• On April 22, 2026, Virginia approved a statewide paid family and medical leave (PFML) program, joining several other states across the nation that have enacted such programs.
• The new program will be administered by the Virginia Employment Commission (VEC), funded through payroll contributions beginning April 1, 2028, and will begin paying benefits on December 1, 2028.
• For Virginia employers, the larger story may be that this is not simply federal Family and Medical Leave Act (FMLA) with wage replacement added. Virginia’s PFML program differs from its federal counterpart in who is covered, which relationships and reasons qualify, how benefits are funded, and when job-restoration rights attach.

Virginia’s New PFML Program Creates a Separate State Leave Framework

The new law establishes a state-administered insurance program through the VEC. Under the statute, the VEC must establish and administer the program by January 1, 2028, begin collecting contributions on April 1, 2028, and begin receiving claims and paying benefits on December 1, 2028. The law also permits employers to apply to satisfy their obligations through an approved private plan if that plan provides benefits equal to or greater than those required by the statute.

As enacted, Virginia PFML will provide up to 12 weeks of paid leave in a benefit year for the birth, adoption, or foster placement of a child, the employee’s own serious health condition, care for a family member with a serious health condition, qualifying military family needs, and care for a covered service member. The law also provides up to four weeks of paid leave to seek defined “safety services” for the employee or a family member. Weekly benefits are set at 80% of average weekly wages, subject to a statutory minimum and maximum, and the law expressly allows intermittent or reduced-schedule leave.

PFML leave that also qualifies as leave under the FMLA runs concurrently with FMLA leave, so the employee receives only a total of 12 weeks per year for leave qualifying under both laws. The PFML statute allows employers to require that PFML be used concurrently with any “disability or family care leave” the employer provides, but it is unclear whether this would permit the employer to require the employee to use PFML concurrently with PTO or general paid sick leave, as is commonly required under employer leave policies.

Virginia Joins Other States in Expanding Its PFML Program Beyond FMLA

Because Virginia historically has not imposed paid leave obligations on private employers, the familiar statutory reference point for Virginia employers has been the federal FMLA. Virginia’s new program, however, does not just mirror the federal scheme; instead, it goes well beyond FMLA’s leave entitlements.

1. Virginia PFML Reaches a Broader Pool of Workers than FMLA

FMLA coverage applies to private employers with 50 or more employees and only to employees who have worked for the employer for at least 12 months, worked at least 1,250 hours in the prior 12 months, and work at a site with 50 employees within 75 miles. Virginia officials, by contrast, describe the new PFML benefit as being widely available to nearly all workers in the Commonwealth, and the statute itself makes benefits available to “covered individual[s]” which generally means a worker who satisfies Virginia’s unemployment-law monetary eligibility criteria. On the employer side, the statute also borrows from Virginia’s unemployment-law, which generally reaches an employing unit that paid $1,500 or more in wages in a calendar quarter or had at least one individual in employment for part of a day in each of 20 different weeks in the current or preceding year. These unemployment benefit thresholds for employee and employer coverage are extremely minimal and will be met by the vast majority of employees and employers.

2. Virginia’s Covered Relationships and Qualifying Reasons also Exceed Those Under FMLA

The new Virginia PFML law also provides more reasons for employees to take leave than federal FMLA. PFML not only covers the FMLA-qualifying reasons, but adds a new category of “safety services” related to domestic violence, harassment, sexual assault, or stalking for which an employee can take extended paid leave. In addition, while FMLA allows employees to take leave to care for only very close relatives (a child, parent, or spouse), PFML expands the leave entitlement to allow extended paid leave for an employee to care for more attenuated relations.

3. Unlike Many Other States Virginia Merges Benefit Eligibility and Job Protection

One critical way in which Virginia PFML is broader than both FMLA and other state PFL laws is in its provision of job protection. In most states with similar PFL laws, paid leave and job protection are separated to balance employer and employee interests. An employee might be entitled to paid leave under the broader state program but is only entitled to restoration to their position if they meet FMLA’s requirements for tenure, employer size, etc…, or fit within the requirements of other specific laws like the Americans with Disabilities Act, Pregnant Workers Fairness Act, or state analogues. Virginia PFML, on the other hand, provides job protection and restoration rights for all employees who meet the relatively short 120-day tenure requirement with their current employer before taking leave.

Why This Matters

Virginia PFML adds more than a new leave right. It also adds a new payroll tax, notice requirements, and administrative system. Although employers have a two (2) year lead time before PFML begins to actively operate, the time will soon come for employers to review their leave policies to ensure that PFML leave is coordinated to work alongside the employer’s other leave requirements, and that all leave policies are in line with the new law’s requirements. Employers can consult their Polsinelli Labor and Employment attorney with any questions.

• The DOL has proposed a new multi-factor standard addressing vertical and horizontal joint employer status under the FLSA, FMLA and MSAWPA.
• The proposal could redraw wage-and-hour liability boundaries by expanding when multiple entities share responsibility.

The Department of Labor strikes again. To help address circuit splits and compliance challenges on April 22, 2026, the DOL proposed a new rule attempting to establish a more uniform standard to determine whether joint employment exists under the Fair Labor Standards Act (FLSA), Family and Medical Leave Act (FMLA) and Migrant and Seasonal Agricultural Worker Protection Act (MSAWPA).

Horizonal versus Vertical Joint Employment

Joint employment is when a worker is considered employed by two or more entities such that each may be liable for compliance with the FLSA. Prior administrations have taken markedly different approaches—ranging from broader, worker-friendly interpretations to narrower, control-based frameworks—when determining whether joint employment exists, leaving employers navigating conflicting guidance.

The DOL’s current proposal aims to resolve that inconsistency by creating separate tests for “vertical” and “horizontal” joint employment. Vertical joint employment exists when a worker has a direct employment relationship with one employer but is controlled by another. Horizontal joint employment exists when an individual works for two or more related employers that jointly control the work.

The DOL’s proposed rule clarifies that horizontal joint employment would exist when separate entities are sufficiently related when it comes to the employment of a specific employee. “Sufficiently related,” for purposes of determining whether horizontal joint employment exists, does not require a formal affiliation but instead turns on whether the entities operate as part of a common business. The DOL will consider factors such as common ownership, overlapping management, shared operations, and coordination over employees in making this determination. In practice, the more the entities function as an integrated enterprise—rather than truly independent businesses—the more likely they are to be deemed sufficiently related and joint employers.

Importantly, ordinary business relationships—such as franchising or vendor sharing—without involvement in the employee’s terms and conditions of employment would not, standing alone, establish joint employment.

The Proposed Standard

The proposed test for determining whether vertical joint employment exists is whether the potential joint employer:

(1) hires or fires the employee

(2) substantially supervises and controls the employee's schedule or conditions of employment

(3) determines the employee's rate and method of pay

(4) maintains the worker's employment records

If the four factors unanimously point towards one finding or another, there would be a "substantial likelihood" that there is or is not joint employment. If the factors yield different conclusions, they are weighed holistically, and additional relevant factors may be considered. In practice, this signals a return to a control-based—but still flexible—analysis.

Notably, the proposal excludes certain factors relevant in the independent contractor analysis—such as opportunity for profit/loss, investment, and special skills—confirming they are not relevant in determining whether joint employment exists.

Where the FLSA and FMLA Converge

The proposed rule could have a meaningful impact on FMLA coverage, particularly for employers near the 50-employee threshold.

An employer is subject to the FMLA if it employs 50 or more employees within a 75-mile radius for at least 20 workweeks in the current or preceding calendar year. If the proposed rule results in a broader or more functional interpretation of joint employment, it could increase the likelihood that:

• A business is deemed a joint employer alongside a staffing agency, franchisee/franchisor, or subcontractor, and
• The workers in those relationships are aggregated when determining FMLA coverage.

For some employers, this may be the most immediate compliance risk—not liability for wages, but newly triggered leave obligations.

What Employers Should Know

For employers, one of the most significant implications of the proposal is its potential to redraw liability boundaries. Businesses that have structured operations to minimize direct employment relationships—by outsourcing functions or relying on third-party labor providers—may face renewed scrutiny if they retain meaningful control over working conditions. Even “hands off” influence, if functionally significant, may favor a joint employment finding.

In anticipation of the new rule, employers may consider:

• Reviewing contracts with staffing agencies and subcontractors to clarify independence
• Auditing the degree of control exercised over non-direct employees
• Assessing whether existing practices could be construed as indicative of joint employment
• Tracking state laws on joint employment to determine how different jurisdictional factors may converge
• Evaluating potential FMLA liability by recalculating employee counts, reviewing contracts and operational control over non-direct employees, and coordinating with staffing agencies on leave responsibilities and compliance protocols.

While the DOL’s proposed rule likely won’t take effect until July, the takeaway is clear: if your business touches the work, it may own the risk. As the DOL continues to edge toward uniformity, the most successful organizations will be the ones that treat compliance as part of their business model moving forward.

For questions about the proposal and its effects on employers, contact your Polsinelli attorney.

• Effective April 18, 2026, New York State now generally prohibits employers from requesting or using consumer credit history for employment purposes, subject to limited statutory exemptions.
• The statute defines “consumer credit history” broadly enough to reach credit reports, credit scores and certain information obtained directly from an applicant or employee.
• New York City employers remain subject to the City’s more protective local regime because the state law expressly preserves local laws that afford greater protection.

What Changed on April 18, 2026?

New York employers face a significant statewide change in recruiting and other employment decision-making practices. Effective April 18, 2026, amendments to New York’s Fair Credit Reporting Act now make it an unlawful discriminatory practice for employers, labor organizations, employment agencies and their agents to request or use the consumer credit history of an applicant or employee for employment purposes, or otherwise discriminate on that basis with respect to hiring, compensation or the terms, conditions or privileges of employment. The statute also changes what may be furnished for employment purposes by requiring employment reports to exclude information bearing on a person’s creditworthiness, credit standing, credit capacity or credit history unless an exemption applies.

1. The law reaches more than hiring.

The new restriction is not limited to pre-employment screening. Under the statute, “employment purposes” includes evaluating an individual for employment, promotion, reassignment or retention, and the operative ban also reaches compensation and other terms, conditions and privileges of employment. For employers that have historically used credit information in internal mobility or role-based screening, that broader reach is particularly notable.

2. “Consumer credit history” is defined broadly.

The law does not target only traditional credit reports. It also covers credit scores and information obtained directly from the individual about credit accounts, late or missed payments, charged-off debt, collections, credit limits, prior inquiries, bankruptcies, judgments or liens. In practical terms, the definition reaches not only vendor-supplied reports, but also certain questions directed to applicants or employees themselves.

3. The exemptions are narrow and role-specific.

The statute contains a limited set of exemptions, including roles where use of credit history is required by state or federal law or by a self-regulatory organization; peace and police officers and certain law-enforcement roles; positions subject to background investigation by a state agency; positions requiring bonding or security clearance; certain non-clerical roles with regular access to trade secrets, intelligence information or national security information; positions with signatory or fiduciary authority over at least $10,000; and positions with regular duties that allow the employee to modify digital security systems designed to prevent unauthorized access to networks or databases.

4. New York City employers still have an added compliance layer.

The statewide law expressly preserves local laws that provide greater protection, which leaves New York City employers with an additional layer of compliance. City guidance continues to construe exemptions narrowly, notes that the City law applies when an employer has four or more employees or one or more domestic workers and contemplates notice and five-year recordkeeping when an employer invokes an exemption. That same guidance also describes the $10,000 funds exemption and the digital-security exemption as generally executive-level, rather than blanket exemptions for finance or IT roles.

Why This Matters

By extending New York City’s existing credit-check restrictions statewide, the NYFCRA expands the issues that can arise in recruiting, background-check administration and role-based exemption analysis. The April 18 effective date places renewed attention on application materials, interview practices, vendor instructions and exemption analyses—particularly in New York City, where the local law continues to add its own notice, recordkeeping and interpretive overlay. This law also joins New York State’s Article 23-A framework and New York City’s Fair Chance Act as another highly granular regulation of the pre-hire and onboarding process. Employers should review their onboarding and recruiting processes to ensure compliance with the Empire State’s increasingly technical hiring requirements and consult their Polsinelli Labor and Employment attorney with any questions.

• 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.

• 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.

• 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.

• 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. 

• 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. 

• 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.