Offit Kurman Blogs
Labor and Employment
Three Workers' Compensation Mistakes Small Businesses with Independent Contractors Can Avoid
Many business owners assume that once they've purchased a workers' compensation policy, they've adequately managed their risk. Unfortunately, some of the most significant exposures arise not from the absence of insurance, but from misunderstandings about who is covered, whether independent contractors are properly classified, and whether coverage remains in place when an injury occurs. A workplace injury can quickly lead to disputes over worker status, insurance responsibility, and employer liability. The good news is that many of these risks are preventable. A few proactive steps can significantly reduce your company's legal and financial exposure. Don't Assume Your Independent Contractors Have Workers' Compensation Coverage Many businesses hire independent contractors with the expectation that the contractor is responsible for maintaining their own workers’ compensation insurance. That assumption can become costly. If a contractor is injured and does not maintain valid workers' compensation coverage, the hiring business may face more than a dispute over insurance obligations. In some cases, the injured worker may contend that he or she was actually an employee rather than an independent contractor. If a state’s Workers' Compensation Commission agrees, the business may become responsible for a workers' compensation claim despite having treated the individual as an independent contractor. The business may also face additional insurance premiums, audits, and scrutiny regarding worker-classification practices. Just as importantly, insurance status and worker classification are separate issues. A signed independent contractor agreement and a contractor's certificate of insurance do not necessarily determine whether the individual will be treated as an independent contractor under a state’s workers' compensation law. When evaluating workplace injuries, agencies and commissions often look beyond labels and examine the actual working relationship, including the degree of control exercised by the hiring entity. Businesses should periodically evaluate contractor relationships to ensure the classification remains defensible and consistent with day-to-day operations. Build a Process to Verify and Continuously Monitor Coverage Insurance verification should be an ongoing process, not a one-time administrative task. Many businesses obtain a certificate of insurance when a contractor is first engaged and never look at the file again. Months later, the policy may have expired without anyone noticing. Consider implementing a standard contractor onboarding and renewal process that includes: Obtaining current proof of workers' compensation coverage, including declarations pages or other documentation confirming active coverage Collecting certificates of insurance for applicable policies Recording policy effective and expiration dates Calendaring renewal dates and requesting updated documentation before policies expire Requiring contractors to notify your business if coverage is cancelled or allowed to lapse Periodically auditing contractor files to confirm documentation remains current Verifying coverage before work begins is an important first step, but it should not be the only step. Businesses should also periodically evaluate whether the contractor relationship is structured and administered in a manner consistent with independent contractor status. An expired policy creates risk, but so does a contractor relationship that may not withstand scrutiny if an injury occurs. Workers' compensation should not be reviewed in isolation. Where appropriate, contractor agreements should also require commercial general liability coverage naming your business as an additional insured. While workers' compensation policies generally do not provide additional insured status in the same manner, verifying both types of coverage helps create a more comprehensive risk-management program. Contracts Matter, Too Insurance verification works best when paired with well-drafted contractor agreements. Depending on your business and industry, contracts should address insurance requirements, require contractors to maintain coverage throughout the engagement, obligate them to provide updated proof of insurance upon renewal, require notice of any lapse or cancellation, and include appropriate indemnification provisions where legally appropriate. While strong contracts are important, they do not guarantee that a worker will be treated as an independent contractor following an injury. Courts and administrative agencies generally examine the substance of the relationship rather than the title used in the agreement. For that reason, businesses should view a contractor agreement as just one component of a broader compliance strategy. Don't Overlook Owner Coverage Elections Another frequently overlooked issue involves business owners themselves. Whether an owner is automatically covered under a workers' compensation policy, or may exclude themselves from coverage, often depends on the state law’s requirements, the company's legal structure, and the owner's role. Depending on the state, sole proprietors, corporate officers, LLC members, and partners may be treated differently. As your business grows or ownership changes, it is worth confirming that your insurance policy accurately reflects your intentions. At least annually, review: Whether owners are currently included in the policy Whether any available elections or exclusions have been properly completed Whether changes in ownership or business structure require updates to your coverage A short annual review can help prevent misunderstandings after a workplace injury. A Five-Minute Annual Compliance Check Once a year, ask yourself: Have I verified that every contractor currently maintains workers' compensation coverage Do I have current declarations pages or other proof of active coverage on file Am I tracking policy renewal dates Do my contractor agreements require continuous insurance coverage Have I confirmed appropriate commercial liability insurance and additional insured endorsements where applicable Have I reviewed whether owner coverage elections still reflect my business structure Have I evaluated whether each independent contractor relationship remains properly classified Are my managers treating contractors differently from employees in day-to-day operations Would the facts of the relationship support independent contractor status if reviewed by my state’s Workers' Compensation Commission If any answer is "no," now is the time to update your procedures. Not after someone gets hurt. In sum, workers' compensation risk management with your independent contractors is more than just collecting certificates of insurance. Businesses should verify contractor coverage, maintain current insurance documentation, periodically review worker classifications, and use carefully drafted agreements that align with actual business practices. Taking these steps can help reduce the risk of unexpected workers' compensation liability, classification disputes, insurance audits, and related litigation.
July 24, 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
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
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
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
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
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
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
