Quick Hits

• The Supreme Court of California ruled that the formatting of an arbitration agreement does not influence its substantive unconscionability, but courts must still evaluate the agreement’s legibility and context for potential unfairness.
• The court emphasized the sliding scale analysis of unconscionability, stating that excessive procedural unconscionability can render even minimally substantively unconscionable agreements unenforceable.
• The court said the appellate court had erred in applying a presumption in favor of arbitration without adequately scrutinizing the ambiguity and fairness of the confidentiality agreement involved.

On February 2, 2026, the California high court reversed a decision by the California Court of Appeal, which had, “relying on ‘the principle that the law strongly favors arbitration,’” directed a trial court to grant the employer’s motion to compel arbitration.

The appellate court found arguments that the arbitration agreement was illegible and that the employer rushed the employee to sign were procedural and did not render the arbitration agreement substantively unconscionable or unenforceable. But, while the California Supreme Court agreed that procedural unconscionability does not affect substantive unconscionability, the high court said the appellate court failed to properly consider substantive unconscionability and erred in its unconscionability analysis.

Background

The case arose from an employment dispute with an employee who alleged she was unlawfully discharged after seeking to extend sick leave for cancer treatments. At the time of hire, the employer presented the employee with an employment agreement containing an arbitration provision requiring the employee to arbitrate “all disputes which may arise out of the employment context.”

According to the decision, the arbitration provision, which was included in her employment application packet, was printed in “very small font,” was “blurry,” had approximately 900 words squeezed into roughly “‘three vertical inches’ of text,” and contained legal jargon and references to statutes. The employee was given “only five minutes” to review the application packet, and was not told that it contained an arbitration agreement, nor did she receive a copy of the agreement.

A trial court denied a motion to compel arbitration filed by the employer, finding that the agreement was unconscionable based on a “very high degree of procedural unconscionability” and a “low to moderate degree of substantive unconscionability.” The appeals court then reversed, holding that “tiny and unreadable print” is a problem of procedural unconscionability only.

Sliding Scale of Unconscionability

The California Supreme Court held that a contract’s format, including font size and legibility, is generally irrelevant to substantive unconscionability, which focuses on the fairness of the contract’s actual terms. But the court reinforced that the question of unconscionability is a sliding scale: the more substantively oppressive the contractual term, the less evidence of procedural unconscionability is required to conclude that the term is unenforceable, and vice versa.

In this case, the court noted in the case that the employer “did not provide” the employee “a meaningful opportunity to review the agreement or ask questions about it, much less to negotiate its terms.” The employer told the employee to hurry to sign the application packet within five minutes and did not tell her that it included an arbitration agreement, nor did it provide her with a copy of the agreement. “These circumstances constitute significant oppression,” the court said. The court found “the significant oppression and unusually high degree of surprise involved in the agreement’s formation undermine the policies that normally favor enforcement.” (Emphasis added.)

“Because the circumstances under which [the employee] signed the agreement involved such a high degree of procedural unconscionability, even a low degree of substantive unconscionability may render the agreement unenforceable,” the court held.

Error With Reliance on Presumption in Favor of Arbitration

Ultimately, the California Supreme Court did not rule on the substantive unconscionability but held that the appeals court had “erred” in its analysis. The court stated that reading the confidentiality agreement that appears to allow the employer to bring claims in court, along with the arbitration agreement, “reveals an ambiguity concerning whether the parties intended claims under the confidentiality agreement to be subject to mandatory arbitration.”

The state high court held the appellate court had “erred in applying a presumption in favor of arbitration to conclude that the confidentiality agreements did not create a one-sided carveout for claims only [the employer] would bring.”

Given the degree of procedural unconscionability, the lower courts “should instead have treated the arbitration agreement like any other contract and closely scrutinized the agreement’s terms for unfairness or one-sidedness, given the high degree of procedural unconscionability, and construed any ambiguous provisions” against the employer as the drafting party.

The California Supreme Court further found that the applicability of the confidentiality agreement largely turned on a factual issue as to whether the employer had properly signed it and remanded the issue to the trial court for consideration. Additionally, the court told the trial court to address the employee’s arguments that the agreement is invalid.

Key Takeaways

The Fuentes decision reinforces that California courts will apply a sliding scale in an unconscionability analysis: the greater the procedural unconscionability of a contract or contractual term, the less evidence of substantive unconscionability is required, and vice versa.

Tiny and almost illegible formatting of a contract term does not necessarily render it substantively unconscionable and unenforceable, but such issues are relevant to procedural unconscionability “because it contributes to the element of surprise.”

Employers may want to review their employment agreements to ensure they have clear, easy-to-read formatting, and that the agreements’ terms are not overly harsh, oppressive, or one-sided. Employers may also want to provide employees a “meaningful opportunity to review” employment agreements.

Ogletree Deakins’ California offices and Arbitration and Alternative Dispute Resolution Practice Group will continue to monitor developments and will provide updates on the Arbitration and Alternative Dispute Resolution, California, and Leaves of Absence blogs as additional information becomes available.

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Quick Hits

• The DOJ and a New Jersey-based IT staffing firm reached a $313,420 settlement over allegations that the firm’s job postings discriminated against U.S. citizens.
• Federal law protects applicants and employees from discrimination and harassment based on race, ethnicity, citizenship status, and national origin, including U.S. nationality.
• This settlement reflects the Trump administration’s emphasis on anti-American bias and addressing discrimination against majority groups.

Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on race, ethnicity, and national origin, including U.S. nationality. Title VII applies to all aspects of employment, including not just hiring and firing, but also compensation, promotions, benefits, disciplinary actions, and other terms and conditions of employment. Similarly, Section 274B of the Immigration and Nationality Act prohibits employers with four or more employees from discriminating in hiring, firing, or recruitment based on citizenship status or national origin.

The DOJ, along with the U.S. Equal Employment Opportunity Commission (EEOC) and other federal agencies, have aligned with the Trump administration’s priorities focusing on anti-American bias. Federal agencies have stated part of their enforcement focus is on staffing firms, among other industries and sectors.

Fitting within this strategic focus, the DOJ investigated Compunnel Software Group, Inc., for allegedly using language in job ads that excluded U.S. citizens and permanent residents and favored workers with H-1B or other temporary visas. The DOJ also claimed the company sent a recruiting email to a U.S. citizen, indicating that it wanted only certain visa holders for a software developer position, and it did not consider the U.S. citizen for that job.

Previously, federal regulators have investigated job ads requesting “U.S. citizens only” or “H-1B visas only.”

By entering into the settlement agreement, Compunnel Software Group did not admit liability. It agreed to pay $255,420 in civil penalties and $58,000 in back pay to the job applicant who was allegedly not considered for the software developer position. It also agreed to train employees on legal compliance and revise its recruitment policies to prohibit discrimination based on national origin, immigration status, citizenship, and other legally protected characteristics.

Employers may wish to review all job ads, including by third parties engaged to recruit on their behalf, to ensure compliance with all applicable federal, state, and local laws. Employers may also wish to provide proactive training to ensure clarity exists with recruiters and decision-makers on how to avoid unlawful discrimination based on national origin.

Ogletree Deakins will continue to monitor developments and will post updates on the Diversity, Equity, and Inclusion Compliance, Employment Law, and Immigration blogs as additional information becomes available.

On April 16, 2026, Ogletree Deakins will host a webinar entitled “The Heightened Risk of ‘Reverse’ or Majority Discrimination Enforcement and Claims.” Register here.

Bernhard Mueller is a shareholder in Ogletree Deakins’ Columbia office.

Nonnie L. Shivers is a shareholder in Ogletree Deakins’ Phoenix 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

• Sweden had planned to implement the EU pay transparency directive through amendments to the Discrimination Act rather than through a separate note statute.
• A January 2026 draft originally envisaged entry into force on 1 July 2026.
• On 11 March 2026, the government said it wanted to delay implementation to 1 January 2027.
• On 26 March 2026, the government said it wanted to seek an EU-level postponement and renegotiation of the directive.
• The government also said it does not currently intend to submit a bill to the Riksdag.

On 26 March 2026, the government announced that it intends to seek a postponement of the directive’s implementation date at EU level, pursue a renegotiation of the directive, and refrain from submitting a bill to the Riksdag, Sweden’s parliament.

This marks a significant change from Sweden’s earlier implementation plans. Until then, Sweden had still been working on national implementation through amendments to the Discrimination Act (2008:567), first with entry into force planned for 1 July 2026 and later with a proposed delay to 1 January 2027. In light of the government’s announcement of 26 March 2026, however, that legislative timetable must now be regarded as uncertain.

In its legislative referral of 15 January 2026, the government proposed implementing Directive (EU) 2023/970 through amendments to the Discrimination Act, rather than through a standalone statute. That proposal would have inserted the new pay transparency rules into Sweden’s existing discrimination law framework, including new obligations relating to recruitment-stage salary information, employee access to pay information, employer reporting, and procedural rules linked to pay discrimination disputes.

The government then adjusted its position on 11 March 2026. At that stage, it still intended to move forward with implementation, but stated that employers, employees, and labour market parties needed more time to prepare. It therefore announced that it intended to propose a later entry-into-force date of 1 January 2027 and to move the first deadline for submitting pay reports to the Equality Ombudsman from 20 May 2027 to 20 May 2028.

The later statement of 26 March 2026 went further. Rather than simply delaying domestic legislation, the government said it considered the directive too administratively burdensome and insufficiently adapted to national conditions. According to the government, unjustified pay differences must continue to be addressed, but the design of the directive should be simplified and its implementation deadline postponed. It has therefore indicated that it will seek both a postponement of the implementation date and a targeted renegotiation of the directive at the EU level.

Sweden had already voted against the directive when it was adopted in spring 2023, arguing that its design was not sufficiently adapted to Swedish conditions, did not provide enough flexibility for national solutions, and risked creating unnecessary administrative burdens. The government has since maintained close dialogue with labour market social partners and nongovernmental organisations regarding the difficulties associated with implementation. It has also emphasised that Sweden has long had requirements for employers to work preventively and proactively to counteract unjustified wage differences, including through wage surveys, and that any new rules should interact with and reinforce that work appropriately.

Although the timetable is now uncertain, the January 2026 draft remains the clearest indication of how Sweden had intended to integrate the directive into its existing legal framework. The draft proposed adding Chapter 3a to the Discrimination Act, specifically dedicated to pay transparency and pay equity.

Sweden already has a relatively robust framework addressing pay equity. These requirements include annual pay equity audits that larger employers must conduct and a firmly embedded prohibition on wage discrimination based on gender. Employers with ten or more employees are required to annually review and document pay structures to identify any unjustified gender pay gaps. Oversight is managed by the Equality Ombudsman, a Swedish government agency dedicated to combating discrimination and supervising compliance.

As many of the directive’s core principles are reflected in Swedish legislation, the government’s approach focused on aligning the directive’s new transparency obligations with existing legal structures, rather than introducing a new regulatory regime.

The January 2026 draft bill introduced pre-employment pay transparency requirements. Employers would have been required to provide job candidates with information on the starting salary or salary range and any relevant collective agreement provisions. Ideally, this information would have appeared in the job advertisement or before the interview stage, enabling an informed salary discussion. Employers would have further been prohibited from asking candidates about their salary history.

Sweden’s draft would also have strengthened employees’ right to pay information. Employees would have been entitled to request written information about their individual pay level and the average pay levels of employees performing the same work or work of equal value, broken down by gender. This information would have had to be provided by employers within two months of the request and employees would have been reminded annually of their right to request such data.

Unlike some other EU member states, Sweden’s draft bill proposed that pay information in small comparator groups would not have been restricted. Similar to the Dutch proposal, the Swedish draft considered the General Data Protection Regulation (GDPR) as adequate to address privacy concerns and does not propose additional data protection obligations relating to the directive at a national level. However, employers may require employees to use the information solely for the purpose of verifying compliance with equal pay rights.

The directive’s reporting requirements would also have applied. Employers with one hundred or more employees would have been obliged to report gender pay gap data as part of a salary report every three years, most likely starting in 2031. Employers with 150 or more employees would have been expected to comply with earlier reporting requirements, with first pay reports to be submitted by May 2028. These reports would have included average and median pay gaps, differences in variable or additional pay components, the distribution of men and women across pay quartiles and the proportion of employees receiving bonuses or other variable compensation. These obligations would have been phased in depending on employer size. Unjustified pay gaps of 5 per cent or more within a category of workers performing equal work or work of equal value would have had to be remedied or justified by the employer. If the pay gap could not have been objectively justified within six months, the employer would have had to conduct a joint pay assessment (gemensam lönebedömning) in cooperation with employee representatives.

The draft also would have provided protection for employees to exercise their pay equity rights. An employee’s pay discrimination claim would have had to be brought within three years. If successful, employees would have been entitled to economic compensation as well as compensation for general damages.

Pending further developments at both the national and EU level, employers may want to keep a close eye on Sweden’s implementation process while also reviewing existing pay transparency and pay equity practices. Even if the legislative timetable changes, the January 2026 draft bill provides a useful indication of the direction of travel.

Employers are encouraged to stay informed about the implementation process in their respective jurisdictions. Information and updates on the progress of the directive’s implementation across the European Union can be found using Ogletree Deakins’ Member State Implementation Tracker.

Further information can also be found by listening to our podcast, “Understanding the EU Pay Transparency Directive: What Employers Need to Know.”

Ogletree Deakins’ London office, Pay Equity Practice Group, and Workforce Analytics and Compliance Practice Group will continue to monitor developments and will provide updates on the Cross-Border, Pay Equity, and Workforce Analytics and Compliance blogs as additional information becomes available.

Daniella McGuigan is a partner in the London office of Ogletree Deakins and co-chair of the firm’s Pay Equity Practice Group.

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

Emilia Mobius, a paralegal in the London office of Ogletree Deakins, contributed to this article.

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Quick Hits

• Romania’s pay transparency draft law largely follows the EU pay transparency directive and does not appear to introduce major additional national obligations.
• However, Romania’s proposal introduces stricter deadlines than the directive for responding to pay information and report-related requests.
• Some uncertainties remain, particularly around worker representatives and the definition of work of equal value.
• Romania is currently well-positioned to meet the 7 June 2026 transposition deadline.

The proposal has already been shared with the business community for feedback and is expected to be discussed with trade unions next. Based on the current timing, Romania appears well-placed to meet the June 2026 deadline for transposing Directive (EU) 2023/970 into national law, ahead of several other member states that are still developing their legislative approach.

Overall, Romania seems to be following a relatively restrained implementation model. Rather than creating an extensive standalone regime, the draft largely follows the structure and substance of the directive. This will likely be seen as a positive development by employers, especially those operating across several EU jurisdictions and seeking consistency in compliance requirements.

The draft follows the directive in several key aspects. The draft law would require employers to inform job applicants of the starting salary or pay range, either in the job advertisement or otherwise in writing. Romania’s draft law also mirrors the directive’s framework on gender pay gap reporting, including the relevant employer thresholds and reporting timetable. In addition, employers with fewer than one hundred employees would be allowed to report on a voluntary basis.

Responsibility for monitoring compliance is expected to lie with ANES, the National Agency for Equal Opportunities between Women and Men.

Although the overall approach is closely aligned with EU rules, the Romanian draft contains a few notable deviations. One of the most important relates to the definition of “work of equal value.” Instead of following the directive’s wording exactly, the draft uses terminology drawn more closely from Romanian law, referring to similar or equal knowledge, skills, effort, responsibilities, and working conditions. That difference may create practical difficulties when employers assess which roles should be compared for pay transparency purposes.

Another point of possible divergence is the proposed requirement for employers to organise a “remuneration system/department” at the unit level. This would go further than the directive, which requires transparent and nondiscriminatory pay structures but does not expressly mandate a dedicated remuneration function. If this requirement is retained, this could impose one of the more burdensome elements of the Romanian legislation going beyond the minimum requirements of the directive.

The draft also sets out shorter response deadlines than those required by the directive. Employers would need to answer employee pay information requests within thirty working days, rather than within two months. For clarification requests linked to pay reports, employers would generally have to respond within thirty to sixty days, with only limited extension possibilities. These tighter timelines may require employers to establish more robust internal procedures.

As for sanctions, the proposal provides for fixed fines of RON 10,000 to 20,000, rising to RON 20,000 to 30,000 for repeated breaches. Whether these amounts would be sufficiently dissuasive for larger employers remains open to question, particularly in light of the directive’s requirement that penalties be effective, proportionate, and dissuasive.

Some issues also remain unresolved. In particular, the draft offers limited guidance on the role of worker representatives. This may be significant in Romania, where trade unions can be either representative or nonrepresentative depending on membership levels. Without further clarification, employers may face uncertainty over which representatives need to be involved in pay transparency processes and in joint pay assessments.

In summary, Romania’s draft legislation suggests a relatively predictable and business-conscious implementation of the directive. While the proposal does not currently appear to involve substantial gold-plating, employers may want to continue following the legislative process carefully, especially with regard to tighter deadlines, possible structural obligations, and the unresolved issue of employee representation.

Employers are encouraged to stay informed about the implementation process in their respective jurisdictions. Information and updates on the progress of the directive’s implementation across the European Union can be found using Ogletree Deakins’ Member State Implementation Tracker.

Further information can also be found by listening to our podcast, “Understanding the EU Pay Transparency Directive: What Employers Need to Know.”

Ogletree Deakins’ London office, Pay Equity Practice Group, and Workforce Analytics and Compliance Practice Group will continue to monitor developments and will provide updates on the Cross-Border, Pay Equity, and Workforce Analytics and Compliance blogs as additional information becomes available.

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Quick Hits

• About 2 percent of U.S. adults have autism.
• The rate of autism diagnoses among U.S. adults is speeding up.
• Employers must provide reasonable accommodations to employees with a qualifying disability, which may include autism.

Autism is a condition characterized by challenges with social skills, repetitive behaviors, speech, and communication. It is one of the conditions included under the broader umbrella of neurodiversity or neurodivergence. Some people with autism have other medical conditions that affect their autism symptoms, such as anxiety, attention deficit hyperactivity disorder (ADHD), obsessive compulsive disorder (OCD), insomnia, or dyslexia. Autism is a spectrum of symptoms with wide variances in how it manifests for each person. This puts increased importance on having an individualized interactive process to discuss possible accommodations.

About 2 percent of adults in the United States have autism, according to the U.S. Centers for Disease Control and Prevention. Research shows the rate of autism diagnoses has increased steadily in recent years. For employers, that may result in more accommodation requests from employees with autism.

Depending on the job type and business needs, employees with autism may present certain strengths in the workplace, such as intense focus, attention to detail, logical thinking, and creativity. At the same time, they may exhibit certain challenges in their communications, thinking processes, social awareness, and personal interactions.

Reasonable Accommodations

Under the Americans with Disabilities Act (ADA), employers with fifteen or more employees must provide reasonable accommodations for employees with a mental or physical impairment that substantially limits a major life activity, such as speaking, hearing, eating, sleeping, or learning. Autism may qualify as a disability under the ADA. Some state and local laws provide lower thresholds for disability accommodations or additional protections beyond what the ADA provides.

Reasonable accommodations for employees with autism may include flexible schedules, remote work, noise-cancelling earplugs or headphones, modified lighting, shades, or a workspace in a quieter location. For some employees with autism, written instructions, visual checklists, and using email instead of phone calls may be helpful.

Each person with autism may have different needs, depending on their individual symptoms and the type of job and workplace. Employers can use the interactive process to pinpoint the accommodations that are likely to work best for a specific employee. The interactive process is a collaborative dialogue between the employer and the employee to identify the employee’s limitations and explore potential accommodations that would enable the employee to perform the essential functions of the job. The ADA calls for employers to engage in this process promptly after receiving an accommodation request without unnecessarily delaying discussions or decisions.

To legally justify denying an accommodation for a qualifying disability, an employer must demonstrate the accommodation would impose an undue burden, meaning a significant cost or difficulty. Determining whether an accommodation poses an undue hardship requires a case-by-case analysis. Factors to consider include the cost of the accommodation, the employer’s financial resources, the size of the business, and the impact on operations. An accommodation that may be an undue hardship for a small employer might be reasonable for a larger organization with more resources.

Employers are required to maintain the confidentiality of employees’ disability-related information in accordance with the ADA.

Next Steps

Employers may wish to train supervisors to understand reasonable accommodations and legal obligations under the ADA. Applying disability accommodations in a consistent and fair manner may help to prevent discrimination lawsuits based on disability or other legally protected characteristics.

Retaliation against employees who request accommodations is prohibited under the ADA. Adverse actions taken against an employee for requesting an accommodation—even if the request is ultimately denied—may give rise to a retaliation claim. Employers may wish to carefully document their legitimate business reasons for denying or revoking accommodation requests.

Employers also may wish to consider providing general autism awareness training for all employees to foster a more inclusive workplace culture, while being careful not to disclose any individual employee’s disability status. Employers can consult the Job Accommodation Network (JAN), a free resource provided by the U.S. Department of Labor that offers practical accommodation ideas and one-on-one consultation services.

In the hiring process, these steps may help employers be more inclusive toward applicants on the spectrum:

• using clear, plain language in job descriptions;
• conducting job interviews on a video call or in a room that isn’t noisy or crowded;
• relying more on skills-based assessments than standard job interviews;
• emphasizing proven skills more than eye contact and social performance; and
• providing interview questions to candidates in advance.

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

Phillip B. Russell is a shareholder in Ogletree Deakins’ Tampa office. He is a co-founder of Autism Inspired Academy in Clearwater, Florida, a nonprofit K-12+ school for students on the spectrum whose mission is to help students build and sustain lives of meaning, purpose, and joy.

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

• A number of organized religions have stepped into the public debate over AI to provide their religious perspective.
• Some employers are receiving accommodation requests from workers who have religious objections to using AI.
• Federal and state laws require employers to provide reasonable accommodations for an employee’s religious beliefs, unless it would impose an undue hardship.

In recent years, many business leaders have implemented new work protocols and performance metrics that require workers to use AI tools for certain job functions. At the same time, religious objections to workplace requirements or procedures are on the rise. One stark example involved a nearly $600,000 jury verdict upheld on appeal in favor of an evangelical Christian employee who objected to his employer’s biometric hand scanner on the grounds that it would imprint him with the “Mark of the Beast”—a symbol from the Book of Revelation associated with followers of the Antichrist—after the employer refused to offer him the same keypad alternative it had already made available to employees with hand injuries.

Meanwhile, leaders and scholars in the Catholic Church, the Church of Jesus Christ of Latter-Day Saints, the National Association of Evangelicals, the Evangelical Lutheran Church of America, the Presbyterian Church (USA), the World Council of Churches, the Seventh-Day Adventist Church, Islamic organizations, Jewish organizations, and Hindu organizations have released statements or guidance regarding AI and ethics. Most of them grapple with and provide philosophical suggestions and options regarding the ethical use of AI and preventing—or at least minimizing—harm to individuals, communities, human connections, and the environment.

Additionally, some employees may form and hold religious beliefs about AI based on statements they heard directly from their priest, pastor, rabbi, or imam. As a result, workers might request to be exempt from AI tasks, to use traditional or manual methods, or to excuse their abstinence from AI usage in their job performance metrics. That could affect the workload that coworkers would have to handle.

Legal Considerations

Under Title VII of the Civil Rights Act of 1964, employers must reasonably accommodate an employee’s sincerely held religious beliefs, practices, and observances, unless doing so would cause an undue hardship. There are, essentially, three steps in this analysis:

• Has the employee demonstrated a sincerely held religious belief or practice?
• Does that belief or practice actually conflict with a workplace rule, requirement, or prohibition?
• Can the conflict be resolved by providing some type of accommodation or compromise for the employee so that the employee’s religious belief or practice can productively co-exist with the job requirements without imposing an undue hardship on the employer?

In Groff v. DeJoy, the Supreme Court of the United States held that employers must establish that an accommodation would result in a substantial burden, meaning a significant difficulty or expense, to deny a religious accommodation request. Most states have antidiscrimination laws similar to the federal law.

Courts will use a case-by-case assessment of the job duties, business size, workplace environment, and the specific accommodation request to determine whether there is an undue hardship. For example, a business may show an undue hardship if an accommodation compromises workplace safety, severely disrupts efficiency and productivity, or infringes on a coworker’s legal rights. The fact that a coworker, client, or customer dislikes or disagrees with an accommodation is not enough to demonstrate an undue hardship.

Next Steps

Employers may wish to review their religious accommodation policies, job descriptions, performance evaluation processes, and other practices to assess whether any changes are needed, given the increased use of AI in most workplaces. Applying  accommodation decisions fairly and consistently may help reduce the risk of religious discrimination lawsuits.

Employers may wish to carefully document their legitimate business reasons for denying or revoking a religious accommodation. Questioning whether an employee’s religious beliefs are sincerely held may create unnecessary liability for employers.

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

Matthew P. Gizzo is a shareholder in Ogletree Deakins’ New York and Dallas offices.

James M. Paul is a shareholder in Ogletree Deakins’ Tampa and St. Louis offices.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Quick Hits

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

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

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

Qualified Tips Defined

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

Voluntariness

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

Cash Tips

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

Managers and Tip Pools

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

Anti-Abuse Rules

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

List of Occupations That Receive Tips

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

Occupations Expanded

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

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

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

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

Final List of Qualifying Occupations

Next Steps

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

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

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Quick Hits

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

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

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

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

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

Llave MX for Labor and Employment Matters

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

Why This Matters for Employers

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

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

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

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

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

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

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

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