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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Quick Hits

• The obligations included in Mexico’s NOM-035 are contingent on the number of employees in the workplace; however, in all cases, employers must ensure the prevention of psychosocial risks through a policy.
• Employers that fail to comply with NOM-035 may be subject to fines ranging from $29,327.50 Mexican pesos ($1,623.06 USD) to $586,550.00 Mexican pesos ($32,464.37 USD).

Employers’ Main Obligations

Under NOM-035, employers must comply with, and keep evidence of compliance with, the following obligations:

• Psychosocial risk policy: All employers must have a policy covering the prevention of psychosocial risks, the prevention of workplace violence, and the promotion of a favorable organizational environment.
• Prevention, identification, and control measures: Employers must adopt measures to prevent, identify, and control psychosocial risks and to ensure a favorable organizational environment. These measures and prevention elements may be included in the psychosocial risk policy.
• Identification of employees exposed to traumatic events: Employers must identify employees who have experienced severe traumatic events related to the workplace and refer them to a social security institution or a private mental health provider.
• Evaluations: Employers with sixteen or more employees must carry out evaluations of employees exposed to workplace violence or psychosocial risk factors when there are signs or symptoms of health effects and the risk analysis so indicates, or when workplace violence complaints have been filed. In addition, the evaluation of psychosocial risk factors must be carried out at least every two years.
• Recordkeeping: Employers must keep records of the evaluation results, the control measures adopted, and the names of workers who underwent examinations and were found to have been exposed to psychosocial risk factors, workplace violence, or severe traumatic events.

General Compliance Review

In light of the NOM-035 anniversary, answering the following questions may help employers while they are reviewing their policies and procedures.

• Does the number of employees meet the threshold requirements for compliance with NOM-035? Requirements vary based on the size of an employer’s workforce.
• Is the psychosocial risk policy up to date with current requirements under the Federal Labor Law (FLL)? The FLL was recently amended and now employers must also train employees regarding workplace violence, especially against women. Employers may want to consider integrating both the NOM-035’s psychosocial risk requirements and the FLL’s workplace anti-harassment and violence prevention requirements in their training materials.
• When was the last evaluation process carried out? Evaluations must be conducted biannually. If needed, employers may want to prepare for the next evaluation process.
• Are all documents that are needed to provide evidence of compliance properly safeguarded if an inspection occurs?

Ogletree Deakins’ Mexico City office will continue to monitor developments and will provide updates on the Cross-Border, Workplace Safety and Health, and Workplace Violence Prevention blogs as additional information becomes available.

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Quick Hits

• A California law taking effect on January 1, 2027, will allow employers to obtain TROs covering conduct directed against a workplace or employees generally, broadening the existing law that only allowed employers to apply on behalf of specific employees who suffered a credible threat of violence.
• The new law allows employers to seek TROs on behalf of a “reasonably identifiable group or class of employees” without being required to “name any individual employee as a protected party.”

Assembly Bill (AB) No. 1961, which Governor Gavin Newsom signed into law on September 30, 2026, expands California Code of Civil Procedure Section 527.8 to allow businesses to seek a TRO applying to the workplace and to a reasonably specified group or class of employees without having to name a specific employee as a protected party.

The law will provide employers with a tool to protect the workplace from individuals who subject them to a credible threat of violence without having to be specifically named as a protected person as part of the petition.

Understanding AB 1961

California Code of Civil Procedure Section 527.8 currently allows employers to seek temporary restraining orders to protect identified employees from individuals who have made credible threats of violence, or engaged in harassment. The law enables employers to file a petition for a temporary restraining order and order to protect specifically named employes at their homes, workplaces, and other applicable locations.

However, this remedy to safeguard employees required employers to specifically identify the protected employees in their petition who had been the targets of a credible threat of violence or harassment.

AB 1961 will expand the law to allow employers to seek restraining orders in situations where an individual has directed a credible threat of violence at a worksite or employees generally. According to the legislative history, the law is designed to address a critical gap in current workplace safety laws given the rise in threats directed at entire workplaces, especially schools, without naming any individual. Supporters of AB 1961 have noted that the bill will help address this problem by changing the definition of “Employee” to include a group of employees based on their employer’s worksite or where their primary job duties are performed.

Specifically, AB 1961 amends Code of Civil Procedure 527.8 to allow an employer to seek a temporary restraining order on behalf of a reasonably identifiable group or class of employees if the threat of violence is directed at the employer’s workplace or employees generally. The law notes that where an employer seeks a temporary restraining order on behalf of a group or class of employees, the employer “shall not be required to name any individual protected employee as a protected party.”

Next Steps

As the effective date of January 1, 2027, approaches, employers may want to start preparing for the expanded protections under AB 1961. Preparations may include updating workplace policies, training human resources personnel and employees, and ensuring that all employees are aware of the new protections.

In the event of a complaint of a credible threat of violence directed at the workplace or at employees generally, employers may wish to explore whether a workplace violence restraining order is an appropriate remedy to address the complaint.

The law is one of several new California employment-related laws set to take effect on January 1, 2027.

Ogletree Deakins’ Workplace Violence Prevention Practice Group will continue to monitor developments and will provide updates on the California, Workplace Safety and Health, and Workplace Violence Prevention blogs.

In addition, the Ogletree Deakins Client Portal provides subscribers with timely updates on California state laws, including California’s updated Workplace Violence Prevention law. Premium-level subscribers have access to comprehensive law summaries, policies, and templates, including a California Workplace Violence Prevention Toolkit. 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.

On October 8, 2026, Ogletree Deakins will host a webinar, “Keeping Current in California,” regarding California’s new employment laws, as well as recent court decisions and upcoming state, local, and industry changes related to minimum wage. Click here for details and registration.

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Quick Hits

• Governor Newsom signed the substantial majority of employment-related bills passed in the 2025-2026 California legislative session, touching on artificial intelligence and workplace surveillance, pay equity enforcement, leave expansions, agricultural labor standards, workplace violence prevention, and immigration-related retaliation.
• The governor vetoed AB 1940, which would have added menopause and related conditions to the Fair Employment and Housing Act’s (FEHA) definition of sex.
• Most of the new laws take effect January 1, 2027, though several carry different operative dates.

California Employment Bills Signed Into Law

What This Means for Employers

With most of these laws taking effect January 1, 2027, California employers may want to begin updating handbooks, harassment prevention and other mandatory training materials, surveillance and monitoring policies, Worker Adjustment and Retraining Notification (WARN) Act notice procedures, and immigration-related nondiscrimination practices ahead of the new year. Employers using automated decision systems or AI-driven workplace tools in particular may want to review how those tools are deployed and documented, given the overlapping requirements now in place under AB 1883, SB 947, and SB 951, and previously enacted laws and regulations.

Ogletree Deakins’ California offices will continue to monitor developments and will provide updates on the Arbitration and Alternative Dispute Resolution, Artificial Intelligence and Innovation, California, Cybersecurity and Privacy, Drug Testing, Immigration, Leaves of Absence, Pay Equity, Reductions in Force, Wage and Hour, Workplace Safety and Health, and Workplace Violence Prevention blogs as additional information becomes available.

In addition, the Ogletree Deakins Client Portal provides subscribers with timely updates on California state laws, including California’s updated laws on Bereavement Leave, Automated Employment Decisions, Sexual Harassment Training Requirements, and Workplace Violence Prevention. 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.

Ogletree Deakins will host a webinar regarding California’s new employment laws, including the “stay or pay” law, which takes effect immediately, on October 8, 2026, from 2 – 3 p.m. ET. Click here for details and registration.

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Quick Hits

• Federal contractors encounter agency guidance at nearly every stage of contract performance.
• DOJ’s revised policy distinguishes between agency guidance that tracks binding regulations and guidance that is purely advisory.
• Under DOJ’s revised policy, noncompliance with agency guidance, standing alone, cannot establish an FCA violation.
• A contract that requires compliance with agency guidance can make that guidance enforceable or “material,” so the source of the obligation matters.
• DOJ may still rely on guidance as evidence of knowledge, industry practice, or materiality, particularly where a contractor has certified compliance.

The DOJ said in its revised Justice Manual that the department generally may not base an FCA action solely on a contractor’s failure to follow “agency guidance,” which are the broad category of documents that agencies issue to explain, interpret, or implement their programs, such as handbooks, manuals, frequently asked questions (FAQs), policy memoranda, and technical publications. These documents can be persuasive and practically important, but they do not carry the force of law. Under the revised policy, an FCA case must rest on a violation of a binding legal requirement, meaning a statute, a regulation, or an enforceable contract term, alone or in combination. Guidance can still play a supporting role in an FCA case, but noncompliance with guidance cannot itself supply the violation. For federal contractors seeking to understand compliance risk, the change makes the source of each compliance obligation the central question, because guidance that is merely advisory on its own can become binding when a contract incorporates it.

Under the revised policy, DOJ enforcement actions must be based on violations of applicable legal requirements. Consistent with the Justice Manual’s broader limits on the use of guidance documents, noncompliance with an agency guidance document cannot, by itself, establish a violation. Much of this material shapes day-to-day performance, but not all of it carries the force of law. Awareness of the actual legal source of an asserted compliance obligation rather than assuming every government instruction is binding can provide contractors with a more accurate assessment of compliance risk.

A Contract Can Make Guidance Binding

DOJ recognizes that a government contract may require compliance with an agency guidance document. In that situation, the contract, not the guidance itself, creates the enforceable obligation. Because federal contracts routinely incorporate outside documents, guidance that is merely advisory for the public may be mandatory for a particular contractor. To accurately assess compliance obligations and risk, agency guidance can be traced through:

• Federal Acquisition Regulation (FAR), Defense Federal Acquisition Regulation Supplement (DFARS), and agency supplement clauses;
• solicitation requirements;
• contract specifications and statements of work;
• incorporated documents and standards; and
• contractor representations and certifications.

This tracing exercise is not always straightforward. Contract clauses often point to other documents, which may be revised after award. Whether a contractor is bound by the version in effect at award or by later updates can depend on the precise incorporation language.

Cybersecurity is a clear example. A National Institute of Standards and Technology (NIST) publication, an agency FAQ, or a U.S. Department of Defense (DoD) implementation document may not independently create FCA liability. The analysis changes, however, when a DFARS clause or contract term requires the contractor to implement a particular standard, such as the NIST SP 800-171 requirements flowing through DFARS 252.204-7012. At that point, the standard is a contractual obligation and knowingly falling short while seeking payment can support FCA liability.

Contract clauses can also shape the materiality analysis. Some recent clauses, such as the FAR clause implementing Executive Order 14398, require the contractor to recognize that compliance is material to the government’s payment decisions for FCA purposes. That language can make a later materiality defense considerably harder.

Guidance That Arrives After Award

Much of the guidance contractors will follow during performance may not arrive with the solicitation. It surfaces after award through agency policy memoranda, updated handbooks, portal instructions, and emails from program personnel. Under DOJ’s revised policy, those materials do not independently create an FCA violation, and they generally do not change the contract either. Only a contracting officer acting within the scope of his or her authority can modify a contract on the government’s behalf.

That distinction matters in an FCA case. Contractors may want to determine whether post-award agency guidance or instructions were ever incorporated into the contract through a modification, a clause that expressly reaches later-issued documents, or the contractor’s own agreement or certification. If not, the instruction may reflect good practice, but it may not be the legal requirement DOJ’s policy demands.

‘Nonbinding’ Guidance Can Still Matter in an FCA Case

An overreading of the new policy could create risk. DOJ may still use agency guidance as evidence of:

• knowledge or notice of an obligation;
• industry standards or practices; and
• falsity or materiality when the contractor has made representations concerning compliance.

There are several steps contractors can take now to assess compliance risk presented by agency guidance materials during performance.

First, consider identifying the source of every significant compliance requirement, and distinguishing statutes, regulations, and contract requirements from guidance. For key performance requirements, it is important to understand where the obligation comes from and which version applies.

Second, consider a careful review of incorporation and certification language. A contract or contractor certification can give legal significance to requirements that otherwise might be merely advisory.

Finally, don’t assume agency guidance is irrelevant to FCA risk. Even when guidance does not independently impose an obligation, DOJ may use it as evidence of scienter, materiality, or industry practice.

DOJ’s revisions do not eliminate FCA risk associated with agency guidance. Instead, they make the source of the contractor’s obligation increasingly important. For federal contractors, the critical question may no longer be simply whether the government issued a particular requirement, but where that requirement appears and how it became binding.

Ogletree Deakins’ Government Contracting and Compliance Practice Group and Workforce Analytics and Compliance Practice Group will continue to monitor developments and will post updates on the Cybersecurity and Privacy, Government Contracting and Compliance and Workforce Analytics and Compliance blogs as additional information becomes available.

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Quick Hits

• Dismissals following an employee’s refusal to accept a unilateral, far-reaching relocation of the workplace may count toward the thresholds for mass dismissals, the European Court of Justice held in a June 2026 decision.
• Whether a workplace relocation is equivalent to a dismissal depends on the circumstances of the individual case, in particular the distance involved, the permanence of the change, and any compensatory measures offered.
• In the event of a site relocation, employers may want to assess early on whether a mass dismissal notification to the German Federal Employment Agency (Agentur für Arbeit) and the involvement of the works council (Betriebsrat) are required.

Site Relocation of More Than 600 Kilometers

The employer is an Italy-based company specializing in the manufacture of power generators. It ceased production at a site in Campania and relocated operations entirely to a new site in Sardinia. The two sites were more than 600 kilometers apart, separated by the Mediterranean Sea. Several employees failed to report to the new workplace, whereupon the employer initiated disciplinary proceedings and terminated their employment contracts. The Italian appellate court submitted a request for a preliminary ruling to the ECJ pursuant to Article 267 of the Treaty on the Functioning of the European Union, asking whether such dismissals must be treated as notifiable mass dismissals for the purposes of the Collective Redundancies Directive.

The Significance of the Change Is Decisive

The Collective Redundancies Directive defines mass dismissals as dismissals effected by an employer for one or more reasons not related to the individual workers concerned, provided that certain quantitative and temporal thresholds are met. The ECJ interprets the concept of a notifiable dismissal under the Collective Redundancies Directive broadly: it encompasses any termination of the employment contract that is not sought by the employee, i.e., that occurs without the employee’s consent.

In the ECJ’s view, a significant change to the essential terms of the employment contract that is imposed unilaterally by the employer to the detriment of the employee for reasons not related to the employee personally also falls within the concept of a notifiable dismissal under the Collective Redundancies Directive.

The workplace regularly constitutes an essential term of the contract, as any change to the workplace can have significant economic and organizational consequences for the employee concerned. The ECJ identified three criteria for determining whether a change is significant: the permanence of the relocation, the distance between the original and the new workplace, and any accompanying measures to compensate for the proposed reassignment.

In the case of a permanent relocation of more than 600 kilometers, the ECJ considered that there was much to suggest a significant change. The final assessment, however, remains with the referring Italian court.

Implications for Employers in Germany

In Germany, Sections 17 and 18 of the German Dismissal Protection Act (Kündigungsschutzgesetz (KSchG)) govern, in particular, the mass dismissal notification to the Federal Employment Agency (Agentur für Arbeit), the associated involvement of the works council (Betriebsrat), and the dismissal moratorium that may apply.

Dismissals issued without the required prior notification are void—a point the Federal Labor Court (Bundesarbeitsgericht (BAG)) reaffirmed in its judgment of April 1, 2026 (Ref. No. 6 AZR 157/22).

In two 2025 rulings, the ECJ held that failure to provide proper notification prior to a mass dismissal will result in invalid layoffs

The latest ECJ ruling broadens the perspective: going forward, employers must also include dismissals following a refused long-distance transfer in the threshold calculation. However, not every refusal to accept a transfer automatically triggers a mass dismissal. The decisive factors are the specific circumstances, in particular the distance involved, the duration, and the absence of compensatory measures.

Takeaways: EU-Law Concept of Dismissal Reaches Far

The ruling confirms that the EU-law concept of “dismissal” is broad in scope. Where the new workplace is far away and the change is permanent, employees’ refusal to transfer can result in the need to initiate mass dismissal proceedings.

Employers may therefore want to assess during the planning phase whether transfers, terminations with an offer of changed conditions (Änderungskündigungen), or subsequent terminations of employment must be aggregated and whether proceedings under Section 17 KSchG should be initiated as a precautionary measure. This is particularly important in the context of major restructurings, as procedural errors can significantly delay implementation and, in individual cases, jeopardize the validity of dismissals already issued.

Andre Appel is a partner in Ogletree Deakins’ Berlin office.

Lela Salman, a law clerk in Ogletree Deakins’ Berlin office, contributed to this article.

Ogletree Deakins’ Berlin office and Global Reorganizations Practice Group will continue to monitor developments and will post updates on the Cross-Border, Germany, Global Reorganizations, and Reductions in Force blogs as additional information becomes available.

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Quick Hits

• A federal district court in California has blocked USCIS, CBP, and the State Department from enforcing or implementing policies related to the proclamation-based $100,000 H-1B payment requirement.
• The California ruling represents another adverse federal district court decision involving the $100,000 payment, which is already blocked pursuant to a separate federal district court decision in Massachusetts that is currently on appeal.
• The court order does not affect the U.S. Department of Homeland Security’s (DHS) separately proposed $103,265 fee for H-1B cap-subject petitions, which remains in the rulemaking process and is not currently in effect.

Background

The case, Global Nurse Force v. Trump, was brought by a coalition of employers, labor organizations, schools, healthcare providers, religious organizations, and individuals challenging the $100,000 H-1B payment requirement and the agencies’ implementation of it.

President Donald Trump established the payment requirement through Proclamation 10973, issued on September 19, 2025. As implemented by USCIS, CBP, and the State Department, the requirement primarily affected H-1B workers outside the United States who needed consular processing or admission at a U.S. port of entry.

On September 18, 2026, President Trump issued Proclamation 11069, extending the restriction through September 21, 2027.

On September 30, 2026, the federal district court in California blocked the agencies from enforcing or implementing the proclamation-based payment requirement unless and until they comply with the rulemaking requirements of the Administrative Procedure Act.

Impact on Employers

For employers, the practical impact is straightforward: the proclamation-based $100,000 H-1B payment is not currently being enforced. Employers filing H-1B petitions, including cases requiring consular processing or admission from abroad, are therefore not currently required to pay the $100,000 amount.

The September 30, 2026, California order is the second federal district court decision blocking the payment requirement. A federal district court in Massachusetts has also blocked the requirement, although that decision is currently on appeal before the U.S. Court of Appeals for the First Circuit.

The litigation continues. The federal district court in California has scheduled a case management conference for October 27, 2026, with a joint case management statement due on October 20, 2026.

Employers should keep the $100,000 proclamation-based payment conceptually separate from DHS’s proposed $103,265 fee for certain H-1B cap-subject petitions. That proposed fee, part of a separate rulemaking process, is not affected by the September 30, 2026, order of court, though the $103,265 fee is not currently in effect. The comment period closed on September 24, 2026, and DHS has not yet issued a final rule.

Next Steps

Employers sponsoring H-1B workers may want to consider the following:

• The proclamation-based $100,000 payment is not currently required. This includes H-1B petitions involving workers who will require consular processing or admission to the United States from abroad.
• Employers should continue monitoring the litigation. USCIS currently advises on its website that, if the applicable court order is later lifted, DHS intends to collect the payment.
• The current litigation posture remains subject to change. Additional court rulings, appellate decisions, or agency actions could alter the requirements applicable to H-1B petitions and admission.
• The separately proposed $103,265 H-1B cap fee is not yet in effect. That proposal is proceeding through a separate rulemaking process and is not affected by the September 30, 2026, court order.

Ogletree Deakins’ Immigration Practice Group will continue to monitor developments and will provide updates on the Immigration blog as additional information becomes available.

For additional insight into the critical immigration issues facing employers today, please join our Virtual Immigration Insights Symposium on Wednesday, October 7, 2026, from noon to 2:30 p.m. ET. Register here.

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

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‘Gone Till November.’ This week, the U.S. Senate wrapped up its current legislative period, and its members hit the campaign trail ahead of the November midterm elections. Senators (as well as members of the U.S. House of Representatives) are slated to return to Washington, D.C., on November 9, 2026, for the lame-duck session of the 119th Congress. The political dynamics in that session are sure to be interesting, as we will—theoretically—know where the balance of power will lie in both legislative chambers beginning in 2027. During the “lame duck” legislative waddle, the Buzz will be monitoring the status of the Faster Labor Contracts Act and federal government funding, which, absent congressional action, will expire on December 12, 2026. There are thirty-two days until Election Day.

District Court Blocks Implementation of $100,000 H-1B Visa Fee. On September 30, 2026, the U.S. District Court for the Northern District of California vacated guidance documents issued by U.S. Citizenship and Immigration Services (USCIS), the U.S. Department of State, and U.S. Customs and Border Protection (together, “the agencies”) that implemented President Donald Trump’s Proclamation 10973, which requires employers to include a $100,000 fee with each H-1B petition filed.

Rather than focusing on the president’s authority to establish the fee requirement, the district court focused on the legality of the implementing guidance documents, which “set their own criteria for administering the fee and determining whether to grant exceptions from it.” The court ruled that the agencies violated the Administrative Procedure Act when issuing the guidance documents because they “failed to consider any alternatives or the reliance interests of the regulated parties” (emphasis in the original) or make the policies available for public comment. Importantly, the decision enjoins the agencies from enforcing or implementing the guidance documents issued pursuant to the proclamation, including its extension until September 21, 2027.

This is the second court to block implementation of the proclamation, while a third court—the U.S. District Court for the District of Columbia—upheld the proclamation as a valid exercise of presidential authority. Both of the prior decisions are under appeal. Predicting where this matter will ultimately be decided, the California district court wrote, “[T]he United States Supreme Court is likely to eventually provide further clarity.” Amanda R. Goodman has additional details.

Sonderling Confirmed as Labor Secretary. On September 30, 2026, the U.S. Senate confirmed Keith Sonderling as secretary of labor by a vote of 47–41. Sonderling has served as acting secretary of labor since April 2026; he previously served as a commissioner on the U.S. Equal Employment Opportunity Commission, and, prior to that, was acting administrator of the U.S. Department of Labor’s (DOL) Wage and Hour Division. Sonderling will undoubtedly play a key role in driving the DOL’s regulatory agenda, particularly as the agency seeks to finalize key regulations in the remaining two years of the administration. Key regulatory developments include the finalization of rules addressing joint-employer and independent-contractor tests under the Fair Labor Standards Act, heat injury and illness prevention, and an increase in the prevailing wages that must be paid to certain employment-based immigrant visa holders and H-1B nonimmigrant visa holders.

Senate Approves College Sports Bill. On September 28, 2026, the U.S. Senate passed the Protect College Sports Act of 2026 (S. 4668) by a vote of 77–22. The bill establishes a federal governance framework to address multiple issues associated with college athletics, such as students’ name, image, and likeness rights, student recruitment and eligibility, regulation of sports agents, coaching transitions, and more. As the Buzz has discussed previously, the Protect College Sports Act is hands-off on students’ employee status, as it contains a provision stating that the bill is “neutral on, and does nothing to alter, employee or non-employee status for student athletes.” This contrasts with the House’s own college sports bill, the Student Compensation and Opportunity through Rights and Endorsements (SCORE) Act, (H.R. 4312) which states, “[N]o individual may be considered an employee of an institution, a conference, or an interstate intercollegiate athletic association based on the participation of such individual on a varsity sports team or in an intercollegiate athletic competition as a student athlete.” Therefore, the House and Senate will have to address this issue if a comprehensive legislative solution addressing college athletics is to pass Congress.

Thurgood Marshall Sworn In. Today in 1967, Thoroughgood “Thurgood” Marshall was sworn in as the Supreme Court of the United States’ first Black justice. Marshall, who as chief counsel of the NAACP Legal Defense and Educational Fund successfully argued Brown v. Board of Education, 347 U.S. 483 (1954), would serve on the Court until his retirement in 1991. At the Buzz, we remember Marshall for authoring the 8–1 majority opinion in Emporium Capwell Co. v. Western Addition Community Organization, 420 U.S. 50 (1975), which upheld the discharge of Black employees who picketed their employer to protest alleged racial discrimination, rather than pursue the grievance procedure set forth in their collective bargaining agreement. Marshall viewed the picketing as unprotected concerted activity because it violated the principle of “exclusive representation” embedded in the National Labor Relations Act (NLRA). Marshall wrote, “The policy of industrial self-determination as expressed in [the NLRA] does not require fragmentation of the bargaining unit along racial or other lines in order to consist with the national labor policy against discrimination.” The concept of exclusive representation remains an important—and controversial—topic of labor policy debates.