Administration Releases Second Regulatory Agenda. Perhaps regulators in the Trump administration are reading the Buzz, because the Unified Agenda of Federal Regulatory and Deregulatory Actions was released just one week after we noted its absence. This is only the administration’s second such regulatory agenda, as the administration failed to issue a fall regulatory agenda in 2025. As always, the dates noted in the current Regulatory Agenda are closer to internal agency “guesstimates” than binding deadlines. Set forth below are the regulatory items employers should watch in the months ahead.

National Labor Relations Board. There are no short-term or long-term regulatory entries for the NLRB.

U.S. Equal Employment Opportunity Commission (EEOC). The EEOC has put forth a robust regulatory agenda. Over the next several months, the Commission plans to rescind the EEO-1 reporting form and its Uniform Guidelines on Employee Selection Procedures (which have been in place for more than forty-five years) and amend the regulations implementing the Pregnant Workers Fairness Act, among other initiatives. T. Scott Kelly, James J. Plunkett, and Nonnie L. Shivers have the details.

U.S. Department of Labor (DOL) – Wage and Hour Division (WHD)

• Independent Contractor. Comments on the Fair Labor Standards Act independent contractor proposal closed on April 28, 2026. A final rule is scheduled to be issued in October 2026.
• Joint Employer. In an example of how the dates in the Regulatory Agenda can sometimes be inaccurate, the WHD’s joint-employer proposal is listed as being released sometime this month. However, the proposal was already issued in April of this year, and the comment docket closed on June 22, 2026. The Regulatory Agenda does not indicate when a final rule will be issued.
• Tip Regulations. In August 2026, the WHD is scheduled to issue “a notice of proposed rulemaking to amend regulatory provisions related to tipped employees under the [Fair Labor Standards Act (FLSA)].”
• Young Workers. The WHD is scheduled to issue a proposal “relating to permissible hours of work 14- and 15-year-olds” in September 2026.
• Overtime and Compensable Hours. Proposals relating to exemptions (such as overtime) for executive, administrative, and professional (EAP) employees, as well as what “kinds of activities constitute hours worked for purposes of the FLSA,” are both listed as long-term actions.

DOL – Occupational Safety and Health Administration (OSHA)

• General Duty Clause. OSHA’s proposal to “exclude from enforcement known hazards that are inherent and integral to the essential function of a professional or performance-based occupation” is scheduled for a public hearing in August 2026.
• Lock-Out/Tag-Out Update. To “modernize United States regulations to better align with current technologies,” OSHA will issue proposed changes to its lock-out/tag-out regulations in November 2026.
• Tree Care Standard. In October 2026, OSHA is scheduled to issue a proposal to address health and safety concerns in the tree care industry.
• Heat Injury and Illness Prevention. The Trump administration continues to move forward with OSHA’s proposal to address excessive heat in the workplace. After holding public hearings on the matter in the summer of 2025, OSHA is now forecasting that it will issue a “supplemental [notice of proposed rulemaking]” in December 2026 and a final rule in October 2027.
• Subpoenas. In November 2026, OSHA is scheduled to adopt an interim final rule relating to subpoenas “to provide helpful clarity to the agency and the regulated public on these issues, while promoting transparency and uniform subpoena practice across the agency.”
• Workplace Violence in Health Care and Social Assistance. This proposal, which has appeared on recent Regulatory Agendas, has now been moved to a long-term action.

DOL – Employee Benefits Security Administration (EBSA)

• Environmental, Social, and Governance (ESG) Investing. The Office of Information and Regulatory Affairs is currently reviewing a proposed rule, “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights,” that would amend current regulations “so that plan fiduciaries select investments and exercise shareholder rights based only on financial considerations … and not to advance social causes.” A proposal will likely be made public this summer. This policy debate has flip-flopped with each presidential administration, beginning with President Obama.
• Alternative Investing. On June 1, 2026, the public comment docket closed on EBSA’s proposal to allow retirement plan sponsors to consider alternative investment options, such as cryptocurrency. While the Regulatory Agenda does not include a date for final action, this time frame suggests that a final rule may be issued in late 2026 or early 2027.
• Association Health Plans. A proposal to allow employer groups or associations to form association health plans is scheduled for release in November 2026. The first Trump administration issued a final rule on this matter in 2018, but it was partially struck down in court and subsequently rescinded by the Biden administration.
• Mental Health Parity. In December 2026, EBSA is expected to issue a proposal relating to regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA).

Immigration

• Prevailing Wage Rule (Employment and Training Administration). On May 26, 2026, the DOL’s Employment and Training Administration (ETA) closed the public comment docket on its proposal to increase the prevailing wage levels that must be paid to EB-2 and EB-3 employment-based immigrant visas (via PERM), as well as H-1B, H-1B1, and E-3 nonimmigrant visa holders. The Regulatory Agenda does not provide a date on which a final rule might issue.
• PERM Changes (ETA). In a new entry on the Regulatory Agenda, ETA states that in July 2026 it will issue a proposal to “modernize the standards and procedures by which the Department [of Homeland Security (DHS)] receives and reviews employers’ applications for permanent labor certification by improving the minimum standards for recruiting qualified U.S. workers, strengthening safeguards for U.S. [w]orkers impacted by layoffs, and enhancing employer compliance with program requirements related to non-discriminatory recruitment and hiring practices, and record retention requirements.”
• H-1B Program Reform (U.S. Citizenship and Immigration Services (USCIS)). In August 2026, USCIS is expected to release a proposal “to reform the H-1B program by revising eligibility for cap exemptions, providing greater scrutiny for employers that have violated program requirements, and increasing oversight over third party placements, among other provisions.”
• Employment Authorization Reform for Asylum Applicants (USCIS). The comment period for this proposal ended on April 24, 2026, but the Regulatory Agenda does not provide any dates for future actions.
• Biometrics (USCIS). A final rule concerning the use and collection of biometrics in “the adjudication of any immigration application, petition, or benefit” is expected to be released in December 2026.
• Automatic Extension of Work Authorization (USCIS). On October 30, 2025, USCIS promulgated an interim final rule (IFR) that ended the practice of automatically extending work authorization for certain foreign nationals while the agency processes their work authorization applications. After receiving public comments on the IFR, USCIS is expected to release a final rule in July 2026.
• H-4 Dependent Spouses. USCIS plans to “restore DHS’s long-standing policy of not extending eligibility to request employment authorization to H-4 dependent spouses.” This regulatory proposal, which was thought to be an early priority of the administration, is listed as a long-term action.
• Duration of Status (U.S. Immigration and Customs Enforcement (ICE)). This action cleared a final review by the Office of Information and Regulatory Affairs on June 16, 2026, so a final rule is imminent.
• Practical Training (ICE). The Optional Practical Training program provides foreign national students with one year of work authorization after their graduation (and up to two additional years if they graduate in a science, technology, engineering, or mathematics (STEM) field). ICE wants to amend the program’s regulations “to address fraud and national security concerns, protect U.S. workers from being displaced by foreign nationals, and enhance the Student and Exchange Visitor Program’s capacity to oversee the program.” This proposal, originally scheduled for September 2025, is not slated to be made public until February 2027.

Visa Bond Program (U.S. Department of State). A rule to make permanent the 2025 visa bond pilot program is scheduled to be released in August 2026.

The Marshall Plan. John Marshall (1755–1835), the fourth chief justice of the Supreme Court of the United States, died 191 years ago this week in 1835. Marshall served as chief justice for thirty-four years—still the longest tenure of any chief justice to have served on the Supreme Court. Having previously served as a U.S. representative from Virginia and as President John Adams’s secretary of state, Marshall was the first person ever to have held an office in each of the three constitutional branches of the federal government. We previously examined Marshall’s decisions in McCulloch v. Maryland and Barron v. Baltimore. However, he is also the author of perhaps the most significant Supreme Court case of all: Marbury v. Madison, which established the doctrine of judicial review, whereby the judiciary serves as a “check” on the actions of the executive and legislative branches.

Quick Hits

• Oklahoma has amended its occupational safety and health citation rule to allow the ODOL to issue citations against public employers more than six months after an alleged violation when that violation arises from a fatality investigation or when third-party conduct caused the delay.
• The amendment takes effect July 11, 2026, and applies to state and local government employers covered by Oklahoma’s public employee occupational safety and health program.
• While citation issuance for violations is mandatory, fine assessment remains discretionary, and the ODOL has stated its preference for achieving compliance without assessing fines.

An amended version of OAR 380:40-1-16 (see pages 955–956 of the July 1, 2026, Oklahoma Register, as well as the ODOL’s December 15, 2025, Rule Impact Statement) now allows the ODOL to issue citations beyond the six-month window in two circumstances: (1) when a citation arises from a fatality investigation, or (2) when a delay in issuance was caused by parties other than the ODOL. According to the ODOL, fatality investigations are complex and frequently take longer than six months. This is often due to coordination with law enforcement, medical examiners, and other agencies, including reliance on outside entities to supply reports and information outside the ODOL’s control. ODOL reasoned that the prior rule was allowing violators to escape accountability on timing grounds alone.

Two Exceptions

The first exception is broad. The language of the rule amendment suggests that a citation need not be for the violation that caused the fatality; it only needs to arise from or relate to the fatality investigation. Conditions observed incidentally during a fatality inspection, even those unrelated to the death itself, could support a citation issued well after the six-month mark.

The second exception, for third-party-caused delays, is less defined. The rule provides no guidance on what conduct qualifies, which will likely generate disputes as the ODOL begins applying it.

One meaningful limitation worth noting: while citation issuance is mandatory when a violation is found, fine assessment is discretionary. The ODOL has stated its intent to work with public employers to correct violations without imposing fines where possible.

Practical Steps for Public Employers

Public employers can no longer treat the passage of six months as a signal that a post-incident investigation has run its course. For any facility or worksite that has experienced a fatality, enforcement exposure now extends through the life of the ODOL’s investigation. Practically speaking, that means:

• preserving records for as long as the investigation remains open. Inspection records, training logs, maintenance documentation, and internal communications are all potentially relevant; and
• updating legal hold procedures to reflect that fatality investigations are open-ended for citation purposes.

Scope Note

This amendment applies exclusively to public employers under Oklahoma’s Public Employees Occupational Safety and Health (PEOSH) program. Oklahoma is one of only seven states that administers its own occupational safety and health program to public sector employers exclusively rather than deferring to federal OSHA, giving it authority to set procedural rules of this kind. Private sector employers in Oklahoma remain subject to federal OSHA’s jurisdiction and its separate six-month citation deadline under 29 U.S.C. § 658(c).

Ogletree Deakins’ Workplace Safety and Health Practice Group and Oklahoma City office will continue to monitor developments and provide updates on the Oklahoma and Workplace Safety and Health blogs as additional information becomes available.

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Quick Hits

• Recent federal circuit decisions and EEOC guidance has impacted how employers should view reassignment under the ADA as a potential accommodation.
• Federal courts are split on whether reassignment requires direct placement or merely an opportunity to compete. The EEOC takes the broadest view and is aggressively enforcing it.
• Employers that follow the broad approach eliminate compliance risk in every jurisdiction.
• Supreme Court review is widely anticipated; but the broad approach is future-proof.

The Americans with Disabilities Act (ADA) expressly lists “reassignment to a vacant position” as a reasonable accommodation, but in practice the scope of that obligation is hotly contested. How far must the employer search? Must the employee compete? This article explains the two dominant frameworks, the current circuit split, and practical steps for employers that want to stay ahead of the curve.

Two Ways to Read the Reassignment Duty

The Narrow Approach. Under this reading, an employer’s neutral, consistently applied policies can limit the reassignment obligation. If the employer requires all internal candidates to compete for openings, it may apply that policy to reassignment. Neutral transfer or geographic-scope policies may likewise cap the search. Proponents read the Supreme Court of the United States’ key accommodation decision broadly—as establishing that neutral policies generally make a disability-based preference unreasonable. Under this framework, the employee may be left to find and apply for vacancies independently.

The Broad Approach. Under this reading, reassignment means placement—not merely a chance to compete. If the employee is qualified for a vacant position, the employer must offer it directly. Neutral policies (other than bona fide seniority systems) do not excuse the duty. The employer bears primary responsibility for identifying vacancies companywide, sharing a list of options with the employee, and offering the position closest to the employee’s current role in pay, status, schedule, and location.

Where Does the EEOC Come Down?

The U.S. Equal Employment Opportunity Commission (EEOC) takes the broadest possible view. Its enforcement guidance holds that: (1) the employee need only be qualified—not the “best qualified”—so placement without competition is required; (2) the employer must lead the search and inform the employee of vacancies because it is in the best position to know what is open; (3) no geographic or departmental limit may be imposed unless the employee voluntarily sets a boundary; (4) the employer must offer the vacancy closest (in pay, benefits, title, responsibility, location, etc.) to the current role first; and (5) the Supreme Court’s key decision applies only to bona fide seniority systems, not to other neutral policies.

The only criteria the EEOC considers legitimate for eliminating a vacancy are that the employee is unqualified, the position is not actually vacant, placement would require creating a new role or bumping another employee, the position would be a promotion, the employee cannot perform the essential functions, or placement would violate a bona fide seniority system the employer does not deviate from.

The Circuit Split: Where Things Stand

Federal appellate courts are divided. The disagreement turns on how each circuit reads the Supreme Court’s key accommodation decision when applied to neutral employer policies. A slight majority of circuits—roughly six—side with the EEOC and adopt the broad approach. A minority—roughly five—take the narrower view. At least one circuit has not squarely decided.

The most prominent dispute is whether the employee must compete for a vacancy. A secondary question is whether the employer must affirmatively search for and share a list of openings—and notably, even some courts rejecting mandatory noncompetitive placement still expect the employer to participate in an interactive process and share vacancy information. The geographic-scope issue tracks the competition question: only courts allowing neutral policies to block reassignment also allow geographic limits. On timing, all courts agree that “vacant” means currently open or reasonably expected to open in a short window—generally a few weeks, not months.

Because the split is tied directly to interpreting a Supreme Court decision, eventual high court review is widely expected.

Following the Broad Approach

Following the EEOC’s guidance does not risk an adverse finding in any circuit—courts that reject the broad view would simply see the employer as having exceeded its obligations. Conversely, following the narrow approach in a broad-approach jurisdiction creates serious exposure: ADA verdicts can be staggering, with reassignment-specific outcomes reaching eight figures and broader accommodation cases producing awards in the hundreds of millions. The EEOC’s current enforcement plan expressly targets employers whose defenses challenge Commission guidance, and the agency has been actively litigating and settling ADA cases. Finally, if the Supreme Court sides with the majority, narrow-approach defenses collapse overnight.

Given the above, here are some practical steps for employers adopting the broad approach:

Confirming the threshold. Documenting the reassignment is warranted. This step includes documenting that the employee held a role, can no longer perform the essential functions with or without accommodation, or continued accommodation would be an undue hardship.

Gathering information. Critical information includes qualifications, restrictions, and relocation preferences from the employee.

Searching companywide. A companywide search involves identifying all locations and departments, reaching out to recruiters about positions opening within approximately a month, and documenting the search.

Sharing a vacancy list. Consider providing qualifications, pay, benefits, schedule, location, and relocation costs on vacancy lists. In addition, consider asking the employee to identify qualifying positions, note accommodations needed, and rank preferences.

Offering the closest match. Consider selecting positions mirroring the employee’s rankings and closest to the employee’s current role. Employers will want to be prepared to justify any deviation.

Putting it in writing. Consider providing offers in writing and obtaining a written acceptance. Employers may want to treat a refusal of a reasonable offer for nondisability reasons as a refusal of accommodation.

Maintaining status and documenting everything. Consider keeping the employee on leave or temporary assignment during the search, while not imposing artificial deadlines. Thorough documentation of each step is important since the process may be scrutinized.

Takeaways for Employers

• The broad approach eliminates legal risk in every federal circuit.
• Supreme Court review is likely; employers relying on the narrow approach may want to be prepared for potential invalidation.
• The EEOC is actively enforcing its guidance; positions at odds with it invite systemic investigations.
• Thorough, contemporaneous documentation of the interactive process is the strongest defense in any charge or litigation involving accommodations.
• Multistate employers benefit most from a uniform, broad-approach reassignment policy.

Ogletree Deakins’ Employment Law Practice Group will continue to monitor developments and will post updates on the Employment Law and Multistate Compliance blogs as additional information becomes available.

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The Spring 2026 deregulation plan incorporates, for the first time, the regulatory plans of independent agencies, now subject to White House coordination following the Supreme Court of the United States’ June 29, 2026, decision expanding presidential removal power. Among the 702 targeted rules are environmental review requirements for energy projects, energy efficiency standards, rules that promote diversity, equity, and inclusion (DEI), and specific deregulatory actions relevant to the federal contracting community.

Quick Hits

• The deregulatory actions include the rescission of Executive Order (EO) 11246’s implementing regulations, the elimination of the U.S. Equal Employment Opportunity Commission’s (EEOC) disparate-impact standard, and the proposed rescission of EEO-1 reporting requirements.
• Federal contractors’ obligations under Section 503 of the Rehabilitation Act and the Vietnam Era Veterans Readjustment Assistant Act (VEVRAA) remain intact despite the rescission of EO 11246 and the proposed defunding of the Office of Federal Contract Compliance Programs (OFCCP).
• The EEOC’s proposed rescission of EEO-1 reporting is still undergoing review by the Office of Information and Regulatory Affairs (OIRA) (expected through mid-August 2026), and existing filing obligations remain in force until rulemaking is complete.
• These deregulatory actions occur alongside new compliance requirements, including EO 14398’s mandatory DEI contract clause (FAR 52.222-90), which must be incorporated into existing contracts by July 24, 2026.

Of particular note to federal contractors, the following deregulatory actions are in the crosshairs of the Unified Agenda.

Deregulatory Proposals

Rescission of OFCCP’s EO 11246 Implementing Regulations

Among the 702 deregulatory actions is the U.S. Department of Labor’s proposed rescission of all regulations implementing Executive Order 11246, the long-standing framework that required federal contractors to maintain affirmative action programs and comply with related nondiscrimination obligations. EO 11246 was revoked by President Donald Trump on January 21, 2025, by EO 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.”

OFCCP published a proposed rule on July 1, 2025, to rescind the implementing regulations at 41 C.F.R. Parts 60-1, 60-2, 60-3, 60-4, 60-20, 60-30, 60-40, 60-50, and 60-999. Although a final rule has not yet been issued, the Unified Agenda confirms this rescission remains a priority. Contractors should note that implementing regulations for EO 11246 are separate and apart from those existing legal obligations under Section 503 of the Rehabilitation Act and VEVRAA. Although certain changes have also been proposed for the implementing regulations of Section 503 and VEVRAA, existing obligations remain unaffected until proposals are finalized, such as the annual preparation of affirmative action programs for individuals with disabilities and protected veterans.

EEOC Deregulatory Actions

The Unified Agenda includes several significant EEOC deregulatory actions. First, the EEOC plans to eliminate the long-standing “disparate impact” standard in proving racial discrimination. This follows EO 14281, which directed agencies to “deprioritize” disparate impact claims. The EEOC has already directed the dismissal of pending disparate impact complaints. For federal contractors, this should mean enforcement scrutiny focused exclusively on intentional disparate treatment, though private parties may still attempt to bring disparate impact claims under Title VII.

Second, the EEOC proposes to rescind federal EEO reporting and recordkeeping obligations, including the EEO-1 reporting framework. On May 14, 2026, the EEOC submitted to OIRA a proposal to rescind reporting obligations related to Title VII, the Americans with Disabilities Act (ADA), the Genetic Information Nondiscrimination Act (GINA), and the Pregnant Workers Fairness Act (PWFA). The rescission of EO 11246 already eliminated the lower fifty-employee EEO-1 filing threshold for federal contractors. However, until formal rulemaking is complete (the ninety-day OIRA review runs through approximately mid-August 2026), existing obligations remain in force, and contractors should prepare to file if the EEOC opens a 2026 filing window.

Third, on July 6, 2026, the EEOC submitted a final interpretative rule to rescind  29 C.F.R. Part 1608 governing voluntary affirmative action plans. The aim of this would be to remove longstanding guidance on permissible voluntary affirmative action in employment, potentially increasing legal uncertainty for contractors that maintained such programs under the prior framework.

DEI-Promoting Regulations

The Unified Agenda specifically targets rules that promote diversity, equity, and inclusion. While EO 14398, “Addressing DEI Discrimination by Federal Contractors” (discussed below), represents a new regulatory requirement, the Unified Agenda’s deregulatory side seeks to remove older rules across multiple agencies that previously encouraged or mandated DEI-related compliance. For federal contractors, this creates a potentially difficult dynamic to navigate: legacy DEI-promoting regulations (now being removed) versus new prohibitions on “racially discriminatory DEI activities” (now being imposed).

The Broader Context for Federal Contractors

The deregulatory actions sit within a broader landscape of regulatory change affecting federal contractors. Key concurrent developments include: EO 14398’s mandatory DEI contract clause (FAR 52.222-90), which prohibits “racially discriminatory DEI activities” and must be incorporated into existing contracts by July 24, 2026; the proposed defunding of OFCCP in the FY 2027 budget (though Congress ignored a similar proposal in fiscal year (FY) 2026 and instead preserved $101 million in funding, along with keeping Section 503/VEVRAA obligations intact); the FY 2026 National Defense Authorization Act’s (NDAA) increase of the certified cost or pricing data threshold to $10 million for defense contracts entered after June 30, 2026, with cost accounting standards (CAS) applicability thresholds potentially rising to $35 million; and the ongoing “Revolutionary FAR Overhaul” eliminating a substantial number of provisions. Collectively, these developments represent a fundamental realignment of the federal contractor compliance environment.

Considerations for Federal Contractors and Subcontractors

Federal contractors and subcontractors are navigating one of the most consequential periods of procurement reform in decades. The combination of the Revolutionary FAR Overhaul, an intense focus on anti-DEI and anti-discrimination obligations, increased cost and pricing thresholds, proposed OFCCP restructuring, and shifting enforcement priorities throughout various federal agencies, creates both compliance risks and potential competitive advantages for contractors that adapt quickly.

Contractors may consider reviewing their existing compliance playbooks, proposal templates, and subcontracting policies in light of the FAR restructuring and renumbering. It may be prudent to assess the impact of EO 14398 on internal DEI programs and subcontractor flow-down provisions, particularly in advance of the July 24, 2026, deadline for bilateral modifications to existing contracts. Defense contractors can evaluate the implications of raised CAS and certified cost or pricing data thresholds for their business models and accounting systems. All contractors should also keep a close eye on existing and potentially changing statutory and regulatory obligations, including ensuring continued compliance until and unless final rules or changes are implemented.

Next Steps

Ogletree Deakins’ Diversity, Equity, and Inclusion Compliance Practice Group, Government Contracting and Compliance Practice Group, and Workforce Analytics and Compliance Practice Group will continue to monitor developments and will provide updates on the Diversity, Equity, and Inclusion Compliance, Employment Law, Government Contracting and Compliance, and Workforce Analytics and Compliance blogs as additional information becomes available.

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

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Quick Hits

• When reviewing a mass layoff notice, the focus must generally be on the purpose of the notification procedure.
• Stating a number of employees to be laid off that is slightly too high in the mass layoff notice does not automatically render the notice invalid.

The Case

The employee worked as a machine setup technician and operator for a key manufacturer and machine builder. The employer became insolvent in November 2024. The insolvency administrator decided to shut down operations and terminate the employment relationships of all employees. In February 2025, a reconciliation of interests was concluded with the relevant works council. Subsequently, a mass layoff notice was filed with the Employment Agency (Agentur für Arbeit). After the Employment Agency received the notice, the employer terminated the employee’s employment relationship, among others. The notice of mass layoffs stated that thirty-four layoffs were to be carried out. In fact, however, thirty-one or thirty-two terminations were issued.

The employee challenged the termination, arguing that the termination was invalid because, during the proceedings under Section 17 KSchG, contradictory or incorrect information regarding the number of employees to be laid off had been provided to both the works council and the Employment Agency.

The Hagen Labor Court upheld the claim. The Hamm State Labor Court, however, dismissed it.

The BAG’s Decision

In its ruling (Ref. No. 6 AZR 7/26, decision of June 25, 2026), the BAG found that the employee’s appeal on points of law was unsuccessful. The termination remained valid.

The BAG initially based its decision on the purpose of the mass layoff notification. This notification was intended to enable the competent Employment Agency to find solutions to the anticipated problems associated with the planned layoffs.

If errors did occur in the submission of the mass layoff notice that did not, however, conflict with the purpose of the notification procedure and did not significantly impede the search for solutions, the mass layoff notice nevertheless satisfied the requirements of Section 17 KSchG and the EU Collective Redundancies Directive (Massenentlassungsrichtlinie (MERL)).

The slightly inflated number of employees to be laid off stated in the present case—thirty-four instead of thirty-one or thirty-two—did not affect the Employment Agency in its task of assessing the consequences of the layoffs, such as which labor market policy measures should be taken. The notice still allowed the Employment Agency to carry out its statutory role.

Thus, according to the BAG, the mass layoff notification remained proper and therefore effective despite the objectively incorrect information.

Practical Significance

The decision is notable, even though the corresponding press release from the BAG (the full text of the decision is not yet available) leaves open the question of when comparable errors in the notification procedure are no longer considered “minor.”

However, the decision is highly relevant in practice, as the “dismissals” to be reported in the notification procedure also include employer-initiated separation agreements. However, the conclusion of such agreements depends on the parties’ willingness to enter into them, so it is not uncommon for termination agreements that were initially “planned” to ultimately not be concluded—or at least not within the thirty-day period specified in the mass layoff notice. The BAG’s focus on the purpose and intent of the notification procedure is therefore pragmatic and correct in this context. Unfortunately, such pragmatism is not necessarily common in the case law of Germany’s highest labor court regarding mass layoff procedures.

Tatjana Serbina is counsel in the Berlin office of Ogletree Deakins.

Maximilian Gössling, a trainee lawyer in the Berlin office of Ogletree Deakins, contributed to this article.

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

Quick Hits

• An employee’s right to be heard before any sanction is imposed is a near-universal international principle.
• The right to be accompanied by someone who supports the employee’s interests at disciplinary or investigatory meetings is statutory or contractual in many jurisdictions.
• Procedural failures in the investigation, including missed deadlines and use of unauthorized investigators, can independently invalidate the disciplinary outcome.
• In many jurisdictions, strict statutory deadlines, sometimes as short as forty-eight hours, govern when disciplinary action must be initiated.
• Employers may want to ensure they address data privacy compliance, including cross-border transfer mechanisms and subject access request risks, before any data collection begins.

The key international principle in an investigation is that procedural compliance is not separate from the substantive disciplinary decision—it is part of it. An employer that reaches the right conclusion by the wrong process will often lose the legal ability to impose sanctions on the employee.

Fundamental Differences: United States vs. International

In the United States, employers have broad latitude to investigate workplace issues. Employees have limited rights to counsel, no general right to refuse to cooperate, and investigation findings can be used freely. Furthermore, investigations can be conducted informally.

Internationally, the investigation process is often regulated by statute or case law. The right to be accompanied by someone who supports the employee’s interests is near-universal in formal proceedings. Cooperation obligations exist but are qualified. Data protection law governs what can be collected, retained, and shared. Critically, procedural failures in the investigation can invalidate the disciplinary outcome entirely.

The Right to Be Heard

A near-universal international principle requires that the employee be given an opportunity to respond before any sanction is imposed. This is known variously as due process, prior hearing, show cause notice process, or disciplinary inquiry, depending on the jurisdiction.

In practice, this requires: (1) written notice of the specific allegations—vague allegations constitute a procedural failure; (2) sufficient time for the employee to prepare a response; (3) an opportunity to present that response, orally or in writing depending on the jurisdiction; (4) in many jurisdictions, the right to cross-examine witnesses or challenge evidence; and (5) a decision made only after genuinely considering the response.

The Right to Be Accompanied

In many jurisdictions, employees have a statutory or contractual right to be accompanied at investigatory and disciplinary meetings. The specific rules vary by country:

In the United Kingdom and Ireland, there is a statutory right to be accompanied by a trade union representative or colleague at formal disciplinary and grievance hearings. In France, employees have the right to be assisted by a fellow employee at the entretien préalable (pre-dismissal interview). In Germany, the works council must be heard before any dismissal; failure renders the dismissal void. In South Africa, employees have the right to a companion and to call witnesses at a disciplinary hearing. In India, employees have the right to bring a coworker representative to the domestic inquiry.

The practical consequence is significant: Scheduling a disciplinary or investigatory meeting without offering the right to accompaniment where it applies renders the outcome procedurally defective—even if the substantive finding is correct.

Who Conducts the Investigation

In the United States, the choice of investigator is largely a matter of employer discretion—an HR manager, outside counsel, or internal legal team can typically conduct the investigation. Internationally, this assumption could be fatal to the disciplinary outcome.

Many jurisdictions require that specific persons or bodies conduct the investigation or disciplinary proceeding. In India, a domestic inquiry must be conducted by an inquiry officer who is impartial and, in many cases, particularly for senior employees or unionized workforces, a formal disciplinary committee is required. In several Latin American countries, the disciplinary process must be conducted locally by authorized personnel; investigation findings produced by a U.S. parent company may lack standing in local proceedings. In jurisdictions with strong works council rights, such as Germany or the Netherlands, employee representative bodies may have consultation or co-determination rights over how investigations are conducted.

The key principle is that an investigation conducted entirely by U.S.-based personnel, without involvement of local HR or legal advisors, may not be recognized as a valid basis for disciplinary action in the local jurisdiction. The U.S. parent’s conclusion—however well-supported—may simply not count.

Timing: The Statutory Clock Is Running

One of the most overlooked aspects of international investigations is timing. Many jurisdictions impose strict statutory deadlines that govern how quickly an employer must act—not just in concluding the investigation, but in initiating disciplinary proceedings once facts are known.

In some countries, these deadlines are remarkably short. In France, for example, employers must initiate formal disciplinary proceedings within two months of becoming aware of the misconduct, and the sanction must be imposed within one month of the disciplinary interview. In Brazil, the prevailing jurisprudential view requires employers to act promptly, with some courts finding delays of more than thirty days constitute condonation of the misconduct. In certain Middle Eastern jurisdictions, deadlines can be as short as forty-eight hours from discovery to initiation of disciplinary action. Missing these windows does not merely weaken the employer’s position—it can extinguish the right to terminate the employment relationship altogether.

The practical implication is significant: A thorough but slow investigation may produce an airtight factual record that cannot be acted upon. Global investigation protocols must account for local timing requirements from the outset and escalate matters appropriately to preserve the employer’s ability to take disciplinary action.

Data Privacy Compliance

Investigations involving access to employee communications, devices, or data trigger data protection obligations in most jurisdictions. Key requirements include:

Proportionality and legal basis: Employers may want to ensure they access only data that is necessary and proportionate. Most regimes require a documented legal basis for accessing data—typically, legitimate interests balanced against employee privacy rights.

Employee notification: Covert monitoring has strict limits. Employees must typically be notified of monitoring either in advance via policy or promptly after covert access.

Cross-border transfers: Sharing investigation reports from a European entity to U.S. headquarters requires a valid transfer mechanism, such as standard contractual clauses or intra-company agreements.

Subject access requests: Under the European Union’s General Data Protection Regulation (GDPR) and similar laws, investigation subjects and complainants can request copies of personal data held about them—including investigation files, interview notes, witness statements, and reports. Exemptions for privilege or ongoing investigations exist but are narrow. Employers may want to structure files with potential disclosure in mind.

A 2026-Ready Strategy

Multinational employers developing internal investigation protocols may want to ensure those protocols:

• incorporate the right to be heard and the right to be accompanied as standard procedural requirements;
• are aligned with local data protection requirements before any data collection begins;
• include documented cross-border data transfer mechanisms for investigations that span jurisdictions;
• provide written notice of specific allegations with sufficient time for the employee to respond;
• account for works council consultation requirements in jurisdictions like Germany, where failure to involve the works council renders the dismissal void; and
• build in awareness of local timing requirements and investigator qualifications to preserve the employer’s ability to act on investigation findings.

Investigations have rules. The right to be heard, the right to be accompanied, and data protection obligations apply before any disciplinary outcome. Procedural failure is independently sufficient for a court to find the employee has been unfairly dismissed in most jurisdictions.

A global investigation template cannot absorb the procedural complexity of international employment law. A global investigation strategy will better serve the corporation.

Ogletree Deakins’ Cross-Border Practice Group and Global Reorganizations Practice Group will continue to monitor developments and will post updates on the Cross-Border, Cybersecurity and Privacy, Global Reorganizations, and Workplace Investigations and Organizational Assessments blogs as additional information becomes available.

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Quick Hits

• A New York appellate court found that a pandemic-related office closure does not exempt nonresident employees from New York income tax on out-of-state earnings.
• The court found that the nonresident employee’s full income was taxable under the state’s convenience of the employer rule because the nonresident employee’s out-of-state remote work situation during the pandemic was not due to the employer’s necessity.
• The court further rejected constitutional claims to the application of the convenience rule, finding a government work-from-home mandate did not require work to be done in other states and that the employee’s work for a New York institution established sufficient contacts with the state.

In Matter of Zelinsky v. Commissioner of Taxation and Finance, the State of New York Supreme Court Appellate Division, Third Judicial Department, upheld a determination by the Tax Appeals Tribunal denying New York State personal income tax refund claims for the 2019 and 2020 tax years by Connecticut residents for work performed out-of-state during the COVID-19 pandemic.

The appellate court rejected constitutional and regulatory challenges by Edward Zelinsky, a Connecticut resident and law professor at Benjamin N. Cardozo School of Law in New York City, to New York’s taxation of all his income earned working for the law school for tax years 2019 and 2020.

Zelinsky typically worked three days a week on campus and performed the rest of his work at his residence in Connecticut. He and his spouse had sought tax refunds for withholding attributable to his income earned while working remotely from his residence in Connecticut after then-New York Governor Andrew Cuomo issued an executive order directing nonessential businesses to implement remote work. Zelinsky alleged that the work-from-home mandate altered the application of the convenience of the employer rule, as established in a 2003 case that he also brought (Zelinsky I). He argued that the tax tribunal irrationally determined that the employee’s work from home was not due to the strict necessity of the employer.

Application of the Convenience of the Employer Rule

Under 20 NYCRR 132.18(a), when a nonresident employee performs services both within and outside New York, out-of-state workdays are treated as in-state workdays unless the remote work was undertaken due to the employer’s “absolute necessity”— not the employee’s convenience. The court stated that the “convenience rule aims to prevent nonresident employees from receiving tax advantages that are unavailable to similarly situated New York residents merely by choosing to perform work remotely outside the state.”

While acknowledging that the pandemic and work-from-home mandate disrupted the traditional application of the convenience rule, the court ruled that the test still turns on “the distinction between work that must be performed at a particular site for the employer’s need or benefit and work that could be performed anywhere.” (Emphasis added). The appellate court held that while Zelinsky could not work on campus in New York, the school did not require him to work in Connecticut. The school was “indifferent” to where faculty delivered videoconference lectures or conducted remote meetings, and thus the employer gained no advantage from Zelinsky performing those job duties in another state.

Constitutional Claims Rejected

The appellate court also denied Zelinsky’s claims that the taxation violated the dormant Commerce and Due Process clauses of the U.S. Constitution. The court held that the dormant Commerce Clause, a doctrine inferred from the Constitution that prohibits states from passing laws that discriminate against or excessively burden interstate commerce, failed because “nonresidents do not implicate themselves or their employers in interstate commerce merely by working from home.” While the pandemic forced Cardozo to implement remote work to protect employee and student health, it “did not establish the requisite nexus to Connecticut or any other state by doing so.”

On the due process claim, the court found Zelinsky maintained sufficient minimum connections to New York through his continued employment, professional affiliation, and the tangible and intangible benefits of his position at a New York institution.

Key Takeaways

The decision emphasized that the critical difference for employers’ necessity under New York’s convenience of the employer rule is whether the employee is required to work remotely or required to work out of state. The narrow exception applies only where the employer derives a specific business advantage from the employee’s out-of-state presence—such as proximity to a client site or specialized equipment unavailable in New York.

The government-mandated closure of a New York employer did not automatically create an employer necessity. Although the petitioner in this case was forced to work remotely, the court found that he voluntarily chose to work from an out-of-state location and thus could not claim tax refunds, even if that choice was rational because it was where he normally performed remote work. That choice was not altered by the governor’s work-from-home mandate, as it did not require employees to travel to other states.

Employers with remote or hybrid workforces that span state lines may want to review their tax withholding practices and ensure that their allocation methodologies remain consistent with New York’s convenience-of-the-employer framework as interpreted and applied in this decision.

Ogletree Deakins’ Employment Tax Practice Group and Multistate Advice and Counseling Practice Group will continue to monitor developments and will provide updates on the Connecticut, Employment Tax, Higher Education, Multistate Compliance, New Jersey, New York, and Return to Work blogs as additional information becomes available.

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Instead, the federal government has now repurposed data (through substantial requests) to show intentional discrimination on an individual or systemic basis, which points toward even more serious allegations and enforcement activity.

Quick Hits

• The federal government’s shift in enforcement priorities does not amend Title VII, and disparate impact remains actionable under federal and state laws, particularly for private plaintiffs and state regulators.
• In rescinding the disparate-impact provisions of federal Title VI regulations, federal agencies expressly kept the data-retention expectation and stated that the data can still prove intentional discrimination.
• The same statistics that once supported a disparate-impact claim are now positioned as evidence of intent—the discrimination theory the EEOC says it is prioritizing.

Disparate Treatment, Disparate Impact, and Adverse Impact Analyses

Disparate treatment and disparate impact are the two theories of discrimination under Title VII of the Civil Rights Act of 1964. Disparate treatment is intentional: an employer treats a person less favorably because of a protected characteristic. Disparate treatment is proven through direct or indirect evidence, including data. Disparate impact is effects-based, relying on data to show a facially neutral practice falls more harshly on a protected group, meaning it can be unlawful without proof of intent.

Adverse-impact analysis is not a third theory. It is a statistical method for measuring whether outcomes differ across groups. The method is often treated as applying only to disparate-impact claims, because the four-fifths rule and validation practices were developed in the selection-procedure context. But the statistics produced by an adverse-impact analysis are not tied to a single theory. A pronounced disparity that an employer cannot explain can serve as circumstantial evidence of intentional discrimination as readily as it can establish the impact element of a disparate-impact claim.

An Enforcement Shift Is Not a Change in the Law

Under Title VII, the disparate impact framework is codified: once a plaintiff identifies a particular practice that causes a disparate impact, the burden shifts to the employer to show the practice is job-related and consistent with business necessity, after which the plaintiff may still prevail by identifying a less discriminatory alternative.

That architecture has not been repealed, and an agency cannot repeal it. What has changed is the enforcement posture and the executive branch’s interpretation. The U.S. Equal Employment Opportunity Commission’s (EEOC) National Enforcement Plan redirects the agency’s priorities toward intentional discrimination. And on June 9, 2026, the DOJ’s Office of Legal Counsel (OLC) issued a memorandum opinion concluding that the EEOC’s disparate-impact guidelines are inconsistent with Title VII and raise constitutional concerns. The OLC opinion is an executive branch legal position, not a statute and not a judicial decision, and it does not change Title VII. The opinion also does not eliminate disparate impact so much as reframe it, construing the data as an evidentiary tool for identifying practices that carry a strong inference of intentional discrimination.

The clearest evidence that the data still matters appears in the federal agency rescission documents. Over roughly seven months, a succession of federal agencies rescinded the disparate-impact provisions of their regulations under Title VI of the Civil Rights Act of 1964. The U.S. Department of Justice (DOJ) acted first, in December 2025, and because it coordinates Title VI enforcement across the government under Executive Order 12250, its rule anticipated that other agencies would consider following. Several did.

The pattern is uniform. Each rule rests on the same authorities, the Supreme Court of the United States’ decision in Alexander v. Sandoval, its more recent decisions in Loper Bright Enterprises v. Raimondo and Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, and Executive Order 14281, and each concludes that Title VI reaches only intentional discrimination.

What matters for employers is what these rules preserved even as they removed disparate-impact liability under Title VI. The U.S. Department of Labor (DOL) rule is the clearest example. While rescinding disparate-impact liability under its Title VI regulations, it left intact the regulatory expectation that recipients maintain the racial and ethnic data available and stated that eliminating the liability “does not preclude the use of data on disparate outcomes to help prove intentional discrimination.” It then drew the distinction directly: using statistical disparity to help establish, as an evidentiary matter, liability for intentional discrimination “materially differs from using it to impose liability for an unintentional disparate impact.” The DOT, USDA, DOJ, and DOI rules used the same language. The repetition across each available rule indicates a deliberate government position rather than an isolated phrase.

The DOL rule was more specific. In describing what it was relieving recipients of, it named the apparatus that Title VII’s selection procedure regime uses, ongoing recordkeeping, adverse-impact monitoring, validation studies, and review of less discriminatory alternatives, and cited the Uniform Guidelines on Employee Selection provisions by number. In removing disparate-impact liability from its own Title VI regulations, the agency cataloged the analytical tools employers have long used and identified the data that remains useful for proving and defending against intent.

The federal government has not told employers that their data is now safe to disregard. It has indicated that the same statistics that once supported a disparate-impact claim may serve as evidence of intentional discrimination, the theory that the EEOC is prioritizing. The data retains its evidentiary force; what has changed is the theory it tends to support.

The DOJ, DOT, USDA, DOL, and DOI rescissions concern Title VI and federally assisted programs, not Title VII employment claims. But the evidentiary logic does not depend on which statute supplies the claim. Disparate outcome data offered as proof of intent operates the same way under either, which is why the same reframing appears in the DOJ’s Title VII opinion and in the agencies’ Title VI rules.

Disparate Impact Enforcement Continues

Even as federal enforcement recedes, disparate impact theory does not disappear.

Private plaintiffs retain an independent right of action under Title VII, unaffected by the EEOC’s enforcement priorities. The employment context differs from the federally assisted program context in an important respect. Under Title VI, the Supreme Court in Alexander v. Sandoval foreclosed a private right of action to enforce disparate impact regulations, which is part of why the Title VI rescissions narrow private exposure in that setting. Title VII contains no equivalent limitation. A reduction in federal enforcement under Title VII does not remove private exposure; it shifts it toward the private bar.

State and local fair-employment agencies are a second forum. Many operate under their own statutes, some of which are more protective than federal law, and several jurisdictions have indicated they will continue to apply disparate-impact analysis regardless of the federal posture, with some moving to reinforce it in response to the federal retreat. An employer operating across jurisdictions may want to consider whether calibrating to the federal posture alone leaves state-law exposure unaddressed.

The courts are a third forum. An enforcement agency can decline to bring a case; it cannot direct a federal court to read disparate impact out of Title VII. The framework remains in effect—and contested—with a recent public retort offered by a group of former EEOC officials.

For employers, the practical consequence follows from these two facts together: the obligation to collect workforce data endures, and that data is now more valuable as evidence, including as evidence of intent. An employer that analyzes its own workforce outside privilege creates a record that may be discoverable, and an unfavorable result in an unprivileged file can become an exhibit. The workable response is not to collect or analyze less, which is neither lawful nor prudent, but to structure the analysis under privilege so exposure can be assessed without generating discoverable material.

Next Steps

Employers may wish to consider the following:

• conducting attorney-client privileged analyses of data collection methods and protections, as well as employment decisions, directed by counsel, that identify whether there is a legal risk;
• treating adverse-impact analysis as privilege-sensitive from the outset, structuring any selection or adverse-impact review as legal work directed by counsel before it begins, rather than addressing privilege after a problem surfaces;
• not mistaking the federal retreat for reduced risk, given the continued availability of private and state-law disparate-impact claims and the reframing of disparate-outcome data as evidence of intent;
• accounting for the data’s new evidentiary role, recognizing that demographic and selection data are now positioned as potential proof of intent and may warrant additional care in how it is generated, stored, and analyzed; and
• monitoring state and local law, which in several jurisdictions is moving to preserve or strengthen disparate-impact analysis, even as federal enforcement recedes.

Ogletree Deakins’ Diversity, Equity, and Inclusion Compliance Practice Group, Government Contracting and Compliance Practice Group, and Workforce Analytics and Compliance Practice Group will continue to monitor developments and will provide updates on the Diversity, Equity, and Inclusion Compliance, Employment Law, Government Contracting and Compliance, and Workforce Analytics and Compliance blogs as additional information becomes available.

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

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Quick Hits

• The German government’s governing coalition issued a reform package that includes labor and employment law proposals that would relax dismissal protections for top earners, provide tax benefits on severance payments for individuals who quickly take up new employment, and eliminate telephone-based sick leave certifications.
• The reform package would also allow fixed-term employment contracts without objective grounds for up to forty-eight months and to be extended up to six times.

Relaxation of Dismissal Protection for Top Earners

Under the proposal, starting January 1, 2027, employers would be permitted to dissolve employment relationships with employees whose annual income exceeds 1.75 times the contribution assessment ceiling for statutory pension insurance (Beitragsbemessungsgrenze (BBG)) in exchange for a severance payment. The regulation is to be structured analogously to the “risk-taker rule in the financial sector.” For the aforementioned risk-bearers, the German Banking Act (Kreditwesengesetz (KWG)) stipulates that a motion for dissolution of the employment pursuant to Section 9 (1) sentence 2 of the German Dismissal Protection Act (KSchG) does not require justification (Section 25a (1), No. 5a KWG).

‘Top-Earners’ Defined

Although the published proposal does not specify exactly how annual income is defined, the reference to the regulations for risk-bearers in the financial sector suggests that annual fixed compensation will be the basis for determination. Based on the currently applicable BBG (2026: EUR 101,400), this would mean that the relaxation of dismissal protection would apply to employees with an annual fixed compensation exceeding EUR 177,450.

Proposed Dismissal Protection Rule Provisions

Employers would still be permitted to terminate the employment relationship with top earners without paying severance pay. If the termination is valid, there would still be no entitlement to severance pay unless such a right is provided for by contract or under a collective arrangement (e.g., in a social plan). The proposal provides that if employees file an unfair dismissal claim, the labor court will decide whether to dissolve the employment relationship in exchange for a severance payment only if the dismissal is invalid and one of the parties has filed a so-called application for dissolution.

An application for dissolution allows the labor court to dissolve an employment relationship by judgment despite an invalid dismissal and to order the employer to pay an appropriate severance payment (Section 9 KSchG).

Under current law, an employer’s motion for dissolution is successful only if there are grounds that make it unlikely that continued cooperation would serve the company’s business purposes. Only in the case of executive employees (Section 14 (2), sentence 2 KSchG)—a situation that rarely arises in practice— no grounds for dissolution are required.

Under the proposed regulation, no grounds for dissolution would be required even for top earners who are not executive employees. Rather, the labor court would declare the employment relationship dissolved as of the date on which it would have ended in the event of a socially justified dismissal. At the same time, the court would order the employer to pay an appropriate severance payment. The amount would be determined in accordance with Section 10 KSchG and would generally not exceed twelve months’ earnings.

For older employees with longer periods of service, the current law provides for higher maximum limits: Upon reaching the age of fifty and having at least fifteen years of service, the severance pay may amount to up to fifteen months’ earnings; upon reaching the age of fifty-five and having at least twenty years of service, it may amount to up to eighteen months’ earnings. This increase does not apply if the employee has already reached the standard retirement age at the relevant dissolution date.

The specific amount of the severance pay would be at the court’s discretion and would be based in particular on the duration of the employment relationship, age, earnings, prospects on the job market, and the circumstances of the dismissal.

Effective Date of Relaxation of Dismissal Protection for Top Earners Rule

The proposed regulation would take effect on January 1, 2027. It is currently unclear whether it would apply only to employment contracts concluded on or after that date or to dismissals issued on or after that date.

Tax Benefits for Severance Pay

The reform package would provide tax benefits for severance payments for individuals who promptly take a new gainful activity. The tax benefit is intended to be greater the sooner the employee takes up new employment. Further details are not yet known.

Fixed-Term Employment Contracts of Up to Four Years

Under current law, fixed-term contracts without objective grounds are generally permitted only for up to two years; within this period, they may be extended no more than three times. Under the reform package, this framework would be significantly expanded for employees hired by the end of 2030: fixed-term employment contracts without objective grounds would be permitted for up to forty-eight months and would be permitted to be extended up to six times.

Elimination of the Written Form Requirement for Fixed-Term Contracts

As of January 1, 2027, the written form requirement for fixed-term contracts would be abolished.

Certificates of Incapacity for Work

In the future, employees would be required to submit a certificate of incapacity for work starting on the first day of illness. Currently, this is only required if the incapacity for work lasts longer than three calendar days. However, employers can already require submission earlier than that.

The proposed regulation would not provide any real relief for employers, as in practice, such certificates of incapacity for work are not issued sparingly. With the planned elimination of sick leave certificates issued by telephone, employees would need to make greater efforts to obtain a certificate of incapacity for work, and misuse would likely be reduced.

Takeaways

The reform package shows that progress is being made on key labor law issues. Further measures—such as simplifying national data protection regulations, utilizing leeway within the European Union’s General Data Protection Regulation (GDPR), reducing the number of in-house data protection officers in small and medium-sized enterprises, and facilitating the simplified and faster implementation of software along with updates and upgrades in accordance with the works council’s co-determination rights—are also to be initiated. The legislative process will therefore be worth watching for employers.

Ogletree Deakins’ Berlin and Munich offices will continue to monitor developments and will post updates on the Cross-Border, Employment Tax, Germany, and Leaves of Absence blogs as additional information becomes available.

Dr. Ulrike Conradi is the managing partner of Ogletree Deakins’ Berlin and Munich offices.

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

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Quick Hits

• The German government’s Pensions Commission has presented thirty-three recommendations that the government intends to address and implement promptly.
• Mini-jobs would largely lose their special status under tax and social security law; special provisions for midi-jobs could also be eliminated.
• The standard retirement age for eligibility for old-age pensions would rise moderately after 2031, while incentives for early retirement are to be reduced.

Current Status: Reform Package, but No Law Yet

The commission’s recommendations are, for now, political proposals. Concrete implementation—such as through legislative procedures—is still pending. Nevertheless, the proposed key points are notable because they may affect typical human resources and compensation structures—and because the federal government has sent a clear signal that it intends to implement all proposals.

At the heart of a potential reform is the goal of placing the statutory pension system on a more stable long-term financial footing and broadening Germany’s overall retirement savings framework beyond the statutory pension. To that end, occupational and private retirement plans are expected to play a greater role in the future. Furthermore, the commission recommended introducing a statutory funded pension with individual capital accounts.

Mini-jobs: End of Special Status?

Of particular relevance to employers is the commission’s proposal to largely abolish mini-jobs. These marginal employment relationships are currently subject to a special tax and contribution regime. Only relatively low flat-rate contributions are payable into the statutory pension insurance system. Individuals in mini-jobs can apply to be exempted from mandatory pension insurance. In the future, marginal employment relationships would be included in the statutory pension insurance system with higher contributions, without this opt-out option. Furthermore, their special status under tax and social security law is to be abolished, meaning that higher social security contributions will also apply in this regard. Exceptions would be possible only for school students. As a result, the current transition range for so-called midi-jobs (employment relationships with gross monthly compensation above the marginal earnings threshold and currently not exceeding EUR 2,000 gross per month) could also be eliminated; in this category, employees currently pay reduced social security contributions.

Depending on the industry, employers may face significant effects on workforce planning. Particularly in sectors where many people work in mini-jobs—such as retail, hospitality and food service, or logistics—recruiting staff could become more difficult. This is because higher taxes and social security contributions are likely to make mini-jobs (possibly in addition to another job subject to social security contributions) less attractive to many people.

Retirement Age: No Immediate Increase in the Retirement Age, but a Gradual Rise

There are no plans to immediately increase the retirement age from the current age of sixty-seven. However, the commission recommended gradually linking this standard retirement age to rising life expectancy starting in 2031. Based on current projections, this could mean an increase of approximately six months per decade.

At the same time, the pension without deductions for individuals with particularly long contribution histories (“Pension at 63: (“Rente mit 63”)) would be abolished. The age limit for the earliest possible retirement for individuals with long contribution histories (with corresponding benefit reductions) would be raised from sixty-three to sixty-four years of age and later adjusted in parallel with the increase in the standard retirement age.

Employer-Sponsored Retirement Plans

There are also plans to strengthen employer-sponsored retirement plans. To this end, a social dialogue (Sozialpartnerdialog) is scheduled to take place later this year, which is intended to help increase the currently below-average coverage of occupational pension plans. This is to be achieved by reducing bureaucratic hurdles, improving the portability of pension entitlements between employers and systems, and enhancing legal certainty. For employers, this could also present an opportunity in the medium term to reposition occupational pension plans as a tool for retaining employees.

Takeaways

Pension reform has not yet been adopted, but the Pensions Commission’s proposals show that the issue is now gaining momentum. The planned changes regarding mini-jobs, the reform of the pension system, and occupational pension plans are especially noteworthy.

Ogletree Deakins’ Berlin and Munich offices will continue to monitor developments and will post updates on the Cross-Border, Employee Benefits and Executive Compensation, and Germany blogs as additional information becomes available.

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

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

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