Quick Hits

• The NLRB upheld an arbitration confidentiality provision to the extent it protected the confidentiality of the proceedings and the outcome, while found that the provision’s blanket prohibition on disclosing the existence of arbitration was unlawful.
• The NLRB also upheld an arbitration provision covering “any and all” employment-related claims, finding a prominent savings clause reasonably informed employees of their rights to file a charge with the NLRB.

On August 10, 2026, the NLRB issued a 2–1 supplemental decision in Ralphs Grocery Company, 375 NLRB No. 25. The NLRB found that an employer’s arbitration policy applying to “any and all” claims did not unlawfully interfere with employees’ access to the NLRB processes. Notably, the NLRB also upheld most of the arbitration policy’s confidentiality provision, finding it was shielded by the Federal Arbitration Act (FAA). But the NLRB found that a blanket prohibition on employees’ acknowledging the existence of an arbitration was not protected because it exceeded the scope of the arbitration process.

The decision resolved those two lingering questions after the Ninth Circuit Court of Appeals remanded the case—which started as a California wage-and-hour class action and Private Attorneys General Act (PAGA) lawsuit—following the Supreme Court of the United States’ 2018 decision in Epic Systems Corp. v. Lewis. That case resolved a separate issue over a class-action waiver in favor of the employer.

Confidentiality Clause Mostly Upheld

The arbitration confidentiality provision at issue required employees to keep the “existence, content, and outcome” of any arbitration proceeding “in the strictest confidence” and prohibited disclosure “without the prior written consent of all the parties.”

The NLRB analyzed the provision under its 2020 precedent in California Commerce Club, which held that confidentiality provisions contained in an arbitration agreement are shielded by the FAA to the extent that they protect the confidentiality of an arbitration proceeding. The NLRB noted that California Commerce Club recognized that while employees’ interest in discussing terms and conditions of employment is at the heart of Section 7 protection, a confidentiality provision “would nevertheless be lawful if shielded by the FAA.”

In the instant case, the NLRB thus found that the “portions of the confidentiality provision restricting the disclosure of the content and outcome of the arbitration are limited to the rules under which the arbitration will be conducted” and are lawful. In particular, the NLRB said the part of the confidentiality clause prohibiting the disclosure of “the outcome” of the arbitration is consistent with California Commerce Club.

However, the NLRB said the provision’s blanket prohibition on disclosing the very existence of an arbitration proceeding crossed the line. “Prohibiting the disclosure of the fact that the arbitration ever happened long after it ended is a perpetual gag order against disclosing, outside the arbitral forum, that the arbitration ever occurred,” the NLRB said. (Emphasis in original). The NLRB said the blanket provision was therefore unlawful under the NLRA since the overall arbitration policy applied to all claims, including claims arising under the NLRA.

Arbitration Policy Does Not Unlawfully Interfere With NLRB Access

The arbitration policy at issue required arbitration for “any and all … employment-related disputes” between employees and the employer “that would constitute cognizable claims or causes of action in a federal, state or local court or agency under applicable federal, state or local laws.” The policy contained a “savings clause” that expressly stated that employees “retain the right under the National Labor Relations Act to file charges with the National Labor Relations Board.”

The NLRB found the arbitration policy with the “prominent, stand-alone” savings clause was lawful because “a reasonable employee could not interpret the arbitration policy to restrict their right to file charges with the Board.” Further, the policy did “not give employees the impression that filing charges would be futile.” (Emphasis added).

Key Takeaways

The NLRB decision reinforces precedent upholding confidentiality provisions in arbitration agreements and highlights the interplay between the NLRA and FAA. The ruling indicates that such confidentiality provisions, even if they limit employees’ Section 7 interests in disclosing details of arbitration proceedings, are nevertheless lawful if protected by the FAA. However, the NLRB drew a line between maintaining confidentiality of the arbitration process and imposing a prohibition on acknowledging that an arbitration even occurred, the latter of which violates the NLRA.

The decision further suggests that well-drafted arbitration agreement with a prominent and clear savings clause is sufficient to survive scrutiny under the NLRA.

Employers wishing to maintain arbitration agreements may wish to review their arbitration policies and accompanying confidentiality provisions in light of this recent NLRB decision.

Ogletree Deakins’ Arbitration and Alternative Dispute Resolution Practice Group and Traditional Labor Relations Practice Group will continue to monitor developments and will provide updates on the Arbitration and Alternative Dispute Resolution, California, Class Action, and Traditional Labor Relations blogs as additional information becomes available.

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Quick Hits

• On September 8, 2026, the Mexican Institute of Social Security (IMSS) published an agreement in the Official Gazette of the Federation that approved the mandatory generation of the digital employers registration identification card (Digital TIP), which will supersede any previously issued physical TIPs.
• The agreement enters into force on September 23, 2026, and employers must enable access to the IMSS electronic notification portal, called Buzón IMSS, to generate the Digital TIP.

The Digital TIP must be generated through the IMSS electronic notification portal (Buzón IMSS). Employers must enable access to the Buzón IMSS in order to access this new service.

Main Modifications and Procedures

The implementation of this agreement represents the following key changes:

1. The Digital TIP is now mandatory and will supersede any previously issued physical TIP for procedures that require a TIP.
2. The Digital TIP is generated exclusively through the Buzón IMSS using the Tax Authority’s electronic signature (e.firma) as the authentication method.
3. IMSS personnel will now be able to verify the employer’s representative capacity, ensuring that an employer’s authorized representatives can carry out any procedure before the IMSS.
4. The Digital TIP format includes the employer’s name, address, date of issuance, name of authorized representatives (maximum of three per employer registration number (Registro Patronal)), and a verification code in QR format. It also includes a transaction folio, certificate number, the e.firma used to designate the employer’s representative(s), and a digital seal to prevent fraud and ensure authenticity.

The Buzón IMSS: A Prerequisite for the Digital TIP

Since the Digital TIP can only be generated through the Buzón IMSS, employers that have not yet enabled access to this portal must do so. The Buzón IMSS is the IMSS electronic notification portal that allows employers to receive notices, administrative resolutions, and requirements related to their compliance obligations. It also allows employers to submit required information, file requests, and review their status before the IMSS.

The following are some of the procedures and notifications available through the Buzón IMSS:

• Certificate of Weeks of Contribution to the IMSS, with a breakdown of enrollment history
• Certificate of Eligibility to Receive Medical Services
• Clarifications and Guidelines on the Operation of the Buzón IMSS
• Resolution of Determination of the Work Risk Premium
• Resolution of Correction of the Work Risk Premium
• Invitation to review the correct classification of employers
• Generation of a Certificate of Compliance with Social Security Tax Obligations
• Suspension of the Administrative Enforcement Process
• Inquiry Regarding Closed Occupational Risk Cases
• Application for Registration and Update of Beneficiaries

For notification purposes, the Buzón IMSS is more efficient than the IMSS’s daily Gazette. The Gazette is for public consultation, which imposes an additional administrative burden while searching through all the content of the Gazette for relevant notices. Additionally, it can only retain notifications for ten business days, making it inefficient and complicated for employers to be informed of any possible notification from the IMSS, especially those related to administrative resolutions and audit procedures.

Employers may want to periodically review the Buzón IMSS to verify any possible notification, or news from the IMSS, considering that, in accordance with the Social Security Law, notifications issued through this portal will be effective on the third business day after they are received by the employer.

Tips for Ensuring Future Compliance

The agreement enters into force on September 23, 2026. Before that date, employers may want to ensure that they have taken the following actions:

1. Verifying that the e.firma of the company and of the legal representative is active before the Tax Authority
2. Enabling the Buzón IMSS if not already activated and designating a representative to regularly review the portal
3. Reviewing and determining the representatives who will be incorporated in the Digital TIP

Ogletree Deakins’ Mexico City office will continue to monitor developments and will provide updates on the Cross-Border and Wage and Hour blogs as additional information becomes available.

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Quick Hits

• The federal government released FAQs that confirm employers are not required to retroactively allocate the full reward for a wellness program when an employee completes a reasonable alternative standard. The guidance applies to health-contingent, outcome-based wellness programs.
• The FAQs provide welcome DOL enforcement relief, but they do not eliminate private litigation risk or resolve all open compliance questions for wellness programs.
• Federal law requires employers to provide a reasonable alternative for employees who cannot satisfy an initial standard under an outcome-based wellness program because of their medical condition.
• The FAQs are not binding on federal courts.

Background

In an effort to help plans address rising healthcare costs, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Affordable Care Act (ACA) permit employers to reward employees for healthy habits through employer-sponsored wellness programs. These may include weight loss programs and tobacco cessation programs. If enough employees participate, a wellness program could prevent absenteeism for medical reasons and reduce a plan’s costs related to pharmaceuticals and doctor visits.

The federal agencies issued final regulations on nondiscriminatory wellness programs in 2006 and 2013. The new FAQs state that the requirement for retroactive application of the award was in the preamble to the 2013 final regulations, but was not in the regulatory text. The federal agencies confirmed they will not take enforcement action against an employer for failing to provide a full reward retroactively to the beginning of the plan year after an employee satisfies a reasonable alternative standard. Employers only need to provide the reward prospectively, when the employee completes the alternative standard, if retroactive rewards are not otherwise provided.

There are multiple class actions pending nationwide that challenge the validity of tobacco surcharge wellness programs. Several of these cases have settled, resulting in millions of dollars of settlement payments.

Reasonable Alternative Standards

Health-contingent wellness programs can be activity-only or outcome-based. The wellness program rewards are contingent on activity when they require action, such as completion of a certain number of nutrition training sessions, exercise classes, or daily nutrition logs. When a reward is based on an outcome, like achieving a certain weight, body-mass index (BMI), blood pressure level, or cholesterol level, the employer must provide a reasonable alternative standard for employees who have medical conditions, such as diabetes or hypothyroidism, that prevent them from meeting the target. The employer also may waive the requirement completely for those with certain health conditions.

An employer cannot legally impose a financial penalty on tobacco users if they fail to quit, unless it provides a legally compliant tobacco-cessation program as an alternative to remove the surcharge.

Wellness Program Communication

The FAQs include a reminder that plans must disclose the availability of a reasonable alternative standard in wellness program materials and notices, if the program is health-contingent. The notice must contain contact information for obtaining a reasonable alternative standard and a statement that recommendations from an individual’s personal physician will be accommodated.

Prior guidance included sample language for this purpose. This requirement creates communication challenges because including reasonable-alternative-standard language in every wellness-related communication can make participant materials longer and arguably more difficult to understand and more likely to be ignored. The FAQs helpfully remind plan sponsors that, under prior guidance, if plan materials merely mention that a wellness program is available, without describing its terms, this disclosure is not required.

Types of Rewards

Some common rewards include discounts on health insurance premiums, contributions to a flexible spending account or health savings account, additional paid time off, wearable fitness trackers, subsidized gym memberships, points to purchase items online, and company swag. The Internal Revenue Service (IRS) treats cash and most gift cards as taxable income, so those generally must be reported as compensation, even if they are connected to a wellness program. They can also raise deferred compensation issues under Code section 409A, and wage-and-hour issues in some instances.

These wellness program rewards have increasingly become the target of plaintiffs’ attorneys. Since the ACA was adopted, wellness program incentives and related regulations have been challenged under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA), particularly where plaintiffs have challenged whether incentives are truly voluntary or instead coercive.

Federal law prohibits wellness program rewards that are coercive, discriminatory, or structured to penalize employees with certain health conditions. “[A]ny wellness program must be reasonably designed, based on all the relevant facts and circumstances, to promote health or prevent disease, and that plans and issuers must ensure that the program is not a subterfuge for discrimination or underwriting based on a health factor, or any of the other requirements for wellness programs,” the guidance states.

It is illegal for the total value of all wellness rewards to exceed 30 percent of the total cost of employee-only health insurance, except for tobacco cessation programs, which can reward up to 50 percent. When designing the incentives, employers may want to consider the impact of any premium discounts or surcharges on whether their health plan will meet ACA affordability requirements.

Next Steps

Although the FAQs provide welcome relief from the agencies’ current enforcement position, they do not eliminate litigation risk. Courts may give limited deference to the guidance, and private plaintiffs are not bound by the guidance. Plan sponsors may wish to proceed cautiously before making changes to their wellness programs based on the guidance.

However, the guidance serves as an important reminder that, as plans move into open enrollment season, they may want to ensure that:

• Any communications regarding the wellness program include required disclosures, and the wording is evaluated with the recent litigation risks in mind.

• Incentives meet the applicable ACA limits and other limits.

• Rewards are being treated appropriately for tax purposes, including withholding and reporting as applicable.

• Any modifications to ensure that programs are providing a sufficient return on investment comply with applicable legal requirements.

Employers may wish to evaluate their wellness programs to determine whether they are meeting objectives, such as reducing healthcare costs, reducing absenteeism, or improving retention rates. If a wellness program is not getting enough participation, changing the size or type of reward may help to boost participation rates.

Not having to provide a reward retroactively may help employers implement a larger reward and not have to absorb as much of the cost. Employers may wish to train HR and managers on how to properly handle requests from employees who want to complete a reasonable alternative standard and receive the wellness reward.

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, Employee Engagement, Employment Tax, and Healthcare blogs as additional information becomes available.

Karen N. Brandon is a shareholder in Ogletree Deakins’ Morristown office.

Carly E. Grey is a shareholder in Ogletree Deakins’ Washington, D.C., office.

Mark E. Schmidtke is a shareholder in Ogletree Deakins’ Chicago 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

• Whether live, in-person teaching was an “essential function” was a fact question for the jury, particularly given that the job description did not distinguish live from virtual instruction and the college had used virtual classrooms during COVID-19 and inclement weather.
• Failing to communicate a decision on a requested accommodation, even while considering it internally, may constitute a denial sufficient to establish a prima facie failure-to-accommodate claim.
• Both parties have obligations in the interactive process: a jury could find bad faith if an employer fails to consider a requested accommodation and repeatedly seeks information it already possesses, while an employee’s refusal to cooperate may be deemed a failure to engage in the process.

Background

In Davis v. Valley Forge Military Academy and College, No. 23-cv-02004 (E.D. Pa. Aug. 21, 2026), an associate professor at a military academy and junior college informed his supervisor of his multiple sclerosis (MS) diagnosis. Two months later, he requested leave under the Family and Medical Leave Act (FMLA), submitting paperwork from his doctor that also identified reasonable accommodations, including that he be allowed to teach one to two classes in person, with the rest taught remotely from home. Although the human resources (HR) director indicated that she might need additional information regarding his request, the professor stated that he would not be providing any. The HR director offered in-person alternatives, including an accessible conference room, a classroom without stairs, a desk and chair for sitting or elevating his feet, a separate entrance, and a golf cart. The professor rejected them, insisting on remote work.

In a subsequent discussion with his supervisor, the professor referenced the conversation with the HR director and reiterated that he would not engage in further discussion. In the meantime, the HR director continued to explore and document possible on-site accommodations. The HR director also informed the professor that she needed to clarify some items in his FMLA paperwork and requested that he sign a medical release to allow her to speak directly with his doctor. After initially refusing, the professor finally authorized the release of medical records related only to the FMLA request.

Due to his worsening condition, the professor then went out on continuous FMLA leave for several months. During that time, his supervisor and HR discussed the possibility of a virtual classroom, but did not decide whether to provide one. At the end of his FMLA leave, the college continued his leave and requested additional information about his condition. The professor contended, however, that the college already had sufficient information based on his FMLA paperwork and prior notes from his doctor. He then sought revised accommodations, including virtual faculty duties during flare-ups. Regarding his current status and revised accommodation request, the college requested a new medical authorization because the prior release was no longer valid. The professor denied receiving the request. He did not return after his FMLA leave expired, and he later received long-term disability benefits. His employment was eventually terminated.

The professor subsequently filed suit, alleging an adverse employment action and a failure to accommodate in violation of the Americans with Disabilities Act.

Legal Framework

The ADA bars discrimination against qualified individuals with disabilities. A “qualified individual” is someone capable of carrying out the essential duties of a given position, either independently or with reasonable accommodation. The U.S. Equal Employment Opportunity Commission (EEOC), which is responsible for enforcing the ADA, has published interpretive guidance identifying several considerations relevant to whether a particular function should be deemed essential. These considerations include, but are not limited to, the employer’s own assessment of the role, any written job descriptions, and the day-to-day tasks actually performed by incumbents in the position.

An employer is obligated to provide reasonable accommodation to enable the employee to perform the essential functions of the position, absent undue hardship to the employer. A failure-to-accommodate claim may be based on a showing that the employer either refused to provide a proposed reasonable accommodation or failed to engage in the interactive process after a request for accommodation was made, though a reasonable accommodation was possible.

The Court’s Ruling

The employer moved for summary judgment on the professor’s claims, arguing that there were no material facts in dispute and that, as a matter of law, the professor’s claim should fail. The court disagreed, finding genuine disputes of material fact existed as to several key issues.

Essential Functions

Whether live, in-person teaching was an essential function of the job remained in dispute. The job description did not distinguish between live and virtual instruction, and virtual instruction might not have been an option when the job description was written. Although the supervisor asserted that on-campus presence and live teaching were essential, the professor cited the college’s virtual classroom capabilities, which had been used during the COVID-19 pandemic and in inclement weather, and the common practice among professors of combining non-live and live teaching. According to the court, a jury would need to resolve the dispute.

Failure to Communicate

Although the college contended it had “never denied” the virtual classroom accommodation, neither HR nor the supervisor told the professor whether he would receive it. The court found that such a failure to respond could support a claim for failure to accommodate and was an issue for the jury.

Interactive Process Issues

The court agreed with the college that it appeared the professor was uncooperative in the interactive process when he refused to sign a full medical authorization, told HR that he would provide no additional information, and (at least initially) insisted on his desired accommodation. That notwithstanding, the court found that a jury could find the college had acted in bad faith by failing to fully consider the virtual classroom and by repeatedly seeking medical information it arguably already had. Because of this, the question as to whether the college had engaged in in the interactive process in good faith was an issue for the jury.

Virtual Accommodation Not ‘Unreasonable as a Matter of Law’

The college cited Taylor v. Phoenixville School District, a Third Circuit opinion from 1999, for the principle that an employee who “insists on a single specific accommodation that is unreasonable as a matter of law … will be at fault for the breakdown in the interactive process.”

While the court acknowledged this principle, it found that issues of fact existed as to whether live teaching was an essential function of the job, and that the college had not shown that virtual teaching (the single specific accommodation sought by the professor) was unreasonable or met that standard. Its adequacy remained a factual question for the jury, according to the court.

Key Takeaways

This decision builds on the guidance provided by the Third Circuit and discussed in our prior article. Employers, especially those in the Third Circuit (comprising Delaware, New Jersey, Pennsylvania, and the U.S. Virgin Islands), handling remote or virtual work accommodation requests may wish to consider the following points:

• It may be helpful to review and revise job descriptions from previous years (particularly, those created prior to the COVID-19 pandemic) to clearly identify essential functions, including any requirement for in-person presence.
• It may be wise to consider each request individually, especially where virtual capabilities exist and have been used before, even if in a more limited manner. Remote work requests may not always be unreasonable.
• It may be useful to document and communicate accommodation decisions in writing and in a timely fashion. Failing to decide or communicate, even if considering the request internally, may be viewed as a denial.
• Employers may wish to track information received in relation to accommodation requests, particularly medical information, and be thoughtful about whether additional information is required. Repeatedly requesting materials already in hand may be used to support a finding of bad faith in the interactive process.
• Like employers, employees must participate in the interactive process in good faith. A refusal to provide relevant medical information or to cooperate with reasonable employer requests may weigh in the employer’s favor.

Ogletree Deakins’ Leaves of Absence/Reasonable Accommodation Practice Group will continue to monitor developments and will provide updates on the COVID-19/Coronavirus, Higher Education, Leaves of Absence, Pennsylvania, and Return to Work blogs as additional information becomes available.

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Quick Hits

• The Home Office is introducing mandatory Multi-Factor Authentication for all Sponsor Management System (SMS) users beginning 3 September 2026, requiring a one-time passcode in addition to existing login credentials to protect against unauthorised access.
• The Level 2 user role will be discontinued from 9 September 2026, and sponsors must upgrade eligible Level 2 users to Level 1 status or deactivate their accounts by 8 March 2027.
• Because sponsors can expect an immediate audit of their SMS users, they may want to verify key personnel details and prepare internal teams for the changes to avoid disruption to licence management and compliance obligations.

These measures are designed to strengthen security, improve oversight of sponsor activity, and modernise SMS user management. The changes include the introduction of mandatory Multi-Factor Authentication (MFA), the removal of Level 2 users, deactivation of inactive user accounts, and the rollout of new licence activity notifications.

Sponsors may want to plan early for the implementation of the SMS changes and review existing SMS governance arrangements to avoid disruption to licence management and sponsored worker activities.

What Is Changing?

Mandatory Multi-Factor Authentication (MFA)

From 3 September 2026, the Home Office is introducing mandatory MFA for SMS users. MFA will require users to verify their identity using a one-time passcode (OTP) in addition to their username and password whenever they log into the SMS. The OTP will be delivered either by email or text message.

The Home Office intends this change to provide greater protection against unauthorised access and cybersecurity threats, even where passwords have been compromised.

Removal of inactive SMS users

The Home Office has confirmed its intention to remove inactive SMS user accounts from sponsor licences. Sponsors are therefore expected to regularly review their SMS users and ensure account details remain current. Failure to maintain active and accurate user records could create operational issues and, in some circumstances, place licence compliance at risk.

Removal of the Level 2 User role

From 9 September 2026, sponsors will no longer be able to appoint new Level 2 users. Existing Level 2 users must either:

• be upgraded to Level 1 users (where eligible), or
• have their accounts deactivated.

Sponsors have until 8 March 2027 to complete this process. The Home Office has encouraged sponsors to act as early as possible to ensure continued access for affected users.

New licence activity notifications

From 9 September 2026, Authorising Officers (AOs) will begin receiving automated email notifications relating to key licence activities, including:

• changes to Level 1 user details,
• addition of new Level 1 users, and
• changes to the AO’s email address.

For sponsors that assigned fewer than 1,000 Certificates of Sponsorship (CoS) or Confirmations of Acceptance for Studies (CAS) during 2025, AOs will also receive notifications regarding CoS and CAS assignments.

The Home Office has indicated that larger sponsors will receive enhanced notification functionality later in 2026.

Implementation Timeline

3 September 2026

• Mandatory MFA rollout begins for Worker and Temporary Worker sponsor licence holders.

9 September 2026

• MFA automatically enabled for all newly granted sponsor licences.
• Sponsors can no longer appoint new Level 2 users.
• New AO licence activity notifications begin.

Early November 2026

• MFA rollout expected for student sponsors, including organisations holding multi-route licences.
• Home Office expects MFA onboarding to be complete.

8 March 2027

• Deadline for sponsors to upgrade eligible Level 2 users to Level 1 status or deactivate those accounts.

MFA Onboarding: What Sponsors Should Expect

The Home Office will onboard existing sponsors in phases. Approximately two weeks before MFA is enabled on a licence, the Home Office will contact the Authorising Officer, Key Contact, and Level 1 users with details of the implementation date and any actions required.

To support the rollout, the Home Office has also published a dedicated MFA User Guide containing step-by-step instructions for users.

Tips for Sponsors

Given the scale of these changes, sponsors may want to review their SMS arrangements as soon as possible, including the following actions and their associated steps:

Conducting an SMS user audit

• Identifying all current Level 1 and Level 2 users
• Removing users who no longer require access
• Confirming that all key personnel remain appropriate and active

Verifying key personnel details

• Checking email addresses for the Authorising Officer, Key Contact, and all SMS users
• Confirming that Level 1 users have accurate mobile phone numbers and email addresses recorded
• Ensuring dates of birth for Level 1 users are correct

Reviewing Level 2 user arrangements

• Identifying individuals who will require ongoing SMS access after March 2027
• Assessing eligibility for Level 1 status and, if necessary, request a Level 1 user account for the Level 2 user

Preparing users for MFA

• Communicating the upcoming changes internally
• Ensuring users understand how OTP verification will operate
• Updating internal SMS access procedures and guidance documents

Establishing regular SMS governance reviews

• Scheduling periodic audits of user access rights
• Reviewing licence activity notifications received by the AO
• Monitoring user activity and account accuracy as part of broader sponsor compliance processes

Key Takeaway

The introduction of MFA represents the most significant operational change to the Sponsor Management System in recent years. While the security enhancements will be welcomed by many sponsors, the administrative work required to prepare for implementation is significant. Early review of SMS user populations, key personnel information, and Level 2 user arrangements will help minimise disruption and ensure continued compliance with sponsor licence duties.

Ogletree Deakins’ London office will continue to monitor developments and will post updates on the Cross-Border, Cybersecurity and Privacy, Immigration, and United Kingdom blogs as additional information becomes available.

Ruhul K. Ayazi is a partner in the London office of Ogletree Deakins.

Carrie-Ann Hosker is an immigration manager for Ogletree Deakins, and is based in the firm’s London office.

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Quick Hits

• NOM-035, published in 2018, established Mexico’s first explicit regulatory framework addressing psychosocial risk factors and employer obligations related to employees’ physical and mental well-being in the workplace.
• The standard catalyzed a series of labor reforms including expanded vacation entitlements, remote work regulations, recognition of mental health disorders as occupational diseases, the Chair Law requiring workplace seating, and the gradual reduction of the workweek to forty hours by 2030.
• Employers in Mexico face growing regulatory and operational challenges as the labor framework increasingly prioritizes employee safety, physical health, mental well-being, and work-life balance in line with the principles first advanced by NOM-035.

Although NOM-035 may initially have appeared to be an isolated regulatory measure, its impact has been far-reaching and profound. Its underlying principles and objectives have substantially influenced the development of various labor reforms and the enactment of new regulations, particularly those aimed at protecting mental health, preventing psychosocial risk factors, and promoting healthier and more balanced work environments for employees.

In October 2018, the Official Mexican Standard NOM-035-STPS-2018, Psychosocial Risk Factors at Work: Identification, Analysis, and Prevention (NOM-035), was published in the Official Gazette of the Federation (Diario Oficial de la Federación, or DOF). This regulatory instrument sparked, for the first time in the Mexican labor context, an explicit discussion regarding psychosocial factors affecting employees’ health and well-being, while establishing specific employer obligations concerning prevention, workplace safety, and both physical and mental well-being. The issuance of NOM-035 marked a significant shift in Mexican labor regulation by recognizing that conditions such as work-related stress, workload, work-life balance, and the organizational environment are integral components of occupational health. Beyond its immediate regulatory scope, NOM-035 paved the way for a broader understanding of workplace health and laid the foundation for subsequent reforms aimed at protecting the physical, mental, and emotional well-being of workers in Mexico.

One of the first developments reflecting this regulatory evolution was the enactment of the Dignified Vacation Reform (Vacaciones Dignas), which took effect in January 2023 and amended the vacation provisions of the Federal Labor Law. This reform increased the minimum vacation entitlement from six to twelve consecutive days during an employee’s first year of service and established progressive increases based on seniority. The reform represented a significant advancement in labor rights in Mexico by bringing to the forefront the need to ensure a proper balance between personal and professional life, based on the recognition that the previous vacation entitlement was insufficient to provide meaningful rest, physical recovery, and overall employee well-being. As evidenced by this reform, the concept of a more balanced working life, advanced by NOM-035, once again became a central consideration in the legislative agenda.

Similarly, the regulation of remote work is closely linked to the legislative changes incorporated into Mexico’s labor framework, particularly those aligned with the principles and objectives of NOM-035. In this regard, remote work seeks to promote a better balance between employees’ personal and professional lives while maintaining compliance with both existing and newly established employer obligations concerning workplace health and safety. The objective is to ensure that employees have appropriate conditions under which to perform their duties within this work arrangement, taking into consideration the standards and principles established by NOM-035.

Subsequently, the Federal Labor Law was amended once again to incorporate work-related mental health disorders into the official table of occupational diseases, including conditions such as anxiety, insomnia, stress, and depression. This amendment represented a substantive step forward in recognizing mental health as an essential component of both occupational health and social security. It opened the door for such conditions to be classified by the Mexican Social Security Institute (Instituto Mexicano del Seguro Social (IMSS)) as occupational risks and, consequently, allowed employees access to the prevention, treatment, and protection mechanisms available under Mexico’s social security system. Naturally, this development also carries significant implications for employers, particularly with respect to the cost of social security contributions.

In the same vein, the enactment of the Chair Law (Ley Silla) may be understood as part of the progressive impact that NOM-035 has had on workplace well-being initiatives. While the requirement to provide employees with seating during the workday may appear, at first glance, to be relatively minor, experience derived from the implementation of the seven-factor assessment questionnaire required by this reform has shown that many workers in Mexico face high levels of risk associated with prolonged standing. One of the primary objectives of the Chair Law is to reduce the risks associated with physical fatigue resulting from extended periods of standing. Beyond its physical consequences, such fatigue may also contribute to mental health conditions, including stress and insomnia.

With respect to the reduction of the workweek, the reform now forms part of Mexico’s legal framework and provides for a gradual implementation process under which the standard workweek will be reduced by two hours per year, with the objective of reaching a forty-hour workweek by 2030. This transition reflects a significant transformation in labor relations in Mexico, focused on strengthening work-life balance without affecting employees’ wages, benefits, or other labor rights. Furthermore, the reform reinforces the broader trend within the Mexican labor system toward more sustainable work arrangements, placing the protection of employees’ physical and emotional well-being at the center of public policy.

Against this backdrop, employers will continue to face significant regulatory and operational challenges as the Mexican government adopts and implements reforms that increasingly prioritize employee safety, physical health, and mental well-being in workplace environments.

Ogletree Deakins’ Mexico City and Monterrey offices will continue to monitor developments and will post updates on the Cross-Border, Leaves of Absence, Mexico, Wage and Hour, and Workplace Safety and Health blogs as additional information becomes available.

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House Returns to D.C., Passes Bill to Avert Government Shutdown. Members of the U.S. House of Representatives were back in Washington, D.C., this week following their August recess, and they got to work quickly, passing a priority bill to extend current federal government funding (originally set to expire on September 30, 2026) through December 11, 2026. President Donald Trump signed the bill into law on September 2, 2026. While this stopgap ensures there won’t be a government shutdown in advance of the November midterm elections, it could portend a messy end-of-year funding battle as the 119th Congress draws to a close.

USCIS Poised to Eliminate Sixty-Day Grace Period. On August 27, 2026, the Office of Information and Regulatory Affairs (OIRA) completed its review of U.S. Citizenship and Immigration Services’ (USCIS) proposal, “Eliminating the Discretionary 60-day Grace Period.” This proposal was not previously published in the Spring Regulatory Agenda, which was issued on July 3, 2026. However, as Jennifer M. Cofer and Maurisa Iacono explain, the proposal’s title suggests that it will amend or rescind a 2017 rule that, among other provisions, granted certain nonimmigrant visa holders a sixty-day period to remain in the United States following their separation from employment. According to the 2017 rule, implemented at the end of the Obama administration, the purpose of the sixty-day period was to “better enable U.S. employers to employ and retain high-skilled workers who are beneficiaries of employment-based immigrant visa … petitions, while increasing the ability of these workers to further their careers by accepting promotions, changing positions with current employers, changing employers, and pursuing other employment opportunities.” USCIS is likely to publish the proposed rule in the Federal Register soon.

House Lawmakers Examine Regulatory Compliance Burdens. The House Committee on Education and the Workforce’s Subcommittee on Workforce Protections held a hearing this week titled “Less Red Tape, More Opportunity: Unleashing American Workers and Job Creators.” According to the opening statement of subcommittee chair Representative Ryan Mackenzie (R-PA), the hearing focused on “barriers that hinder economic growth and stifle private sector employment.” Witnesses addressed current, pressing employment policy matters, such as independent contractors, joint employment, and excessive heat in the workplace, advocated for the finalization of U.S. Department of Labor proposed rules concerning independent contractor and joint-employer status, and called for the advancement of complementary legislation, such as the Modern Worker Empowerment Act (H.R. 1319), the Save Local Business Act (H.R. 4366), and the American Franchise Act (H.R. 5267). Republicans and witnesses also promoted the Heat Workforce Standards Act of 2025 (H.R. 6213), which has been approved by the Education and Workforce Committee and awaits a vote by the full House. While these legislative opportunities may soon be foreclosed to Republicans if Democrats retake the House majority in 2027, the Trump administration is expected to continue to pursue these issues in the regulatory arena.

Sharp Dressed Man. Members of Congress often take pride in and boast about their hometowns and constituents. Some, like Senator Dan Sullivan (R-AK) or Representative Mike Levin (D-CA), even take time to regularly highlight the achievements of local residents. This week, Representative Troy Nehls (R-TX) took to the House floor to honor the life of one of his constituents, ZZ Top drummer Frank Beard, who recently passed away. Nehls described Beard as a friend, “a true Texas legend, Rock & Roll Hall of Famer, and the heartbeat of ZZ Top for more than fifty years.” In 2021, Nehls delivered a similar eulogy following the passing of Beard’s bandmate, bassist Dusty Hill.

Quick Hits

• SEVP issued Broadcast Message 2608-01 on August 12, 2026, signaling heightened scrutiny of CPT authorizations that may not satisfy regulatory requirements.
• Broadcast Message 2608-02, issued August 24, 2026, provides additional Q&A guidance on when practical training is considered “integral” to an established curriculum.
• Both messages are directed at DSOs and SEVP-certified schools rather than employers, and they do not create new regulations or alter existing CPT requirements.

On August 12, 2026, SEVP issued Broadcast Message 2608-01 to DSOs at SEVP-certified schools, reminding them of their obligations when authorizing CPT. The message notes an increase in CPT authorizations that may not satisfy regulatory requirements, particularly where the training is not integral to an established curriculum or directly related to a student’s major area of study, and indicates SEVP may request documentation to confirm the curricular basis for an authorization.

On August 24, 2026, SEVP issued a follow-up guidance document, Broadcast Message 2608-02, with additional questions and answers addressing how SEVP assesses whether practical training is integral to a curriculum. The guidance distinguishes CPT from Optional Practical Training (OPT), noting that CPT guidance focuses on whether practical training is a required component of the curriculum, and states that formal DSO authorization and Student and Exchange Visitor Information System (SEVIS) record updates are required before a student begins CPT.

According to the client alert, the two broadcast messages constitute agency-level guidance rather than a new rule or final agency action, and they do not alter existing CPT regulations. SEVP has indicated it will scrutinize CPT authorizations more closely where it suspects abuse, while acknowledging that schools, not the federal government, define degree requirements.

The guidance is directed at DSOs and their institutions rather than employers and creates no new compliance obligations for employers directly. However, employers may want to be prepared to provide detailed documentation establishing that they will provide a quality practical training experience related to the student’s major area of study.

Ogletree Deakins’ Immigration Practice Group will continue to monitor developments and will post updates on the Higher Education and Immigration blogs as additional information becomes available.

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Ogletree Deakins’ Traditional Labor Relations Practice Group is pleased to announce the publication of the Summer 2026 issue of the Practical NLRB Advisor. This issue discusses the latest news from the National Labor Relations Board (NLRB) in the wake of a year-long period that the five-member Board lacked the statutorily required three-member quorum due to unfilled vacancies.

Even following this extended period when the Board did not have the authority to issue decisions, with two Board vacancies and the three current members divided 2-1 on most major issues, the NLRB could not tackle any controversial cases since three votes are typically required to overturn precedent. This situation lasted another seven months beyond January of 2026, until a fourth Board Member, James Macy, was sworn in on August 17. Thus, for over nineteen months, we have seen no significant policy developments coming from the Board.

Although the Board has largely been in hibernation for an extended period, the federal courts have been particularly active in areas that directly impact the Board. The overarching theme of these court decisions has been one of limiting the authority of federal agencies and increasing judicial scrutiny of their activity. These developments in administrative law have raised serious questions as to whether so-called “independent agencies” are constitutionally viable at all.

To date, much of the judicial re-assessment of administrative law has centered on the policy-making and administrative functions of federal agencies, boards, and commissions. Of equal and arguably greater concern and practical impact is the judicial function of many of these federal entities. The NLRB has its own complete judicial system, but in the wake of Trump v. Slaughter, it is only logical to ask if this system may not pass constitutional muster. Justice Gorsuch clearly previews this question in his concurring opinion in Slaughter in which he notes that the Court must “finish the journey [it] start[s] today” and must restore judicial power to the federal courts. This may well portend a complete re-examination of the NLRB’s system of adjudication and the administrative law theory that has delegated such authority to federal agencies. As Justice Gorsuch further noted: “We have tolerated [such] adventurous theories long enough.”

We hope you will enjoy this issue of the Practical NLRB Advisor on the latest developments at the NLRB. We will issue the next edition in the coming months. Please let us know if you have any questions.

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

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Quick Hits

• The IRS unveiled a new set of detailed FAQs on August 6, 2026, that supersede FAQs that were posted on January 23, 2026, regarding taxation of tips and overtime pay under 2025’s omnibus spending bill.
• The new FAQs provide information concerning the definition of qualified overtime, eligibility for the deduction, tax withholding obligations, and reporting and correcting qualified overtime on year-end tax forms.  
• The “no tax on tips and overtime” provisions are set to expire on December 31, 2028.

In July 2025, President Donald Trump signed an omnibus spending bill that specified no taxes on tips and overtime pay through December 31, 2028. These provisions are available whether the worker itemizes or takes the standard deduction.

Qualified Overtime Deduction

The FAQs clarify that overtime compensation not required by the Fair Labor Standards Act (FLSA) is not eligible for the tax deduction. To deduct qualified overtime, an employee must be covered by the FLSA and must not qualify for an overtime exemption, such as the one for executives, administrators, and professionals. 

Business owners who own at least 20 percent of their business and actively participate in management generally are not eligible to deduct qualified overtime because they are considered exempt executive employees under the FLSA. Individuals who own less than 20 percent of their business may qualify for the overtime deduction if they are not covered by a different overtime exemption.

Qualified overtime is limited to the premium portion of overtime pay required under the FLSA—i.e., the 0.5 premium amount. Other types of overtime, such as overtime required by state law or a collective bargaining agreement, or overtime paid voluntarily by employers, are not eligible for the tax deduction. The qualified overtime portion can be calculated as the total FLSA hours worked over forty in a workweek, multiplied by one-half, multiplied by the employee’s regular rate of pay. 

For the tax year 2025, employers were not required to include qualified overtime pay on year-end tax forms, including Form W-2. Beginning in 2026, these amounts must be included on year-end tax forms for workers to claim the overtime deduction. Generally, these amounts will be reported on Form W-2 in box 12, using code TT. Employers must correct a Form W-2 if they discover an error made in the Form W-2 box for the total overtime calculation.

Employees are instructed to request a Form W-2c from their employers if they believe the employer omitted or understated the amount of qualified overtime compensation on the employee’s Form W-2. The employee is not entitled to a qualified overtime tax deduction that differs from the amount of qualified overtime compensation reported on the employee’s Form W-2.

The FAQs clarify that employers “may not reduce withholding on wages to account for the qualified overtime deduction unless the employee furnishes the employer an updated and valid Form W-4 accounting for the employee’s expected deduction for qualified overtime compensation.”

Independent contractors may only receive qualified overtime if they are considered employees under the FLSA, while still being classified as independent contractors for IRS purposes, a circumstance the IRS deemed “rare.”

Tipped Occupations

In April 2026, the IRS released final regulations to expand the list of specified occupations that “customarily and regularly” receive tips, such as bartenders, waiters, cooks, gambling dealers, musicians, baggage porters, and concierges. The expanded list now includes app/platform delivery people, visual artists, floral designers, gas pump attendants, pet and show animal caretakers, and eyebrow and eyelash technicians.

Employees in those occupations may deduct up to $25,000 per year in tips. This applies to taxable years beginning after December 31, 2024, and before January 1, 2029.

Next Steps

The new FAQs provide helpful guidance for employers and employees to remain compliant with federal tax laws. Looking ahead, employers may wish to stay abreast of any new developments or guidance that could be forthcoming. The U.S. Congress could choose to pass new legislation to extend the provisions for no tax on tips and overtime pay beyond 2028.

Ogletree Deakins’ Employment Tax Practice Group and Hospitality Industry Group will continue to monitor developments and will post updates on the Employment Tax, Hospitality, and Wage and Hour 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.

Michael K. Mahoney is a shareholder in Ogletree Deakins’ Morristown office.

Stephen Kenney is an associate in Ogletree Deakins’ Dallas 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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