SCOTUS Begins 2026–2027 Term. This week, the Supreme Court of the United States kicked off its 2026–2027 term. The Court will continue to fill its docket in the coming weeks, but it already has several cases that should be of interest to employers (though these cases are perhaps a bit more esoteric than those of the last term, which dealt with matters concerning presidential removal powers and birthright citizenship, among others).

For example, the justices will review a case concerning pleading standards when challenging imprudent investments under the Employee Retirement Income Security Act of 1974. Another case to be heard by the Court addresses whether the United States Constitution prohibits the U.S. Department of Labor’s (DOL) administrative law judges from imposing monetary penalties on employers for H-2A violations following the Court’s 2024 decision involving the U.S. Securities and Exchange Commission.

The justices will also examine whether employees of federally funded educational institutions can pursue employment discrimination claims under Title IX of the Education Amendments of 1972—which allows for quicker access to courts and does not have statutory caps on damages—as opposed to Title VII of the Civil Rights Act of 1964. Finally, the Court will decide whether an employer can raise an affirmative defense for the first time at summary judgment that it has not previously raised without amending its answer.

DHS Proposes OPT Fee Rule. On October 10, 2026, the U.S. Department of Homeland Security (DHS) issued a notice of proposed rulemaking (NPRM or “proposal”) on “Optional Practical Training Fees.” Key elements of the proposal are as follows:

• Initial fee. The NPRM proposes that schools be charged a fee of $70,000 per F-1 nonimmigrant student the first time that they recommend an F-1 nonimmigrant student for any type of optional practical training (OPT).
• Additional fee. The NPRM also proposes a requirement that these schools then pay a $30,000 fee for each additional time they recommend the student for OPT. For example, a school would be required to pay a total of $100,000 for a student who engages in OPT prior to completing his or her program ($70,000), followed by post-graduation OPT ($30,000).
• Who pays? Schools would be required to pay the fee, but “DHS acknowledges that the schools may pass the financial obligation of this proposed fee onto F-1 nonimmigrant students, all students, or employers.”
• Effective date. The rule would apply prospectively to F-1 nonimmigrant students who apply for OPT after the effective date of the final rule, which would be sixty days after its publication in the Federal Register.
• Foreshadowing? DHS warns stakeholders that “absent these fees, it will not be able to operate OPT consistent with its focus on preventing fraud and protecting American workers and may shut down the program entirely.” (Emphasis added.)

DHS maintains that the proposal is necessary “to ensure that schools, students, and employers participate in OPT for its intended purpose instead of [as] a means to circumvent the H-1B visa program.” Because the fee is designed to have a deterrent effect, it will be deposited in the U.S. Treasury and not earmarked for any DHS processing or operational costs. Comments must be received on or before November 9, 2026.

Andrew G. Drozdowski, Amanda R. Goodman, and Tiffany Lam-Bentley have additional details.

Unions, Immigration Groups File Challenge to Policies on Adjustment of Status and Benefits Denials. A coalition of labor unions and immigrants’ rights groups has filed a legal challenge in the U.S. District Court for the District of Massachusetts against two recent DHS policies regarding adjustment of status applications and denials of benefit requests. The lawsuit alleges that these policies exceed DHS’s statutory authority and violate the Administrative Procedure Act because they are arbitrary and capricious (as DHS arguably failed to articulate a reasoned explanation for the policy changes and did not consider reliance interests) and because the policies were issued without providing the public notice or an opportunity to comment on the changes. The complaint also alleges that the policies violate the due process clause of the Fifth Amendment because they fail to provide an adequate or fair procedure for adjudicating adjustment-of-status applications. The lawsuit asks the court to preliminarily enjoin the policies during the challenge and vacate them.

FLSA Independent Contractor Reg. Moves Forward. The DOL’s Wage and Hour Division (WHD) sent the Office of Information and Regulatory Affairs (OIRA) a final version of its rule relating to independent contractor status under the Fair Labor Standards Act, the Family and Medical Leave Act, and the Migrant and Seasonal Agricultural Worker Protection Act. After OIRA completes its review of the draft rule—which can take several weeks—WHD will publish the final rule. If the rule is finalized as proposed, the DOL would adopt an “economic realities” test for evaluating independent contractor status that focuses on two core factors: the nature and degree of control over the work and the worker’s opportunity for profit or loss.

‘No Taxation Without Representation.’ The Stamp Act Congress began this week in 1765 in New York City. Attended by twenty-seven merchants, lawyers, and landowners from the thirteen colonies—many of whom would go on to sign the Declaration of Independence and attend the 1787 Constitutional Convention—the Congress sought to develop a unified strategy in response to Britain’s recent passage of the Stamp Act of 1765. Directed specifically at the American colonies, the Stamp Act was designed to raise revenue to cover the costs of stationing British troops in the colonies. As a result, colonists were taxed on nearly every paper they used, including newspapers, books, court documents, commercial papers, deeds, and even playing cards and dice. After eighteen days, the Congress produced the Declaration of Rights and Grievances, which contained fourteen statements. Two of these statements would feature prominently in the subsequent fight for independence and the drafting of the United States Constitution: no taxation without representation and the right to trial by jury.

Quick Hits

• Germany’s Federal Labor Court held in a recent decision that if the body with authority to represent the company authorizes individual members to represent the company alone, the termination notice may be rejected if proof of that authorization is not attached.
• A rejection within one week is generally still considered prompt.

The Case—Termination by Two of Three Supervisory Board Members

The parties disputed the validity of two termination notices. The managing director of the defendant limited liability company (Gesellschaft mit beschränkter Haftung (GmbH)) was employed as managing director under an employment agreement. The company’s articles of association provide for a supervisory board (Aufsichtsrat) responsible for appointing and removing managing directors and for concluding and terminating their employment agreements.

The three-member supervisory board unanimously resolved to remove the managing director and terminate the managing director’s employment relationship. In a letter dated August 11, 2023, the company gave ordinary notice of termination. The termination notice, however, was signed by only two of the three supervisory board members—including the chair—and no proof of authority for the two acting supervisory board members was attached. The managing director received the termination notice on August 14, 2023, and was removed as managing director at the same time.

On August 18, 2023, the managing director rejected the termination notice because no proof of authority had been submitted and challenged the authority of the two signatories. The managing director filed a lawsuit challenging the termination of the employment relationship. On December 7, 2023, the company, in a pleading transmitted electronically to the Labor Court (Arbeitsgericht), terminated the employment relationship without notice as a precautionary measure. After the company had disputed the existence of an employment relationship before the labor court, it no longer disputed it on appeal.

The Decision—No Proof of Authority, Terminations Invalid

The BAG affirmed the lower courts’ decisions and held both termination notices invalid.

In this case, the BAG found that an employment relationship existed because the company no longer disputed its existence, at least on appeal.

The first, ordinary termination was invalid because the managing director promptly rejected it by analogous application of Section 174 sentence 1 of the German Civil Code (Bürgerliches Gesetzbuch (BGB)). No authorization for the two acting supervisory board members had been presented to the managing director, and the managing director had not previously been informed of such authorization.

The authority to remove and discharge managing directors had been transferred by the company’s articles of association to the supervisory board as a whole. No authorization existed for the two acting supervisory board members to act on behalf of the supervisory board. The supervisory board resolution, which at most could have implicitly granted such authorization, had also not been presented to the managing director.

The company had not informed the managing director of such authorization either, by analogous application of Section 174 sentence 2 BGB.

In the BAG’s view, the rejection on August 18, 2023—four days after the termination notice was received—was prompt. Only after more than one week has elapsed is a rejection no longer prompt absent special circumstances of the individual case.

The subsequent extraordinary termination without notice was invalid for lack of proper form. A termination contained in a pleading transmitted electronically does not satisfy the written-form requirement. Section 46h of the German Labor Court Act (Arbeitsgerichtsgesetz (ArbGG)), under which a termination contained in a pleading now generally satisfies the written-form requirement, did not enter into force until July 17, 2024.

Takeaways

Although the present case concerned the discharge of a managing director, for which the supervisory board was responsible, the BAG’s reasoning is relevant to employee discharges as well. In that context, the decision indicates that original proof of authority is required if, under a joint-representation arrangement, only one managing director without sole authority to represent the company signs the termination notice. Without such proof, the termination notice may be rejected. A prompt rejection would render the termination invalid for lack of proof of authority.

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

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Quick Hits

• The EEOC has submitted a draft to rescind its 2012 enforcement guidance related to using arrest and conviction records in employment decisions.
• The 2012 guidance indicated that an employer’s use of criminal history information in employment decisions could implicate Title VII of the Civil Rights Act of 1964 under disparate treatment or disparate impact theories.
• The federal government has signaled its intention not to pursue enforcement of federal anti-discrimination laws based on disparate impact theories.

The 2012 guidance, “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions under Title VII of the Civil Rights Act,” stated that employers using criminal background information to make employment decisions might violate Title VII either by disparate treatment (intentional discrimination based on a protected characteristic) or disparate impact (when a facially neutral policy or practice disproportionately affects one or more protected groups, even without intent).

The 2012 guidance indicated that employer use of criminal histories might have a disparate impact based on race and national origin, most notably on Black and Hispanic applicants and employees. It affirmed that the traditional three-part framework for establishing a disparate impact case applies in the criminal background check context:

• First, a plaintiff must identify a particular practice (such as an employer’s background check program) and establish that it causes a disparate impact.
• Then the burden shifts to the employer to show the practice is job-related and consistent with business necessity. Although the guidance set out two ways employers could establish this defense, most employers opted to do so using the targeted screen method, i.e., establishing that the employer considered (1) the nature and gravity of the offense; (2) the amount of time that has passed since the offense or completion of the sentence; and (3) the nature of the job held or sought. The guidance listed nine individualized assessment factors for employers to consider after an applicant or employee received an opportunity to address the criminal history. For example, an employer seeking to hire school bus drivers might demonstrate a business necessity for excluding applicants with recent prior convictions for driving under the influence or for distributing child pornography. Many employers have used the three Green factors (named for a federal circuit court case) plus the nine individualized assessment factors for more than fourteen years.
• Once an employer establishes that a background check program or practice is job-related and consistent with business necessity, a plaintiff still may prevail by identifying a less discriminatory alternative.

Beginning in 2025 and continuing in 2026, the federal government has pivoted away from enforcing employment laws based on disparate impact theories.

Expected Impact of the Guidance Rescission

Based on executive branch past practice, it is very possible (perhaps even likely) that the EEOC will rescind the 2012 guidance and not reissue any new guidance on employment-related criminal background checks. If that occurs, the rescission may have an impact on some legal theories under Title VII.

If the guidance is rescinded, background-check disparate-treatment allegations (e.g., evaluating or treating one applicant more harshly than another applicant based on the first applicant’s protected characteristic) should continue to be viable.

Although the EEOC likely would continue not to pursue disparate impact charges (opting instead to issue right-to-sue letters), disparate impact allegations based on criminal histories would continue in private lawsuits, as disparate impact is based on Title VII and well-established case law, not on executive agency decision-making or guidance. However, rescission of the 2012 guidance could indirectly affect private lawsuits because employers may argue that the rescission undercuts a Title VII disparate impact claim, while private plaintiffs may argue that the rescission does not impact existing Title VII disparate impact case law. Interpretive case law would have to fill in the gaps.

Additionally, the guidance recission would not impact the federal Fair Credit Reporting Act (FCRA), which imposes procedural and substantive requirements on employers using background checks obtained from third-party vendors, or state and local background check laws governing the use of criminal history information, which would continue to be enforced by agencies other than the EEOC and/or private plaintiffs. In fact, recent moves by some state agencies have made clear they are prepared to fill in the gap created by the EEOC’s decision not to pursue disparate impact claims. State and local background check laws, which have proliferated in recent years, vary widely in their restrictions and requirements, including when employers may conduct background checks and which types of criminal history may be considered in taking adverse employment actions. This patchwork of requirements may make compliance particularly challenging for multistate employers.

Next Steps

If the 2012 guidance is rescinded, the EEOC likely will continue to pursue enforcement of cases involving disparate treatment, but not disparate impact, in the use of criminal background checks in employment. Plaintiffs, on the other hand, likely will continue to bring private lawsuits alleging Title VII discrimination based on both disparate treatment and disparate impact claims. The guidance recission is not expected to directly impact the federal FCRA or state or local laws governing the use of criminal history information.

Employers may wish to stay abreast of any EEOC final rules, review their written policies to ensure compliance with state and local laws regarding background checks, and consider training hiring managers to stay compliant with background check laws.

Ogletree Deakins’ Background Checks Practice Group will continue to monitor developments and will provide updates on the Background Checks and Employment Law blogs as additional information becomes available.

In addition, the Ogletree Deakins Client Portal provides subscribers with timely updates on federal and state Background Check laws, as well as those of major localities. Subscribers have access to comprehensive law summaries, policies, and templates. Snapshots and Updates are complimentary for all registered client users. For more information on the Client Portal or a Client Portal subscription, please email clientportal@ogletree.com.

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

Stephen R. Woods is a shareholder in Ogletree Deakins’ Greenville office.

Gustavo A. Suárez is senior counsel in Ogletree Deakins’ Greenville office.

Amie M. Willis is compliance counsel in Ogletree Deakins’ Atlanta 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

• Under SB 951, Cal/WARN notices for job losses caused in whole or in substantial part by AI or other automated technology must include four additional items: (1) the number of affected layoffs (with classifications or occupations and work locations); (2) the job functions that will be automated; (3) the category or type of technology involved; and (4) at the top of each covered notice, the following technology-displacement statement: “This notice is for a technology displacement.”
• The Employment Development Department will publish a summary of the notices it receives on its website, along with a quarterly statewide summary of reported technological displacements.
• SB 951 takes effect on January 1, 2027.

Background: The Existing Cal/WARN Act

The Cal/WARN Act already requires employers to provide sixty days’ notice of: (a) cessations or substantial cessations of operations at covered establishments; (b) mass layoffs affecting fifty or more employees at covered establishments; and (c) relocations of all or substantially all employer operations at a covered establishment by one hundred or more miles. A “covered establishment” is any industrial or commercial facility (or part thereof) that employs or has employed seventy-five or more persons at any point in time within the past twelve months. Cal/WARN notices must be provided to the affected employees, the EDD, the local workforce development board, and certain local officials. Employers that fail to give the required notice may be liable to affected employees for back pay and benefits and face a civil penalty of up to $500 for each day of the violation.

Highlights of SB 951

New notice content: SB 951 applies when a mass layoff, relocation, or termination is “caused in whole or in substantial part by” an AI system or other automated technology replacing or automating employment positions. In those cases, the employer’s Cal/WARN notice must include, in addition to the content already required: (1) the number of layoffs substantially attributable to replacement or automation by AI or other automated technology, including the classifications or occupations and work locations involved; (2) the job functions performed by affected workers that will be automated; (3) the specific category or type of AI system or other automating technology that substantially resulted in the technological displacement; and (4) the statement “This notice is for a technology displacement” at the top of the notice.

Definition of AI: SB 951 defines “artificial intelligence” as “an engineered or machine-based system that varies in its level of autonomy and that can, for explicit or implicit objectives, infer from the input it receives how to generate outputs that can influence physical or virtual environments.” This definition is broad and may reach workforce software that employers do not ordinarily think of as AI.

Public reporting: The EDD must publish a summary of the technology displacement notices it receives on its website and post a quarterly statewide summary of the technological displacements reported.

Legislative report: By January 1, 2028, the EDD must submit a report to the legislature on AI’s effects on business hiring practices, including its impact on industries and occupations at the state and regional levels. The requirement to submit that report will be repealed on January 1, 2029, but it signals that a broader AI-related notice requirement could follow.

Next Steps

Employers planning workforce reductions, relocations, or closures in California may want to consider the following steps before January 1, 2027:

• Updating existing Cal/WARN notice templates.
• Documenting the extent to which AI or automated technology contributed to the elimination of specific positions or functions, in order to evaluate whether the “in whole or in substantial part” trigger is met.
• Ensuring that legal, HR, technology, and communications teams coordinate their work so that the reasons stated in Cal/WARN notices align with reduction in force documentation and internal/external communications.

Ogletree Deakins’ California offices and RIF/WARN Practice Group will continue to monitor developments and will provide updates on the Artificial Intelligence and Innovation, California, and Reductions in Force blogs as additional information becomes available.

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Quick Hits

• The DEA’s chief administrative law judge stayed marijuana rescheduling proceedings to consider adding a new GAO drug scheduling report to the hearing record and permit supplemental briefings concerning rescheduling all marijuana products, not just those approved by the FDA.
• Federal agencies must respond by October 13, 2026. After that, the judge will decide whether to admit the GAO report.
• Forty states and Washington, D.C., have legalized medical marijuana, and twenty-four states and Washington, D.C., have legalized recreational marijuana for adults.

Under the Controlled Substances Act (CSA), the federal government classifies drugs into five schedules based on accepted medical uses, potential for abuse, and potential for addiction. Schedule I drugs are deemed to have no accepted medical use and a high potential for abuse. This includes LSD, ecstasy, and heroin. Schedule III drugs are deemed to have an accepted medical use and moderate to low potential for physical and psychological dependence. This includes some pain medications, ketamine, and anabolic steroids.

The U.S. Food and Drug Administration (FDA) provides scientific and medical analyses that inform federal drug scheduling decisions, and the DEA makes the final classification decisions.

Federal Actions

On December 18, 2025, President Donald Trump signed an executive order directing the attorney general to reschedule marijuana from a Schedule I to a Schedule III drug. Rescheduling marijuana would not legalize it for recreational or medicinal use, but it would loosen restrictions on research of the drug as a potential treatment for certain medical conditions, such as anxiety, insomnia, post-traumatic stress disorder, chronic pain, and nausea from chemotherapy.

On April 28, 2026, the DEA published a final rule to place “drug products containing marijuana that have been approved by the FDA” and “marijuana subject to a state medical marijuana license” in Schedule III. That final rule took effect immediately.

In June and July 2026, the DEA Office of Administrative Law Judges held hearings on whether to move all marijuana products, including those for recreational use, to Schedule III, and whether to leave “medical marijuana” and “FDA-approved” marijuana on Schedule III.

GAO Report

The GAO report noted that the FDA lacked formal policies and procedures specifying how its staff should evaluate drugs and develop scheduling recommendations.

The report provides three recommendations:

• The administrator of the DEA should develop policies and procedures that identify DEA’s roles, responsibilities, and protocols for evaluating and scheduling substances.
• The commissioner of the FDA should develop policies and procedures that staff are to follow when completing evaluations and developing scheduling recommendations, including the criteria for determining a substance’s potential for abuse relative to other substances.
• The commissioner of the FDA and the director of the National Institutes of Health (NIH) should update their memorandum of understanding concerning developing drug scheduling recommendations.

GAO did not recommend against rescheduling marijuana or conclude that the FDA’s marijuana evaluation was flawed.

Next Steps

The administrative law judge will issue an opinion, followed by an opportunity for the parties to file exceptions and a review by the DEA administrator. After that, the DEA could publish a proposed rule with a comment period before a final rule is published. Certain parties could potentially challenge the final rule in federal court.

Employers may wish to review their policies and practices to ensure compliance with local and state laws regarding workplace drug testing and disability accommodations for employees who are medical marijuana cardholders. The state laws vary widely. Employers are still legally permitted to maintain a drug-free workplace and fire or discipline a worker for consuming cannabis or being intoxicated at the workplace.

Employers may want to monitor any regulatory developments and guidance from the U.S. Department of Transportation (DOT), the DEA, and the U.S. Department of Health and Human Services (HHS). If marijuana is rescheduled, potentially the biggest change for employers could be in the transportation industry.

Ogletree Deakins’ Drug Testing Practice Group will continue to monitor developments and will post updates on the Drug Testing, Healthcare, and Trucking and Logistics 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.

M. Tae Phillips is a shareholder in Ogletree Deakins’ Birmingham office and co-chair of the Drug Testing Practice Group.

Michael S. O’Malley is an associate in Ogletree Deakins’ Stamford office.

Jennifer L. Pacicco is an associate in Ogletree Deakins’ Philadelphia 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

• DHS is proposing a $70,000 fee for the first OPT recommendation for an F-1 student and a $30,000 fee for any subsequent OPT recommendation, including a STEM OPT extension.
• The SEVP-certified school would be responsible for paying the applicable fee before the designated school official could enter the OPT recommendation in the Student and Exchange Visitor Information System, but DHS acknowledges that schools may pass the cost on to students or employers.
• Public comments on the proposed rule will be accepted through November 9, 2026, and comments on the related information collection are due by December 7, 2026.

Under the proposal, schools certified by the Student and Exchange Visitor Program (SEVP) would be required to pay $70,000 for a student’s initial OPT recommendation and $30,000 for a subsequent OPT recommendation, which could total $100,000 for a student who completes initial OPT and later receives a STEM OPT extension.

Proposed OPT Fee Structure

Under the proposed rule, an SEVP-certified school would pay a one-time $70,000 fee the first time it recommends a student for any type of OPT, whether pre-completion or post-completion, and $30,000 for each subsequent OPT recommendation, including a STEM OPT extension (an additional work authorization period for qualifying STEM graduates). Payment of each fee would be required before the designated school official (DSO) issues the Form I-20 reflecting the recommendation. The fees would be triggered by the school’s OPT recommendation, not by a particular employer or a change in employment, and the proposal does not affect Curricular Practical Training (CPT). A student who receives twelve months of post-completion OPT followed by a STEM OPT extension could therefore generate $100,000 in total fees. Splitting OPT between pre-completion and post-completion periods would also generate $100,000 ($70,000 plus $30,000), and DHS expects schools to steer students toward post-completion OPT only. DHS is also seeking comment on an alternative under which the $70,000 initial fee would apply again when a student begins OPT at a higher degree level.

OPT currently provides eligible F-1 students with up to twelve months of work authorization related to their fields of study at each education level, while qualifying STEM graduates may receive an additional twenty-four months. STEM OPT also carries employer compliance obligations, including E-Verify participation, completion of the Form I-983 Training Plan, and wage and working condition attestations.

The proposal follows other recent DHS actions affecting F-1 students. On July 17, 2026, DHS published a final rule that would replace duration of status (D/S) admission for F, J, and I nonimmigrants with fixed periods of admission. On September 14, 2026, the day before the rule was scheduled to take effect, the U.S. District Court for the District of Massachusetts issued a nationwide preliminary injunction blocking its implementation. The government has appealed, but the rule remains blocked while the litigation continues, and F-1 students continue to be admitted under the existing D/S framework.

Schools Would Be Responsible for Payment but Can Pass Costs On

The proposed fees would be paid by the SEVP-certified educational institution. The school would have to pay the applicable fee before the DSO could enter the OPT recommendation in the Student and Exchange Visitor Information System (SEVIS) and issue an updated Form I-20 (the student’s Certificate of Eligibility for Nonimmigrant Student Status). U.S. Citizenship and Immigration Services (USCIS) would not grant employment authorization until the fee had been paid. DHS states that schools “may pass the financial obligation of this proposed fee onto F-1 nonimmigrant students, all students, or employers,” and the proposal places no specific limits on how schools source the funds, as long as they follow other laws, such as federal foreign gift and contract reporting. Fee recovery approaches will also likely be shaped by other laws, such as state consumer protection or tuition rules, and by the terms of enrollment agreements. Schools could request a refund, at SEVP’s discretion and on a case-by-case basis, only if the student has not received an employment authorization document for the associated OPT. The DSO would first have to remove the OPT recommendation from SEVIS. Refund determinations would be final and not subject to administrative appeal.

DHS estimates that the proposed fees could generate approximately $8.4 billion to $16.5 billion annually, with a primary estimate of approximately $12.4 billion after the first year. DHS acknowledges that the fees could reduce OPT and STEM OPT participation, because some schools may decline to pay the fee.  

Next Steps

Public comments will be accepted through November 9, 2026, and comments on the related information collection are due by December 7, 2026. Once the comment periods close, DHS will review the comments before publishing any final rule. The rule, if finalized, will take effect sixty days after publication. The substance, timing, and implementation of the rule may change during the rulemaking process.

For now, there is no new OPT fee in effect, and existing OPT and STEM OPT procedures remain in place.

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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Quick Hits

• English-only workplace rules are generally impermissible but may be lawful in situations where they’re required for safe or efficient business operations.
• The EEOC recently released a video indicating an intent to increase its enforcement focus on national origin discrimination against Americans and English speakers.
• The EEOC has prioritized its efforts on protecting American workers from “anti-American national origin discrimination.”

Background

Title VII of the Civil Rights Act of 1964 protects workers from employment discrimination based on national origin. The scope of this protection includes employees born outside the United States, as well as U.S.-born workers and those with ancestors born in the United States. According to the U.S. Equal Employment Opportunity Commission’s (EEOC) enforcement and litigation statistics, in fiscal year (FY) 2025, the agency received 7,856 charges alleging national origin discrimination (8.9 percent of all charges received in FY 2025) and had 1,250 merit resolutions involving national origin discrimination.

The EEOC considers an individual’s primary language “often an essential national origin characteristic.” While employers may require English in certain situations, such as when speaking only English is needed to ensure safe and efficient communication for specific tasks, an employer’s English-only rule must be justified by business necessity and enforced for nondiscriminatory reasons. In general, it’s unlawful for an employer to require workers to speak only English during rest breaks, meal breaks, or other off-duty times.

Pivot in Enforcement Priorities

On June 4, 2026, the EEOC approved a new National Enforcement Plan, signaling the agency’s pivot away from pursuing disparate-impact theories of discrimination in investigations. Five days later, on June 9, 2026, the U.S. Department of Justice (DOJ) issued a concurrent opinion letter stating that the EEOC’s existing guidelines regarding disparate-impact liability were inconsistent with Title VII and unconstitutional. This policy posture aligned with EEOC plans to “increase[e] enforcement of employment antidiscrimination laws against employers that illegally prefer non-American workers.”

The agency has indicated a move away from its long-standing intention to advance disparate-impact claims (i.e., claims of liability based on facially neutral employment practices that disproportionately affect members of protected groups), including such claims related to language and national origin. Fourteen states, however, recently reaffirmed their commitment to enforcing civil rights laws under disparate-impact theories.

On September 14, 2026, the EEOC posted a video of EEOC Chair Andrea Lucas encouraging workers to contact the EEOC if they believed they had suffered discrimination based on speaking English or being American.

“Maybe you were laid off and told to train an H-1B or other guest worker visa holder who replaced you. Or maybe your manager or coworkers excluded you from conversations because you speak English or moved work discussions into another language or even onto a foreign messaging app,” Lucas said in the video. “Have you been harassed at work for speaking English or for being too American? Or has your employer preferred workers of one foreign national origin to serve customers with that same background?”

Next Steps

Going forward, the EEOC is likely to pursue more cases alleging national origin discrimination against American employees and English speakers.

If an employer wishes to adopt an English-only rule for nondiscriminatory reasons—for specific times, spaces, or job duties—it generally must inform its affected employees about when the rule applies and what the consequences will be for violating it. Documenting the business necessity for the rule may help to defend against discrimination claims. Customer preferences, manager preferences, and general workforce morale are typically not considered legitimate business reasons under Title VII.

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

Stephen J. Quezada is a shareholder in Ogletree Deakins’ Houston 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

• Employers need to keep track of two diverging regulatory tracks: the EU AI Act, with transparency obligations enforceable as of August 2, 2026, and further high-risk AI restrictions from 2 December 2027; and the UK’s Data (Use and Access) Act 2025.
• The EU AI Act is a floor, not a ceiling: individual member states layer their own obligations on top.
• U.S. state-by-state AI related employment laws in Illinois, California, New York City, and Colorado are now active or taking effect through 2027, even with a nonregulatory approach at the federal level.
• Similar to the United States, Canada has a province-by-province approach to AI regulation. Quebec, in particular, has passed comprehensive privacy laws that specifically address automated decision-making technologies (ADMT) and the processing of personal information. Each province has a standalone human rights statute that, if violated, can lead to sanctions, and in some provinces, punitive damages in addition to general employment and privacy laws.
• A jurisdiction-by-jurisdiction compliance strategy is no longer sustainable for employers whose AI tools and employee data cross borders; a single, harmonised framework calibrated to the strictest applicable standard is more efficient and lower-risk.

European Union

Under the EU AI Act, the EU’s landmark regulation governing the development and use of AI systems, AI tools used for employment-related decisions, such as recruitment, candidate screening, performance evaluation, task allocation, worker monitoring, and decisions on promotion or termination, are deemed “high-risk”. From 2 December 2027, following a sixteen-month extension agreed under the EU’s “Digital Omnibus” simplification package, these high-risk AI systems will need to satisfy full compliance obligations before they can be placed on the market or put into service. These obligations will include transparency requirements, risk assessment, risk mitigation measures, human oversight, and technical documentation.

The transparency requirements under Article 50 of the EU AI Act took effect on 2 August 2026, requiring organisations to disclose when individuals are interacting with an AI system. A related obligation to label AI-generated or manipulated content, such as deepfake images, audio, or video, as artificially generated was deferred under the Digital Omnibus package and now takes effect on 2 December 2026.

The EU AI Act sets an EU-wide floor, but employers must also navigate member state-specific overlays. In France, for example, to comply with the French labor law, employers must inform and consult the works council (Comité Social et Économique, or CSE) before introducing any new technology, including AI tools, that affects working conditions, employment, or health and safety under Article L. 2312-8 of the Labour Code. Recent case law, including a Paris Court of Appeal decision of 21 May 2026, confirms that deploying such tools without consultation, even during a pilot phase, can lead to a court-ordered suspension of the rollout. Separately, the Commission Nationale de l’Informatique et des Libertés (CNIL)—France’s data protection authority—requires a data protection impact assessment for AI used in recruitment and has announced targeted enforcement action on algorithmic recruitment and performance-evaluation tools in 2026. Employers rolling out AI tools across the EU should expect this kind of national variation and plan for it accordingly, rather than assuming that EU AI Act compliance alone is sufficient in every member state.

United Kingdom

Although the UK has no standalone AI statute, the Data (Use and Access) Act 2025 (the DUA Act) comes closest to a regulatory framework. Section 80 of the DUA Act, which came into force on 5 February 2026, replaced Article 22 of the UK GDPR, fundamentally shifting the UK’s legal approach from a general prohibition with narrow exceptions to a more permissive framework backed by mandatory procedural safeguards.

On 31 March 2026, the Information Commissioner’s Office (ICO) published its ‘Recruitment Rewired’ report, detailing key findings and guidance on the use of automated decision-making (ADM) in recruitment. The ICO’s research revealed an unconscious over-reliance on ADM among employers, a lack of human involvement and monitoring, and gaps in bias testing that the research concluded could amplify historical discrimination embedded in these systems. Compliance with the revised regime under the DUA Act requires detailed mapping and interrogation of the decision-making process, documenting human involvement, and adopting robust safeguards.

United States

At the federal level, there is currently no comprehensive AI legislation, and the current administration has favoured a permissive, deregulatory approach. In response, several states have enacted significant AI legislation to introduce certainty into this regulatory vacuum, resulting in ongoing tension between state and federal approaches. As of the time of writing, there has been no ruling on federal preemption.

The key frameworks are as follows:

New York City enacted Local Law 144, one of the first and most restrictive U.S. laws to directly regulate AI in the recruitment process. It does not allow employers to use automated employment decision tools (AEDT) for hiring, promotion, or termination, unless the tool has undergone an independent annual bias audit and the results have been publicly disclosed. Employers must also notify candidates at least ten business days before an AEDT is used, with instructions for requesting an alternative process. Civil penalties start at $500 for a first violation and rise to $500 to $1,500 for each subsequent violation, with each day of continued noncompliance treated as a separate violation.

In Illinois, HB 3773 was signed into law in 2024 and took effect on 1 January 2026, extending the Illinois Human Rights Act to prevent employers from using AI in a way that discriminates against employees or prospective employees on account of their protected characteristics, regardless of intent. The law also prohibits using zip codes as a proxy for protected classes or race and requires employers to notify employees and applicants whenever AI is used in recruitment, hiring, promotion, discharge, discipline, or other employment decisions. While the Illinois Department of Human Rights temporarily withdrew its draft implementing rules in June 2026, the underlying statutory obligations under HB 3773 remain active.

In California, the California Privacy Protection Agency (CPPA) finalised regulations in September 2025, effective 1 January 2026. These new guidelines require covered businesses to provide notice and access rights when automated decision-making technology is used for significant decisions, including employment decisions such as hiring, termination, and compensation. Separate privacy risk assessment rules, also effective 1 January 2026, are triggered when ADMT is used for significant decisions concerning consumers, including employees in certain contexts. In addition, on September 30, 2026, California Governor Gavin Newsom signed into law a package of bills targeting the use of AI in the workplace.

In Colorado, SB 26-189 was signed into law in May 2026, repealing and replacing the earlier SB 24-205, and takes effect on 1 January 2027. Under the new statute, covered employers must disclose the use of AI in the recruitment process and, within thirty days, provide a description of the automated decision-making technology’s role in any adverse, consequential decision. They must offer an opportunity for human review and allow individuals to request corrections to factually incorrect personal data used by the tool. Employers should note that enforcement may be further delayed by a pending constitutional challenge to Colorado’s predecessor AI law, in which the U.S. Department of Justice has intervened in support of an artificial intelligence company, and which has led the attorney general to state that enforcement of SB 26-189 will also be paused pending its outcome.

The momentum of state regulation can be evidenced through the December 2025 New York State Comptroller audit, which found that the NYC Department of Consumer and Worker Protection (DCWP) had been enforcing NYC Local Law 144 ineffectively; firms are expecting tighter enforcement through 2026 and beyond.

As of September 2026, legislators in several states, including Washington, New Jersey, and Texas, are seeking to replicate the requirements imposed under NYC Local Law 144.

Canada

Canada has no dedicated federal AI statute. The proposed Artificial Intelligence and Data Act (AIDA), which would have introduced federal obligations for high-impact AI systems, died on the order paper when Parliament was prorogued in January 2025 and has not been reintroduced. However, AI use in the employment context is governed principally through targeted provincial legislation and existing general law. In Ontario, the Working for Workers Four Act, 2024 amended the Employment Standards Act, 2000 to require employers with 25 or more employees to disclose, in every publicly advertised job posting, whether AI is used to screen, assess, or select applicants, a requirement that took effect January 1, 2026.

In Quebec, the Act respecting the protection of personal information in the private sector regulates any decision made exclusively on the basis of automated processing of personal information. Where such a decision significantly affects an individual, the organization must inform the individual that the decision was automated and, on request, explain the personal information used and the principal factors and parameters that led to the decision, and must give the individual the opportunity to submit observations to a staff member in a position to review the decision. Before deploying such a system, organizations must conduct a privacy impact assessment (PIA); if the organization cannot demonstrate through that assessment that the risks are mitigated and that the decision is explainable, the tool cannot be adopted compliantly. Penalties under the Quebec Privacy Act can range from 2 percent to 4 percent of global revenue. Because each province has a human rights code prohibiting discrimination on the basis of protected characteristics, together with a designated tribunal to enforce it, employees who believe they have been adversely affected by an AI-driven decision based on a protected ground have recourse available to them throughout Canada. “

Key Takeaways

In effect, wherever an employer uses AI to hire, monitor, or manage people, that employer is responsible for understanding its risks, ensuring human oversight, establishing transparency and preventing discrimination. AI tools also frequently graft onto other regulated areas, such as electronic monitoring, video surveillance, or audio recording and transcription, so a tool assessing employee productivity is necessarily also a monitoring tool and must be evaluated under that lens as well. Because these obligations diverge by jurisdiction, even though the underlying AI tools and data flows typically do not, employers with a multijurisdictional footprint need a coordinated compliance strategy rather than a series of disconnected local fixes.

Employers operating with a view to maintaining multijurisdictional AI and data compliance may want to consider the following:

• mapping where AI tools and employee data actually operate, rather than assuming compliance obligations stop at the home jurisdiction;
• benchmarking existing AI governance and employee notices against the strictest applicable standard across the EU, UK, relevant U.S. states, and Canada, rather than the most lenient; and
• building a single, coordinated AI and data compliance framework, rather than treating each jurisdiction’s obligations as a standalone project.

Ogletree Deakins’ Artificial Intelligence and Innovation Practice Group, Cross-Border Practice Group, and Cybersecurity and Privacy Practice Group, working across our U.S., UK, European, and Canadian offices, will continue to monitor developments and provide updates on the Artificial Intelligence and Innovation, Cross-Border, and Cybersecurity and Privacy blogs as additional information becomes available.

In addition, the Ogletree Deakins Client Portal provides subscribers with timely updates on state laws related to artificial intelligence, including automated employment decisions. Premium-level subscribers have access to comprehensive law summaries, policies, and templates. Snapshots and Updates are complimentary for all registered client users. For more information on the Client Portal or a Client Portal subscription, please email clientportal@ogletree.com.

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Quick Hits

• A dental assistant for the California Department of Corrections and Rehabilitation (CDCR) alleged she faced whistleblower retaliation and constructive discharge after reporting safety concerns.
• The Court of Appeal affirmed a lower court’s decision that individual supervisors cannot be liable for retaliation under state law.
• The Court of Appeal overturned the lower court’s dismissal of the retaliation claim against the state and the CDCR.

Farzana Chaudhry, a dental assistant who worked at the California Medical Facility (CMF), which provides dental care for prison inmates, sued the state, the California Department of Corrections and Rehabilitation (CDCR), and three individual supervisors for retaliation under California’s Government Claims Act, California Labor Code section 1102.5, and the California Whistleblower Protection Act (Government Code Section 8547), which protects whistleblowers who report alleged improper government activities. She also sued for constructive discharge in violation of public policy.

Chaudhry alleged CMF retaliated against her in July 2018, October 2019, and multiple times in 2020 and 2022, terminated her employment after reinstatement by the State Personnel Board (SPB), and terminated her employment again a month after her return in January 2022. In August 2022, the day she returned to work after having again been reinstated by the SPB, she involuntarily resigned.

Chaudhry alleged that, in retaliation for her reports of unsafe working conditions and complaints to the California Division of Safety and Health (Cal/OSHA), her supervisors yelled at her, unfairly criticized her work, issued an employee counseling record accusing her of unsafe sterilization practices, accused her of wearing a face mask incorrectly and having a tool discrepancy, and twice improperly asked her to provide a doctor’s note for sick leave in April 2020 and August 2020. She also claimed they refused to promote her to acting supervising dental assistant, suspended her, and ultimately forced her to involuntarily resign on August 29, 2022.

Chaudhry filed her original complaint in April 2021, her first amended complaint in May 2022, and her operative second amended complaint in May 2023. In a motion for judgment on the pleadings, the three supervisors argued that they cannot be held liable under Section 1102.5 as a matter of law because they are not employers. Chaudhry, however, argued she could sue the individuals personally because the statute prohibits retaliation by an employer “or any person acting on behalf of the employer.”

The trial court dismissed all of Chaudhry’s claims, finding that she did not adequately support her retaliation and constructive discharge claims and that she failed to show she exhausted administrative remedies required under the California Whistleblower Protection Act. Chaudhry appealed.

Appellate Court Decision

The Court of Appeal, in a matter of first impression in California courts, agreed that individual supervisors cannot be liable for retaliation under Labor Code section 1102.5. The Court of Appeal examined Section 1102.5 in the context of its statutory scheme and, noting the ambiguity, took guidance from Jones v. Lodge at Torrey Pines Partnership. Under California law, the employer bears responsibility for the actions of its supervisors and employees, and retaliation claims often arise from the performance of necessary personnel duties.

Further, to constitute retaliation (an adverse employment action), an employer’s actions must materially affect the terms, conditions, or privileges of employment. The Court of Appeal concluded that the two doctor’s note requests and the mask accusation were minor and trivial and did not rise to the level of an adverse employment action. The Court of Appeal found Chaudhry did not demonstrate that the employee counseling record resulted in a change to the terms, conditions, or privileges of employment, such as a loss of pay or benefits.

Key Takeaways

This case confirms that supervisors cannot be personally liable for retaliation under Section 1102.5. The employer can still be held liable.

California employers may want to consider reviewing their employee handbooks and other written policies to ensure compliance with state and federal laws prohibiting retaliation.

Ogletree Deakins’ Whistleblower and Compliance Practice Group will continue to monitor developments and will post updates on the California and Ethics/Whistleblower blogs as additional information becomes available.

Tracie L. Childs is a shareholder in Ogletree Deakins’ San Diego office.

Joel H. Kosh is of counsel in Ogletree Deakins’ San Francisco office.

Sandra Aguilar is an associate in Ogletree Deakins’ Orange County 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

• If an employee is awarded or agrees to legal costs or attorneys’ fees as a result of a case or informal claim of unlawful discrimination, retaliation, or a whistleblower action, those amounts would not be subject to New Jersey state income tax under legislation (AB 5485) introduced in the Assembly.
• AB 5485 would not alter the taxation of other components of settlements or monetary awards (e.g., back pay).
• If enacted, the bill would apply to taxable years beginning on January 1 of the year following the date of enactment.

Assembly Bill (AB) 5485 was introduced on September 14, 2026, and has been assigned to the New Jersey Assembly Judiciary Committee. It would apply to awards of legal costs and attorneys’ fees in cases or claims involving unlawful discrimination, retaliation, wrongful discharge, breach of contract, or unpaid wages, severance, or overtime. It also would apply to monetary awards a state taxpayer received under the federal False Claims Act or the New Jersey False Claims Act. However, other types of awards, such as back pay, settlement money, general damages, and punitive damages, remain fully taxable.

In 2004, the U.S. Congress passed the federal Civil Rights Tax Relief Act, which permits taxpayers to deduct from federal income taxes the attorneys’ fees and legal costs awarded in unlawful discrimination, retaliation, or whistleblower claims. Previously, in some cases, taxpayers had to pay income taxes on attorneys’ fees they never received because the fees were paid directly to the attorneys out of a judgment award or settlement agreement. The New Jersey bill aims to conform state law with the Internal Revenue Code to address that situation.

Next Steps

If enacted, the bill would apply to taxable years beginning on or after January 1 of the year following the date of enactment.

Employers in New Jersey may wish to coordinate with their third-party payroll vendor to ensure compliance with tax reporting and tax withholding obligations when an employee receives settlement money, legal costs, attorneys’ fees, back pay, or monetary damages.

Ogletree Deakins’ Employment Tax Practice Group will continue to monitor developments and will post updates on the Employment Tax, New Jersey, and Ethics / Whistleblower blogs as additional information becomes available.

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