Quick Hits

• A clerical error led to the Cal/OSHA Appeals Board’s decision to retract a worker-friendly ruling that it issued on March 12, 2026.
• In the original ruling, the Appeals Board overturned a Cal/OSHA administrative law judge’s decision that vacated two Serious Accident-Related citations the agency imposed on a general contractor after a sub-subcontractor’s worker sustained serious injuries in a fall accident.

In its KPRS Construction Services, Inc., decision, issued on March 12, 2026, the Appeals Board overturned a Cal/OSHA administrative law judge’s (ALJ) vacating of two Serious Accident-Related citations the agency imposed on a general contractor after a sub-subcontractor’s worker fell about twenty-seven feet off a roof, sustaining serious injuries.

Although the Appeals Board retracted its ruling, general contractors and controlling employers in California may want to note the following:

• Inspections should be conducted in every place where employees are working.
• Employers must demonstrate due diligence to establish a valid lack of knowledge defense.
• General contractors are responsible for all subcontractors, even sub-subcontractors.

The case is now back with the Appeals Board for reconsideration.

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

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Administration’s Proposed Budget Would Boost EEOC, Trim DOL. President Donald Trump has released the administration’s fiscal year (FY) 2027 proposed budget. Although the U.S. Congress sets federal spending levels, the president’s budget outlines the administration’s priorities, thereby providing guidance to federal appropriators. For the Buzz, the FY 2027 budget provides insight into the administration’s labor and employment policy priorities. For example:

• The U.S. Department of Labor (DOL) would receive about a 26 percent cut to its budget, despite receiving a funding boost in the previous fiscal year. Sub-agencies such as the Wage and Hour Division and the Occupational Safety and Health Administration would be subject to these cuts.
• Further, the remaining elements of the DOL’s Office of Federal Contract Compliance Programs (OFCCP) that enforce the Vietnam Era Veterans’ Readjustment Assistance Act and Section 503 of the Rehabilitation Act would be absorbed into an expanded Office of Civil Rights.
• The DOL’s Women’s Bureau—which survived elimination last year—would be eliminated.
• The Office of Foreign Labor Certification (OFLC), currently housed within the Employment and Training Administration, would be elevated to an independent DOL sub-agency in order to “enable OFLC to administer immigration and migration policies, regulations, and programs in a manner that optimizes performance, minimizes unnecessary use of resources, and ensures resiliency and continuity of operations that are customer centered.”
• The National Labor Relations Board would receive a $9 million cut.
• The U.S. Equal Employment Opportunity Commission (EEOC) would receive an additional $20 million, indicating that the administration is likely pleased with the Commission’s work.

Ultimately, Congress will have the final say on agency funding levels. Stay tuned to see how close they come to the administration’s requests.

House Lawmaker Wants Vote on Bill to Impose Government-Dictated Contracts on Employers and Employees. On March 26, 2026, Representative Donald Norcross (D-NJ) filed a petition to discharge the Faster Labor Contracts Act (FLCA) from the U.S. House of Representatives’ Committee on Education & Workforce. As the Buzz has discussed, the Faster Labor Contracts Act would establish statutory timelines for negotiating collective bargaining agreements with the federal government ultimately setting the contract’s terms if the parties cannot come to an agreement in time. While the bill enjoys limited support of some populist-leaning Republicans, because committee chairs control the legislative agenda of bills within their jurisdiction, the FLCA is unlikely to see the light of day under the leadership of Chair Tim Walberg (R-MI). Under House rules, a discharge petition allows rank-and-file members to force a floor vote on a bill that hasn’t been approved by a committee. Representative Norcross will need a total of 218 signatures on his petition in order to discharge the FLCA from the committee and onto the floor. This would require all House Democrats to sign the petition, along with just four Republicans (there are currently seventeen Republican cosponsors of the bill).

The Coalition for a Democratic Workplace describes the Faster Labor Contracts Act as a “horrible bill” that “would allow government bureaucrats to dictate the employment terms of workers via mandatory, binding arbitration.”

EEOC Releases Annual Performance Report. The EEOC has released its “Fiscal Year 2027 Agency Performance Plan (APP) and Fiscal Year 2025 Agency Performance Report (APR).” The report highlights actions and accomplishments of the Commission from October 1, 2024, through September 30, 2025 (representing the federal government’s 2025 fiscal year). According to the report, these accomplishments include “rooting out unlawful race and sex discrimination arising from or related to DEI programs, policies, and practices; protecting American workers from unlawful national origin bias that places foreign hires ahead of citizens; safeguarding women’s sex-based rights at work; and defending religious liberty by addressing unlawful bias against people of faith.”

While the agency has had politically appointed individuals serving as acting general counsels during the Trump administration, it has lacked a U.S. Senate-confirmed general counsel. President Trump has nominated management-side attorney Carter Crow to fill that role on a permanent basis. Assuming Crow is confirmed, employers should expect an uptick in the enforcement of the agency’s priorities.

Remembering Abe Fortas. Former associate justice of the Supreme Court of the United States, Abraham Fortas, died this week in 1982.After graduating from Yale Law School, Fortas served as an attorney in multiple federal agencies before starting his own law firm in Washinton, D.C. In that capacity, he represented Clarence Earl Gideon in his Supreme Court case (Gideon v. Wainwright), which established a right to counsel in criminal cases under the U.S. Constitution’s Sixth Amendment. Although Fortas resigned from the Court in 1969 amidst an ethics scandal, he is known for penning one of the more famous lines in Supreme Court jurisprudence. He wrote the majority opinion in the 1969 case, Tinker v. Des Moines Independent Community School District, in which the Court found that a public school’s suspension of students for wearing anti-war black arm bands violated their First Amendment rights. Fortas concluded, “It can hardly be argued that either students or teachers shed their constitutional rights to freedom of speech or expression at the schoolhouse gate.”

Quick Hits

• The IRS has finalized regulations allowing eligible workers in more than seventy qualifying occupations to take a deduction for “qualified tips” from their taxable income.
• The final regulations clarify that “qualified tips” must be “cash tips” voluntarily paid by customers without conditions and excludes automatic gratuities.
• The final regulations introduce a revised approach to anti-abuse rules for tips, implementing a facts-and-circumstances test rather than a blanket prohibition for tip recipients with ownership interests.
• The list expands the list of qualifying occupations.

The final regulations, titled “Occupations that Customarily and Regularly Received Tips; Definition of Qualified Tips,” are set to be formally published in the Federal Register on April 13, 2026.

The final regulations, which followed more than 300 comments and a public hearing in October 2025 on the proposed regulations issued in September 2025, largely track the proposed regulations for the “No Tax on Tips” provision of the OBBBA. The regulations allow eligible workers—including both those who itemize their taxes and do not—who work in an expanded list of seventy-one specified occupations that “customarily and regularly” receive tips to deduct up to $25,000 per year in tips as a tax deduction. They apply to taxable years beginning after December 31, 2024, and before January 1, 2029.

Qualified Tips Defined

The final regulations clarify that “qualified tips” are “amounts received as cash tips” by “individuals” in “occupation[s] that customarily and regularly receive[] tips” as outlined in the regulations. The tips “must be paid voluntarily,” meaning they are paid without consequence for nonpayment, are not negotiable, and are determined by “payors” (i.e., customers). Tips received for illegal activities, prostitution, and pornographic activity are also excluded.

Voluntariness

Qualified tips do not include automatic gratuities or surcharges. Notably, the IRS and Treasury rejected calls for a transition rule concerning automatic gratuities paid in 2025. The regulations include an example of a restaurant with a menu that specifies an automatic 18 percent charge for parties of six or more. Such a charge would not be a qualified tip for purposes of a deduction. The final language was also modified to make clear that customers must have the option to reduce a tip amount to zero. The regulations include an example of customers being presented with a handheld point-of-sale (POS) device that must include an option to leave “no tip” or move a tip slider down to zero for the amount paid to constitute a qualified tip.

Cash Tips

The definition of “cash tips” remains largely unchanged from the proposed regulations—which includes tips paid by electronic payments, checks, debit cards, gift cards, or “intangible or tangible tokens,” such as “casino chips”—except that it is expanded to include “foreign currency.” The IRS and Treasury declined to reconsider whether digital assets, including “stablecoins,” would be considered “cash tips,” deferring to forthcoming regulations under the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act).

Managers and Tip Pools

The final regulations provide that tips “received by a manager or supervisor through a voluntary or mandatory tip-sharing arrangement, such as a tip pool, are not qualified tips.” However, the final regulations state that “amounts received directly by a supervisor or manager for services they provided in the course of duties performed in an occupation that customarily and regularly received tips … are qualified tips if all other requirements … are met.”

Anti-Abuse Rules

The final regulations revise the proposed rule’s blanket prohibition on tips paid to individuals with an ownership interest in or employed by the payor, replacing it with a facts-and-circumstances test for recharacterization of wages or payments as tips. The final regulations create an “irrebuttable presumption” of recharacterization when: (a) “the employer is the payor” of the tip, or (b) “the tip recipient has a direct ownership interest in the payor.”

List of Occupations That Receive Tips

The final regulations list “[o]ccupations that customarily and regularly received tips,” broken into eight categories, and assign a three-digit Treasury Tipped Occupation Code (TTOC) for reporting tips on Form W-2 in Box 14b.

Occupations Expanded

The final regulations keep all the same occupations from the proposed list and add new occupations: “Visual Artists” (TTOC 509), “Floral Designers” (TTOC 510), and “Gas Pump Attendant” (TTOC 810). “Food Servers, Non-restaurant” was renamed to “Food and Beverage Servers, Non-restaurant,” and “Pet Caretaker” was revised to “Pet and Show Animal Caretaker,” and “Eyebrow Threading and Waxing Technicians” was renamed to “Eyebrow and Eyelash Technicians” (TTOC 606) to include eyelash services.

Several prior categories were expanded, including clarifications that residential building doormen qualify as “Baggage Porters and Bellhops” (TTOC 301) or “Concierges” (TTOC 302), and residential building maintenance workers (ostensibly superintendents) qualify under “Home Maintenance and Repair Workers” (TTOC 401).

Notably, the illustrative examples for “Goods Delivery People” (TTOC 804) added “app/platform based delivery person” to address comments that the prior definition may have excluded “app-based delivery workers (also called gig economy delivery drivers).”

Further, examples for “Digital Content Creators” (TTOC 209) add new examples distinguishing between payments that provide access to content, which constitute compensation, not tips, and voluntary payments made after accessing content, which constitute qualified tips. It also clarifies that amounts retained by host platforms are not qualified tips.

Final List of Qualifying Occupations

Next Steps

Employers may want to review the final rules and the list of occupations eligible for the “No Tax on Tips” deduction. Employers and employees share responsibility for determining eligibility: “Taxpayers wishing to claim the deduction and entities responsible for information reporting [i.e., employers] are primarily responsible for ensuring their occupation is on the List of Occupations that Receive Tips.” Further, employers may want to note that the deduction applies only for individual income tax purposes and does not adjust employers’ payroll tax withholding or remittances.

Ogletree Deakins’ Employment Tax Practice Group will continue to monitor developments and will provide updates on the Employment Tax, Hospitality, Retail, Sports and Entertainment, and Wage and Hour blogs as additional information becomes available.

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Quick Hits

• Llave MX is a new digital identity system for accessing Mexican government platforms and completing official procedures online.
• Employers have been required to use a Llave MX account to register their labor and employment procedures with the Federal Center for Conciliation and Labor Registration since January 5, 2026.
• A company’s Llave MX system is tied to an individual’s credentials, so companies may want to plan ahead and align with the applicable representative.

For employers, Llave MX is not simply “another portal login.” Because it is designed around an individual credential that is used to carry out procedures on behalf of an entity, it can become an operational dependency on a specific person, which can create delays, and continuity risks. The “Guidelines for the Implementation and Operation of Llave MX” were published in the Official Gazette of the Federation (Diario Oficial de la Federación (DOF)) on February 6, 2025, issued by the Agency for Digital Transformation and Telecommunications (Agencia de Transformación Digital y Telecomunicaciones (ATDT)).

Llave MX functions as a single sign-on credential that may be used across various government platforms. It is unique and nontransferable.

A key operational point is that companies cannot “hold” Llave MX. Instead, a company’s interaction with Llave MX-enabled platforms occurs because individuals uses their personal Llave MX accounts to incorporate and manage the legal entity’s profile and to submit filings on the entity’s behalf. In practice, the only individual who can do this is the one who acts as the company’s legal representative before the Mexican tax authority (Servicio de Administración Tributaria (SAT)).

This matters because, depending on the government platform and procedure, the ability to complete filings can depend on whether the correct individual is recognized as the person who can link the entity and act for it. In practice, that can mean that if the relevant individual is unavailable, loses access, or is in transition (for example, due to termination, leave, or an internal reorganization), the company may not be able to move as quickly as it needs to on procedures that are time sensitive.

Llave MX for Labor and Employment Matters

This is particularly relevant for labor and employment teams because a number of employer procedures are filed with, or routed through, the Federal Center for Conciliation and Labor Registration (Centro Federal de Conciliación y Registro Laboral (CFCRL)). Internal Work Regulations, union registrations, and registrations of collective bargaining agreements are examples of matters that may require interaction with CFCRL systems, and these filings often arise in contexts where timing and continuity are important. As of January 5, 2026, access to certain CFCRL-facing procedures has required using Llave MX, making it important for employers to ensure they can complete registrations and submissions without interruption.

Why This Matters for Employers

Employers operating in Mexico, particularly those that impose disciplinary measures (where internal work regulations are mandatory for enforceability), maintain collective bargaining relationships, or otherwise interact with CFCRL systems may want to ensure that the right individuals have active Llave MX access and are prepared to use it for the company’s filings. Given the dependency on a specific individual’s access, companies may also want to plan for changes and handoffs so that routine or urgent filings are not disrupted at critical moments.

Finally, Llave MX is part of the Mexican government’s broader strategy to digitalize administrative procedures, with a goal of moving 80 percent of government procedures online during the current administration. This means it is highly likely that other labor- and employment-related procedures will also be handled utilizing Llave MX in the near future.

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

Pietro Straulino-Rodríguez is the managing partner of the Mexico City office of Ogletree Deakins.

Nora M. Villalpando Badillo is of counsel in the Mexico City office of Ogletree Deakins.

Natalia Merino Moreno is an associate in the Mexico City office of Ogletree Deakins.

María José Bladinieres is a law clerk in the Mexico City office of Ogletree Deakins.

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Quick Hits

• The DOJ will not prosecute companies when they voluntarily self-disclose misconduct, fully cooperate with the DOJ’s investigation, and correct the misconduct in a timely and appropriate manner.
• Companies will be eligible for a declination even if a whistleblower reports to the DOJ first, if the company self-reports to DOJ within 120 days of receiving an internal report.
• The new policy became effective immediately.

The DOJ investigates a wide range of corporate crimes, including financial fraud, identity theft, insider trading, foreign bribery, money laundering, sanctions evasions, government benefit fraud, and healthcare kickback schemes. The new enforcement policy applies to all types of corporate criminal cases, except those relating to antitrust matters. It applies to companies in all industries, including financial services.

To receive a declination (or decision to not prosecute), a company must:

• promptly self-report conduct previously unknown to the DOJ,
• self-report before an imminent threat that DOJ would discover the misconduct,
• have no previous obligation to self-report to the DOJ,
• fully cooperate with investigators, and
• promptly correct violations.

If a whistleblower reports wrongdoing both internally and to the DOJ, the company will still be exempt from prosecution if the company self-reports to the DOJ within 120 days after receiving the whistleblower’s internal report.

If a company fully cooperated and timely remediated misconduct, but it is ineligible for a declination because of aggravating factors that warrant a criminal resolution, the DOJ may provide a non-prosecution agreement, reduce the fine by 50 percent to 75 percent, and not require an independent compliance monitor. Aggravating factors could include the egregiousness or pervasiveness of the misconduct, the severity of harm caused by the misconduct, or previous criminal charges of similar misconduct within the last five years.

Shortly after implementing the new policy, on March 17, 2026, the DOJ granted its first declination under this policy to Balt SAS and its subsidiary Balt USA, a medical device manufacturer. The company voluntarily self-disclosed that an internal investigation uncovered bribery by a physician at a French hospital in order to ensure the hospital would purchase medical devices from Balt. The DOJ found the company took disciplinary action against individuals, strengthened controls, provided compliance training, terminated certain business relationships, and disgorged itself from the gains from illegal actions.

Key Takeaways

• Ensure internal reporting policies and procedures are robust.
• With the 120-day window to self-report to the DOJ after receiving an internal report to receive the declination, prompt investigation of internal claims is critical.
• As highlighted by the Balt matter, prompt and thorough remediation is essential to the decision to grant the declination.
• Consider updating training to employees, so they know the proper avenues to report misconduct internally. If an employee bypasses internal channels and reports directly to the government, the company loses the opportunity to discover the issue and remediate via an internal report.
• Provide training to managers, so they understand when to escalate concerns that they receive from their direct reports. 

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

Jane A. Norberg is co-chair of the Whistleblower and Compliance Group and a shareholder in Ogletree Deakins’ Washington, D.C., office.

Kathryn C. Newman is Of Counsel in Ogletree Deakins’ Las Vegas office.

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

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Quick Hits

• OSHA’s heat-related illness and injury prevention NEP is set to expire on April 8, 2026, with no public indication that the current administration intends to extend or replace it.
• OSHA’s proposed permanent heat illness prevention rule has stalled with no target date for finalization and appears unlikely to advance in the near term.
• OSHA retains citation authority under the OSH Act’s General Duty Clause and multiple states already enforce their own heat illness prevention standards.

Expiration of the Heat National Emphasis Program

Federal OSHA’s national emphasis program (NEP) on outdoor and indoor heat-related hazards, originally launched on April 8, 2022, is set to expire on April 8, 2026. The NEP was extended for one year in January 2025 by then-president Joe Biden’s OSHA assistant secretary, Douglas Parker, just days before the transition to the Trump administration. The extension directive stated that the NEP would remain in effect until April 8, 2026, “or until superseded by an updated directive.”

Under the NEP, OSHA dramatically increased its focus on heat-related hazards in the workplace. The program targeted more than seventy high-risk industries—including construction, manufacturing, landscaping, restaurants, retail, and agriculture—and authorized proactive inspections whenever the heat index reached 80°F or when the National Weather Service issued a heat warning or advisory. The NEP also prioritized on-site responses to heat-related fatalities, complaints, referrals, and employer-reported hospitalizations. By its terms, the program required employers to demonstrate measures such as providing cool drinking water, shaded rest areas, acclimatization plans for new or returning workers, training on heat stress symptoms, and monitoring of environmental conditions.

OSHA’s notice extending the NEP includes valuable enforcement data. Between April 2022 and December 2024, OSHA conducted approximately 7,000 heat-related inspections—a dramatic increase from the roughly 200 annual heat inspections conducted between 2015 and 2020. The agency issued sixty citations for violations of the Occupational Safety and Health (OSH) Act’s General Duty Clause, distributed 1,392 hazard alert letters, and reported removing nearly 1,400 employees from hazardous heat conditions.

As of the date of this article, OSHA has not publicly announced any intention to extend or renew the NEP beyond its April 8, 2026, expiration date. Whether the current administration will allow it to lapse, extend it, or replace it with a different directive remains to be seen.

Status of OSHA’s Proposed Heat Illness Prevention Rule

Separate from the NEP enforcement initiative, OSHA has been engaged in a multi-year rulemaking effort aimed at establishing a permanent federal standard for heat injury and illness prevention. On August 30, 2024, OSHA published a notice of proposed rulemaking (NPRM) titled “Heat Injury and Illness Prevention in Outdoor and Indoor Work Settings..” The proposed rule would apply across general industry, construction, maritime, and agriculture and would require employers to develop substantial written heat injury and illness prevention plans, monitor workplace heat conditions, implement controls at two trigger levels (an initial heat trigger at a heat index of 80°F and a high heat trigger at 90°F), provide mandatory rest breaks, establish acclimatization protocols, and train employees and supervisors.

The public comment period closed on January 14, 2025, and an extended post-hearing comment period closed on October 30, 2025. However, no further steps toward finalizing the rule have been taken since. The most recent entry in the federal unified regulatory agenda did not include a target date for final action on the heat rule, leaving its timeline uncertain.

In sum, while the proposed heat standard has not been formally withdrawn, its path to finalization under the current administration appears unlikely in the near term.

Practical Takeaways

Even with the NEP set to expire and the proposed rule stalled, employers may want to consider continuing heat illness prevention measures as summer approaches.

First, the General Duty Clause of the OSH Act, Section 5(a)(1), remains fully in effect and provides OSHA with independent authority to cite employers for failing to protect workers from recognized heat-related hazards. OSHA has used this authority to issue heat-related citations during the NEP period, and it can continue to do so regardless of whether the NEP is renewed.

Second, multiple states with OSHA-approved State Plans—including California, Colorado, Maryland, Minnesota, Nevada, Oregon, and Washington—already have their own heat illness prevention standards, and other states have proposed similar standards. Employers operating in those jurisdictions must comply with state-specific requirements regardless of what happens at the federal level.

Employers that invest in these measures now may be better positioned to demonstrate good-faith compliance, reduce the risk of heat-related injuries and fatalities, and prepare for whatever regulatory framework ultimately emerges at the federal level.

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

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Quick Hits

• The Illinois Supreme Court held that Illinois’s Minimum Wage Law does not adopt federal exclusions for preliminary and postliminary activities.
• The ruling came in a certified question from the U.S. Court of Appeals for the Seventh Circuit and revived a class of employees’ state wage-and-hour claims over mandatory pre-shift COVID-19 screenings.
• The ruling highlights a trend of state courts holding that their states’ wage-and-hour laws do not necessarily follow the federal understanding of compensable time.

On March 19, 2026, the Illinois Supreme Court issued a decision answering a certified question from the Seventh Circuit Court of Appeals concerning whether Section 4a of the Illinois Minimum Wage Law (IMWL) incorporates the PPA’s exclusion from compensation for activities that are “preliminary to or postliminary to [an employee’s] said principal activity or principal activities.”

Pre-Shift COVID-19 Screenings

In Johnson, a group of employees filed a class action alleging they were not compensated for mandatory pre-shift COVID-19 screenings, which they claimed lasted an average of ten to fifteen minutes and sometimes caused them to clock in late. The employees raised claims under the federal Fair Labor Standards Act (FLSA) and the IMWL.

A federal district court found that the employees’ federal claims were barred under the PPA, which amended the FLSA to relieve employers from paying for commuting time and certain “preliminary or postliminary” (i.e., before and after work) activities that are not “integral and indispensable” to an employee’s principal job duties. The district court also dismissed the Illinois claims, reasoning that Illinois courts frequently looked to FLSA case authority for guidance.

Illinois Wage Law Does Not Incorporate Preliminary and Postliminary Exclusion

In a 6–0 ruling (one justice took no part), the Illinois Supreme Court ruled that the IMWL did not incorporate PPA’s exclusion for preliminary and postliminary activities.

The court pointed out that there is no mention or reference to the PPA or to preliminary or postliminary activities in the IMWL. Moreover, the court commented that the IMWL does list specific exceptions to the forty-hour overtime requirement, only four of which incorporate by reference the FLSA. The court reasoned that this shows that had the Illinois General Assembly intended to incorporate the PPA, it would have done so expressly.

Further, the court noted that while the Illinois Department of Labor (IDOL) regulations defining “hours worked” reference certain PPA regulations governing the compensability of travel time, they do not reference the PPA provisions establishing the exclusion for preliminary or postliminary activities.

“To the contrary, IDOL defines ‘hours worked’ to include all time an employee is required to be on the employer’s premises, which contradicts the potential applicability of any such exclusion,” the court stated.

Finally, the court rejected the employer’s argument that, because the IMWL is patterned on the FLSA, it should be interpreted the same way. The court stated, “It is the dominion of the legislature to enact laws and the courts to construe them, and we can neither restrict nor enlarge the meaning of an unambiguous statute.” While interpretations of the FLSA are persuasive with respect to parallel provisions of state law, the court said the IMWL and the FLSA are not parallel on this point.

What the Ruling Means for Employers

The ruling by the Illinois high court could have significant practical implications for employers as Illinois becomes the latest state to find that the PPA’s preliminary and postliminary activities exclusion does not apply to state law.

Next Steps

Employers in Illinois may want to review their timekeeping and compensation practices, considering mandatory pre- and post-shift activities. The Illinois high court’s ruling states that the IMWL requires employers to pay employees for “all time [they are] required to be on duty, or on the employer’s premises, or at other prescribed places of work.” At the same time, the preliminary and postliminary exclusion continues to bar employee wage-and-hour claims for pre- and post-shift activities under the federal FLSA.

Ogletree Deakins’ Chicago office and Wage and Hour Practice Group will continue to monitor developments and will provide updates on the Class Action, COVID-19/Coronavirus, Illinois, Wage and Hour, and Workplace Safety and Health blogs as additional information becomes available.

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Quick Hits

• California Assembly Bill (AB) 2095 proposes significant amendments to California’s ban-the-box law, the Fair Chance Act.
• Provisions of the bill would require employers to provide a list of specific job duties that may be relevant to the employer’s subsequent assessment of conviction history and establish a rebuttable presumption regarding conviction-to-job relationships.
• AB 2095 would also require employers to document their assessments in writing and provide them to the applicant.

Current California Background Check Restrictions

The California Fair Chance Act restricts employers with five or more employees from seeking disclosure of an applicant’s conviction history on an application or inquiring about or considering an applicant’s conviction history before a conditional job offer. Employers considering taking post-offer adverse action based on an applicant’s conviction history are required to conduct an assessment of whether the applicant’s conviction history has a direct and adverse relationship with the specific duties of the job that justifies adverse action. In conducting this assessment, employers must consider a host of factors and sub-factors set forth in the associated regulations. The law applies to internal and external applicants, as well as to employees whose criminal history is reviewed and considered because of a change in ownership, management, policy, or practice. 

After completing an initial assessment, the existing law requires an employer to send a written notice (a pre-adverse action letter) to the applicant of the potential adverse action; allow at least five business days for the applicant to respond with additional information, including evidence of the applicant’s rehabilitation and/or mitigating circumstances; allow an additional five business days if the individual notifies the employer that they dispute the accuracy of the conviction history report; and consider any new information before making a reassessment. If the employer ultimately decides to revoke its conditional offer based on criminal history information, it must send a letter (an adverse action letter) notifying the applicant of the decision.

Pre-Offer Restrictions and New Prohibitions

AB 2095 would expand existing pre-offer restrictions by prohibiting employers from including on any employment application any question that directly or indirectly seeks disclosure of conviction history or consent for a background check. Employers would also be barred from requesting consent for or initiating a background check before providing the applicant with a list of specific job duties with which a conviction may have a direct and adverse relationship. Additionally, the bill would prohibit requiring applicants to cover background check costs, self-disclose conviction history, or provide documentary evidence of conviction history or rehabilitation at any time. The bill would add an explicit anti-retaliation provision protecting the exercise of rights under Section 12952.

Individualized Assessment and Rebuttable Presumption

AB 2095 would strengthen the individualized assessment process by requiring the employer to demonstrate that its assessments were made reasonably and in good faith. Further, the employer’s assessment would have to be committed to writing. The bill would also establish a rebuttable presumption that the conviction-to-job relationship does not justify denial if the applicant has completed the sentence (excluding parole, probation, or supervised release) or holds a required government-issued credential.

Enhanced Notification and Response Procedures

The bill would strengthen the multistep notification process for adverse decisions. A pre-adverse action notice would have to include the employer’s reasoning and a copy of the written individualized assessment, in addition to the current law’s requirements to include the disqualifying conviction(s), the conviction history report, and the applicant’s right to respond. In addition, AB 2095 would increase applicants’ response time from five business days to ten additional business days if the applicant disputes the report’s accuracy. After receiving a response, the employer would be required to document the individualized reassessment in writing. If the employer ultimately decides to take adverse action, in addition to current requirements, the employer would have to include its reasoning and a copy of the written individualized reassessment in the adverse action letter.

Key Definitions

The bill would broaden the definition of “applicant” to include individuals “seeking … continued work,” making clear the law would apply to all employees. It would also define a “conditional job offer” as one that is written. The current law does not require a conditional offer of employment to be in writing. “Conviction history” includes convictions as defined in Labor Code Section 432.7, specified health facility arrests, and arrests for which an individual is out on bail or his or her own recognizance pending trial. A temporary paid suspension during the employer’s compliance process would not be considered an adverse action. Remedies under the bill are cumulative with all other rights and remedies, including those under local ordinances.

Ogletree Deakins’ California offices and Background Checks Practice Group will continue to monitor developments and will post updates on the Background Checks and California blogs as additional information becomes available.

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Quick Hits

• A Massachusetts federal court granted a preliminary injunction halting enforcement of the ACTS survey against public institutions in seventeen plaintiff states, finding plaintiffs are likely to succeed on their claim that the promulgation and adoption of the survey was arbitrary and capricious.
• The court rejected plaintiffs’ arguments that the ACTS survey exceeds NCES’s statutory authority and that it violates the Paperwork Reduction Act, affirming that NCES has broad authority to collect disaggregated demographic data and that the statute does not bar its use for enforcement referrals.
• The court found the promulgation and adoption of the ACTS survey was arbitrary and capricious because NCES abandoned its established deliberative process solely to meet an unexplained 120-day presidential deadline and “‘entirely failed’” to consider the simultaneous dismantling of ED.
• The injunction is limited to the seventeen plaintiff states and their constituent public institutions; institutions outside those states remain subject to the ACTS survey requirements absent separate judicial relief.

Background

The underlying lawsuit, Massachusetts v. U.S. Department of Education, was filed by the Commonwealth of Massachusetts and sixteen other states against the ED, the secretary of education, the Office of Management and Budget (OMB), and its director, challenging the approval and implementation of the ACTS survey as unlawful. The ACTS survey, which institutions of higher education were initially required to complete by March 18, 2026, significantly expands the Integrated Postsecondary Education Data System (IPEDS) data collection. The survey requires institutions to report admissions, aid, and outcomes data disaggregated by race, sex, test scores, GPA, income, and other factors for the current academic year, and, for the first time in IPEDS history, six prior years (2019–20 through 2024–25).

In August 2025, President Donald Trump directed the secretary of education to expand the scope of IPEDS reporting within 120 days to track race-conscious admissions practices following the Supreme Court of the United States 2023 ’decision in Students for Fair Admissions, Inc. v. President & Fellows of Harvard College. Secretary of Education Linda McMahon then directed NCES to collect the data within that same 120-day timeline. After abbreviated notice-and-comment periods, OMB approved the ACTS, and ED opened the survey on December 18, 2025.

On March 11, 2026, plaintiffs filed a complaint asserting three claims under the Administrative Procedure Act (APA): (1) that the ACTS exceeds NCES’s statutory authority, (2) that it violates the Paperwork Reduction Act and the E-Government Act of 2002, and (3) that it was proposed and adopted arbitrarily and capriciously. The court issued a series of temporary restraining orders extending the ACTS survey deadline while briefing proceeded. Following a March 24, 2026, hearing, the court treated plaintiffs’ motion as one seeking a preliminary injunction.

The Court’s Ruling

The court found that plaintiffs were unlikely to succeed on their statutory authority and PRA claims.

On statutory authority, the court held that the ACTS survey “fits comfortably” within NCES’s authority under 20 U.S.C. § 9543(a)(3) to collect disaggregated data by race, ethnicity, and similar characteristics. The court rejected plaintiffs’ argument that the survey’s potential use for enforcement referrals rendered it non-neutral, reasoning that “one of the primary reasons for the government to seek data broken down by race and ethnicity … is to ascertain whether the data shows a potential pattern of racial discrimination” and that the statute contains no prohibition on using IPEDS data for enforcement referrals. The court also rejected the argument that only the Office of Civil Rights could receive compliance-related data, finding that NCES is not barred from collecting such information in the first instance.

On the PRA claim, the court concluded that the statute requires only that an agency certify compliance and provide a supporting record, not that a court independently determine whether the agency substantively complied with the PRA’s requirements.

The court found a strong likelihood of success on the arbitrary and capricious claim, identifying two principal deficiencies.

First, the court found that NCES abandoned the deliberate, multistep process it had historically used to implement IPEDS changes, including technical review panels, stakeholder collaboration, and pilot testing, solely to meet an unexplained 120-day presidential deadline. Neither the president, the secretary, nor the agency ever provided a reasoned explanation for the compressed timeline.

The agency dismissed all alternatives raised by commenters, including pilot years, and phased collections, as “infeasible” based solely on the timeline, without explaining why the deadline existed or why the alternatives could not be adopted. The court emphasized that the problem was not simply that there was a deadline, but rather that the agency rejected multiple concerns and alternatives “solely in order to achieve an arbitrary and unexplained deadline.”

Second, the court found that NCES entirely failed to consider the simultaneous dismantling of the ED. At the time the ACTS survey was being implemented, NCES had reduced its staff from approximately one hundred employees to as few as three or thirteen, and the IPEDS team went from eight staff members to three.

The agency never acknowledged the staff reductions, never explained how its diminished workforce would manage the expanded workload, and never addressed what would happen to the data once NCES ceases to exist. The court characterized the agency’s dismantlement as “an important aspect of the problem” that the agency “entirely failed to consider.”

The court found irreparable harm based on the administrative burden on institutions, which were forced to restructure data-collection systems and divert resources from essential functions such as financial aid, scholarship awards, and accreditation. The court also credited the risk of enforcement actions arising from inconsistent or inaccurate data submissions caused by unclear definitions and compressed timelines, noting that federal regulation authorizes fines of up to $71,545 per violation. The court deferred ruling on student privacy issues.

The balance of equities and public interest favored relief, with the court citing a strong public interest in restraining arbitrary exercises of federal power and relieving public universities of unnecessary burdens.

Scope of Relief

The preliminary injunction is limited to the seventeen plaintiff states: California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Massachusetts, Nevada, New Jersey, New York, Oregon, Rhode Island, Vermont, Virginia, Washington, and Wisconsin, and their constituent public institutions. The court declined to issue universal or nationwide relief, noting that plaintiffs themselves did not seek it. The order was issued under both 5 U.S.C. § 705 and Federal Rule of Civil Procedure 65 and is without prejudice to further modification. The court also ordered plaintiffs to retain all records responsive to the ACTS survey for the duration of the litigation.

Next Steps

Two motions to intervene, filed by the Association of American Universities (AAU) and the Association of Independent Colleges and Universities in Massachusetts (AICUM), remain pending, with a hearing scheduled for April 13, 2026. Institutions outside the seventeen plaintiff states remain subject to the ACTS survey requirements absent separate judicial relief, although the court’s finding on the arbitrary-and-capricious claim may encourage additional challenges by other states or institutional groups.

Higher education institutions may wish to monitor developments in this litigation and assess their compliance posture in light of this order. Institutions within the seventeen plaintiff states may wish to note the record-retention obligation and consider how to preserve all data responsive to the ACTS survey.

Ogletree Deakins’ Higher Education 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, Government Contracting and Reporting, Higher Education, State Developments, 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 Massachusetts Superior Court held that the PFMLA’s anti-retaliation protections impose obligations only on “employers” as defined in the unemployment insurance statute, and do not extend liability to a corporate employer’s officers, agents, investors, or board members.
• The court distinguished the PFMLA from the Massachusetts Wage Act, which expressly deems corporate officers and agents to be “employers” of the corporation’s employees, language that is absent from the PFMLA.
• The court further rejected an aiding and abetting theory of PFMLA liability, noting that unlike Massachusetts’s anti-discrimination statute, which expressly provides for aiding and abetting liability in discrimination cases, the PFMLA contains no analogous provision, indicating the legislature did not intend to authorize such claims.
• The ruling appears to be one of the first decisions squarely addressing whether individual liability can attach under the PFMLA.

In its decision, Laughlin v. BinStar, Inc., the court also rejected the plaintiff’s attempt to assert PFMLA claims against the individual employee defendants on an aiding and abetting theory, reasoning that the legislature’s decision not to include an aiding and abetting provision, after having expressly provided for aiding and abetting liability in the Commonwealth’s anti-discrimination statute (M.G.L. c. 151B), indicated that it had not intended to provide a cause of action for aiding and abetting a PFMLA violation.

Background

The case arose out of the dissolution of BinStar, Inc., a Delaware-incorporated discount retail company that operated stores in Boston, Saugus, and Avon, Massachusetts. The plaintiff, Jackson Laughlin, co-founded BinStar and served as its president and CEO. Alpaca VC Fund III LP (Alpaca), a New York entity, was an investor in BinStar, and defendants Aubrie Pagano and Ryan Freedman, both affiliates of Alpaca, served on BinStar’s board to represent Alpaca’s interests.

During the summer of 2023, BinStar needed capital. Laughlin alleged that Alpaca exploited this opportunity to restructure BinStar, gaining significant corporate advantages, including acquiring veto power over BinStar’s budgets, debt, equity, mergers, and his role as CEO. By the spring of 2024, BinStar faced financial distress and insolvency, carrying over $1.3 million in debts. Laughlin alleged that Pagano and Freedman rejected a $4 million bridge investment and instead pursued a $1 million alternative on inferior terms.

These events, Laughlin alleged, “precipitated the collapse” of his physical and mental health. From mid-October 2024 through the end of February 2025, Laughlin took a leave of absence under the PFMLA. During his leave, Laughlin remained CEO of BinStar and no successor CEO was appointed. While he was on leave, Pagano and Freedman allegedly sent more than sixty-five messages demanding “CEO-level duties” from Laughlin, including signing dissolution consents, removing a former employee as a director, and giving administrative access to a 401(k) account. On November 22, 2024, BinStar filed for dissolution. That same day, Freedman allegedly disclosed the details of Laughlin’s PFMLA leave to a former employee and his counsel as “a retaliatory act” to undermine Laughlin’s credibility.

Laughlin filed suit and asserted, among other claims, a claim for violation of the PFMLA against Pagano and Freedman, alleging that the barrage of messages during his leave violated the PFMLA. Pagano and Freedman moved to dismiss, arguing that they were not “employers” under the PFMLA and therefore could not be held individually liable.

The Superior Court’s Decision

The court began its analysis of the individual liability issue by examining the text of the PFMLA, observing that the PFMLA makes it “‘unlawful for any employer to retaliate by discharging, firing, suspending, expelling, disciplining …, threatening or in any other manner discriminating against an employee for’” exercising PFMLA leave rights, and provides aggrieved employees with a private right of action for violating that provision. (Emphasis and alteration added by the court). Critically, the court noted, the PFMLA incorporates the definitions of “employer” and “employee” set out in § 1 of M.G.L. c. 151A, the unemployment insurance statute, which defines an “employer” as “any employing unit,” that is, “any individual or type of organization … who or which has or … had one or more individuals performing services for him or it” in Massachusetts.

The court then noted a key distinction between the PFMLA and the Massachusetts Wage Act. Unlike the Massachusetts Wage Act, which expressly provides that “[t]he president and treasurer of a corporation and any officers or agents having the management of such corporation shall be deemed to be the employers of the employees of the corporation,” the PFMLA contains no such language extending liability to individual officers, agents, investors, or board members. “Because no such language is used in Chapter 151A or the PFML statute,” the court ruled, “I decline to import it.” Based on that ruling, the court held that the obligations and prohibitions created by the PFMLA “rest on the employer” and “may not be enforced against investors or board members.”

The court also addressed and rejected Laughlin’s alternative argument that he should be permitted to amend his complaint to assert a claim for aiding and abetting a PFMLA violation. While acknowledging that a corporation may only act through its employees, agents, officers, or directors, the court reasoned that the PFMLA, in contrast to the Massachusetts Wage Act, does not impose liability on those individual actors. The court also noted that the cases cited by Laughlin concerned discrimination claims arising under M.G.L. c. 151B, which expressly provides for aiding and abetting liability: “It shall be an unlawful practice … [f]or any person, whether an employer or an employee or not, to aid, abet, incite, compel or coerce the doing of any of the acts forbidden under this chapter or to attempt to do so.” The absence of similar language in the PFMLA, the court concluded, “indicates the legislature did not intend to provide liability for aiding and abetting a violation of the PFMLA statute.”

Accordingly, the court dismissed with prejudice Laughlin’s PFMLA claim against Pagano and Freedman.

Key Takeaways

The Laughlin decision is significant because it appears to be one of the first rulings to squarely address whether the PFMLA imposes individual liability on persons other than the corporate employer. In holding that it does not, the court applied a straightforward textual analysis, contrasting the PFMLA’s silence on individual liability with the express language found in both the Massachusetts Wage Act and M.G.L. c. 151B. This interpretive framework, relying on the legislature’s deliberate omission of individual liability and aiding and abetting provisions, is likely to be influential in future PFMLA litigation.

For employers, the decision reinforces that PFMLA obligations run to the corporate entity, not to individual officers, directors, or investors. Notably, the court expressly declined to address whether Laughlin had stated a viable PFMLA claim against BinStar itself, noting that the corporate employer had not filed a motion to dismiss that claim. Employers may want to continue to ensure that they comply fully with the PFMLA’s requirements, including its anti-retaliation provision, which continue to apply to employers.

For individual officers, directors, and investors, the decision provides welcome clarity. Although the ruling comes from the Superior Court and is not binding appellate authority, its thorough statutory analysis and its issuance from the Business Litigation Session give it persuasive weight.

The decision also highlights the ongoing patchwork of individual liability standards across Massachusetts employment statutes. The Massachusetts Wage Act expressly extends liability to corporate officers and agents, and M.G.L. c. 151B expressly provides for aiding and abetting liability. The PFMLA, by contrast, contains neither provision.

Ogletree Deakins’ Boston office will continue to monitor developments and will post updates on the Massachusetts and Leaves of Absence blogs as additional information becomes available.

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