Quick Hits

• The European Union has provisionally agreed to delay the implementation of high-risk AI regulations in employment decisions until December 2, 2027.
• Subject to formal adoption, the agreement would delay the requirements for “high-risk” systems, which include those intended to be used to make decisions affecting employment terms, promotion, termination, task allocation, and monitoring or evaluating workers’ performance.
• Although the revised deadline is expected, employers may still want to prioritize preparing for compliance by the original deadline considering the scope of the EU AI Act’s requirements.

New Deadline Pending

On May 7, 2026, the European Parliament, Council of the European Union, and the European Commission reached a provisional agreement on a proposal, the Digital Omnibus on AI, to amend parts of the EU AI Act. On June 16, 2026, the European Parliament approved the provisional agreement, which now must be formally approved by the Council before it becomes law.

Notably, among the changes, the proposal would delay the application of the AI Act’s requirements for high-risk AI systems, which include those used in employment, until December 2, 2027.

Once the agreement is approved by the Council, the amendments would enter into force three days after publication in the Official Journal of the European Union. Publication is expected before August 2026.  

For employers, the key point is that the delay is not a repeal. Employment-related AI remains squarely in the AI Act’s high-risk category when used for recruitment, selection, promotion, termination, task allocation, or performance monitoring. Although the new deadline is expected to become official beforehand, employers may want to continue preparing for the August deadline out of an abundance of caution.

Regulation of High-Risk Systems

The EU AI Act takes a risk-based approach that subjects AI tools to a spectrum of four levels of increasing regulation based on perceived potential risks: (1) “unacceptable risk,” which are banned; (2) “high risk”; (3) “limited risk”; and (4) “minimal risk.”

Under Annex III of the AI Act, high-risk employment systems include AI used to place targeted job advertisements, analyze and filter job applications, and evaluate candidates. They also include AI used to make decisions affecting employment terms, promotion, termination, task allocation based on individual behavior or personal traits, and monitoring or evaluating workers’ performance or behavior.

Overall, the AI Act requires employers to notify workers that a high-risk AI system is used in the workplace, provide human oversight and intervene when necessary, monitor for potential discriminatory impacts, record AI system logs, and ensure compliance with data privacy requirements. Employers using a vendor’s AI system for the employment purposes described are also required to follow the vendor’s instructions, which vendors are legally required to provide.

Next Steps

The provisional agreement and the delay in compliance deadlines may reflect an acknowledgment that more time may be needed to adapt to the new regime. If formalized, this will provide additional time to make the necessary compliance adjustments.

However, the changes merely delay certain deadlines and do not substantially change impending compliance obligations. High-risk workplace AI remains regulated. Employers may wish not to wait and begin preparing now, including reviewing which AI tools they use and how they are used, in order to develop and implement a compliance plan.

Ogletree Deakins’ Cross-Border Practice Group and Technology Practice Group will continue to monitor developments and will provide updates on the Cross-Border, Cybersecurity and Privacy, Employment Law, and Technology blogs as additional information becomes available.

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Quick Hits

• An MSA is a contract in which both the employer and the employee agree to end the employment relationship by mutual consent, often involving an additional payment from the employer in exchange for a release of claims.
• MSAs are particularly useful in jurisdictions with stringent termination laws and can help employers avoid prolonged disputes or litigation by securing releases of potential employment claims.
• A best practice for employers is to assess local laws, evaluate the risk of unilateral termination, understand enforceability requirements, and finalize a separation strategy tailored to local customs and expectations.

MSAs Explained

Unlike the at-will framework familiar to U.S.-based companies, most countries around the world require robust justification or detailed procedures before an employer can unilaterally discharge an employee. An MSA is a contract in which the employer and the employee agree to end the employment relationship by mutual consent. Typically, in exchange for the employee’s agreement to a full and final release of claims, the employer provides an additional payment, often referred to as an ex gratia amount, on top of any statutory termination entitlements. MSAs usually include confidentiality terms to protect the employer and may have other features to make the offer more attractive or enforceable, depending on the jurisdiction.

MSAs’ Value

MSAs are especially valuable in jurisdictions where unilateral terminations are difficult or risky. Local laws may require robust justification or procedures to terminate for misconduct, performance issues, or redundancy. Some countries impose “employment for life” standards, meaning that employment termination is treated as a last resort after the employer has exhausted other options such as reassignment or retraining. In these environments, the core value of an MSA from the employer’s perspective is the release of potential employment claims, thereby avoiding prolonged disputes or litigation. The effectiveness of this release varies by jurisdiction, underscoring the need to align the strategy with local laws and practices.

Evaluating the Need for an MSA: A Four-Step Framework

When deciding whether to pursue an MSA rather than unilateral termination of employment, employers may want to consider a four-step evaluation process.

• Assess local laws: Understand the requirements for employment termination in the relevant jurisdiction, including mandatory payments.
• Evaluate the risk profile: Analyze the risk of unilateral termination based on facts such as the documentation, performance standards, and/or any required remediation steps.
• Understand enforceability requirements: Identify what makes an MSA valid and enforceable in the jurisdiction, such as cooling-off or consideration periods, payments in exchange, required terms, or specific signature requirements.
• Finalize the separation strategy: Align the separation strategy with local customs and expectations, including negotiation approaches, ex gratia payment ranges, and the timing for presenting the agreement.

Step 1: Assessing Local Law

Employers will want to identify what is legally required to terminate employment generally in the relevant country, and map the mandatory termination payments under local law. These requirements may include statutory severance, pay in lieu of notice, and a payout for accrued leave. Together, any mandatory payments form the “floor” for the purposes of calculating the ex gratia amount needed to secure a release.

Step 2: Evaluating the Risk Profile

This step is a facts-plus-law exercise. Can the employer meet the legal standard for employment termination in that country? For a performance-based termination, for example, the employer may want to consider whether the performance documentation is strong and whether any required steps, such as warnings or improvement plans, were properly followed. If the local legal standard is not met, the risk of an adverse outcome increases.

Employers may also want to evaluate the potential remedies and timelines in the relevant jurisdiction. In some countries, unfair termination claims can lead to substantial back-pay awards, and if proceedings typically take a long time to reach judgment, the potential exposure can grow over time. Answering the question, “What could this cost if the employee wins?” helps frame whether an MSA is the better path, and, if so, what ex gratia range makes sense.

Step 3: Understanding Enforceability Requirements

Enforceability considerations fall into two main categories. The first relates to validity requirements. Some jurisdictions impose mandatory notice or consideration periods, require specific clauses, mandate approval through local labor authorities, or even insist on wet-ink signatures to make the agreement valid. Missing any of these can jeopardize the entire agreement.

The second category relates to enforcement outcomes, which vary widely. In some jurisdictions, a valid MSA fully bars later claims. In others, an employee may still bring a claim, but any award is offset by the ex gratia payment already made. In still other jurisdictions, an MSA may neither bar nor offset future claims, but it can deter litigation because the employee has already accepted a negotiated package. These differences directly influence both the decision to use an MSA and the pricing of the ex gratia component.

Step 4: Finalizing the Separation Strategy

When building a separation strategy, employers may want to consider developing talking points tailored to the specific jurisdiction and situation, establish clear negotiation parameters for the ex gratia payment (including a rational opening offer and a firm ceiling), and consider the right time to present the agreement. Tone and process matter enormously in these negotiations. In Korea, for example, it is common for employees to record termination meetings for later use in court, making careful word choice essential. In Finland, authorities closely scrutinize whether coercion was a factor, and if the process appears pressured or intimidating, a court may nullify the MSA. The goal is always a clear, respectful, and voluntary process that will withstand scrutiny if challenged.

Timing and sequencing also require careful thought. In some jurisdictions, such as Taiwan, it can be strategically advantageous to effect the termination first and then negotiate a post-termination settlement. This approach can be important because in certain countries, an employee who files a claim gains protection from employment termination while the litigation is pending. If an employee senses an impending separation and preemptively files, the employer can find itself locked into the very relationship it is trying to end. However, sequencing strategies are highly fact- and jurisdiction-specific and ideally should be coordinated with counsel who understands local nuances.

Regional Variations

Strategic considerations may vary not only from country to country but also from region to region within a single country. China provides a useful illustration. Negotiating an MSA is common in China because unilateral terminations carry significant legal and financial risk. A typical separation package will cover all statutory entitlements (commonly referred to as “N,” representing the minimum severance requirements), pay in lieu of notice, and accrued annual leave. On top of those entitlements, the ex gratia is often described using the formula “N plus X,” where X represents the additional number of months’ pay offered above the statutory minimum.

The X component may vary by location within China. Shenzhen’s market practice, for example, differs from Shanghai’s, and the amount may also depend on local court practices and the nature of the separation. Further, individual separations may carry different expectations than mass redundancies.

Key Takeaways

In conclusion, while consistency in corporate principles is typically helpful, execution must be locally customized to be maximally effective. By following the foregoing guidelines, multinational employers can better navigate the complexities of global MSAs and manage employee separations with greater confidence and reduced risk.

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

Samantha R. Duncan is senior counsel in the Washington, D.C., office of Ogletree Deakins.

Kristyn L. Lambert is of counsel in the New Orleans office of Ogletree Deakins.

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

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In October 2025, Philadelphia Mayor Cherelle Parker signed amendments to the FCRSSO, effective January 6, 2026. As enacted, the amendments authorized, but did not require, the Philadelphia Commission on Human Relations to create a form of required pre-adverse action notice, an updated summary of rights, and a statement concerning evidence of error or rehabilitation. The Commission has now published a document, titled, “Notice: 2026 amendments to Fair Chance Hiring Law,” but has not clarified how this document relates to these requirements.

Quick Hits

• The Philadelphia Commission on Human Relations published its “Notice: 2026 amendments to Fair Chance Hiring Law” regarding the FCRSSO, but has not yet clarified its significance.
• The notice follows amendments that went into effect on January 6, 2026, which narrowed the conviction records employers may consider, defined ambiguous terms, and confirmed that an individual must be allowed to respond with evidence of criminal record inaccuracy or provide an explanation before any final adverse decision.
• Because the FCRSSO applies to all criminal history information, overlaps with federal and state requirements when a consumer reporting agency is involved, and provides a private right of action, employers should consider that a summary of rights is only one element of a broader compliance review.

Summary of the 2026 Amendments

The amendments resolved long-standing ambiguities while imposing additional restrictions.

For instance, Philadelphia defined “felony,” “misdemeanor,” “summary offense,” and “incarceration”; expanded the definition of “adverse action”; and confirmed that job advertisements fall within the definition of “employment process,” meaning that any advertisement referencing a background check must disclose that an individualized assessment will occur. The amendments also established that an individual must be allowed to dispute or explain a criminal record before a final adverse decision.

Absent a contrary requirement of state or federal law, employers may not consider misdemeanor convictions more than four years old, measured from the later of the date of arrest or release from incarceration, and may not consider summary offenses. Employers must also disregard records known to be sealed or expunged. Before taking adverse action, employers must provide an employee or applicant with a summary of rights and an affirmative statement that they will consider evidence of error, rehabilitation, or mitigation, and they must furnish instructions for submitting that information. The amendments also require a defined response when an individual files a complaint and adds retaliation protections.

As before, employers must post a summary of the ordinance requirements in a conspicuous location both on the employer’s website and its premises.

Additional Considerations for Employers

The FCRSSO should be implemented in conjunction with other applicable state and federal laws. It is important to note that the FCRSSO requirements apply to all criminal history, irrespective of the source. Pennsylvania’s Criminal History Record Information Act limits employers to felony and misdemeanor convictions that relate to job suitability; the federal Fair Credit Reporting Act imposes its own disclosure, pre-adverse, and adverse action requirements when the information is obtained from a consumer reporting agency.

Providing an FCRSSO summary of rights satisfies only one component of these obligations. Because the amendments require that an opportunity to respond be provided before a final adverse decision, the sequencing and documentation of notices is now central to defending potential litigation. Absent further guidance from the Philadelphia Commission on Human Relations, employers should not assume the “Notice: 2026 amendments to Fair Chance Hiring Law” constitutes the required summary of rights. Ogletree Deakins has sought clarification from the Commission but has not yet received a response.

Next Steps

Employers with operations in Philadelphia should consider taking the following actions:

• Utilize the FCRSSO process for all criminal history information when used as a basis for an employment decision.
• Review job advertisements and application materials for impermissible criminal-history inquiry requirements and ensure any background check reference discloses the individualized assessment.
• Revise the scope of the search history to exclude misdemeanor convictions more than four years old and to disregard summary offenses.
• Confirm the notice sequence affords an employee or applicant an opportunity to respond before any final adverse decision, and document timing accordingly.
• Consider a broader, privileged assessment of screening practices across all jurisdictions where the company hires.

Philadelphia pre-adverse action letters, adverse action letters, and law summaries are available on the Ogletree Deakins Client Portal to Advanced– and Premium-level subscribers. For more information on the Client Portal or a Client Portal subscription, please contact clientportal@ogletree.com.

Ogletree Deakins’ Philadelphia office, Background Checks Practice Group, and Retail Industry Group will continue to monitor developments and will provide updates on the Background Checks, Retail, and Pennsylvania blogs as additional information becomes available.

Brandon R. Sher is a shareholder in Ogletree Deakins’ Philadelphia office and co-chair of the firm’s Retail Industry Group.

Jennifer L. Pacicco is an associate in Ogletree Deakins’ Philadelphia office.

Jake H. Weintraub, a law student currently participating in the summer associate program in the Philadelphia office of Ogletree Deakins, contributed to this article.

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Quick Hits

• On June 8, 2026, a Massachusetts federal district court vacated the Trump administration’s $100,000 H-1B fee requirement.
• On June 11, 2026, the administration filed an appeal of the district court’s decision and on June 12, 2026, asked the district court to stay its decision.
• With multiple pending challenges in different circuits, the Supreme Court will likely weigh in.

Background

On September 19, 2025, President Donald Trump issued Proclamation 10973 which imposed a $100,000 fee for new H-1B petitions filed for beneficiaries located outside of the United States. The administration stated that the fee was intended to address perceived abuse of the H-1B program, and protect U.S. workers, specifically focusing on science, technology, engineering, and mathematics (STEM) occupations. The fee became effective September 21, 2025, and applied to new H-1B petitions for beneficiaries subject to consular processing.

The fee was subsequently challenged in multiple federal courts.

Analysis and Impact

In State of California v. Noem, twenty Democratic state attorneys general challenged the fee proclamation, arguing that the proclamation exceeded the president’s statutory authority and that the agency guidance implementing the fee violated the Administrative Procedure Act (APA). On June 8, 2026, the U.S. District Court for the District of Massachusetts granted summary judgment in favor of the states on all claims (constitutional tax authority, APA violation, and statutory authority) and vacated the policy implementing the fee in its entirety.

The U.S. District Court for the District of Massachusetts found that the $100,000 fee proclamation was not an immigration restriction, but rather a tax, which the president lacked authority to impose. Additionally, the court determined that the fee proclamation violated the APA as the agency’s implementation of the fee failed to follow statutory procedures.

On June 11, 2026, the Trump administration filed a notice of appeal to the First Circuit Court of Appeals. Then, on June 12, 2026, the administration sought a stay of the district court’s order pending appeal which the court granted.

Notably, the U.S. District Court for the District of Massachusetts’s holding starkly contradicts a conclusion reached in the U.S. District Court for the District of Columbia, which upheld the fee proclamation in a lawsuit brought by the U.S. Chamber of Commerce and the Association of American Universities. The decision in that case is currently on appeal before the United States Court of Appeals for the D.C. Circuit, which held oral argument in March 2026. Meanwhile, a lawsuit challenging the fees was also brought by healthcare organizations, labor unions, and educational institutions remains pending in the U.S. District Court for the District of California. The government’s appeal of the U.S. District Court for the District of Massachusetts’s decision adds to a potential circuit split which could end up in the Supreme Court of the United States.

Key Takeaways

• The precise scope of the stay issued by the U.S. District Court for the District of Massachusetts is unclear and U.S. Citizenship and Immigration Services (USCIS) has not issued guidance about whether it intends to continue collecting the fee.
• As remaining lawsuits challenging the proclamation continue, the rules surrounding the fee proclamation are subject to change.
• The ultimate outcome of the rule will likely be decided in the U.S. Supreme Court.

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

For additional insights into this development, Ogletree Deakins’ Immigration Practice Group will hold a webinar entitled “Federal Court Blocks $100,000 H-1B Fee: Key Takeaways and Next Steps,” on June 17, 2026, from 2:00 p.m. – 2:30 EDT. Register here.

For more insight into this development and other critical immigration issues facing employers today, please join our Virtual Immigration Insights Symposium on Wednesday, October 7, 2026, from noon to 2:30 p.m. ET. Register here.

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Quick Hits

• ILO Convention No. 193 is the first international labor standard specifically designed for platform and gig economy work.
• Under the Convention, core protections including minimum wage, social protection, and occupational safety and health (OSH) rights apply to all platform work, regardless of a platform worker’s formal employment classification (e.g., “independent contractor” or “employee”).
• Algorithmic management is addressed in a binding international instrument for the first time: platforms must disclose automated decision-making and provide human-review mechanisms.
• The Convention is not self-executing. Countries must now decide whether to ratify it and, if ratified, must implement it through their domestic law.
• The United States voted against adoption and is unlikely to ratify. However, U.S.-headquartered companies will still feel the Convention’s effect if they retain platform workers in countries where it has been ratified and implemented into domestic law.

What Happened

At its 114th session in Geneva, the International Labour Organization (ILO) formally adopted Convention No. 193, capping a multiyear standard-setting process that launched in 2024. The delegate vote was 406-to-8, with 36 abstentions. The United States and New Zealand government delegates voted against while the United Kingdom and India government delegates abstained, which serves as a reminder that ratification will be uneven. The new Convention is supplemented by a Recommendation that provides additional (nonbinding) guidance.

Convention No. 193 is the first instrument built specifically for the platform economy, with provisions tailored to algorithmic management, cross-border platform structures, and the classification problems unique to gig work.

The scope is broad. The Convention applies to all digital labor platforms. A “digital labor platform” is defined as a company or individual that “(i) organizes and/or facilitates work performed by persons for remuneration or payment, for the provision of service, upon request of the recipient or requestor; (ii) regardless of whether that work is performed online or in a specific geographic location.” In other words, it applies to much more than ride-hailing and food-delivery services.

In addition, the Convention applies regardless of a platform worker’s formal employment classification. The Convention does not require countries to classify gig workers as employees, but it requires that core protections apply regardless of classification.

The Key Provisions

Classification

The Convention does not mandate a single classification model, but it does require governments to ensure workers are correctly classified based on how work is actually performed, not merely on how the parties have labeled the relationship. This reaffirms the substance-over-form standard that exists in most countries. However, unless ratifying countries expressly provide that satisfying the Convention’s requirements will not, in itself, create an employment relationship, compliance (e.g., wage floors, expense reimbursement, structured oversight, and employment termination protections) may generate circumstances that trigger employee status under existing domestic law.

Minimum Wage, Timely Payment, and Expense Coverage

The Convention requires payment in full and on time, compliance with applicable minimum wage standards, and reimbursement of work-related expenses. The classification risk identified above applies with particular force here.

Algorithmic Management

For the first time in any ILO Convention, algorithmic management has been addressed directly. Under the Convention, platforms must inform workers and their representatives how automated systems are used for monitoring and decision-making, and must provide written explanations and human review for decisions affecting pay, suspension, deactivation, or terminations of employment. A human in the loop is required. Foundational principles of the EU AI Act and the EU Platform Work Directive will, through ratification, now begin reaching markets beyond Europe.

Social Protection, OSH, and Termination

Platform workers are typically excluded from statutory social insurance schemes, such as pension contributions, unemployment insurance, and workers’ compensation, because contractor classification puts them outside the employer-employee relationship that those schemes assume. The Convention requires ratifying countries to close that gap. The Convention also provides baseline protections for occupational injuries and protections against unjustified deactivation or employment termination.

Fundamental Rights

The Convention extends freedom of association, collective bargaining, and access to dispute resolution to platform workers regardless of classification.

Data Protection

The Convention includes safeguards on the collection and use of personal data in the platform context.

What It Does Not Do (Yet)

The Convention is not self-executing. Like all ILO conventions, it binds only those member states that ratify it, and even ratifying states must pass implementing legislation before the provisions have domestic legal force. Member states are constitutionally required to submit the Convention to their respective competent national authorities within twelve months for ratification consideration, but submission is not ratification. If the delegate votes are any indication of what is to come, ratification is likely to be uneven, which can create a complex compliance landscape for multinational employers.

Next Steps

Companies with platform-based or contractor-heavy workforce models in multiple jurisdictions should consider prioritizing the following action items:

• auditing current classification practices against the standards the Convention is expected to influence;
• assessing algorithmic management systems for disclosure and human-review readiness; and
• mapping which operating jurisdictions are likely to ratify quickly and what that means for existing contractor relationships.

Ogletree Deakins’ Cross-Border Practice Group will monitor ratification developments and the interaction between the Convention and domestic legislation across key markets., and will provide updates on the Cross-Border, Cybersecurity and Privacy, Employment Law, Technology, Wage and Hour, and Workforce Analytics and Compliance blogs as additional information becomes available.

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President Trump Signs Immigration Enforcement Funding Bill Into Law. On June 10, 2026, President Donald Trump signed into law legislation providing $70 billion in funding for U.S. Immigration and Customs Enforcement (ICE) and U.S. Customs and Border Protection (CBP), which will ensure the agencies’ operations for the remainder of President Trump’s term. While this means that funding for ICE and CBP will no longer be an issue as part of the broader negotiations for funding the federal government, it does not mean that the appropriations process will instantly become an easy exercise. With current government funding set to expire approximately one month prior to the midterm elections, the process may turn into another political flashpoint.

House Passes Bill to Speed Collective Bargaining and Force Contract Terms. On June 9, 2026, the U.S. House of Representatives passed the Faster Labor Contracts Act (FLCA). The bill sets artificial timelines for collective bargaining and allows government officials to dictate workers’ terms and conditions of employment. Representative Tim Walberg (R-MI), chairman of the House Committee on Education & Workforce, spoke in opposition to the bill on the House floor, saying, “Simply put, the FLCA is not pro‑worker. It is an ideological Trojan horse that harms the very people it claims to help, empowers bureaucrats over workers, and undermines the collaborative process that has long defined American labor relations.” The bill now heads to the U.S. Senate, where its champion, Josh Hawley (R-MO), applauded its passage in the House during a National Labor Relations Board (NLRB)–related hearing this week (more on the hearing below). James J. Plunkett and Ryan T. Sears have the details.

Federal Court Vacates President Trump’s $100,000 H-1B Proclamation. On June 8, 2026, the U.S. District Court for the District of Massachusetts vacated President Trump’s $100,000 H-1B proclamation in a legal challenge filed by twenty state attorneys general. The court found that while the Immigration and Nationality Act provides the president with “broad discretion to suspend the entry of aliens into the United States,” it does not confer upon him the authority to impose taxes, as the proclamation does. The court writes, “[T]he Policy imposes a tax on H-1B petitions without the requisite delegation by Congress.” The court also found that the issuance of the proclamation and its supporting materials (e.g., memoranda and FAQs) violated the Administrative Procedure Act (APA), in part because the administration did not make the materials available for public notice-and-comment. Because the court vacated the proclamation in its entirety pursuant to the APA, the ruling would appear to prohibit the administration from collecting the fee, but the case continues to be litigated at the federal district court and appellate levels.

Two other legal challenges are pending at the U.S. Court of Appeals for the District of Columbia Circuit and the U.S. District Court for the Northern District of California. Marquita L. Capers has more.

Additional Immigration Policy News.

• Jennifer M. Cofer and Anabella Lojpur have the details on a U.S. Department of State temporary final rule that permits B-1 business visitor and B-2 tourist visa applicants to secure expedited interview appointments at consular posts upon the payment of a $750 fee. The rule is effective from July 1, 2026, through December 31, 2026.
• Nicole Fink and Philip K. Sholts have the scoop on a June 5, 2026, decision by the U.S. District Court for the District of Rhode Island that invalidates four U.S. Citizenship and Immigration Services (USCIS) policies emanating from President Trump’s “travel ban” executive order and proclamations. The court determined that USCIS “has violated the very immigration laws that Congress has charged it with administering, as well as the administrative laws that govern the agency’s actions.”

Senate Committee Holds Confirmation Hearing on NLRB Nominations. On June 9, 2026, the U.S. Senate Committee on Health, Education, Labor and Pensions (HELP) held a hearing on the nominations of James Macy and David Prouty to serve as members of the NLRB. (Prouty’s nomination is for a second term, as his current term is set to expire on August 27, 2026. Macy has been a management-side labor and employment attorney for decades and has served in several roles within the current U.S. Department of Labor (DOL), including as director of the Office of Workers’ Compensation Programs.) If confirmed, Macy would provide current Republican Board members, Scott Mayer and Chair James Murphy, with the potential necessary third vote required by Board tradition to overturn current Board law. A vote in the Senate HELP Committee is expected shortly.

DOJ Opinion Letter Questions Disparate-Impact Discrimination. On June 9, 2026, in response to a request from U.S. Equal Employment Opportunity Commission (EEOC) Chair Andrea Lucas, the U.S. Department of Justice’s (DOJ) Office of Legal Counsel issued an opinion letter stating the EEOC’s interpretations of federal case law and the Civil Rights Act of 1991 relating to disparate impact discrimination “embrace an unconstitutional reading” of federal law. In contrast to disparate treatment or intentional discrimination, disparate impact allows for a finding of discrimination when an otherwise neutral policy, such as a criminal background check, has an adverse effect on protected groups. The opinion letter maintains that disparate-impact analysis unlawfully and unconstitutionally “functions as a qualified racial-proportionality mandate and spurs employers to engage in race-based decisionmaking to avoid liability.” (Regarding liability, Title VII does not allow for the recovery of punitive or compensatory damages in disparate impact claims.) The opinion letter specifically characterizes the Uniform Guidelines on Employee Selection Procedures (jointly adopted by the EEOC, the DOL, and the DOJ) and the EEOC’s Affirmative Action Guidelines as contrary to Title VII and unconstitutional.

The opinion letter does not amend federal law, which still provides for disparate-impact causes of action. Nor does it change decades of case law that has expounded on disparate-impact discrimination. Accordingly, this theory of discrimination is still available to plaintiffs. However, the opinion buttresses both the White House’s and EEOC’s policy positions that deemphasize disparate-impact discrimination (as outlined in the EEOC’s National Enforcement Plan).

Proposed Federal Grant Requirements Mandate E-Verify, Codify White House EOs. The White House Office of Management and Budget, along with dozens of federal agencies, has proposed changes to the regulations governing the issuance of federal grants and financial assistance. The proposal would impact applicants and recipients (including their subrecipients and contractors) in the following ways:

• Disparate-impact discrimination. The proposal would codify the administration’s position on disparate-impact discrimination “to ensure that awards are administered in a manner that does not promote or support theories of disparate-impact liability, including by not issuing terms, conditions, or guidance that would advance theories of disparate-impact liability.”
• Protected groups. The proposal further removes the current nondiscrimination language that references Bostock v. Clayton County, 140 S. Ct. 1731 (2020), and adds a new provision expressly prohibiting discrimination against a grant applicant on the basis of the organization’s religious affiliation.
• Codification of executive orders (EOs). Agencies and recipients must ensure that federal funds are “not used to fund, promote, encourage, subsidize, or facilitate”: (1) “Diversity, Equity, and Inclusion,” as defined in EO 14173; (2) gender ideology as defined in EO 14168; or (3) the transition of individuals under nineteen years of age pursuant to EO 14187.
• E-Verify. The proposal would require all federal grant recipients to enroll in E-Verify “to confirm the employment eligibility of all employees and contractors hired in or performing work in the United States under a Federal award.”

Comments on the proposal are due by July 13, 2026.

Seersucker Summer Returns. Pursuant to a bipartisan resolution (S.Res.757) introduced by Senators Bill Cassidy (R-LA) and Raphael Warnock (D-GA) and agreed to by unanimous consent of the Senate, June 11, 2026, was designated “National Seersucker Day,” and June 2026 was designated “Seersucker Appreciation Month.” Seersucker is a lightweight fabric that is purposely designed to be puckered and wrinkled so as not to sit directly on the skin, making it more breathable in the summer months. (The Buzz wrote about the history of “Seersucker Thursday” several years ago.) Pursuant to the resolution, “every subsequent Thursday through the last Thursday in August 2026” has been designated as “Seersucker Thursday.” The resolution further invited “the people of the United States to don their warm weather finest on National Seersucker Day and every Seersucker Thursday.”

Next week’s edition of the Buzz will be published on Thursday, June 18, 2026.

Quick Hits

• Governor Jared Polis recently signed legislation that requires employers in Colorado to provide EEO-1 data to the Colorado secretary of state beginning July 1, 2027, even if federal EEO-1 reporting is repealed or discontinued.
• The new Colorado law may signal a broader trend of state-level action to preserve demographic reporting obligations as the EEOC proposes to eliminate federal EEO-1 reporting.
• The elimination of federal EEO-1 reporting would create ripple effects across numerous state and local jurisdictions that currently rely on EEO-1 data or report categories.

The Colorado reporting requirement bears some similarities to the requirement for Illinois employers to provide Section D of the EEO-1 report as part of their annual Domestic Corporation Annual Report. Significantly, the new Colorado law states that employers “shall provide the EEO-1 data required” even if the federal EEO-1 reporting requirement is repealed or discontinued. This provision is timely in light of the U.S. Equal Employment Opportunity Commission’s (EEOC) proposal to eliminate EEO-1 reporting. The law does not explain how the required demographic data will be collected or if Colorado will create a standard reporting system, but it makes it clear that federal action will not end the requirement to report demographic data to the Colorado secretary of state.

While there are open questions about how this new law will operate if the federal EEO-1 reporting requirement ends, its passage may be an early warning sign of a series of actions by states in reaction to the scaling back of federal EEO-1 reporting. While the EEOC’s effort to end EEO-1 reporting has not been completed, that effort if finalized will impact several states’ reporting requirements. For instance, Massachusetts’s pay/demographic reporting requirement for EEO-1 filers due each year by February 1 is dependent on the EEO-1 reports. To satisfy their reporting obligation, covered employers provide Massachusetts with their most recently filed EEO-1 report. It is unclear what employers will provide to Massachusetts in 2027, if no EEO-1 reports are collected in 2026. Likewise, employers may soon face a question of what to provide to the Illinois secretary of state in support of their annual Domestic Corporation Annual Report if federal EEO-1 reporting ends.

These broader state reporting questions do not begin to address other state and local requirements for employers to provide copies of their EEO-1 reports or collected EEO-1 data. The ripple effect of the elimination of the EEO-1 report would be expected to spread throughout the nation’s compliance reporting system. In addition to Colorado’s proactive approach, it is interesting to note that beginning during California’s pay data filing cycle next year reporting employers will no longer use EEO-1 categories to categorize their employees but will change to Standard Occupational Classification (SOC) coding. While this earlier change may have been focused on providing more granular job category information, it could have been based in part on a feeling that federal demographic reporting was under threat.

In light of the proposed rescission of the EEO-1 reporting requirement and the expected effects on compliance requirements beginning with Colorado, employers may want to pay special attention to this area to continue to understand their compliance reporting requirements.

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

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Quick Hits

• Effective January 1, 2027, private employers in Alabama may voluntarily adopt written hiring and promotion preference policies for veterans, spouses of veterans, and spouses of active-duty service members.
• Employers that implement such policies must notify the Alabama Department of Workforce.
• The Alabama law’s definitions of veterans and active-duty service members may be narrower than those under USERRA.

HB 307

On April 16, 2026, Alabama Governor Kay Ivey signed into law House Bill (HB) 307, Act No 2026-574, titled, “Expanding Employment Opportunities for Military Families in Alabama,” along with a broader package of legislation intended to assist military families. HB 307 replaces former Alabama Code Section 36-226-15 and takes effect on January 1, 2027.

While the new law primarily applies to access to state employment for uniformed service personnel, Section 3 of the law permits private employers to adopt voluntary hiring preference policies for veterans, spouses of veterans, and spouses of active-duty service members.

Any such voluntary policy must be in writing and uniformly applied to the hiring and promotion decisions of the employer. HB 307 also provides that any such policy will apply to veterans who can provide proof of service and honorable discharge via DD 214 (Certificate of Release or Discharge from Active Duty) forms, spouses of veterans who can provide relevant DD 214s and proof of marriage to eligible veterans, and spouses of active-duty service members who can provide proof of the active-duty status and proof of marriage to the active-duty service members. Any preference afforded to the spouse of an active-duty service member is “limited to the time during which the service member remains on active duty and up to 180 days after the service member’s discharge or separation from service.” The statute provides no details on how the hiring preferences in these voluntary programs should be structured.

Any private employer that voluntarily implements such a policy must notify the Alabama Department of Workforce (ADOW), which is directed to use that information to create a registry of employers that have voluntary veterans’ preference employment policies. ADOW is required by HB 307 to make this registry publicly available on its website, and to establish and maintain a page on its website through which employers may provide this information. Any such voluntary veterans’ preference policy shall not be considered a violation of “any state or local law.” Title VII of the Civil Rights Act of 1964 provides a carveout for veterans’ hiring preferences, so implementing such a policy is unlikely to constitute a violation of Title VII, 42 U.S.C. § 2000e-11 (1982).

HB 307 and USERRA

Interestingly, HB 307’s application to veterans and active-duty service members may be more limited than as defined by the federal Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). HB 307 defines an “active-duty service member” as “[a]n individual who is on active duty as a member of the National Guard or a reserve or active component of the Armed Forces of the United States.” Likewise, HB 307 defines an “eligible veteran” as “[a]n individual who has ever served in the National Guard or a reserve or active component of the Armed Forces of the United States and been honorably discharged.” By contrast, USERRA broadly defines “service in the uniformed services” to encompass HB 307’s definitions, as well as service in State active duty, the National Urban Search and Rescue Response System, and the Federal Emergency Management Agency under certain circumstances.

Staying Informed

Ogletree Deakins’ Military Workforce Practice Group will continue to monitor developments and will provide updates on the Alabama and Employment Law blogs as additional information becomes available.

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Quick Hits

• Under the Accessibility for Ontarians with Disabilities Act (AODA), companies with twenty or more employees in Ontario must file an accessibility compliance report by December 31, 2026.
• The AODA applies to provincially regulated organizations in the Province of Ontario, Canada.
• Failure to submit the report may lead to potential enforcement action.

Background Facts

Enacted in 2005, the AODA is Canada’s oldest and most fulsome accessibility legislation.

Provincially regulated organizations are required to meet the standards set out in the AODA and its regulations if they operate in Ontario.

Organizations will be considered to operate in Ontario if they provide goods, services, or facilities; employ people; offer accommodation; own or occupy a building, structure, or premises; or are engaged in business in Ontario.

Preparing for Compliance

Every three years, organizations covered by the AODA that have twenty or more Ontario employees (including full-time, part-time, seasonal, and fixed-term contract employees) must submit a report regarding their compliance to the Ontario Ministry of Seniors and Accessibility via the Accessibility Compliance Portal.

Failure to submit the report may lead to potential enforcement action.

To prepare, employers should access the Accessibility Compliance Portal to update their organization profile and review the questions that the organization will be required to answer.  The questions track closely with the requirements set out in the Integrated Accessibility Standards (Ontario Regulation 191/11). Once the organization is satisfied with its answers to the questions set out in the accessibility compliance report, the organization can finalize and submit the report.

Ogletree Deakins’ Toronto office and Disability Access Practice Group will continue to monitor developments and will post updates on the Canada, Cross-Border, and Disability Access blogs as additional information becomes available.

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Quick Hits

• Twenty states and the District of Columbia, acting in their capacity as federal contractors, have filed suit challenging the FAR Council’s implementing actions for EO 14398, arguing those actions exceed the agency’s statutory authority and were issued without the notice-and-comment process required under federal procurement policy requirements.
• The state coalition targets the agency implementing actions under the APA, arguing they are procedurally defective and the resulting contract terms too vague to enforce.
• Another lawsuit challenges the executive order on First Amendment grounds and alleges the FCA materiality provision exceeds presidential authority under the Procurement Act.

The lawsuit, Maryland v. Hegseth, does not challenge the executive order itself. Rather, it takes direct aim at the federal agency actions implementing the order, arguing those actions violate the Administrative Procedure Act (APA) by exceeding statutory authority, bypassing mandatory notice-and-comment procedures, and producing contract terms so vague as to be arbitrary and capricious. For federal contractors and subcontractors currently navigating compliance with EO 14398, the lawsuit raises the possibility of court intervention before the July 24, 2026, deadline for bilateral modification of existing contracts.

Background: EO 14398 and Its Implementation

EO 14398, titled “Addressing DEI Discrimination by Federal Contractors,” requires federal agencies to insert a mandatory contract clause into all contracts, subcontracts, and “contract-like instruments” prohibiting contractors from engaging in “racially discriminatory DEI activities,” defined as disparate treatment based on race or ethnicity in recruitment, employment, contracting, program participation, or the allocation or deployment of an entity’s resources. Noncompliance risks include contract cancellation, debarment from future federal contracts, and potential liability under the False Claims Act.

Pursuant to EO 14398, the Federal Acquisition Regulatory Council (FAR Council) issued a memorandum dated April 17, 2026, directing agencies to adopt Federal Acquisition Regulation (FAR) deviations incorporating the new contract clause, designated as FAR 52.222-90. The memorandum set an April 27, 2026, deadline for agencies to adopt those deviations and instructed agencies to make every effort to bilaterally modify existing contracts by July 24, 2026. Multiple agencies, including the National Aeronautics and Space Administration (NASA), the Consumer Product Safety Commission, and the National Science Foundation, moved to adopt class deviations consistent with the FAR Council’s instructions.

The plaintiff states span twenty jurisdictions, from California and Illinois to Virginia and Wisconsin, and collectively hold hundreds of federal contracts worth billions of dollars annually. The complaint alleges that the “abrupt and unlawful rollout of Executive Order No. 14398 and its implementation threatens grave and irreparable harm to the States’ economic interests and their ability to serve the public.”

Legal Grounds Challenging the Agency Actions

The complaint brings two counts, both under the APA. The lawsuit targets agency-level implementing actions rather than the executive order itself and does not raise claims under the First Amendment of the U.S. Constitution or other constitutional claims.

Count I: Procedural Violations and Excess of Statutory Authority

The states allege the FAR Council and other federal agencies exceeded their statutory authority and violated mandatory procedural requirements. Specifically, the complaint alleges:

• The new contract terms and policies have a significant effect on contractors and impose significant compliance costs, and thus were required to be published for public comment in the Federal Register at least sixty days before taking effect under 41 U.S.C. § 1707, the statute governing federal procurement policy. Neither the FAR Council nor any agency complied with that requirement, and no valid waiver was invoked.
• The FAR Council’s April 2026 memorandum exceeded the authority granted to it under 41 U.S.C. § 1303, which authorizes the FAR Council to manage and coordinate the FAR, not to prescribe agency deviations, direct agency procurement activities, or set mandatory deadlines for bilateral modification of existing contracts.
• The agency class deviations are unauthorized under the FAR’s own provisions, which permit deviations only “‘when necessary to meet the specific needs’” of an individual agency and do not permit deviations to implement a new governmentwide policy.
• The False Claims Act (FCA) materiality clause in FAR 52.222-90 is contrary to law. The provision purports to make compliance with the clause “material” under the FCA, but under controlling Supreme Court of the United States precedent, “[m]erely labeling a clause ‘material’ does not make it so.” This matters for contractors and subcontractors because the clause, as drafted, purports to expose them to FCA liability for noncompliance with contract terms that the states argue have not been lawfully adopted.
• The agencies also violated the Paperwork Reduction Act by imposing reporting and recordkeeping requirements without first completing the required notice-and-comment process and obtaining Office of Management and Budget approval.

Count II: Arbitrary and Capricious Agency Action (APA)

The states separately allege the implementing actions are arbitrary and capricious because the agencies failed to adequately explain what the new contract terms mean or require and failed to explain how they differ from antidiscrimination requirements previously and currently applicable to federal contractors. The complaint identifies several ways this vagueness causes concrete harm:

• Contractors are left to guess whether common antidiscrimination and outreach activities might constitute prohibited “disparate treatment” in recruitment or resource allocation. The complaint offers concrete examples: forwarding a job listing to an associate at a historically Black college, attending a job fair in a predominantly white rural community, or responding to workplace incidents of antisemitism by training employees and distributing educational materials. It is unclear under the current contract terms whether any of these activities would be prohibited.
• The definition of “racially discriminatory DEI activities” echoes existing prohibitions on discrimination based on race or ethnicity but provides no meaningful guidance on whether, or how, it imposes requirements beyond those already applicable under Executive Order No. 11246 (rescinded) or its successor, Executive Order No. 14173.
• The vagueness is compounded by the ancillary requirements attached to FAR 52.222-90: broad records-access requirements, obligations to report possible subcontractor violations, and the threat of FCA liability. The complaint argues “[i]t is unreasonable to demand that contractors identify possible violations of a requirement that itself has not been defined clearly.” (Emphasis in original.)
• The agencies failed to account for the reliance interests of federal contractors and subcontractors that have designed their employment, subcontracting, and compliance policies and practices based on federal statutes and controlling decisional law in effect for decades.

Relationship to the April 2026 Constitutional Challenge

Federal contractors and subcontractors now face a litigation environment in which EO 14398 is being challenged on two independent fronts. Either case could produce injunctive relief affecting contract compliance obligations.

The April 2026 constitutional challenge filed by the National Association of Diversity Officers in Higher Education (NADOHE) and a coalition of higher education and minority trade associations focused on First Amendment violations, alleging the order chills protected speech and association, imposes unconstitutionally overbroad and content-based restrictions on contractors, and that the EO’s FCA materiality provision exceeds presidential authority under the Procurement Act.

The state coalition’s APA lawsuit operates independently and on different legal footing. By targeting agency-level implementing actions rather than the executive order itself and relying exclusively on APA grounds, the states position themselves to seek vacatur of the FAR Council’s April 2026 memorandum and the agencies’ class deviations without the court needing to reach constitutional questions. The complaint also introduces a procedural angle not present in the NADOHE case: the argument that the FAR Council and agencies were required to conduct public notice and comment before implementing these contract terms and failed to do so.

Next Steps

Maryland v. Hegseth is the latest challenge to the Trump administration’s executive orders seeking to eliminate DEI programs among federal contractors, and sets the stage for additional potential court orders affecting implementation of EO 14398. While the requested injunction is limited to the plaintiff states, a court order vacating the FAR Council memorandum and agency class deviations would have governmentwide effect. All federal contractors and subcontractors, not only those in plaintiff jurisdictions, have reason to monitor this litigation closely. Given the evolving litigation landscape, federal contractors and subcontractors may wish to assess their current posture and consider the following steps:

Bilateral modification requests. Contractors and subcontractors that have received or anticipate receiving requests from contracting officers to execute bilateral modifications incorporating FAR 52.222-90 may wish to consider the legal ramifications in advance of the July 24, 2026, deadline, particularly given the pendency of this litigation. The potential contract consequences of declining to agree to a modification are among the considerations that may warrant early legal guidance.

Consider a qualitative and quantitative privileged review of workforce programs. Contractors and subcontractors may wish to conduct a privileged review of existing antidiscrimination, outreach, recruiting, and workforce compliance programs, including privileged workforce analytics for legal risk mitigation. The complaint itself identifies uncertainty about whether common activities such as targeted recruiting outreach and workplace antisemitism training fall within the scope of FAR 52.222-90. Recent enforcement actions have demonstrated that the government conducts its own workforce analytics using employers’ raw data; organizations that have conducted their own privileged analysis in advance are better positioned to provide context and explanations if questions arise.

Understand the FCA compliance certification risk. FAR 52.222-90 includes a materiality clause representing that compliance is material to the government’s payment decisions under 31 U.S.C. § 3729(b)(4). Under the FCA, “knowingly” includes acting in “deliberate ignorance” or “reckless disregard” of the truth. 31 U.S.C. § 3729(b)(1). Contractors and subcontractors may wish to assess how their existing compliance programs relate to the certifications being made on each invoice submitted under a covered contract.

Consider preserving documentation of existing compliance practices. Contractors and subcontractors may also wish to consider how their existing employment and compliance programs are documented in relation to federal antidiscrimination statutes and controlling case law. The states’ reliance-interest argument in this lawsuit suggests that the history of how compliance programs were designed and grounded in existing law may be relevant both to any litigation outcome and to agency compliance reviews.

Records-access considerations. FAR 52.222-90 requires contractors to provide broad access to books, records, and accounts for compliance review. Given the clause’s vague scope, contractors and subcontractors may wish to consult with counsel regarding what records could be subject to demand and how workforce analytics and compliance documentation is currently structured.

Monitor both active challenges. Track developments in both Maryland v. Hegseth and the NADOHE constitutional challenge rulings on both the preliminary injunction, which is limited to the plaintiff states, and any vacatur of the FAR Council memorandum and agency class deviations, which would have governmentwide effect on the July 24, 2026, compliance deadline.

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

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

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