Noem Out, Mullin In (Maybe. And Certainly Not Yet). On March 5, 2026, President Donald Trump removed Kristi Noem from her position as secretary of homeland security and reassigned her to be “Special Envoy for The Shield of the Americas,” a new global security initiative. President Trump further announced on social media that Senator Markwayne Mullin (R-OK), would assume the role of secretary of homeland security, “effective March 31, 2026.” Of course, because the secretaryship is a Senate-confirmed position, neither President Trump nor Mullin controls his Senate confirmation date (if he is confirmed) and subsequent swearing-in. Further, neither the Federal Vacancies Reform Act nor the Homeland Security Act of 2002, the latter of which provides a specified order of succession in the absence, disability, or vacancy of the secretary or deputy secretary of homeland security, would permit Mullin to simply be appointed the “acting” secretary of homeland security.

Invalid appointments at DHS were found to have occurred on multiple occasions during President Trump’s first term. For example, in September 2021, a federal district court invalidated an attempted precursor to the current H-1B weighted selection rule because it was approved by an acting homeland security, Chad Wolf, who was found to have been unlawfully appointed. Earlier, in 2020, the Government Accountability Office had found that, in addition to Wolf, Kevin McAleenan had been unlawfully named as acting secretary, and that Ken Cuccinelli had unlawfully been appointed as the “Senior Official Performing the Duties of Deputy Secretary.”

All of this is to say that simply becoming secretary of homeland security (or even “acting” secretary of homeland security) by a specified date is not as easy as it sounds.

H-1B Cap Season Begins. The fiscal year 2027 H-1B cap season has begun, as the initial registration for the selection process opened at noon ET on March 4, 2026. This initial registration period will close at noon ET on March 19, 2026. Of course, this year, U.S. Citizenship and Immigration Services’ new weighted selection rule will control the lottery process. Additionally, covered sponsoring employers of H-1B workers may be subject to President Trump’s Presidential Proclamation No. 10973, “Restriction on Entry of Certain Nonimmigrant Workers,” which set a $100,000 fee and is the subject of three ongoing legal challenges.

NLRB GC Memo Addresses Enhanced Remedies, Workplace Rules. On February 27, 2026, National Labor Relations Board (NLRB) General Counsel Crystal Carey (GC) issued a memorandum providing guidance to regional offices on “best practices, settlement considerations, and investigatory procedures in unfair labor practice cases.” The memo builds on Acting GC William Cowen’s rejection of former GC Jennifer Abruzzo’s expanded remedies approach, stating, “Enhanced remedies—such as notice readings, apology letters, or nationwide postings—should not be routinely included in settlement agreements or complaints.” The memo goes on to note that pursuing cases “based solely on the maintenance of potentially unlawful rules, without any concurrent allegation of enforcement or evidence demonstrating actual impact on employees … is not an efficient use [of Board resources].” Immediate policy changes at the Board are unlikely to transpire anytime soon, due to the current case backlog and a lack of a third affirmative vote to overturn extant Board case law. However, with this memo, GC Carey has sought incremental changes that will impact parties to Board proceedings.

EEOC Decision Changes Course on Federal Transgender Employee Bathroom Use. In a federal case issued on February 26, 2026, the U.S. Equal Employment Opportunity Commission (EEOC) reversed its position regarding the application of Title VII of the Civil Rights Act of 1964 to transgender federal workers’ access to single-sex spaces that correspond to their gender identity. In Selina S. v. Driscoll, the Commission dismissed a complaint alleging that the U.S. Army had discriminated against a transgender civilian employee by denying her access to a bathroom that aligned with her gender identity. The Commission majority wrote that Title VII “permits a federal agency employer to exclude employees, including trans-identifying employees, from opposite-sex facilities.” The 2–1 decision reverses the Commission’s 2015 ruling in Lusardi v. Department of the Army. Although not applicable to private-sector employers, the ruling in Selina S. v. Driscoll demonstrates that the issue of same-sex spaces is a priority for the Commission. T. Scott Kelly, Nonnie L. Shivers, and Zachary V. Zagger have the details.

EEOC Chair Reminds Employers of DEI-Related Responsibilities. In a letter dated February 26, 2026, EEOC Chair Andrea Lucas reminded Fortune 500 companies of the “EEOC’s technical assistance documents addressing race and sex-based discrimination in employment that may result from a company’s so-called diversity, equity, and inclusion (DEI) policies, programs, or practices.” These technical assistance documents include a one-pager, “What To Do If You Experience Discrimination Related to DEI at Work,” as well as a document titled, “What You Should Know About DEI-Related Discrimination at Work.” The letter further reminds companies of the Commission’s enforcement capabilities, noting, “In October 2025, the Commission regained its quorum, empowering it to bring all types of cases in federal court, including systemic cases; pattern and practice lawsuits; and other large-scale litigation.” The letter is further evidence that scrutiny of employers’ diversity, equity, and inclusion programs remains a priority for the Commission.

Getting to Know Senator Mullin. The aforementioned Senator Markwayne Mullin is likely well known to Oklahomans, but perhaps not to Buzz readers. Below is a quick background on Senator Mullin:

• Mullin is a member of the Cherokee Nation and only the second member of the Cherokee Nation to serve in the U.S. Senate. One of the first two senators to represent Oklahoma—Robert Latham Owen Jr.—was also a member of the Cherokee Nation. He served in the Senate from 1907 to 1925.
• Mullin is the first Native American to serve in the Senate since the late Ben Nighthorse Campbell of Colorado (1933–2025) retired from the Senate in 2005.
• Mullin is one of two current U.S. senators without a bachelor’s degree. (Senator Rand Paul [R-KY] left Baylor University before obtaining his bachelor’s degree to enroll in Duke University School of Medicine, which did not require a college degree at the time.) Of course, no one needs a bachelor’s degree to be successful. Prior to becoming a member of the U.S. House of Representatives and the Senate—successes on their own, to be sure—Mullin operated multiple successful family businesses.
• Between 2006 and 2007, Mullin fought in three professional mixed martial arts (MMA) matches. He went 3–0, winning one by technical knockout, one by armbar submission, and one by a “rear-naked choke” submission.
• In 2023, Mullin threatened to use his MMA skills when he challenged Teamsters President Sean O’Brien to a fight during a Senate committee hearing. The two potential pugilists have since made up and are perhaps a bit cozier than management-side labor policy watchers would prefer.

Assuming Mullin goes through the normal confirmation process, his nomination hearing will be before the U.S. Senate Committee on Homeland Security and Governmental Affairs, chaired by Senator Paul. Mullin previously called Paul a “freaking snake.”

Quick Hits

• The EEOC issued a warning to Fortune 500 companies about potential Title VII violations related to DEI programs, urging merit-based practices.
• This marks a continuation of the shift in enforcement priorities, indicating possible increased litigation against companies with policies, programs, or practices that the EEOC has characterized as DEI-related discrimination.

The letter, entitled “Reminder of Title VII Obligations Related to DEI Initiatives,” addressed to chief executive officers (CEOs), general counsels (GCs), and board chairpersons of the Fortune 500 companies, emphasizes companies’ obligations under Title VII and warns that programs or practices labeled as DEI or other “euphemisms” may constitute unlawful employment discrimination. Collectively, the top 500 companies employ more than 31 million people worldwide.

What Are Unlawful DEI Policies?

The reminder letter’s messaging aligns with the Trump administration’s policies, notably  Executive Order (EO) 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” and the administration’s stated view that DEI programs have resulted in promoting discrimination against certain races or groups. Chair Lucas has separately solicited “white male” employees to file discrimination claims with the EEOC.

The letter points to the EEOC’s technical assistance documents released under the leadership of Chair Lucas, including a one-pager addressed to employees, while noting that these are “non-binding documents.” The letter does not provide any new insights about the EEOC’s view of what constitutes unlawful DEI programs, nor does it outline any specific programs, policies, or practices that employes should take to reach the objective of ensuring that all workers have an equal opportunity to succeed. However, the U.S. General Services Administration (GSA) on February 18, 2026, released a draft revised Supporting Statement that, among other features, offers examples of practices that may violate federal antidiscrimination laws.

In response, on March 4, 2026, EEOLeaders, a group that includes former officials of the EEOC and the Office of Federal Contract Compliance Programs (OFCCP), issued a letter urging, in part, that “initiatives such as collecting workforce demographic data, providing training to advance diversity, equity, and inclusion, and supporting Employee Resource Groups remain permissible under the law.”

What Does the Letter Mean for Employers?

The reminder letter states that the EEOC is committed to bringing cases in federal court, including systemic cases, cases based on pattern and practice theories of liability, and other large-scale litigation, at least those that are consistent with the EEOC’s new priorities. Beyond enforcement, the letter also emphasizes the agency’s commitment to “fully utilizing all statutory tools to fulfill the Commission’s mission—from education and compliance efforts to the administrative enforcement process and litigation.”

Notably, the reminder letter comes after the EEOC revamped its procedures, which could further hone its enforcement focus on these new priorities. In February, the EEOC—which in October 2025 regained a quorum of members with a 2–1 Republican majority—voted to eliminate long-standing bipartisan procedures for policy decisions, meeting agendas/votes, and to require the chair’s approval for systemic cases and litigation involving fifteen or more employees.

Next Steps

The reminder letter is another indication that the EEOC will continue to enforce Title VII and bring systemic cases against employers under Title VII. At the same time, anti-discrimination obligations under state law remain in effect and also merit consideration for corporations with employees in multiple states that may be considering whether to modify or continue workplace policies, programs, and practices.

Employers may wish to take notice of new announcements and developments from the EEOC, such as the reminder letter, and stay updated on pending legal challenges. Employers may also want to review their ongoing and past programs to identify and mitigate risks in line with all applicable laws.

Ogletree Deakins’ Diversity, Equity, and Inclusion Compliance Practice Group and Workforce Analytics and Compliance Practice Group will continue to monitor developments and will provide updates on the Diversity, Equity, and Inclusion Compliance, Employment Law, and Workforce Analytics and Compliance 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’ Administration Resource Hub.

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Quick Hits

• Arizona House Bill 2135 proposes a private right of action allowing employees to seek statutory damages against employers for violating DEI policies.
• The legislation could expose employers to significant liability, with minimum damages set at $100,000, amid growing federal scrutiny of lawful DEI initiatives.
• It is unclear at this time whether it will be passed and signed into law by the governor.

Arizona House Bill (HB) 2135, titled “Prohibited Diversity, Equity and Inclusion Policies,” would create a private right of action under Arizona law against covered entities that violate state or federal laws prohibiting certain DEI “policies” or “concepts.” The Arizona House of Representatives passed the bill on February 23, 2026, and it was sent to the state Senate, where it is currently under consideration.

The legislation could raise further concerns for employers engaging in lawful DEI initiatives and practices. The Trump administration and the U.S. Equal Employment Opportunity Commission (EEOC), as well as other federal agencies, continue to intensify enforcement against “unlawful DEI,” which they consider a violation of Title VII of the Civil Rights Act of 1964. The EEOC and DOJ are also actively encouraging members of majority groups to file discrimination claims under federal antidiscrimination laws.

What the Legislation Would Cover

HB 2135 would broadly allow “a person whose rights are violated” to “commence a civil action against a covered entity.” “Covered entity” is defined as any “corporation, organization, institution or agency in [Arizona] that is subject to a state or federal law prohibiting a [DEI] policy.”

HB 2135 defines a “diversity, equity and inclusion policy” as “a policy that is known and practiced as DEI, critical race theory or anti-racism,” including several broadly defined concepts based on notions that one race or sex is inherently superior to another, that the United States is fundamentally racist or sexist, that individuals are inherently racist or oppressive by virtue of their race or sex, or that meritocracy and hard-work ethics are racist or sexist. The legislation would also apply to “race or sex stereotyping” and other forms of “race or sex scapegoating,” but it does not provide specific definitions of these terms.

Finally, the bill tracks the Trump administration’s federal policy (not federal law) that sex is binary and immutable, applying to any instances in which an individual is “compelled” by a covered entity “to believe in, and to speak in a manner consistent with, the concept that an individual can change the individual’s sex or gender.”

What It Could Mean for Employers

HB 2135 would create a new area of potential liability for covered entities—including employers—with significant economic consequences, as the legislation sets a minimum damages threshold of “at least $100,000.” If enacted, the legislation would also grant a prevailing plaintiff declaratory relief, injunctive relief, compensatory damages, court costs, and reasonable attorneys’ fees. Claims would be subject to a three-year statute of limitations.

Arizona’s push is part of a broader national trend of states seeking to ban DEI initiatives, even if lawful, and focus strictly on merit and meritocracy. While HB 2135 would not ban DEI outright (as some other states’ bills have sought to do), it is distinctive in creating a private right of action with a high minimum statutory damages amount—a framework that is more aggressive than other states’ approaches to date.

However, the bill is not clear about what standing a plaintiff would need to file a civil action. The right of action would be for “a person whose rights are violated,” which could include an employee of an employer with a DEI policy prohibited by the bill. It is not clear how this right of action could overlap or conflict with an employee’s right to file employment discrimination charges or civil actions under federal and state antidiscrimination laws, such as Title VII.

Next Steps

HB 2135 is progressing through the Arizona State Legislature and was read for a second time in the state Senate on March 3, 2026. The chances of enactment remain unclear. In 2025, Governor Katie Hobbs vetoed legislation that would have banned DEI programs within government employers, public schools, and public universities.

Employers may wish to continue performing privileged audits of their DEI programs, including those covered by the proposed legislation, should HB 2135 become law. Employers should remain mindful of all applicable federal, state, and local laws, including the Supreme Court of the United States’ ruling in Bostock v. Clayton County, Georgia, which prohibits making hiring or firing decisions based on sexual orientation or gender identity.

Ogletree Deakins’ Diversity, Equity, and Inclusion Compliance Practice Group and Workforce Analytics and Compliance Practice Group will continue to monitor developments and will provide updates on the Arizona, Diversity, Equity, and Inclusion Compliance, Employment Law, and Workforce Analytics and Compliance 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’ Administration Resource Hub.

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Quick Hits

• New York enacted amendments to the Trapped at Work Act that delay its effective date to December 19, 2026.
• The law’s central prohibition is unchanged in purpose but sharpened in phrasing; employers may not require, as a condition of employment, that an employee or applicant execute an employment promissory note.
• The statute defines such a note as any instrument, agreement, or contract provision that requires an employee to pay the employer (or its agent) a sum of money if the employment relationship with a specific employer terminates before a stated period.
• The law declares these conditions unconscionable, against public policy, and unenforceable, and it makes clear that if a prohibited term appears inside a broader agreement, the rest of the agreement can stand.

On February 13, 2026, New York Governor Kathy Hochul signed legislation enacting the chapter amendments, Assembly Bill A9452, to the “Trapped at Work Act” (Article 37, N.Y. Lab. Law §§ 1050–55), which was signed into law on December 19, 2025. While the amendments sharpen aspects of the Trapped at Work Act, it continues to prohibit employers from requiring, as a condition of employment, that an employee or applicant execute an employment promissory note.

At the same time, the amendments make it clearer that the Trapped at Work Act allows for certain non-educational incentives such as sign-on bonuses and relocation assistance, as well as certain educational reimbursements tied to transferable credentials. The amendments also narrow coverage to only “employees” and refine penalties and enforcement. While these revisions address some questions raised at enactment, they leave important ambiguities that may require further clarification from the New York State Department of Labor.

What Is Covered: Not Just Education and Training

The amendments remove prior language that singled out “reimbursement for training” within the definition. That deletion clarifies that the prohibition is not limited to training-related repayments. Instead, it is triggered by the structure of the obligation: a requirement to pay money upon early separation within a specified period. This is a broad, content-neutral rule that can encompass a range of repayment constructs unless they fit an explicit exception.

Effect on Education and Training Programs

The amendments draw a sharper line between permissible educational cost-sharing and impermissible training repayment schemes. The statute now allows agreements that require an employee to reimburse the employer for the cost of tuition, fees, and required educational materials for a transferable credential, but only if several conditions are met:

• The agreement must be in a separate written contract and cannot make obtaining the credential a condition of employment.
• The repayment amount must be specified up front and cannot exceed the employer’s actual costs.
• Any required service period must be supported by a proportional, pro rata repayment schedule with no acceleration if employment ends.
• And the agreement cannot require repayment if the employee is terminated, except in cases of misconduct.

The amendments also define “transferable credential” in detail. A credential qualifies if it is widely recognized in the relevant industry as a qualification independent of any particular employer’s practices, or if it demonstrably enhances the employee’s employability with other employers in that industry.

The statute expressly excludes employer-specific or non-transferable training, such as instruction on proprietary processes, systems, software, or equipment, as well as mandated safety and compliance training required by law, such as workplace safety certifications or sexual harassment prevention courses. Read together, these provisions signal that employers may not shift the cost of employer-specific or legally required training to employees through repayment obligations that activate upon separation.

Certain employer-sponsored training or education programs are subject to the Employee Retirement Income Security Act (ERISA). ERISA preempts state laws that “relate to” employee benefit plans. The applicability and scope of ERISA preemption to training programs that would otherwise be impacted by the act is uncertain, but employers may want to consider whether using an ERISA plan would enable them to maintain any repayment obligations that would otherwise be prohibited by the act.

Impact on Non-Educational Incentives and Property Transactions

The amended law also addresses common non-educational repayment arrangements. It permits agreements requiring employees to repay a financial bonus, relocation assistance, or other non-educational incentive or payment that is not tied to specific job performance, subject to two important limitations. Repayment may not be required if the employee is terminated for any reason other than “misconduct,” and repayment may not be enforced if the employer misrepresented the duties or requirements of the job. In practical terms, classic sign-on or relocation clawbacks that are conditioned solely on continued service can remain viable when a departure is voluntary or when termination is for misconduct, provided the job was accurately described.

Separately, the statute confirms that ordinary property transactions are not the target of the prohibition. Agreements that require employees to pay for property the employer sold or leased to them remain permissible, provided the sale or lease was voluntary, and the payment obligation is not tied to termination. While this should be helpful to employers using bona fide, voluntary loans to facilitate employee purchases of restricted stock or other equity interests, employers may want to consider analyzing any repayment provisions tied to termination to avoid potential issues under the act.

Who Is Covered, When It Takes Effect, and How It Is Enforced

The amendments replace the prior, broader “worker” construct with “employee.” By removing the prior “worker” concept, the law appears to no longer expressly cover independent contractors, interns, or volunteers. The statute’s protections are now focused on employees. Arrangements with non-employees may still implicate other legal requirements, but they appear to fall outside the act’s express terms.

Enforcement is administrative. An aggrieved employee or applicant may file a complaint with the New York State Department of Labor. If the Department determines a violation, the employer may be fined between $1,000 and $1,500 per violation, with the amount adjusted by the employer’s business size, the employer’s good-faith compliance belief, the gravity of the violation, and prior history. Each employee or applicant required to execute an employment promissory note, and each attempt to enforce such a note, counts as a separate violation.

Effective Date

The amendments further adjust the effective date of the Trapped at Work Act, which had taken effect “immediately” upon its signing into law on December 19, 2025. The amendments replace “immediately” in the act with “one year after it shall have become law,” thereby apparently fixing the effective date to December 19, 2026. However, there is a question as to whether the amendments are intended to delay the effective date to one year after they were signed, which would set the effective date to February 13, 2027.

Key Ambiguities Remain

Several key terms and concepts in the act remain undefined and may require further clarification from the Department. These include:

• “Misconduct”: The term misconduct appears in two places: to preserve repayment in certain terminations under educational agreements, and to limit when non-educational incentive repayments are allowed. However, the statute does not define misconduct. This creates a significant gray area, especially because most sign-on and relocation repayment agreements are typically tied to cause, not misconduct. Employers and employees may therefore disagree over what conduct qualifies, and whether internal policy definitions will control. Until clarified further, this ambiguity raises risk in close cases.
• Retroactivity to agreements entered prior to the effective date. The act states that “[n]o employer may require” an employment promissory note, and that any such condition “shall be null and void.” It is unclear whether this language renders agreements entered before the effective date now void, or whether the act only voids agreements entered after the effective date. Until clarified, employers with existing, prohibited agreements face uncertainty about their enforceability after the effective date.
• “Condition of employment.” The statute prohibits requiring an employment promissory note as a condition of employment, and labels such a condition unconscionable and void. It is less explicit about agreements executed after an offer is accepted or outside the hiring condition. The education carve-out’s requirement that qualifying agreements be separate from employment and not a “condition of employment” suggests the legislature is comfortable with truly voluntary, standalone arrangements in that narrow context. Outside that lane, however, any termination-triggered repayment device that functions as a de facto employment condition risks falling within the prohibition. The statute also treats seeking to enforce a prohibited note as a violation, indicating that end-runs in form but not substance may be scrutinized.
• “Not tied to specific job performance.” The non-educational carve-out allows repayment of bonuses, relocation assistance, and other incentives that are not tied to specific job performance. However, the phrase “not tied to specific job performance” is undefined. A pure sign-on bonus conditioned solely on length of service is likely within the carve-out, whereas a production bonus tied to output or sales metrics appears outside it. Hybrid incentives that mix continued service with minimal performance goals fall into a gray zone that the text does not clearly resolve.
• “Transferable credential” and “widely recognized.” The transferable-credential definition hinges on whether a credential is widely recognized in the industry or demonstrably enhances employability with other employers. This is highly fact-sensitive. Degrees or licenses from accredited institutions or industry bodies will likely qualify. More tailored training tied closely to a single employer’s systems may not. Documentation of industry recognition may help in close cases, but the statute’s explicit exclusions for employer-specific instruction and mandated compliance training draw bright lines that cannot be overcome by characterization.
• “Pro rata repayment” and “no acceleration.” For educational agreements, the statute requires proportional, pro rata repayment over any required service period and forbids acceleration upon separation. The text does not specify the cadence of pro rata calculations—whether monthly, quarterly, or otherwise—nor does it spell out post-separation payment timing. Aligning the repayment schedule to the original service period appears consistent with the “no-acceleration” rule, but the mechanics remain open to interpretation.

Practical Considerations

Organizations reviewing their programs may find it helpful to begin with the statute’s structural premise: any pay-on-departure obligation is presumptively prohibited unless it falls squarely within an express exception. Education-related repayment is available only for truly transferable, industry-recognized credentials and only through separate, voluntary agreements that are capped at cost, proportionally forgiven over time, non-accelerating on separation, and inapplicable to terminations other than for misconduct. Employer-specific training and legally required compliance instruction fall outside this lane and cannot be recouped via termination-triggered payback.

For non-educational incentives such as sign-on bonuses and relocation assistance, the statute permits arrangements that are not tied to specific job performance and that do not require repayment when employment ends for reasons other than misconduct or when the job was misrepresented. Characterizing an incentive as service-based rather than performance-based, and ensuring accurate job descriptions, appear to be consistent with the act’s text, while recognizing that the undefined term “misconduct” injects uncertainty.

Employers might also consider shifting from traditional “stay-or-pay” arrangements to deferred bonuses, phased equity, or service-based incentives that reward ongoing employment without repayment upon separation. These alternatives can be complex and warrant careful review for compliance with federal tax requirements for deferred compensation.

Finally, the delayed effective date and penalty structure give employers time to reassess legacy agreements and plan future offerings. Employers may wish to carefully consider that each execution and enforcement attempt can count as a separate violation toward statutory penalties.

Organizations may wish to evaluate their specific programs and agreements in light of the statute’s language and the ambiguities noted above, particularly as further guidance develops ahead of the effective date.

Ogletree Deakins’ New York offices and Employee Benefits and Executive Compensation Practice Group will continue to monitor developments and will provide updates on the Employee Benefits and Executive Compensation and New York blogs as additional information becomes available.

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Quick Hits

• Effective October 1, 2026, Alabama’s “Trey’s Law” will ban the use of confidentiality agreements that prohibit the disclosure of sexual abuse.
• The law applies solely to elements of an agreement related to acts of sexual abuse and does not affect other aspects of agreements, such as compensation.

What Trey’s Law Provides

Trey’s Law renders void and unenforceable any provision in a nondisclosure agreement, confidentiality agreement, employment agreement, settlement agreement, or any other type of agreement that prohibits an individual or entity from disclosing an act of sexual abuse or facts related to such abuse. The law broadly defines “sexual abuse” to include any conduct constituting a criminal violation under Alabama’s sexual offense statutes, regardless of whether the conduct has led to a criminal charge, conviction, adjudication, or sentence. The legislation covers sexual abuse crimes committed against both adults and children, as well as human trafficking offenses.

Importantly, the law applies solely to elements of an agreement related to acts of sexual abuse and does not affect other aspects of agreements, such as compensation. SB30 applies only to agreements entered into, executed, or amended on or after October 1, 2026.

What Does This Mean for Employers?

Trey’s Law may carry significant implications for Alabama employers, particularly those that utilize nondisclosure or confidentiality provisions in severance agreements, settlement agreements, and employment contracts. With the October 1, 2026, effective date approaching, employers may want to proactively review their standard template agreements and ensure compliance with this new law.

Ogletree Deakins’ Birmingham office will continue to monitor developments and will post updates on the Alabama and State Developments blogs as additional information becomes available.

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Quick Hits

• The New York State Human Rights Law’s express recognition of disparate impact claims diverges from President Trump’s executive order directing the deprioritization of disparate impact claims by federal agencies.
• Disparate impact can result from the use of artificial intelligence to assist in employment decision-making processes.

A practice is deemed to have a discriminatory effect when it “actually or predictably results in a disparate impact on a group of persons” because of their membership to a class protected by the NYSHRL. By expressly recognizing disparate impact claims, the amendment largely codifies what New York courts have already treated as permissible under existing case law construing the NYSHRL.

New York’s amendment runs counter to the actions taken by the federal government. President Donald Trump’s April 2025 executive order called for “all agencies” to “deprioritize enforcement of all statutes and regulations to the extent they include disparate-impact liability,” including Title VII of the Civil Rights Act of 1964, and directed the attorney general and the chair of the U.S. Equal Employment Opportunity Commission (EEOC) to “assess pending investigations, civil suits, or positions taken in ongoing matters” that “rely on a theory of disparate-impact liability.” The U.S. Department of Justice issued a final rule in December 2025 eliminating disparate impact liability for organizations receiving federal funding.

Artificial Intelligence and Disparate Impact

The amended NYSHRL, juxtaposed against the actions of the federal government, may increase the frequency of state law claims alleging discrimination based upon an alleged, disparate impact due to a particular action or practice. For the increasing number of employers that use artificial intelligence (AI) for employment decision-making processes such as hiring or firing, this amendment may result in additional scrutiny of AI systems in administrative proceedings or litigation. Even if an employer utilizes AI systems to facilitate decision-making based upon the expectation that such systems will increase efficiencies and potentially eliminate inconsistencies that could be associated with human decision-making, it may still face liability if the use of the AI system results in a discriminatory impact on a protected class absent specific evidence to demonstrate that the use of the AI tool is job related for the position in question and consistent with business necessity and that the business necessity could not be served by another practice that has a less discriminatory effect.

New York City previously enacted legislation that requires employers who use automated employment decision tools (AEDTs) to substantially assist or replace discretionary decision-making to conduct bias audits and make the results of the bias audit publicly available. The purpose of the bias audit is to assess the tool’s potential disparate impact on sex, race, and ethnicity. The frequently asked questions guidance issued by the Department of Consumer and Worker Protection clarifies that employers are not required to take action based on the outcome of the bias audit. However, the passage of the amendment to the NYSHRL highlights the potential risks of using an AEDT in the face of data that shows that use of the tool actually results in a disparate impact on a group of persons who are members in a protected class, as well as the potential risks of using an AEDT or other form of AI without conducting a proactive audit, even if no such audit is required by applicable law. Because the data from a bias audit could support a disparate impact claim, the two laws considered together highlight the importance of proactively evaluating any AI platforms or processes being used by New York employers to substantially assist in employment decisions.

Next Steps

In defense against discrimination lawsuits, employers can present evidence that their employment practices are job related and consistent with business necessity and that the business necessity could not be served by another practice with a less discriminatory effect. Going forward, employers may wish to carefully document the reasons for utilizing AI in advance of deploying new systems or enhanced features of existing AI systems to assist or facilitate employment-related decisions. In addition, in light of the complexities of establishing the defense in practice, employers may wish to consider conducting privileged, proactive audits to evaluate AI tools currently in use to determine if there are any outcomes of concern, and where warranted, implement appropriate measures to enhance their potential defenses in administrative proceedings or litigation.

Ogletree Deakins’ New York office and Technology Practice Group will continue to monitor developments and will provide updates on the New York and Technology blogs as additional information becomes available.

Simone R.D. Francis is the office managing shareholder of Ogletree Deakins’ St. Thomas office and a shareholder in the firm’s New York office.

Matthew P. Gizzo is a shareholder in the New York office of Ogletree Deakins.

Emily A. Hall is a 2025 graduate of the Cardozo School of Law and is currently awaiting admission to the State bar of New York.

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Quick Hits

• The Consolidated Appropriations Act of 2026 (CAA 2026) represents the most sweeping federal effort to date to regulate pharmacy benefit managers (PBMs).
• Most of the changes will not take effect until 2029 (for calendar year plans).
• At the center of the CAA 2026: full pass-through of rebates and required compensation disclosure by PBMs.

The CAA 2026 represents the most sweeping federal legislative effort to regulate the pharmacy benefit management industry to date. Signed into law on February 3, 2026, the CAA 2026 broadly applies to all employer-sponsored group health plans, including both self-funded and fully-insured plans, and creates new mandatory reporting, disclosure, and audit requirements applicable to PBMs. The law also requires PBMs to pass through 100 percent of all rebates to group health plans and, importantly, requires other entities that initially receive a portion of such payments, such as rebate aggregators and group purchasing organizations, to remit the proceeds to the PBMs. These developments are described below.

The CAA 2026 makes a “clarification” to Section 408(b) of the Employee Retirement Income Security Act (ERISA) to expressly provide that PBMs are “covered service providers,” which requires them to disclose to plan sponsors their direct and indirect compensation. Section 408(b)(2) provides an exemption to ERISA’s prohibited transaction rules, which permits the payment of service provider fees from plan assets if the services are necessary for plan operation and the fees are considered “reasonable.” Accordingly, PBMs must now adhere to the same compensation disclosure rules applicable to other ERISA plan service providers and advisors, such as investment advisors, recordkeepers or brokers, and other entities receiving “indirect compensation” (e.g., accounting, auditing, actuarial, banking, and consulting service providers), which, in turn, will enable employers sponsoring group health plans to better evaluate and negotiate PBM compensation under their contracts.

Effective Dates

While regulatory guidance is undoubtedly forthcoming, the inclusion of PBMs as covered service providers appears to be effective immediately, which means that the compensation disclosures applicable to service providers under ERISA Section 408(b) are effective immediately.

However, other requirements, including the standardized reporting rules, rebate pass-through requirements, and audit rights, take effect with the first plan year beginning thirty months after the date of enactment. For calendar-year plans, this means January 1, 2029.

100 Percent Rebate Pass-Through Requirements for PBMs

Among the most significant CAA 2026 reforms is the requirement that PBMs pass through 100 percent of all rebates and related payments to ERISA-covered group health plans. The law specifically requires that rebates include any and all manufacturer rebates, alternative discounts, price concessions, and fees and other payments tied to drug utilization by plan participants. PBMs must remit these amounts on a quarterly basis and provide plans with accurate accounting records to verify their compliance.

Notably, the statute contains an exception for “innocent” fiduciaries. This exception provides protection for a responsible plan fiduciary from fiduciary breach if the fiduciary did not know the PBM failed to remit rebates or reasonably believed the PBM remitted the required amounts. In order to take advantage of this protection, the fiduciary must request in writing that the PBM remit the rebates. The fiduciary must also notify the U.S. Department of Labor (DOL) if the PBM fails to comply with the written request within ninety days.

Reporting, Disclosure, and Notice Requirements

The CAA 2026 introduces a new mandatory semiannual reporting framework for PBMs. For so-called “large plans,” meaning those with at least one hundred participants, PBMs are required to disclose:

• Drug-by-drug pricing information, including net prices after rebates
• Total spending by the plan and participants
• Spread pricing information
• Formulary information, including which drugs are included and the rationale for inclusion
• Affiliated pharmacy disclosures, including whether the plan steers patients toward these pharmacies
• Compensation information, including amounts paid to pharmacies or other third parties

PBMs will also need to provide the following information to a plan sponsor regardless of the number of participants in the plan:

• Summary reports showing overall prescription drug costs and utilization rates
• Information on rebates, fees, and discounts received

In addition to the PBM disclosure rules described above, the CAA 2026 also creates new notice obligations that apply to group health plans. Specifically, group health plans must provide participants with a written notice that explains the plan’s PBM’s obligation to submit detailed reports regarding prescription drug costs, rebates, and related compensation. Plans may combine this notice with other notices and plan documents provided to participants or provide it as a stand-alone notice. The DOL will prepare a model for plan sponsors to use.

Employer Audit Rights

CAA 2026 creates new affirmative audit rights for ERISA plan sponsors, including a right to conduct an annual audit of their PBMs—using an auditor of their choice—to verify that PBM disclosure and rebate payments are accurate. The PBM cannot impose any limitations on the selection of the auditor (many PBM contracts currently are drafted to give the PBM veto power over the plan sponsor’s choice of auditor and require that the auditor adhere to strict audit guidelines prepared by the PBM).

Proposed PBM Transparency and Disclosure Regulations

Several days before the CAA 2026 was enacted, the DOL’s Employee Benefits Security Administration (EBSA) proposed regulations that similarly seek to enhance transparency and disclosure requirements applicable to PBMs.

Like the CAA 2026, the proposed regulations would require PBMs to disclose information to plan sponsors and provide for certain rights, including:

• disclosing payments from drug manufacturers received by the PBM, including rebates, administrative fees, and price protection fees;
• identifying other compensation, including spread amounts with respect to pharmacies; and
• permitting annual audits using an auditor of the employer’s choice.

There are some notable differences, however. The proposed rules, for example, would not require full pass-through of rebates. In addition, while EBSA’s proposed regulations create disclosure requirements for PBMs only, the CAA 2026 requires plans to provide notice to participants as described above. The CAA 2026 also provides for civil monetary penalties for enforcement under the law’s requirements.

EBSA’s proposed regulations will likely be updated to reflect the enactment of the CAA 2026. The comment period on the proposed rules ends on March 31, 2026.

Next Steps for Group Health Plan Sponsors

Considering the breadth of the new requirements under the CAA (and potentially the EBSA regulations), employers may want to prepare for additional regulatory guidance as the deadline for compliance approaches. Employers that are currently negotiating PBM contracts or will be negotiating a renewal of their PBM contract prior to the effective date under the CAA should be mindful of the new requirements, including rebate pass-through, audit, and disclosure.

Ogletree Deakins’ Employee Benefits and Executive Compensation Practice Group will continue to monitor developments and will post updates on the Employee Benefits and Executive Compensation and Healthcare blogs as additional information becomes available.

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Quick Hits

• The Fifth Senate of Germany’s Federal Labor Court clarified that remuneration in the event of default of acceptance (Section 615 sentence 1 BGB) cannot be contractually excluded in advance in the event of an invalid termination by the employer or a termination that only takes effect later.
• Although the provision can, in principle, be contractually amended, this does not apply to the protection of livelihood.
• Remuneration is a typical economic basis of life and as such is specially protected.

Inquiry by Second Senate of the BAG Into Case Law of the Fifth Senate of BAG

As recently as March 2023, the Fifth Senate of the BAG ruled that employees could not demand remuneration for work not performed in the meantime following an invalid termination by the employer (BAG, March 29, 2023 – 5 AZR 55/19). Section 615 sentence 1 BGB, which upholds the claim to remuneration in the event of default of acceptance by the employer, had been effectively excluded in the employment contract for this case. In June 2025, the Second Senate asked the Fifth Senate whether it would uphold its previous ruling (decision, June 18, 2025 – 2 AZR 91/24).

Decision of the Fifth Senate of BAG

In its decision of January 28, 2026 (Ref. No.: 5 AS 4/25), the Fifth Senate of the BAG confirmed the fundamental possibility of excluding Section 615 sentence 1 BGB, which regulates the obligation to continue paying remuneration in the event of default of acceptance, in advance by means of a clause in the employment contract. This results from a review of the systematics and legislative history of Section 615 sentence 1 BGB.

In deviation from its previous case law, the Fifth Senate also clarified that the fundamental exclusion of Section 615 sentence 1 BGB finds its limits in the protection of livelihood. In the event of an invalid or only later effective termination, the remuneration for default of acceptance secures the financial livelihood of employees for the period of release following termination. The exclusion of remuneration for default of acceptance in the employment contract in the event of an invalid termination by the employer or a termination that only takes effect later (due to an incorrect notice period) is therefore not possible and is void under Section 134 BGB.

The Fifth Senate justified this change in case law with the concept of protection against dismissal, the systematics of labor law, and the importance of remuneration for economic livelihood.

Takeaways

The change in case law by the Fifth Senate strengthens protection against dismissal and the rights of employees. Employment contract clauses that exclude the right to remuneration in the event of invalid termination by the employer are not tenable. For employers, this means that they continue to bear the risk of invalid termination themselves. Actions for protection against dismissal become more financially attractive for employees because their remuneration entitlement remains secure during the court proceedings.

Ogletree Deakins’ Berlin and Munich offices will continue to monitor developments and will post updates on the Cross-Border and Germany blogs as additional information becomes available.

Kerstin Swoboda is a senior associate in the Munich office of Ogletree Deakins.

Niklas Thiel, a law clerk in the Munich office of Ogletree Deakins, contributed to this article.

Pauline von Stechow, a law clerk in the Berlin office of Ogletree Deakins, contributed to this article.

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Quick Hits

• The PWFA mandates that covered employers provide reasonable accommodations for pregnancy, childbirth, and related medical conditions.
• Since the PWFA went into effect, the EEOC has initiated several lawsuits alleging violations, focusing on failure to accommodate, unlawful termination, and forced leave for pregnancy-related conditions. Most have resulted in settlements, while others remain pending.
• The EEOC received 2,729 charges of discrimination alleging violation of the PWFA for fiscal year 2024, which represents the period of October 1, 2023, to September 30, 2024. Fiscal year 2024 represents the first full year of the EEOC’s enforcement of the PWFA.

Overview

The PWFA went into effect on June 27, 2023, for employers with fifteen or more employees. The EEOC’s final rule implementing the PWFA became effective on June 18, 2024. The final rule leans on the concepts of the Americans with Disabilities Act (ADA) with which employers are likely familiar, including the definitions for key terms, such as “essential functions,” “reasonable accommodation,” “undue hardship,” and “interactive process.” However, there are notable differences between the PWFA and the ADA, including the types of “related medical conditions” qualifying under the PWFA but not under the ADA; an alternative definition of “qualified” and a potential suspension of essential job functions; and limitations on an employer’s right to request documentation.

Related medical conditions include prior pregnancy, menstruation, fertility treatments, endometriosis, the use of contraception, postpartum depression, antenatal anxiety, lactation, miscarriage, and stillbirth. While the rule initially included abortion as a related medical condition, on May 21, 2025, 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.

Trends Noted From EEOC Enforcement Actions

The EEOC enforcement actions have focused on alleged noncompliance with basic concepts under the PWFA.

In a lawsuit filed against Urologic Specialists of Oklahoma, Inc., the EEOC claimed that a pregnant worker requested accommodation, including permission to sit, take short breaks, or work part-time. The medical practice allegedly required the worker to take unpaid leave, refused to guarantee her job following her return from leave, and refused to guarantee that it would provide lactation breaks after childbirth. The worker resigned. The parties settled the case for $90,000 in February 2026.

The settlement provides several notable insights for employers, including the following:

• Requests to sit and take unpaid breaks are the type of accommodation requests falling within the scope of “predictable assessments.” The EEOC’s stance is that predictable assessments, comprised of four categories of simple modifications, “will, in virtually all cases, be found to be reasonable accommodations that do not impose an undue hardship when requested by a qualified employee due to pregnancy.”
• Reasonable accommodations related to lactation include providing breaks to express milk and a space to do so. Lactation accommodations may include nursing “where the regular location of the employee’s workplace makes nursing during work hours a possibility because the child is in close proximity.”
• Leave is considered an accommodation of last resort. Employers cannot require workers to take paid or unpaid leave if another reasonable accommodation can be provided.

The EEOC also filed suit against a manufacturer in September 2024. The lawsuit alleged that a new employee at an assembly facility, who notified the employer that she was pregnant, was not excused for absences due to her pregnancy-related conditions and medical appointments and was required to work overtime, despite medical orders not to work more than forty hours per week. Because the worker was not eligible to accrue paid time off (PTO) until after a sixty-day probationary period, the employer allegedly assessed attendance points against the employee “for absences necessitated by her pregnancy-related medical conditions and medical appointments.” The employee resigned to avoid being discharged. The parties settled this dispute for $55,000 in July 2025.

Most recently, in January 2026, the EEOC filed suit against U.S. Steel where at least some of the alleged PWFA violations concern areas of ambiguity remaining under the current law and available guidance. In this case, the employee worked as a mobile equipment operator at an ore mine, and after she became pregnant, her healthcare providers restricted her from operating physically jarring equipment. While her role as a mobile equipment operator included additional duties not falling within her restrictions, the employee was allegedly denied accommodation and placed on leave for several weeks. When the employee returned, she was allegedly assigned menial work outside of her normal job duties and placed in an office under renovation, exposing her to cold air and dust. The employee suffered a miscarriage, and when she returned from bereavement leave, the employee was again assigned to jobs outside her regular role in a remote part of the mine that offered lower earnings potential.

The EEOC’s lawsuit against U.S. Steel suggests a preferred ranking of potential accommodations with the best accommodation being the removal of essential job duties. This is true even if the accommodation requires coworkers to temporarily take over the physically demanding aspects of the job.

While the PWFA makes clear that leave is the accommodation of last resort, the EEOC’s lawsuit also raises the question of whether placement in an alternative position—which is expressly recognized as a permissible accommodation—must also be of similar status or prestige and with similar earning potential to be a reasonable accommodation and thus, in compliance with the PWFA.

The fact that the employee in U.S. Steel suffered a miscarriage, requiring time off, serves as a reminder that miscarriages and stillbirths are related medical conditions falling with the scope of the PWFA. Employers may need to afford time off from work in these situations, regardless of whether the employer maintains a bereavement leave policy.

Key Takeaways

Reasonable accommodations under the PWFA may include time off for prenatal and postnatal appointments, fertility treatments, or recovery from childbirth complications.

Employers have struggled with reconciling their attendance, paid time off, and leave policies with what is required under the PWFA, including with newer employees who have not accrued PTO or employees who have exhausted their PTO. In these circumstances, employers must consider approving unpaid leave under the PWFA, unless there is an undue hardship.

Current Pressure Points

Employers frequently receive accommodation requests to work remotely during the pregnancy or thereafter as it concerns lactation. These requests can be challenging, given the PWFA’s limitations on the type of documentation that can be requested from healthcare providers. Employers are not required to accept an employee’s preferred accommodation, if there are equally effective accommodations, including on-the-job accommodations, identified through the interactive process.

Employers generally cannot require medical documentation for most lactation accommodations. Employers can request documentation, however, if the employee asks for remote work as a lactation accommodation. The documentation should state whether the accommodation is needed due to a limitation of the employee, as opposed to the child. The PWFA does not require accommodation if the limitation is related to the child.

Physical restrictions are more challenging for companies that employ individuals for physically demanding work, such as operating equipment, driving trucks, and working on assembly lines. Enforcement actions to date solidify the notion that employers cannot skip the interactive process; rather, there should be a dialogue between the employer and the employee to consider on-the-job accommodations with a preference for allowing the worker to remain in her current role through excusal of essential job functions. Alternatively, employers may wish to consider light-duty work for pregnant employees, as it is commonly offered to workers injured on the job, but this may be problematic to the extent it negatively impacts earning potential.

Next Steps

Employers may wish to revisit their policies on absenteeism as the PWFA contemplates deviation from standard processes, such that individuals requiring time off for pregnancy, childbirth, or related medical conditions are not penalized for lacking paid time off or for being absent for prenatal appointments or fertility treatments. Attention also might be paid to call-off procedures, as it is likely reasonable to require all employees to adhere to the same practices, absent unusual circumstances.

Employers may wish to train supervisors to understand the accommodation process and what is required under the PWFA, particularly as it concerns predictable assessments and lactation breaks. The PWFA restricts employers’ ability to request documentation in some circumstances, and in others, the type of documentation that can be requested is limited. Employers may wish to ensure that they do not inadvertently use healthcare provider questionnaires typically used under the ADA for accommodation requests under the PWFA, unless the situation implicates continuous or intermittent leave under the Family and Medical Leave Act. In those situations, it is permissible to utilize the Certification of Health Care Provider for Employee’s Serious Health Condition under the Family and Medical Leave Act as promulgated by the U.S. Department of Labor.

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

In addition, the Ogletree Deakins Client Portal covers developments related to the Pregnant Workers Fairness Act (PWFA) in the Federal Pregnancy, Childbirth, and Lactation and Federal Parental Leave law summaries. Premium and Advanced subscribers have access to policy templates and a step-by-step walkthrough for Pregnancy Accommodation Requests. All client-users have access to updates. For more information on the Client Portal or a Client Portal subscription, please reach out to clientportal@ogletree.com.

Tiffany Stacy is a shareholder in Ogletree Deakins’ San Antonio 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

• An Ontario labour arbitrator accepted eyewitness evidence of an employee’s cannabis use based on the distinct smell of marijuana, finding this constituted “clear and cogent evidence” even without formal drug recognition training.
• The employee’s dismissal was reduced to a three-month suspension because the employer did not prove observable impairment—only that cannabis was consumed during working hours.
• The employer’s delayed response—waiting until the next day to escalate the concern—eliminated the opportunity to document signs of impairment.

Background Facts

The employee left the plant and went for a walk during his lunch break. The quality manager, who was also on lunch, saw the employee at a nearby intersection smoking what appeared to be a hand-rolled joint and testified that he smelled cannabis, with the odour intensifying as he approached.

However, the quality manager did not report the incident immediately. After finding the general manager’s door closed, he chose to wait until the next day to raise the issue, by which time any opportunity to assess or document impairment had passed.

When confronted, the employee denied smoking cannabis and claimed it was a cigarette. He responded with significant insolence, repeatedly shouting derogatory remarks at the operations manager after being advised that he was suspended pending investigation. His employment was subsequently terminated.

Arbitrator’s Findings

The arbitrator found that the employer proved, on a balance of probabilities, that the employee was smoking cannabis. The evidence of a distinct and recognizable cannabis odour while it was being burned was accepted as clear and cogent evidence of use, and the quality manager’s familiarity with the smell was sufficient, despite having no formal training.

However, the employer failed to prove impairment. There was no evidence of diminished performance, motor skills, or alertness, and by the time the matter was reported, it was too late to assess impairment. While the arbitrator accepted the employee may have returned to work within a period of influence, that alone was insufficient to justify termination.

Given the safety-sensitive workplace, dishonesty, insolent behaviour, and prior discipline—balanced against nine years of service and the absence of any safety incident—the arbitrator substituted a three-month unpaid suspension for termination and declined to award retroactive compensation.

Key Takeaways

This case demonstrates that while employers can successfully prove cannabis use through eyewitness testimony, particularly through the distinctive smell of marijuana, termination may not be upheld without evidence of actual impairment.

Delay in taking out of service an employee who has been observed smoking cannabis, and failure to note signs of actual impairment, can negatively impact the employer’s case for just cause supporting termination.

Observable indicators of impairment that can be documented in disciplinary cases can include:

• Demeanor and behavior
• Eye appearance (redness, glassiness)
• Speech patterns
• Motor coordination
• The smell of cannabis on clothing or person
• Any admission or statement by the employee

The arbitrator’s decision to impose a three-month unpaid suspension, while declining any back pay due to the employee’s insolent conduct, shows that arbitrators take workplace cannabis use seriously, particularly in safety-sensitive environments. But the difference between a suspension and a termination may come down to whether the employer acted quickly enough to capture the evidence of impairment.

Ogletree Deakins’ Canada offices will continue to monitor developments related to cannabis use in the workplace and will provide updates on the Canada, Cross-Border, Drug Testing, and  Workplace Safety and Health blogs as additional information becomes available.

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