Quick Hits

• Life science employers face a rapidly evolving 2026 legal landscape spanning noncompete enforcement shifts, expanding pay transparency mandates, AI bias audit requirements, immigration overhauls, DEI program legal exposure, NLRB policy reversals, OSHA heat standards, new leave and accommodation obligations, and workforce development imperatives.
• State and federal developments are moving in different and sometimes opposing directions, with the Trump administration pulling back on certain enforcement priorities while states accelerate regulation across areas including salary disclosure, AI in employment, paid leave, and restrictive covenants.
• A proactive, systematic compliance approach can help reduce legal exposure and maintain competitive positioning in the life sciences talent market.

From shifting noncompete rules and pay transparency mandates to AI bias audits and immigration overhauls, the regulatory environment has never been more demanding.

This article organizes the most significant action items across nine compliance areas. Life sciences can use it as a spring cleaning guide to audit agreements, update policies, and prepare their organizations going forward.

1. Dusting Off Noncompete Agreements and Trade Secret Protections

The noncompete landscape has shifted dramatically at both the federal and state levels, and life science employers may want to make their restrictive covenant agreements a top priority this spring.

At the federal level, the Federal Trade Commission (FTC) has abandoned the Biden-era blanket ban but is now pursuing targeted, case-by-case enforcement against noncompetes it deems anticompetitive—with a particular focus on healthcare and life sciences. Warning letters have already been sent to employers in the sector.

State-by-state variation continues to widen. As of July 1, 2026, Virginia prohibits enforcement of noncompete agreements against any employee fired without “cause,” unless the employer provides severance or payment. Wyoming broadly voided most noncompetes entered after July 2025. Florida moved in the opposite direction with its employer-friendly Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth (CHOICE) Act. Several states have also imposed healthcare-specific restrictions, including shortened permissible durations and outright voids of physician noncompetes.

Meanwhile, employee leaks account for an estimated two-thirds or more of trade secret theft incidents in the life sciences sector. Strong trade secret protection protocols—including robust onboarding and offboarding procedures—are essential complements to any restrictive covenant strategy.

2. Auditing Job Postings and Pay Structures for Transparency Compliance

Pay transparency is no longer a fringe requirement—it is now the law in a growing number of jurisdictions where life science employers compete for talent. For example, Illinois, Massachusetts, Minnesota, New Jersey, and Vermont have each enacted salary range disclosure requirements for job postings, with varying thresholds, timing rules, and content mandates. And other jurisdictions have adjusted their requirements over time. California has updated its definition of “pay scale,” broadened the definition of “wages” for equal pay analysis, and extended the statute of limitations on equal pay claims. New York City now requires large private employers to submit annual pay-data reports for use in citywide equity studies. And, regardless of the legal requirements, today’s workforce—and particularly younger workers— expect pay transparency.

For multistate employers—which describes most life science companies—the patchwork of various laws and regulations is a compliance minefield. A single job posting distributed nationally may trigger obligations under multiple state regimes simultaneously. As such, getting it right is critical. Separately, employers may want to review their internal compensation structures for equal pay exposure. Courts and agencies are scrutinizing pay disparities along race, sex, and other protected characteristic lines with renewed intensity.

3. Assessing AI Tools for Bias and Regulatory Compliance

Life science employers increasingly rely on AI tools for recruitment, workforce management, and employment decisions. While such tools may enhance efficiency, their use places them squarely in the crosshairs of a rapidly expanding state-level AI regulatory framework.

California, Colorado, Illinois, Texas, Virginia, and New York City have enacted laws, finalized regulations, or provided other standards targeting AI-related discrimination in employment. California’s Civil Rights Department has implemented regulations expressly prohibiting the use of automated decision-making software that discriminates. Proposed legislation in several additional states would regulate workplace surveillance tools, ban AI-based sole decision-making in discipline and termination, and require notice to applicants before AI tools are used.

Critically, plaintiffs’ attorneys are now using the absence of an AI bias audit as evidence of negligence or discriminatory design. Conducting and documenting such audits is rapidly becoming a minimum standard of care.

4. Refreshing Immigration Compliance Protocols

Life science companies are uniquely dependent on foreign national talent, and 2026 brings major changes to the H-1B program and immigration enforcement that demand proactive attention.

The U.S. Department of Homeland Security (DHS) is replacing the current random H-1B lottery with a wage-weighted selection system that prioritizes higher-salary positions—potentially disadvantaging startups and entry-level specialty roles. A new $100,000 fee applies to certain H-1B petitions filed for beneficiaries located outside the United States. Increased site visits from U.S. Citizenship and Immigration Services’ Fraud Detection and National Security Directorate, more intensive security vetting, and shorter employment authorization document (EAD) validity periods are all very likely.

Beyond H-1B, employers may want to ensure their Form I-9 compliance programs are airtight. Increased enforcement, including worksite investigations and audits, makes this a particularly high-risk area for organizations that have not focused on key I-9 processes.

5. Reviewing DEI Programs in Light of New Legal Standards

Diversity, equity, and inclusion (DEI) programs that were accepted practice just a few years ago now face significant legal exposure. Life science employers—many of which have invested heavily in DEI infrastructure—need to carefully examine those in light of these developments. President Donald Trump’s Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” requires federal contractors and grantees to certify they do not operate any “illegal” DEI programs. That requirement exposes such contractors (many of which are life science employers) to False Claims Act liability, so compliance is critical.

Further, the Supreme Court of the United States’ unanimous decision in Ames v. Ohio Department of Youth Services eliminated a heightened burden for majority-group plaintiffs in Title VII of the Civil Rights Act of 1964 cases, opening the door to discrimination claims from a broader range of employees. The U.S. Equal Employment Opportunity Commission (EEOC) has published guidance associating certain DEI practices with potential Title VII violations and is actively soliciting charges from individuals who believe they have been harmed by DEI programs.

This does not mean DEI programs must be abandoned. But it does mean that employers may want to ensure that these programs are carefully designed to be facially neutral in their application, consistently implemented, and thoroughly documented.

6. Revisiting Labor Relations Policies as the NLRB Resets

The National Labor Relations Board (NLRB) has been reconstituted with new Republican members and a new general counsel, and the reconstituted Board is expected to walk back several significant Biden-era precedents. Life science employers should understand what is changing and update their workplace policies accordingly.

Among the expected reversals or limitations: the Cemex bargaining order doctrine, the expanded Thryv, Inc., remedies framework, and the Stericycle standard for evaluating workplace rules, as well as potentially the McLaren Macomb standards for severance agreements. The Board has already reinstated the more employer-friendly 2020 joint-employer standard. General Counsel Crystal Carey has issued directives calling for less aggressive enforcement.

The practical implication for employers is a window to revisit handbook policies, conduct policies, and arbitration agreements that may have been drafted defensively to comply with more expansive Biden-era standards. The current partisan balance on the Board may slow some changes, so employers should not assume an immediate and full rollback of all Biden-era rules, but President Trump’s recent nominees, if confirmed, may ultimately result in more substantial changes.

7. Preparing for OSHA’s Heat Standard and Laboratory Safety Updates

Workplace safety remains a perennial compliance area for life science employers given the inherent hazards of laboratory, manufacturing, and clinical environments—and 2026 adds new layers.

In April 2026, the federal Occupational Safety and Health Administration (OSHA) renewed its national emphasis program on outdoor and indoor heat-related hazards. And OSHA’s proposed federal heat injury and illness prevention standard, which would create a permanent federal standard for heat injury and illness prevention that would apply across all industry sectors, is progressing through rulemaking. OSHA has signaled it may revise the proposal to be more performance-based, but a final rule is expected—and is likely to face legal challenge.

For life science employers, the heat standard is only one piece of the safety picture. Laboratory chemical exposure, biological hazards, and clinical environment risks all require ongoing attention, regardless of administration priorities. Employers may want to consider conducting a fresh risk assessment for all laboratory, manufacturing, and clinical environments, and reviewing heat illness prevention plans with an eye toward compliance with the anticipated OSHA standards.

8. Updating Leave, Accommodation, and Repayment Agreement Policies

A wide-ranging set of state mandates on leave, workplace accommodation, and training repayment agreements is taking effect or expanding in 2026, and life science employers operating in multiple jurisdictions face a significant administrative burden.

By mid-2026, nearly one-third of all states will enforce some form of mandatory paid family and medical leave. Courts are increasingly recognizing mental health conditions as ADA-protected disabilities, driving a rise in accommodation requests for flexible scheduling, modified supervision, and remote work arrangements. Several states and localities have enacted or proposed legislation requiring accommodations for menopause-related conditions—a new frontier in accommodation law. These new changes suggest life science employers take another look at their paid leave policies for compliance with new state mandates, as well as accommodation processes for mental health issues.

On the training repayment side, “stay-or-pay” provisions—where employees are required to repay training costs if they leave within a specified period—are being sharply curtailed in California and New York, as well as several other states. Life science employers that rely on these agreements to protect investments in employee development may want to review their current provisions for enforceability.

9. Investing in Employee Well-Being and Workforce Development

Beyond specific legal mandates, life science employers may want to use this spring as an opportunity to assess the broader health of their workforce programs. The rapid pace of innovation in the industry—driven by AI, automation, and biotechnology—means that employee skills can become outdated quickly, and a workforce that is not continuously developed is a competitive liability. Moreover, mental health resources, wellness programs, and a culture that supports open conversation about well-being are not merely nice-to-haves. Not only can they help create a happier and more satisfied workforce, but they also reduce absenteeism, improve retention, and increasingly serve as a differentiator in recruiting specialized talent in a competitive market. Accordingly, employers may want to assess their workforce training programs as well as the health and wellness programs to close gaps.

Conclusion: A Cleaner Compliance House

The employment and labor law landscape for life science employers in 2026 is not just complex—it is moving fast in multiple directions at once. Federal enforcement priorities are shifting under the Trump administration, while state-level regulation is accelerating across multiple compliance layers. Waiting for the dust to settle is not a viable strategy.

The good news is that a disciplined spring cleaning approach—prioritizing and working systematically through each of these areas—can meaningfully reduce legal exposure while also strengthening the organization’s operational and cultural foundations. Employers that prioritize proactive auditing, clear documentation, and regular policy review will be far better positioned than those that react only when problems arise.

Ogletree Deakins’ Life Sciences Industry Group will continue to monitor developments and will post updates on the Cybersecurity and Privacy, Diversity, Equity, and Inclusion Compliance, Employee Benefits and Executive Compensation, Employee Engagement, Employment Law, Immigration, Leaves of Absence, Multistate Compliance, Pay Equity, State Developments, Technology, Traditional Labor Relations, Unfair Competition and Trade Secrets, and Workplace Safety and Health blogs as additional information becomes available.

In addition, the Ogletree Deakins Client Portal covers legal developments (federal, state, District of Columbia, and major locality) in Pay Transparency, Heat Illness Prevention and Wildfire Smoke Exposure, Leaves (including Family and Medical), Disability Accommodation, Protected Characteristics, Pregnancy, Childbirth, and Lactation, and E-Verify Requirements. Snapshots and updates are available to all registered client users. Premium and Advanced subscribers have access to detailed law summaries, template forms and policies, and step-by-step guides (e.g., Disability Accommodation Requests Task). For more information on the Client Portal or for a Client Portal Subscription, please reach out to clientportal@ogletree.com.

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Quick Hits

• California’s AB 2064 would add “criminal history” as a new protected characteristic under both the Unruh Civil Rights Act and FEHA.
• Employers would retain the ability to consider criminal history through an individualized assessment under the Fair Chance Act, but would be required to demonstrate that the conviction directly and adversely relates to specific job duties before denying employment.
• The bill builds on California’s existing Fair Chance Act framework rather than replacing it, and if enacted would significantly expand employer obligations around criminal history inquiries across employment, housing, and business accommodation contexts.

What the Bill Would Do

At its core, AB 2064, which was introduced by Assembly Member La-Shae Sharp-Collins (D-San Diego) and amended on April 6, 2026, would amend two foundational California civil rights statutes to prohibit discrimination based on a person’s criminal history.

The bill would add “criminal history” to the Unruh Civil Rights Act’s list of protected characteristics—which currently includes sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, sexual orientation, citizenship, primary language, and immigration status. The bill defines “criminal history” for purposes of the Unruh Act to mean a documented record of criminal offenses for which a person has been arrested, charged, convicted, incarcerated, or referred to a pretrial or posttrial diversion program.

AB 2064 would also add “criminal history” to FEHA’s provisions on protected characteristics in employment and housing. The FEHA definition is broader than the Unruh Act definition: it encompasses any record of an individual’s involvement with the state or federal criminal legal system, including arrests, charges, convictions, records that have been sealed, pardoned, dismissed, expunged, statutorily eradicated, or set aside, as well as referrals to diversion programs and juvenile court adjudications or actions. It is not clear why the two definitions differ, and they might be harmonized in a later amendment.

A Critical Carve-Out for Employers

The bill would not eliminate an employer’s ability to consider criminal history altogether. Under the proposed amendments to Government Code Section 12940, an employer may still deny an applicant a position—or discharge a current employee—if the employer conducts an individualized assessment pursuant to the Fair Chance Act (Government Code Section 12952) and determines that the person’s criminal history directly and adversely relates to the specific duties of the job. An employer that reaches that conclusion would have to provide the applicant or employee with a written notice explaining its reasoning and allow at least five business days to respond before making a final decision. The bill also specifies that for disparate impact claims, an employer would have to demonstrate that its policy is either required by federal or state law, or is job-related and consistent with business necessity, and that the conviction history bears a direct and adverse relationship to the specific job duties.

How This Fits Into the Existing Framework

California already has substantial legal infrastructure governing the use of criminal history in employment decisions. The Fair Chance Act prohibits most employers with five or more employees from inquiring about conviction history before making a conditional offer of employment and requires an individualized assessment before rejecting an applicant based on a conviction. AB 2064 builds on top of that framework rather than replacing it. The bill expressly states that its criminal history provisions are in addition to those in Section 12952 and any other applicable law, and that local jurisdictions would not be limited from enacting additional protections.

Should AB 2064 advance and ultimately be signed into law, California employers would face meaningful new obligations—not just in hiring, but in how they handle criminal history inquiries across employment, housing, and business accommodation contexts.

Ogletree Deakins’ California offices and Employment Law Practice Group will continue to monitor AB 2064 as it progresses through the legislative process, and will provide updates on the Background Checks, California, and Employment Law blogs as additional information becomes available.

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Quick Hits

• The DOL’s AI Literacy Framework defines essential skills for effectively using and evaluating generative AI technologies in the workplace.
• The framework encourages employers to provide hands-on training to ensure all employees possess baseline AI literacy skills to engage with AI tools responsibly and effectively.
• The framework outlines foundational content areas and key principles for effective training, including experiential learning and the integration of complementary human skills alongside AI competencies.

On February 13, 2026, the U.S. Department of Labor’s Employment and Training Administration published Training and Employment Notice (TEN) 07-25, rolling out the DOL’s “Artificial Intelligence Literacy Framework.” The framework provides voluntary guidance “designed to encourage expanded AI literacy across the public workforce and education systems.” The framework establishes a working definition of AI literacy and identifies five foundational content areas and seven delivery principles intended to guide program design for AI education and training.

What Does ‘AI Literacy’ Mean?

The DOL defines AI literacy as “a foundational set of competencies that enable individuals to use and evaluate AI technologies responsibly, with a primary focus on generative AI, which is increasingly central to the modern workplace.” The framework identifies “generative AI,” (which is more broadly understood as a type of AI that creates new content such as text, images, or programing code) as “the most transformative and widespread application[] of AI” and what is typically meant when people refer to “AI.” Key to AI literacy is that workers have a “foundational level of knowledge and skill” that “serves as a baseline for engaging with AI tools in any job,” while noting that for some jobs, workers may need “specific AI skills” and a greater “depth of knowledge” or “proficiency.” (Emphasis in original).

What Is the Framework’s Purpose?

At the core of AI literacy and the framework is a recognition that “every worker will need baseline AI literacy skills to succeed, regardless of industry or occupation.” The DOL is specifically calling on employers to use the framework as a guidepost to prepare workers and new hires to use AI tools “responsibly and effectively,” including onboarding new hires, upskilling current employees, and ensuring managers can guide AI adoption.

The framework encourages employers to review their workflows and identify tasks where AI can “augment employee capabilities.”

“Employers can encourage simple hands-on practice built around common workplace tasks, provide staff with clear internal guidance on appropriate AI use, and identify roles that may require deeper proficiency,” the framework states.

The framework follows up on the White House’s July 2025 AI “Action Plan” seeking to remove regulations and other barriers to development of AI technology in the United States, and the president’s April 2025 Executive Order 14277, “Advancing Artificial Intelligence Education for American Youth,” which seeks to promote education and integration of AI in K-12, higher education, and workplaces.

What Are the Key Principles?

The framework outlines five foundational content areas that AI literacy programs should address, focused on: (1) Understanding AI Principles; (2) Exploring AI Uses; (3) Directing AI Effectively; (4) Evaluating AI Outputs; and (5) Using AI Responsibly.

To that end, the framework identifies seven delivery principles to guide employers, educational institutions, and other stakeholders in designing and implementing AI literacy training efforts:

1. Enable Experiential Learning—The framework states that AI literacy is “most effectively developed through direct, hands-on use,” such as interactive prompt exercises and live feedback loops, rather than abstract instruction.
2. Embed Learning in Context—According to the framework, training is more effective when aligned with a worker’s specific job, industry, or existing training program, such as registered apprenticeships or career and technical education (CTE) curricula.
3. Build Complementary Human Skills—The framework emphasizes that AI tools amplify human input, and training should demonstrate how AI augments skills like critical thinking, creativity, and domain expertise rather than replacing them.
4. Address Prerequisites to AI Literacy—The framework notes that AI literacy efforts require learners to have foundational access, including digital literacy skills, device access, and broadband connectivity, and that “[p]rograms should proactively identify and address these barriers.”
5. Create Pathways for Continued Learning—The framework positions foundational AI literacy as a “starting point” and encourages programs to establish routes for workers to pursue specialized training or transition into AI-related roles.
6. Prepare Enabling Roles—The framework states that managers, trainers, mentors, and career counselors supporting workers should themselves be equipped with AI knowledge through approaches like train-the-trainer models and manager upskilling.
7. Design for Agility—Because “AI technologies evolve at a pace unlike previous workplace tools,” the framework calls for built-in mechanisms for adaptation, including modular content design, continuous updates, and feedback-driven iteration.

Next Steps

The DOL’s AI Literacy framework illustrates the current administration’s approach to addressing the impact of AI on the workforce and labor markets, seeking to promote the adoption, use, and understanding of this emerging technology. While voluntary and not a mandate, the DOL’s framework encourages employers to embrace AI training and skill development. As such, employers may want to review their AI training programs and resources and consider implementing such programs for their employees and new hires with consideration to the framework’s outlined principles.

At the same time, the DOL acknowledges that the framework is a working document intended to evolve over time in response to rapidly changing technology, evolving labor dynamics, and stakeholder input. The DOL is welcoming feedback from employers and other stakeholders on effective AI literacy efforts, barriers to success, and opportunities for further guidance. Employers may want to consider taking the opportunity to provide feedback and influence future guidance on this issue.

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

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

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Quick Hits

• Several federal laws may require businesses to provide reasonable accommodations for employees seeking infertility treatments.
• A growing number of states have passed laws requiring health plans to cover infertility diagnosis and treatments.
• Fertility medications and procedures are not always covered by health insurance.

Leave Benefits

The Family and Medical Leave Act (FMLA) may apply to fertility treatments if they are needed to address a serious health condition requiring ongoing care from a physician. For example, an egg retrieval, in vitro fertilization, or procedure to treat endometriosis or uterine fibroids could be a serious health condition under the FMLA.

The FMLA entitles workers to twelve weeks of unpaid leave to care for their own serious illness, care for a family member’s serious illness, or bond with a child. Twelve states and Washington, D.C., have paid family and medical leave programs. The amount of leave and wage replacement benefits varies by state.

If a miscarriage or stillbirth happens, an employee may be entitled to take FMLA leave to obtain medical care or recover physically. Some employers allow employees to take bereavement leave after a miscarriage or stillbirth, even when it is not legally required.

Some states have new laws granting time off for reproductive losses. For example, California requires employers to provide five days of paid leave for employees after a miscarriage, stillbirth, failed surrogacy, failed adoption, or unsuccessful assisted reproduction procedure. The Illinois Family Bereavement Leave Act provides eligible employees up to two weeks of unpaid leave to grieve, make arrangements, or attend services for a stillbirth, miscarriage, unsuccessful reproductive procedure, failed adoption or surrogacy agreement, or diagnosis that negatively impacts pregnancy or fertility. New Jersey has a pending bill that would amend the New Jersey Family Leave Act to include “the death of a child or miscarriage or stillbirth of a child” and “time to grieve” in the definition of job-protected “family leave.”

Reasonable Accommodations

The Pregnant Workers Fairness Act (PWFA) requires employers with fifteen or more employees to provide reasonable accommodations for limitations related to pregnancy, childbirth, and related medical conditions, even if they do not fall within the definition of a “disability” under applicable statutes. Such conditions may include infertility, gestational diabetes, postpartum depression, lactation, and miscarriage. Typical accommodations under the PWFA include time off requested by the employee, remote work, light duty assignments, permission to sit, and permission to drink water at the workstation.

In addition, the Americans with Disabilities Act (ADA) applies to employers with fifteen or more employees and typically covers employees experiencing infertility because reproduction is considered a major life activity under the ADA. In addition, employees seeking fertility treatments may have related medical conditions that also qualify as disabilities under the ADA.

For employees with a known disability, employers are required to engage in an interactive process to determine the employee’s limitations and agree on reasonable accommodations if needed. For individuals undergoing fertility treatments, reasonable accommodations may include remote work, flexible schedules, time off to attend medical appointments, and permission to avoid heavy lifting.

Confidentiality

The FMLA, PWFA, and ADA require employers to keep employees’ medical information confidential, and such information may not be maintained in personnel files.

Health Insurance Coverage

Fertility treatments can be very expensive. Even when accommodations and leave benefits are available, that does not mean an employer’s health plan will cover the cost of fertility treatments. California, Colorado, Connecticut, Delaware, Washington, D.C., Illinois, Maryland, Massachusetts, Maine, New Hampshire, New Jersey, New York, Rhode Island, and Utah have laws that require certain health plans to cover in vitro fertilization or other fertility treatments. Twenty-one states have laws that require health plans to cover fertility preservation, such as egg freezing or sperm freezing, when necessary because of a medical intervention like surgery, chemotherapy, or radiation. In some cases, religious employers may be exempt from state mandates to cover fertility treatments.

Previously, infertility was defined by unsuccessful attempts to conceive through unprotected heterosexual intercourse. Thus, for some LGBTQ+ employees, a clinical infertility diagnosis was not available, and infertility treatments sometimes were not covered for that reason. In 2023, the American Society for Reproductive Medicine changed the definition of infertility to include the need for medical intervention, such as donor eggs or donor sperm, to attain pregnancy. That led to more health plans covering infertility treatments for LGBTQ+ patients.

Regardless of coverage, LGBTQ+ workers still may be entitled to take time off under the PWFA and the FMLA. In addition, Title VII of the Civil Rights Act of 1964 prohibits employment discrimination, harassment, and retaliation based on infertility, pregnancy, and childbirth. It applies equally to heterosexual and LGBTQ+ employees.

Next Steps

Employers may wish to review their written policies and train managers to comply with all local, state, and federal laws mandating time off, accommodations, and nondiscrimination. Many states have laws similar to the protections under the FMLA, ADA, and PWFA.

Employers may wish to carefully document the legitimate business reasons for denying any accommodation request related to fertility treatments, pregnancy, or childbirth.

Ogletree Deakins’ Leaves of Absence/Reasonable Accommodation Practice Group will continue to monitor developments and will post updates on the Employee Benefits and Executive Compensation, Employment Law, Healthcare, and Leaves of Absence blogs as additional information becomes available.

In addition, the Ogletree Deakins Client Portal provides subscribers with timely updates on state family and medical leave laws and bereavement leave laws, as well as pregnancy accommodation laws. Premium-level subscribers have access to comprehensive law summaries and updated policies, as well as detailed step-by-step guidance and templates for handling Pregnancy Accommodation Requests. 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.

Justine L. Abrams is a shareholder in Ogletree Deakins’ Morristown office.

Sheri L. Giger is a shareholder in Ogletree Deakins’ Pittsburgh office.

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

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Quick Hits

• The IRS has issued new guidance reflecting that the tax exclusion for educational assistance programs under Section 127 will be adjusted for inflation starting in 2027, while maintaining a flat cap of $5,250 for 2026.
• The guidance clarifies the permanent extension for tax-free employer contributions toward qualified education loans and clarifies that educator expenses can be claimed as itemized deductions starting in 2026.

The IRS updated its frequently asked questions (FAQs) related to educational assistance programs with the issuance of Fact Sheet 2026-10, which provides general guidance for taxpayers and tax professionals. The new fact sheet replaces a prior version issued in 2024 under the Biden administration.

Section 127 of the Internal Revenue Code allows taxpayers to exclude educational assistance benefits provided by their employers from their gross income if those benefits are provided under a qualifying educational assistance program. Under such programs, employers may provide tax-free educational assistance for tuition, fees, and similar expenses, books, supplies, equipment, and qualifying education loans. Payments may be applied to undergraduate or graduate coursework and do not have to apply to work-related courses.

Updates in the 2026 Fact Sheet

The new FAQs make three substantive changes compared to the FAQs released in 2024:

1. Cost-of-Living Adjustment to the $5,250 Exclusion

The 2024 fact sheet indicated that the exclusion for educational assistance benefits was capped at a flat $5,250, which was the statutory limit prior to the OBBBA. While that cap remains flat at $5,250 for 2026, the OBBBA states that the amount will be adjusted based on the IRS’s “cost-of-living adjustment” (COLA) rounded to the “nearest multiple of $50.” The new fact sheet indicates the $5,250 cap will be “adjusted for increases in the cost of living for taxable years beginning after 2026.” That means, for tax years 2025 and 2026, taxpayers may exclude up to $5,250 of employer-paid educational assistance, and employers cannot include those benefits in wages, tips, or other compensation shown in Box 1 of Form W-2, according to the fact sheet.

2. Permanent Extension of Qualified Education Loan Payments

The 2024 fact sheet stated that tax-free educational assistance benefits also include employer payments of qualified education loan principal and interest made “after March 27, 2020, and before January 1, 2026 (unless extended by future legislation).” The 2026 fact sheet removes the sunset date entirely, in accordance with the OBBBA, stating the benefit is simply available for payments beginning March 27, 2020, with no end date.

3. Educator Expense Itemized Deduction (Starting 2026)

The 2026 fact sheet clarifies that the educator expense deduction claimed on “Form 1040 Line 11” may be claimed as an itemized deduction. The new fact sheet adds the following language not included in the prior version: “Starting in 2026, educator expenses may also be deducted as itemized deductions.” The deduction allows K-12 teachers to deduct “costs like books, supplies, computer equipment and software, classroom equipment and supplementary materials used in the classroom.”

Next Steps

Employers may want to note the exclusion for employees for educational assistance benefits paid by employers, which allows employers to provide up to $5,250 per year in tax-free benefits to employees, and that the cap is set to change with the COLA beginning in 2027. Employers may want to consider such programs in structuring their compensation and benefits programs, including whether to review and amend programs implemented prior to the enactment of the OBBBA.

Ogletree Deakins’ Employment Tax Practice Group will continue to monitor developments and will provide updates on the Employee Benefits and Executive Compensation, Employment Tax, and Higher Education blogs as additional information becomes available.

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Quick Hits

• The California Court of Appeal held that an arbitrator’s finding of no Labor Code violations has issue-preclusive effect on an employee’s PAGA standing.
• The decision barred an employee from pursuing representative PAGA claims in court after losing on individual claims in arbitration.
• The ruling confirms a powerful strategy for employers: compel individual claims to arbitration, secure a favorable ruling, and then move to dismiss the representative PAGA action.

On March 3, 2026, in Sorokunov v. NetApp, Inc., the California Court of Appeal, First Appellate District held that, absent any Labor Code violations, which were dismissed in arbitration, the employee is no longer an “aggrieved employee,” and the employee’s representative PAGA claim cannot survive.

Background

Former NetApp employee Alexander Sorokunov sued the company, alleging various Labor Code violations related to his compensation and sought civil penalties under PAGA on behalf of himself and other affected employees.

The trial court granted NetApp’s motion to compel arbitration of Sorokunov’s individual (non-PAGA) claims but refused to stay the PAGA claim during the arbitration proceedings. The trial court confirmed the arbitration award and then granted NetApp’s motion for judgment on the pleadings on the PAGA claim, concluding that the arbitration award conclusively established that Sorokunov was not an “aggrieved employee” and thus lacked standing to pursue the PAGA cause of action.

On appeal, the First Appellate District upheld the trial court and rejected Sorokunov’s arguments that the trial court had erred by compelling arbitration, denying summary adjudication on his PAGA claim, confirming the award, and applying issue preclusion to bar PAGA standing.

Issue Preclusion Barred the PAGA Claim

The most significant portion of the ruling addressed whether the arbitration award barred the employee’s PAGA claim through issue preclusion—a doctrine that prevents relitigating issues between parties in privity that are identical to issues that have been “actually litigated” on the merits in a prior proceeding.

Issue Preclusion Applies

Sorokunov argued that issue preclusion cannot be applied because the parties were not the same or in privity, because a PAGA claim is an action prosecuted on behalf of the state. The court rejected this, holding that while preclusion barred Sorokunov personally from prosecuting a PAGA action, it had no effect on the California Labor and Workforce Development Agency’s (LWDA), i.e., the state’s, ability to investigate and prosecute the same violations, nor would it prevent other NetApp employees from asserting their own claims.

Sorokunov also argued the issues were not identical, characterizing the PAGA case as involving broader employer “practices.” The court was not persuaded, explaining that “to the extent [Sorokunov’s] PAGA standing is dependent on having suffered the same Labor Code violations that have been adjudicated in arbitration, his standing and the underlying violations are considered identical issues.” Once a confirmed award establishes that an employee did not experience the alleged violations, he is no longer an “aggrieved employee” with PAGA standing.

Arbitration Award Had Preclusive Effect

The appellate court further held that an arbitrator’s findings that no Labor Code violations occurred were preclusive on the question of the employee’s PAGA standing. The court stated: “[t]he arbitrator determined both as a matter of fact and law that [the employee] had not suffered any of the alleged Labor Code violations and,  … we agree with that conclusion. The trial court did not err in finding that the arbitrator’s findings were subject to issue preclusion. Nor did the trial court err by relying on those conclusive findings to determine that [the employee] was not an aggrieved employee” or find that he lacked standing.

Policy Arguments Rejected

Finally, the appellate court rejected policy arguments against applying issue preclusion, including the concern that doing so would eliminate the state’s enforcement interest because PAGA claims may be time-barred before a replacement plaintiff or the LWDA can act. The court noted that the LWDA receives notice of every PAGA claim at the outset, retains the ability to investigate on its own timeline, and is not bound by the arbitration award.  

Key Takeaways

Sorokunov confirms a powerful strategic sequence for California employers: compel individual claims to arbitration, win on the merits, and use that result to end the companion representative PAGA action. For companies facing PAGA claims, the individual arbitration is not merely a procedural formality—it is the main event. Key takeaways include:

• Arbitration agreements remain a powerful tool for managing PAGA exposure. When an employee’s individual Labor Code claims are resolved in the employer’s favor through arbitration, the employee may lose standing to pursue representative PAGA claims based on those same alleged violations. This makes well-drafted arbitration agreements an increasingly critical component of employer litigation strategy in California.
• Individual arbitration can be a PAGA defense. After Sorokunov, employers may want to consider approaching the individual arbitration with an understanding that the findings may serve as the basis for a dispositive motion on the PAGA claim.
• Preclusion likely only applies to substantive arbitration ruling, not procedural ruling. Issue preclusion requires that the violations were “actually litigated” and “necessarily decided.” Thus, an arbitrator who dismisses on procedural grounds may not generate the preclusive finding needed to defeat a representative PAGA claim.

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

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Quick Hits

• Federal and state laws prohibit employment discrimination, harassment, and retaliation based on pregnancy.
• Employers may be required to provide leave and reasonable accommodations for employees experiencing pregnancy or childbirth, undergoing fertility treatments, or breastfeeding.
• Applying benefits and accommodations consistently can help employers reduce legal risk.  

Legal Protections

Several federal laws provide benefits and protect pregnant workers from discrimination, harassment, and retaliation in the workplace. In 1978, the Pregnancy Discrimination Act amended Title VII of the Civil Rights Act of 1964 to prohibit employment discrimination based on pregnancy. Many states have similar laws providing benefits and legal protections for pregnant workers.

Eligible employees of covered employers may qualify for twelve weeks of unpaid leave under the Family and Medical Leave Act (FMLA) when they give birth or welcome a child through adoption or foster care. In some states, they may qualify for state-run paid family and medical leave programs when they give birth or welcome a child through adoption or foster care.

Pregnant workers can use intermittent FMLA leave to attend prenatal medical appointments and deal with pregnancy-related complications and symptoms. They must provide at least thirty days’ advance notice if the need for FMLA leave is foreseeable, such as for a scheduled labor and delivery.

Some states have mandated prenatal leave (not to be confused with “parental” leave), as well. For example, New York employers must provide up to twenty hours per year of paid prenatal personal leave for pregnancy-related healthcare purposes, such as physical exams, medical procedures, monitoring, testing, and discussions with health care providers related to the pregnancy. In New Jersey, there is a pending bill that would establish the New Jersey Paid Prenatal Personal Leave Act and similarly require New Jersey employers to provide employees with up to twenty hours of paid prenatal leave per year.

Colorado and Illinois have new state laws that require covered employers to provide time off for employees with a child in a neonatal intensive care unit.

A nongestational parent who is part of a same-sex couple has the same rights to take twelve weeks of unpaid FMLA leave as heterosexual parents do. After a child is born, an LGBTQ+ employee may need to take time off to bond with the child and complete the legal tasks necessary for the nonbiological parent to adopt the child. State-run paid family and medical leave programs also may be available in that situation.

Reasonable Accommodations

The Pregnant Workers Fairness Act (PWFA) requires employers with fifteen or more employees to provide reasonable accommodations for limitations related to pregnancy, childbirth, and related medical conditions, including gestational diabetes, postpartum depression, lactation, fertility treatments, and miscarriage, regardless of disability status. Typical accommodations under the PWFA include time off requested by the employee, remote work, light duty assignments, permission to sit, and permission to drink water at the workstation.

The Americans with Disabilities Act (ADA) applies to employers with fifteen or more employees, but generally does not require accommodations for someone with a normal, healthy pregnancy. However, it may cover workers with pregnancy complications, such as gestational diabetes, preeclampsia, or sciatica, if the condition limits a major life activity as defined under the law. Even if a pregnant employee does not qualify for an accommodation because she is not considered “disabled” under the ADA, she may be entitled to accommodations under the PWFA.

Both the ADA and PWFA require employers to go through an interactive process following a request for accommodation or when they know that the employee has a condition and is experiencing some workplace issue because of it, or the employee’s condition prevents her from making a formal request.

To justify denying a reasonable accommodation under the ADA or the PWFA, an employer must demonstrate the accommodation would impose an undue hardship, meaning a significant expense or difficulty. This is a high legal standard to meet. The fact that the employer, or a coworker, client, or customer disagrees with or dislikes a reasonable accommodation is not enough to establish an undue hardship. Rather, the accommodation would have to be unduly costly, extensive, substantial, or disruptive, or fundamentally alter the nature or operation of the business, to be considered an undue hardship.

For example, a request to reduce a full-time clerk’s hours to part-time might create an undue hardship if doing so would overburden the remaining clerk with a significantly increased workload and would compromise the remaining clerk’s ability to provide adequate and timely customer service. The employer in that scenario might be able to deny the requested accommodation as an undue hardship, but it would remain obligated to consider alternative accommodations.

LGBTQ+ employees may have specific needs related to pregnancy and fertility that may require reasonable accommodations. It would most likely violate state and federal antidiscrimination laws if an employer permitted heterosexual employees to take time off or receive accommodations for pregnancy or fertility treatments, but did not permit LGBTQ+ employees to do the same.

Employees who request pregnancy-related accommodations or leave are protected from retaliation for having made such a request or exercising their rights. The FMLA, PWFA, and ADA require employers to keep employees’ medical information confidential, and such information may not be maintained in personnel files.

Health Insurance Coverage

Under the Affordable Care Act (ACA), many prenatal services and prenatal vitamins are considered preventive care and must be covered by qualifying health plans without charging a deductible, copay, or coinsurance. Likewise, childbirth, breastfeeding support, newborn care, and postpartum depression treatment are deemed essential health benefits that must be covered by qualifying health plans, which can charge a deductible, copay, or coinsurance.

Meanwhile, birth and adoption are considered major life events that legally entitle an employee to enroll a child as a dependent in a health plan outside of the open enrollment period.

Next Steps

Employers may wish to review and update their written policies and practices to comply with all local, state, and federal laws regarding health insurance coverage mandates, leave and accommodation mandates, and other protections for pregnant workers and those welcoming a newborn or a child through adoption or foster care.

Applying leave policies, time off policies, and accommodations in a consistent manner using a consistent process may help prevent discrimination lawsuits based on pregnancy, gender, or sexual orientation.

Employers may wish to carefully document the legitimate business reasons for denying an accommodation request related to pregnancy, childbirth, or pregnancy-related conditions.

Ogletree Deakins’ Leaves of Absence/Reasonable Accommodation Practice Group will continue to monitor developments and will post updates on the Employee Benefits and Executive Compensation, Employment Law, Healthcare, and Leaves of Absence blogs as additional information becomes available.

In addition, the Ogletree Deakins Client Portal provides subscribers with timely updates on state family and medical leave laws and bereavement leave laws, as well as pregnancy accommodation laws. Premium-level subscribers have access to comprehensive law summaries and updated policies, as well as detailed step-by-step guidance and templates for handling Pregnancy Accommodation Requests; 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.

Justine L. Abrams is a shareholder in Ogletree Deakins’ Morristown office.

Sheri L. Giger is a shareholder in Ogletree Deakins’ Pittsburgh 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

• Beginning no later than January 3, 2028, eligible Maryland employees will be entitled to up to twenty-four weeks of paid family and medical leave for certain specified reasons.
• The MDOL’s FAMLI Division has significantly overhauled its website to provide new and expanded guidance to employers and employees in advance of the start of the paid family and medical leave insurance (FAMLI) program.
• The FAMLI Division’s employer-focused resources include dedicated webpages, downloadable FAQ documents, and direct contact information, all of which are designed to walk employers through every phase of implementation.

A FAMLI Refresher

In 2022, Maryland enacted the FAMLI program to provide most employees with up to twelve weeks of paid family and medical leave, and a possible additional twelve weeks of parental leave. The details of the program are set forth in our article, Maryland’s FAMLI Program, Part I: An Overview of the Law. Funding for the program through employer and employee contributions will begin on January 1, 2027, and benefits will be available no later than January 3, 2028. The MDOL recently issued extensive final regulations to implement the program, which we discuss in our series, Maryland FAMLI Program Rules, Parts I, II, and III.

Overview of the FAMLI Website’s Employer-Focused Resources

The FAMLI Division’s website is organized into several main sections accessible from a top-level navigation menu: “About the program,” “For employers,” “For employees,” and “Connect with us.” Unfortunately, it is not the clearest or most intuitive of websites. Not all subsections of the website are available from the main menu or sub-menus; for example, the private plans page link is buried in the text of the “For employers” webpage, while the frequently asked questions (FAQs) are only visible through the “Law and regulations” webpage under “About the program.”

The “For employers” section is the primary hub for implementation guidance. This section provides employers with practical information on the online portal registration process, contribution rate calculations and remittance, quarterly wage and hour reporting, leave coordination with existing benefit programs, and equivalent private insurance plan (EPIP) alternatives. Notably, the employer webpage also walks employers through actions they can take right now to prepare for FAMLI, including signing up for email updates, considering whether a state-sponsored plan or a private plan is the right fit, budgeting for contributions, reviewing how existing benefits may interact with FAMLI, discussing payroll system adjustments, selecting the employer’s authorized officer, and beginning employee communications.

The Updated FAQ Documents

As part of the revamped website, the FAMLI Division has published comprehensive FAQ guidance—also broken out into individual FAQ documents on “General Questions,” “Contributions,” “Claims,” and “Private Plans”—on its “Law and regulations” webpage.

Several of the division’s FAQ answers are worth special attention for employers preparing for FAMLI:

• Notification dates. The FAQs clarify that the first FAMLI notification to employees must take place one pay period before payroll deductions begin. Other required notification dates are July 2027 (six months before benefits begin), at hire, annually, when an employee requests FAMLI-qualifying leave, and when an employer knows an employee is taking leave for a FAMLI-qualifying reason.
• Employer EIN. All of an employer’s subsidiaries or subdivisions within its federal Employer Identification Number (EIN) will be registered under that EIN. There will be only one registration per EIN.
• Different contribution benefits for different groups of employees. Although the law allows the contribution amount to be split fifty-fifty between the employer and employee, an employer may choose to cover the employee’s share of the contribution, and may choose to do so only for a select group of employees.
• Contribution payment due dates. Payroll deductions will begin on January 1, 2027, and the first quarterly payment to the state is due April 30, 2027. Going forward, Q1 payments (January 1 through March 31) will be due April 30 of each year, Q2 (April 1 through June 30) will be due July 31, Q3 (July 1 through September 30) will be due October 31, and Q4 (October 1 through December 31) will be due January 31.
• Household and single-employee employers. The FAQ confirms that single-employee or household employers—anyone who pays a salary or wage to at least one person, including families that employ a nanny—are considered employers under FAMLI and must comply with all program requirements.
• No employment category exemptions. Unlike Maryland’s unemployment insurance program, which exempts certain employment categories, FAMLI covers all employment categories without exception. Seasonal, part-time, temporary, and AmeriCorps employees are all covered.
• Federal employees excluded. Federal employees working in Maryland will not be covered by FAMLI and will not be able to opt into the program.
• Employee working for more than one employer. Employees working for more than one employer at the same time will be able to file a claim as to each employer.
• Workers’ compensation. An employee may not receive FAMLI benefits at the same time as workers’ compensation benefits, with a limited exception for permanent partial disability payments.
• Unemployment or retirement. Unemployed or retired employees are not eligible for FAMLI benefits.
• Other assistance benefits. The receipt of benefits other than workers’ compensation or unemployment insurance (e.g., SNAP, WIC, Section 8, etc.) will not impact an employee’s eligibility for FAMLI.
• Employee choice to apply for FAMLI. An employee may choose whether to apply for FAMLI benefits; the employer cannot require them to do so. However, if an employee is using “alternative family purpose leave” (AFPL) (i.e., employer-provided leave specifically designated as a separate bank of time off for medical leave, family leave, qualified exigency leave, or under a disability policy, that is not leave provided under an EPIP), it may be counted against the employee’s FAMLI entitlement.
• No reimbursable employer option. Employers that are accustomed to operating as “reimbursable employers” under the unemployment insurance program (i.e., only paying based on employee usage) should note that FAMLI does not offer a similar option.
• Employer costs and employee usage. Employers in the state plan will not be individually charged more based on their employees’ usage of benefits. Private plans, however, may be structured differently.
• Private plan Declaration of Intent (DOI) window. Employers intending to apply for a private plan in 2027 must submit a DOI to the FAMLI Division between September 1 and November 15, 2026. The FAMLI Division will begin accepting private plan applications once they are available on the market in 2027.
• Switching plans. Employers with a private plan are expected to remain in that plan for at least a year. After that period, an employer may apply to change plans or join the state plan, but there may be significant financial penalties for switching to the state plan during 2028 or 2029, including retroactive contributions plus interest.

Additional Resources and Contact Information

Beyond the webpages and FAQs, the FAMLI Division’s website offers several additional resources. Employers can sign up for the division’s email list to receive program updates, deadlines, and helpful tips. The division also accepts requests to send FAMLI Division staff to employer workplaces or events to walk through the program and answer questions, which employers can arrange by filling out an event request form on the website. For individual questions, the division’s Customer Care Contact Center is available at (410) 525-4010 or paid.leave@maryland.gov, and the division notes that anyone—including employers with private plans—can access this resource.

Ogletree Deakins’ Baltimore office will continue to monitor developments and will provide updates on the Leaves of Absence and Maryland blogs as additional information becomes available.

In addition, the Ogletree Deakins Client Portal provides subscribers with timely updates on state family and medical leave laws, including Maryland’s FAMLI program. Premium-level subscribers have access to comprehensive Law Summaries and updated policies; 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

• The California Court of Appeal, Second Appellate District, held that ambiguities in three arbitration documents did not defeat the parties’ mutual intent to arbitrate. The ambiguities involved Federal Arbitration Act (FAA) applicability, arbitrator selection, and Private Attorneys General Act (PAGA) waivers.
• The court found only a low level of procedural unconscionability, typical of adhesive employment agreements, and no substantive unconscionability.
• The agreement’s severability clause allowed the court to sever one invalid wholesale PAGA waiver. That waiver did not render the entire agreement unenforceable.
• The court held that the confidentiality agreement’s injunctive relief provision was not substantively unconscionable. It did not require the employee to consent to an immediate injunction.

In Santana v. Studebaker Health Care Center, LLC, the California Court of Appeal, Second Appellate District, reversed a trial court’s denial of an employer’s motion to compel arbitration. The trial court had found that the multiple documents showed a lack of mutual assent. It also found the arbitration agreement procedurally and substantively unconscionable. The appellate court’s decision offers important guidance for employers using multiple arbitration documents during onboarding.

Background

The case involved an employee who began working at a skilled nursing facility in 2020. The defendant-employer purchased the facility in January 2023. During onboarding, the employer required the employee to sign three arbitration-related documents. These documents covered different types of employment claims. The court called them, collectively, the “agreement to arbitrate.” The employee also signed a confidentiality agreement prohibiting disclosure of confidential information and trade secrets.

In May 2024, the employee filed a wage-and-hour class action against the employer. She alleged California Labor Code violations, a PAGA cause of action, and unfair business practices under Business and Professions Code section 17200.

The employer moved to compel arbitration of the employee’s individual claims, including her individual PAGA claim. It also sought to enforce the class action waiver. The trial court denied the motion on two grounds. First, inconsistencies among the documents showed a lack of mutual assent. Second, even if a valid agreement existed, it was unconscionable. The court found procedural unconscionability from unequal bargaining power and conflicting terms. It found substantive unconscionability from the PAGA waiver and the confidentiality agreement’s injunctive relief and mutuality provisions. The employer appealed.

Key Holdings on Appeal

Valid Agreement to Arbitrate

The Second Appellate District rejected the trial court’s finding that conflicting terms regarding FAA applicability and arbitrator selection made the agreement unenforceable. The court held the agreement plainly provided that the FAA applied. The documents contained different arbitrator selection provisions. But both assumed the parties agreed to arbitrate and allowed mutual selection of an arbitrator. They differed only on the fallback process if the parties could not agree.

Individual PAGA Claims Are Arbitrable

The appellate court found the agreement reflected the parties’ intent to arbitrate individual PAGA and Labor Code claims. Wholesale PAGA waivers remain prohibited. But the FAA requires enforcement of agreements to arbitrate individual PAGA claims.

Three of four PAGA provisions validly carved out non-individual PAGA claims. One document contained a wholesale PAGA waiver inconsistent with the others. The court held that the trial court should have resolved this conflict through contract interpretation. If necessary, it should have severed the invalid provision under the severability clause.

Agreement to Arbitrate Was Not Unconscionable

The appellate court found only a low level of procedural unconscionability. The employer presented the agreements on a “take it or leave it” basis. But adhesion alone does not establish a high degree of procedural unconscionability. The trial court relied on a case involving deceptive practices. In that case, the employer distributed a bilingual summary describing only mediation in Spanish. The actual English policy required binding arbitration. The appellate court found no such deception here.

The appellate court also found no substantive unconscionability. The agreement’s severability clause allowed the court to sever the single invalid wholesale PAGA waiver.

Confidentiality Agreement Did Not Exempt Employer From Arbitration

The Second Appellate District rejected the argument that the confidentiality agreement exempted the employer from arbitration. The court harmonized the two agreements: the employer must arbitrate its employment claims, but may also seek injunctive relief in court.

The court held that the confidentiality agreement did not relieve the employer of the burden of proving the likelihood of success at trial or interim harm for preliminary injunctive relief. The agreement stated only that a breach “may” give rise to unfair competition. It did not concede any element needed to obtain an injunction.

Key Takeaways

The Santana decision offers key takeaways for employers structuring arbitration agreements in California.

• Consistency across onboarding documents matters, but ambiguities are not fatal. Minor ambiguities across multiple arbitration documents will not necessarily defeat the parties’ intent to arbitrate.
• PAGA waivers can be severed. Wholesale PAGA waivers remain unenforceable. But agreements requiring arbitration of individual PAGA claims, while carving out non-individual claims, may be enforced under the FAA. Employers will want to ensure consistent PAGA waiver language across their arbitration documents.
• Severability clauses are important. The court relied on the severability clause to sever one invalid wholesale PAGA waiver rather than striking the entire agreement. A well-drafted severability clause can preserve the overall agreement’s enforceability.
• Confidentiality agreement remedies matter. Courts will scrutinize whether a confidentiality agreement’s remedies effectively exempt the employer from arbitrating its own claims.
• Presentation of arbitration agreements still matters. A “take it or leave it” presentation alone does not establish a high degree of procedural unconscionability. But adhesive contracts carry some procedural unconscionability, and deceptive practices or a high degree of surprise may tip the balance toward unconscionability.

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

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Quick Hits

• On April 24, 2026, the Cal/OSHA Standards Board released a revised draft workplace violence rule that includes employer-provided transportation providing that the regulation applies to “all employers, employees, places of employment, employer-provided housing, and employer-provided transportation.”
• The revised draft clarifies that the regulation will not apply to employers when places of employment are not accessible to the public and the employer has fewer than a total of ten employees at the place of employment at all times during the preceding 365 days and is in compliance with the California injury and illness prevention plan regulations.
• The deadline for comments on the revised draft is June 1, 2026.

The draft regulation adds employer-provided transportation within the scope of what is covered. The discussion draft states that the regulation would apply to “all employers, employees, places of employment, employer-provided housing, and employer-provided transportation.”

However, the revised draft clarifies that the regulation would not apply to employers when places of employment are not accessible to the public and the employer has fewer than a total of ten employees at the place of employment at all times during the preceding 365 days and complies with the California injury and illness prevention plan regulations.

The definitions of “authorized employee representative” and “designated representative” were adjusted and added within the regulation.

The language around staffing levels as a workplace violence hazard was updated to delete references to hostile work environments, required and excessive overtime, working in high crime areas, and providing security services.

Employers would still have to offer or make available post-incident trauma counseling.

The draft regulation provides that training not given in person would have to include interactive questions to be answered within one business day by a person knowledgeable about the workplace violence prevention plan.

The crime of stalking under California Penal Code 646.9 was deleted from the definition of workplace violence although it is included in the list of examples of workplace violence hazards. The removal of the Penal Code reference to stalking was a win for California employers that pushed the Standards Board to delete that reference for reasons including the broad definition of stalking included harassment and also could have occurred from another state.

Workplace violence prevention plan

The draft regulation would require a workplace violence prevention plan that includes:

1. the name or job title of the person responsible for the plan;
2. procedures for active involvement of employees in developing and implementing the plan;
3. coordination of the plan with other employers at their worksites;
4. procedures to respond to reports of workplace violence;
5. compliance procedures;
6. communications methodologies for the plan including reporting workplace violence and communicating investigation results;
7. procedures for responding to emergencies;
8. training procedures;
9. procedures for identifying and evaluating workplace violence hazards;
10. methodology for correcting workplace violence hazards;
11. post-incident response procedures and investigation actions; and
12. procedures for review and evaluation of the workplace violence prevention plan.

The Standards Board will accept comments through June 1, 2026, and then provide a final version for the notice and subsequent vote. A vote approving the final draft standard is expected for late summer 2026 with an implementation date of January 1, 2027.

Ogletree Deakins’ Workplace Violence Prevention Practice Group will continue to monitor developments and will post updates on the California, Workplace Safety and Health, and Workplace Violence Prevention blogs as additional information becomes available.

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