Key Takeaways The 2024 EEO-1 Report is expected to open May 20 pending approval of the instruction book and justification. The EEO-1 is expected to eliminate the option to report non-binary employees. Employers should confirm how their system collects data on the sex of employees to comply with binary-only gender reporting. On April 15, 2025, the Equal Employment Opportunity Commission (EEOC) submitted its 2024 EEO-1 Component 1 Instruction Booklet and justification to the Office of Information and Regulatory Affairs (OIRA), containing potential changes that may impact employers. This booklet indicates that 2024 EEO-1 Component 1 reporting will begin on Tuesday, May 20, 2025, with the deadline to file on Tuesday, June 24, 2025. The 2024 report will cover employee data from the payroll period between October 1, 2024, through December 31, 2024. These reporting dates remain tentative as OIRA must approve the booklet, which can take 30-60 days from the date of submission. Final dates will be posted on the EEO-1 reporting page. Understanding the EEO-1 Reporting Requirements The EEO-1 is an annual requirement that certain employers submit demographic workforce data, including information on race, ethnicity and sex by job group. The EEO-1 report is required for employers with 100 or more employees and employers with less than 100 employees who are related to other entities, such that combined, there are over 100 employees. Changes are Expected to the 2024 EEO-1 Executive Order 14168: Defending Women From Gender Ideology Extremism And Restoring Biological Truth To The Federal Government could have an impact on EEO-1 reporting, particularly concerning the recognition of sex. Executive Order 14168 reinforced the federal government's stance on recognizing only two sexes—male and female. In recent reporting periods, employers were instructed to report non-binary employees by footnote. EEOC is seeking approval to remove the option for employers to voluntarily report on employees who have self-identified as “non-binary” in order to comply with Executive Order 14168. This change would mean that the booklet’s instructions on “Reporting by Sex” would be restated to: “The EEO-1 Component 1 data collection provides only binary options (i.e., male or female) for reporting employee counts by sex, job category, and race or ethnicity.” What Employers Should Do Now? To ensure compliance with the new EEO-1 reporting requirements, employers should review and update their data collection processes. This includes auditing current systems to ensure they can accommodate the reporting of sex as needed. Employers should also stay informed about any updates or clarifications issued by the EEOC regarding the implementation of these changes. Polsinelli will continue to monitor developments with the EEO-1 report. If you have questions about EEO-1 reporting, contact Erin Schilling, Shivani Bailey or your Polsinelli attorney.

Key Takeaways Disparate impact liability holds employers accountable for policies that appear neutral, but disproportionately harm a particular race, sex or a protected group, even without discriminatory intent. This EO significantly reduces federal agency enforcement of disparate impact claims, but importantly, does not impact the risk of a class or individual claim under federal or state laws. Businesses should continue to review hiring and promotion policies for unintentional bias, ensure compliance with federal law and any applicable state laws, and await updated federal guidance from the EEOC. On April 23, 2025, President Trump issued an Executive Order entitled “Restoring Equality of Opportunity and Meritocracy” (“EO”) mandating the elimination of disparate impact liability within Title VI and VII of the Civil Rights Act of 1964. The EO further emphasizes the importance and focus of this administration on the concept of equal employment opportunity. Disparate impact liability is a means by which employers can be held liable for discrimination when their facially neutral policies or practices result in a disproportionate adverse impact on a particular race, sex or a protected class. This theory of liability was recognized by the Supreme Court in 1971 in the case of Griggs v. Duke Power Co., and was later codified by Congress in the Civil Rights Act of 1991. This EO seeks to eliminate the use of this theory of liability to the “maximum degree possible.” To effectuate this goal, the order takes several key steps. First, it revokes several former presidential actions that approved of disparate impact liability. Second, it directs all agencies to deprioritize enforcement of statutes and regulations to the extent that they include disparate impact liability. This order directs the Attorney General to initiate appropriate action to repeal or amend the implementing regulations for Title VI of the Civil Rights Act of 1964 for all agencies to the extent they contemplate disparate-impact liability. In addition, within 30 days of the date of the EO, the Attorney General is to report to the President, in coordination with the chairs of all other agencies, all existing regulations, guidance, rules or orders that impose disparate impact liability and detail steps for their amendment or repeal. This EO also directs the Attorney General and EEOC Chair to assess all pending investigations, civil suits or positions taken in ongoing matters that rely on a theory of disparate impact liability and to take appropriate action consistent with this EO. Further, the Attorney General is to determine whether Federal Authority preempts State laws that impose disparate impact liability. Finally, the EO directs the Attorney General and the EEOC Chair to issue guidance or technical assistance to employers regarding appropriate methods to promote equal access to employment regardless of whether an applicant has a college education, where appropriate. Practically, this EO signals a continued shift in enforcement at the EEOC. It seems unlikely the EEOC will bring any new litigation relying on disparate impact. However, a private right of action for disparate impact still exists under the precedent of Griggs and similar cases, allowing employees to bring claims of discrimination relying on a disparate impact theory. Moreover, state laws may also provide for disparate impact liability. Employers should monitor further guidance that is expected to be issued following this EO. If you have any questions about how these changes may impact you or your organization, please feel free to reach out to Erin Schilling, Gabriel Gomez, Polsinelli’s Executive Action Working Group or your regular Polsinelli attorney.

On April 29, 2025, the Missouri Supreme Court ruled to uphold Proposition A, the voter-approved initiative that increases the state’s minimum wage and requires employers to provide earned paid sick leave. The law will take effect as planned on Thursday, May 1. What is Proposition A? Proposition A raises minimum wage and introduces mandatory earned paid sick leave for most workers. Some of the key provisions of Proposition A include: Raising the minimum wage to $13.75 per hour in 2025 and $15 by 2026 and providing for annual inflation-based increases thereafter. Requiring employers to provide paid sick leave, with workers earning one hour of leave for every 30 hours worked. The Legal Challenge Business associations and other opponents of the measure challenged the law in Case No. SC100876, Raymond McCarty, et al. v. Missouri Secretary of State, et al. Plaintiffs argued that the summary statement and fiscal note summary were so misleading that they cast doubt on the fairness of the election and validity of its results. Further, Plaintiffs argued that Proposition A was invalid because it violated the “single subject” and “clear title” requirements of Art. III, Section 50 of the Missouri Constitution. Majority Opinion The Missouri Supreme Court’s majority held the results of the election adopting Proposition A are valid and dismissed, without prejudice, the claim contending Proposition A violated the single subject and clear title requirements for lack of jurisdiction. Key points from the majority opinion: Ballot Summary: The Court determined that the summary language was not materially inaccurate or seriously misleading to demonstrate an irregularity. Instead, the Court stated that Plaintiffs made conclusory allegations that the summary statement language misled voters but did not offer evidence to support those conclusions. Thus, a new election was not warranted. Single-Subject Rule: The judges declined to rule on whether Proposition A violated the single subject rule—the Court dismissed the claim without prejudice for lack of jurisdiction, stating that the claim had not been properly raised in a lower court before coming to the Supreme Court. Separate Opinion Judge Ransom issued a separate opinion from the majority, stating that she disagreed that the Supreme Court possesses original jurisdiction over election contests. However, Judge Ransom agreed with the majority’s decision if, for argument’s sake, the Court had jurisdiction to hear the challenges. What Happens Next? With the ruling in place: Proposition A will take effect on May 1, 2025. Employers must comply with new minimum wage rates and paid sick leave requirements, including taking immediate steps to implement paid sick leave by May 1. Lawmakers or business groups could still seek legislative revisions or bring new legal challenges. For questions about what your business needs to do to comply with the new law, reach out to your Polsinelli attorneys.

The earned paid sick time provisions of Proposition A are set to take effect on May 1, 2025. Missouri Proposition A requires employers to provide employees working in Missouri at least 1 hour of sick leave for every 30 hours worked and allows carryover of up to 80 of such hours per year. The law applies to almost all Missouri employees, including full-time, part-time and temporary with limited exceptions. For more details on the requirements and background of this paid sick leave law, see our prior blog posts on Missouri Proposition A requirements here and litigation challenge here. While ongoing litigation and legislative efforts seek to delay or modify certain aspects of the law, these initiatives are unlikely to affect the start date or the notice period required by the statute. Therefore, it is essential for employers to begin preparing for the implementation of the law to ensure compliance with the statutory requirements, including the mandatory notice and poster provisions. Notice and Poster Requirements Written Notice to Employees Employers are required to provide written notice of the earned paid sick time policy to all employees by April 15, 2025. The notice must be provided on a single sheet of paper, using a font size no smaller than 14-point. This notice should be distributed along with the employer’s updated written policy. The Missouri Department of Labor & Industrial Relations has provided a standardized notice for employers. Poster Display Requirement In addition to the written notice, Proposition A mandates that employers display a poster detailing the earned paid sick time policy in a “conspicuous and accessible place” at each workplace. This poster must be displayed starting April 15, 2025. The Missouri Department of Labor & Industrial Relations has also provided a poster for this purpose. Litigation Update On March 12, 2025, the Missouri Supreme Court heard oral arguments in a case brought by various business groups and associations challenging the constitutionality of Proposition A. The plaintiffs argue that the Proposition is unconstitutional due to its inclusion of both minimum wage and paid sick time issues on the same ballot. While the Supreme Court has not yet issued a ruling, it typically takes between 100 and 200 days for the Court to render an opinion. Although the outcome of the case may ultimately affect certain provisions of the law, employers should continue preparing for the implementation of Proposition A as currently written, effective May 1, 2025. Legislative Update On March 13, 2025, House Bill 567 passed in the Missouri House of Representatives. This bill seeks to repeal the paid sick leave provisions of Proposition A, delay the scheduled minimum wage increase, and eliminate the annual adjustments to the minimum wage based on the price index. The bill cleared a public hearing in the Senate on March 26, and an executive session will be held on April 7. If the bill passes the Senate and is signed into law by the Governor, it will not take effect until August 28, 2025. As a result, Proposition A will remain in effect beginning May 1, 2025, and employers should prepare for the law to be implemented as currently written. Resources and Support The Missouri Department of Labor & Industrial Relations has developed an overview and frequently asked questions (FAQ) section on its website to assist employers in understanding the requirements of Proposition A and the earned paid sick time benefits. Missouri employers need to review and likely need to update their existing policies regarding sick time and/or paid time off to comply with Missouri paid sick leave requirements. For questions and assistance regarding such changes, please contact your Polsinelli attorney. We are available to help ensure your organization remains compliant with the law.

As Polsinelli has discussed, President Donald Trump issued two Executive Orders, No. 14151 and No. 14173 (the “Orders”), targeting DEI (Diversity, Equity and Inclusion) programs and race- or gender-based preferences. The legal landscape surrounding these Orders continues to evolve. The Orders were initially blocked by a District Court in Maryland. However, the U.S. Court of Appeals for the Fourth Circuit reversed and allowed the Orders to remain in effect while the case was resolved on the merits. Accordingly, employers may want to evaluate whether their workplace practices, policies and/or procedures align with these Orders to mitigate potential legal risks. Additionally, employers need to stay mindful of the rights of employees who raise concerns about a business’s DEI initiatives. Employees who report potential perceived violations may be protected from retaliation, even if the Orders are eventually overturned. Employers should respond to whistleblower complaints carefully, documenting actions and maintaining communication with the reporting employee, while ensuring that any adverse employment actions are based on legitimate reasons, not retaliation. Employers should consider reviewing their complaint reporting procedures and consulting legal counsel to ensure compliance with evolving laws, fostering a workplace that supports both legal and business objectives. Read the full update.

On March 20, 2025, the Equal Employment Opportunity Commission (EEOC) released two key guidance documents focusing on DEI-related discrimination in the workplace. These documents are written as guidance for employees and outline ways the EEOC believes initiatives could lead to unlawful discrimination, including disparate treatment, reverse discrimination, segregation and harassment. The guidance stresses the importance of regular policy reviews, comprehensive training and legal consultation to navigate DEI-related challenges effectively and remain compliant with Title VII protections. Read the full update. 

On March 14, 2025, President Trump issued an Executive Order rescinding 18 previous orders, including Executive Order 14026, which had raised the minimum wage for federal contractors to $17.75 per hour, higher than both the federal and most state minimum wages. The rescission ends the legal uncertainty around this wage increase, which had been invalidated by the Ninth Circuit but upheld by the Fifth and Tenth Circuits. While the new order does not rescind Executive Order 13658, which set a lower minimum wage, it creates uncertainty about federal contractors' obligations under existing contracts that included the $17.75 wage. Read the full update.

On March 14, 2025, the Fourth Circuit Court of Appeals allowed the Trump administration to enforce executive orders (EOs) aimed at restricting Diversity, Equity and Inclusion (DEI) programs while litigation continues. These EOs have sparked legal challenges, with the National Association of Diversity Officers in Higher Education arguing they violate constitutional rights. Federal agencies like the Department of Education (DOE), Department of Health and Human Services (HHS) and the Equal Employment Opportunity Commission (EEOC) are actively investigating and issuing guidance to ensure compliance with the new rules, such as prohibiting the use of race in admissions and hiring decisions. Despite this, 14 state Attorneys General have pushed back, asserting that race can still be considered in admissions if it relates to a student’s personal experiences. Organizations, especially federal contractors, should consider carefully reviewing and updating their DEI policies and practices in light of these ongoing legal developments. Read the full update.

Many state and local government employment laws went into effect January 1, 2025. Here is a non-exhaustive list of 2025 employment law updates. Contact your Polsinelli attorney if you have any questions or need assistance regarding employment law compliance for these legal updates. Polsinelli provides this material for informational purposes only. This material is not intended for use as legal guidance. Please consult with a lawyer to evaluate your specific situation. The choice of a lawyer is an important decision and should not be based solely upon advertisement. Copyright © 2025. Polsinelli PC, Polsinelli LLP in California, Polsinelli PC (Inc) in Florida.

Introduction Since President Trump’s inauguration, the administration has underscored its commitment to prioritizing immigration enforcement. This shift includes an increase in U.S. Immigration and Customs Enforcement (“ICE”) raids and the rescission of previous policies that restricted federal immigration authorities from conducting enforcement actions in sensitive locations such as schools, churches and hospitals. Given the new enforcement landscape, it is crucial for employers to be prepared for potential ICE raids or other immigration audits. Preparing for an ICE Raid An ICE raid is an unannounced operation conducted by ICE agents at businesses or homes to apprehend individuals suspected of violating federal immigration law. During a raid, ICE agents may question individuals present and detain or arrest specific persons. However, their authority to search private space is limited without a judicial warrant. Specifically, ICE agents can enter public areas of a business, such as parking lots or lobbies, without restriction. However, they cannot access nonpublic areas without consent or a valid judicial warrant. In contrast, private spaces, such as a private home or office, are not generally accessible to the public and may even have signage indicating that they are intended to be private.  A judicial warrant, issued by a federal or state court and signed by a judge, specifies the search’s scope and location, which may include a private area. Employees must allow access to areas specified in the warrant but can refuse entry to nonpublic areas beyond the warrant’s authorizing scope. In contrast, an administrative warrant, which is not issued by a judge, does not authorize ICE agents to enter private spaces without permission. It directs law enforcement to arrest or detain specific individuals suspected of immigration violations but does not impose a legal duty to comply with ICE demands.  If ICE agents present a warrant, company management should request a copy, verify its type and validity, and proceed accordingly. Legal counsel should be contacted immediately if there is any doubt about the warrant or its validity. It is also important not to interfere with ICE officers or impede their investigation in any way, as obstructing an investigation may result in significant criminal and civil sanctions. To prepare for a potential enforcement action, employees should be trained on how to interact with ICE agents and who to contact if agents arrive. Employees should be counseled on their rights during an enforcement action. Employers should designate a point of contact knowledgeable about employers’ rights and trained to communicate with agents and legal counsel. Nonpublic areas should be clearly marked to delineate private spaces of a business from public areas. Preparing for an I-9 Audit With the heightened focus on immigration enforcement, an increase in I-9 audits and compliance investigations is anticipated. Federal law mandates that employers timely complete an I-9 form for each employee to verify employment eligibility. The Immigration Reform and Control Act of 1986 (“IRCA”) prohibits employing individuals unauthorized to work in the U.S. and requires employers to verify identity and employment authorization. If the federal government initiates an I-9 audit, the employer will receive a notice of inspection (“NOI”) and generally will have three days to produce I-9 forms for review. If ICE determines that certain employees are unauthorized to work, the employer has ten days to provide valid work authorization for the employees, and if the employer is unable to do so the employees will need to be terminated. Affected employees must be notified of the audit findings. To prepare for a potential I-9 audit, employers should ensure the use of the current Form I-9 and confirm all employees have proper work authorization. Conducting an internal audit with legal counsel can help identify non-compliance issues, allow for corrections to the I-9 forms, and demonstrate good faith if an NOI later is issued, which can help limit civil penalties against the employer. Contact legal counsel immediately upon receiving an I-9 NOI for guidance and compliance. Conclusion With the Trump administration’s focus on immigration enforcement, employers must be prepared for potential ICE actions including enforcement raids in their places of business. Polsinelli’s government investigations and immigration teams are available to assist employers in developing response plans and navigating immigration enforcement.

During her 2025 State of the State Address on January 14, 2025, New York Governor Kathy Hochul announced a plan to support workers displaced by Artificial Intelligence (AI) by requiring employers who engage in mass layoffs or closings subject to New York’s state Worker Adjustment and Retraining Notification law (“NY WARN”) to disclose whether AI automation played a role in the layoffs. Governor Hochul stated that the goal of these disclosures is to understand “the potential impact of new technologies through real data.”  The Governor’s announcement states that she is directing the New York Department of Labor to impose this requirement, so presumably the change will be imposed without the need for legislative action. Specific details about the scope of the new disclosure requirement are not yet available. The rise of AI in the workplace has been a matter of concern to many state lawmakers across the nation, as well as federal regulators. In New York, for example, New York City’s 2021 Local Law 144 placed guardrails on employers utilizing AI and other Automated Employment Decision Tools (“AEDTs”) in employment related decisions by requiring bias audits of AEDT tools and employer notice to employees and candidates of their use. Similarly, California nearly passed a law in 2024, SB 1047, requiring notice to employees when an AI system is used in employment decisions. While the bill was stalled out at the end of the 2024 California legislative session, California is expected to propose more AI safety legislation in 2025. Colorado will also impose a new requirement in 2026 for developers and users of employment-related AI to “use reasonable care to protect consumers from any known or reasonably foreseeable risks of algorithmic discrimination in the high-risk system.” At the federal level, the Equal Employment Opportunity Commission (EEOC) issued two guidance documents in 2023 concerning the issues of adverse impact and disability accommodations in the use of AI and machine learning tools in making workplace decisions. These proliferating laws show the need for employers to be intentional about their use of AI tools in making employment decisions. Legal and human resources leaders should familiarize themselves with how their organizations are using AI tools in the employment context, and design policies to ensure that the rapidly proliferating state and local requirements around AI usage are met. 

On January 21, 2025, President Trump issued an Executive Order revoking Executive Order 11246, which imposes anti-discrimination and affirmative action requirements on federal government contractors and subcontractors. This action, part of the new administration’s broader assault on DEI efforts in the federal government and private sector, may eliminate a significant compliance obligation for federal contractors. However, much remains uncertain about the going forward status of affirmative action requirements in federal contracting.  The new Executive Order requires the Office of Federal Contract Compliance Programs (OFCCP), which administers Executive Order 11246 among other laws, to immediately cease promoting diversity, stop federal contractors and subcontractors from taking affirmative action and end workforce balancing by federal contractors based on race, color sex, sexual preference, religion or national origin. The Executive Order also states that federal contractors shall not consider race, color, sexual preference, religion or national origin “in ways that violate the Nation’s civil rights laws” when making employment, procurement and contracting decisions. The Executive Order states that federal contractors may continue to comply with the regulatory scheme required by Executive Order 11246 until April 20, 2025. OFCCP did not immediately issue guidance on how the new Executive Order impacts contractors’ obligations. Given that OFCCP’s regulations provide that affirmative action goals are not quotas or set-asides, do not supersede merit selection and do not justify making employment decisions in a discriminatory manner, it is unclear how they conflict or would interact with the Executive Order’s prohibition of illegal discrimination and workplace balancing.  With that said, the now-revoked Executive Order 11246 is the source of those OFCCP regulations and contractor race and gender affirmative action obligations. It does not appear that the Executive Order would affect veteran affirmative action plan obligations under the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA) or disability affirmative action plan obligations under Section 503 of the Rehabilitation Act, given the statutory basis for those requirements. In addition to eliminating Executive Order 11246, the new Executive Order requires that every federal contract or grant award must now include a term certifying that the contractor or award recipient will not operate any programs promoting DEI that violate federal anti-discrimination laws, and a term requiring compliance “in all respects with all applicable Federal anti-discrimination laws.” The Executive Order states that this term is material to the government’s payment decision. This raises the specter of potential whistleblower actions under the False Claims Act against contractors operating allegedly discriminatory programs. The revocation of Executive Order 11246 underlines the extent to which DEI efforts are in the Trump administration’s crosshairs. On the same day as the new Executive Order, the Office of Personnel Management issued a memorandum immediately suspending with pay all federal employees working in agency DEI offices. As other agencies continue to take actions based upon President Trump’s DEI-related executive orders, companies that do business with the federal government will need to pay close attention. While much remains unclear, the new Executive Order will undoubtedly be a sea of change for federal contractors and subcontractors. Polsinelli is available to assist contractors in navigating the changing landscape surrounding affirmative action and other DEI requirements.

On January 15, 2025, the Supreme Court of the United States issued a unanimous decision in E.M.D. Sales, Inc. v. Carrera, finally clarifying the standard of proof for employers to demonstrate an employee is properly exempt from minimum-wage and overtime-compensation requirements under the Fair Labor Standards Act of 1938 (“FLSA”). Long story short, the Supreme Court has made it crystal clear that FLSA exemptions are subject to the default “preponderance of the evidence” standard, akin to other employment law claims under Title VII. The Court explained that this decision was made, in large part, because: (1) the FLSA does not specify an evidentiary standard (which generally indicates a default preponderance standard); and (2) it does not involve the limited types of claims (e.g., constitutional claims or citizenship removal proceedings) in which the heightened “clear and convincing evidence” standard is warranted. Until the Carrera decision, the Fourth Circuit stood alone as the sole circuit embracing the “clear and convincing” standard of proof for FLSA exemptions. The Carrera decision rectified this discrepancy, making every circuit uniform in this respect. Ultimately, this decision is a win for employers in the Fourth Circuit, because it lowers their evidentiary burden to successfully argue their workers fall within an FLSA exemption. Employers elsewhere should continue doing business as usual. Contact your Polsinelli attorney to inquire whether your workforce is properly classified as exempt under the FLSA or to spot potential areas of risk related to minimum wage or overtime pay issues.

Governor Hochul signed legislation titled the “New York State Fashion Workers Act” (the “Act”), which has a widespread impact on the modeling industry as it relates to compensation, contractual restrictions, and other workplace protections. The Act takes effect on June 19, 2025. Applicability The Act is geared towards protecting models, regardless of employee or independent contractor status. The Act aims to close any loopholes by placing affirmative requirements and restrictions on model management companies and their clients. Model management companies include those persons or entities engaged in the management, procurement, or counseling of models. The Act applies to clients of model management companies, including retail stores, manufacturers, clothing designers, advertising agencies, photographers, publishing companies or any other person or entity that receives modeling services. Requirements and Prohibitions for Model Management Companies All model management companies must register with the New York Department of Labor within one year of the effective date of the Act, by June 19, 2026. After the registration is complete, the model management company must post their certificate of registration in a conspicuous place within their physical office and on their website. Model management companies may file a request for exemption if it: 1) submits a properly executed request for exemption; 2) is domiciled outside of New York and is licensed or registered as a model management company in another state that has the same or greater requirements as the requirements under this Act; and 3) does not maintain an office in New York or solicit clients located or domiciled within New York. The registration and exemption status only lasts for a two-year period. Notably, if the management company employs more than five employees, then it must post a surety bond of $50,000. The Act broadly imposes a fiduciary duty upon model management companies that is owed to their models. Acting in good faith, model management companies must, inter alia, conduct due diligence, procure opportunities, provide final agreements to models at least twenty-four hours prior to the start of modeling services, disclose any financial relationship with a client, and identify their registration number in any advertisement (including social media). The Act seeks to provide transparency to models’ compensation by requiring the management companies to clearly specify costs that the model must reimburse and providing the model with supporting documentation of those costs on a quarterly basis. The management companies must ensure that employment of a sexual nature or involving nudity complies with state civil rights law. The Act also considers the management company’s past and future use of images. For former models, the Act requires the management companies to send a written notification to the models informing them if the company continues to receive royalties. For future use of a model’s image, the management company must obtain a written consent separate from the representation agreement that details the creation, use, duration, scope and rate for that digital replica. The Act also prohibits management companies from engaging in certain activities. Among prohibitions related to compensation and fees, the Act prohibits a contractual term greater than three years and prohibits the contract from automatically renewing without affirmative consent from the model. The model management companies are prohibited from taking more than twenty percent of a commission fee. Model management companies are prohibited from discrimination, harassment and retaliation. A new topic of interest is the Act’s prohibition on altering the model’s digital replica using artificial intelligence. Finally, the Act specifies that a management company cannot present a power of attorney agreement as a necessary condition to working with the management company. Requirements of Clients The language of the Act establishes client responsibilities owed to models as it relates to compensation and safety. Clients should be aware that if a model works over eight hours in a twenty-four-hour period, they must receive overtime pay and they must receive at least one thirty-minute meal break. Clients must only offer opportunities that do not pose an unreasonable risk of danger, ensure that work opportunities of a sexual nature or involving nudity comply with civil rights law, and allow the model to be accompanied by a representative to any work opportunity. Causes of Action and Penalties Under the Act, models have a private right of action in addition to the enforcement authority of the commissioner and attorney general. The Act provides a six-year statute of limitations. The commissioner may impose penalties of $3,000 for the initial violation and $5,000 for subsequent violations. Before a court of competent jurisdiction, a plaintiff may obtain actual damages, reasonable attorneys’ fees and costs, and liquidated damages up to 100% for non-willful violations and up to 300% for willful violations. Conclusion In anticipation of the Act going into effect, model management companies should thoroughly review and update their policies and practices and prepare to register or seek an exemption. Likewise, businesses that hire models should review their practices and revise policies as necessary to ensure compliance with the Act. Polsinelli attorneys are available to assist with any questions that may arise in anticipation of the June 19, 2025, effective date and any questions that may arise thereafter.

As 2024 comes to a close, employers should be aware of the hourly minimum wage rate increases set to take effect in various jurisdictions on January 1, 2025. 21 states and 48 local jurisdictions will “ring in” the New Year with new minimum wage rates. Of these jurisdictions, 8 states will have minimum wage rates reaching or exceeding $15/hour. Non-exempt employees earning minimum wage in the following states will be impacted by the upcoming increases: Alaska Arizona California Colorado Connecticut Delaware Illinois Maine Michigan  Minnesota Missouri* Montana Nebraska New Jersey New York Ohio Rhode Island South Dakota Vermont Virginia Washington Those states identified in italics also have local jurisdictions with minimum wage increases effective January 1, 2025, that are higher than the applicable state minimum wage. Missouri’s current wage increases are under legal challenge. See our recent blog post here for more details. Employers should be on the lookout for any employees who may be affected by the minimum wage increases in the above states and localities to ensure they are ready to comply with these adjustments. In addition, employers with tip credit employees should review their tip credit notices to ensure full compliance with applicable laws (including cash wage being paid to the tipped employee and the amount of tip credit claimed by the employer). Finally, most jurisdictions require employers to post an updated minimum wage notice in the workplace, so make sure you find those notices before the holiday season takes over. Contact your Polsinelli attorney if you have any questions regarding your wage and hour compliance before we spring into 2025.

The Missouri Chamber of Commerce and Industry, along with other Missouri business groups, recently filed a lawsuit in the Supreme Court of Missouri attempting to stop Proposition A from taking effect. The lawsuit asserts five counts requesting the Supreme Court of Missouri set aside and/or invalidate Proposition A: The fiscal note summary was insufficient and unfair because it: fails to address costs to local governments; inaccurately presents Proposition A’s actual fiscal impact; fails to identify direct costs to private employers and state administrative costs; and fails to note the impact Proposition A would have on tax revenues. The summary statement was insufficient and unfair because it: fails to notify voters of the use cap on paid sick time and that it differs depending on total number of employees; improperly suggests that “all employers” would be required to provide one hour of paid sick leave for every thirty hours worked when the actual measure exempts certain employers; mispresents enforcements and oversight authority; misrepresents requirements of Missouri law; fails to properly identify which employees are excluded from the minimum wage increase; mispresents the exemptions for education institutions; fails to notify voters of creation of a new crime for failure to comply; and fails to notify voters that the new sick leave applies to non-health related reasons. Proposition A violates the single subject clause of the Missouri Constitution by including both the minimum wage increase and paid sick leave. Proposition A violates the clear title requirement of the Missouri Constitution because the title has more than one subject. Proposition A treats similarly situated entities different in violation of the Fourteenth Amendment to the United States Constitution and Article I, Section 2 of the Missouri Constitution. The Missouri Supreme Court has yet to set a briefing schedule or hearing on the matter. Absent a decision on the merits prior to January 1, 2025, employers should be preparing to institute the minimum wage provisions of Proposition A. Employers should also be preparing to implement the paid sick leave provisions of Proposition A beginning May 1, 2025. We previously detailed key provisions of Proposition A here. Polsinelli will continue to monitor this lawsuit for further developments. Please contact your Polsinelli attorney for further assistance.

In the 2024 election, Missouri voters approved Proposition A, a measure that raises the minimum wage beginning January 1, 2025, and introduces mandatory earned paid sick leave for most workers effective May 1, 2025. Key Provisions of Proposition A Applicability: Proposition A applies to most private employers and applies to most employees including full and part-time with limited exceptions. Minimum Wage Increase: Proposition A establishes a gradual increase in Missouri’s minimum wage over the next two years. Starting January 1, 2025, employers must pay Missouri employees a minimum wage of $13.75 per hour. The minimum wage increases to $15.00 per hour on January 1, 2026. Beginning January 1, 2027, the minimum wage will either increase or decrease year after year based on the cost of living. Earned Paid Sick Leave: The law mandates that employers provide paid sick leave, allowing employees to take time off for conditions such as personal illness or care of a family member with an illness. Employers can either front-load sick leave, providing employees with their full annual leave at the start of the year or use an accrual system where leave is earned over time. The amount of accrual depends on the number of employees. For example, an employer with fifteen or more employees must provide a minimum accrual of one hour of earned paid sick time for every thirty hours worked. Full-time employees who are exempt from overtime under the Fair Labor Standards Act are assumed to work 40 hours in a work week for accrual calculations—these employees are expected to accrue approximately 70 hours of earned paid sick time per year. Carryover: Employees can carry over up to 80 hours of unused, earned sick leave into the following year. However, an employer does not have to permit an employee to use more than the entitled number of sick time hours available under the statute. For employers with fifteen or more employees, employees are not entitled to use more than 56 hours of earned paid sick time per year, unless the employer selects a higher amount. PTO Policies: In lieu of implementing a second policy, an employer who already has a paid time off policy can modify their existing policy to comply with Proposition A’s requirements. If the paid leave policy meets the accrual requirements and can be used for the same conditions as earned paid sick time, additional earned paid sick time is not required. Payout: Employers are not required to pay out unused sick leave at the end of the year but may choose to do so as part of their policy instead of allowing carryover. Notably, an employer does not have to pay an employee unused earned paid sick time at termination or separation from employment. Impact on Employers Adjustments Required: Employers must comply with the new minimum wage requirements and set up systems to manage paid sick leave. They can opt for front-loading or an accrual method. Employers opting to adjust their paid leave policy to encompass earned paid sick time may do so if their policy complies with Proposition A’s accrual and use requirements. Flexibility: While the wage increases and paid sick leave mandate may increase costs, employers have some flexibility in managing sick leave through carryover limits, payouts, use limits, and discretion to loan sick time in advance. Proposition A introduces significant changes for Missouri minimum wage and paid sick leave. For questions and assistance regarding such changes, please contact your Polsinelli attorney.

New Jersey recently became the newest state to enact pay transparency legislation. On November 18, 2024, New Jersey Governor Murphy signed Bill S2310 (the “Act”) into enactment. The Act will go into effect on June 1, 2025. The Act applies to employers – broadly defined as “any person, company, corporation, firm, labor organization or association which has 10 or more employees over 20 calendar weeks and does business, employs persons or takes applications for employment within this State, including the State, any county or municipality or any instrumentality thereof.” The Act also applies to employment agencies. Beginning this summer, employers must incorporate two new practices under the Act. First, the Act attempts to provide notice of promotional opportunities to the employer’s existing workforce. The Act requires that employers “make reasonable efforts to announce, post or otherwise make known opportunities for promotion that are advertised internally within the employer or externally on internet based advertisements, postings, printed flyers or other similar advertisements to all current employees in the affected department or departments of the employer’s business prior to making a promotion decision.” However, there are exceptions to the notice requirement. Promotions for current employees based on years of service or performance, or instances of emergencies, are not subject to the notice requirement.   Second, the Act requires that employers specify the compensation package offered for new job openings and transfers. Specifically, employers are required to include the hourly or salary rate, or range and general description of benefits in the job advertisements for internal and external new jobs and transfer opportunities. Failure to comply with the Act’s requirements will lead to a summary proceeding with the Commissioner of Labor and Workforce Development. Employers found in violation of the Act are subject to civil penalties ranging from $300 for first time violations and $600 for subsequent violations. Only one violation exists despite an employer listing the opportunity for a new job, transfer or promotion on multiple forums. In anticipation of the Act going into effect, employers should review and update their job posting policies and practices. Employers should provide training to those employees involved in the hiring process to ensure understanding of compliance with the Act. Polsinelli attorneys are available to assist with any questions that may arise in anticipation of the June 1, 2025 effective date and any questions that may arise thereafter.

On November 15, 2024, the Office of Federal Contractor Compliance Programs (OFCCP) published its Corporate Scheduling Announcement List (CSAL) online, identifying contractors who will be receiving an audit scheduling letter in the coming year. Contractors were selected based on a variety of considerations, including higher employee count. This CSAL includes 2,000 establishments of supply and service contractors with federal contracts. The list identifies the specific review types that contractors will be subject to, including 1,880 standard establishment reviews, 60 corporate management compliance evaluations, 48 functional affirmative action program reviews, and 12 university reviews. A full copy of the lists can be found here. OFCCP does not make any promises regarding how soon each compliance review will be initiated and has stated it depends on the agency’s workload. Contractors on the CSAL can expect to receive a scheduling letter at any point after the CSAL is posted with some receiving notice quickly and others waiting many months. Contractors will have only 30 days to respond to the scheduling letter once received. Accordingly, the advance notice provided by the CSAL can be a valuable opportunity for contractors to prepare for an upcoming audit, collect the data and documents the contractor will be required to submit to OFCCP within a relatively short period after receipt of the scheduling letter, and identify any potential compliance vulnerabilities that may need to be addressed during the audit process. Contractors named in the CSAL should consider consulting with experienced counsel to assist in preparing for the forthcoming audit scheduling letter and to take advantage of this valuable preparation time. Polsinelli regularly represents federal contractors and subcontractors in OFCCP audits, and is available for consultation with contractors identified in the CSAL. 

On November 13, 2024, the National Labor Relations Board (“NLRB”) issued a sharply divided decision in Amazon.com Services LLC, overruling yet another decades-old rule and holding that captive-‍audience meetings violate national labor law after being lawful since 1948. Captive-Audience Meetings. A captive-audience meeting occurs when employees are required to attend a meeting where the employer expresses its views on unionization. Under Section 8(c) of the National Labor Relations Act (the “Act”), employers are allowed to express those views so long as there is “no threat of reprisal or force or promise of benefit.” In 1948, the NLRB decided in Babcock & Wilcox Co. that the Act generally does not prohibit captive-audience meetings, even when attendance is compelled through implicit or explicit threats of discipline. The New Ruling. Calling the Babcock & Wilcox rule “largely unexplained” and “flawed as a matter of statutory policy,” the NLRB majority overruled the 76-year-old decision and held that captive-audience meetings and “other similar mandatory employer-employee encounters” are unfair labor practices under Section 8(a)(1) of the Act. The majority explained that such meetings “have a reasonable tendency to interfere with and coerce employees in the exercise of their Section 7 right to freely decide whether or not to unionize” when employees should “be free from such domination.” Under this decision, an employer violates the Act whenever it requires employees to attend a meeting for the employer to express its views on unionization, regardless of whether those expressions support or oppose unionization. What Meetings are Allowed? Under the majority’s decision, a voluntary workplace meeting during work hours is lawful if, reasonably in advance of the meeting, the employer provides and follows through with the following assurances to its employees: The employer intends to express its views on unionization at a meeting at which attendance is voluntary; Employees will not be subject to discipline, discharge, or other adverse consequences for failing to attend the meeting or for leaving the meeting; and The employer will not keep records of which employees attend, fail to attend, or leave the meeting. The Dissent. Member Kaplan, in a lengthy dissent, argued that an employer’s right to hold a captive-audience meeting is supported by the free speech provision in Section 8(c) of the Act, that they are not coercive, and that the majority’s decision unconstitutionally infringes on an employer’s right to free speech. To comply with the NLRB’s majority decision, employers should carefully adhere to the above guidelines for voluntary meetings. For questions and assistance regarding such meetings, please contact your Polsinelli attorney.

Employers have been waiting with bated breath on the challenges to the DOL’s newest salary increase for exempt employees scheduled to take effect on January 1, 2025. On November 15, 2024, U.S. District Court Judge Sean Jordan for the Eastern District of Texas granted summary judgement in Texas v. Dept. of Labor striking down the DOL’s April 2024 rule. As a brief recap, in late April 2024, the DOL proposed two increases to the minimum salary threshold for the FLSA’s executive, administrative, and professional exemptions (known as the White Collar Exemptions). At the time of the new rule, the salary threshold was set at $684 per week, or $35,568 per year. The rule made the first increase starting July 1, 2024, of $844 per week ($43,888 annually), and the second increase starting on January 1, 2025, of $1,128 per week ($58,656 annually). While there were several challenges before the July 1, 2024 increase, three courts that had challenges before them did not issue injunctive relief to prevent that increase from going into effect. In his order, Judge Jordan found that the DOL’s rule exceeded its authority. Specifically, Judge Jordan found that while the DOL can use salary as a part of its authority to define the requirements of the White Collar Exemptions, the salary test “is not included in the statutory text,” and is “not unbounded.” He stated that the salary threshold cannot “displace” the duties tests for each of the White Collar Exemptions. In using the 2024 U.S. Supreme Court case Loper Bright Enterprises v. Raimondo in his reasoning, Judge Jordan examined the impact of the salary threshold increases compared to prior adjustments, specifically the latest increase in 2019. Judge Jordan found that the new salary increases did not just screen out those employees who were clearly non-exempt, but also resulted in disqualifying significant portions of employees who would otherwise meet the applicable duties tests. For example, the Judge calculated that the July 2024 increase alone resulted in a third of prior exempt employees being disqualified from the exemption. “When a third of otherwise exempt employees who the Department acknowledges meet the duties test are nonetheless rendered nonexempt because of an atextual proxy characteristic – the increased salary level – something has gone seriously awry.” Judge Jordan’s ruling completely strikes the April 2024 rule on a nationwide basis – including the increases that occurred on July 1, 2024. Thus, the salary threshold is reverted back to the $684 weekly ($35,568 annually) amount. The DOL can appeal the decision, but with the upcoming change in administration, it is uncertain what the DOL’s next step will be.

On November 8, 2024, the National Labor Relations Board (“NLRB”) issued a decision in Siren Retail Corp. d/b/a Starbucks, throwing out an almost 40-year-old rule that categorically allowed employers to tell their employees how unionization will impact the employer-employee relationship. The NLRB’s new standard will apply to cases filed after November 8, 2024. The Prior Standard. In 1985, the NLRB decided in Tri-Cast, Inc. that employers may lawfully tell their employees that, when they unionize, their relationship will change, and the employer will no longer be able to address individual grievances once the union is involved. Since that time, Tri-Cast, Inc. has been broadly applied as a categorical rule that explaining the negative consequences of unionization is not an unlawful threat, so long as the employer’s statements are truthful. The Starbucks Case. In Siren Retail Corp., the NLRB criticized the Tri-Cast, Inc. standard because it “categorically immunized nearly any employer statement to employees touching on the impact that unionization would have on the relationship between individual employees and their employer” when such statements “could have a reasonable tendency to coerce employees.” Although the NLRB kept the Tri-Cast, Inc. standard for the Siren Retail Corp. case to avoid an unfair result, it prospectively overruled Tri-Cast, Inc. for all cases filed after November 8, 2024. The “New” Standard. The NLRB’s decision in Siren Retail Corp. effectively tosses out the Tri-Cast, Inc. standard in favor of returning to an even older approach set forth in NLRB v. Gissel Packing Co., a case decided by the United States Supreme Court in 1969. Under the Gissel rule, an employer’s statements concerning the potential impact of unionization are evaluated on a case-by-case basis and must be “carefully phrased on the basis of objective fact to convey an employer’s belief as to demonstrably probable consequences beyond his control.” But if, under that case’s circumstances, the statement implies that the employer will act differently “solely on his own initiative for reasons unrelated to economic necessities,” then the statement will be considered an unlawful threat. What Should Employers Do Now? The “new” standard requires an employer’s statements to be not only substantiated with facts beyond the employer’s control but also carefully worded. Because it involves a case-by-case analysis, employers will not have certainty about the risks and legality of their communications. As such, it will be critical for employers to vet communications to employees about unionization efforts with experienced counsel. For questions and assistance regarding your statements to employees and how to comply with this new standard, please contact your Polsinelli attorney.

On October 29, 2024, the Office of Contract Compliance Programs (“OFCCP”) published a notice in the Federal Register about a request for Type 2 Consolidated EEO-1 Reports (the “Consolidated Reports”) for 2021. (The request is also for 2022 reports, but OFCCP does not currently have those reports.) This request has been made by the University of Utah and a non-profit organization named “As You Sow” – and is separate from the 2022 request made by the Center for Investigative Reporting, which sought the same reports for 2016-2020. An appeal of the proposed release of the objected-to data remains pending in the Ninth Circuit. The Consolidated Reports contain demographic data for all employees at headquarters as well as all establishments, categorized by race/ethnicity, sex, and job category. With the publication of the Notice by OFCCP, government contractors now have until December 9, 2024, to object to the release of this sensitive data. If contractors miss that deadline, their data could be automatically released. The OFCCP has provided a list of contractors subject to this request.  As occurred with the prior FOIA request for Consolidated Reports, contractors must submit their objections to the release of the data to OFCCP through the OFCCP’s Submitter Notice Response Portal (or certain other specified means). The portal provides specific questions for contractors to answer, which address whether the Consolidated Reports and their data should be withheld pursuant to FOIA Exemption 4, which specifically addresses the withholding of trade secret or commercial or financial information. The OFCCP has provided FAQs to aid contractors in determining whether they are covered by the request and how to object, as well as providing contact information for reaching out to the OFCCP FOIA Help Desk. If a contractor submits an objection, OFCCP will independently evaluate the objections and make a determination regarding withholding the Consolidated Reports under Exemption 4. Both the objector and the requesting entities will receive notice of a determination to withhold data. Accordingly, if there is data in your Consolidated Reports that you don’t want published or accessible to competitors, act quickly to submit objections prior to the December 9th deadline. Otherwise, you should expect that your report’s data may be provided to an entity who will make it public. For questions or assistance in evaluating whether you should file an objection to the FOIA request, or in preparing an objection, please contact your Polsinelli attorney.

This past week, the FTC appealed a Texas federal court’s August ruling that blocked nationwide enforcement of the non-compete ban. The non-compete ban will remain blocked during the pendency of the appeal process. However, the outcome of the appeal will determine: (1) whether the non-compete ban remains blocked; and (2) the future scope of the FTC’s regulatory authority. There are three court challenges to the non-compete ban. The status of those challenges (including appeals) is detailed below: Ryan v. The Federal Trade Commission: On October 18, 2024, the FTC filed a Notice of Appeal to challenge a Texas federal court’s seminal ruling, which held the non-compete ban unlawful and blocked—nationwide—the FTC’s non-compete ban from taking effect on September 4, 2024. Pending the appeal, the non-compete ban remains enjoined. The rule will now be considered by the Fifth Circuit. It is likely the issue will be appealed to the U.S. Supreme Court for review. Properties of the Villages, Inc. v. Federal Trade Commission: In August 2024, a Florida federal court entered a limited injunction prohibiting enforcement of the non-compete ban against the named plaintiff. In late September 2024, the FTC filed a Notice of Appeal. The rule will now be considered by the Eleventh Circuit. If there is a circuit split in the U.S. Courts of Appeals, that could create uncertainty in the business community. A circuit split on an issue of national importance, such as this, would also increase the high probability that the U.S. Supreme Court would entertain an appeal and weigh in itself. ATS Tree Services, LLC v. Federal Trade Commission: As the appeals of the Ryan and Villages cases progress, one challenge to the non-compete ban will not be moving forward. In July 2024, a Pennsylvania federal court upheld the legality of the FTC’s non-compete ban. Following that ruling, the Court refused to issue a stay pending the appeal in Villages and the then-anticipated Ryan appeal, prompting the plaintiff to abandon its challenge to the non-compete ban and dismiss the case. Evaluating the potential impact of FTC leadership change: Another consideration for the non-compete ban’s legal battle is the fate of FTC Chair Lina Khan’s tenure. Her three-year term expired in late September, but she may remain on the job as acting chair until or if she’s replaced. Depending on the outcome of the Presidential and Congressional elections, the FTC could come under new leadership at which time the non-compete ban could be rescinded and/or the appeals dropped. What comes next? As the appeal process unfolds, the non-compete ban remains blocked vis-à-vis the Ryan court’s ruling. Polsinelli attorneys will continue to monitor the status of the appeals.

On September 11, 2024, the U.S. Court of Appeals for the Fifth Circuit in Mayfield v. U.S. Department of Labor confirmed that the United States Department of Labor (“DOL”) has the authority to use a salary basis to define its white-collar overtime exemptions. This is a significant win for the DOL as it is presently defending its latest increase to the minimum salary thresholds for executive, administrative, and professional exemptions under the Fair Labor Standards Act (“FLSA”), also known as the FLSA’s “white-collar exemptions," in litigation pending in the U.S. District Courts for the Eastern and Northern Districts of Texas. The Mayfield Decision In Mayfield, a unanimous three-judge panel of the Fifth Circuit provided that the DOL has the authority to "define and delimit" an exemption from overtime pay under the FLSA. In so ruling, the Court affirmed the dismissal of a lawsuit initiated by a Texas fast-food operator, Robert Mayfield, who claimed Congress never authorized the DOL to use salaries as a test for whether workers have managerial duties. The Court rejected Mayfield’s argument. In response, the Fifth Circuit wrote that "[d]istinctions based on salary level are... consistent with the FLSA’s broader structure, which sets out a series of salary protections for workers that common sense indicates are unnecessary for highly paid employees.” Upon issuing the Mayfield decision, the Fifth Circuit joined the four other federal appeals courts that have considered this issue previously (including the D.C. Circuit, Second Circuit, Sixth Circuit, and the Tenth Circuit). 2024 DOL Rule The 2024 DOL rule effectively focused on three main points. First, it raised the minimum weekly salary to qualify for the FLSA’s white-collar exemptions from $684 per week to $844 per week (equivalent to a $43,888 annual salary) on July 1, 2024. Second, it called for another increase of the minimum weekly salary to $1,128 per week (equivalent of a $58,656 annual salary) on January 1, 2025. Third, under the 2024 DOL rule, the above salary threshold would increase every three years based on recent wage data. As mentioned above, the Mayfield decision comes at a time when the DOL is defending its recent 2024 rule increasing the salary thresholds for white-collar exemptions in both the Eastern and Northern Districts of Texas. Indeed, the Mayfield decision’s timing could not have come at a more opportune time for the DOL because it supplies these Texas federal judges with new direction from the Fifth Circuit to consider when making their rulings. What Does This Mean for Employers? The Mayfield decision bolsters the DOL in its bid to set and increase the minimum salary requirements for its white-collar overtime exemptions, which will certainly pose challenges for employers in creating compliant employee compensation structures. In short, if the 2024 DOL rule goes into effect, employers will have to substantially raise their employees’ salaries to ensure they remain properly exempt from the overtime provisions of the FLSA. Contact your Polsinelli attorney if you have any questions related to wage and hour matters or compliance with the FLSA in light of these recent developments.

Yesterday, Judge Ada E. Brown of the U.S. District Court for the Northern District of Texas in Ryan v. The Federal Trade Commission upheld a challenge by business groups to the FTC’s non-compete ban. In addition to confirming her earlier ruling that the FTC non-compete ban was not a valid exercise of agency power, the judge also expanded the limited, temporary injunction entered on July 3, 2024 to hold unlawful and set aside the noncompete-ban in a ruling with a “nationwide effect” that is not limited to the parties in the lawsuit. In other words, the FTC’s non-compete ban will not take effect on September 4 for anyone. The Court concluded that: (1) the FTC lacked statutory authority to promulgate substantive rules concerning unfair methods of competition, i.e. the non-compete ban; and (2) the non-compete ban is arbitrary and capricious because it is “unreasonably overbroad without a reasonable explanation.” As a result, the Court found the non-compete ban to be an unlawful agency action. In deciding the appropriate relief, the Court relied on recent precedent from the Fifth Circuit to conclude its ruling must have a “‘nationwide effect,’ is ‘not party-restricted,’ and ‘affects persons in all judicial districts equally.’” Thus, the Court’s ruling prevents (1) the FTC from taking any action to enforce the non-compete ban against anyone; and (2) the FTC non-compete ban from taking effect on September 4, 2024—effectively vacating it. What happens next? In the wake of the ruling, the FTC’s spokesperson stated, “[The FTC is] seriously considering a potential appeal.” If the FTC decides to appeal, the decision would be reviewed by the U.S. Court of Appeals for the Fifth Circuit in New Orleans. Any decision rendered by the Fifth Circuit would likely be appealed to the U.S. Supreme Court—meaning the final fate of the FTC’s non-compete will be revisited and could change. Importantly, even though the FTC non-compete ban will likely not go into effect in the immediate future, the FTC still has the power in the interim under Section 5 of the FTC Act to pursue enforcement actions on a case-by-case basis. In reacting to the ruling, an FTC spokesperson stated, “Today’s decision does not prevent the FTC from addressing noncompetes through case-by-case enforcement actions.” If the FTC is to be taken at its word, it appears ready to amplify such enforcement actions in the future. The FTC’s posture could change after the November election depending upon the policies of the next administration. How should employers approach non-competes? Notwithstanding yesterday’s ruling, employers should still be mindful of the enforceability of their non-competes now and in the future. Several states have limited or outright banned the use of non-competes. The move by the FTC could spark additional state legislatures to revisit state-level restrictions as they return from recess and begin new legislative sessions this Fall. The U.S. Congress could also decide to enact legislation of its own; and, it’s conceivable that yesterday’s ruling will serve as a catalyst for Congress to revisit such legislation. Polsinelli attorneys are continually monitoring the evolving landscape of restrictive covenant law and are available to help you evaluate your use of non-competes and other restrictive covenants to protect competitive information.

Missouri voters will decide in November whether to raise the state’s minimum wage and guarantee paid sick leave for workers. On August 13, 2024, Missouri Secretary of State Jay Ashcroft certified a ballot measure advanced by the Missourians for Healthy Families & Fair Wages. Proposition A proposes to guarantee that Missouri workers can earn up to seven paid sick days per year and would gradually raise the minimum wage to $15/hour. Proposition A asks: Do you want to amend Missouri law to: Increase minimum wage January 1, 2025, to $13.75 per hour, increasing $1.25 per hour each year until 2026, when the minimum wage would be $15.00 per hour; Adjust minimum wage based on changes in the Consumer Price Index each January beginning in 2027; Require all employers to provide one hour of paid sick leave for every thirty hours worked; Allow the Department of Labor and Industrial Relations to provide oversight and enforcement; and Exempt governmental entities, political subdivisions, school districts, and education institutions? Notably, Proposition A exempts federal, state and local governments, school districts, and educational institutions, among others, from its requirements. Proposition A also carves out numerous exceptions to the “employees” subject to the proposed amended statute, including government workers, non-profit volunteers or independent contractors, retail or service employees who work for a business that makes less than $500,000 per year, individuals who are incarcerated, golf caddies, and babysitters. If it passes, Proposition A would change Missouri law rather than the Constitution. Practically speaking, that means the Republican-controlled General Assembly could repeal the measure. However, the popularity of previous ballot initiatives raising the minimum wage curtailed action from the General Assembly. Therefore, if Proposition A passes by a large margin, the General Assembly may be reticent to repeal. Polsinelli will continue to monitor developments as the vote unfolds. If you have questions about the potential impact these amendments could have on your business or employees, contact your Polsinelli attorney.

Many state and local government employment laws go into effect this summer. Here is a non-exhaustive list of mid-year employment law updates. To hear a discussion on what you need to know from 2024 and more information about complying with these changing laws, regulations, and rulings, we invite you to register here for a webinar on September 26 from 1:00 PM to 2:00 PM ET. Contact your Polsinelli attorney if you have any questions or need assistance regarding employment law compliance for these legal updates.

Yesterday (July 23), a Pennsylvania judge—in ATS Tree Services, LLC v. Federal Trade Commission—upheld the legality of the FTC's non-compete ban. This ruling contradicts the ruling recently issued in a parallel proceeding in Texas. Earlier this month, a Texas judge—in Ryan, LLC v. Federal Trade Commission—temporarily enjoined the FTC’s non-compete ban from going into effect against the named plaintiff/intervenors. Although the Texas judge declined to implement a nationwide injunction, she signaled an intent to uphold the challenge to the non-compete ban in a future ruling based on her finding that the FTC had likely exceeded its statutory authority and a categorical ban on non-competes would be arbitrary and capricious.  The ruling sides with the FTC, creating a divide in the judiciary on the scope of the FTC's regulatory powers and the legality of the FTC’s upcoming non-compete ban (scheduled to take effect on September 4). While the Court’s ruling partially denied a preliminary injunction based on a finding of no irreparable harm, the crux of the opinion held that plaintiff was unlikely to succeed in establishing that the FTC’s non-compete ban is unlawful. In so finding, the judge endorsed the FTC’s interpretation of its procedural and substantive rulemaking authority and concluded that the FTC has the authority to promulgate a rule that effectively bans non-competes nationwide. What comes next? While the Pennsylvania judge's decision provides a lifeline to the quickly approaching non-compete ban, the FTC's win may be short-lived. By August 30, the Texas judge intends to rule on the ultimate merits of the challenge to the non-compete ban, at which time she could issue more expansive, nationwide relief. Additionally, briefing is underway in a third challenge to the non-compete ban filed in Florida (Villages, Inc. v. Federal Trade Commission). It is expected that yesterday’s developments could spur additional legal challenges by employers. We will continue to monitor and report new developments.   What should employers do now? Given the uncertainty of whether the FTC’s non-compete band will go into effect on September 4, employers should consult with counsel about their options and the appropriate steps and contingencies to explore in the interim.

On July 3, a Texas judge in the bellwether lawsuit, Ryan, LLC v. The Federal Trade Commission, became the first to weigh in on the legality of the FTC’s non-compete ban that is set to take effect on September 4. As was widely anticipated, the Court concluded that a preliminary injunction was appropriate, and it temporarily enjoined the non-compete ban from going into effect against the named plaintiff/intervenors to the Ryan lawsuit. Less anticipated, the Court declined to issue a nationwide injunction to non-parties—meaning that the FTC’s non-compete ban currently remains set to take effect on September 4 for all employers who are not named parties in the Ryan lawsuit. In reaching its conclusion, the Court held that the FTC’s rule banning most non-competes is likely unlawful for two reasons: (1) the FTC likely exceeded its statutory authority because it does not have substantive rulemaking authority to craft rules regarding unfair methods of competition; and (2) a categorial ban on nearly all non-competes would likely be arbitrary and capricious because it is overly broad without any reasonable explanation. While these findings are a clear rebuke of the FTC’s actions, the Court expressed doubt about whether it would be appropriate for it to issue a nationwide injunction that would extend to non-parties because such relief is unnecessary to protect the interests of the named parties (which is the focus at the preliminary injunction stage). The implications of this ruling are going to evolve over the next two months. The Court has ordered the parties to submit a joint status report by July 9 to determine the case’s next steps, and it has committed to issuing a final decision on the merits of the entire lawsuit by August 30. This forthcoming merits-based decision could result in a more expansive nationwide injunction that would extend to non-parties; however, many employers may view this as providing little reprieve in the interim because of the anticipated rulings timing with the looming September 4 effective date and actions needed to prepare for that effective date. For now, employers will need to revisit how they intend to approach the FTC’s Final Rule in the days leading up to September 4. Attention will also likely shift to the parallel lawsuit in Pennsylvania, ATS Tree Services, LLC v. The Federal Trade Commission, which leaves open the possibility of a nationwide injunction still being issued by that Court later this month.

In April, the U.S. Supreme Court unanimously held in Muldrow v. City of St. Louis, that to sustain a prima facie case of employment discrimination under Title VII of the Civil Rights Act of 1964 (“Title VII”), plaintiffs do not have to show that a discriminatory transfer to another position caused “material” or “significant” harm to the plaintiff; rather plaintiffs only have to show that “some” harm occurred because of the job transfer. In its opinion, the Court did not explicitly articulate how “some” harm is defined. Regardless, the reduced “harm” standard will invariably increase the number of claims that survive early dismissal at the trial court level. Indeed, Justice Kavanaugh opined that a plaintiff “should easily be able to show some additional harm – whether in money, time, satisfaction, schedule, convenience, commuting costs or time, prestige, status, career prospects, interest level, perks, professional relationships, networking opportunities, effects on family obligations, or the like.” Pre-Muldrow, federal circuits disagreed on how much harm a plaintiff must show to have suffered an actionable “adverse employment action” under Title VII. Some circuits previously held that no showing of harm necessary beyond the discriminatory act itself was required, while other circuits generally applied a heightened standard of harm for claims to be actionable under Title VII. Post-Muldrow, employers will be forced to grapple with a lowered, undefined standard of “harm,” which will likely require additional litigation to sort out. Further, while the Court’s holding was focused on job transfers, the decision might encourage employees to challenge other types of employment actions, (i.e., scheduling changes, work assignments, training and mentorship, or other opportunities) in an attempt to lower the legal standards for actionable discrimination claims altogether. However, it is not time to panic (yet). Employers still have the well-known defense in their arsenal that the job transfer was made for legitimate, non-discriminatory reasons. As such, thorough documentation for the reasons supporting an employee’s job transfer have just become even more critical to shield employers from increased discrimination claims under Title VII. Contact your Polsinelli attorney to ensure your policies, programs, and employment decisions are structured to mitigate increased risk surrounding the new Muldrow job transfer standard.

On June 7, 2024, the Office of Federal Contract Compliance Programs (OFCCP) released its first Corporate Scheduling Announcement List (CSAL) for fiscal year 2024. Specifically, this list identifies around 500 federal supply and service contractors and subcontractors that will be audited. The CSAL can be found here and the OFCCP answers to CSAL-related questions can be found here. Of the 500 contractors and subcontractors identified, 440 are establishment-based reviews, 30 are corporate management compliance evaluations (CMCE) focused on the contractor’s headquarters, 24 are functional affirmative action plan (FAAP) reviews, and 6 are university reviews. The release of the CSAL does not indicate that audits are beginning but rather, informs contractors and subcontractors that they have been identified for audit. This allows contractors and subcontractors advance notice and can be very helpful in providing time to prepare for the audit, gather data and documents necessary for the audit, and identify any potential issues that may need to be addressed before or during the audit. Before formally initiating an audit, OFCCP sends contractors and subcontractors a Scheduling Letter. Scheduling Letters are often issued around 45 days after the CSAL is released, and as such, it can be difficult and rushed for contractors and subcontractors to prepare for the audit. Polsinelli regularly represents federal contractors and subcontractors in OFCCP audits and is available for consultation with contractors and subcontractors identified in the CSAL.

Tuesday, June 4, 2024, is the deadline to submit and certify the 2023 EEO-1 Component 1 Report to the Equal Employment Opportunity Commission (EEOC). While the deadline has been extended occasionally in prior years, no such announcement has been made to date. Accordingly, all covered employers should take steps to comply by the deadline. The importance of meeting this annual reporting requirement was further emphasized this week when the EEOC filed suit against 15 employers in various industries across 10 states for failing to submit their EEO-1 Component 1 Reports for past years, including for the years 2021 and 2022. Additional information regarding reporting requirements and whether your company is required to submit and certify can be found here. Polsinelli will continue to monitor developments with EEO-1 reporting and the above-referenced EEOC lawsuits. If you have questions about EEO-1 reporting or need assistance preparing this report, contact your Polsinelli attorney.

Yesterday (May 29), in Ryan, LLC et al. v. The Federal Trade Commission, the FTC filed its response in opposition to Plaintiffs’ request to stay/enjoin the FTC Rule banning non-competes from taking effect on September 4. The Court has committed to issuing a decision on Plaintiffs’ request no later than July 3. Consistent with commentary to the Rule, the main thrust of the FTC’s response argues it has authority to issue the Rule pursuant to the Federal Trade Commission Act’s directive that Congress “empowered and directed” the FTC to prevent the use of unfair methods of competition through rulemaking. The FTC also devotes significant briefing to dispelling the application of the “major questions doctrine” to curtail its regulatory ability. We anticipate the Court’s decision will most likely hinge on whether the Court applies the major questions doctrine – articulated in the U.S. Supreme Court’s 2022 decision in West Virginia v. Environmental Protection Agency – to grant a nationwide injunction enjoining the Rule. In the West Virginia decision, the Supreme Court found the EPA’s policy involved a “major question” and that the agency went too far in its attempt to regulate absent explicit permission from Congress to do so. The U.S. Court of Appeals for the Fifth Circuit employed that same rationale to affirm a preliminary injunction blocking enforcement of President Biden’s COVID-19 federal contractor vaccine mandate. The Fifth Circuit’s decision likely drove the filing of the two lawsuits challenging the Rule in Texas federal courts, which sit in the Fifth Circuit. Plaintiffs' reply briefs are due June 12. Your Polsinelli Restrictive Covenant and Trade Secret Group will continue to monitor these cases and will keep you updated with any major litigation developments.