Federal Government Mostly Funded; DHS Remains. After a brief partial shutdown, the federal government reopened for business on February 3, 2026, following passage of legislation in the U.S. House of Representatives that President Trump signed into law later that day. The funding package includes five underlying spending bills, which, combined with other funding bills already enacted, will fund the vast majority of the federal government through September 30, 2026. This includes funding for agencies popular here at the Buzz, such as the U.S. Department of Labor (DOL), the National Labor Relations Board (NLRB), and the U.S. Equal Employment Opportunity Commission (EEOC). However, securing full fiscal-year funding for the U.S. Department of Homeland Security (DHS) remains a challenge, as Democratic lawmakers are pushing for changes surrounding Customs and Border Protection and Immigration and Customs Enforcement. As part of the legislation signed into law this week, DHS will continue receiving current funding only through February 13, 2026—which doesn’t give lawmakers a lot of time to work out a long-term deal. If there is not a deal by the deadline—either a full-year funding bill or a continuing resolution—DHS will shut down.

USCIS Announces Dates for Initial H-1B Cap Registration. The initial registration period for the fiscal year 2027 H-1B cap season will open at noon ET on March 4, 2026, and close at noon ET on March 19, 2026, according to a U.S. Citizenship and Immigration Services announcement. For this year’s cap season, two new policies will loom large over the process: the administration’s H-1B weighted selection rule and President Trump’s $100,000 H-1B proclamation. While no legal challenges to the weighted selection rule have been filed, three lawsuits have been filed challenging the proclamation. None of those lawsuits, however, is likely to be resolved before the initial registration period opens. Natalie L. McEwan has additional details.

DHS, DOL Provide Additional H-2B Visas. On February 3, 2026, DHS and DOL jointly issued a temporary final rule that provides 64,716 H-2B nonimmigrant visas for fiscal year 2026. The additional visas will be made available in three different allocations: first, for employment beginning on January 1, 2026, followed by employment start dates beginning April 1, 2026, and finally for employment start dates from May 1 through September 30, 2026. According to the rule, the visas “will be available only to those American businesses that are suffering or will suffer impending irreparable harm, i.e., those facing permanent and severe financial loss, as attested by the employer.”

Bipartisan House Group Endorses Franchise Joint Employer Bill. The Buzz recently discussed how Republican leaders had to cancel a scheduled floor vote on the Save Local Business Act, the long-standing bill that would provide employers with clarity regarding potential joint-employer liability. While that was a blow to the broader business community, a smaller segment of that community—franchisors and franchisees—received some good news this week on the legislative front. The Problem Solvers Caucus—a bipartisan group of more than forty House members “committed to advancing common-sense solutions to key issues facing our nation”—announced its endorsement of the American Franchise Act (H.R. 5267). The bill clarifies that a franchisor may only be a joint employer of employees of a franchisee when it “possesses and exercises substantial direct and immediate control over one or more essential terms and conditions of employment” of those employees. The bill further defines what it means to exercise “direct and immediate control” over wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction. Time will tell whether the Problem Solvers Caucus’s endorsement helps the American Franchise Act get additional legislative traction.

House Subcommittee Holds Second Hearing on Artificial Intelligence (AI). On February 3, 2026, the House Subcommittee on Health, Employment, Labor, and Pensions held its second hearing in a series of hearings on the impact of AI in the workplace. While the first hearing took a broad view of AI’s impact on education and jobs, this week’s hearing focused on whether current federal laws and regulations should adapt to developing technology. Republican members and their witnesses argued that even with the increasing advancement and deployment of AI in the workplace, actions resulting from its use already fall within the scope of federal laws like the Fair Labor Standards Act, the National Labor Relations Act, and Title VII of the Civil Rights Act of 1964. These same witnesses also warned about the pitfalls of rushing to regulate at the state and local levels and of the conflicts and confusion that may result from such a regulatory patchwork. On the other hand, the Democrats and their witness argued that AI could be used to discriminate against job applicants, unlawfully surveil workers, or establish unsafe productivity standards.

Super Bowl Sunday in the Senate. Even with funding for DHS set to expire on February 14, 2026, Congress has no plans to stay in Washington, D.C., this weekend to negotiate. The situation was decidedly different approximately two years ago, when the U.S. Senate met on Super Bowl Sunday, February 11, 2024, to debate a $95 billion foreign aid and national security supplement to provide funding to Ukraine, Israel, and Taiwan, among other provisions. To our knowledge, this was the first and only time the Senate has met on Super Bowl Sunday. As for the game, the Kansas City Chiefs defeated the San Francisco 49ers, 25–22 in overtime. And, like the game, debate in the Senate went into overtime as well, extending into the following day and night, culminating in a vote at 5:14 a.m. on the morning of February 13, 2024. Passed by a vote of 70–29 in the Senate, the bill was eventually passed by the House and ultimately signed into law by President Joe Biden on April 24, 2024.

Quick Hits

• The New Jersey Diane B. Allen Equal Pay Act (NJEPA)—an amendment to the New Jersey Law Against Discrimination (NJLAD)—does not apply retroactively prior to its effective date of July 1, 2018. This is the first New Jersey state court case to hold as such.
• However, NJEPA’s six-year lookback period for pay discrimination claims does not eliminate the prior two-year lookback period under the NJLAD for claims arising after the July 1, 2018, effective date.
• Plaintiffs advancing claims under the NJEPA can potentially obtain comparator employee compensation data in discovery—critical evidence in any pay equity claim – from all of an employer’s operations and facilities, including nationwide data when applicable, and not just from an employer’s New Jersey office.

Background

In Affrunti v. Reed Smith, LLP, the plaintiff, Sherri Affrunti, was employed by Reed Smith as a non-equity partner from January 1, 2006, through January 11, 2019. After she resigned from the firm, she filed suit against the firm, alleging, among other claims, that she had been paid less than her male counterparts because of her gender, in violation of the NJEPA. Reed Smith then filed a motion seeking to limit her damages and the discovery of comparator employee compensation information to (1) the time period of July 1, 2018 (the effective date of the NJEPA) through her departure from the firm in January 2019, and (2) only those non-equity partners located in Reed Smith’s New Jersey office.

The trial court granted Reed Smith’s motion, finding that because the NJEPA does not apply retroactively, “it follows that alleged damages should comport with the same temporal limitation”—i.e., July 1, 2018, through the date of her resignation. Additionally, the trial court entered an order prohibiting her from seeking discovery of comparator pay data nationwide and limiting such discovery to Reed Smith’s New Jersey-based non-equity partners. The plaintiff-(former) employee then appealed each of these rulings.

Temporal Scope of the Plaintiff’s Unequal Pay Damages

On appeal, the Appellate Division first considered whether the plaintiff was entitled to seek damages for the entire period she worked at Reed Smith as a non-equity partner—again, January 1, 2006, through January 11, 2019. Relying on established New Jersey Supreme Court precedent, the Appellate Division agreed with the trial court’s conclusion that the NJEPA does not apply retroactively, but it disagreed with how the trial court prospectively applied the NJEPA to the plaintiff’s alleged unequal pay damages. Specifically, the Appellate Division found that, because a two-year lookback period already existed under the NJLAD before the NJEPA took effect, the unequal pay damages alleged should not be limited to the effective date of the NJEPA. Accordingly, plaintiff was allowed to pursue back pay damages for the two-year period predating the filing of her complaint on December 18, 2020, only.

Temporal Scope of Comparator Pay Discovery

The Appellate Division then considered the issue of whether the plaintiff was entitled to discovery of comparator employee compensation for the time period July 1, 2018, through January 11, 2019, only. Relying on the NJEPA’s text, legislative history, and relevant agency interpretations, the appellate panel concluded that the plaintiff was entitled to such discovery for the entire period she was employed as a non-equity partner, and not just the period following the NJEPA’s effective date of July 1, 2018. Importantly, however, the Appellate Division expressly noted that the admissibility of such discovery was “not before us,” thus leaving open the question of whether materials regarding pay after the NJEPA’s July 1, 2018, effective date could be used by the plaintiff at trial.

Geographic Scope of Comparator Pay Discovery

Finally, the Appellate Division addressed the plaintiff’s contention that the trial court had erred in barring her from seeking discovery of comparator pay data throughout all of Reed Smith’s United States locations. Relying primarily on guidance issued by the New Jersey Division on Civil Rights, the Appellate Division found that the plaintiff was permitted to seek comparator pay discovery throughout the entire United States, and not just that limited to Reed Smith’s New Jersey office location, concluding that “[a]s an employer within the definition of the [NJ]LAD, Reed Smith is subject to the [NJEPA’s] provision requiring that the ‘comparison of wage rates … be based on wage rates in all of an employer’s operations or facilities.’”

Key Takeaways

Employers of all sizes can view Affrunti as a cautionary tale and strategic inflection point. With expansive discovery rules and evolving statutory horizons for damages available to pay equity plaintiffs, employers may want to consider auditing their pay practices on a regular and proactive basis. Pay equity reviews and audits can make or break defenses in pay discrimination disputes, and businesses concerned about pay equity compliance, compensation practices, and how to respond strategically to pay discrimination claims or discovery requests may want to consider undertaking such an analysis.

Ogletree Deakins’ Morristown office will continue to monitor developments and will provide updates on the New Jersey and Pay Equity blogs as additional information becomes available.

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Quick Hits

• On December 30, 2025, HHS’s OIG issued Advisory Opinion No. 25-12, determining that home care agencies’ proposed sign-on bonuses for prospective caregivers, who are often family members of Medicaid participants, constituted impermissible remuneration under the federal Anti-Kickback Statute and potentially violated the Beneficiary Inducements Civil Monetary Penalty provision.
• The OIG found that the proposed sign-on bonuses, advertised without eligibility criteria, created an “inextricable link” between caregivers and client referrals, effectively acting as upfront payments to influence the selection of home care agencies based on financial incentives rather than care quality.
• Based on the OIG’s advisory opinion, home care agencies may want to review their recruitment and marketing materials for advertisements of sign-on bonuses tied to client referrals and consider alternative arrangements.

The Proposed Arrangement

The entities requesting an opinion from the OIG each operate a home care agency where eligible clients, who are Medicaid recipients, can select attendants to provide home care services. The home care agency submits claims for services performed by the attendants to the State Medicaid program and receives payment for those services. Typically, the client’s attendant is a family member.

To remain competitive, the home care agency proposed marketing a sign-on bonus to prospective attendants. The bonus would be advertised only as the amount, without any criteria for eligibility.

The OIG’s Analysis

Based on the requesting party’s specific factual scenario, the OIG determined that the proposed arrangement implicated the AKS and Beneficiary Inducements CMP and that it failed to satisfy any of the AKS safe harbor provisions. The OIG determined that there was an “inextricable link” between prospective attendants and the referral of new clients, especially when the attendant would have influence over the home care agency that the attendant’s family member would select. Further, the OIG viewed the advertisement of the sign-on bonus as functionally a solicitation for referrals. Specifically, the OIG held that the bonus advertisements were effectively upfront payments and, therefore, an enticement for attendants to select home care agencies based on financial incentives rather than the quality of care. The OIG further expressed its concern that market competition would incentivize home care agencies “to offer increasingly higher sign-on bonuses” and divert resources from being invested in the quality of services rendered. Ultimately, the OIG issued an unfavorable opinion, concluding that the proposed arrangement constituted prohibited remuneration.

Key Takeaways

Home care agencies with clients who are Medicaid participants will likely want to ensure that any bonuses for the purposes of recruiting attendants are not connected to, directly or indirectly, client referrals. Notably, AO 25-12 is based on a specific set of facts provided by the requesting parties and should not be viewed as an endorsement of marketing tactics for other types of bonuses.

Depending on a home care agency’s specific needs and circumstances, the following options may be considered as viable alternatives to the proposed arrangement analyzed by the OIG:

• Sign-on bonuses paid to attendants who are not connected to a potential client. Understanding whether this could implicate the AKS would require a case-by-case examination of the level of influence a prospective attendant would have over potential clients.
• Sign-on bonuses paid to prospective attendants with respect to clients who are not Medicaid participants. However, employment compensation arrangements that are not standardized could trigger other healthcare and employment law-related concerns.
• Bonuses paid after hiring that are not advertised or offered (or understood to be available) prior to hiring.
• Bonuses paid after hiring that are advertised prior to hiring but clearly state the conditions of payment, provided that those conditions have nothing to do with incentivizing a prospective attendant to bring along a client over whom they have influence.

Importantly, any type of arrangement that could implicate the AKS should be reviewed before implementation. The bonuses discussed in AO 25-12 are only one kind of the many marketing tactics that, while generally considered industry norms in other sectors, may run afoul of the AKS.

Ogletree Deakins’ Healthcare Industry Group and Whistleblower and Compliance Practice Group will continue to monitor developments and provide updates on the Healthcare and Ethics / Whistleblower blogs as additional information becomes available.

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Quick Hits

• On January 1, 2026, Colorado’s state minimum wage increased from $14.81 to $15.16 per hour.
• Employers will be required to keep records for each employee’s amount of vacation hours and paid sick leave accrued and used.
• Local governments are now allowed to set a tip credit that is higher than the state’s tip credit.

These legal changes may impact Colorado employers in 2026:

• Colorado’s minimum wage for nontipped workers is $15.16 per hour for most employers, as of January 1, 2026. Counties and cities may have a higher minimum wage than the state.
• Colorado’s minimum salary basis for exempt positions is $1,111.23 per week ($57,784 rounded annual equivalent).
• House Bill (HB) 25-1001 updated the definition of “employer” to include “each individual who owns or controls at least 25 percent of the ownership interests in an employer” unless that minority owner “demonstrates full delegation of its authority to control day-to-day operations of the employer.” This law took effect on August 6, 2025.
• HB 25-1001 also permits the director of the Division of Labor Standards and Statistics (DLSS) to adjudicate wage-claim cases for up to $13,000 of unpaid wages for cases filed from July 1, 2026, through December 31, 2027, and in an amount specified by the director of the division to adjust for inflation beginning January 1, 2028. (Previously, the maximum was $7,500.) The DLSS will publish on the division’s website the names of all employers found to be in violation (with unpaid wages) and whether the violation was willful.
• State regulations were amended to require employers to maintain accurate records, for each employee, with the number of vacation hours accrued, used, and available for use during the current benefit year; and the number of paid sick leave hours accrued, used, and available for use during the current benefit year under the Colorado Healthy Families and Workplaces Act. This took effect on February 1, 2026.
• HB 25-1208 allows (but does not require) local governments to set a tip credit higher than the state tip credit of $3.02, as long as the local tipped minimum wage is at least the state tipped minimum wage. This law took effect on January 1, 2026.

Next Steps

Employers in Colorado may wish to review their payroll policies and practices to ensure they adhere to recent changes to wage-and-hour rules in the state. They may wish to coordinate with their third-party payroll administrator to confirm compliance with state and local laws regarding minimum wage, paid leave, and tip credits.

In Colorado, it is illegal to retaliate against an employee for reporting a complaint about unpaid wages or a violation of the state paid sick leave law.

Ogletree Deakins’ Denver office will continue to monitor developments and will provide updates on the Colorado, Leaves of Absence, and Wage and Hour blogs as new information becomes available.

David L. Zwisler is a shareholder in Ogletree Deakins’ Denver office.

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

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Quick Hits

• The Republican majority on the Commission (currently composed of two Republican commissioners and one Democratic commissioner) voted to eliminate long-standing bipartisan procedures related to Commission policy decisions and meeting agendas/votes, while also requiring Commission approval for systemic cases and litigation involving fifteen or more employees.
• EEOC Chair Andrea Lucas has also publicly called for white male employees to file discrimination complaints and warned that DEI programs (regardless of what they are called) may be unlawful if they consider race or sex in employment decisions.
• Employers can expect more agency activities that further align the EEOC with the enforcement and policy priorities articulated by the current administration.

The EEOC’s latest changes, combined with the Trump administration’s stated view that civil rights protections have resulted in white people being “very badly treated,” mark a significant shift in federal employment law enforcement that employers across all industries should monitor closely.

Voting and Litigation Approval Authority Changes

On January 14, 2026, the EEOC voted 2–1 to overhaul its voting protocols, giving Chair Lucas authority to approve or deny requests for Commission meetings and control which matters reach the full Commission. During the Commission meeting, Chair Lucas defended the changes, stating that “elections have consequences” and that the agency “will not be dilly-dallying,” but rather “charging forward” with the Trump administration’s agenda.

Nine days later, on January 23, 2026, the Commission voted 2–1to approve a resolution to “require Commission approval of almost all litigation.” The EEOC specifically voted to tighten restrictions on the EEOC general counsel’s authority to file lawsuits. Commissioners must now vote before the EEOC (including any of its regional offices) can pursue systemic discrimination cases, pattern-or-practice cases, matters involving fifteen or more aggrieved workers, or cases presenting “unsettled” legal issues. Chair Lucas stated that the resolution had “restore[d] to the Commission panel the critical responsibility to authorize litigation” that Congress originally entrusted to commissioners.

A group of nearly thirty civil rights organizations signed onto a letter criticizing the changes as “a power grab that appears intended to further politicize the agency.” 

DEI Enforcement Priorities

Scrutinizing corporate DEI initiatives remains central to the EEOC’s enforcement agenda. Chair Lucas has warned companies that program labels will not provide protection: “It doesn’t matter if you call that DEI or belonging or ‘EO’ or anything: If it functions like that, it’s illegal.” As such, employee resource groups, supplier diversity programs, and demographic-targeted recruitment efforts may all face enforcement scrutiny.

Moreover, in an unprecedented move, Chair Lucas posted a video on social media in December 2025, directly soliciting discrimination complaints from white male employees, stating, “Are you a white male who has experienced discrimination at work based on your race or sex? You may have a claim to recover money under federal civil rights laws. Contact the EEOC as soon as possible …. The EEOC is committed to identifying, attacking, and eliminating all forms of race and sex discrimination, including against white male applicants and employees.”

The administration’s position was underscored by President Donald Trump’s January 7, 2026, interview with The New York Times, in which he stated that Civil Rights–era protections had resulted in white people being “very badly treated” and in which he characterized affirmative action as “reverse discrimination.”

Consistent with this position, the Department of Justice (DOJ) recently filed suit against the State of Minnesota for alleged Title VII violations arising from a statewide affirmative action program for civil service positions. The complaint alleges that Minnesota’s legally required affirmative action practices—which include numerical goals, underutilization analysis, and pre-hire justifications requirements—constitute unlawful discrimination. 

EEOC Enforcement Tools

The EEOC has indicated it will leverage a wide range of enforcement tools to identify potential violations. Chair Lucas (as well as the DOJ) has specifically referenced the agency’s ability to search archived web content to identify companies that have changed DEI language without substantively altering underlying practices. This signals the EEOC’s skepticism regarding whether companies are making meaningful changes to their programs.

The EEOC has also rescinded Biden-era anti-harassment guidance, notably including the recent January 2026 rescission of guidance the EEOC adopted in April 2024 that stated that the prohibition on sex discrimination in Title VII of the Civil Rights Act of 1964 prohibited discrimination based on sexual orientation or gender identity. That guidance stemmed from the Supreme Court of the United States’ 2020 decision in Bostock v. Clayton County, which held that Title VII prohibits employers from discharging a worker for identifying as LGBTQ+.

Further policy changes, including expected revisions to regulations under the Pregnant Workers Fairness Act (PWFA), can now proceed without public meetings under the new voting procedures.

Legal Landscape Supporting Enforcement Shift

This interpretation of Title VII as applying to white individuals is not new. In 1976, in McDonald v. Santa Fe Trail Transportation Company, the Supreme Court held that Title VII prohibited race discrimination against white individuals (sometimes referred to as “reverse discrimination”), as well as racial minorities. Recent Supreme Court cases have widened the doorway for more claims from individuals from majority groups.

In 2024, in Muldrow v. City of St. Louis, the Court allowed a female police officer to proceed with an unlawful discrimination claim related to a job transfer to a position with the same pay but less desirable hours, thereby expanding the types of employment actions that could support a discrimination claim. Further, in 2025, in Ames v. Ohio Department of Youth Services, the Court revived a heterosexual woman’s lawsuit alleging she’d been discriminated against in favor of employees who identified as gay, ruling that individuals from majority groups could not be held to a higher evidentiary standard to prove employment discrimination.

Next Steps for Employers

These developments represent a meaningful shift in federal employment law enforcement priorities that warrants attention from employers of all sizes. The combination of consolidated EEOC authority and explicit enforcement focus on DEI programs creates a new compliance landscape. Employers may face increased exposure to discrimination claims from majority-group employees and heightened regulatory scrutiny of diversity-related policies and programs.

Employers may wish to evaluate existing diversity initiatives, employee resource groups, and recruitment practices to understand how they operate and whether they could constitute employment actions based on protected characteristics. Employers should also ensure that workplace policies are applied consistently across all employee groups. Additionally, employers should consider revising and updating training modules to include all forms of unlawful discrimination and harassment, ensuring that training addresses protections for employees of all backgrounds, including majority-group members.

Employers should also track new developments carefully and plan for their impact. The EEOC is expected to pursue revisions to the PWFA regulations, rescind the EEO-1 Reporting requirement, and also take action to rescind the Uniform Guidelines on Employee Selection Procedures, which incorporate a single set of principles to assist employers, labor organizations, employment agencies, and licensing and certification boards to comply with requirements of federal law prohibiting employment practices that discriminate on grounds of race, color, religion, sex, or national origin. These policy changes may proceed with limited public notice under the new voting procedures. Employers will want to monitor EEOC guidance, technical assistance, and emerging enforcement patterns for signals about how these policies will be applied in practice.

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 EEOC, among other things. Register here.

Ogletree Deakins’ Diversity, Equity, and Inclusion Compliance Practice Group and Workforce Analytics and Compliance Practice Group will continue to monitor developments and will provide updates on the Diversity, Equity, and Inclusion Compliance, Employment Law, 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 Kansas Legislature passed legislation restricting transgender individuals’ access to bathrooms and other multi-occupancy private spaces (such as locker rooms) in public buildings to their biological sex at birth, imposing potential civil and criminal penalties for violations.
• The legislation mandates drivers’ licenses and birth certificates reflect biological sex designated at birth.
• The legislation allows individuals to sue for damages if their privacy is violated by someone of the opposite sex entering designated single-sex spaces in government buildings.
• The move aligns Kansas with multiple other states where similar restrictions are being considered or have been enacted, along with proposed federal legislation.

On January 28, 2025, the Kansas Legislature passed House Substitute for Senate Bill (SB) 244, after being fast-tracked and appearing to bypass public hearings and opportunities for public input. There appears to be enough votes in the Republican-led legislature to override Democratic Governor Laura Kelly’s expected veto of the measure.

SB 244 would restrict access to designated single-sex private spaces, including bathrooms, locker rooms, and changing rooms, in government-owned or -leased public buildings based on biological sex as determined at birth, and would impose potential civil and criminal penalties on violators.

The bill further would provide a private right of action for individuals to seek damages against individuals of the opposite sex who violate their privacy by entering single-sex spaces. In addition, SB 244 requires state driver’s licenses and birth certificates to reflect the biological sex of individuals’ sex designated at birth.

Kansas SB 244

SB 244 directs government agencies to designate “multiple-occupancy private space[s]” in government buildings as spaces “for use only by individuals of one sex” as defined under state law as an “individual’s biological sex, either male or female, at birth.” Government-owned buildings would be allowed to designate unisex restrooms designed for single occupancy. The bill also contains exceptions for certain purposes, such as cleaning and maintenance or carrying out law enforcement, and for children under age nine when accompanied by an individual caring for the child.

Repeat violators who enter such designated spaces not consistent with their biological sex could face civil and criminal penalties for repeat violations. Further, government agencies that fail to enforce the restrictions could also face investigations and penalties imposed by the state attorney general.

Notably, the bill would create a private right of action for individuals who are “aggrieved by the invasion of such individual’s personal privacy or otherwise harmed by a violation … by an individual of the opposite sex.” The bill provides for actual damages or liquidated damages of $1,000, as well as declaratory and injunctive relief.

Additionally, SB 244 would invalidate driver’s licenses and birth certificates issued before July 1, 2026, that identify the holders’ gender in a manner “contrary” to a binary, male-or-female definition of sex and reissue them to “correct” the gender identification.

Federal Policy Shift and EO 14168

With SB 244, Kansas will join other states with some form of transgender bathroom restrictions (such as Texas and Florida, among others) that largely apply to government buildings. Meanwhile, on the federal level, despite the Supreme Court of the United States’ decision in Bostock v. Clayton County, Georgia recognizing discrimination based on gender identity (specifically against transgender individuals in hiring or firing decisions) constitutes unlawful sex discrimination under Title VII of the Civil Rights Act of 1964, the Trump administration has shifted federal policy, taking the position that gender is binary and immutable.

Specifically, Executive Order (EO) 14168, issued by President Donald Trump on January 20, 2025, mandated that “intimate spaces” (e.g., bathrooms, locker rooms, and lactation rooms) in federal workplaces be designated by biological sex and not gender identity. EO 14168 further directed agencies to enforce federal policy, after the U.S. Equal Employment Opportunity Commission (EEOC) rescinded guidance that had recognized harassment against individuals based on sexual orientation and gender identity, including denial of access to bathrooms consistent with an individual’s gender identity, as a form of harassment based on sex.

However, parts of EO 14618 have been blocked by at least five federal district courts, and questions remain over whether denial of access to bathrooms consistent with an individual’s gender identity may constitute unlawful sex discrimination or contribute to an unlawful hostile work environment.

Further, on November 20, 2025, federal employees filed a class action complaint against the federal government and federal agencies challenging EO 14168’s prohibition on transgender and intersex federal employees using restrooms aligned with their gender identity. The first claim for relief in that suit alleges that the denial of restroom access consistent with gender identity constitutes discrimination “based on sex” in violation of Title VII, which requires that all personnel actions affecting federal employees be free from sex discrimination.

The complaint also challenges EO 14168’s prohibition violates the Administrative Procedure Act (APA) and that the government agencies’ actions are arbitrary, capricious, contrary to law, and in violation of statutes such as the Federal Property and Administrative Services Act, as well as constitutional guarantees of equal protection and due process, because they single out transgender and intersex employees for adverse treatment. Litigation remains ongoing, with the government’s deadline to file a motion to dismiss set for February 26, 2026.

Possibility of Nationwide Legislation

Federal lawmakers have also proposed bills restricting bathroom access. In July 2025, Representative Greg Steube (R-FL), and Senator Jim Banks (R-IN), introduced the “Restoring Biological Truth to the Workplace Act,” H.R.4554/S.2037, which seeks to reinforce EO 14168. The bill would make it unlawful to discriminate against an employee based on “covered expression, that describes, asserts, or reinforces the binary or biological nature of sex,” and require that employees have access to single-sex private spaces and bathrooms based on their biological sex.

That bill comes after Representative Nancy Mace (R-SC), reintroduced the “Protecting Women’s Private Spaces Act,” H.R.1016, in February 2026, which would restrict access to bathrooms and private single-sex spaces on federal property based on biological sex.

However, to date, neither federal bill has advanced in committee, and their chances of passage are unclear. Still, the legislation signals at least some willingness to expand bathroom bans nationwide.

Next Steps

The Kansas restrictions, while applying to government buildings, could portend further legislation in other states impacting the rights of transgender individuals. Such legislative developments create compliance challenges for multi-state employers where state and local protections may differ, as well as those operating in government buildings, as they attempt to balance compliance with the restrictions with the potential for unlawful employment discrimination and harassment in the workplace.

Employers in Kansas and beyond will want to stay aware of new legislation and developments in this shifting legal landscape. Employers outside Kansas will want to stay aware of all applicable federal, state and local law, including prohibitions on discrimination on the basis of sexual orientation and gender identity under Title VII and state analogues.

Ogletree Deakins’ Diversity, Equity, and Inclusion Compliance Practice Group and Workforce Analytics and Compliance Practice Group will continue to monitor developments and will provide updates on the Diversity, Equity, and Inclusion Compliance, Employment Law, Kansas, 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

• In January 2026, the UK government published guidance titled “Factsheet: Unfair Dismissal” to clarify provisions of the UK Employment Rights Act 2025.
• The qualifying period for unfair dismissal claims will be reduced from two years to six months.
• From January 2027, employees may find it easier to bring unfair dismissal claims, while employers could face higher costs in defending them.

The Employment Rights Act 2025 will introduce a substantial shift in unfair dismissals claims for employers. Currently, the compensatory award is set at £118,223 (or fifty-two weeks’ gross pay—whichever is lower) but from January 2027 both thresholds will be abolished, and tribunals will access compensation based solely on the employee’s actual financial loss. While the basic award will remain unchanged, compensation will become uncapped, bringing rewards in line with discrimination and whistleblowing claims.

For employers, this may mean that there is increased financial risk—particularly regarding highly paid employees or those in senior roles where dismissal leads to prolonged unemployment or loss of benefits.

Alongside the removal of the compensation cap, the qualifying period for unfair dismissal claims will be reduced from two year to six months, with both changes coming into force on January 1, 2027. It is thought that this reform seeks to replace the government’s original proposal to introduce unfair dismissal as a “day one” right, which was met with resistance during parliamentary review.

Under the new measures, employees will be eligible for unfair dismissal protection once they have completed six months of service.

Ogletree Deakins’ London office will continue to monitor developments and will post updates on the Cross-Border and United Kingdom blogs as additional information becomes available.

Justin T. Tarka is a partner in the London office of Ogletree Deakins.

Lorraine Matthews, a practice assistant in Ogletree Deakins’ London office, contributed to this article.

Ella Strickland, a marketing assistant in Ogletree Deakins’ London office, contributed to this article.

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Quick Hits

• California’s transition to electric vehicles is causing a decline in gas tax revenue, prompting the state to consider a mileage tax to fund transportation infrastructure.
• The proposed mileage tax would likely trigger existing state labor laws, requiring employers to reimburse employees for the tax as a necessary business expense.
• Employers may face significant financial impacts from increased reimbursements, potentially leading to higher prices for customers, reduced employee travel, or other cost-control measures.

In response, the California Legislature is seriously considering new ways to fund the state’s transportation infrastructure—including by imposing a tax on miles driven.

From August 2024 through January 2025, the state tested the road charge pilot program, a monitoring system to measure vehicles’ mileage with a potential 2.8-cents tax per mile. With the pilot program having recently concluded, the official results and subsequent legislative proposals are anticipated to arrive in the next few months.

For California employers, this is not a distant policy debate; it is a looming financial reality. The implementation of a mileage tax would likely trigger existing state labor laws, creating a new mandatory business expense with significant bottom-line implications.

At the heart of this issue is California Labor Code Section 2802, a cornerstone of the state’s employee-protective public policy. The statute mandates that an employer must indemnify an employee “for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.”

The underlying principle is that an employee’s wages should not be indirectly diminished by forcing them to bear the operational costs of the employer’s business.

In simpler terms, employers must cover any reasonable costs that their employees incur while performing their job, ensuring that employers bear the costs of doing business and do not shift those costs to their employees.

For decades, California courts have consistently interpreted Section 2802 to require employers to reimburse employees for the business use of their personal vehicles.

As clarified in cases like the Supreme Court of California’s 2007 decision in Gattuso v. Harte-Hanks Shoppers Inc., employers have two primary methods for this reimbursement: (1) paying the employee’s actual expenses, which requires detailed tracking of costs like fuel, maintenance and insurance; or (2) paying a reasonable per-mile rate.

The latter is far more common, with most employers opting for the standard mileage rate that is set annually by the Internal Revenue Service. The California Division of Labor Standards Enforcement expressly approves the use of the IRS mileage reimbursement rate.

The IRS rate is a carefully calculated composite figure designed to cover both variable costs, including fuel, oil, and tires, and fixed costs, such as insurance, registration, depreciation, and wear and tear. The rate is intended as a proxy for the total cost of operating the vehicle, a fact that becomes central when considering the addition of a new, separate tax.

To put the current financial obligation into perspective, Californians drove an average of 11,409 miles in 2024, per Trusted Choice, citing Federal Highway Administration data. If we assume that 10 percent of total mileage is for work-related travel, the average California employee would drive 1,140 miles for work, excluding their commute.

Using the 2026 IRS rate of 72.5 cents per mile, this translates to an existing annual reimbursement cost of approximately $826.50 per employee. For industries that are reliant on a mobile workforce, such as outside sales, home healthcare, construction and field services, this figure is substantially higher.

This existing reimbursement requirement under Labor Code Section 2802 already places a significant financial responsibility on employers, establishing a baseline cost that is poised to increase with the introduction of a mileage tax.

The introduction of a state-mandated mileage tax would create a new, distinct layer of financial obligation. Under established California legal precedent, a plaintiff’s potential argument that this tax would be a reimbursable necessary expenditure on top of the IRS reimbursement would be exceptionally strong.

In Cochran v. Schwan’s Home Service Inc. in 2014, the California Court of Appeal, Second Appellate District, ruled that employers must reimburse employees for the business use of a personal cellphone, even if the employee has an unlimited data plan and incurred no extra out-of-pocket cost.

The court reasoned that the employer benefits from the use of the employee’s personal asset and, therefore, must pay a reasonable portion of its cost.

A mileage tax presents an even more straightforward case. It would be a direct, government-levied charge incurred for the specific act of driving for work. The causal link is undeniable: The tax was only incurred by the employee because the employee had to drive for work purposes. Therefore, it fits squarely within Section 2802’s definition of a “necessary expenditure” that was incurred “in direct consequence” of performing job duties.

To illustrate, consider an employee who drives their personal car 100 miles round trip for a client visit. There is no current rate proposed for the mileage tax, but assuming a hypothetical mileage tax of 5 cents per mile, and using the 2026 IRS standard rate of 72.5 cents per mile, the total reimbursement calculation would be twofold.

First, the employer must reimburse the employee for the general use and wear of the vehicle, covered by the IRS rate: 100 miles x 72.5 cents per mile = $72.50. Second, the mileage tax represents a separate, direct cost levied by the state for that specific activity.

The employer would almost certainly have to reimburse this tax in its entirety: 100 miles x 5 cents per mile = $5. This results in a total reimbursement of $77.50 for the trip. If this employee makes such a trip just once per week, the new tax alone would add $260 to the annual reimbursement cost for this single employee.

Given the geographic layout of California, employees can easily drive long distances for work.

One area where employers find some relief is the long-standing commute rule, established by the California supreme court’s 2000 ruling in Morillion v. Royal Packing Co., which generally holds that employers are not responsible for reimbursing employees for their regular commute between home and their primary worksite.

However, this rule is narrow and its exceptions are critical. Any travel from an employee’s home to an alternate location—such as a client’s office or a temporary jobsite—at the employer’s direction is considered work-related, and must be fully reimbursed from the moment the employee leaves home.

For example, if an employee drives from home to a client meeting, and then to the office, the first leg of that journey is reimbursable. Likewise, for itinerant workers who have no fixed office, e.g., home health aides or field technicians, travel from their home to their first work location of the day is typically reimbursable.

Employers may want to apply these rules diligently, as misclassifying reimbursable travel as a nonreimbursable commute can lead to significant liability.

California employers will want to keep a close watch on the mileage tax proposal—Assembly Bill (AB) 1421—as it will have a significant impact on many of their bottom lines if enacted.

Increased reimbursements will cause employers to either increase their prices for customers or attempt to reduce travel for their employees to control costs. Either action could result in significant impacts for employers.

Potential outcomes could include loss of sales, loss of service and customer relations, increased costs in technology spending, or reductions in workforce.

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

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A version of this article was published in Law360.

Quick Hits

• For the election of a separate works council in Germany, a certain territorial unit belonging to a company must either constitute an establishment with unified management or an independent part of an establishment with a minimum degree of organizational autonomy.
• Mere delivery zones (“remote cities”) of a platform-based delivery service, where only delivery drivers are employed, do not constitute organizational units eligible to elect a works council. The simple grouping into a delivery zone with its own shift schedule is insufficient; nor does a community of interest among the drivers employed there provide the requisite minimum degree of organizational autonomy.

The Case: Hub Cities and Remote Cities

The employer operates a platform-based food delivery service. The company is organizationally divided into three areas: the central human resources department at the company’s headquarters, so-called “hub cities” (main distribution bases with administrative and back-office staff as well as delivery drivers), and so-called “remote cities” (mere delivery zones where only delivery drivers work). Communication between the drivers and the employer is conducted primarily through an app.

In 2022 and 2023, separate works councils were elected in several remote cities. The employer challenged these elections, arguing that the remote cities did not constitute independent establishments or autonomous parts of establishments within the meaning of the German Works Constitution Act (Betriebsverfassungsgesetz (BetrVG)). The German regional labor courts ruled in favor of the employer and declared the elections void. The works councils’ appeals on points of law to the BAG were unsuccessful.

The Decision: No Works Council Without Autonomy

The BAG affirmed the decisions of the regional labor courts: Pursuant to Section 1 of the BetrVG, works councils are elected in establishments. Pursuant to Section 4 paragraph 1, sentence 1 of the BetrVG, independent parts of establishments are also deemed to be establishments.

However, an organizational unit satisfies the definition of an establishment only if it is managed by unified leadership responsible for that unit in essential personnel and social matters. A minimum degree of organizational autonomy vis-à-vis the main establishment is required.

The BAG clarified that these principles apply to “normal” work and platform work, where employment relationships are managed predominantly through a digital app. The shift to digitally organized work does not modify the establishment concept.

The remote cities do not meet these requirements, the BAG held. The mere grouping of delivery drivers into a delivery zone with its own shift schedule does not constitute an establishment or an independent part thereof. The remote cities lack the requisite minimum degree of organizational autonomy, which, in particular, cannot be established solely by the drivers employed there forming a community of interest.

Key Takeaways

The BAG’s reasoning is not surprising and is consistent with prior case law (e.g., concerning stationing locations of foreign airlines). The focus on the independent organizational unit is appropriate, as a works council can effectively perform its function as the employees’ representative body and as a negotiating counterpart of management only when it is formed at the level where managerial decisions are made. It requires a capable counterpart in establishment management in order to enforce codetermination rights in personnel and social matters. This requirement is fulfilled only in an establishment or in an organizationally autonomous part of an establishment with its own management.

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

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

Teodora Ghinoiu contributed to this article as a research assistant in the Berlin office of Ogletree Deakins.

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Quick Hits

• On January 22, 2026, the U.S. Small Business Administration (SBA) released guidance that eliminates race-based presumptions of social disadvantage and abandons prior narrative frameworks, replacing them with a fact-specific inquiry focused on whether an individual has experienced social disadvantage.
• SBA’s subsequent announcement that only sixty-five companies were admitted to the 8(a) Program in 2025 signals a materially narrower program going forward, with heightened scrutiny of applications and a significantly higher bar for demonstrating eligibility.
• Current participants should expect increased agency oversight, while prospective applicants should carefully evaluate whether participation remains viable under the new standards.

Together with SBA’s separate announcement on January 28, 2026, that only sixty-five companies were admitted to the 8(a) Program in 2025, the new guidance is another strong indication that the Trump administration aims to significantly change the way in which federal procurement policy may implement socioeconomic preference programs.

Overview of the 8(a) Program

Section 8(a) of the Small Business Act authorizes SBA to operate a development program for small businesses owned and controlled by individuals who are both socially and economically disadvantaged. A company’s participation in the program provides access to federal contracting opportunities that are otherwise unavailable to most small businesses, including:

• Sole-source contract awards up to applicable statutory thresholds
• Competitive 8(a) set-aside procurements
• Mentor-Protégé relationships and joint venture opportunities

Participation is limited to a maximum of nine years, and admission to the program has always been at the agency’s discretion. Historically, however, the program admitted hundreds and in some years thousands of new participants annually.

The Small Business Act defines “socially disadvantaged individuals” in race-neutral terms. Under the statute, such individuals “are those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities.” The statute itself does not identify specific racial or ethnic groups, nor does it establish presumptions of disadvantage. Instead, it directs SBA to determine whether an individual has sufficiently experienced social disadvantage to warrant participation in the program.

SBA’s implementing regulations create a rebuttable presumption of social disadvantage for individuals who are members of certain enumerated racial or ethnic groups. Individuals outside those groups are required to affirmatively demonstrate social disadvantage through detailed narratives and supporting documentation. In 2023, a federal district court in Tennessee held that SBA’s race-based presumptions of social disadvantage were unconstitutional. Following that decision, the Trump administration’s U.S. Department of Justice advised the U.S. Congress that it would not defend the constitutionality of those provisions.

The SBA Guidance

SBA’s guidance formalizes how the agency has been administering the 8(a) Program since early 2025 and clarifies the standards that apply to current and future applicants. The guidance states that the 8(a) Program must be administered on a race-neutral basis and no applicant may be denied admission or given any presumptive preference based solely on race. SBA also disavows the use of “social disadvantage narratives” and related guidance documents that were previously used to assess eligibility. SBA personnel are instructed not to request, consider, or rely on those narratives in evaluating applications.

Rather, SBA will now conduct a fact-specific inquiry into whether an individual has actually experienced social disadvantage. The guidance directs SBA staff to consider whether an individual has been harmed by unlawful discrimination or excluded from opportunities as a result of unconstitutional or illegal diversity, equity, and inclusion (DEI) or affirmative action policies, whether imposed by governmental or non-governmental actors. This approach represents a fundamental shift away from eligibility based on group membership toward a narrowly tailored, individualized assessment.

The SBA noted in its January 28, 2026, announcement that the number of companies admitted into the program in 2025 is a significantly lower figure by historical standards. Although SBA has not formally linked that number to the guidance, the implications are clear: admissions are now significantly more selective and the burden on applicants to demonstrate social disadvantage has increased materially. SBA appears committed to operating a smaller, more tightly controlled program to align with what it views as constitutional constraints and current administration policy.

For companies considering whether to pursue 8(a) certification, the guidance materially changes the risk-benefit analysis. Applications premised on prior presumptions or legacy narrative templates appear unlikely to succeed. Prospective applicants may want to carefully assess whether they can support an individualized showing of social disadvantage consistent with the guidance and evolving review standards.Early strategic and legal evaluation is increasingly important to determine whether the program remains a viable growth strategy.

Looking Ahead

SBA has indicated that it is finalizing formal regulatory changes to align the 8(a) Program with its interpretation of current law. Until those regulations are issued, the guidance provides the clearest indication of how the current administration intends to operate the program. For companies that rely on the 8(a) Program or are considering whether participation makes sense in the current environment the takeaway is straightforward: the program remains available, but it is smaller, more selective, and more legally constrained than at any point in recent history.

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

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