Recent federal circuit decisions and EEOC guidance has impacted how employers should view reassignment under the ADA as a potential accommodation.
Federal courts are split on whether reassignment requires direct placement or merely an opportunity to compete. The EEOC takes the broadest view and is aggressively enforcing it.
Employers that follow the broad approach eliminate compliance risk in every jurisdiction.
Supreme Court review is widely anticipated; but the broad approach is future-proof.
The Americans with Disabilities Act (ADA) expressly lists “reassignment to a vacant position” as a reasonable accommodation, but in practice the scope of that obligation is hotly contested. How far must the employer search? Must the employee compete? This article explains the two dominant frameworks, the current circuit split, and practical steps for employers that want to stay ahead of the curve.
Two Ways to Read the Reassignment Duty
The Narrow Approach. Under this reading, an employer’s neutral, consistently applied policies can limit the reassignment obligation. If the employer requires all internal candidates to compete for openings, it may apply that policy to reassignment. Neutral transfer or geographic-scope policies may likewise cap the search. Proponents read the Supreme Court of the United States’ key accommodation decision broadly—as establishing that neutral policies generally make a disability-based preference unreasonable. Under this framework, the employee may be left to find and apply for vacancies independently.
The Broad Approach. Under this reading, reassignment means placement—not merely a chance to compete. If the employee is qualified for a vacant position, the employer must offer it directly. Neutral policies (other than bona fide seniority systems) do not excuse the duty. The employer bears primary responsibility for identifying vacancies companywide, sharing a list of options with the employee, and offering the position closest to the employee’s current role in pay, status, schedule, and location.
Where Does the EEOC Come Down?
The U.S. Equal Employment Opportunity Commission (EEOC) takes the broadest possible view. Its enforcement guidance holds that: (1) the employee need only be qualified—not the “best qualified”—so placement without competition is required; (2) the employer must lead the search and inform the employee of vacancies because it is in the best position to know what is open; (3) no geographic or departmental limit may be imposed unless the employee voluntarily sets a boundary; (4) the employer must offer the vacancy closest (in pay, benefits, title, responsibility, location, etc.) to the current role first; and (5) the Supreme Court’s key decision applies only to bona fide seniority systems, not to other neutral policies.
The only criteria the EEOC considers legitimate for eliminating a vacancy are that the employee is unqualified, the position is not actually vacant, placement would require creating a new role or bumping another employee, the position would be a promotion, the employee cannot perform the essential functions, or placement would violate a bona fide seniority system the employer does not deviate from.
The Circuit Split: Where Things Stand
Federal appellate courts are divided. The disagreement turns on how each circuit reads the Supreme Court’s key accommodation decision when applied to neutral employer policies. A slight majority of circuits—roughly six—side with the EEOC and adopt the broad approach. A minority—roughly five—take the narrower view. At least one circuit has not squarely decided.
The most prominent dispute is whether the employee must compete for a vacancy. A secondary question is whether the employer must affirmatively search for and share a list of openings—and notably, even some courts rejecting mandatory noncompetitive placement still expect the employer to participate in an interactive process and share vacancy information. The geographic-scope issue tracks the competition question: only courts allowing neutral policies to block reassignment also allow geographic limits. On timing, all courts agree that “vacant” means currently open or reasonably expected to open in a short window—generally a few weeks, not months.
Because the split is tied directly to interpreting a Supreme Court decision, eventual high court review is widely expected.
Following the Broad Approach
Following the EEOC’s guidance does not risk an adverse finding in any circuit—courts that reject the broad view would simply see the employer as having exceeded its obligations. Conversely, following the narrow approach in a broad-approach jurisdiction creates serious exposure: ADA verdicts can be staggering, with reassignment-specific outcomes reaching eight figures and broader accommodation cases producing awards in the hundreds of millions. The EEOC’s current enforcement plan expressly targets employers whose defenses challenge Commission guidance, and the agency has been actively litigating and settling ADA cases. Finally, if the Supreme Court sides with the majority, narrow-approach defenses collapse overnight.
Given the above, here are some practical steps for employers adopting the broad approach:
Confirming the threshold. Documenting the reassignment is warranted. This step includes documenting that the employee held a role, can no longer perform the essential functions with or without accommodation, or continued accommodation would be an undue hardship.
Gathering information. Critical information includes qualifications, restrictions, and relocation preferences from the employee.
Searching companywide. A companywide search involves identifying all locations and departments, reaching out to recruiters about positions opening within approximately a month, and documenting the search.
Sharing a vacancy list. Consider providing qualifications, pay, benefits, schedule, location, and relocation costs on vacancy lists. In addition, consider asking the employee to identify qualifying positions, note accommodations needed, and rank preferences.
Offering the closest match. Consider selecting positions mirroring the employee’s rankings and closest to the employee’s current role. Employers will want to be prepared to justify any deviation.
Putting it in writing. Consider providing offers in writing and obtaining a written acceptance. Employers may want to treat a refusal of a reasonable offer for nondisability reasons as a refusal of accommodation.
Maintaining status and documenting everything. Consider keeping the employee on leave or temporary assignment during the search, while not imposing artificial deadlines. Thorough documentation of each step is important since the process may be scrutinized.
Takeaways for Employers
The broad approach eliminates legal risk in every federal circuit.
Supreme Court review is likely; employers relying on the narrow approach may want to be prepared for potential invalidation.
The EEOC is actively enforcing its guidance; positions at odds with it invite systemic investigations.
Thorough, contemporaneous documentation of the interactive process is the strongest defense in any charge or litigation involving accommodations.
Multistate employers benefit most from a uniform, broad-approach reassignment policy.
The Spring 2026 deregulation plan incorporates, for the first time, the regulatory plans of independent agencies, now subject to White House coordination following the Supreme Court of the United States’ June 29, 2026, decision expanding presidential removal power. Among the 702 targeted rules are environmental review requirements for energy projects, energy efficiency standards, rules that promote diversity, equity, and inclusion (DEI), and specific deregulatory actions relevant to the federal contracting community.
Quick Hits
The deregulatory actions include the rescission of Executive Order (EO) 11246’s implementing regulations, the elimination of the U.S. Equal Employment Opportunity Commission’s (EEOC) disparate-impact standard, and the proposed rescission of EEO-1 reporting requirements.
Federal contractors’ obligations under Section 503 of the Rehabilitation Act and the Vietnam Era Veterans Readjustment Assistant Act (VEVRAA) remain intact despite the rescission of EO 11246 and the proposed defunding of the Office of Federal Contract Compliance Programs (OFCCP).
The EEOC’s proposed rescission of EEO-1 reporting is still undergoing review by the Office of Information and Regulatory Affairs (OIRA) (expected through mid-August 2026), and existing filing obligations remain in force until rulemaking is complete.
These deregulatory actions occur alongside new compliance requirements, including EO 14398’s mandatory DEI contract clause (FAR 52.222-90), which must be incorporated into existing contracts by July 24, 2026.
Of particular note to federal contractors, the following deregulatory actions are in the crosshairs of the Unified Agenda.
Deregulatory Proposals
Rescission of OFCCP’s EO 11246 Implementing Regulations
Among the 702 deregulatory actions is the U.S. Department of Labor’s proposed rescission of all regulations implementing Executive Order 11246, the long-standing framework that required federal contractors to maintain affirmative action programs and comply with related nondiscrimination obligations. EO 11246 was revoked by President Donald Trump on January 21, 2025, by EO 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.”
OFCCP published a proposed rule on July 1, 2025, to rescind the implementing regulations at 41 C.F.R. Parts 60-1, 60-2, 60-3, 60-4, 60-20, 60-30, 60-40, 60-50, and 60-999. Although a final rule has not yet been issued, the Unified Agenda confirms this rescission remains a priority. Contractors should note that implementing regulations for EO 11246 are separate and apart from those existing legal obligations under Section 503 of the Rehabilitation Act and VEVRAA. Although certain changes have also been proposed for the implementing regulations of Section 503 and VEVRAA, existing obligations remain unaffected until proposals are finalized, such as the annual preparation of affirmative action programs for individuals with disabilities and protected veterans.
EEOC Deregulatory Actions
The Unified Agenda includes several significant EEOC deregulatory actions. First, the EEOC plans to eliminate the long-standing “disparate impact” standard in proving racial discrimination. This follows EO 14281, which directed agencies to “deprioritize” disparate impact claims. The EEOC has already directed the dismissal of pending disparate impact complaints. For federal contractors, this should mean enforcement scrutiny focused exclusively on intentional disparate treatment, though private parties may still attempt to bring disparate impact claims under Title VII.
Second, the EEOC proposes to rescind federal EEO reporting and recordkeeping obligations, including the EEO-1 reporting framework. On May 14, 2026, the EEOC submitted to OIRA a proposal to rescind reporting obligations related to Title VII, the Americans with Disabilities Act (ADA), the Genetic Information Nondiscrimination Act (GINA), and the Pregnant Workers Fairness Act (PWFA). The rescission of EO 11246 already eliminated the lower fifty-employee EEO-1 filing threshold for federal contractors. However, until formal rulemaking is complete (the ninety-day OIRA review runs through approximately mid-August 2026), existing obligations remain in force, and contractors should prepare to file if the EEOC opens a 2026 filing window.
Third, on July 6, 2026, the EEOC submitted a final interpretative rule to rescind 29 C.F.R. Part 1608 governing voluntary affirmative action plans. The aim of this would be to remove longstanding guidance on permissible voluntary affirmative action in employment, potentially increasing legal uncertainty for contractors that maintained such programs under the prior framework.
DEI-Promoting Regulations
The Unified Agenda specifically targets rules that promote diversity, equity, and inclusion. While EO 14398, “Addressing DEI Discrimination by Federal Contractors” (discussed below), represents a new regulatory requirement, the Unified Agenda’s deregulatory side seeks to remove older rules across multiple agencies that previously encouraged or mandated DEI-related compliance. For federal contractors, this creates a potentially difficult dynamic to navigate: legacy DEI-promoting regulations (now being removed) versus new prohibitions on “racially discriminatory DEI activities” (now being imposed).
The Broader Context for Federal Contractors
The deregulatory actions sit within a broader landscape of regulatory change affecting federal contractors. Key concurrent developments include: EO 14398’s mandatory DEI contract clause (FAR 52.222-90), which prohibits “racially discriminatory DEI activities” and must be incorporated into existing contracts by July 24, 2026; the proposed defunding of OFCCP in the FY 2027 budget (though Congress ignored a similar proposal in fiscal year (FY) 2026 and instead preserved $101 million in funding, along with keeping Section 503/VEVRAA obligations intact); the FY 2026 National Defense Authorization Act’s (NDAA) increase of the certified cost or pricing data threshold to $10 million for defense contracts entered after June 30, 2026, with cost accounting standards (CAS) applicability thresholds potentially rising to $35 million; and the ongoing “Revolutionary FAR Overhaul” eliminating a substantial number of provisions. Collectively, these developments represent a fundamental realignment of the federal contractor compliance environment.
Considerations for Federal Contractors and Subcontractors
Federal contractors and subcontractors are navigating one of the most consequential periods of procurement reform in decades. The combination of the Revolutionary FAR Overhaul, an intense focus on anti-DEI and anti-discrimination obligations, increased cost and pricing thresholds, proposed OFCCP restructuring, and shifting enforcement priorities throughout various federal agencies, creates both compliance risks and potential competitive advantages for contractors that adapt quickly.
Contractors may consider reviewing their existing compliance playbooks, proposal templates, and subcontracting policies in light of the FAR restructuring and renumbering. It may be prudent to assess the impact of EO 14398 on internal DEI programs and subcontractor flow-down provisions, particularly in advance of the July 24, 2026, deadline for bilateral modifications to existing contracts. Defense contractors can evaluate the implications of raised CAS and certified cost or pricing data thresholds for their business models and accounting systems. All contractors should also keep a close eye on existing and potentially changing statutory and regulatory obligations, including ensuring continued compliance until and unless final rules or changes are implemented.
This article and more information on how the Trump administration’s actions impact employers can be found on Ogletree Deakins’ Administration Resource Hub.
When reviewing a mass layoff notice, the focus must generally be on the purpose of the notification procedure.
Stating a number of employees to be laid off that is slightly too high in the mass layoff notice does not automatically render the notice invalid.
The Case
The employee worked as a machine setup technician and operator for a key manufacturer and machine builder. The employer became insolvent in November 2024. The insolvency administrator decided to shut down operations and terminate the employment relationships of all employees. In February 2025, a reconciliation of interests was concluded with the relevant works council. Subsequently, a mass layoff notice was filed with the Employment Agency (Agentur für Arbeit). After the Employment Agency received the notice, the employer terminated the employee’s employment relationship, among others. The notice of mass layoffs stated that thirty-four layoffs were to be carried out. In fact, however, thirty-one or thirty-two terminations were issued.
The employee challenged the termination, arguing that the termination was invalid because, during the proceedings under Section 17 KSchG, contradictory or incorrect information regarding the number of employees to be laid off had been provided to both the works council and the Employment Agency.
The Hagen Labor Court upheld the claim. The Hamm State Labor Court, however, dismissed it.
The BAG’s Decision
In its ruling (Ref. No. 6 AZR 7/26, decision of June 25, 2026), the BAG found that the employee’s appeal on points of law was unsuccessful. The termination remained valid.
The BAG initially based its decision on the purpose of the mass layoff notification. This notification was intended to enable the competent Employment Agency to find solutions to the anticipated problems associated with the planned layoffs.
If errors did occur in the submission of the mass layoff notice that did not, however, conflict with the purpose of the notification procedure and did not significantly impede the search for solutions, the mass layoff notice nevertheless satisfied the requirements of Section 17 KSchG and the EU Collective Redundancies Directive (Massenentlassungsrichtlinie (MERL)).
The slightly inflated number of employees to be laid off stated in the present case—thirty-four instead of thirty-one or thirty-two—did not affect the Employment Agency in its task of assessing the consequences of the layoffs, such as which labor market policy measures should be taken. The notice still allowed the Employment Agency to carry out its statutory role.
Thus, according to the BAG, the mass layoff notification remained proper and therefore effective despite the objectively incorrect information.
Practical Significance
The decision is notable, even though the corresponding press release from the BAG (the full text of the decision is not yet available) leaves open the question of when comparable errors in the notification procedure are no longer considered “minor.”
However, the decision is highly relevant in practice, as the “dismissals” to be reported in the notification procedure also include employer-initiated separation agreements. However, the conclusion of such agreements depends on the parties’ willingness to enter into them, so it is not uncommon for termination agreements that were initially “planned” to ultimately not be concluded—or at least not within the thirty-day period specified in the mass layoff notice. The BAG’s focus on the purpose and intent of the notification procedure is therefore pragmatic and correct in this context. Unfortunately, such pragmatism is not necessarily common in the case law of Germany’s highest labor court regarding mass layoff procedures.
Tatjana Serbina is counsel in the Berlin officeof Ogletree Deakins.
Maximilian Gössling, a trainee lawyer in the Berlin office of Ogletree Deakins, contributed to this article.
Ogletree Deakins’ Berlin and Munich offices will continue to monitor developments and will post updates on the Cross-Border, Germany, and Reductions in Force blogs as additional information becomes available.
An employee’s right to be heard before any sanction is imposed is a near-universal international principle.
The right to be accompanied by someone who supports the employee’s interests at disciplinary or investigatory meetings is statutory or contractual in many jurisdictions.
Procedural failures in the investigation, including missed deadlines and use of unauthorized investigators, can independently invalidate the disciplinary outcome.
In many jurisdictions, strict statutory deadlines, sometimes as short as forty-eight hours, govern when disciplinary action must be initiated.
Employers may want to ensure they address data privacy compliance, including cross-border transfer mechanisms and subject access request risks, before any data collection begins.
The key international principle in an investigation is that procedural compliance is not separate from the substantive disciplinary decision—it is part of it. An employer that reaches the right conclusion by the wrong process will often lose the legal ability to impose sanctions on the employee.
Fundamental Differences: United States vs. International
In the United States, employers have broad latitude to investigate workplace issues. Employees have limited rights to counsel, no general right to refuse to cooperate, and investigation findings can be used freely. Furthermore, investigations can be conducted informally.
Internationally, the investigation process is often regulated by statute or case law. The right to be accompanied by someone who supports the employee’s interests is near-universal in formal proceedings. Cooperation obligations exist but are qualified. Data protection law governs what can be collected, retained, and shared. Critically, procedural failures in the investigation can invalidate the disciplinary outcome entirely.
The Right to Be Heard
A near-universal international principle requires that the employee be given an opportunity to respond before any sanction is imposed. This is known variously as due process, prior hearing, show cause notice process, or disciplinary inquiry, depending on the jurisdiction.
In practice, this requires: (1) written notice of the specific allegations—vague allegations constitute a procedural failure; (2) sufficient time for the employee to prepare a response; (3) an opportunity to present that response, orally or in writing depending on the jurisdiction; (4) in many jurisdictions, the right to cross-examine witnesses or challenge evidence; and (5) a decision made only after genuinely considering the response.
The Right to Be Accompanied
In many jurisdictions, employees have a statutory or contractual right to be accompanied at investigatory and disciplinary meetings. The specific rules vary by country:
In the United Kingdom and Ireland, there is a statutory right to be accompanied by a trade union representative or colleague at formal disciplinary and grievance hearings. In France, employees have the right to be assisted by a fellow employee at the entretien préalable (pre-dismissal interview). In Germany, the works council must be heard before any dismissal; failure renders the dismissal void. In South Africa, employees have the right to a companion and to call witnesses at a disciplinary hearing. In India, employees have the right to bring a coworker representative to the domestic inquiry.
The practical consequence is significant: Scheduling a disciplinary or investigatory meeting without offering the right to accompaniment where it applies renders the outcome procedurally defective—even if the substantive finding is correct.
Who Conducts the Investigation
In the United States, the choice of investigator is largely a matter of employer discretion—an HR manager, outside counsel, or internal legal team can typically conduct the investigation. Internationally, this assumption could be fatal to the disciplinary outcome.
Many jurisdictions require that specific persons or bodies conduct the investigation or disciplinary proceeding. In India, a domestic inquiry must be conducted by an inquiry officer who is impartial and, in many cases, particularly for senior employees or unionized workforces, a formal disciplinary committee is required. In several Latin American countries, the disciplinary process must be conducted locally by authorized personnel; investigation findings produced by a U.S. parent company may lack standing in local proceedings. In jurisdictions with strong works council rights, such as Germany or the Netherlands, employee representative bodies may have consultation or co-determination rights over how investigations are conducted.
The key principle is that an investigation conducted entirely by U.S.-based personnel, without involvement of local HR or legal advisors, may not be recognized as a valid basis for disciplinary action in the local jurisdiction. The U.S. parent’s conclusion—however well-supported—may simply not count.
Timing: The Statutory Clock Is Running
One of the most overlooked aspects of international investigations is timing. Many jurisdictions impose strict statutory deadlines that govern how quickly an employer must act—not just in concluding the investigation, but in initiating disciplinary proceedings once facts are known.
In some countries, these deadlines are remarkably short. In France, for example, employers must initiate formal disciplinary proceedings within two months of becoming aware of the misconduct, and the sanction must be imposed within one month of the disciplinary interview. In Brazil, the prevailing jurisprudential view requires employers to act promptly, with some courts finding delays of more than thirty days constitute condonation of the misconduct. In certain Middle Eastern jurisdictions, deadlines can be as short as forty-eight hours from discovery to initiation of disciplinary action. Missing these windows does not merely weaken the employer’s position—it can extinguish the right to terminate the employment relationship altogether.
The practical implication is significant: A thorough but slow investigation may produce an airtight factual record that cannot be acted upon. Global investigation protocols must account for local timing requirements from the outset and escalate matters appropriately to preserve the employer’s ability to take disciplinary action.
Data Privacy Compliance
Investigations involving access to employee communications, devices, or data trigger data protection obligations in most jurisdictions. Key requirements include:
Proportionality and legal basis: Employers may want to ensure they access only data that is necessary and proportionate. Most regimes require a documented legal basis for accessing data—typically, legitimate interests balanced against employee privacy rights.
Employee notification: Covert monitoring has strict limits. Employees must typically be notified of monitoring either in advance via policy or promptly after covert access.
Cross-border transfers: Sharing investigation reports from a European entity to U.S. headquarters requires a valid transfer mechanism, such as standard contractual clauses or intra-company agreements.
Subject access requests: Under the European Union’s General Data Protection Regulation (GDPR) and similar laws, investigation subjects and complainants can request copies of personal data held about them—including investigation files, interview notes, witness statements, and reports. Exemptions for privilege or ongoing investigations exist but are narrow. Employers may want to structure files with potential disclosure in mind.
A 2026-Ready Strategy
Multinational employers developing internal investigation protocols may want to ensure those protocols:
incorporate the right to be heard and the right to be accompanied as standard procedural requirements;
are aligned with local data protection requirements before any data collection begins;
include documented cross-border data transfer mechanisms for investigations that span jurisdictions;
provide written notice of specific allegations with sufficient time for the employee to respond;
account for works council consultation requirements in jurisdictions like Germany, where failure to involve the works council renders the dismissal void; and
build in awareness of local timing requirements and investigator qualifications to preserve the employer’s ability to act on investigation findings.
Investigations have rules. The right to be heard, the right to be accompanied, and data protection obligations apply before any disciplinary outcome. Procedural failure is independently sufficient for a court to find the employee has been unfairly dismissed in most jurisdictions.
A global investigation template cannot absorb the procedural complexity of international employment law. A global investigation strategy will better serve the corporation.
A New York appellate court found that a pandemic-related office closure does not exempt nonresident employees from New York income tax on out-of-state earnings.
The court found that the nonresident employee’s full income was taxable under the state’s convenience of the employer rule because the nonresident employee’s out-of-state remote work situation during the pandemic was not due to the employer’s necessity.
The court further rejected constitutional claims to the application of the convenience rule, finding a government work-from-home mandate did not require work to be done in other states and that the employee’s work for a New York institution established sufficient contacts with the state.
In Matter of Zelinsky v. Commissioner of Taxation and Finance, the State of New York Supreme Court Appellate Division, Third Judicial Department, upheld a determination by the Tax Appeals Tribunal denying New York State personal income tax refund claims for the 2019 and 2020 tax years by Connecticut residents for work performed out-of-state during the COVID-19 pandemic.
The appellate court rejected constitutional and regulatory challenges by Edward Zelinsky, a Connecticut resident and law professor at Benjamin N. Cardozo School of Law in New York City, to New York’s taxation of all his income earned working for the law school for tax years 2019 and 2020.
Zelinsky typically worked three days a week on campus and performed the rest of his work at his residence in Connecticut. He and his spouse had sought tax refunds for withholding attributable to his income earned while working remotely from his residence in Connecticut after then-New York Governor Andrew Cuomo issued an executive order directing nonessential businesses to implement remote work. Zelinsky alleged that the work-from-home mandate altered the application of the convenience of the employer rule, as established in a 2003 case that he also brought (Zelinsky I). He argued that the tax tribunal irrationally determined that the employee’s work from home was not due to the strict necessity of the employer.
Application of the Convenience of the Employer Rule
Under 20 NYCRR 132.18(a), when a nonresident employee performs services both within and outside New York, out-of-state workdays are treated as in-state workdays unless the remote work was undertaken due to the employer’s “absolute necessity”— not the employee’s convenience. The court stated that the “convenience rule aims to prevent nonresident employees from receiving tax advantages that are unavailable to similarly situated New York residents merely by choosing to perform work remotely outside the state.”
While acknowledging that the pandemic and work-from-home mandate disrupted the traditional application of the convenience rule, the court ruled that the test still turns on “the distinction between work that must be performed at a particular site for the employer’s need or benefit and work that could be performed anywhere.” (Emphasis added). The appellate court held that while Zelinsky could not work on campus in New York, the school did not require him to work in Connecticut. The school was “indifferent” to where faculty delivered videoconference lectures or conducted remote meetings, and thus the employer gained no advantage from Zelinsky performing those job duties in another state.
Constitutional Claims Rejected
The appellate court also denied Zelinsky’s claims that the taxation violated the dormant Commerce and Due Process clauses of the U.S. Constitution. The court held that the dormant Commerce Clause, a doctrine inferred from the Constitution that prohibits states from passing laws that discriminate against or excessively burden interstate commerce, failed because “nonresidents do not implicate themselves or their employers in interstate commerce merely by working from home.” While the pandemic forced Cardozo to implement remote work to protect employee and student health, it “did not establish the requisite nexus to Connecticut or any other state by doing so.”
On the due process claim, the court found Zelinsky maintained sufficient minimum connections to New York through his continued employment, professional affiliation, and the tangible and intangible benefits of his position at a New York institution.
Key Takeaways
The decision emphasized that the critical difference for employers’ necessity under New York’s convenience of the employer rule is whether the employee is required to work remotely or required to work out of state. The narrow exception applies only where the employer derives a specific business advantage from the employee’s out-of-state presence—such as proximity to a client site or specialized equipment unavailable in New York.
The government-mandated closure of a New York employer did not automatically create an employer necessity. Although the petitioner in this case was forced to work remotely, the court found that he voluntarily chose to work from an out-of-state location and thus could not claim tax refunds, even if that choice was rational because it was where he normally performed remote work. That choice was not altered by the governor’s work-from-home mandate, as it did not require employees to travel to other states.
Employers with remote or hybrid workforces that span state lines may want to review their tax withholding practices and ensure that their allocation methodologies remain consistent with New York’s convenience-of-the-employer framework as interpreted and applied in this decision.
Instead, the federal government has now repurposed data (through substantial requests) to show intentional discrimination on an individual or systemic basis, which points toward even more serious allegations and enforcement activity.
Quick Hits
The federal government’s shift in enforcement priorities does not amend Title VII, and disparate impact remains actionable under federal and state laws, particularly for private plaintiffs and state regulators.
In rescinding the disparate-impact provisions of federal Title VI regulations, federal agencies expressly kept the data-retention expectation and stated that the data can still prove intentional discrimination.
The same statistics that once supported a disparate-impact claim are now positioned as evidence of intent—the discrimination theory the EEOC says it is prioritizing.
Disparate Treatment, Disparate Impact, and Adverse Impact Analyses
Disparate treatment and disparate impact are the two theories of discrimination under Title VII of the Civil Rights Act of 1964. Disparate treatment is intentional: an employer treats a person less favorably because of a protected characteristic. Disparate treatment is proven through direct or indirect evidence, including data. Disparate impact is effects-based, relying on data to show a facially neutral practice falls more harshly on a protected group, meaning it can be unlawful without proof of intent.
Adverse-impact analysis is not a third theory. It is a statistical method for measuring whether outcomes differ across groups. The method is often treated as applying only to disparate-impact claims, because the four-fifths rule and validation practices were developed in the selection-procedure context. But the statistics produced by an adverse-impact analysis are not tied to a single theory. A pronounced disparity that an employer cannot explain can serve as circumstantial evidence of intentional discrimination as readily as it can establish the impact element of a disparate-impact claim.
An Enforcement Shift Is Not a Change in the Law
Under Title VII, the disparate impact framework is codified: once a plaintiff identifies a particular practice that causes a disparate impact, the burden shifts to the employer to show the practice is job-related and consistent with business necessity, after which the plaintiff may still prevail by identifying a less discriminatory alternative.
That architecture has not been repealed, and an agency cannot repeal it. What has changed is the enforcement posture and the executive branch’s interpretation. The U.S. Equal Employment Opportunity Commission’s (EEOC) National Enforcement Plan redirects the agency’s priorities toward intentional discrimination. And on June 9, 2026, the DOJ’s Office of Legal Counsel (OLC) issued a memorandum opinion concluding that the EEOC’s disparate-impact guidelines are inconsistent with Title VII and raise constitutional concerns. The OLC opinion is an executive branch legal position, not a statute and not a judicial decision, and it does not change Title VII. The opinion also does not eliminate disparate impact so much as reframe it, construing the data as an evidentiary tool for identifying practices that carry a strong inference of intentional discrimination.
The clearest evidence that the data still matters appears in the federal agency rescission documents. Over roughly seven months, a succession of federal agencies rescinded the disparate-impact provisions of their regulations under Title VI of the Civil Rights Act of 1964. The U.S. Department of Justice (DOJ) acted first, in December 2025, and because it coordinates Title VI enforcement across the government under Executive Order 12250, its rule anticipated that other agencies would consider following. Several did.
What matters for employers is what these rules preserved even as they removed disparate-impact liability under Title VI. The U.S. Department of Labor (DOL) rule is the clearest example. While rescinding disparate-impact liability under its Title VI regulations, it left intact the regulatory expectation that recipients maintain the racial and ethnic data available and stated that eliminating the liability “does not preclude the use of data on disparate outcomes to help prove intentional discrimination.” It then drew the distinction directly: using statistical disparity to help establish, as an evidentiary matter, liability for intentional discrimination “materially differs from using it to impose liability for an unintentional disparate impact.” The DOT, USDA, DOJ, and DOI rules used the same language. The repetition across each available rule indicates a deliberate government position rather than an isolated phrase.
The DOL rule was more specific. In describing what it was relieving recipients of, it named the apparatus that Title VII’s selection procedure regime uses, ongoing recordkeeping, adverse-impact monitoring, validation studies, and review of less discriminatory alternatives, and cited the Uniform Guidelines on Employee Selection provisions by number. In removing disparate-impact liability from its own Title VI regulations, the agency cataloged the analytical tools employers have long used and identified the data that remains useful for proving and defending against intent.
The federal government has not told employers that their data is now safe to disregard. It has indicated that the same statistics that once supported a disparate-impact claim may serve as evidence of intentional discrimination, the theory that the EEOC is prioritizing. The data retains its evidentiary force; what has changed is the theory it tends to support.
The DOJ, DOT, USDA, DOL, and DOI rescissions concern Title VI and federally assisted programs, not Title VII employment claims. But the evidentiary logic does not depend on which statute supplies the claim. Disparate outcome data offered as proof of intent operates the same way under either, which is why the same reframing appears in the DOJ’s Title VII opinion and in the agencies’ Title VI rules.
Disparate Impact Enforcement Continues
Even as federal enforcement recedes, disparate impact theory does not disappear.
Private plaintiffs retain an independent right of action under Title VII, unaffected by the EEOC’s enforcement priorities. The employment context differs from the federally assisted program context in an important respect. Under Title VI, the Supreme Court in Alexander v. Sandoval foreclosed a private right of action to enforce disparate impact regulations, which is part of why the Title VI rescissions narrow private exposure in that setting. Title VII contains no equivalent limitation. A reduction in federal enforcement under Title VII does not remove private exposure; it shifts it toward the private bar.
State and local fair-employment agencies are a second forum. Many operate under their own statutes, some of which are more protective than federal law, and several jurisdictions have indicated they will continue to apply disparate-impact analysis regardless of the federal posture, with some moving to reinforce it in response to the federal retreat. An employer operating across jurisdictions may want to consider whether calibrating to the federal posture alone leaves state-law exposure unaddressed.
The courts are a third forum. An enforcement agency can decline to bring a case; it cannot direct a federal court to read disparate impact out of Title VII. The framework remains in effect—and contested—with a recent public retort offered by a group of former EEOC officials.
For employers, the practical consequence follows from these two facts together: the obligation to collect workforce data endures, and that data is now more valuable as evidence, including as evidence of intent. An employer that analyzes its own workforce outside privilege creates a record that may be discoverable, and an unfavorable result in an unprivileged file can become an exhibit. The workable response is not to collect or analyze less, which is neither lawful nor prudent, but to structure the analysis under privilege so exposure can be assessed without generating discoverable material.
Next Steps
Employers may wish to consider the following:
conducting attorney-client privileged analyses of data collection methods and protections, as well as employment decisions, directed by counsel, that identify whether there is a legal risk;
treating adverse-impact analysis as privilege-sensitive from the outset, structuring any selection or adverse-impact review as legal work directed by counsel before it begins, rather than addressing privilege after a problem surfaces;
not mistaking the federal retreat for reduced risk, given the continued availability of private and state-law disparate-impact claims and the reframing of disparate-outcome data as evidence of intent;
accounting for the data’s new evidentiary role, recognizing that demographic and selection data are now positioned as potential proof of intent and may warrant additional care in how it is generated, stored, and analyzed; and
monitoring state and local law, which in several jurisdictions is moving to preserve or strengthen disparate-impact analysis, even as federal enforcement recedes.
This article and more information on how the Trump administration’s actions impact employers can be found on Ogletree Deakins’ Administration Resource Hub.
The German government’s governing coalition issued a reform package that includes labor and employment law proposals that would relax dismissal protections for top earners, provide tax benefits on severance payments for individuals who quickly take up new employment, and eliminate telephone-based sick leave certifications.
The reform package would also allow fixed-term employment contracts without objective grounds for up to forty-eight months and to be extended up to six times.
Relaxation of Dismissal Protection for Top Earners
Under the proposal, starting January 1, 2027, employers would be permitted to dissolve employment relationships with employees whose annual income exceeds 1.75 times the contribution assessment ceiling for statutory pension insurance (Beitragsbemessungsgrenze (BBG)) in exchange for a severance payment. The regulation is to be structured analogously to the “risk-taker rule in the financial sector.” For the aforementioned risk-bearers, the German Banking Act (Kreditwesengesetz (KWG)) stipulates that a motion for dissolution of the employment pursuant to Section 9 (1) sentence 2 of the German Dismissal Protection Act (KSchG) does not require justification (Section 25a (1), No. 5a KWG).
‘Top-Earners’ Defined
Although the published proposal does not specify exactly how annual income is defined, the reference to the regulations for risk-bearers in the financial sector suggests that annual fixed compensation will be the basis for determination. Based on the currently applicable BBG (2026: EUR 101,400), this would mean that the relaxation of dismissal protection would apply to employees with an annual fixed compensation exceeding EUR 177,450.
Proposed Dismissal Protection Rule Provisions
Employers would still be permitted to terminate the employment relationship with top earners without paying severance pay. If the termination is valid, there would still be no entitlement to severance pay unless such a right is provided for by contract or under a collective arrangement (e.g., in a social plan). The proposal provides that if employees file an unfair dismissal claim, the labor court will decide whether to dissolve the employment relationship in exchange for a severance payment only if the dismissal is invalid and one of the parties has filed a so-called application for dissolution.
An application for dissolution allows the labor court to dissolve an employment relationship by judgment despite an invalid dismissal and to order the employer to pay an appropriate severance payment (Section 9 KSchG).
Under current law, an employer’s motion for dissolution is successful only if there are grounds that make it unlikely that continued cooperation would serve the company’s business purposes. Only in the case of executive employees (Section 14 (2), sentence 2 KSchG)—a situation that rarely arises in practice— no grounds for dissolution are required.
Under the proposed regulation, no grounds for dissolution would be required even for top earners who are not executive employees. Rather, the labor court would declare the employment relationship dissolved as of the date on which it would have ended in the event of a socially justified dismissal. At the same time, the court would order the employer to pay an appropriate severance payment. The amount would be determined in accordance with Section 10 KSchG and would generally not exceed twelve months’ earnings.
For older employees with longer periods of service, the current law provides for higher maximum limits: Upon reaching the age of fifty and having at least fifteen years of service, the severance pay may amount to up to fifteen months’ earnings; upon reaching the age of fifty-five and having at least twenty years of service, it may amount to up to eighteen months’ earnings. This increase does not apply if the employee has already reached the standard retirement age at the relevant dissolution date.
The specific amount of the severance pay would be at the court’s discretion and would be based in particular on the duration of the employment relationship, age, earnings, prospects on the job market, and the circumstances of the dismissal.
Effective Date of Relaxation of Dismissal Protection for Top Earners Rule
The proposed regulation would take effect on January 1, 2027. It is currently unclear whether it would apply only to employment contracts concluded on or after that date or to dismissals issued on or after that date.
Tax Benefits for Severance Pay
The reform package would provide tax benefits for severance payments for individuals who promptly take a new gainful activity. The tax benefit is intended to be greater the sooner the employee takes up new employment. Further details are not yet known.
Fixed-Term Employment Contracts of Up to Four Years
Under current law, fixed-term contracts without objective grounds are generally permitted only for up to two years; within this period, they may be extended no more than three times. Under the reform package, this framework would be significantly expanded for employees hired by the end of 2030: fixed-term employment contracts without objective grounds would be permitted for up to forty-eight months and would be permitted to be extended up to six times.
Elimination of the Written Form Requirement for Fixed-Term Contracts
As of January 1, 2027, the written form requirement for fixed-term contracts would be abolished.
Certificates of Incapacity for Work
In the future, employees would be required to submit a certificate of incapacity for work starting on the first day of illness. Currently, this is only required if the incapacity for work lasts longer than three calendar days. However, employers can already require submission earlier than that.
The proposed regulation would not provide any real relief for employers, as in practice, such certificates of incapacity for work are not issued sparingly. With the planned elimination of sick leave certificates issued by telephone, employees would need to make greater efforts to obtain a certificate of incapacity for work, and misuse would likely be reduced.
Takeaways
The reform package shows that progress is being made on key labor law issues. Further measures—such as simplifying national data protection regulations, utilizing leeway within the European Union’s General Data Protection Regulation (GDPR), reducing the number of in-house data protection officers in small and medium-sized enterprises, and facilitating the simplified and faster implementation of software along with updates and upgrades in accordance with the works council’s co-determination rights—are also to be initiated. The legislative process will therefore be worth watching for employers.
The German government’s Pensions Commission has presented thirty-three recommendations that the government intends to address and implement promptly.
Mini-jobs would largely lose their special status under tax and social security law; special provisions for midi-jobs could also be eliminated.
The standard retirement age for eligibility for old-age pensions would rise moderately after 2031, while incentives for early retirement are to be reduced.
Current Status: Reform Package, but No Law Yet
The commission’s recommendations are, for now, political proposals. Concrete implementation—such as through legislative procedures—is still pending. Nevertheless, the proposed key points are notable because they may affect typical human resources and compensation structures—and because the federal government has sent a clear signal that it intends to implement all proposals.
At the heart of a potential reform is the goal of placing the statutory pension system on a more stable long-term financial footing and broadening Germany’s overall retirement savings framework beyond the statutory pension. To that end, occupational and private retirement plans are expected to play a greater role in the future. Furthermore, the commission recommended introducing a statutory funded pension with individual capital accounts.
Mini-jobs: End of Special Status?
Of particular relevance to employers is the commission’s proposal to largely abolish mini-jobs. These marginal employment relationships are currently subject to a special tax and contribution regime. Only relatively low flat-rate contributions are payable into the statutory pension insurance system. Individuals in mini-jobs can apply to be exempted from mandatory pension insurance. In the future, marginal employment relationships would be included in the statutory pension insurance system with higher contributions, without this opt-out option. Furthermore, their special status under tax and social security law is to be abolished, meaning that higher social security contributions will also apply in this regard. Exceptions would be possible only for school students. As a result, the current transition range for so-called midi-jobs (employment relationships with gross monthly compensation above the marginal earnings threshold and currently not exceeding EUR 2,000 gross per month) could also be eliminated; in this category, employees currently pay reduced social security contributions.
Depending on the industry, employers may face significant effects on workforce planning. Particularly in sectors where many people work in mini-jobs—such as retail, hospitality and food service, or logistics—recruiting staff could become more difficult. This is because higher taxes and social security contributions are likely to make mini-jobs (possibly in addition to another job subject to social security contributions) less attractive to many people.
Retirement Age: No Immediate Increase in the Retirement Age, but a Gradual Rise
There are no plans to immediately increase the retirement age from the current age of sixty-seven. However, the commission recommended gradually linking this standard retirement age to rising life expectancy starting in 2031. Based on current projections, this could mean an increase of approximately six months per decade.
At the same time, the pension without deductions for individuals with particularly long contribution histories (“Pension at 63: (“Rente mit 63”)) would be abolished. The age limit for the earliest possible retirement for individuals with long contribution histories (with corresponding benefit reductions) would be raised from sixty-three to sixty-four years of age and later adjusted in parallel with the increase in the standard retirement age.
Employer-Sponsored Retirement Plans
There are also plans to strengthen employer-sponsored retirement plans. To this end, a social dialogue (Sozialpartnerdialog) is scheduled to take place later this year, which is intended to help increase the currently below-average coverage of occupational pension plans. This is to be achieved by reducing bureaucratic hurdles, improving the portability of pension entitlements between employers and systems, and enhancing legal certainty. For employers, this could also present an opportunity in the medium term to reposition occupational pension plans as a tool for retaining employees.
Takeaways
Pension reform has not yet been adopted, but the Pensions Commission’s proposals show that the issue is now gaining momentum. The planned changes regarding mini-jobs, the reform of the pension system, and occupational pension plans are especially noteworthy.
Specifically, the EEOC identified ten actions it intends to pursue, including regulatory proposals to rescind the Uniform Guidelines on Employee Selection Procedures (UGESP), eliminate the annual EEO-1 report, and withdraw long-standing interpretive guidance on affirmative action and national origin discrimination. The EEOC’s regulatory agenda, as released in its latest submission in the federal Unified Agenda of Federal Regulatory and Deregulatory Actions, is a statement of the agency’s intent, but is not a change in existing law.
Quick Hits
The regulatory agenda released signals the agency’s intent. These are planned actions at the proposed or final stage. The first, the rescission of the 1979 affirmative action guidelines, occurred on July 6, 2026, via a final interpretive rule published in the Federal Register, but most of the agenda, including the more consequential proposals for employers, has not been issued, and several items must still go through notice and comment before they take effect.
Title VII remains unchanged. Every rescission on the EEOC’s regulatory agenda withdraws an agency guideline or report. Title VII, including its disparate-impact framework, remains in force and enforceable by private plaintiffs and state agencies.
Rescinding the Uniform Guidelines removes the employer’s validation safe harbor while leaving the statutory disparate-impact liability intact. Employers may wish to keep collecting and analyzing workforce data and retaining validation records, all under attorney-client privilege, because the potential legal exposure persists.
What Was Published and What It Is
Each spring and fall, the federal government publishes the Unified Agenda of Federal Regulatory and Deregulatory Actions, and agencies contribute their regulatory plans identifying rules scheduled for review, development, or finalization over roughly the next twelve months. The agenda provides transparency into an agency’s priorities. It does not carry legal force. An entry on the agenda is a plan to regulate, not a regulation. Further, the dates listed in the agenda are aspirational in nature, rather than hard-and-fast deadlines.
Under the Administrative Procedure Act, a substantive rule generally does not bind anyone until it has completed the required process and been published by the Office of the Federal Register with an effective date. Most final rules carry a minimum thirty-day delay before taking effect. Proposed rules must first go through a public comment period, and an agency can modify, delay, or abandon a proposal in response to comments or intervening events. Recent experience underscores the point: an approval briefly posted to the government’s own review website in June 2026 was corrected within days. Agenda entries and even completed Office of Management and Budget (OMB) actions can shift. Acting as though a proposal is already law risks noncompliance with obligations still in force, wasted effort, and exposure if the rule changes or does not survive. Nevertheless, the regulatory agenda may inform and educate employers on enforcement priorities and legal interpretations adopted by the EEOC.
The Ten Items
The agenda’s ten EEOC items fall into two groups by stage. Items at the final rule stage are further along; items at the proposed rule stage must still complete the notice-and-comment process. Interestingly, EEOC has not made any of the entries listed in the final rule stage available for public comment.
Adjust notice-posting penalty for inflation (29 C.F.R. 1601.30)
3046-AB42
Final
Final July 2026
Selection-Procedure Rescissions (UGESP)
The two most consequential items for workforce analytics concern the Uniform Guidelines on Employee Selection Procedures (UGESP), and they are on different tracks. The first (RIN 3046-AB43) would rescind the interpretive rulemaking portions of UGESP, the long-standing validation framework that tells employers how to demonstrate that a selection procedure with an adverse impact is nonetheless job-related and consistent with business necessity. The RIN places it at the final rule stage, with the agenda projecting a final action in November 2026 and an effective date in January 2027; however, no final rule has yet been issued. The EEOC’s own abstract states that this action “would not impact other agencies’ interpretation and application of UGESP,” a limitation on the rescission’s reach that appears in the entry itself.
A separate proposal (RIN 3046-AB45) would rescind the UGESP recordkeeping requirements, the obligation to retain validation documentation, and the requirement to retain records permitting analysis of selection procedures by race, sex, and ethnicity. It is only at the proposed stage and must still go through the notice-and-comment process.
The practical significance is narrower than the headline suggests. Even if both are finalized, Title VII of the Civil Rights Act of 1964’s prohibition on discrimination and its statutory disparate-impact framework, codified in the 1991 Civil Rights Act, remain in place. What the rescissions remove is the agency’s roadmap for validating a challenged selection procedure, not the underlying liability. An employer with a selection procedure that produces an adverse impact still faces exposure from private plaintiffs and state regulators. Attorney-client privileged self-analysis may become more valuable with less official guidance.
Disparate impact is a statutory burden-shifting framework: once a plaintiff shows that a particular selection procedure causes a disparate impact, the employer must prove the procedure is job-related for the position in question and consistent with business necessity. Both halves of that framework, the plaintiff’s claim and the employer’s defense, live in the statute, and neither is removed when the EEOC withdraws its guidelines. What UGESP supplied was not the defense itself but the standardized method for proving it: a defined validation methodology and an agency-sanctioned framework that courts had long treated as the accepted way to demonstrate business necessity. Rescinding the guidelines does not eliminate the business-necessity defense, but it withdraws the safe harbor and the validation roadmap employers relied on to establish it.
One question remains genuinely open: whether courts will continue to treat UGESP’s validation principles as persuasive even after the guidelines are rescinded. Those principles reflect decades of validation science and Supreme Court of the United States precedent, and they may well continue to inform judicial analysis of business necessity as a matter of established practice, regardless of the regulation’s status. That uncertainty is itself a reason for caution. An employer that dismantles its validation records now, on the assumption that they no longer matter, may find them essential to a defense that still exists and may still be judged by the same standards.
EEO Reporting Rescission (EEO-1 and Companion Reports)
Another EEOC regulatory proposal (RIN 3046-AB37) would rescind the EEO-1 and its companion reports (EEO-2 through EEO-5) at 29 C.F.R. 1602. The EEO-1, which is filed annually, requires private-sector employers with one hundred or more employees to report employee data by job category and by sex, race, and national origin. The agency frames these as agency-created data collections that Title VII authorizes, but does not require, imposing a significant burden. The EEOC cites an estimated 5.2 million reporting hours and roughly $273 million in annual employer costs from its May 2023 Paperwork Reduction Act (PRA) notice. The agenda also notes that, with the revocation of Executive Order 11246, the EEOC no longer has authority to collect contractor data for the Office of Federal Contract Compliance Programs (OFCCP) through the EEO-1.
This proposal is expected to be released in July 2026, with a comment period projected to run into September 2026 (though, as noted above, these dates are prone to delay). As a practical matter, the proposal raises questions about the timing of the 2025 EEO-1 filing cycle and whether those reports will ultimately be collected. Employers should not assume current reporting obligations have changed until the EEOC takes further action. Rescinding the report also does not eliminate the separate duty to collect and maintain applicant and workforce data, and the agency has continued to obtain such data through enforcement and to penalize employers that lack these records.
Interpretive-Guideline Rescissions (Affirmative Action, National Origin, and Sex Discrimination)
Three items withdraw older interpretive guidance that the EEOC views as outdated. The first (RIN 3046-AB39) rescinds the 1979 affirmative action interpretive rule as inconsistent with intervening case law. This is the first of the agenda items to reach publication: the rescission was published in the Federal Register on July 6, 2026, confirming that the agency is moving on its final-stage items on the timetable the agenda projected. A second (RIN 3046-AB40) rescinds the 1980 national origin guidelines, and the agency’s stated rationale is instructive for the broader theme: it explains that the guidelines’ presumption that English-only rules can violate Title VII conflicts with the 1991 amendments, which place the burden on the plaintiff to prove that a specific practice causes a disparate impact. In other words, the agency is grounding the rescission in the statutory disparate-impact framework, the very framework that survives all of these changes. A third (RIN 3046-AB44) rescinds the appendix to the sex-discrimination guidelines, a 1979 interpretation of the Pregnancy Discrimination Act that predates the 2022 Pregnant Workers Fairness Act (PWFA). All three are at the final stage.
Pregnant Workers Fairness Act Revisions
A proposal (RIN 3046-AB36) would revise the EEOC’s PWFA regulations, including the interpretation of “pregnancy, childbirth, or related medical conditions.” It is at the proposed stage, with an NPRM projected for November 2026 and comments due in January 2027. Because this is a revision to regulations implementing a statute, employers may wish to watch the specific regulatory text closely when the NPRM issues (though any changes to the existing implementing regulations would only become effective after the rule is finalized).
Administrative Items (Records, Fair Employment Practice Agencies, and Notice-Posting Penalty)
Three of the regulatory agenda items are administrative. A records proposal (RIN 3046-AB38) would revise the availability-of-records rules, including public reading room requirements and charge-file requests. A procedural rule (RIN 3046-AB41) would move the list of designated fair employment practice agencies—state and local agencies that often partner with the EEOC to enforce antidiscrimination laws—from the regulation to the agency’s website. A final item (RIN 3046-AB42) is the annual inflation adjustment to the notice-posting penalty, a routine statutory requirement. These carry a limited direct compliance impact for most employers.
Two Cautions the Agenda Does Not Mention
Two risks sit outside the four corners of the agenda but bear directly on how employers may wish to respond.
The first concerns the state-law implications. Every item on this agenda is federal deregulation, but state and local law are moving in the opposite direction in some areas, with some existing laws and enactments that are more protective than federal law. As the EEOC withdraws federal guidelines and proposes to end federal reporting, a growing number of jurisdictions are expanding pay-data reporting, mandating bias audits for automated hiring tools, and applying their own disparate-impact standards through active state enforcement. An employer that reads the federal rollback as a general green light and eases its compliance posture accordingly may step directly into state and local exposure that the federal changes do nothing to reduce. For multistate employers in particular, the practical compliance floor is increasingly set by the most demanding jurisdiction, not by federal law.
The second is the risk of treating a rescinded requirement as a reason to discard records. Even where a recordkeeping obligation is withdrawn, an employer’s litigation hold duties and its practical need to defend against claims do not disappear. Records that a rescinded rule once required may remain essential to defending a disparate treatment or impact claim, a pay-equity challenge, or a systemic investigation, and destroying them because the retention mandate has lapsed can create spoliation risk and strip an employer of its own best evidence. The end of a requirement to keep records is not permission to purge them.
Next Steps
The recurring theme across all ten items is that a plan to regulate is not a regulation. Employers may wish to consider the following:
Not dismantling compliance infrastructure in anticipation. Because none of these items changes current law, discontinuing data collection, altering selection-procedure validation practices, or unwinding programs now may create risk under obligations that remain fully in force.
Continuing to collect and analyze workforce data under privilege. The statutory disparate-impact framework and private and state-law claims survive every item on this list. Privileged, counsel-directed analysis remains the most reliable way to understand and manage exposure, and it becomes more important as official validation guidance recedes.
Retaining validation and workforce records. Even where a retention requirement is proposed for rescission, existing litigation-hold duties, and the need to defend claims may make those records essential. Rescission of a requirement is not a reason to destroy the underlying documentation.
Weighing the cost of reversal. Agency positions can be litigated or revisited by a future administration, as prior guidance has been. An employer that dismantles infrastructure now may have to rebuild it later, and the cost of overcorrecting and reversing is real.
Monitoring the proposed-stage items and their comment periods. The EEO-1 rescission, the UGESP recordkeeping rescission, the PWFA revision, and the records-availability revision must all go through a notice-and-comment process, and the final text may differ from the proposal, so building to a proposed rule is premature. Employers and trade associations may wish to consider whether to submit comments.
Tracking effective dates, not agenda dates. The agenda’s projected dates are planning estimates. Employers should not assume that any current obligation has changed until the EEOC takes further action, because obligations change only when a final rule is published with an effective date, and most carry a delay before taking effect.
Distinguishing the guideline from the statute in internal communications. Where internal stakeholders may read headlines as “disparate impact is gone,” counsel may wish to clarify that the theory remains statutory and enforceable regardless of the guidelines’ status.
Conducting this assessment under privilege. An employer’s own analysis of how these changes affect its exposure is exactly the kind of candid self-assessment that can become discoverable. Employers may wish to route that analysis through counsel for the purpose of legal advice.
The EEOC’s regulatory agenda tells employers where the agency intends to go. It does not tell them the law has changed, because it has not. A steady, well-documented, privileged compliance posture is the surest footing while these proposals move through the process, if they move at all.
This article and more information on how the Trump administration’s actions impact employers can be found on Ogletree Deakins’ Administration Resource Hub.
The New York Court of Appeals clarified that, pursuant to New York Labor Law § 220, contractors on public projects in New York must pay prevailing wages even if the contract does not promise to pay prevailing wages.
The court found that any agreement in a public works contract to shorten the statute of limitations governing third-party claims for prevailing wages is not enforceable.
Prevailing wages may apply to work performed on state-funded projects and federally funded projects.
Background on the Case
In this case, a company employed technicians who install, maintain, inspect, test, repair, and replace fire alarms, fire sprinklers, and security system equipment. The company entered contracts for fire alarm testing and inspection services with various New York public works projects. The contracts included a clause stipulating that no lawsuits could be brought against the company more than one year after accrual of the cause of action. Some contracts indicated that prevailing wages were not required, and some contracts indicated that a revised agreement would be needed if prevailing wages applied. Other contracts were silent on the matter of prevailing wages.
A group of technicians brought a class action against the company, claiming failure to pay prevailing wages and required overtime pay under the Fair Labor Standards Act (FLSA) and New York law. This included a third-party beneficiary breach of contract claim.
The company argued that the contracts did not explicitly confirm that the plaintiffs were entitled to prevailing wages. It also argued that the claims were time-barred due to the shortening of the statute of limitations in the contract, and the plaintiffs’ testing and inspection work is not subject to the prevailing wage requirements under New York Labor Law § 220 (NYLL).
Court Rulings
In February 2020, the U.S. District Court for the Northern District of New York granted the company’s motion for partial summary judgment on the prevailing-wage-related claims. However, in September 2025, the U.S. Court of Appeals for the Second Circuit held that the plaintiffs were entitled to prevailing wages in part because their work qualified as construction, maintenance, or repair work.
The Second Circuit then certified two questions to the New York Court of Appeals for review and determination. First, whether “the promise to pay prevailing wages is implicit in every public works contract so that individuals employed on public works projects may sue their employers for breach of contract to enforce the prevailing wage requirement under [Labor Law] § 220 even if the employer’s written contract does not include the statutorily required promise to pay prevailing wages.” Second, whether “agreements to shorten the statute of limitations in public works contracts to one year [are] enforceable against works bringing third-party beneficiary breach of contract claims to enforce the prevailing wage law,” which is governed by a three-year statute limitation. The answer from the New York Court of Appeals was yes to the former and no to the latter.
As to the first question, the court held that Labor Law § 220 requires that all public work contracts contain a provision that a worker shall be paid “not less than the prevailing rate for a day’s work in the same trade or occupation in the [relevant] locality within the state.” Thus, the “the statute’s promise to pay prevailing wages is inserted into every covered public works contract by operation of law for covered workers’ benefit,” regardless of the actual language contained in the contract. The court held that because this promise was for the benefit of covered workers, individuals employed on public works projects were third-party beneficiaries who could sue their employers for prevailing wages.
The New York Court of Appeals noted that, “under normal circumstances,” parties may prescribe a shorter statute of limitations by written agreement. “However, in the unique context of third-party claims to enforce Labor Law § 220’s prevailing wage requirements, the contractual benefit flows from a statutory comment.” The court reasoned that “to allow contracting parties to limit workers’ ability to recover prevailing wages would be plainly inconsistent with the statute’s purpose.” Accordingly, any agreement to shorten the three-year statute of limitation governing third-party prevailing wage claims is not enforceable.
Key Takeaways
Contractors that work on public projects in New York may wish to carefully review the language concerning prevailing wages in their contracts. Going forward, public works contracts in New York will be presumed to provide prevailing wages, and any provisions attempting to shorten the limitation period for claims over prevailing wages will not be enforceable.
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