer where the employee is. It is whether the employee is fit for duty during working time. That sounds like a subtle distinction. It is not. Policies that focus on presence rather than performance are increasingly out of step with both how work is performed and how the law evaluates these issues. What a defensible approach actually looks like. Employers who are managing this well tend to have one thing in common. Their policies are not just updated. They are deliberate. They distinguish clearly between off-duty conduct and on-duty expectations. They define impairment in terms that can be observed and documented. They use testing in a way that aligns with legal limits rather than as a default response. And they train managers to make decisions that will withstand scrutiny after the fact, not just in the moment. Just as importantly, they recognize when a situation calls for legal analysis rather than a reflexive policy application. The takeaway. This is one of those areas where the law has moved faster than most workplace practices. Employers who continue to rely on familiar approaches are not necessarily being careless. But they are often operating with assumptions that no longer reflect the legal landscape. That is where risk accumulates. A well-drafted policy is part of the solution. It is not the entire solution. Alignment between policy, training, and decision-making is what ultimately determines whether an employer is protected or exposed. In a landscape that continues to evolve, getting that alignment right is not simply a compliance exercise. It is a strategic one.
April 24, 2026
Labor and Employment
Non-Discrimination Training: What In-House Counsel and HR Executives Need to Do Now
Non-discrimination training is no longer simply a best practice; it is increasingly a legal imperative. Across the country, states, and municipalities are imposing affirmative obligations on employers to implement, document, and periodically refresh training programs to prevent workplace discrimination and harassment. For companies operating in multiple jurisdictions, the array of requirements presents both compliance complexity and potential litigation risk. This advisory is directed to in-house legal counsel and human resources executives. Its purpose is straightforward: if your organization does not currently have a structured, recurring non-discrimination training program in place, you need one — and the time to act is now. The Legal Landscape: A Jurisdiction-by-Jurisdiction Overview The following summary reflects the current state of non-discrimination training requirements and formal recommendations across key jurisdictions. This is not an exhaustive survey, but it illustrates the breadth of regulatory attention employers face. California California imposes an affirmative duty on employers to take reasonable steps to prevent and promptly correct unlawful discrimination and harassment. While the statute does not establish a single universal periodic training mandate for all protected categories, it does require certain employers to provide regular sexual harassment training. Critically, California law also requires that any training program leading to employment be administered in a nondiscriminatory manner. Employers with California operations who are not already conducting regular, structured anti-discrimination training should treat this as a compliance gap requiring immediate correction. New York City The New York City Human Rights Commission recommends that employers implement antidiscrimination policies specifically addressing gender identity and expression and provide ongoing training for employees and agents. In the context of New York City’s historically aggressive enforcement posture—including substantial administrative penalties and individual liability exposure—these recommendations carry significant practical weight. In-house counsel should treat the commission’s guidance as a strong indicator of what regulators will scrutinize in the event of a complaint. Philadelphia The Philadelphia Fair Practices Ordinance guidance recommends that employers provide training to managers and employees before problems arise—particularly regarding gender identity and expression. This proactive framing is significant: Philadelphia regulators are signaling that reactive training (i.e., training only after a complaint is filed) is insufficient. Employers with Philadelphia operations should build training into their standard onboarding and periodic compliance calendars. San Francisco San Francisco imposes some of the most explicit affirmative obligations. The San Francisco Human Rights Commission requires all agencies, businesses, organizations, city contractors, and city departments to clearly communicate the city’s non-discrimination laws. It further recommends ongoing training for all management, employees, and volunteers on gender identity issues. Washington The Washington State Human Rights Commission recommends that employers educate all employees about non-discrimination policies, with particular attention to gender identity and expression. The commission further suggests that employers consider bringing in outside consultants to provide specialized training on gender identity sensitivity and awareness. For organizations with a significant Washington workforce, this consultant recommendation reflects regulatory awareness of the limits of generic training—and should prompt a review of whether your current training program is sufficiently tailored. District of Columbia The District of Columbia mandates compliance with non-discrimination laws and requires that employer programs contribute to the elimination of sex stereotyping and barriers to employment. While current guidance does not specify a universal periodic training interval for all employers, the District’s substantive mandate is clear, and employers operating there should not interpret the absence of a specific training schedule as an option to forgo training altogether. Why “Recommendations” Carry Real Legal Risk In-house and outside legal counsel sometimes draw a sharp distinction between legal requirements and regulatory recommendations, treating the latter as aspirational and optionally advisable. In the employment discrimination context, that distinction can be misleading and potentially costly. When a regulatory body with enforcement authority—such as the New York City Human Rights Commission, the Philadelphia Commission on Human Relations, or the San Francisco Human Rights Commission—issues guidance recommending employer training, that guidance typically reflects the standard against which the agency will measure employer conduct when adjudicating a complaint. An employer who ignored formal training guidance from an enforcement agency will face a significantly more difficult defense posture than one who followed it. Beyond agency enforcement, you should consider the evidentiary implications in civil litigation. Plaintiffs’ counsel regularly introduce evidence of an employer’s failure to conduct training, or to conduct it adequately, as evidence of a discriminatory or hostile work environment. Courts have consistently recognized training programs as a component of an employer’s affirmative defense in harassment cases. The absence of training, by contrast, can undermine an employer’s ability to invoke the Faragher-Ellerth defense or its state-law equivalents. A Practical Action Plan for Legal Counsel and HR The following steps represent a baseline compliance framework for organizations operating in one or more of the jurisdictions addressed above. Legal counsel and HR executives should assess their current programs against each item. Conduct a Jurisdictional Audit Map your workforce to the specific jurisdictions where employees work or are supervised. For each jurisdiction, identify applicable statutes, ordinances, and agency guidance. Pay particular attention to gender identity and expression requirements, which appear consistently across the surveyed jurisdictions. Establish a Training Calendar Several jurisdictions emphasize ongoing or periodic training—not one-time programs. Build a recurring training schedule into your compliance calendar, with defined intervals for managers and employees. Tie training events to onboarding, annual compliance cycles, and promotion into supervisory roles. Differentiate Manager and Employee Training Management-level training should address investigation obligations, reporting duties, and liability implications that differ from general employee instruction. Several jurisdictions specifically call out training for managers and agents, ensure your program reflects this distinction. Address Gender Identity and Expression Explicitly Every jurisdiction reviewed here specifically references gender identity and expression as a training focus. Ensure your curriculum addresses these protected categories with specificity, not merely as a line item in a broader protected-class list. Consider Specialized Consultants Washington State’s recommendation that employers engage outside consultants for gender identity training is worth noting for employers in any jurisdiction. Where internal training capacity is limited, or where a workforce has complex dynamics, outside expertise can improve both the quality and the credibility of your training program. Document Training records should be maintained systematically. Document attendance, training content, delivery dates, and any acknowledgment forms signed by participants. In the event of an administrative complaint or civil litigation, contemporaneous documentation of a robust training program is among the most valuable evidence an employer can produce. The Bottom Line Non-discrimination training requirements are not static, and the regulatory trend is clearly toward more specificity, more frequency, and more accountability—not less. Employers who treat training as a one-time orientation task, or who have allowed their programs to go stale, are accumulating legal exposure that is relatively inexpensive to address proactively and potentially very costly to address reactively. In-house counsel should elevate this issue with HR leadership and, where appropriate, the executive team. A well-designed, regularly delivered, and carefully documented training program is one of the most straightforward investments a company can make in its employment law compliance infrastructure—and one of the most defensible positions it can establish when regulatory or litigation exposure materializes. Employers should consult qualified employment counsel to evaluate compliance obligations applicable to their specific circumstances and jurisdictions.
April 21, 2026
Landlord Representation
Avoiding FLSA Pitfalls When Offering Onsite Housing and Rent Discounts
Onsite housing and rent discounts are common benefits in the property management industry, but federal wage-and-hour litigation makes clear that these arrangements can create significant Fair Labor Standards Act (FLSA) exposure if they are not carefully structured. The central question courts ask is not how the benefit is labeled, but whether onsite living primarily benefits the employer and whether it results in unpaid or underpaid work. When housing benefits blur into compensation or operational control, employers face heightened risk of overtime liability, off‑the‑clock claims, and retaliation allegations. Keep Housing Truly Voluntary Housing benefits pose the least FLSA risk when employees are free to live onsite by choice rather than necessity. Requiring onsite residence as a condition of hire or continued employment strongly suggests that the arrangement exists for the employer’s benefit. Employers should ensure that employment offers, policy documents, and actual practices make clear that living onsite is optional and that declining housing has no effect on wages, scheduling, or job security. Separate Housing Benefits from Compensation Rent discounts must remain clearly distinct from wages. When discounts vary by job title, seniority, or responsibility, courts are more likely to view the housing as compensation rather than a fringe benefit. Uniform discounts—or discounts that are demonstrably unrelated to performance or availability—are easier to defend. Employers should avoid structuring housing benefits in ways that resemble pay incentives or substitutes for overtime compensation. Avoid Creating Implicit On‑Call Obligations Employees who live onsite are often perceived—by management or by tenants—as naturally available after hours. Even absent a formal on-call policy, this expectation can give rise to compensable work time. Employers should clearly define work hours, limit after-hours requests, and avoid relying on employees’ proximity as a substitute for staffing. Where on-call work is required, it must be clearly documented and compensated in accordance with the FLSA. Use Arms-Length Leasing Practices Treating employee residents the same as non-employee tenants reinforces the non-compensatory nature of housing benefits. Requiring standard rental applications, background checks, and lease agreements supports an arms-length relationship and reduces the argument that housing is a condition or incident of employment. Special treatment, guaranteed units, or waived leasing requirements undermine that distinction. Pay for All Time Worked—Including After Hours After-hours responses to maintenance calls, tenant complaints, or emergencies frequently constitute compensable work time. Employers should implement reliable timekeeping procedures that allow employees to record this work and should train supervisors to avoid discouraging accurate reporting. Failure to capture and pay for after-hours work remains one of the most frequent sources of FLSA liability in the property management context. Evaluate Whether Rent Discounts Affect the Regular Rate When onsite living primarily benefits the employer—by ensuring immediate coverage, enhanced security, or continuous availability—the value of a rent discount may be required to be included in the regular rate of pay for overtime calculations. Employers should evaluate housing arrangements holistically and seek legal guidance before excluding rent discounts from overtime calculations, particularly where onsite residence is expected or strongly encouraged. Bottom Line Onsite housing can be a lawful and effective benefit, but only when it functions as a voluntary perk rather than an operational necessity. When housing is mandatory, compensation-linked, or tied to unpaid availability, FLSA risks increase substantially. Careful program design, clear policies, and consistent compensation practices are essential to minimizing wage-and-hour exposure.
April 20, 2026
Immigration Law
Understanding the EB 5 Program’s Critical Deadlines: What Investors Need to Know
The EB‑5 Immigrant Investor Program continues to be one of the most reliable pathways for families seeking permanent residency in the United States through investment. But with the passage of the EB‑5 Reform and Integrity Act (RIA), timing has become more important than ever. Two key dates—September 30, 2026, and September 30, 2027—now shape the strategic landscape for investors. Understanding the difference between these deadlines can help you protect your immigration process, secure your place in line, and avoid unnecessary risk. History of the EB‑5 Immigrant Investor Program The EB‑5 Immigrant Investor Program was created by Congress in 1990 to stimulate the U.S. economy through foreign investment and job creation, offering eligible investors and their families a path to permanent residency in exchange for investing in a new commercial enterprise that creates at least 10 full‑time U.S. jobs. In 1992, Congress introduced the Regional Center Program, allowing investors to participate in pooled, federally designated projects and count indirect job creation, which dramatically expanded the program’s reach and popularity. Over the decades, EB‑5 has undergone significant reforms, most notably the 2022 EB‑5 Reform and Integrity Act, which modernized oversight, increased investment thresholds, and introduced strong integrity measures. September 30, 2026, Grandfathering Deadline Under the RIA, any EB‑5 Regional Center petition filed on or before September 30, 2026, receives powerful “grandfathering” protection. This means: USCIS must continue processing your petition even if the EB‑5 Regional Center Program expires in the future Your case remains valid under the rules in place at the time of filing You are shielded from political uncertainty, program lapses, or regulatory changes that could otherwise disrupt your immigration process For many families, this date represents the safest window to file. Submitting an I‑526E petition before the 2026 deadline locks in today’s requirements and ensures your case cannot be altered by future program interruptions. September 30, 2027, Program Authorization Deadline The EB‑5 Regional Center Program is currently authorized through September 30, 2027. Investors may still file after the 2026 grandfathering deadline and before the 2027 program expiration. However, filings made between October 1, 2026, and September 30, 2027, do not receive the same guaranteed protection. If Congress fails to reauthorize the program after 2027: Petitions filed after September 30, 2026, may be paused or left unprocessed Investors could face delays, uncertainty, or the need to refile under new rules Investment thresholds or program requirements could change In short, you can file until 2027, but only filings made by 2026 are guaranteed protection. Why Investors Should Act Before 2026 Filing before the September 30, 2026, grandfathering deadline offers several advantages: Guaranteed case processing, regardless of future political developments Earlier priority dates, which matter for investors from backlogged countries Protection from future rule changes, including potential increases in investment amounts Reduced risk of delays caused by last‑minute filing surges Given the long‑term nature of the EB‑5 process, securing stability early is often the most prudent choice. Investment total increases and potential fee increase in 2027 January 1, 2027, is another critical date for potential EB-5 investors, as at that point, the USCIS can increase the investment totals under RIA. In addition, new fees and changes to the program are also possible. What This Means for You If you are considering the EB‑5 program, the next 18–24 months represent a uniquely important window. Filing before the 2026 deadline provides the strongest legal protections available under current law. Filing after that date remains possible but carries more uncertainty. Whether you are just beginning your EB‑5 journey or evaluating project options, now is the time to understand your timeline and prepare your strategy.
April 16, 2026
Labor and Employment
Jury Awards Employee $22.5 Million For Employer’s Improper Denial of Pregnancy Accommodation Request
When dealing with injured, sick, or pregnant employees, employers must exercise extreme diligence when denying an accommodation request; it is not as clear-cut as it might appear. The courts (and juries) tend to favor employees. Employers are simply playing with Fire with a capital “F” if an accommodation is denied without first consulting with experienced labor counsel. Take the Ohio state court case discussed below. On March 18, 2026, an Ohio jury awarded an employee $22.5 million dollars for her wrongful death claim against her employer for the loss of her child arising from the denial of her request for a pregnancy-related work accommodation. The jury found that the employer’s initial denial, of only two days, from her work-from-home request, was a substantial factor resulting in her baby’s death. The employee, a fairly new claims associate for a logistics company, was prescribed bed rest by her doctor after she suffered a serious complication related to her pregnancy; this was not in dispute. When she requested a temporary work-from-home accommodation, as was allowed to others, and provided supporting medical documentation, the company denied the request. Instead, it placed her on unpaid leave of absence. Because she and her family depended upon her paycheck and continued medical benefits, she was unwilling to forgo any paychecks and the employee quickly returned to in-office work. At the end of her second day, after the work-from home-denial, the employer reconsidered and said she could work from home. However, unfortunately, that night, after the second day of in-office work, she suffered severe medical complications resulting in her child being born too early; six hours after being born, her baby girl died. The employer’s counsel, we believe, of course, with hindsight, chose a disingenuous defense strategy that obviously offended and inflamed the jury, resulting in the huge verdict. Employer’s counsel conflated the employee having her mother drive her to work so she could ask her supervisor if she could work from home (which the supervisor said she could) and to pick up her computer so she could work at home, by saying she came to work and worked that day of her own volition. Then, when the human resources department overruled the supervisor and denied the employee’s request to work-from-home, it placed her on unpaid leave. When the employee, needing her pay and medical benefits, felt she had to come into work, the employer’s counsel faulted the employee for coming into the office rather than staying on unpaid leave. It became clear that the employer made an error and wrongfully considered the employee’s request as one for unpaid leave of absence. The baby’s estate filed a wrongful death lawsuit in February of 2023: Larkin v. Total Quality Logistics, LLC, (Hamilton County, Ohio). There is no reported decision, and the above alleged facts have been assembled from copies of the complaint and motions filed in the case; it will likely be appealed. We highlight this extreme case because it shows the real danger and consequences of the improper handling of an employee’s good-faith request for a reasonable work accommodation. If the employee suffers physical harm as a result of the denial, or even the unreasonable delay in approval, the employer may be on the hook not only for lost wages, but also the damages that flow from the denial/delay, including wrongful death, medical bills and costs, and pain and suffering. As this employee was relatively new and did not appear to even qualify for FMLA leave, which is unpaid leave, the employer was offering a leave of absence instead of allowing the employee to work from home. However, she had other causes of action under federal and state law. Under the Americans with Disability Act (ADA), 42 U.S.C. §12101 et seq., the Family Medical Leave Act (FMLA), 29 U.S.C. § 2601, et seq. and the Pregnant Workers Fairness Act (PWFA), 42 U.S.C. 2000gg et seq., covered employers are required to assess, through an interactive process with a covered employee, whether a suggested accommodation may allow an employee to fulfill their required job duties in a manner least burdensome on the business. To legally justify denying a reasonable accommodation request, an employer must demonstrate the accommodation would impose an undue hardship, meaning a substantial cost or difficulty, as determined by factors such as the nature and cost of the accommodation, the employer’s financial resources, and the impact on business operations. An employer does not have to create a new position for the employee, but where the disabled/pregnant employee could perform the essential functions of the job by working from home, an employer (especially a large employer, as this was) will have a difficult time justifying a denial. This case serves as a reminder that the stakes of these employment decisions are very high, and mistakes can lead to drastic consequences for both employee and employer. Employers should review employee job descriptions for accuracy and train supervisors on the accommodation process and what is required under the ADA, FMLA, and PWFA. As always, documentation is key. Experienced labor and employment counsel can help successfully navigate this process and should be contacted as soon as there is any discussion about the denial of an accommodation. A short phone call or two (or emails) with labor counsel before a denial could greatly increase the chances of avoiding liability, six figures of attorney’s fees, and serve to avoid harming an employee and his/her family.
April 16, 2026
Labor and Employment
Responsible AI in HR Starts with Transparency and Trust
Artificial intelligence (AI) is increasingly positioned as a tool to help businesses better understand workforce trends, predict retention risk, and improve performance. Yet from the employee perspective, these same tools can feel intrusive. AI systems often pull sensitive data directly from HRIS platforms including, personal information, performance metrics, engagement signals, communications, and behavioral indicators. Without clear communication, employees may be left wondering what data is being collected, how it is being interpreted, and whether it could be used against them. In this context, transparency is essential: employees should understand not only what data is gathered, but why it is necessary and how it benefits both the business and the workforce. Employers, meanwhile, face their own set of risks. Many AI-driven workforce tools rely on third-party vendors, raising important questions about data ownership, retention, and security. Is employee data being stored indefinitely? Is it being used to train models beyond the scope of the employer’s relationship with the vendor? These concerns make careful contract review critical, particularly around data usage rights, confidentiality, and security safeguards. A practical guiding principle is data minimization: if data is not essential to achieving a clear business purpose, it should not be collected. Excessive data collection can increase legal and regulatory exposure without delivering proportional value. Ultimately, the issue of AI-driven employee monitoring extends beyond compliance to governance, risk management, and organizational trust. When employees believe they are being surveilled without sufficient guardrails and transparency, morale can erode and retention risks can grow. Businesses that use AI responsibly limit data collection and communicate openly with employees are better positioned to maintain employee confidence and foster a culture where technology supports, rather than undermines the workforce.
April 16, 2026
Labor and Employment
How to Use Contractors and Gig Workers Safely: Navigating DOL Classification Standards in a Changing Enforcement Climate
The use of independent contractors and gig workers remains an attractive and, in many industries, essential component of modern workforce strategy. Flexibility, cost control, and scalability continue to drive businesses toward non-employee labor models. At the same time, the legal framework governing worker classification has become more exacting, more nuanced, and more actively enforced. Misclassification is no longer a technical compliance issue. It is a material risk with significant financial and reputational consequences. Understanding how to engage contractors safely requires more than a surface-level application of outdated tests. It requires a disciplined, fact-specific analysis grounded in current U.S. Department of Labor standards and enforcement priorities. The DOL’s Economic Reality Test: Substance Over Form The governing framework under the Fair Labor Standards Act is the economic reality test, as refined by recent Department of Labor rulemaking. The inquiry is not determined by contractual labels or the parties’ stated intentions. It turns on whether, as a matter of economic reality, the worker is dependent on the business or is operating an independent enterprise. While the analysis remains holistic, several core factors consistently guide the determination. The degree of control exercised by the company is often central. Where a business dictates how, when, and where work is performed, classification as an independent contractor becomes increasingly difficult to sustain. Equally significant is the worker’s opportunity for profit or loss based on managerial skill. Independent contractors typically can increase earnings through initiative, investment, or business judgment. Workers paid on a fixed or standardized basis, without meaningful entrepreneurial discretion, present heightened risk. The permanence of the relationship also carries weight. Open-ended or indefinite engagements resemble traditional employment relationships, particularly where the worker is integrated into ongoing operations. Investment in tools and resources, the degree of skill required, and whether the work is integral to the business’s core function all further inform the analysis. No single factor is dispositive. However, in practice, patterns emerge. Where multiple factors point toward economic dependence, the likelihood of misclassification findings increases substantially. Why Misclassification Risk Is Rising Recent enforcement trends reflect a clear and consistent priority. Federal and state agencies are increasingly aligned in scrutinizing contractor arrangements, and plaintiffs’ counsel continue to leverage classification issues as a gateway to broader wage-and-hour claims. Misclassification rarely exists in isolation. It often gives rise to allegations involving unpaid overtime, minimum wage violations, failure to provide benefits, and tax exposure. In collective or class contexts, liability can scale rapidly. In addition, state law frameworks, including ABC-style tests in certain jurisdictions, impose stricter standards than federal law. A classification that may be defensible under federal guidance can nonetheless fail under applicable state requirements. This layered regulatory environment requires a coordinated approach. A one-size-fits-all model is no longer viable for employers operating across multiple jurisdictions. Common Missteps That Create Exposure A recurring issue in contractor engagements is the reliance on form over function. Well-drafted independent contractor agreements, standing alone, do not establish compliance. Agencies and courts consistently look beyond contractual language to the realities of the working relationship. Similarly, classification decisions driven by business preference rather than legal analysis create significant exposure. The fact that a contractor model is operationally convenient, or industry common does not insulate it from challenge. Another frequent concern arises where contractors are treated, in practice, like employees. Requiring adherence to internal policies designed for employees, imposing rigid schedules, or integrating contractors into core teams without distinction undermines the independence necessary to support proper classification. Finally, the use of long-term, exclusive contractor relationships presents elevated risk, particularly where the individual does not meaningfully market services to other clients. Practical Strategies for Structuring Compliant Relationships Mitigating classification risk requires alignment between documentation and day-to-day operations. Engagements should be structured to reflect genuine independence. This includes defining project-based scopes of work, preserving contractor discretion in how services are performed, and avoiding unnecessary control over scheduling or methods. Compensation models should, where appropriate, allow for variation based on performance, efficiency, or business judgment, rather than mirroring employee wage structures. Businesses should also evaluate whether contractors are making meaningful investments in their own operations, including tools, equipment, or business infrastructure. Regular audits are essential. Classification determinations made at the outset of a relationship may become outdated as the engagement evolves. Periodic review allows employers to identify and address risks before they mature into liabilities. Importantly, compliance strategies must account for both federal and state standards. Where stricter state tests apply, those frameworks should govern the analysis. The Strategic Imperative The continued expansion of the gig economy ensures that contractor relationships will remain a focal point of regulatory and litigation activity. Employers who approach classification as a static, check-the-box exercise are increasingly vulnerable. Those who treat it as an ongoing, strategic consideration are better positioned to manage risk effectively. The distinction between an employee and an independent contractor is, at its core, a legal conclusion drawn from operational realities. Aligning those realities with governing standards requires careful planning and informed judgment. For organizations seeking to preserve flexibility while minimizing exposure, experienced counsel is not simply beneficial; it is essential. Proactive structuring, informed by current enforcement priorities, remains the most reliable way to avoid costly disputes and to ensure that workforce models withstand scrutiny when it matters most.
April 10, 2026
Labor and Employment
From Allegations to Adjudication! Court Strips Lively–Baldoni Case to a Retaliation Reckoning
The April 2, 2026, decision in the dispute between Blake Lively and Justin Baldoni is best understood as a post discovery narrowing that leaves the case both smaller and more legally coherent. Judge Lewis Liman granted the defendants’ motion for judgment on the pleadings and motion for summary judgment in substantial part, dismissing most of the claims and allowing only a limited set to proceed. This was not an early-stage plausibility ruling. It was a merits-driven assessment of what the record can actually support. What remains is precise. Lively’s retaliation claim under the California Fair Employment and Housing Act proceeds against the production entities. Her aiding and abetting retaliation claim proceeds against the public relations firm. Her breach of contract claim proceeds against the entity that signed the Contract Rider Agreement. The rest of the case, including Title VII, Labor Code retaliation, and the common law theories, has been dismissed. The contractual analysis is where the opinion does some of its most important work, and it explains why the case looks the way it does now. The court treated two agreements very differently, and the reason is not subtle. One was never signed. One was. The Actor Loanout Agreement failed as a matter of contract formation. The court focused on express language that made execution a condition of any obligation. The agreement provided that the company’s obligations were conditioned on “receipt of executed copies of this Agreement signed by Lender and Artist.” It also required execution of the inducement. Those provisions were not treated as boilerplate. They were treated as dispositive. Lively never signed. The parties continued to negotiate material terms, including the very provision addressing sexual harassment and remedies. On those facts, the court held there was no binding contract to enforce. That conclusion carries broader significance than this case. The court rejected the idea that substantial performance can override an express intent not to be bound absent execution. Filming occurred. Compensation was paid. Negotiations continued. None of that altered the contractual analysis. Where the parties clearly reserve the right not to be bound until signature, courts will enforce that reservation. In practical terms, the court treated the ALA as exactly what it was in the record. An unconsummated negotiation. The Contract Rider Agreement, by contrast, is the rare piece of paper in this record that does exactly what lawyers expect a contract to do. It was signed. It contains operative language. And that language goes directly to the theory that survived. Paragraph 10 provides that there shall be “no retaliation of any kind” against Lively for raising concerns, including retaliation “during publicity and promotional work.” That provision is not abstract. It is tailored to the very conduct Lively alleges occurred after she raised complaints. The court’s willingness to let the contract claim proceed flows directly from that text. The difference in treatment between the ALA and the CRA is therefore not a matter of judicial preference. It is a straightforward application of contract law. An unsigned agreement with disputed terms does not bind. A signed agreement with a clear anti-retaliation clause does. The retaliation analysis follows a similar pattern of doctrinal precision. Several claims failed because they required an employment relationship that the court concluded was not present. That determination eliminated the Title VII and Labor Code theories. But FEHA retaliation is written differently. It protects any person who engages in protected activity. That statutory distinction is what allows the claim to proceed. The court also declined to treat the alleged conduct as too remote from California to support a FEHA claim. It found a sufficient connection based on allegations that California-based actors directed and executed the challenged conduct. That holding keeps California law in play and preserves a framework that is often broader than its federal counterpart. The most closely watched aspect of the case, the alleged reputational campaign, survives but only in the narrow sense that matters at this stage. The court did not find that retaliation occurred. It held that a reasonable jury could find it occurred. It also held that the defendants’ explanation that they were protecting their reputations and the film does not resolve the issue as a matter of law. Competing explanations are for a jury where the record supports them. That brings us to the question that tends to get lost in the headlines. What about Baldoni himself. Is he out? The answer is no, but his exposure is materially reduced. Many of the claims asserted directly against him, including harassment and certain statutory claims, have been dismissed. However, he remains a defendant to the extent he is part of the group alleged to have engaged in retaliatory conduct and conspiracy. The case against him now lives or dies on the retaliation theory rather than on the broader set of claims originally pleaded. The same narrowing applies across the board. Wayfarer is no longer in the contract case because it was not a party to the agreements and the argument was not preserved. But it remains in on retaliation. The public relations entity remains in on aiding and abetting. The film specific entity remains in on both retaliation and contract. The cast of defendants is still present. The script they are operating under is simply much tighter. What the court has done is not to decide who is right. It has decided what can be decided later. The case now turns on a set of familiar but demanding questions. Whether Lively engaged in protected activity. Whether she experienced adverse action after doing so. Whether that action was motivated by retaliation. And whether it breached a written promise prohibiting retaliation. For a legal audience, the lesson is as straightforward as the holding. Contracts matter in the form they are actually executed, not the form in which they are discussed. Statutes matter in the words they actually use, not the words we assume they contain. And at summary judgment, claims survive not because they are compelling in the abstract, but because the record permits a reasonable jury to accept them. The case that remains is narrower. It is also more dangerous in a familiar way. Retaliation claims tend to turn on motive and sequence rather than a single discrete act. Those are questions that courts are often reluctant to resolve as a matter of law. That is why, even after a ruling that eliminates most of the complaint, this litigation is far from over.
April 3, 2026
Labor and Employment
Spring Cleaning Your Employee Files
Spring inspires a certain kind of ambition. Closets are reorganized. Garages are reclaimed. Kitchen drawers finally surrender their mysterious collections of takeout menus and expired soy sauce packets. Employers would do well to apply the same seasonal energy to another space that tends to accumulate clutter quietly over time: employee records. Personnel files have a remarkable way of expanding without supervision. A performance note here, an email printed there, a manager’s handwritten reminder tucked into a folder for “later.” Years later, the file resembles less of a clean employment record and more of a historical archive. Unfortunately, when a dispute arises, those archives tend to become exhibits. Spring is a useful moment for employers to step back and examine how employee records are organized, what should be retained, and what should not be living in the same file in the first place. A thoughtful approach to data retention is not just good housekeeping, it is a meaningful risk management strategy. One of the most common misconceptions about employee files is that everything related to an employee should live in one folder. Legally speaking, that approach creates more problems than it solves. Most employers should maintain several distinct categories of employee records, each with its own purpose and level of confidentiality. The traditional personnel file is the record most employers think of first. It typically contains materials related to hiring, compensation, performance evaluations, promotions, disciplinary actions, and other employment decisions. In short, it tells the professional story of the employee’s relationship with the company. But certain types of information should not live in that same file. Medical information is a prime example. Documents related to medical conditions, disability accommodations, and medical certifications for leave must be maintained separately and treated as confidential under federal law, including the Americans with Disabilities Act. Keeping medical records apart from the general personnel file helps limit access and ensures managers reviewing performance information are not inadvertently exposed to protected medical details. Immigration related documents are another category that deserve their own home. Form I-9s, which verify employment eligibility, should be stored in a separate I-9 file or electronic system rather than within the personnel file itself. There is a practical legal reason for this. If the Department of Homeland Security or another agency conducts an I-9 audit, employers are required to produce those forms. Housing them separately allows employers to provide the required documents quickly without turning over the entire personnel file or exposing unrelated, potentially sensitive employment records. A similar logic applies to background check documentation. Reports obtained under the Fair Credit Reporting Act often contain personal information that should be maintained separately from routine personnel materials and handled in accordance with the statute’s confidentiality requirements. If this sounds like a lot of folders, it is. But the structure matters. Separating records by category is not about bureaucracy. It is about protecting sensitive information, limiting unnecessary disclosure, and ensuring compliance with multiple overlapping employment laws. Consistency is equally important. Employers should aim for uniform recordkeeping practices across the workforce. Documents that are routinely created, such as performance evaluations or written warnings, should appear consistently in employee files. Sporadic documentation invites uncomfortable questions later about whether records were selectively created or preserved. This becomes especially relevant in litigation. When employee files contain scattered notes, informal comments, or partial documentation, they often raise more questions than they answer. The absence of records can be just as problematic. If an employer asserts that an employee struggled with performance but the file contains no documentation of those concerns, that gap becomes difficult to explain. Of course, spring cleaning does not mean shredding everything in sight. Employers must comply with a bevy of federal and state record retention requirements. Under the Fair Labor Standards Act, for example, payroll records must generally be retained for at least three years. The Equal Employment Opportunity Commission requires employers to preserve personnel and employment records for at least one year, and longer if a charge of discrimination has been filed. Form I-9s must be retained for a specific period tied to the employee’s date of hire and separation. Benefit plan records, tax documents, and workplace injury reports often carry their own retention timelines as well. Because the rules vary, the most effective approach is to adopt a written document retention policy that clearly identifies which records must be maintained and for how long. A well-designed policy helps HR teams manage records consistently and prevents the ad hoc cleanups that tend to occur when file cabinets become too full. Those spontaneous cleanups can create real problems. Once an employer becomes aware of a dispute, investigation, or potential claim, the organization has a legal obligation to preserve relevant records. Destroying documents after that point, even if it would normally be permitted under a retention policy, can lead to allegations of evidence destruction. Courts tend to take a dim view of that kind of spring cleaning. Modern technology has also complicated the recordkeeping landscape. Employee information now lives in HR platforms, email systems, messaging tools, shared drives, and occasionally personal devices. A comprehensive retention strategy should account for both physical and electronic records and ensure they are governed by consistent rules. At the same time, employers should resist the temptation to keep everything forever. Over retention can create its own problems. The more documents an organization keeps, the more it may have to search, review, and produce in the event of litigation or an investigation. In other words, the goal is not hoarding. It is curation. Spring cleaning employee files may not provide the immediate satisfaction of finally conquering the garage, but it offers something arguably more valuable: clarity. Organized, compliant records help employers make better decisions, respond confidently to audits or claims, and protect the confidentiality of sensitive information. And unlike that kitchen drawer full of soy sauce packets, an orderly recordkeeping system rarely produces unpleasant surprises later.
April 1, 2026
Labor and Employment
Virginia Joins the National Trend Limiting Noncompete Agreements
Employers who do business in Virginia and have employees who work in that jurisdiction need to be aware of a law which will soon be enacted limiting the use of noncompete agreements. It is no secret that there is a growing national trend towards limiting the use and enforceability of noncompete agreements, predicated upon what legislatures and courts deem to be unfair restrictions on employee mobility and freedom of competition in the marketplace. Thus, on March 4, 2026, the Virginia legislature approved Senate Bill 170, which contains a detailed regimen of restrictions imposed on employers who have employees in the Commonwealth. So, in general, what does this piece of legislation do, which is expected to be signed into law by Governor Spanberger? Well, there are a number of detailed nuances to the legislation, and they are too numerous to be enumerated here, but the following are merely highlights of the newly anticipated restrictive law: The new law, if enacted as expected, would prohibit noncompetes for any employee who is laid off without severance benefits or other monetary payment, unless such employee is terminated for “cause” (both “severance benefits” and “cause” are undefined in the law) The new law would become effective for all noncompete provisions entered into, amended, or renewed AFTER July 1, 2026, but significantly does not apply retroactively to any agreement entered into prior to July 1, 2026 Interestingly, the law applies to all employees, irrespective of their rank or station in the company, even those in senior management positions The law does not prohibit non-solicitation of customers or employees Employers who violate the provisions of the law face the possibility of being sued in a private right of action where the claimant can obtain injunctive relief, liquidated damages, backpay, and counsel fees Additionally, under the law, the Virginia Commissioner of Labor and Industry may impose a civil monetary penalty of $10,000 for each violation Employers doing business and employing individuals in Virginia need to closely monitor developments with the new law, and if enacted as expected, be prepared to carefully draft noncompete provisions in accordance with what appears to be a very restrictive legislative scheme. Because there are many open questions surrounding the details of the new law, it is strongly advised to seek qualified employment counsel when contemplating the use of noncompete provisions in the Commonwealth of Virginia.
April 1, 2026
Labor and Employment
JFK–Bessette: When an Employee Becomes the Headline—How Much Control Do Employers Have Over Public Image?
Ryan Murphy’s dramatization of the relationship between Carolyn Bessette Kennedy and John F. Kennedy Jr. offers an extreme illustration of a workplace issue that employers increasingly face—when an employee’s personal profile begins to impact the brand he or she represents. Long before becoming part of one of the most scrutinized couples of the 1990s, Bessette worked in public relations at Calvin Klein, managing celebrity relationships and helping shape the company’s public image. But as media attention surrounding her relationship with Kennedy intensified, the publicity began to compete with the brand she was responsible for promoting, creating a distraction from the very image she had been hired to help manage. While that story took place decades before social media, it highlights a question employers continue grappling with today: how much control does an employer have over an employee’s public image when it affects the company’s reputation? The answer, in most cases, is that employers have some ability to regulate conduct that legitimately affects the business, but that authority is limited. Employers, understandably, care about how their workforce reflects on the organization. In roles such as public relations, marketing, executive leadership, and client-facing positions, employees function as ambassadors for the company’s brand. When public attention turns toward an employee, whether by media coverage or viral online exposure, that attention can easily spill over onto the employer. That concern is no longer confined to celebrities or high-profile executives. In the digital era, the separation between employees’ professional and personal lives has narrowed dramatically. Social media allows posts, comments, and photographs to circulate widely within hours, and it often makes it easy to connect individuals to their employers. As a result, situations that once affected only public figures can now involve employees at every level of an organization. To manage the negative side of that risk, many companies implement policies addressing employee conduct outside the workplace. These policies include social media guidelines governing how employees reference their employer online and restrictions on public statements that could be perceived as representing the company, and confidentiality provisions protecting internal information. When employees serve as public-facing representatives of the brand, employment agreements may also include reputation or morality clauses allowing employers to respond when an employee’s conduct creates reputational risk. Nonetheless, employers’ authority to control employee conduct has limits. Even when reputational concerns are legitimate, companies must balance their interests against employee rights. For example, some states protect lawful off-duty conduct, which could limit an employer’s ability to discipline employees for activities outside the workplace that have no connection to their jobs. Similarly, under federal labor law, employees have the right to discuss workplace conditions, publicly in some instances, if those discussions constitute protected concerted activity. In addition, employers also must be mindful of discrimination risks. If workplace image policies are enforced against some employees but not others, those decisions can expose the employer to claims of disparate treatment. Consistency in enforcement is therefore critical when reputational concerns arise. The lesson for employers is not that they should attempt to control employees’ personal lives. Rather, employers should focus on clearly defining expectations that relate to legitimate business interests. Well-drafted social media policies, consistent enforcement practices, and thoughtful training for managers can help organizations navigate situations where an employee’s public image intersects with the company’s reputation.
March 30, 2026
Labor and Employment
Continued Disparities in Joint-Employer Status Laws
Updated on April 23, 2026 On April 22, 2026, the U.S. Department of Labor announced a plan to create one nationwide standard from multiple federal laws for when two or more employers can be jointly liable for workplace offenses. The proposed rule, as published in the Federal Register, would eliminate the current disparate treatment of joint employer status under various federal laws, including the Fair Labor Standards Act, the Family and Medical Leave Act, and the Migrant and Seasonal Agricultural Worker Protection Act. The proposed singular rule would reduce the previous “economic realities” tests to just four criteria: (a) the power to hire or fire, (b) the ability to supervise or control a worker's schedule, (c) the power to determine the rate and method of payment to the worker, and (d) maintaining a worker's employment records. The new rule would not eliminate the disparities present in state laws discussed in the article below but would provide important clarification and simplification of federal laws on joint employer status. The new rule could also provide more guidance which may potentially resolve conflicting rulings in federal courts. Federal law provides baseline joint‑employer standards under the National Labor Relations Act (as interpreted and enforced by the National Labor Relations Board) and the Fair Labor Standards Act (as interpreted and enforced by the U.S. Department of Labor). States, however, have increasingly adopted their own joint‑employer rules, often broader and more worker‑protective. The result is an assortment of rules in which a business may be a joint-employer under state law but not under federal law or potentially even under the Fair Labor Standards Act but not the National Labor Relations Act. National Labor Relations Act and National Labor Relations Board: Current Law The operative rule is the 2020 Trump-era “direct and immediate control” standard. The following is a summary of the key developments that led to the current framework. The 2020 standard established that to be deemed a joint employer, an entity must exercise "substantial direct and immediate control" over essential terms and conditions of employment. Workers were required to demonstrate this level of control by another entity over another entity's employees. On October 27, 2023, the NLRB published a final rule that rescinded and replaced the 2020 rule. The proposed new rule would have dramatically broadened the standard by establishing that two or more entities may be considered joint employers if each: Has an employment relationship with the employees; and Shares or codetermines one or more of the employees' essential terms and conditions of employment. On March 8, 2024, Texas federal judge J. Campbell Barker vacated the 2023 rule, holding that the test was unlawfully broad, as it would have allowed an entity to be deemed a joint employer with or without any exercise of meaningful control over the relevant employees' terms and conditions of employment. As the 2023 rule never took effect, the prior 2020 rule remained the operative rule. The NLRB formalized this by revising its regulations, effective February 27, 2026, to replace the vacated regulatory text with the 2020 rule. The NLRB had filed an appeal of the Texas court's decision in 2024, but given the change in administration and the formal February 2026 withdrawal of the 2023 rule, the broader Biden-era standard appears definitively off the table for now. Fair Labor Standards Act and U.S. Department of Labor: Current Law Similar “back and forth” changes have occurred in the U.S. Department of Labor’s joint-employer criteria. The DOL’s current joint-employer criteria under the Fair Labor Standards Act (FLSA) and other federal employment laws hinge not only on whether two or more businesses, through association, share "substantial direct and immediate control" over an employee's essential terms and conditions—specifically hiring, firing, discipline, supervision, and pay—but also on the “economic realities” of the relationship of each employer to the employees. The current DOL focus is on whether a business "meaningfully affects" a worker's employment. Key Aspects of Joint Employment (FLSA/DOL) Influence Over Essential Terms and Conditions: Includes hiring, firing, discipline, supervision, and pay. Horizontal Joint Employment: Exists when an employee works for two separate employers who are sufficiently associated (e.g., shared employees, common management). Hours worked for both must be combined for overtime pay. Vertical Joint Employment: Occurs when an employee of an intermediary (like a staffing agency) is economically dependent on another employer (the client). Key Considerations Control vs. Association: The test is not just about ownership but whether they share control. Overtime Liability: Joint employers are jointly responsible for compliance, including overtime, for all hours worked. Key Aspects of DOL Joint-Employer Criteria Control and Association: A joint employment relationship exists when employers share control over essential terms and conditions of employment, such as hiring, firing, payroll, and supervision. Totality of the Circumstances: No single factor determines the status; it is based on the entire relationship, including shared facilities, overlapping management, and interconnected business operations. Shared Personnel: An employee works for two different entities, such as two restaurant locations, in the same workweek. Coordinated Operations: Employers share managers, a kitchen, or other resources. Economic Reality: The worker is economically dependent on both potential joint employers. This pre-2020 FLSA standard now governs wage-and-hour joint-employer liability, particularly for franchisors, staffing agencies, and companies using third-party contractors. Different Applications of the FLSA by Different Courts In 2024, the Supreme Court’s decision in Loper Bright Enterprises v. Raimundo overturned the legal doctrine known as Chevron deference, meaning courts now exercise independent judgment in interpreting statutes and do not defer to agency interpretations simply because a statute is ambiguous. However, prior cases upholding specific agency actions remain good law. As a result, while DOL regulations and guidance remain influential, federal courts now independently interpret the FLSA’s joint-employer provisions, focusing on statutory text and the economic realities of the employment relationship. Consequently, employers in different federal court jurisdictions may be subject to different joint-employer criteria. Patchwork of Differing State Laws State joint-employer laws and regulations vary substantially across states. Some states coincide with or expressly follow federal standard. Other states have adopted independent and more expansive tests, with the result that some employers that are not joint employers under one or both federal laws are joint employers under one or more state laws. The broader state tests include criteria such as: Economic dependence frameworks Statutory expansions targeting industries such as franchising or subcontracting The result is a fragmented legal landscape where joint‑employer status depends heavily on jurisdiction, industry, and the specific statute(s) that apply to the employer’s operations. Industry‑Specific Joint‑Employer Rules Some states impose joint‑employer obligations in targeted sectors: Construction (e.g., wage theft statutes making general contractors liable for subcontractor wages) Janitorial services (e.g., California’s Property Service Workers Protection Act) Agriculture (e.g., state migrant worker protections) Fast food (e.g., California’s recent reforms) Federal law does not have comparable industry‑specific joint‑employer statutes. Key Practical Takeaways Under the NLRA: The narrower 2020 standard applies, requiring actual, substantial, and direct control over employment terms to establish joint-employer status. Under the FLSA: A similar pre-2020 standard governs, but joint-employer liability for wage-and-hour purposes may be more easily established based on potential or indirect control, considering a variety of relevant facts. Businesses that utilize independent contractors, including franchise business models, should remain wary of these evolving standards. This is an area of active legal and regulatory change, so consulting an employment attorney for advice specific to your situation is strongly recommended, along with regular review of federal and state laws that may apply to your operations.
March 24, 2026
Labor and Employment
Safeguarding Your Business in an Era of Restrictive Covenant Scrutiny
For years, businesses have relied on non-competes and broad confidentiality agreements to protect themselves when employees leave. That approach is changing. Courts and regulators are increasingly wary of restrictions that limit employee mobility, as reflected in the last several years of activity by the Federal Trade Commission, the National Labor Relations Board, and state legislatures. This shift, however, is not anti‑business. It is aimed at curbing overbroad restraints that prevent former employees from earning a living. In many respects, it reflects a return to the true purpose of restrictive covenants: protecting legitimate business interests and competitive advantage. As a result, employers’ litigation focus is moving away from preventing former employees from simply joining competitors and toward examining whether company information was improperly taken or used. In practical terms, protecting the business now centers on protecting its data. Importantly, restrictive covenants are not dead. Properly tailored covenants remain enforceable in most jurisdictions and continue to play a meaningful role in safeguarding legitimate interests. Courts are far more likely to enforce restrictions that are narrowly drafted, periodically reviewed, and tied to an employee’s role and access to sensitive information. Employers should therefore refine—not abandon—restrictive covenants to ensure they can withstand scrutiny. Within this framework, data protection operates as a supplement to, not a replacement for, other restrictive covenants, providing an added safeguard if contractual restrictions are narrowed or fail. Most businesses are not harmed simply because a former employee takes a new job. Rather, the harm occurs when something leaves with that employee: customer lists, pricing strategies, internal processes, technical know‑how, reports, or analytics. To qualify for protection, this information must be valuable, not generally known, and subject to reasonable safeguards. Modern disputes increasingly turn on trade secret principles under the Defend Trade Secrets Act and comparable state laws. Courts focus less on contractual labels and more on whether the company actually treated the information as valuable. Effective protection requires more than labeling information “confidential.” At hiring, employees should be clearly informed about the information they will access and the limits on its use. At departure, employers should require exit certifications confirming that devices were returned, company files were removed from personal accounts, and no information was retained or forwarded. This process alone prevents many disputes and creates a clear record if concerns later arise, allowing employers to investigate based on objective representations rather than speculation. During employment, employers increasingly rely on monitoring tools that provide objective evidence of whether files were accessed, transferred, or retained improperly. Courts are generally more receptive to such technical proof than to assumptions based solely on an employee joining a competitor. The takeaway is straightforward. Courts are becoming less concerned with where a former employee works and far more concerned with whether protected information was misused. Businesses best positioned going forward will not be those with the longest non‑compete agreements, but those that can show they identified their critical information and consistently safeguarded it.
February 27, 2026
Labor and Employment
Employer Use of AI Wage-Setting Tools: Risks, Bias Concerns, and Employer Responsibilities
As employers increasingly adopt artificial intelligence to streamline compensation decisions, the promise of efficiency must be carefully balanced against significant legal and ethical risks. AI‑driven wage‑setting tools can help analyze market data, standardize pay ranges, and reduce human error, but only when the underlying data and algorithms are reliable. When these systems rely on incomplete, outdated, or biased inputs, they may unintentionally replicate or even worsen existing disparities. For example, algorithms trained on historical pay data can reinforce gender‑ or race‑based wage gaps, regardless of an employer’s intent. Lawmakers are also signaling that wage‑setting algorithms will not operate in a regulatory vacuum. Over the last year, legislators in California, Colorado, Georgia, and Illinois have introduced bills to curb discriminatory or opaque uses of AI in compensation decisions. Several states, including Georgia, Illinois, Maryland, and New York, are renewing or expanding these efforts in 2026. Many of these proposals reflect a growing concern that businesses may rely on personal data unrelated to job duties – such as biometric characteristics, behavioral patterns, or even parental status – to generate so‑called “optimized” pay rates. Employers should remember that AI does not shield them from longstanding legal obligations. Anti‑discrimination statutes, equal pay laws, and wage‑and‑hour requirements apply regardless of whether a human or an algorithm drives the recommendation. With state activity accelerating, employers should take a proactive approach to assessing their exposure and strengthening internal controls over wage decisions. Regular pay‑equity audits, careful review of the data inputs and assumptions behind AI tools, and meaningful human involvement in all compensation decisions are essential steps to ensure employers can meet emerging legal standards and maintain fair, compliant pay practices. By reinforcing these safeguards now, organizations will be better positioned to adapt as regulatory requirements continue to evolve.
February 23, 2026
Labor and Employment
A Practical Guide to Collective Bargaining: Strategies, Obligations, and Best Practices for 2026
Collective bargaining remains one of the most important processes governing labor–management relations in the United States. For organizations preparing for negotiations in 2026 and beyond, the key to success is understanding not only the legal framework, but also the strategy, preparation, and interpersonal dynamics involved. This outline walks through the essentials of collective bargaining under the National Labor Relations Act (NLRA), along with practical techniques, negotiation tactics, and preparation tips drawn from decades of labor‑relations practice. What Is Collective Bargaining? Collective bargaining is the structured process by which an employer and a union negotiate wages, hours, benefits, and working conditions of employees represented by the union. The outcome is a Collective Bargaining Agreement (CBA), a binding contract that sets those terms for a defined period. The process is regulated by the National Labor Relations Act, which preempts state labor laws for private employers. Though every negotiation is unique, all follow a similar progression. Collective bargaining typically unfolds in several key phases: Preparation - Both sides analyze the existing CBA, gather economic and operational data, and develop proposals. Negotiation - Each party presents its proposals, discusses priorities, and responds to the other side’s demands. Agreement - Once consensus is reached, the parties draft a written agreement or memorandum of understanding. Ratification - The union’s membership votes on the agreement, and the employer formally approves it. Implementation The new CBA takes effect, often retroactively if negotiations extend past the previous contract’s expiration. The Legal Duty to Bargain Section 8(d) of the NLRA requires both parties to meet at reasonable times and negotiate in good faith over mandatory subjects such as wages, hours, and working conditions. Importantly, neither party is required to agree to any specific proposal, nor must they make a concession. Types of Bargaining Subjects Mandatory Mandatory subjects are those that “vitally affect” wages, hours, or working conditions. Examples include: Compensation and incentive pay Pension and benefit plans Paid and unpaid leave Discipline and discharge Seniority Work rules Grievance procedures Employers may not make unilateral changes to mandatory subjects without bargaining. Permissive Permissive subjects are relevant, but not central to working conditions They include definition of the bargaining unit, internal union procedures, and terms for non-unit employees. Parties may negotiate these, but neither side can be forced. Illegal Illegal subjects are topics prohibited by law, and include closed shop provisions, hot-cargo agreements, and discriminatory clauses based on race, religion, sex, age, disability, national origin, or union activity. Understanding these categories helps both sides stay compliant and focused on productive negotiation topics. Good Faith vs. Bad Faith Bargaining Good-faith bargaining is legally required and is the foundation of the negotiation process. It requires sincerity, openness, and a genuine desire to reach an agreement. What Good‑Faith Bargaining Looks Like: Meeting at reasonable times Making concessions and counteroffers Providing relevant information upon request Engaging in meaningful discussion Drafting written agreements when terms are reached Importantly, good faith does not require either party to accept proposals or make concessions they find unacceptable. Automatic Violations of Good Faith Certain actions are considered violations regardless of intent: Making unilateral changes to mandatory subjects before the impasse Bargaining directly with employees instead of the union Refusing to meet or discuss mandatory subjects Refusing to sign a written agreement reached at the table Other Signs of Bad Faith The National Labor Relations Board may also infer bad faith from patterns of behavior, such as: Delaying tactics Unreasonable demands Withdrawing previously agreed‑upon terms Failing to designate a representative with authority to bargain Attempting to bypass the union Good‑faith bargaining is not just a legal requirement—it is essential to building trust and reaching durable agreements. The Duty to Provide Information Under the National Labor Relations Act, both the employer and the union must provide information relevant to bargaining, resolution of grievances, or contract administration. Failure to provide information can result in: Unfair labor practice charges Conversion of an economic strike to an unfair labor practice strike Delayed or invalid impasse claims Even vague or burdensome requests may need to be answered, and requests cannot be ignored simply because they involve confidential information. Preparing for Negotiations Preparation is the backbone of successful bargaining. Management’s team typically includes: A chief spokesperson Financial and cost specialists HR representatives Operations experts A note‑taker Decision makers with authority The NLRA prohibits either side from interfering with the other’s choice of representatives, and employers cannot limit the size of a union bargaining team. Economic data collection is essential. Key sources include: Bureau of Labor Statistics (CPI, wages, employment data) Bloomberg Law contract settlement databases Local and industry CBA comparisons Teams should identify desired changes, anticipate union demands, prioritize issues, and prepare arguments with supporting data. Negotiation Strategies and Tactics Collective bargaining is both a legal process and a strategic exercise. Successful negotiators understand the unwritten rules, anticipate the other side’s priorities, and maintain discipline throughout the process. Experienced negotiators follow unwritten norms, such as: Neither party expects to get everything it asks for Parties begin with broad proposals and refined goals Early progress often focuses on non‑economic issues Major issues are typically addressed closer to contract expiration Common Bargaining Styles Auction bargaining - High opening proposals lowered incrementally. Trade‑off bargaining - Movement on one issue in exchange for concessions on another. Blue‑sky bargaining - Unrealistic initial demands with slow movement. Illegal Bargaining Styles Boulwarism - Presenting a single “fair, firm offer” and refusing to negotiate. Surface bargaining - Pretending to bargain with no real intent to reach an agreement. Experienced and successful negotiators operate from a realistic, “give and take” perspective that often involves some of the following tactics. Acknowledge the other party’s views Use real‑world examples Highlight points of agreement Ask open‑ended questions Keep negotiations fair, calm, and professional Build trust, rapport, and momentum Running Effective Bargaining Sessions The first meeting sets the tone and bargaining climate. Each party makes an opening statement, establishes schedules and routines, and exchanges initial proposals. Unions typically present more than they expect to receive, setting room for concessions. At the next session— usually the second meeting— the parties clarify demands, understand priorities, and begin evaluating economic impacts. This is critical for setting expectations and building negotiation strategy. For subsequent sessions as the deadline approaches sessions become more frequent, offers and counteroffers accelerate, committees may handle complex issues, and tentative agreements (TAs) are recorded clause-by-clause. Best Practices: Tips, Tricks, and Traps Collective bargaining has elements of skill. Skilled negotiators will recognize the other party’s perspective, provide clear explanations and supporting data, often ask open-ended questions, keep discussions focused and productive, and importantly remain calm and respectful. The most effective teams are well‑prepared, unified, and strategic in how they present and defend their proposals. Here are some hints and tips: Treat all early agreements as tentative until the full contract is settled. Document everything—written summaries, session notes, and caucus discussions. Never lose your temper, even if provoked intentionally. Avoid claiming you “cannot afford” a proposal, which could obligate financial disclosure. Caucus frequently to regroup or strategize. Build momentum through small agreements. Always preserve the authority and credibility of the chief negotiator. Advanced Negotiation Techniques Certain techniques may be useful for resolving conflicts and finding common ground. These include: (a) caucuses, which are private discussions of each negotiating team that are used to refine proposals, assess costs, or cool tensions; and (b) so-called “sidebar” meetings, which are private meetings between lead negotiators to break logjams or explore sensitive options. Trust is essential. If negotiations stall, the Federal Mediation and Conciliation Service (FMCS) can facilitate resolution by suggesting compromises, tradeoffs, or settlement formulas. Understanding Impasse An impasse occurs when good‑faith negotiations no longer offer a realistic path to agreement. When negotiations stall, executives and in-house counsel must navigate a complex landscape of legal standards, operational risks, and strategic considerations. Understanding impasse and mediation is essential to avoiding missteps that could escalate conflict or trigger legal exposure. After impasse is declared: Employers may implement their last, best, and final offer—but only positions already proposed before impasse Strikes and lockouts may occur The duty to bargain is suspended, not terminated Impasse may be broken by events, such as new proposals, the passage of time, strikes, or changed economic conditions. Business Decisions and “Effects” Bargaining Employers must bargain over employment-related decisions such as layoffs or production quotas, but not over core entrepreneurial decisions like closing a business unit. However, even when not required to bargain the decision, employers must bargain over the effects of that decision—timing, transition issues, severance, etc.—at a meaningful time. Key Questions for Upcoming Negotiations Collective bargaining is one of the most consequential legal processes an organization undertakes. It shapes labor stability, operational flexibility, cost structure, and long‑term workforce relations. For executives and in‑house counsel, the goal is not simply to negotiate a contract — it is to manage legal exposure, protect enterprise interests, and ensure compliance with federal labor law at every stage. Below are some key questions that may help achieve these goals. What are the union’s likely demands? Which CBA provisions are most problematic for management? What changes does the company desire? What internal or external constraints shape negotiation limits? Final Thoughts Effective collective bargaining is both an art and a science—grounded in legal requirements but shaped by preparation, data, trust, communication, and strategy. With thoughtful planning and disciplined execution, organizations can reach agreements that are fair, workable, and sustainable for both labor and management.
February 20, 2026
Labor and Employment
Severance Packages: Best Practices for Calculating and Communicating Them
Severance decisions sit at the intersection of legal risk, employee relations, and business judgment. For employers, the challenge is not simply deciding whether to offer severance, but determining how much to offer, under what circumstances, and how to communicate it without creating unnecessary exposure. From the employer-side counsel perspective, severance works best when it is approached deliberately—not reactively—and when it aligns with both the reason for separation and the employer’s broader workforce strategy. Understanding the Legal Starting Point Despite common assumptions, severance is rarely required by law. Outside of contractual obligations, collective bargaining agreements, or statutory notice requirements tied to layoffs, most severance arrangements are discretionary. Problems arise when past practice, offer letters, or outdated policies blur that line and create an expectation of entitlement where none was intended. Before discussing numbers, employers should confirm what obligations already exist and whether prior decisions have set informal benchmarks. Consistency matters, but so does clarity about when severance is offered as a business decision rather than a legal requirement. Let the Reason for Separation Drive the Analysis Not all separations should be treated the same, and severance decisions should reflect that reality. A position eliminated due to restructuring presents a very different risk profile than a termination for poor performance or misconduct. Offering severance in situations that contradict the stated reason for termination can undercut the employer’s position if the separation is later challenged. Employer-side counsel often advises against rigid formulas in favor of a framework that considers why the employment relationship is ending, how the decision was documented, and what claims the employee could realistically assert. Severance should reinforce the employer’s narrative—not weaken it. Calculating Severance With Defensibility in Mind While there is no universal formula, employers benefit from anchoring severance decisions to objective factors such as length of service, seniority, and compensation level. These guideposts help ensure internal equity and reduce the risk that severance decisions appear arbitrary or discriminatory. At the same time, employers should preserve discretion. High-risk separations may justify enhanced severance in exchange for a comprehensive release, while low-risk exits may not. The goal is not mathematical precision but defensibility if the decision is later scrutinized. Severance as a Risk-Management Tool From a legal standpoint, severance is most valuable when it is tied to meaningful protections. Employers are not simply paying for goodwill; they are often seeking certainty. A properly structured separation agreement can significantly reduce exposure by resolving potential claims before they become disputes. That tradeoff only works if the consideration offered is proportionate to the risk being addressed. Underpaying for broad releases or overpaying in low-risk situations can create problems. Thoughtful calibration is key. The Importance of Clear, Careful Communication Even well-designed severance packages can create risk if they are communicated poorly. Separation conversations are emotional, and off-the-cuff remarks can later take on outsized significance. Employers should communicate severance in a way that is respectful, measured, and precise, avoiding language that suggests fault, guarantees, or precedent. Employees should understand that severance is being offered in exchange for an agreement, and they should be given adequate time to review. A rushed or confusing process often invites second-guessing—and, in some cases, litigation. Avoiding Unintended Precedent One of the most common employer concerns is that severance decisions will set a precedent for future separations. While consistency is important, employers are not required to treat every departure identically. What matters is whether each decision can be explained based on legitimate business considerations. Maintaining internal documentation of the rationale behind severance decisions—particularly when they deviate from past practice—can be invaluable if those decisions are later challenged. Revisiting Severance Practices Over Time Severance practices should evolve alongside the business. Workforce changes, economic conditions, and developments in employment law can all affect how severance is viewed and valued. Employers who periodically review their policies, templates, and decision-making frameworks are far better positioned than those who rely on habits formed years earlier. Severance is not just an end-of-employment expense. When handled thoughtfully, it is a strategic tool that helps employers manage risk, preserve credibility, and bring closure to difficult transitions.
February 18, 2026
Labor and Employment
Pinged After Dark: Email Expectations, Burnout, and Employment Law Risk
One of the most common questions labor and employment attorneys hear from employers in the post-remote workplace is whether employees can be expected to answer emails outside standard business hours. The question seems straightforward, but it sits at the intersection of wage and hour law, workplace culture, and an evolving understanding of employee burnout. The rise of remote and hybrid work has permanently blurred the line between work time and personal time. What was once an occasional after-hours message has, for many employees, become a steady stream of evening and weekend communications. While constant connectivity can support flexibility and responsiveness, it also creates legal and operational risks when expectations are unclear or unmanaged. From a legal perspective, after-hours email expectations matter most under wage and hour laws. For non-exempt employees, time spent reading and responding to emails outside of scheduled work hours may be compensable under the Fair Labor Standards Act and similar state laws. Even brief, sporadic email activity can add up over time, creating exposure for unpaid wages or overtime if that time is not properly tracked and paid. Employers often underestimate how easily “just checking email” can become a compliance problem. For exempt employees, the analysis is different but not risk-free. While these employees are not entitled to overtime pay, constant after-hours availability can contribute to burnout, stress-related health issues, and requests for medical leave or workplace accommodations. Employers increasingly face claims tied to mental health conditions, and a culture that implicitly demands round-the-clock responsiveness can become evidence in those disputes. Oftentimes there is a disconnect between written policies and actual practice. Many employers maintain policies stating that after-hours work is not required, yet managers routinely send late-night emails or praise employees who respond immediately. Over time, this behavior creates an unwritten expectation that employees reasonably feel they must meet. In legal disputes, it is often those informal expectations — not the handbook language — that carry the most weight. Although U.S. law has not formally adopted a “right to disconnect,” global trends and employee expectations are moving in that direction. Several jurisdictions outside the United States already limit after-hours communications, and similar ideas are gaining traction domestically. Employers should assume that after-hours availability will continue to be scrutinized from regulators, courts, and employees alike. The most effective approach is clarity. Employers benefit from clearly defining when employees are expected to be available and when they are not, and from ensuring that managers understand how their communication habits affect both compliance and morale. Where business needs require after-hours responsiveness, those expectations should be deliberate, consistent, and aligned with compensation practices. Burnout is no longer just a workforce morale issue. It is a business and legal risk that can lead to turnover, leave-related disputes, and costly claims. Employers that proactively set reasonable boundaries around email use and availability are better positioned to retain talent, reduce risk, and defend their practices if challenged. After-hours email is not simply a question of convenience or courtesy. It reflects how well an organization understands its legal obligations and how seriously it takes the sustainability of its workforce. Thoughtful boundaries today can prevent significant problems tomorrow.
February 4, 2026
Labor and Employment
New Year, New Employment Laws; What Employers Must Know for 2026
As 2026 begins, employers across the United States face a wave of significant labor and employment law changes that demand immediate attention. From California’s updates to minimum wage, exempt salary thresholds, and equal pay requirements, to Illinois’ expanded workplace transparency and AI-related compliance obligations, these developments reflect a growing emphasis on employee protections, pay equity, and technology governance. Pennsylvania and Texas also introduced targeted reforms, including anti-discrimination measures, paid leave adjustments, and new standards for responsible AI use. The following provides an overview of the changes effective in early 2026 and outlines practical steps employers should take to help ensure compliance and mitigate risk. Jump to: California | Delaware | New York | Illinois | Pennsylvania | Texas California Minimum Wage Increases to $16.90 Per Hour Several cities and counties have their own required minimum wages. Employers should check their local city and county ordinances where they have employees to ensure they are paying the correct minimum wage. Forty (40) California cities and counties have minimum wage rates that are higher than the state minimum wage of $16.90. Twenty-eight (28) of those forty local cities and counties have increases to their minimum wage beginning January 1, 2026, with West Hollywood, at $20.25 per hour, being the highest. What Employers should do: Employers should check the minimum wages for any city or county where they have employees. Make sure hourly rates are updated to comply with state law and the City/County where the employee is working. Employers must pay minimum wage in the city or county where the employee works and not where the employer is located. The Salary Requirement for Exempt Employees Rises to $70,304 In order to be exempt, an employee must meet the duties test and the salary test. The California salary test requires exempt employees to earn twice the minimum wage. With the increase in minimum wage to $16.90 on January 1, 2026, the new minimum salary for California exempt employees is $70,304. What Employers should do: Make sure any California employee who is exempt has an annual salary of at least $70,304. Requirement to Allow Employees to Use Sick Leave for Jury Duty and When Appearing as a Witness Use of sick leave was expanded to allow employees to use sick leave for jury duty or when they are required to appear in court to comply with a subpoena or other court order. What Employers should do: Employers should revise their sick leave policy in their Employee Handbook and make sure that the new 2026 posters are displayed. In the alternative, employers can provide employees with the Notice linked to this Article. The revised and required notice is linked below. Poster English Spanish New Notice Requirement – California Workplace – Know Your Rights Effective February 1, 2026, and each year thereafter, employers must provide notice of employees’ rights. The Labor Commissioner has developed notices that are linked here in Spanish and English. Employers are required to keep records of each written notice provided or sent for three years, including the date provided or sent. Employers may, but are not currently required to, provide a link or show the video developed by the Labor Commissioner’s office. In addition, by March 30, 2026, employers must provide employees the opportunity to name an emergency contact and indicate whether that contact should be notified if the employee is arrested or detained. What Employers should do: Employers should distribute the Notice to employees and keep records of how and when it was distributed. In addition, employers should calendar distribution for each year and give employees the opportunity name an emergency contact if they are arrested or detained. Changes to the California Equal Pay Act The definition of “pay scale” under the California Equal Pay Act has been broadened, and the statute of limitations for claims thereunder has been increased from two (2) to three (3) years, with employees able to get relief for up to six (6) years. The definition of “pay scale” is revised to include a good-faith estimate of the salary or hourly wage range the employer reasonably expects to pay for the position upon hire. “Wages” and “wage rates” are also redefined to include all forms of pay, including, but not limited to, salary, overtime pay, bonuses, stock, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits. What employers should do: Employers should ensure that they review their pay scales and document how they determined the pay scale to show that the pay scales were based on a good-faith estimate. Employment Contracts Cannot Require Employees to Pay Employers for Training (if they leave their employment) For employment contracts entered into on or after January 1, 2026, it is unlawful to include or to require an employee to execute as a condition of employment or a work relationship a contract that includes a contract term that does any of the following: Requires the worker to pay an employer, training provider, or debt collector for a debt if the worker’s employment or work relationship with a specific employer terminates. Authorizes the employer, training provider, or debt collector to resume or initiate collection of or end forbearance on a debt if the worker’s employment or work relationship with a specific employer terminates. Imposes any penalty, fee, or cost on a worker if the worker’s employment or work relationship with a specific employer terminates. This means employers cannot require employees to reimburse them for any training provided to them if they leave their employment. If this new law is violated, employees are entitled to actual damages sustained by the worker or five thousand dollars ($5,000), whichever is greater, in addition to injunctive relief, and reasonable attorney’s fees and costs. There are certain exceptions as follows: A contract entered into under any loan repayment assistance program or loan forgiveness program provided by a federal, state, or local governmental agency. A contract related to the repayment of the cost of tuition for a transferable credential that meets certain requirements. A contract related to enrollment in an apprenticeship program approved by the Division of Apprenticeship Standards. A contract for the receipt of a discretionary or unearned monetary payment, including a financial bonus, at the outset of employment that is not tied to specific job performance, provided certain conditions are met. A contract related to the lease, financing, or purchase of residential property. What employers should do: Make sure new contracts do not have provisions requiring repayment upon an employee’s termination unless they fit within one of the exceptions above. Personnel Files Must Include Education and Training Records Labor Code 1198.5 is revised to require an employer who maintains education or training records in those records in the employee’s personnel file which include the following: The name of the employee. The name of the training provider. The duration and date of the training. The core competencies of a training, including skills in equipment or software. The resulting certification or qualification. What employers should do: If employers have training or education records for employees, ensure they are placed in the employee’s personnel file. In addition, employers should ensure that electronic personnel files include all documents and are properly maintained. Revisions to California’s Baby WARN Act In addition to the prior notice requirements, employers are now required to give notice of whether the employer plans to coordinate services, such as a rapid response orientation, through the local workforce development board, the employer plans to coordinate services through a different entity, or the employer does not plan to coordinate services with any entity. In addition, employers are required to include in the notice a description of the statewide food assistance program known as CalFresh. Regardless of whether the employer chooses to coordinate services with the local workforce development board or another entity, the employer shall include in the notice a functioning email and telephone number of the board and the following description of the rapid response activities offered by the local workforce development board, and specifically: “Local Workforce Development Boards and their partners help laid off workers find new jobs. Visit an America’s Job Center of California location near you. You can get help with your resume, practice interviewing, search for jobs, and more. You can also learn about training programs to help start a new career.” If the employer chooses to coordinate services with the local workforce development board or another entity, the employer shall arrange services within 30 days from the date of the notice. What employers should do: If employers have layoffs that trigger California’s WARN Act, they should ensure they provide the information above in the notices sent to employees. Failure to give proper notice would subject an employer to a violation of WARN because the penalties are significant. California’s Transparency in Frontier AI Act California’s Transparency in Frontier Artificial Intelligence Act (TFAIA) is the first U.S. law specifically regulating frontier level AI systems. The law takes effect January 1, 2026, for covered developers. TFAIA creates the first U.S. regulatory framework specifically targeting developers of advanced, high-capacity AI models. While the law is aimed at AI developers, employers and their Human Resources representatives play a critical role because the Act requires organizational transparency, risk reporting, and safety processes for AI development and deployment. What employers must do: Ensure employees understand new responsibilities, documentation expectations, and escalation pathways and employers should review their AI practices. Determine Whether the Company Is a “Covered Developer” - Employers must determine whether the organization develops “foundation models” or “frontier models” as defined in the Act. - An employer is considered a “frontier developer” if you train or initiate training of a “frontier model,” which is defined as a model that is: (1) trained on a broad set of data, (2) designed for generality of output, and (3) can be adapted to a wide range of distinctive tasks. - A “large frontier developer” is a frontier developer whose entity (and its affiliates) had annual gross revenues exceeding US $500 million in the preceding calendar year. Large frontier developers are subject to additional obligations under the Act. Implementation of Mandatory Training Programs - Employers should develop training programs on compliance obligations, seek to define roles and responsibilities for safety reporting, and implement whistleblower protections aligned with the Act’s transparency goals. Training should cover the required documentation and transparency practices, how to identify and escalate safety concerns, and the ethical use of AI. Critical Safety Incident Reporting - A frontier developer must report “critical safety incidents.” The statute requires the company to establish a mechanism for submission by a frontier developer or member of the public. Internal Reporting & Whistleblower Channels - The Act emphasizes risk disclosure and public accountability for advanced AI systems. Employers must ensure employees know how to report safety issues or misuse, protect employees who raise concerns, and maintain documentation of reports and follow-up actions. Whistleblower Protections - Employees (“covered employees”) who assess, manage, or address frontier model risk are protected when they disclose: - a specific and substantial danger to public health or safety from a catastrophic risk - a violation of the chapter. Large frontier developers must: - Provide an anonymous internal reporting process for such disclosures. - Provide monthly updates to the whistleblower on the status of disclosure. If retaliation occurs, the burden shifts to the employer to show clear and convincing evidence that they would have taken the same action absent the disclosure. Practical Steps: - Update whistleblower policies to cover frontier AI risk disclosures. - Set up anonymous reporting channels (internal or third-party) - Train human resources, legal, and safety teams in handling such disclosures in line with the Act. Monitor Regulatory Updates & Enforcement Trends - Because SB 53 is the first law of its kind, enforcement of the Act will be unpredictable. Employers must regularly track guidance from California regulators, monitor similar legislation in other states, and prepare for potential federal alignment or preemption. California’s Transportation Network Company Drivers Labor Relations Act California’s Transportation Network Company Drivers Labor Relations Act establishes a new labor relations framework for app-based rideshare and delivery drivers. Although drivers remain classified as independent contractors under Proposition 22, the Act creates collective representation or “union” rights, minimum labor standards, and new Human Resources compliance obligations for Transportation Network Companies (“TNC”). Note that this Act does not apply to drivers who are employees. The Act allows workers to form, join, and participate in the activities of driver organizations, to bargain through representatives of their own choosing, and to engage in concerted activities for the purposes of bargaining or other mutual aid protection. To participate, drivers must meet a "20 rides in six months" threshold to ensure a more established connection to the industry. Despite the new rights allowed to gig drivers, they continue to be classified as independent contractors under California law. What employers need to know: Drivers Have New Rights to Representation - The Act allows drivers to form or join Driver Representative Organizations (DROs), which can collectively advocate for drivers, participate in sector-wide “meet and confer” processes, and raise concerns about pay, safety, and working conditions. TNCs must treat these rights similarly to traditional labor relations protections. Anti-Retaliation Rules Apply - TNCs may not retaliate against drivers for joining or supporting a DRO, participating in collective discussions, or raising safety or working condition concerns. Further, the Act emphasizes certain unfair employer practices, including but not limited to failure to provide requested information, interfering with the organization or activities of, discouraging membership, blacklisting, coercing, or otherwise inappropriately engaging with certified driver bargaining organizations. TNCs must ensure that driver deactivation decisions are well documented, performance-related actions are consistent and non-discriminatory, and that no adverse employment action appears in the New Notice and Posting Requirements TNCs must ensure that drivers receive: Written notice of their rights under the Act, information about DROs, and instructions for filing complaints or participating in representation processes. These notices must be accessible in the driver app and be provided in the driver’s primary language. Within two weeks after the end of each calendar quarter, commencing with the quarter ending on March 31, 2026, each covered TNC shall submit the following items to the board: Driver’s name, driver’s license number, and, to the extent known by a TNC, the most recent email address, local residence and mailing addresses, cellular telephone number; and The TNC driver’s first date joining the platform and the number of rides the TNC driver completed in the previous six months, for each TNC driver who has completed at least 20 rides within the State of California within the prior six months to any “union” related protected activity. Further Implications TNCs must be careful to recognize potential protected activity and avoid statements that could be interpreted as discouraging representation. They must also take steps to handle drivers’ complaints neutrally and consistently. Given the nature of the new law and its structure, encouraging interaction between drivers and TNCs, TNCs can reasonably anticipate a sharp increase in driver inquiries, including inquiries about pay transparency and working conditions, and increased scrutiny of deactivation decisions. Drivers will also likely initiate requests for meetings or mediation, creating significantly more work for involved human resource professionals. A consistent, documented process will be essential to ensure compliance. New Ordinance in Los Angeles Effective December 1, 2025, Los Angeles hotel employers with 60 or more guest rooms must provide public housekeeping training of at least six hours on topics including: Hotel worker rights and employer responsibilities. Best practices for identifying and responding to suspected human trafficking, domestic violence, or violent or threatening conduct. Best practices for effective cleaning techniques to prevent the spread of disease. Best practices for identifying and avoiding insect or vermin infestations. Best practices for identifying and responding to the presence of other potential criminal activity. What employers should do: Employers in the City of Los Angeles who have a hotel with 60 or more rooms need to provide the above training to employees. The training must be provided by a certified trainer and the employer, must be 5 ½ hours in length and the employer must pay for the training. Delaware 2025 HS 1 for HB 55: An Act to Amend the Delaware Code Relating to Prohibited Discrimination on the Basis of Military Status Signed by the Governor 7/23/25 (effective immediately) – Adds “military status” as a basis for discrimination to state public accommodation, housing, insurance, education, and employment law. 19 Del. C. Ch. 37: Family and Medical Leave Insurance Program 12/1/25 - Paid Family and Medical Leave Act contributions to the program commence for employers with 10 or more employees. 2026 19 Del. C. Ch. 37: Family and Medical Leave Insurance Program 1/1/26 – Paid Family and Medical Leave Act became effective; employees may begin taking leave under the statute. 2027 HS 2 for HB 105: An Act to Amend Title 19 of the Delaware Code Relating to Employment Practices Signed by the Governor 9/26/25 (effective 9/26/27) – Creates 19 Del. C. 709C, Pay Transparency Act, mandating that employers disclose hourly/salary compensation range plus benefits description to all applicants for employment. Notable Pending Legislation SB 63 w/ SA 1: An Act to Amend Title 19 of the Delaware Code Relating to Labor Expands workplace fraud liability to all upstream prime and general contractors (and construction managers) for workplace fraud (misclassification of employees as independent contractors) violations by downstream contractors, regardless of privity of contract. Passed by Delaware House and Senate, vetoed by the Governor 8/28/25. Future status is uncertain. SB 197: An Act to Amend Title 14 And Title 29 Of the Delaware Code Relating to Project Labor Agreements for School Public Works Contracts Introduced 6/26/25 – Imposes union-only project labor agreements on all public and charter school construction. Likely illegal as pre-empted by NLRA. Future status is uncertain. 19 DE Admin. Code 1322: Proposed Amendments to Delaware Prevailing Wage Regulations Changes proposed but not promulgated due to considerable objections, various changes exceeding statutory authority, and numerous errors and omissions. Future status is uncertain. New York New York City Earned Safe and Sick Time Act, Amendments (Int. 780 A) Effective February 22, 2026, New York City amended the New York City Earned Safe and Sick Time Act (“ESSTA”) to require private employers of any size to provide all employees with 32 hours of frontloaded, unpaid safe and sick time that is available for use immediately upon hire and each calendar year thereafter. These hours are in addition to existing paid safe and sick time hours required under ESSTA. The amendment expands covered uses of leave to include caregiving needs by an employee “caregiver” for a minor child or defined “care recipient,” workplace violence-related needs for the employee or employee-caregiver for a family member, public disasters (e.g., workplace closures, shelter in place orders, school/childcare restrictions), and benefits and housing proceedings. Although no waiting period is permitted to be imposed, employers may set a minimum increment of up to four hours per workday and need not carry over unused unpaid hours. Employers are required to track paid and unpaid leave balances (e.g., on pay statements or other written documentation for each pay period). New York State Paid Prenatal Personal Leave, NYLL § 196-b(4-a) Effective January 1, 2025, New York requires that any private sector employee, regardless of employer size, working in the state be afforded at least 20 hours of paid prenatal personal leave in any 52-week period as part of the New York State Paid Sick Leave Law. This leave obligation, which amends NYLL § 196-b to add section 4-a, is separate from and in addition to the hours of safe and sick leave already required under NYLL § 196-b. Leave under NYLL § 196-b(4-a) may be used only by the pregnant employee for prenatal healthcare services such as medical appointments, exams, procedures, testing, monitoring, and fertility treatment. Employers cannot require employees to exhaust other accrued safe and sick leave first, and the 52-week period begins the first time the employee uses prenatal leave. If an employee separates from the employer, the employer has no obligation to pay the employee for unused paid prenatal leave hours. Notably, guidance issued by the New York Department of Labor states that spouses, partners, or other support persons are not eligible to use paid prenatal leave to attend prenatal appointments with a pregnant person. Employers should update their handbooks or create a standalone policy describing eligibility, covered uses, procedures to request leave, and an anti-retaliation provision. Employers should also update their payroll or paid time off tracking systems to comply with the requirement to separately track a prenatal leave balance. New York State Paid Prenatal Leave/FAQs New York City Paid Prenatal Personal Leave, NYC Admin Code § 7-216 Effective July 2, 2025, New York City amended the New York City Earned Safe and Sick Leave Law to add the same 20-hour paid prenatal leave requirement as added by New York State earlier in the year. The city law contains additional requirements beyond the State’s law, such that employers must provide a written notice on pay stubs detailing hours used and any remaining balance for each pay period, as well as specify that “reasonable” notice for foreseeable leave is at least 7 days and that “as soon as practicable” is the standard for unforeseeable leave. The City law further requires maintaining records of leave use, dates, and amounts for at least three years, and that employers distribute an updated “Notice of Employee Rights” to new and existing employees. New York State Right to Paid Prenatal Leave/FAQs New York City Lactation Accommodation, Local Law 109 (2014 109) Effective May 8, 2025, NYC Local Law 109 of 2024 amends the New York City Human Rights Law (“NYCHRL”), primarily codified in New York City Administrative Code § 8-107(1)(b), to modify the City’s existing lactation room and policy obligations, including that employers must physically and electronically post their lactation accommodation policy and the policy must acknowledge New York State law which provides 30 minutes of paid lactation break time per pumping session. Employees may use paid break or meal time for any additional needed time. NYC Commission on Human Rights Retail Worker Safety Act, NYLL §27-e Effective June 2, 2025, employers with ten or more retail employees must adopt a retail workplace violence prevention policy that is equivalent to the model policy or more protective and train all employees annually. Notice of training must be provided at each annual session. For retailers with 500 or more employees in New York State, silent response and panic buttons, as well as training on their use, are required in covered retail locations starting January 1, 2027. NY Department of Labor/Retail Worker Safety Expanded Mental Injury Coverage, Workers’ Compensation Law § 10(3) Effective January 1, 2025, New York amended the Workers’ Compensation Law § 10(3) to allow any worker to file a claim for a mental injury caused by extraordinary work-related stress. This amendment expands workers’ compensation coverage for mental injuries from extraordinary work-related stress beyond first responders to all workers. As of June 4, 2025, the Workers’ Compensation Board may not disallow a claim simply because the stress was not greater than normal workplace stress where the claim is for PTSD, acute stress disorder, or major depressive disorder premised on extraordinary work-related stress attributable to distinct work-related events and supported by medical evidence under the DSM criteria. The mental health condition can be a standalone claim and does not need to be tied to a physical injury. New York State Medical Treatment Guidelines Reproductive Health Decision-Making, NYLL § 203-e As of January 1, 2025, employers were again required to include a notice of employee rights and remedies under NYLL § 203-e in handbooks or as a standalone policy, as the U.S. Court of Appeals for the Second Circuit vacated the prior injunction, which had eliminated the written notice requirement. There is no model policy available at present. Policies should thus be carefully crafted to note that the employer will not request or seek to access an employee’s personal information regarding the employee’s or the employee’s dependent’s reproductive health decision making, including but not limited to, the decision to use or access a particular drug, device, or medical service, without the employee’s prior informed affirmative written consent. The policy should include decisions to use contraception, fertility treatments, or other reproductive health services as covered reproductive health decision-making. A policy should also note that the employer will not discriminate or retaliate for these choices, and employees’ related medical information disclosed to the employer will remain confidential. https://www.govinfo.gov/content/pkg/USCOURTS-ca2-22-01076/pdf/USCOURTS-ca2-22-01076-0.pdf New York State COVID-19 Quarantine Paid Sick Leave New York’s COVID-19 quarantine/isolation paid sick leave mandate expired July 31, 2025. Employees may rely on the New York State Paid Sick Leave Law and, if applicable, the New York City Earned Safe and Sick Leave Law, for illness, diagnosis, treatment, or care for COVID-19, including COVID-related health conditions. Equal Rights Amendment to N.Y. Const. Art. I § 11 Effective January 1, 2025, the New York State Constitution’s equal protection clause prohibits discrimination based on ethnicity, national origin, age, disability, and sex (including sexual orientation, gender identity, gender expression, pregnancy, pregnancy outcomes, and reproductive healthcare and autonomy). Employers should revise EEO statements to list the new protected classes and consider EEO training refreshers referencing the constitutional amendment. Illinois Illinois has enacted several new laws effective January 1, 2026, impacting employment agreements, workplace practices, and employee rights. Workplace Transparency Act Amendments (HB 3638) These amendments expand protections for employees and contractors, covering all violations of state and federal employment laws, not just discrimination. Employers cannot impose unilateral contract terms that shorten statutes of limitations, apply non-Illinois law, require out-of-state venues, or restrict truthful disclosures or concerted activity. Confidentiality clauses in settlement or termination agreements must include separate consideration and cannot waive future concerted activity. What employers should do: Review and update all agreements, revise confidentiality provisions, and train HR and legal teams on compliance. Human Rights Act Amendments (HB 3773) Employers must not use AI in ways that discriminate based on protected classes or use zip codes as proxies. They must also notify employees when AI is used in employment decisions. What employers should do: Audit AI-driven hiring and decision-making systems, implement clear notification processes, and train HR and IT teams. Nursing Mothers in the Workplace Act Amendments (SB 212) Employers must pay employees for lactation breaks at their regular rate and cannot require the use of paid leave for these breaks. What employers should do: Update break policies, adjust payroll systems, and communicate changes to staff. Blood and Organ Donation Leave Amendments (HB 1616) Part-time employees are now entitled to 10 days of organ donation leave, with pay calculated based on their average daily pay over the last two months. What employers should do: Revise leave policies and ensure payroll accuracy. Victims’ Economic Security and Safety Act Amendments (HB 1278) Employers cannot retaliate against employees who use employer-issued devices to document domestic or gender-based violence. They must grant access to related information on those devices and post notices explaining employee rights. What employers should do: Update device-use policies, ensure proper notice postings, and train managers on retaliation prohibitions. Pennsylvania CROWN Act During this period, the most significant statewide development was the expansion of Pennsylvania’s anti-discrimination framework through amendments to the Commonwealth’s CROWN Act, which became effective on January 24, 2026. These amendments expressly prohibit employment discrimination based on hair texture, protective hairstyles, and certain head coverings and hairstyles historically associated with religious creeds. The statute specifically identifies styles such as locs, braids, twists, coils, Bantu knots, afros, and extensions, making clear that appearance-based policies can no longer be justified where they disproportionately affect racial or religious groups. What employers should do: This change requires a careful reassessment of grooming standards, dress codes, and professionalism policies, as well as supervisor training to ensure that enforcement practices do not give rise to disparate treatment or disparate impact claims under the Pennsylvania Human Relations Act. Workplace Posting Requirements In early January 2026, Pennsylvania employers also became subject to a new workplace posting obligation aimed at increasing awareness of benefits available to veterans and their families. Effective January 3, 2026, employers with more than 50 full-time employees must post a notice prepared by the Pennsylvania Department of Labor and Industry that outlines federal and state veterans’ benefits and services. The required posting includes contact information for the U.S. Department of Veterans Affairs Crisis Line and county directors of veterans affairs. What employers should do: Although this change does not alter substantive employment rights, it adds a compliance obligation that employers must integrate into their standard posting practices, particularly those operating multiple worksites across the Commonwealth. Pittsburgh’s Paid Sick Days Act Amendments to Pittsburgh’s Paid Sick Days Act, effective January 1, 2026, increased the annual caps on paid sick leave accrual while maintaining the existing accrual rate of one hour for every 30 hours worked. Under the amended ordinance, employers with 15 or more employees must now permit employees to accrue and use up to 72 hours of paid sick leave per year, while smaller employers must allow accrual and use of up to 48 hours annually. What employers should do: These changes require Pittsburgh employers to update payroll systems, written leave policies, and employee handbooks. Texas Responsible Artificial Intelligence Governance Act (HB 149) Effective January 1, 2026, Texas’s Responsible Artificial Intelligence Governance Act establishes a comprehensive regulatory framework governing anyone who conducts business in the state or develops or deploys AI systems for use in Texas. The Act adopts a broad, technology-neutral definition of artificial intelligence systems and assigns compliance responsibilities based on whether an entity develops or deploys such systems. More specifically, the Act prohibits the development or deployment of AI intended for social scoring or discriminatory purposes, imposes baseline duties on developers and deployers, and requires governmental entities to notify individuals when they interact with AI. It also preempts local AI regulations, vests exclusive enforcement authority with the Texas Attorney General, and creates both an Artificial Intelligence Council and a first‑in‑the‑nation regulatory sandbox to support supervised testing of AI innovations. What employers should do: Audit AI tools to ensure they are not developed or deployed for any prohibited intent, update internal policies to prohibit harmful or discriminatory AI uses, and train staff on compliance with the new legal standards. Amendments to Non-Compete SB 1318, amending SB 1318, amending Effective September 1, 2025, healthcare practitioner non-compete amendments take effect under SB 1318, amending Tex. Bus. & Com. Code Ann. § 15.50 and adding Tex. Bus. & Com. Code Ann. § 15.501. Under the amendments, non-compete agreements with physicians and other health care practitioners, including dentists, professional and vocational nurses, and physician assistants, must (1) allow the physician to buy out the non-compete for no more than the physician’s annual salary and wages at the time of terminating the contract or employment, (2) not last more than one-year post-termination, (3) be limited geographically to no more than five miles of the physician’s primary practice location, and (4) be clearly and conspicuously stated in writing. The statute further caps non-compete buy-outs at the employee’s salary. The amendments apply only to new or renewed agreements after the effective date. Trey’s Law, SB 835 Effective September 1, 2025, Texas’s Trey’s Law, Senate Bill 835 adding Tex. Civ. Prac. & Rem. Code Ann. §§ 129C.001 and 129C.002, voids and renders unenforceable non-disclosure or confidentiality agreements and provisions prohibiting a person from disclosing an act of sexual abuse or facts related to an act of sexual abuse. The law covers all civil cases for sexual assault, regardless of the victim’s age or when the abuse occurred. The law applies to agreements made before September 1, 2025, but enforcing prior NDAs will now require a court order. Other parts of settlement agreements, like the monetary amount, can remain confidential.
January 26, 2026
Labor and Employment
Inclusive Holidays: Building Trust and Engagement at Work
With Lunar New Year falling on February 17 this year, employers have an opportunity to pause and think more broadly about how religious and cultural holidays are recognized in the workplace. Holiday inclusion is often treated as a year-end issue, but for many employees, meaningful observances occur well outside the traditional Western calendar. Lunar New Year is widely celebrated across East and Southeast Asian cultures and, for many individuals, carries deep cultural, familial, and sometimes religious significance. Employees may travel, participate in religious ceremonies, or spend extended time with family. When these observances are overlooked or misunderstood, employees can feel invisible or undervalued, even in otherwise well-intentioned workplaces. From an employment law perspective, holiday inclusion is not simply a morale issue. Federal and state anti-discrimination laws require employers to reasonably accommodate sincerely held religious beliefs unless doing so would create an undue hardship. While Lunar New Year itself is often cultural rather than religious, requests for time off or schedule flexibility may still implicate accommodation obligations, particularly when tied to religious practice or long-standing traditions. Problems most often arise when holiday-related requests are handled inconsistently. Approving time off for some holidays but questioning others, or celebrating certain traditions while ignoring others, can expose employers to claims of disparate treatment. These risks are heightened when managers are left to make ad hoc decisions without clear guidance. Employers can reduce both legal exposure and employee frustration by focusing on flexibility and neutrality. Policies that allow employees to use floating holidays or personal time for observances that matter to them tend to work better than rigid holiday calendars. Clear communication and manager training are also critical so that requests tied to cultural or religious observance are handled thoughtfully and consistently. Workplace celebrations require similar care. Recognizing Lunar New Year can be positive, but only when done respectfully and without assumptions about who celebrates or how. Employees should never feel pressured to participate, explain their culture, or serve as informal ambassadors simply because of their background. As workforces continue to diversify, inclusive holiday practices increasingly function as both a compliance strategy and a culture building tool. Employees notice when their traditions are acknowledged and when they are ignored. Over time, those signals can affect engagement, retention, and trust. Lunar New Year serves as a useful reminder that inclusion does not require employers to recognize every holiday on the calendar. Instead, it requires systems that allow employees to observe what matters to them without friction or stigma. Thoughtful planning now can help employers support a diverse workforce while staying aligned with legal obligations throughout the year.
January 23, 2026
Labor and Employment
The EEOC’s New Posture on DEI Under Chair Andrea Lucas: What Executives and Corporate Counsel Need to Know
The landscape of workplace civil rights enforcement is shifting — and fast. With Andrea Lucas now serving as Chair of the U.S. Equal Employment Opportunity Commission (EEOC), organizations should expect a markedly different approach to diversity, equity, and inclusion (DEI) initiatives. EEOC Chair Lucas has long expressed concerns that many DEI programs, as commonly implemented, cross the line into unlawful employment discrimination. Recent public statements and actions by the EEOC under her leadership make clear that this is no longer a theoretical stance — it is now an enforcement priority. A New Enforcement Philosophy: “Colorblind” Civil Rights Compliance Public reporting indicates that Lucas has consistently advocated for what she describes as a “colorblind” approach to civil rights enforcement, arguing that some DEI initiatives risk unlawful “reverse discrimination”. She has also emphasized heightened scrutiny of practices that classify or treat employees differently based on protected characteristics — even when the stated purpose is to advance diversity. This represents a significant departure from the more permissive posture many organizations have relied on in designing DEI programs over the past decade. Recent EEOC Actions Signal a Clear Direction In March 2025, the EEOC — under Lucas’s leadership as then-temporary Chair — sent letters to 20 major law firms requesting detailed information about their DEI related employment practices. The letters expressed concern that certain DEI programs may involve: Unlawful disparate treatment in hiring, promotion, or compensation Limiting or segregating employees based on protected traits Classifying employees in ways that could violate Title VII This is one of the most direct and public signals to date that the EEOC intends to scrutinize DEI programs not only in theory but in practice. Statements by EEOC Chair Andrea Lucas in Her Recent Reuters Interview Recent reporting from Reuters provides the most transparent window yet into Andrea Lucas’s enforcement philosophy and her expectations for corporate DEI programs. In her December 2025 interview with Reuters, Lucas made several notable statements that senior executives and corporate counsel should pay close attention to: DEI Programs Are Facing a “Reckoning” Lucas told Reuters that federal inquiries into corporate DEI programs are already underway and represent a “major shift in civil rights enforcement” under the current administration. A Shift Toward a More Conservative Interpretation of Civil Rights Law Lucas described her approach as “a more conservative view of civil rights,” emphasizing that the EEOC will prioritize cases involving discrimination against any protected group — including white men. This signals a significant pivot from prior enforcement patterns. Explicit Warning That DEI Programs Using Protected Traits May Be Unlawful According to Reuters reporting, Lucas warned that DEI initiatives that explicitly use race, sex, or other protected characteristics as “motivating factors” in employment decisions could violate Title VII and face enforcement action. Lucas expressed concern that many corporate DEI programs may cross the line into unlawful disparate treatment, even when the intent is remedial or inclusion‑focused. Enforcement Actions Are Already in Motion Lucas confirmed that the EEOC has already begun federal inquiries into corporate DEI practices, signaling that this is not merely a policy stance but an active enforcement priority. What This Means for Employers For senior executives and corporate legal counsel, the implications are significant. The EEOC’s new posture does not prohibit DEI efforts — but it greatly restricts the use of commonly implemented DEI efforts and does require a recalibration of how those efforts are structured, documented, and communicated. Key Risk Areas Organizations should pay particular attention to: Hiring or promotion goals tied to specific demographic categories. These may be interpreted as quotas or preferential treatment. Programs limited to certain protected groups. Even well‑intentioned initiatives (e.g., leadership programs for women or minorities) may be scrutinized for exclusionary effects. Use of demographic data in ways that influence employment decisions. Lucas has signaled concern about any practice that treats demographic characteristics as determinative factors. Supplier diversity requirements that impose demographic criteria. These may also fall within the scope of EEOC review. Strategic Steps for Organizations Executives and counsel should consider the following actions: Conduct a Privileged Audit of DEI Programs Review all DEI initiatives — hiring programs, mentorships, leadership pipelines, public statements, web pages, recruiting and marketing literature, supplier diversity, and training — to identify potential disparate‑treatment risks. Reframe DEI Around Compliance‑Safe Principles Focus on:Equal opportunity Barrier removal Inclusive culture Skills-based hiring Broad outreach and recruitment These approaches align with Title VII and avoid the pitfalls of demographic preferences. Ensure Documentation Reflects Legally Defensible Intent Policies, training materials, and internal communications should emphasize:Nondiscrimination Equal treatment Voluntary participation Business‑driven rationales Prepare for Potential EEOC Inquiries Given the agency’s recent outreach to law firms, other industries may be next. Organizations should be ready to respond quickly and accurately to information requests. The Bottom Line Andrea Lucas’s recent statements to Reuters confirm a decisive shift in the EEOC’s approach to DEI. The agency is moving from passive observation to active enforcement. Organizations that proactively align their DEI programs with Title VII’s equal‑treatment framework will be best positioned to mitigate regulatory and litigation risk.
January 20, 2026
Labor and Employment
Power, Proof, and Perception in the Blake Lively–Justin Baldoni Litigation
This blog provides an update on the ongoing litigation involving Blake Lively and Justin Baldoni. If the original blog explored how this case began, this chapter is about what it has become. Some lawsuits resolve disputes, and there are lawsuits that reveal systems. The litigation between Blake Lively and Justin Baldoni belongs squarely in the latter category. What began as a conflict arising out of the production of It Ends With Us has become a slow-moving but oddly illuminating seminar on how modern employment law operates when the workplace is glamorous, the parties are famous, and the stakes extend well beyond liability. At a distance, this case is often flattened into a familiar cultural shorthand. Two celebrities. Competing narratives. A public eager to assign heroes and villains before the pleadings have even settled. Up close, however, the litigation is far more interesting and far less cinematic. It is not about grand gestures or dramatic revelations. It is about burden shifting, evidentiary texture, and the unromantic mechanics of proving what the law actually requires rather than what public opinion might prefer. Lively’s claims are rooted in doctrinally orthodox territory. Hostile work environment and retaliation are not exotic causes of action, even in Hollywood. What complicates matters is not the legal framework but the context in which it must be applied. Film sets are workplaces that market intimacy, emotional exposure, and creative vulnerability as professional virtues. That does not exempt them from employment law, but it does make line-drawing more delicate. Conduct that might be clearly inappropriate in a corporate office can appear, at least superficially, normalized when wrapped in the language of art and collaboration. Juries are asked to navigate that ambiguity without losing sight of the legal question, which is not whether the environment was intense or uncomfortable, but whether it crossed a legally cognizable threshold. This is where the case becomes less about personalities and more about proof. Severity and pervasiveness are not abstract concepts. They are constructed through accumulation. Frequency. Context. Reaction. Silence or objection. Response or indifference. The text messages and communications that have emerged through discovery are legally interesting not because they are personal, but because they are contemporaneous. They are the breadcrumbs juries are trained to follow when reconstructing intent and impact long after the moment has passed. Baldoni’s defense strategy reflects a sophisticated understanding of those dynamics. His posture has not been limited to denial. Instead, it has focused on reframing. Recharacterizing interactions as misread. Suggesting that objections were unclear or retrospective. Implicitly arguing that what the plaintiff experienced as coercive or hostile was, in fact, part of a fraught but mutual creative process. This is not an argument that misconduct never occurs. It is an argument that ambiguity exists, and in civil litigation, ambiguity can be a powerful ally. The brief countersuit, though procedurally unsuccessful, fits neatly within that strategy. Its real value was never doctrinal. It was narrative. It signaled resistance rather than retreat and attempted to reposition reputational harm as a two-way street. Courts can dispatch weak claims with relative ease. Jurors, however, carry impressions with them long after motions are denied. Litigation is as much about what lingers as what survives. The retaliation component of the case may ultimately prove more consequential than the underlying harassment claims. Retaliation law is less concerned with tone and more with timing. It asks whether adverse consequences followed protected activity and whether those consequences can be explained without resort to post hoc rationalization. In industries where decisions are informal and documentation is sparse, that inquiry can quickly become uncomfortable. Silence, in these cases, is rarely neutral. Hovering over all of this is the court’s increasingly difficult task of managing relevance in an era of celebrity saturation. Discovery disputes over third-party anonymity and sealing are not merely procedural housekeeping. They reflect a more profound anxiety about what happens when litigation escapes the courtroom and becomes cultural content. The law presumes openness for good reason, but it was not designed for cases where relevance is routinely conflated with notoriety. Judges are left to perform a delicate balancing act while everyone else watches for entertainment. What makes this case compelling is not the promise of a dramatic verdict, but the way it exposes the friction between legal standards and human storytelling. Employment law is intentionally unsentimental. It reduces experience to elements and burdens and asks factfinders to be disciplined in their empathy. Celebrity culture, by contrast, thrives on immediacy, identification, and moral clarity. When the two collide, neither emerges entirely intact. By the time this case reaches a jury, if it does, much will already have been decided in quieter ways. In discovery conferences. In evidentiary rulings. In how jurors are primed to interpret ambiguity. And perhaps in how the industry itself recalibrates its tolerance for informality masquerading as creativity. This lawsuit will not end Hollywood’s reckoning with power or fix the uneasy relationship between art and accountability. The law is not built for that kind of closure. What it can do, and what this case is already doing, is force a conversation about what workplaces owe their employees, even when the workplace happens to come with a red carpet. What is perhaps most striking about this litigation is how little of it turns on dramatic moments and how much of it turns on endurance. Employment cases of this kind rarely win with a single revelation. They win through accumulation. Through patience. Through the unglamorous discipline of discovery, motion practice, and evidentiary framing. In that sense, the Blake Lively and Justin Baldoni case is an unusually pure illustration of how civil law actually functions when stripped of narrative shortcuts. The public tends to assume that credibility is something a party either has or lacks. Courts know better. Credibility is constructed incrementally through consistency, corroboration, and the absence of convenient revision. It is shaped as much by what parties do when no one is watching as by what they say once litigation begins. That is why contemporaneous documentation looms so large here, and why informal industries often find themselves at a disadvantage once formality is imposed retroactively by a lawsuit. Film production culture has long relied on trust, improvisation, and professional intimacy as operating norms. Those norms are not inherently unlawful, but they are legally fragile. They assume good faith, mutual understanding, and aligned incentives. Litigation, by contrast, assumes none of those things. It assumes conflict, misinterpretation, and self-interest. When a dispute moves from the set to the courtroom, the cultural currency of collaboration is abruptly converted into the legal currency of proof. Not all industries make that exchange gracefully. This case also illustrates the quiet but significant role of institutions that never appear in the caption. Insurers, production companies, distributors, and financiers are watching closely, not for moral lessons but for risk signals. They are asking whether existing safeguards are sufficient, whether reporting mechanisms function in practice, and whether informal authority structures create exposure that contracts alone cannot neutralize. These are not abstract questions. They affect underwriting decisions, contractual provisions, and the degree of oversight studios are willing to impose on creative leads who have historically operated with broad discretion. There is, too, a cautionary tale here about the limits of reputational self-help through litigation. Aggressive narrative counteroffensives may satisfy an immediate impulse to respond, but they also lengthen disputes and deepen entanglement. The longer litigation persists, the less control any party has over how they are perceived. The law does not reward eloquence. It rewards coherence. And it is remarkably indifferent to whether a party feels misunderstood. For lawyers, this case is a reminder that celebrity does not simplify litigation. It complicates it. Famous clients are scrutinized differently by jurors, judges, and adversaries alike. Their communications are read with suspicion. Their motives are interrogated. Their silence is rarely interpreted as restraint. Representing them requires not just technical competence but also strategic restraint and a tolerance for ambiguity, which can be difficult to maintain under public pressure. For workplaces, particularly creative ones, the lesson is not that informality must disappear, but that it must be bounded. Clarity, documentation, and meaningful response mechanisms are not bureaucratic intrusions. They are legal insulation. They protect not only employees but also leadership by ensuring that disputes are addressed early, internally, and with a record that reflects intent rather than reconstruction. And for observers tempted to treat this case as entertainment, it offers a quieter but more durable insight. The law is not a referendum on character. It is a method for resolving disputes under conditions of uncertainty. It does not promise catharsis. It promises a process. When we mistake one for the other, we misunderstand both. As this case continues its methodical progress toward trial, it will likely generate more headlines, more commentary, and more attempts to distill it into a morality play. That impulse is understandable. It is also misleading. The real work of this litigation is happening in places that do not trend. In conference rooms. In discovery disputes. In evidentiary rulings that shape what a jury will ultimately be allowed to hear. That is where outcomes are decided. Quietly. Incrementally. Without a soundtrack. Again, while the original blog examined the origins of this case, this chapter focuses on how the matter has evolved and what it has now become. Not a scandal, but a study. Not a spectacle, but a process. And for anyone interested in how the law actually mediates power, creativity, and accountability, it is a study worth paying attention to.
January 16, 2026
Labor and Employment
Cannabis in the Workplace: From Stigma to Acceptance
The recent federal policy shift, marked by Executive Order 14370: Increasing Medical Marijuana and Cannabidiol Research, reflects not only a legal development but also a broader cultural transformation. Cannabis is increasingly viewed less as a dangerous narcotic and more like alcohol — a substance that, while legal in many contexts, still requires responsible use. This evolving perception influences employee attitudes and expectations, making it critical for employers to reassess how they approach cannabis in the workplace. While cannabis remains classified as illegal under federal law, many employer obligations are driven by state and local law, where legalization and employee protections continue to develop. For employers not subject to federal contractor requirements or safety-sensitive regulations, the challenge lies in addressing impairment without overreaching into lawful off-duty conduct. This is where the alcohol analogy becomes especially useful. Most organizations do not prohibit employees from having a glass of wine at home; they prohibit being intoxicated at work. A similar framework can apply to cannabis. Rather than banning all use, employers can focus on what truly matters: performance, safety, and productivity. Policies can prohibit use during work hours, impairment on the job, and conduct that compromises workplace safety, while respecting employees’ lawful off-duty choices. However, employees should understand that while cannabis may be legal and more socially accepted, being impaired at work is never acceptable. Employers should review their drug and alcohol policies to ensure they reflect both legal requirements and company values. Consider whether a zero-tolerance approach aligns with your operational needs, or whether a policy modeled on alcohol use – prohibiting on-duty use and impairment – makes more sense. Managers should be trained to recognize signs of impairment and respond consistently and objectively. Because cannabis laws vary widely by jurisdiction, consulting legal counsel before implementing changes remains essential. Thoughtful policy design allows employers to manage risk effectively while acknowledging the reality of a rapidly changing legal and cultural landscape.
January 15, 2026
Labor and Employment
The Post-Holiday Reset: Re-Establishing Communication and Availability Norms
The weeks following the holidays often bring a familiar feeling: full inboxes, overlapping priorities, and a sudden return to urgency after a brief pause. During the holiday season, many teams naturally loosen expectations around response times and availability. The challenge in January is not simply returning to work, but resetting clear and healthy norms before old habits (or unhealthy ones) take hold again. In today’s hybrid and remote work environments, boundaries around communication are rarely self-correcting. Without intentional reset moments, employees may assume they are expected to remain as available as they were during peak periods, even when that level of responsiveness is no longer necessary or sustainable. The post-holiday return provides a rare opportunity to recalibrate. One of the most common sources of confusion is silence. When organizations do not explicitly restate expectations, employees are left to infer them based on behavior. A single late-night email or weekend message can unintentionally signal that immediate responses are once again required. Over time, these small signals shape norms that are difficult to unwind. Re-establishing healthy expectations starts with clarity. Teams benefit from shared understanding around what constitutes urgent communication versus what can wait. Not every message needs an instant reply, yet modern tools make everything feel immediate. Resetting norms means reinforcing that responsiveness should be purposeful, not constant. Manager behavior plays an outsized role in this process. Employees tend to mirror what they see, not what they are told. If leaders resume sending messages at all hours or praising rapid responses, boundaries quickly erode. Conversely, when leaders model reasonable response times and respect off-hours, those practices spread organically across teams. It is also important to acknowledge that flexibility cuts both ways. Many employees value the autonomy to step away during the day or adjust schedules as needed. That flexibility works best when paired with mutual respect for personal time. Resetting expectations is not about reducing productivity; it is about ensuring that availability aligns with actual business needs rather than habit or inertia. January is also an ideal time to address roles that genuinely require extended availability. Rather than allowing informal expectations to creep back in, organizations should be intentional about when and why off-hours communication is necessary. Clear parameters reduce frustration and help employees understand when responsiveness truly matters. Healthy communication norms do more than protect work-life balance. They improve focus, reduce burnout, and enhance collaboration. When employees are not operating in a constant state of interruption, the quality of work and decision-making improves. As teams settle back into routine after the holidays, the question is not how quickly everyone can return to being “always on.” The better question is: which norms will support sustainable performance throughout the year? A thoughtful reset now can prevent misunderstandings, protect morale, and set a tone that lasts well beyond the first quarter.
January 7, 2026
Immigration Law
The Gold Card Gamble: High Stakes for U.S. Residency
The United States Citizenship and Immigration Service has released the brand-new form I-140G – the Immigrant Petition for the Gold Card Program. This form can be used by applicants who have previously registered on www.trumpcard.gov. The form also requires a $15,000 filing fee per applicant. The USCIS also explains the “gift” requirement for the filing. Individuals filing an I-140G must provide a gift of $1 million per applicant. The per-person rule is a significant increase in the program’s anticipated costs since its initial inception. While more details of the process have emerged, significant questions and concerns regarding the program remain. What We Know About the Gold Card The Gold Card offers a $1 million payment to the United States in exchange for legal permanent residence. The 24-page I-140G form lays out the process for potential Gold Card applicants, including biographic information and the usual attestations regarding potential grounds of inadmissibility. The form includes entirely new sections on the applicant’s source of funds and net worth. The source-of-funds instructions lack the complexity of EB-5 applications and are likely to be subjected to additional screening. Further, the form includes a section for corporations to complete if they are the sponsoring entity. Lastly, the G140 form requires a potential recipient to indicate if they are seeking an immigrant visa under one of two categories: the first preference alien of extraordinary ability, or the second preference alien of exceptional ability seeking a National Interest Waiver (NIW). This path was outlined early as the proposed mechanism for gold card applications to be counted with annual immigrant visa limitations imposed by the Immigration and Nationality Act. The form and its instructions state that the entire process will be completed online with biometrics required for all applicants, even if abroad. What We Don’t Know While a form is now available, details are still lacking. Vague instructions regarding filing the case online after paying the substantial filing fee are provided, with no evidence that the online portal at MyUSCIS can actually process the cases. No timelines or processing details are provided. The Department of Homeland Security has indicated that proposed rulemaking for the employment-based immigrant petitions is scheduled for early 2026. It is possible that clarity and the creation of the regulatory framework for the gold card will be included. Significant questions remain regarding the actual program. For example, is the program authorized under the Immigration and Nationality Act? That question is still up in the air. There are some major issues with the current proposed format, as the Executive order that created the program differs from the application process as described. In addition, the authority of the USCIS to create programs is limited by its mandate from Congress. This means that, without a change in the law (not regulation) new programs cannot be created that materially impinge on existing programs such as the EB-5 investment visa. Given the major questions relating to the legal underpinning of the program, as well as the technical details of its processing, any potential applicant should consider whether to proceed very carefully. For example the stated “nonrefundable” filing fee of $15,000 per applicant would be at risk, should the program be found in violation of the will of Congress, not to mention the gifted funds should an applicant progress that far. The examination of the potential risk for loss here is critical, especially when compared to existing programs such as the EB-5 investment visa, which also involves risks but provides for a repayment of investment funds to the intending immigrant.
December 23, 2025
Labor and Employment
The Amazon v. PERB Decision: Reaffirming Federal Supremacy in Labor Law
The November 26, 2025, preliminary injunction issued by Judge Eric R. Komitee of the U.S. District Court for the Eastern District of New York in Amazon Services v. New York State Public Employment Relations Board represents a critical reaffirmation of federal preemption doctrine in American labor law. The decision found that amendments to the New York State Employment Relations Act (SERA) are preempted under the Supreme Court's holding in San Diego Building Trades Council v. Garmon. The Constitutional Context At the heart of this dispute lies a fundamental question about the structure of American governance: when a federal agency faces operational paralysis, can states step in to fill the regulatory void? New York's September 2025 amendments to SERA attempted to do precisely that, granting the state's Public Employment Relations Board (PERB) jurisdiction over private-sector labor disputes traditionally handled by the National Labor Relations Board (NLRB). The legislation emerged from a genuine governance crisis — following President Trump's removal of Board Member Gwynne Wilcox, the NLRB was left without the quorum necessary to issue decisions on union representation petitions or unfair labor practice charges. Governor Kathy Hochul signed the amendments as a stopgap measure, arguing they were necessary to protect workers' rights during federal dysfunction. The law would have allowed PERB to exercise NLRB powers unless and until the federal board obtained a court order establishing jurisdiction — effectively reversing the presumption of federal authority that has governed labor relations for decades. The Garmon Doctrine: A Pillar of Labor Law Judge Komitee's decision rested heavily on the doctrine established in the Supreme Court's 1959 Garmon decision, which holds that when an activity is even arguably subject to the National Labor Relations Act, states must defer to the NLRB's exclusive competence. This principle reflects a deliberate congressional design: to create uniform national labor policy administered by an expert federal agency rather than allowing potentially conflicting state regulations. The Garmon preemption doctrine applies not only when the NLRB has actively asserted jurisdiction, but also when the board has declined to exercise its authority. This breadth serves a critical purpose — preventing the very jurisdictional conflicts and regulatory uncertainty that New York's law threatened to create. As the court emphasized, states cannot regulate labor activities simply because the federal agency is temporarily unable to act. The Court's Rejection of "Unique Circumstances" New York and the Amazon Labor Union advanced a novel argument: that the unprecedented circumstances of the NLRB's lack of a quorum, combined with the constitutional challenge to board members' removal protections, justified an exception to traditional preemption principles. The district court firmly rejected this position, holding that temporary federal dysfunction cannot justify state legislation that directly contradicts Supreme Court precedent. This rejection is significant for several reasons. First, it establishes that preemption is not contingent on federal capacity but on federal authority. The NLRA remains the supreme law governing private-sector labor relations regardless of whether the NLRB can currently adjudicate cases. Second, it prevents states from using administrative or political crises as opportunities to expand their regulatory reach into areas Congress has reserved for federal control. Third, it maintains the principle that doctrinal exceptions must come from the Supreme Court, not from state legislatures responding to expedient circumstances. Implications for American Federalism The Amazon decision arrived at a moment when multiple states — including California, New Jersey, and Massachusetts — have proposed or enacted similar legislation attempting to fill the NLRB's vacuum. Judge Komitee's opinion serves as a warning shot to these efforts, reasserting the primacy of federal labor law even during periods of federal incapacity. While states traditionally possess broad police powers to protect workers' health and safety, labor relations have long been recognized as requiring national uniformity. The New York court's decision reinforces the principle that constitutional preemption doctrines are not suspended during administrative crises, however genuine those crises may be. Practical Consequences For employers like Amazon, the injunction prevents the nightmare scenario of navigating conflicting state and federal labor systems. Without the injunction, companies operating across multiple states could face dramatically different legal frameworks for identical conduct, undermining the uniformity that the NLRA was designed to achieve. For workers and unions, the decision is more complicated. It removes a potential avenue for expedited resolution of labor disputes at a time when the NLRB remains effectively paralyzed. Looking Forward The Amazon decision is unlikely to be the final word. New York will likely appeal to the Second Circuit, where the case could produce important appellate guidance on the application of preemption doctrine in contexts of federal administrative failure. Moreover, the underlying constitutional questions about NLRB members' removal protections remain pending before the Supreme Court, and their resolution could reshape the landscape that produced this controversy. Conclusion Judge Komitee's ruling in Amazon Services v. New York State Public Employment Relations Board is important because it reaffirms principles of federal preemption at a moment when those principles faced their most serious state-level challenge in decades. The decision prioritizes constitutional structure and legal consistency over pragmatic problem-solving, holding that even genuine governance crises cannot justify state encroachment into areas of exclusive federal jurisdiction. For labor law specifically, the decision maintains the NLRA's primacy and the Garmon doctrine's vigor, ensuring that private-sector labor relations remain governed by uniform national standards rather than fragmenting into state-by-state variations The decision leaves unresolved the deeper problem it illuminates: what happens when the federal government's institutional mechanisms fail, yet constitutional doctrine prohibits states from filling the void? This question extends beyond labor law to implicate numerous regulatory domains where federal preemption is broad but federal capacity is fragile. Judge Komitee's opinion answers the legal question decisively, but the practical and political challenges it exposes will likely persist long after this litigation concludes.
December 19, 2025
Labor and Employment
Union Types Explained: How They Impact Employer Strategy
When employers receive notice that employees have filed a petition with the National Labor Relations Board (NLRB) to unionize, one question becomes immediately important: What type of union are we dealing with? Employees might be joining a well-established, nationally affiliated union such as the Communication Workers of America or the International Brotherhood of Teamsters. Or, as has been the trend in recent years, they could affiliate with an independent union of their own creation. The answer can shape negotiation strategy, resource planning, and long‑term labor relations management. Understanding the Two Models Well-established, national unions provide robust infrastructure support: assistance with election procedures, contract negotiation expertise, legal representation, strike funds, and training programs. These organizations bring decades of collective bargaining experience and established relationships with labor attorneys. Independent unions, by contrast, operate with greater autonomy. Examples such as the Amazon Labor Union – prior to its affiliation with the Teamsters – demonstrate how workers maintain more direct control over internal operations and strategic decisions. Members avoid contributing high percentages of their dues to national overhead costs, keeping resources concentrated at the local level. At the bargaining table, both union types pursue the same fundamental goal: negotiating over wages, benefits, and working conditions. Key Differences that Impact Employers Once employees vote to unionize, the process moves into collective bargaining, and national and independent unions bring different expertise and resources to this process. National unions bring professional negotiators with extensive experience and established bargaining strategies. Employers face well-prepared adversaries but ones that may be more predictable. Independent unions may initially lack professional negotiating experience, leading to longer, more unpredictable sessions, but they may be more flexible and creative when responding to employer proposals during negotiations. In addition, more established unions may provide strike funds, legal support, and public relations resources that enable sustained labor disputes. On the other hand, independent unions operate with limited resources but often generate strong member commitment and community support that resonates locally. A third key difference is that national unions feature formal procedures and hierarchical structures, offering employers clear points of contact but potentially resulting in bureaucratic delays. Independent unions often use direct democracy, facilitating faster problem-solving but potentially complicating negotiations when leadership must repeatedly seek membership approval. Whether facing a well-established, national union with decades of experience or an independent union born from your workplace, success requires thorough preparation, legal compliance, and commitment to constructive dialogue.
December 18, 2025
Labor and Employment
Holiday Parties Without Headaches: Handling Complaints with Care
The annual holiday party is meant to lift spirits, reward employees, and create a sense of connection as the year draws to a close. It is often one of the few opportunities for your team to relax together outside the workplace. Yet the same relaxed atmosphere can also lead to missteps. When an employee later reports harassment arising from the event, an employer suddenly faces a complex combination of legal obligations, workplace culture concerns, and employee relations challenges. I regularly help organizations navigate these situations. How you respond in the hours and days after receiving a report matters greatly. With the right approach, you can address the issue responsibly, protect all parties involved, and strengthen trust within your workforce. Responding When an Employee Comes Forward When an employee reports harassment related to a company event, the first and most important step is to acknowledge the complaint and ensure the employee feels heard. Even though the behavior occurred outside the office, the legal analysis does not change when the event is employer-sponsored or reasonably connected to work. Your obligations under federal, state, and local anti-harassment laws still apply. Begin by gathering the essential facts: what occurred, who was involved, where the incident took place, and whether any witnesses or relevant communications exist. Holiday events often generate photographs, videos, or social-media posts that may become significant pieces of evidence. Preserve anything that may be relevant as early as possible. Once you have the initial information, move promptly to an impartial investigation. A trained internal investigator or outside counsel can do this. The key is neutrality: no one involved in the investigation should have a personal connection to the individuals involved, and the process should follow the same procedures you would use for any other workplace complaint. While the investigation is ongoing, consider whether temporary steps are necessary to prevent retaliation or further interaction between the individuals involved. These measures need not imply wrongdoing; they are simply safeguards while the facts are being gathered. At the conclusion of the investigation, determine whether your policies were violated and identify appropriate corrective actions. Communicate the findings to the individuals involved in a way that preserves confidentiality while assuring them that the matter was taken seriously. Finally, check in with the reporting employee afterward to ensure that no subtle form of retaliation has occurred, whether through scheduling changes, exclusion from meetings, or other shifts in workplace dynamics. Why Holiday Parties Create Unique Risks Although holiday gatherings feel informal and festive, the legal standards governing workplace conduct do not disappear at the door of the venue. When the employer organizes, sponsors, or encourages attendance at an event, it is generally considered an extension of the workplace. Alcohol service, dimmer social boundaries, and a sense of celebration can cloud judgment and create opportunities for conduct that someone later perceives as inappropriate, unwelcome, or intimidating. Employers also sometimes assume that what happens after official party hours is beyond their responsibility. But if employees continue the celebration in a way that directly follows the company event, the conduct may still be viewed as connected to the workplace. Understanding this continuum is essential when assessing what occurred and how to address it. A consistent theme in my work with clients is that risk increases when boundaries are unclear: unlimited drinks, a lack of visible leadership presence, or an atmosphere that drifts too far from the professional culture you maintain during the workday. When employees are unsure where the lines are, the potential for misunderstanding increases. Creating a Celebration That Reflects Your Values Most employers do not want to cancel holiday events, and they shouldn’t. With thoughtful planning, these gatherings can remain enjoyable while aligning with your legal obligations and your organizational culture. The most effective preparation begins before the party. Communicate expectations clearly but respectfully. A simple reminder that all workplace policies still apply, including those on harassment, professionalism, and retaliation, sets the tone without dampening spirits. Consider the format of the event and whether the venue, timing, and availability of alcohol reflects the environment you want to create. Provide non-alcoholic options, ensure food is available, and, if alcohol is served, rely on trained bartenders rather than self-serve. Managers play a crucial role. A brief refresher on their responsibilities can make a substantial difference. They set the tone and often serve as the first point of contact if an issue arises. Their visible, engaged presence communicates that the organization values both celebration and safety. After the event, a short message thanking employees for attending and reminding them that any concerns can be reported without fear of retaliation further reinforces your culture of respect. When a Report Occurs: The Guiding Principles If you receive a complaint related to the party, approach it with the same care you would apply to any workplace concern. Ask whether the event was employer-sponsored, what evidence may exist, how quickly the complaint was made, and whether any safety or interim measures are needed. Consistency and fairness are essential. So is prompt action. Delays can undermine credibility and may create legal exposure. When handled well, the response to a complaint not only addresses the immediate issue but also strengthens the organization’s culture. Employees notice when leadership acts thoughtfully and with integrity. That trust is valuable long after the holiday season ends. A well-planned holiday party can bring your team together in meaningful ways. With clear expectations, attentive leadership, and a willingness to act quickly when concerns arise, employers can enjoy the benefits of these celebrations without creating unnecessary risk.
December 17, 2025
Labor and Employment
Employee Handbooks: Essential Guide or Outdated Relic?
For years, employee handbooks were treated as routine onboarding documents, i.e., something handed out on a new hire’s first day and rarely revisited unless a legal issue arose. But in 2026, the pace of workplace change has rendered the “static handbook” approach obsolete. With hybrid work now firmly embedded across industries and compliance obligations multiplying at a rapid rate, the modern employee handbook has become one of the most critical tools an employer can maintain. Whether an organization views it as a cultural roadmap or a liability shield, the reality is that a well-maintained handbook is no longer optional. One of the biggest drivers behind this shift is the transformation of how and where employees work. Traditional handbooks were built around the assumption of a centralized, physical workplace. Today’s workforce operates across multiple states and time zones, and home offices, often using company systems in spaces the employer cannot control. Without clearly defined expectations (how time should be recorded, what equipment must be secured, how quickly employees should respond, and what “professionalism” looks like through a webcam), employers unintentionally create inconsistencies that can later breed miscommunication or even litigation. The hybrid model has also introduced new questions around expense reimbursement, data security, and workplace safety, all of which require written guidance to manage effectively. Legal compliance is another area where employers face mounting pressures. The last several years have brought sweeping changes in employment law at every level. From expanding privacy laws governing employee data, to new protections for caregiver status and reproductive decision-making, to the resurgence of federal scrutiny over non-competes and independent contractor classification, the regulatory landscape is complex and evolving. A handbook that has not been meaningfully updated within the last one or two years is almost certainly missing something critical, and often something required by law. Even policies that feel evergreen, such as anti-harassment or leave provisions, may be outdated if they do not reflect newer protected categories or recent state-level paid leave mandates. What many employers do not realize is that the handbook is also one of the most important documents in a dispute. Courts and agencies regularly review handbook policies to determine whether employers communicated expectations clearly and applied them consistently. When a policy is vague or outdated, employees and managers may interpret it differently, leading to discrimination claims, retaliation allegations, and wage-and-hour challenges. A modern, accurate handbook not only provides clarity to employees — it becomes a critical defense exhibit when disputes arise. The content of today’s handbooks looks very different from that of just a few years ago. Remote and hybrid work policies now need to be specific and actionable, addressing topics such as performance expectations outside the office, the use of AI-based tools, and the handling of confidential information in remote environments. Anti-harassment standards must acknowledge that misconduct can occur in virtual settings just as easily as in physical workplaces, and reporting procedures must be accessible to employees who may rarely visit a company office. Likewise, timekeeping rules must squarely address off-the-clock work and break compliance in a distributed workforce, where supervisors cannot easily observe employee activity. Technology and data privacy have also become essential components of the handbook. With the growing use of monitoring software, AI-assisted performance evaluation, and increased reliance on personal devices, employees expect transparency around what data is collected and how technology will be used. Many states now require employers to provide written disclosures regarding privacy practices. A handbook that avoids these topics leaves both employees and the organization vulnerable to confusion and legal risk. One notable shift in recent years is the move away from static paper or PDF manuals. The most effective organizations now treat their handbooks as living compliance resources: digitally housed, easily searchable, and updated regularly. Electronic acknowledgments have replaced signature pages, and some employers are even incorporating short explainer videos or interactive elements to help employees better understand complex policies. In this environment, a handbook is no longer a document that sits untouched for years; it is a dynamic framework that evolves alongside the organization and its legal obligations. The process of modernizing a handbook does not stop with rewriting policies. Employers must ensure that the document accurately reflects actual workplace practices. Courts scrutinize discrepancies between written policies and managerial behavior, and inconsistencies can undermine an employer’s defense. Training supervisors on the content of the handbook, especially policies related to leave, performance management, and remote work expectations, is just as important as updating the text itself. Multi-state employers must also account for the varying state and local laws that apply differently across their workforce, often through state-specific addenda. In many ways, the increase in complexity has reaffirmed the purpose of the employee handbook. Rather than becoming outdated, the handbook has become essential for navigating the uncertainties of the modern workplace. It provides structure in an era of evolving norms, clarity in a landscape of regulatory change, and consistency across a workforce that may never gather under one roof. Employers who update their handbooks regularly (and, ideally annually, and more often if operating in multiple states) position themselves to stay ahead of compliance risks and maintain a more informed, engaged workforce. The bottom line is simple: if your organization has not reviewed its handbook in the last 12 to 18 months, 2026 is the year to do it. A thoughtful, modernized handbook supports your culture, protects your business, and ensures that employees understand what is expected of them (no matter where they work).
December 4, 2025
Labor and Employment
OSHA Reopens After Government Shutdown: What Employers Should Expect
The Occupational Safety and Health Administration (OSHA) is officially back to full operations, now that the government shutdown has ended. With staff fully restored, employers need to recognize that agency activity previously paused is now resuming — and, in many cases, accelerating. As OSHA re-engages inspections, rulemaking, and policy initiatives, organizations that assumed a “wait-and-see” stance during the shutdown may find themselves playing catch-up. During the funding lapse, OSHA’s enforcement was largely limited to imminent danger situations, workplace fatalities and catastrophes, and high-gravity serious violations that could not wait. Programmed inspections, outreach, cooperative-program activity, and some informal conferences were suspended. Yet despite that pause, employers did not gain any regulatory holiday: many deadlines continued to run. For example, the six-month statute of limitations for OSHA to issue citations remained in force, as did the 15-working-day deadline for filing a Notice of Contest once a citation is issued. Because of that, businesses must now review and respond to any enforcement activity that may have been initiated during the shutdown period but did not proceed in a typical manner. With the shutdown behind us, OSHA will begin clearing the backlog of work that accumulated, and that means employers should expect increased activity. Complaints filed during the shutdown may lead to inspections, email inquiries, or phone contact, and cited cases may be pushed toward litigation or settlement as the agency’s Office of the Solicitor resubmits matters to the Occupational Safety and Health Review Commission (OSHRC). The new leadership at OSHA and OSHRC, confirmed during or immediately following the shutdown, signals a renewed policy push: new priorities, new enforcement emphasis, and perhaps fresh interpretations of the rules. On the regulatory side, rulemaking initiatives that were paused are now reactivated. For example, OSHA recently closed its post-hearing comment period for a proposed heat exposure standard, and staff will resume review of comments now that appropriations have returned. Other dockets — related to chemical respiratory protection, changes to the general duty clause, lighting in construction, and workplace violence/infectious disease standards — are also moving forward. Employers should remain alert because while final rules may not be imminent, the path is now open. Given this environment, it is imperative for employers to revisit their safety, health, and compliance programs—and do so with urgency. While the shutdown may have created a temporary lull, it did not suspend employer obligations. During the pause, many firms may have held off on site audits, deferred training programs, delayed record-keeping cleanup, or postponed internal corrective actions. Now is the time to address those gaps. Reporting requirements remain in effect: for example, employers must report work-related fatalities within eight hours and serious injuries (such as amputations, loss of an eye, hospitalization) within 24 hours of occurrence. Furthermore, even in states under federal OSHA plan coverage, the same rules apply: while federal inspectors may have been limited, many state-plan jurisdictions continued inspections and enforcement. Another significant factor: backlog and delay do not mean indefinite delay. When inspections resume in earnest, the accumulation of complaints and deferred cases may result in a surge of agency activity, meaning firms that assumed “no one is watching during the shutdown” could find themselves under scrutiny. In other words, the quiet period is essentially over. Employers should confirm that abatement deadlines, informal conference windows, and contest deadlines have not expired during the shutdown. If citations were issued, the 15-working‐day contest deadline is jurisdictional: missing it means losing the right to challenge the citation. Even if informal conferences were unavailable during the shutdown, the contest deadline continued to run. That means many firms may need to act even before the agency shows up. Documentation of abatement actions, corrective steps, and safety program updates will be vital. In terms of regulatory posture and leadership, the era ahead may bring changed enforcement priorities. With a new assistant secretary for OSHA and a newly confirmed solicitor of labor now in place, OSHA will likely clarify its strategic focus and resume formal rulemaking. Employers should anticipate possible shifts in emphasis — for instance in the areas of musculoskeletal disorders, infectious disease in healthcare, workplace violence protections, and emerging hazard exposures. The agency’s restart also triggers renewed activity at the Mine Safety and Health Administration (MSHA) and its review commission. For employers in mining and heavy industry, that means you should not assume continued dormancy. For practical steps, employers should immediately conduct a legal-compliance health check. Review outstanding citations, confirm whether any deadlines have run or are about to run, track complaints filed with OSHA during the shutdown, and review your injury/illness reporting and record-keeping for accuracy. Update or re-launch training and internal auditing efforts that may have been deferred. Check the status of rulemaking efforts that may affect your industry (for example, the heat stress standard) and monitor whether state-plan jurisdictions are adopting or adapting state-specific rules in response. If your firm operates in multiple states, especially with state-plan OSHA programs, coordinate your multi-state compliance posture now because state enforcement may not have had the same suspension. Finally, ensure your safety culture remains robust: a period of reduced government oversight is not grounds to reduce employer vigilance. In short, OSHA’s return means business as usual — and then some. Employers who treat the shutdown as a pause rather than a break may find themselves at a disadvantage. Now is the time to engage proactively, refresh your compliance strategy, reinforce your safety programs, document your actions, and stay alert.
November 20, 2025
Labor and Employment
Increasing Minimum Wages: Emerging Trends Across the U.S.
The conversation around minimum wage in the United States has gained renewed momentum in recent years. While the federal minimum wage has remained unchanged since 2009, states and municipalities have taken the lead in implementing wage increases to reflect the rising cost of living and economic shifts. State-Level Action in the Absence of Federal Change With the federal minimum wage stuck at $7.25 per hour for over a decade, many states have enacted their own legislation to raise wage floors. These efforts include: State-level minimum wage increases Automatic adjustments tied to inflation Municipalities setting wages above state levels This decentralized approach has led to a patchwork of wage standards across the country, with significant variation depending on location. Widespread Increases Since 2014 The movement to raise minimum wages has gained substantial traction: 28 states and the District of Columbia have increased their minimum wage since 2014 30 states and the District of Columbia now have minimum wages above the federal rate 63 municipalities or counties have set minimum wages higher than their respective state minimums Wage rates exceeding $15.00 per hour are increasingly common These changes reflect a broader recognition of the need for wages that better support working individuals and families. Leading the Nation: Highest Minimum Wage Rates As of mid-2025, several states and cities stand out for their high minimum wage rates: District of Columbia: $18.00/hour (effective July 1, 2025) California: $16.50 Connecticut: $16.35 New Jersey: $15.49 New York (NYC, Long Island, Westchester): $16.50 Washington: $16.66 Municipalities in Washington State boast the highest local rates: Burien, WA: $21.10 Tukwila, WA: $21.10 (for large employers) Seattle, WA: $20.76 These figures highlight the growing trend of local governments stepping in to ensure livable wages. Who Still Earns the Federal Minimum? Despite the federal rate remaining at $7.25, only a small fraction of workers earn this amount: Less than 2% of American workers are paid the federal minimum wage The Bureau of Labor Statistics projects wage growth of 3% to 5% across most states in 2025 By October 2025, over half of all states will have minimum wages above $14.00/hour This data suggests that market forces and state legislation are driving wage increases independently of federal action. Federal Legislation on the Horizon? The Raise the Wage Act of 2025, introduced in both chambers of Congress on April 8, 2025, proposes sweeping changes: Gradual increase of the federal minimum wage to $17.00/hour by 2030 Elimination of the subminimum wage for tipped workers and workers with disabilities Tipped employee minimum wage to rise to $15.00/hour by 2030 Strong backing: 175 Congressional sponsors and support from 85 labor organizations If passed, this legislation would mark a significant shift in federal wage policy and could set a new national standard.
November 19, 2025
Labor and Employment
Independent Contractor Misclassification: Labels Don’t Shield Liability, Says Eleventh Circuit
In a decision that underscores the importance of substance over form in employment relationships, the Eleventh Circuit recently reaffirmed that contractual labels alone do not determine whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (FLSA). The case, Galarza v. One Call Claims, LLC, involved three insurance adjusters who sued for unpaid overtime, alleging they were misclassified as independent contractors. The plaintiffs had signed independent contractor agreements with One Call Claims, LLC (OCC), which staffed adjusters for Texas Windstorm Insurance Association (TWIA). Despite the agreements, the adjusters worked full-time for TWIA for nearly two years, were restricted from working for other carriers, and had no control over their pay or hours. TWIA dictated how they performed their work—even after transitioning them to remote roles. The Eleventh Circuit applied the six-factor economic reality test from Scantland v. Jeffrey Knight, Inc., emphasizing that no single factor is dispositive. Instead, the focus is on the worker’s economic dependence on the company. The court found that five of the six factors weighed in favor of employee status, reversing the trial court’s summary judgment and sending the case to a jury. Key takeaways from the decision include: Control Matters: The companies’ significant control over the adjusters’ work and schedules undermined their classification as independent contractors. Economic Dependence Is Central: The court stressed that the ability to deduct expenses or maintain licenses does not negate economic dependence. Indefinite Engagements Raise Red Flags: The long-term, exclusive nature of the relationship suggested an employment arrangement. Essential Services Tip the Scale: The adjusters’ work was integral to the companies’ operations, further supporting employee status. The court’s conclusion was striking: “If a jury could not reasonably find that the workers were economically dependent under these facts, it’s not clear that a professional working from home could ever establish economic dependence under the FLSA.” What Employers Should Do This case serves as a cautionary tale for employers. Simply labeling a worker as an independent contractor does not insulate a company from liability. Employers must evaluate the actual working relationship using the economic reality test. Misclassification can lead to substantial legal exposure, including back pay, penalties, and litigation costs. Employment counsel should guide clients in conducting regular audits of contractor relationships, ensuring that classifications align with the realities of the work performed. When in doubt, err on the side of caution — and compliance.
November 3, 2025
Labor and Employment
The Warning Signs Managers Miss: How to Build a More Transparent Workplace
It's not uncommon for employers to be caught off guard by union organizing. Managers frequently describe the experience the same way: “I had no idea.” By the time a representation petition is filed with the National Labor Relations Board (NLRB), the campaign may have been underway for weeks or even months, quietly, strategically, and largely unnoticed. Understanding why management often misses the warning signs and how to build a more transparent workplace culture is critical for maintaining trust among employees. Even well-intentioned and attentive managers can overlook early warning signs of organizing activity. A lack of complaints is often mistaken for employee satisfaction, but silence can just as easily signal dissatisfaction, especially when workers feel their concerns won’t be heard or addressed. Communication gaps also play a major role: frontline supervisors are typically the first to notice shifts in morale or group dynamics, yet they may not report these patterns upward or may fail to recognize their importance. Finally, over time, routine dissatisfaction about scheduling, workload, or management style can become so familiar that it fades into the background, even as it quietly fuels collective frustration. The most effective way to avoid being caught off guard by organizing activity is to create a workplace culture where employees feel genuinely heard, respected, and valued. This requires intentional, ongoing effort. First, open and consistent communication is essential, providing employees with regular opportunities to share feedback, raise concerns, and see that their input leads to meaningful action. Second, supervisors should be trained to recognize shifts in morale and to respond effectively, since they are often the first to sense when issues are brewing. Employers can also benefit from conducting periodic check-ins, such as engagement surveys or small-group discussions, to identify recurring themes of employee dissatisfaction. When management understands the root causes of dissatisfaction and addresses them early, employees are less likely to seek outside representation. It's important to remember that employees have a legally protected right to organize and engage in concerted activity under the National Labor Relations Act. The goal isn't to suppress organizing, but to address the underlying workplace issues that may lead employees to seek union representation in the first place. By staying attentive, transparent, and proactive, employers can work towards fostering a cohesive, engaged workplace and avoiding the all-too-common refrain: “I had no idea."
October 22, 2025
Labor and Employment
The Hidden Cost of Remote Work: Who Pays for the Home Office?
Remote work is now a customary feature of many workplaces. Until recently, employer policies (if any) governed payment of the job-related expenses incurred by remote workers. However, a number of states have now enacted express mandates for payment of remote employment expenses. California, Illinois, Iowa, Massachusetts, Minnesota, Montana, New Hampshire, New York, North Dakota, Pennsylvania, South Dakota, and the District of Columbia have statutes that require employers to reimburse employees for certain remote work expenses. The city of Seattle also requires payment of “remote work expenses” under its wage payment statute. There are three different types of expense reimbursement laws: Required Reimbursement Most of these states require reimbursement of “necessary” expenses that relate to the performance of the employee’s duties. Those states are California, Illinois, Massachusetts, Montana, North Dakota, South Dakota and the District of Columbia. Conditional Reimbursement Two states make reimbursement conditional on the employer’s policy. Iowa requires reimbursement of expenses “authorized by the employer;” and New York only requires payment for expenses that are “promised” to the employee. Equipment/Tools Reimbursement Two states do not have the “necessary” condition for reimbursement but require payment for equipment or tools based on their use in connection with employment. Minnesota requires reimbursement of expenses for “equipment used” in for work, except “tools of the trade.” New Hampshire similarly requires payment for any expenses “incurred at the request of the employer” except for “expenses normally borne by the employee.” All of these state laws commonly require more extensive reimbursement for work expenses compared with the narrower typical expense reimbursement practices historically used by employers. However, detailed guidance on the scope and nature of required reimbursements is not yet provided in these state laws. State laws that require employers to reimburse the expenses of remote workers typically define the costs covered in terms of whether they are “necessary” for discharge of the employee’s duties and directly related to the kind of work performed. Although not expressly stated in these laws, the underlying premise is that the expenses would not have been incurred unless the employee was performing remote work for the employer. Clearly, the definition of reimbursable expenses is very broad, since any equipment, software, connectivity, or furniture that is actually and routinely used to perform work can be seen as “necessary.” Typical examples of reimbursable expenses would include computer equipment, printers, cellphones, internet connections, software licenses, and cameras/microphones for video conferencing. However, the definition of expenses that are required to be reimbursed is broader than the typical scope of equipment that is reimbursed or furnished to the employee. For example, if a desk or an ergonomic chair is necessary for performance of the employee’s duties, then it may well fit the definition of a reimbursable expense under state law. As a general rule, any expenses that would be incurred by the employee if the employee were not working for the employer are not covered by the state reimbursement laws. Certainly, any normal living expenses (such as food, furniture, electric power, etc.) are not reimbursable under these laws. Also, any personal luxury items that are not necessary for the work (such as decorations for a home office) are not covered. The state statutes do not distinguish between temporary and more long-term remote work for purposes of reimbursement. None of the state laws address how the allocation of expenses that are used both for work and personal activities should be handled. Under the laws of the seven states that use the “necessary expense” test, it would probably violate the law to require pro rata apportionment, since the expenses are fully reimbursable if “necessary” for work. In the two states where the test is whether the equipment or tools are “used” in connection with employment, a similar analysis could apply. In the two states where the employer reimburses pursuant to its authorization or promises, the employer may allow for partial reimbursement as part of its policy. However, establishing and enforcing the separation of employment-related costs and personal costs would be very difficult. The state of Illinois is an exception to the lack of guidance on reimbursable expenses under state laws. The Illinois law supplies a five-part test for determining what expenses are covered: Whether the employee has any expectation of reimbursement Whether the expense is required or necessary to perform the employee’s job duties Whether the employer is receiving a value that it would otherwise need to pay for How long does the employer receive the benefit Whether the expense is required for the job In more than 75% of the states, reimbursement of remote work expenses is neither required by law nor regulated. As a best practice, however, employers should establish clear, detailed policies that describe what remote work expenses are considered to be necessary and directly related to employee duties, as well as policies for documentation and reimbursement of expenses. These policies may need to vary depending upon the job description, work performed, or disability accommodation.
October 20, 2025
Labor and Employment
EEOC Regains Quorum and Signals Major Policy Shifts Ahead
On October 7, 2025, the United States Senate confirmed President Trump’s nomination of Brittany Panuccio as the third commissioner of the Equal Employment Opportunity Commission (EEOC). Her confirmation restores the commission’s quorum for the first time since early 2025 and gives the agency the power to issue, amend, or rescind regulations and guidance, and to take formal policy action under all major civil rights statutes. Since January, Acting Chair Andrea Lucas has led the EEOC without a quorum, which prevented the agency from adopting or revising rules and limited its ability to pursue systemic litigation or other actions requiring a majority vote. With Commissioner Panuccio joining Lucas and Commissioner Kalpana Kotagal, the EEOC now holds a two-to-one Republican majority. The agency is positioned to act quickly in reshaping key regulations and enforcement priorities consistent with the administration’s civil rights enforcement agenda. Acting Chair Lucas has stated that the EEOC will focus on restoring “evenhanded enforcement of employment civil rights laws for all Americans.” She has identified several priorities, including addressing what she describes as race- and sex-based discrimination linked to diversity, equity, and inclusion initiatives, expanding protections for religious liberty, reinforcing sex-based rights rooted in biological distinctions, and increasing enforcement in areas involving national origin and religious discrimination. The Pregnant Workers Fairness Act Will Likely Be the First Target The Pregnant Workers Fairness Act (PWFA) Final Rule, issued in 2024 under a Democratic majority, is expected to be the first regulatory area the commission revisits. Lucas has long expressed concern that the Final Rule improperly expands the phrase “pregnancy, childbirth, or related medical conditions” to include conditions such as menstruation, infertility, abortion, and menopause. She has argued that these conditions are tied to female biology and not to a specific pregnancy or childbirth, and therefore fall outside the statute’s scope. When the Final Rule was approved in April 2024, Lucas voted against it and issued a statement explaining her opposition. She stated that the regulation “fundamentally errs in conflating pregnancy and childbirth accommodation with accommodation of the female sex.” She also warned that the rule’s structure makes it difficult to sever the portions she viewed as unlawful from those she considered reasonable. In May 2025, the U.S. District Court for the Western District of Louisiana agreed in part, vacating the section of the Final Rule that interpreted the PWFA as requiring accommodations for elective abortions. The court ordered the EEOC to revise the rule, but the agency was unable to do so without a quorum. Now that a quorum has been restored, the EEOC is well-positioned to issue a revised version that reflects both the court’s order and Lucas’s interpretation of the statute. Until the revised rule is published, the current PWFA Final Rule remains in effect except for the vacated abortion provision. Employers should therefore continue to comply with existing requirements while preparing for potential revisions that may narrow the definition of “related medical conditions” and reduce the range of circumstances requiring accommodation. Anticipated Shifts in Other Enforcement Priorities The EEOC is expected to move quickly in several additional areas. The first is diversity, equity, and inclusion initiatives. The agency has already emphasized that Title VII does not recognize any “diversity” or “equity” justification for making employment decisions based on protected characteristics. Employers should expect additional technical assistance and enforcement activity aimed at programs that take race, sex, or other protected traits into account in hiring, promotion, compensation, or participation in mentorship and employee resource programs. The second is religious accommodation. Following the Supreme Court’s decision in Groff v. DeJoy, which heightened the standard employers must meet to show that a religious accommodation would create an undue hardship, the EEOC is expected to take an expansive approach favoring employees. Lucas has a long record of supporting religious liberty initiatives and is likely to prioritize this area in future enforcement actions. The third involves LGBTQ protections. The EEOC may reconsider its interpretation of Bostock v. Clayton County and revisit its 2024 harassment guidance, which included examples related to pronoun usage and access to facilities consistent with gender identity. The agency has already removed certain gender identity resources from its website, suggesting that further revisions are imminent. Finally, the restoration of a quorum means that the EEOC can again authorize systemic or “pattern or practice” litigation and file amicus briefs in significant appellate cases. While reports indicate that the commission has deprioritized cases based on disparate impact theory, employers should remember that private plaintiffs and state enforcement agencies can still pursue such claims under Title VII and related laws. What Employers Should Do Now Employers should continue to comply with the current PWFA Final Rule, but monitor developments closely as the EEOC prepares revisions. They should review their diversity and inclusion programs to confirm that participation criteria and selection practices are neutral and compliant with Title VII. Religious accommodation policies should be updated to reflect the stricter standard established in Groff v. DeJoy, and harassment and equal opportunity training materials should be reviewed for consistency with potential upcoming changes to EEOC guidance. The restoration of a quorum marks a turning point for the EEOC. With full authority restored and a clear policy direction under Acting Chair Lucas, the agency is likely to move swiftly to revise the PWFA regulations, issue new guidance on DEI and religious rights, and revisit prior positions on gender identity and sexual orientation. Employers should expect significant regulatory activity in the coming months and prepare to adapt their workplace policies and practices accordingly.
October 15, 2025
Labor and Employment
Government Shutdown Pauses E-Verify Operations, But I-9 Rules Still Apply
The government shutdown has closed the E-Verify program, meaning employers cannot access their E-Verify accounts. As a result, enrollment, creation of cases, running reports, and terminations are all suspended. Additionally, all customer service channels are closed. Temporary Policies The “three-day rule” for the creation of E-Verify cases is suspended, but the I-9 rules and verification requirements continue. This means that employers must still complete Form I-9 no later than the third business day after an employee starts work for pay and comply with all other Form I-9 requirements. Employers will need to assist employees with completing a paper version of Form I-9, and for any employee whose E-Verify+ cases were “Pending Employee Response” or “Ready for Review” in the E-Verify system. Any pending E-Verify mismatches during the shutdown will not accrue time towards deadlines. If a SSA mismatch has occurred, employees will have to wait until E-Verify is back in operation to correct their mismatch at the SSA. Employers are advised they may not take any adverse action against an employee whose E-Verify case is “Interim case status.” Federal contractors are advised to contact contracting officers regarding deadlines.
October 6, 2025
Labor and Employment
New York City Expands Minimum Pay Protections to Grocery Delivery Workers
On September 10, 2025, the New York City Council voted to override Mayor Eric Adams’ vetoes and enacted legislation extending workplace protections and minimum pay standards to grocery delivery workers. With this development, app-based couriers delivering groceries through third-party platforms, such as Shipt or Instacart, will now be entitled to the same $21.44 per hour minimum pay rate that has been in effect for restaurant delivery workers since April 2025. Background: How We Got Here New York City has steadily built out a framework for regulating app-based delivery work. In 2021, the city became the first in the nation to pass comprehensive legislation creating wage and workplace protections for restaurant delivery couriers. That law prohibited companies from charging workers fees to access their pay, guaranteed restroom access at restaurants, required companies to provide insulated delivery bags, and mandated greater transparency around pay and tips. It also authorized the Department of Consumer and Worker Protection (DCWP) to study working conditions and establish a minimum pay standard. Following DCWP’s review, the city implemented a pay floor for restaurant couriers in 2023. After scheduled increases, the minimum pay rate reached $21.44 per hour as of April 1, 2025. Until now, however, grocery delivery workers have remained excluded from those protections. The July 2025 Legislation On July 14, 2025, the City Council passed a package of bills aimed at closing that gap. In addition to extending the minimum pay standard to grocery couriers, the bills required delivery apps to build in a 10% tipping option at checkout and mandated that workers be paid within seven days of the close of a pay period. When Mayor Adams did not act within 30 days, most of the bills automatically became law on August 13, 2025. However, Adams vetoed two of the most significant measures, including those that would have extended minimum pay to grocery delivery workers. In his veto message, he expressed concern that higher labor costs would lead to rising grocery prices at a time when many New Yorkers, particularly seniors, families relying on SNAP or EBT, and individuals with disabilities, already face food insecurity. The Council Override The City Council strongly disagreed, emphasizing that grocery couriers face the same risks and exploitation as restaurant couriers and deserve equal treatment. On September 10, 2025, the council voted to override the mayor’s vetoes, enacting the measures in full. While some provisions are tied to the effective dates of related safe-access legislation, the core result is that grocery delivery workers are now covered by the same $21.44 hourly pay standard as restaurant couriers. Reactions and What Comes Next The legislation has sparked vigorous debate. Worker advocates and council sponsors hailed the change as a victory for fairness, pointing out that grocery and restaurant couriers often perform identical tasks under similar conditions. Delivery platforms and some grocers, by contrast, have warned that the laws will significantly raise costs, potentially by as much as 46%, reduce tipping, cut shifts, and increase fees for local grocers. At least one company has already threatened litigation against the city. DCWP will continue monitoring compliance, and enforcement is expected to be strict. For businesses operating in New York City, this means both restaurant and grocery delivery models are now subject to enhanced wage obligations, new in-app tipping requirements, and accelerated payment timelines. Employer Takeaway The expansion of New York City’s delivery worker protections represents another step in the city’s effort to regulate the gig economy. App-based service providers should act quickly to review pay practices, update app functionality, and confirm compliance protocols to avoid penalties or reputational risk. Grocers that rely on third-party platforms should also be prepared for potential increases in delivery costs and related contract renegotiations.
September 29, 2025
Labor and Employment
The Heat Is On: OSHA’s Proposed Heat Safety Rule Advances with June 16 Hearing
Update: OSHA Extends Post-Hearing Comment Deadline On September 17, 2025, OSHA extended the deadline for submitting post-hearing comments on its proposed Heat Injury and Illness Prevention in Outdoor and Indoor Work Settings rule. Chief Administrative Law Judge Steven Henley granted a 30-day extension, moving the deadline to October 30, 2025. As a reminder, OSHA published the proposed rule in the Federal Register on August 30, 2024 and held an informal public hearing from June 16 through July 2, 2025. The agency has received more than 43,000 comments to date. Only stakeholders who filed a Notice of Intent to Appear at the hearing may submit post-hearing comments at this stage. Submissions, including supporting data, must be filed electronically through www.regulations.gov (Docket No. OSHA-2021-0009). What this means for employers: Employers who are eligible to file post-hearing comments should review their earlier submissions and consider whether supplemental comments are warranted before the October 30 deadline. Even if not eligible, employers should continue to monitor this rulemaking closely, as OSHA is moving forward quickly with finalizing the heat standard. Proactive compliance planning — including assessing current heat-illness prevention measures — will help employers stay ahead of regulatory changes. Original article published on June 19, 2025 As summer temperatures soar, so does the urgency for workplace safety measures to protect employees from heat-related illnesses. On July 2, 2024, the Occupational Safety and Health Administration (OSHA) unveiled its proposed rule, “Heat Injury and Illness Prevention in Outdoor and Indoor Work Settings,” a groundbreaking step toward establishing the first nationwide standard to combat excessive heat in workplaces. With a public hearing scheduled to begin on June 16, 2025, this proposed rule is poised to reshape how employers across industries manage heat hazards. OSHA will hold the hearing virtually, and it will continue through July 2, 2025. The purpose of the hearing is to gather public input on the proposed rule, which aims to protect workers from hazardous heat exposure. What is the Proposed Rule? OSHA’s proposed standard is a comprehensive framework designed to protect approximately 36 million workers in both indoor and outdoor settings. The rule applies to all employers and activates when the heat index hits 80°F for more than 15 minutes during any 60-minute period — termed the “initial heat trigger.” At 90°F, the “high heat trigger” introduces additional requirements. Here’s a snapshot of what employers would need to do: Written Heat Injury and Illness Prevention Plan (HIIPP): Employers must develop and implement a tailored, written plan to evaluate and control heat hazards. This includes designating a heat safety coordinator to oversee compliance. Temperature Monitoring: Outdoor employers must monitor temperatures frequently to assess heat exposure accurately. Indoor employers need to identify areas where the heat index may reach 80°F and incorporate a monitoring plan into their HIIPP. Mandatory Breaks and Cool-Down Areas: At the initial heat trigger, employers must provide access to drinking water and break areas. At the high heat trigger, mandatory 15-minute breaks every two hours and observation systems (similar to buddy systems) to monitor for heat illness symptoms are required. Training and Acclimatization: Employees must receive training on heat hazards, emergency responses, and acclimatization protocols to gradually build tolerance to higher temperatures, especially for new or returning workers. Hazard Alerts and Signage: Employers must issue heat hazard alerts before shifts or when high heat is recognized, using accessible communication methods that are easily understood by all employees. For indoor areas frequently exceeding 120°F, warning signs are mandatory. This isn’t just a suggestion—it’s a specification standard, meaning employers have little wiggle room to deviate from OSHA’s requirements. The rule’s scope is vast, covering general industry, construction, maritime, and agriculture; however exemptions apply to work with no reasonable expectation of reaching the initial heat trigger or areas consistently air-conditioned below 80°F. Why This Rule Is a Big Deal OSHA’s push for a federal heat standard has been simmering since 2021, fueled by President Biden’s Executive Order 13990 on climate change. The agency’s National Emphasis Program on heat hazards, launched in April 2022, underscored the need for action, though citations under the General Duty Clause have been sparse and often overturned in litigation. This proposed rule aims to close those gaps, providing clear, enforceable requirements to protect workers from heat-related illnesses, which can range from heat exhaustion to life-threatening heatstroke. The timing is critical. Rising temperatures are no longer just a summer concern—record-breaking heat waves are hitting year-round, especially in regions like the Southwest. States like California, Minnesota, Oregon, and Washington already have heat illness prevention standards, and California’s recent indoor heat rule (effective July 23, 2024) shares similarities with OSHA’s proposal. For employers with existing plans, the good news is that OSHA’s rule doesn’t mandate changes if your program already includes the proposed elements. However, aligning your plan with OSHA’s requirements could be a smart move to avoid General Duty Clause violations. The Public Hearing: Your Chance to Shape the Future The public hearing begins on June 16, 2025 (and continues through July 2, 2025), offering a platform for employers, industry groups, and workers to weigh in. Only those individuals who filed a timely Notice of Intention to Appear (NOITA) will be allowed to testify or ask questions at the hearing. The comment period, which closed on December 30, 2024, saw robust engagement, and this hearing is the next step in refining the rule. Recent Supreme Court decisions, such as Loper Bright Enterprises v. Raimondo, have raised questions about the authority of federal agencies, potentially impacting OSHA’s rulemaking. Additionally, the Trump administration’s “Regulatory Freeze Pending Review,” issued on January 20, 2025, could delay or alter the rule’s trajectory, though its impact on ongoing rulemaking remains unclear. The hearing will be a critical moment to gauge the rule’s momentum and OSHA’s response to these dynamics. Practical Tips for Employers While the rule is still in the proposal stage, proactive employers can get ahead of the curve. Here’s how: Review Existing Plans: If you have a heat illness prevention program, compare it to OSHA’s proposed elements. Gaps in training, monitoring, or break policies could expose you to future citations. Engage in the Hearing: Attend the hearing (even if you failed to submit a timely NOITA) to stay informed and, if able, to voice practical concerns, especially if your industry faces unique challenges (e.g., indoor heat in manufacturing or outdoor work in construction). Train Your Team: Start training supervisors and employees on heat hazards and acclimatization now. Early adoption can reduce risks and demonstrate compliance readiness. Monitor State Standards: If you operate in states with existing heat rules, ensure compliance while preparing for potential federal alignment. California’s indoor rule, for example, has trigger points at 82°F and 87°F, slightly different from OSHA’s. The Heat Is On—Are You Ready? OSHA’s proposed heat injury and illness prevention standard is a wake-up call for employers to prioritize worker safety in a warming world. With the public hearing kicking off on June 16, 2025, now is the time to engage, prepare, and adapt. Whether you’re a small business or a multinational corporation, this rule could redefine your workplace safety obligations.
September 25, 2025
Labor and Employment
Visa Uncertainty: The Presidential Proclamation on H-1Bs and a $100,000 for New Petitions
On September 19, 2025, the Trump administration issued a Presidential Proclamation “Restriction on Entry of Certain Nonimmigrant Workers,” effective at 12:01 a.m. September 21, 2025. The Presidential Proclamation specifically targets H-1B Visa Holders who are outside of the United States. Any H-1B visa holder attempting to enter the United States after the effective date must be accompanied by proof of payment of an additional $100,000 fee. This action created panic among large H-1B employers and employees as employees scrambled to return to the United States before the effective date and time. The Administration, through United States Citizenship and Immigration Services (USCIS), U.S. Customs and Border Protection (CBP), and the Press Secretary’s office, had to “clarify” that their rule was only effective for new H-1B petitions. USCIS Statement attempting to clarify the situation: This proclamation only applies prospectively to petitions that have not yet been filed. The proclamation does not apply to aliens who: are the beneficiaries of petitions that were filed prior to the effective date of the proclamation, are the beneficiaries of currently approved petitions, or are in possession of validly issued H-1B non-immigrant visas. All officers of the United States Citizenship and Immigration Services shall ensure that their decisions are consistent with this guidance. The proclamation does not impact the ability of any current visa holder to travel to or from the United States. Accordingly, individuals in H-1B status in the United States are unaffected. The vast majority of H-1B cases pending for this cap year will also not be affected. Individuals traveling outside of the country with valid H-1B visas or seeking to obtain renewal of an H-1B visa, will also be unaffected. Instead, the focus will be on certain key groups. The first major group will be the new H-1B cap applicants in 2026. These applicants will be required to demonstrate payment of a $100,000 fee before filing their petition with the USCIS. Also, the effective date of the order will directly impact cap-exempt employers looking to hire new workers in H-1B status. These employers tend to be in research, medical, academia, and related fields. It should be noted that there is currently no guidance on how to make the fee payment. Exemptions are also built into the order, but they are not specific. Currently, it appears that they may exist for an individual, a company, or potentially a whole industry, if DHS determines that it is in the national interest of the United States and does not pose a threat to the security or welfare of the United States. Crucially, the Proclamation does not address whether the fee and restriction apply to cap-exempt H-1B workers outside of the U.S., who are typically exempt from the majority of H-1B fees. What should employers do? We currently believe that international travel will not be affected for the vast majority of H-1B visa holders. We recommend all non-immigrant visa holders consult with counsel before international travel, given the current climate. Employers and individuals looking to apply in the 2026 H-1B lottery or seeking employment with a Cap Exempt H-1B employer should seek legal advice immediately. How long is this effective for? The Presidential Proclamation is effective for a period of 12 months. What Happens in the future? The proclamation is likely to face legal challenges as it directly contradicts the will of Congress in the issuance of the H-1B visa program and its implementing regulations, including the introduction of application fees without notice and comment. Entry of nonimmigrants, however, is controlled by the executive branch, so potentially a modified version of this proclamation will continue.
September 22, 2025
Labor and Employment
The FTC’s Noncompete Ban Is Dead – But Enforcement Is Alive and Well
The Federal Trade Commission has officially withdrawn its appeal in Ryan, LLC v. FTC, putting an end to its controversial attempt to ban noncompete agreements through agency rulemaking. That effort may be over, but the commission has made clear that employers are not free to impose noncompetes “willy-nilly.” As FTC Chair Ferguson recently cautioned, the failure of the Biden Administration’s sweeping ban does not mean the agency is abandoning the field. From Rulemaking to Case-by-Case Enforcement Rather than pursuing broad regulations, the FTC has pivoted toward an enforcement model. On September 4, the commission announced a complaint against Gateway Services, Inc. over its use of noncompete clauses. Alongside the complaint, Commissioners Ferguson and Holyoak issued a joint statement emphasizing a new philosophy – using targeted enforcement to signal to the market what the FTC views as unlawful practices. In their words, a “steady stream of enforcement actions” provides transparency and nudges employers toward compliance without sweeping rulemaking. This case-by-case strategy echoes traditional antitrust enforcement – send a clear warning through precedent, not regulation. Public Input Still Matters At the same time, the FTC issued a Request for Information (RFI) seeking data about how noncompetes are used, justified, and experienced across industries. While the agency insists this is not a return to rulemaking, the RFI will likely shape enforcement priorities, especially sector-specific initiatives. Employers with legitimate business interests in protecting trade secrets or client relationships should consider submitting comments before the November 3 deadline to ensure their perspective is not drowned out by opponents. Healthcare in the Crosshairs The FTC has already signaled special scrutiny of healthcare employers. On September 10, Chair Ferguson sent letters to large health systems and staffing firms urging them to review restrictive covenants in their employment agreements. The move is striking given that states already regulate healthcare noncompetes more aggressively than nearly any other sector – dozens of new bills have been proposed in the past year alone. Why the added federal attention? One explanation may be the flood of public comments targeting healthcare during last year’s failed rulemaking process. In other words, political pressure and anecdotal evidence may be driving the FTC’s focus more than labor market data – where healthcare remains one of the strongest employment sectors nationwide. How Employers Can Avoid the “Willy-Nilly” Label The Gateway Services complaint and other FTC actions provide insight into what will draw scrutiny. Employers should work closely with counsel to design noncompete and restrictive covenant programs that focus on legitimate interests rather than blanket employee control. Key considerations include: Legitimate purpose: Use restrictive covenants to prevent unfair competition and protect confidential information, not merely to retain employees or block mobility. Role-specific tailoring: Reserve noncompetes for positions where they are truly necessary (e.g., senior executives, client-facing sales roles). Apply different restrictions for different levels of employees. Narrower alternatives: Consider whether non-solicitation, confidentiality, or customer protection clauses can adequately protect the business. Reasonable scope: Draft restrictions that are proportionate in duration, geography, and covered activities. Agreements that prevent someone from working for a competitor “in any capacity” – say, even as a janitor – are likely to raise red flags. Compliance with state law: Many states have already tightened restrictions on noncompetes. Ignoring state law not only risks invalidation but may also invite FTC scrutiny. The Bottom Line While the federal ban is off the table, the FTC is not retreating. Employers should expect enforcement actions to continue, particularly in sectors like healthcare, and should take this moment to review their agreements. A thoughtful, legally sound approach to restrictive covenants will make it much harder for regulators to paint your practices as “willy-nilly.”
September 18, 2025
Labor and Employment
The Social Media Aftermath of the Charlie Kirk Assassination – Can An Employer Fire An Employee for Offensive Social Media Posts?
In an article in the September 16, 2025, edition of The Washington Post, the lead paragraph read as follows: “The wave of companies and other institutions firing or suspending employees over what they’ve said in reaction to last week’s killing of conservative influencer Charlie Kirk has expanded in recent days, as some of his supporters in and outside the government amp up a push against speech they say crosses lines.” Thus, the question that arises in the minds of both employees and employers related to the voluminous publicity surrounding the recent Kirk assassination is whether an employee’s social media post, which is deemed to be offensive, can justify the potential termination of such an employee. The short answer to this inquiry is that in the private sector, as opposed to the arena of public employment, where First Amendment protections may be applicable, employers have wide discretion to discipline and even fire employees for posts which are deemed to be unduly offensive, inflammatory, or violative of their cultural or internal policies. The caveat for private sector employers is that employees enjoy statutory protections under the National Labor Relations Act for speech of a political or social nature when such speech or posted comment is related to such employee’s workplace’s wages, hours or terms and conditions of employment. Furthermore, employees also enjoy protections under Title VII of the federal Civil Rights Act if, for instance, their social media posts protest discrimination in the workplace, when that alleged discrimination refers to any protected status, such as religion, national origin, race, disability, etc. Private employers would be well-advised in this incendiary political climate to analyze each situation based on the facts and circumstances of the post in question, and to evaluate whether such post is violative of its internal policies, is deemed to be overly inflammatory and/or offensive to a person(s), is disparaging or defamatory to the employer or its employees or customers, is damaging to the company’s reputation or cultivated image, or is deemed to be simply inconsistent with civilized and acceptable societal discourse. In any situation where termination may be predicated upon a social media post and where uncertainty may exist regarding potential legal exposure and/or a looming public relations crisis, it is always advisable for the employer to consult with competent employment counsel and/or a public relations crisis expert. Howard Kurman is a founder of Offit Kurman, a AmLaw 200 law firm. He is a principal in the firm’s labor/employment practice and regularly counsels employers on all facets of employment and labor relations law and practice. To contact Howard, he may be emailed at hkurman@offitkurman.com, or by phone at his office: 410-209-6417.
September 18, 2025
Labor and Employment
Getting Paid for Nothing? The Legal Risks of No-Show Jobs
From political scandals to organized crime cases, the phrase “no-show job” is often associated with something shady. Think HBO’s The Sopranos, where Tony Soprano’s crew collected paychecks on construction sites without having to lift a finger. The idea of being paid well for doing very little — or nothing at all — might sound like a dream job, but it often comes with strings attached. And now, with recent reporting about NBA star Kawhi Leonard’s alleged $28 million endorsement deal, the “no show job” is back in the headlines. What Exactly Is a “No-Show Job”? A “no-show job” is a position where someone collects a paycheck without actually doing meaningful work. In some cases, the person is officially listed on the payroll but may not be expected to report or perform the same duties as other employees or contractors. These arrangements can take many forms, but typically include symbolic titles, roles specifically created for family or friends, or mechanisms for shifting money outside traditional channels. No-Show Jobs in the Private Sector In the private sector, employers have greater latitude to structure compensation as they wish. Executive contracts, retainers, and consulting agreements may guarantee pay, regardless of performance. Still, such arrangements can become problematic if they involve misuse of company resources, breaches of fiduciary duty, or violations of payroll and tax laws. Public Sector and Organized Labor With taxpayer funds, the line is far clearer. “No-show jobs” funded with public money are often the target of federal investigation and have led to convictions for fraud, embezzlement, and corruption. In labor relations, the practice of “featherbedding” (requiring payment for unnecessary work) has been unlawful since the Taft-Hartley Act of 1947, which prohibits unions and employers from agreeing to pay for work not actually performed. Where Sports Money Gets Complicated In professional sports, the legal issues surrounding “no-show jobs” differ from those in ordinary employment. In the NBA, the primary concern is salary cap circumvention. The league’s Collective Bargaining Agreement (CBA) requires that all compensation related to a player’s services be disclosed and counted toward the salary cap, promoting competitive balance among teams. That’s why recent reports involving Kawhi Leonard are drawing attention. According to investigative reporting and bankruptcy filings brought to light by sports podcaster Pablo Torre, a now-bankrupt fintech company allegedly promised $28 million to a Leonard-managed entity in exchange for endorsement duties that Leonard never performed. That company was reportedly tied to Los Angeles Clippers owner Steve Ballmer, which prompts speculation about whether the deal was merely an off-the-books way to supplement Leonard’s NBA compensation with the Clippers. Notably, even if this would be considered a lawful private agreement under general contract law, a hidden “no-show job” arrangement of this kind could be interpreted as an attempt to skirt NBA salary rules. If proven to be the case, the league has the authority to impose penalties, including heavy fines or the loss of draft picks. For now, both Ballmer and the Clippers have denied any wrongdoing. The NBA launched a formal investigation on September 3, but NBA Commissioner Adam Silver recently said the league is not rushing to judgment. Still, the story highlights how compensation structures in sports or business alike can blur the line between creative deal-making and questionable circumvention. Lessons Beyond the NBA For businesses outside the world of professional sports, the Kawhi Leonard headlines offer a reminder that “no-show jobs” can trigger serious problems for employers. Shareholders may view it as misuse of company funds, regulators may question classification of workers, as well as payroll and tax compliance, and company reputation and trust may be at risk. The best practice for all employers is to have a clear record of what each employee on payroll is doing to earn their compensation.
September 11, 2025
Labor and Employment
Department of State Limits Nonimmigrant Visa Applications
On Saturday, September 6th, 2025, the Department of State announced that, effective immediately, all applicants for U.S. nonimmigrant visas (NIV) should schedule their visa interview appointments at the U.S. Embassy or Consulate in their country of nationality or residence. Individuals who currently have appointments booked are advised that their appointments “generally will not be cancelled” – however, no guarantee is made that their NIV will be issued. This policy changes the current guidance for so-called “third country nationals,” i.e., individuals who apply for a visa outside of their home country. It has been a long-standing policy that individuals can apply for an NIV anywhere in the world. Some embassies have pushed back on third-country nationals due to the overwhelming number of requests. Some examples include Canada, Mexico, and smaller consulates such as the Bahamas. This change drastically affects the visa options for individuals from countries with lengthy wait times and delays in visa processing. Indian nationals can no longer avail of interview waivers, and the current NIV wait times of two-three months are set to dramatically increase. This change underlines the importance of planning ahead for travel and understanding all potential risks. Individuals and employers should carefully consider the implications of travel if an individual would be required to travel to another country for an extended period. Finally, individuals with current visa appointments should consult with an immigration attorney to assess the risks of attending their visa interview. What is residency for NIV purposes? No further guidance is provided on what NIV applicants should provide to demonstrate residence in the country in which they are applying. Accordingly, applicants should carefully assess the totality of evidence that they can provide to an Embassy ahead of their appointment. It is advisable to have as much evidence as possible of residency at the interview to avoid any lengthy administrative processing. Exceptions to the rule? The current guidance states that “rare exceptions may also be made for humanitarian or medical emergencies or foreign policy reasons.” With no further guidance immediately available, it is safe to assume that exceptions will be very limited. Typically, humanitarian exceptions can include family unity reasons, as well as deaths or illness within a family, so applicants can potentially advocate for an exception on these grounds. The risks are substantial as the applicant may only be informed that their visa application is not eligible for processing at the interview. Accordingly, caution is advised when exploring exceptions in this area. But what if there is no US Embassy in my home country? Further guidance was provided for NIV applicants where NIV processing is suspended in their home country; they should make an appointment at their designated NIV consulate or embassy: NATIONAL OF DESIGNATED LOCATIONS(S) Afghanistan Islamabad Belarus Vilnius, Warsaw Chad Yaoundé Cuba Georgetown Haiti Nassau Iran Dubai Libya Tunis Niger Ouagadougou Russia Astana, Warsaw Somalia Nairobi South Sudan Nairobi Sudan Cairo Syria Amman Ukraine Krakow, Warsaw Venezuela Bogota Yemen Riyadh Zimbabwe Johannesburg
September 8, 2025
Labor and Employment
Evolving Standards for Religious Accommodations at Work
The legal framework surrounding religious accommodations in the workplace has evolved significantly, driven by recent court decisions, EEOC enforcement actions, and federal guidance. Employers must gain a clear understanding of these changes, to ensure compliance with Title VII of the Civil Rights Act of 1964. With heightened scrutiny on religious exemption requests, particularly in the wake of COVID-19 vaccine mandates, employers must stay informed to avoid costly litigation and foster inclusive workplaces. Key Court Rulings Clarify Religious Accommodation Standards Recent judicial decisions have reshaped how employers must evaluate religious accommodation requests under Title VII. Below are pivotal cases that highlight the courts’ focus on sincerity of belief and the elevated standard for denying accommodations. Second Circuit: Defining Sincerely Held Beliefs In Gardner-Alfred v. Federal Reserve Bank of New York, 143 F.4th 51 (2d Cir. 2025), the Second Circuit offered critical guidance on assessing “sincerely held” religious beliefs in the context of COVID-19 vaccine mandate exemptions. The Federal Reserve Bank of New York (FRBNY) terminated two employees after denying their religious exemption requests. The court’s ruling clarified: Low Threshold for Sincerity: Plaintiff Gardner-Alfred’s exemption request was dismissed due to its reliance on a generic “exemption package” lacking ties to specific religious practices. Employers can expect courts to require detailed, individualized expressions of belief. Inconsistency Does Not Disqualify: Co-plaintiff Diaz’s claim was revived despite inconsistent behavior (e.g., using medications potentially conflicting with her religious objections). The court emphasized that imperfect adherence does not negate sincerity. Misunderstandings Are Valid: Diaz’s objection to mRNA vaccines, based on a mistaken belief about fetal cell lines, was deemed genuine. Employers cannot dismiss requests due to factual inaccuracies. Other Landmark Cases Groff v. DeJoy, 143 S. Ct. 2279 (2023): The Supreme Court raised the bar for denying accommodations, requiring employers to show a “substantial increased cost” or operational burden. This decision significantly strengthens employee protections. Keene v. City and County of San Francisco, No. 22-16567 (9th Cir. 2024): The Ninth Circuit ruled that blanket denials of religious exemptions, without engaging in the interactive process, violate Title VII. Bube v. Aspirus Hospital, Inc., No. 22-cv-745 (W.D. Wis. 2024): A federal district court rejected a hospital’s denial of exemptions based on vague claims of workplace disruption, reinforcing the need for specific evidence of undue hardship. Employers must conduct individualized, respectful inquiries into the sincerity of religious beliefs and avoid denials based on assumptions or skepticism. EEOC’s Robust Enforcement of Religious Rights The Equal Employment Opportunity Commission (EEOC) has intensified its focus on religious accommodations, particularly in response to COVID-19 vaccine mandate disputes. Key developments include: Recent EEOC Appellate Decisions (August 4, 2025) The EEOC’s Office of Federal Operations issued three decisions clarifying accommodation standards: Department of Veterans Affairs: A physician requesting Friday afternoons off for prayer was offered reduced hours or an overly burdensome schedule. The EEOC ruled these options unreasonable, noting that accommodations causing employee disadvantage (e.g., reduced pay) are insufficient. Claims of “low morale” among staff were also deemed inadequate justification. Federal Reserve Board: A law enforcement officer’s exemption request was denied without exploring accommodations or documenting hardship. The EEOC applied the Groff standard retroactively, emphasizing the need for a thorough process. EEOC’s Enforcement Milestones (August 18, 2025) In its “200 Days of EEOC Action to Protect Religious Freedom at Work” press release, the EEOC reported: Over 10,000 charges related to religious accommodations for COVID-19 vaccine mandates More than $55 million recovered for workers, including a $1 million settlement with Mercyhealth Lawsuits against organizations like Silver Cross Hospital and the Mayo Clinic for improper denials of religious exemptions The EEOC is prioritizing robust enforcement, and employers face significant risks for cursory or unsubstantiated denials of religious accommodations. Federal Guidance Promotes Accommodation The Office of Personnel Management (OPM) issued memoranda on July 16 and July 28, 2025, urging federal agencies to adopt a pro-accommodation stance. Key points include: Emphasizing a good-faith interactive process with detailed documentation Encouraging low-cost solutions like telework or flexible scheduling, which require strong justification if denied While directed at federal agencies, these guidelines reflect broader expectations for all employers under Title VII. Practical Steps for Employers To navigate this high-scrutiny environment, employers should adopt the following strategies. Risk Area Actionable Steps Sincerity Challenges Conduct respectful interviews, focusing on the employee’s stated beliefs. Avoid demanding theological proof or overly intrusive inquiries. Undue Hardship Claims Provide specific, data-backed evidence of substantial costs or operational burdens. General claims like “staff discomfort” are insufficient. Manager Training Train supervisors on clear protocols for handling accommodation requests compassionately and escalating them appropriately. Policy Review Update accommodation policies to align with the Groff standard and EEOC’s enforcement priorities. Ensure procedures are transparent and consistent. Documentation Log every step of the interactive process to demonstrate compliance and build a defensible record. The Lasting Impact of COVID-Era Policies The legal and regulatory focus on religious accommodations, spurred by COVID-19 vaccine mandates, has created a lasting shift in employment law. From scheduling adjustments to exemption requests, religious considerations are now central to workplace compliance. Employers must stay proactive, ensuring policies and practices reflect the latest legal standards to avoid litigation and promote a respectful, inclusive workplace.
August 25, 2025
Labor and Employment
Pregnancy and Lactation in the Workplace: Employer Duties Under Federal Law
August is the most popular birth month in the U.S., meaning many employees will return from parental leave this fall and winter with new postpartum needs. Two key federal laws – the PUMP Act and the Pregnant Workers Fairness Act (PWFA) – shape the legal obligations employers must provide to nursing employees and others with pregnancy-related conditions. Understanding these laws is essential for compliance and creating a supportive workplace for new parents. PUMP Act The Providing Urgent Maternal Protections for Nursing Mothers Act (“PUMP Act”), 29 U.S.C. § 218d, signed into law in December 2022, expands protections under the Fair Labor Standards Act (FLSA) for employees who need to express breast milk at work. The PUMP Act requires that employers provide reasonable break time, whenever needed, for an employee to express breast milk for her nursing child during the first year after birth and prohibits denying a covered employee a necessary pumping break. The law also requires employers to provide a space, other than a bathroom, that is shielded from view and free from intrusion by coworkers and the public. These protections apply to nearly all FLSA-covered employees; however, certain employees of airlines, railroads, and motorcoach carriers are exempt from the law, and employers with fewer than 50 employees are not subject to the break time and space requirements if compliance would impose an undue hardship. Even so, employees who are exempt under federal law may still be entitled to protections under state or local laws. The PWFA The Pregnant Workers Fairness Act, 42 U.S.C. §§ 2000gg to 2000gg-6, effective June 27, 2023, requires covered employers to provide reasonable accommodations for known limitations related to pregnancy, childbirth, or related medical conditions, unless doing so would cause undue hardship. Examples of reasonable accommodations under the PWFA include modified work schedules to allow for pumping, additional breaks beyond those required by the PUMP Act, and temporary changes in duties to reduce postpartum physical strain. The PWFA covers private and public sector employers with 15 or more employees, Congress, federal agencies, employment agencies, and labor organizations. 42 U.S.C. § 2000gg(2). Employers can take several proactive measures to comply with the PUMP Act and PWFA while supporting pregnant, nursing, and postpartum employees. Employers should start by reviewing and updating workplace policies to ensure they reflect the requirements of both laws, including clear procedures for requesting accommodations and designating appropriate lactation spaces that meet the PUMP Act standards for privacy and accessibility. Employers should also have processes in place to ensure that managers, supervisors, and HR personnel understand how to promptly respond when an employee raises a pregnancy- or postpartum-related need or accommodation request. Finally, maintaining open communication with employees returning from parental leave by proactively providing information on their rights and the resources available to them can help prevent misunderstandings, reduce legal risk, and foster a more supportive and inclusive workplace culture.
August 22, 2025
Labor and Employment
New DOJ Memo Addresses Legality of DEI Programs for Federal Funding Recipients
On July 30, 2025, the Department of Justice released a memo from Attorney General Pam Bondi offering guidance to federal agencies and recipients of federal funding regarding practices that the administration views as potentially unlawful under federal antidiscrimination laws. While the memo focuses heavily on institutions of higher education, its implications extend to all federal funding recipients, federal contractors, and employers subject to Title VII. The memo outlines the administration’s interpretation of federal law as it applies to diversity, equity, and inclusion (DEI) initiatives and similar programs. It provides examples of practices the DOJ considers unlawful or legally questionable, as well as "best practices" intended to help organizations avoid liability. Key Takeaways Applicability Beyond Higher Education: Although many examples concern colleges and universities, the guidance expressly encourages all entities subject to federal antidiscrimination laws, including public and private employers, state and local governments, and contractors, to review and evaluate their DEI programs. DOJ’s Interpretations Are Not Binding Law: The memo reflects the DOJ’s interpretation of existing law, not a change in the law itself. Courts remain the final arbiters of what federal statutes mean, and state laws may impose different or additional requirements, especially in areas such as transgender rights, where the administration’s views may conflict with both state law and judicial precedent. Examples of Practices the DOJ Views as Unlawful or Problematic Race-Based Scholarships or Opportunities: Programs that limit access to scholarships, internships, or leadership initiatives based on race (e.g., a “Black Excellence Scholarship”) violate federal law unless they meet the very high bar for race-conscious programs. Race-Exclusive Facilities or Resources: DEI initiatives that designate certain physical spaces (e.g., “BIPOC-only lounges”) or create identity-based access restrictions may amount to unlawful segregation or exclusion, even if intended to foster inclusion. Segregated Training or Affinity Groups: Programs that separate participants based on race (e.g., mandatory DEI sessions with race-exclusive breakouts) risk violating civil rights laws. Voluntary, open-to-all professional support networks may be permissible. Diverse Slate Hiring Requirements: Mandating racial or demographic composition in interview pools (e.g., requiring a minimum number of minority candidates per hiring slate) may violate the law if used to exclude otherwise qualified individuals based on race. Race- or Sex-Based Contracting Preferences: Automatically favoring minority- or women-owned businesses in procurement decisions, without narrowly tailoring those preferences to a compelling government interest, raises legal concerns. Note: The DOJ flags this area as particularly sensitive given that many entities, including government contractors, are required to establish utilization goals for disadvantaged businesses. The legality of these long-standing programs may now be in flux. Proxies for Race or Sex Consideration: Cultural Competence or “Lived Experience” Requirements: When tied to race or ethnicity, such criteria may unlawfully advantage candidates based on protected characteristics Diversity Statements or “Obstacle” Essays: Requiring narratives that implicitly reward racial or gender identity may function as indirect proxies for discrimination The memo sharply narrows the permissible interpretation of the Supreme Court’s language in Students for Fair Admissions v. Harvard, particularly Chief Justice Roberts’ explicit statement that applicants may discuss how race shaped their experiences, provided race itself is not the basis for decisions. Recommended “Best Practices” To reduce legal risk, the DOJ encourages organizations to: Eliminate Demographic-Driven Goals: Avoid designing policies or using facially neutral criteria (e.g., “first-generation student” or “underserved zip code”) to achieve demographic outcomes tied to protected characteristics Justify Criteria with Legitimate, Non-Discriminatory Rationales: Document how selection criteria are related to objective performance or institutional needs — not race, sex, or other protected traits Evaluate Potential Proxy Effects: Before implementing race-neutral policies, assess whether they function in practice as proxies for race, sex, or other protected statuses Abandon Diversity Quotas: Avoid policies that require representation of specific demographic groups in candidate pools, committees, or final hiring selections Include and Enforce Nondiscrimination Clauses in Contracts: Require third parties receiving federal funds to comply with nondiscrimination obligations. Monitor compliance and terminate funding where violations occur. Note on Scope of Coverage The DOJ memo applies to recipients of federal financial assistance, which includes grants, loans, subsidies, and insurance, not federal procurement contracts. However, many principles may be relevant to federal contractors, particularly where compliance with Title VII or similar statutes is at issue.
August 8, 2025
Labor and Employment
Sustaining LGBTQ+ Inclusivity: Legal and Workplace Strategies After Pride Month 2025
Pride Month 2025, commemorating the 1969 Stonewall Riots, celebrates the LGBTQ+ community’s contributions, but inclusivity must extend beyond June to foster workplaces where everyone feels valued. Navigating the complex legal landscape — shaped by the Supreme Court’s 2020 Bostock decision, Executive Order (EO) 14173, and the Department of Justice’s (DOJ) Civil Rights Fraud Initiative — requires strategic planning. Cultural dynamics, including employee activism and consumer expectations, further emphasize the need for year-round inclusivity. This blog provides actionable legal and practical strategies to ensure compliance with Title VII, mitigate False Claims Act (FCA) risks, and create psychologically safe workplaces where LGBTQ+ employees can thrive without hiding their identities. Understanding the Legal Framework The Supreme Court’s Bostock v. Clayton County (140 S. Ct. 1731, 2020) decision established that Title VII of the Civil Rights Act of 1964 prohibits discrimination based on sexual orientation and gender identity for employers with 15 or more employees. The Equal Employment Opportunity Commission (EEOC) enforces Title VII, providing guidance on restroom access aligned with gender identity, harassment prevention, and protections against discrimination based on nonconformity to sex-based stereotypes (EEOC Guidance, 2021). However, a May 15, 2025, federal court ruling vacated parts of the EEOC’s harassment guidance, pending appeal. The Eleventh Circuit’s Lange v. Houston County decision underscored the importance of inclusive benefits, holding employers liable for excluding gender-affirming care from health plans. State and local anti-discrimination laws in 25 states, the District of Columbia, and many municipalities, may impose stricter standards or apply to smaller employers. Globally, over 60 countries criminalize same-sex relationships, creating risks for employees on international assignments. EO 14173, signed January 21, 2025, requires federal fund recipients to certify DEI program compliance with anti-discrimination laws, with violations risking FCA liability. The DOJ’s Civil Rights Fraud Initiative, launched May 19, 2025, targets false certifications in DEI programs, such as gender-identity-based restroom policies, using FCA’s treble damages and qui tam provisions. Addressing Workplace Challenges Post-Pride Month Beyond Pride Month, employers must address ongoing challenges to sustain inclusivity. Many LGBTQ+ employees feel pressured to “cover” (hiding aspects of their identity), such as avoiding mention of same-sex partners or gender identity to fit in, which can harm mental wellbeing and productivity. Despite Bostock, harassment over pronouns, dress codes, or benefits persists, risking Title VII claims. Employee activism, often heightened during Pride, may continue as resource groups push for robust inclusion policies. Missteps could lead to union organizing, lawsuits alleging discrimination, or consumer backlash from perceived over or under-support of LGBTQ+ issues. The DOJ’s focus on “unlawful DEI” may prompt some to scale back inclusivity efforts, while religious accommodation requests require careful balancing with Title VII obligations. FCA Defenses: Safeguarding Against DOJ Enforcement The DOJ’s Civil Rights Fraud Initiative frames false DEI compliance certifications as FCA violations, but employers can leverage robust defenses. In United States ex rel. Schutte v. SuperValu Inc. (143 S. Ct. 1391, 2023), the Supreme Court held that FCA liability requires subjective knowledge of noncompliance. Employers who reasonably believed their DEI programs complied with Title VI, Title IX, or Section 1557 — based on legal counsel or ambiguous regulations — can argue they lacked the “scienter” needed for liability. Documenting good-faith compliance efforts strengthens this defense. In Universal Health Services, Inc. v. United States ex rel. Escobar (136 S. Ct. 1989, 2016), the Court required that false certifications materially influence federal payment decisions. If the government knew of DEI practices through audits or continued funding despite disclosures, employers can argue immateriality. The Eleventh Circuit’s Honeyfund.com v. Florida (2023) decision, which invalidated anti-DEI restrictions as First Amendment violations, supports arguments that inclusivity initiatives, like employee resource groups or training, are protected speech. These defenses — good-faith compliance, lack of materiality, and free speech — help mitigate FCA risks when supported by legal counsel. Practical Strategies for Year-Round Inclusivity To sustain inclusivity post-Pride Month while complying with Title VII and mitigating FCA risks, employers can adopt the following strategies to create workplaces where employees feel safe and valued: Update Policies for Clarity and Compliance Revise anti-discrimination policies to explicitly cover sexual orientation and gender identity, aligning with EEOC guidance, state/local laws, and Title VI/IX/Section 1557. Ensure DEI programs avoid assigning benefits by protected characteristics. Support restroom and dress code access aligned with gender identity, offering gender-neutral facilities as a compliance option. Accurately reflect these practices in federal certifications to avoid FCA liability. Offer Voluntary, Inclusive Training Provide voluntary training on preferred pronouns, names, and Title VII compliance to reduce discrimination risks and foster inclusion. Training should be non-segregatory to avoid DOJ scrutiny. Equip HR with de-escalation training to handle identity-based conflicts, creating a psychologically safe environment where employees can be authentic, without fear of judgment. Implement Confidential Reporting Channels Establish confidential reporting mechanisms and thorough investigation processes to address discrimination promptly, preventing workplace hostility and Title VII claims. Swift responses to inappropriate comments, such as those about restroom access, demonstrate a commitment to inclusivity. Support Gender-Affirming Benefits and Accommodations Ensure health plans cover gender-affirming care, compliant with Lange and the Respect for Marriage Act (Pub. L. 117-228). Develop accommodation plans for transitioning employees, ensuring accurate federal certifications. For international assignments, assess destination laws and provide safety protocols for LGBTQ+ employees. Conduct Privileged DEI Reviews Perform privileged reviews of DEI programs and certifications under Title VI/IX/Section 1557, focusing on policies like restroom access that may attract DOJ scrutiny. Document compliance efforts to support Schutte defenses and track payment decisions for Escobar arguments. Foster Inclusive Cultural Observances Extend Pride Month’s spirit by integrating inclusivity into year-round observances, such as decorating contests with rainbow themes or inclusive swag like pens, to foster belonging. Apply consistent, objective criteria to cultural observances (e.g., Pride Month, Black History Month) aligned with company values to avoid FCA risks. Ensure events are voluntary and inclusive, with legal review for sponsorships or displays to address FCA and First Amendment implications. Balance Religious Accommodations Process religious accommodation requests for inclusivity initiatives compliantly, balancing with Title VII duties. Manage conflicts without compromising anti-discrimination policies to maintain a safe workplace for all. Encourage Mentorship and Allyship Promote mentorship programs to support LGBTQ+ employees, fostering career growth and a sense of belonging. Encourage allyship year-round by creating spaces where employees can be open about their identities, reducing the need to cover, and enhance wellbeing. Align Legal, HR, DEI, and PR Teams Coordinate across teams to ensure inclusivity initiatives reflect brand values and risk tolerance. Prepare communication strategies to address employee and consumer sentiment, leveraging Honeyfund arguments for expressive activities. Maintain records of compliance efforts to counter potential FCA claims. Sustaining Inclusivity Beyond Pride Month 2025 Hiding one’s identity to fit in can erode mental wellbeing and limit professional growth. With over 500 anti-LGBTQ+ bills pending and heightened DOJ scrutiny, employers must remain vigilant. By aligning with Title VII, leveraging FCA defenses (Schutte, Escobar, Honeyfund), and fostering psychologically safe environments, employers can create workplaces where authenticity thrives. Legal counsel is essential to navigate Title VII, FCA, and First Amendment complexities, ensuring sustained inclusivity for LGBTQ+ employees year-round.
July 31, 2025
Labor and Employment
Travel Bans Are Back – Are Exemptions Possible?
Travel bans are back, with an initial list of 19 countries, and that list may be expanded to include an additional 36 nations. This latest round of travel restrictions find their basis in Presidential Proclamation 10949 “Restricting the Entry of Foreign Nationals To Protect the United States From Foreign Terrorists and Other National Security and Public Safety Threats” which has put in place visa and entry restrictions on citizens of Afghanistan, Burma, Chad, Republic of Congo, Equatorial Guinea, Eritrea, Haiti, Iran, Libya, Somalia, Sudan, and Yemen. The proclamation also adds additional suspension of citizens from Burundi, Cuba, Laos, Sierra Leone, Togo, Turkmenistan, and Venezuela as visitors or students. Officials will consider additional restrictions for Egypt. Currently the administration is considering additional restrictions to a larger list of countries including: Angola, Antigua and Barbuda, Benin, Bhutan, Burkina Faso, Cabo Verde, Cambodia, Cameroon, Cote D'Ivoire, Democratic Republic of Congo, Djibouti, Dominica, Ethiopia, Egypt, Gabon, The Gambia, Ghana, Kyrgyzstan, Liberia, Malawi, Mauritania, Niger, Nigeria, Saint Kitts and Nevis, Saint Lucia, Sao Tome and Principe, Senegal, South Sudan, Syria, Tanzania, Tonga, Tuvalu, Uganda, Vanuatu, Zambia, and Zimbabwe. See Trump administration weighs adding 36 countries to travel ban, memo says | Reuters. History Repeating This is not the first set of travel restrictions that we have seen implemented. During the first term of the Trump administration, several travel bans were implemented for a variety of reasons, culminating with COVID-19 travel restrictions. What do the prior travel bans tell us about this latest proclamation? The administration has expanded its travel restrictions to include a broader set of countries, potentially including those that benefit from citizenship-by-investment programs, as well more than 20 African countries. The National Interest Exemption is Back Previous travel bans had allowed for travel in support of specific areas of national interest (NIE), which included crucial infrastructure. Authorities have reinstated the NIE as an option for obtaining an exemption from the travel restrictions. The wording of the current proclamation appears to severely limit NIEs in terms of requirements and processing. The “case by case” language suggests that NIEs will be significantly harder to obtain for individuals affected by the current restrictions. There is currently no procedure for advance application for NIEs; accordingly, they must be requested at an embassy appointment. Applicants must also qualify for the visa they are seeking before the NIE step, which raises the visa interview stakes. Accordingly, significant preparation is recommended for travelers affected by these bans, particularly in terms of visa qualification and NIE qualification. Finally, applicants must be prepared for significant administrative processing as NIEs are reviewed. Applicants seeking NIEs for visa issuance are recommended to consult immigration counsel to conduct an in-depth review of qualifications and supporting evidence. With the 2026 World Cup approaching, we can expect guidance on NIEs to evolve in the coming months.
July 18, 2025
Labor and Employment
H.R.1 Ends Taxes on Tips & Overtime: Employer Guide
On July 4, 2025, President Donald J. Trump signed H.R.1—the One Big Beautiful Bill Act—into law following its narrow passage in the House of Representatives just days earlier. Touted as the Trump administration’s marquee legislative victory ahead of the 2026 midterms, the Act makes headlines for many reasons. But for employers, two provisions demand immediate attention: A new above-the-line tax deduction for qualified tip income, and A new above-the-line tax deduction for qualified overtime compensation. Both provisions are now law and will take effect starting with the 2025 tax year, bringing new complexities to wage practices, payroll reporting, and compensation strategy. Below is a summary of the legal and practical considerations employers need to know. "No Tax on Tips:" Tax Deduction for Employees Receiving Qualified Tip Income Section 70201 of the Act allows certain employees to deduct up to $25,000 annually in qualifying tip income. The deduction is aimed at hospitality and service industry workers, but its implementation raises numerous legal and compliance considerations for employers. Key Requirements Eligibility Cap: Deduction phases out beginning at $150,000 in modified AGI ($300,000 for joint returns). Qualified tips must:be voluntarily paid by the customer (not mandatory service charges or auto-gratuities), be paid in cash, by card, or through valid tip-sharing arrangements, and be received in a qualifying occupation that customarily and regularly receives tips as of December 31, 2024.The Treasury must publish a definitive list of qualifying occupations within 90 days. Excluded Occupations: Employees in law, accounting, finance, consulting, performing arts, and similar professions are categorically excluded from eligibility. Reporting Requirements Employers must report:Total cash tips received by the employee on Form W-2. The employee’s qualifying occupation (2025 approximations allowed, subject to Treasury guidance). Employer Risks and Considerations Mischaracterization of wages as tips to secure a tax advantage may trigger IRS enforcement or wage-hour liability. Employers may consider changes to tip pooling or customer-facing tipping practices, but must:remain compliant with FLSA tip pool rules, including exclusion of managers and supervisors, avoid coercing tipping in non-traditional settings where it was not previously customary, ensure 100% tip reporting is enforced among employees. Until the Treasury issues regulations and the occupation list, employers should avoid restructuring wages to exploit this provision. "No Tax on Overtime:" Deduction for Federally Mandated Overtime Compensation Section 70202 of the Act allows employees to deduct up to $12,500 ($25,000 for joint filers) in FLSA-required overtime compensation. This deduction is limited in scope but may prompt employers to rethink how overtime is classified and compensated. Qualified Overtime Compensation Applies only to overtime required under Section 7 of the FLSA (i.e., 1.5x pay for hours over 40 per week). Does not apply to:Overtime required only by state law (e.g., California’s daily overtime rules). Overtime paid voluntarily under employer policy or collective bargaining agreements. Payments already claimed as qualified tips. Reporting Requirements Employers must separately report qualified overtime compensation on Form W-2.For 2025, approximations are permitted under a reasonable method (to be defined by the Treasury). Compliance Risks With this new deduction, employers may be tempted to reengineer pay practices. However, doing so carries significant legal exposure: Example 1: Reclassifying salaried exempt employees as nonexempt hourly employees, lowering base pay, and inflating overtime hours to maintain prior salary levels = FLSA violation if hours are not actually worked and accurately tracked. Example 2: Reducing regular hourly rates for nonexempt employees while creating artificial overtime (e.g., setting an internal 30-hour threshold or applying double-time bonuses) = disallowed, as only FLSA-mandated overtime premiums qualify for the deduction. The Treasury is authorized to issue regulations preventing abuse and wage reclassification. Employers who attempt to engineer “deductible overtime” without strict compliance will face regulatory scrutiny. Practical Employer Guidance The “no tax on tips” and “no tax on overtime” provisions will likely be popular with employees and heavily publicized during the 2025 W-2 season. But for employers, the changes bring regulatory complexity, legal risk, and potential downstream litigation. What Employers Should Do Now Do not alter compensation structures prematurely.Wait for Treasury regulations, especially the occupational list for tip eligibility. Ensure accurate wage and hour records.All overtime-eligible employees must have their hours and regular rates carefully documented. Audit tip pool arrangements and ensure FLSA compliance.Exclude ineligible participants, properly allocate tips, and enforce reporting discipline. Prepare to update payroll systems.New W-2 fields for tip and overtime breakdowns will require reconfiguration. Long-Term Strategy Employers considering reclassification of exempt employees, modification of pay rates, or introduction of creative incentive structures should engage qualified employment counsel. Wage-hour compliance and federal tax strategy must be aligned to avoid triggering enforcement by the IRS, DOL, or plaintiffs’ attorneys. Final Thoughts The tax benefits of H.R.1 may create new incentives for employees, but they also present a compliance minefield for employers. The risk of misclassification, improper reporting, or wage-hour violations is high, especially as employers rush to leverage perceived tax advantages. Employers seeking to responsibly explore compensation adjustments in light of the “no tax on tips” and “no tax on overtime” deductions should consult with legal counsel familiar with FLSA compliance, payroll tax reporting, and employee classification issues. Our labor and employment team is actively advising clients on how to navigate H.R.1's implementation. Contact us to schedule a strategy session or compliance audit.
July 10, 2025
Labor and Employment
SCOTUS Levels Title VII Standards in Reverse Discrimination Case
The U.S. Supreme Court unanimously ruled that so-called “reverse discrimination” claims—discrimination claims brought by members of a “majority” race, gender, or other protected characteristic—are not subject to heightened standards of proof. The June 5, 2025, decision in Ames v. Ohio Department of Youth Services clarifies the legal standards for such claims under Title VII of the Civil Rights Act of 1964, serving as a critical reminder for employers to ensure fairness in employment decisions as reverse-discrimination claims become more prevalent. Issue The core question before the court was whether majority-group plaintiffs must show additional “background circumstances” to support the claim that the employer discriminates against the majority, in addition to meeting the standard elements of an employment discrimination claim under Title VII. In discrimination law, a majority group refers to a group that is perceived as having numerical or social dominance in a specific context. For example, 78% of software engineers are men, making males the majority group in this case. The Ames ruling clarifies that members of majority groups—such as heterosexuals in Ames’s case—do not face a higher burden when alleging workplace discrimination, ensuring equal protection under Title VII for all individuals. Background Marlean Ames, a heterosexual woman, was employed by the Ohio Department of Youth Services since 2004. In 2019, under a new supervisor (a homosexual woman,) Ames received positive performance reviews but was passed over for a promotion to the Bureau Chief of Quality in favor of another homosexual woman. Four days later, Ames was demoted to a secretarial role, and a gay man was hired to fill her previous position. Ames filed a lawsuit against her employer, alleging discrimination based on her sex and sexual orientation under Title VII. The U.S. District Court for the District of Ohio granted summary judgment in favor of the Ohio Department of Youth Services, and the Sixth Circuit affirmed. The Sixth Circuit held that, as a heterosexual plaintiff, Ames was required to show “background circumstances” to support the suspicion that the employer was an unusual one that discriminated against the majority, including evidence that a member of the minority group made the employment decision or statistical evidence of a pattern of discrimination against the majority. Ames failed to meet this requirement, as her termination was decided by heterosexual directors, and she provided no evidence of a broader pattern of discrimination. Prior to the Supreme Court’s ruling, four circuit courts (Eighth, Seventh, D.C., and Tenth) had adopted the “background circumstances” requirement for majority-group plaintiffs, while two circuits (Third and Eleventh) had rejected it. Court’s Holding In a unanimous opinion authored by Justice Ketanji Brown Jackson, the Supreme Court held that majority-group plaintiffs bringing “reverse discrimination” claims under Title VII are not required to show “background circumstances” to prove discrimination. The court found that this requirement is inconsistent with the text of Title VII and Supreme Court precedent. The court emphasized that Title VII’s disparate-treatment provision does not distinguish between majority and minority-group plaintiffs, focusing instead on “individuals” rather than groups. The statute’s language, which establishes protections for every individual regardless of group membership, leaves no room for courts to impose special requirements on majority-group plaintiffs. The court further clarified that all Title VII discrimination claims should be evaluated under the burden-shifting framework established in McDonnell Douglas Corp. v. Green (1973,) without additional hurdles for majority-group plaintiffs. The “background circumstances” rule, the court noted, disregards the flexibility of the McDonnell Douglas framework, which was never intended to be “rigid, mechanized, or ritualistic” (Swierkiewicz v. Sorema N.A., 2002). By imposing a uniform, highly specific evidentiary standard on majority-group plaintiffs, the rule violated this principle. The court rejected the Ohio Department of Youth Services’ argument that the “background circumstances” requirement was merely a way to assess whether an employment decision suggested discrimination based on a protected characteristic. The Sixth Circuit’s application of the rule explicitly relied on Ames’s failure to meet a heightened evidentiary standard, which Title VII does not support. Consequently, the Supreme Court vacated the Sixth Circuit’s judgment and remanded the case for application of the proper prima facie standard. Concurrence Justice Clarence Thomas, joined by Justice Neil Gorsuch, concurred fully with the majority but wrote separately to highlight the problems with judicially created “atexual legal rules” like the “background circumstances” requirement. Justice Thomas pointed out the difficulty of defining the “majority” in contexts like gender (where women are a majority nationally but not in certain industries) or race (where categories are often imprecise). He also questioned the McDonnell Douglas framework’s utility, signaling openness to reconsidering it in future cases. Notably, Justice Thomas referenced diversity, equity, and inclusion (DEI) initiatives in a footnote, suggesting that such programs may lead to discrimination against perceived majority groups, a point likely to be cited in future challenges to DEI policies. Why This Matters This ruling ensures that all workers, regardless of their race, gender, or other protected characteristic, are subject to the same legal standards when bringing discrimination claims under Title VII. By eliminating the “background circumstances” requirement, the court has removed an unfair hurdle for majority-group plaintiffs, likely leading to an increase in reverse-discrimination claims. The decision aligns with recent Supreme Court rulings emphasizing equal treatment, such as those on affirmative action and job transfers. Takeaways for Employers Increased Scrutiny of Employment Decisions: With barriers lowered for majority-group plaintiffs, employers should expect a rise in reverse-discrimination claims. All employment decisions—hiring, promotions, terminations—must be supported by legitimate, well-documented business reasons, regardless of the employee’s protected class. Training and Compliance: Employers should train supervisors and HR personnel to recognize and prevent all forms of workplace discrimination, including those affecting majority groups. Litigation Strategy: While employers can still use evidence like the decision-makers’ characteristics or the experiences of other employees to rebut discrimination claims, the Supreme Court has confirmed that reverse-discrimination claims face no higher burden of proof than other Title VII claims. DEI Considerations: The decision, particularly Justice Thomas’s concurrence, signals potential judicial skepticism toward DEI initiatives. Employers should review DEI programs to ensure compliance with Title VII and prepare for possible legal challenges. This ruling underscores the importance of equitable treatment across all employee groups and reinforces the Supreme Court’s commitment to uniform application of Title VII’s protections.
June 19, 2025
Labor and Employment
Workplace Violence: Why Employers Can’t Afford to Ignore the Warning Signs
When employers think about workplace safety, the conversation often begins and ends with OSHA inspections or slip-and-fall prevention. But in today’s world, the most urgent threat to your workforce isn’t on the floor. It’s in the atmosphere: workplace violence. Violence doesn’t just mean active shooter scenarios. It includes verbal threats, stalking, physical intimidation, domestic abuse that spills into the workplace, and psychological harassment. These are not just personnel issues but legal liabilities waiting to explode. The Legal Landscape is Shifting and Employers Must Keep Up Under OSHA’s General Duty Clause, employers are legally required to provide a safe working environment free from recognized hazards, including the risk of workplace violence. Failing to act on known threats can result in citations, civil liability, and, in extreme cases, criminal exposure. Add to that claims for negligent hiring, negligent retention, workers’ comp exposure, ADA violations, and reputational ruin, and the stakes become even clearer. Laws are continuing to evolve. California’s 2024 mandate for Workplace Violence Prevention Programs (WVPPs) set a new national standard, and other states, including New York, are following suit. Employers must now demonstrate proactive measures, not reactive apologies when something goes wrong. The Red Flags are Rarely Subtle and Often Dismissed Nearly every workplace violence incident is preceded by clear indicators: escalating arguments, erratic behavior, hostile emails, or an employee voicing concern about a colleague’s conduct. What’s dangerous — and legally reckless — is waiting until someone crosses the line before acting. Employers are expected to prevent foreseeable harm, which means acting before tragedy strikes. Your First Line of Defense: a Written, Enforced Violence Prevention Policy Organizations of all sizes and industries must have a clear, written policy for workplace violence prevention. This is not just a formality. Your workplace violence prevention policy should: Define prohibited conduct with precision, including threats, intimidation, and harassment. Create safe, accessible, and anonymous reporting channels. Establish a transparent response protocol. Reinforce zero tolerance for retaliation. This is your legal and cultural foundation. Training is Not Optional! It is a Legal and Practical Imperative A policy that sits unread on a shelf offers zero protection. Managers, supervisors, and employees must be trained to recognize red flags, de-escalate conflict, and report concerns safely and effectively. Even a single hour of annual training has proven to materially reduce risk. Training must be specific, interactive, and mandatory. Where appropriate, combine it with harassment prevention or ADA accommodation training; do not treat it as a check-the-box exercise. High-Risk Moments Demand Heightened Vigilance Terminations, layoffs, and performance-based discipline are flashpoints for violence. Employers should: Plan separation meetings carefully. Consider having security present. Conduct high-risk terminations off-site or via video if needed. Offer Employee Assistance Programs (EAPs) where appropriate. The Right Team: Security, Legal, and Behavioral Health Professionals Working in Tandem Preventing and responding to workplace violence takes more than HR alone. You need a cross-functional team of: Security professionals who assess risk and implement physical safety protocols. Threat assessment experts (forensic psychologists, trained law enforcement) who evaluate risk and help strategize de-escalation. Employment counsel who understands the legal implications and can coordinate with law enforcement, courts, and insurers. Executive protection for high-profile or targeted employees. Each component must align under a single, integrated WVPP strategy. Real Estate and Isolated Work Environments Face Elevated Risk Industries like property management, real estate, and healthcare, where employees work alone, during off-hours, or interact frequently with the public, face unique and elevated exposure. Employers in these sectors must tailor policies, training, and security measures accordingly. Employer Liability is Real and Expensive Beyond OSHA citations, employers may face lawsuits alleging: Negligent hiring or retention. Failure to warn. ADA violations (e.g., mishandling mental health-related threats). Discrimination or retaliation for mishandled reporting. Employers cannot afford to be reactive. Workplace violence prevention is not about paranoia. It is about creating a culture of trust, accountability, and action. Employees are more likely to report threats when they believe the company will take them seriously. That alone can prevent tragedy. If your workplace violence prevention policy has not been reviewed in the last year or if your team has never been trained on recognizing or responding to threats, the time to act is now.
May 29, 2025
Labor and Employment
Non-Compete Ban for Maryland Healthcare Professionals Set to Take Effect July 1, 2025
Effective July 1, 2025, the second phase of Maryland’s restrictions on non-compete agreements and conflict of interest provisions for healthcare professionals will go into effect, targeting employers who provide direct patient care. This follows the earlier phase of the law, which banned non-competes for veterinary professionals beginning June 1, 2024. What Does This Mean for Healthcare Employers? Healthcare employers can continue enforcing non-compete provisions in agreements executed before July 1, 2025. However, starting July 1, any newly signed agreement that includes a non-compete or conflict of interest clause for a qualifying healthcare provider may be partially or wholly unenforceable, depending on compensation and job function. Key Provisions Under the Updated Maryland Statute Under the amended Md. Code Ann., Labor & Employment §3–716, Maryland continues to prohibit non-compete agreements for employees in any profession who earn 150% or less of the state’s minimum wage. The updated law expands these protections by banning non-competes for veterinary practitioners and veterinary technicians, as well as for licensed healthcare professionals who provide direct patient care and earn $350,000 or less annually. For healthcare professionals earning more than $350,000 annually, non-compete agreements are still permitted but now face strict limitations: they may last no longer than one year and must be limited to a geographic radius of 10 miles from the provider’s principal place of practice. The amended law also introduces a new obligation for employers: upon a patient’s request, they must disclose the new location of a former healthcare provider. Despite these expanded restrictions, the statute explicitly affirms that employers may still take steps to protect client lists and proprietary business information. Best Practices for Healthcare Employers In light of the upcoming change, employers should: Review and revise all employment agreements that will be signed on or after July 1, 2025 Ensure HR and recruiting teams are informed and using compliant templates Plan for patient communication procedures tied to provider transitions Use alternative protections—like confidentiality and non-solicitation agreements—to safeguard business interests. Even contracts signed before July 1 may still face scrutiny under Maryland’s reasonableness standard for restrictive covenants. Background on Non-Compete Reform The updated statute stems from House Bill 1388, passed in 2024 as part of Maryland’s growing effort to curtail restrictive employment practices in the healthcare and veterinary sectors. Nationally, the Federal Trade Commission’s (FTC) attempt to implement a broad non-compete ban across every industry remains in limbo after district court challenges blocked enforcement. In March, FTC attorneys filed motions requesting a 120-day stay of the agency’s appeals, citing the change of the presidential administration and a need to reassess its position under new leadership. It remains unclear whether non-competes will remain a policy priority at the federal level. As a result, state-level action, like Maryland’s, has become the primary driver of non-compete reform.
May 28, 2025
Labor and Employment
Virginia Expands Non-Compete Restrictions for Employers
Virginia Governor Glenn Youngkin has signed Senate Bill 1218 into law, amending the state’s non-compete statute. Effective July 1, 2025, the updated law will broaden restrictions on non-compete agreements in Virginia. Previously, the law only protected “low-wage employees,” or those earning less than the average weekly wage in Virginia. Under the new amendment, employers will also be prohibited from entering into non-compete agreements with “non-exempt employees.” These are workers who are entitled to overtime pay under the Fair Labor Standards Act. Under the new amendment, all non-exempt employees – regardless of their income level – will be covered by the Commonwealth’s prohibition on non-compete agreements. However, the amendment is not retroactive. Therefore, employers who have entered into non-compete agreements with non-exempt employees prior to July 1, 2025, will remain valid; any such agreements executed on or after July 1, 2025, will be prohibited by law. Moving forward, employers will need to ensure accurate classification of workers as either exempt or non-exempt under federal standards to avoid liability under the new amendment. Employers should review their policies on non-competes, particularly as applied to offer letters, severance agreements, and employee handbooks to ensure compliance with the amendment.
May 27, 2025
Labor and Employment
Weddings, Honeymoons, and Milestones: Employer Guidance for Time Off Requests
For HR leaders and business owners alike, the question is not whether employees will request time off for major life events, but when and how your organization will respond. Weddings, honeymoons, and personal milestones do not fall under FMLA or mandatory leave laws, but how you handle these moments speaks volumes about your culture, legal risk tolerance, and ability to retain top talent. There’s No Legal Right — But There Are Legal Risks It’s true: U.S. employers have no legal obligation under federal or state law to offer “wedding leave.” These events are not protected by the Family and Medical Leave Act (FMLA), paid sick leave laws, or any other statutory entitlement. But do not mistake a lack of mandate for a lack of risk. Employers who approve or deny time-off requests inconsistently, particularly in ways that appear to impact employees based on gender, race, religion, or other protected characteristics, may face claims under Title VII or state anti-discrimination laws. The U.S. Department of Labor (DOL) continues to emphasize enforcement around leave and accommodation policies that have a disparate impact. While “wedding leave” is not protected, your process must still comply with anti-discrimination and fair treatment standards. FMLA and Paid Leave Interaction: Be Clear on What Applies While weddings and honeymoons typically fall outside the scope of the FMLA, some related events might trigger protected leave. For example: Destination wedding involving a serious health condition (e.g., pre-surgical travel): FMLA may apply. Caring for a seriously ill spouse during or after a wedding or travel abroad: FMLA may apply. Employee illness or complications resulting in an inability to return to work: also potentially protected under FMLA. Moreover, the DOL recently clarified that when employees receive state or local paid family or medical leave benefits, employers cannot require them to simultaneously use accrued paid time off (PTO). This rule limits an employer’s ability to control how leave is structured when overlapping benefits are involved. Employers must understand the interplay between federal FMLA rights and state/local paid leave programs. Suppose an employee receives paid benefits through a government program (e.g., California PFL, DC Paid Family Leave). In that case, employers must designate FMLA leave when appropriate but may only allow PTO to be used as a supplement if mutually agreed, not mandated. Build Goodwill Without Losing Control Your policies should reflect both empathy and operational discipline. A wedding is not a frivolous request — it is a once-in-a-lifetime event that deeply matters to your employee. When employers respond with humanity and structure, it creates loyalty. That does not mean granting every request or disrupting workflow. It means having a clear, written policy that: Requires advance notice (e.g., 30–60 days). Reserves approval based on business needs. Clarifies whether PTO or unpaid leave may be used. Avoids any ambiguity about the consequences of overstaying approved leave. Consider including a “personal leave” clause in your employee handbook to address non-medical, non-FMLA, and non-emergency time off. Your language can be simple and clear: personal leave may be granted at management’s discretion, subject to operational needs. Watch Out for International Travel If the honeymoon involves international travel, extra scrutiny is warranted. Confirm the return-to-work date in writing before the employee departs, and clearly communicate that unapproved extensions may be treated as unexcused absences. Lingering COVID-era entry restrictions, visa issues, or logistical complications can cause delays, but those are not excuses for avoiding your leave policies. Where possible, plan backup support and document expectations in writing to avoid any disputes upon return. Small Gestures, Big Impact From a culture-building perspective, do not underestimate the power of a simple “Congratulations!” A card, a team mention, or a verbal note from leadership can make an employee feel valued. Some employers go a step further — offering a “wedding day off” or an extra PTO day. These gestures are optional, but impactful. Policy Consistency Is Your Best Defense If your leave policies are outdated, vague, or silent on personal time off, now is the time to revise them. Review and align them with current DOL guidance, FMLA regulations, and your state’s paid leave laws. Train your managers, document every request and response, and apply the same standards to every employee, regardless of role, relationship, or circumstance. Bottom Line for Employers Personal milestones matter to your employees and your business. They can create resentment, attrition, or even litigation when handled poorly. When handled well, they can build trust and reinforce culture. Be fair. Be clear. Be compliant. Be human. And most importantly, be consistent.
May 21, 2025
Labor and Employment
Under-Performing Pregnant or Disabled Employees: Balancing Performance Management with the ADA, FMLA, and Pregnant Workers Fairness Act
Performance conversations can quickly become legal minefields when an employee is pregnant, has a disability, or has requested protected leave. Too often, well-meaning employers delay intervention, mishandle documentation, or apply policies inconsistently, opening the door to claims under laws like the Americans with Disabilities Act (ADA), the Pregnant Workers Fairness Act (PWFA), and the Family and Medical Leave Act (FMLA). Employers navigating sensitive performance management matters should understand the laws at play and focus on the fundamentals: document thoroughly, communicate clearly, and take decisive action. Know the Landscape: ADA, PWFA, and FMLA in the Performance Context Americans with Disabilities Act (ADA) The ADA prohibits discrimination against qualified individuals with disabilities. It requires employers to provide reasonable accommodations that enable those individuals to perform the essential functions of their jobs—unless doing so would cause an undue hardship. Importantly, employees with disabilities must still meet legitimate performance and conduct standards. But before disciplining or terminating such an employee, an employer must consider whether: The performance issue is related to the disability. A reasonable accommodation could help the employee meet expectations. The employee was given a meaningful opportunity to improve. Pregnant Workers Fairness Act (PWFA) Effective June 27, 2023, the PWFA expands protections for pregnant workers by requiring employers to offer reasonable accommodations for known limitations related to pregnancy, childbirth, or related medical conditions—similar to the ADA framework. Key differences between the PWFA and ADA include: The PWFA applies even to temporary or moderate limitations (e.g., lifting restrictions, more frequent breaks, and part-time schedules). Employers cannot require a pregnant employee to take leave if another accommodation is available. The statute prohibits retaliation for requesting or using a pregnancy-related accommodation. Performance issues that arise in the context of pregnancy or a related condition should be handled carefully—especially if the employee has requested (or is entitled to) accommodation under the PWFA. Family and Medical Leave Act (FMLA) The FMLA entitles eligible employees to up to 12 weeks of unpaid, job-protected leave for serious health conditions (including pregnancy), family caregiving, and bonding with a new child. Employers must tread carefully if an employee is underperforming while on FMLA leave or shortly after returning. Disciplining or terminating an employee for conduct related to a protected leave period can easily be construed as interference or retaliation—even if the employer’s intent was neutral. Common Pitfalls When Performance and Protected Status Intersect Ignoring the Role of Accommodation Employers must explore accommodations under both the ADA and PWFA before taking adverse action. If an employee’s performance is suffering due to a medical condition or pregnancy-related limitation, your first step is not discipline—it’s engagement. Legal obligation: Initiate the interactive process to determine if a reasonable accommodation would enable the employee to meet expectations. Failing to engage in this process is a leading cause of liability under both laws. Accommodations may include modified duties, schedule changes, ergonomic supports, remote work or temporary reassignment. Inconsistent Application of Performance Standards If an employer holds a pregnant or disabled employee to a higher (or lower) standard than others, the result is rarely good. Legal risk: Disparate treatment claims under Title VII, the ADA, the PWFA, or state human rights laws. Ensure your expectations, metrics, and disciplinary procedures are applied consistently—particularly regarding attendance, deadlines, and work quality. Poor or Biased Documentation Vague or emotionally charged performance documentation (“She’s not committed anymore since becoming pregnant”) is both unhelpful and legally risky. Best practice: Stick to objective, quantifiable facts. Instead of “seems distracted,” document details, like: “missed three deadlines in March; quality of reports has declined, with five factual errors noted.” Good documentation provides a legitimate, non-discriminatory basis for action—and will support your decision if it’s challenged later. Disciplining During or After FMLA Leave Without a Clear Basis Courts closely scrutinize adverse actions taken during or shortly after FMLA leave. Even if you have valid concerns, timing matters. Tip: If an employee’s performance issues predate the leave, ensure you have clear records to show that the concerns existed—and were addressed—before the leave began. Avoid the appearance of retaliation by proceeding only when the documentation supports your decision. Practical Steps for Employers: How to Manage Performance Issues Lawfully and Effectively Train Managers to Spot Accommodation Triggers. Supervisors should loop in HR or legal before acting whenever an employee references a medical condition, pregnancy limitation, or medical leave. Engage Early and Document Diligently. Don’t delay performance conversations out of fear—address issues early, but do so thoughtfully. Document any meetings, expectations, improvement plans, and accommodations discussed or offered. Apply Policies Uniformly. Consistency is key, whether it’s an attendance policy, quality standard or progressive discipline process. Explore Accommodations Before Discipline. Particularly where medical or pregnancy-related limitations are at play, you must first assess whether the employee can meet expectations with reasonable support. Avoid “Gotcha” Terminations. Avoid abrupt disciplinary action if performance concerns haven’t been clearly documented and communicated. Courts frown on surprise terminations, especially after protected leave or accommodation requests. Consult Counsel Before Termination. Before terminating a pregnant or disabled employee—or one who recently returned from leave—have a legal review of the facts, documentation, and process. A brief consultation can prevent months of costly litigation. Pregnancy and disability do not shield employees from accountability, but they do change how employers must approach performance management. With the passage of the Pregnant Workers Fairness Act and the continued complexity of ADA and FMLA compliance, employers must proceed with care, compassion, and a clear understanding of their legal duties. Performance issues don’t go away on their own, but mishandling them can create far bigger problems. The key is to act early, engage meaningfully, and document everything.
April 30, 2025
Labor and Employment
Does Your Dress Code Discriminate? What Employers Need to Know
In the ever-evolving landscape of workplace discrimination laws, savvy employers are reexamining longstanding policies—including those that may not seem controversial at first glance. One of the most commonly overlooked (yet frequently litigated) areas? The company dress code. What was once a straightforward requirement—“business casual” or “jeans on Fridays”—has become a complex legal issue, especially as courts and administrative agencies scrutinize how dress and grooming policies intersect with anti-discrimination laws. From hairstyle protections to gender identity accommodations, the modern workplace dress code carries more legal weight than many employers realize. Here’s what you need to know to ensure your company’s dress code reflects both current legal standards and best practices. The Legal Foundation: Employers May Set Reasonable Standards As a general matter, employers are permitted to impose reasonable restrictions on workplace appearance. Courts have long recognized a company’s legitimate interest in maintaining a professional image—especially for employees who interact with clients, vendors, or the public—or in enforcing safety-based attire requirements depending on the nature of the work. However, dress codes must be implemented in a way that does not discriminate directly or indirectly. Your workplace dress code should not: Impose unequal burdens on certain groups Reinforce outdated gender stereotypes Fail to provide religious or medical accommodations Be applied inconsistently or selectively Gender-Specific Policies: Proceed with Caution Historically, some courts have permitted different grooming or dress requirements for male and female employees—as long as the policy is applied evenly and doesn’t impose a greater burden on one gender. However, employers relying on these traditional standards may be exposing themselves to risk. Courts have increasingly accepted Title VII claims based on gender stereotyping, where policies require employees to present in ways that conform to traditional gender roles—for instance, requiring women to wear skirts or prohibiting men from growing long hair. These requirements can give rise to claims when they compel employees to dress in a manner inconsistent with their gender identity or personal expression. Several states and municipalities have taken a more explicit approach. In California, for example, it is unlawful to require women to wear skirts. In Washington, DC, the law prohibits discrimination based on appearance, which includes dress and grooming. Employers operating in multiple jurisdictions should review policies with a careful eye toward state and local requirements, which may be more protective than federal law. Gender Identity and Expression: Aligning with Bostock and Beyond In the wake of the U.S. Supreme Court’s 2020 decision in Bostock v. Clayton County, employers must recognize that Title VII prohibits discrimination based on gender identity and sexual orientation. As a result, enforcing gender-specific dress codes or grooming policies that conflict with an employee’s gender identity may constitute unlawful discrimination. Many jurisdictions have adopted laws that go even further, requiring employers to affirmatively allow employees to dress in accordance with their gender identity or expression. Employers should carefully assess whether their appearance standards respect these legal obligations and provide sufficient flexibility. The Rise of Hairstyle Discrimination Laws A growing number of states have passed legislation recognizing that grooming policies can serve as proxies for racial discrimination. Laws in Maryland, Virginia, California, New York, and others prohibit workplace restrictions that ban natural hairstyles or protective styles such as afros, braids, locks, and twists. These laws are often framed as extensions of race discrimination protections under Title VII. Employers should avoid policies that prohibit or limit hairstyles unless there is a demonstrable, legitimate business justification—such as a safety concern in an industrial setting—and even then, the policy must be narrowly tailored. Accommodations for Religious Beliefs and Medical Conditions Under Title VII, employers must reasonably accommodate sincerely held religious beliefs, including those that conflict with dress or grooming policies. This may include permitting head coverings, religious jewelry, or exceptions to attire norms due to modesty practices. Similarly, under the Americans with Disabilities Act, employers must accommodate qualified employees with disabilities. For instance, a blanket ban on facial hair may need to yield to an employee with a medical condition that makes shaving painful or harmful. Failure to consider these accommodations not only exposes employers to liability—it also undermines inclusivity and employee morale. Union Activity and Protected Expression Dress codes must also respect employees’ rights under the National Labor Relations Act (NLRA), which protects their ability to engage in concerted activity, including the right to wear union insignia or clothing expressing workplace concerns. A policy that broadly bans “derogatory” or “inappropriate” attire without a clear connection to legitimate business interests—like safety or security—may be deemed unlawfully overbroad by the National Labor Relations Board. Best Practices for Employers To ensure that dress codes meet legal standards and reflect modern workplace norms, employers should consider the following: Use Neutral Language: Policies should be gender-neutral, avoiding references to attire “expected” of men or women. Avoid Over-Specification: Instead of listing every acceptable or unacceptable item of clothing, opt for broader, flexible guidelines (e.g., “employees must present a clean and professional appearance appropriate to their role”). Be Consistent: Apply the policy uniformly across departments and roles, unless a legitimate business reason supports a distinction. Build in Flexibility: Include language acknowledging the need to accommodate religious practices, cultural expression, or medical conditions. Review Regularly: Revisit your dress code periodically in light of new legal developments and cultural trends. Final Thoughts While office dress codes may seem like a minor issue, they often sit at the intersection of major employment law concerns. A policy that is too rigid—or worse, discriminatory in application—can lead to reputational harm and costly litigation. The good news is that most companies can maintain professionalism without micromanaging wardrobe choices. A thoughtful, updated policy can reinforce your company’s values while keeping you compliant with the law. If you have questions about your company’s dress code or need assistance revising your policies, consult employment counsel familiar with the latest developments in federal, state, and local law. A well-drafted dress code can do more than keep the office looking sharp—it can help your company avoid some very real legal pitfalls.
April 16, 2025
Labor and Employment
Key Trends in PAGA Arbitration Decisions: Insights for Employers and Legal Counsel
The proliferation of wage and hour litigation in California and recent significant changes to the law have created uncertainty for employers and their lawyers alike. Both recent PAGA (Private Attorneys General Act of 2004) reform legislation and critical court decisionsi have changed the landscape for employers seeking to prevent and defend these wage and hour claims. Generally speaking, PAGA allows employees who have suffered Labor Code violations (such as the failure to provide minimum wage, overtime, accurate wage statements, and proper meal and rest breaks) to sue their employers on behalf of the state for Labor Code violations—even for violations that affect other employees. In essence, the California Attorney General has deputized employees to pursue Labor Code violations on their behalf in an effort to enforce wage and hour laws. While most employers are familiar with the risk associated with wage and hour class actions, the companion PAGA claims are on the rise and being pursued by employees at a rapidly increasing rate. While recent PAGA reform law has arguably helped to limit aspects of the law, including requiring employees to suffer violations and have standing to do so, before bringing lawsuits, reducing certain repetitive damages, and allowing for the potential early cure or resolution of claims in some instances, ultimately the reforms have not slowed the momentum of these lawsuits against employers. More precisely, the reform has provided additional tools and defenses to employers to address the lawsuits. With this in mind, it becomes even more apparent that the goal of every employer should be to take steps to prevent or minimize the chances of large representative wage and hour lawsuits against their business. The drafting and implementing arbitration clauses and class action/PAGA waivers can accomplish this. Many employers seek to use arbitration agreements to keep these kinds of claims out of court. However, recent legal decisions threaten to make it much more difficult to use these measures to avoid legal claims unless the agreements are carefully drafted. More recently, California courts have been active in issuing decisions that clarify the effectiveness of arbitration provisions in subsequent lawsuits to force employees into less dangerous and less expensive individual arbitrations versus full-blown representative actions. Three very recent decisions issued in 2025 from California’s Second District Court of Appeal underscore the importance of well-crafted arbitration and class action and PAGA waivers.ii Key Legal Decisions Shaping Arbitration Agreements Ballesteros v. FormFactor, Inciii In a clear example of courts nitpicking imprecise arbitration clause language to allow employee representative claims to proceed to court, the Court of Appeal in Ballesteros interpreted the employer arbitration agreement, to exclude all PAGA claims from the scope of the arbitration agreement. The court based its decision on some imprecisely drafted language in an arbitration clause that failed to accurately list PAGA claims as claims pursued on behalf of the state of California. As a result, rather than the arbitration agreement being interpreted to send claims to arbitration, the Court found that the arbitration agreement specifically allowed representative PAGA claims to be pursued in court.iv The Court determined that the arbitration agreement excluded from arbitration PAGA “representative actions” without distinguishing between claims brought on an individual or nonindividual basis. This decision is instructive because the Court chose a very favorable interpretation of the arbitration clause for the employee and went to great lengths to justify its position. The decision serves as a warning that arbitration clauses must be regularly updated to avoid these types of consequences. Cusimano v. Brilliant Earth, LLCv In the Cusimano decision, the Court of Appeal ruled that the entire arbitration agreement was unenforceable because the agreement to arbitrate contained an unenforceable waiver of nonindividual PAGA claims. Initially, the Court concluded that the arbitration agreement was flawed because it improperly barred employees from bringing representative actions against their employers. The Court found that the arbitration agreement contained a nonseverability clause that tied the validity of the agreement as a whole to the validity of the defective waiver of nonindividual PAGA claims and found the full agreement to be invalid, directing the entire matter for resolution in court.vi Much of the Court’s decision was premised on the flawed and unenforceable draft language in the employer documents. The Court was even more assertive in Cusimano in declaring that imprecise drafting and defects will result in employers being forced to litigate class action and PAGA claims in court. Cusimano reinforces the trend of courts strictly scrutinizing employer-drafted arbitration clauses, allowing costly representative litigation to proceed for employees against their employers. Arzate v. ACE American Insurance Companyvii In Arzate, a costly appeal was won, at least in part due to effective (while imperfect) drafting of their arbitration language. The Court of Appeal’s analysis in Arzate centered on the interpretation of arbitration agreements and which party was required to initiate arbitration. The arbitration language at issue required that any party who sought to initiate arbitration must do so within thirty days. The Court determined that the only party who would seek to initiate a claim would be a party seeking relief or, in other words, an employee. As a result, the Court of Appeal found that the employer was not required to initiate arbitration and, as a result, did not breach the arbitration agreements or waive its right to arbitrate. Tellingly, the Court made clear that while the employer “arguably could have used different language in the arbitration rules and procedures to underscore this point, [] the document appear[ed] to be written with a minimal amount of legalese for the benefit of employees without legal training. Read in the context of the entire agreement, the colloquial language shows that the plaintiffs were the party that “want[ed] ... [a]rbitration,” and that they were required to file a demand to initiate the process given their agreement that they would “submit” their employment-related claims to arbitration.” While, ultimately, this decision favored the employer, the trend is clear: Employers must seek regular guidance from their attorneys who monitor these decisions and can provide cutting-edge advice to avoid these types of legal issues. Implications for Employers These cases illustrate a trend in Second District jurisprudence regarding the importance of precision in drafting arbitration provision language. While the law has an underlying strong public policy favoring arbitration, these decisions establish a recurring pattern of the refusal to enforce unclear arbitration provisions in a variety of contexts. Poorly drafted provisions can result in significant litigation, which likely would have been avoided if carefully considered language was utilized. These problems are clearly demonstrated through the various interpretations of the arbitration clauses invalidity and the Court’s unwillingness to enforce them in various scenarios. A carefully crafted arbitration provision and class action/PAGA waiver should be clearly worded, voluntary in nature, fair, and mutual, and include adequate notice to the employee. The provisions should also take into consideration recent decisions which, provide more specific guidance as to pitfalls that must be avoided. These recent decisions serve as a warning: employers who fail to seek regular review may find themselves embroiled in costly and unnecessary litigation without defenses that were otherwise available to them. Action Plan: Steps Employers Should Take Every employer should take this opportunity to seek a review of existing forms provided to their employees or put in place new forms that will ensure adequate protection and insulate them from costly wage and hour litigation in the future.
April 8, 2025
Labor and Employment
The Future of DEI in the Private Sector: Navigating a Changing Legal Landscape
The private sector's Diversity, Equity, and Inclusion (DEI) landscape is undergoing significant transformation in response to evolving federal policies and legal challenges. Two executive orders from President Donald Trump in early 2025—Executive Order 14151, “Ending Radical and Wasteful Government DEI Programs and Preferencing,” and Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity”—mark a clear shift in the federal government’s stance on DEI initiatives. These orders eliminate DEI programs within federal agencies, revoke affirmative action requirements for federal contractors, and impose new compliance obligations. As a result, private employers—especially federal contractors and grant recipients—should reassess their DEI strategies, considering increased scrutiny and potential legal risks. Executive Orders and Policy Shifts The Trump administration has ramped up its scrutiny of DEI initiatives across both the federal government and the private sector, treating employment practices that take protected characteristics into account as potentially unlawful. While the Administration has not explicitly defined "illegal DEI," public statements suggest that policies tying compensation to diversity targets, factoring protected characteristics into hiring, or requiring diverse interview slates are high-risk. However, initiatives such as open employee resource groups and broader candidate pools may face less scrutiny. Companies should align internal policies with disclosures and prepare for potential government investigations. Executive Order 14151, issued on January 20, 2025, mandates the termination of all federal DEI-related offices, grants, and programs, asserting that such initiatives violate civil rights laws. The following day, Executive Order 14173 rescinded affirmative action requirements for federal contractors, directing the Office of Federal Contract Compliance Program to halt diversity-related enforcement. Contractors must now certify compliance with anti-discrimination laws, with noncompliance potentially leading to False Claims Act liability. On February 5, 2025, the Department of Justice (DOJ) Civil Rights Division announced plans to investigate and penalize illegal DEI mandates in the private sector and federally funded institutions. Simultaneously, the Office of Personnel Management (OPM) instructed federal agencies to remove unlawful diversity requirements from hiring and selection processes, reinforcing a shift toward merit-based employment policies. Expanded Enforcement Landscape: What Employers Must Do Now—and Why Private businesses must take immediate and deliberate steps to evaluate their DEI policies and practices and craft a strategic response. That response may involve revising existing policies, reaffirming a commitment to DEI (whether amended or intact), or preparing to pause, pivot, or defend current practices. In today’s fast-moving and high-stakes enforcement environment, inaction is not a neutral stance. It is a strategic decision—one that could expose an organization to government scrutiny, private litigation, reputational backlash, internal tension, or all of the above. Executive Order 14173 signals a dramatic expansion in the federal government’s oversight of diversity-related initiatives, extending well beyond public institutions and federal contractors. The order explicitly instructs all agencies to investigate what it terms “illegal” DEI preferences in the private sector and to issue formal enforcement recommendations within 120 days. These directives apply not only to publicly traded corporations but also to large nonprofits, philanthropic foundations, professional associations, and major universities—broadening the scope of potential enforcement targets across virtually every major sector of the economy. The Equal Employment Opportunity Commission (EEOC) is taking active steps to implement the administration’s vision. EEOC Chair Andrea R. Lucas has publicly committed to rooting out what she describes as unlawful DEI-driven discrimination, particularly those policies based on race or sex. The agency has removed language related to gender identity from its internal and public-facing platforms and has emphasized a shift toward a strictly merit-based framework in alignment with the administration’s priorities. In parallel, other federal agencies have been tasked with developing litigation strategies and potential regulatory actions to deter identity-based preferences, creating an increasingly complex legal landscape for employers. What makes this moment particularly challenging is the legal ambiguity that now surrounds many DEI practices. Although Executive Order 14173 stops short of banning all DEI initiatives, it targets those that include quotas, demographic set-asides, or explicit preferences based on protected characteristics—practices the administration has signaled are incompatible with federal civil rights law. These categories of DEI programming now carry heightened legal risk, even if they were once considered industry best practices. This presents a difficult paradox for private employers. Continuing with DEI programs may trigger reverse discrimination lawsuits, internal employee complaints, or direct federal investigation. At the same time, rolling back or eliminating those programs altogether may lead to claims of disparate impact, undermine employee morale, damage recruitment and retention efforts, and erode hard-won reputational goodwill. In short, the stakes are high, and the risks exist on both sides of the equation. Employers cannot afford to take a passive or reactive posture. Whether your organization has a well-established DEI framework or is in the early stages of building one, now is the time to conduct a thorough review, understand your exposure, and make intentional decisions that balance legal compliance with business goals and organizational values. The key is to act—not out of fear but with clarity, strategy, and purpose. Judicial Challenges and the Ongoing Legal Debate These actions have triggered a wave of litigation, contributing to a rapidly evolving and uncertain legal landscape for private employers and institutions navigating DEI compliance. On February 3, 2025, several advocacy and academic organizations—including the National Association of Diversity Officers in Higher Education and the American Association of University Professors—filed suit in the U.S. District Court for the District of Maryland, seeking to block key provisions of Executive Orders 14151 and 14173. In National Association of Diversity Officers in Higher Education et al. v. Trump et al., the plaintiffs argued that the orders violated the First and Fifth Amendments by imposing vague and overbroad restrictions on speech and association, and by chilling lawful DEI-related activities. On February 21, 2025, Judge Adam B. Abelson issued a nationwide preliminary injunction enjoining federal agencies from enforcing the Termination, Certification, and Enforcement Threat Provisions of the executive orders. However, the court allowed federal investigations into alleged “illegal DEI discrimination” to proceed, emphasizing that while certain aspects of the orders could be constitutionally enforced, others lacked clarity and posed significant risks to protected constitutional rights. Judge Abelson denied the Trump administration’s motion for a stay of the injunction on March 3, 2025, finding that the plaintiffs had demonstrated a likelihood of irreparable harm and that the challenged provisions raised serious constitutional concerns. The court also declined to limit the relief to the named plaintiffs, citing the broad implications of the orders across multiple sectors and jurisdictions. On March 10, 2025, the court reaffirmed that the preliminary injunction applied nationwide to all federal executive agencies, departments, and officials—excluding only the President—underscoring that executive authority must still operate within constitutional boundaries. However, on March 14, 2025, the U.S. Court of Appeals for the Fourth Circuit granted the government’s motion to stay the preliminary injunction, effectively restoring full enforcement of Executive Orders 14151 and 14173 pending appeal. The unanimous ruling by a three-judge panel was issued shortly after the district court addressed plaintiffs’ concerns that the Department of Justice had failed to comply with the earlier injunction. In a rare move, each judge on the Fourth Circuit panel issued a separate concurring opinion. Chief Judge Albert Diaz acknowledged the controversy surrounding DEI and expressed support for those working to advance such initiatives, while also noting that neither executive order defined the term “DEI” or its components. Judge Pamela Harris concurred in the stay based on the limited scope of the executive orders but cautioned that overbroad enforcement could still raise significant First Amendment and Due Process concerns. Judge Allison Jones Rushing, in her concurrence, questioned the breadth of the district court’s injunction and emphasized judicial impartiality, pushing back on the normative statements in support of DEI expressed by her colleagues. On March 17, 2025, the Fourth Circuit requested the parties to respond to a proposed briefing schedule by March 24, which could extend the briefing into late May. While the stay allows the executive orders to remain in effect during the appeal, the ultimate legality of the orders remains unresolved and may ultimately be determined by the U.S. Supreme Court. For now, private employers and institutions should stay closely attuned to these legal developments as the balance between regulatory enforcement and constitutional protections continues to shift. The evolving litigation landscape may significantly impact compliance obligations, enforcement risks, and the future of DEI-related initiatives nationwide. Business Consideration and Strategic Adjustments for Employers Despite increased federal scrutiny, businesses must carefully balance compliance with broader DEI objectives, ensuring alignment with legal requirements and inclusivity goals. Actions to consider include: Conducting a Comprehensive Legal and Risk Assessment - Employers should evaluate their DEI programs for compliance with federal anti-discrimination laws. Initiatives involving quotas or preferential treatment based on protected characteristics should be reviewed and, if necessary, modified. Refining DEI Messaging and Training Programs - Businesses should reassess their public statements and training programs to emphasize equal opportunity principles while avoiding language that could be construed as endorsing unlawful preferences. Monitoring Legislative and Judicial Developments - Employers should stay informed about regulatory changes that may impact DEI initiatives. Consulting with legal counsel and industry groups can help businesses navigate this uncertain environment. Adapting DEI Strategies to Align with Legal and Business Goals - Companies should continue fostering inclusive workplaces through legally compliant initiatives, such as mentorship programs, leadership development efforts, and workplace culture assessments. Businesses can maintain their DEI commitments while minimizing legal by focusing on equity and opportunity rather than preferential treatment. Conclusion The private sector must navigate a complex and evolving DEI landscape shaped by federal policies, legal challenges and shifting public expectations. While government-mandated DEI programs face heightened scrutiny, corporate diversity initiatives remain a key business strategy. However, evolving executive actions introduce ambiguity in compliance obligations, requiring companies to balance federal court interpretations of Title VII, state and local anti-discrimination laws, and international regulations. By proactively adapting to these changes, businesses can continue to promote inclusivity while ensuring compliance and mitigating legal risks.
March 28, 2025
Labor and Employment
Adjusting Job Descriptions for Business Needs – What You Need to Know
Changing an employee's job description during business restructuring can be tricky, especially when balancing business needs with legal requirements. Can human resource managers change an employee’s job description to align with new business needs without the employee’s consent? From a legal perspective, the general answer is yes; in some cases, you can make these changes. Business Necessity and Employment At-Will Unless there is a specific clause in an employment contract or a collective bargaining agreement that dictates otherwise, employers generally have the right to adjust an employee’s job duties, schedule, or work location based on business needs. This flexibility is part of the principle of “at-will” employment, which allows employers to make changes to terms and conditions of employment as long as those changes don’t violate any specific laws or agreements. However, it’s important to note that some local and state regulations may impose additional requirements. For example, certain states and cities have predictive scheduling laws that require businesses to provide workers with advance notice of schedule changes. If the company fails to do so, it could face penalties. Additionally, in some places, if an employee’s scheduled hours are cut upon arrival to work, they may be entitled to what’s known as "reporting pay" or "show-up pay" — a set minimum amount for showing up, even if they aren’t needed to work their full shift. Considerations Under the FMLA If your employee is on Family and Medical Leave Act (FMLA) leave, you must proceed with caution. The FMLA protects employees from having their job duties, schedules, or work locations changed in a way that negatively impacts their ability to take leave. For example, an employer cannot reduce the employee’s hours to avoid their eligibility for FMLA or transfer the employee to a position that discourages the use of leave. Moreover, when the employee returns from FMLA leave, they must be reinstated to their same job or an equivalent one. An "equivalent" position is one that is virtually identical in terms of pay, benefits, working conditions, and responsibilities. While you can offer the employee a different shift, schedule, or position after they return from leave, you cannot pressure them to accept it if it is against their wishes. Retaliation and Discrimination Protections It’s also important to remember that changing an employee’s job duties or schedule in retaliation for exercising their legal rights can result in legal violations. For example, retaliating against an employee for filing a workers' compensation claim, taking FMLA leave, or engaging in other protected activities is illegal. Similarly, making changes based on discriminatory reasons (e.g., reducing hours or authority for only certain groups of employees, such as women) is also prohibited. Key Takeaways for HR Managers Check your company’s policies: Ensure there are no employment contracts or collective bargaining agreements that limit your ability to change the employee’s job description. Know the laws in your state and locality: Be mindful of predictive scheduling laws and reporting pay regulations that may impact your ability to make changes. FMLA considerations: If the employee is on FMLA leave, be careful not to make changes that interfere with their rights to take leave or return to a similar position. Avoid retaliation or discrimination: Ensure that any changes are not made in retaliation for an employee’s legal rights or based on unlawful discrimination. When changing an employee’s job description, balance business needs with legal compliance and clear communication. While you may have the authority to adjust roles, keep employees informed, consider their concerns, and comply with relevant laws to help prevent potential disputes. Thoughtful planning and transparency can go a long way in maintaining a positive workplace during change.
March 20, 2025
Labor and Employment
EEOC Investigates 20 Private Law Firms Questioning Their DEI-Related Employment Practices
On March 17, EEOC Acting Chair Andrea Lucas sent letters to 20 large law firms requesting information about their diversity, equity and inclusion (DEI) related employment practices. The letters express the EEOC’s suspicions that the firms’ employment practices, including those labeled or framed as DEI, are, in fact, discriminatory based on race, sex, or other protected characteristics, in violation of Title VII of the Civil Rights Act of 1964 (Title VII). The suggestion is that the firms are treating various groups in different ways regarding the terms, conditions, and privileges of employment, or that they may be limiting, segregating, and classifying employees according to a protected characteristic. Lucas wrote: “The EEOC is prepared to root out discrimination anywhere it may rear its head, including in our nation’s elite law firms.” Lucas continued, “No one is above the law—and certainly not the private bar.” You can read the letters here. Moreover, the EEOC has established an email where whistleblowers can submit information to the EEOC about potentially unlawful DEI practices at law firms: lawfirmDEI@eeoc.gov. Private employers should carefully re-examine their employment practices, including hiring practices, determining if they are allocating more resources to promote one group of employees, whether all employees are welcome to participate in all programming (for example, a women employees’ support group), and whether pay practices are consistently equal pay for equal work.
March 18, 2025
Labor and Employment
Office Romance: Navigating Workplace Relationships and Managing Legal Risks
Dear Sarah, Two of my employees have started dating, and I’m worried it might affect their work or lead to complaints from others. Should we have a formal policy on workplace relationships? Are we even allowed to have such a policy? Yours in keeping it professional this Valentine’s Day (and beyond), The HR Cupid The HR Cupid, I can understand your concern. Office relationships, while not uncommon, can quickly become a tricky issue for employers to manage. Whether it's gossip, a drop in productivity, or potential legal claims, workplace romances can create significant risks for both employees and the company. The good news is, with a clear policy and proactive approach, you can mitigate these risks while still allowing employees to navigate their personal lives in a professional manner. Can You Have a Policy on Workplace Relationships? Yes, you absolutely can have a policy on workplace romances. In fact, it’s strongly recommended that employers do so. While outright banning office relationships is typically unreasonable (and likely unenforceable), a policy that establishes clear expectations for conduct can help mitigate potential risks. The reality is that office romances can open the door to several issues, including sexual harassment, retaliation, favoritism, and even workplace violence in extreme cases. These risks can lead to significant legal liabilities if not managed carefully. A thoughtful, well-drafted policy can go a long way in helping you prevent problems before they arise. What Are the Risks of Office Relationships? There are a number of risks to consider when office romance enters the picture: Sexual Harassment Claims: One of the most common legal risks of office romances is sexual harassment. These claims often arise when one employee feels their personal space or boundaries are violated by a romantic advance, particularly in relationships between supervisors and subordinates. Even consensual relationships can lead to claims if other employees perceive favoritism or if the relationship sours. Public displays of affection, or a sudden shift in the dynamics between employees, can also create uncomfortable work environments and lead to hostile work environment claims. Retaliation: If an employee rebuffs unwanted advances or ends a relationship, retaliation can become a concern. For example, an employee might claim that they were treated unfairly or passed over for promotions as a result of rejecting or ending a romantic relationship. Retaliation claims are often rooted in employees feeling that they were punished for not engaging in or maintaining a relationship. Favoritism and Conflicts of Interest: Relationships between supervisors and subordinates carry the risk of favoritism claims. Employees may feel that the romantic couple is receiving special treatment, whether in terms of assignments, promotions, or performance reviews. Even if favoritism is not actually occurring, the perception of bias can cause significant issues with morale and productivity. Workplace Violence: While rare, workplace violence stemming from a failed romance or unrequited affection is a very real possibility. Employers are responsible for maintaining a safe work environment, and if a situation involving a breakup or unreturned advances escalates into violence, the company could be held liable if they failed to manage the risks. How Can Employers Minimize Risk? There are several steps employers can take to reduce the risks associated with office relationships: Bar Romance Between Supervisors and Subordinates: Relationships between supervisors and subordinates are among the riskiest for sexual harassment claims and can lead to serious conflicts of interest. Many employers choose to prohibit these types of relationships or require the employee in the supervisory role to disclose the relationship so that any necessary adjustments can be made. A direct reporting relationship between a supervisor and their partner could create significant problems, and it’s often best to ensure that there is no overlap in their work responsibilities. Implement a “Love Contract”: A “love contract” is an agreement between two employees in a romantic relationship that affirms their relationship is consensual and not a form of sexual harassment. It can also include a reminder that the employees are expected to maintain a professional demeanor while at work. While not a guaranteed shield against legal action, it can provide a level of transparency and reduce the risk of future claims. Ensure Access to Sexual Harassment Training and Reporting Channels: One of the most effective ways to minimize the risk of sexual harassment claims is to provide ongoing sexual harassment training for all employees. This training should clearly define inappropriate behaviors, outline reporting procedures, and reassure employees that complaints will be taken seriously. Additionally, offering multiple, accessible reporting channels (such as anonymous hotlines or online forms) can help ensure that employees feel safe reporting any issues before they escalate. Communication and Monitoring Policies: In today’s digital age, communication often takes place via email, company chat systems, or even social media. Employers should make it clear that digital communications within the workplace are monitored and that harassment can take place through these channels as well. Having a policy that outlines acceptable use of company technology can act as a deterrent and ensure employees understand the expectations for professional conduct online. What Should Employers Do When Things Go Wrong? If a workplace romance goes sour, the situation can quickly escalate. The best defense for an employer is to ensure that all preventative measures—policies, training, and monitoring—are in place and adhered to. Courts will look at whether an employer has taken reasonable steps to address potential issues and mitigate risks. If a claim is filed, employers who have documented their policies, communicated expectations clearly, and enforced those policies will be in a better position to defend themselves. Additionally, any documentation related to the relationship (such as the disclosure of the relationship or a signed love contract) can be useful in protecting the company’s interests. Final Thoughts: Office Romance, Yes—But With Caution While you can’t stop love from blooming in the workplace, you can take steps to ensure that it doesn’t create legal or professional problems. By implementing a clear policy on workplace relationships, providing sexual harassment training, and setting expectations around professional behavior, you can manage the risks and allow your employees to balance their personal and professional lives effectively.
February 14, 2025
Labor and Employment
Sports Betting in the Workplace: Ensuring the Super Bowl and March Madness Don't Cause Legal Madness and Super Problems
Dear Sarah, My employees want to do a fantasy football league. I don’t really care as long as it doesn’t mess with their work. Is there any reason I need to worry about this, or can I just let them go at it? – Janet "I’m Not the HR Police" from Accounting It’s the season for sports betting excitement, with the Super Bowl upon us and March Madness just around the corner. Your employees are likely buzzing with talk of squares, brackets, and maybe even some secret side bets. While these friendly competitions can boost morale and foster camaraderie (especially for remote or hybrid teams), there are some legal considerations to keep in mind. Because as much fun as a bracket challenge can be, sports betting could land you in a legal bind if you're not careful. Is Workplace Sports Betting Legal? Thirty-eight states and Washington D.C. have legalized sports betting in some form since the U.S. Supreme Court struck down the federal ban in 2018. But here’s the kicker: the regulations vary widely. Some states have specific exceptions that allow for “social gambling,” meaning office pools can be permissible if they meet certain conditions, like ensuring no one running the pool profits. The rules on what qualifies as a “social” game and what constitutes “illegal” gambling can be murky, and those rules are still evolving. For instance, New York introduced a bill in 2023 to specifically legalize Super Bowl squares. Gambling and unlicensed sports betting, including office pools, are prohibited in many states and under the Interstate Wire Act of 1961 (IWA) and the Uniform Internet Gambling Enforcement Act of 2006 (UIGEA). The IWA makes it illegal for anyone in the U.S. to place or receive wagers on any sporting event or contest that involves interstate or foreign commerce. The UIGEA criminalizes the act of accepting funds for unlawful internet gambling, specifically by those "engaged in the business of betting or wagering." With the rise of remote and hybrid work setups, there's an increased risk that office pools could cross state lines, triggering the laws of multiple states and federal gambling regulations., So while you might think it’s just a friendly office competition, the law might say otherwise in certain jurisdictions. Understanding Which State Laws Apply Modern companies are no longer limited to hiring people from the state in which they are based, and remote-first businesses often have employees spread across multiple states with differing legal stances on sports betting. In most cases, the laws that govern sports betting are determined by where employees are physically located. If an employee is based in a state where sports betting is illegal, they may be restricted from participating in sports betting activities, regardless of whether the company itself operates in a jurisdiction where betting is legal. Companies with large, distributed teams need to have systems in place to track the physical location of employees and assess legal requirements accordingly. This is where working with a payroll provider, human resources tools, or compliance experts can be incredibly valuable in staying informed about location-based regulations. The rise of fully remote and hybrid work models has made this issue even more complex. For companies with employees working remotely from different states, where the employee is physically working from at any given time becomes key. For example, if an employee works from a state where sports betting is illegal, they may not be permitted to place bets, even if they are working for a company based in a state where the activity is allowed. If a company is headquartered in a state where sports betting is legal, but some employees are working remotely from states where it’s banned, the company may need to consider how to handle internal policies and even provide guidance about prohibited activities. Consider Non-Monetary Alternatives: Prizes Don’t Have to Be Cash The risk of violating gambling laws can be reduced significantly when the pool doesn’t involve money. You could opt for fun, non-cash prizes like extra time off, a team lunch, or even just bragging rights. These types of prizes keep things light and engaging without the potential legal risks associated with monetary rewards Maintain Productivity Amidst the Madness Between filling out brackets and selecting squares, productivity could take a hit. If employees are sneaking off to check scores, make sure you set expectations about what’s acceptable during work hours. Some companies have implemented policies where pools and betting activities are restricted to non-work hours, or at least during designated breaks. This helps mitigate the negative impact on productivity and keeps employees engaged without the legal headaches. Mitigate Common Risks with Written Policies A well-drafted company policy on sports betting can help minimize legal risk and clarify the boundaries for employees. A “no betting” policy or a policy that outlines clear, specific rules for office pools is a great start. An effective company policy on sports betting should touch on: Participation: Restrict participation to employees in states where it’s legal and clarify eligibility criteria. Emphasize that participation should always be voluntary to respect those who choose to opt out for personal, religious, or addiction-related reasons. Profits and Prizes: To avoid crossing into illegal territory, ensure that the person running the pool isn’t taking a cut of the money. This is a common rule in states that allow office pools: the organizer must not profit in any way. Be sure to also comply with any local laws that limit or restrict prize money. If your pool will offer non-monetary prizes, outline them in your policy. Procedures and Expectations: Prohibit employees from using work devices or company time to organize or manage pools. Encourage participation during breaks or outside of work hours. You should also establish procedures to address any potential complaints or violations that may arise to ensure fairness and transparency. Takeaway Where legal, office sports betting pools can be a great way to build morale and camaraderie, but they require careful planning to comply with the law. With the proper planning and compliance with the relevant laws, you can foster a fun and compliant workplace environment that avoids unnecessary risks.
February 5, 2025
Labor and Employment
It Ends with Us, But Continues in Court: Blake Lively and Justin Baldoni's Legal Battle
The film “It Ends With Us” was a massive hit in 2024, grossing $350 million globally. Yet, the drama surrounding the film has shifted from the big screen to the courtroom, with a series of legal battles between its stars, Blake Lively and Justin Baldoni, that have captivated both the public and legal observers alike. In the ongoing legal battle between actors Blake Lively and Justin Baldoni, a federal judge has stepped in to try and quell the increasingly public war of words. At a hearing in Manhattan on February 3, 2025, Judge Lewis J. Liman ordered both legal teams to limit their out-of-court commentary, citing a New York rule (Rule 3.8) designed to prevent public statements that could prejudice legal proceedings. This intervention comes as the public has been parsing footage of a scene at issue in Lively’s lawsuit, recently released alongside a statement from Baldoni’s attorney. Baldoni’s team has also launched a website where users can access court documents related to the film's production. The lawsuits present conflicting accounts of events on the set of "It Ends With Us," an adaptation of a novel about domestic abuse, in which Lively plays the heroine and Baldoni her abusive partner. Lively’s suit accuses Baldoni and Wayfarer Studios CEO Jamey Heath of sexual harassment, including entering her trailer uninvited while she was undressed or breastfeeding, improvising unwanted kisses, and discussing his “previous pornography addiction.” She claims that after raising objections, Wayfarer launched a “retaliation campaign” against her. Baldoni’s suit denies these accusations, claiming all trailer entries were consensual, kissing scenes were not improvised, and the discussion of his past addiction was contextualized. He accuses Lively, her husband Ryan Reynolds, and her publicist of defamation and extortion, claiming she sought to “extract concessions and creative control” of the movie. He further alleges that he was the victim of her attempts to damage his reputation. The hearing was the first court appearance by the lawyers since Lively filed her initial complaint in California in December, followed by a New York Times report on her accusations. Baldoni has since sued the Times for libel, claiming the article omitted key information. The Times has stated they will vigorously defend their reporting. Judge Liman, acknowledging the extensive public record of the accusations, emphasized that the court proceedings, not public pronouncements, will ultimately determine the facts of the case. Neither Lively nor Baldoni was present at the hearing. Initial Allegations On December 20, 2024, Blake Lively filed a formal complaint with the California Civil Rights Department, accusing director and co-star Justin Baldoni, producer Jamey Heath, and Wayfarer Studios of sexual harassment and creating a toxic work environment. It seems that behind the movie magic was a not-so-glamorous reality. Lively’s complaint lays out a series of troubling incidents, including Baldoni allegedly ignoring intimacy protocols, improvising unapproved physical contact (like, biting Lively’s lower lip during a scene), and inserting controversial sexual content into the film without consent. Meanwhile, producer Heath is accused of showing Lively an unsolicited nude video of his wife giving birth. From a legal standpoint, these allegations—if proven true—could present serious violations under California’s Fair Employment and Housing Act (FEHA). FEHA protects workers from discrimination, harassment, and retaliation, and sexual harassment is a particularly serious violation that could expose the production company and individuals involved to significant liability. In Lively’s case, the allegations regarding unsolicited physical contact and the lack of consent for intimate scenes could amount to unlawful sexual harassment in the workplace. These types of cases are taken very seriously in California, where the state’s strict sexual harassment laws are designed to prevent such behavior and ensure that victims have legal recourse. The real complexity in these claims lies in proving the behavior was pervasive and unwelcome. Given that these events allegedly took place during production and involved multiple key players—director Baldoni and producer Heath—it will be important for Lively to provide evidence of the repeated and pervasive nature of the harassment to make her case. The New York Times published an article about the allegations the very next day, also hinting at deeper tensions, including a campaign allegedly aimed at destroying Lively’s reputation. Baldoni Fires Back with Defamation by Implication Claim Ten days later, Baldoni fired back and sued the New York Times for defamation on December 31, 2024[i]. Baldoni claims the publication’s story about the sexual harassment allegations against him was part of a broader “smear campaign” orchestrated to undermine him. This counters Lively’s claims; Baldoni accuses Lively of damaging his reputation through false reporting. Baldoni’s lawsuit presents an interesting legal angle, focusing on defamation by implication. According to his complaint, the New York Times article contained damaging content that painted him in a false light. While the article never directly accused him of sexual harassment, Baldoni contends that the context and tone of the reporting led readers to infer his guilt. Defamation by implication occurs when the publication or communication indirectly suggests false information that harms a person’s reputation. Baldoni argues that the story—by highlighting Lively’s allegations without providing his side—implicitly presented him as the perpetrator. Moreover, Baldoni also seeks to address the “damage to his career” caused by these articles, which is a standard claim in defamation suits (i.e., the plaintiff is claiming that the defamatory statements harmed their reputation and resulted in professional or financial loss). He’s not just asking for retraction or correction; he’s pursuing actual damages (compensation for the real losses suffered as a result of the defamation) and possibly punitive damages (additional financial penalties aimed at punishing the defendant if the reporting was done with reckless disregard for the truth or malicious intent). Baldoni has also claimed that Lively was actively working against him throughout production, asserting that she "berated" him on set and attempted to undermine his creative control. The lawsuit further alleges that Lively edited the film’s final cut without his approval and attempted to block him from attending the premiere. Baldoni claims that Lively’s actions amounted to a "pattern of vindictiveness" designed to ruin his professional standing. This part of Baldoni’s claim—focused on the editing of the film and his exclusion from the premiere—could potentially lead to a breach of contract or tortious interference claim. A breach of contract claim would suggest that terms agreed upon in a legal agreement were violated, while tortious interference occurs when someone intentionally disrupts the relationship or contractual agreement between parties, potentially leading to significant financial damages and reputational harm. Film directors often have the final say on creative decisions, so Lively’s interference could be viewed as overstepping and damaging to Baldoni’s reputation in the film industry. Additionally, Baldoni claims that Lively, along with her husband Ryan Reynolds, leveraged their Hollywood clout to push for his removal from the film's production, including allegedly pressuring William Morris Entertainment to drop him as a client. If true, this could form the basis for a tortious interference claim. In such a claim, one party would argue that another intentionally interfered with their contractual relationships or business dealings. This can be tricky to prove, as it requires showing that the interference was unjustified and intentional. Lively Escalates Her Complaint into a Federal Lawsuit On the same day as Baldoni filed his lawsuit against the New York Times in Los Angeles, Lively formalized her California Civil Rights Department complaint into a federal lawsuit[ii] in New York. According to Lively’s lawsuit, Baldoni, Heath, and a crisis PR expert named Melissa Nathan tried to bury Lively’s reputation by manipulating social media, planting negative stories, and leveraging crisis communications to protect Baldoni’s public image. Lively claims that this campaign included texts from Nathan and Baldoni discussing how to “bury” people and target women in the public eye. The lawsuit alleges that even the big money folks at Wayfarer Studios, including co-founder Steve Sarowitz, were involved in the plot. From a legal perspective, if Lively’s claims about the smear campaign are proven, this could be a strong case for defamation and tortious interference. Defamation requires showing that false statements were made about a person, which harmed their reputation. In this case, the alleged "burying" of Lively through negative media manipulation would likely involve defamatory statements, whether directly or indirectly implied. Tortious interference claims, on the other hand, focus on one party intentionally damaging another’s business or reputation by improper means. If Lively can demonstrate that Baldoni and his team used these tactics intentionally to damage her career, there could be significant legal repercussions for all involved. However, the challenge for Lively will be proving that these negative media tactics were both intentional and defamatory, rather than part of a broader public relations strategy designed to mitigate the fallout from the initial complaints. PR teams are often hired to clean up a reputation, but if they cross the line into deceptive practices or actively seek to harm someone's reputation, they may have legal exposure. The decision to file the lawsuit in New York—despite the initial complaint being lodged in California—appears to be a strategic move regarding forum selection. California might offer more protections under its state laws, but New York law allows for quicker and more direct access to the courts, enabling Lively and her legal team to bypass some procedural hurdles and go straight to litigation. Additionally, the New York venue may offer a broader legal framework by incorporating both federal and state claims, and it could potentially provide a more favorable jurisdiction for Lively's case, particularly considering that much of the case's events occurred in New York. Lively’s complaint included demands for a jury trial. Baldoni Also Sues Lively in the Southern District of New York Adding another layer to the legal battle, Baldoni and Wayfarer Studios filed a lawsuit[iii] against Lively, Reynolds, and publicist Leslie Sloane on January 16, 2025, seeking a staggering $400 million in damages. This suit, filed in the federal District Court for the Southern District of New York, expands upon the existing claims, alleging civil extortion, defamation, and a series of contract-related violations. This lawsuit reinforces the argument that the conflict originated from a creative struggle. It alleges that Lively gradually increased her influence, demanding creative control beyond the typical scope of an actor's role. This included taking over wardrobe decisions, rewriting scenes, creating her own film cut, and ultimately demanding Baldoni's exclusion from promotional activities. The lawsuit vehemently denies any sexual harassment or inappropriate behavior by Baldoni, Heath, or any member of the production team. Instead, it accuses Lively and Reynolds of engaging in "extortionate threats" to damage Baldoni's reputation. Baldoni amended his complaint on January 31, 2025, just days before the scheduled initial pretrial conference. In the amended filing, which now includes the New York Times as a defendant, Baldoni alleges that metadata on the New York Times' website reveals the paper had access to Lively's civil rights complaint at least 11 days prior to their bombshell December 21st report. That report, titled "'We Can Bury Anyone': Inside a Hollywood Smear Machine," accused Baldoni and his publicists of orchestrating a campaign to damage Lively's reputation, seemingly in retaliation for her complaints of sexual harassment on set. This new information regarding the Times' prior knowledge of the complaint raises questions about the timing and context of their reporting. Furthermore, the amended lawsuit includes new claims regarding Ryan Reynolds' portrayal of the character Nicepool in "Deadpool & Wolverine," with Baldoni accusing Reynolds of using the character to mock and bully him. The amended filing includes claims for civil extortion, defamation, false light invasion of privacy, breach of implied covenant of good faith and fair dealing, intentional interference with contractual relations, intentional interference with prospective economic advantage, negligent interference with prospective economic advantage, promissory fraud, and breach of implied-in-fact contract. Leaked Footage, Gag Order Request, and Website Launch On January 21, 2025, Justin Baldoni's legal team dropped a bombshell: a 10-minute video from the "It Ends With Us" set. This move, intended to counter Blake Lively's sexual harassment allegations, captures intimate moments, including a rehearsal of a romantic dance with Lively. While Baldoni claims the footage exonerates him, Lively's team argues it actually supports her claims, pointing to specific scenes as evidence of inappropriate behavior. In a dramatic escalation, Lively and Reynolds filed a motion for a gag order against Baldoni's lawyer, Bryan Freedman. They accuse Freedman of a relentless media campaign, including inflammatory statements and potential leaks, aimed at swaying public opinion and prejudicing the jury pool. This, they allege, is a continuation of the alleged retaliation orchestrated by Baldoni and his team since Lively first spoke out. Additionally, a day after amending his New York complaint on January 31, 2025, Baldoni’s legal team launched a website, featuring the amended complaint and a detailed timeline of events. Given the proximity of the launch to the pre-trial conference, this may have been a preemptive move by Baldoni to circumvent any potential gag order. By publishing the information online, Baldoni may be attempting to solidify his narrative in the public eye and potentially undermine the basis for a gag order. Case Consolidation and Trial Date Set In a major update from New York, federal judge Lewis J. Liman has scheduled a trial date for March 9, 2026, marking the next chapter in this high-profile legal battle. The trial, which will address the complex claims of sexual harassment, defamation, and contract violations, is now set to proceed after Liman moved the initial conference from mid-February to next week. The court is also preparing for discussions on pretrial publicity and attorney conduct, with both sides expected to present concerns over the impact of public statements and potential jury bias. This adjustment follows a filing by Lively’s legal team, which alleges that Baldoni’s attorney is attempting to influence potential jurors. Specifically, Lively’s lawyers claim that Baldoni’s legal team has been actively working to harm Lively’s career by launching a website that selectively releases documents and communications between the two stars. According to Lively’s legal representatives, the goal of this strategy is to sway public opinion and turn prospective jurors against her before the trial even begins. As the New York case gains momentum, another legal front has emerged in Texas. Lively has filed a request in a Texas court to depose a man she claims played a central role in turning online sentiment against her during the film’s release and promotion. This new legal move adds further complexity to the already tangled web of lawsuits, as Lively seeks to identify and address those responsible for the negative publicity she alleges was orchestrated to damage her public image during the film's promotional campaign. As the legal battle intensifies on both coasts, all eyes will be on the actions of the court and the legal strategies of both Lively and Baldoni as they prepare for what promises to be a protracted and high-profile trial. The Legal Implications Moving Forward Judge Liman's January 27th decision to consolidate the Lively and Baldoni cases in the Southern District of New York marks a new, and potentially decisive, phase in their legal battle. This procedural move streamlines the trial process, focusing the complex factual and legal issues into a single proceeding, while simultaneously raising the stakes considerably for both parties. Consolidation not only avoids duplicative litigation but also presents a unified narrative to the court, forcing both sides to confront the totality of the allegations and defenses. While it remains to be seen whether Judge Liman will also consolidate Baldoni's separate, and arguably related, suit against the New York Times, the fact that the Times is now a defendant in the consolidated case suggests this is highly probable. This joinder could significantly broaden the scope of discovery and potentially introduce thorny First Amendment issues regarding journalistic privilege and fair report. The outcome of these lawsuits carries significant implications for the entertainment industry, potentially shaping the landscape of workplace conduct and media scrutiny. If Lively's claims of sexual harassment and retaliation are substantiated, particularly given the high-profile nature of the case, it could establish a crucial precedent for worker protections in Hollywood, especially for women navigating the pervasive power imbalances. This could embolden others to come forward and trigger a wave of policy changes regarding reporting and investigating harassment claims. Conversely, Baldoni's claims of defamation and tortious interference, if successful, could raise important questions about the often blurry line between personal and professional conduct on set, potentially chilling the willingness of individuals to report misconduct for fear of legal reprisal. This aspect of the litigation touches upon the delicate balance between free speech and reputational harm, an area of law ripe for development in the context of the #MeToo era. As the litigation unfolds, the entertainment industry will be watching closely. It will be interesting to see how the courts navigate these complex issues of proof and credibility, particularly regarding allegations of harassment and retaliation, which often rely on circumstantial evidence. The case also presents a fascinating interplay between traditional defamation law and the evolving standards for media reporting on sensitive matters, particularly in the context of ongoing investigations and public accusations. Furthermore, the potential long-term effects on industry dynamics, including the power of public opinion and social media pressure, are significant. Regardless of the outcome, this litigation is likely to leave a lasting mark on Hollywood and beyond. [i] Wayfarer Studios LLC v. New York Times, 24STCV34662 (Ca. Sup. Ct. Dec. 31, 2024) [ii] Lively v. Wayfarer Studios LLC, 1:24-cv-10049, (S.D.N.Y.) [iii] Wayfarer Studios LLC v. Lively, 1:25-cv-00449, (S.D.N.Y.)
February 4, 2025
Labor and Employment
Better Call Sarah: Political Speech in the Workplace
Dear Sarah, Help! After this last election, it seems everyone at the office has something to say about politics, and I’m caught between my mission to keep the peace and the very real risk of stifling free speech. Is there a way I can manage these heated political discussions without turning our office into a debate club or accidentally infringing on anyone's rights? Sincerely, Politically Puzzled in HR Dear Politically Puzzled in HR, Political discussions at work intersect with various labor and employment laws, including anti-discrimination regulations, the National Labor Relations Act (NLRA), state laws on mandatory meetings[1], and voting leave policies. Political conversations can also give rise to claims of discrimination, harassment, or retaliation under federal, state, and local anti-discrimination laws. By being mindful of both your right as an employer to set boundaries on political expression and employees’ rights in this area, you can comply with the law and maintain a positive workplace culture. Misconceptions About Free Speech in Private Workplaces Many people assume that the First Amendment guarantees unlimited free speech rights in all workplaces, but it actually applies mainly to government regulation, not to private employers. This means that, generally, private companies have broad discretion to manage political speech at work. However, federal laws like the National Labor Relations Act (NLRA) and anti-discrimination statutes create important limits on this authority. Protected Activities Under the National Labor Relations Act (NLRA) The NLRA, for instance, protects employees—even in non-union settings—when they engage in “concerted activities” related to workplace conditions, such as discussions about pay or safety. If political discussions are directly related to these issues, they may also fall under protected activity. Employers should take care in addressing such conversations, especially as recent guidance from the National Labor Relations Board (NLRB) suggests that protected discussions may now include social justice or other political topics related to employee rights. Risks of Political Speech Leading to Discrimination Claims Even though political views themselves are generally not protected under anti-discrimination laws, discussions that touch on protected characteristics (e.g., race, gender, national origin) may lead to complaints of harassment or discrimination. For example, political debates on topics like immigration or reproductive rights could be seen as targeting certain groups, creating a hostile work environment. Employers should handle any related issues consistently and fairly to prevent claims of biased or discriminatory treatment. State and Local Laws Offering Additional Protections Additionally, some states have laws that prevent employers from disciplining or restricting employees based on their political affiliations, views, or party associations. In some cases, state protections extend beyond traditional political speech to cover social justice advocacy and other issues. Employers must also be aware that state and local laws often provide greater protections for employees than federal laws. For example, some states offer protections similar to First Amendment rights for private employees. Employers should also be familiar with the differences between federal EEO laws and state-level EEO regulations to ensure compliance. Developing Clear and Inclusive Policies Employers should develop clear, effective policies that align with legitimate business interests while minimizing ambiguity around what political activities and expressions are allowed. The policy must consider activities and communications protected under the NLRA as well as relevant state and local laws. To reduce the risk of discrimination, harassment, or bullying claims, employers may want to discourage supervisors from engaging in political discussions with subordinates, as supervisors are not protected by the NLRA. However, these policies must also be carefully crafted to comply with state-specific laws. Additionally, employers should consider implementing a social media policy to set clear expectations for online behavior. Political statements—especially on social media or in public spaces—can have a direct impact on your company’s reputation. Public backlash can arise if an employee, visibly linked to the organization, expresses controversial views. In today’s digital landscape, social media posts are just as influential as in-person comments, so it’s essential to handle online expression carefully. Many states protect employees’ privacy, meaning employers generally cannot demand access to personal social media accounts. If disciplinary action is needed, verify that any content was publicly accessible and relevant to workplace conduct to avoid legal risks. A policy on social media use, drafted in line with state and federal regulations, can help clarify expectations for how employees express their views online. Managing Off-Duty Conduct Employers should be mindful of employees’ rights to engage in political expression outside of work. In California, Colorado, New York, and North Dakota, laws protect employees from adverse actions based on lawful political activities conducted outside of work hours. Employers should exercise caution when considering disciplinary actions for off-duty conduct to avoid violating state-specific protections. Fostering a Respectful and Inclusive Workplace Culture Addressing political speech in the workplace requires a careful balance. A comprehensive, consistently applied policy that values respect and inclusivity can help maintain a positive work environment while respecting employees’ rights. By fostering a respectful culture, employers can reduce potential conflicts and support a productive, harmonious workplace. In the current polarized climate, taking proactive steps to handle political speech thoughtfully can strengthen workplace morale and protect the company from legal risks, ensuring a fair, respectful environment for all. [1]Mandatory employer-sponsored or so-called “captive audience” meetings are those an employer convenes during working hours to educate employees on certain topics, particularly the employer’s views on unionization. Although the NLRB has yet to issue a formal ruling on this issue, it is anticipated that the agency may take a strong stance against these types of meetings.
January 17, 2025
Labor and Employment
New Employment Laws Become Effective on January 1, 2025
The following is a summary of new employment laws which become effective on January 1, 2025. All States Minimum Wage Increases Employers should check their state statutes and local ordinances to determine whether the minimum wage has been increased. Failure to do so could lead in underpayment to employees and potential fines and penalties. State minimum wage increases, effective January 1, 2025: California: $16.50/hour Delaware: $15/hour New Jersey: $14.53–$15.49/hour$15.49 (employers with six or more employees) $14.53 (seasonal employers and employers with fewer than six employees) New York: $15.50–$16.50/hour$16.50 per hour (New York City, Long Island and Westchester County) $15.50 per hour (rest of the state) Also, in some states, like California, the salary test for exempt employees is dependent on the state’s minimum wage. Failure to increase an exempt employee’s salary would result in breaking the exemption and entitling exempt employees to overtime and other requirements for non-exempt employees. California Seven new employment laws in California took effect on January 1, 2025. Changes to the Fair Employment and Housing Act The Fair Employment and Housing Act was amended as follows: Government Codes § 12920 was amended to state that employers may not discriminate against employees based upon any combination of characteristics protected under the Fair Employment and Housing Act. Government Code § 12926 is amended to define “race” as including traits associated with race (rather than historically associated with race), such as hair texture and protective hairstyles. Any city, city and county, county, or other political subdivision of the state will be able to enforce local law prohibiting discrimination in employment against classes of persons covered by the Fair Employment and Housing Act if certain requirements are met, including a requirement that local enforcement is pursuant to a local law that is at least as protective as the act. The Civil Rights Department will promulgate regulations governing local enforcement pursuant to those provisions. Changes to Leave Laws There are two amendments to statutes related to employee leaves of absence: Paid Sick Leave – Employers must provide sick leave to agricultural employees to avoid smoke, heat or flooding conditions created by a state of local emergency. Paid Family Leave – Employers can no longer require that employees take up to two weeks of earned vacation leave prior to using paid family leave. California Worker Freedom from Employer Intimidation Act The California Worker Freedom from Employer Intimidation Act prohibits employers from retaliating against employees who decline to attend employer sponsored meetings or to listen to employer communications that have the purpose of communicating the employer’s religious or political opinions. Workplace Violence Law Employers may seek a temporary restraining order against an individual who has harassed employees or engaged in workplace violence or threats of violence against employees. Worker’s Compensation Notices Employers will be required to include the following in the notice to employees: The employee has the right to consult with an attorney The attorney’s fees will be paid in most cases This is a good reminder to update your employment posters effective January 1st of every year. Prohibition on Requiring Employees to Provide Driver’s License Employers cannot require applicants to have a driver’s license unless the employer reasonably expects driving to be one of the job functions and an alternative form of transportation would not be comparable in travel time or cost to the employer. Freelance Worker Protection Act This Act requires the following for contracts with a freelance worker, defined as a person, that is hired or retained as a bona fide independent contractor by a hiring party to provide professional services in exchange for an amount equal to or greater than $250: Contracts between a hiring party and a freelance worker be in writing and the new law requires a hiring party to retain the contract for no less than 4 years. A hiring party to pay a freelance worker the compensation specified by a contract for professional services on or before the date specified by the contract or, if the contract does not specify a date, no later than 30 days after completion of the freelance worker’s services. The law prohibits a hiring party from discriminating or taking adverse action against a freelance worker for taking specified actions relating to the enforcement of these provisions. The law authorizes an aggrieved freelance worker or a public prosecutor to bring a civil action to enforce these provisions. Delaware Healthy Delaware Families Act The Healthy Delaware Families Act requires that employers with ten or more employees must enroll in the paid leave program and begin paying the following contributions: The contribution rate for medical leave benefits as a percentage of wages is 0.4%. The 2025 contribution rate for family caregiving benefits as a percentage of wages is 0.08%. The contribution rate for parental leave benefits as a percentage of wages is 0.32%. Employers may deduct up to 50% of premiums from employees’ wages. New York Equal Protection The New York Constitution, and specifically Article 1, § 11 (the equal protection law) is amended to also prohibit discrimination based upon: Ethnicity National origin Age Disability Sex, including:Sexual orientation Gender identity Gender expression Pregnancy Pregnancy outcomes Reproductive healthcare and autonomy Paid Prenatal Leave Private sector employers must provide pregnant employees with twenty (20) hours of paid prenatal leave per year. The twenty hours must be made available upon hire. Pregnant employees can use this leave for healthcare services received by the employee during the employee’s pregnancy or related to such pregnancy, including physical examinations, medical procedures, monitoring and testing, and discussing with the employee’s health care provider related to the employee’s pregnancy. Prenatal leave may be taken in one-hour increments. Prenatal leave is not paid out when an employee leaves their employment. Pennsylvania Fair Contracting for Health Care Practitioners Act The Fair Contracting for Health Care Practitioners Act prohibits non-compete agreements exceeding one year for doctors, Certified Registered Nurse Anesthetists (CRNAs), Certified Registered Nurse Practitioners (CRNPs), and Physician Assistants (PAs). Disclaimer: This list is not intended to provide a comprehensive overview of all employment laws effective January 1, 2025, across the United States. Instead, it highlights significant employment law updates in jurisdictions where Offit Kurman serves clients. This content is for informational purposes only and does not constitute legal advice. For personalized guidance, please consult with an attorney.
December 31, 2024
Labor and Employment
Better Call Sarah: Inappropriate Behavior at Office Parties - What You Need to Know
Mistletoe and Missteps: Ensuring a Safe and Fun Holiday Party Dear Sarah, I’m looking to keep our company’s annual holiday party lighthearted and fun and make sure it doesn't turn into a legal disaster (nobody wants a sexual harassment lawsuit under the mistletoe, right?). So, what's the best way to ensure our holiday festivities stay friendly and fun, without crossing any lines? And, just in case things do get out of hand, how should we handle any complaints or potential allegations of misconduct that may arise after the party? Cheers to no awkward lawsuits, The Mistletoe Monitor Inappropriate Behavior at Office Parties: What You Need to Know Dear Mistletoe Monitor, As much as the holiday party is a time for celebration, it's also a time when employer liability can become a concern. When alcohol is involved, workplace boundaries can become blurred, increasing the risk of inappropriate behavior—whether under the mistletoe or at the office party in general—which could lead to serious legal consequences. So, what should you do if something goes awry? Here are a few steps to mitigate liability and protect your business if an issue arises. 1. Respond Promptly to the Complainant. If an employee comes forward with a complaint, act quickly. Start by talking to the employee and assuring them that the complaint will be investigated thoroughly. Document all conversations and begin your investigation right away. This demonstrates that you take such matters seriously and are committed to creating a safe workplace. 2. Consider Having an Attorney Direct the Investigation. One option is to bring in legal counsel—either in-house or external—to guide the investigation. Having an attorney involved ensures that the process is handled appropriately and can help protect communications under attorney-client privilege. This is particularly important when dealing with sensitive situations that could lead to legal exposure. If you're unsure about the process or legal ramifications, consulting with an attorney early on is always a good idea. 3. Consider Protective Measures Pending the Investigation. Depending on the nature of the complaint and the circumstances, you may need to take interim actions. This could include modifying work assignments, adjusting schedules, or even placing the alleged harasser on leave. The goal is to maintain a safe environment while the investigation is ongoing. For example, if the situation involves two employees from different departments, you could temporarily change their work assignments to prevent further interaction until the investigation is completed. 4. Tailor the Response to the Situation. Remember that each case is unique, and your response should be proportional to the situation at hand. For serious allegations, you may need to take more immediate action, including suspensions or temporary leave for the accused party. Always consult with legal counsel to determine the most appropriate course of action based on the facts. 5. Keep the Event Safe and Enjoyable. Of course, the goal is to prevent these situations from occurring in the first place. You can minimize the risk of harassment claims by being proactive, setting clear expectations, and monitoring the party. Have policies in place to promote respectful behavior and remind employees that although they are at a social event, they still represent the company. If someone gets out of hand, don't hesitate to step in to prevent further issues. Your office holiday party should be a time for celebration, but it’s important to be prepared in case something goes wrong. By following these best practices, setting clear expectations, and consulting legal counsel, when necessary, you can reduce the chances of a party mishap turning into a legal nightmare. Happy holidays (with boundaries!).
December 17, 2024
Labor and Employment
Better Call Sarah: Reducing Liability While Hosting a Holiday Event
Dear Sarah, Planning our holiday party and I’m a little ‘shaken’ with concern—what are my liabilities if employees overindulge? Am I responsible if someone gets hurt, causes a scene, or drinks and drives? Should I be worried about potential legal fallout, or is it on them to know when to stop? How can I keep the fun flowing without the liability risk? Cheers (responsibly), HR in a Holidaze Dear HR in a Holidaze, While employees are generally responsible for their own actions, as an employer, you still have a duty to provide a safe environment and take reasonable steps to manage risks. Even without alcohol, social gatherings can lead to issues such as bullying, sexual harassment, other misconduct, and accidents and injuries. If alcohol is provided at your holiday party, however, you could be held liable if an employee’s intoxication leads to injury, damage, or misconduct, particularly if it occurs during or shortly after the event. For example, an impaired employee causing a workplace accident or an incident of harassment could result in legal exposure for the company. Additionally, employers need to be aware that providing alcohol brings with it legal liability—similar to what your local tavern owner faces. Courts have frequently held event sponsors responsible for tragedies involving impaired individuals, particularly when those individuals are involved in accidents. The entity providing the alcohol takes on some risk for the individual’s actions while intoxicated, including the possibility that alcohol may end up in the hands of minors. While it’s impossible to eliminate all risk, there are best practices employers can follow to reduce liability at holiday events. These aren’t meant to be a buzzkill but are steps to ensure that your event is safe and fun while limiting legal exposure. Consider Not Providing Alcohol at All: One viable risk management option is to simply avoid alcohol at company functions. While some employees might miss out on the drinks, offering gifts or prizes instead can offset this. Especially in events where children are present, excluding alcohol can prevent minors from gaining access and create a more relaxed, enjoyable atmosphere for everyone. Provide Plenty of Non-Alcoholic Options: straightforward and effective way to manage risk is by providing a variety of non-alcoholic beverages. Avoid putting your employees in a situation where their only options are alcoholic drinks. Offer a selection of sodas, iced tea, lemonade, sparkling water, and even a signature mocktail to encourage moderation and create an inclusive atmosphere for everyone. Use a Professional Caterer or Bartender: For more formal or elaborate events, consider using a third-party vendor to manage alcohol service. Professional servers are trained to identify intoxicated individuals and can limit consumption. If you go this route, make sure to carefully review the vendor contract, request liability insurance, and consider a “hold harmless” agreement to protect your business. Plan for Safe Transportation: One of the most important considerations is ensuring safe transportation home for employees who may overindulge. Consider arranging taxis, ride-sharing, or designated drivers to help those who may not be in condition to drive. It’s also helpful to have key members of management refrain from drinking and monitor the event to spot potential problems early. Set Clear Expectations for Behavior: Let employees know that, although alcohol is provided, they’re expected to act professionally. Remind everyone that they are still representatives of the company at the event, and inappropriate behavior won’t be tolerated. Make it clear that if someone’s actions put others at risk (such as driving while intoxicated), the company will take steps to ensure their safety—including potentially involving law enforcement if necessary. Limit Alcohol Consumption: Consider implementing a drink ticket system to limit the amount of alcohol each attendee can consume. A couple of drinks per person are generally sufficient for a fun evening. This can help prevent overindulgence and manage the alcohol flow in a controlled manner. By implementing these precautions, you can significantly reduce the chances of liability while hosting a fun and safe holiday event. Consulting with legal counsel to ensure your event policies are solid and well-documented is also a smart move. Ultimately, the goal is to create an enjoyable and memorable event without putting the company at risk. So, to answer your question: yes, employers can be held responsible for incidents that occur during or as a result of company-sponsored events. However, with proper planning, clear communication, and safety measures in place, HR can minimize the risks while still fostering a festive and inclusive environment.
December 10, 2024
Labor and Employment
State of the Union – Artificial Intelligence
On June 28, 2024, the Supreme Court issued its decision in Loper Bright v. Raimondo, overruling the Chevron doctrine[1] which required courts to observe regulatory agency interpretation of statutory law. In Loper Bright, the Court ruled that judges cannot defer to an agency’s interpretation of the law merely because it is deemed “reasonable.” The decision cautioned courts against relying on agencies' claims of authority based on their “subject matter expertise” or their role in political “policymaking.” Instead, federal judges are required to exercise “independent judgment” and interpret statutes based on their "best meaning." This standard makes judges more skeptical of agency interpretations, particularly when those interpretations are inconsistent. While judges may consider agency guidance if it is persuasive, longstanding, and consistent, such guidance is not legally binding. In the dissent of Loper Bright, Justice Elena Kagan noted that artificial intelligence (AI) is likely to be “the next big piece of legislation on the horizon.” She emphasized the challenges Congress faces in regulating the technical area of AI, stating that “Congress can hardly see a week in the future with respect to this subject, let alone a year or a decade.” As Congress endeavors to legislate AI in the wake of Loper Bright, it will have to be specific in what power will belong to agencies to regulate AI. In turn, agencies will have less flexibility in creating and enforcing AI regulations unless power is specifically delegated to them in AI legislation. The rapidly expanding landscape of federal and state legislation and regulation in the AI space is already creating compliance challenges for employers. Given the fast-paced evolution of AI technology, regulatory flexibility is essential. In the wake of Loper Bright, while legal compliance remains a priority, employers will find it easier to challenge agency rules—especially if those rules deviate from the statutory text or shift unpredictably with changes in administration. Akin to the recent legislation passed by the state of Colorado,[2] before Congress enacts comprehensive AI federal legislation, local and state governments will have the opportunity to pass AI regulation specific to for their constituents. However, without a greater federal regulatory scheme expressing a goal of uniformity, this could lead to divergent AI judicial decisions. In recent years, and in the absence of congressional legislation on artificial intelligence (AI) in the workplace, the U.S. Equal Employment Opportunity Commission (EEOC), National Labor Relations Board (NLRB), and the U.S. Department of Labor (DOL) have announced various initiatives to restrict the use of AI in the workplace. The possibility of differing interpretations between state and federal courts raises significant concerns about the future of AI regulation in the United States. Employers operating across multiple states may encounter conflicting requirements, adding complexity to an already challenging compliance landscape. Additionally, employers could face varying legal standards when individuals seek redress for alleged AI-related harms, depending on whether the case is heard in state or federal court. Consequently, the legal landscape for AI is poised to become fragmented and complex. The wheels of justice may also turn too slow to keep up with AI’s fast evolving pace. Greater reliance on courts to determine the appropriate usage of AI could place users of AI at an increased risk for litigation. To minimize potential liability, AI users should implement an AI governance system. Such a system will determine how the AI used, its limitations, risks and provide guidance on best practices. Having advanced knowledge of an AI system's potential pitfalls will provide a business with a tactical advantage to avoid unnecessary litigation while still leveraging the benefits of the AI technology. Legal strategies will need to be tailored to the specific jurisdiction in question, and companies may need to implement more robust compliance measures to account for the varying standards that will emerge. [1] Chevron established a two-step analysis for judicial review of statutory interpretation. Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc, 467 U.S. 837 (1984). Under Chevron, if a court concluded that a statute was silent or ambiguous, it had to defer to an agency’s permissible construction of the statute. The Loper Bright decision is premised on what the majority believes is a plain text reading of the Administrative Procedure Act (APA), which governs judicial challenges to agency actions. The Court specifically determined that the APA, which was not considered in Chevron, reflects the traditional understanding of the judiciary's role. This role requires courts to independently interpret the meaning of laws. [2] Colorado’s newly enacted AI law aims to establish comprehensive regulations governing AI use, with a focus on transparency, accountability, and fairness. The law requires companies to conduct impact assessments and implement safeguards to mitigate bias and discrimination in AI systems, with compliance required by February 1, 2026.
November 22, 2024
Labor and Employment
Here We Go Again: The DOL’s Proposed Overtime Rule with its Accompanying New Salary Test is Struck Down by a Texas Federal Court
On November 15, 2024, in the case of State of Texas v. United States Department of Labor, Texas federal court judge Sean Jordan struck down what had been scheduled to be a mandatory adjustment in the so-called “white collar” overtime exemption classifications taking effect on January 1, 2025. The “white collar exemptions” included those employees classified as “executive”, “administrative” or “professional” employees who met both a “duties” test and a “salary” test under the Fair Labor Standards Act. Under a 2019 rule, the salary level needed to be met by an exempt employee was $684/week or $35,568 per year. The Department of Labor under the Biden administration promulgated a rule which mandated two adjustments to the exempt salary requirement for executive, administrative and professional employees. Those adjustments called for an increase on July 1, 2024 to $844/week or $43,888/year; and a further adjustment scheduled for 2025 of $1,128/week or $58,656/year. In his decision Judge Jordan, in vacating the DOL’s proposed rule, concluded that the DOL had impermissibly elevated the new salary requirement in a manner which, in essence, negated or drastically reduced the importance of an exempt employee’s bona fide job duties and thus exceeded its Congressionally delegated authority to determine the elements of a legitimate exempt employee under the FLSA. While it is certainly possible that Judge Jordan’s decision could be appealed to the Fifth Circuit, given the results of the recent presidential election and the predicted more conservative and employer-friendly trends that will most likely follow in agencies such as the DOL, EEOC and NLRB, it is more probable that for the time being the decision striking down the proposed new salary level will remain in effect. The implication of the decision is that the former salary level of $684/week for exempt employees will remain in effect now pending any further adjustment sometime in the future. From a business perspective, companies that adjusted their exempt salary levels back in July will have to decide whether it is more prudent and acceptable to keep those salary levels intact rather than reverting to the then-mandated July 1 adjustment.
November 21, 2024
Labor and Employment
Better Call Sarah: Workplace DEI
Dear Sarah, I’ve been reflecting on how best to promote diversity and inclusion in my workplace. With year-end reviews and the holidays around the corner, I want to make sure that our DEI (diversity, equity, and inclusion) initiatives are truly making a difference. There’s also the looming concern of the potential rollback of education-based affirmative action policies and DEI programs under the upcoming Trump administration. With these shifts on the horizon, many in corporate America are wondering how to adapt and continue fostering inclusivity in their organizations. What strategies can I implement to ensure my team remains inclusive, diverse, and equitable in an evolving political and corporate landscape? - Inclusive Innovator Dear Inclusive Innovator, Thank you for your insightful question! November is a great time for you to focus on diversity, equity, and inclusion (DEI), especially as the holiday season approaches and often highlights cultural diversity. Fostering an inclusive workplace can enhance employee morale while driving innovation and productivity. Corporate DEI policies are facing increased scrutiny and legal challenges, even as the U.S. workforce becomes more diverse. As diversity continues to grow in both familiar and unexpected ways, DEI programs will be crucial for organizations looking to thrive in this evolving environment. While DEI programs will vary based on each organization’s unique goals, effective programs often share key elements: Make Anti-Discrimination Central to Your DEI Policy: Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on race, color, religion, sex, or national origin. Challenges to DEI programs frequently arise from claims of discrimination against protected groups. To prevent misinterpretations that could create perceptions of favoritism—and thus undermine your program’s effectiveness—ensure that strong non-discrimination principles are integral to your DEI policies. Legally, employers cannot favor specific races, genders, or religions in hiring and promotion. Evaluate whether your DEI initiatives truly foster an inclusive culture that values all employees and promotes an equitable playing field. A compliant DEI program can expand the talent pool for jobs and promotions by proactively engaging with diverse communities. Align DEI Goals with Your Organizational Mission and Culture: Before developing a DEI program, consider your organization’s identity. Understanding your mission, audience, operational methods, and regulatory context will help frame how DEI supports broader goals rather than appearing as an afterthought. Analyze Your Current and Future Workforce Composition: Root your DEI program in your current workforce. Understand individual and team dynamics to make informed decisions about future enhancements. While demographic statistics can offer insights, approach them carefully to avoid oversimplification. Instead of giving "preference" to specific groups, adopt identity-neutral DEI strategies that eliminate bias. These strategies can include structured recruitment and promotion processes with clear, transparent, merit-based criteria; removing biased language from evaluations; and applying employee benefits equitably. Clearly Define “Diversity”: Specify the aspects of diversity your DEI policy aims to address and why. In a compliant DEI program, a true commitment to non-discrimination in a diverse workforce should naturally lead to greater diversity within your organization. Clarify “Equity” and “Inclusion” Definitions: These terms can be broad and sometimes contradictory. Equity doesn’t mean identical outcomes for everyone but rather tailored support that enhances each employee’s chances for success. Inclusion means ensuring that all employees can thrive, fostering teamwork that appreciates diversity. Build a DEI program that encourages a more inclusive workplace culture without directly affecting individual employment benefits. Review Training Materials for Alignment with Your Organizational Values: DEI training materials vary widely in quality. Be cautious about training that could conflict with state laws, particularly in states where DEI-related legislation is being challenged. Given the current climate surrounding DEI, some organizations may hesitate to pursue these programs. However, as society and the workforce continue to diversify, it’s essential to adapt. Rather than retreat, consider this an opportunity to develop DEI programs that resonate with the needs of an evolving society.
November 21, 2024
Labor and Employment
Employer Alert: Employees’ Right to Time-Off for Voting
With the first Tuesday in November around the corner and matters both big and small on the ballots – from local environmental issues to the right to choose and election measures on state ballots to the exalted presidential election – it is an appropriate time to reexamine employees’ rights and employers’ obligations to provide time off to vote. Strangely, there is no federal law that addresses the rights of employees to voting leave. Instead, there is a tapestry of state laws addressing the issue. Some states require paid voting leave, while others only provide for unpaid leave. And, of those that require leave – some have specific exceptions if an employee has enough time to vote before or after work while polls are open. Still, other states require employers to notify employees of their rights. This, no doubt, results in a complex web of laws that is difficult for employers to navigate. For example, (a) New York requires employers post notice of employees’ voting leave rights and provide employees with at least two hours of paid voting time, unless the employee has at least four non-working hours while the polls are open, (b) Maryland requires that employers provide registered voters with up to two hours of voting leave, unless the employee has at least two continuous hours off-duty time while the polls are open, and (c) California requires employers post notice of employees’ voting leave rights and to pay employees for up to two hours of voting time at the beginning or end of a work shift. Employers are reminded that it is best practice to consult their own internal policies which may well provide employees with rights that go beyond those required by the state in which their employees are working. As November 5th approaches, Offit Kurman’s Employment Law Group is always available to answer any questions you might have on voting leave or any related matter.
November 1, 2024
Labor and Employment
Better Call Sarah: Mental Health in the Workplace
Dear Sarah, With October being Mental Health Awareness Month, I’m concerned about how we can better support our employees’ mental well-being at work. We’ve been hearing a lot about the importance of mental health, but as a small business owner, I’m unsure how to implement effective strategies. What can I do to create a more supportive environment? – Mindful in Marketing Dear Mindful in Marketing, Thank you for your thoughtful question! Mental health in the workplace is an increasingly relevant issue, especially during October, when awareness campaigns are in full swing. Supporting your employees’ mental well-being is more than a compassionate choice – it is a smart business strategy that can lead to increased productivity and lower turnover rates. You also need to comply with the law. If an employee’s mental health condition qualifies as a disability under the Americans with Disabilities Act (ADA), you are required to provide reasonable accommodations. Conditions like major depressive disorder, bipolar disorder, and schizophrenia meet this definition, while others such as PTSD, anxiety, and depression may also qualify. Mental health conditions may also trigger protections under the Family and Medical Leave Act (FMLA) [1]. It's important to be aware of these legal frameworks to protect both your employees and your business. It’s also especially important for businesses to comply with these laws, as the Equal Employment Opportunity Commission (EEOC) has emphasized its focus on protecting workers with mental health-related disabilities in its most recent Strategic Enforcement Plan. Fortunately, you can take proactive steps to support mental wellness in the workplace to support your employees and help protect your business from potential discrimination claims. Mental Health Policies and Procedures Employers should be prepared with the proper policies and procedures in place to address employee mental health concerns. Draft and Communicate a Mental Health Policy Create a clear mental health policy that outlines your commitment to employee well-being. Include resources available, such as Employee Assistance Programs (EAPs) and mental health days. Make sure this policy is easily accessible and communicated to all employees. Manager Training and Education Train managers and supervisors on their legal obligations under the ADA, FMLA, and related laws. This should include knowing how and when to involve HR. It’s also wise to designate HR professionals to handle leave requests and accommodation issues promptly and consistently. Engage in the Interactive Process If an employee approaches HR with a mental health-related issue that qualifies as a disability, employers must engage in the “interactive process.” This dialogue between employer and employee is aimed at finding reasonable accommodations that allow the employee to perform their job. Common accommodations to address mental health issues are extended leave, scheduling changes, and additional breaks. You need to listen to the employee and the employee’s healthcare provider. Always remember that this is an interactive process, so it may take several steps. Be patient and creative. Reduce Mental Health Stigma Historically, employers avoided discussing mental health with their employees. Even today, employers may feel uncomfortable bringing it up because they don’t know the “right” words or worry they might overstep. But it’s important to talk about. Employees who feel supported and who have receptive supervisors may be less likely to have a sudden need for an ADA accommodation. They are also less likely to file an EEOC charge. Check On Your Employees Regular check-ins with employees—whether through one-on-one meetings or anonymous surveys—can help you gauge how employees are feeling. When employees feel supported, they are more likely to seek help early, which can reduce the need for more formal ADA accommodations later on. Offer Mental Health Trainings Consider organizing workshops or inviting mental health professionals to provide guidance on recognizing the signs of mental health struggles and how to support colleagues. Train managers to approach sensitive conversations with empathy and understanding. Lead by Example As a business leader, it’s important to model healthy behaviors. Share your own strategies for managing stress and openly discuss the importance of mental health. When employees see leadership prioritizing well-being, they feel empowered to do the same. Create A Work Environment That Promotes Mental Well-Being Building a culture that supports mental health involves more than just offering workshops—it requires integrating mental well-being into everyday work practices. Flexibility, balance, and proper resources are straightforward ways employers can build a work environment that supports employees’ mental health. Flexibility Mental health can fluctuate over time, and offering flexibility—whether through adjustable workloads, flexible deadlines, or remote work options—can help employees manage stress during tough times. Encourage employees to communicate their needs and be open to adjustments as necessary. Work-Life Balance Promote a healthy work-life balance by encouraging employees to take regular breaks, use their vacation time, and, if possible, offering flexible work schedules. Employees who feel that their personal time is respected are more likely to be productive and less likely to experience burnout. Adequate Staffing and Resources Employers can reduce unnecessary stress by ensuring employees have access to the tools and resources they need to do their jobs effectively. This includes providing up-to-date technology, clear processes, and adequate staffing levels so employees aren’t overburdened. When employees have what they need to perform their tasks efficiently, they experience less frustration and can focus on their work without additional stress. Regularly assess whether your team has the proper support, equipment, and training, and address any gaps promptly to maintain a healthy and productive work environment. Incorporating mental health support into your workplace culture is a powerful investment in your business’s future. These strategies can ensure legal compliance while also fostering a positive, healthy work environment. Prioritizing employee well-being will reduce stress, improve productivity, and create an atmosphere where your team can thrive. [1] The U.S. Department of Labor published “Fact Sheet #280: Mental Health Conditions and the FMLA” in May 2022, to explain leave eligibility under the Family and Medical Leave Act (FMLA) for use related to an employee’s own mental health condition or that of an immediate family member. Additionally, the FMLA’s definition of a serious health condition can be broader than the definition of a disability and encompass many illnesses, injuries, and physical or mental conditions that require multiple treatments and intermittent absences. State leave and disability laws can provide greater amounts of leave and/or benefits to employees, including those who may not be covered by the ADA or FMLA.
October 30, 2024
Labor and Employment
Top California Court Rules Gig Workers are Independent Contractors
In a recent ruling, the Supreme Court of California has allowed Prop 22 to stand, meaning more than 1.4 million Californians who work as app-based gig workers for companies such as Uber, Lyft, DoorDash, and Instacart can continue to be categorized as independent contractors as opposed to employees. This is just the latest development in the evolution of employee classification in the state, and it surely will not be the last. In this case, the Court upheld Prop 22, a 2020 voter-approved law allowing gig economy platforms to classify drivers as independent contractors rather than reclassify them as employees in California. The Court rejected claims brought by drivers and a labor union that the law is unconstitutional, citing interference with lawmakers’ authority over matters dealing with workers’ compensation. Prop 22 defined a new classification for workers entitled to limited benefits, including healthcare subsidies, occupational accident insurance, disability insurance, and a net earnings floor based on the state minimum wage, but not necessarily all rights granted to full-fledged employees. Numerous challenges have been raised to the legislation, which was reversed in 2021 and then reinstated in 2023 by the courts. The July 25, 2024 Supreme Court ruling ends the long legal fight over Prop 22 for now and is a significant win for rideshare giants Uber and Lyft, which have fought to classify their workers as contractors. While this ruling permits gig-work companies to treat their California drivers as independent contractors, it's important to note that there is still the possibility of future legal challenges to Prop 22. The potential for further legal action adds an element of intrigue to the ongoing debate about the classification of gig workers, which has been scrutinized in several state legislatures recently. However, this decision applies specifically to rideshare drivers in California.
October 14, 2024
Labor and Employment
OK at Work: Effective Strategies for Utilizing Your Attorney
On this week's OK at Work, Sarah Sawyer and Russell Berger discuss strategies for leveraging your attorney to help your business mitigate legal risk. Listen to learn more.
September 10, 2024
Labor and Employment
Navigating the FTC’s New Non-Compete Rule: Steps to Prepare by September 4, 2024
On April 23, 2024, the Federal Trade Commission (FTC) approved a new rule (FTC Rule) that invalidates most existing non-compete agreements for employees at for-profit businesses, except for those agreements for "senior executives" signed before September 4, 2024 (Effective Date). This FTC Rule fundamentally alters the longstanding practice of using non-compete clauses to safeguard an employer's interests. Overview of the FTC’s New Non-Compete Rule and Its Implications Under the new rule, non-compete agreements will only remain enforceable for senior executives—defined as those earning more than $151,164 annually and holding significant policy-making roles, such as president or CEO—and will remain enforceable if signed before the Effective Date. After September 4, 2024, employers will be prohibited from imposing non-compete agreements on new hires, even if they are senior executives. Employers are also required to inform both current and former employees bound by non-compete agreements that these agreements will not be enforced. The FTC has provided model language for this notice, available on its website in multiple languages. Employers should use this notice carefully and avoid issuing it to senior executives who the FTC Rule does not impact. Key points to consider: The term “worker” is broadly defined and includes employees, independent contractors, interns, volunteers, apprentices, and even sole proprietors. The FTC’s jurisdiction generally does not cover non-profit organizations, banks, savings and loan institutions, federal credit unions, common carriers, and air carriers, so the rule may not apply to these sectors. The rule does not address non-compete agreements that prevent employees from soliciting customers or other employees unless these agreements are overly broad and interfere with a worker’s ability to seek or accept new employment. Agreements designed to protect trade secrets and confidential information, such as non-disclosure agreements, remain enforceable. The FTC Rule does not apply to non-compete agreements related to the bona fide sale of a business entity and does not affect any pending enforcement actions pertaining to non-competes established before the Effective Date. The rule applies to post-employment non-compete agreements and does not impact agreements that limit competitive activities during employment. The FTC Rule overrides conflicting state laws but does not supersede state laws that provide greater protections, such as California’s comprehensive ban on non-competes for all employees, including senior executives. Current Legal Challenges to the FTC Rule It is no surprise that several federal lawsuits have been filed to challenge the enforcement of the FTC Rule. In one case, ATS Tree Services, LLC v. FTC, the U.S. District Court for the Eastern District of Pennsylvania ruled that the plaintiffs were unlikely to succeed in their claims against the FTC and denied their request for a preliminary injunction to halt the rule’s enforcement. Consequently, it is reasonable to anticipate that the ATS court may ultimately support the FTC’s position. In contrast, in Ryan LLC v. Federal Trade Commission, the U.S. District Court for the Northern District of Texas issued a limited preliminary injunction preventing the enforcement of the FTC Rule against the plaintiffs and intervenors involved in that case. The Ryan court is expected to decide by August 30, 2024, whether to grant a nationwide permanent injunction, just before the FTC Rule is set to take effect. Additionally, on June 21, 2024, Properties of the Villages, Inc. v. Federal Trade Commission was filed in the Middle District of Florida before Judge Timothy J. Corrigan. The plaintiff is seeking a preliminary injunction against the FTC Rule as it applies to them and an order to vacate it entirely under the Administrative Procedure Act. Judge Corrigan is scheduled to hear arguments on the motion for a preliminary injunction on August 14, 2024. Recommended Action for Businesses Before the FTC Rule Takes Effect Businesses should be prepared to act by the Effective Date. Despite ongoing litigation challenging the FTC Rule, no nationwide injunction has been issued, so employers should proactively: Strengthen other restrictive covenants (e.g., non-solicitation clauses) and develop strategies to address potential risks associated with the rule. Consider how the rule might impact valuations in mergers or acquisitions due to the potential for increased competition. (Note that the FTC Rule does not apply to non-compete clauses related to the bona fide sale of a business, a person's ownership interest in a business, or substantially all of a business's operating assets.) Evaluate options for updating or introducing agreements for senior executives before the Effective Date. Review and analyze the impact of the FTC Rule on existing non-compete agreements. Plan for issuing the required notices to affected employees and former employees. Offit Kurman has a dedicated practice group focused on issues related to employee mobility, including restrictive covenants and trade secrets. Our attorneys are uniquely positioned to guide you through these challenges, helping you weigh the risks specific to your business and make informed decisions that align with your business objectives. The information contained in this document is intended for informational purposes only. It should not be relied upon or construed as legal advice. 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August 13, 2024
Labor and Employment
Federal Court Denies ATS Tree Services' Bid to Delay FTC Rule Implementation
On July 23, 2024, U.S. District Judge Kelley Brisbon Hodge, serving the Eastern District of Pennsylvania, rejected ATS Tree Services LLC’s request to delay the Federal Trade Commission’s (FTC) final rule, set to take effect on September 4, 2024. ATS also sought a preliminary injunction against the rule. Still, Judge Hodge also denied this request, concluding that ATS had not shown that the rule would cause irreparable harm or that it could establish a likelihood of success on the merits. This decision followed shortly after U.S. District Judge Ada Brown of the Northern District of Texas issued a preliminary injunction blocking the FTC from enforcing the rule against Ryan, LLC, a tax preparation company, and certain intervenors. Judge Hodge’s denial of ATS's motion was based on a determination that ATS had failed to prove it would suffer irreparable harm because of the rule. The court found that ATS’s claims of irreparable harm—such as nonrecoverable compliance costs and the potential loss of contractual benefits— were based upon either a choice or a “speculative risk,” which did not rise to the level of irreparable and immediate harm required for an injunction. The court cited Third Circuit precedent, stating that nonrecoverable compliance costs, such as monetary losses or business expenses, do not constitute irreparable and immediate harm required for an injunction. Additionally, the court held that ATS offered no binding precedent to support its argument that the loss of contractual rights is an irreparable harm, reiterating that such determinations must be on a case-by-case basis. Even if ATS could establish irreparable harm, the court found that it had not demonstrated a likelihood of success on the merits. Judge Hodge’s opinion included a detailed analysis of the FTC’s authority to issue substantive rules regarding unfair methods of competition. The court confirmed that the FTC has such authority, noting that Section 6 of the FTC Act does not limit the FTC to procedural rules alone. The use of the term "prevent" in Section 5 of the Act supports the FTC's ability to make rules to prevent harm before it occurs rather than merely remedying it. The court also referenced prior circuit court decisions and Congressional actions, such as the Magnuson-Moss Act, which affirmed the FTC’s rulemaking authority. The court also addressed ATS’s other challenges to the rule. It upheld the FTC’s authority to broadly regulate non-compete clauses as unfair methods of competition, rejected claims that regulation of non-competes is solely a state matter, and found that the Major Questions Doctrine does not apply to the rule. Additionally, the court dismissed ATS’s nondelegation challenge, affirming that Congress had provided a clear guiding principle for the FTC’s rulemaking authority under the FTC Act. Given these findings, the court did not need to evaluate the balance of equities or public interest considerations. This ruling is significant for several reasons. It contrasts with the earlier decision in Ryan LLC v. Federal Trade Commission, where Judge Brown granted a preliminary injunction, suggesting the plaintiffs would likely succeed on the merits. The Texas court has indicated it will decide on the enforceability of the FTC rule by August 30, 2024. While Judge Hodge’s decision represents a victory for the FTC, it may be temporary. The Texas court’s preliminary injunction in Ryan LLC hinted at potential future invalidation of the rule based on arguments that the FTC lacked statutory authority or that the rule was arbitrary and capricious under the Administrative Procedure Act (APA). If the Texas court rules against the FTC, it might vacate the rule entirely or issue a permanent injunction, though the specifics are yet to be determined. In the meantime, businesses should continue to assess and document their use of non-competes and explore alternative protections like non-disclosure agreements, invention protection, non-solicits, training repayment programs, garden leaves, and non-competes related to business sales. The FTC’s guidance suggests that if properly structured, these alternatives should comply with the new rule. Additionally, state legislation and actions by other federal agencies, like the National Labor Relations Board (NLRB), may further influence the legal landscape regarding non-competes.
August 7, 2024
Labor and Employment
OK at Work: How Will the Newest Supreme Court Decision Affect Your Business?
On this week's OK at Work, Sarah Sawyer and Russell Berger discuss the Supreme Court's recent decision eliminating the substantial deference that federal courts previously gave to the decisions of administrative agencies and what it could mean for business owners, executives, and in-house counsel. Listen to learn more.
July 30, 2024
Labor and Employment
California Labor & Employment Update: PAGA Reform
On July 1, 2024, Governor Newsom signed Senate Bill 92 and Assembly Bill 2288, amending The Private Attorneys General Act (PAGA). The amendments are effective June 19, 2024, but do not affect civil actions that were filed or cases where the required notice to the employer and the Labor Workforce Development Agency (“LWDA”) was submitted prior to June 19, 2024. The amendment was a compromise reached among Governor Newsom, business leaders and the unions to remove a measure to repeal PAGA from the November ballot. PAGA has been tough on businesses in California. While the amendments are helpful, businesses still need to be vigilant to avoid the penalties under PAGA. PAGA was enacted in California in 2004, allowing employees to file lawsuits against employers for violations of the labor code on behalf of themselves, other employees, and the state of California. The law essentially deputizes employees to act as private attorneys general and to pursue civil penalties for violations that would typically only be enforceable by state labor agencies. If an employee believes there has been a violation of the California Labor Code by their employer, the employee can then file a claim under PAGA. Claims can include a broad range of violations ranging from overtime to meal and rest breaks. Part of the penalties recovered are distributed to the state, with affected employees and their legal representation receiving the remainder. The following summarizes the most significant changes to PAGA: Individual Plaintiffs Must Have Suffered a Violation for Each Claim Made in their Complaint. There are several changes to PAGA, but the most significant for businesses is that a plaintiff be able to prove that they were subject to the specific PAGA violations upon which their complaint is based. Previously, a plaintiff, with one violation, could allege that the employer violated every section of the Labor Code. For example, if the plaintiff only suffered meal period violations, they cannot now bring an action for unpaid overtime. While this should limit some PAGA litigation and penalties, it will probably result in multi-plaintiff lawsuits, with employee plaintiffs alleging that they suffered differing violations. Ability to Cure Once a Labor and Workforce Development Agency Notice if Received. The amendments expand when employers can cure violations when they receive the LWDA notice to avoid PAGA litigation. However, it is unclear in the new legislation exactly how much is needed to cure the violation and make the employee whole. What this provision does do is make it more important for employees to immediately contact counsel once they receive an LWDA notice to be able to audit their practices and attempt to cure them where allowed. Early evaluation conference. The bill would also authorize an employer who employed at least 100 employees and who has been served with a summons and complaint asserting a claim under PAGA to file a request and participate in an early evaluation conference and to request a stay of court proceedings. The employer has the ability to cure violations by using this procedure. The requirements are very specific and must occur shortly after the service of any action on the employer. As a result, employers should take care to avail themselves of this new procedure because if the employer cures the violations as set forth in the procedures for the Early Evaluation Conference, the penalties are capped at $15 per employee. Penalty Reductions. One of the most difficult elements of PAGA are the penalties. The new legislation: (a) revises the penalty structure and reduces it in certain situations; (b) encourages compliance with labor laws by capping penalties on employers who quickly take steps to fix policies and practices and make workers whole after receiving a PAGA notice, as well as on employers that act responsibly to take steps proactively to comply with the labor code before even receiving a PAGA notice; (c) creates new, higher penalties on employers who act maliciously, fraudulently or oppressively in violating labor laws; and (d) ensures that more of the penalty money goes to employees by increasing the amount allocated to employees from 25% to 35%. Some examples of reduced penalties are as follows: Penalty Cap Reductions for Employers Who Take “All Reasonable Steps” to Comply with the Labor Code. Penalties are reduced by 15% or 30% if a person accused of a violation has taken all reasonable steps to comply with the provisions alleged to have been violated in the required notice provided by the aggrieved employee. Reasonable steps may include, but are not limited to, any of the following: (1) The employer conducted periodic payroll audits and took action in response to the results of the audit. (2) The employer disseminated lawful written policies. (3) The employer trained supervisors on applicable Labor Code and wage order compliance or took appropriate corrective action with regard to supervisors. The amendments to PAGA state that whether the employer’s conduct was reasonable shall be evaluated by the totality of the circumstances and take into consideration the size and resources available to the employer and the nature, severity and duration of the alleged violations. The amendments further provide that the existence of a violation, despite the steps taken, is insufficient to establish that an employer failed to take all reasonable steps. Employers with Weekly Pay Periods. The amendments reduce penalties for employers with weekly pay periods by one-half, effectively calculating penalties as if the employer had bi-weekly pay periods. PAGA has significantly impacted labor law enforcement in the state, and these new reform measures will hopefully streamline the law even further. Employers should work with legal counsel to fully understand the details of this reform and any action that should be taken at this time. Given the new penalty structure, employers need to act quickly once they receive notice of a potential PAGA action. Quick action can help to reduce and/or eliminate some of the penalties.
July 17, 2024
Business
Supreme Court Overturns Chevron Deference in Landmark Loper Bright Decision
On June 28, 2024, the Supreme Court issued its decision in Loper Bright v. Raimondo and Relentless v. Department of Commerce. As expected, following oral argument, the Court overruled the Chevron deference doctrine in a 6–3 decision written by Chief Justice John Roberts. The doctrine stems from a 1984 Supreme Court case, Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc, 467 U.S. 837 (1984), establishing a two-step analysis for judicial review of statutory interpretation. Under Chevron, if a court concluded that a statute was silent or ambiguous, it had to defer to an agency’s permissible construction of the statute. Now, under Loper Bright, courts must “exercise their independent judgment” and “may not defer to an agency interpretation of the law simply because a statute is ambiguous.” Supreme Court Review: Chevron Doctrine's Applicability to Cases Post-Loper Bright In Loper Bright, two sets of fishing companies challenged a rule issued by the National Marine Fisheries Service requiring vessels operating in the Atlantic herring market to pay for a government-certified observer during their fishing trips. Applying Chevron, the district court in each case rejected the companies’ challenge to the observer rule and granted summary judgment to the government. Panels of the U.S. Courts of Appeals for the D.C. Circuit and First Circuit affirmed these decisions. The U.S. Supreme Court granted certiorari in both cases on the limited question of whether Chevron should be overruled or clarified. Supreme Court's Interpretation of APA in Loper Bright The Loper Bright decision is premised on what the majority believes is a plain text reading of the Administrative Procedure Act (APA), which governs judicial challenges to agency actions. The Court specifically determined that the APA, which was not considered in Chevron, reflects the traditional understanding of the judiciary's role. This role requires courts to independently interpret the meaning of laws. The Court dismissed the notion of a “presumption” of agency expertise, explaining that resolving unclear laws falls within the court’s jurisdiction, not the agencies. Put another way, while courts may use an agency’s interpretation to help “inform their inquiry,” they cannot dictate how courts interpret the law. The Loper Bright Court also rejected the idea that Chevron promotes consistency, highlighting inconsistencies in its application. Furthermore, it concluded that adherence to Chevron is not mandated by stare decisis. Chevron had proven “unworkable” because determining whether a statute is ambiguous is an indeterminate exercise. Consequently, the Court vacated and remanded the lower court’s decisions. Supreme Court Opinion: Chief Justice Roberts and the Majority Chief Justice Roberts delivered the opinion of the Court, in which Justices Thomas, Alito, Gorsuch, Kavanaugh, and Barrett joined. Justices Thomas and Gorsuch each filed concurring opinions. Justice Kagan filed a dissenting opinion, in which Justices Sotomayor and Jackson joined.
July 12, 2024
Labor and Employment
Texas Court Blocks FTC Non-Compete Rule: What It Means for Businesses
On July 3, 2024, a federal district court in Texas took a significant step, temporarily blocking the Federal Trade Commission's (FTC) proposed rule banning non-competes. U.S. District Judge Ada Brown for the Northern District of Texas granted the motion for preliminary injunction filed by plaintiffs Ryan LLC and plaintiff-intervenors U.S. Chamber of Commerce, Business Roundtable, Texas Association of Business, and Longview Chamber of Commerce, effectively putting the FTC’s rule on hold for the named plaintiffs. Although the stay is temporary pending the court’s final decision on the merits of the case and applies only to the movants, it signals that a permanent and nationwide injunction is likely. Background on the FTC's Non-Compete Rule As a quick refresher, in April 2024, the FTC narrowly passed a rule along party lines intended to ban future non-compete agreements and nullify most existing ones. The FTC asserted its authority to enact this rule under Section 6(g) of the FTC Act, claiming it grants the power to establish substantive rules against unfair competition. Set to take effect on September 4, 2024, the rule would prohibit all new employment-related non-competes and invalidate nearly all existing ones. Ryan LLC and others immediately challenged the rule in court on various grounds. Judge Ada Brown's Ruling on the FTC Rule Judge Ada Brown, a former President Trump appointee, ruled in favor of the plaintiffs, determining that they successfully demonstrated all the necessary criteria for a preliminary injunction: (i) a strong likelihood of winning the case; (ii) a significant risk of irreparable harm if the injunction wasn't granted; and (iii) a favorable balance of the potential harms and benefits to both parties. Judge Brown’s opinion focused on two key points: The Scope of the FTC’s Authority: The court’s determination that the FTC lacked statutory authority to enact the rule is significant, particularly considering its alignment with the "major questions" doctrine. Historically, the FTC has disclaimed such power, but Congress has not expressly granted it. The court's reasoning aligns with the recent trend of limiting agencies' authority, echoing concerns in the "major questions" doctrine. Whether the Rule is Arbitrary and Capricious: Judge Brown ruled that the rule was arbitrary and capricious under the Administrative Procedure Act (APA) due to its overbroad nature and lack of supporting evidence. The opinion noted that no state has enacted a ban as broad as the one proposed by the FTC, and the FTC failed to justify its sweeping approach or consider less disruptive alternatives. Additionally, the court agreed that the rule would cause irreparable harm to the plaintiffs' businesses and that the balance of equities favored maintaining the status quo. Current Status and Potential Developments of the FTC Rule While the injunction only applies to Ryan LLC and the U.S. Chamber of Commerce (and not its members), no entities will be subject to enforcement before the rule's intended effective date of September 4, 2024. Additionally, Judge Brown indicated that she intends to issue a final ruling by August 30, 2024, which could invalidate or permanently enjoin the rule. In the interim, the parties will further brief the merits issues and the narrow scope of the court’s order, including whether the injunction should be expanded nationwide. A separate challenge brought by ATS Tree Services LLC is pending in Pennsylvania, with a hearing scheduled for July 10, 2024, potentially resulting in a nationwide injunction 1. This underscores the potential nationwide impact of the ongoing legal proceedings. Impact on FTC's Rulemaking Authority This ruling is a significant setback to the FTC's agenda to expand its rulemaking authority and regulate labor markets. It reflects a broader trend of constraining administrative agencies following the Supreme Court's recent decision (issued June 28, 2024) in Loper Bright Enterprises. In Loper Bright, the court overruled Chevron’s deference. It concluded that courts must interpret statutes de novo, and agency interpretations are not entitled to deference. The court found that even where a statute is “ambiguous,” there is a single “best reading” of the statute that courts, not agencies, are responsible for determining. Previously, courts often deferred to agencies under the Chevron doctrine if their interpretation of an ambiguous law was reasonable. However, Loper mandates that courts independently assess whether an agency acted within its authority, regardless of statutory ambiguity. This means the Ryan court's final decision will heavily depend on its own interpretation of the FTC's statutory power. Given this new precedent, it is plausible to expect the FTC's rule may be overturned, at least in part. The business community, which has strongly opposed the rule, likely sees this as a positive sign. However, state-level efforts to limit non-competes continue, and the National Labor Relations Board (NLRB) has taken the view that the proffer, maintenance, and enforcement of non-competes generally violate the National Labor Relations Act 2. Proactive Review of Non-Competes: Alternative Strategies Businesses are advised to proactively review their use of non-competes across their organization and explore alternative strategies to safeguard their interests. These alternatives include: Non-Disclosure Agreements (NDAs) Intellectual Property Protection Non-solicitation agreements Training Reimbursement Programs Garden Leave Clauses Non-Competes Linked to Business Sales The FTC has indicated that, when properly structured, these alternatives should not violate its proposed rule. _____________________________________________ 1 ATS Tree Services, LLC v. FTC, No. 2:24-cv-1743 (E.D. Pa. 2024). 2 On June 13, 2024, an administrative law judge for the NLRB held that certain non-compete and non-solicit covenants violated an employee’s labor rights under the NLRA. See J.O. Mory, Inc., 25-CA-309577, 25-CA-336995, JD-36-24 (2024).
July 10, 2024
Labor and Employment
Employee Classification: Recent California Developments
The battle over employee classification in California has been a long one, and there is still uncertainty surrounding the future of independent contractor vs. employee classification in the state. One sector this impacts greatly is the gig economy, with companies such as Uber, Lyft, DoorDash, and Instacart awaiting a major decision that could have serious implications. The Background of Employee Classification in California Employee classification in California long relied on the Borello test, which came from a 1989 Supreme Court case. This was a multifactor case that focused on how much control the employer had over the manner and means by which the employee performed their work. However, in 2018, the Dynamx decision changed all that when the California Supreme Court adopted the ABC test for determining whether an employee was an independent contractor or an employee under California law. Post Dynamex, a worker is categorized as an employee unless the company can prove that A) the worker is free from the control and direction of the hiring entity in connection with the performance of the work; B) The worker performs work outside the usual course of the hiring entity’s business; and C) The worker is also engaged in an independently established trade or business that is of the same nature they are performing for the hiring entity. AB5 was then signed in 2019 in California, codifying the decision in Dynamex. This became law in 2020, expanding the application of the ABC test to most workers and making it even more difficult for companies to classify workers as independent contractors. The Impact on the Gig Economy Because of the nature of the gig economy, this has had a significant impact on employers within the industry. These companies relied heavily on the ability to classify their workers as independent contractors, avoiding the benefits and employment regulations that come along with employee classification (such as insurance, overtime, and minimum wage requirements). So, it is no surprise that lawsuits and ballot measures followed AB5. Many gig economy companies also sponsored Proposition 22, which was a ballot initiative that exempted app-based transportation and delivery companies from AB5. California voters approved the measure in 2020, allowing these companies to continue classifying their workers as independent contractors. Recent Developments The passage of Proposition 22 is not where this story ends. There have, of course, been legal challenges, with a judge ruling it unconstitutional in 2021. That decision has been appealed, and we are waiting for a decision from the California Supreme Court this summer. AB5 has also been challenged in the courts, with Uber and Postmates claiming the law violated their rights under the Equal Protection Clause of the state and US constitutions. However, the 9th Circuit disagreed, recently blocking their efforts to overturn the law. This latest failure for Uber in the courts means gig economy companies must rely on the California Supreme Court to uphold Proposition 22 in order to continue classifying employees as independent contractors. Broader Implications While it might seem that this only impacts companies in this space in the state of California, this does have some broader implications to consider. It highlights the real issues that exist surrounding innovation and employment law. The technology that allows these companies to operate outpaced developments in regulations and legislation governing companies and workers in this space. And while it attempts to “catch up,” the legal battles have left a great deal of uncertainty for both sides. We will be watching for the California Supreme Court’s decision on Proposition 22 that should come down in the next few months and will update on the future of employee classification in the state and what companies need to know at that time.
July 10, 2024
Labor and Employment
The Healthy Delaware Families Act: What Employers Should Know
In recent years, Delaware has taken significant steps to support its workforce through progressive employment legislation, including the Healthy Delaware Families Act. This act introduces paid leave benefits, aims to enhance work-life balance, and supports employees during critical life events. Here’s what employers need to know about this important initiative: Coverage and Eligibility Employees who have worked for their employer for at least 12 months and clocked in at least 1,250 hours during the last year are eligible for benefits under the Healthy Delaware Families Act, mirroring the federal Family and Medical Leave Act (FMLA). Coverage Requirements: Most businesses in Delaware are covered under the act and must provide eligible employees with paid leave. Exceptions: Certain businesses, such as seasonal ones and those with fewer than ten employees, are exempt. Employers with 10-24 employees are only required to participate in parental leave. Alternative Benefits: Businesses offering more generous paid leave benefits or those providing a state-approved alternative paid leave insurance plan meeting minimum standards may opt out of the program. Types and Duration of Leave Under the Healthy Delaware Families Act, eligible workers can take the following types of leave with pay: Parental Leave: Up to 12 weeks. Medical Leave: Up to six weeks, including care for a family member. Military Deployment: Up to six weeks. Intermittent Leave: Employees can use leave intermittently (not consecutively) if medically necessary, provided they take leave at least one day per week. Combined Parental Leave: If both parents work for the same employer, they can take up to 12 weeks combined. Benefits and Contributions Wage Replacement: Workers receive approximately 80% of their usual weekly wages while on leave, based on their average weekly wage over the last 12 months. Maximum Benefit: Currently set between $100 and $900 per week, adjusted annually for inflation. Contribution: Starting in 2025, participating businesses will contribute up to 0.8% of their payroll towards the program. Employees may also contribute up to 0.4% of their wages annually. Job Protection and Rights Job Security: Employees are entitled to retain their health insurance benefits and return to their previous position after taking leave. Protection from Retaliation: Employees who have been with their employer for at least 90 days are protected from retaliation for requesting or using leave. Administration and Compliance Administration: Delaware’s Department of Labor oversees the program, ensuring education, claims processing, financial stability, and compliance. Enforcement: The Department investigates violations and reports regularly to the Governor and Legislature on the program’s effectiveness. Conclusion The Healthy Delaware Families Act represents a significant step forward in supporting Delaware’s workforce with comprehensive paid leave benefits. For employers, understanding the act’s requirements and benefits is crucial for compliance and fostering a supportive workplace environment. By embracing these changes, businesses can enhance employee satisfaction, retention, and overall productivity. Please contact me for further information on the Healthy Delaware Families Act or similar legislation in Maryland. I am also available to present to large groups interested in understanding these important employment laws.
June 21, 2024
Labor and Employment
Navigating Overtime Regulations: Plaintiffs Challenge Department of Labor's New Overtime Rule
On May 21, 2024, a significant event unfolded in the legal landscape as several plaintiffs filed a lawsuit challenging the Department of Labor’s (DOL) new overtime rule. This rule, which raises the salary threshold for professional and highly compensated employee exemptions, is scheduled to take effect on July 1, 2024. The rule, in essence, stipulates that a worker can only be exempt from overtime under the professional or highly compensated exemptions if they are paid at least $43,888 annually. For a highly compensated employee, the threshold is set at$132,964. These thresholds are set to increase over three years, beginning in January 2025. The lawsuit was filed in the Eastern District of Texas, the same court where plaintiffs successfully challenged the Obama-era overtime rule in 2016. That rule sought to raise the salary threshold for executive, administrative, and professional exemptions to $47,476. Plaintiffs argue that this rule’s “new salary threshold is so high that it is no longer a plausible proxy for delimiting which jobs fall within the statutory terms ‘executive,’ ‘administrative,’ or ‘professional.” It also maintains that the DOL’s planned three-year automatic increase to the salary is illegal. Moreover, the Trump-era overtime rule is currently under review by the Fifth Circuit Court of Appeals. If the Court of Appeals finds in the plaintiffs’ favor, the 2024 DOL rule would also be overturned. Businesses should still assume that the new rule will go into effect on July 1, 2024. There is no telling whether either court will decide these lawsuits before that date. If you have any questions, please do not hesitate to contact me.
June 5, 2024
Labor and Employment
The Right to Disconnect for California Employees
California is often the first when it comes to new laws and regulations governing employers, and a new law introduced by San Francisco Assemblyman Matt Haney would be another first of its kind. If passed, this proposed legislation would make California the only state in the country to mandate that employers give their employees the ability to disconnect. Assemblyman Haney has introduced a bill giving employees the legal right to disconnect, ignoring non-emergency calls and emails after the workday has concluded. The bill proposes a fine of at least $100 for violations. Assemblyman Haney is basing this law off similar legislation introduced in Australia that would give employees the right to disregard unreasonable calls and messages from their employer outside of normal work hours. The Australian legislation is designed to ensure employees are not working unpaid overtime. The proposed California legislation, AB-2751, would require both public and private employers to establish workplace policies providing employees the right to disconnect from communications from the employer during nonworking hours, except as specified. The right to disconnect makes an exception for an emergency or for scheduling (scheduling is limited to changes to a schedule within 24 hours). Otherwise, an employee has the right to ignore communications from the employer during nonworking hours. AB 2751 is silent on whether it applies to both exempt and non-exempt employees. The bill requires employers to establish clear nonworking hours via a written agreement between an employer and employee. Nonworking hours would include both before and after an employee’s assigned hours of work. Employees would be able to file a complaint with the Labor Commissioner if there is a clear pattern of violation, with employers subject to civil penalties. A pattern of violation is defined as three or more violations of the right to disconnect. Canada, France, Spain, and other countries in the EU already have similar laws on their books. But it is important to note that New York considered a very similar measure back in 2018, and that failed to pass. So, it will be interesting to see if California moves ahead with the first implementation of a right to disconnect in the US. We will be watching closely and updating as this develops, as this is something California employers will need to monitor.
May 9, 2024
Labor and Employment
FTC's Final Rule: Understanding the Ban on Non-Compete Clauses
On April 23, 2024, the United States Federal Trade Commission (FTC) announced its final rule on non-competition clauses, voting 3-2 to adopt the final regulations, known as the “Non-Compete Clause Rule.” This rule marks a significant milestone, establishing a comprehensive ban on non-compete agreements. The decision comes fifteen months after the FTC released its proposed rule in January 2023. The final rule will not take effect until 120 days after publication in the Federal Register, and lawsuits have already been brought challenging the authority of the FTC to issue such a broad rule. Nonetheless, it is crucial for employers to understand the broad requirements, the exceptions, and how to protect legitimate business interests in the wake of the FTC’s rule. The rule applies to all businesses and individuals within the FTC’s jurisdiction, which covers all types of companies in nearly all industries. However, certain entities fall outside the FTC’s jurisdiction and, therefore, are exempt from the ban. These include banks, savings and loan institutions, federal credit unions, common carriers, air carriers, and certain non-profits. The rule restricts businesses and individuals from including non-competition language in future employment agreements, policies, handbooks, or websites for their workers. Additionally, it extends to non-solicitation and confidentiality agreements that function as de facto non-competition agreements. Importantly, this prohibition applies to all workers (not just “employees”), including independent contractors, interns, externs, volunteers, apprentices, and others. According to the rule’s preamble, “it is an unfair method of competition—and therefore a violation of section 5—for employers to, inter alia, enter into non-compete clauses with workers on or after the final rule’s effective date.” Once the rule takes effect, agreements and policies containing non-compete language will become unenforceable, with the only exception being for “Senior Executives.” The rule defines “Senior Executives” as a worker earning more than $151,164 annually and holding a “policy-making position.” Compensation can include salary, commissions, performance bonuses, and any other agreed-upon forms of compensation, excluding benefits or board and lodging. If the individual only worked part of the year, their earned compensation can be annualized to determine whether they meet the threshold. Policy-making positions include the president, CEO, or individuals with authority to make company-wide policy decisions. While “Senior Executives” will not have their non-competes retroactively voided like other workers, the rule prohibits covered businesses and individuals from entering into such agreements with future workers, even if they qualify as “Senior Executives.” Once in effect, the rule will also require businesses and individuals to notify workers of the ban and rescind existing non-competes (except those with senior executives). Model language for an appropriate notice can be accessed at Noncompete Rule | Federal Trade Commission (ftc.gov). Consequently, the bulk of existing restrictions will become unenforceable upon the rule’s enactment. The FTC anticipates the rule will increase employee earnings by at least $400 billion over the next decade. While the rule fundamentally prohibits all non-compete agreements between businesses and their workers, exceptions exist for non-competes between businesses and between the seller and buyer of a company. Specifically, the FTC’s rule prohibits anything that restricts, penalizes, or prevents a worker from pursuing a different job or starting a business after leaving their current job. That includes: Prohibitive terms and conditions expressly saying that a worker cannot get another job, such as with a competitor or embark on a business venture; Terms and conditions mandating financial penalties for workers who get another job or start a business; or Terms and conditions that aren’t labeled as non-competes but are so restrictive that they effectively prevent a worker from getting a new job or starting a business. This may include overly broad confidentiality clauses, which could potentially violate the National Labor Relations Act, Employers are advised to seek guidance from experienced employment counsel to ensure compliance. As noted at the outset, given the extremely broad nature of the rule, legal challenges are anticipated, potentially leading to further delays or permanently preventing the rule’s enactment. We will continue monitoring developments and providing updates accordingly. In the meantime, employers are encouraged to take advantage of this period by: Evaluating and analyzing existing agreements to ensure certain protections are in place in anticipation of the rule’s implementation; and Consulting with trusted legal counsel to devise a communication strategy regarding the notice requirement for impacted workers, ensuring effectiveness and compliance with legal standards. If you have any questions or need assistance with navigating these changes, please reach out to Gabriel Celii and Sarah Goodman
April 25, 2024
Labor and Employment
In the Know Series - Labor & Employment Law Changes in Pennsylvania
Stay Ahead of the Curve with Key Insights from Our L&E Team Pennsylvania employers must navigate evolving legislation impacting labor and employment practices in the Keystone State. Now that the first quarter is behind us, our team has assembled a concise overview of the recent changes to help you stay compliant and informed. Parental Leave: Currently, the Commonwealth of Pennsylvania does not require an employer to offer its employees parental leave. However, this past year, Pennsylvania legislators introduced House Bill 181, the Family Care Act, which would create a statewide paid family and medical leave program in Pennsylvania for the first time in the Commonwealth’s history. The program would offer up to twenty (20) weeks of paid leave. The House referred House Bill 181 to the Labor and Industry Committee on March 8, 2023. The House re-committed House Bill 181 to the Rules Committee on June 6, 2023. The Rules Committee and the Appropriations Committee last considered House Bill 181 on December 13, 2023, and a vote has not yet been scheduled. On March 28, 2024, the Senate introduced SB580, a companion bill.
April 22, 2024
Labor and Employment
In the Know Series - Labor & Employment Law Changes in New Jersey
Stay Ahead of the Curve with Key Insights from Our L&E Team New Jersey continues its expansion of workplace legislation, necessitating close attention from employers statewide. Stay ahead of the curve with our overview of the latest employment-related updates impacting employment practices in the Garden State. NJ-WARN Act: On January 10, 2023, Governor Phil Murphy signed a bill (“NJ WARN”) that significantly expands liability with respect to certain terminations of employment in the state of New Jersey, effective April 10, 2023. The NJ WARN law was previously adopted in 2020 but its effectiveness was delayed as a result of the COVID-19 pandemic. The law applies to employers that employ 100 or more employees, including part-time employees. If the employer terminates 50 or more employees (including part-time employees) throughout the State of New Jersey (generally over 90-day period), then NJ is applicable and an employer must provide 90 days’ advance written notice of such termination. In addition, if NJ WARN is applicable, then NJ WARN requires mandatory severance of one week of pay per year of service, and this severance may not be waived without approval from a court of the Commissioner of the NJ Labor and Workforce Department. If the 90 days’ advance notice is not provided, then in addition to the requirements described above (including to pay the employees for the 90-days), severance of four weeks’ pay per affected employee is required. This is one of the most restrictive mini-WARN Acts in the nation. Temporary Workers’ Bill of Rights: Effective May 7, 2023, temporary staffing agencies and their clients must follow the New Jersey Temporary Workers’ Bill of Rights’ notice and antiretaliation provisions. Child Labor Law: Effective June 1, 2023, New Jersey’s child labor law was amended to require that minor register with the New Jersey Department of Labor and Workforce Development. Additionally, the amendment repealed the parental consent requirements for most exemptions from restrictions on working time.
April 19, 2024
Labor and Employment
In the Know Series - Labor & Employment Law Changes in New York
Stay Ahead of the Curve with Key Insights from Our L&E Team As the new year commences, so do changes in New York's employment laws, bringing both challenges and opportunities for employers. Stay informed and proactive with our comprehensive summary of the latest updates affecting employment practices in the Empire State. Accommodations for Nursing Mothers: Effective June 7, 2023, requirements for private employers now match those of state employers. Employers must ensure “that pumping spaces are convenient and private, as well as include seating, access to running water and electricity, and a working space,” and employers must develop and implement a written policy for these rights. Warehouse Worker Protection Act: Effective June 19, 2023, The Warehouse Worker Protection Act was amended to alter several provisions regarding definitions, notice, recordkeeping, employees’ rights to record inspections, retaliation, and enforcement. The Warehouse Worker Protection Act applies to employers with over 100 employees at a single warehouse in New York, or over 1,000 employees in warehouses across the state. Finally, employers must provide each employee with production quotas within 30 days of June 19, 2023, or upon hire.
April 18, 2024
Labor and Employment
In the Know Series - Labor & Employment Law Changes in Maryland
Stay Ahead of the Curve with Key Insights from Our L&E Team Employers in Maryland face new challenges and opportunities as recent updates to employment laws come into effect. These legal developments will continue to impact the workplace in 2024 and beyond. Understanding these changes is essential for maintaining compliance and fostering a positive workplace environment. Here's a snapshot of the latest developments in Maryland's labor landscape. Recreational Marijuana Legalization: Effective July 1, 2023, Maryland has legalized recreational marijuana use under Maryland Constitution Article XX, § 1. Maryland has not yet clarified related protections for employees using recreational marijuana. Noncompete Wage Threshold: Maryland has amended its Labor and Employment Code § 3-716 to prohibit employers from including a noncompete provision in an employment contract with an employee earning less than or equal to 150% of Maryland’s minimum wage. This law took effect on October 1, 2023. Additionally, for any agreements entered into starting July 1, 2025, noncompete provisions are banned for veterinary and health care professionals earning $350,000 or less in total compensation. For those earning more, any noncompete restrictions may not exceed 1 year and 10 miles. Paid Family and Medical Leave Contributions: Maryland again delayed the date that the Maryland Paid Family and Medical Leave Law becomes effective. The law will require covered employers to make contributions beginning on July 1, 2025 to fund paid family and medical leave benefits, accessible to employees beginning July 1, 2026. Among other changes, recent amendments to the law set the total contribution rate, provide that employees cannot be required to use certain paid leave while receiving program benefits, specifies that only employees who perform employment services in Maryland are eligible for benefits, authorizes employers to receive information about employee claims, and add “domestic partner” to the covered list of family members. Salary Posting Requirement: Beginning October 1, 2024, employers will be required to include wage ranges, benefits and any other compensation in their job postings for jobs that are physically performed, at least in part, in Maryland, employers will be required to include wage ranges, benefits and any other compensation in their job postings for jobs that are physically performed, at least in part, in Maryland. Military Status is Now A Protected Characteristic: Military status (meaning a member of the uniformed services or reserves, as well as being a dependent of such a member) will be added to the list of protected characteristics under Maryland’s anti-discrimination law beginning October 1, 2024. Hiring Preference for Military Spouses: Beginning July 1, 2024, the spouse of a full-time active member of the uniformed services may be granted a preference in hiring or promotion. Presently, under Maryland law, employers can offer a preference in hiring or advancement to a qualified veteran (defined as someone who received an honorable discharge or certificate of satisfactory completion of uniformed service), along with the partner of a qualified veteran with a service-connected disability or the surviving partner of a deceased qualified veteran.
April 17, 2024
Labor and Employment
In the Know Series - Labor & Employment Law Changes – Federal
Stay Ahead of the Curve with Key Insights from Our L&E Team Now that the first quarter is behind us, employers across the nation must navigate changes in federal labor and employment regulations. Our team has compiled a comprehensive overview of the latest updates at the federal level, providing insights to help you stay compliant and proactive in managing your workforce. While not updates to the law, notable issues are below: With increased scrutiny on the ERC, the Service is starting to send out letters denying the credit. We anticipate it will send letters to employers who deserve the credit. Misdirected payroll tax deposits by payroll companies have increased, particularly where the payroll company handles payroll for related companies. Because they involve payroll taxes, the Service is particularly aggressive in its collection efforts. The quicker the client lets us know, the easier (and quicker) it is to resolve. ACA Issues: companies are receiving deficiency notices for failure to provide MEC. Most notices now are for the 2020 tax year. It is important for employers to understand that Treas. Reg. § 54-4980H-5((e)(2)(ii) does not define whether an offer of coverage is affordable. It simply provides a safe harbor. IRC § 36B(c)(2)(C)(i) determines whether an employer’s offer of coverage is affordable, which means even if coverage does not meet the safe harbor, it still may be affordable, so the employer avoids a penalty. We have obtained penalty abatements for several clients on this issue. Employer-Sponsored Healthcare Plans - The Next ERISA Fiduciary Duty Battlefield: With the issuance of much awaited final regulations, DOL has made clear that ERISA fiduciary duties apply with equal force to health and welfare benefit plans. Plaintiffs’ lawyers are actively looking for plaintiffs who are participants in employer-sponsored plans, particularly following the recent court decision regarding Johnson & Johnson’s healthcare plan. As in many areas, the best offense is a strong defense, which begins with companies implementing a health and welfare benefits committee to take a much more active role in the selection and negotiation of health plan benefits and documenting this process We have guided many clients on how to organize and structure health and welfare benefit committees.
April 15, 2024
Labor and Employment
In the Know Series - Labor & Employment Law Changes in Delaware
Stay Ahead of the Curve with Key Insights from Our L&E Team Delaware joins the ranks of states ushering in updates to employment legislation this year. Now that the first quarter is behind us, it is crucial for construction industry employers in the First State to stay informed about these changes to ensure compliance and mitigate potential risks. Here is a brief summary of some of the key updates affecting construction industry employers in Delaware. Paid FMLA: This passed and was signed a year or more ago and rolls out a major change for Delaware employers with 10 or more employees. Far too detailed to explain in depth here but suffice it to say that this creates a system similar to unemployment, where employers pay into a fund for their employees (partially paid by the employee, partially paid by the employer) and employees will eventually be able to tap the fund for qualifying FMLA events. While similar to federal FMLA the “paid” component creates a host of employer obligations. Wage Theft: This was passed a year or so ago and allows the State to pursue employers criminally for “wage theft” from their employees. To my knowledge this has not been tested yet, but our highly aggressive DOL has only to find a good test case and I’m sure we’ll see it in action. Recreational Marijuana: The bill was allowed to become law without the Governor’s signature (he opposed it and vetoed the version that passed in 2022). At present the agency tasked to administer the law is preparing draft regulations and creating the infrastructure for licensing in cultivation, testing, manufacture, and retail sale of marijuana in Delaware. Employers may still prohibit use on company property/time and conduct testing. This is distinct from medical marijuana, which has been legal here for over a decade. Joint and Several Liability: Efforts are underway in the General Assembly to make upstream contractors, prime and general contractors, liable for violations of wage and contractor registry statutes. This creates a tremendous burden on upstream contractors to “police” those working under them, even second and third (or greater) tier subcontractors.
April 11, 2024
Labor and Employment
Ask Sarah: Handling Extended Employee Absences Effectively
Dear Sarah: Help! I have an employee who has been out of work for twenty weeks. He has an “expected” return to work date, but we have not received anything definitive. Because of his absence, business is suffering, and I need to find someone to take over his job duties. What am I legally permitted to do here!? — Frustrated & Confused HR Rep Believe it or not, encountering this issue is not uncommon. When an employee requests additional time off beyond their twelve-week Family Medical Leave Act (FMLA) entitlement (assuming FMLA applies to that employer), it often leaves employers feeling perplexed. Accommodating a disabled employee under the Americans with Disabilities Act (ADA) can pose significant challenges for employers. If the employee's limitations prevent them from fulfilling essential job duties, granting an unpaid leave of absence may be deemed a reasonable accommodation. However, relying solely on unpaid leave creates staffing challenges for employers. Nonetheless, if other alternative accommodations are not feasible, unpaid leave should be considered an option. Reasonable accommodations for a qualified individual with a disability — defined as someone who, with or without reasonable accommodation, can perform the essential functions of their job — may involve various measures, including: Eliminating non-essential job duties Modifying job processes Providing supportive aids to assist the employee Adjusting schedules to accommodate needs Offering light duty positions if available Facilitating transfers to open positions Granting an unpaid leave of absence, among other options While an employer is not obligated to provide the exact accommodation requested by an employee, it is required to provide a reasonable accommodation that enables the employee to effectively perform essential job functions. If implementing the only feasible reasonable accommodation would result in substantial difficulty or expense for the employer or fundamentally alter the nature of the job, it may be deemed an undue hardship, exempting the employer from providing it. The threshold for defining undue hardship may vary based on the employer's size and resources, but meeting this standard can be particularly challenging in certain circumstances. The Equal Employment Opportunity Commission's (EEOC) ADA guidance suggests that considering unpaid leave as a reasonable accommodation is wise for employers. While EEOC guidance lacks the weight of law, courts often find it persuasive due to the agency's role in ADA enforcement. The duration of leave an employer must grant is not explicitly defined and should be assessed on a case-by-case basis. The EEOC and numerous federal courts assert that an indefinite leave of absence without a reasonable estimate of the return-to-work timeframe may constitute an undue hardship and is not mandatory. However, situations where an employee's medical provider recommends an extended absence before the employee returns to the job pose challenging and context-specific questions influenced by factors such as the nature of the employer's business, the employee's role, and the anticipated duration of absence. While definitive answers may not exist for every scenario, if the requested leave has a defined duration and supporting medical documentation suggests it will enable the employee to return to work, employers retain the right to deny it if granting the leave would unduly burden the business. Furthermore, even if a specific leave initially seems manageable, circumstances may change over time, emphasizing the importance of requiring thorough documentation throughout the leave period. For example, requesting a note from the treating physician specifying an estimated return-to-work date and asking the medical provider to opine on the medical rationale for the leave may help make the leave process more transparent and facilitate the employee's return. Additionally, gathering this information could help employers apply the undue hardship analysis in a manner that is advantageous to its operations. Handling successive leave requests cautiously and seeking consultation before making decisions are crucial practices to uphold. In conclusion, navigating extended employee leaves beyond the FMLA entitlement can be daunting for employers, especially when accommodating disabled employees under the ADA. While unpaid leave may be a reasonable accommodation, it can pose operational challenges. Employers must explore alternative accommodations while considering undue hardship factors, such as significant difficulty or expense. The EEOC's guidance on unpaid leave underscores its importance as a potential accommodation, albeit without a specified duration. However, indefinite leaves without a return-to-work timeframe may constitute undue hardship. Employers should carefully assess each situation, document medical rationales, and seek legal advice to make informed decisions. If you're facing similar HR dilemmas or need legal guidance on employment matters, don't hesitate to contact me for assistance. Reach out today to ensure compliance with ADA regulations and protect your business's interests. Blog Disclaimer: The information provided in this blog is for general informational purposes only and should not be considered legal advice. Consult a qualified attorney for advice on specific legal issues.
April 10, 2024
Labor and Employment
In the Know Series - Labor & Employment Law Changes in California
Stay Ahead of the Curve with Key Insights from Our L&E Team Now that the first quarter is behind us, all California employers should ensure that they are aware of and are in compliance with the new 2024 California employment laws. Our team has compiled a concise overview of these changes to keep you informed and prepared for compliance. The west coast was fairly active this year and the following are the major changes in the law: Effective January 1, 2024: State-mandated sick leave increases to 5 days. If the client has PTO, the analysis may be a math problem. Also, remember that several California cities have their own sick leave laws that require more than 5 days of sick leave. All employers, regardless of size, must allow up to 5 days of reproductive loss leave (for failed adoption, failed surrogacy, miscarriage, stillbirth, or an unsuccessful assisted reproduction). This is in addition to family medical leave. The state has codified the fact that non-competes are void, with the exception of the sale of goodwill when a business is sold as set forth in Business and Professions Code § 16601. One new statute states they are void regardless of where signed (even outside the state). Another statute requires employers with employees who have signed non-competes to notify them by February 14, 2024, that the non-compete provision is void. Marijuana use becomes a protected basis under the Fair Employment and Housing Act. Employees cannot use or be under the influence at work, but an applicant cannot be denied employment if they test positive for marijuana. The regulations regarding criminal background checks were revised requiring the employer to conduct a detailed individualized assessment before denying an applicant employment. The minimum wage is increasing to $16.00/hour on January 1, 2024, which means exempt employees need to earn a minimum of $66,560 annually and $5,546.67 monthly in order to be exempt. Effective April 1, 2024 The minimum wage for fast food workers rises to $20/hour. Effective July 1, 2024: All employers will be required to have a workplace violence plan. Similar to an Injury & Illness Prevention program if you are familiar with those plans – in other words, it needs to be in writing, employees need to be trained and it will take some effort to be in compliance.
April 5, 2024
Labor and Employment
Employment Law Update: Delaware Supreme Court Takes a Stand on Restrictive Covenants
In Cantor Fitzgerald, L.P. v. Ainslie, C.A. No. 9436 (Del. Jan. 29, 2024), the Delaware Supreme Court signaled to its lower courts that many well-drafted restrictive covenants remain valid and enforceable. The Cantor Court unanimously reversed the Delaware Chancery Court’s ruling, which had rejected as unenforceable a financial services company’s limited partnership agreement clause under which a limited partner’s equity is forfeited if the partner violates non-competition provisions. The decision is noteworthy because the Court of Chancery has increasingly demonstrated a willingness to strike down overly broad non-compete agreements, accompanied by a growing reluctance to revise (or “blue pencil”) agreements by narrowing their terms. The Court of Chancery held that the non-compete and non-solicitation provisions contained in the limited partnership agreement, which had a worldwide geographic scope, were geographically overbroad and unenforceable. Additionally, the Court of Chancery found the definition of “Competitive Activity” overbroad due to its inclusion of “any Affiliated Entity,” reasoning that “it is highly possible that a partner could unknowingly engage in a Competitive Activity.” 2023 WL 106924, at *18. Notably, the court declined to “blue pencil” the provisions to make them more reasonable. The Court of Chancery then focused on the forfeiture-for-competition provision triggered by “Competitive Activity.” The Court of Chancery considered whether it should evaluate the forfeiture-for-competition provision (which it called a “Conditioned Payment Device”) for reasonableness or apply contractual deference under the “employee choice” doctrine. The court determined that “forfeitures do not enjoy this Court’s contractarian deference” and conducted a reasonableness analysis. Id. at *24. Although the court applied a “lenient” reasonableness test, it nonetheless determined that the Conditioned Payment Device was unreasonable and invalid, given the broad definition of “Competitive Activity,” the lack of an established legitimate business interest for the broad restrictions, and the four-year temporal scope, which extended beyond the temporal scope of the contractual non-competition and non-solicitation provisions. Id. at *26. The Supreme Court disagreed, highlighting the distinction between non-competition clauses for former employees and those for former partners. It ruled that partnership agreements could include consequences not typical in standard contracts, like penalties and forfeitures. While the Delaware Supreme Court’s decision was specific to limited partnership agreements, employers should still take note. Put another way: while employment-based non-compete clauses are still subject to a reasonableness standard, the tides in Delaware may be shifting back towards the employer-friendly interpretation of restrictive covenants, at least for now (and until there is more clarity surrounding the FTC’s final rule). Moreover, such provisions may not be enforceable in specific industries, such as law firm partnership agreements where ethics rules may be implicated due to a chilling effect on a client’s right to select counsel. Furthermore, following the Cantor ruling, the Delaware Supreme Court accepted an interlocutory appeal regarding a Chancery Court ruling in Sunder Energy, LLC, v. Jackson, C.A. No. 455, 2023 (Del. Jan. 25, 2024). This case concerns the denial of a preliminary injunction to enforce a non-compete provision in a limited liability company agreement and a refusal to engage in blue-penciling. The Delaware Supreme Court’s stance on the matter remains to be determined. Given the current state of Delaware jurisprudence on restrictive covenants, employers must carefully consider any restraints on employee mobility. They should also give similar consideration to the choice of law and forum selection provisions contained in employment agreements. Thank you for reading our legal update- please get in touch with us if you have any questions or require any assistance. Sarah Goodman can be reached at sarah.goodman@offitkurman.com or 267-338-1319, and Charles McCauley can be reached at cmccauley@offitkurman.com or 484-531-1712.
February 27, 2024
Labor and Employment
SBA To Require PPP Borrowers of $2 Million or More to Provide Documentation to Support Certification of Necessity Due to Economic Uncertainty
This blog post may contain information that was accurate at the time of publication but could become outdated over time. We strive to provide relevant and timely content, but circumstances, facts, and data can change. Users are encouraged to verify the current status of any information presented and seek updated guidance where necessary. Originally posted on 11/6/2020, no content changes. The U.S. Small Business Administration (“SBA”) recently posted a notice seeking comment on draft Loan Necessity Questionnaire Form 3509 (For-Profit Borrowers) and Form 3510 (Non-Profit Borrowers) to be used by the SBA to review Paycheck Protection Program (“PPP”) forgiveness applications. The SBA claims that the purpose of the necessity questionnaire is to facilitate the collection of supplemental information used by SBA loan reviewers to evaluate the good-faith certification that borrowers made on their PPP Loan Application that economic uncertainty made the loan request necessary. The completed necessity questionnaire will be due to the PPP lender within ten business days of receipt from a borrower’s lender. These necessity questionnaires present serious concerns for the 29,000 non-profit and for-profit businesses that received PPP loans in excess of $2 Million. The necessity questionnaires contain many questions requiring disclosure of confidential financial and proprietary information. It is not clear whether responses to the questionnaire will be required disclosures with a loan forgiveness application or whether the responses will be required in advance of, or without, submission of a loan forgiveness application. The necessity questionnaire has two parts, a “Business Activity Assessment” and a “Liquidity Assessment.” Business Activity Assessment A comparison of the gross revenue for the first quarters of 2019 and 2020, including supporting documentation. Borrowers must provide information about how COVID-19 has temporarily shut down, caused a reduction in operations, or resulted in additional capital outlays of a borrower. Liquidity Assessment Borrowers are required to provide documentation regarding the amount of liquidity on hand when the PPP loan application was submitted. Borrowers are required to provide documentation regarding distributions and dividends paid to owners during the covered period. Borrowers are required to provide documentation regarding all debt prepayments and capital expenditures made during the covered period. Borrowers are required to provide documentation regarding the amounts paid to owners in excess of $250,000 annualized during the covered period. If privately held, the borrower is required to provide its book value on the last day of the quarter preceding its loan application. Borrowers are required to disclose whether they received any other CARES Act benefits, excluding tax benefits. The necessity questionnaire includes certifications regarding the accuracy of responses, and alarmingly warns that false statements will result in criminal penalties. If you are a borrower with a PPP loan in excess of $2 Million, you need to consult your legal counsel immediately. The information sought will be used by the SBA to determine whether PPP borrowers were initially eligible for the PPP loans they received due to the category of business, access to capital, or ownership by a foreign entity, among other reasons. For borrowers eligible for a PPP loan, aside from the necessity issue, using hindsight to review the actual impact on the PPP borrower after receipt of PPP funds due to business closures, losses in revenue, and effects on employees is patently unfair. Further, no formal SBA guidance was available on the PPP application date. The SBA urged all businesses to apply quickly to avoid losing out on the opportunity to receive PPP funds. Given the uncertainty with how the SBA will use this information, the confidential and proprietary nature of the information sought (which may be publicly available), PPP borrowers should consult with counsel immediately and before submission of a loan forgiveness application. Borrowers may be best served by waiting as long as possible before seeking loan forgiveness (if ever) to allow for SBA and lender guidance to be issued, legal challenges and resolution, and obtain information from lenders as to how the information will be used.
November 6, 2023
Labor and Employment
Noncompete Update: Bans, New Limitations and Restrictions
Employers should remain vigilant, adapt their practices, and explore alternative measures to protect their interests in the face of shifting legal frameworks and heightened scrutiny of non-compete agreements. The Legal Intelligencer By Sarah R. Goodman In today’s rapidly changing business environment, the utilization and enforcement of noncompete agreements and restrictive covenants have become central to maintaining a competitive edge. As businesses adapt to new economic, technological, and workforce dynamics, the legal frameworks surrounding these agreements are also evolving. Notably, two federal agencies are actively working to diminish the prevalence of noncompete agreements. An increasing number of states are joining the ranks of jurisdictions that either prohibit or place significant restrictions on noncompetes, including many nonsolicitation agreements, by enacting comprehensive bans or introducing new limitations. Meanwhile, certain states, while not entirely banning noncompetes, have introduced fresh restrictions. In addition, courts are recognizing novel legal theories for challenging these agreements. Nevertheless, there are still scenarios in which employers can utilize noncompete agreements to safeguard their proprietary information and defend against unfair competition. However, there are formidable new obstacles to overcome, and the regulatory landscape may change in the near future. Recent Key Regulatory Changes On Jan. 5, 2023, the Federal Trade Commission (FTC) introduced a proposed rule aimed at banning most noncompete agreements in the United States on the basis that they constitute unfair methods of competition. The FTC’s proposal attracted significant attention and the public comment period closed on March 20. The FTC has yet to issue a final rule or provide a timeline for doing so; observers closely following the proposed ban do not anticipate a final FTC rule until April 2024 at the earliest. When (and if) the FTC issues the final rule, it will be subject to numerous court challenges by a variety of private entities, including the U.S. Chamber of Commerce. It is unclear whether the final rule will survive attack. Basis for attack include the FTC Act’s own limitations on the FTC’s authority vis-à-vis the history of Section 6(g) and unfair competition; the U.S. Supreme Court’s aversion to upholding federal agency rules when scrutinized under the “major questions” doctrine; the rule itself being an improper delegation of legislative authority under the nondelegation doctrine; and the everchanging political landscape. Despite these challenges, federal agencies are increasingly utilizing new methods to challenge noncompete agreements. This includes an increasing number of antitrust claims targeting traditional noncompetes (and not just no-poach agreements), along with intra-agency cooperation between the FTC, the U.S. Department of Labor, and the National Labor Relations Board (NLRB) to help regulate noncompetes. The NLRB’s general counsel, Jennifer Abruzzo, has taken her own stand on noncompete agreements. On May 30, Abruzzo issued a memorandum expressing her view that most post-employment, noncompete and nonsolicitation agreements violate the National Labor Relations Act (NLRA). In the memorandum, addressed to all regional directors, officers-in-charge and resident officers, Abruzzo asserted that these agreements impede the exercise of Section 7 rights under the NLRA for nonsupervisory employees. She opined that, with few exceptions, the offering, maintenance, and enforcement of such agreements likely violate Section 8(a)(1) of the NLRA. While the NLRB itself had not yet ruled on Abruzzo’s position, it could issue a ruling soon that broadly prohibits non-competition (and nonsolicitation) agreements. Jurisdiction-Specific Challenges to Noncompetes The landscape has also been altered by new state laws. Five states, namely California, Colorado, Minnesota, North Dakota and Oklahoma, have instituted comprehensive bans on virtually all noncompetes with very limited exceptions, such as for certain business sales. California has strengthened its existing noncompete ban, granting employees the ability to obtain attorney fees for successful challenges. Several other states are considering similar laws. On June 20, the New York State Legislature passed a bill banning post-employment noncompetition agreements. While Gov. Kathy Hochul has yet to sign the bill, she has until the end of the year to do so. States that do permit noncompetes are enacting broader restrictions. Over 20 states prohibit various categories of noncompetes, including laws that ban all no-poach agreements and all traditional noncompetes for employees earning less than a specific salary threshold. A growing trend is legislation requiring that employers give individuals advance notice (or a “consideration period”) before the employee can sign a restrictive covenant agreement. Employers in all states, even those without specific laws, must satisfy a common law test for enforcing a noncompete, demonstrating that it is necessary and narrowly tailored to protect a legitimate business interest, typically in terms of geographic scope and duration. Employer Response: Stay Alert and Be Proactive Employers currently using noncompete agreements should assess their current approach and formulate contingency plans for a future where noncompetes might become illegal. While it may take time for a broad noncompete ban to take effect, existing agreements may not be “grandfathered” in or exempted, necessitating alternative safeguards for proprietary information and competitive defense. It is also time to consider other options for protecting business interests. This includes bolstering confidentiality agreements to address gaps left by noncompete bans. Well-drafted confidentiality agreements, coupled with remedies for violations, can offer effective protection for proprietary information. Existing laws like the federal Defend Trade Secrets Act and state laws can serve as alternatives to noncompetes in safeguarding trade secrets. Employers should ensure they treat key proprietary information as trade secrets and consider including arbitration clauses and other provisions for securing relief in their agreements. Modifying employee compensation structures may also discourage unfair competition. For example, introducing longevity bonuses and seniority-based pay raises may deter departures of senior employees who pose a competitive threat. Improving training can also help fill gaps left by noncompete bans. When pursuing mergers, acquisitions, or other deals, account for the evolving legal landscape. Ensure that agreements provide adequate protection in the event of noncompete bans or increased restrictions. Employers should also begin utilizing noncompetes strategically, rather than applying a one-size-fits-all approach to all employees. Overly broad usage may invite scrutiny and threaten the enforceability of truly important agreements for key employees. In other words: treat noncompetes as a precise tool, not a weapon of mass destruction. Employers should remain vigilant, adapt their practices, and explore alternative measures to protect their interests in the face of shifting legal frameworks and heightened scrutiny of noncompete agreements. Reprinted with permission from the October 23, 2023, edition of The Legal Intelligencer © 2023 ALM Global Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or asset-and-logo-licensing@alm.com.
November 3, 2023
Labor and Employment
In a 2019 Decision, the NLRB Establishes a (Not So) New Independent Contractor Test
Originally posted on 2/18/2019, content updated on 10/13/2023 In 2019, the National Labor Relations Board (NLRB) revised its independent contractor test, overturning a controversial standard established in 2014. The decision was a federal attempt to clarify the legal distinction between employees and independent contractors. Although many employers struggle to differentiate the two, one category is afforded certain rights and protections, while the other is not. Under the National Labor Relations Act (NLRA), employees are permitted to unionize; independent contractors are not. Similarly, contractors are not entitled to the same protection from unfair labor practices employees receive. Independent contractors also must pay their own income taxes, Medicare, and Social Security. Traditionally, the NLRB has used a 10-factor, common-law test to guide every determination about whether a worker should be classified as an employee or independent contractor under the NLRA. Those factors are as follows: The extent of control which, by the agreement, the master may exercise over the details of the work. Whether or not the one employed is engaged in a distinct occupation or business. The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision. The skill required in the particular occupation. Whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work. The length of time for which the person is employed. The method of payment, whether by the time or by the job. Whether or not the work is part of the regular business of the employer. Whether or not the parties believe they are creating the relation of master and servant. Whether the principal is or is not in business. At the core of this test is the question of “entrepreneurial opportunity”: the measure of an individual’s ability to develop and manage a business on their own terms. In its decision in FedEx Home Delivery, 361 NLRB No. 55 (2014), the Board amended this long-standing system. First, the Board placed greater emphasis on “actual, not merely theoretical, entrepreneurial opportunity” and what effect an employer may have on a worker’s ability to pursue the opportunity. Second, the Board proclaimed it would start considering any evidence suggesting a company controlled a contractor’s capacity to operate an independent business. Together, these elements deemphasized the entrepreneurial opportunity question and placed a greater burden on companies to prove their workers were properly classified—that purported independent contractors were not, in fact, employees. On January 25th, 2019, the NLRB reversed its previous decision and returned to its pre-FedEx test. The news should come as a relief to employers who felt over-encumbered by the 2014 rule. Regardless, the decision does not erase the risk of a worker misclassification claim. Note that the NLRB considers the merits of every claim individually and that no single factor automatically sways the Board’s determination. If you have any questions about worker misclassification or any other Labor and Employment Law matter, please contact Richard Romeo at rromeo@offitkurman.com or 347.589.8547.
October 13, 2023
Labor and Employment
Gender Identity and Expression Are Now Protected Characteristics Under New York State Law
Originally posted on 03/12/2019, content updated on 10/11/2023 On Sunday, February 24, 2019, the Gender Expression Non-Discrimination Act (GENDA) went into effect in the state of New York. The law safeguarded transgender and gender nonconforming people from discrimination by designating gender identity and gender expression as protected characteristics under New York’s human rights and hate crimes laws. Other protected characteristics in New York include sex, sexual orientation, race, religion, and disability status. In January 2019, former Governor Andrew Cuomo signed GENDA into law, following years of advocacy from transgender activists and other LGBTQ community leaders. GENDA prohibits gender identity and expression-based discrimination in the areas of employment, housing, and public accommodations. It is not the first state law to provide such protections. Eighteen other states, as well as the District of Columbia, have similar statutes in place. As of this writing, no analogous federal law exists. Multiple studies have shown that transgender and gender-nonconforming individuals face disproportionate rates of discrimination and harassment in the workplace. According to the United States Transgender Survey, for instance, 30% of transgender and gender nonconforming workers said they had been terminated, denied a promotion, or harassed at work due to their gender identity. Employers in New York should review and, if necessary, revise their policies and employee handbooks to conform to the new law. Best practices include the following: Ask employees about their preferred pronouns and use those pronouns in every form of communication. Allow employees to use their chosen names (even if a legal name change has not been completed) in email addresses, identification cards, and other organizational documents. Ensure every employee has access to a restroom that conforms to their gender identity—and consider creating gender-neutral, single-occupancy facilities or stalls. Adopt gender-neutral language in any dress code policy, and remove any language that identifies an item of clothing with a specific gender. To ensure GENDA compliance, employers should speak to their legal advisors as soon as possible. If you have any questions about this law or any other Labor and Employment Law matter, please contact me at rromeo@offitkurman.com or 347.589.8547.
October 11, 2023
Labor and Employment
New York City Employers: Do You Know All the Labor and Employment Laws that Apply to Your Business?
Originally posted on 06/11/2019, content updated on 10/09/2023 Business owners in and around New York City have a greater number of legal obligations than do employers in almost every other region in the United States. Why? Because New York City business owners stand at the intersection of three sets of rigorous labor and employment laws. Federal Laws that Apply to Business Owners in and Around New York City Regardless of their location, size, or industry, all employers in the US must follow certain labor and employment laws. These include, but are not limited to, the following: The Occupational Safety and Health Act (OSHA), which requires employers to maintain safe working environments. Title VII of the Civil Rights Act, which protects workers from discrimination on the basis of race, color, religion, sex, age, national origin, and other specified characteristics. The Americans with Disabilities Act (ADA), which prohibits discrimination on the basis of disability and obligates employers to provide reasonable accommodations for people with disabilities. The Family Medical Leave Act (FMLA), which requires certain “covered” employers to provide employees with unpaid leave under certain qualified circumstances. Other federal labor and employment laws that may impact your business include regulations related to employee benefits, unions, family and medical leave, veterans, and more. State Laws that Apply to Business Owners in and Around New York City In addition to federal laws enforced by the Department of Labor, New York employers face a large number of state-level regulations and requirements in categories such as the following: fair employment equal pay salary history questions overtime background checks healthcare and benefits pregnancy accommodations paid family leave and other paid time off whistleblower protections smoke-free workplaces The state’s equal employment opportunity (EEO) rules are broader as well. Employers may not discriminate against victims of domestic violence, on the basis of an individual’s sexual orientation, or—as codified by the recent passage of GENDA—on the basis of gender identity and expression. Local Laws that Apply to Business Owners in and Around New York City New York City has a wide array of workplace laws, many of which reach beyond state and federal rules in areas such as the following: sexual harassment and discrimination in the workplace (read about the “Stop Sexual Harassment in NYC Act” here) paid sick leave employees’ rights to organize safe and healthy workplaces Also in place in New York City are various industry-specific regulations, creating additional requirements for fast food establishments, groceries, apparel makers, nail salons, construction firms, and other particular kinds of businesses. Navigating Your Many Legal Requirements The sheer number of laws out there can be dizzying for business owners—and this overview is far from exhaustive. Moreover, if you are located in Nassau, Suffolk, or Westchester Counties in New York, or in Bergen County in New Jersey, there may be additional laws in those particular counties to keep in mind. To stay on top of the myriad rules that apply to your business, you will need more than a simple list of what you can and cannot do. As a business owner, you need to make sure to a) comply with all applicable laws, and b) understand the nuances of and interactions between those laws. For example, you can ask a potential employment candidate about a felony conviction in New York State, but in NYC, you can only ask that question after a conditional offer of employment has been made. In either case, you may not use that felony conviction to deny the applicant the job unless that conviction relates to the job. Say you are hiring someone as a school bus driver, and they were arrested for fraud and embezzlement. As long as they will not have any access to money in their role, you might have a problem denying that person the school bus job even in light of their past conviction. This might not be the case, however, if that prior conviction was for sexual offenses against children. In any event, if the applicant is denied employment based upon that conviction, the employer must provide a written statement explaining the reasons for this denial within 30 days of the applicant’s request. These are critical concerns for any employer, especially any small to mid-sized company. A single lawsuit brought under federal, state, or local regulations can have catastrophic effects on the future of your business. Until next time, if you have any questions about the rules that apply to your business, or any other Labor and Employment Law matter, please contact me.
October 9, 2023
Labor and Employment
Employers, Know Your FLSA Basics
Originally posted on 07/5/2019, content updated on 10/05/2023 Are you aware of your obligations under the Fair Labor Standards Act (FLSA)? Do you understand the differences between the FLSA and similar state statutes? A surprisingly large number of decision-makers in established businesses are unable to sufficiently answer these questions. That can be a serious problem. Uncertainty around labor laws can expose a company to numerous legal and financial risks, including lawsuits and Department of Labor investigations that may result in the company owing back wages plus civil penalties and even attorneys’ fees. What Is the FLSA? The FLSA is a federal statute that guarantees “non-exempt” employees the right to a minimum hourly wage, as well as time-and-a-half “overtime” compensation for any hours worked in excess of 40 hours in any given week. Since its passage in 1938, the law has been amended numerous times, but some form of minimum wage and overtime provisions have generally remained in place. However, there are also many state and local minimum wage and overtime laws in place and if those laws provide greater benefits or protections to workers than does the FLSA, then in such cases, employers must comply with those more stringent state and local laws. First, under certain circumstances and in certain industries and trades, not all employees must be paid an hourly wage equal to the minimum wage. A worker who “customarily and regularly” earns a certain amount of tips each hour, and that amount varies by industry and geographic location in New York State, may be paid an hourly wage less than the New York minimum wage, so long as the employee’s total compensation is equal to or greater than what the employee would make otherwise. Second, some employees, such as executives and salespeople, may also be exempt from overtime pay under the FLSA. Employers must be careful when classifying workers as exempt or non-exempt, as the distinction is nuanced and multifaceted. Third, the FLSA is federal law. It applies to many businesses in the United States. However, employers must also follow wage and hour laws in any state and city in which they have employees—and state and local rules may hold businesses to different standards. For instance, New York’s minimum wage is higher than the federal minimum wage. In this and any other similar instances, the highest minimum wage applies. How Can You Avoid an FLSA Violation? FLSA violations can result in substantial damages for employers. Businesses that fail to properly pay their employees may face DOL penalties of tens of thousands of dollars, or even millions. To stay on the right side of the law, stick to the following practices: Properly classify every employee as exempt or non-exempt. Keep accurate records of how many hours your employees work each week. Make proper calculations for overtime. An experienced labor and employment attorney can help you understand your legal obligations, address any existing liabilities, and ensure compliance with the FLSA as well as state and city wage and hour laws. If you have questions about this or any workforce legal matter, please contact me. Until next time, if you have any questions about the rules that apply to your business, or any other Labor and Employment Law matter, please contact me.
October 5, 2023
Labor and Employment
New York’s Harassment and Discrimination Laws Just Changed—Again. Is Your Business Up to Date?
Originally posted on 09/16/2019, content updated on 10/03/2023 Less than a year after substantial changes were enacted in 2018, New York State laws concerning harassment and discrimination in the workplace are changed once again. An omnibus bill amended various provisions of the New York State Human Rights Law (NYSHRL), the General Obligations Law, the Civil Practice Law and Rules, and the New York Labor Law. Continue reading for an overview of what the new laws entail, along with their effective dates. Expanded Coverage for Employers and Workers Small businesses, take note: NYSHRL now applies to all private employers. That means every person or entity, regardless of size, must comply with state-level harassment prevention regulations, including annual harassment prevention training. The statutes also broadened the scope of worker protections. Domestic workers, such as housekeepers and gardeners, are now covered under laws prohibiting employment discrimination. Non-employees, including independent contractors, subcontractors, vendors, consultants, and other service providers, are similarly protected from any unlawful discriminatory practices—not only sexual harassment. Effective date: Already in effect as of October 11, 2019 New Sexual Harassment Prevention Policy Document Requirements Employers must now provide every employee with a written notice containing the employer’s sexual harassment prevention policy. This document must be provided at the time of hiring and once per year, during annual anti-harassment training. The policy should be available in English as well as any other language an employee identifies as their primary language. Employers need not attempt to craft such notices alone, as The New York Department of Labor (DOL) is responsible for preparing model sexual harassment prevention policy and training templates. If an employee requests a template in a certain language that is not available, the employer can provide the employee with the English-language notice. Employers will not be penalized for errors or omissions in any non-English forms created by the DOL. Effective date: Already in effect as of August 12, 2019 The End of the “Severe or Pervasive” Standard Previously, allegations of harassment or other forms of workplace discrimination needed to demonstrate “severe and pervasive” misconduct. The new laws remove this standard. Additionally, alleged harassment no longer needs to be “unwelcome.” The laws do stipulate, however, that “the harassing conduct [must] rise above the level of what a reasonable victim of discrimination with the same protected characteristic would consider petty slights or trivial inconveniences.” Effective date: Already in effect as of October 11, 2019 Faragher–Ellerth Defenses Thrown Out In New York and elsewhere, employers have often successfully avoided liability for harassment by using the so-called “Faragher–Ellerth” defense. The defense essentially reasons that employees should first report any incident internally, so that the employer can have the opportunity to resolve or remediate the issue before commencing any legal proceedings. New York’s new laws eliminate this defense. In other words, an employee no longer needs to file a complaint with their employer before taking the matter to court. Effective date: October 11, 2019 An Across-the-Board Ban on Mandatory Arbitration in Employment Agreements The New York laws enacted in 2018 prohibited employers from requiring mandatory arbitration to resolve sexual harassment claims. The amendments widened this to include all kinds of employment discrimination. Effective date: Already in effect as of October 11, 2019 Current Restrictions on NDAs Employers can no longer require, as a condition of the settlement of any employment discrimination claim, any terms or conditions which prohibit disclosure of the underlying facts and circumstances of the discrimination claim, unless such is the complainant’s preference. In that case, the complainant will have 21 days to consider that preference, and such confidentiality provisions must be memorialized in a separate writing signed by all parties. Additionally, for a period of seven days, the complainant shall have the right to revoke such confidentiality agreement, and such confidentiality agreement shall not become effective or enforceable until such revocation period has expired. Effective date: Already in effect as of October 11, 2019 Future Restrictions on NDAs Any provision in any contract between an employer and any employee or potential employee entered into after January 1, 2020, which prohibits the disclosure of factual information related to a future claim of discrimination is void and unenforceable unless such provision notifies the employee or potential employee that it does not prohibit him or her from speaking with law enforcement, the employee’s attorney, or any federal, state, or local agency that enforces employment discrimination laws. Effective date: Already in effect as of January 20, 2020 A Longer Statute of Limitations for Sexual Harassment The statute of limitations for sexual harassment claims has been extended from one year to three years after the date of the alleged harassment. The statute of limitations for all other forms of employment discrimination remains at one year. Effective date: Already in effect as of August 12, 2020 (applies to all claims filed after this date). Punitive Damages and Attorney Fees Under the amendments, the DOL and the courts can, where appropriate, in their discretion, issue an award of punitive damages in favor of an employee who prevails in an employment discrimination proceeding. Previously, New York Courts and the DOL had the discretion to award attorney fees to a prevailing party in employment discrimination proceedings. That discretion has now been removed as the amendments require the courts and the DOL to award attorney fees to a prevailing party in an employment discrimination proceeding. Note, however, in order for the employer to recover attorneys’ fees, the employer must make a separate motion to the court and must establish that the employee’s case was “frivolous”, meaning that it was commenced or continued in “bad faith” without any reasonable basis. Effective date: Already in effect as of October 11, 2019 Liberal Construction NYSHRL is “to be construed liberally for the accomplishment of the remedial purposes thereof, regardless of whether federal civil rights laws, including those laws with provisions worded comparably to the provisions of this article, have been so construed.” Exceptions and exemptions to the law “shall be construed narrowly in order to maximize deterrence of discriminatory conduct.” This language indicates that courts should interpret state harassment and discrimination laws as broadly as possible. The NYSHRL has an express purpose to protect those who have experienced harassment or other forms of discrimination. Effective date: Already in effect as of August 12, 2019 Next Steps Given that 2019 is the second consecutive year in which New York has amended the state’s harassment and discrimination laws, employers can reasonably assume that more changes will come along sooner rather than later. Future legislation will likely build on these amendments as well as GENDA; the act passed earlier this year that addresses discrimination related to gender identity and expression. With that in mind—not to mention the fast-approaching deadlines in 2019—employers should speak with legal counsel and develop proactive strategies as soon as possible. Looking for experienced, flexible guidance in navigating New York’s new laws? At Offit Kurman, we are well-equipped to adapt to the needs of businesses of all sizes. For instance, our firm makes it easy for small employers to pool together and conduct shared annual training on a cost-effective basis. Discover how we can help you and your organization, as well as the members of any association or local community you belong to. Learn more about our New York Labor and Employment Law services.
October 3, 2023
Labor and Employment
New York State Permanent Sick Leave
Originally posted on 07/24/2020, content updated on 09/29/2023 New York State enacted a permanent paid sick leave law on April 3, 2020, which took effect 180 days after the enactment, on September 30, 2020 (the “PSLL”). The PSLL adds Sec. 196-b to the N.Y. Labor Law. Under the PSLL, employees began accruing leave as of September 30, 2020, but employees could not begin to use accrued leave until January 1, 2021. Amount of Leave/Paid vs. Unpaid The amount of leave an employer is required to provide and whether it is paid or unpaid leave, varies based on the size of the employer’s workforce in any calendar year and the amount of net income in the previous tax year: Employers with four or fewer employees and net income of $1 million or less in the previous tax year are required to provide 40 hours of unpaid sick leave per calendar year. Employers with four or fewer employees and net income of greater than $1 million in the previous tax year are required to provide 40 hours of paid sick leave per calendar year. Employers with five to 99 employees must provide 40 hours of paid sick leave per calendar year. Employers with 100 or more employees must provide 56 hours of paid sick leave per calendar year. For the purposes of calculating the number of employees, a “calendar year” is defined as the 12-month period from January 1 through December 31. For the purposes of using and accruing leave, a “calendar year” means either January 1 through December 31 or any regular and consecutive 12-month period. Accrual and Frontloading: Leave must accrue at a rate of at least one hour per 30 hours worked; however, an employer may choose to provide employees with the entire amount of leave at the beginning of the year. An employer who chooses to frontload leave may not later reduce the amount of leave if the employee does not work sufficient hours to accrue the amount provided. Use of Sick Leave Reason for Leave: An employee may use sick leave for any one of the following reasons: mental or physical illness, injury or health condition of an employee or the employee’s family member (regardless of whether a diagnosis has been obtained); diagnosis, care or treatment of a mental or physical illness, injury, or health condition of, or the need for medical diagnosis of, or preventative care for, the employee or employee’s family member; or absence when an employee or employee’s family member has been the victim of domestic violence, a family offense, sexual offense, stalking or human trafficking and seeks or obtains services, including from a shelter, attorney or law enforcement, or takes “any other action to ensure the health or safety of the employee or family member or to protect those who associate or work with the employee.” Covered Family Members: A family member is defined as an employee’s child, spouse, domestic partner, parent, sibling, grandchild or grandparent or the child or parent of an employee’s spouse or domestic partner. “Parent” is defined as “a biological, foster, step- or adoptive parent, or a legal guardian of an employee, or a person who stood in loco parentis when the employee was a minor child.” Additionally, “child” is defined as a biological, adopted or foster child, a legal ward or a child of an employee standing in loco parentis. Proof of Qualifying Reason: An employer may not require the disclosure of confidential information as a condition of providing leave, such as information relating to a mental or physical illness, injury or health condition of the employee or the employee’s family member. Minimum Increment: An employer may set a reasonable minimum increment at which leave must be used; however, this increment may not exceed 4 hours. Compensation: PSLL compensation must be the greater of: (1) the employee’s regular rate of pay, or, (2) the applicable minimum wage established by N.Y. Labor Law Sec. 652. Carry Over: Unused sick leave will be carried over. However, employers with fewer than 100 employees may limit an employee’s use of sick leave to 40 hours per year, and employers with 100 or more employees may limit use to 56 hours per year. No Payout at Separation: Employers are not required to pay employees for unused sick leave upon an employee’s voluntary or involuntary separation from employment, including retirement. Interaction with Other Leave: Employer Policy: An employer that already provides a sick leave or paid time off policy that meets or exceeds the leave provided by this law need not provide additional leave as a result of this law. The employer’s policy must also satisfy the accrual, carryover and use requirements of the law. Local Paid Sick Leave Laws: This law does not prevent a city or municipality with a population of one million or more from enforcing local laws or ordinances which meet or exceed the standards or requirements of this law. The law also provides that any paid leave benefits provided by a municipal corporation existing as of the effective date of the law will remain in effect. New York City and Westchester County have existing sick leave laws. Collective Bargaining Agreements: Employers who enter into collective bargaining agreements on or after the effective date of this law must provide benefits comparable to those provided under the law. These agreements must specifically acknowledge the provisions of the law. Job Protections Retaliation: An employer may not retaliate or discriminate against or otherwise penalize any employee for requesting or using sick leave. Job Protections: An employee must be restored to his or her position with the same pay and terms and conditions of employment upon return from leave. Documentation: An employer is required to track the amount of sick leave provided to each employee and maintain this information in its payroll records for six years. Upon request by an employee, the employer must provide within three business days a summary of the amount of sick leave accrued and used by the requesting employee.
September 29, 2023
Labor and Employment
U.S. Department of Labor Announces Proposed Rules Designating More Workers as Non-Exempt from Overtime
Today, the U.S. Department of Labor announced a proposal to “Define and Delimit the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees” that would “restore and extend overtime protections” to millions of salaried workers if finalized. The proposal is currently publicly available on its website: https://www.dol.gov/newsroom/releases/whd/whd20230830. The Department of Labor’s proposed rule would, among other things: Increase the FLSA regulations’ standard salary level from $684 per week ($35,568 per year) to $1,059 per week ($55,068 per year). Automatically update earnings thresholds every three years to keep pace with changes in worker salaries. Increase the total annual compensation requirement for highly compensated employees from $107,432 to $143,988 per year in order to designate such workers as exempt. Revising definitions of the executive, administrative, and professional exemptions from overtime. Restore overtime protections for workers in U.S. territories. After the proposed rule is published in the Federal Register, individuals will be able to submit comments for a period of time to be determined by the Department. Employers, if so inclined, should submit comments opposing the new rules to potentially avoid these coverage exemptions. However, in the meantime, it is critical that employers correctly classify workers as exempt or non-exempt. The DOL takes no prisoners and demands double payments of unpaid overtime to all misclassified workers for three years prior to a complaint and fines employers. I have recently identified many expensive mistakes by several sophisticated employers. As always, please reach out to me if you have any questions.
September 1, 2023
Labor and Employment
What You Should Know About the New Pregnant Workers Fairness Act
There’s another new federal law providing additional protections to pregnant employees. The Pregnant Workers Fairness Act (PWFA) requires employers with 15 or more employees to provide “reasonable accommodations” to a worker’s known limitations related to pregnancy, childbirth, or related medical conditions, unless the accommodation will cause the employer an “undue hardship.” It becomes effective on June 27, 2023. Beginning on that date, the U.S. Equal Employment Opportunity Commission (EEOC) will accept charges based upon violations of this law. To date, the EEOC has issued no proposed regulations, although it will do so. It offers some guidance here. Your state may already have a similar law, but even if it does, the EEOC guidance may be helpful. The PWFA adopts the familiar ADA interactive process in order to determine if the limitations may be accommodated without undue hardship. The EEOC defines “undue hardship” as “significant difficulty or expense for the employer.” The House Committee on Education and Labor Report on the PWFA provided some examples of accommodations, including the ability to sit or drink water; receive closer parking; have flexible hours; receive appropriately sized uniforms and safety apparel; receive additional break time to use the bathroom, eat, and rest; take leave or time off to recover from childbirth; and be excused from strenuous activities and/or activities that involve exposure to compounds not safe for pregnancy. It’s sometimes difficult to determine whether a request for accommodations is reasonable or an undue hardship. Don’t assume that the request is a hardship. Remember that a leave of absence may be a reasonable accommodation; consult your employment attorney, who can provide the latest court guidance on the issue.
May 3, 2023
Labor and Employment
The Power of Mediation: Mediator Settles Fox News v. Dominion Voting Systems During European River Cruise
Mediator to the rescue again! Mediator Jerry Roscoe was called in by counsel for Fox News and Dominion Voting Systems at the eleventh hour the night before the trial began. A huge amount of money and public images were at stake in the defamation trial. After attorneys failed to broker a deal over the weekend, Judge Davis had ordered the parties to attempt again to settle. At the time of the call, Mr. Roscoe was celebrating his birthday on a cruise ship sailing from Budapest to Bucharest. Notwithstanding this situation, he accepted the surprise job and reportedly estimated that he conducted as many as 50 calls with the parties from Sunday night through Tuesday afternoon (when the jury was selected and sworn in). CNN quoted Mr. Roscoe driving home the point: “Presence in the courtroom often tends to crystalize the focus of the risks and benefits of litigation. “Once the jury sits down and you’re looking at people who are going to decide your fate, it’s an awakening experience.” The moral of the story: don’t pay astronomical court and attorneys’ fees only to roll the dice with a jury in the public eye. Instead, save time, money, and reputation by agreeing to privately mediate disputes between employers and employees. Put it in writing and make sure it’s a legally enforceable agreement. Moreover, other commercial disputes include a mediation clause. Agree to settle arguments with your neighbors, even without a written agreement. I’ve mediated those, too. This is another example of the wisdom of calling a mediator. Sometimes, we perform what seems like an impossible task. Kudos to Mr. Roscoe for settling a case for one of the largest defamation awards in history.
April 27, 2023
Labor and Employment
PUMP Act Changes Protections for Working Mothers
Congress passed the bipartisan Providing Urgent Maternal Protections (PUMP) for Nursing Mothers Act as part of the omnibus budget bill for the fiscal year 2023. The PUMP Act is an extension of the Break Time for Nursing Mothers Act (the pumping break time law), which is part of the Affordable Care Act (ACA). The ACA requires employers to provide reasonable break time to nurse or pump and a private place to pump. Employers must provide “a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which may be used by an employee to express breast milk.” Also, employers must give “reasonable break time” to their employees to pump for up to one year after the birth of their child. Women whose positions were exempt from overtime were not entitled to these ACA protections; the PUMP Act applies to all working mothers. In addition, the PUMP Act outlines legal remedies if an employer has violated any aspect of the Act or retaliated against an employee for behaving according to the Act. Employees may immediately file suit if employers ignore the break time requirement or have indicated that they don’t intend to provide private space to pump or if they were fired for requesting break time or a private location to pump. As a practical solution, short of court, employees must notify their employers if they have not provided a space to pump, and the employer then has ten (10) days to provide an appropriate space. Keep in mind the specific requirements and take note that putting an employee into a room with a camera (even if it’s turned off) or a private room where she may be viewed through a window or door will not comply with the law. Pumping breaks may be unpaid time and scheduled at employees’ regular break time.
April 20, 2023
Labor and Employment
Post-McLaren: How Confidentiality and Non-Disparagement Provisions in Severance Agreements Interact with Section 7 Rights
Confidentiality and non-disparagement clauses are frequently included by employers when negotiating and drafting severance agreements. Several recent challenges, on both the state and federal level, have been made to these types of provisions, specifically, whether they are illegal on their face and/or unduly coercive. The National Labor Relations Board (“NLRB”) recently chimed in, holding in McLaren Macomb, 372 NLRB No. 58, that an employer violates Section 7 of the NLRA “when it proffers a severance agreement with provisions that would restrict employees’ exercise of their NLRA rights,” including agreements containing broad confidentiality and/or non-disparagement prohibitions. Thus, under McLaren, an employer violates the NLRA, which applies to both union and nonunion employees, anytime it offers a severance agreement to an employee that contains an unreasonably broad confidentiality and/or non-disparagement provision – whether the employee signs the agreement is irrelevant. The McLaren decision has sparked significant interest. On March 22, 2023, NLRB General Counsel Jennifer Abruzzo issued GC Memo 23-05 (the “GC Memo”), which addresses questions raised by the decision and provides guidance to employers. The memo confirms that confidentiality clauses that are narrowly tailored to restrict the dissemination of proprietary or trade secret information, have a limited duration, and are based on legitimate business reasons are permissible. Similarly, the memo notes that it is acceptable to restrict employee statements that are “maliciously untrue, such that they are made with knowledge of their falsity or with reckless disregard for their truth or falsity.” The memo also confirmed that the McLaren decision will apply retroactively; therefore, agreements proffered to employees prior to February 21, 2023, may be subject to challenge up to six months after the unlawful proffer if unsigned. Executed agreements containing unlawful provisions are not subject to any time bar if they do not contain an expiration date. Importantly, the GC Memo also clarified that the decision is not limited to severance agreements. The types of provisions that may interfere with Section 7 rights include noncompete clauses, non-solicitation clauses, no-poaching clauses, broad liability releases and covenants not to sue that go beyond the employer and/or employment claims, and cooperation requirements involving any current or future investigation or proceeding involving the employer as that affects the employee’s right to refrain under Section 7, such as if the employee were asked to testify against co-workers that the employee assisted with filing an unfair labor practice charge. Considering the McLaren decision and the GC Memo, employers should review and update their template agreements to mitigate or eliminate risk. This includes not only severance agreements, but also any separation or settlement agreements and other employment-related documents. Employers may also want to consider whether to take the preemptive remedial action of notifying prior recipients of agreements that overbroad confidentiality and non-disparagement restrictions will not be enforced.
April 11, 2023
Labor and Employment
Highly Paid Employee Awarded Overtime
You can’t make enough money to be exempt from overtime. In a surprising decision, the U.S. Supreme Court recently ruled that an employee who made over $215,000.00 per year was entitled to overtime payments. In Helix Energy Solutions Group v. Hewitt, the Supreme Court ruled 6-3 that Mr. Hewitt, a former employee, was eligible for overtime pay because he was paid on a daily basis, not a guaranteed salary basis. Mr. Hewitt’s daily pay varied. So, regardless of the fact that he earned $248,053 in 2015 and $218,863 in 2016, Helix Energy Solutions should have been paying him overtime, per the Court. According to the Court, “salary” as used in the Fair Labor Standards Act (FLSA) “connotes a steady and predictable stream of pay” and must be paid by the week or longer period. Why mention this decision? To highlight that the Court reads the FLSA regulations in a very technical way, and accordingly, employers must educate themselves about the requirements. Employers have to prove in court that employees are exempt from overtime. It doesn’t matter if the payment is very generous. I’ve had a number of clients investigated for violations, even when the pay was more than fair. Shock value. I want to meet the attorney who agreed that Mr. Hewitt should sue and pursue overtime payments all the way to the Supreme Court. Let me know if this raises any FLSA questions about classifying people as exempt or non-exempt and compliance with the overtime law.
April 6, 2023
Labor and Employment
A Dose of Education Law: Supreme Court Rules Disabled Students May Sue Under ADA After Settling with School District
As you may know, I represent students in education matters (as well as educators in some employment matters.) I help elementary and secondary students with everything from attaining special education services, accommodations, and payment for private schools when public schools aren’t serving students’ needs, provide bullying help to victims, and I defend disciplinary matters such as expulsions. For post-secondary (including graduate) students, I defend Title IX complaints, appeal disciplinary actions and school or program dismissals, and enforce my clients’ Americans with Disabilities Act (ADA) rights to accommodations (enforceable in every post-secondary program that accepts federal student loan money or federal grants). So I am, of course, interested in a recent Supreme Court case on an ADA action brought by a deaf student. Students and parents must proceed with an administrative process before seeking court relief in special education cases for failure to provide a free appropriate education under the federal Individuals with Disabilities Education Act (IDEA). Money damages are not available under the IDEA; courts may order school districts to pay for tutoring or private education as a remedy for failure to provide a proper education, however. The question arose whether, if a special education student settled a complaint against a school district for violating their ADA rights, they may sue in court for monetary damages without going through the administrative process regarding the ADA claim. Mr. Perez, a deaf man, alleges that the district provided him with aids who didn’t know sign language to translate for him and misled the family about the amount of progress he made. The unanimous Court allowed the case under the ADA for money damages to move forward even after Mr. Perez had received a settlement for his violation of IDEA claims. This decision is a game changer, as many students with disabilities will have a threat of an ADA claim hanging over the school district in addition to the threat of an administrative hearing under IDEA. In fact, Justice Gorsuch wrote that the case “holds consequences not just for Mr. Perez but for a great many children with disabilities and their parents.” The case is Perez v. Sturgis Public Schools, et al., No. 21-887, U.S. (2023). Many parents and students don’t know the extent of their rights under the ADA nor the IDEA and don’t know where to get assistance. Education specialists give legal guidance and help students navigate the process of attaining relief for students who were denied education via legal violations. Reach out if you have questions.
March 30, 2023
Labor and Employment
Time to Review Settlement and Severance Agreement Templates
In a surprising decision that reveals the National Labor Relations Board’s (NLRB) position on perceived threats to employees’ right to organize under the National Labor Relations Act (NLRA), the Board held in McLaren Macomb, 372 NLRB No. 58 (2023), that even if an employer (with a unionized or non-unionized workplace) merely offers a severance agreement containing broad confidentiality and non-disparagement provisions, it is illegal. Note: The Board’s ruling only applies to nonmanagerial, nonsupervisory employees with Section 7 rights under the NLRA. The current Board’s view is that agreements are unlawful on their face if they contain terms with a “reasonable tendency to interfere with, restrain, or coerce employees in the exercise of their Section 7 rights” under the NLRA. As such, if an employee files a complaint, the NLRB will now review severance agreements for language that’s too “broad or coercive.” In McLaren Macomb, the NLRB found that asking an employee to agree to keep terms of an agreement confidential (even with exceptions for spouses, lawyers, and tax advisors, and as ordered by a court or agency) violated the NLRA because the former employee would be unable to discuss it with current employees, who might want to organize. The Board also decided that a non-disparagement agreement was illegally overbroad when it required the employee not to make statements that could disparage or harm the image of the “employer, its parent and affiliated entities and their officers, directors, employees, agents and representatives.” Note: This restriction has no time limitation and covers other entities and persons, not just the employer. Courts don’t have to follow the rulings of the NLRB. The courts always look to whether a non-disparagement agreement is “reasonable under the circumstances,” and I believe that a non-disparagement clause limited to the company would be reasonable as long as the non-disparagement clause doesn’t purport to last forever and cover too many entities. Would a court agree that it’s illegal to promise not to disclose the agreement’s terms? The ability to require confidentiality serves as the important public policy of encouraging settlements outside of court. That said, having your template severance and settlement agreements with employees reviewed for compliance with the Board’s rationale and holding it is not very time-consuming. I’m recommending this to my clients — tweaks would not be difficult. If you have questions, please reach out.
March 23, 2023
Labor and Employment
Adhering to Laws of Every State in Which Employees Are Working Remotely Part II
As I’ve written before, the employment laws of the states where an employer hires employees are applicable to the employment relationship. If you missed those blogs, you may access them here and here. I am listing more types of laws to consider here. If you’re bored by this topic, I promise this is my last blog on the subject. Prior wages inquiries: The employer can’t do any or all of the following under some state laws: Require, as a condition of employment, that an employee refrain from inquiring about, discussing, or disclosing information about either the employee's own wages or about any other employee's wages (also violates federal law); Seek the wage or salary history of a prospective employee from the prospective employee or a current or former employer or to require that a prospective employee's prior wage or salary history meet certain criteria; provided, however, that: If a prospective employee has voluntarily disclosed such information, a prospective employer may confirm prior wages or salary or permit a prospective employee to confirm prior wages or salary; and A prospective employer may seek or confirm a prospective employee's wage or salary history after an offer of employment with compensation has been negotiated and made to the prospective employee. Employers can’t retaliate against employees who report violations. Wage payment: Employers must pay wages earned by employees within different time periods of a termination; the definitions of “wages” and penalties for failing to pay on time vary from state to state. Medical assistance & family medical leave contributions: Employers in some locations must pay into an account set up by the state, similar to the unemployment insurance fund. Workers’ compensation and unemployment insurance premiums: Employers must pay these, in every state, for each employee performing any work in that state. Contribution to a workforce training fund program: Where a state has such a fund or similar, the employer must contribute. The list is not exclusive. There are other employment-related laws in some states that are not common, so I’ve omitted them here. Please ask if you have questions.
March 9, 2023
Labor and Employment
Adhering to Laws of Every State in Which Employees Are Working Remotely
As I’ve written before, the employment laws of the states where an employer hires employees are applicable to the employment relationship. If you missed that blog, you can access it here. I am listing more types of laws to consider. Sexual harassment policies: It may be legally required to adopt a policy against sexual harassment and provide notice of the policy at certain times. Workplace safety laws: Enough said. Non-competition agreements in an employment relationship: Severely limited or forbidden in some states and may soon be federally banned. Please look at my previous blog on this topic and the proposed legislation. Mini-COBRA laws: There are some state laws applying the COBRA requirements to employers with less than 20 employees. Voting leave: In certain cases, employers are required to provide leave to vote for a certain length of time and be paid for this. Lie detector tests: Requiring or requesting one is unlawful in some locations. Requiring the use of certain surnames: In some states, it’s illegal for employers to require employees to use, because of such individual's sex or marital status, any surname other than the one by which such individual is generally known. Veterans’ Day & Memorial Day leave: Employers in some locations must grant unpaid leave to a veteran or a member of a Department of War veteran who desires to participate in a Memorial Day exercise, parade, or service in the employee's community of residence. Volunteer emergency responders’ leave: Employers can’t take any disciplinary action against any employee of some states because they fail to report for work at the commencement of their regular working hours, where such failure is due to his responding to an emergency in their capacity as a volunteer member of a fire or ambulance department. This list is not exhaustive. I will continue the list in my next blog. I’m able to advise on employment laws applicable in other states, as needed.
March 3, 2023
Labor and Employment
Consider Labor Laws When Hiring in Other States
Please be aware that the employment laws of the states where an employer hires employees are applicable to the employment relationship. Many companies continue to hire remotely without this consideration. Some states have very complex laws favoring employees, and employers should be alert to this issue. I am mentioning some types of laws to consider so that employers can review this list when considering hires in other states. This is a rather lengthy list to be continued. Written notices: This is a commonly overlooked legal requirement. Check to be sure which legal notices must be provided in each state. Anti-discrimination laws based on protected status: There are various classifications on which an employer may not legally discriminate. These might include the classes protected by federal law or exceed them. For instance, it is illegal in Delaware to discriminate against an employee because they are a firefighter. Disability accommodations: In some states, it’s illegal for an employer to require documentation from an appropriate health care or rehabilitation professional in certain situations, such as a request to lift less than 20 pounds. Pregnancy accommodations: In some states, employers must grant reasonable accommodations requested by employees for their pregnancy or related conditions unless employers can show that these accommodations would impose an undue hardship on their business. Parental leave & sick leave: Some states’ laws grant employees parental leave, unpaid sick leave, or paid sick leave. To be continued next blog. In the meanwhile, if you have questions, please reach out.
February 24, 2023
Labor and Employment
Is an Individual with a Workers’ Compensation Injury Protected Under the ADA?
Companies operating in the logistics industry, whether it be as contractors for DHL, FedEx, Amazon, or the like, are all too familiar with the challenges of having a workforce that relies primarily on physical ability and the challenges associated with employees who suffer from injuries on the job that impact their ability to perform their job duties and potentially create unsafe working conditions. With physically demanding jobs comes the increased chance for accommodation requests under the Americans with Disabilities Act (ADA). When an employee is injured on the job, contractors are often quick to ensure they follow proper protocols for any potential workers’ compensation claims. However, they often overlook the application of the Americans with Disabilities Act, which may cover the injured worker if the employee meets the definition of disability. The ADA applies to employers with 15 or more employees. It prohibits employers from discriminating against qualified disabled individuals and requires that such employers provide reasonable accommodations that allow them to perform the essential functions of their job or to enjoy benefits and privileges of employment equal to those without a disability. An individual has a disability and is subject to protection if they have a physical or mental impairment that substantially limits major life activities. Crucially, the ADA does not require a showing of long-term effects to qualify, and short-term impairments are covered if they are considerably limiting. Often, employers mistakenly believe that employees struggling with short-term impairments due to a workplace injury do not qualify for protection under the ADA and are too focused on the initial worker’s compensation assessment to realize they also need to consider the implications of the ADA. If an employee asks for accommodation after a workplace injury, the ADA may apply, and the company must perform an individualized assessment to determine whether the individual meets the ADA definition of disabled, and if they do, assess what reasonable accommodations to grant based to help the employee perform their job duties. An accommodation request in the logistics industry can take many forms, including: requests for light duty, including limiting hours worked and weight lifted; requests for periodic unpaid leave or an alternative work schedule to attend physical therapy appointments; increased breaks; and reassignment to a less physically demanding position. While an employer is not obligated to grant the exact accommodation an employee requests, it must assess the request and engage in the interactive process with the employee to determine the employee’s limitations and needs, whether the accommodation requested is appropriate, and what other accommodations are needed. Employers’ obligations under the ADA are complex and fact specific. So complicated, in fact, that the U.S. Equal Employment Opportunity Commission’s (EEOC) guidance is seventy-six pages long. Employers must have a clear and compliant ADA policy that includes instructions for employees on pursuing an accommodation request.
February 22, 2023
Labor and Employment
Secure 2.0 Act of 2022
Attorneys Sarah Sawyer and Scott Tippett discuss extensive changes to the 2019 Secure Act, collectively called the Secure 2.0 Act of 2022. The Secure 2.0 Act increases the options for employers and employees regarding retirement plans and outcomes and adds additional compliance considerations for companies. In this informative legal update, Sarah and Scott discuss: Automatic enrollment requirements Increased age for mandatory distributions for IRAs The new inclusion of student loan payments as contributions for matching purposes Tax credit for military spouses Timing considerations for implementing and complying with the Act Sarah and Scott also discuss the importance of understanding the nuances of the Act and being proactive. Listen to learn more!
February 15, 2023
Labor and Employment
New Federal Workforce Mobility Act Would Further Limit Non-Compete Agreements
Last week, politicians reintroduced the federal Workforce Mobility Act, a bipartisan bill intended to limit the use of non-compete agreements with U.S. employees. As the bill states, “economists now estimate that 1 in 5 workers is covered by a non-compete agreement.” It further finds that non-compete agreements are “blunt instruments that crudely protect employer interests and place a drag on national productivity by forcing covered workers to wither idle for long periods of time or leave the industries in which the workers have honed their skills altogether… [they] also reduce wages, restrict worker mobility, impinge on the freedom of a worker to maximize labor market potential, and slow the pace of innovation in the United States.” TheWorkforce Mobility Act would: Limit the use of non-competes to business sales and dissolution of partnerships; Require most employers to post a notice of the law for employees; Allow the Federal Trade Commission to bring an action to enforce the act according to the Federal Trade Commission Act; Direct the Department of Labor to investigate violations – confidentially - and allow it and state attorneys general to bring legal action against the employer who uses a non-compete; and Provide that employees may sue their employers or former employers to enforce the act, recovering both actual damages and attorney’s fees and costs. If this act passes, it will expose employers to a minefield of liabilities and enforcement actions. At this point, given both the proposed FTC rule banning non-competes, discussed in my previous blog, companies need to meet with their attorneys regarding protecting information, assets, and business by means of other agreements. Prediction from this litigator/ agreement drafter: if this bill passes, a great deal of litigation is coming. This bill doesn’t allow employees to agree to arbitrate any of these disputes. Employees will have little disincentive to file because they will recover their attorney’s fees and costs if they win the lawsuit. Looking forward, it will be more important than ever to craft an up-to-date agreement with employees to protect a business and its trade secrets.
February 9, 2023
Labor and Employment
New Harvard Wage Study Shows Employers Are Inflating Titles to Illegally Dodge Overtime
I am constantly reminded of employers’ mistakes in determining that their workers are exempt from overtime payments under the Fair Labor Standards Act. I recently came across a report of a new study from researchers at Harvard Business School and the University of Texas at Dallas. This study, covering 2011 – 2018, examined “title inflation,” misclassification of employees to avoid paying overtime, and the risk of U.S. Department of Labor/ USDOL suits. The report states, in part, "Our evidence indicates that firms strategically use job titles to exploit regulatory thresholds to avoid paying for overtime work … We find that [this practice] is also strongly associated with the usage of fake managerial titles and … thus can be used as a timely indicator of potential FLSA violations." The law requires that in order to classify an employee as exempt from overtime, the employee must earn a certain amount of salary, as well as perform the job duties of a non-exempt worker (for instance, managing others, professional duties based on a higher degree, and computer programming.) During the study’s time period, there was a 485% increase in managerial titles and pay that barely bumped workers over the minimum salary required to classify workers as exempt. Inflated titles are used to justify salary: researchers saw a barber called a “grooming manager” and a front desk clerk labeled as a “director of first impressions.” Overtime — or lack thereof — is prevalent in issues of wage theft. Nearly two-thirds of wage theft violations that resulted in fines involved overtime issues, according to the study's analysis of U.S. Department of Labor data from 2010 to 2021. Of all back wage fines levied by the agency, over 80% were for overtime. The USDOL has recovered millions of dollars in back pay for unpaid overtime. If just one employee blows the whistle – it costs employers dearly. Review the employee’s primary duties and then classify them correctly. If concerns arise about retention, know that the employee can retain the title (and salary); but watch hours closely to ensure overtime isn’t owed and set a policy requiring management’s permission to work overtime. Consult an experienced attorney for help to determine classification.
January 25, 2023
Labor and Employment
Alert: The Paycheck Protection Program Is Now Accepting First Draw and Second Draw Applications
This blog post may contain information that was accurate at the time of publication but could become outdated over time. We strive to provide relevant and timely content, but circumstances, facts, and data can change. Users are encouraged to verify the current status of any information presented and seek updated guidance where necessary. Originally posted on 1/20/2021, no content changes. The Small Business Administration (“SBA”) reopened the Paycheck Protection Program (“PPP”) for First Draw PPP loans and is now also accepting applications for Second Draw PPP loans. The PPP now allows certain eligible borrowers that previously received a PPP loan to apply for a Second Draw PPP loan with the same general loan terms as their First Draw PPP loan. Second Draw PPP loans can be used for payroll costs and benefits. Loan proceeds can also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations. Loan Amount. For most borrowers, the maximum loan amount of a Second Draw PPP loan is 2.5 multiplied by the average monthly payroll costs up to $2 million. Loan amounts may be based on payroll costs for the calendar year 2019, the calendar year 2020, or the actual trailing 12-month period before the application. Qualification Requirements. To qualify for a Second Draw PPP loan, the borrower must have: Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses; Have no more than 300 employees; and Demonstrate a decline in gross receipts of 25 percent in any quarter of 2020 over the corresponding quarter or submit tax returns showing a 25 percent decline in 2020 revenue over 2019. Gross receipts include all revenue in whatever form received in accordance with the borrower’s accounting method. Eligible Entities. Eligible Second Draw PPP entities include businesses, certain non-profit organizations, housing cooperatives, veterans’ organizations, tribal businesses, self-employed individuals, sole proprietors, independent contractors, and small agricultural co-operatives. Expansion of Allowable and Forgivable Uses. The Second Draw PPP expands the scope of payroll costs to include group insurance benefit payments, covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures. By way of further explanation, Second Draw PPP funds may be used for the following allowable and forgivable uses: Covered operations expenditures include payment for any software, cloud computing, and other human resources and accounting needs. Covered property damage costs include expenses related to property damage due to public disturbances that occurred during 2020 that are not covered by insurance. Covered supplier costs include expenditures to a supplier pursuant to a contract, purchase order, or order for goods in effect prior to taking out the loan that is essential to the recipient’s operations at the time at which the expenditure was made. Supplier costs of perishable goods can be made before or during the life of the loan. Covered worker protection expenditures include personal protective equipment and adaptive investments to help a loan recipient comply with federal health and safety guidelines or any equivalent State and local guidance related to COVID-19 during the period between March 1, 2020, and the end of the national emergency declaration. Forgiveness Covered Period. A Second Draw PPP borrower can elect a forgiveness covered period of any duration from eight to 24 weeks. Additional Loan Terms and Qualifications. Seasonal employers may calculate their maximum loan amount based on a 12-week period beginning February 15, 2019, through February 15, 2020. Entities in industries assigned to NAICS code 72 (Accommodation and Food Services) may receive loans of up to 3.5X average monthly payroll costs. Certain businesses with multiple locations that are eligible entities under the initial PPP requirements may employ not more than 300 employees per physical location. An eligible borrower may only receive one PPP second draw loan. Fees are waived for both borrowers and lenders to encourage participation. For loans of not more than $150,000, the borrower may submit a certification attesting that the borrower meets the revenue loss requirements on or before the date the borrower submits their loan forgiveness application, and non-profit and veterans organizations may utilize gross receipts to calculate their revenue loss standard. Tax Deductible Expenses. With the reopening of PPP, the SBA, in conjunction with the Treasury, also reversed prior guidance, and now there is an income tax deduction available for expenses paid with PPP loan proceeds. For most borrowers, this will result in substantial extra cash (not including PPP loan proceeds) available for business operations, to pay down loans, or to even make distributions to business owners. This article is not intended to provide legal advice as the SBA continually updates, modifies, reverses and changes its PPP loan program guidance. Moreover, all borrowers have different concerns and face different qualification issues for a PPP First Draw and/or Second Draw Loan. If you have questions or concerns regarding a PPP loan or need legal guidance, please contact the author of this article – Charles “Max” McCauley at cmccauley@offitkurman.com or 484-531-1712.
January 20, 2023
Labor and Employment
The FTC Has Issued a Proposed Rule Making Non-Competes Unlawful
On January 5th, the FTC issued a proposed rule prohibiting businesses from entering into or maintaining non-compete agreements with workers (employees or independent contractors). While non-disclosure agreements and non-solicitation (of customer and employee) agreements are generally, permitted under the proposed rule, the FTC intends to take a functional approach to enforcement. So, even restrictions that are not denominated as non-competes but effectively restrict an employee’s ability to seek or accept employment will be prohibited. Significantly, the new rule would require employers to rescind existing non-competes and actively inform workers that they are no longer in effect. The only exception contained in the proposed rule is for persons selling a business or their entire interest in a business or persons owning at least 25% of a business as to which all or substantially all of the assets are being sold. The FTC has solicited comments on the proposed rule – which may be filed through March 10th, 2023. Please reach out to me or my colleagues at Offit Kurman regarding questions about the proposed rule or any other employment matter.
January 19, 2023
Labor and Employment
Federal Trade Commission Proposes Rule Banning Non-compete Agreements Between Employers and Workers
As I mentioned in a 2022 post, the Federal Trade Commission (FTC) has been considering a rule banning non-competes for a while now; President Biden has publicly voiced his support for the ban. The current proposal is based on the FTC’s belief that non-competes violate anti-competition laws. The rule would supersede all state, local, and federal laws on this subject. The rule has a sweeping definition of a non-compete: “a contractual term … that prevents the worker from seeking or accepting employment with a person, or operating a business, after the conclusion of the worker’s employment.” The rule outlaws other provisions which are not labeled “non-competes,” too: if an agreement not to solicit the employer’s customers or not to disclose the employer’s information functions as a non-compete, it is illegal. The FTC rule also intends to forbid employee promises such as repayment of the employer’s training costs if the employee worked for less than a certain period of time, where the repayment is not “reasonably related” to the employer’s actual training costs. The proposed rule would become final 60 days after it’s published in the Federal Register. Employers would have 180 days after publication to comply. The rule states that employers would have until that time to rescind any existing non-competes (including those applicable to ex-employees). This rule would upend centuries of state common law. Many of my clients have agreements that would disappear or change drastically. Drafting agreements to protect business and confidential information would become a whole different game. If you are in Delaware and would like to attend an in-person roundtable at which I’ll speak about this topic, please reply to this email, and I will send you an invitation. If you can’t attend, I am planning to record it; contact me for a copy of my remarks.
January 18, 2023
Labor and Employment
HUD Clarifies Dual Employment Limits
In Mortgagee Letter 2022-22, dated December 15, 2022, FHA Commissioner Julia Gordon has clarified FHA’s position on what dual employment and compensation is permitted for employees of FHA-approved lenders. The Mortgagee Letter outlines changes to the Handbook, which will now permit loan originators to have dual employment, including working as a real estate sales agent. Prior to the Mortgagee Letter, the Handbook provided that the Mortgagee’s employees had to work exclusively for the lender unless the company determined that the outside employment did not create conflict of interest. Further, employees were prohibited from having multiple roles or multiple sources of compensation from a single FHA transaction. Most FHA lenders concluded that this prohibited their loan officers from acting as an agent or receiving compensation as a real estate agent in an FHA transaction. Further, there was ambiguity as to whether the loan originator could act as a sales agent when even originating a conventional Fannie/Freddie loan. The prior Handbook, 4060.1, REV-2, Section 2-9(G), had clearly prohibited other outside employment in the mortgage lending, real estate or a related field. The Mortgagee Letter now provides that “[p]articipants that have a direct impact on the mortgage approval decision” are prohibited from having multiple roles or sources of compensation. These participants include underwriters, appraisers, inspectors and engineers. Participants that do not have a direct impact on the mortgage approval process are now permitted to have multiple roles and sources of compensation for services actually performed. Of course, a sales agent also acting as a loan originator will need to be properly licensed or registered to perform both activities. Further, the lender should ensure that dual employment is permitted by state law. Finally, any such employment must be treated consistent with RESPA requirements. The Mortgagee Letter is effective immediately for case numbers assigned after the date of the Mortgagee Letter. For more information about this topic, contact Wayne Watkinson.
December 27, 2022
Labor and Employment
New Federal Contractor Rule
The question of who’s an employee with protections and benefits under labor law and who is a contractor not covered by those laws has always been important for many reasons. New trends favoring more flexibility to classify workers as contractors have highlighted the issue even more. The Department of Labor has now proposed a new rule designed to favor the classification of workers as employees. Secretary of Labor Marty Walsh said, “misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages.” There is a comment period (make your organization’s position known); then, the DOL reviews them and prepares to finalize the rule. The new proposal from the Department of Labor would change the current test to determine worker status, which had been greatly simplified and had the effect of permitting more workers to be classified as contractors. This proposed rule uses a six-factor test to determine the working relationship. The test is consistent with the analysis federal courts use in making the decision. The proposed DOL test considers the nature and degree of the worker’s control over the work; the worker’s opportunity for profit or loss; investments by the worker and the employer; the degree of permanence of the working relationship; the extent to which the work performed is an integral part of the employer’s business; and the degree of skill and initiative exhibited by the worker. What are the problems if workers are falsely designated as independent contractors? Businesses have to face multiple types of potential claims, including failure to pay employment taxes, failure to provide unemployment and workers’ compensation insurance, Obamacare issues, and the biggie: failure to pay overtime and provide breaks if the worker would have been entitled to overtime and break laws. So this is worth some serious consideration.
November 10, 2022
Labor and Employment
Delaware Non-Compete Update
As you may know, I provide employment law advice to our teams here at Offit Kurman, assisting our clients in company sales. In that capacity, and because I also draft restrictive covenants for businesses, I try to update my business clients on the latest news regarding non-competition clauses. The Delaware Court of Chancery recently gave us some good information regarding limits that buyers may place on sellers in terms of competing with the sold business. Many deals across the United States are written in accordance with Delaware law, so it has a wide-ranging impact. Recently the Court of Chancery clarified that non-competes which try to prevent a seller from competing with a buyer’s pre-existing business are not enforceable. Kodiak Building Partners, LLC v. Adams, C.A. No. 2022-0311 (Del. Ch. Oct. 6, 2022). Such promises are only enforceable to the extent that they protect the buyer’s interest in the assets or company purchased in the deal. Even more interesting because of its larger potential effect on employment agreement non-competes is the Court’s holding that a seller’s promise in a purchase agreement not to challenge the reasonableness of a restrictive covenant means nothing. It is up to the Court to determine the reasonableness of the terms according to Delaware law. If your company wants a binding agreement, it is worthless to have a party promise that the non-compete is reasonable. I’d argue that this decision extends to employment agreement non-competes because the Court made the ruling based on public policy, which applies to all areas of law. Consult a Delaware lawyer with up-to-date non-compete knowledge to draft your sales and employment agreements. The Court continues to move in favor of allowing free competition.
November 4, 2022
Labor and Employment
New York City’s Pay Transparency Law Takes Effect November 1, 2022
In what is becoming a growing trend among local and state legislative bodies – New York City passed the Pay Transparency Law (the “Law”), otherwise known as Local Law 32 of 2022. The Law was passed in an effort to improve wage transparency, balance the bargaining power between applicants and employers and narrow the wage gap. The Law requires covered employers to list minimum and maximum potential salary amounts in job postings. What You Need to Know: Effective Date: The Law, which amended the NYC Human Rights Law and was enacted on January 15, 2022, was initially scheduled to take effect on May 15, 2022 – but was later amended to take effect on November 1, 2022. Required Information/Disclosures: Employers must state the minimum and maximum salary range for the advertised position that the employer, “in good faith,” believes at the time of the posting it would pay for the position. Open-ended salary ranges (i.e., “a maximum of $50,000” or “15/hour and up”) are not acceptable. Salary ranges should be posted for each opportunity where advertisements cover multiple positions. “Salary” refers to base annual or hourly wage. It does NOT include: (a) health, life or other insurance, (b) paid or unpaid time off, sick or vacation days or employer-funded pension plans, (c) severance pay, (d) overtime, (e) commissions, tips, bonuses, stock or the value of employer-provided meals or lodging. Covered Employers: All employers with four (4) or more employees or at least one domestic worker. Not all employees must work at the same location, as long as at least one employee works in NYC. Owners and individual employers count toward the four (4) employee minimum, as do independent contractors, part-time employees, paid interns and domestic workers. Temporary employment agencies are exempted from the Law. The Commission defines temporary agencies as businesses that recruit and hire their own employees and assign those employees to perform work at or perform services for other organizations or businesses. Covered Postings: Any advertisement for a job, promotion or transfer opportunity for a job that would be performed in NYC. An “advertisement” is any written description of an available job, promotion or transfer opportunity –regardless of how disseminated. Importantly, the Law applies not only to public advertisements but also to any internally advertised job, promotion and transfer opportunities. And the Law applies equally to temporary and part-time positions as it does to “permanent” and full-time positions. Employers are not required to post for a position they seek to fill. Geographic Scope: Positions that can or will be performed, in whole or in part, in New York City, whether from an office, in the field, or remotely from the employee’s home. Violations and Enforcement: Violation of the Law is considered an unlawful discriminatory practice. The NYC Commission on Human Rights has the authority to enforce the Law. There will be no penalty for first-time violations if the employer corrects the violation within 30 days. However, an employer’s submission of proof that the violation was corrected “shall be deemed an admission of liability for all purposes.” Future violations will subject an employer to monetary damages and civil penalties of up to $250,000. We Can Help: Should you have any questions regarding NYC’s Pay Transparency Law or any other employment matter – please feel free to reach out to Offit Kurman’s Employment Group.
November 1, 2022
Labor and Employment
Monitoring Employee Email for Unionization Activity
We’re all noticing that increased unionization is the national trend. With new Democratic-appointed National Labor Relations Board members, the Board is no longer all Republican, and employers are closely watching the effects of this political shift in favor of unionization rights. On September 30, a panel of two Republican members and one Democratic member decided that T-Mobile US, Inc. broke the National Labor Relations Act by disciplining a customer service worker for sending a union-related email following a court battle appealing its initial decision. This reversed a 2020 decision by an all-Republican panel that T-Mobile had the right to discipline the worker for using its email for non-business-related purposes. The Board found that T-Mobile had broken labor law by “selectively and disparately” using company policies to silence the pro-union worker. However, this finding was specific to the facts of this case. Other employees had been permitted to use T-Mobile’s email for non-business purposes without being disciplined. Other employees sent mass emails about non-work issues such as hockey tickets, bowling parties, and “Nacho Day” in the cafeteria—but weren’t punished, said the decision. T-Mobile appeared to be targeting the worker who was promoting unionization. Employers may still restrict workers’ email use for non-work issues, including union organizing, as long as they don’t target union communications specifically. So, if employers want to prevent unionization emails on their servers, they need to monitor the servers for other uses and shut them down, too.
October 3, 2022
Labor and Employment
Preparing for Potential Union or Organizing Activity
U.S. labor unions are becoming increasingly popular among Americans after years of relative indifference by rank-and-file employees. Approval ratings for unions and unionization efforts are at the highest point since 1965, according to a recent Gallup survey. Organizing activity is bubbling up in unexpected areas like gaming and the broader technology industry and in global organizations like Starbucks and Amazon. This workplace trend created an unsettling development for all employers as they contemplate their relationships with employees heading into 2023. Offit Kurman’s Labor & Employment group offers an informative 60–90-minute virtual presentation for business owners, HR professionals and managers, providing information crucial to mitigating risk and avoiding unionization in their organizations. The presentation covers applicable labor laws and regulations governing union activity, compliance requirements, proactive strategies to identify organizing warning signs, best practices for union-related communications and how to address organizing activity before it gains steam. There is also ample time allotted for Q&A. The presentation is directed only to management-level employees, not rank-and-file employees. If you would like to schedule a presentation or receive more information, please feel free to reach out.
September 22, 2022
Labor and Employment
The Turning Tide: How Americans Currently View the Supreme Court
Not too shocking: about half of Americans’ ratings of the Supreme Court are now as negative as – and more politically polarized than – at any point in three decades. According to the Pew Research Center’s report published September 1, the share of Democrats or Democrat-leaning participants who say they have a favorable opinion of the Court has dropped from 67% in 2020 to 28% in August 2022. Almost half of the respondents indicated their belief that the Court has too much power. In contrast, Republican and Republican-leaning approval ratings were very similar to 2020 at over 70%. The justices were once proud to say that they are apolitical, citing the fact that many of their decisions are unanimous, 8-1, or 7-2. But the percentage of those opinions dropped from 49% in 2016 to 28% in 2022, according to the authoritative empirical SCOTUS blog. I have been to the Supreme Court twice: once in 2015 and once in 2019. Our 2015 opinion was unanimously decided, and in 2019, the Court declined to review the lower court’s decision. This indicates – from my very small sample – cohesive views. Pew’s survey was much larger. It polled 7,647 adults, including 5,681 registered voters, from Aug. 1-14, 2022, using a national, random sampling of residential addresses. What do you think? Has the 6-3 “conservative” majority been that divisive? And isn’t it sad that we now commonly refer to the “factions” as “conservative” and “liberal”?
September 7, 2022
Labor and Employment
CDC Speaks Again: How Does it Affect Employees?
New COVID guidance from the CDC throws some of what we’ve learned about safe returns to work and prevention out the window. The CDC’s recommendation is now that anyone exposed to COVID is safe to be around others by wearing a well-fitted and high-quality mask for ten days. I’d suggest that the “well-fitting and high-quality mask” is a big factor. Employers should still require that employees inform them of exposure and intent to test and, at that time, let them know the new standard and that they may report in person. Keep a stock of KN95 or other tight-fitting masks on hand. Delaware still requires employers to provide masks, and these are readily available. All persons should still seek testing for active infection when they are symptomatic or if they have a known or suspected exposure to someone with COVID. Symptomatic or infected persons should isolate promptly, and infected persons should remain in isolation for at least five days (day 0 is the day of exposure) and wear a well-fitting and high-quality mask if they must be around others. Infected persons may end isolation after five days, only when they are without a fever for at least 24 hours without the use of medication and all other symptoms have improved. They should continue to wear a mask or respirator around others at home and in public through day 10. Don’t forget: employees at high risk for severe illness and those in contact with them (such as caregiving recipients and household members) may want to minimize risk if they learn they’ve been exposed. They may still ask to quarantine while they await test results. This may either be handled by telework, isolating onsite, or taking available paid or unpaid time off. Be cognizant of reasonable accommodations for workers with disabilities; this may fall into that basket. On another note, I am really happy to announce that I was voted into Best Lawyers in America for employment law. I joined 59 of my colleagues at Offit Kurman, who were included in the listing of the top 5% of American lawyers. Sincerely, thank you for your trust in me.
August 31, 2022
Labor and Employment
Take Notice: Required Postings
Recently, I was struck yet again by the huge number of laws requiring employers to provide notice to their employees of employment-related laws. Often laws require employers to provide notices over and over, too. For instance, Washington DC has a new law banning almost all non-compete provisions (which takes effect October 1). Not only do employers with one or more employees have to be aware that they may no longer ask their employees to sign non-compete agreements, but they must also remember to provide notice 1) ninety days after the law becomes effective (so they have to track that, too); 2) seven days after hire, and 3) within 14 calendar days of a written request for the text of the law. Who knew? I had to sit down and research this – and I’m an employment lawyer. From this example alone, it’s clear that keeping up with notification requirements is a pain. And it’s extremely burdensome if the company is operating in multiple states. All the remote working has increased this administrative burden on employers. Remember, the employment laws of the state in which employees are working are those applicable to them. I suggest that management – at those employers without HR personnel – take a look at the websites of each state as a beginning point. All of the notices are usually available there in a PDF to be posted. Caution: it seems even the Departments of Labor in some states can’t keep up with their own lawmaking because I’ve noticed some missing on their own websites. It’s a good starting place and also an education in laws applicable, as you’ll see when you read the notices. And, of course, don’t forget your federal law notices, either (DOL.gov)! Post in all brick and mortar sites and email notices to remote employees. Review once per year
August 24, 2022
Labor and Employment
Affirmative Action v.2022
The argument continues on whether affirmative action is legal in the academic admissions setting. In October, the Supreme Court will hear arguments in two cases challenging university affirmative action programs. This is the first affirmative action case heard by the Court since the conservative majority was seated. Management of some major corporations believes that the implications of those decisions could be far broader than their effects on schools’ admissions. It could affect businesses’ hiring, too. The cases are brought by a group called Students for Fair Admissions against Harvard and the University of NC, arguing that the school’s affirmative action admissions policies unconstitutionally harm Asian-American and white students. The universities maintain that race is only one of many factors considered in admissions, including geography, military service, and socio-economic status. Almost 80 companies, including Meta, Apple, Lyft, Uber, Verizon, and Alphabet, filed briefs supporting the schools’ affirmative action programs. Their attorneys assert that corporate diversity, equity, and inclusion efforts “depend on university admissions programs that lead to graduates educated in racially and ethnically diverse environments.” Their position is that only by allowing universities to use affirmative action will there be enough highly qualified future workers and business leaders, especially given the increasingly global nature of the economy. The brief also states that “[E]mpirical studies confirm that diverse groups make better decisions thanks to increased creativity, sharing of ideas, and accuracy.” Do you think workers trained or educated in a racially diverse environment are better employees?
August 15, 2022
Business
Executive Playbook: Alternative Solutions for Recruiting and Retention
Recruiting and retention continues to be a challenge for employers. While employers could always pay employees more, that is not a particularly attractive solution and, in many cases, is not a solution at all. In this episode of the Executive Playbook, Mike and Russell discuss strategies that employers can implement to attract new employees and retain existing employees.
July 28, 2022
Labor and Employment
Please Release Me
I have been dealing with a lot of claims recently from unhappy clients who have either been charged with employment discrimination or threatened with suit by disgruntled former employees. What to do? One word: release. I’m begging you have your outgoing employees sign a release of all claims and promise not to sue. This requires a good form and a payment to the outgoing employee. The payment is required to create an enforceable contract: you pay them, and they release your business from claims. A lot of employers are understandably reluctant to pay severance to people they’ve let go. However, it can be a very small payment. Employees appreciate the gesture as well, and this may decrease the chances that they bad-mouth the business. (A good release also includes a promise not to disparage the business, however.) It can cover all potential claims arising up to the time of signature and can also alert employers to any potential claims (for example, a workplace accident.) A smattering of recent examples: The minority employee who charged the employer with race discrimination (the same person hired and fired the employee, obviously making it far less likely that the decision-maker was biased.) The employee who charged the employer with disability discrimination and failure to accommodate disabilities (the person never reported any disabilities, the decision maker had no knowledge of any, and the person never requested accommodations). The employee who claimed to have reported a financial discrepancy to the employer (they don’t recall this employee ever discussing financial matters), and thus, they claim that they were discharged in retaliation for whistleblowing. The list goes on; these are just a few recent examples. Don’t be afraid to let an underperforming employee go, but give them a week’s severance and get that release signed. Check with an employment attorney to be sure that your release covers all potential legal issues.
July 27, 2022
Labor and Employment
Overturning Roe v. Wade : Potential Effects on the Workforce (Not a Political Speech)
I started thinking of some questions which might occur in the employment context after Dobbs v. Jackson Women’s Health Organizationoverturned Roe v. Wade and all cases following it since 1973. Here are a few. Are people protected from employment discrimination if they end or refuse to end a pregnancy? The Pregnancy Discrimination Act and Title VII of the Civil Rights Act of 1964 should continue to protect employees of companies with more than 15 employees from reproductive health-related discrimination and harassment even after the Supreme Court’s decision, regardless of their state of employment. Some states also have explicit abortion nondiscrimination statutes and/or a fewer employee number threshold. The Third, Fifth, and Sixth Circuit federal Courts of Appeals have held that an employer can’t discriminate based on the employee obtaining an abortion. The EEOC will continue to take this position. But the best course is not to inquire about employees’ health care decisions in the first place. Can an employer fire a person based on religious grounds for having an abortion? Courts generally have held that private employers can’t discriminate based on sex even if the policy purportedly is based on their religious beliefs. However, an exception to Title VII’s discrimination provision bars clergy members from bringing an employment discrimination claim against religious institutions. Can a pregnant person or one who had an abortion be protected from employment discrimination based on the Americans with Disabilities Act? Pregnancy itself isn’t a disability under the ADA unless the person is experiencing complications or aftereffects of pregnancy that impact one or more “essential life functions”; for instance, the mother develops long-term high blood pressure, affecting her ability to work at a broad variety of jobs. It’s also feasible that the aftereffects of an abortion could be an ADA disability if it impacts those functions. There will be more claims of disability and requests for accommodations due to pregnancy. How will this decision impact our current labor shortage? An immediate reduction in the labor force is a logical conclusion. The more pregnancies there are, the more pregnancy-related health issues will exist – leading to more absenteeism, reduced work hours, and disability leaves. Mothers will be out on maternity leave; paid maternity leave is legally mandated in some states. Workers sometimes leave the workforce because of pregnancy. That’s a few thoughts I’ve mulled over. What questions do you have about the effects of the Dobbs decision?
July 14, 2022
Labor and Employment
Time to Care Act
The Time to Care Act has passed, and beginning on January 1, 2025, most Maryland employees can apply for paid leave from a state fund. Fortunately, while this law took effect June 1, 2022, it isn’t functional until October 1, 2023, when employee and employer contributions start, and employees will not be eligible to take leave until January 1, 2025-allowing employers time to prepare. Essentially, employees who worked at least 680 hours over the 12 months immediately preceding the date on which leave is to begin are entitled to 12 weeks of paid leave for health and caretaking reasons. This leave can run concurrently with FMLA leave and, in many cases, essentially makes FMLA paid leave. That said, for employers who do not fall under the FMLA, it is important to note that the Time to Care Act does contain job protection similar to FMLA. While employers should start to consider next steps related to implementing new leave laws, they have some lead time. While employees won’t be eligible to take leave until 2025, employers should start communicating with employees about the new law next year since they will see contributions to the fund deducted from their paychecks beginning October 1, 2023. There are also a few unanswered questions based on how the law is drafted that I expect we will get answers to over the next 12-18 months.
July 13, 2022
Labor and Employment
Revisit Your Non-Disclosure Agreements or Risk #MeToo Issues
As you probably know, non-disclosure agreements signed by employees are legally binding. These may prevent workers from speaking out about workplace practices, including #MeToo issues. Newly introduced federal legislation targets NDAs that silence employees reporting sexual harassment. This is already a matter of law in some states, including California and Washington. Lift Our Voices, a pro-worker policy group headed by former Fox News anchor Gretchen Carlson, has spurred the House introduction by a Democrat of the SPEAK OUT Act (H.R. 8227). As with the last #MeToo related law passed, SPEAK OUT is backed by several GOP representatives already. Lift Our Voices expects an introduction of a similar Senate bill, apparently to be backed by Republican senators, including Lindsey Graham. Lift Our Voices supported another #MeToo-related bill, H.B. 4445, through its passage. That law nullifies provisions that force workers to arbitrate #MeToo claims rather than have their day in court. The SPEAK OUT Act applies to pre-dispute non-disclosure agreements signed before an issue arises. However, if a business is sued by an employee alleging sex discrimination or harassment, it would still be legal to include an NDA in a settlement agreement or release. Take a look at NDAs you’re using. It might be a good time to revise them, given the bipartisan support of this bill and state bills. I’m speculating here, but a court could go on to invalidate other provisions of the NDA if it contains this type of provision.
July 8, 2022
Labor and Employment
Is the Company’s Non-Compete Enforceable?
There’s a lot of fuss nationwide about whether agreements signed by employees not to compete after their employment are allowable. The FTC has now said that it is going to pursue a regulation banning non-competes. I have reviewed and written many non-compete agreements over the course of my career. Many of them are likely unenforceable under existing law. Here are some possible reasons (this list is not exhaustive): Agreements may be overbroad. For example, it may be that an agreement trying to ban someone from working worldwide when they only had a U.S. role is unenforceable. Depending upon where the person lives or is sued, the court might not let the employer revise the scope to make it enforceable. It would simply be thrown out, in that case. Employers: don’t overreach! Agreements may apply to employees who can’t be restricted. If the person is working in a state in which non-competes are void, even if the person is brought into a different state court, they might not be held to the agreement. D.C. passed an ordinance banning non-competes last year. Agreements don’t protect a legitimate business interest. Is there a legitimate business interest in disallowing a person (who has signed a confidentiality agreement) from working in the mailroom of a competitor? Agreements may restrict a person’s right to free speech. Just try to enforce an agreement not to disparage a company (and its employees, services, products, etc.) forever. Agreements don’t offer the employee any type of consideration for signing. In some states, merely letting someone continue to work for an employer is not enough value to the signer to enforce the non-compete. Most employees think nothing of signing these agreements – they want their jobs – or are not allowed to receive valuable things such as stock options if they don’t. But when the employee is moving on, they are faced with this dilemma: will I be sued if I ignore the non-compete? My advice is to consult a lawyer experienced in non-competes and non-solicitation agreements to learn more about yours. And employers, beware of the above common problems with non-competes; the law is changing very quickly on this subject. It’s wise to have your agreements reviewed often, given the number of recent court decisions and many new state laws limiting these provisions.
June 30, 2022
Labor and Employment
Defamation Claims: Johnny Depp Pulled Off a Miracle
Clients very frequently approach our lawyers with a keen interest in suing someone for defamation, a la Johnny Depp. I strongly discourage these claims. It’s a very tough row to hoe. First, defamation (libel is written defamation and slander is spoken defamation) requires a statement of fact, not opinion. For example, “John Doe is a racist” is not a defamatory statement because “racist” is an opinion (versus “John Doe used a racial slur.”) It also requires publication – sharing the statement with others. That means that a person could tell you off when you’re in a room alone, and it’s not defamation. Also, there are exceptions: for example, special standards apply to statements about people in the public eye. Almost anything goes with political figures, for instance. Finally, you have to prove actual damages. It might have hurt your feelings that someone published something very negative about you or your business, but did it lead to monetary harm? More than your legal bill would be if you sued? If the above requirements don’t eliminate the possibility of filing a defamation claim, I still think it’s a very tough one. As clearly revealed at the Depp v. Heard trial, it is “he said, she said” all the way. The plaintiff must prove by a preponderance of the evidence (that’s 51%) that the defendant’s statement was defamatory. Looking at the example above, how does John Doe prove that he did not make the racial slur? It’s his word against someone else’s word. Somehow, Depp pulled off this miracle. Defamation suits are only for people who lost a lot of money or suffered a huge indignity via the statements and have money to burn. Depp lost a pirate movie and other commercial opportunities; it’s extremely embarrassing to be labeled as a domestic abuser, and he is very wealthy. I shiver to think what he paid his lawyers for that win – against a person who filed a successful counterclaim for defamation against him; likely can’t pay it because the verdict is so large; and, at the bare minimum, won’t be paid for quite a while during the appeals process. I wonder if he feels it was worth it.
June 22, 2022
Labor and Employment
Anti-SLAPP and Section 230 Ruling
In a rare ruling on April 26, 2022, the Circuit Court for Baltimore City granted our Anti-SLAPP Motion to Dismiss in a defamation case brought by Joshua Harris, a former Green Party candidate for Mayor of Baltimore, against our clients Courtney Fix and Get Your Fix, LLC. Ms. Fix, who was the owner of a local donut shop, Full Circle Doughnuts, was sued by five different men in three separate lawsuits for defamation based on her social media posts that shared the stories of other women and their alleged loathsome experiences involving the men who filed suit. While two of the lawsuits were ultimately resolved out of court, the case filed by Mr. Harris was dismissed on several grounds, including Anti-SLAPP and Section 230 of the Communications Decency Act. In granting Ms. Fix’s Motion, the Court found that Mr. Harris brought the case against Ms. Fix in bad faith, his case lacked merit, Ms. Fix’s speech was protected under the First Amendment, and Mr. Harris’s status as a public figure, as well as the content of Ms. Fix’s speech in the context of the MeToo and Times Up movements, made Ms. Fix’s speech a matter of public concern. In making its ruling, the Court noted Mr. Harris’ request that the Court force Ms. Fix to submit to a mental evaluation “particularly offensive.” I was honored to have worked with my colleague Mark Dimenna to secure this outcome for our client. While Maryland’s Anti-SLAPP law has been on the books since 2004, these matters are rarely before Maryland courts, and there is just one reported case analyzing the law. On April 29, 2022, Mr. Harris appealed the Baltimore City Circuit Court’s decision, and the case is now pending before the Court of Special Appeals, providing just the second opportunity for Maryland’s appellate courts to consider the Anti-SLAPP statute. Check out the Baltimore Business Journal article on this case here: Judge dismisses defamation lawsuit against former Full Circle Doughnuts owner
June 3, 2022
Labor and Employment
You Can’t Arbitrate That!
Making an agreement to arbitrate an issue may be a great way to limit expense, save time, and preserve the confidential nature of the dispute. I often consider these when I draft contracts like severance agreements, non-compete agreements, and employment agreements. This has been a tool to keep information that might damage a company’s reputation out of the press. However, a new federal law says that employers can’t force employees to arbitrate claims about workplace sexual harassment or assault, even if they agreed in writing. The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act had widespread bipartisan support. Employees may now choose (regardless of what they signed) how to bring any sexual harassment or assault claims against a company – in court or through arbitration. They also can’t be forced to waive their rights to join others in a lawsuit claiming sexual harassment or assault, regardless of what they signed. Note that some states also have laws forbidding employers from requiring an employee who’s alleged sexual harassment or assault to sign a non-disclosure agreement. This type of law is pending in a number of states, too. There’s obviously a strong sentiment among lawmakers to discourage an organization’s ability to keep such claims private. For those reasons, employers should consider updating anti-harassment policies and training programs (which are legally required in some states). Employers should also review and revise employment agreements that contain mandatory arbitration clauses and/or joint-action waivers – or just lower expectations of privacy.
May 13, 2022
Labor and Employment
May Your Business Require Employees Not to Mask?
As more and more businesses mandate that workers return to the workplace, management is wondering about masking requirements. Some business owners feel strongly that they don’t want to require their employees to wear masks. Others do not want to create the impression that the location isn’t safe for customers and feel that this might be exacerbated by masked public-facing employees. Some feel strongly that it’s their right as an employer to impose a no-mask policy for other reasons. Is that a good idea? If an employee decides to defy the no-mask policy, they may have a legal claim (backed by science) if the business fires them for disobeying the policy. The CDC (Centers for Disease Control) is still recommending public masking. An employee might even bring a whistleblower claim under state law if the employee complains about the safety of the workplace to management and/or health authorities. An employee could also complain to OSHA. Although the Supreme Court struck down the OSHA Emergency Temporary Standard requiring safety measures, OSHA will still enforce a masking policy if it determines that the location is unsafe (at least for certain employees) without masking. Finally, it bears repeating that an employee with a disability who’s protected by the Americans with Disabilities Act (or equivalent state law) and whose healthcare provider advises that masking is required should be allowed to mask. That claim (depending upon the exact facts, of course) would make it past a motion to dismiss and cost the business a lot to litigate. I haven’t seen a case on this topic yet, but for these reasons, I wouldn’t advise a mandated no-mask policy right now. Why not create a mask-optional policy if the business feels strongly? It might yield very similar results. Update on last week’s blog on the no-poach agreement criminal trial: the jury found the defendants not guilty. However, this was a criminal trial, and it’s easier to prove liability in a civil case (remember, O.J. Simpson). It’s still ok to mandate mask-wearing on the job.
April 29, 2022
Labor and Employment
The Department of Justice Has Cooked Up Criminal Charges for No-Poach Agreements
Here’s yet another reason not to enter agreements with other companies not to hire (poach) other companies’ employees: potential criminal prosecution. In the first-ever criminal trial for labor-related antitrust (Sherman Act) violations, the Department of Justice alleges that former DaVita Inc. CEO Kent Thiry conspired with other healthcare CEOs to limit employee movement to competitors. As of this writing, the federal jury is deliberating. The trial was eight days long. Prosecutors allege that Thiry and DaVita entered “no-poach” agreements with Surgical Care Affiliates LLC, Radiology Partners, and Hazel Health Inc. not to solicit each other’s executives or to ask the executives to tell their bosses before applying for a job with one of the three companies. If so, prosecutors argued that this arrangement had a “chilling effect” on commerce by keeping wages down in the companies’ market. The defendants have admitted that such an agreement existed – but that it had no such effect on business. The DOJ and workers have already brought many civil suits claiming that no-poach agreements adversely affected markets. Apple, Google, Adobe, Pixar, Intel, Intuit, Lucasfilm, McDonald’s, and Jimmy John’s are among those that have been sued.
April 20, 2022
Labor and Employment
How the Ukrainian Invasion Could Impact U.S.-Based Employees
Russia’s recent invasion of Ukraine—and the related sanctions against Russia— impacts your company’s U.S. employees. How, you ask? First, I don’t need to belabor this point, but limiting Ukrainian and Russian trade puts stress on supply chains, leading to additional U.S. food and other shortages and adding fuel to the inflation fire. Employers might have to consider suspending projects or reducing production, leading to furloughs or layoffs. If the company’s thinking about a layoff of more than a few dozen people, check the federal WARN Act as well as any WARN Act in the states where employees are working for notice requirements, which could be months in advance. If they aren’t planning to lay off workers, employers should be sensitive to the effects of the rising cost of living – consider small raises for valuable employees. Also, if pay issues become too important in the workforce overall, keep in mind that companies might have to fight union campaigns. On the immigration front, over two million people have fled Ukraine; as of the time I’m writing this, many are expected to apply to come to the U.S. Moreover, on March 3, the Department of Homeland Security granted what’s called Temporary Protected Status (TPS) to eligible Ukrainian nationals in the U.S. because of “ongoing armed conflict” and “extraordinary and temporary conditions.” Those eligible for TPS must have continuously resided in the U.S. since March 1, 2022, or earlier. The TPS will last 18 months, and people applying for TPS may also apply for a document allowing them to work in the U.S. for the duration of their TPS status. This could help with labor shortage issues if companies are still hiring. Finally, employers should be sensitive to the emotional impact of the situation. It might not be easy for employees who see colleagues, friends, and their families affected by the war. They might even need access to mental health care. Don’t forget that if the company is subject to the federal Family and Medical Leave Act or similar state statutes, military family leave provisions entitle eligible employees to take FMLA leave for any “qualifying exigency” arising from the foreign deployment of the employee’s spouse, son, daughter, or parent with the Armed Forces. This includes leave to arrange for departures of their loved one. Uncharted territory might lead to legal mistakes on top of all the other problems right now. Make sure to think through your personnel decisions.
March 21, 2022
Labor and Employment
Is Your Company Keeping Records as Legally Required?
A client just asked me in the course of moving offices what employee files the company needs to retain. What I’ve unearthed indicates that this is complicated. (Be sure to check with a lawyer to confirm that these requirements are in effect at the time the company is deciding this issue. Never rely on the internet for legal advice … I have stories.) Here are some requirements: IRS regulations dictate that companies retain all employee files reflecting payments for at least four years after the employment tax came due or was paid, whichever is later. The Department of Labor requires employers to retain 14 different types of documents! The Department of Labor regulations requires companies to retain all payroll records and collective bargaining agreements for three years. All-time cards and piece work tickets, wage rate tables, work and time schedules, and records of additions to or deductions from wages must be kept for two years. Form I-9s for every employee must be retained for three years after the employee was hired or one year after termination, whichever is later. Employers must retain employment applications and related documents, records regarding transfers, demotions, layoffs, selection for apprenticeships or training, and requests for accommodations under state or federal law (such as for disabilities) for at least one year from the date of making the record or the action reflected in the document. In the case of terminated employees, the records must be kept for one-year post-termination. Where a charge of discrimination has been filed under Title VII, the ADA, or GINA, or where the EEOC or the Attorney General has sued the employer under those laws, the employer must retain all records related to the charge or action until final disposition of the charge or action. The date of final disposition is 91 days of the complaining employee’s receipt of a Right to Sue Notice from the EEOC or the date on which the litigation ends. Keep benefits records such as plan documents, 401(k) forms, COBRA documentation, benefits election forms, plan termination records, and other such documentation for six years following the employee’s termination. There are more requirements if the company has had any workers employed by immigration visa or the company has been a federal contractor … I won’t go there today. Good luck organizing your documents! Ask me about document retention policies and why a company should or should not retain documents for longer than legally required.
March 9, 2022
Labor and Employment
Warning: Audit Your Worker’s Pay
This week I wanted to address a news item about the women’s U.S. national soccer team. These players have very high earning potential (depending upon their performance in the World Cup.) Unfortunately for their employer, the U.S. Soccer Federation, the men’s national team has even higher earning potential (depending upon various issues mentioned below.) This brings up that compensation specter: the Equal Pay Act. The Equal Pay Act provides that those performing equal work requiring equal skill and effort must be equally paid. The Federation settled an Equal Pay Act and sexual discrimination lawsuit filed by the women’s national team players by paying them $24 million (in total; $22 million is paid outright to the women and their lawyers). The settlement is contingent upon the players entering into a new collective bargaining agreement with the Federation and court approval. This is the real headache: the Federation still has to reconcile the current pay structures to ensure equity. At the moment, male players get $407,608, and a woman makes $110,000 if their team wins the World Cup. Women receive $37,500 for making a World Cup team; men receive $67,000. The men’s team receives pay even if they lose to a team outside the top 25 in the FIFA rankings and a bonus of $9,375 for winning. Women receive nothing for losing and $5,250 if they win. It really doesn’t matter if the women’s team deserved this win. It was very expensive for the Federation, cast it in a very negative light, and they ended up paying a lot of money to get rid of these expenses and ensure the women will play. So audit your company to ensure that those who are performing the same or very similar jobs are receiving the same money and benefits under the same working conditions (guaranteed by Title VII). And remember, the amount someone is making is NOT confidential information. Prohibiting workers from discussing pay violates the National Labor Relations Act. So people can compare notes. Tell me about your experiences with equal pay issues, or contact me for more information on audits.
March 2, 2022
Labor and Employment
Vaccination Exemption Guidelines
I’m getting more and more questions about exemptions from COVID vaccination/booster mandates. I thought I’d offer reminders about the legal analysis in these situations. As you know, the exemptions are for disability-related reasons and religion-based reasons. Here goes, I tried to cut the legalese. Disability Under the ADA, employers may require all employees to meet a qualification standard that is job-related and consistent with business necessity, such as a safety-related standard requiring vaccination. If an employee can’t meet such a safety-related standard due to a disability, an employer may not require that employee to comply unless it can show that the person would pose a “direct threat” to the health or safety of others at work. The federal regulations define a direct threat as “a significant risk of substantial harm to the health or safety of the individual or others that cannot be eliminated or reduced by reasonable accommodation.” This determination consists of two steps: (1) is there is a direct threat and, if so, (2) assessing whether a reasonable accommodation would reduce or eliminate the threat. To determine if an employee who’s unvaccinated due to a disability poses a “direct threat” in the workplace, an employer first must assess the employee’s present ability to safely perform the job’s essential functions. Consider: (1) the duration of the risk; (2) the nature and severity of the potential harm; (3) the likelihood that the harm will occur; and (4) the imminence of the harm. I advise my clients that the determination that an employee poses a direct threat should be based on the most current medical knowledge about COVID-19. Whether there’s a direct threat also depends on the work environment, such as whether the employee works alone or with others and where; the available ventilation; the frequency and duration of direct interaction the employee typically will have with others; the number of partially or fully vaccinated individuals already in the workplace; whether other employees are wearing masks or undergoing routine screening testing; and the space available for social distancing. If a person with a disability who isn’t vaccinated would pose a direct threat to self or others, an employer must consider whether providing a reasonable accommodation, absent undue hardship, would reduce or eliminate the threat. If there is undue hardship – expense, changing jobs, displacing other personnel, etc. – then the vaccination exemption might not be reasonable. Religion Once an employee presents evidence of a sincerely held religious belief, practice, or observance that prevents them from vaccinating, an employer must provide a reasonable accommodation unless it would pose an undue hardship. Courts define “undue hardship” (in this religious context) as more than minimal cost or burden on the employer. Considerations relevant to undue hardship may include, among other things, the proportion of vaccinated employees and the extent of employee contact with non-employees with unknown vaccination status. Ultimately, if an employee cannot be accommodated, employers should determine if any other rights apply under equal employment opportunity laws or other federal, state, and local authorities before taking adverse employment action against an unvaccinated employee. Just take all of the individualized circumstances into account each time. No two situations are the same, and you don’t want to be sued.
February 17, 2022
Labor and Employment
Supreme Court Ruling on OSHA’s ETS: Update
In my January 14, 2022, blog, Supreme Court Ruling on OSHA’s ETS: What Does it Mean and What’s Next? I discussed what could be next for OSHA’s Emergency Temporary Standard. As of January 26, 2022, OSHA has withdrawn the Emergency Temporary Standard and is pursuing a permanent standard through the standard process, which is slower and more rigorous. OSHA withdrawing the ETS means that employers can rest easy that they will never have to comply with its requirements. However, there’s more to come as OSHA looks to implement similar requirements through a permanent rule.
February 1, 2022
Labor and Employment
Supreme Court Ruling on OSHA’s ETS: What Does it Mean and What’s Next?
On January 13, 2022, three days after the Occupational Safety and Health Administration (OSHA) Emergency Temporary Standard (ETS) COVID-19 vaccination and testing mandates went into effect; the Supreme Court stayed the mandate pending further review in the Sixth Circuit. However, the stay is only temporary, and employers should remain vigilant. For now, the mandate that would have impacted an estimated 100 million Americans is on hold, and employers, who were at the ready to race towards compliance, are likely breathing a collective sigh of relief. Supreme Court Ruling In a 6-3 decision, the Supreme Court reinstated the temporary injunction stopping OSHA from enforcing the ETS, pending resolution in the Sixth Circuit Court of Appeals. The Court’s decision focused on whether OSHA has the requisite authority to promulgate the ETS. In its ruling, the Court explained that, while OSHA has the power to “set workplace safety standards,” it does not have the authority to set “broad public health measures.” Ultimately, given that COVID-19 is a daily risk to individuals as they go about their daily lives, not just in the workplace, the Court found that “although COVID-19 is a risk that occurs in many workplaces, it is not an occupational hazard in most.” Accordingly, the Court views COVID-19 as part of “the hazards of daily living,” not a workplace hazard under OSHA’s purview. Justices Breyer, Kagan, and Sotomayor dissented, finding that OSHA acted within its scope of authority in issuing the ETS. The dissenting justices concluded that COVID-19 presents a “grave danger” to employees, and the ETS is necessary to address those dangers. What’s Next? It is now up to the Sixth Circuit Court of Appeals to determine whether the ETS is valid. If it does, based on the Court’s reasoning in staying the ETS, it is unlikely to survive should it go before the Court again. Another consideration for the future of this regulation is that the ETS is a temporary standard meant to be replaced by a permanent standard on or before May 5, 2022. As such, we could see some movement by OSHA to engage in the formal rulemaking process to publish a formal regulation in the coming months. Also, given that Court approval of a vaccine mandate is unlikely, we may see new targeted regulations from OSHA to implement additional safety measures in workplaces where in-person work is necessary and social distancing is difficult, which are less likely to face successful legal challenges. Though employers are not currently required to comply with the numerous requirements of the ETS, including mandatory vaccination, it is within their discretion to mandate vaccination and implement other COVID-19 safety protocols. Even without OSHA’s mandate, many employers are mandating vaccination or implementing safety protocols based on vaccination status. While businesses implementing voluntary directives do not need to jump through the regulatory hoops of the ETS, they must still take care to develop comprehensive and compliant policies to ensure compliance with Title VII and the Americans with Disabilities Act (ADA). Additionally, it is imperative that companies still carefully consider what safety protocols are suitable for their workplace as the transmittal of COVID-19 in the workplace has both practical and legal consequences, especially where employers are subject to state and local COVID-19 safety orders.
January 14, 2022
Labor and Employment
What Now for Employers? CDC Issues New Recommendations Regarding Isolation
So, the Centers for Disease Control and Prevention (CDC) has issued guidance shortening the recommended time that people should quarantine from 10 days to 5 days based on certain conditions. The CDC’s new guidance says: For those who test positive for COVID-19, but don’t have symptoms, the quarantine period may be reduced from 10 days to 5 days as long as the person wears a mask around others (everywhere) for at least 5 additional days. However, if a person has a fever, they should continue to quarantine until the fever resolves (without medication for 24 hours). The CDC’s recommendation is the same as above for symptomless people who had close contacts with positive individuals if they are:unvaccinated, over 6 months out from receiving the second dose of the Pfizer or Moderna vaccines, or 2 months out from their single dose of Johnson & Johnson (without a booster). (I’m sure that you remember the definition of “close contact”: someone within 6 feet of the positive person for 15 minutes or longer during a 24-hour period.) The CDC now advises that no quarantine is needed for those with close contacts with people who tested positive and who have no symptoms and: have received a booster shot, are less than six months out from being fully vaccinated with Pfizer or Moderna, are less than 2 months from their J&J vaccine, or vaccinated people who are not yet eligible for a booster – including students younger than 16. People who are fully vaccinated should wear a mask in public indoor spaces for 10 days. Keep in mind that even those meeting criteria in #3 above who have symptoms should test and follow #1. According to the CDC, for all those exposed, best practice would also include a COVID-19 test at day 5 after exposure. If symptoms occur, individuals should immediately quarantine until a negative test confirms symptoms are not related to COVID-19. Good luck getting a test at home, but states still have PCR testing centers and some pharmacies are providing rapid and PCR tests for free. What does all of this mean for employers? Revise your policies. There will be less impact from COVID-19 on attendance, so long as your employees wear masks and remain symptomless. Be sure to include and enforce the mask mandate. Collect data on employees’ vaccinated versus unvaccinated status and dates of vaccination and boosters in order to enforce the guidelines. Maintain strict confidentiality. Continue to inform other employees, customers, visitors, and the state’s health department of a positive case. I hope that this is helpful. Please feel free to contact me with any related questions.
January 6, 2022
Labor and Employment
Why Your Company Should Adopt a Vaccination or Test and Mask Policy Regardless of Its Size
The court that stayed the OSHA vaccination ETS rejected the Biden administration's request to set deadlines in the legal challenge that would have had the case ready for oral argument by the end of December. Accordingly, even if the ETS is implemented, it won't be for a while because the court won't even hear an argument until January at the earliest. So many companies thought leaders are asking: what if the OSHA ETS is never effective? What if our company has less than 100 employees? Should our company still adopt a similar vaccine or test and mask policy? My advice is yes. Even if the ETS is ruled illegal by courts, it won't be illegal for a company to adopt the same policy. If the ETS is ruled invalid, it will be rejected on arguments that the government can't force this on private employers. For instance, the argument's being made that there shouldn't be an OSHA emergency rule unless something poses a "grave danger" to the workplace. At this point, lawyers are arguing that it's not "grave" anymore because of the vaccines. This has no impact on private employers' ability to promulgate a policy like this. OSHA is the Department of Labor's workplace safety expert agency. They have studied this situation, have statistics on the number of cases (and clusters) and have investigated how these cases spread at workplaces. In other words, OSHA has a lot of data on this subject. They have good safety reasons for the recommendations. The approach is not as intrusive as dictating vaccines but could make employees feel safer (because even vaccinated people can get COVID, and they don't know who around them is vaccinated.). Protecting employees portrays the company as a caring employer. At the same time, this type of policy reduces the likelihood that employees or customers may successfully sue the company for negligence if they contract COVID. Key to lawyers! Finally, preventing illness minimizes loss of productivity. Mandating vaccinations, with the required exemptions, would be the best way to prevent illness. But if employees who oppose vaccination aren't forced to vaccinate, they are more likely not to resign. This is a concern in the current labor market. For all of those reasons, I recommend a policy very similar to the ETS policy be implemented. But I welcome your input and discussion.
December 10, 2021
Labor and Employment
Rules Regarding Vaccinations Applicable to Certain Health Providers
Personally, I’m getting “breaking COVID news” fatigue. I’m willing to guess that you are too, but I have to constantly re-write these blogs. Yesterday, a federal court in Missouri blocked the Biden administration from enforcing a vaccine mandate for healthcare workers in 10 states. The U.S. District Court for the Eastern District of Missouri entered a preliminary injunction and the decision marks the first victory for opponents of the mandate, which requires workers at certain facilities that participate in the Medicare and Medicaid programs to be vaccinated by Jan. 4, 2022, and take other action by December 5. This is no longer the case at this time in the states of Missouri, Nebraska, Arkansas, Kansas, Iowa, Wyoming, Alaska, South Dakota, North Dakota and New Hampshire. They aren’t subject to the rule while the injunction stands. More than half of states are now involved in challenges in different federal courts, which claim that the mandate will exacerbate staffing shortages along with other complaints. However, a federal judge in Florida already declined to block the rule in a separate suit. Some with knowledge believe that the mandate is likely to be upheld ultimately because the Centers for Medicare & Medicaid Services have the right to govern the rules for facilities if they want funding. But, the Eastern District federal judge Schlep ruled that the vaccine exceeds the agency’s authority because Congress did not authorize it. The conservative advice is for the qualifying health care businesses to proceed with the requirements for the planning as the December 5 deadline looms. It’s not safe to assume that any other court will enter an injunction. Again, this is still required in all states except the ones highlighted above. The facilities are required to: Develop a process/plan for vaccinating all eligible staff (who must be vaccinated by January 4, so two-shot vaccination series must begin by December 5); develop a process/ plan for providing exemptions and accommodations for those who are exempt; and develop a process/plan for tracking and documenting staff vaccinations. If your business needs more details on the mandates, please reach out.
December 8, 2021
Labor and Employment
ETS Legal Challenges, Requirements and Omissions
Ok, so now everyone’s heard that – as promised - OSHA’s new Emergency Temporary Standard has been issued and that, in general, employers with 100+ employees must require workers to vaccinate for COVID or be tested weekly starting January 4. (Incidentally, the guidance for contractors is now requiring vaccination by that date, as well.) Important note – don’t pull the trigger yet, if you haven’t already – although the standard took effect on Nov. 5, the U.S. Court of Appeals for the Fifth Circuit stayed the rule the very next day, pending further litigation (which will be expedited, so the question of whether it was validly issued is decided). To be honest, I would not be surprised if this went to the Supreme Court. We’ll see. The biggest question that my clients have asked so far is who pays for testing, given the ETS doesn’t require employers to pay testing fees or compensate workers for the time spent being tested? Employers are not off the hook because other laws may require it. Importantly, the Fair Labor Standards Act guidance reads: “[the] employer is required to pay you [worker] for time spent waiting for and receiving medical attention at their direction or on their premises during normal working hours. … For many employees, undergoing COVID-19 testing may be compensable because the testing is necessary for them to perform their jobs safely and effectively during the pandemic.” Safe advice: pay non-exempt workers if you’re requiring COVID testing. You don’t want the DOL to come calling and assess double damages and a fine for your company’s failure to pay. Stay tuned, I’ll update you further. In the meantime, contact me if you have any questions and as always, I’d love your feedback. What is your company planning to do?
November 11, 2021
Labor and Employment
Unexpected Long-Lasting Impacts of the COVID-19 Pandemic on Employers
The COVID-19 pandemic has undoubtedly had long-lasting impacts on the workplace as we now enter the twentieth month of the pandemic. Some effects were expected, such as increased safety precautions, layoffs, rehiring, closed offices, and remote work. However, some of the challenges facing employers have been a bit more unexpected and longer-lasting than initially anticipated. In the later months of the pandemic, companies have been navigating vaccine mandates and increases in Americans with Disabilities Act (ADA) requests against a backdrop of worker shortages and continued safety concerns, which weigh heavily on the decisions they are making as it relates to workplace policies. Vaccine Mandates Since vaccines became available earlier this year, employers have been grappling with whether to mandate or encourage vaccination or stay silent. Initially, the lion’s share of employers were opting to remain silent on vaccination or encourage vaccination through incentives or gentle nudging to avoid the hassle of mandating vaccination and providing religious and medical exemptions. Though, as it became clear over the summer that the COVID-19 pandemic was far from over, many employers began to consider mandating vaccination. This change was largely driven by a shift in public opinion, bold moves at the federal level, and the practical need for many employers with in-person operations to keep their workforce healthy and working. However, with many companies struggling to hire and retain enough employees to staff their operations fully, the analysis for many employers has gone well beyond the health and safety of their employees. Ahead of the implementation of the federal mandate through the Occupational Safety and Health Administration (OSHA) issuing an Emergency Temporary Standard, due to industry-agnostic worker shortages, many employers have opted to encourage vaccination over requiring it since they cannot afford to terminate employees for failing to comply with a vaccine mandate. For those who have decided to mandate vaccination, many have faced walkouts and terminations, sometimes resulting in a mass exodus of their workforce. ADA Requests The COVID-19 pandemic has resulted in many business owners and Human Resource (HR) professionals taking a crash course in ADA compliance. While many employers may typically receive a couple of requests per year, the pandemic has led to an increase in these requests, with some being COVID-19 related and many being COVID-19 adjacent. As it relates to COVID-19 specifically, while temporary COVID-19 illness is not a disability, many employers have received leave and accommodation requests related to managing risk around contracting COVID-19 with a pre-existing condition or COVID-19 long-hauler illness. Additionally, companies have seen an increase in employees needing to take time away from work or needing accommodations for mental health conditions. In many instances, these requests have led employers to dig deep into the EEOC’s guidance on these issues and examine the interaction between the ADA and FMLA and determine how accommodating employee needs impact the business's operations. Overarching in both of these issues are the operational burdens of administering these policies and the impact on the company’s workforce based on employees being unavailable to work or terminated or restricted from returning to the office. As employers continue to navigate employment matters related to the COVID-19 pandemic, they will continue to face increased administrative burdens related to keeping their workforce safe and accommodating and retaining employees. There is no shortage of complex issues and legal landmines involved, and employers must stay vigilant regarding legal compliance and consider the practical and legal consequences of their actions.
October 28, 2021
Labor and Employment
That’s a violation of HIPAA! But is it…
It has certainly been an eventful summer from the reopening of businesses and office spaces, talk of a fall “comeback” with many employers hoping to return the majority of their workforce to working in person or operating in a hybrid model, and the elimination of mask mandates to the reinstatement of mask mandates, a delta surge, increased vaccine mandates, and approval of the Pfizer vaccine. As we have learned over the last 18 months, there is never a dull moment when it comes to the COVD-19 pandemic. Over the last month, I have seen a sharp increase in companies mandating vaccination in the workplace and organizations requiring proof of immunization or a negative COVID-19 test to attend meetings or events. With these increases in mandatory policies, I have also been fielding many questions regarding HIPAA compliance. Namely, what do we need to do to comply with HIPAA when requesting and obtaining medical information, such as vaccination status? Well, I am here to set the record straight-HIPAA probably doesn’t apply to your business. The Health Insurance Portability and Accountability Act of 1996, better known by its acronym, “HIPAA,” is a federal law that created national standards to protect sensitive patient health information from being disclosed without the patient’s consent or knowledge. Since this law covers patients, it only applies to healthcare providers, health plans, healthcare clearinghouses (“Covered Entities”), and business associates acting on behalf of these Covered Entities. HIPAA does not cover businesses that are not in healthcare or acting on behalf of healthcare entities. While HIPAA does not cover most businesses who call me with questions regarding HIPAA compliance, that does not mean they are not responsible for keeping medical information confidential and keeping it secure and out of the wrong hands. When it comes to protecting confidential medical information, other federal, state, and local laws likely apply. For example, when it comes to employees, under the Americans with Disabilities Act (ADA), employers are required to keep all employee medical information confidential and keep it in a confidential medical file separate from the employee’s personnel file. There are also laws, such as the Family Education Rights and Privacy Act (FERPA), that protect the medical information of elementary, secondary, and post-secondary students. While asking whether HIPAA applies is not technically relevant to most companies or organizations, the question has become a colloquial way of asking what they should do with confidential information to stay out of trouble, which is a thoughtful and necessary question. Ultimately, when obtaining or storing personal medical information of employees, clients, or event attendees, companies and organizations need to check federal, state, and local regulations to ensure compliance.
August 26, 2021
Labor and Employment
Can Public Facing Businesses Deny Entry Based on Vaccination Status?
MAY I DENY A CUSTOMER OR CLIENT ENTRANCE TO MY BUSINESS? YES BUT. Business owners concerned about customers or clients entering their place of business without proof of a COVID-19 vaccine should be mindful of their obligations under Title III of the Americans with Disabilities Act. Specifically, Title III prohibits discrimination on the basis of disability in the activities of places of public accommodations (businesses that are generally open to the public and that fall into one of 12 categories listed in the ADA, such as restaurants, movie theaters, schools, day care facilities, recreation facilities, and doctors’ offices) and requires newly constructed or altered places of public accommodation—as well as commercial facilities (privately owned, nonresidential facilities such as factories, warehouses, or office buildings)—to comply with the ADA Standards. 42 U.S. Code § 12182 et seq. While Title III has general restrictions that businesses have to abide by when they choose to deny accommodations, a business may deny goods or services to individuals if their participation would result in a “direct threat” to the health and safety of others, but only when this threat cannot be eliminated through an alteration of policies, practices, procedures, or providing auxiliary aids and services. See 42 U.S.C.A. § 12182 (b)(3). Unsurprisingly, there is no precedent applying the law of public accommodations to an individual’s inoculation status. And though no court has yet said that the “direct threat” provision of Title III will be an affirmative defense to public accommodation discrimination, the analogous “direct threat” provision of Title I of the ADA, concerning employment discrimination, has been held to be an affirmative defense. Chevron U.S.A. Inc. v. Echazabal, 536 U.S. 73, 78 (2002) (interpreting 42 U.S.C. § 12113(b)); see also Bragdon v. Abbott, 524 U.S. 624, 649 (1998) (§§ 12113(b) and 12132(b)(3), of Titles I and III, are “parallel provisions”). Still the Equal Employment Opportunity Commission, analyzing the analogous provisions under Title I, has said that under the ADA, a “direct threat requirement is a high standard.” See What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws, EEOC Guidance, available at https://www.eeoc.gov/es/node/131879. WHAT IF A CUSTOMER REFERENCES HIPPA? HIPAA does not prohibit businesses or employers from requestinghealth information, including information about vaccination status. Rather, HIPPA protects the disclosure of such by the provider. Here is why: HIPPA applies to the following: Health plans Health care clearinghouses Health care providers who conduct certain financial and administrative transactions electronically. These electronic transactions are those for which standards have been adopted by the Secretary under HIPAA, such as electronic billing and fund transfers. WHAT ARE MY OBLIGATIONS BEFORE DENYING A CUSTOMER OR CLIENT ENTRANCE TO MY BUSINESS? Businesses would be wise to apply the same three step review of their policies and procedures that they would with their customers and clients under Title III, as they would with their employees under Title I. First, businesses should make an individual assessment before turning away a customer or client. In determining whether a customer or client poses a direct threat to the health or safety of others, a business must make an individualized assessment, based on reasonable judgment, that relies on current medical knowledge or on the best available objective evidence, to ascertain: STEP 1: The business must identify the specific risk posed by the individual. Here, the inquiry is whether the unvaccinated customer or client will expose others to COVID-19. STEP 2: Once the risk is determined, then the business must look at the four factors of whether the “direct threat” actually exists: Duration of the risk; Nature and severity of the potential harm; Likelihood that the potential harm will occur; and The imminence of the potential harm. 28 C.F.R. § 36.208(b). Businesses should consult with counsel when conducting this four-pronged assessment. Second, businesses should balance these factors before turning away a customer or client. When balancing factors relevant to determine whether the risk to health or safety of others is significant, each factor does not need to be significant on its own; rather, the gravity of one factor might compensate for the relative slightness of another. See 42 U.S.C. § 12182(a), (b)(3); See also Montalvo v. Radcliffe, 167 F.3d 873, 878 (4th Cir. 1999). Third, businesses should recognize that just as they do under Title I, they maintain a duty to try an accommodation first (before finding a direct threat). If the business determines that the customers and client would pose a significant risk to the health and safety of others, then it must determine “whether reasonable modifications of policies, practices, or procedures will mitigate the risk,” 28 C.F.R. § 36.208(c), to the point of “eliminat[ing]” it as a “significant risk.” 42 U.S.C. § 12182(b)(3). Under the ADA, a failure to make a reasonable modification is itself an act of discrimination unless the business can demonstrate that implementing the modification would fundamentally alter the nature of their business. See 42 U.S.C. § 12182(b)(2)(A)(ii). BOTTOM LINE: Businesses can deny customers and clients entrance to their businesses if they are unvaccinated. Businesses must make individualized assessment and balance those factors before denying unvaccinated customers and clients entrance to their business. Businesses are required to try an accommodation if it would not alter the nature of their business before denying unvaccinated customers and clients entrance to their business. Again, businesses should consult with counsel on issues relating to vaccination of customers and clients. This is a nuanced issue and additional guidance and rules are anticipated.
August 11, 2021
Labor and Employment
Vaccine Mandates: Are the Tides of Public Opinion Turning and Will it Lead to Increased Mandates?
Dr. Anthony Fauci recently expressed his support for more local vaccine mandates for schools and businesses, which was swiftly followed by a barrage of state and local governments and healthcare companies mandating the vaccine. While businesses have always been able to require vaccination, many have shied away from doing so based on the practical and legal implications, which include providing religious and medical exemptions and preparing to enforce a mandatory vaccination policy even if it means terminating high performing employees. Based on these complications, many private businesses have been encouraging vaccination instead of mandating it. However, with more encouragement from federal, state, and local governments and public health officials, the tides of public opinion are turning, and more businesses may opt to mandate vaccination. That said, moving forward, regardless of guidance from governments, the CDC, and public health officials, business owners will still have to consider the practical realities of vaccine mandates and the potential pitfalls. One practical consideration for many employers has been the appetite for vaccination among their employees. When employers mandate vaccination, they have to be prepared to enforce the policy if an employee refuses to get vaccinated, which could cause them to lose top talent in a competitive job market where replacements are hard to find. Another potential pitfall to mandating vaccinations is the administrative costs associated with processing and vetting exemption requests, especially related to religious exemptions, which are often difficult to assess and determine validity. On the flip side, with the cold and flu season on the horizon, unvaccinated workers may miss substantial amounts of work for common cold symptoms. Just last week, after Dr. Fauci encouraged vaccine mandates, I commented on this subject in the Maryland Reporter (view the article here). Since that time, as the infection and death rates related to the delta variant continue to rise, vaccine mandates have rolled out at a rapid pace with vaccine mandates for New York City, California, and Veterans Affairs workers and a wide range of medical groups and long-term care employees. Many of these mandates have been partial mandates giving employees an interesting choice: get vaccinated or get tested for COVID-19 weekly. Providing a testing option encourages vaccination by putting the burden on employees to get tested weekly and reduces the administrative headache of drilling down on exemptions claimed by employees by providing an alternative to vaccination. While there has been an increase in vaccine mandates in the public sector that may result in increases in private business mandates, the change in public opinion does not eliminate the potential pitfalls and challenges private employers face when determining if a vaccine mandate is right for them. Accordingly, employers still have several things to consider before mandating vaccination and should be sure to have a comprehensive policy to ensure their practices are legally compliant.
July 30, 2021
Labor and Employment
COVID-19 “Long-Haulers” and Workplace Accommodations
Employers spent the better part of 2020 and the beginning of 2021 evaluating how to prevent employees from contracting COVID-19 and address COVID-19-positive employees. Now, as employees return to work, employers face new requests from employees who had COVID-19 weeks or months ago but have not fully recovered. These individuals, typically called" long-haulers," often suffer from lasting physical and psychological issues from their illness. With little currently known about long-haulers, the problems and ailments long-haulers face are likely to impact the workplace for the foreseeable future. COVID-19 long-haulers deal with a host of ailments, including shortness of breath, debilitating fatigue, sluggish mental capacity and memory loss, and dizziness. As one can imagine, these symptoms may inhibit an employee's performance or attendance. As a result, employers should consider ways to address these issues and remain compliant with applicable state and federal laws. If an employee expresses concern regarding long-haul COVID-19 symptoms impacting their work performance, employers should consider whether the employee's challenges trigger company obligations under the Americans with Disabilities Act (ADA). While there's little precedent regarding whether COVID -19 long-haulers ailments are a condition covered under the law, employees who request accommodations because of long-haul symptoms will likely qualify for accommodation. The definition of "disability" under the ADA is intentionally broad, and the ADA does not provide a specific list of what conditions are covered. Instead, individuals meet the definition of "disability" if they have "a physical or mental impairment that substantially limits one or more major life activities." While the ADA does not likely cover an employee who contracts COVID-19 and fully recovers within the standard recovery time of two weeks, if an employee has lingering COVID-19 symptoms that limit their ability to perform their job duties, they likely qualify for coverage under the ADA. Similarly, long-haulers who ask for leave may be entitled to it under the Family Medical Leave Act (FMLA). The FMLA defines a serious health condition as an illness, injury, impairment, or physical or mental condition that involves inpatient care or continuing treatment by a health care provider. A serious health condition also includes impairment of more than three calendar days plus two or more visits to a health care provider. An employee suffering from long-term COVID-19 ailments is likely to meet the definition of a serious health condition and may qualify for leave, intermittent or continuous, under the FMLA. Ultimately, as employees return to work, employers should be mindful of handling requests from employees around COVID-19 related illnesses and challenges to ensure they are compliant and do not inadvertently or improperly deny employee requests.
July 16, 2021
Labor and Employment
Separate Pay for Restaurant “Side Work?” Maybe.
Anyone who has ever worked in the restaurant industry is familiar with the term "side work." For most servers, side work, typically consisting of folding napkins, setting tables, restocking, and other maintenance tasks, often make up a significant portion of their work hours. This is especially true when the restaurant is slow and there isn't much for servers to do. Side work, which is untipped work, is typically regarded as undesirable grunt work that is a necessary evil of waiting tables. Often, since restaurant owners can reduce servers' hourly rates well below the minimum wage to account for tips, employees are making as little as $2.13 per hour. However, a rule proposed by the DOL is seeking to change the way employees are paid for their side work, creating a dual approach where employees are paid at one rate when completing tip-producing duties and another when completing other tasks. Under the proposed rule, individuals who spend a "substantial amount of time" on untipped side work would be entitled to the full minimum wage for certain hours worked. The DOL defines a "substantial amount of time" as (a) spending more than 20% of their hours worked in a workweek on side work (otherwise known as the 80/20 rule), or (b) spending more than 30 minutes of uninterrupted time on side work must be paid standard minimum wage. Thus, per the proposed rule, if an employee spends a substantial amount of time on untipped work, the employer will not take a tip credit and lower the employee's minimum wage for the time the employee spends on untipped work. The comment period for the DOL's proposed tipped rule closes on August 23, 2021. If it is adapted, restaurants will need to shift from simply tracking the hours employees work to documenting what employees are doing during those hours.
July 2, 2021
Labor and Employment
Are you National Labor Relations Act (NLRA) compliant?
In 1935, Congress enacted the National Labor Relations Act (NLRA) intending to protect workers from harmful labor practices and encourage collective bargaining. Out of the NLRA came the National Labor Relations Board (NLRB), an independent federal agency created to enforce the NLRA. While the NLRA granted employees the right to form or join a union and engage in activities aimed at improving working conditions, many employers are unaware of the impact of the NLRA beyond its unionization rights. The NLRA applies to all private workplaces (unionized and non-unionized) in the United States, and all businesses must ensure that their policies and practices do not violate the NLRA's protected activity provisions. Under the NLRA, employees have the right to act with co-workers to address work-related issues. These rights materialize in many ways that go above and beyond employees circulating a petition or joining together to protest working conditions. Concerted protected activities include employees talking openly about pay and benefits, talking to the media about working conditions in the workplace, and refusing to work in unsafe conditions. It is also important to note that it does not take several employees engaging in the activity for it to be a "concerted protected activity." Individual employees may be engaging in protected activity if they are acting on the authority of other employees, bringing group complaints to the employer's attention, trying to induce group action, or seeking to prepare for group action. Ultimately, employers should not prohibit employees from talking about their pay and benefits and must be mindful of their confidentiality, workplace conduct, conflict of interest, and solicitation policies and whether they are NLRA compliant. Overly restrictive policies, while appearing reasonable on their face, may run afoul of the NLRA. For example, while an employer may prohibit an employee from posting something maliciously false or disparaging on social media, broad policy language prohibiting employees from posting anything negative or unsavory about an employer is likely unlawful.
June 10, 2021
Labor and Employment
Delaware's Contractor Registration Act – 19 DEL. C. CHAPTER 36
EFFECTIVE JULY 1, 2021 After a lengthy delay caused by the COVID-19 pandemic, the Delaware Contractor Registry will “go live” on July 1, 2021. Any Contractor who performs construction or maintenance services in Delaware must be registered before performing those services. If the services include work on any public project, the registration must be completed by August 1, 2021. Failure to become registered can result in severe penalties, some of which will effectively put the Contractor out of business. Registration is being handled online through the Delaware One-Stop system (https://onestop.delaware.gov) and is currently in a testing phase with contractor volunteers. Assuming that one has all of the necessary information at their fingertips, the process appears relatively simple and painless. The annual fee is $200 for Contractors performing only private work, $300 for only pubic work, and $500 for those who perform both. A two-year registration discount exists for Contractors who are on the registry for two years with no violations. Most of the information necessary to register is straightforward (FEIN, NAICS Code, contact information, business, and related licenses) if also somewhat intrusive (contact information for all persons with a financial interest in the business). Proof of participation in unemployment and workers’ compensation is required, as well as having an OSHA-compliant safety plan. One item likely to cause confusion and discontent is the disclosure of “labor law violations” during the prior six (6) years. The form asks if the Contractor has received “notifications” from the Department of Labor that it has incurred a violation but fails to distinguish between mere allegations and actual, proven violations. And penalties, of course, there are penalties. They range from being denied registration or having registration revoked (and thereby the ability to work) to being required to post a surety bond to civil penalties ranging from $5,000 to $85,000 (no, that last one is not a typo). One unusual aspect of this statute is that while appeals to the Secretary of Labor are allowed (as with other labor law statutes), there is also a right of appeal from the Secretary’s decision to the Superior Court. Any business that performs construction services or maintenance work must register and do so quickly. For further information, go to the Department of Labor website at CONTRACTOR REGISTRATION ACT - Delaware Department of Labor. This site has FAQs, a copy of the statute, a brochure and checklist of the required information, and links to the Delaware One Stop and the application.
June 3, 2021
Labor and Employment
What to Ask a Lawyer When Starting a Business
(Note: to navigate through the video, click on the YouTube button on the bottom right of the video to open the full version with time controls.) I sat down with Dave Lorenzo on the Inside BS Show to discuss what business owners should consider when hiring an attorney and the importance of having a team of subject matter experts available to help when needs arise. During my conversation with Dave, I answer several questions regarding how I engage with clients and what business owners need to know when dealing with legal issues impacting their business, including: Do I need a lawyer to start a business? Should I work with a litigator of a transactional attorney? What questions should I ask a lawyer before I hire her? Check out the interview for the answers to these questions and more. You can use the timestamps below to navigate through the interview: 00:00 - What to Ask a Lawyer When Starting a Business 01:47 - Business Lawyer Profile: How do you become a business lawyer? 02:22 - What is the biggest challenge you face as a business lawyer? 03:40 - What challenges do you face related to the law and COVID? 05:24 Why is it important to work with a lawyer who knows litigation as well as transactional work? 06:47 What is the definition of Complex Commercial Litigation? 08:00 Why your attorney must ask the right questions when you are a business start-up. 09:53 Do I need a lawyer to start a business? 11:48 How do you protect trade secrets when you hire employees? 14:53 How to get business clients as a lawyer 16:16 How to use LinkedIn and Blogs for law firm marketing. 18:00 Examples of strategic alliance marketing for law firm business development 19:40 How do I find the right lawyer for my small business? 21:18 What unique insight has being a general counsel given you as a business lawyer? 24:36 What is the biggest challenge for a small business owner in working with a lawyer? 26:33 How to get in touch with a business lawyer
June 1, 2021
Labor and Employment
Saying Goodbye to Maryland’s Mask Mandate: Now what?
On Friday, May 14, 2021, Governor Hogan announced changes to Maryland’s mask mandate, which took effect on Saturday, May 15, 2021. Under Governor Hogan’s executive order, individuals are no longer required to wear masks, inside or outside, except when they are: in or on any Public Transportation or School Bus; obtaining healthcare services, including without limitation, in offices or physicians and dentists, hospitals, pharmacies, and laboratories, and indoors in any portion of a School where interaction with others is likely, including, without limitation, classrooms, hallways, cafeterias, auditoriums, and gymnasiums. Many Maryland counties have advised that they will follow Governor Hogan’s order and not impose any additional mask restrictions. In contrast, some jurisdictions, such as Baltimore City, have kept their mask mandates in place. While individuals are no longer required to wear masks under Maryland law, the CDC has recommended that individuals who are not fully vaccinated against the coronavirus should continue to wear masks and practice social distancing (where possible) when inside or when outside and engaging in any of the following behavior: Attending a small outdoor gathering with fully vaccinated and unvaccinated people; Dining at an outdoor restaurant with friends from multiple households; And attending a crowded outdoor event, like a live performance, parade, or sports event. While Governor Hogan’s order does not distinguish between vaccinated and unvaccinated individuals, the CDC does. The CDC still recommends that unvaccinated individuals wear a mask most of the time to protect themselves. Now that Governor Hogan has limited the mask mandate, Employers must determine what policies and procedures make the most sense for their workforce. While, under Equal Employment Opportunity Commission (EEOC) guidance, employers can ask employees to verify whether they are fully vaccinated, the administrative burden will likely be too much for most employers. However, if employers are unaware of the vaccination status of their workforce, they are left to either continue a mask mandate in the office to protect unvaccinated employees or implement policies allowing employees to go maskless and encouraging unvaccinated employees to wear a mask to protect themselves. Putting the onus on each individual to act according to their vaccination status is likely how many employers will move forward. However, in doing so, it is vital for employers to thoroughly inform their employees of the current guidance and make it clear that employees, regardless of vaccination status, may still wear masks and practice social distancing. Additionally, regardless of whether employers decide to require masks or ditch mask-wearing, they need to pay close attention to what other policies they need to keep, such as quarantine requirements for unvaccinated employees and reporting policies. Ultimately, employees should explore their options and develop a clear and comprehensive policy letting employees know what the company expects and how to keep themselves safe. It is also crucial that employers continue to pay close attention to local rules and mandates. Questions about this or any other legal matter, please contact Sarah at Sarah.Sawyer@offitkurman.com.
May 20, 2021
Labor and Employment
Pennsylvania Enacts Law Requiring Mandatory Police Officer Background Disclosures
Pennsylvania Act 57 of 2020 (enacted July 14, 2020) is a game changer in terms of what a Township Police Department must make public and disclose to prospective Police Employers concerning a former or present Township Police Officer. It is long, long overdue and should be welcome by all Townships, Police Officers and Police Unions. It makes all the sense in the world that before a Police Officer is hired, given lifetime tenure, a gun and the power to take life and liberty that the Township and Police Department know everything they can about the officer including all past discipline. The law now requires the Municipal Police Officer Education and Training Commission (“Commission”) to develop a database to hold separation records of all "law enforcement officers" in the Commonwealth (defined as "peace officers" in Title 18 Pa.C.S.A. § 501). The act requires the database to be operational by July 14, 2021 and temporary regulations that were established on March 14, 2021 [Pennsylvania Bulletin (pacodeandbulletin.gov)]. All too often Township Police Departments in their zeal to get rid of a bad officer, for expediency purposes, will agree to expunge an officer’s disciplinary record or let him/her resign in good standing before disciplinary charges are filed, agreeing to not disclose that discipline when the officer applies to another Police Department. The new Department, however, has no idea it is getting a “bad apple.” It is a vicious cycle that, if not broken, harms all Township Police Departments and the public they are entrusted to protect. While a Police Chief is thrilled to be rid of a problem officer, the Department could fall victim, if the next officer hired had his/her prior disciplinary record cleansed as well. Everyone should have empathy and consideration for others who could end up with the problem officers if proper disclosures are not made. This new law finally attempts to address this very serious issue brought about by the recent national publicity about problem officers and the desire for more public transparency and accountability. We expect that more states, if they have not already, will adopt similar legislation in the wake of public backlash against problem police officers. Under this law the Township must proactively maintain and make certain employment records available on the Township website for the public and other Prospective Employer Police Departments to view. Further, it provides a process whereby a prospective employer can go to court if the prior employer stonewalls on providing documents, a process that did not exist before. Municipal employers should consult experienced employment counsel for any assistance needed in complying with the new requirements. Any questions please contact, Gabriel V. Celii at Offit/Kurman, gcelii@offitkurman.com.
May 5, 2021
Labor and Employment
Workplace Discrimination and Harassment Outside the Office
The breakdown of a concrete workplace where worker interaction was somewhat limited to the office during work hours has led to increased flexibility for workers and employers. In many cases, this flexibility has allowed companies greater access to skilled workers, led to a more productive and engaged workforce, and reduced overhead. However, the blurring of the lines between work and home has created additional compliance burdens, especially when communicating and enforcing harassment and discrimination policies. Difficulty ensuring that employees are compliant with workplace policies promoting healthy work environments did not start with the increase in remote work, but they have certainly increased since the world went remote a little over a year ago. Before the COVID-19 pandemic, employers were navigating the difficulties associated with employees’ behavior on social media. Many companies found themselves balancing their desire not to control or police employee behavior outside of work with the impact their outside behavior had on the company culture and exposure. For example, if a group of employees have connected on social media and an employee posts something discriminatory in nature and her colleagues see that post and bring it to the attention of the company, the company may face liability even though the post was made outside of work hours on an employee’s personal page. Now, with many employees working remotely, the ability for employers to prevent and address discriminatory and harassing behavior has become even more complex, and the impacts of such behavior have been more severe. A 2020 Pew Research Center study found that 41% of Americans have personally experienced some form of online harassment. Virtual harassment can take many forms, including sexually explicit jokes, use of derogatory terms through electronic communications, inappropriate use of memes and emojis, insistence on video calls after work hours, and a failure to maintain dress code during video conferences and calls. With fewer natural touchpoints between management and their subordinates, workplace harassment is more likely to go unreported. With this conduct taking place virtually within employees’ homes, employees are more likely to suffer more severe effects. So, what are employers to do? Employers should invest in training and adapt their policies to fit new and evolving office dynamics. Companies can mitigate many of the issues outlined above through clear expectations of employee conduct during work hours and outside work hours, a practical reporting structure that meets the needs of a remote environment, and regular check-ins with remote employees. More than ever, clear and consistent communication with employees is essential to a compliant and healthy work environment. Questions about this or any other legal matter, please contact Sarah at Sarah.Sawyer@offitkurman.com.
April 29, 2021
Labor and Employment
All of My Employees are Vaccinated. Can We Ditch the Masks?
Not Yet. Over the last three months, many employers, including large employers like Aldi, Amtrak, Instacart, McDonald’s, and Target, have been hard at work motivating employees to get vaccinated through incentive programs and education campaigns. Many businesses, especially small businesses with small workforces, wonder when they can start to lift COVID-19 safety protocols, such as mask-wearing in common areas and limiting in-person meetings. While we are the closest we have ever been since the start of the pandemic to scaling back these restrictions, in most states, we aren’t there yet. While the CDC has given vaccinated individuals the green light to visit with other fully vaccinated people indoors without wearing masks or distancing, a review of the CDC’s guidance is the start of the analysis, not the end. Many states, including the State of Maryland, still have mask mandates in place that impact employers. For example, in Maryland, Governor Hogan’s statewide mask mandate from July 2020 is still in place and requires that individuals wear a mask when “engaged in work in any area where…interaction with others is likely, including without limitation, in shared areas of commercial offices…” (View the Governor’s Order here: Executive Order 20-07-29-01) Governor Hogan’s Order does not contain any exceptions for vaccinated individuals, and willfully violating the Order is a misdemeanor punishable by up to a year in jail or up to a $5,000 fine or both. While changes to the Maryland mask mandate are likely in the months to come as more individuals are vaccinated, employers must continue to abide by the current order. Additionally, even when the rules on the federal and state levels loosen, employers will need to consider what makes the most sense for their workplace based on vaccination rates and the realities of their physical workplace to continue to keep employees safe. While restrictions are lifted nationwide, employers should be mindful of the risks associated with prematurely lifting restrictions in the workplace and continue to review their policies and procedures to ensure their employees are safe and comfortable coming to work. Main takeaway? Employers should continue to encourage their employees to get vaccinated, as vaccination is the best way for employees to stay safe and avoid contracting the virus. However, it is too soon to start removing other safety procedures in the workplace. Employers should continue to utilize COVID safety protocols, including liberal use of remote work, where possible, and mask and distancing mandates. Questions about this or any other legal matter, please contact Sarah at Sarah.Sawyer@offitkurman.com.
April 15, 2021
Labor and Employment
Now Hiring: Getting Back to Work Amid the COVID-19 Pandemic
For much of 2020, my conversations with employers were around layoffs, furloughs, and terminations. With the uncertainty of the pandemic, many companies moved forward with mass layoffs and terminations. With businesses opening back up, individuals getting vaccinated, and more information about the virus, employers are bringing employees back and making new hires. With these are overall positive changes, there are also challenges with hiring or rehiring during a global pandemic. While there are the obvious complications associated with safety and COVID-19 compliance, many employers face complaints around who they rehired and who they didn't. Though employers are not required to reinstate employees they have laid off or terminated due to the pandemic; if they reinstate some employees and terminate others, their actions could come under scrutiny if they reflect a potentially discriminatory pattern. For example, suppose an employer laid off similarly situated men and women of all ages but only brings back the young men under forty. In that case, the company could face age and sex discrimination claims. Employers are particularly susceptible to these claims when they do not bring back otherwise qualified candidates without any history of poor performance or misconduct. Accordingly, employers should be mindful of who they are bringing back and why and look for potential problematic patterns that could appear discriminatory. Also, as a practical matter, in addition to avoiding a potential claim of discrimination, bringing back employees who are already trained and ready to hit the ground running can provide businesses with a leg up and allow a business to scale back up quickly. However, many individuals companies laid off have found other jobs. With many companies hiring simultaneously and many individuals still being cautious because of COVID, many employers are struggling to find qualified candidates. This is particularly true in the hospitality industry, where many employees, still reeling from the industry uncertainty caused by the pandemic, have left the industry in favor of jobs that are more likely to withstand the ebbs and flows of crisis. Main Takeaway: As many employers go into hiring mode, they should think strategically regarding whether they rehire, who they rehire, and how they attract new talent. Former employees who were laid off or terminated and aren't rehired may challenge the company's hiring decisions and claim they were discriminatory or retaliatory.
April 15, 2021
