Key Highlights Menopause protections are emerging at the state level, led by Rhode Island, which became the first state to explicitly prohibit menopause discrimination and require workplace accommodations — highlighting a growing shift in employment law. A significant gap exists in federal law, leaving employees to rely on overlapping protections (sex, age, disability), which creates uncertainty and legal risk for both workers and employers. Employers should prepare proactively, as more states are likely to follow and menopause-related claims are already gaining traction—making it important to consider accommodations and policy updates now. This just in: menopause has entered the legal spotlight. For decades, menopause has existed in a legal gray area, widely experienced but largely invisible in workplace policy. States are now incorporating menopause protections into existing anti-discrimination laws, clarifying workplace law and expectations. In 2025, Rhode Island led the charge by becoming the first state to explicitly cover menopause when it amended its Fair Employment Practices Act to prohibit menopause discrimination and require reasonable accommodations. This approach offers a framework for states looking to fill gaps left by federal law. The Federal Gap Federal anti-discrimination laws — like Title VII, the Americans with Disabilities Act, and the Age Discrimination in Employment Act — do not recognize menopause as a distinct protected category. Instead, employees must rely on overlapping protections — sex, age or disability discrimination — to bring claims. The gray area creates uncertainty for both employees and employers. Rhode Island’s approach cuts through that confusion by declaring menopause its own protected category and treating it as such. By incorporating menopause into an existing pregnancy accommodation framework, the state requires employers to engage in the interactive process and provide reasonable accommodations absent undue hardship. Why Menopause Matters Menopause is not niche — it affects millions of women in the workforce. Common symptoms include hot flashes, fatigue, sleep disruption, headaches, as well as difficulty concentrating, memory lapses and “brain fog.” Managing these physical changes in the workplace is no easy feat. The symptoms of menopause can affect focus, productivity, attendance and comfort — especially in environments with rigid schedules or high cognitive demands. Studies show that menopause often pushes women into early retirement, causing employers to lose valuable contributors, skills, experience, and knowledge prematurely. Put simply: menopause is a workplace issue, not just a personal one. The Expansion Playbook Rhode Island’s law did not reinvent the wheel. Instead, it built onto an existing pregnancy accommodation framework. Folding menopause into an established legal framework may become the dominant model nationwide. It allows legislatures to build upon familiar laws while extending protections to a historically overlooked condition. Momentum Beyond Rhode Island Although Rhode Island is currently the only state with explicit menopause protections, it is unlikely to remain an outlier. The issue is gaining traction in state legislatures, where broader menopause-related initiatives — from insurance coverage to provider training — have been introduced across multiple jurisdictions. For example, New York, California and Virginia are reviewing proposed bills to expand legal protections for people experiencing menopause in the workplace. Historically, the most impactful employment laws have followed a certain trajectory: one state moves first, the rest follow. Menopause protections will likely follow suit. Implications for Employers Employers around the country — listen up! Even if you do not have employees in Rhode Island, this isn’t something to ignore. Courts and agencies are already more receptive to menopause-related claims under existing laws, particularly when symptoms overlap with recognized disabilities or sex-based issues. As state laws begin to diverge, employers operating across multiple jurisdictions may face a growing patchwork of legal obligations. Policies that suffice in one state may fall short in another. Forward-looking employers may consider adopting menopause-related accommodations proactively — such as flexible scheduling, temperature adjustments or modified break policies — rather than waiting for legal mandates. A New Frontier in Workplace Law The explicit expansion of anti-discrimination statutes to cover menopause reflects a broader evolution in employment law: explicitly recognizing under-addressed health conditions. Menopause may represent the next frontier in workplace protections — one that sits at the intersection of sex, age and disability and challenges traditional categories of discrimination law. In the end, this is not a singular issue — it is a workforce reality. People navigating menopause are often at the height of their careers, managing teams and holding institutional knowledge that companies cannot easily replace. State moves to close the gap reflect a growing recognition that when women are supported, organizations succeed. For questions about this evolving legal trend, please contact your Polsinelli attorney.

Key Highlights The Equal Employment Opportunity Commission has held Title VII permits federal agencies to maintain single-sex bathrooms/locker rooms and exclude transgender employees from opposite-sex facilities. While the decision applies only to the federal sector, it provides a roadmap for how the EEOC may analyze bathroom/locker room issues post-Bostock. Six years after the Supreme Court’s 2020 decision in Bostock v. Clayton County reshaped Title VII, the EEOC has addressed an unanswered question from that decision: whether Title VII requires a federal agency to allow a transgender employee to use bathrooms and locker rooms consistent with the employee’s gender identity. Selina S. v. Daniel Driscoll, Secretary, Department of the Army, EEOC Appeal No. 2025003976 (Feb. 26, 2026). Inside the EEOC’s Holding The case involves a civilian employed by the U.S. Army who had used male-designated restrooms and locker rooms without issue. In 2025, the complainant informed management that he identified as a woman and requested access to female-designated facilities. The agency denied the request based on guidance requiring sex-based designation of “intimate spaces.” The EEOC framed the appeal as presenting an issue not “authoritatively addressed” — whether Title VII’s prohibition on discrimination “because of sex” extends to access to sex-designated bathrooms and locker rooms. The analysis relied heavily on Bostock, which held that firing (or refusing to hire) someone “simply for being . . . transgender” is discrimination “because of . . . sex” under Title VII. Bostock, however, left open the question of access to “bathrooms, locker rooms, or anything else of the kind.” Using that framing, the EEOC treated restroom and locker room access as a distinct issue. The EEOC concluded that Title VII permits federal agencies to maintain single-sex bathrooms and similar intimate spaces and to exclude employees from opposite-sex facilities. Exclusion from intimate spaces by itself, the Commission clarified, does not state a plausible Title VII claim. Applying what it characterized as an “equal treatment” approach, the EEOC reasoned that a policy separating bathrooms by biological sex does not constitute unlawful discrimination if applied equally to all employees, regardless of transgender status. According to the majority, men and women are not similarly situated in intimate spaces, and sex-based separation in those contexts reflects privacy interests and biological distinctions rather than discriminatory animus. Given the decision arises in the federal administrative context, judicial review is possible. Federal courts are not required to adopt the EEOC’s interpretation. We anticipate continued litigation in this area is likely, given Bostock’s unsettled scope. Why This Matters While the decision does not apply to private-sector employers, it provides insight into how the EEOC may approach facility-access claims. The decision distinguishes between adverse employment actions based on transgender status — squarely addressed in Bostock— and access to sex-designated intimate spaces, which Bostock did not resolve. Additionally, the ruling does not provide a safe harbor for employers’ decisions concerning employees’ access to intimate spaces. Federal courts remain divided on Bostock’s reach, and many state and local laws expressly require that employees be permitted to access facilities consistent with their gender identity. Employers operating across jurisdictions might consider evaluating whether a uniform nationwide policy creates compliance risk in particular states or municipalities. Workplace safety guidance and other regulatory considerations may also intersect with facility-access policies. For federal contractors and subcontractors, the practical impact may be more immediate. Contractors often operate on federal property and alongside federal employees. Contractors operating on federal property may face operational and employee-relations challenges if agency rules governing facility access differ from internal policies. Contractors might consider reviewing site-specific access protocols, assessing alignment between employee handbooks and federal worksite rules and reviewing supervisor training on addressing related employee concerns. Looking Ahead The contours of Title VII’s application to bathroom and locker room access remain unsettled. Continued litigation is likely, and further judicial clarification may follow. Polsinelli attorneys will continue to monitor developments in light of evolving federal, state and local requirements. Employers with questions about the EEOC’s decision or compliance considerations should consult their Polsinelli Labor and Employment attorney.

Key Highlights Washington to Ban Most Noncompetes: ESHB 1155 renders nearly all noncompetition agreements void and unenforceable effective June 30, 2027. The law provides an expanded definition that targets both traditional noncompetes and contractual workarounds, and it will apply to all covered agreements, not just those executed after the effective date. Narrow Path for Permissible Restrictions: Employers may still use limited nonsolicitation, confidentiality and trade secret protections, but these must be carefully tailored to comply with the law’s stricter standards. Immediate Action Required to Mitigate Risk: Employers should begin auditing agreements, revising templates and preparing required notices now, as the law introduces new compliance obligations and significant litigation exposure for violations. Governor Ferguson signed ESHB 1155 on March 23, banning the use of noncompete agreements between businesses and workers. With this new law, Washington State joins the growing list of states prohibiting or sharply limiting the use of noncompetition agreements.    The Ban The law makes all noncompetition agreements void and unenforceable once the law takes effect, which is expected to be June 30, 2027, regardless of when they were signed. The bill also broadens what qualifies as a noncompetition covenant. In addition to traditional noncompetes, the definition includes certain agreements between performers and venues or intermediaries that restrict lawful performance, as well as provisions requiring a worker to return, repay or forfeit compensation or benefits because the worker engages in a lawful business or profession. In practical terms, this means courts will closely review compensation and benefits arrangements for provisions that may function as a penalty on post-employment competition. For example, clawback terms, forfeiture-for-competition provisions in bonus or equity plans, retention payments that must be repaid only if the worker joins or starts a competing business, and similar disincentives may now be treated as noncompetition covenants if they are triggered by the worker’s decision to engage in lawful competitive work. Permissible Activity Some restrictions remain permissible: Nonsolicitation clauses are permitted but must be “narrowly construed.” Such clauses may bar solicitation of coworkers or customers the worker developed a relationship with for up to 18 months. However, nonsolicitation clauses cannot restrict a former employee accepting or doing business with customers. The sale of business carveout from the previous law remains intact. Specifically, a noncompetition covenant does not include one “entered into by a person purchasing or selling the goodwill of a business or otherwise acquiring or disposing of an ownership interest,” but only if the signer is dealing with an ownership interest representing 1% or more of the business. Confidentiality, trade secret, invention‑assignment provisions, certain sale‑of‑business covenants and limited educational‑expense repayment clauses remain valid. The Notice Requirement For employers that currently use noncompetes, notice is not just a formality — it’s a central compliance obligation. By October 1, 2027, employers must make reasonable efforts to provide written notice to all current and former employees and independent contractors whose noncompetition covenants would otherwise still be in effect, advising them that those covenants are void and unenforceable. The bill does not define “reasonable efforts” to notify employees. To avoid the risks associated with that uncertainty, employers might consider documenting efforts to locate and contact workers, and immediately start identifying contracts that might be subject to this requirement. What Employers Using Noncompetes Can Do Now Review of Existing Agreements: Review employment agreements, contractor forms, separation agreements, equity documents, bonus plans, clawback provisions and other compensation-related terms for provisions that may violate the new law. Review nonsolicitation clauses carefully to ensure they do not run afoul of new restrictions to create an unlawful noncompetition restriction. Assess any repayment or forfeiture provisions that could penalize a worker for engaging in a lawful occupation. Evaluate Enforcement Plans:Evaluate offboarding documents and talking points for language that could be inconsistent with the new statute. Develop training for HR, recruiting and in-house legal teams based on the law and any revisions to the company’s documents. Develop a Notice Plan:Identify affected current and former workers, confirm contact information and document reasonable efforts to deliver written notice. Enforcement and Litigation Exposure The bill authorizes enforcement by the attorney general and private suits by aggrieved persons. If a court or arbitrator finds a violation, the violator must pay the greater of actual damages or a $5,000 statutory penalty, plus attorneys’ fees, expenses and costs. Taken together, these remedies significantly increase litigation risk, particularly for employers using standardized agreements across large workforces or a contractor population. Importantly, the law’s new definitions, rules, remedies and displacement provision, which makes this chapter the controlling framework over conflicting state laws governing worker competition, apply to cases filed on or after June 30, 2027, even if the underlying conduct or agreement predates that date. Proceedings already pending before then continue under the prior version of the statute. Conclusion Employers can begin preparing for the effective date of the new legislation now by gathering agreements, reviewing templates and building a notice process ahead of the effective date. For guidance on noncompetes, nonsolicitation clauses or other restrictive covenant issues, contact your Polsinelli attorney.

Key Takeaways The New Jersey Supreme Court ruled that employers cannot evade state wage obligations based on a worker’s undocumented status in violation of federal immigration law. Employers who knowingly hire or retain undocumented workers must still comply with state wage obligations, regardless of conflicting federal law or alternative compensation agreements. The decision increases legal exposure for employers violating state wage laws based on immigration status. In Lopez v. Marimac LLC, the New Jersey Supreme Court closed the door on a long-debated defense in wage disputes: an employee’s undocumented status. On March 19, 2026, the Court clarified the relationship between immigration status and state wage-and-hour compliance, holding that employers cannot use undocumented status to avoid paying wages. The case arises from an undocumented worker hired in 2015 by the owner of a realty company. After learning of the worker’s immigration status, the employer stopped paying wages and instead offered rent-free housing, claiming that paying formal wages would be “against the law.” Tension Between Federal and State Law The IRCA prohibits employers from hiring or continuing to employ individuals not authorized to work in the United States. These prohibitions apply even after an employer becomes aware of a worker’s unauthorized status. Notably, the statute does not expressly prohibit paying wages for work already performed. The New Jersey Supreme Court’s ruling affirms an impactful proposition: immigration status does not excuse noncompliance with state wage laws. The Court focused on the plain language of the New Jersey Wage Payment Law (WPL) and Wage and Hour Law (WHL), neither of which expressly excludes undocumented workers from their purview. Instead, employers who violate the IRCA must still pay workers for work performed, regardless of immigration status or alternative barter agreements. The Court reasoned that finding otherwise—that federal law preempts state wage and hour protections—would “incentivize employers to hire undocumented immigrants and pay reduced wages.” Enabling this practice would undermine the IRCA’s core objective of preventing the hiring of undocumented immigrants. Expanding Worker Protections in New Jersey The decision aligns with New Jersey’s broader policy trend toward strengthening protections for immigrant workers. For example, New Jersey continues to actively enforce wage-and-hour laws through initiatives like its “Workplace Accountability in Labor List,” which publicly identifies employers with outstanding wage liabilities. Against this backdrop, the Court’s ruling aligns with a consistent policy direction: ensuring that all workers—regardless of status—are covered by baseline employment protections. Implications for Employers The decision underscores the risks of employing undocumented workers while failing to comply with state wage laws. Employers should note several practical implications of the decision, including: Increased Litigation Risk: Undocumented workers may be more likely to bring wage claims using the rationale of Lopez not only in New Jersey, but also in other states. Elimination of a Common Defense Strategy: Arguments that wage obligations do not apply due to a worker’s unauthorized status are unlikely to succeed in New Jersey courts. Compliance is Status-Neutral: Pay requirements, overtime calculations, and recordkeeping requirements apply to all employees, regardless of work authorization status in New Jersey. Heightened Enforcement Exposure: Violations involving undocumented workers may attract additional scrutiny from regulators. Next Steps for Employers Given this recent ruling, it is recommended that employers operating in New Jersey: Conduct wage-and-hour audits to ensure compliance across all employee categories Review policies and training to eliminate any status-based pay disparities Strengthen documentation and payroll practices Consult counsel when addressing workforce compliance issues involving immigration considerations. For questions and assistance regarding this decision and its impact on employers, please contact your Polsinelli attorney. 

Key Takeaways The Illinois Supreme Court Expands the Boundaries of Compensable Hours: The Illinois Supreme Court held that the Illinois Minimum Wage Law (IMWL) does not automatically incorporate federal Portal-to-Portal Act limitations. Rather, the statute requires compensation for off-the-clock work activities. Impact on Compensability: Employer-mandated pre- and post-shift activities may be compensable under Illinois law, even if not compensable under federal law. Effect on Employers: The decision increases potential wage-and-hour exposure for Illinois employers, particularly for off-the-clock activities such as screenings and security checks. Employers should review timekeeping and pay practices to ensure compliance with Illinois-specific requirements. To exclude or not to exclude off-the-clock activities, that is now a pressing question for Illinois employers. On March 19, 2026, the Illinois Supreme Court issued a significant decision clarifying the scope of compensable work under the Illinois Minimum Wage Law (IMWL), with potentially far-reaching implications for employers operating in the state. The ruling arises from litigation involving Amazon warehouse employees who sought compensation for time spent undergoing mandatory pre-shift COVID-19 screenings. The central legal question—certified to the Court by the Seventh Circuit—was whether Illinois law incorporates the federal Portal-to-Portal Act (PPA), which excludes certain “preliminary” and “postliminary” activities from compensable time. A Departure from Federal Limitations Under federal law, the PPA does not require employers to compensate pre- or post-work activities, unless those activities are “integral and indispensable” to the employee’s principal duties. Courts have historically applied this framework to exclude time spent in security screenings or similar activities. The Illinois Supreme Court, however, has now made clear that the IMWL does not incorporate the Portal-to-Portal Act’s categorical exclusions and instead requires an independent analysis under Illinois law. The Court focused on the plain language of the IMWL and the Illinois Department of Labor’s “hours worked” definition, noting that—unlike federal law—neither explicitly excludes “preliminary” or “postliminary” activities. Absent clear legislative intent, the Court declined to read those limitations into the statute. During oral argument, Amazon warned that an expansive interpretation could create liability for routine workplace activities “ranging from walking from their cars, to waiting for an elevator,” to undergoing security procedures. While the Court did not adopt that sweeping formulation outright, the decision leaves open the possibility that Illinois courts will take a more employee-favorable approach than federal law. Notably, the Court did not determine whether the specific activities at issue were compensable, leaving that determination to the Seventh Circuit on remand. A Broader Trend in Illinois Wage Law The ruling is consistent with a recent trend in Illinois Supreme Court jurisprudence interpreting the IMWL expansively. For example, in Mercado v. S&C Electric Co., the Court held that non-discretionary bonuses must be included in the “regular rate of pay” for overtime calculations, rejecting narrower interpretations of compensation. Together, these decisions signal a clear judicial preference for applying the plain language of the IMWL without importing federal limitations that could narrow employee protections. Implications for Employers This decision materially increases potential wage-and-hour exposure for Illinois employers. If broadly applied, the ruling could extend compensability to a wide range of pre- and post-shift activities, including: Health and safety screenings Security checks Required on-site waiting time Other employer-mandated activities performed off the clock. What Should Employers Do Now Employers with Illinois operations should take proactive steps in light of this development: Review pay practices: Evaluate whether employees are required to perform activities before clock-in or after clock-out. Assess compensability: Consider whether such activities could now be deemed compensable under Illinois law, even if excluded under federal standards. Update policies and procedures: Ensure timekeeping practices capture all potentially compensable work. Monitor litigation risk: The decision may spur class and collective actions challenging longstanding pay practices, particularly in industries that rely on pre-shift screening or security protocols. The Illinois Supreme Court’s ruling underscores that compliance with federal wage-and-hour law may no longer be sufficient in Illinois. Because the case will return to the Seventh Circuit for a final determination on off-the-clock compensability, changes to the Illinois Supreme Court’s decision may be on the horizon. In the meantime, employers should anticipate increased scrutiny of off-the-clock work and adjust their practices accordingly to mitigate risk. For questions and assistance regarding this decision and its impact on employers, please contact your Polsinelli attorney. 

Key Highlights DOL Clarifies Bonus Treatment Under the FLSA: In Opinion Letter FLSA2026-2 (Jan. 5, 2026), the Department of Labor confirmed that certain performance-based bonuses must be included in the “regular rate of pay” when calculating overtime. Advance Promises Eliminate Discretion: Bonuses are not considered “discretionary” if the employer communicates the criteria and amounts in advance. Once promised, the employer has “abandoned” discretion under the FLSA. Impact on Overtime Calculations: Because the safety and performance bonuses at issue were non-discretionary, they must be included in the regular rate for any workweek in which they are earned—requiring employers to review bonus programs to ensure proper overtime compliance. On January 5, 2026, the U.S. Department of Labor’s  Wage and Hour Division (the “DOL”) issued Opinion Letter FLSA2026-2 addressing the question of whether an employer must include certain bonus payments in the “regular rate of pay” when calculating an employee’s overtime pay under the Fair Labor Standards Act (“FLSA”). Background: The Employer’s Safety and Performance Bonus Plan The DOL’s letter responds to an inquiry from an employee who worked in the waste management industry inquiring whether certain performance-based bonuses were considered “discretionary bonuses” that could be excluded from the “regular rate” for purposes of calculating overtime for   hourly, non-exempt employee drivers of the employer. Specifically, the employer provided certain performance-based bonuses pursuant to a “Safety, Job Duties, and Performance” bonus plan designed to reward an employee’s punctuality, attendance, consistency in completing daily safety tasks, driving safety, compliance with traffic laws, proper attire, and performance efficiency. The amounts of the bonus, as well as the criteria to earn such bonuses, were communicated to the employees as part of a bonus plan prior to any employee meeting the performance requirements. What Qualifies as a “Discretionary” Bonus Under the FLSA? The DOL concluded that the bonus payments were not discretionary. In its letter, the DOL explained that, to be considered an excludable discretionary bonus under the FLSA, the payment must satisfy three conditions: (1) the fact and amount of the payment must be determined at the sole discretion of the employer; (2) the employer’s determination must occur at or near the end of the period when the employee’s work was performed; and (3) the payment must not be made pursuant to any prior contract, agreement, or promise that causes the employee to expect such payments regularly. 29 U.S.C. § 207(e)(3). The DOL reasoned that while the employer technically had initial discretion in deciding whether it would offer the bonus program, and on what terms, it had communicated the criteria for receiving the bonus to its employees well in advance of their performing work. As a result, the fact and amount of the bonus payments were not made at the “sole discretion of the employer at or near the end of the period” in which the work was performed. This is consistent with the FLSA’s regulations, which provide: “If the employer promises in advance to pay a bonus, he has abandoned his discretion with regard to it.” 29 C.F.R. § 778.211(b). DOL’s Conclusion: Bonuses Must Be Included in the Regular Rate Because the bonuses at issue were not discretionary, the DOL concluded that the employer must include the bonus payments in the regular rate of pay in any workweek for which they are earned when calculating overtime for the drivers. Employer Takeaways and Compliance Considerations Employers providing performance-related bonuses should keep the three factors outlined by the DOL in mind and should review their policies and practices to ensure all such bonuses are properly classified as either discretionary or non-discretionary so that the regular rate is properly calculated when paying overtime. For questions and assistance regarding the inclusion of bonus payments or other issues involving the FLSA or wage-and-hour laws, please contact your Polsinelli attorney.

Key Highlights PAGA reforms elevate the importance of proactive compliance: The 2024 amendments reallocate penalties, expand cure opportunities, and give courts more discretion to reduce penalties for good-faith errors—making prompt remediation and well-documented compliance efforts critical in 2026. Wage-and-hour fundamentals continue to drive exposure: Daily overtime rules, regular rate calculations, evolving minimum wage requirements and strict meal and rest period obligations remain the primary sources of liability despite PAGA changes. Operational gaps can create outsized risk: Payroll misconfigurations, off-the-clock work, missed break premiums and delayed final pay can quickly compound across employees and pay periods, leading to significant penalties and litigation risk. California’s wage-and-hour framework is one of the nation’s most complex and vigorously enforced. In 2024, the California legislature enacted significant reforms to the Private Attorneys General Act (PAGA) affecting civil penalties allocations, employers’ ability to cure certain violations and PAGA case management. Those reforms took effect in 2025 and continue to influence statewide risk exposure in 2026. The PAGA Context: Reforms That Matter in 2026 PAGA deputizes employees to pursue civil penalties on behalf of the State of California and other employees for Labor Code violations. Historically, employers faced large PAGA penalties because: PAGA actions do not require class certification; Penalties could accumulate per employee, per pay period; and Procedural requirements and enforcement timing often created settlement pressure. The 2024 reforms recalibrated several parts of this framework as they: Reallocated civil penalties so that 65% now goes to California’s Labor and Workforce Development Agency and 35% to aggrieved employees (subject to certain adjustments); Expanded cure opportunities to give employers the chance to fix certain violations within defined windows and limit penalty exposure; and Adjusted penalty structures to give courts clearer guidance to reduce penalties for isolated and good-faith errors while preserving high penalties for persistent or bad-faith violations. The PAGA reforms might seem procedural. But in practice, they highlight how documented compliance efforts, rapid remediation and coordinated cross-functional responses to notices carry strategic importance for California employers. Wage-and-Hour Fundamentals That Still Drive Risk Even following the PAGA reform, the underlying wage-and-hour requirements of the California Labor Code remain central to most claims. (1) Overtime Pay California’s overtime structure is distinctive: 1.5× the regular rate for hours over 8 in a day or 40 in a week; and 2× the regular rate for hours over 12 in a day Employers with multistate payroll systems often find that other states’ “weekly-only” overtime rules do not meet California’s daily requirements. Misconfigured systems can systematically underpay overtime, and small errors compound quickly across a workforce. Because overtime is based on the regular rate and not necessarily the employee’s base hourly rate, items like nondiscretionary bonuses and differentials can change the overtime calculation—another common source of underpayment when payroll rules are not configured to California’s requirements. (2) Minimum Wage California’s statewide minimum wage is $16.90/hour in 2026, with many cities and counties requiring higher rates. Industry-specific minimum wages, like in fast food and health care, may also apply. Minimum wage exposure often stems from: Off-the-clock work; Unpaid pre- or post-shift tasks; Misapplied meal or rest period premiums; and Pay practices that inadvertently reduce effective hourly rates. Minimum wage violations also interact with exempt status thresholds, which are tied to the state minimum wage. (3) Meal and Rest Periods California requires a: 30-minute off-duty meal break for shifts over five hours; Second 30-minute meal break for shifts over 10 hours (with limited waiver options); and Paid 10-minute rest breaks for every four hours worked. Missed meal or rest breaks trigger premium wages—one additional hour of pay per violation. Additionally, meal and rest period premiums count as wages, so they must appear correctly on wage statements and be paid in the next regular payroll cycle. (4) Off-the-Clock Work Employers must compensate for all time an employee works. Common “off-the-clock” risks include: Pre-shift setup or security checks; Donning/doffing time; After-shift duties; and Remote work outside scheduled hours. Even small increments of unpaid time can push employees into unpaid overtime. (5) Final Pay and Waiting Time Penalties Final pay must be issued immediately upon termination and within three days of voluntary resignation or immediately with proper notice. Delays—even for legitimate administrative reasons—can lead to waiting time penalties that accrue daily for up to 30 days. Why This Matters California’s recent PAGA reforms do not reduce employers’ wage-and-hour obligations; they reinforce the importance of getting compliance right. While the amendments create new cure and penalty-management mechanisms, the underlying requirements governing overtime, minimum wage, meal and rest periods and final pay remain unchanged and continue to drive litigation risk. Employers should reassess payroll systems, break practices, classification decisions and final pay procedures. For more information about the PAGA reforms or California wage-and-hour compliance, contact your Polsinelli Labor and Employment attorney.

Key Takeaways:  DOL Moves to Reinstate Business-Friendly Independent Contractor Standard: The Department of Labor has proposed rescinding the 2024 independent contractor rule and returning to a more flexible “economic reality” test that emphasizes two core factors — control and opportunity for profit or loss — potentially narrowing federal misclassification exposure under the FLSA. NLRB Restores 2020 Joint Employer Rule: The NLRB has formally reinstated the Trump-era standard requiring “substantial direct and immediate control” for joint employer status, limiting liability based solely on indirect or reserved control and reducing bargaining and unfair labor practice exposure for many businesses. Despite the clocks moving forward this week, federal employer classification standards are turning back. The Department of Labor (DOL) and National Labor Relations Board (NLRB) have recently moved to restore Trump-era employment standards that reshape worker classification for businesses across industries. These developments mark a significant shift in federal labor policy with implications for employers navigating classification, franchising, staffing and gig-economy models. DOL Proposes Rescission of 2024 Independent Contractor Rule After abandoning the Biden administration’s 2024 independent contractor test, the DOL announced a proposed rule on Feb. 26, 2026 to replace its current enforcement scheme under the Fair Labor Standards Act (FLSA), which applied a six-factor “totality of the circumstances” economic realities analysis without assigning weight to any particular factor. Under the DOL’s proposal, the independent contractor standard will again be tested by the “economic reality,” focusing on whether an individual is dependent on an employer or in business for themselves. This signals a return to a more flexible, business-friendly analysis. DOL Wage and Hour Division Administrator Andrew Rogers stated: “Generally, if a worker is economically dependent on an employer for work, he or she is an employee. Generally, if a worker is in business for him or herself and isn't dependent on an employer for work, the worker is an independent contractor.” While the 2024 rule weighed six factors equally, the DOL’s proposal will apply a list of five non-exhaustive factors while elevating two to “core factors”: the nature and degree of control; and the worker’s opportunity for profit and loss. The others become less probative “guideposts”: skill required; permanence of the relationship; and integration into the employer’s production process. The intent is to look at the “actual practice” of the parties rather than what may be contractually or theoretically possible. In emphasizing control and opportunity for profit/loss, the DOL appears to be narrowing employers’ misclassification exposure under the FLSA, particularly in industries where workers exercise meaningful entrepreneurial discretion. Although this shift aligns more closely with Supreme Court and federal appellate precedent, employers should not assume that federal enforcement risk will disappear. Private plaintiffs’ attorneys are likely to continue pursuing collective and class actions, and state-law classification standards remain unaffected. Employers should review their current classification practices and prepare to update policies and training. NLRB Reinstates Trump-Era 2020 Joint Employer Standard The NLRB also formally reinstated the 2020 joint employer rule on Feb. 26 after a federal court vacated the Biden-era’s broader definition. Under the rule, joint employer status requires “substantial direct and immediate control” over one or more essential terms and conditions of employment such that it “meaningfully affects matters relating to the employment relationship.” Further, “substantial direct and immediate control” must have a “regular or continuous consequential effect” on employment terms, not control exercised only on a “sporadic, isolated, or de minimis basis.” Reserved or indirect control alone is generally insufficient. Reinstating the 2020 rule is expected to have an outsized impact on franchisors, staffing companies, private equity-backed platforms and businesses operating through layered contracting relationships. By requiring exercised or direct control, the rule will likely meaningfully limit federal bargaining obligations and unfair labor practice exposure tied to another entity’s workforce. Still, contractual language and day-to-day operational practices must align to avoid inadvertently triggering joint employer status. Employers should review current workforce relationships to assess potential obligations for bargaining and unfair labor practice exposure. Companies with pending NLRB matters or organizing activity should evaluate how the reinstated standard may affect strategy, particularly where joint employer allegations were previously asserted. Why This Matters Together, these developments signify the Trump administration’s employer-friendly approach to rulemaking and reflect a narrower federal interpretation of independent contractor and joint employer standards. While both rules may face continued legal scrutiny, employers should use this moment to proactively review independent contractor models, audit franchise and staffing arrangements, align operations with contractual intent and evaluate classification risks under relevant state standards. Polsinelli will continue to report on any DOL and NLRB updates related to these standards. Please contact your Polsinelli attorney for more information.

With a wave of rapid-fire executive orders and the expanding use of artificial intelligence in agency enforcement, 2026 is already shaping up to be a pivotal year in Washington. But beyond the headlines, what do these developments really mean for businesses? In the latest episode of the D.C. Download podcast, Labor & Employment Shareholder Will Vail joins for a timely discussion on what comes next. From implementation challenges and emerging litigation trends to shifting appropriations dynamics, the conversation explores how policy decisions are translating into regulatory action. The episode also offers practical, forward-looking strategies for navigating an increasingly complex and evolving regulatory landscape. Listen to the latest episode here.

Key Highlights New York City’s Earned Safe and Sick Time Act (ESSTA) adds 32 hours of frontloaded unpaid safe/sick time to its existing paid safe/sick time requirements for employers. The ESSTA also expands the permissible uses for both types of leave under the Act to include scenarios tied to caregiving, housing or subsistence proceedings, public disasters and workplace violence. Employers, however, will no longer be required to grant a set number of temporary schedule changes; employees, instead, will enjoy a protected right to request such changes. What Is Changing on February 22, 2026? New York City employers should prepare for significant changes to the City’s ESSTA taking effect February 22, 2026—joining changes to New York state laws affecting disparate impact liability and the use of “stay-or-pay” contracts. The amended ESSTA includes a new bank of 32 hours of unpaid safe/sick time, expanded permissible uses of safe/sick time and a scaling back of obligations under the City’s Temporary Schedule Change Act (TSCA). 1. Employers must provide 32 hours of unpaid safe/sick time in addition to paid ESSTA leave. The ESSTA will require employers to provide employees, upon hire and on the first day of each calendar year, a minimum of 32 hours of unpaid safe/sick time that is immediately available for use. Employers will not, however, be required to carry over unused hours from this unpaid bank to the next calendar year. The Act further contemplates that when an employee needs time off for an ESSTA-covered purpose, the employer generally must provide paid safe/sick time first (if available), unless ESSTA paid time is unavailable or the employee specifically requests to use other leave (e.g., other PTO pursuant to an employer’s vacation policy). One potential issue for employers lies in the Act’s text. It ties the unpaid bank to “upon hire” and “the first day of each calendar year.” With a February 22, 2026, effective date, it is not clear from the statute whether employers must make the unpaid bank available to current employees as of the effective date. Given the short time before the effective date, employers likely will have to make a decision on this point before any additional guidance from the City’s Department of Consumer and Worker Protection becomes available. 2. Employees may now use paid and unpaid safe/sick time for new “covered uses.” ESSTA continues to allow leave for traditional illness/injury, preventive care and care of family members but now expands certain categories and adds new ones, including: Sick Time Additions Leave related to business closure or child school/childcare closure may now include closures tied to a public disaster—not just a public health emergency. Instances in which a public official directs an employee to remain indoors or avoid travel during a public disaster that prevents an individual from reporting for work. Safe Time Additions Circumstances where the employee or a family member is the victim of workplace violence in addition to the existing domestic violence/sexual offense/stalking/human trafficking categories. Certain instances of caregiving for minor children or other care recipients. Legal proceedings or hearings related to subsistence benefits or housing and other related steps necessary to apply for, maintain, or restore benefits or shelter. These expansions overlap with what NYC historically treated as “personal events” under the TSCA’s framework but now more expressly integrates the framework into the ESSTA. 3. The TSCA moves from “must grant” to “right to request” when it comes to temporary schedule requests. Following its effective date, the amendment softens the temporary schedule change regime in the City. Employees remain protected from retaliation for requesting a temporary schedule change, but the law provides that an employer may grant or deny the request, must respond as soon as practicable and may propose an alternative change, which the employee is not required to accept. Employers should keep in mind that independent obligations under federal, state and local accommodation laws remain unchanged, so some schedule adjustments may still be required as reasonable accommodations even where the TSCA request itself is discretionary. Why This Matters These amendments significantly expand the scope and administration of protected leave in New York City. By adding a new unpaid ESSTA leave bank, broadening the reasons that trigger protected absences, and shifting temporary schedule changes to a right-to-request framework, the City increases the risk of missteps in policy drafting, payroll administration and day-to-day management of leave requests. Employers should take time now to evaluate how these changes affect their existing leave, scheduling and reporting practices ahead of the February 22, 2026, effective date. Employers with questions about the amended ESSTA, or who would like assistance assessing or updating their policies and practices in advance of the effective date, should contact their Polsinelli Labor and Employment attorney.

Over two years ago, the Northern District of California issued an order requiring the OFCCP to disclose EEO-1 Type 2 reports to the Center for Investigative Reporting (“CIR”) over the objections of thousands of employers, as previously reported. In the interim, OFCCP did not release the reports for those employers who had objected as they appealed the District Court’s decision to the Ninth Circuit. In 2025, the Ninth Circuit affirmed the District Court’s decision that the EEO-1 reports did not contain “commercial” information that would be protected from disclosure pursuant to an exemption under the Freedom of Information Act (“FOIA”). The case remains pending in the District Court with other issues to be resolved. However, the Ninth Circuit’s decision became final after the OFCCP chose not to seek rehearing of the issue – and the parties filed a stipulated proposal with the District Court regarding the end of the stay of the release of the reports. The District Court granted the stipulation on February 9, 2026, which will allow for the release of the reports from 2016-2020. The District Court has now ordered the following by February 11, 2026: OFCCP shall release the reports of five “bellwether” objecting contractors which were considered in making the determination of whether the reports contained “commercial information.” OFCCP shall provide notice to the additional 4,500+ objecting contractors that their reports will be released on February 25, 2026. Contact your Polsinelli attorney for further guidance regarding the release of the reports, the potential effect of the release on your organization, and other government contractor matters.

The Federal Trade Commission (FTC) has reaffirmed that it will pursue noncompete enforcement through individual cases rather than sweeping rulemaking. In a recent public workshop featuring each of the sitting commissioners and panels of economists and current and former agency attorneys, the FTC stopped short of signaling that it will pursue a new national rule to govern all noncompetition agreements. Instead, the FTC emphasized it will continue to pursue enforcement on a case-by-case basis,1  with a focus on agreements that are overly broad in scope or duration and not narrowly tailored to protect legitimate business purposes. Key Takeaways The FTC indicated it is not pursuing a national rule to ban noncompetition agreements but will continue bringing targeted enforcement actions against agreements it deems overly broad or unjustified. The agency emphasized it views certain noncompetition agreements, particularly those involving lower-wage or non-specialized roles, as anticompetitive and legally suspect, especially when they lack a clear business justification. Employers should review existing noncompete agreements to ensure they are narrowly tailored, reasonable in scope and duration and grounded in a legitimate business interest. Read the full update here.

Key Highlights The U.S. Department of Justice (DOJ) filed a lawsuit against the State of Minnesota challenging its affirmative action hiring program. It alleges that Minnesota’s requirement to consider race, sex and other protected characteristics in public employment decisions violates Title VII of the Civil Rights Act of 1964. The case is poised to test the limits of affirmative action in employment and could become a bellwether for similar policies nationwide and across public and private employers. DOJ Targets Minnesota’s Use of Race and Sex in Public Hiring Minnesota law mandates that state agencies take proactive steps to recruit and hire individuals from historically underrepresented groups, aiming to address workforce disparities. In a complaint filed on Jan.14, 2026, the DOJ asserts that this practice unlawfully favors certain applicants based on protected characteristics. Federal lawyers argue that the mandate amounts to intentional discrimination in violation of Title VII’s ban on making employment decisions because of race, color, religion, sex or national origin. The lawsuit acknowledges past U.S. Supreme Court decisions, such as United Steelworkers v. Weber and Johnson v. Transportation Agency, that permitted limited affirmative action plans to remedy persistent inequality. The DOJ, however, contends that those decades-old precedents are outdated and conflict with both Title VII’s text and the Supreme Court’s 2023 decision ending race-conscious college admissions. By certifying the Minnesota case as one of “general public importance,” the DOJ also seeks a special three-judge panel to hear the matter pursuant to 42 U.S.C. § 2000e-6(b), which would fast-track any appeal directly to the Supreme Court. Broader Implications for Employers and State Diversity Initiatives The Department’s challenge signals increased scrutiny of government-mandated diversity, equity and inclusion initiatives. Many employers have already grown more cautious with voluntary diversity programs following Executive Orders issued in 2025, but they were left with some uncertainty on conflicting obligations between federal and state laws. A ruling against Minnesota could further imperil similar state or local requirements for affirmative action in hiring or contracting. If the Supreme Court ultimately curtails or eliminates affirmative action in the employment context, public-sector workforces and contractor practices nationwide may need to adjust accordingly. Polsinelli Labor and Employment attorneys are closely monitoring this case and will advise clients as appropriate as developments unfold.

Key Highlights Brand ambassadors and influencers can present growing misclassification exposure. Luxury, retail and hospitality brands increasingly rely on short-term, brand-facing talent and when these workers are closely integrated into marketing, customer engagement and brand presentation, they can trigger the same wage-and-hour risks as traditional employees. California’s ABC test presents a high bar for independent contractor models. Prong B, in particular, creates challenges when brand ambassadors, stylists and pop-up personnel perform work tied to core brand functions such as customer experience and brand presentation. Control and brand standards drive risk across jurisdictions. Even outside ABC-test states, factors such as training, scripted interactions, fixed schedules, exclusivity or content approval for influencers can undermine independent-contractor classification, regardless of engagement length. Luxury brands increasingly rely on brand ambassadors, stylists, influencers and pop-up personnel to deliver curated customer experiences and reinforce brand identity. These engagements are often short-term or campaign-based and are frequently classified as independent contractor relationships. As worker-classification standards continue to tighten nationwide, however, that model carries growing legal risk. For luxury, retail and hospitality brands, misclassification claims are no longer confined to traditional retail staffing. Brand-facing marketing talent — often viewed as flexible and external — can present the same exposure as in-store employees when classification rules are not carefully applied. Why Classification Has Become a Pressure Point Misclassification can expose brands to significant liability, including unpaid minimum wages and overtime, missed meal and rest periods, payroll tax exposure, statutory penalties and representative or class actions. These risks are amplified in luxury and hospitality settings, where brand standards, customer experience and messaging consistency are central to the business. Although many brand ambassadors view themselves as independent creatives, classification turns on legal standards — not job titles or worker preferences. California’s ABC Test: A High Bar for Luxury Brands California remains the most challenging jurisdiction for contractor models. Under California Labor Code § 2775, a worker is presumed to be an employee unless the hiring entity establishes all three prongs of the ABC test: The worker is free from the control and direction of the hiring entity in performing the work, both under the contract and in practice; The worker performs work outside the usual course of the hiring entity’s business; and The worker is customarily engaged in an independently established trade or business of the same nature as the work performed. Failure to satisfy any prong results in employee status. For luxury brands, prong B often presents the greatest challenge. Brand ambassadors, stylists and pop-up representatives frequently perform work that goes to the core of the brand’s business: marketing, customer engagement and brand presentation. When the brand experience itself is the product, it becomes challenging to argue that these services fall “outside the usual course” of business. Control and Brand Standards Still Matter Elsewhere Outside California, some brands assume classification risk is lower. That assumption can be misleading. For example: New York does not apply the ABC test for wage-and-hour purposes. Instead, courts apply a common-law “control” test that examines factors such as supervision, scheduling, training and integration into the business. Illinois similarly relies on a right-to-control analysis for most wage claims, though ABC-style tests apply in certain statutory contexts, including unemployment insurance. See 820 ILCS 405/212. In practice, these standards still present meaningful risk for luxury brands. Extensive training, required attendance at brand briefings, fixed schedules, exclusivity requirements or detailed scripts and presentation guidelines can all weigh in favor of employee status, even in jurisdictions without an ABC test. The more control a brand exercises over how ambassadors interact with customers and represent the brand, the harder it becomes to sustain a contractor classification. Influencers and Pop-Up Activations: Added Complexity Influencer marketing and pop-up activations present additional classification challenges. Some influencers operate established businesses with multiple clients, supporting independent-contractor status. Others, however, function more like on-demand brand representatives. Classification risk increases when brands require pre-approval of content, dictate posting schedules, restrict work for competitors or tie compensation to strict compliance with brand directives. Engagement length alone does not eliminate exposure. Even short campaigns can give rise to misclassification claims if the underlying relationship resembles employment. Looking Ahead Luxury, retail and hospitality brands will continue to rely on flexible, brand-forward talent to remain competitive. But as worker-classification standards evolve and enforcement intensifies, contractor models that once seemed routine may no longer be defensible. Addressing classification issues at the outset of a campaign rather than after it concludes can help brands preserve flexibility while reducing legal exposure. Brands with questions about independent contractor classification or campaign staffing strategies should consult their Polsinelli Labor & Employment attorney.

At a Glance Clarified Pay Transparency Requirements Effective Jan. 1, 2026: California employers are now able to publish a good-faith estimate of the salary or hourly wage they reasonably expect to pay a new hire at the time of hire, rather than a general range for the position. Broader Scope for Equal Pay Act Claims: SB 642 expands the definition of “wages” to include nearly all forms of compensation—such as bonuses, equity, benefits, allowances and reimbursements—potentially increasing exposure in pay equity claims and underscoring the importance of reviewing total compensation packages. Longer Statute of Limitations and Expanded Liability Window: The law extends the statute of limitations for Equal Pay Act claims to three years regardless of willfulness, with a six-year look-back period for relief, emphasizing the need for proactive compliance and documentation. Job Posting Requirements Effective January 1, 2026, SB 642, also known as the Pay Equity Enforcement Act, amends pay transparency and pay scale requirements for California employers. The changes clarify the definition of “pay scale” for job posting requirements, broaden the forms of pay considered for assessing Equal Pay Act claims, and extend the statute of limitations to bring civil actions alleging violations of pay reporting statutes. As described in our prior blog post, California requires employers to publish pay scale information on job postings. SB 642 amends California Labor Code § 432.3 to expand the definition of pay scale to a “good faith estimate of the salary or hourly wage range that the employer reasonably expects to pay for the position upon hire.” Previously, “pay scale” was defined to include the salary or wage range that employer expected to pay for the position generally. The amended definition requires disclosure of what an employer reasonably expects to pay the new hire on the date of hire as opposed to an estimate of the position in general. Equal Pay Act Claims Labor Code § 1197.5 prohibits employers from paying employees less wages for performing substantially similar work based on sex. SB 642 broadens the definition of “wages” and “wage rates” under this section. As a result, alleged violations may consider 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 and gasoline allowances, hotel accommodations, reimbursement for travel expenses and benefits.” The law also provides new guidance on when an Equal Pay Act violation may occur, including when: An alleged unlawful compensation decision or other practice is adopted; An individual becomes subject to an alleged unlawful compensation decision or other practice; and An individual is affected by application of an alleged unlawful compensation decision or other practice, including each time wages, benefits or other compensation is paid. SB 642 establishes a statute of limitations of three years after the last date of alleged violation to bring an Equal Pay Act claim, regardless of whether the violation is willful. Previously, the statute of limitations was two years and only three years if the violation was proven willful. The law introduces a look-back period limiting relief to a maximum of six years. Key Takeaways for Employers   The changes to job posting requirements provide relief to employers that provide a “good faith” reasonable estimate in their postings. With the changed definition of “wages” for the purposes of Equal Pay Act claims, employers may wish to review the equity of their pay packages including non-salary compensation to ensure compliance. Employers are advised to consult with counsel on compliance including when new compensation practices are adopted and changed. Polsinelli attorneys will be monitoring new developments in this area and remain prepared to assist employers.

Effective January 1, 2026, numerous state and local government employment laws have taken effect. Below is a non-exhaustive summary of key employment law updates for January 2026. For additional insights, register for the 2026 Employment Law Developments: Key Considerations for Employers webinar here. To navigate each employment law update by state, click here. Please note that the above is a non-exhaustive summary of recent employment law developments. For questions or assistance with employment law compliance in 2026, or to ensure you are informed about the latest updates, please contact your Polsinelli attorney.

Key Highlights New York prohibits arrangements requiring employees to repay or reimburse their employer: The newly enacted Trapped at Work Act bars employers from enforcing agreements that require workers to repay or reimburse training or other costs or payments if they leave employment before a specified period. Ambiguous language creates risk for common compensation practices: Although motivated by controversial training repayment arrangements, many commonplace practices like education stipends, tuition assistance programs, forgivable loans, advanced retention bonuses and certain consulting arrangements may now face challenges. Law applies broadly to workers beyond employees: The Act covers not only employees, but also independent contractors, interns, volunteers, apprentices and other service providers, with only limited statutory exceptions. New York employers are now prohibited from enforcing or requiring so-called “stay-or-pay” contracts that obligate employees to repay money to their employer if they leave employment prior to a stated date.  With the new “Trapped at Work Act,” New York joins other states, including Colorado and California, in protecting employees from requirements to reimburse their employer for employer-provided training. Although the Act and other similar laws have been motivated by criticisms of employer training repayment requirements, the breadth and ambiguity of New York’s new law threaten to go beyond that immediate concern and prohibit or render uncertain many commonplace employee compensation arrangements. The Act prohibits employers from using or enforcing any “employment promissory note,” which is defined as “any instrument, agreement or contract provision that requires a worker to pay the employer, or the employer's agent or assignee, a sum of money if the worker leaves such employment before the passage of a stated period of time,” including any agreement to reimburse training provided by the employer. The scope of the Act is broad, as it applies not only to traditional employees, but also to independent contractors, interns and externs, volunteers, apprentices and sole proprietors providing services. The Act does exclude certain types of agreements from its prohibition, including: Agreements to repay the employer for sums advanced to the employee, other than sums for “training related to the worker’s employment with the employer”; Repayment for property sold or leased to the employee; or Repayments pursuant to a collective bargaining agreement. Although the Act is aimed at controversial arrangements requiring employees to repay their employer for mandatory trainings, it may inadvertently sweep in other commonplace employee compensation frameworks that do not raise similar controversy. These include: Education Stipends: Employers often provide educational or tuition stipends to employees, and it is common to have retention provisions included in such arrangements. It is not clear whether such arrangements would continue to be permissible, given that the funds may not be advanced directly to the employee and the education likely relates to the employee’s position. Forgivable Loans/Advanced Retention Bonuses: Arrangements where funds are fronted to employees, subject to a retention requirement, can potentially fall within the Act’s exceptions, but they must be carefully structured to avoid penalties and enforceability issues. These types of arrangements and bonuses are common in many industries, especially financial services. Liquidated Damages for Consulting Arrangements: Given that the Act applies to independent contractors (even if properly classified as such), it is arguable that a penalty for the contractor’s early termination of the agreement would violate the Act. Even as New York Governor Hochul signed the Act, she noted that its language “was ambiguous in certain respects” and stated that she had agreed with the Legislature to “address these concerns” in the future. Unless and until clarification is provided, however, employers in New York will have to review and carefully modify any agreements that require employees or other workers to repay sums to the employer based on retention considerations.  Failure to do so can lead to the agreement being deemed null and void and subject the employer to fines, ranging from $1,000 to $5,000 for each worker with whom they have a prohibited agreement, as well as liability for attorneys’ fees incurred by the employee in defending against enforcement. For assistance reviewing agreements or other questions relating to this law, be sure to contact your Polsinelli attorney.

Key Highlights: A recent amendment expressly codifies disparate impact liability under the New York State Human Rights Law (NYSHRL) for employment discrimination claims. This comes as the U.S. Equal Employment Opportunity Commission has backed away from disparate impact theories in enforcing federal employment discrimination statutes. The increasing use of Artificial Intelligence (AI) tools in personnel processes and decision-making has the potential to raise disparate impact issues to the extent that AI processes have varying effects on specific groups. New York employers may face increased potential exposure from neutral employment practices, underscoring the importance of proactive review and documentation. New York Governor Kathy Hochul signed Senate Bill S8338 on Dec. 19, 2025, which codifies that a facially neutral employment practice may violate the New York State Human Rights Law (NYSHRL) based on its discriminatory effects, even absent discriminatory intent. While the amendment largely clarifies existing law, it comes at a time when federal enforcement of disparate impact theories has become less certain as the U.S. Equal Employment Opportunity Commission has taken a more restrained approach to pursuing disparate impact claims under federal employment discrimination statutes. Against that backdrop, the amendment underscores the continuing importance of state-law compliance and employer attention to outcome-based employment practices, as well as the purportedly neutral decisions of their AI tools. What the Amendment Does The legislation adds a new subdivision to New York’s Executive Law § 296, providing that, in NYSHRL employment discrimination cases, an unlawful discriminatory practice may be established where an employer uses a policy or practice that actually or predictably results in a disparate impact based on a protected characteristic. The statute makes clear that proof of discriminatory motive is not required. After the employee demonstrates that a particular employment practice causes, or predictably will cause, a disparate impact on a protected class, the employer then bears the burden to establish that the practice is job-related for the position in question and consistent with business necessity. Even if that showing is made, an employee may still prevail by showing the employer’s business necessity could be satisfied by a less discriminatory alternative. The statute also requires that an employer’s justification be supported by evidence and not based on hypothetical or speculative considerations, reinforcing the need for objective validation and documentation of employment criteria. Although disparate impact liability is not a new concept, the amendment injects ambiguity into the analysis by prohibiting policies and practices that “actually or predictably” yield disparate results. This raises the specter of challenges to practices that do not “actually” cause a disparate impact but can be argued to “predictably” do so. Given the litigation climate in New York, this additional language creates another reason for employers to be intentional in assessing the effect, or event "predicted" effect, of personnel practices and policies. Why This Matters Now, Especially as AI Gains Ground in Employment Practices By codifying disparate impact liability, New York has increased scrutiny of ostensibly neutral employment practices — such as hiring criteria, screening tools, promotion standards and compensation structures — that may produce statistically significant disparities. AI tools are often adopted to promote efficiency and consistency and typically would not be viewed as intentionally discriminatory. However, these tools present disparate impact risks to the extent that the data inputs, models or selection criteria underlying those tools have varying effects on specific groups. For example, even in the relatively early phases of AI’s adoption, there have been claims in litigation that an employer’s use of AI training datasets disproportionately composed of one protected group (for example, males) results in an adverse disparate impact to members of other groups (for example, females). The beefed-up disparate impact liability under NYSHRL, combined with New York City’s 2023 regulations on AI use in personnel processes, guide in favor of an intentional approach by employers in using these tools for employment decisions. Looking Ahead This amendment applies to employment discrimination occurring on or after its effective date of Dec. 19, 2025, making proactive compliance efforts particularly important. Employers should consider reviewing key employment practices to assess disparate impact risk, ensure that job-related criteria are well supported, and evaluate whether alternative approaches could achieve business objectives with less discriminatory effect. If you have questions about how this amendment may affect your organization, or would like assistance evaluating existing policies and practices, contact your Polsinelli Labor & Employment attorney.

Key Takeaways FTC to revisit a national non-compete ban: The FTC will host a Jan. 27, 2026 workshop as it restarts efforts to regulate or potentially ban most non-competition agreements nationwide. Renewed effort follows prior rule’s collapse: The workshop comes after the FTC’s 2024 final rule banning non-competes was blocked in court, vacated and ultimately abandoned due to legal and administrative challenges. Future national standard possible: The workshop may signal the first step toward a new FTC rule, despite current non-compete enforceability continuing to vary significantly by state law. The FTC appears poised to renew its years-long effort to address, and potentially ban, most non-competition agreements on a national level. On Jan. 27, 2026, the Federal Trade Commission will host a workshop titled, “Moving Forward: Protecting Workers from Anticompetitive Noncompete Agreements.” The FTC reports that the workshop “will include public statements from FTC Commissioners, victims of unfair and anticompetitive noncompete agreements and leading experts in the field.” The workshop follows years of national attention and contentious litigation regarding the FTC’s prior attempt to impose a national ban on most non-competition agreements. The FTC’s effort started in January 2023, when the FTC proposed a rule to ban most non-competition agreements. In April 2024, the FTC issued a final rule banning most non-competition agreements nationwide effective Sept. 4, 2024, but employer groups quickly filed lawsuits challenging the rule. In August 2024, a Texas district court enjoined the final rule’s enforcement as arbitrary and capricious. The FTC appealed the injunction to the Fifth Circuit but subsequently vacated the final rule and dropped the appeal, citing legal issues and administrative changes. Now, it appears that the FTC is ready to take up the issue again — and the January workshop could be the first step towards issuing another rule that would provide a national standard for addressing non-competition agreements. Currently, the validity and enforceability of non-competition agreements are governed by state law, which varies widely from state to state. The workshop will be held from 1-5 p.m. ET on Jan. 27, 2026, and it will be open to the public. Attendees must register in advance to attend in person at the FTC’s headquarters or attendees may attend via livestream. Polsinelli Restrictive Covenant Attorneys will be in attendance at the workshop. If you currently have or are thinking about implementing non-competition agreements in your workforce, it is important to have an attorney well-versed in non-competition law review your agreements for compliance with all applicable state laws. Please contact your Polsinelli attorney for help reviewing or updating your agreements and broader non-compete strategy.  

Key Highlights Under Section 503 of the Rehabilitation Act (Section 503) (extending protection to individuals with disabilities), the basic coverage threshold increased from $15,000 to $20,000. Under the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) (extending protection based on veteran status), the basic coverage threshold increased from $150,000 to $200,000. Although the Affirmative Action Program (AAP) coverage remains the same for Section 503, the AAP coverage requirements increased accordingly for the VEVRAA and now apply to contractors and subcontractors with at least 50 employees and a single contract of $200,000 or more. On October 1, 2025, the Office of Federal Contract Compliance Programs (OFCCP) increased the jurisdictional thresholds for two key federal contractor laws: Section 503 and the VEVRAA. These higher thresholds affect whether a contractor is covered by each law and, as a result, whether it must maintain written AAPs for individuals with disabilities and protected veterans. The increases result from the Federal Acquisition Regulatory Council’s periodic review and inflationary adjustment of “acquisition-related” thresholds in federal procurement statutes as required by Section 807 of the Ronald Reagan National Defense Authorization Act (41 U.S.C. § 1908). As part of its assistance efforts, the OFCCP has issued a “Jurisdictional Thresholds” infographic and updated its webpage with additional guidance and tools. While federal affirmative action plan requirements for women and minorities have changed significantly in 2025, federal contractors are reminded that affirmative action requirements for individuals with disabilities and veterans remain in effect for covered contractors. If you have questions about how these updated thresholds apply to your organization—or whether your contracts and workforce size trigger written AAP obligations—Polsinelli’s Labor and Employment attorneys are available to assist.

Key Highlights NLRB Poised for a Partisan Shift: With the Senate HELP Committee advancing two of President Trump’s nominees, the NLRB may soon regain a quorum and shift to its first Republican-led majority since 2021 — potentially signaling changes to existing federal labor law. Expanded Remedies Under Thryv Remain in Force — for Now: The NLRB’s Thryv, Inc. decision (2022) broadened employer liability in unfair labor practice cases by requiring compensation for all “direct or foreseeable” harms. Courts Split on the NLRB’s Authority: Federal appellate courts have issued conflicting rulings on the NLRB’s power to award these expanded damages — creating uncertainty until the NLRB or the Supreme Court provides further clarity. Employers Should Prepare for Policy Shifts: A Republican-led majority on the NLRB could narrow Thryv remedies and reexamine key doctrines affecting joint-employer standards, independent-contractor classifications, and union election rules. Employers should monitor developments closely and seek counsel on pending or potential labor disputes. On Oct. 9, 2025, the Senate Health, Education, Labor & Pensions (HELP) Committee advanced two of President Trump’s three pending nominations to the National Labor Relations Board (NLRB). Although the third nominee was tabled following a divided vote, the approvals signal the NLRB may soon regain a quorum and operate under a Republican-led majority for the first time since 2021. Why It Matters Historically, when the NLRB flips partisan control, prior precedent — especially decisions viewed as favorable to labor or broad in scope — often comes under review. Large employers should monitor several key implications: Unfair labor practice liability remains significant under current NLRB law, and U.S. Courts of Appeal have disagreed on whether the NLRB has exceeded its statutory authority. In its December 2022 decision in Thryv, Inc., 372 NLRB No. 22 (Dec. 13, 2022), the NLRB significantly expanded its remedial authority in unfair labor practice cases. The decision clarified that in all cases where a standard make-whole remedy would apply, employers must “compensate affected employees for all direct or foreseeable pecuniary harms . . . suffer[ed] as a result of the [employer’s] unfair labor practice.” The NLRB expressly moved beyond traditional backpay and reinstatement relief to authorize reimbursement of additional costs like out-of-pocket medical expenses and credit card debt. Appellate courts have disagreed on the NLRB’s authority to expand unfair labor practice remedies.Most recently, the Court of Appeals for the Ninth Circuit upheld the NLRB’s use of the Thryv framework in International Union of Operating Engineers, Local 39 v. NLRB. The Ninth Circuit found the NLRB did not exceed its statutory authority in awarding Thryv damages and enforced the NLRB’s remedy order. The Court of Appeals for the Third Circuit took a different tack earlier this year. In its Starbucks-related decision, the Third Circuit held the NLRB’s remedial order for consequential damages exceeded the NLRB’s authority. It reasoned that Congress did not empower the NLRB to award full compensatory damages of that nature. If the NLRB retains a quorum, we expect it to revisit the expanded remedies under Thryv. If the full Senate confirms the two nominees to the NLRB, employers should anticipate that the NLRB will revisit the remedial doctrine set forth in Thryv. While the second Trump administration has indicated an intent to be more labor friendly, a Republican majority may choose to reinstate narrower remedial parameters, limit the “direct or foreseeable” horizon, or otherwise reduce employer exposure. Until such a shift occurs, however, the current Thryv-based standard remains in force and applicable before the NLRB and across circuits that have upheld it. Looking Ahead The HELP Committee’s approvals signal a likely realignment in the months ahead but not an immediate one, as it remains unknown as to when or whether the NLRB will have a quorum. A new NLRB majority may act quickly once seated to revisit recent precedents—not only Thryv, but also rules governing joint-employer status, independent-contractor classifications and union election procedures. The coming months will be a period of heightened uncertainty for employers navigating ongoing unfair labor practice matters. Employers facing organizing activity or unfair labor practice allegations should consult with an experienced member of Polsinelli’s Management-Labor Relations Practice Group to assess how forthcoming NLRB changes may affect exposure, negotiation strategy and overall labor-relations planning.

On Sept. 19, 2025, President Trump signed a Proclamation, Restriction on Entry of Certain Nonimmigrant Workers, requiring a $100,000 payment with any new H-1B petition filed on or after Sept. 21, 2025, including those for the 2026 lottery. While the restriction does not apply to petitions filed before that date, approved petitions, or valid visa holders, questions remain regarding its impact on extensions and transfers. Given the fluid and evolving nature of these changes, employers and visa holders should exercise caution, particularly with international travel, and consult your Polsinelli Immigration counsel or Polsinelli’s Executive Action Working Group with any questions. Read the full update.

Key Highlights End of nationwide ban efforts: The FTC has officially moved to dismiss its appeals and voted to vacate its proposed nationwide non-compete ban, signaling the end of its push for a universal prohibition. Shift to targeted enforcement: While dropping the broad ban, the FTC remains committed to scrutinizing non-competes on a case-by-case basis, particularly in industries like healthcare and staffing where such agreements are prevalent. Immediate employer impact: On Sept. 10, 2025, the FTC sent letters to large healthcare and staffing employers urging a review of non-competes and restrictive agreements, indicating an enforcement focus in those sectors, alongside a broader public inquiry open until Nov. 3, 2025. Guidance for compliance: Commissioner Meador outlined key factors that the FTC will consider when assessing non-competes, including wage and skill level, scope and duration, less restrictive alternatives and market power — making it essential for employers to review and refine their covenants to align with federal scrutiny and evolving state laws. On Sept. 5, 2025, the FTC moved to dismiss its appeals of injunctions blocking the enforcement of the non-compete ban it sought to implement nationwide last year. That same day, the FTC voted 3-1 to take steps to vacate the ban. These moves mark the end of the FTC’s efforts to implement a universal ban on non-competes, following a change in administration and FTC leadership. However, recent FTC actions suggest the agency remains focused on non-compete agreements, especially in the healthcare and staffing industries. Renewed scrutiny: Rather than pursuing a blanket ban, the FTC is pivoting to case-by-case enforcement and targeting covenants that it views as unfair or anticompetitive. On Sept. 10, 2025, the FTC sent letters to several large healthcare employers and staffing firms urging them to conduct a comprehensive review of their employment agreements — including any non-competes or other restrictive agreements — to ensure they are appropriately tailored and comply with the law. These letters suggest the FTC intends to initially direct its scrutiny of non-competes to the healthcare and staffing industries The FTC’s move parallels state-level action in places like Colorado, Texas and Pennsylvania, which have adopted stricter limits on non-competes in health care, as previously reported by Polsinelli. In addition, the FTC has also launched a public inquiry — open until Nov. 3, 2025 — through which the public may submit information that may be used to inform future enforcement actions. Importantly, this public inquiry is not limited to the healthcare or staffing industries, meaning the FTC’s scrutiny may expand to other sectors. FTC provides roadmap to enforcement priority: In announcing the FTC’s intent to revoke the non-compete ban, Commission Meador issued a statement identifying several contextual and legal factors to help evaluate non-compete provisions: Employee wage and skill level; Deployment in a distribution network (for example, non-competes in the franchise context); Independent contractors; Likelihood of free riding (employer investments in training, employee access to confidential information); Availability of less restrictive alternative; Scope and duration; Market power; and Evidence of economic effects. Impact on current non-competes: Employers should carefully review their non-compete covenants to ensure they are carefully drafted and aligned with both federal and state law. The FTC has made it clear that enforcement is coming — just not through a single sweeping rule. Additionally, in light of the factors from Commissioner Meador, employers should consider their overall non-compete strategy, including which workers are required to enter non-competes and whether alternative tools are available to protect their business interests. Please contact your Polsinelli attorney for help reviewing or updating your agreements and broader non-compete strategy.    

On July 28, 2025, the United States Office of Personnel Management (“OPM”) issued a memorandum endorsing federal employees expressing their religious beliefs in the workplace. Specifically, OPM Director Scott Kupor instructed government agencies to “allow personal religious expression by Federal employees to the greatest extent possible unless such expression would impose an undue hardship on business operations.” Although this memorandum does not directly contemplate any new direction for private employers, it raises questions about whether this guidance signals impending changes in the private sector. What Does This Mean for the Federal Workplace? The OPM memorandum directs federal employers to permit religious expression in the workplace to the same extent as other non-religious, private expression. Stated otherwise, the OPM is encouraging federal employees to fully express their religious beliefs. This is a unique policy stance that has not been observed in recent memory. The OPM offered a handful of “categories” to demonstrate what religious conduct should be permitted, including: Display and use of items used for religious purposes or religious icons Expressions by groups of federal employees Conversations between federal employees Expressions among or directed at members of the public Expressions in areas accessible to the public The OPM memorandum clarifies that the “undue hardship” exception remains but avoids discussing it in much detail. Absent evidence to the contrary, it is expected that the OPM will utilize the standard endorsed by the Supreme Court in 2023. Groff v. DeJoy, 143 S. Ct. 2279 (2023). In Groff, the Supreme Court held that “undue hardship is shown when a burden is substantial in the overall context of an employer’s business,” “tak[ing] into account all relevant factors in the case at hand, including the particular accommodations at issue and their practical impact in light of the nature, size and operating cost of an employer.” What Type of Belief Is “Religious” According to the OPM? Notably, the OPM memorandum defers to traditional Title VII analyses for determining what would constitute a “sincerely held religious belief” warranting protection. The EEOC has been abundantly clear that protections are not just reserved for traditional, organized religions such as Christianity, Judaism, Islam, Hinduism or Buddhism, but rather a realm of “moral or ethical beliefs as to what is right and wrong which are sincerely held with the strength of traditional religious views.” Further, the Supreme Court has made it clear that it is not a court’s role to determine the reasonableness of an individual’s religious beliefs, and that “religious beliefs need not be acceptable, logical, consistent, or comprehensible to others in order to merit First Amendment protection.” In sum, the best practice for federal employers is to take a broad approach to defining religion in the workplace to avoid any semblance of discriminatory conduct, so long as the expression of these beliefs does not constitute a true “undue hardship.” What About Private Employers? While this memorandum does not apply to private employers, Title VII does. Thus, it raises serious questions about whether the EEOC will follow suit by taking inspiration from the new OPM memorandum. In the past, the EEOC has issued guidance cautioning private-sector supervisors from engaging in religious expression that might reasonably appear coercive due to their supervisory role. The OPM’s memorandum, however, takes a different stance, explaining supervisors should not be treated any differently than non-supervisors on the basis of their workplace roles. It is expected this change of tune will work its way into the private sector sooner rather than later, whether it be through EEOC guidance or private employer policy changes attempting to mimic OPM guidance. Another possibility on the horizon could include whether the federal government issues similar requirements for all federal contractors, which would drastically increase the impact of expansion of religious expression. As with everything in the practice of law between different administrations, time will tell. What Should Private Employers Do Next? As these changes are implemented at the federal level, private employers should take a look in the mirror to see whether their current policies and procedures align with current guidance on religious expression in the workplace. For assistance in reviewing internal policies and procedures on religious expression in the workplace, be sure to contact your Polsinelli attorney.

What You Need to Know: Washington’s new mini-WARN Act applies to smaller employers with 50 or more full-time employees, unlike the federal WARN Act, which only applies to employers with 100 or more employees. The new mini-WARN Act includes a private right of action and penalties for affected employees against employers who violate the requirements. In addition to applying to smaller employers, the mini-WARN Act has broader notice requirements in comparison to the federal WARN Act and excludes specific employees from being part of mass layoffs. On July 27, 2025, Washington State implemented its own version of the Worker Adjustment and Retraining Notification (WARN) Act, officially titled the Securing Timely Notification and Benefits for Laid-Off Employees Act, commonly referred to as a "mini-WARN Act." The mini-WARN Act is a state-level law that complements the federal WARN Act.  Washington joins thirteen other states (California, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, New Hampshire, New Jersey, New York, Tennessee, Vermont and Wisconsin) in implementing mini-WARN Acts. WARN Acts provide protections for employees facing layoffs or business closures. Key Aspects of the Act Notice Requirement: Under the mini-WARN Act, employers must provide at least 60 days' notice before a mass layoff or business closing (business closings can be permanent or temporary). This notice must be given to affected employees, the state, and local government officials and must contain very specific information (including anything required by the federal WARN Act, information regarding the site affected, contact information, specifics regarding the layoff or closure, anticipated dates, names and job titles for those affected, and information regarding relocation of operations/roles). The mini-WARN Act provides some limited exceptions for faltering companies, unforeseeable business circumstances, and natural disasters. The mini-WARN Act also has certain exceptions related to sales of business and mass layoff for specific construction projects. Who is Covered: The mini-WARN Act applies to employers with 50 or more employees in the state of Washington. This is a broader scope than the federal WARN Act, which only covers employers with 100 or more employees. The mini-WARN Act applies to mass layoffs or business closings affecting 50 or more full-time employees, which is similar to the federal WARN Act; however, the “single site of employment” requirement is different in the mini-WARN Act. Under the federal WARN Act, employee counts are based on separations at a single site of employment for both mass layoffs and business closures. Under Washington’s new mini-WARN Act, the “single site of employment” requirement is only applicable to business closings. In other words, the mini-WARN Act will apply to mass layoffs affecting multiple sites if the total layoffs accumulate to 50 or more. Additionally, of note, under the mini-WARN Act, employees are any people employed in the state of Washington by an employer. Employee Protections: By providing 60 days’ notice of a job loss, the mini-WARN Act aims to give employees time to prepare for job loss, seek new employment, or pursue retraining opportunities. The mini-WARN Act also protects employees currently on leave under Washington Paid Family and Medical Leave law by preventing an employer from including such an employee in a mass layoff. Penalties for Non-Compliance: Employers who fail to comply with the notice requirements may face penalties, including up to 60 days of back pay and benefits for each day of violation for each affected employee, $500 per day in penalties, and attorneys’ fees. Employers should familiarize themselves with the new requirements to navigate this evolving landscape effectively. As the mini-WARN Act takes effect, it is crucial for businesses to review their policies and procedures to ensure compliance, especially prior to layoffs, closures, and reductions in work. For questions and assistance regarding the Washington mini-WARN Act, other state mini-WARN Acts, or the federal WARN Act, please contact your Polsinelli attorney. 

On July 17, 2025, President Trump announced his selection of two choices for the National Labor Relations Board (NLRB). The President tapped Scott Mayer and James Murphy to fill those seats. If confirmed, Mayer and Murphy would fill two seats that have been vacant since President Trump returned to the White House. Mayer currently serves as Boeing’s Chief Labor Counsel and has been in that role since 2022. Murphy is a longtime NLRB official who first clerked for the NLRB in 1974 and most recently served as Chief Counsel to Marvin Kaplan, chair of the NLRB. Both bring strong management-side credentials to the table. Subject to Senate confirmation, Mayer and Murphy filling two of the three vacant seats will provide the NLRB with a quorum and enable it to issue decisions, engage in rulemaking, and fulfill its statutory duties. The NLRB has lacked a quorum since President Trump’s controversial termination of former member Gwynne Wilcox. Those in opposition to their nomination argue that, procedurally, they should not be confirmed until the validity of the termination of Wilcox is resolved by the federal courts. For questions regarding these nominations, the anticipated impact of the NLRB regaining a quorum, or other labor-related issues, please contact a member of Polsinelli’s Management-Labor Relations Practice Group.

What you need to know: DOL will no longer seek liquidated (double) damages in pre-litigation FLSA settlements, limiting recovery to unpaid wages. Liquidated damages still apply in court cases, so employers remain at risk in litigation. Early in the Biden administration, the Wage and Hour Division of the Department of Labor (“WHD”) issued Field Assistance Bulletin No. 2021-2 reversing practices adopted during the first Trump administration and returning to a more vigorous pursuit of liquidated damages from employers in pre-litigation investigations regarding potential violations of the Fair Labor Standards Act (“FLSA”). Now, just a few months into the second Trump administration, the WHD has reversed course again. Pursuant to Field Assistance Bulletin No. 2025-3, FAB No. 2021-2 is rescinded and the WHD will limit all pre-litigation administrative settlements to the recovery of unpaid wages or overtime compensation. It will no longer request any liquidated damages in pre-litigation investigations or resolutions. Liquidated damages are essentially “double damages,” requiring an employer that is liable for minimum wage or overtime compensation violations pay a second amount equal to the unpaid wages. In explaining this new approach, the WHD noted that Congress had “authorized” liquidated damages “only in judicial proceedings – not administrative matters” under the FLSA’s Section 216(c), which allows the DOL to “supervise the payment” of unpaid wages or overtime compensation to employees. It is the WHD’s opinion that is it “not authorized to seek liquidated as part of any payment it supervises under § 216(c).” The WHD also pointed to Section 260 of the FLSA to support its conclusion, because that Section vests courts – not the Agency – with the authority to evaluate employer’s good faith defenses that might preclude a recovery of liquidated damages. FAB 2025-3 states that “[t]he structure of § 260 reinforces that liquidated damages are a judicial remedy, and not an administrative tool available.” The practice of seeking liquidated damages in pre-litigation investigations and settlements began in 2010 under the Obama administration. While the first Trump administration attempted to rein this practice in to an extent with FAB No. 2020-2, the current stance is more aggressive. Of course, liquidated damages remain available in any litigation involving an FLSA violation – whether that litigation is brought by the WHD/DOL or a private party. For questions and assistance regarding WHD wage-and-hour investigations or other issues involving the FLSA or other wage-and-hour laws, please contact your Polsinelli attorney. 

The Ninth Circuit has now joined a growing number of appellate courts holding that, in Fair Labor Standards Act (FLSA) collective actions, personal jurisdiction must be determined on a claim-by-claim basis when general jurisdiction over the defendant is absent. In Harrington v. Cracker Barrel Old Country Stores, Inc., a group of current and former employees alleged that Cracker Barrel had violated the FLSA in its treatment of tipped workers’ wages. The case was filed in the District of Arizona, though Cracker Barrel is incorporated and headquartered in Tennessee. The plaintiffs sought conditional certification of a nationwide collective action. Following the traditional two-step certification process, the district court conditionally certified the collective and authorized notice to be sent nationwide, reasoning that the presence of a single plaintiff with a connection to the forum state sufficed to establish specific personal jurisdiction for all claims. Cracker Barrel then asked for an interlocutory appeal on three issues. The Ninth Circuit affirmed the district court on two, but took up the third question: Does the Supreme Court’s decision in Bristol-Myers Squibb Co. v. Superior Court of California apply to FLSA collective actions in federal court, thereby rendering nationwide notice improper? In Bristol-Myers Squibb Co. v. Superior Court of California, 582 U.S. 255 (2017), the Supreme Court held that the Fourteenth Amendment’s Due Process Clause prohibits state courts from exercising specific personal jurisdiction over claims by non-resident plaintiffs against a non-resident defendant when the claims lack a sufficient connection to the forum state. The Third, Sixth, Seventh and Eighth Circuits have already extended this principle to FLSA collective actions, while only the First Circuit has reached a different conclusion. Aligning with the majority, the Ninth Circuit held that when a collective action is based on specific personal jurisdiction — that is, where the defendant is neither incorporated nor headquartered in the forum state — each opt-in plaintiff’s claim must be evaluated for its connection to the defendant’s activities in that state. Accordingly, the Ninth Circuit reversed the District of Arizona’s authorization of nationwide notice, concluding it was based on the “mistaken assumption” that such specific personal jurisdictional analysis was unnecessary. For questions and assistance regarding collective actions or other issues involving the FLSA or other wage-and-hour laws, please contact your Polsinelli attorney. 

Colorado generally prohibits restrictive covenants, except in narrow circumstances. On May 8, 2025, the Colorado Legislature passed Senate Bill 25-083, which imposes three significant new limitations on the use of restrictive covenants for certain healthcare providers and narrows their application in business sales. These changes will apply to agreements entered into or renewed on or after August 6, 2025. Current Law Overview Under current law (C.R.S. § 8-2-113), non-compete and customer non-solicitation agreements are enforceable only in certain circumstances. For instance, non-competes are enforceable for “highly compensated individuals” when the agreement is reasonably necessary to protect an employer’s trade secrets. However, covenants that restrict a physician’s right to practice medicine after leaving an employer are already void under Colorado law. Key Changes Under SB25-083 Broader Ban on Non-Competes for Healthcare Providers The amendment prohibits non-compete and non-solicitation agreements for certain licensed healthcare providers, even if they meet the "highly compensated" threshold. This includes those who: Practice medicine or dentistry Engage in advanced practice registered nursing Are certified midwives Fall under additional categories listed in C.R.S. § 12-240-113 Liquidated Damages in Physician Contracts Previously, physician employment agreements could include liquidated damages tied to termination or competition. This amendment removes that provision, meaning that: Agreements with unlawful restrictive covenants are unenforceable. Agreements without unlawful provisions remain enforceable and may still carry damages or equitable remedies. It remains unclear whether competition-related liquidated damages are still enforceable under the new law. Expanded Patient Communication Rights Medical providers can no longer be restricted from informing patients about: Their continued medical practice New professional contact information The patient’s right to choose their healthcare provider Confidentiality and trade secret agreements are still allowed, as long as they don’t prevent sharing general knowledge. New Limitations on Business Sale Non-Competes Colorado law has long permitted non-competes in connection with the purchase or sale of a business. SB25-083 narrows this by: Allowing non-competes only for owners of a business interest Placing time limits on non-competes for minority owners or those who received ownership through equity compensation For these individuals, the non-compete duration is capped using a formula: Total consideration received ÷ Average annual cash compensation in the prior two years, or the duration of employment if less than two years. For questions and assistance regarding the upcoming changes to restrictive covenants in Colorado, please contact your Polsinelli attorney.

On June 12, 2025, the Department of Homeland Security (DHS) began sending termination notices to foreign nationals paroled into the United States under a parole program for Cubans, Haitians, Nicaraguans and Venezuelans (CHNV). The terminations are legally allowed under a May 30, 2025, decision by the US Supreme Court lifting a federal district court injunction that had temporarily barred the federal government from implementing the revocations. The termination notices inform the foreign nationals that both their parole is terminated, and their parole-based employment authorization is revoked – effective immediately. Employer Obligations The Immigration law provides that it is unlawful to continue to employ a foreign national in the U.S. knowing the foreign national is (or has become) an unauthorized alien with respect to such employment. How will an employer know if an employee has lost work authorization? For E-Verify users, E-Verify is in the process of notifying employers and employer agents that they need to log in to E-Verify and review the Case Alerts on the revocation of Employment Authorization Documents (EADs). The employer is then on notice that an employee has lost work authorization. However, many employers are not enrolled in E-Verify. Those employers may learn of a revocation when an employee presents the termination notice to the employer. Also, as the CHNV revocation is in the news, DHS may consider employers on notice, with an obligation to review the status of its employees to determine whether workers have lost authorization to work. At this point, DHS has not provided guidance to employers on their obligations, but we recommend employers act cautiously and take reasonable steps to determine whether company employees are impacted. We encourage taking these steps: Employers should review their I-9 records and supporting documents to determine if employees have employment authorization cards with the code C11, and that the country of citizenship on the card lists Cuba, Haiti, Nicaragua or Venezuela. When an employer is notified or discovers that an employee's C11 work authorization has been revoked, the employer should not immediately terminate the employee. Certain individuals, even from the impacted countries, may have C11 work authorization separate and apart from the CHNV program. These work authorizations remain valid. When an employer is reasonably certain the employee’s C11 employment authorization has been terminated, the employer should ask the employee if they have other valid work authorization (which is common). If yes, the employer should then reverify the employee's Form I-9 in Supplement B, with the employee presenting new employment authorization documentation. If an employee is unable to provide new employment authorization documentation, the employer should consider terminating employment. In the event of an Immigration & Customs Enforcement investigation, knowingly to continue to employ a foreign national who is not authorized to work in the U.S. can result in a potential charge. When an employer is uncertain regarding the correct course of action, we recommend speaking to Immigration counsel to review and determine the appropriate steps.

Sweeping changes to noncompete covenants are set to take effect on September 1, 2025, for health care employers in Texas. These changes stem from recent amendments to Texas’ noncompete statute. These changes will: Expand Texas’ heightened enforceability requirements to nearly all health care practitioners. Impose strict limits on the duration and geographic area of applicable noncompete covenants. Cap the buyout option that must be provided to covered health care practitioners. Who Is Impacted? The recent amendments to Texas’ noncompete statute were enacted through Texas Senate Bill 1318 (SB 1318) that was signed into law by Governor Abbott on June 20, 2025. It will impact Texas-licensed physicians, dentists, nurses (including advanced practice nurses), physician assistants, and health care entities that execute noncompete covenants with the aforementioned health care practitioners. Downstream, these amendments have the potential to alter various health care business models, and the value assigned to health care entities in mergers and acquisitions. What Are the Key Changes? Since 1999, the Texas noncompete statute has imposed heightened requirements for securing enforceable covenants with physicians licensed by the Texas Medical Board. SB 1318 takes these protections a step further by incorporating the following heightened requirements: Mandatory/Salary-Capped Buyout Options – Similar to physicians, mandatory buyout clauses must now be integrated into noncompete covenants with dentists, nurses and physician assistants. The amendments eliminate the statute’s open-ended “reasonable price” requirement and will now require buyout clauses to not exceed a covered individual’s “total annual salary and wages at the time of termination.” For many agreements, this will result in a significant reduction from previous buyout clauses. One-Year Duration – Noncompete covenants that are executed with physicians and other health care practitioners will be limited to one (1) year following the termination of the covered individual’s contract or employment. Five-Mile Radius – The geographic area of noncompete covenants that are executed with physicians and other health care practitioners will now be limited to “a five-mile radius from the location at which the health care practitioner primarily practiced before the contract or employment terminated.” Termination Without “Good Cause” for Physicians – The circumstances of a physician’s termination will impact the enforceability of their noncompete covenant. Noncompete covenants will be void and unenforceable against a physician if they are involuntarily terminated without “good cause,” which is defined as “a reasonable basis for discharge . . . that is directly related to the physician’s conduct, including the physician’s conduct on the job, job performance and contract or employment record.” Importantly, this distinction is limited to physicians. The enforceability of noncompete covenants that are executed with other health care providers will not be impacted by the circumstances of their termination. Clear and Conspicuous Language – Noncompete covenants that are executed with physicians and other health care practitioners must now “have terms and conditions clearly and conspicuously stated in writing.” SB 1318 does not expand further on this requirement, but it will result in noncompete covenants being susceptible to attack on this basis. Managerial/Administrative Carve-Out – Before the enactment of SB 1318, Texas’ heightened enforceability requirements extended to most physician-entered noncompete covenants “related to the practice of medicine” (excluding certain business ownership interests). This created some ambiguity regarding when these heightened requirements were triggered. SB 1318 partially resolves this by emphasizing “the practice of medicine does not include managing or directing medical services in an administrative capacity for a medical practice or other health care provider.” Stated differently, noncompete covenants that are executed with physicians employed solely in a managerial or administrative capacity will not be subject to these heighted requirements. When Do These Changes Go into Effect? The changes go into effect on September 1, 2025. Importantly, these changes are prospective in nature and only apply to noncompete covenants that are entered into or renewed on or after this date—meaning that preexisting noncompete covenants will continue to be governed by Texas’ noncompete laws existing before the effective date of SB 1318. What’s Next? These amendments are consistent with the nationwide trend towards more restrictions on the permissive use of noncompete covenants. While these amendments are not retroactive, it is conceivable that judges may still take these amendments into consideration when analyzing the enforceability of preexisting covenants in future litigation under Texas’ current “no greater than necessary” standard. In turn, employers will need to weigh whether they make these changes on a rolling basis or preemptively amend existing agreements and consider other avenues for protection. Polsinelli attorneys are available to assist covered health care entities in navigating these changes and ensuring that their protectable business interests are adequately safeguarded.

What You Need to Know: Equal Protection Under Title VII: On June 5, 2025, the U.S. Supreme Court unanimously ruled that Title VII’s protections apply equally to all individuals, regardless of whether they are in a majority or minority group, reinforcing a plain-language interpretation of the statute. DEI Implications and Legal Scrutiny: The decision comes amid increasing scrutiny of employer DEI initiatives, highlighting the need for programs to comply with Title VII’s equal treatment requirements for all protected groups. More Changes on the Way? A concurring opinion questions whether the longstanding McDonnell Douglas standard should govern at summary judgment in Title VII cases, possibly foreshadowing more changes to come. In Ames v. Ohio Department of Youth Services, the U.S. Supreme Court unanimously rejected a rule requiring that Title VII discrimination claims brought by “majority-group” plaintiffs meet a heightened evidentiary standard to establish a prima facie case of discrimination. In doing so, the Court held that Title VII applies equally to all groups within its protected classes based on the plain language of the statute that does not differentiate amongst groups. This decision is significant in light of the shifts in the Equal Employment Opportunity Commission’s position on employer diversity, equity, and inclusion (DEI) initiatives. In Ames, a heterosexual woman plaintiff alleged that she was denied a promotion and subsequently demoted due to her sexual orientation. The district court granted summary judgment to the employer on the grounds that the plaintiff failed to meet the Sixth Circuit’s "background circumstances" rule. Plaintiffs who are members of a majority group are required to establish “background circumstances to support the suspicion that the defendant is that unusual employer who discriminates against the majority.” Multiple other Circuits similarly imposed heightened evidentiary burdens on majority group plaintiffs. The Supreme Court unanimously rejected the background circumstances rule, holding that Title VII's text does not support imposing a heightened standard on majority-group plaintiffs. Justice Ketanji Brown Jackson, delivering the unanimous opinion for the Court, stated that Title VII's protections apply equally to all individuals; they do “not vary based on whether or not the plaintiff is a member of a majority group.” While the decision is not necessarily unexpected, the impact of the Ames decision could be heightened given the recent focus on employer DEI initiatives. In recent guidance finding that employer DEI programs that provide benefits to employees based on race or other protected group status may be unlawful, EEOC has similarly expressed that Title VII’s protections and requirements are equally applicable to all protected groups. Also notable is a concurring opinion issued by Justices Clarence Thomas and Neil Gorsuch. In addition to noting their agreement with the majority, Justices Thomas and Gorsuch questioned the lower court’s use of the McDonnell Douglas burden-shifting standard in awarding summary judgment to the employer. The concurring opinion expressed that requiring employees to meet the McDonnell Douglas standard at the summary judgment stage was an excessive burden, and invited future challenges to the standard’s application. The Ames decision underscores the importance of treating all employees fairly under Title VII. Further, the decision emphasizes the need to assess workplace programs for vulnerabilities in light of the EEOC’s DEI focus. For questions or guidance regarding compliance, please contact Valerie Brown, Jack Blum, Earl Gilbert, or your Polsinelli attorney.

What You Need to Know: OSHA’s Updated SST Plan Targets High-Risk Workplaces Using New Data: The revised Site-Specific Targeting (SST) Inspection Plan now relies on injury data from OSHA’s Injury Tracking Application (ITA), focusing on high-hazard, non-construction establishments with 20+ employees. Key Changes Include More Inspections and Industry Focus: The plan expands the number of inspections and emphasizes industries with high injury rates, while dropping “record-only” inspections for sites mistakenly flagged. Proactive Compliance Strategies Are Essential: Companies should prioritize accurate record-keeping, comprehensive safety training, internal audits and building a strong safety culture to ensure compliance and readiness for surprise inspections. The Occupational Safety and Health Administration (OSHA) has recently updated its Site-Specific Targeting (SST) Inspection Plan, a critical development for companies across various industries. This blog will cover the SST Plan, its recent changes, and practical steps to ensure compliance and readiness for inspections. Site-Specific Targeting Inspection Plan Explained The SST Inspection Plan is OSHA's primary method for targeting high-hazard, non-construction workplaces with 20 or more employees. The Plan uses data from the OSHA Data Initiative (ODI) to identify establishments with high rates of injuries and illnesses. By focusing on these sites, OSHA aims to reduce workplace hazards and improve safety standards. Key Changes in the Updated SST Plan There are three important changes that the updated SST Plan introduces: Data Utilization: The new plan places greater emphasis on data from the OSHA Injury Tracking Application (ITA) to identify establishments for inspection. This shift underscores the importance of maintaining accurate and timely injury and illness records. The SST Plan will select establishments for OSHA inspection based on data from Form 300A for the period 2021 to 2023. Increased Inspections: The updated plan expands the scope of inspections, potentially increasing the number of establishments subject to review. This change highlights the need for companies to be prepared for inspections at any time. But there is some good news: now, if an establishment is targeted in error, OSHA won't continue on with a "record-only" inspection. Rather, it will just leave the premises. Focus on High-Risk Industries: The SST Plan now prioritizes non-construction industries with historically high rates of workplace injuries and illnesses. HR professionals and those involved with safety initiatives in these sectors should be particularly vigilant in ensuring compliance with OSHA standards. Advice for Companies To navigate the updated SST Plan effectively, companies should consider the following strategies: 1. Maintain Accurate Records Accurate record-keeping is as crucial as ever under the new SST Plan. Companies should ensure that all injury and illness records are up-to-date and accurately reflect workplace incidents. This includes regular audits of OSHA 300 logs and ensuring that all required documentation is readily available for inspection. 2. Enhance Safety Training Investing in comprehensive safety training programs is essential. HR professionals should work with safety officers to develop training sessions that address specific workplace hazards and promote safe practices. Regular training not only helps prevent accidents but also demonstrates a company's commitment to safety, which can be beneficial during an OSHA inspection. 3. Conduct Internal Audits Regular internal audits can help identify potential safety issues before they become problems. HR professionals should collaborate with safety teams to conduct thorough inspections of the workplace, ensuring compliance with OSHA standards. These audits can also serve as a valuable tool for preparing for potential OSHA inspections. 4. Foster a Safety Culture Creating a culture of safety within the organization is perhaps the most effective way to ensure compliance with OSHA standards. Companies should encourage open communication about safety concerns and involve employees in safety planning and decision-making. Recognizing and rewarding safe practices can also motivate employees to prioritize safety in their daily activities. The Importance of Compliance Compliance with OSHA's SST Plan is not just about avoiding fines and penalties; it is about ensuring the safety and well-being of employees. By understanding the updated SST Plan and implementing the strategies outlined above, companies can play a pivotal role in creating a safer workplace. What the New SST Inspection Plan Means for Employers The updated SST Inspection Plan represents a significant shift in OSHA's approach to workplace safety. For companies, this means taking proactive steps to ensure compliance and readiness for inspections. By maintaining accurate records, enhancing safety training, conducting internal audits, and fostering a safety culture, companies can not only meet OSHA's requirements but also create a safer, more productive work environment. Polsinelli understands the complexities involved with OSHA compliance and is committed to helping employers meet their obligations efficiently and effectively. If you have questions about OSHA compliance, contact Will Vail, Harry Jones, Shivani Bailey, or your Polsinelli attorney.

Key Takeaways The U.S. Equal Employment Opportunity Commission 2024 EEO-1 Component 1 Report filing opened on May 20, 2025, with a submission deadline of June 24, 2025, and no extensions being granted. Employers must select a workforce snapshot from October 1, 2024, to December 31, 2024. Filing is mandatory for private employers with 100 or more employees, federal contractors with 50 or more employees and certain affiliated private employers. As anticipated, 2024 EEO-1 Component 1 Report filing officially opened May 20, 2025, on the EEO-1 Data Collection website. The EEOC has expressed that, as part of cost savings, the filing period for EEO-1 data will be shorter than in the past. Specifically, employers will have a deadline for submission of June 24, 2025. It is important to note that no extensions will be granted this year, making timely compliance essential. In addition to the shorter time period for submission, there are additional changes to the 2024 EEO-1 reporting as discussed here. Filing Requirements The EEO-1 Report is a mandatory annual data collection that requires certain employers to submit demographic workforce data, including data by race/ethnicity, sex and job categories. The following entities are required to file: Private employers with 100 or more employees; Federal contractors with 50 or more employees; and Private employers with fewer than 100 employees who are affiliated through centralized control or ownership with other entities, totaling 100 or more employees. To complete their report, employers must select a workforce snapshot from any pay period between October 1, 2024, and December 31, 2024, for both full-time and part-time employees. Compliance Assistance Polsinelli understands the complexities involved in the EEO-1 reporting process and are committed to helping employers meet their obligations efficiently and effectively. If you have questions about EEO-1 reporting, contact Erin Schilling, Shivani Bailey or your Polsinelli attorney.

On May 14, 2025, the Missouri Senate voted 22-11 to repeal portions of Proposition A, the voter-approved initiative that increases the state’s minimum wage and requires employers to provide earned paid sick leave. The legislation repeals two key pieces of Proposition A: The earned paid sick time requirement, which requires employers to provide employees with one hour of earned paid sick time for every 30 hours worked, took effect on May 1. The increase to the state’s minimum wage based on inflation and a rise in the cost of living. Employers who implemented policy changes to meet the paid sick leave requirements now will face the choice of rolling those changes back or leaving them in place. Although Missouri’s minimum wage increased on January 1 of this year and will again increase at the beginning of 2026, these minimum wage increases were not set to increase based on the Consumer Price Index (CPI) until 2027. Accordingly, the increases to minimum wage this year and again in 2026 remain unchanged. Proposition A passed in November 2024 but has faced significant legislative and legal challenges. For instance, several entities brought a lawsuit, alleging the statute violated the Missouri Constitution, among other things. However, on April 29, 2025, the Missouri Supreme Court ruled to uphold Proposition A in Raymond McCarty, et al. v. Missouri Secretary of State, et al., Case No. SC100876. See our earlier blogs on these issues here and here. In the wake of the Missouri Supreme Court’s ruling, Senate Republicans used a rare procedural move to force a vote on the legislation. The bill, passing unchanged through the Senate from the House, will now advance to Governor Kehoe’s desk, and he is expected to sign the legislation into law. If signed, the repeal will become effective on August 28, 2025. Until then, employers must continue to abide by the law as currently written. For questions and assistance regarding compliance with Proposition A and upcoming changes, please contact your Polsinelli attorney.

What You Need to Know The U.S. Department of Labor has announced it will no longer enforce the 2024 independent contractor rule under the Fair Labor Standards Act (FLSA), reverting to the more employer-friendly 2008 “economic reality” test. The 2008 Rule and a reinstated 2019 Opinion Letter—favorable to app-based and gig economy businesses—will guide enforcement actions, emphasizing factors like control, investment, and profit/loss potential to determine worker status. While the shift is seen as beneficial to businesses, employers must continue to monitor developments and ensure compliance with federal, state, and local classification standards to avoid misclassification penalties. On May 1, 2025, the Wage and Hour Division of the U.S. Department of Labor (“DOL”) announced that it will no longer enforce its 2024 independent contractor rule under the Fair Labor Standards Act (“FLSA”). The nixed 2024 rule previously set forth a six-factor test to classify workers as employees or independent contractors based on a “totality of the circumstances test” of non-exhaustive factors. The 2024 rule had been subject to numerous legal challenges in district courts across the country because employers considered it to skew towards classifying workers as independent contractors. Now, the DOL will revert back to the framework set out back in 2008 in Fact Sheet #13 (the “2008 Rule”) until it can develop a revised standard. The DOL’s Guiding Independent Contractor Standard (for now) The 2008 Rule asserts that “an employee, as distinguished from a person who is engaged in a business of his or her own, is one who, as a matter of economic reality, follows the usual path of an employee and is dependent on the business which he or she serves.” Under this 2008 Rule, the employer-employee relationship under the FLSA is tested by “economic reality” rather than “technical concepts.” It also states that the following factors are considered significant in determining whether there is an employee or independent contractor relationship: The extent to which the services rendered are an integral part of the principal’s business; The permanency of the relationship; The amount of the alleged contractor’s investment in facilities and equipment; The nature and degree of control by the principal; The alleged contractor’s opportunities for profit and loss; The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor; and The degree of independent business organization and operation. Finally, the 2008 Rule provides that certain factors, such as (i) where work is performed; (ii) the absence of a formal employment agreement; (iii) whether an alleged independent contractor is licensed by a state or local government; and (iv) the time or mode of pay, are immaterial to determining whether there is an employment relationship. Impact of the DOL’s Recent Departure from the 2024 Test The DOL’s announcement does not formally revoke the 2024 rule, but it does indicate that changes to the rule will be forthcoming. The DOL will now utilize the Fact Sheet #13 and a 2019 Opinion Letter (which was previously withdrawn) to conduct audits and other enforcement actions. The 2019 Opinion Letter re-instituted by the DOL on May 2, 2025, addresses whether the workers of a virtual marketplace company that provides an “online and/or smartphone-based referral service that connects service providers to end-market consumers” are independent contractors or employees. In essence, the 2019 Opinion Letter concludes that these “on-demand” workers for virtual marketplace companies, who perform services for users (such as transportation, delivery, shopping, moving, etc.), are independent contractors, not employees. App-based rideshare companies and other similar technology-based service companies will be directly impacted by the DOL’s announcement. While these recent DOL announcements are generally viewed as more employer-friendly, time will tell if that is the practical reality of these changes. Don’t forget – state and local laws can impact the analysis of proper worker classification, so employers need to stay vigilant to ensure they are not making any major changes that would violate those pesky geographic nuances. Employers Should Proactively Monitor This Area Employers should evaluate their existing employee classifications in light of these recent developments to ensure that employees are properly classified to avoid violations of the FLSA’s requirements, including minimum wage, overtime, and recordkeeping. This is particularly important for employers to consider because misclassification issues can be costly. Additionally, employers need to stay alert for any further changes because the DOL has signaled that additional rulemaking regarding independent contractor classification under the FLSA is expected. Please contact your Polsinelli attorney if you have any questions related to this important legal development.

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.