Quick Hits

  • Knowing which type of salary to use for employees in Mexico is crucial for terminations, calculation of social security contributions, and the calculation of statutory benefits.
  • Using the wrong salary base may lead to employee claims, fines from labor, social security, and tax authorities, and disgruntled employees.

The Three Main Purposes of Salary in Mexico

Mexican law uses salary for three main purposes: (1) paying salary and benefits, (2) paying social security contributions, and (3) paying severance. Each purpose may require a different type of salary.

Payment of salary and benefits: The daily salary is the compensation agreed upon between the employer and the employee. It is used to calculate statutory benefits such as the Christmas bonus, vacation premium, vacation pay (upon termination), and any other benefit that refers to payment of a day of salary. The daily salary can never be lower than the minimum wage (general or professional).

Minimum wage: The minimum wage is the lowest amount an employee must receive for a day of work (even for an hour of work!). Each year, the National Minimum Wage Commission sets this amount. For 2026, the general minimum wage in Mexico is MXN $315.04 (approximately USD $17.08) per day, and the minimum wage in the Northern Border Free Zone is MXN $440.87 (approximately USD $23.91) per day.

Payment of social security contributions: The contribution base salary is the salary used to calculate and pay contributions to the Mexican Institute of Social Security (Instituto Mexicano del Seguro Social (IMSS)) and the National Institute of Workers’ Housing Fund (INFONAVIT), including contributions to the employee’s individual retirement account (AFORE). It is made up of the daily base salary plus the benefits that the Social Security Law requires to be included, but expressly excludes those the law allows to be left out (such as certain savings funds and food vouchers within statutory limits). It is capped at twenty-five times the Unit of Measurement and Update (UMA), a reference value updated each year to calculate legal obligations and limits. Based on the 2026 UMA, effective February 1, 2026, the cap is MXN $2,932.75 (approximately USD $159.01) per day.

Payment of severance: Mexico does not recognize employment at will. Therefore, unless there is a justified cause under the Mexican Federal Labor Law (FLL), employers must, as a general rule, pay severance upon termination. Severance includes: accrued statutory benefits, ninety days’ pay, twenty days’ pay per year of service, and the seniority premium. The ninety days’ and twenty days’ pay are the tricky ones, as they must be calculated using the aggregate daily salary. Under the FLL, the aggregate daily salary is made up of the daily cash payments, bonuses, benefits, housing, premiums, commissions, payments in kind, and any other amount or benefit delivered to the employee for their work. In practice, this means the daily base salary plus all benefits the employee receives for services rendered (Christmas bonus, vacation premium, food vouchers, bonuses, commissions, savings funds, etc.). Unlike the contribution base salary, it has no cap and no exclusions. The seniority premium, however, is capped at two times the minimum wage.

Using the right type of salary for each purpose is key to avoiding liability. Employers may want to confirm with their payroll providers and HR departments that each payment, contribution, and severance calculation relies on the correct type of salary.

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

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State Flag of California

Quick Hits

  • California’s SB 1237 raises the maximum civil penalty for a second or later failure to file a required pay data report from $200 per employee to $1,000 per employee.
  • The penalty for the first failure to file stays at up to $100 per employee.
  • The amended statute takes effect January 1, 2027, and this year’s pay filing deadline is May 12, 2027.

Covered Employers

Covered employers include private employers with one hundred or more employees with at least one employee working in California. A separate report is required for employers with one hundred or more employees hired through labor contractors with at least one active employee in California. These low thresholds mean that employers with even a small number of California employees and/or labor contractors need to be careful to understand their reporting requirements and ensure they are in compliance.

A Fivefold Increase for Repeat Failures

Under Section 12999, if CRD does not receive the required report, it may seek a court order requiring the employer to comply and may recover the costs of seeking that order. At CRD’s request, a court must impose a civil penalty of up to $100 per employee for the first failure to file. Before SB 1237, the penalty for a subsequent failure was capped at $200 per employee. SB 1237 raises that cap to $1,000 per employee. Penalties are paid into the Civil Rights Enforcement and Litigation Fund. If an employer cannot file a complete and accurate report because a labor contractor did not provide the required pay data, the court may assign part of the penalties to that labor contractor.

This is a major change. Because the penalty is calculated per employee, the exposure grows quickly. For an employer with 2,000 employees, the maximum penalty for a second failure to file a required report rises from $400,000 to $2 million. The change also builds on SB 464, which already requires courts to impose civil penalties on noncompliant employers when CRD asks.

A New Tool for CRD to Force Compliance

The higher penalty gives CRD much more leverage. CRD’s enforcement process already moves through a series of escalating notices: a notice of potential noncompliance, then a notice of noncompliance, then a notice of impending court action, and finally a lawsuit. In its 2023 action against Cambrian Homecare, Inc., the employer filed all of its missing reports within three weeks of being sued. The employer ultimately agreed to pay a $70,000 penalty for its unfiled 2022 report, plus $24,778 in litigation costs. With a $1,000 per-employee ceiling for repeat failures, an employer that ignores CRD’s notices faces far greater financial consequences.

Avoiding an Interruption in Filings

CRD’s two most recent lawsuits show that employers that once filed and then stopped filing are a key enforcement target. On September 14, 2026, CRD filed petitions to compel compliance against two employers that allegedly had previously filed pay data reports but then stopped filing for multiple years, even after being reminded of their obligations.

  • California Food Management LLC (d/b/a Burger King). CRD alleges the company did not file reports for reporting years 2023, 2024, and 2025, even though it had filed a certified report for 2022. According to CRD, the company did not respond to notices sent in September 2025, January 2026, and April 2026. CRD is seeking $100 per employee for 2023 and $200 per employee for 2024 and 2025.
  • Coast 2 Coast Coaching, Inc. (d/b/a Elevo and Sports for Learning). This employer has more than 2,100 employees. CRD alleges it did not file reports for 2024 and 2025 after filing for 2021 through 2023. CRD is seeking $100 per employee for 2024 and $200 per employee for 2025.

In both cases, CRD is seeking the higher “subsequent failure” penalty for the later years. Under SB 1237, that higher tier will reach up to $1,000 per employee. Gaps in filing like these can come from a variety of events including personnel turnover, changes in who is responsible for compliance, mergers or reorganizations, or changes in payroll or HR vendors.

Employers may want to consider taking steps to ensure that there are no interruptions in their pay reporting. These steps can include actions such as:

  • following up on personnel changes in the compliance reporting area to ensure that the responsibility for pay reporting is established and maintained when personnel changes occur;
  • annually updating (or more often as required) CRD contact information within the pay reporting portal so that company addresses are current to make sure that all pay reporting mailings are directed to the correct address so that they receive immediate attention;
  • using pay reporting contact email addresses that are received by multiple employees in an effort to broaden the audience for important pay reporting updates; and
  • maintaining a centralized document repository for all completed pay filings so that filings can be accessed by more than the individual responsible for filing.

Never Filed? CRD Can Find You

Employers that have never filed pay reports should not assume they are out of view simply because they are not in CRD’s pay data reporting system. Section 12999 requires California’s Employment Development Department (EDD), which handles unemployment compensation, to give CRD, within sixty days of CRD’s request, “the names and addresses of all businesses with 100 or more employees” to “ensure compliance with this section.” CRD can compare that list against the reports it receives to identify employers that have never filed. Those employers could then face the same escalating notices and court action.

New CRD Publication Requirement

For the first time SB 1237 requires CRD to publish annually the total number of pay data reports submitted. This information must be published in aggregate, in a way reasonably calculated to prevent any data from being linked to an individual business or person. These annual totals could make drops in filing activity more visible and could be used by CRD to gauge how many employers are failing to make their required pay data filings, which could lead to increased enforcement actions.

Major Employee Mapping Change 2026 Reporting

Effective January 1, 2027, pay reporting will no longer rely on EEO-1 categories; instead, all employees must be classified into one of twenty-three standard occupational classification (SOC) job categories. This will require substantial work by filers, as employers have traditionally mapped their employees to EEO-1 categories and have not used SOC codes for employee mapping. These twenty-three categories are based on SOC categories and are a significant expansion from the ten options provided by the EEO-1 categories.

While these categories have limited parallels to EEO-1 categories, their focus on the subject matter of the work performed differs significantly from the EEO-1 categories’ focus on corporate structure. For instance, the twenty-three categories include “Business and financial operations occupations,” “Computer and mathematical occupations,” and “Architecture and engineering occupations,” each of which could presumably span more than one of the existing EEO-1 categories. This illustrates the major shift in how employees will be classified, beginning with the 2026 pay reports. Based on this substantial shift in employee classification, filers—including both employers and labor contractors—may want to consider putting together plans to begin reclassifying employees into these twenty-three categories.

Key Takeaways for Employers

With the higher penalties taking effect January 1, 2027, and in light of the May 12, 2027, pay filing deadline, employers may want to consider:

  • confirming whether they are covered and file all required payroll employee and labor contractor employee reports;
  • checking for and determine action plans with respect to any gaps in past filings;
  • ensuring that personnel and company changes do not result in missed filings;
  • responding promptly to any CRD notice; and
  • preparing for the expansion to twenty-three SOC job categories beginning in 2027.

Ogletree Deakins’ California offices, Government Contracting and Compliance Practice Group, Pay Equity Practice Group, and Workforce Analytics and Compliance Practice Group will continue to monitor developments with respect to California pay data reporting and will provide updates on the firm’s California, Government Contracting and Compliance, Pay Equity, and Workforce Analytics and Compliance blogs as additional information becomes available.

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The Capitol - Washington DC

Congress Returns, ‘Lame Duck’ Session Begins. Before the 120th Congress gavels in on January 3, 2027, there are still approximately four weeks remaining of the 119th Congress (both the U.S. Senate and U.S. House of Representatives will not be in session during the week of Thanksgiving). During this “lame duck” session of the U.S. Congress, the Buzz will be especially interested in the following:

  • Nominations. With Democrats wielding “advise and consent” confirmation authority in the next Congress, these next few weeks perhaps present the last opportunity for the Trump administration to confirm nominees to the executive and judicial branches. Any pending nominees who are not acted on before the current Congress adjourns sine die must be renominated in the next Congress (where they will have a very tough time getting confirmed). Current labor and employment-related nominees include:
    • Douglas Ralph and Loren Sweatt, nominated to serve as members of the National Mediation Board, are awaiting Senate floor votes.
    • Catherine Eschbach, general counsel, U.S. Equal Employment Opportunity Commission (EEOC), had her confirmation hearing before the U.S. Senate Committee on Health, Education, Labor, and Pensions (HELP) on November 11, 2026. Her vote in the HELP Committee is scheduled for November 18, 2026. If advanced by the committee, Eschbach would then be teed up for a vote on the Senate floor.
    • Michael Doyle, nominated to be a member of the Occupational Safety and Health Review Commission (OSHRC) will also be voted on in the HELP Committee on November 18, 2026.
    • This week, President Donald Trump nominated Matt Zandi to fill the remaining Republican seat on the EEOC. Zandi is currently chief of staff at the U.S. Department of Justice’s Civil Rights Division. Zandi will likely have to have a confirmation hearing, followed by a vote in the HELP Committee, before receiving a full vote by the Senate. This would be a lot to do in a short period of time.
  • Government funding. Current funding for the federal government runs through December 11, 2026. Currently, there isn’t much discussion about a potential federal government shutdown, though a deadline approximately one month away barely lands on the radar for federal lawmakers, who often don’t act until the last minute. The Buzz will be monitoring funding developments in the weeks ahead.
  • Faster Labor Contracts Act (FLCA). The FLCA would impose an unrealistic, one-size-fits-all bargaining framework and let government officials dictate the terms of a first collective bargaining agreement. The House passed the bill in June 2026, with twenty Republicans voting in favor. Now the bill’s proponents are pushing for a vote in the Senate, where it is supported by Republican Senators Josh Hawley (MO), Bernie Moreno (OH), and Roger Marshall (KS). Further, Teamsters President Sean O’Brien recently posted on social media that he voted for Florida Republican Senator Ashley Moody and looks forward “to working with Sen. Moody in her role on the Senate HELP Committee to pass the Faster Labor Contracts Act.” Just as pending nominations expire when Congress adjourns sine die, so do active bills. As discussed in detail below, the FLCA likely has greater odds of passing Congress in 2027 with Democrats controlling the majority of both chambers.

Looking Ahead: The 120th Congress. As of this writing, beginning on January 3, 2027, when the 120th Congress begins, Democrats will enjoy a 55–44 majority in the Senate (Alaska results are still pending) and a 256–169 majority in the House. Despite the significant majorities, the Senate’s legislative filibuster and President Trump’s veto authority will both work to stymie much of the Democrats’ legislative plans. Still, there is much the Democrats can accomplish with control of Congress:

  • Legislation. There will be no shortage of labor and employment bills introduced in the 120th Congress. At most, Democrats will only need to convince five Republican senators to vote with them (possibly as few as four, if Mary Peltola prevails in her race against Alaska Senator Dan S. Sullivan (R)) to send a bill to the White House. Additionally, President Trump’s populist leanings make the business community nervous that he might not necessarily veto every labor/employment bill the Democrats might send him. Finally, Democrats could use the next two years as a proving ground for messaging and legislation that they will push in the future. Here are some bills that the Buzz will be monitoring in 2027:
    • Faster Labor Contracts Act. As mentioned above, the legislative prospects for the FLCA look even greater in 2027. Democrats in the House will pass the bill easily. In the Senate, Democrats will have fifty-five or fifty-six votes, plus the affirmative votes of Senators Hawley (R-MO) and Moreno (R-OH), who are original cosponsors of the bill. This would give the FLCA fifty-eight votes in the Senate—just two short of the sixty affirmative votes needed to overcome a filibuster. Will Democrats be able to convince two more Republicans to vote in favor of the bill?
    • Protecting the Right to Organize (PRO) Act. The PRO Act has been big labor’s north star for many years now, as it would allow for card check organizing, ban right-to-work laws, restrict employer speech, allow for secondary boycotts, institute monetary penalties, and provide tests for joint employer and independent contractor status that employers may find ambiguous, among other provisions. In a social media post made this week by the House Labor Caucus—with more than 120 members—outlining their “Pro-Worker Path Forward,” the PRO Act was the only specific piece of legislation named. Over recent decades, both political parties have eschewed incremental legislative gains in favor of larger, more comprehensive bills. Could Democrats view the FLCA as “too small” and refocus their energies on passing the PRO Act? It is certainly possible. Moving both bills simultaneously is also a possibility.
    • Warehouse Worker Protection Act. This bipartisan bill would create a new unfair labor practice for certain productivity quotas and resuscitate the Occupational Safety and Health Administration’s (OSHA) ergonomic standard, which was previously rejected by Congress, among other provisions.
    • Wages. Democrats will likely introduce legislation to increase the minimum wage under the Fair Labor Standards Act (FLSA). Additionally, we could see an effort to increase the federal overtime period as called for in the Double the Wage for Overtime Act.
    • Noncompete Agreements. Democrats may attempt to restrict or prohibit the use of noncompete agreements. The Workforce Mobility Act has enjoyed bipartisan support in recent Congresses.
    • Arbitration. Multiple bills have been introduced in recent Congresses that would limit or restrict the use of workplace arbitration agreements, such as the “Restoring Justice for Workers Act,” the “Ending Forced Arbitration of Race Discrimination Act” (prohibiting predispute arbitration of race discrimination claims), and the Forced Arbitration Injustice Repeal (FAIR) Act (prohibiting predispute arbitration agreements in employment, consumer, antitrust, and civil rights disputes). The FAIR Act passed the House in 2022.
    • Paid Sick Leave and Paid Family Leave. These issues are likely to be key components of Democrats’ legislative strategy as they will fit nicely into their broader “affordability” agenda. In the past, Democrats have championed the Family and Medical Insurance Leave (FAMILY) Act, which would provide employees with twelve weeks of paid leave for Family and Medical Leave Act (FMLA) purposes.
  • Oversight. As chairs of the various congressional committees, Democrats will set the agenda for the 120th Congress. With legislation likely off the table, their top priority will undoubtedly be to conduct robust oversight of both the administration and the private sector. Foreign policy, immigration enforcement, artificial intelligence, President Trump’s impoundment of appropriated funds, and investigations into agency officials all promise to be prime targets for oversight.

    In the labor and employment space, the likely incoming chair of the House Education and Labor Committee, Bobby Scott, has already sent letters to EEOC Chair Andrea Lucas, Secretary of Labor Keith Sonderling, and National Labor Relations Board (NLRB) Chair James Murphy instructing them to preserve records under the Federal Records Act of 1950 to ensure “that Congress can fulfill its essential oversight responsibilities.” The EEOC, which has perhaps taken the most dramatic turn in how it now views itself as an executive branch agency, and in its enforcement priorities, will draw significant scrutiny. Through information requests, subpoenas, and hearings, Democratic lawmakers will demand information about the EEOC’s deemphasis of the disparate impact theory of discrimination, the rescission of its harassment guidance, and the elimination of the EEO-1 form, among other topics. Similarly, Democratic lawmakers will investigate employment-based immigration activities within the U.S. Department of Homeland Security, the U.S. Department of Labor (DOL), and the U.S. Department of State.

    Additional activity at the DOL and NLRB, both of which have stayed in their traditionally partisan lanes, will also be examined, but may be further down the list of Democratic priorities.
  • Appropriations. Democrats may also seek to use the annual appropriations process to impact labor, employment, and immigration policies. Using the “power of the purse,” Democrats could include riders in annual spending bills that prohibit the finalization, implementation, and enforcement of particular regulations. Republicans would likely push back on such a strategy by leaning into the Senate’s legislative filibuster and President Trump’s veto.

A Salute to Veterans. Veterans Day, observed this week, can be traced to the interment of an unidentified American service member who died in World War I and to the dedication of the Tomb of the Unknown Soldier at Arlington National Cemetery on November 11, 1921. Soon after, annual memorial ceremonies honoring American veterans would occur throughout the United States. The date, November 11, was chosen to commemorate the Armistice of November 11, 1918, which ended World War I. (The Armistice took effect at the eleventh hour of the eleventh day of the eleventh month of the year.) Through a resolution issued in 1926, Congress officially recognized the day as “Armistice Day.” Following World War II, some veterans began to refer to Armistice Day as “Veterans Day” in order to honor all veterans, not just those who served in World War I. Recognizing this, Congressman Edward Rees of Kansas introduced a bill to officially designate November 11 as “Veterans Day.” President Dwight D. Eisenhower signed the bill into law in 1954. The Uniform Monday Holiday Act of 1968 temporarily moved the observance of Veterans Day to the fourth Monday in October, but in 1978 the holiday’s date was changed back to November 11 to reemphasize the date’s historic significance.


American flag flapping in front of corporate office building in Lower Manhattan

Quick Hits

  • On November 4, 2026, the DOL OIG announced an audit of the effectiveness of OSHA’s actions to address workplace violence.
  • It is the OIG’s first review of the issue since a September 2001 report found OSHA could do more on guidance, outreach, and recordkeeping.
  • OSHA still has no workplace violence standard and relies on the General Duty Clause, so the audit’s findings could shape future enforcement and rulemaking.

Background

The OIG’s fiscal year (FY) 2026 audit workplan previewed the audit, noting that 849 of the 5,486 workplace fatalities recorded in 2022 involved intentional injury by another person. The OIG’s 2001 report recommended that OSHA clarify its use of the General Duty Clause for workplace violence, assess its outreach, and track workplace violence data.

Twenty-five years later, OSHA’s healthcare and social assistance rulemaking remains a long-term action on the regulatory agenda. OSHA has instead historically cited employers under the General Duty Clause, an approach that has been upheld by courts.

What It Could Mean for Employers

Although the audit itself does not impose new obligations on employers, its findings could influence OSHA’s future approach to workplace violence prevention. Potential outcomes include:

  • Increased enforcement: OSHA could place greater emphasis on assessing workplace violence hazards during inspections and investigations, particularly in higher-risk industries.
  • Expanded guidance: OSHA may update its workplace violence prevention guidance, including recommendations concerning hazard assessments, employee training, and incident response.
  • Renewed rulemaking efforts: Depending on the audit’s findings, OSHA could face additional pressure to advance a federal workplace violence prevention standard, particularly for healthcare and social assistance employers.

For multistate employers, the audit also serves as a reminder that workplace violence prevention obligations vary significantly by jurisdiction. Employers operating in states such as California must continue complying with applicable state-specific requirements, regardless of developments at the federal level.

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

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State Flag of Oregon

Quick Hits

  • On October 21, 2026, the Court of Appeals of Oregon held in Ayala v. Culbertsons LLC, held that the state’s wage law permits payroll deductions to repay employee-requested wage advances when the arrangement benefits both the employee and employer.
  • The court upheld deductions totaling $1,000 because the employee received requested, interest-free advances before earning the wages and agreed in writing to specific repayment deductions.
  • Oregon employers may want to document requested advances and repayment authorizations, accurately report deductions, avoid fees, and refrain from deducting repayment amounts from final wages.

The court reached this result even though the deductions ultimately paid the employer back. The decision answers a question Oregon’s appellate courts had not directly addressed: under the state’s wage statute at ORS 652.610(3)(b), a deduction made “for the employee’s benefit” does not have to be solely for the employee’s benefit.

Background

During Anthony Ayala’s employment, his employer, Culbertsons LLC, advanced him money several times before the pay periods to which the advances were related. Each advance was documented in an “Official Employee Loan Agreement,” which acknowledged Ayala’s debt and authorized specific future payroll deductions to repay it. Culbertsons deducted the agreed amounts from later paychecks, recorded the deductions in its books and on Ayala’s paystubs, and charged no interest or fees.

The eleven deductions totaled $1,000. None came from Ayala’s final paycheck or were taken when his employment ended.

Ayala sued, arguing that the deductions violated ORS 652.610(3) because they were not made for his benefit, or at least not for his sole benefit. The trial court denied his motion for summary judgment and granted Culbertsons’s cross-motion. The employee appealed.

The Court’s Decision

The Court of Appeals affirmed, with Judge James C. Egan writing the opinion. The court found that Ayala received a direct benefit from the overall arrangement. It pointed to these facts:

  • Ayala requested the advances.
  • Culbertsons had no contractual obligation to provide them.
  • Ayala was not otherwise entitled to the funds under his employment agreement.
  • The advances gave him immediate access to money he had not yet earned.
  • He would not have received the advances without agreeing to repay them through payroll deductions.
  • No deductions were taken from wages due when his employment ended.
  • Culbertsons charged no interest or fees.

The court stated that its decision was consistent with nonbinding federal case law that read ORS 652.610(3)(b) to allow arrangements benefitting both employers and employees, and that distinguished statutory “for the employee’s benefit” language from statutes that expressly required a deduction to be solely for the employee’s benefit.

The court also rejected the idea that the deductions failed the test because they returned money to the employer. The court explained, “The question under subsection (3)(b) is whether the deduction was for the employee’s benefit.” The undisputed facts showed that the employee got the money before any deduction was made. They also showed he would not have received it without agreeing to the repayment arrangement.

Key Takeaways

Ayala gives Oregon employers appellate authority for a point that had been murky. A deduction can satisfy ORS 652.610(3)(b) even when it also benefits the employer. The decision also confirms that payroll advances can be repaid through paycheck deductions if they are carefully documented.

The court’s reasoning relied heavily on specific facts, so employers may want to consider the following:

  • documenting each advance in a written agreement that acknowledges the debt and authorizes specific repayment deductions,
  • making sure the employee requests the advance,
  • avoiding charging interest or fees,
  • recording deductions accurately in payroll records and on paystubs, and
  • avoiding taking repayment from final wages owed at termination.

Ogletree Deakins’ Portland (OR) office and Wage and Hour Practice Group will continue to monitor developments and will provide updates on the Oregon and Wage and Hour blogs.

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Silhouette Of A Solider Saluting Against US Flag at Sunrise

Quick Hits

  • The New Jersey Superior Court Appellate Division recently ruled that USERRA does not preempt the state’s more expansive protections for military leave for state employees who take military leave.
  • In this case, the Atlantic City Police Department fired a police officer after he exceeded USERRA’s five-year limit for protected military leave.
  • The court rejected the city’s contention that New Jersey law stops protecting a servicemember after five years of leave.

USERRA provides a cumulative total of up to five years of job-protected military leave with one civilian employer when servicemembers are called to duty. USERRA supersedes any local law, state law, or employment contract that would reduce the time or benefits provided under USERRA, and its regulations specify that it establishes a floor, not a ceiling, for the rights of those it protects.

A recent New Jersey case highlights the importance of USERRA’s deference to more expansive state law protections for servicemembers. New Jersey’s military leave laws are more expansive than USERRA and require that employees of state entities who are servicemembers “shall be entitled, in addition to pay received, if any, as (servicemembers), to leave of absence from his or her respective duties without loss of pay or time on all days during which he or she shall be engaged in any period of state or federal active duty.” The same statute clarifies that any such leave of absence beyond ninety days may be unpaid.

In In re: McDevitt, the New Jersey Superior Court Appellate Division held that the more expansive New Jersey law was controlling.

Background on the Case

Atlantic City Police Officer Brian McDevitt accrued 1,982 days (or approximately 5.43 years) of military leave while employed by the Atlantic City Police Department. During McDevitt’s deployments, the city paid him for up to ninety workdays of military leave per calendar year and, under city policy, paid him the difference between his military pay and his regular police pay for the rest of each deployment. During one of McDevitt’s deployments in December 2022, the city informed him that his military orders exceeded the five-year cumulative service limit under USERRA, and that he must return to work, resign, or retire by February 1, 2023.

McDevitt responded that his continued leave was protected under New Jersey law and that he intended to return to the police department after completing his deployment. On May 2, 2023, the city served him with a letter seeking his removal and charging him with insubordination, conduct unbecoming a public employee, and job abandonment. The city terminated McDevitt’s employment on January 26, 2024.

McDevitt appealed to the New Jersey Civil Service Commission, which overturned the Atlantic City Police Department’s decision and ordered his reinstatement with mitigated back pay, benefits, seniority, and counsel fees. The city appealed to the Appellate Division of the Superior Court of New Jersey. It argued that USERRA’s five-year cumulative service limit preempts federal, state, and local laws and that New Jersey’s military leave statute does not provide for unlimited cumulative service that supersedes USERRA’s five-year limit. In other words, the city argued that New Jersey law does not protect a servicemember from discharge once that employee has passed USERRA’s five-year minimum.

Court’s Ruling

The Appellate Division affirmed the commission’s decision “in all respects.” The court held that USERRA does not preempt state laws that afford greater protection than USERRA’s five-year cumulative service limit. The court rejected the city’s preemption argument based on USERRA’s plain language that it specifically does not supersede, nullify, or diminish any state law that establishes rights or benefits for servicemembers greater than those provided by USERRA.

The court also rejected the city’s argument that New Jersey’s military leave law stops protecting a servicemember after five years of leave. It noted that N.J.S.A. 38A:4-4 “expresses no temporal limitation on the length of military leave it protects” and provides only that leave beyond ninety workdays per calendar year is unpaid.

The court stopped short of deciding whether New Jersey law confers “unbounded leave and a perpetual right of reemployment.” Instead, it resolved only whether the police officer’s additional 0.43 years of leave beyond USERRA’s five-year minimum justified his discharge for “insubordination” and “conduct unbecoming a public employee.” The court called those characterizations of his absence while serving the country “inapt” and “antithetical to the declared purposes of our federal and state military leave laws.”

New Jersey state law allows servicemembers up to ninety days within which to apply for private reemployment after completion of service, regardless of the length of such service. By contrast, USERRA only allows the same ninety-day allowance if the servicemember’s period of service lasts for more than 180 days. Otherwise, USERRA requires a servicemember to report to the next regularly scheduled work period if the period of service is thirty days or less, or within fourteen days if the period of service is between thirty-one and 180 days.

Next Steps

Employers may wish to assess their policies and practices affecting servicemembers to ensure compliance with USERRA and state military leave laws. New Jersey state law may be open-ended as to its cumulative service limit for servicemembers employed by public entities.

USERRA’s five-year cumulative service limit is also not as straightforward as it may appear, since there are numerous statutory exceptions for certain types of service. Other state law requirements may apply.

Ogletree Deakins’ Military Workforce Practice Group will continue to monitor developments and will post updates on the Leaves of Absence, Military Workforce, and New Jersey blogs as additional information becomes available.

In addition, the Ogletree Deakins Client Portal provides subscribers with timely updates on state and federal laws around Military Leave requirements for private employers, including New Jersey Military Leave. 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.

Michael J. Nacchio is a shareholder in Ogletree Deakins’ Morristown office.

Alysonne O. Hatfield is of counsel in Ogletree Deakins’ Birmingham 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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Close-up of helping to fill in paper form in unemployment office. Concept of helping Ukrainian refugee to integrate into society.

Quick Hits

  • The Fourth Circuit held that Title VII’s Section 702 religious employer exemption is limited to religious discrimination and accommodation claims and does not shield a religious organization from sex, race, or national origin discrimination claims, even when the employment decision is motivated by sincerely held religious beliefs.
  • For lay employees who do not perform spiritual functions and are therefore not covered by the exemption for ministerial employees, the majority held that the church autonomy doctrine does not displace federal and state antidiscrimination law.
  • The court held that the Religious Freedom Restoration Act (RFRA) cannot be raised as a defense in a lawsuit between private parties, even if the government intervenes in the litigation.
  • Religious employers in the Fourth Circuit—in Maryland, Virginia, North Carolina, South Carolina, and West Virginia—may want to review benefits eligibility rules and other employment policies that draw religiously based distinctions affecting nonministerial employees.

In Doe v. Catholic Relief Services, a split three-judge Fourth Circuit panel rejected, 2–1, an employer’s religiously based statutory and constitutional defenses to Title VII and MFEPA sex discrimination claims. In the majority’s view, the employer was seeking “extremely broad and nearly unbounded immunity” arising from its religious status that “is not required by any statute or constitutional provision.” A lengthy dissent described the decision as “stunningly restrictive of religious freedom.” The sharp split suggests the issues may receive further review.

Background

Catholic Relief Services (CRS) is a nonprofit social services agency affiliated with the Catholic Church and governed by the United States Conference of Catholic Bishops. CRS has more than 8,000 employees. It does not require them to adhere to the Catholic faith except in “representational” positions. The plaintiff, an IT and data analyst, told a CRS recruiter in 2016 that he was gay and married. He asked whether his husband would be covered by dependent health benefits, and the recruiter said he would be.

Five months after the plaintiff enrolled his husband, CRS told him the enrollment was a mistake. CRS explained that extending dependent benefits to his husband conflicted with its religious values. CRS offered an alternative arrangement that included transitional coverage and a raise to offset most out-of-pocket costs. The plaintiff declined, and CRS terminated his husband’s coverage.

The plaintiff employee sued for sex discrimination under Title VII and the Equal Pay Act, and for sexual orientation discrimination under MFEPA. The district court granted summary judgment to the plaintiff as to liability under Title VII and the Equal Pay Act. It entered judgment for him on his MFEPA claim after a bench trial.

The Majority Opinion

    On appeal, CRS raised multiple defenses arising from various statutes as well as the First Amendment’s Religion Clauses, including the following: that it was subject to the religious employer exemption under Title VII and MFEPA; that the RFRA barred enforcement of those statutes against it; and that the First Amendment’s church autonomy doctrine provides immunity from liability. The court majority rejected all of these arguments.

    Title VII’s Section 702 Exemption

    Section 702 provides that Title VII “shall not apply to … a religious corporation, association, educational institution, or society with respect to the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities.” CRS argued that the exemption applies whenever a religious employer acts because an employee’s conduct is incompatible with its faith. The majority disagreed.

    Relying on the canon that exemptions from remedial statutes are to be construed narrowly, the court held that Section 702 immunizes religious organizations only from religious discrimination claims; it “does not apply to claims of discrimination based on sex, race, or national origin,” even when a decision is motivated by religious belief. Applying Title VII’s familiar mixed-motive framework, the court explained that if sex is a but-for cause of the decision, a concurrent religious motive does not change the result. The court emphasized that religious organizations may still “favor co-religionists in hiring” and may also discharge employees whose conduct or beliefs are inconsistent with those of their employers from a religious perspective, so long as the decision is not in any way based on race, sex, or national origin.

    MFEPA’s Religious Exemption

    MFEPA exempts religious entities from sexual orientation claims for “work connected with the activities of the religious entity.” The Maryland Supreme Court previously held that this exemption applies only when the employee’s duties “directly further the core mission(s) … of the religious entity.” The Fourth Circuit affirmed the district court’s finding that the plaintiff’s IT and data roles were “materially indistinguishable from those performed by individuals at secular organizations” and therefore did not qualify as mission-related jobs.

    The RFRA

    The RFRA provides religious organizations with a shield from certain governmental regulations or enforcement when such action conflicts with an organization’s religious mission. However, based on the RFRA’s text, including its reference to “appropriate relief against a government,” the court held that the RFRA applies only when the government is a party to the suit. In this case, the U.S. Department of Justice merely intervened in this private litigation between an employee and his employer, and that scenario did not trigger the RFRA’s protections.

    Church Autonomy

    The church autonomy doctrine arises out of the First Amendment’s religious protections. It bars courts from deciding questions of faith, doctrine, or internal church governance. The majority recognized that the doctrine presumptively covers three areas: the employment of ministers, church membership and hierarchy, and church discipline. It declined to extend the doctrine to all employment decisions rooted in religious belief. Drawing on Justice O’Connor’s concurrence in the Supreme Court of the United States’ decision in Roberts v. U.S. Jaycees, the majority reasoned that a religious organization filling lay positions through the commercial employment market “must participate in the surrounding regulatory scheme just like every other employer.”

    Interestingly, the court also expressly disagreed with the now-vacated January 2026 Ninth Circuit panel decision in Union Gospel Mission of Yakima v. Brown, which held that the church autonomy doctrine—a First Amendment principle beyond the ministerial exception—protects religious organizations’ nonministerial hiring decisions when based on sincerely held religious beliefs. That decision would have prevented enforcement of the Washington Law Against Discrimination’s antidiscrimination provisions with regard to hiring and employment decisions tied to the organization’s religious beliefs. That issue is now being reconsidered by the full U.S. Court of Appeals for the Ninth Circuit sitting en banc.

    The Dissent

    In dissent, Judge Quattlebaum would have reversed on several independent grounds.

    • Church Autonomy. He reasoned that the church autonomy doctrine extends beyond the ministerial exception to “‘internal management decisions that are essential to the institution’s central mission.’” In his view, that includes setting terms of employment, including policies and benefits, based on religious tenets. He criticized the majority for treating religious freedom “like getting an after-work beer—a little bit is okay, but not too much.”
    • Section 702. He also read this statutory section’s language that “this subchapter shall not apply” broadly to mean that all types of discrimination prohibited by Title VII—not just its religious discrimination ban—would disappear when a religious employer acts based on an employee’s religious observance or conduct that fails to conform to the religious employer’s requirements. He warned that under the majority’s view, religious organizations “[would] be required to hire employees who reject their beliefs,” but federal court precedent interpreting Section 702 has not traditionally gone that far.

    Key Takeaways for Employers

    A few points from the case may be worth considering by religiously affiliated employers in the Fourth Circuit:

    • Section 702 appears to be narrower in the Fourth Circuit than some religious employers may assume. Within the circuit, the Section 702 exemption protects decisions based solely on religion, such as preferring co-religionists. However, it does not cover decisions in which sex (including sexual orientation under Bostock) or another protected characteristic is part of that decision.
    • Benefits plans may merit a closer look. The case arose from an employer’s denial of dependent health insurance coverage, and the majority characterized the denial as unequal compensation based on sex. Religious employers may want to review their spousal and dependent eligibility rules, along with related plan documents and enrollment communications.
    • Job duties. The ministerial exception remains available for employees who perform spiritual functions. Under MFEPA, the exemption turns on whether the employee’s duties directly further the organization’s core mission. Employers may want to evaluate and document the religious functions of key roles.
    • Recruiting communications. In this case, a recruiter told the employee that his husband would be covered, and the employer reversed course months later. Employers may want to make sure recruiters and HR staff describe benefits eligibility accurately and consistently.
    • The RFRA is not a defense in private suits in the Fourth Circuit. The court’s majority found that the “RFRA does not apply in cases between private parties” and concluded the RFRA was “not an available defense in this case.” Religious employers facing private discrimination claims in the Fourth Circuit may be hard-pressed to rely on the RFRA as a defense under this decision.
    • Watch for further review. The 2–1 split, the eighty-seven–page dissent, and the conflicting authority across circuits suggest the case may draw further appellate attention. And we await the Ninth Circuit’s en banc opinion in Union Gospel Mission of Yakima v. Brown.

    Ogletree Deakins will continue to monitor developments in these cases, including any petition for rehearing en banc or for a writ of certiorari, and will provide updates on the firm’s Employment Law and State Developments blogs as additional information becomes available.

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    Quick Hits

    • The  Ontario Superior Court of Justice read a “for cause” confidentiality provision together with a CEO’s termination clause and found that the parties objectively intended to comply with the Canada Labour Code, rather than isolating individual words.
    • The court distinguished Ghazvini v. Canadian Imperial Bank of Commerce and Henderson v. Slavkin, finding that the clauses in those cases permitted termination without notice where the statute prohibits it, and that neither decision applied the Baker framework.
    • Allegations that the CEO was dismissed in retaliation for raising concerns about legal retainers went to the reason for dismissal, not the manner of dismissal, and did not support moral damages.
    • The claim was struck in its entirety without leave to amend, and the plaintiff was ordered to pay $24,500 in costs.

    In Henshell v. Batchewana First Nation of Ojibways, 2026 ONSC 5768, the court applied the Court of Appeal for Ontario’s interpretive framework in Baker v. Van Dolder’s Home Team, 2026 ONCA 568, and held that a chief executive officer’s termination clause complied with the Canada Labour Code. The court also struck the former CEO’s claims for moral and punitive damages and dismissed the action without leave to amend.

    Background Facts

    The plaintiff, who pleaded that she was a practising lawyer with twenty years of experience, left her law practice to become CEO of Batchewana First Nation of Ojibways (BFN) under a written employment agreement. She was employed from May 6, 2024, until her employment was terminated without cause on July 23, 2024.

    Section 13 of the agreement permitted BFN to terminate employment “for any lawful reason” upon providing the notice or pay in lieu of notice, and other entitlements, required by the Canada Labour Code, and excluded any further notice at common law. Separately, section 9 stated that any breach of BFN’s confidentiality policies “will be cause for severe discipline and/or termination of employment for cause.”

    The plaintiff claimed $350,000, representing twenty-four months’ pay in lieu of reasonable notice, along with moral and punitive damages of $500,000 arising from her dismissal. BFN moved under Rule 21.01 of the Ontario Rules of Civil Procedure to have the termination clause declared enforceable and the claim struck.

    The Court’s Findings

    The Termination Clause Was Enforceable

    The plaintiff argued that section 9 allowed BFN to terminate her employment for any confidentiality breach without her statutory entitlements, which rendered section 13 unenforceable. The court acknowledged that this reading might be plausible if the words were read literally and in isolation, but noted that it ignored the word “or,” which indicated that not every breach would result in termination for cause.

    Applying Baker, the court described the framework as a “welcomed departure” from comparing isolated words from case to case, and asked instead whether the termination provisions reflected an objective intention to comply with the minimum statutory standards. Reading sections 9 and 13 together, the court found that neither party—including the plaintiff, an experienced lawyer—could reasonably have intended to displace her Canada Labour Code entitlements. The clause was valid and enforceable, and the plaintiff was not entitled to common law reasonable notice.

    Moral, Punitive, and Repudiation Claims Were Struck

    The court confirmed that moral damages are not an extension of the notice period and remain available even where a termination clause is enforceable. However, none of the facts pleaded—inducement to leave her practice, an “unceremonious” termination, alleged retaliation, a council member’s conflict of interest, and the denial of a promised second opportunity to address council—amounted to bad faith in the manner of dismissal. Citing the Supreme Court of Canada’s decision in Wallace v. United Grain Growers Ltd., the court noted that employers are not required to have “good faith” reasons for dismissal, and found there was no legal right to a second attendance before council.

    The punitive damages claim failed because no independent actionable wrong was pleaded, and the alternative claim for repudiation failed because the alleged conduct fell well short of the egregious behaviour required. Because the plaintiff had already pleaded all of the facts on which she relied, the court refused leave to amend and fixed costs at $15,000 for the motion and $9,500 for the action.

    Key Takeaways

    Henshell illustrates how Baker is shifting the analysis of termination clauses away from a “magic words” approach and toward the parties’ objective intentions, read in light of the contract as a whole and the surrounding circumstances. While this may give employers greater confidence in well-drafted provisions, it is not a substitute for careful drafting. Employers may want to consider:

    • including clear language in termination provisions confirming that, in all circumstances, employees will receive at least their minimum entitlements under the applicable employment standards legislation;
    • reviewing “for cause” language in confidentiality, conflict of interest, and policy compliance provisions to ensure it does not suggest termination without statutory entitlements;
    • documenting relevant contract terms at hiring, such as probationary periods and the treatment of prior service, which the court noted were inconsistent with the plaintiff’s allegation that she was promised long-term employment; and
    • ensuring that the dismissal process itself is honest, transparent, and professional, as moral damages remain available even where a termination clause is enforced.

    Ultimately, the decision suggests that an employer’s reason for dismissal, where that reason is not alleged to be unlawful, is unlikely on its own to attract moral damages—but how the dismissal is carried out remains open to scrutiny.

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

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    Quick Hits

    • DV-2026 visa processing and DV-2027 lottery registration have faced separate disruptions.
    • DV-2027 registration remains closed, with no confirmed opening date.

    Diversity Visa Lottery Background

    Each year, the Diversity Visa program offers up to 55,000 immigrant visas to eligible individuals from countries with historically low levels of immigration to the United States. The process begins when individuals enter the lottery, and the State Department randomly selects entrants. Those selected may then apply for an immigrant visa or, if eligible, seek adjustment of status to lawful permanent residence in the United States.

    As discussed in our June 2025 article on the DV lottery, selection does not guarantee a visa. Principal applicants must still meet education or qualifying work experience requirements and complete the remaining immigration process.

    The program’s name identifies a federal fiscal year, not the calendar year in which people enter the lottery. For example, the State Department selected DV-2026 entrants on May 3, 2025. For DV-2027, the State Department has identified October 1, 2026, through September 30, 2027, as the visa application period, even though registration has not opened.

    Key Events Leading to the DV-2027 Stay

    September–November 2025. The State Department adopted a $1 lottery entry fee, then delayed DV-2027 registration without announcing an opening date.

    December 2025–early 2026. The State Department paused DV visa issuance, and U.S. Citizenship and Immigration Services (USCIS) held decisions on DV green card applications. These measures affected people already selected, not the separate delay in opening DV-2027 registration.

    March–April 2026. The State Department adopted a DV-2027 rule requiring most entrants to submit passport details. The rule took effect April 10, but registration remained closed.

    August 19, 2026. Red Eagle Law, L.C., sued in its own name to require the State Department to open DV-2027 registration.

    August 28, 2026. In a separate case, Medani v. Trump, a court ordered DV visa processing to resume. The State Department said its December 2025 issuance pause was no longer in effect. DV-2027 registration remained closed.

    September 30–October 1, 2026. The DV-2026 visa year ended, and the DV-2027 visa year began without an open registration period.

    October 14, 2026. In Red Eagle Law, L.C. v. Rubio, the court ordered the State Department to launch DV-2027. Under the revised timetable, the State Department had to:

    • announce entry dates and requirements by October 29;
    • open registration for thirty days by November 1; and
    • notify selected entrants by December 3, 2026.

    The October 14, 2026, order also required timely processing of DV-2027 visa applications. The government appealed.

    Recent Updates

    October 29, 2026: The Ninth Circuit temporarily stayed the district court’s order requiring the State Department to open DV-2027 registration. The appeals court granted the government’s request for an emergency stay. A stay temporarily suspends the lower court’s requirements while the appeal proceeds. As a result, the State Department was no longer required to meet the injunction’s October 29 announcement, November 1 registration, and December 3 selection-notification deadlines while the stay remains in effect.

    November 1–2, 2026: DV-2027 registration remains closed. The previously ordered November 1 opening did not take place, and no confirmed replacement opening date is available. The stay does not finally resolve whether the State Department’s failure to launch the program is lawful.

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

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    Group of young adults, photographed from above, on various painted tarmac surface, at sunrise.

    Quick Hits

    • Unlimited PTO outside the United States does not eliminate the need to track minimum statutory leave, carryover, and payout-on-termination; rather, it adds a layer of complexity to it.
    • In jurisdictions with already generous statutory leave regimes, unlimited PTO may create productivity and coverage challenges.
    • Replacing a more generous contractual PTO entitlement with unlimited PTO is generally considered a detrimental change requiring employee consent.
    • In some countries, employers looking to make changes to their PTO policies must complete a consultation process—which can take two to four weeks—before seeking employee consent.
    • Employees outside the United States may perceive unlimited PTO as a disincentive to taking leave rather than a benefit, which can complicate rolling out an unlimited PTO policy even further.

    Outside the United States, the administrative burden of tracking PTO accrual and carryover does not disappear. It often becomes more complicated.

    The key international principle is this: An unlimited PTO policy does not replace statutory leave entitlements—it sits on top of them. Before going global, employers may want to address three critical issues: (1) generous statutory leave regimes, (2) changing contractual PTO entitlements, and (3) the consultation process.

    Why Unlimited PTO Is Different Outside the United States

    In the United States, employees generally do not have a legal entitlement to vacation. Internationally, the picture is different. Almost all other jurisdictions require employers to provide some minimum statutory vacation entitlement. Many jurisdictions also have rules requiring employers to allow employees to carry over some or all of their vacation entitlement from year to year, and to pay out any accrued but unused vacation upon separation from employment.

    Overlaying an unlimited PTO policy on these legal requirements does not simplify compliance. Employers must still track each employee’s minimum statutory entitlement, ensure any unused statutory leave is carried over in accordance with local law, and make sure it is paid out on termination of employment. Against that backdrop, three critical issues arise when unlimited PTO goes global.

    Issue 1: Generous Statutory Leave Regimes

    Unlimited PTO policies should be assessed jurisdiction by jurisdiction. Some countries already have very generous statutory leave requirements, which may include twenty to thirty days of mandatory vacation, ten to fifteen public holidays, mandatory bereavement leave, paid sick days, and even leave for special occasions such as the birth of a child, a wedding, or moving to another house.

    Layering a global unlimited PTO policy on top of these entitlements could result in employees in those jurisdictions receiving even more time off, which may affect productivity and create coverage issues—particularly in countries where extended summer vacations are already common.

    Issue 2: Changing Contractual PTO Entitlements

    Many employers already offer more PTO than local law requires, typically through employment contracts. Outside the United States, at-will employment generally does not exist, and the employment relationship is governed by employment agreements. An employer that wants to move to unlimited PTO—and achieve cost savings by paying out only accrued but unused statutory PTO on termination—will generally need employees to agree to an amendment to their employment agreements.

    Employee consent is required because the change is considered detrimental to the terms and conditions of employment, even though employees may technically be able to take more PTO than before. Securing that consent can be challenging. While the change can be positioned as beneficial, many employees may hesitate to accept a reduced payout on termination.

    Issue 3: The Consultation Process

    In some countries, employers must consult with employees before requesting their consent. While requirements vary by country, consultation generally involves proposing the change, inviting feedback through individual meetings, group meetings, or written submissions, and genuinely considering that feedback before deciding whether to proceed.

    Only after the consultation process—which can take approximately two to four weeks—should employers notify employees of the decision to change the PTO structure and ask them to sign a contractual amendment reflecting the new PTO terms.

    To help facilitate employee agreement, employers may consider pairing the move to unlimited PTO with other beneficial changes, such as a one-time bonus, an improved medical or pension plan, or a new or enhanced global parental leave entitlement, presented as part of a single initiative.

    A Thread Running Through All Three: Employee Perception

    Each of these issues is shaped by how employees view unlimited PTO, which is very different outside the United States. Employees who already enjoy generous statutory leave often see it not as a benefit, but as a way to discourage them from using leave—making them less likely to agree to a contractual change and more likely to raise concerns during consultation. Unlimited PTO policies frequently include rules on when PTO may be used, how much may be taken at once, and how much can be combined with other statutory leaves, such as maternity leave. Employers adopt these rules to prevent abuse, but they can have a chilling effect, leading employees to take less PTO than they did under a defined entitlement, and which can result in higher payouts of statutory PTO on termination of employment.

    A 2026-Ready Strategy

    Multinational employers considering a global unlimited PTO policy may want to ensure their approach:

    • assesses the policy jurisdiction by jurisdiction against existing statutory leave entitlements;
    • continues to track minimum statutory leave, carryover, and payout obligations under local law;
    • accounts for employee consent and, where required, consultation before amending contractual PTO entitlements;
    • considers pairing the change with other beneficial changes to encourage employee agreement; and
    • evaluates whether usage rules may discourage employees from taking leave.

    Unlimited PTO does not replace statutory leave obligations—it adds to them. Employers that plan for generous statutory leave regimes, contractual PTO entitlements, and local consultation requirements from the outset will be best-positioned to roll out unlimited PTO globally. A global unlimited PTO template cannot absorb the complexity of international leave laws. A thoughtful, jurisdiction-specific global PTO strategy can.

    Ogletree Deakins’ Cross-Border Practice Group will continue to monitor developments and will post updates on the Cross-Border and Leaves of Absence blogs as additional information becomes available.

    Shirin (Aboujawde) Gudgin is a shareholder in the New York office of Ogletree Deakins, and a partner in the firm’s London office.

    Peg Ventricelli, a practice assistant in the Stamford office of Ogletree Deakins, contributed to this article.

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