On Feb. 21, 2025, the federal district court for the District of Maryland issued a preliminary injunction partially enjoining two of President Trump’s executive orders: Ending Radical and Wasteful Government DEI Programs and Preferencing (Jan. 20, 2025)(J20 Order) and Ending Illegal Discrimination and Restoring Merit-Based Opportunity (Jan. 21, 2025)(J21 Order).
The Court’s ruling focused on three provisions of the executive orders:
The “Termination Provision” of the J20 Order directing federal agencies to terminate “equity-related” grants and contracts;
The “Certification Provision” of the J21 Order directing federal agencies to require federal contractors and grantees to certify under penalty of the False Claims Act that they do not operate programs promoting DEI that violate discrimination laws; and
The “Enforcement Threat Provision” of the J21 Order directing the Attorney General to take actions to “deter DEI programs or principles . . . that constitute illegal discrimination or preferences,” including drafting a report recommending actions and identifying corporations, higher education institutions or certain other entities for “civil compliance investigations.”
The plaintiffs in the case are the National Association of Diversity Officers in Higher Education, the American Association of University Professors, Restaurant Opportunities Centers United, and the Mayor and City Council of Baltimore. The Court ruled that the plaintiffs had demonstrated a likelihood of prevailing on their claims that the J20 and J21 executive orders suffered from an unconstitutional vagueness and that they abridge freedom of speech, among other infirmities. The Court also found that the plaintiffs had demonstrated that the plaintiffs would be irreparably harmed if the executive orders were to be implemented while further judicial proceedings are held to ultimately determine the legality of the executive orders. The Court went on to find that a nationwide injunction was appropriate.
Therefore, the Court issued a preliminary injunction preventing federal agencies from:
Freezing, terminating or changing the terms of any existing grants or contracts, on the basis of the Termination Provision in the J20 Order;
Requiring any grantee or contractor to make any “certification” or other representation pursuant to the Certification Provision; and
Bringing any “False Claims Act enforcement action, or other enforcement action,” pursuant to the Enforcement Threat Provision.
Notably, the scope of the injunction issued by the Court was not as all-encompassing as the plaintiffs had requested. The Court expressly declined to enjoin the Attorney General from preparing a report of recommendations on strategic steps to “encourage the private sector to end illegal discrimination and preferences, including DEI” or from engaging in investigations of potential violations federal anti-discrimination laws pursuant to the Enforcement Threat Provision.
As a result of the Court’s ruling, there is less immediate concern that federal grants or contracts will be interrupted on the basis that they fund “equity-related” activities or that a grantee or contractor will be subject to the threat of the False Claims Act for engaging in DEI programs or policies. On its face, the scope of the Court’s ruling is quite broad, as it prevents not only False Claims Act actions but also “any other enforcement action.”
The ruling is not a final ruling and could be reversed on appeal or altered by the court itself, in whole or in part, as the matter proceeds. Thus, issues raised by the J20 and J21 executive orders are worth reviewing, although some of the immediacy is removed at this time.
In addition, one should not assume that the Court’s injunction addresses all legal concerns with respect to DEI programs and policies currently in place. As a general matter, an entity engages in unlawful discrimination when it makes decisions based on an individual’s race, color, ethnicity, sex or various other protected characteristics. Despite the Court’s preliminary injunction, there remains the risk of liability based on illegal discrimination, even if the illegal discrimination resulted from well-intentioned efforts to increase diversity. Stated another way, some programs and policies may have had compliance issues before the J20 and J21 executive orders and those issues are not affected by the preliminary injunction and should be assessed and addressed if warranted.
As before this latest development, DEI programs, policies and initiatives should be reviewed to ensure their compliance with existing anti-discrimination law. Close attention should also be paid to the rapidly occurring developments against the backdrop of enforcement actions by both federal and state officials, funding and reimbursement implications of the programs and the possibility of private litigation.
Bond continues to follow these and related developments closely. Please contact a Bond attorney in the labor and employment practice or the Bond attorney with whom you normally work, for questions, concerns and tailored consultation.
Under New York Labor Law Section 191, individuals who fall under the broad definition of “manual worker” must receive their wages weekly. There is currently a split among the courts as to whether manual workers have a private right of action to recover liquidated damages for untimely payments. In Vega v. CM & Associates Construction Management, LLC, the First Department held that manual workers who were paid late had a private right of action under Section 198 of New York Labor Law to recover liquidated damages for up to six years of their wages. Conversely, in Grant v. Global Aircraft Dispatch Inc., the Second Department held that Section 198 does not create a private right of action for late payment when the employee is still paid in full.
Despite the lack of clarity in the law as to whether manual workers have a private right of action, there has been a surge in individual and class-action lawsuits that could expose employers to substantial liability, requiring them to pay employees who were already paid in full, albeit not on a weekly basis. Governor Hochul has included legislation in her proposed budget for the 2026 fiscal year to address this issue.
Governor Hochul’s proposed legislation would clarify the damages available to manual workers for untimely payments. First-time violations allow for the recovery of 100% of interest lost due to delayed payments. Second-time violations would allow for the recovery of 300% of the lost interest due to delayed payment. Finally, for all subsequent violations, recovery includes liquidated damages equal to 100% of the total amount of wages due to the employee. This legislation would limit plaintiffs’ recovery of liquidated damages and prevent financial harm to employers who have paid employees the correct amount on a biweekly schedule. If enacted, Section U would take effect 60 days after approval. Similar legislation on how to remedy the frequency of pay controversy was proposed in the 2025 fiscal year budget, but did not pass.
The 2026 budget must be approved by April 1, 2025, and we will continue to provide updates regarding this issue. If you have any questions regarding the effects of this legislation, please contact Nicholas Jacobson, any attorney in Bond’s labor and employment practice or the attorney at the firm with whom you are regularly in contact.
On Feb. 5, 2025, President Trump signed an Executive Order, “Keeping Men Out of Women’s Sports.” The Executive Order states that “[i]n recent years, many educational institutions and athletic associations have allowed men to compete in women’s sports,” a situation that the Order states has denied women and girls equal athletic opportunity.
The Executive Order states:
“Therefore, it is the policy of the United States to rescind all funds from educational programs that deprive women and girls of fair athletic opportunities, which results in the endangerment, humiliation, and silencing of women and girls and deprives them of privacy. It shall also be the policy of the United States to oppose male competitive participation in women’s sports more broadly, as a matter of safety, fairness, dignity, and truth.”
This Executive Order follows another order signed by the President on Jan. 20, 2025, “Defending Women From Gender Ideology Extremism And Restoring Biological Truth To The Federal Government,” which sets more broadly the federal government’s position that there are two immutable biological binary sexes, male and female, and that the Executive Branch will enforce all sex-protective laws accordingly.
Effective Feb. 5, 2025, the Executive Order directs the Secretary of Education to:
Enforce Title IX of the Education Amendments of 1972 to “affirmatively protect all-female athletic opportunities and all-female locker rooms,” including through regulations and policy guidance; and
Prioritize Title IX enforcement actions against educational institutions and athletic institutions composed of or governed by educational institutions that deny women an equal opportunity to participate in athletics by “requiring them, in the women’s category, to compete with or against or to appear unclothed before males.”
The Executive Order also directs all executive departments and agencies to review grants and educational programs and “where appropriate” to “rescind funding to programs that fail to comply with the policy established in this order.”
The Executive Order may be challenging for educational institutions, particularly those with transgender female students currently participating on girls and women’s teams. Additionally, in jurisdictions with state or local laws, including the State of New York, that extend rights based on gender identity, the Executive Order conditions federal funding on actions that may be inconsistent with state and local laws. College and university leadership should consult with legal counsel about the impact of this Executive Order on their athletic programs.
Bond attorneys are following these, and related legal developments, closely. If your institution would like further guidance, please reach out to an attorney in our higher education practice or the Bond attorney with whom you are regularly in contact.
On Jan. 21, 2025, President Trump issued an executive order titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (the Order). Among other changes, the Order revokes Executive Order 11246 (EO 11246), which governs federal contractors and subcontractors.
EO 11246, which was signed into law in 1965 by Lyndon B. Johnson, has been enforced by the U.S. Department of Labor, Office of Federal Contract Compliance Programs (OFCCP). EO 11246 prohibited federal contractors, subcontractors and federally assisted construction contractors, who did over $10,000 in business with the federal government, from discriminating in employment decisions and required them to take affirmative action to ensure equal opportunity without regard to race, color, religion, sex, sexual orientation, gender identity or national origin. In addition, certain federal contractors who had contracts above a certain monetary threshold were also obligated to implement a written affirmative action program (AAP). Covered federal contractors obligated to maintain written AAPs were required to certify on the OFCCP's online Contractor Portal, on an annual basis, that they developed and were in compliance with the AAP mandates.
The Order not only rescinds EO 11246, but also directs OFCCP to immediately cease:
Promoting “diversity”;
Holding federal contractors and subcontractors responsible for taking “affirmative action”; and
Allowing or encouraging federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion or national origin.
The Order also requires federal agencies to include in every contract or grant award a term requiring the contractor/grantee to “certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.”
Federal contractors must comply with the Order within 90 days. While we are continuing to analyze the implications of the revocation of EO 11246, many questions remain, including the impact on federal contractors currently undergoing an OFCCP audit or compliance review.
The Rehabilitation Act of 1973 (covering individuals with disabilities) and the Vietnam-Era Veterans’ Readjustment Assistance Act of 1974 (covering protected veterans), which are also enforced by OFCCP, prohibit discrimination in employment and require certain federal contractors to develop written affirmative action plans. Those affirmative action obligations for individuals with disabilities and protected veterans, which are not found in EO 11246, do not appear to be impacted by President Trump’s Order and will remain in effect.
On Dec. 18, 2024, the U.S. Citizenship and Immigration Services (USCIS) announced a final rule introducing significant changes to the H-1B nonimmigrant visa program. This rule aims to modernize the H-1B process, improve program efficiency, offer new benefits and flexibilities, and implement enhanced integrity measures. While the changes primarily affect H-1B specialty occupation workers, other nonimmigrant classifications, including H-2, H-3, F-1, L-1, O, P, Q-1, R-1, E-3 and TN categories, will also see impacts.
Key Updates
The new H-1B eligibility requirements and accompanying changes will apply to petitions filed on or after Jan. 17, 2025. At that time, USCIS will require a revised Form I-129 for all filings. A preview of the updated form is currently available on the USCIS website.
In response to public comments, USCIS highlighted several key revisions and removals from the proposed rule (NPRM) in the final regulation. One significant change involves the definition of “specialty occupation.” The proposed rule previously specified that if a petitioner required only a general degree, such as “business administration” or “liberal arts,” without further specialization, the occupation would not qualify as an H-1B “specialty occupation.” References to these degrees were removed in the final rule. This change shifts focus to the “beneficiary’s actual course of study” rather than solely the degree title, emphasizing the relevance of the education to the job.
Under the final rule, a position qualifies as an H-1B “specialty occupation” if it requires the theoretical and practical application of highly specialized knowledge and mandates at least a bachelor’s degree in a “directly related” specific specialty or its equivalent. A “directly related” degree is defined as one with a “logical connection between the required degree and the duties of the position.”
For positions where a bachelor’s degree in a specific specialty is “normally” the minimum requirement, petitioners do not need to prove that it is always the minimum. DHS clarified that “normal” is interpreted as “usual, typical, common, or routine,” and rejected a proposal to use the preponderance of the evidence standard (“more likely than not”) for this determination.
When petitioners specify a range of acceptable degree fields, they must demonstrate that each field is “directly related” to the job’s duties. Each degree must equip the beneficiary with the specialized knowledge required to perform the job. The petitioner bears the burden of proving how each field of study represents a “specific specialty” directly connected to the position’s responsibilities.
USCIS has also updated the requirements for H-1B cap exemptions. Nonprofit and governmental research organizations must now demonstrate that research is a “fundamental activity” rather than their primary mission.
To qualify for the ACWIA fee exemption, a nonprofit organization must now be recognized by the Internal Revenue Service (IRS) as tax-exempt under sections 501(c)(3), (c)(4) or (c)(6). Previously, regulations required that nonprofits not only be tax-exempt under these IRS sections but also have specifically obtained IRS approval for tax-exempt status for research or educational purposes.
USCIS has removed the requirement for detailed itineraries covering the full validity period of the petition. However, petitioners must still establish that the position will exist as of the start date. For third-party placements, specialty occupation requirements will now be based on the job criteria of the third-party organization. Supporting evidence such as contracts, statements of work, or client letters will remain necessary.
Expanded authority for site visits will allow USCIS to inspect not only petitioner worksites but also third-party locations and private residences where remote work occurs. Refusal to cooperate during site visits may lead to petition denial or revocation.
Amended petition requirements have been clarified to codify existing guidance, including when new Labor Condition Applications (LCAs) are unnecessary (e.g., for short-term placements). USCIS has also codified its deference policy, meaning prior determinations involving the same parties and facts will generally be deferred to, barring material errors, changes or new adverse information.
Under the new rule, H-1B Cap-Gap extensions may continue until April 1 of the fiscal year for which the non-frivolous petition was filed or until the start date of the H-1B petition if approved, whichever occurs first. Previously, H-1B Cap-Gap extensions lasted until Sept. 30, the day before the start of the fiscal year associated with the petition.
The new rule under 8 CFR 214.2(h)(9)(ii) adds a provision for H-1B petitions approved after the requested validity period. USCIS may issue an RFE allowing petitioners to amend the dates. If the new dates exceed the Labor Condition Application (LCA) validity, a new LCA must be submitted. Changes to employment dates or wage increases are not considered material changes if the position remains the same. If no amendment is requested or no RFE is issued/replied to, the petition is approved for the original period without status changes or extensions.
Action Items
We recommend that clients review current and planned filings in light of these new rules. For those with upcoming H-1B or other nonimmigrant petitions, it is critical to prepare for the changes to eligibility requirements, updated forms and enhanced compliance measures.
If you have any questions, please contact Kseniya Premo, any attorney in the firm’s immigration or labor and employment practices, or the Bond attorney with whom you have regular contact. We are here to help ensure a smooth transition and compliance with the new regulations
As we approach the end of 2024, employers in New Jersey should be preparing for the implementation of new employment and business laws and regulations in the upcoming year. This article provides an overview of some significant changes and updates in the law set to take effect in 2025, though it is not a fully comprehensive list.
Minimum Wage Increases: Effective Jan. 1, 2025, the minimum wage will increase by $0.36 to $15.49 per hour for most employees. N.J.S.A. 34:11-56a4. For tipped workers, the minimum wage will increase to $5.62 per hour, up from $5.26. The maximum tip credit for employers remains at $9.87. N.J.S.A. 12:56-3.5.
Pay Transparency: On Nov. 18, 2024, Governor Phil Murphy signed a new statute requiring employers with at least 10 employees to include wage or salary information, or a compensation range, in any posting for a promotion, new job or transfer. The law, effective June 1, 2025, also requires employers to list benefits and other compensation programs for which the employee would be eligible within the employee’s first 12 months of employment.
Gender Neutral Dress Code Policies: On June 28, 2024, the New Jersey Attorney General and New Jersey Division of Civil Rights Director announced that businesses are mandated to adopt gender neutral dress codes for patrons and employees. This decision comes after the Division on Civil Rights issued a finding of probable cause where a restaurant refused to adopt a gender-neutral dress code. As part of the consent order, the restaurant agreed to modify its dress code for both employees and customers. Employers should reevaluate and modify any existing dress code policies and/or handbooks to ensure compliance with the new standards set forth by the Attorney General’s Office.
New Jersey Data Protection Act: Starting Jan. 15, 2025, New Jersey will require covered entities to: (1) limit the collection of personal data to what is adequate, relevant and reasonably necessary; (2) implement reasonable data security practices; (3) provide privacy notices; (4) allow consumers to revoke consent for processing; (5) conduct data protection impact assessments; and (6) maintain records of data protection assessments. C.56:8-166.12. Covered entities include: (a) entities that conduct business in New Jersey or produce products or services targeted to New Jersey; and (b) control or process the personal data of at least 100,000 consumers (not including personal data controlled solely for the purpose of completing a payment transaction), or control or process the personal data of at least 25,000 consumers and derive revenue or receive a discount on the price of any goods or services from the sale of personal data. C.56:8-166.5. “Consumers” are defined as a person that is a resident of New Jersey, not acting in a commercial or employment context. C.56:8-166.4(1). The Office of the Attorney General has the sole and exclusive authority to enforce a violation of the New Jersey Data Protection Act (“NJDPA”), which are considered violations of the Consumer Fraud Act. C.56:8-166.19. Penalties for a first violation are up to $10,000 and up to $20,000 for subsequent violations. Given the expansive nature of this new privacy law, New Jersey businesses should consider reviewing their company’s personal data policy and retention practices.
Key Takeaways
Given these recent and forthcoming changes in New Jersey law, employers should take steps to update their employee handbooks, ensure their job postings meet compliance standards, and adjust their hiring procedures to align with updated policies and wage practices. Furthermore, New Jersey’s new far reaching cyber privacy law will require businesses to review their data privacy policies and data collection processes to ensure compliance.
All contractors and subcontractors who submit bids or perform construction work on public work projects or private projects covered by Article 8 of the Labor Law are required to register with the New York State Department of Labor (NYSDOL) by Monday, Dec. 30, 2024, pursuant to N.Y. Labor Law Section 220-i. The new law is designed to ensure contractors and subcontractors working on public projects or projects receiving public funding “do not have previous labor law violations and will abide by the New York Labor Laws and Regulations, including prevailing wage requirements.”
Who is Covered?
Section 220-i(a) defines a contractor as “any entity entering into a contract to perform construction, demolition, reconstruction, excavation, rehabilitation, repair, installation, renovation, alteration, or custom fabrication.” Under 220-i(b), a subcontractor is any entity who subcontracts with a contractor to perform any of the tasks mentioned in the contractor definition.
What is Covered?
Private projects subject to Article 8 of the Labor Law include those covered by Labor Law Sections 224-a (public subsidy funded projects), 224-d (renewable energy systems), 224-e (broadband projects), and 224-f (climate risk-related and energy transition projects, and roadway excavations).
Registration Requirements
Contractors and subcontractors will need to be able to provide the following information:
Business name and principal address
Contact phone number
Status as a person, partnership, association, joint stock company, trust, corporation, or other form of business entity
The name, address, and percentage interest of each person with an ownership interest
The names and addresses of the corporation’s officers (if a publicly traded corporation)
Tax Identification Number (FEIN)
Unemployment Insurance Registration Number
Workers’ Compensation Board Employer Number
Outstanding wage assessments
Federal or state debarment history over the last eight years
Final determinations of violations of any labor laws or employment tax laws including but not limited to:
Workers’ compensation coverage requirements
Payment of workers’ compensation premiums
Deduction and payment of income taxes
Payment of unemployment insurance contributions
Payment of prevailing wage
Final determinations of violations of any workplace safety laws or standards, including federal Occupational Safety and Health Act (OSHA) standards
Participation in a New York State Apprenticeship Program, if applicable
Status as a New York State certified Minority or Women-owned Business Enterprise (MWBE), if applicable
Proof of Workers’ Compensation Insurance Coverage
Penalties for Failing to Register
Pursuant to Section 220-i(8), “a contractor bidding on a contract for public work knowing it is not registered, or allow[ing] a subcontractor to commence work on a covered project that it knows or should have known is not registered,” can be subject to a fine of up to $1,000. Subcontractors that knowingly engage in projects that are covered but unregistered will be subject to the same penalty. NYSDOL encourages all contractors and subcontractors to register as soon as possible to avoid negatively impacting a bidding period or project schedule. Contractors are responsible for verifying that all of their subcontractors are properly registered.
If approved, contractors and subcontractors will receive a Certificate of Registration electronically. If registration is not approved, contractors and subcontractors can request a hearing within 30 days of notification.
On Dec. 3, 2024, the U.S. Department of Labor’s Wage and Hour Division (WHD) released a Notice of Proposed Rulemaking to phase out the issuance of Fair Labor Standards Act (FLSA) Section 14(c) certificates that allow employers to pay employees with disabilities subminimum wages.
The proposed rule would end the issuance of new Section 14(c) certificates and would only allow certificate holders to apply for renewals for three years after the effective date. At the end of the three-year phase out period, all Section 14(c) certificates will expire and all workers that were paid subminimum wages under Section 14(c) certificates will be required to be paid at or above the minimum wage. The WHD has emphasized that this rule will not require workers to leave their places of employment or require current certificate holders to alter any additional services they provide to these employees.
The FLSA created a guaranteed, non-waivable, federal minimum wage which is currently $7.25 per hour “except as otherwise provided.” Pursuant to Section 14(c)(1) of the FLSA, the Secretary of Labor has a limited power to issue certificates that allow employers to pay subminimum wages if it is determined that the certificates are necessary to prevent the curtailment of employment opportunities for individuals with disabilities. The WHD proposed this new rule to phase out the issuance of Section 14(c) certificates because it has determined that this statutory condition is no longer met.
The WHD based this determination on several factors. First, since the FLSA was signed into law in 1938 and since the most recent substantive revisions to Section 14(c) were made in 1989, the WHD noted that there have been significant steps to promote employment opportunities for individuals with disabilities through advances in technology, community advocacy and legislation.
Second, the WHD cited the steady decline in current certificate holders and subminimum wage employees as evidence of a lack of curtailment of employment opportunities for individuals with disabilities. According to data gathered by the WHD, there were 424,000 workers paid subminimum wages under Section 14(c) certificates and 5,612 certificate holders in 2001, compared to 40,579 workers paid subminimum wages and 801 certificate holders in 2024.
Third, the WHD noted that 33 states have already prohibited or further restricted the payment of subminimum wages to individuals with disabilities.
Finally, the WHD cited several studies suggesting misuse of Section 14(c) certificates and indicating that the work done by the employees working under those certificates often lacks opportunities for advancement or does not provide transferable skills. Based on those studies, the WHD concluded that the use of Section 14(c) certificates may have the counterproductive effect of curtailing employment opportunities for individuals with disabilities.
The WHD has invited the public to comment on all aspects of the proposed rule. The public comment period will be open until Jan. 17, 2025.
As 2024 comes to a close, New York prepares for the rollout of new employment laws and regulations in the coming year. While not an exhaustive summary, this article highlights key developments and updates in employment law for 2025.
Minimum Wage Increases. Effective January 1, 2025, the hourly minimum wage for the New York metro area, which includes New York City, Westchester and Long Island, will increase from $16.00 to $16.50. Wages across the rest of New York State (excluding New York City, Westchester and Long Island) will increase from $15.00 to $15.50. Also, effective January 1, 2025, are changes to the tip credit for food service workers. In New York City, Westchester and Long Island, the tip credit for food service works will be increased from $5.35 to $5.50. For service workers, the tip credit will be increased from $2.65 to $2.75. Other than New York City, Westchester and Long Island, the tip credit for food service workers in New York will be increased from $5.00 to $5.15 and the tip credit for service workers will be increased from $2.50 to $2.60.
Salary Exempt Threshold Changes. Employees may be exempt from overtime requirements depending on their job duties.On January 1, 2025, the new weekly minimum salary threshold for exempt status will increase to $1,237.50 from $1,200.00 in New York City, Westchester and Long Island. For the rest of New York State, the new weekly minimum salary is $1,161.65 per week, up from $1,124.20.
New York Retail Worker Safety Act. On September 5, 2024, Governor Kathy Hochul signed the New York Retail Worker Safety Act into law. Covered retail employers have until March 4, 2025 to ensure compliance with the law’s new requirements for the adoption of polices and training for workplace violence prevention. Specifically, the Act requires a workplace violence prevention policy that (1) outlines a list of factors or situations in the workplace that might place retail employees at risk of workplace violence, (2) outlines methods that the employer may use to prevent incidents of workplace violence, (3) includes information concerning the federal and state statutory provisions concerning violence against retail workers and remedies available to victims of violence, and (4) states that retaliation against individuals who complain of workplace violence, or who testify or assist in any is unlawful. The Act also requires a workplace violence prevention training program providing, among other things, information on the requirements under the law, active shooter drills and training on areas of previous security problems. Finally, effective January 1, 2027, covered retail employers with 500 or more retail employees nationwide must provide access to “panic” buttons throughout the workplace to summon immediate assistance from law enforcement.
End of COVID-19 Paid Sick Leave. COVID-19 Paid Sick Leave expires on July 31, 2025. After July 31, 2025, employees will need to use existing paid leave, such as New York State’s Paid Sick Leave or New York City’s Earned Safe and Sick Time to manage care or isolate for COVID-19.
Paid Prenatal Leave. Effective January 1, 2025, employers are required to provide employees with 20 hours of prenatal personal leave during any 52-week calendar period. Paid prenatal leave is to be provided in addition to other existing sick leave. The leave may be taken for health care services such as physical examinations, medical procedures, monitoring and testing and discussions with health care providers related to pregnancy. Paid prenatal leave may be taken in and must be paid in one-hour increments. Additionally, the use of the language “their pregnancy” indicates the law covers only pregnant employees and not spouses. The law does not state employees must work for a specified period of time before being eligible for prenatal leave. Employers are not required to pay an employee for unused paid prenatal leave upon termination, resignation or other separation from employment.
In light of these recent and upcoming employment law developments, employers should review and update their employee handbooks, bring their job advertisements into compliance and revise their hiring practices as they relate to employee policies and wage practices.
On Nov. 15, 2024, the U.S. District Court for the Eastern District of Texas vacated the U.S. Department of Labor’s (DOL) final rule that increased the minimum salary requirements for employees exempt from the Federal Fair Labor Standard Act’s (FLSA) minimum wage and overtime protections under the executive, administrative and professional exemptions (also known as white-collar exemptions).
The DOL issued this final rule in April 2024, which had several parts. First, on July 1, 2024, the minimum salary for white collar exemptions increased from $684 per week ($35,568 annually) to $844 per week ($43,888 annually). Then, the minimum salary for white collar exemptions was set to increase again on Jan. 1, 2025 to $1,128 per week ($58,656 annually). Finally, the minimum salary was set to increase again in July 2027, automatically increasing every three years.
The Texas district court’s decision prevents the DOL’s final rule from going into effect on a nation-wide basis. The court reasoned that the rule exceeded the DOL’s statutory authority under the FLSA.
Based on the court’s decision, the increase to the overtime threshold scheduled on Jan. 1, 2025 will not go into effect. The decision also retroactively struck down the salary increase that went into effect on July 1, 2024. This decision sets the FLSA salary requirements for white-collar exemptions back to $684 per week.
Of course, many states have salary requirements for these exemptions that exceed the FLSA threshold. New York is one of these states. In New York City, Nassau, Suffolk and Westchester counties, exempt executive and administrative employees have a minimum salary requirement of $1,200 per week ($62,400 annually). For the remainder of New York state, the minimum salary requirement for the executive and administrative exemptions is $1,124.20 per week ($58,457.40 annually). These amounts increase on Jan. 1, 2025 to $1,237.50 ($64,350 annually) and $1,161.65 ($60,405.80 annually), respectively.
Notably, New York does not have a salary requirement for the professional exemption. Therefore, New York employers must follow the FLSA salary requirement for exempt professional employees, which, as described above, is back to $684 per week.
With this decision, employers should review their salary levels for exempt executive, administrative, and professional employees to ensure compliance with state and federal laws.
If you have any questions or would like any additional information, please contact Michael Billok, Natalie Vogel or any attorney in Bond’s labor and employment practice, or the Bond attorney with whom you are regularly in contact.
Once again, the National Labor Relations Board (the Board) has upended long-established precedent. On Nov. 13, 2024, the Board issued its decision in Amazon.com Service, LLC, banning so-called “captive audience meetings” where employers express their views on unionization.
We previously reported that the National Labor Relations Board (NLRB or the Board) General Counsel Jennifer Abruzzo issued a memorandum in May 2023 advancing the position that non-compete agreements between employers and employees that limit employees from accepting certain jobs at the end of their employment, interfere with employees’ rights under Section 7 of the National Labor Relations Act (the Act). On October 7, 2024, the General Counsel issued another memorandum that expands her position on non-compete agreements by stating her opposition to certain repayment arrangements often included in sign-on bonus and retention bonus programs and policies to reimburse for relocation costs, training and education courses, that are commonly referred to as “stay-or-pay” provisions.
The General Counsel’s memorandum does not represent a statement of the current law nor does it establish new law. Rather, it is the latest effort by the General Counsel, in her advocacy role, to try to reinterpret the NLRA, which, in this case, may serve to restrict employers’ actions to protect their legitimate interests.
New Potential Penalties for Unlawful Non-Compete Agreements
The General Counsel’s May 2023 memorandum stated her position that most non-compete agreements violate employees’ Section 7 rights. General Counsel Abruzzo’s rationale for this position is that non-compete agreements may deter employees from resigning or threatening to resign in protest of working conditions. In the October 2024 memorandum, the General Counsel states her intent to pursue expansive remedies against employers found to have maintained unlawful non-compete agreements.
Specifically, according to the General Counsel, where an employer has been found to have maintained a non-compete agreement or provision that is unlawful under the Act, the employer should be ordered to post a notice of its violation and, during the notice-posting period (usually 60 days), current employees should be permitted to come forward to show their entitlement to damages. The memo states that an employee need prove only the following: (1) There was a vacancy available for a job with a better compensation package; (2) they were qualified for the job; and (3) they were discouraged from applying for or accepting the job because of the non-compete provision. The employer would then be required to compensate the employee for the difference (in terms of pay or benefits) between what the employee would have earned and what they did earn during the same period. Additionally, former employees would be able to come forward to claim any damages, such as reductions in earnings or increased time between jobs, that they experienced due to the non-compete agreement or provision.
To be clear, these remedies are not current Board law. While they only represent the General Counsel’s newly formulated enforcement strategy, such remedies become a relevant factor in an employer’s risk assessment over the use and enforcement of non-compete agreements.
The Burden to Justify Stay-Or-Pay Provisions Will Fall on the Employer
The GC memorandum defines a stay-or-pay provision as “any contract under which an employee must pay their employer if they separate from employment, whether voluntarily or involuntarily, within a certain time frame.” Stay-or-pay provisions are generally tied to employee benefits such as sign-on bonuses, retention bonuses, payments for relocation costs and reimbursement for tuition and other costs associated with educational programs and training courses. The memo also describes so-called “quit fees” and damages clauses as arrangements that impose a financial penalty on the employee for their separation from employment untethered to a pre-payment or benefit previously provided to the employee.
The General Counsel’s view is that all stay-or-pay provisions similarly have a tendency to interfere with, restrain or coerce employees in the exercise of their Section 7 rights by limiting employee mobility and by “increas …[ing] employee fear of termination for engaging in activity protected by the Act.” In her opinion, all stay-or-pay provisions are presumptively unlawful. They will be found to violate the Act unless an employer rebuts this presumption by providing that the provision advances a legitimate business interest and is narrowly tailored to minimize infringement on Section 7 rights. An employer can meet this standard by proving that the stay-or-pay provision: (1) is voluntarily entered into in exchange for a benefit; (2) has a reasonable and specific repayment amount; (3) has a reasonable “stay” period; and (4) does not require repayment if the employee is terminated without cause.
General Counsel Abruzzo explains that where a stay-or-pay provision was voluntarily entered into with informed consent but is not narrowly tailored in one or more ways discussed above, the employer should be ordered to rescind the unlawful provision and replace it with a lawful one. However, where the arrangement was not entered into with informed consent, the General Counsel will seek an order that includes the cancelation of the debt to the employer.
The outsized reach of the General Counsel is illustrated by her proposed mandatory rewrite of sign-on bonus arrangements:
With respect to cash payments, such as a relocation stipend or sign-on bonus, in my view a stay-or-pay provision can only be considered fully voluntary if employees are given the option between taking an up-front payment subject to a stay-or-pay or deferring receipt of the same bonus until the end of the same time period. Only in this way can employees who anticipate possibly engaging in protected concerted activity avoid becoming indebted to their employer without a significant financial downside. If the only alternative was to decline the cash payment outright, that “choice” would be illusory. . . .
In addition, the memo urges that the remedies for an unlawful “stay-or-pay” provision should be the same as an unlawful non-compete, as they both restrict employment mobility. Therefore, the General Counsel’s position is that the posting requirement for a violation should include notice that individuals will be entitled to damages if they show that: (1) There was a vacancy available for a job with a better compensation package; (2) they were qualified for the job; and (3) they were discouraged from applying for or accepting the job because of the stay-or-pay provision. If the employer attempted to enforce an unlawful “stay-or-pay” provision, there will be additional remedies, such as the employee’s legal fees or compensation for damage to their credit.
The GC memorandum offers employers a 60-day window to “cure” pre-existing stay-or-pay provisions that advance a legitimate business interest by altering the provisions’ terms to conform with the requirements set forth above. Stay-or-pay provisions that do not adhere to the General Counsel’s requirements will be subject to prosecution after December 6, 2024.
What Employers Should Do
While the memorandum is not binding on the Board, it does provide direction to the NLRB regional offices to investigate and prosecute unfair labor charges. Additionally, it is reasonable to expect the current Board to give careful consideration to the General Counsel’s arguments and recommendations as cases involving these provisions and agreements come before the Board in the future. How receptive to these sweeping changes the federal courts and, ultimately, the U.S. Supreme Court will be, remains to be seen.
Employers should carefully consider the arguments and opinions laid out in the memo when evaluating the need for non-compete agreements with different categories of employees, the terms of those agreements and the specific business interests that the agreements are designed to protect in light of the prospect of expansive remedies for current and former employees bound to non-compete agreements.
Similarly, as to “stay-or-pay” arrangements, employers would be well served to consult with legal counsel to evaluate their existing agreements in light of the General Counsel’s new, far-reaching perspective on these common benefit terms, including consideration of the 60-day window (until December 6, 2024) to modify existing “stay-or-pay” provisions, to assess the risks of future unfair labor practice claims.
