Quick Hits

• The Supreme Court has granted a stay of orders from the District Court for the District of Columbia enjoining the president’s removal of NLRB member Gwynne Wilcox and MSPB member Cathy Harris pending the disposition of an appeal in the U.S. Court of Appeals for the District of Columbia Circuit.
• The stay, which will remain in effect until the Supreme Court rules on the issue, has the effect of preventing the NLRB from having the quorum needed to issue decisions for the foreseeable future.

The Supreme Court granted the government’s emergency application to stay two district court orders that had reinstated Wilcox and Harris as members of the NLRB and MSPB, respectively. The Supreme Court stated that the stay would remain in effect through the appeal in the U.S. Court of Appeals for the District of Columbia Circuit and until the Supreme Court rules on the issue, if a writ of certiorari is timely sought.

“Should certiorari be denied, this stay shall terminate automatically,” the Court stated. “In the event certiorari is granted, the stay shall terminate upon the sending down of the judgment of this Court.”

The stay ruling comes after an en banc decision by the U.S. Court of Appeals for the D.C. Circuit voided a decision by a three-judge D.C. Circuit panel and revived the two district court orders reinstating Wilcox and Harris. The Trump administration then sought emergency relief from the Supreme Court, and Chief Justice John Roberts granted a temporary stay.

By statute, the president is prohibited from removing NRLB and MSPB members except for cause. However, the Trump administration has argued that provisions limiting the president’s removal power are unconstitutional and infringe the president’s authority as the executive.

“The stay reflects our judgment that the Government is likely to show that both the NLRB and MSPB exercise considerable executive power,” the Supreme Court stated. “But we do not ultimately decide in this posture whether the NLRB or MSPB falls within such a recognized exception; that question is better left for resolution after full briefing and argument.

“The stay also reflects our judgment that the Government faces greater risk of harm from an order allowing a removed officer to continue exercising the executive power than a wrongfully removed officer faces from being unable to perform her statutory duty,” the Court stated.

Justice Elena Kagan issued a dissenting opinion, joined by Justices Sonia Sotomayor and Ketanji Brown Jackson, arguing the Court should not “overrule or revise existing law” through an expedited emergency application “with little time, scant briefing, and no argument.”

The dissent pointed to the 1935 decision in Humphrey’s Executor v. United States, in which the Supreme Court upheld restrictions on the president’s authority to remove officers of certain types of independent agencies—in that case, a commissioner of the Federal Trade Commission.

A D.C. Circuit panel is currently considering the consolidated action of Wilcox and Harris challenging their removal. The court heard oral arguments in the case on May 16, 2025.

Next Steps

Though not final, the Supreme Court’s ruling backs President Trump’s near-unprecedented removal of members of independent federal agencies without cause. Notably, the Supreme Court’s stay will remain in effect until it decides the issue, as litigation remains ongoing.

In the meantime, the NLRB lacks the quorum required to issue decisions, hampering its ability to revise or reverse some of the employee-friendly decisions issued during the Biden administration. At least until the president appoints, and the U.S. Senate confirms, one or more new Board members, the Supreme Court’s stay seems to ensure that the NLRB will remain without a quorum for the foreseeable future.

Ogletree Deakins’ Traditional Labor Relations Practice Group will continue to monitor developments and will provide updates on the Governmental Affairs and Traditional Labor Relations blogs as additional information becomes available.

This article and more information on how the Trump administration’s actions impact employers can be found on Ogletree Deakins’ New Administration Resource Hub.

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Quick Hits

• The U.S. District Court for the District of Minnesota ruled in favor of a natural gas distribution company that discharged an employee who failed a random drug test.
• The court found that federal laws, including the Natural Gas Pipeline Safety Act, the Hazardous Liquids Pipeline Safety Act, and DOT drug and alcohol testing regulations preempted DATWA’s employment protections regarding drug testing.
• The decision underscores the significance of federal preemption in workplace drug testing, emphasizing the necessity for employers to align their policies with federal regulations when conflicts arise with state laws.

U.S. District Judge Nancy Brasel granted summary judgment for Minnesota Energy Resources Corporation (MERC) in a lawsuit by a discharged employee who alleged the company violated DATWA. The employee, who worked as a gas distribution system designer, alleged the company violated DATWA in part by requiring the employee to submit to a random drug test and failing to provide him with required notices.

However, the court found that it was impossible for the company to comply with both the federal DOT regulations, which require random drug testing and immediate removal after positive results, and Minnesota’s DATWA, which provides employment protections regarding employer drug tests. Thus, the court ruled that the federal regulations preempt DATWA and dismissed the employee’s claims.

Background

The lawsuit was brought by an employee who was discharged after he tested positive for tetrahydrocannabinol, the primary psychoactive compound in marijuana or cannabis, in a random employer drug test.

The company is subject to the DOT regulations for companies transporting hazardous materials, which require employers to maintain a drug and alcohol testing program. The employer maintained a drug and alcohol testing policy that required employees in safety-sensitive positions who perform “covered functions” to submit to random drug testing.

Following his discharge, the employee and his union filed a grievance. An arbitrator determined that the employee was subject to random drug testing under federal law and that the company acted with just cause in discharging him for failing the drug test. The arbitrator did not address whether the employee was in a safety-sensitive position under DATWA or adjudicate any of the DATWA claims.

The employee then filed a lawsuit against the company, alleging he was not supposed to be subject to random testing and that the employer had failed to provide the required notices under DATWA. Specifically, the employee alleged the company violated DATWA by: (1) requiring him to submit to a random drug test, (2) failing to inform him of his rights in writing, (3) failing to offer counseling or rehabilitation before discharging him, and (4) disclosing his positive test result to a federal agency without a confirmatory test.

Federal Preemption

The district court found that the federal DOT regulations expressly preempt the employee’s DATWA claims because complying with both DATWA and the applicable federal regulations would be impossible or impede the execution of federal drug testing procedures.

DATWA includes many employment protections for employees regarding drug testing. The law requires employers to inform employees in writing of their rights to testing and to a confirmatory test, prohibits employers from discharging employees without first providing them with an opportunity to participate in a counseling or rehabilitation program, and restricts the disclosure of a positive test result.

Also, DATWA contains a preemption clause that exempts employees who are subject to drug and alcohol testing under “federal regulations that specifically preempt state regulation of [such] testing with respect to those employees.”

On the other hand, the applicable DOT regulations state that they preempt state or local requirements where compliance with both “is not possible.” The regulations also require mandatory random drug testing for employees in safety-sensitive positions, require immediate removal from such positions upon a positive test result, require the medical review officer (not the employer) to take certain actions, and further outline specific procedures for notifying employees of positive test results.

“DOT regulations expressly preempt DATWA because compliance with both federal regulations and DATWA is either impossible or an obstacle to the accomplishment and execution of DOT requirements,” the court said.

Alternatively, the court further determined that the company had met the burden of showing that the federal regulations preempt DATWA under a theory of conflict preemption for the same reasons.

Next Steps

The court’s decision in favor of the employer highlights the importance of federal preemption in workplace drug testing. Employers must adhere to federal regulations, which can override state laws when there is a conflict. This ruling serves as a critical reminder for employers to ensure their drug testing policies comply with federal standards, particularly for employees in safety-sensitive positions.

Ogletree Deakins’ Drug Testing Practice Group will continue to monitor developments and will provide updates on the Drug Testing and Minnesota blogs as additional information becomes available.

Editor’s Note: Attorneys from Ogletree Deakins represented the employer in this litigation.

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Quick Hits

• The NLRB’s acting general counsel issued a new memo, relaxing requirements for officials to approve settlements related to unfair labor practice allegations.
• The memo gives NLRB’s regional directors more discretion in crafting settlement agreements to reduce the pending backlog of cases.
• The new policy takes effect immediately.

On May 16, 2025, William B. Cowen, acting general counsel of the NLRB, released a memo to clarify the discretion NLRB regional directors can use to select remedies in settlement agreements related to allegations of unfair labor practices.

In February 2025, Cowen rescinded memoranda from the former NLRB general counsel that called for regional directors to attach certain types of make-whole remedies to certain types of settlements and complaints. “We should be mindful of not allowing our remedial enthusiasm to distract us from achieving a prompt and fair resolution of disputed matters,” he wrote.

While regional directors will maintain the discretion to tailor remedies to the circumstances of each case, the nonmonetary remedies (such as mandates to reinstate workers, post notices, or restart bargaining with a union) should not automatically be sought, and, instead, should be limited to “cases involving widespread, egregious, or severe misconduct,” Cowen wrote in Memo GC 25-06. “In drafting Settlements, the scope of the remedial relief sought should typically be consistent with the remedy that would be ordered by the Board in a case involving similar facts and violations.”

The memo also includes the following instructions:

• Regional directors may approve unilateral settlement agreements without prior authorization.
• Settlements should strive to make sure employees are made whole for losses they incurred as a result of unlawful actions, but regional directors may approve settlements that provide for “less than 100 percent of the total amount that could be recovered if the region fully prevailed on all allegations in the case.” When doing so, regional directors should consider the nature of the violations alleged, the weight of the evidence, the inherent risks of litigation, and the “extent to which a prompt resolution of a contentious dispute will promote labor peace.”
• Nonadmissions language may be considered in certain settlement agreements, but should not be included in settlement agreements involving employers with a history of repeated violations.
• Default language, which permits prosecutors to quickly bring a case to the Board if the charged party does not comply with the settlement terms, is not required in every settlement agreement, but it can be used in initial proposed settlement agreements “where appropriate.”

In general, these items aim to remove barriers that may have precluded some settlements in the past.

The latest memo also addresses a 2022 NLRB decision that expanded the remedies recoverable by a successful charging party in unfair labor practice cases. It concluded that the NLRB’s make-whole remedy includes compensating employees for all direct or foreseeable harms or losses suffered as a consequence of labor violations.

To narrow this application, the memo instructs regional directors to “focus on addressing foreseeable harms that are clearly caused by the unfair labor practice.”

Next Steps

Going forward, the acting general counsel’s new memo indicates the NLRB intends to take a more flexible approach to the types of remedies it will seek in settlements between employers and their employees or unions. If more cases are settled, that could help clear the backlog of NLRB cases in the regional offices.

Notably, the NLRB’s regional offices can approve settlements without a Board quorum.

Ogletree Deakins’ Traditional Labor Relations Practice Group will continue to monitor these developments and will provide updates on the Traditional Labor Relations blog.

Thomas M. Stanek is a shareholder in Ogletree Deakins’ Phoenix office.

This article was co-authored by Leah J. Shepherd, who is a writer in Ogletree Deakins’ Washington, D.C., office.

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Quick Hits

• The U.S. District Court for the Western District of Louisiana vacated the EEOC’s final rule interpreting the PWFA to require elective abortion-related accommodations and removing abortion from the definition of a pregnancy-related medical condition.
• The ruling tracks a prior preliminary injunction ruling that found the EEOC exceeded its authority and evidence of congressional intent for the PWFA to apply to elective abortion lacking. 

U.S. District Judge David Joseph, a Trump appointee, found that the EEOC exceeded its statutory authority by including the “abortion accommodation mandate” in the April 2024 final rule and violated the “major questions doctrine,” which requires clear congressional authorization for agency actions of significant economic and political importance.

The court granted summary judgment in favor of the plaintiffs, vacating the “abortion accommodation mandate” and sent the rule back to the EEOC to revise it and any implementing regulations or guidance, accordingly.

“[T]he record before the Court clearly establishes that the EEOC has exceeded its statutory authority to implement the PWFA and, in doing so, both unlawfully expropriated the authority of Congress and encroached upon the sovereignty of the Plaintiff States under basic principles of federalism,” Judge Joseph said in the decision.

The ruling comes in consolidated litigation filed by the states of Louisiana and Mississippi and a group of four Catholic organizations led by the United States Conference of Catholic Bishops, challenging the EEOC’s interpretation of the PWFA’s requirement to reasonably accommodate employees for “related medical conditions” to pregnancy as to include “termination of pregnancy, including via miscarriage, stillbirth, or abortion.” (Emphasis added.)

Both Louisiana and Mississippi passed abortion bans following the 2022 ruling from the Supreme Court of the United States in Dobbs v. Jackson Women’s Health Organization, in which the Court overturned Roe v. Wade and held that the U.S. Constitution does not provide a right to abortion.

In June 2024, Judge Joseph issued a preliminary injunction delaying enforcement of the “abortion accommodation mandate” as it applied to certain employers in Louisiana and Mississippi. Judge Joseph kept that preliminary injunction in place until the final dismissal of the matters by the court.

The latest ruling vacates the mandate for reasons that largely track the findings in the preliminary injunction order. In that order, the judge found that the “abortion accommodation mandate” exceeded the EEOC’s authority under the Administrative Procedure Act (APA) and principles of statutory construction and was not clearly authorized by Congress.

That ruling noted that it must be presumed that Congress’s decision not to include explicit references to elective abortion in the PWFA was intentional. The preliminary injunction ruling pointed out that while the PWFA cross-references Title VII of the Civil Rights Act of 1964, the statute fails to incorporate Title VII’s protections for employees who choose to have abortions.

Further, the preliminary injunction found that the “abortion accommodation mandate” implicated the “major questions doctrine,” and that the EEOC cannot point to clear language in the PWFA that would empower it to make such a rule, which likely would have been addressed by Congress had it intended to do so given the highly contentious political nature of the issue.  

The Louisiana district court ruling is the latest blow to the Biden-era EEOC. The ruling comes less than one week after the U.S. District Court for the Northern District of U.S. District Court for the Norther District of Texas vacated portions of the EEOC’s workplace harassment guidance regarding harassment based on sexual orientation and gender identity. Employers should note, however, that the April 2024 enforcement guidance has not been officially rescinded because the EEOC currently lacks a quorum.

Next Steps

Since it is unlikely that the current EEOC will appeal the ruling given the prior statements of EEOC Acting Chair Andrea Lucas, this decision presumably means that employers are not required to follow the PWFA’s requirement to provide accommodations for purely elective abortions that are not necessary to treat medical conditions related to pregnancy. While the court vacated the need to accommodate elective abortions under the PWFA, it noted that terminations of pregnancy or abortions stemming from the underlying treatment of medical conditions related to pregnancy are not affected by the order. Employers must continue to provide accommodations for such terminations or abortions to the extent required by the PWFA. Employers should remember that the decision to have or not an abortion remains protected by Title VII.

Ogletree Deakins’ Leaves of Absence/Reasonable Accommodation Practice Group will continue to monitor developments and will provide updates on the Employment Law, Leaves of Absence, Louisiana, and Mississippi blogs as additional information becomes available.

This article and more information on how the Trump administration’s actions impact employers can be found on Ogletree Deakins’ New Administration Resource Hub.

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Quick Hits

• Some companies are reconsidering and even cancelling cultural celebrations, acknowledgements, and activities, such as Pride Month activities, in response to increased scrutiny from the new administration.
• Employers should be mindful of the EEOC’s technical assistance focused on DEI titled “What You Should Know About DEI-Related Discrimination at Work,” which previews the EEOC’s position on certain DEI initiatives and potential rights and claims under Title VII of the Civil Rights Act of 1964 related to DEI initiatives.
• Employers considering cultural celebrations may also want to consider factors such as their budgets; economic uncertainty; which sponsorships and celebrations to choose and why; whether they will use federal funds to pay for these activities and the potential legal and contractual implications if they do; the takeaways and potential optics impacting the organization’s employees, customers, and stakeholders; and whether a visible partnership exposes the organization to consequences outside of the company’s current risk tolerance.

The Impact of EO 14173 for Pride Month and Beyond

EO 14173, which President Trump signed on January 21, 2025, has introduced significant changes for organizations doing business with or receiving money from the federal government. The order mandates that these organizations certify that they do not operate DEI programs that violate federal antidiscrimination laws. This certification is now a material term for purposes of the False Claims Act (FCA), adding a layer of complexity for businesses, especially in light of the U.S. Department of Justice’s (DOJ) May 19, 2025, announcement that it will create a new investigative unit for DEI/FCA investigation and enforcement.

With Pride Month quickly approaching in June, some employers are revisiting their engagement on LGBTQ+ issues in light of EO 14173 and other new DEI-related executive orders and related guidance from agencies like the U.S. Equal Employment Opportunity Commission (EEOC) and the DOJ. A recent study by Gravity Research found that two in five corporate executives are pulling back from Pride Month engagement in 2025 compared to previous years. The study revealed that six in ten executives cited President Trump’s policies regarding transgender people and DEI initiatives as the primary reason for this shift. Additionally, 40 percent of executives expressed concerns over potential criticism from customers, shareholder derivative actions, and disagreements over the content of such celebrations. Of course, with “unlawful DEI” undefined in the EOs or otherwise, whether celebrations or education fall within that undefined term remains to be seen and will be highly fact-specific.

Considerations for Lawful Celebrations and Education

The lack of clear guidance from the administration on what constitutes unlawful DEI practices has left many employers in a state of uncertainty. In fact, one of the most common questions employers are struggling with in light of these developments is whether employers should cancel their sponsorships of events like Pride parades. The answer is not straightforward, as it depends on various factors, including legal compliance and each employer’s risk tolerance.

Despite the changes brought by the new administration, employers may continue to acknowledge historical events and educate their workforces on protected characteristics. While celebrations and educational programs on identities and protected characteristics are still legal, employers may need to consider how to carefully manage and execute them.

One foundational step is ensuring that educational and cultural programming is not exclusionary. For instance, activities that divide groups by protected characteristics or only permit those with certain characteristics to participate would likely be exclusionary. Additional relevant guardrails for compliance that employers can choose to use to help them stay on the right side of the law and avoid enforcement crosshairs when adopting cultural celebrations include:

1. EEOC Technical Assistance: Employers should be mindful of whether they have aligned their programs with the EEOC’s technical assistance and other active guidance. Notably, on May 15, 2025, a federal court vacated portions of the EEOC’s workplace harassment guidance, specifically, guidance on harassment based on sexual orientation and gender identity. Employers should remain mindful of all applicable law, including state and local laws prohibiting discrimination and harassment on gender identity and sexual orientation.
2. Unlawful Segregation: Employers should consider whether their programs, celebrations, or employee groups segregate employees based on protected characteristics. For example, do certain activities group LGBTQ+ employees separately from non-LGBTQ employees? Are the events open in all respects to all individuals to participate? Are roles within groups or activities limited in any way?
3. Voluntary Participation: Employers should examine their celebrations and educational programs to verify participation is voluntary—excluding, of course, the need to conduct legally required training on harassment, discrimination, and equal employment opportunity compliance.
4. Accommodation Requests: Employers may need to be prepared to manage employees’ requests for accommodations based on religious beliefs and robustly consider all concerns and intersecting rights as they may arise.
5. Equitable Recognition: In recognizing different characteristics, cultures, and holidays, employers can strive for fairness and equity and generally ensure that their DEI initiatives are balanced and inclusive.

Risk Management and Privileged Assessments

When deciding whether to sponsor events like Pride parades, companies may want to consider conducting a return on investment (ROI) analysis. One factor to consider is the impact of economic uncertainty on the company’s budget and the optics of participation. Federal contractors and recipients of federal funds—which are facing tight scrutiny under the Trump administration—may want to be particularly cautious and may wish to avoid using federal funds for these celebrations.

In this respect, ongoing, privileged assessments may help employers analyze the data they have on hand that may be relevant to these analyses. Assessments typically evaluate risk tolerance, ROI, and compliance with evolving laws and administrative approaches. In particular, employers can closely assess their own celebrations and educational programs and their sponsorships of cultural events to see if they align with both the company’s lawful DEI initiatives and legal antidiscrimination requirements, but also achieve the desired ROI.

Looking Ahead

As the administration’s approach to DEI continues to evolve, companies would benefit from staying informed and adaptable. The upcoming strategic enforcement plan from the attorney general, which is expected on or after May 21, 2025, may provide further guidance on these and other DEI issues. While the current environment presents challenges for DEI celebrations and education, careful planning, legal compliance, and ongoing assessments can help organizations navigate these complexities successfully.

For more information on these and other DEI topics and compliance considerations for employers, please join us for our upcoming webinar, “EO 14173: DEI Strategic Enforcement Update,” which will take place on Wednesday, May 28, 2025, from 2:00 p.m. to 3:00 p.m. (EDT). The speakers, T. Scott Kelly and Nonnie L. Shivers, will review the evolving legal landscape of DEI programming, initiatives, and related enforcement activities. Register here.

In addition, Nonnie L. Shivers and T. Scott Kelly discuss the complexities of participating in and/or sponsoring cultural events that celebrate DEI in light of the current administration’s scrutiny of such programs on our recent podcast episode, “From Pride to Parity: Legal Insights for DEI Cultural Events.”

Ogletree Deakins will continue to monitor developments and will provide updates on the Diversity, Equity, and Inclusion Compliance and Employment Law blogs as new information becomes available.

This article and more information on how the Trump administration’s actions impact employers can be found on Ogletree Deakins’ New Administration Resource Hub.

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Quick Hits

• Life sciences employers planning RIFs may want to develop a planning matrix that addresses key employment law compliance issues, including federal and state WARN Act requirements and industry-specific considerations.
• Employers may want to ensure they have created defensible and analytical selection criteria for layoffs, ensuring decisions are based on legitimate, nondiscriminatory business justifications and supported by credible evidence.
• Conducting a statistical review of preliminary layoff decisions can help employers identify and address any potential disparate impact on certain demographic groups.

1. Consideration of WARN Act and Mini-WARN Requirements

Any reduction in force should take into account federal and state laws that regulate layoffs. The federal Worker Adjustment and Retraining Notification (WARN) Act requires employers to provide employees sixty days’ advance notice prior to a “plant closing” or “mass layoff.” A plant closing or mass layoff can be triggered with as few as fifty employment losses at a “single site of employment.”

Moreover, many states have similar plant-closing laws as well, often referred to as “mini-WARN” laws. Some of these laws are not mandatory but rather encourage voluntary compliance, while others contain requirements that, for the most part, follow the federal WARN Act requirements. However, several states’ mini-WARN laws have lower thresholds for employment losses and thus are triggered more easily than the federal WARN Act. These include Maryland (fifteen employees) and Illinois, Iowa, and Wisconsin (twenty-five employees). The Maine law can require severance in certain situations, while California’s law varies from the WARN Act in several ways. New Jersey law requires ninety days’ notice, and, in some cases, the payment of severance. Thus, before conducting the RIF planning process, employers may want to take into account the impact federal WARN Act and state mini-WARN laws may have on the reduction in force well in advance.

2. Developing Defensible Selection Criteria

To defend its layoff decisions, an employer will want to be able to identify legitimate and nondiscriminatory business justifications, backed by credible evidence, as the basis for its RIF employee selections and terminations.

• Position or Group Elimination. In some cases, the reason for a decision is easily established, and there is little basis for second-guessing any “selections,” as all of the employees in a specific position or group are terminated. For example, a biotech company might eliminate all research positions working on a particular oncology molecule if early clinical stage results are poor. This type of elimination is the easiest to defend, as all employees are usually affected and there is no basis for an employee to argue he or she was treated unfairly or differently than employees in other demographic categories. Thus, defending selection decisions for these reasons primarily requires explaining and documenting the business rationale for position or group eliminations.
• Selections Among Employees in Like Jobs. Employers often will select some but not all employees in a specific position or job classification (for example, a reduction in force affecting 10 percent of employees holding the role “Research Scientist I”). Because the employer is picking and choosing between employees, keeping some and discharging others, the decision can be subject to challenge by employees who believe an impermissible factor may have driven the decision (i.e., age, race, gender, etc.). As such, employers may want to consider utilizing business-based criteria to guide the decision-making. The factors considered can include subjective and objective factors. Factors an employer might utilize include performance, skill sets, tenure, location, or other criteria important to the department involved. (Note that the criteria need not be the same for each group or department.) For example, human resources likely values different skills and proficiencies as compared to product development. Many employers will weigh each factor in a matrix that produces an overall “score” for each employee and then “stack rank” each employee from highest- to lowest-ranked, and ultimately choose the lowest-ranked employees for layoff. By creating such a (relatively) scientific process, the employer will have created valuable evidence of a fair and nondiscriminatory method for its decision-making. While the initial decisions might wisely be considered attorney-client privileged, subject to review by employment counsel, in the event of a charge of discrimination or demand, the employer often benefits from maintaining final documents in a discoverable and nonprivileged format that can be shown (if needed) to employees and their counsel. These documents often form the basis for the company’s defense—proof of the legitimate and nondiscriminatory reasons for the selection.

3. Statistical Review

Employers may want to consider conducting a statistical review of preliminary layoff decisions to determine whether the layoff decisions have a “disparate impact” on employees in a certain demographic characteristic (i.e., gender/age/race, etc.). Without delving into all the details, a disparate-impact analysis generally looks at the demographic characteristics of selected employees compared to those not selected and determines whether that outcome is reasonably likely by chance. However, if the likelihood of the actual selections becomes so small as to be statistically unlikely (for example, an employer with a 50/50 split in male and female accountants selects 90 percent of women for discharge), there could be a problem with the selection criteria or the application of those criteria. Note that a statistical variance does not establish gender discrimination in this example, as there may be many other nondiscriminatory reasons that contributed to the variance. Nevertheless, a significant statistical variance often warrants further review. Thus, many employers may find it to be a useful exercise to review the statistical analysis, explore any variances that are statistically significant, identify nondiscriminatory reasons for the statistical variance, and “pressure test” the proposed decisions to help ensure that the application of the selection criteria was fair and appropriate.

Even though the Trump administration has sought to eliminate the use of disparate-impact liability under civil rights laws, this statistical-analysis step remains prudent for several reasons: (i) while President Trump’s executive order may prevent the U.S. Equal Employment Opportunity Commission (EEOC) from prosecuting disparate-impact cases against employers, former employees can still likely sue for disparate impact, based on their own private right of action; (ii) the executive order does not directly eliminate disparate-impact rules arising under state law; and (iii) perhaps most important, a statistical analysis can help identify red-flag pockets of the organization that may be more vulnerable to disparate-treatment liability.

4. OWBPA Disclosures

In most instances, employers conducting layoffs will offer severance to impacted employees in return for their release of any claims they may have related to their discharge. Care, however, must be taken under the federal Age Discrimination in Employment Act (ADEA), as employers must adhere to special rules under the Older Workers Benefit Protection Act (OWBPA) to obtain enforceable releases of claims. In the context of a “group” (i.e., two or more employees) termination of employment, the OWBPA requires employers to provide employees age forty and over with (among other things): forty-five days to consider the offer of severance, seven days to revoke any acceptance of the offer, advising such employees to consult with counsel before executing the agreement, and certain written disclosures to inform the eligible individuals of the following:

• any class, unit, or group of individuals covered by such program, any eligibility factors for such program, and any time limits applicable to such program; and
• the job titles and ages of all individuals eligible or selected for the program, and the ages of all individuals in the same job classification or organizational unit who are not eligible or selected for the program.

To comply with these obligations, employers may want to include in the disclosure the scope of the “decisional unit” (i.e., the group of employees which the employer considered in making layoff selection and retention decisions, which itself can be difficult to determine) and the eligibility or selection criteria.

Courts require “strict compliance” with these requirements. However, as the OWBPA regulations are neither entirely clear nor consistent, compliance with the standards can be difficult. These federal OWBPA rules, however, do not apply to employees under the age of 40.

5. Multistate Releases

One size does not fit all in the case of release language. Not only do employers need to be aware of OWBPA obligations, but a number of states in the last several years have issued heightened obligations necessary for legally enforceable releases. Because of the varied nature of these obligations, employers may consider developing releases that comply with all state laws in which employees are affected.

6. Protection of IP

Of particular interest to any life sciences employer is the protection of the employer’s intellectual property and relationships after a reduction in force. Typically, affected employees, like those retained, will possess confidential information, such as product or drug development plans, or perhaps impacted employees developed important relationships with suppliers or customers. As such, employers may want to consider how best to protect their trade secrets and relationships, which they often do through existing agreements signed at the outset of employment (such as nondisclosure, nonsolicit, and noncompete agreements). Depending on the circumstances and the state involved, those agreements may or may not be fully enforceable. For example, in Massachusetts, certain noncompete agreements entered into on or after October 1, 2018, are not enforceable if the employee was dismissed via a layoff. Because of these intricacies, employers concerned about the impact of a layoff on these key employer assets might consider what steps they can take to further their protection as it relates to a reduction in force, including potentially building in new or enhanced protections in severance agreements.

7. Implementation

Lastly, life sciences employers undertaking the difficult step of a layoff may want to consider carefully how the RIF is implemented. Not only do layoffs impact the affected employees in a significant way, they also affect those employees retained and the business itself in the marketplace, especially in the hypercompetitive life sciences space. As such, employers often will develop a communication plan for affected employees, those who are retained, and external audiences. Further, employers may want to be mindful of wage-payment obligations, as many states have specific requirements regarding how and when wages must be paid upon termination of employment.

Conclusion

The above are some of the primary workstreams employers consider as they prepare for and structure reductions in force. Of course, there are others that may need to be addressed, including severance plan development, consideration of unionized employee dismissals (if any), tracking plans for the receipt of signed separation agreements, outplacement plans, public relations concerns, and continuation of health benefits under COBRA, to name a few.

Ogletree Deakins’ RIF/WARN Practice Group and Life Sciences Industry Group will continue to monitor developments and provide updates on the Reductions in Force blog as additional information becomes available.

In addition, the Ogletree Deakins Client Portal provides subscribers with updated WARN and mini-WARN law summaries, as well as other information related to Terminations and RIFs, including Termination Notices and Final Pay Upon Termination requirements. For more information on the Client Portal or a Client Portal subscription, please reach out to clientportal@ogletree.com.

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Quick Hits

• The EEOC has opened the 2024 EEO-1 Component 1 reporting period, emphasizing that employers must not use the reported demographic data to justify discriminatory employment practices based on race, sex, or other protected characteristics. 
• EEOC Acting Chair Andrea Lucas warned employers that there is no “diversity exception” to Title VII of the Civil Rights Act, even if the data suggests employer policies may have a disparate impact on certain groups.
• The warning potentially complicates employers’ evaluation of their compliance with equal opportunity and antidiscrimination laws and regulations.

Current EEOC regulations require private employers with one hundred or more employees, and federal contractors with fifty or more employees that meet certain criteria to submit annual EEO-1 Component 1 reports with demographic data on their employees, including race/ethnicity, sex, and EEO job categories.

The EEOC states EEO-1 data is used in a variety of ways, including enforcement, self-assessment by employers, and research. Some employers have thus looked at their EEO-1 data and potential employment disparities to gain insights into their workforce demographics and evaluate their compliance with equal opportunity and anti-discrimination laws and regulations, including Title VII of the Civil Rights Act of 1964.

However, in announcing the platform’s opening, EEOC Acting Chair Lucas warned employers that their “obligations under [Title VII] not to take any employment actions based on, or motivated in whole or in part by, an employee’s race, sex, or other protected characteristics.”

Specifically, Acting Chair Lucas told employers that they may not use any potential race or sex disparities revealed in their employment data as a basis for implementing hiring or promotion policies that might give preferences to job candidates or employees based on sex, race, ethnicity, or other protected characteristics.

“Your company or organization may not use information about your employees’ race/ethnicity or sex—including demographic data you collect and report in EEO-1 Component 1 reports—to facilitate unlawful employment discrimination based on race, sex, or other protected characteristics in violation of Title VII,” Acting Chair Lucas stated.

“There is no ‘diversity’ exception to Title VII’s requirements,” she added.

Disparate Impact

Acting Chair Lucas pointed to President Donald Trump’s April 23, 2025, EO 14281, “Restoring Equality of Opportunity and Meritocracy,” which calls for an end to liability for unlawful discrimination based on disparate impact, under which employers may be held liable for neutral employment policies or practices that have a substantial adverse impact on a protected group, such as race or sex. Specifically, the EO directed federal agencies like the EEOC to deprioritize enforcement of disparate impact claims.

The acting chair said that under her leadership, the EEOC will follow and enforce the EEOC and “will prioritize remedying intentional discrimination claims.” She reiterated that employers may not use information collected as part of an EEO-1 report to treat employees differently based on any protected characteristic.

“[T]he fact that a neutral employment policy or practice has an unequal outcome on employees of a particular race or sex—that is, has a ‘disparate impact’ based on race or sex—does not justify your company or organization treating any of your employees differently based on their race or sex,” Acting Chair Lucas stated. “[Y]ou must not use the information collected and reported in your organization’s EEO-1 Component 1 report to justify treating employees differently based on their race, sex, or other protected characteristic.”

Next Steps

The EEOC announced that the 2024 EEO-1 Component 1 data collection filing platform is now open until June 24, 2025, at 11:00 p.m. (EDT), which the EEOC will not extend, and the platform will close. This means covered employees will need to promptly prepare and file their reports by the deadline to maintain compliance.

The EEOC acting chair’s warnings are in line with recent EEOC guidance issued under her leadership and policy directives from the Trump administration. Since taking office in January 2025, President Trump has issued a series of EOs, which are facing numerous legal challenges, seeking to eliminate unlawful DEI programs in employment and revoking federal contractors’ affirmative action program mandates, largely stripping authority from the Office of Federal Contract Compliance Programs (OFCCP).

At the same time, the EEOC acting chair’s warnings to employers could complicate employers’ efforts to maintain antidiscrimination compliance and evaluate potential risk for unlawful discrimination claims.

Ogletree Deakins’ Diversity Equity, and Inclusion Compliance Practice Group and Government Contracting and Reporting Practice Group will continue to monitor developments and will provide updates on the Diversity, Equity, and Inclusion Compliance, Employment Law, and Government Contracting and Reporting blogs as additional information becomes available.

This article and more information on how the Trump administration’s actions impact employers can be found on Ogletree Deakins’ New Administration Resource Hub.

Editor’s Note: This article was revised on May 22, 2025, to clarify Andrea Lucas’s title as “Acting Chair.”

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Quick Hits

• In Ontario, if AI is used to screen, assess, or select applicants, a disclosure may be required directly in the job posting.
• Employers with fewer than twenty-five employees are exempt from Ontario’s requirement.
• In Quebec, if a decision is made exclusively through automated processing (such as AI), employers need to inform the individual and offer a mechanism for human review.
• Across Canada, privacy laws (Quebec, Alberta, British Columbia, and federally under PIPEDA) suggest that individuals be informed about the purposes for collecting their personal data and openness requirements, which suggests disclosing AI use.
• In Quebec, individuals also have the right to know what personal data was used, the key factors behind an automated decision, and to request corrections.

With the coming into force of Ontario’s Working for Workers Four Act, 2024 (Bill 149) and the coming into force of Quebec’s Act to Modernize Legislative Provisions as Regards the Protection of Personal Information (Law 25), which began in 2022, alongside longstanding privacy obligations in Alberta, British Columbia, and under federal law, the Personal Information Protection and Electronic Documents Act, S.C. 2000, c. 5 (PIPEDA), employers may want to carefully review how AI is used in job postings and the broader hiring process.

Quebec—Regulatory Context

Quebec’s Act Respecting the Protection of Personal Information in the Private Sector, CQLR c. P-39.1, was significantly amended and is now in force. These provisions apply to all private sector organizations collecting, using, or disclosing personal information in Quebec. This includes employers hiring employees located in Quebec, regardless of where the employer is based, as long as they are considered to be doing business in Quebec.

Section 12.1 provides that any individual whose personal information is the subject of a decision made exclusively through automated processing may be informed of the decision, the main factors and parameters that led to it, and of their right to have the decision reviewed by a person. As such, employers may want to ensure that systems that are used for any automated decision-making in Quebec are explainable so that if they receive a request on the factors and parameters that led to the decision they are able to provide this information.

Although the law is not specific about how such a request must be made, we assume that the section on access rights will apply. This means that employers would need to respond to a written request for information within thirty days.

While the statute does not define “automated decision-making technology,” the language of the law may be interpreted broadly and may apply to a wide range of systems, including algorithmic and AI tools used in hiring. Based on the approach of the data protection regulatory authority in Quebec, the Commission d’accès à l’information (CAI), we can expect a broad interpretation of this concept as the CAI has recently taken the position that privacy laws in Quebec are quasi-constitutional in nature. (For a discussion of Quebec’s restrictive approach to data privacy, see our article, “Québec’s Restrictive Approach to Biometric Data Poses Challenges for Businesses Working on Security Projects.”)

The CAI has broad investigative and enforcement powers. These powers include conducting audits, issuing binding orders, and imposing administrative monetary penalties. Employers may want to monitor guidance from the CAI as the authority’s enforcement evolves.

Ontario—Regulatory Context

On March 21, 2024, the Working for Workers Four Act, 2024 (Bill 149) received Royal Assent in Ontario. Among other amendments, the act introduced a new provision under the Employment Standards Act, 2000, S.O. 2000, c. 41 (ESA) regarding employer disclosure of artificial intelligence use in hiring when a job is publicly advertised.

The implementing regulation, O. Reg. 476/24: Job Posting Requirements, defines artificial intelligence as:

“A machine-based system that, for explicit or implicit objectives, infers from the input it receives in order to generate outputs such as predictions, content, recommendations or decisions that can influence physical or virtual environments.”

The same regulation defines a “publicly advertised job posting” as:

“An external job posting that an employer or a person acting on behalf of an employer advertises to the general public in any manner.”

This requirement is set to take effect on January 1, 2026. It will not apply to general recruitment campaigns, internal hiring efforts, or employers with fewer than twenty-five employees at the time of the posting.

Employers may find it useful to assess what tools qualify as “artificial intelligence” or what constitutes “screening,” “assessing,” or “selecting” a candidate. The broad definition may include simple keyword filters or more complex machine learning systems, raising the potential for over- or under-disclosure.

Considerations for Employers: Human Rights and AI Bias

Employers in Canada may also want to consider their use of AI tools in conjunction with human rights legislation to ensure that their recruitment practices comply with legal standards. These laws prohibit discrimination based on grounds such as race, gender, age, disability, and other protected characteristics.

When implementing AI in hiring, employers may want to assess whether any of the tools used unintentionally promote bias or perpetuate discriminatory outcomes. AI systems, if not properly designed or monitored, can inadvertently reinforce bias by relying on historical data that may reflect past inequalities. For example, predictive models may favor certain demographic groups over others, which could lead to unintentional bias in hiring decisions.

Employers can play a key role in minimizing these risks by considering the following:

• being involved in discussions about how AI tools work, ensuring transparency about the data being used, and the potential for bias in decision-making;
• choosing AI tools that are explainable—meaning the algorithms and their decision-making processes are understandable to humans. This can help employers detect and correct biases before they impact hiring decisions.
• regularly auditing AI tools to identify and addressing any unintentional bias, ensuring that these tools comply with both privacy and human rights obligations; and
• for employers subject to PIPEDA or provincial privacy laws, providing clear, accessible notices explaining how personal information is collected, why it is collected, and who to contact with questions.

AI is increasingly common in recruitment, and with this advancement comes increased scrutiny. The new laws are intended to support transparency, fairness, and human oversight. By using explainable AI, having strong internal mechanisms, and communicating across departments, employers may not only reduce legal risks but also foster trust in the hiring process, ensuring that all candidates are treated fairly and equitably.

Next Steps

Tips and considerations for responsible AI use include the following:

• understanding the AI technology, verifying that it complies with the requirements of transparency under data privacy law, and understanding what the tool is doing to determine if it is necessary to indicate this information in a job posting;
• communicating across the organization by having company-wide discussions about the implementation of AI tools to avoid the risk of a tool being used without being advertised in a job posting or privacy notice;
• revising job posting templates to include AI-use disclosures where applicable
• creating plain-language descriptions of AI tools used in hiring, especially those that may lead to automated decisions;
• implementing procedures that enable human review of AI decisions, as reflected under Quebec’s Law 25;
• maintaining up-to-date privacy policies that explain AI usage, list contact information for privacy inquiries, and detail individual rights;
• training hiring personnel on how AI tools function and how to respond to applicant questions related to privacy and automation;
• limiting data collection to what is necessary and reasonable for recruitment purposes, in line with privacy obligations under applicable laws; and
• verifying the applicability of exemptions. For example, Ontario’s AI disclosure requirement may not apply to employers with fewer than twenty-five employees, though privacy obligations may still be relevant.

AI is transforming the hiring process—and the legal landscape is evolving just as fast. Employers across Canada may want to proactively review their recruitment practices through the lens of employment standards, privacy laws, and human rights obligations. Embracing transparency doesn’t just reduce legal risk—it can build trust with candidates and unlock the full potential of AI while respecting individual rights.

Ogletree Deakins’ Calgary, Montréal, and Toronto offices and Cybersecurity and Privacy Practice Group will continue to monitor developments and provide updates on the Cross-Border and Cybersecurity and Privacy blogs as additional information becomes available.

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Quick Hits

• On April 7, 2025, New Mexico became the third state to legalize access to psilocybin, following Colorado and Oregon.
• Employers are not required to accommodate employees under the influence of psilocybin at work.

Under the new law—the “Medical Psilocybin Act”—the following qualifying conditions are listed as eligible for psilocybin treatment: “(1) major treatment-resistant depression; (2) post-traumatic stress disorder; (3) substance use disorders; (4) end-of-life care.” The law also allows the New Mexico Department of Health to promulgate regulations that would add qualifying conditions to that list.

New Mexico’s secretary of health has been tasked with establishing a “medical psilocybin advisory board,” to consist of nine members who have knowledge of the medical use of psilocybin. At least one member must be a member of an Indian nation, one must be a behavioral health advocate, and another must be “a representative of the health care authority.” The law also establishes a research fund to allow New Mexico state universities to research additional medical benefits of psilocybin. Finally, the law establishes an “equity fund” which allows for qualified patients who meet certain income requirements to receive psilocybin treatment.

A key takeaway for employers is that the law does not create a private cause of action for violations of its provisions. Thus, as of now, an employee cannot sue an employer for failing to accommodate his or her medical use of psilocybin. However, underlying Americans with Disabilities Act (ADA) claims could arise from failing to accommodate an employee’s use of psilocybin.

It is likely to take a few years for the psilocybin program to be fully operational. (The law requires the program to be implemented by December 31, 2027.) However, in the meantime, employers in New Mexico may want to review their drug testing and accommodations policies with regard to medical psilocybin for qualified patients. As a reminder, employers are not required to accommodate employees who are under the influence of psilocybin while at work.

Ogletree Deakins’ Drug Testing Practice Group will continue to monitor developments and will provide updates on the Drug Testing and New Mexico blogs as additional information becomes available.

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Quick Hits

• Under the EU pay transparency directive (Directive (EU) 2023/970), employers are subject to requirements, such as upholding the principle of “work of equal value,” reporting on gender pay gap statistics, and making pay information available to job applicants during recruitment and employees upon request.
• Each EU member state can choose to implement compliance requirements beyond the directive’s existing requirements.
• Belgium, Sweden, Poland, Ireland, the Netherlands, and Finland have so far led the way, and other EU countries are expected to publish draft proposals during 2025.

As detailed in our previous article, “Preparing for the EU’s Pay Transparency Directive,” the directive calls for a review of current employer practices to ensure ongoing compliance.

Key Updates From Member States

Belgium

Belgium became the first EU member state to transpose the directive into national law. The Fédération Wallonie-Bruxelles, which is mainly applicable to public sector employers in the French Community of Belgium, was signed into law on 12 September 2024 and has been effective since 1 January 2025. The decree does not apply universally to all Belgian employers, and the directive will continue to be transposed across Belgium, although the timeframe for implementation is still unknown.

Key provisions go beyond the directive’s minimum requirements:

• Pay information or salary ranges at the recruitment stage must be presented in a format that is accessible for individuals with disabilities.
• Job titles used in recruitment must be nondiscriminatory.
• Gender pay gap reporting must include a fair assessment of pay progression for employees who take family-related leave.

Sweden

The Swedish government shared an investigation for the transposition of the directive on 29 May 2024, which is currently under review. The directive introduces stricter pay transparency and gender pay gap reporting requirements for employers than the existing Swedish Discrimination Act, including:

• Providing pay information to job applicants. Employers would be required to disclose the relevant provisions of their collective agreements as well as the salary range to candidates before interviews.
• Ensuring pay information, such as salary and pay progression, is easily accessible. Employees would also be entitled to request pay information through employee representatives or gender equality bodies rather than directly from the employer. Under Swedish law, all companies with twenty-five or more employees in Sweden have employee representatives on their board of directors, which would enable this provision to operate effectively.
• Including specific content requirements for gender pay reports. This includes how pay has been determined; this requirement has already been implied in the directive, but the Swedish proposal specifically addresses this requirement.
• Gender pay gap reporting would have to include a comparison of pay progression for employees who take parental leave compared with employees who do work of equal value but do not take parental leave.
• Sweden would maintain current pay reporting requirements under the Swedish Discrimination Act for employers with ten or more employees.

Poland

Poland’s progress on transposing the directive is at the draft legislation stage. Originally initiated by members of Parliament on 5 December 2024, a new version of the draft was presented by a parliamentary committee on 1 April 2025. On 9 May 2025, the Polish parliament (Sejm) passed a draft amending the Labour Code. The draft largely aligns with the directive but currently does not state provisions for gender pay gap reporting obligations and is limited to the recruitment stage. The draft will now progress to the Senate for further review, and, after the legislative process is completed, the act will take effect within six months from the date of promulgation.

In its current form, the draft includes the following obligations:

• Providing applicants with information on the starting salary or its range (based on objective and neutral criteria) and, where applicable, the relevant provisions of collective agreements or remuneration regulations throughout the recruitment process, including in the job advertisement.
• Using gender-neutral language in job advertisements and gender-neutral job titles, as well as conducting the recruitment processes in a non-discriminatory manner.
• A prohibition on asking questions regarding salary history.

Ireland

Ireland published the General Scheme of the Equality (Miscellaneous Provisions) Bill 2024 on 15 January 2025. Like Poland, Ireland did not include any details that address the pay reporting requirement under the directive. However, unlike Poland, Ireland already has gender pay reporting in place under the Gender Pay Gap Information Act 2021, which requires employers with a headcount of 150 or more employees (reducing to 50 or more employees from 1 June 2025) to publish information on their gender pay gap annually.

The current draft specifies:

• Job advertisements must include the pay rate or range for the job role. This is more stringent than the directive, which allows employer flexibility in providing the information to the applicant in advance of the interview rather than requiring its inclusion in the job posting.
• Employers are prohibited from requesting information from job applicants regarding their pay history.

The Netherlands

In March 2025, the Netherlands published its draft proposal, which closely follows the text of the directive. This draft was subject to public consultation; the outcome of which is currently undergoing further review in the Dutch Parliament.

Finland

On 16 May 2025, the Finnish government published its draft proposal, which largely aligns with the directive by specifying the inclusion of pay rates during the recruitment stage, the right of employees to request pay information, and the prohibition on employers from requesting information from job applicants regarding their pay history.

However, the draft goes beyond Finland’s current pay survey reporting obligations and does contain specific nuances on reporting by company size. Under the proposal, gender pay gap reporting would be required for companies with 100 or more employees. This would follow a phased approach with companies with 150 to 249 employees reporting by 2027, and those with 100 to 149 employees by 2031. Fines for noncompliance are proposed to range from €5,000 to €80,000.

Organisations can stay up to date with the progress of Directive (EU) 2023/970 and how it will apply across each EU member state by visiting Ogletree Deakins’ interactive EU Pay Transparency Directive – Member State Implementation Tracker.

Ogletree Deakins’ London office and in-house data analytics team will continue to monitor developments and will provide updates on the Cross-Border, Leaves of Absence, and Pay Equity blogs as additional information becomes available.

Daniella McGuigan is a partner in the London office of Ogletree Deakins and co-chair of the firm’s Pay Equity Practice Group.

Lorraine Matthews, a data privacy and cybersecurity practice assistant in the London office of Ogletree Deakins, contributed to this article.

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