DHS Shutdown Continues. Today is the seventh day of the U.S. Department of Homeland Security (DHS) shutdown, and there are several reasons why it may continue for some time. First, the U.S. Congress was in recess this week, and even though the White House is handling negotiations for the Republicans, the absence of lawmakers on Capitol Hill certainly isn’t conducive to dealmaking. Second, the parties reportedly remain far apart on compromise reforms to Immigration and Customs Enforcement (ICE) and U.S. Customs and Border Protection (CBP), which is the underlying cause of the shutdown. Finally, as the Buzz has previously discussed, agencies such as ICE, CBP, and U.S. Citizenship and Immigration Services (USCIS) are already largely funded. DHS agencies such as the U.S. Coast Guard, Federal Emergency Management Agency (FEMA), and Transportation Security Administration (TSA) are the most impacted. In the past, air travel disruptions resulting from a lack of TSA personnel have played a role in forcing the parties to reach a spending deal.

BLS Releases Union Membership Numbers. This week, the U.S. Bureau of Labor Statistics (BLS) released its 2025 data on union membership rates. At the risk of dating ourselves, the numbers are a virtual carbon copy of the 2024 statistics. In 2025, the percentage of workers who were labor union members was 10 percent. (It was 9.9 percent in 2024.) Put aside public-sector union members, and the numbers get even smaller. Only 5.9 percent of private-sector workers were union members in 2025—the same percentage as in 2024. The only real wrinkle in 2025 was the forty-three-day government shutdown, during which BLS was unable to collect survey data. Accordingly, this week’s BLS release warns, “2025 annual estimates are not strictly comparable with annual averages for other years.”

Whither the Regulatory Agenda? As the business community looks ahead in 2026, the Buzz wonders when the administration might issue an up-to-date regulatory agenda. The Regulatory Flexibility Act and multiple executive orders require every administration to publish its regulatory forecast for the next six months—twice each year—in the spring and the fall. The timeframe is generally flexible, but administrations usually stick to this requirement (though the Buzz recalls that the Obama administration issued only one regulatory agenda in 2012). Thus far, the Trump administration has issued only one regulatory agenda, released on September 4, 2025, styled as the “Spring” agenda. No fall agenda was ever released, and the Buzz wonders whether it might be bypassed entirely in favor of a 2026 Spring Regulatory Agenda. Regardless, the agenda is out of date, making it extremely difficult for the business community to plan ahead and forecast the regulatory changes it may face in the future. The forty-three–day government shutdown only adds to the uncertainty, as employers do not know what impact it may have had on the predicted dates on which proposed or final rules are scheduled to issue.

Business Groups Seek NLRB Rulemaking on Independent Contractor Status. Speaking of regulatory forecasts, the Buzz has its eyes on the U.S. Department of Labor’s (DOL) proposed rule on “Employee or Independent Contractor Status Under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act,” which has been under review at the Office of Information and Regulatory Affairs (OIRA) since January 7, 2026. This proposal is just one front in the ongoing independent contractor policy battle that has been waged in Washington, D.C., for some time now. Another front is, of course, at the National Labor Relations Board (NLRB), which has changed its test for determining whether a worker is an employee or independent contractor multiple times over various administrations. In light of these policy swings, a group of trade associations has petitioned the NLRB to issue a rule clarifying the independent contractor test under the National Labor Relations Act (NLRA). The proposed rule, as drafted by the trade groups, tracks largely with a 2019 decision by the Board that examines the common law factors of agency as applied to the worker’s opportunity for profit or loss. The petition further notes the benefits of the rulemaking process, which include public notice and comments, prospective application, and a more durable framework that is less prone to political oscillation.

While the Board makes its way through its current case backlog, a potential rulemaking on independent contractor status provides a way for the Board to make new policy while it waits for a third Republican member, who will be needed to overturn extant Board law.

Baltimore and the Bill of Rights. The Potomac River sewage spill, which appears to be the largest of its kind in American history, isn’t the first controversy surrounding the government’s alleged mismanagement of waterways. In fact, 193 years ago this week, the Supreme Court of the United States decided Barron v. Baltimore, a case involving Baltimore Harbor and the Fifth Amendment to the U.S. Constitution. In 1815, John Barron bought a wharf in Baltimore Harbor, and it quickly became very profitable. Some years later, Baltimore initiated several public works projects that included diverting several streams into Baltimore Harbor. The streams brought sediment into the Harbor, decreasing the depth of water at Barron’s wharf, which eventually prohibited large ships from docking. Barron sued Baltimore for loss of revenue, claiming its actions amounted to a taking of his property without just compensation under the Fifth Amendment. The case eventually made its way to the Supreme Court, which ruled in 1833, in Chief Justice John Marshall’s last opinion, that the Bill of Rights applies only to the federal government and “contain[s] no expression indicating an intention to apply them to the State governments.” Barron v. Baltimore set an important precedent regarding our federalist system, but its holding has been eroded—if not overruled—over time. Following ratification of the Fourteenth Amendment in 1868, the Supreme Court has ruled, on a case-by-case basis, that the Fourteenth Amendment’s Due Process Clause “incorporates” the Bill of Rights to the states.

Quick Hits

• The DCWP has released proposed rules to implement the recent amendments to New York City’s ESSTA.
• The ESSTA amendments included the addition of thirty-two unpaid leave hours, expansion of ESSTA reasons, new pay statement documentation requirements, and modification of potential penalties.
• Employers and other stakeholders may submit comments to the DCWP. A public hearing on the proposed rules is scheduled for March 2, 2026, at 11:00 a.m. EST.

Recent Amendments to the ESSTA

The recent amendments aligned the ESSTA with New York City’s Temporary Schedule Change Law, expanding the circumstances under which employees may take protected time off. Those circumstances now include:

• caring for a child or for a member of an employee’s household with a disability;
• attending legal proceedings related to benefits for an individual under an employee’s care;
• the closure of an employee’s place of business or a child’s school or place of care due to a public disaster;
• government directives to avoid travel or stay indoors during a public disaster;
• seeking legal services or assistance if an employee or a family member is a victim of workplace violence; and
• other reasons that would qualify for safe/sick time under the ESSTA.

Further, the amendments provide employees with a separate bank of thirty-two hours of unpaid protected time off, available immediately upon hire, in addition to the forty or fifty-six hours, depending on employer size, already mandated under the ESSTA.

The Proposed Changes to the Rules

The proposed rules would amend Section 20-912 of the New York City’s Administrative Code to refer to “protected time off,” a term that would be defined in the same way as “safe/sick time” under Section 20-912, which includes both paid and unpaid time off for various authorized reasons. The proposed rules would incorporate the additional authorized uses of protected time off and the requirement to provide an immediate bank of thirty-two hours of unpaid protected time off.

Additionally, the proposed rules would clarify employer recordkeeping requirements, specifying that employers must track by pay period the following: the amount of protected time off accrued and used by each employee, differentiating between paid and unpaid protected time off; each employee’s balance of accrued protected time off; and the amount of paid and unpaid prenatal leave used. Employers would be required to display similar information on employees’ pay statements.

The proposed rules would also adjust the penalties for failure to provide paid prenatal leave, by clarifying that, when an “employer, as a matter of official or unofficial policy or practice, does not provide or refuses to allow the use of paid prenatal leave,” the “relief granted to each and every employee affected … must include (1) application of 20 hours of paid prenatal leave to the employee’s paid prenatal leave balance; and (2) monetary relief in the amount of $500 per employee per calendar year the policy or practice was in effect.”

Next Steps

While the proposed rules do not significantly modify the amended ESSTA’s obligations, they are likely to create additional recordkeeping and pay statement requirements and alter potential penalties. The proposed rules would also provide updated compliance guidance for employers.

A public hearing on the proposed rules will be held on March 2, 2026, at 11:00 a.m. EST, and will be accessible by phone and videoconference. Comments on the proposed rules can be submitted to the DCWP through New York City’s rules website (NYC Rules), by email, or by speaking at the hearing.

Employers in New York City or with employees in New York City may wish to review and revise relevant leave-related policies and procedures to reflect the ESSTA amendments, which include providing a separate bank of unpaid protected time off upon hire and at the beginning of each year, and adding the new reasons for protected time off. Employers may also wish to educate and train supervisors and human resources professionals on these changes to ensure their compliance, as well as update existing practices to align with the above requirements. In addition, employers may wish to take steps to prepare for the new recordkeeping requirements ahead of their February 22, 2026, effective date.

Ogletree Deakins’ New York office and Leaves of Absence/Reasonable Accommodation Practice Group will continue to monitor developments and will provide updates on the Leaves of Absence and New York blogs as additional information becomes available.

In addition, the Ogletree Deakins Client Portal provides subscribers with timely updates on New York City’s ESSTA requirements. Premium-level subscribers have access to updated policy templates for New York. Snapshots and Updates are complimentary for all registered client users. For more information on the Client Portal or a Client Portal subscription, please email clientportal@ogletree.com.

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Quick Hits

• Resolution 4179 of 2025 by Colombia’s Ministry of Labor introduces a new labor inspection model, “An Inspection With Purpose,” focusing on human rights protection and incorporating differential approaches across gender, disability, ethnicity, life stage, and protection against violence and discrimination.
• The model mandates unannounced visits and immediate preventive measures, prioritizing high-risk sectors to ensure compliance with the 2025 Labor Reform (Law 2466 of 2025) and promote inclusive and safe work environments.
• Companies may want to ensure that they have aligned their internal regulations, hiring processes, and occupational health and safety management systems with the new inspection framework to mitigate risks and prepare for unannounced inspections.

Labor inspection is no longer a purely administrative procedure—it is now designed to identify and prevent human rights violations in the workplace. All inspection activities will apply gender, disability, ethnic/intercultural, life-stage (age), and anti-violence and anti-discrimination approaches. Inspections will be conducted without prior notice.

Inspectors may order immediate compliance measures, including the suspension of dangerous activities, temporary closures, relocation of workers, and mandatory provision of personal protective equipment (PPE) and physical workplace adjustments. The model defines strategic inspection areas with emphasis on labor reform compliance, rural zones, strategic sectors, and freedom of association. Companies may want to review their internal regulations, hiring processes, occupational health and safety management systems (SG-SST), and labor documentation to align with Law 2466 of 2025 and the new inspection framework.

Refocusing Inspection: From Administrative Procedure to Rights Protection

Resolution 4179 of 2025 transforms labor and social security inspection into a mechanism for the effective protection of human dignity in the workplace. The Ministry of Labor has adopted a “refocused model” based on a preventive and technical approach—emphasizing guidance, document verification, and labor risk analysis—using inspection not only to sanction violations but to prevent them.

The model is guided by several core principles and categories, including human rights violations in the workplace, the in dubio pro operario principle (favoring the worker), workplace violence, gender-based violence, and workplace discrimination encompassing ageism, xenophobia, ableism, and racism. Differential approaches are embedded throughout, with specific protections for individuals in vulnerable conditions, as well as gender-focused and disability-focused protections.

Under this framework, inspectors are expressly trained and empowered to identify situations that may have previously gone undetected, such as gender-based violence and harassment (conduct causing physical, psychological, or economic harm), ageism (discrimination based on age, particularly against individuals over forty-five), ableism (barriers and unequal treatment of persons with disabilities), racism and ethnic discrimination, xenophobia (unequal treatment or lower wages for foreign nationals), and intersectional discrimination (violations based on multiple simultaneous factors, such as being a woman, of African descent, and young).

Return of the ‘Surprise Factor’: Unannounced Visits and Immediate Measures

The resolution reaffirms that all inspection visits—whether preventive, reactive, initiated ex officio, or strategic—will be conducted without prior notice. The “surprise factor” is conceived as essential to ensuring the real effectiveness of inspections, securing the evidentiary value of inspection activities, and observing the “operational reality” of the company without prior preparation.

During these visits, upon detecting imminent risks to the life, physical integrity, health, or safety of workers, inspectors may order immediate compliance measures, including suspension of dangerous activities posing health or safety risks, temporary relocation of personnel in cases of inadequate working conditions, immediate provision of personal protective equipment (PPE), physical corrections to the workplace (lighting, ventilation, signage, etc.), guaranteed access to occupational health services and psychological care, urgent implementation of SG-SST protocols, and cessation of acts threatening freedom of association where they jeopardize the existence of a union.

New Perspectives on Discrimination and Labor Practices

Resolution 4179 requires companies to go beyond merely having a formal internal regulation. Inspections will evaluate coherence between policies, practices, and differential approaches; effective policies for preventing workplace violence and gender-based violence; and the absence of explicit or implicit discriminatory practices—such as paying lower wages to foreign nationals (xenophobia); unequal treatment based on age, disability, race, or ethnicity; and intersectional discrimination.

Practical Implications for Employers and HR Teams

In light of the new inspection model and the 2025 Labor Reform, organizations may want to consider immediate actions to mitigate risks and prepare for unannounced visits, such as the following:

Updating the legal matrix and SG-SST: Incorporating obligations arising from Resolution 4179 and Law 2466 of 2025, including specific protocols for prevention and response to harassment and workplace violence (with a gender focus), management of psychosocial risks, and handling of discrimination complaints (based on age, gender, disability, ethnicity, nationality, etc.).

Reviewing and updating internal work regulations: Aligning regulations with changes introduced by the 2025 Labor Reform, particularly regarding working hours, rest periods, and disconnection time; enhanced protection for vulnerable groups; disciplinary and contractual rules consistent with the new legislation; protocols for preventing and sanctioning violence and discrimination; and union guarantees and participation mechanisms.

Strengthening the occupational health and safety management system (SG-SST): Ensuring up-to-date documentary evidence (policies, procedures, risk matrices, training records, PPE delivery, etc.) and periodically verifying physical workplace conditions (lighting, ventilation, signage, ergonomics, accessibility, among others).

Training leaders and middle management: Sensitizing and training area managers and personnel supervisors on concepts of ageism, ableism, racism, xenophobia, and gender-based violence; the scope of differential and gender approaches in human resources management; and the practical implications of Law 2466 of 2025 in daily management (disciplinary decisions, terminations, shift organization, etc.).

Reviewing hiring processes and labor relations: Auditing selection processes to eliminate discriminatory biases, ensuring that hiring, promotion, and termination decisions are supported by objective and documented criteria; and verifying general documentary compliance (contracts, social security affiliations, payroll, leaves, permits, social security system reports, etc.).

Preparing for unannounced inspections: Implementing internal response protocols for inspector arrivals (who will attend, what documentation must be available, internal communication channels), keeping labor and occupational health and safety documents organized and up to date at all times, and avoiding reliance on “preparation” prior to a visit.

Conclusion

Resolution 4179 of 2025 represents a profound shift in how the Colombian government conducts labor inspection, centering enforcement on human rights protection, prevention of violence and discrimination, and strict verification of compliance with the 2025 Labor Reform. The emphasis on unannounced visits, differential approaches, and immediate measures significantly raises compliance standards for employers across all sectors. Preparation is key to reducing exposure to sanctions, preventing workplace risks, and ensuring effective respect for workers’ rights in an increasingly demanding regulatory environment.

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

Lina Fernandez is an associate in the Boston office of Ogletree Deakins.

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

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Quick Hits

• On December 19, 2025, the FTC announced an enforcement action against business-to-business no-poach practices and issued a proposed order that would require building services contractor Adamas Amenity Services LLC and its affiliated businesses (Adamas) to cease enforcement of their anticompetitive no-hire agreements. The order was finalized on February 12, 2026.
• This latest action, which mirrors two prior enforcement actions of the same type against Planned Building Services and Guardian Services Industries, aligns with FTC Chairman Andrew Ferguson’s comments last year that the Commission would remain interested in labor market issues and would look at noncompete and other restrictive covenant agreement terms on a case-by-case basis.

The FTC’s Enforcement Action and Proposed Order

Adamas is a building services contractor that provides residential and commercial luxury properties and property managers with people and technology to perform various services, including amenities, building and maintenance, concierge, parking and valet, and security services. Adamas routinely includes no-hire agreements in its contracts with building owners and management companies across New Jersey and New York City.

The enforcement action against Adamas comes on the heels of the Commission’s first enforcement action under the Trump administration. In that action, the FTC reached an agreement containing a ten-year consent order that required a pet cremation business to stop enforcing noncompete agreements against nearly 1,800 employees.

Adamas’s no-hire agreements (1) restrict the building owners and management companies from directly hiring workers employed by Adamas, including by imposing a fee in connection with such conduct; (2) limit Adamas workers’ ability to negotiate for higher wages and better benefits and working conditions from the building owners and management companies; and (3) limit the building owners’ and management companies’ ability to seek or accept bids from Adamas’s competitors due to the prospect of losing long-serving employees.

The FTC initiated an investigation of Adamas, after which the Commission’s Bureau of Competition furnished to Adamas a draft complaint, charging Adamas with violations of Section 1 of the Sherman Act and Section 5 of the Federal Trade Commission (FTC) Act, as amended. The draft complaint alleges that Adamas’s no-hire agreements constitute a method of unfair competition by (1) impeding the entry and expansion of Adamas’s competitors in the building services industry; (2) reducing employee mobility; and (3) causing lower wages and salaries, reduced benefits, less favorable working conditions and, among other things, personal hardship to employees. It also alleges that Adamas could have achieved any legitimate objectives through significantly less restrictive means.

In response to the draft complaint, Adamas and the Bureau of Competition entered into a consent agreement containing a proposed decision and order. Based on the materials provided, the FTC agreed the complaint should be issued, accepted the consent agreement and proposed order, and placed it on the public record for a period of thirty days for the receipt and consideration of public comments. The comment period closed January 22, 2026. The consent order was finalized on February 12, 2026.

The order will remain in effect for ten years and requires Adamas to comply with the following obligations, among others:

• Cease and Desist From Enforcing No-Hire Agreements. Adamas is enjoined from, directly or indirectly, entering or attempting to enter into, maintaining or attempting to maintain, enforcing or attempting to enforce, or threatening to enforce any no-hire agreement, or communicating to any prospective or current customer or person that any employee is or may be subject to a no-hire agreement.
• Provide Written Notice. Adamas is required to provide the following written notices within thirty days after issuance of the order:
• Deliver to each customer subject to a no-hire agreement or that has been subject to a no-hire agreement in the last three years an approved letter stating the no-hire agreement restriction is null and void;
• Deliver to each Adamas employee subject to a no-hire agreement an approved letter stating the no-hire agreement restriction is null and void; and
• Post clear and conspicuous notice in new hire documentation and in any shared employee space that employees are not subject to no-hire agreements and may seek or accept a job with the building owner directly, or with any company, including competitors, that may win the building’s business.
• Submit Compliance Reports. Adamas is required to take certain other compliance steps, including submission of verified written compliance reports at various intervals after issuance of the order.

In a press release issued on December 19, 2025, Daniel Guarnera, director of the FTC’s Bureau of Competition, stated that “anticompetitive no-hire agreements, just like the ones Adamas uses, prevent workers from realizing their full earning potential” and confirmed the FTC “will continue to take enforcement action to protect workers from harmful labor practices that lower paychecks and limit opportunities.”

Next Steps

The FTC’s actions underscore a clear policy that contractual provisions that suppress competition for workers, including by prohibiting or taxing hiring across businesses, are viewed as anticompetitive by the Commission. The FTC’s recent actions relating to no-hire agreements also confirm the FTC’s priority to investigate and scrutinize noncompete and other restrictive covenant agreements and their potential impact on labor markets—particularly where antitrust issues are implicated—through targeted, case-by-case enforcement moving forward.

To increase chances of withstanding scrutiny under the FTC’s latest agenda and under existing and developing state law, employers may want to continue ensuring that restrictive covenants are narrowly tailored as needed to protect their legitimate business interests.

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

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Quick Hits

• The OECD’s November 2025 update to the Model Tax Convention introduces a new two-part framework for assessing permanent establishment (PE) risks from cross-border remote work, including a 50 percent working time safe harbor and a “commercial reason” test.
• No automatic PE arises from mere employee-driven remote work in another country, providing relief for multinational employers managing hybrid and distributed teams.
• Employers may want to track working time splits across borders to avoid unintended tax nexus, social security shifts, or withholding obligations in foreign jurisdictions.
• The OECD guidance aligns with post-pandemic trends but requires updates to global mobility policies, contracts, and compliance tech to mitigate risks in bilateral treaty contexts.

For multinational employers, these changes are a double-edged sword: they provide predictability for “borderless” workforces but underscore the importance of robust tracking and policy frameworks to avoid unexpected tax liabilities, social security complications, and compliance pitfalls across jurisdictions.

New Framework for Remote Work PE Risks

The updated commentary on Article 5 replaces outdated 2012 guidance with a comprehensive, facts-and-circumstances approach designed to prevent “micro-PEs” while ensuring fair taxation. At its core is a two-part test:

1. Temporal test (50 percent working time benchmark): If an employee spends less than 50 percent of his or her total working time for the enterprise at a remote location in another treaty country over any twelve-month period, that location is generally not considered a “fixed place of business,” and no PE arises. This safe harbor accommodates incidental remote stints, such as short-term relocations for family reasons or digital nomad lifestyles, without triggering tax exposure. However, exceeding 50 percent shifts the analysis to the qualitative factors.
2. Commercial reason test (qualitative assessment): For arrangements over the 50 percent threshold, the OECD examines whether the employee’s physical presence in the foreign country serves a genuine commercial purpose for the business—beyond personal convenience. Factors include:

• Business ties to the location (e.g., serving local clients, accessing regional markets, or supporting on-site operations).
• Continuity and permanence of the remote setup.
• Whether the location is effectively at the enterprise’s disposal.
• Exclusion of preparatory or auxiliary activities (per Article 5(4)).

If the remote work is primarily for employee retention, cost efficiencies, or flexibility without a location-specific business link, a PE is unlikely. Conversely, client-facing or sales roles with strong jurisdictional ties could create one.

Illustrative examples in the commentary highlight scenarios like short-term internal work (no PE) versus long-term market-serving activities (likely PE), helping employers anticipate outcomes.

Cross-Border Implications for Employers

In a world where talent crosses borders seamlessly (think U.S.-based tech firms with EU remote workers or Swiss multinationals employing French commuters), these updates intersect with bilateral tax treaties, social security coordination (e.g., EU Regulation 883/2004 or U.S. totalization agreements), and immigration rules. Key risks include a number of tax and withholding obligations.

For example, a PE could trigger corporate income tax, profit attribution under Article 7 of the Model Tax Convention, and employee withholding in the host country, complicating payroll and increasing costs.

• Social security and benefits shifts: Exceeding time thresholds might reassign affiliation, affecting contributions and coverage, especially under multilateral agreements that currently exist in Europe which allow up to 49.9 percent telework between countries without changes.
• Global mobility challenges: Digital nomads or hybrid teams risk creating unintended location discrimination, particularly in high-enforcement jurisdictions like India or non-OECD countries that may deviate from the Model where the Temporal Test does not apply.
• Audit and compliance burdens: Tax authorities are increasingly scrutinizing remote arrangements, with the OECD’s guidance influencing interpretations even before treaty amendments.

These changes build on 2026 trends such as expanding digital nomad visas, amplifying the importance of integrated strategies.

Practical Steps for Multinational Employers

To navigate this landscape, employers may want to consider the following steps:

• auditing current cross-border remote setups, focusing on time splits and commercial justifications;
• implementing AI-powered tracking tools (e.g., geofencing apps integrated with payroll) for accurate day logs and automated alerts;
• revising work-from-anywhere policies, employment contracts, and approval processes to incorporate the 50 percent benchmark and documentation requirements;
• coordinating with tax, HR, and legal teams for treaty-specific advice, including  certificates for social security proving that employees working temporarily in another European Union member state or European Economic Area country remain covered by their home country’s social security system (A1 certificate); and
• considering Employer of Record (EOR) solutions or entity restructuring to minimize PE exposure in high-risk scenarios.

Proactive compliance not only mitigates risks but also enhances talent attraction in a competitive global market.

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

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Quick Hits

• The Delaware supreme court affirmed that an employer cannot recover damages for violation of restrictive covenants that are unreasonable.
• The ruling clarified that a claim seeking damages for breach of restrictive covenants is subject to reasonableness review, distinguishing it from forfeiture-for-competition agreements, which are not generally subject to such a review.

In a brief one-paragraph order, the Delaware supreme court unanimously affirmed the Court of Chancery of Delaware ruling in Fortiline, Inc. v. Hayne McCall that granted summary judgment in favor of the employer’s founder, who allegedly left to set up a competing business and poached half its workforce. The high court order comes less than two weeks after it heard the appeal on January 28, 2026.

The case involved a unique posture in which Fortiline, a waterworks industry company that was acquired by Patriot Supply Holdings, Inc. (PSH), sought to recover damages, instead of injunctive relief, against the founder and former employees for the alleged breaches of restrictive covenants, including noncompetition and nonsolicitation covenants, that they had agreed to in exchange for equity units in PSH. The Court of Chancery had previously found those restrictive covenants to be unreasonably broad and unenforceable when the employer sought a preliminary injunction.

“[A]fter consideration of the parties’ briefs, the argument of counsel, and the record on appeal, it appears to the Court that the judgment of the Court of Chancery should be affirmed on the basis of and for the reasons stated in its memorandum opinion,” the Delaware supreme court stated.

Distinguished From Forfeiture-for-Competition Agreements

The employer had argued that seeking only damages for the alleged breaches would not trigger the court’s analysis of whether the agreements themselves are reasonable. The employer pointed to decisions where courts had upheld forfeiture-for-competition provisions, in which an employee forfeits a supplemental benefit if the employee competes with the employer, that are not subject to reasonableness review.

But the Court of Chancery found that enforcing forfeiture-for-competition agreements is not akin to recovering damages for a breach, since forfeiture-for-competition contracts called for the set return of a supplemental benefit when an employee competes. Damages, on the other hand, seek to restore the aggrieved party to the position it would have been in if the breach had not occurred.

“A damages award for breach of a restrictive covenant and an order enforcing a forfeiture-for-competition provision both move money around because of employee competition, but those similarities are superficial and, at bottom, irrelevant,” the Court of Chancery stated. “The law treats the promises differently because they call for different performance.”

Since the restrictive covenants serve to restrain employees from competing, they implicate public policy interests and require review for reasonableness, the trial court found. The court had already found them unreasonable and unenforceable. The trial court concluded that the employer was not “entitled to any damages based on breaches of unreasonable restrictive covenants.”

Next Steps

The ruling underscores that Delaware courts will examine the reasonableness and scope of restrictive covenants when they prohibit an employee from competing, whether the employer seeks injunctive relief or damages.

At the same time, the Court of Chancery’s underlying ruling and the affirmance by the Delaware supreme court make clear that employers will still be able to enforce properly crafted forfeiture-for-competition provisions that require an employee to forfeit a supplemental benefit if the employee competes with the company.

Ogletree Deakins’ Unfair Competition and Trade Secrets Practice Group will continue to monitor developments and will provide updates on the Delaware and Unfair Competition and Trade Secrets blogs as additional information becomes available.

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Quick Hits

• Despite repeated requests from multiple courts, the administration has yet to articulate what distinguishes lawful DEI programs from those that the federal government believes violate antidiscrimination laws, leaving employers without clear compliance guidance.
• Federal contractors and money recipients that cannot certify compliance face potential False Claims Act liability, including treble damages, civil investigative demands, and possible criminal exposure—consequences far exceeding traditional antidiscrimination enforcement.
• The Seventh Circuit panel signaled concern about the scope of a lower court’s injunction in light of the Supreme Court of the United States’ ruling in Trump v. CASA, Inc.; employers outside the plaintiff’s direct relationships may want to prepare for the possibility that the injunction’s scope and impact may be limited.

Background

Executive Order (EO) 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” includes a certification provision requiring federal agencies to include terms in every contract or grant requiring each recipient to (1) certify compliance with all federal antidiscrimination laws, and (2) certify “that it does not operate any programs promoting DEI that violate any applicable Federal antidiscrimination laws.”

Chicago Women in Trades (CWIT), a nonprofit organization that trains women for careers in the construction trades and receives federal grant funding through the U.S. Department of Labor, challenged the certification provision. CWIT has argued the provision violates the First Amendment because it targets speech rather than conduct and constitutes viewpoint discrimination because it singles out pro-DEI programs while ignoring anti-DEI programs that might also violate antidiscrimination laws. CWIT has also argued that the provision imposes unconstitutional conditions by requiring certification of compliance for activities beyond those receiving federal funding. Several entities cancelled or sought to cancel relationships with CWIT out of concern about the certification requirement.

The U.S. District Court for the Northern District of Illinois issued a preliminary injunction blocking enforcement of the certification provision. The government appealed.

Takeaways From the Oral Argument

Oral argument exposed persistent uncertainty facing employers about what distinguishes lawful from unlawful DEI programs. Lawyers for the government continued to struggle to define what constitutes “unlawful DEI,” drawing sharp criticism from Judge David Hamilton, who stated, “[Y]ou understand the frustration, from everybody dealing with this case on the court side, has been the government’s failure to answer that question.”

The government did acknowledge that lawful DEI programs exist and that EO 14173 does not prohibit “educational, cultural, or historical observances that celebrate diversity, recognize historical contributions, or promote awareness without engaging in exclusion or discrimination.” But the panel remained unsatisfied with the government’s lack of concrete guidance on where the line falls.

The panel also signaled concern about the scope of the district court’s injunction, given the Supreme Court’s ruling in Trump v. CASA, Inc., suggesting the district court’s broad preliminary injunction could be narrowed. District courts remain split on whether the certification provision regulates speech or conduct, an issue Chief Judge Michael Brennan identified as “the distinguishing metric” between different outcomes in different courts.

Next Steps

Employers uncertain about the status of their DEI programs remain in largely the same position, and the Seventh Circuit’s ruling, when issued, likely will not resolve that question.

Federal contractors and grantees face exposure beyond ordinary antidiscrimination enforcement. The certification requirement can trigger False Claims Act liability, with treble damages, civil investigative demands, and possible criminal exposure, creating a materially different risk profile than a traditional enforcement action. The certification provision also extends to programs “whether federally funded or not,” meaning employers may need to certify compliance across their entire organization.

Employers may want to consider evaluating whether their DEI programs comply with existing federal antidiscrimination laws and document that compliance. Because the government acknowledged that educational, cultural, or historical observances that “celebrate diversity, recognize historical contributions, or promote awareness without engaging in exclusion or discrimination” do not run afoul of the executive orders, employers may wish to frame their initiatives accordingly while monitoring further developments in this litigation and related cases.

For more information on DEI enforcement, please join us for our upcoming webinar, “DEI Programs and Enforcement: What Employers Can Expect in 2026,” which will take place on February 24, 2026, from 2:00 p.m. to 3:00 p.m. EST. The speakers, T. Scott Kelly and Nonnie L. Shivers, will discuss the latest updates from the U.S. Equal Employment Opportunity Commission (EEOC), among other things. Register here.

Ogletree Deakins’ Diversity, Equity, and Inclusion Compliance Practice Group, Government Contracting and Reporting, 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 Reporting, 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

• On February 6, 2026, the Fourth Circuit held that the plaintiffs’ facial challenges in National Association of Diversity Officers in Higher Education v. Trump to President Trump’s anti-DEI executive orders (EOs) were unlikely to succeed, but the court did not validate the administration’s enforcement practices, did not endorse its interpretation of anti-discrimination law, and did not define what constitutes “unlawful DEI.”
• The certification provision in EO 14173 applicable to federal contractors and grant recipients targets only programs that “violate any applicable Federal anti-discrimination laws,” not DEI programming generally.
• The court expressly preserved the right of employers and other affected parties to challenge specific agency enforcement actions.

The plaintiffs, including the National Association of Diversity Officers in Higher Education, the American Association of University Professors, and the City of Baltimore, had argued that the executive orders were unconstitutionally vague and violated the First Amendment of the U.S. Constitution. The Fourth Circuit disagreed, finding that the plaintiffs’ facial challenges were unlikely to succeed. The court’s narrow ruling, however, did not validate the administration’s enforcement practices, does not clarify what the administration considers “unlawful DEI,” and expressly preserved the right of employers and other affected parties to bring as-applied challenges to specific federal agency actions taken to enforce these executive orders.

The court’s decision focused narrowly on whether the text of two provisions, the termination provision in EO 14151 and the certification provision in EO 14173, is facially unconstitutional.

The termination provision directs all federal agencies to “terminate, to the maximum extent allowed by law, all DEI, DEIA, and ‘environmental justice’ offices and positions,” as well as “all ‘equity action plans,’ ‘equity’ actions, initiatives, or programs, ‘equity-related’ grants or contracts.”

The certification provision requires agencies to include in every contract or grant award term requiring the recipient to (1) certify compliance with all federal anti-discrimination laws, and (2) “certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.” Noncompliance with these certifications could expose recipients to potential False Claims Act liability and other results, such as loss of funding.

The Fourth Circuit concluded that both provisions, as written, survive constitutional scrutiny. Regarding the termination provision, the court characterized it as an internal executive matter—a policy directive from the president to his subordinates to terminate DEI-related grants and contracts. The court held that a more lenient vagueness standard applies in funding contexts than in criminal or regulatory schemes. Because the government is acting as a “patron” distributing funds rather than as a “sovereign” imposing penalties, courts afford greater latitude for imprecision. Regarding the certification provision, the court found that it requires only that grant recipients and contractors certify compliance with existing federal anti-discrimination laws and not any new legal standard. Because the First Amendment does not confer a right to violate anti-discrimination laws, the court held that the certification provision does not facially violate the Constitution.

The court’s ruling turned on the distinction between facial and as-applied constitutional challenges. A facial challenge asks whether a provision is unconstitutional in all or a substantial number of its applications—a high bar. An as-applied challenge targets how a provision is enforced in specific circumstances. Here, the court addressed only the former.

Notably, the court took no position on whether the administration’s interpretation of anti-discrimination law is correct, did not validate any specific enforcement actions as lawful, and did not find what DEI programs are lawful versus unlawful. The court made clear that if the administration or agency actors misinterpret federal anti-discrimination law, for example, by treating lawful DEI programming as illegal, affected parties can challenge those decisions “in a specific enforcement action.” As-applied challenges remain fully available. Notably, Chief Judge Albert Diaz wrote separately to underscore this point, expressing concern that “the evidence cited by plaintiffs, their amici, and the district court suggests a more sinister story: important programs terminated by keyword; valuable grants gutted in the dark.” His message: “Follow the law. Continue your critical work. Keep the faith. And depend on the Constitution.”

Next Steps

This decision is not judicial endorsement of the administration’s enforcement practices or a signal that aggressive anti-DEI enforcement has been “greenlit.” The court addressed only whether the text of the executive orders is facially unconstitutional. It did not validate the administration’s interpretation of anti-discrimination law, did not approve any specific enforcement actions, and did not define what constitutes “unlawful DEI.” Employers that have been uncertain about the status of their DEI programs are in largely the same position they were before this ruling.

Employers may want to evaluate whether their DEI programs comply with existing federal anti-discrimination statutes laws and document that compliance. Because the certification provision requires certification of compliance with existing law, employers with federal contracts or grants may be called upon to demonstrate that their programs do not discriminate on the basis of race, color, religion, sex, national origin, or other characteristics protected by federal anti-discrimination laws.

The Fourth Circuit’s decision is not the final word on challenges to the administration’s anti-DEI executive orders. Other courts are considering similar challenges, and as-applied challenges to specific agency enforcement actions are likely to follow. Employers may want to monitor how federal agencies are interpreting and enforcing the executive orders.

For more information on DEI enforcement, please join us for our upcoming webinar, “DEI Programs and Enforcement: What Employers Can Expect in 2026,” which will take place on February 24, 2026, from 2:00 p.m. to 3:00 p.m. EST. The speakers, T. Scott Kelly and Nonnie L. Shivers, will discuss the latest updates from the U.S. Equal Employment Opportunity Commission (EEOC), among other things. Register here.

Ogletree Deakins’ Diversity, Equity, and Inclusion Compliance Practice Group, Governmental Affairs Practice Group, Government Contracting and Reporting 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, Governmental Affairs, 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

• Federal contractors must distinguish between contracts entered into before January 30, 2022 (subject to Executive Order (EO) 13658 and DOL’s annual indexed increases), and those entered into on or after that date, which were governed by EO 14026 prior to its revocation.
• Even though DOL is no longer enforcing EO 14026, contractors remain bound by existing contract clauses unless modified by the contracting officer and must comply with other applicable federal, state, and prevailing wage laws.
• The January 30, 2022, compliance date continues to determine which wage framework applies, whether DOL’s latest increase is triggered, and how legacy clauses and option exercises should be analyzed.

Since President Donald Trump revoked Executive Order 14026, which established a $15 per hour federal contractor minimum wage, contractors have faced uncertainty about minimum wage obligations. DOL’s recent annual minimum wage increase affecting certain federal contracts may add to the confusion. The key to understanding the current minimum wage landscape is recognizing that different rules apply depending on when a federal contract was entered into.

There have been two distinct federal contractor minimum wage regimes that affect contractors depending on the dates of their contracts: (1) an Obama-era contractor minimum wage rule, which remains in effect and is subject to annual inflation-based increases issued by DOL; and (2) the now-revoked Biden-era $15 minimum wage rule, which applied to contracts entered into on or after January 30, 2022.

Contracts Entered Into Before January 30, 2022

The federal contractor minimum wage did not originate with the Biden administration. An earlier executive order issued during the Obama administration (EO 13658) established a minimum wage for certain covered federal contracts and directed DOL to adjust that wage annually based on inflation. That executive order remains in effect today. Consistent with that directive, DOL recently issued its annual notice increasing the contractor minimum wage applicable to covered contracts entered into or extended via options before January 30, 2022. The DOL notice takes the position that post revocation of EO 14026, EO 13658 does not apply to contracts awarded, renewed, or extended after January 29, 2022. The increase took effect at the beginning of the calendar year and applies for the duration of covered contract performance. For contractors performing long-term or legacy federal contracts, this means the newly increased DOL minimum wage may still be mandatory, even though the Biden-era $15 rule has been revoked.

Contracts Entered Into on or After January 30, 2022

For contracts entered into on or after January 30, 2022, President Joe Biden’s Executive Order 14026 established a $15 per hour minimum wage for covered contractor employees, with annual indexing above that level. Importantly, EO 14026 provided that Executive Order 13658 “is superseded, as of January 30, 2022, to the extent it is inconsistent with this order.” For several years, EO 14026 was the controlling rule for new federal contracts and exercised options. But because EO 14026 has been revoked, it no longer establishes a federal contractor minimum wage for new contracts and the automatic $15-plus, inflation-indexed wage floor no longer applies by default to contracts entered into after January 30, 2022. However, the revocation does not mean that no minimum wage requirements apply to those contracts.

DOL has yet to issue clear guidance for contractors that are performing contracts subject to EO 14026 and whether they are no longer required to apply the $15-plus, inflation-indexed federal contractor minimum wage. Because the executive order was the sole legal authority for that wage floor, its revocation eliminates the policy basis for continued enforcement. The DOL’s website states that it “is no longer enforcing Executive Order 14026 or the implementing rule (29 CFR part 23) and will take steps, including rescinding 29 CFR part 23, to implement and effectuate the revocation of Executive Order 14026.” However, federal contractors generally must comply with the terms of their contracts, which may contain references to “FAR 52.222-55 Minimum Wages for Contractor Workers Under Executive Order 14026,” until those terms are modified by the contracting officer. Contractors may want to confirm with the contracting officer whether their agency has issued a class deviation or contract modification before making any wage adjustments from what is contractually required.

Remaining Minimum Wage Obligations

For contracts entered into on or after January 30, 2022, following the revocation of EO 14026, minimum wage obligations are determined by the express terms of the contract until modification by the contracting officer, and then existing federal labor statutes and applicable state law, rather than by a standalone executive order. In practice, this means contractors must look to the following sources:

• Fair Labor Standards Act (FLSA). At baseline, contractors must comply with the federal minimum wage under the FLSA, which currently remains $7.25 per hour, unless a higher wage is required by another law.
• Service Contract Labor Standards. For covered federal service contracts, the Service Contract Act (SCA) typically governs wages. Under the SCA employees must be paid at least the wage rates and fringe benefits specified in the applicable DOL wage determination. Those rates vary by locality and labor category and often exceed the EO 13658 minimum wage.
• Davis-Bacon Act. For covered construction contracts, the Davis-Bacon Act requires payment of prevailing wages set forth in DOL wage determinations, which are generally well above EO 13658 minimum wages.
• State and Local Wage Laws. Contractors must also comply with applicable state and local minimum wage laws, which frequently establish wage floors higher than the federal minimum and apply independently of federal contracting rules.

Why the January 30, 2022, Date Still Matters

Although the Biden-era $15 minimum wage rule has been revoked, January 30, 2022, remains a critical compliance marker because it determines whether DOL’s most recent annual contractor minimum wage increase applies (it applies only to contracts entered into before that date); and whether a contract was ever subject to Executive Order 14026, which may affect legacy clauses, option exercises, and agency enforcement positions.

As a result, many contractors continue to operate under multiple wage frameworks simultaneously, depending on contract vintage, contract type, and place of performance. For contractors with mixed portfolios, this remains a compliance and risk-management issue, not just a payroll issue. Careful contract-by-contract analysis remains critical to ensuring compliance and minimizing exposure under wage-and-hour laws and related enforcement regimes.

Ogletree Deakins’ Government Contracting and Reporting Practice Group will continue to monitor developments and will post updates on the Construction, Government Contracting and Reporting, and Wage and Hour blogs as additional information becomes available.

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Quick Hits

• The EEOC issued FAQs to assist federal agencies in implementing President Trump’s return-to-office order in compliance with the Rehabilitation Act of 1973, the federal sector analog to the ADA.
• As private employers implement return-to-office policies, the EEOC’s FAQs provide useful guidance for managing telework accommodation requests under the ADA.
• Employers may re-evaluate existing telework arrangements for individual employees and modify or rescind them, depending on the availability and effectiveness of alternative in-office accommodations.

Key Points From the FAQs

The FAQs cover a wide range of topics related to telework as a reasonable accommodation for employees with mental and physical disabilities. They offer an illuminating roadmap of the EEOC’s position on a number of complicated issues that employers face. Below is a summary of some of the more significant points.

Employers should recognize when telework qualifies as a reasonable accommodation—and when it does not. Under the ADA, reasonable accommodations, including telework, must enable an individual to accomplish one of the following: (1) participation in the application process, (2) performance of essential functions, or (3) access to equal benefits and privileges of employment.

The EEOC explains that telework requested primarily for personal benefit, without serving one of these purposes, is not a reasonable accommodation. Furthermore, the EEOC states that “[w]hat the law does not require … is accommodations that only mitigate symptoms without also enabling the performance of essential functions.” (Emphasis in original). The EEOC goes on to explain:

“Some employees who request full-time or recurring telework assert that telework would help them manage their condition, mitigate their symptoms, or improve their quality of life. But these employees often do not explain how telework would also enable them to perform essential functions of their jobs. Possible symptom mitigation does not, by itself, establish an entitlement to telework as a reasonable accommodation.”

Employers may implement other effective accommodations instead of telework. As the EEOC also notes, when several effective accommodations are available, the employer has the discretion to choose which accommodation to provide, even if it is not the employee’s preference. In lieu of telework, other effective in-office accommodations may include assistive technology, modified equipment, environmental modifications (sound, smell, light, etc.), job restructuring, or modified schedules.

Employers may reevaluate telework accommodations. Employers need not continue an accommodation, including a telework accommodation, in perpetuity. Instead, employers may reevaluate and/or adjust an existing accommodation on a periodic or situational basis. Such reevaluation may be warranted in light of changes to the employee’s condition, job duties, the employer’s operational needs, or applicable law. If the reevaluation reveals that the employee no longer requires telework, or perhaps never did, the employer may rescind the accommodation.

The EEOC emphasizes that an employer that granted an accommodation that exceeded its obligations under the law may choose to discontinue such accommodation at any time. As the EEOC notes, “To hold otherwise would see an [employer] ‘punished for its generosity.’”

Employers may need updated medical information to reevaluate telework accommodations. Whether such information is required may depend on the circumstances. If the employee initially provided sufficient medical information, the employer may need only to confirm that the information still is accurate. However, the employer may have approved telework accommodations without sufficient information or the employee’s condition may have changed such that updated medical information is necessary. The EEOC notes that an employer that previously accepted insufficient documentation “does not forfeit its option to revisit the issue and make a new decision.”

Employers may take mitigating measures into account. Employers may ask healthcare providers about mitigating measures or self-accommodations that could enable in-office work. The concept of “reasonableness” in the accommodations process may involve a comparison of relative cost between the employer and employee; it may be unreasonable to provide a telework accommodation that is less than optimal for an employer’s operations when reasonable and effective self-accommodation measures are available.

Employers may consider conflicting or contradictory evidence. Employers may consider reliable evidence that conflicts with an employee’s asserted need for telework, including social media activity or other observations of employee conduct inconsistent with the reported limitations). In addition, if the employee and/or the healthcare provider provide insufficient information, an employer may require that a healthcare provider of its choice examine the employee in order to assess a telework accommodation’s necessity.

Employers need not remove essential functions. While employers temporarily may have excused employees from performing essential functions such as in-office attendance or enabled telework during the pandemic, doing so did not permanently alter a position’s essential functions or establish telework as always feasible. In-person presence may be essential for many jobs—especially interactive roles that require supervision and teamwork. Determining whether in-person attendance is essential for a particular job requires a case-specific assessment.

Consider testing in-office accommodations. If an employee claims that a particular in-office accommodation will be ineffective, employers may want to ask the employee to provide a detailed explanation with supporting evidence. If the employer reasonably believes in—and the available evidence supports—the likely effectiveness of an in-office accommodation instead of telework, the employer may require the employee to try the in-office accommodation. If the in-office measure is ineffective, employers may reconsider full-time or recurring telework, without removing essential functions or incurring undue hardship.

Noncompliance may be subject to discipline. An employee who refuses to report to the office may be considered absent without leave. However, employers first should ensure the employee understands why telework is not or is no longer available and invite suggestions for in-office alternatives. If the employee still refuses to return, the employer may discipline the employee in accordance with the employer’s attendance policy, consistent with its discipline of similarly situated employees.

Telework is not necessarily required to address in-office anxiety. Although employees with mental health impairments may experience workplace-related anxiety, the EEOC explains that the ADA “does not create a general right to free from all discomfort and distress in the workplace, including anxiety.” The relevant issue is whether the symptoms “impose a material barrier” to meeting the essential function of in-office presence or the enjoyment of equal benefits and privileges of employment. The EEOC suggests that anxiety is not a material barrier if employees are able to meet performance standards on-site. Even if anxiety is a material barrier, other in-office accommodations may be effective, and telework is mandated only if they are not.

A difficult or lengthy commute does not warrant a telework accommodation. The EEOC states that “[I]n most cases, an employer has no duty to help an employee with a disability with the methods and means of [their] commute to and from work, assuming the employer does not offer such help to employees without disabilities.” However, the employer may need to provide accommodations such as flexible scheduling to enable the employee to commute effectively. Temporary telework may be reasonable to allow the employee time to relocate closer to the workplace or make alternative commuting arrangements.

Conclusion

Although the EEOC’s FAQs are directed at federal agencies and constitute non-binding technical assistance, private employers implementing return-to-office mandates or dealing with telework requests more generally may treat these FAQs as practical guidance for minimizing risk in handling such requests.

Ogletree Deakins’ Leaves of Absence/Reasonable Accommodation Practice Group will continue to monitor developments and will provide updates on the Employment Law, Return to Work, and Leaves of Absence blogs as additional information becomes available.

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