On February 18, 2026, the U.S. General Services Administration (GSA) released a draft revised Supporting Statement providing the text of this proposed certification, which would be added to the registration process for the System for Award Management (SAM.gov), the federal database where entities must register to receive federal funding.

The certification requirement implements Executive Order (EO) No. 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” and the U.S. attorney general’s July 2025 memorandum, “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination” (AG Memo). While this proposal targets financial assistance recipients, a similar certification for federal contractors is expected in the near future. Public comments are due by March 30, 2026.

Quick Hits

• Organizations receiving federal financial assistance will likely be required to certify that their DEI-related programs do not violate federal antidiscrimination laws.
• The certification carries significant liability exposure, including False Claims Act liability for organizations and potential criminal liability under 18 U.S.C. § 1001 for authorized officials who sign.
• Public comments are due by March 30, 2026; federal contractors may also wish to monitor this proposal, given that a parallel certification requirement is expected.

Context

The draft statement provides a redline (see page 8) of the draft Financial Assistance General Certifications and Representations to be accepted by entities registering on the System for Award Management (SAM.gov) to receive federal financial assistance. The draft statement explains that the revisions to the Financial Assistance General Certifications and Representations are intended to align with updated executive branch guidance, including the AG Memo, and with EO 14173.

This alignment has practical implications, as agencies across the federal government would rely on a single set of baseline certifications in SAM.gov for assistance recipients, potentially reducing fragmentation in agency-specific terms. As we have noted previously, federal contractors are subjected to varying EO 14173 certifications. In addition, the draft statement also reaches beyond the antidiscrimination landscape—though that remains the most prominent piece.

The New DEI Certification

A central feature of the draft statement is the DEI-related certification. The text affirms that federal antidiscrimination laws apply to programs or initiatives that involve discriminatory practices, including those labeled as “diversity, equity, and inclusion” (DEI) or “diversity, equity, inclusion, and accessibility” (DEIA), and specifically references prohibitions on discrimination based on race or color. Notably, there is no reference to sex, age, disability, veteran status, or various other categories protected from discrimination.

The draft offers examples of practices that may violate federal antidiscrimination laws, including:

• preferential treatment based on race or color, such as race-based scholarships or preferential hiring or promotion practices;
• segregation by race or color in trainings, facilities, or program eligibility;
• the use of race or color as criteria, such as in “diverse slate” hiring policies, race-based contract selection, or allocation of program resources;
• training programs that stereotype, exclude, or single out individuals based on protected characteristics or that create a hostile environment; and
• retaliation against employees, participants, or beneficiaries who raise concerns or refuse to participate in programs they reasonably believe are discriminatory.

The examples do not import the AG Memo’s articulated focus on unlawful proxy discrimination. Yet, the examples do warn against “implicit segregation through program eligibility” and “resources based on race or ethnicity, including through the use of ‘cultural competence’ requirements, ‘overcoming obstacles’ narratives, or ‘diversity statements.’”

While the AG Memo acknowledges that not all initiatives characterized as “DEI” are unlawful, the inclusion of these examples at the certification level signals heightened federal scrutiny of practices that differentiate or allocate opportunities based on protected characteristics. Indeed, by embedding these examples within the SAM.gov certification itself, GSA would seemingly elevate what has been advisory guidance and enforcement criteria into a uniform, up-front grantee attestation.

However, the draft language may create confusion by focusing exclusively on race—rather than any other protected characteristics such as sex—and, even then, referring variously to “race or color,” “race-based,” and “race or ethnicity.”

Additional Certifications Beyond DEI

Beyond DEI, the draft adds certifications that recipients:

• “[w]ill not knowingly bring or attempt to bring to the United States, transport, conceal, harbor, shield, hire, or recruit for a fee an illegal alien, and will not induce an alien to enter or reside in the United States with reckless disregard [of unlawful status]”; and
• “[w]ill not fund, subsidize, or facilitate violence, terrorism, or other illegal activities that threaten public safety or national security.”

The draft also consolidates compliance attestations to a non-exhaustive list of federal statutes and regulations applicable to financial assistance, including the Trafficking Victims Protection Act of 2000; drug-free workplace requirements for federal grant recipients; whistleblower protections at 41 U.S.C. § 4712; the National Environmental Policy Act of 1969; 2 C.F.R. parts 25, 170, and 180; various false claims and false statement provisions; the Administrative False Claims Act of 2023; and key civil rights laws such as Title VI of the Civil Rights Act of 1964, Title VIII of the Civil Rights Act of 1968, Title IX of the Education Amendments of 1972, Section 504 of the Rehabilitation Act of 1973, and the Age Discrimination Act of 1975.

Important Framing Elements and Liability Exposure

The draft contains two notable framing elements. First, it states that to the extent any certification is the subject of an active court order or injunction that is legally binding on the recipient and the relevant awarding agency, and that prohibits enforcement of such requirements, the affected certification will be deemed inapplicable to that recipient while all other certifications remain in force.

Second, and critically for compliance officers and executives, the draft closes with an acknowledgement that the authorized official may face criminal liability under 18 U.S.C. § 1001 and civil liability under the False Claims Act for misrepresentations to the government. This creates significant personal exposure for individuals responsible for signing these certifications on behalf of their organizations.

Public Comments

To date, all comments have focused on the EO 14173 and DEI aspects of the proposed certification. In particular, comments are focused on the implications for grantees, particularly for healthcare-focused fields, including health, behavioral health, substance use, reentry, and social service programs, where grants and research often target particular populations and have defined performance outcomes.

Next Steps

Federal grantees may want to offer comments by the March 30, 2026, deadline. Further, they may want to conduct privileged EO 14173 reviews, policy audits, and privileged bias assessments to ensure a good-faith basis for certifying. All federal contractors will want to carefully monitor this proposal, as the proposed Federal Acquisition Regulation–related clauses may use similar language.

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

For more on this topic, please join us for our upcoming webinar, “FAR Overhaul: Tips to Survive the Biggest Procurement Shake-Up in 40 Years,” which will take place on Tuesday, March 3, 2026, from 2:00 to 3:00 p.m. EST. The speakers, Joseph E. Ashman and T. Scott Kelly, will provide important information for employers doing business with the federal government. Register here.

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

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Quick Hits

• New York City’s Department of Consumer and Worker Protection (DCWP) published updated FAQs and form notices in light of the amended ESSTA.
• Thirty-two hours of unpaid safe and sick time is available immediately to current employees and new hires.
• Twenty hours of paid prenatal leave is available immediately to current employees and new hires.
• Employers are required to provide documentation on use and accrual of unpaid and paid safe and sick and paid prenatal leave each pay period.

Overview

As previously reported, on October 25, 2025, New York City adopted Int. No. 0780-2004, which amended the ESSTA. The amendments expanded covered reasons to use ESSTA and provided for a separate bank of thirty-two hours of unpaid safe and sick leave and codified the requirement that employers provide a separate bank of twenty hours of paid prenatal leave. The ESSTA amendments also scale back employer obligations under the Temporary Schedule Change Law (TSCL), which required employers to grant two temporary schedule changes annually for personal events. The DCWP’s updated FAQs provide clarification and guidance regarding the ESSTA amendments on several areas, which are highlighted below. The DCWP has also rebranded unpaid and paid safe and sick leave as “Protected Time Off” while reiterating that paid prenatal leave is a separate benefit and in addition to protected time off.

Immediate Unpaid Safe and Sick Leave for Current Employees and New Hires

In addition to paid safe and sick time, the ESSTA amendment requires all employers, regardless of size or net income, to provide thirty-two hours of unpaid safe and sick time or “protected time off” to employees. As drafted, the amendment stated that the unpaid safe and sick time would be available immediately upon hire and subsequently on the first day of the employer’s calendar year.

The FAQs clarify that, as of February 22, 2026, employers must provide thirty-two hours of unpaid safe and sick leave for immediate use to all current employees, in addition to new hires. Additionally, employers must provide another bank of thirty-two hours of unpaid protected time off on the first day of the employers’ calendar year. The FAQs also clarify that employers cannot provide a prorated amount of immediately available hours when an employee is hired partway through the calendar year.

Additionally, the FAQs clarify that if an employer provides an additional thirty-two hours of paid time off benefits over and above what is required of the employer by the ESSTA, and makes those thirty-two hours immediately available for use, the employer does not need to create a separate leave bank for the unpaid thirty-two hours required by the ESSTA amendment.

Pay Statement and Recordkeeping Requirements

The FAQs provide additional guidance on the recordkeeping requirements for unpaid safe and sick leave and paid prenatal leave. For each pay period, employers must include the amount of unpaid protected time off available for use in a calendar year. The employer can include this information on pay stubs or other documentation provided to the employee for each pay period. Pursuant to the FAQs, for each pay period an employee uses paid prenatal leave, the employer must provide the amount of paid prenatal leave used during the pay period and the total amount of paid prenatal leave still available for use in the fifty-two-week period. Such information may be provided on pay stubs, in other documentation to the employee for the pay period, or in separate written documentation.

Temporary Schedule Change Law

As previously reported, the ESSTA amendments scaled back the requirements under the TSCL. Under the TSCL, employers were required to grant two temporary schedule changes annually for personal events. The ESSTA amendments expanded leave coverage to include the personal events covered by the TSCL and replaced the required grant of schedule changes with thirty-two hours of unpaid leave. While employees may still request temporary schedule changes instead of taking protected time off, such as working remotely, swapping shifts, or changing the time or location of their work shift, employers are no longer obligated to approve them but can approve, deny, or propose an alternative to such a request.

Updated Model Notices

The DCWP also published updated versions of the Notice of Employee Rights and the Workers’ Bill of Rights, which employers must distribute to their employees and post in the workplace by March 8, 2026.

The updated Notice of Employee Rights outlines employer obligations for paid prenatal leave as well as the expanded uses for paid and unpaid protected time off, the amount and accrual rate for paid and unpaid protected time off and paid prenatal leave, and a statement against retaliation.

In addition, the Workers’ Bill of Rights has been updated to incorporate the amendments to the ESSTA and TSCL.

Rules for Protected Time Off Policies

The DCWP also published Rules for Protected Time Off Policies. Employers are required to have a written paid time off policy, and paid prenatal leave policy and sick policies are required to be included in that single document. The policy rules also outline information that must be included in an employer’s policy, including, but limited to, an explanation of accrual, front-loading, carryover calculations, and policies and procedures for using protected time off and paid prenatal leave. Employers may want to update their policies and distribute them to employees by March 8, 2026.

Next Steps

Employers in New York City or with employees in New York City may wish to review and revise relevant leave-related policies and procedures to reflect the ESSTA amendments and updated FAQs. Employers may also wish to educate and train supervisors and human resources professionals on these changes to ensure their compliance, as well as update existing practices to align with the above requirements. In addition, employers may wish to review their pay statement practices and other recordkeeping policies and procedures to ensure they comply with the new requirements.

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

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

Leslie A. Lajewski is a shareholder in the Morristown office of Ogletree Deakins.

Jamie Haar is of counsel in the New York office of Ogletree Deakins.

Emily A. Hall is a 2025 graduate of the Cardozo School of Law and is currently awaiting admission to the State Bar of New York.

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Quick Hits

• Several new developments could impact the employment of military service members and their families and employers’ compliance obligations in 2026.
• Changes range from proposals to increase incentives for hiring military spouses to enhanced employment protections for service members while on duty.
• Military spouse employment opportunities and support remain a focus for pending legislation.

1. Military Spouse Employment

One key area to watch is bipartisan legislation to reduce the unemployment rate among spouses of active-duty military service members, who often face rates several times the national rate.

On November 20, 2025, Senators Bill Cassidy (R-LA) and Maggie Hassan (D-NH), and Representatives Steven Horsford (D-NV) and Lloyd Smucker (R-PA) introduced an updated version of the Improve and Enhance the Work Opportunity Tax Credit Act (S.3265/H.R.6231) that would extend the Work Opportunity Tax Credit (WOTC) to military spouses. The WOTC provides federal tax credits to employers that hire certain “American job seekers who have consistently faced barriers to employment.” That proposed legislation is similar to the Military Spouse Hiring Act (H.R.2033/S.1027), introduced earlier in 2025.

For employers, the proposals could create new tax incentives to hire military spouses, alongside other proposals that could reshape compliance and hiring strategies.

2. Frequent Relocations

Frequent relocations continue to strain military families and can make it more challenging for employers to hire and retain military spouses. Expanding the WOTC could create new incentives for employers to hire military spouses and tap into this underutilized talent pool.

In addition, the Supporting Tours Across Years (STAY) Act (H.R.6146), introduced in November 2025,  seeks to limit relocations of active-duty servicemembers. The bill would require a comprehensive review of official transfers of active-duty service members, known as Permanent Change of Station (PCS), to determine when relocations may be unnecessary and to reduce the frequency of moves. The U.S. Congress has not yet taken up the STAY Act this year, but if it is eventually enacted, it could result in reduced PCS moves that could affect recruiting, retention, and remote-work policies for military spouses.

3. Military Re-Employment Protections

Federal law already provides civilian employment leave protections for veterans and service members who are involuntarily or voluntarily deployed for military service. The Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) entitles service members who meet certain conditions to be restored to the same job and benefits they had prior to their military service and allows them to elect to continue their employer-based health plan coverage for themselves and their dependents for up to twenty-four months while on leave.

In January 2025, Congress enacted the Senator Elizabeth Dole 21st Century Veterans Healthcare and Benefits Improvement Act (Dole Act), which included provisions affecting USERRA enforcement and remedies. The Dole Act bolstered anti-retaliation protections and allowed plaintiffs alleging USERRA violations to seek minimum liquidated damages of $50,000 and attorneys’ fees.

Agencies and courts may continue to interpret and apply the Dole Act’s USERRA-related provisions. Employers may want to ensure their military leave and reemployment policies, training, and escalation procedures align with current USERRA obligations and emerging guidance.

4. New Employer Resources

In January 2025, the U.S. Department of Labor’s Veterans’ Employment and Training Service (DOL/VETS) launched a program for employers to seek guidance for ensuring compliance. The Support and Assistance for Leaders in USERRA Training and Employment (SALUTE) program is an opportunity for employers to request technical guidance on USERRA-related questions or specific issues in their workforce before the onset of a DOL/VETS complaint or lawsuit.

Next Steps

Employers may want to prepare for potential 2026 activity by assessing policies and practices affecting servicemembers, veterans, and military families. Priority actions include reviewing USERRA compliance programs and training, updating military leave and reemployment policies, validating health-benefit continuation procedures, and aligning hiring and tax-credit screening processes to quickly capture new incentives for military spouses.

Ogletree Deakins’ new Military Workforce Practice Group brings together a team of lawyers, many of whom are veterans or currently serving in the Reserves or National Guard, who regularly advise on USERRA compliance, policy development, multistate implementation, and investigations and litigation. Amy Quick Glenos and James A. Patton, Jr. co‑chair the group.

In addition, the Ogletree Deakins Client Portal covers new laws and developments in Military Leave. All client-users have access to Snapshots and Updates. Premium subscribers have access to details, updated templates, and other resources. For more information on the Client Portal or a Client Portal subscription, please reach out to clientportal@ogletree.com.

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

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Quick Hits

• The Regional Labor Court of Hamburg’s ruling in a case involving the termination of a radiation protection officer underscores the importance of verifying an employee’s scope of duties before assigning the employee a task.
• Only the failure to comply with directions that fall within an employee’s area of responsibility can give rise to consequences under employment law, such as written warnings and, where applicable, termination.

The Facts—Dispute Over Gender-Neutral Radiation Protection Instruction

The employee is a qualified chemist employed by the German Federal Maritime and Hydrographic Agency (Bundesamt für Seeschifffahrt und Hydrographie (BSH)), where she had been appointed as a radiation protection officer. The BSH issued two written warnings against the employee and subsequently effected an extraordinary termination with a notice period. The reason: She had failed to amend a radiation protection instruction despite her manager’s direction to do so. Specifically, she was required to revise the document to incorporate gender-sensitive language and to include a particular clarification.

The Decision—No Valid Direction

At first instance, the Labor Court of Hamburg (Arbeitsgericht (ArbG)) had already ruled that the written warnings must be removed from the employee’s personnel file (Ref. No. 4 Ca 62/25) and that the termination was invalid (Ref. No. 4 Ca 53/25). The BSH appealed both judgments to the LAG—without success.

On February 5, 2026, the LAG upheld the first instance judgments. Notably, the court did not address whether the employee could have been validly directed to use gender-sensitive language in the radiation protection instruction. The termination failed at an earlier stage of the legal analysis: The employee was under no obligation to make amendments to the radiation protection instruction at all.

In the present case, no such obligation arose either from the employment contract in conjunction with the job description underlying her position, or from a valid delegation of duties pursuant to section 70(2) of the Radiation Protection Act (Strahlenschutzgesetz) in conjunction with section 43 of the Radiation Protection Ordinance (Strahlenschutzverordnung). In short: Amending the radiation protection instruction simply did not fall within the employee’s scope of duties. Consequently, her refusal to make the amendments could not trigger any consequences.

Key Takeaways

This judgment underscores the importance of determining whether tasks fall within the scope of duties of the relevant employee. Only where this is the case can failure to comply with corresponding directions give rise to consequences under employment law.

Julia Kulmegies is an associate in the Berlin office of Ogletree Deakins.

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

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

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Quick Hits

• Providing a company vehicle to works council members in Germany for private use constitutes prohibited preferential treatment within the meaning of Section 78 sentence 2 BetrVG if it is granted solely by reason of their office.
• If the company vehicle is subsequently withdrawn from the works council member, the member cannot claim compensation for the loss of private use, as the underlying vehicle use agreement is void from inception under Section 134 of the German Civil Code (Bürgerliches Gesetzbuch (BGB)) due to the violation of the prohibition against preferential treatment.

The Case—Company Car With Private Use for a Works Council Member

The plaintiff is employed by the defendant as a store manager and has been, as a works council member, on garden leave for several years.

In 2016, the employer introduced a social counseling program and exclusively offered works council members the opportunity to undergo training as social counselors on a voluntary basis and to perform social counseling duties afterwards. The employee completed this training and subsequently worked as a social counselor. The employer then provided the employee with a company vehicle that she was also permitted to use for private purposes pursuant to a vehicle use agreement. Under the employer’s company vehicle policy, store managers are not entitled to a company vehicle for private use. In 2024, the employer outsourced its social counseling program and demanded the return of the company vehicle from the employee. The employee complied with this demand. However, she simultaneously filed suit with the Labor Court of Hanover (Arbeitsgericht Hannover), seeking compensation for the loss of the possibility to use the company vehicle following the withdrawal. After the trial court dismissed her claim, the employee appealed to the LAG.

The Decision—Usage Agreement Void Due to Impermissible Preferential Treatment

The LAG affirmed the decision of the trial court and dismissed the appeal. The court rejected the employee’s claim for compensation for loss of use under Sections 280 paragraph 1 sentence 1 and 283 paragraph 1 Bürgerliches Gesetzbuch (BGB), holding that the vehicle use agreement between the parties was void under Section 134 BGB due to a violation of Section 78 sentence 2 BetrVG.

The court held that providing the company vehicle for private use constituted preferential treatment within the meaning of Section 78 sentence 2 BetrVG because it objectively placed the employee in a more favorable position than employees who were not works council members. It emphasized that an intent to confer a (unlawful) benefit is not required.

The provision of the vehicle for private use was granted solely by reason of the employee’s office because the opportunity to train as a social counselor and perform the inherent activities was made available exclusively to works council members. Furthermore, the social counseling role was not assigned to the employee under a separate contractual arrangement. As a social counselor, she was not subject to any instructions from her employer, nor was she obligated to perform a specific amount of social counseling work. The court also ruled that the provision of the vehicle constituted a compensatory element in the form of a non-cash benefit that exceeded the remuneration owed under Section 37 paragraph 2 BetrVG.

Key Takeaways

The provision of company cars to works council members for private use does not always constitute an impermissible benefit. In particular, if a released works council member would have been entitled to a company car for private use as part of their contractual employment, there is no impermissible benefit. However, if the provision is made solely because of works council activities, this constitutes a violation of the prohibition on preferential treatment under Section 78 sentence 2 of the German Works Constitution Act (BetrVG), with the consequence that the usage agreement is void from the outset under Section 134 of the German Civil Code (BGB).

A distinction must be made regarding the provision of a company car exclusively for business use: This does not constitute a compensation component and is therefore generally permissible without further requirements. The employer may even be obligated to provide one under certain circumstances if a company car is necessary for the effective performance of works council duties (Section 40 paragraph 2 BetrVG).

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

Bastian Sepp is an associate in the Munich office of Ogletree Deakins.

Niklas Thiel, a law clerk in the Munich office of Ogletree Deakins, contributed to this article.

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Quick Hits

• Under the German Pay Transparency Act, disclosure requests can only be asserted within a narrow time frame. With respect to pay information, the statute provides only an establishment-level right to disclosure, not a companywide one.
• The EU Pay Transparency Directive will substantially expand employers’ disclosure and reporting obligations. Going forward, job applicants will have a right to pay information as early as the interview stage.
• Germany must transpose the EU Pay Transparency Directive by June 7, 2026.

The German Federal Labor Court (Bundesarbeitsgericht (BAG)) is currently examining the scope of information disclosure rights under the existing German Pay Transparency Act (Entgelttransparenzgesetz (EntgTranspG)). The underlying case is a decision from the Regional Labor Court of Cologne (Landesarbeitsgericht Köln (LAG)), Judgment of February 12, 2025, Ref. No. 5 Sa 479/23). At the same time, a fundamental reform of the Pay Transparency Act is underway to transpose the EU Pay Transparency Directive (EU 2023/970), which will have significant implications for employers.

Current Legal Framework: The LAG on the Scope of Disclosure Rights

The LAG recently issued an opinion in a case in which a female employee requested information about the criteria used to determine pay and the median salary of her male colleagues. She sought information spanning multiple years and covering the entire company.

The court dismissed the claim, clarifying three key points:

1. Where the criteria for pay determination are set out in a works agreement, a reference by the employer to that agreement is sufficient. A separate, explicit disclosure is not required.
2. The disclosure right relates to the calendar year preceding the request—not multiple years in the past. A request submitted in 2025, for example, can only cover the year 2024.
3. The disclosure obligation is limited to the establishment where the requesting employee works. There is no right to disclosure of the companywide median salary.

The BAG will hear the appeal on February 19, 2026, and will reconsider the temporal and geographic scope of the disclosure right.

Outlook: The EU Pay Transparency Directive

With EU Directive 2023/970, which must be transposed by June 2026, German pay transparency law will be fundamentally expanded. The key changes are as follows:

Right to Pay Information

• Job applicants will be entitled to information about the starting salary or pay range before the job interview. In addition, asking about a job candidate’s current salary will no longer be permissible.
• For existing employment relationships, disclosure rights will be significantly broadened. Employees will be able to request information about their individual pay level as well as the average pay of their comparison group, broken down by gender. The limitation to the establishment level will no longer apply.
• In addition, employers will be required to inform their workforce annually about the existence of this right-to-pay information.
• The German federal government is currently considering a time limitation on the disclosure period. Whether such a restriction is compatible with EU law remains to be seen.

Transparency Obligations

Employers must inform all employees about the criteria used to determine their pay, pay levels, and pay progression. These criteria must be objective and gender-neutral, and must be made easily accessible, e.g., by publication on the company intranet.

Reporting Obligations

Companies with at least 150 employees, and, from 2031, those with at least one hundred employees, will be subject to regular reporting requirements on the gender pay gap. This goes well beyond the current legal framework, which only requires reports upon request from the works council.

Penalties and Remedies

• Violations may result in penalties and damages claims by employees.
• The evidentiary threshold for employees to establish pay discrimination will be further lowered. Instead of the current rule allowing employees to present circumstantial evidence as a first step, a full reversal of the burden of proof will apply. In practical terms, employers will now have to prove that no pay discrimination exists.
• Employers may also want to note that contractual clauses prohibiting employees from disclosing their salary will be unenforceable going forward.

Key Takeaways

While the LAG’s decision may appear employer-friendly, the expansions introduced by the directive should be taken seriously. It will be interesting to see how the BAG positions itself in regard to the LAG’s decision ahead of the directive’s transposition.

With the transposition of the EU Pay Transparency Directive due by June 7, 2026, the requirements for justifying pay differences will increase substantially. Recent BAG case law on pay discrimination already demonstrates that courts are applying a strict standard to the requirement for transparent pay systems. Employers may want to review their compensation structures early for transparency and gender neutrality and to make adjustments where there are indications of discrimination.

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

Karl Melzer is an associate in the Berlin office of Ogletree Deakins.

Teodora Ghinoiu, a law clerk in the Berlin office of Ogletree Deakins, contributed to this article.

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Quick Hits

• On February 10, 2026, the Connecticut Supreme Court held that mandatory security screening time on employer premises must be compensated under Connecticut General Statutes § 31-76b(2)(A), which defines “hours worked” to include “all time during which an employee is required by the employer to be on the employer’s premises.”
• Although the court did not purport to address every conceivable situation where the de minimis rule may apply, it stated strongly that Connecticut’s wage laws do not include an exception that would allow employers to disregard small increments of compensable time.
• The decision establishes that Connecticut’s wage laws are more protective than the federal FLSA, which does not require compensation for postliminary security screenings.

Background

Javier Del Rio, Colin Meunier, and Aaron Delaroche were warehouse workers at Amazon fulfillment centers in Windsor and North Haven between 2018 and 2021. At the conclusion of each shift, Amazon required employees to pass through a metal detector before leaving the building. Depending on whether employees carried personal items, they were routed through one of three screening processes: express lanes (no delay), divesting tables (for items like keys and wallets), or X-ray machines (for bags and lunch boxes). If an alarm sounded, a second screening with a hand-held metal detector was required.

The screenings typically ranged in time from a few seconds to several minutes, though employees testified that wait times occasionally extended to ten or even twenty minutes. Employees clocked out before going through security, meaning they were not compensated for screening time.

The plaintiffs filed a putative class action complaint in Connecticut Superior Court in August 2021, alleging that Amazon violated Connecticut wage laws by failing to pay employees for time spent undergoing these mandatory security procedures. Amazon removed the case to the U.S. District Court for the District of Connecticut under the Class Action Fairness Act.

The district court granted summary judgment for Amazon, concluding that Connecticut’s wage laws should be interpreted consistently with federal law. Specifically, under a 2014 decision issued by the Supreme Court of the United States, security screenings are noncompensable “postliminary activities” under the FLSA because they are “not ‘integral and indispensable’” to employees’ principal warehouse duties.

The plaintiffs appealed, and the Second Circuit determined that the case raised unresolved questions of Connecticut state law. The Second Circuit then certified two questions to the Connecticut Supreme Court: (1) whether Connecticut wage laws require compensation for mandatory security screening time, and (2) whether a de minimis exception applies.

Analysis

The Connecticut Supreme Court began its analysis by reviewing the plain language of § 31-76b(2)(A), which defines “hours worked” as “all time during which an employee is required by the employer to be on the employer’s premises.” The statute expressly includes waiting time, even “when an employee is required to wait on the premises while no work is provided by the employer.”

Amazon contended the statute was ambiguous because it does not define “work.” The court rejected this argument, holding that the meaning of “work” is irrelevant to compensability under the plain statutory text. The phrase “hours worked” is expressly defined to include time an employee is required to be on premises, regardless of whether work is being performed. Because Amazon required employees to remain on-site during security screenings, that time was compensable.

The Connecticut Supreme Court contrasted Connecticut’s wage laws with federal law. According to the Supreme Court’s 2014 ruling, under the federal FLSA as amended by the Portal-to-Portal Act, security screenings are noncompensable “postliminary activities” because they are not “integral and indispensable” to employees’ principal duties. But the Connecticut Supreme Court noted that FLSA establishes only a “national floor.” States remain free to enact wage laws more protective than the federal standard, and, according to the court, Connecticut has done that by defining “hours worked” to include all time employees are required to be on employer premises.

Amazon argued that such a broad reading of Connecticut’s wage laws would produce absurd or unworkable results because employers cannot track every moment employees spend on premises. The court was unpersuaded, observing that Amazon could simply relocate its time clocks outside the security area. The court also emphasized that policy judgments about costs and benefits belong to the legislature, not the courts.

Finally, the court rejected a de minimis exception that would apply to Amazon’s security screenings. In other words, Connecticut law did not permit Amazon to disregard trivial amounts of time spent by the employees engaging in the screenings.

Next Steps for Employers

In light of the Del Rio decision, Connecticut employers may want to consider reviewing their practices in Connecticut, including as follows:

• Employers requiring any post-shift activities on premises may want to evaluate whether employees are appropriately compensated for that time. If employees are not clocked in during certain required activities, employers may face liability.
• Employers may want to explore whether certain pre- or post-shift requirements can be restructured to minimize required time at the work location, including by potentially streamlining screening processes.
• The Connecticut Supreme Court pointed out that employers with security screening or other exit procedures could presumably place time clocks outside the screening area so employees clock out after completing the process
• Unlike under federal law, Connecticut employers arguably cannot dismiss wage claims as de minimis simply because the uncompensated time is brief. Employers may want to consider reviewing all practices to determine whether employees are paid for all always worked.

Ogletree Deakins’ Stamford office and Wage and Hour Practice Group will continue to monitor developments and will post updates on the Class Action, Connecticut, Trucking & Logistics, and Wage and Hour blogs as additional information becomes available.

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Quick Hits

• In Sentry Force Security, LLC v. Barrera, a private security firm sued a former employee for breaching a restrictive covenant that contained customer and employee nonsolicitation provisions after he started his own private security company.
• The Court of Appeals of Virginia concluded that employers can lawfully prohibit low-wage employees from directly soliciting customers (i.e., initiating contact with a customer). However, employers cannot prohibit low-wage employees from accepting unsolicited business from a customer (i.e., when a customer initiates contact with a former employee).
• The court held that employers cannot enter into or enforce employee nonsolicitation provisions with low-wage employees.

Virginia law prohibits “covenants not to compete” against “low-wage employees,” meaning those who earn less than the average weekly wage in Virginia or are entitled to overtime under the Fair Labor Standards Act (FLSA). After Virginia passed that law in 2020, employers have questioned whether customer and employee nonsolicitation clauses fell within the scope of prohibited covenants.

In this case, Sentry Force claimed James Barrera breached his customer and employee nonsolicitation agreements when he established a new private security company, diverted customers to the new company, and hired several Sentry Force employees to join the new company. Barrera filed a counterclaim against Sentry Force for violating Virginia’s law banning “covenants not to compete” against low-wage employees, which carries a $10,000 penalty per violation.

Under Virginia law, a “covenant not to compete” is broadly defined as:

“[A] covenant or agreement, including a provision in a contract of employment, between an employer and an employee that restrains, prohibits, or otherwise restricts an individual’s ability, following termination of the individual’s employment, to compete with his former employer. A ‘covenant not to compete’ shall not restrict an employee from providing a service to a customer or client of the employer if the employee does not initiate contact with or solicit the customer or client.”

Customer Nonsolicitation Provisions

The Court of Appeals of Virginia concluded that the law prohibits employers from entering into a customer nonsolicitation provision with a low-wage employee, but only if that provision has the effect of barring the employee from accepting unsolicited business from a former customer. 

The law permits employers to restrict a low-wage employee’s ability to actively solicit former customers. The Court of Appeals noted that the “plain language” of the law “actually does allow” an employer to protect its customers from direct solicitation by its current or former employees. In other words, an agreement that bars an employee from actively soliciting a former employer’s customers is not a “covenant not to compete” under the law, but if the customer approaches the former employee with its business, the former employee can accept that customer’s business.

Employee Nonsolicitation Provisions

The Court of Appeals of Virginia further concluded that employee nonsolicitation provisions fall within the broad definition of “covenants not to compete” and, therefore, cannot be entered into or enforced against low-wage employees.

Unlike customer nonsolicitation provisions, the law does not contain an exception for employees who seek out new employment in an unsolicited manner. Thus, the court held that “an agreement (1) between an employer and employee that (2) bars that employee from soliciting the employer’s other employees (3) after the employee no longer works for the employer clearly falls within the scope of the statute.” The court reasoned that such an agreement would be a covenant between an employer and employee that restrains that employee’s ability to compete with the former employer after termination of the individual’s employment.

Next Steps

Employers in Viriginia may want to identify their low-wage employees, defined as those who earn less than $78,364.52 per year or are nonexempt under the FLSA. The earnings threshold changes each year.

Employers in Virginia also may want to review their restrictive covenants to ensure they are in compliance with the current state of the law. Obviously, employers in Virginia will want to ensure any employee nonsolicitation clauses comply with the holding in Sentry Force Security. Similarly, if a customer nonsolicitation clause prohibited former employees from accepting unsolicited business from former customers, Sentry Force Security holds that such provisions do not comply with state law.

This case shows that employers may be successful in taking legal action against low-wage employees who directly solicit clients or customers in violation of a nonsolicitation clause.

Along with Virginia, Colorado, Illinois, Maine, Maryland, New Hampshire, Oregon, Rhode Island, Washington, and Washington, D.C., have banned noncompete agreements with low-wage workers. The income thresholds vary by state.

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

Tevis Marshall is a shareholder in Ogletree Deakins’ Richmond office.

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

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Quick Hits

• The NLRB issued a final rule that reinstates the 2020 standard for joint employer status, formally withdrawing a broader 2023 rule struck down in federal court. 
• The rule narrows the meaning of “essential terms and conditions of employment” for joint employer status purposes to wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.
• The return to the 2020 rule provides greater clarity and predictability for employers, particularly those operating in franchise, staffing, subcontracting, or other arrangements involving multiple entities.

The NLRB is issuing the final rule, which is set to be published in the Federal Register on February 27, 2026, without a period of notice and comment. The final rule reinstates the 2020 rule that has functionally been in effect since a March 2024 decision by U.S. District Court for the Eastern District of Texas vacated the rule before it ever took effect, finding it was unlawfully broad and was “arbitrary and capricious.”

The Board determined a notice and public comment period to be unnecessary given the 2023 rule never took effect after it was vacated and the Board voluntarily dismissed its appeal of that decision. The reinstated 2020 joint-employer rule turns on an entity’s substantial direct control over essential employment terms and conditions as opposed to indirect control or unexercised authority.

The Prior 2023 Joint-Employer Rule

The prior 2023 rule would have made it more likely that an entity could be deemed a joint employer of another employer’s workers, focusing the inquiry on whether an entity has authority or control over any essential term or condition of employment, regardless of whether it ever actually exercised that control. The 2023 further would have set forth “essential terms and conditions of employment,” including some vague terms, and would have required joint employers to bargain with workers’ bargaining representative over all terms and conditions with which the joint-employer has control, even if they are not deemed “essential.”

Key Requirements of the Reinstated 2020 Rule

While both the 2020 and 2023 joint-employer standards focused on an entity’s control over essential terms and conditions of employment, the now-reinstated 2020 standard shifts the inquiry to whether the entity actually exercises direct control, rather than whether it arguably possesses authority to control, either indirectly or based on authority that it has not actually exercised.

Under the reinstated 2020 rule, an employer may be considered a joint employer of another employer’s employees only if the two employers “share or codetermine the employees’ essential terms and conditions of employment.” Critically, establishing joint employer status requires demonstrating that an entity possesses and exercises “substantial direct and immediate control” over one or more essential terms or conditions of employment such that it “meaningfully affects matters relating to the employment relationship.” The rule further clarifies that “substantial direct and immediate control” must have a “regular or continuous consequential effect” on employment terms, not control exercised only on a “sporadic, isolated, or de minimis basis.”

The rule limits the role of indirect control, including “contractually reserved but never exercised authority,” over mandatory bargaining subjects other than essential employment terms. Such “indirect control” explicitly does not include “control or influence over setting the objectives, basic ground rules, or expectations for another entity’s performance under a contract.”

Furthermore, evidence of indirect control “is probative of joint-employer status, but only to the extent it supplements and reinforces evidence of the entity’s possession or exercise of direct and immediate control over a particular essential term and condition of employment.” The rule states that “contractually reserved authority” that has “never been exercised” does not, on its own, establish joint employer status. Additionally, the party claiming there is a joint employer relationship bears the burden of proof.

‘Essential Terms and Conditions’

The reinstated 2020 rule narrows the defined “essential terms and conditions of employment” to an eight-factor list traditionally considered to be core terms and conditions of employment: wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.

The rule provides detailed guidance on what constitutes “direct and immediate control” for each factor:

• Wages: An entity must actually determine wage rates, salaries, or pay rates for individual employees or job classifications. Cost-plus contracts, even those with a maximum reimbursable wage rate, do not establish direct control sufficient to establish joint employer status.
• Benefits: An entity must actually determine fringe benefits, such as selecting health insurance or pension plans. Permitting another employer to participate in benefit plans under an arm’s-length contract does not establish direct control.
• Hours of Work: An entity must actually determine work schedules or overtime. The rule states that simply establishing operating hours or when services are needed does not suffice to establish a joint employer relationship.
• Hiring: An entity must actually decide which particular employees will be hired. Requesting staffing level changes or setting minimal hiring standards (such as government-required qualifications) does not constitute the requisite direct control.
• Discharge: An entity must actually decide to terminate an employee. Reporting misconduct, expressing a negative opinion, refusing to allow an employee to continue performing work, or setting minimal performance standards does not establish requisite direct control.
• Discipline: An entity must actually decide to suspend or otherwise discipline an employee. Notably, simply reporting issues to the actual employer or “refusing to allow another employer’s employee to access its premises or perform work under a contract,” does not qualify to establish a joint employer relationship.
• Supervision: An entity must actually instruct employees on how to perform their work or issue “performance appraisals” beyond routine instructions on “what work to perform, or where and when to perform the work, but not how to perform it.”
• Direction: An entity must assign employees their “individual work schedules, positions, and tasks.” Employers do not exercise control by setting project completion schedules or describing work objectives.

Key Takeaways

The formal return to the 2020 rule is a welcome sign for employers following several years of uncertainty. The reinstated 2020 rule provides greater clarity and predictability for employers, particularly those operating in franchise, staffing, subcontracting, or other arrangements involving multiple entities.

While joint employer status will still be determined by a totality of the circumstances, under the current framework, the focus remains squarely on whether an entity actually exercises  substantial direct and immediate control over the core aspects of an employment relationship based on wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction. Thus, entities that simply set broad parameters, establish performance expectations, or maintain contractual rights that they never exercise may be less likely to be found to be joint employers.

Businesses may want to review their contracts, operational practices, and day-to-day interactions with workers and business partners, including franchise, staffing, subcontracting, and other similar business arrangements, to ensure they understand the potential for joint employer liability and can structure their relationships accordingly.

Ogletree Deakins’ Traditional Labor Relations Practice Group will continue to monitor developments and will provide updates on the Traditional Labor Relations blog as additional information becomes available.

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

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Quick Hits

• The DOL recently published a proposed rule revising the test for determining whether workers are employees or independent contractors under the Fair Labor Standards Act.
• The proposed rule would rescind a 2024 final rule, which used a “totality of the circumstances” framework.  
• The public can submit comments on the proposed rule from February 27, 2026, until April 28, 2026.

The proposed rule, “Employee or Independent Contractor Status Under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act,” could have significant legal and economic ramifications for companies, especially in industries that tend to rely more heavily on independent contractors, such as construction, home health, transportation, warehousing, ridesharing, agriculture, and food delivery. Unlike employees, who are covered under the FLSA, independent contractors are not entitled to a minimum wage, overtime pay, unemployment insurance, and worker’s compensation.

While the new proposed rule may not substantially affect litigation, as it remains to be seen whether and to what extent courts would actually follow and apply it in litigation, it does significantly reduce the risk profile at the DOL level. The DOL proposes that the analysis also apply to the Family and Medical Leave Act (FMLA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA), both of which incorporate the FLSA’s scope of employment.

If the proposed rule is finalized:

• The analysis would retain the “economic reality” test, which has been used by courts for many years, to determine whether a worker is an independent contractor or an employee who is economically dependent on an employer.

• Two core factors will be given greater weight in determining if a worker is an independent contractor or employee: The nature and degree of control over the work, and the worker’s opportunity for profit or loss based on initiative or investment. The two core factors should be considered first, and if they both point toward the same classification, there is a substantial likelihood that is the accurate classification for the individual.
• Other factors may be considered in determining whether a worker is an independent contractor or employee, including the amount of skill required for the work, the degree of permanence of the working relationship, and whether the work is part of an integrated unit of the business. These factors are not exhaustive, and no single factor is dispositive.  These additional factors serve as additional guideposts but are less probative than the core factors, and, at times, may not be probative at all. Moreover, they are very unlikely, individually or collectively, to outweigh the combined probative value of the two core factors, if they are aligned and point toward the same classification.
• The actual practice of the worker and employer will be more relevant than what is contractually or theoretically possible.

The proposed rule states that certain employer requirements do not demonstrate a degree of control requiring employee classification. These include requiring a worker to comply with specific legal obligations, meet health and safety standards, carry insurance, or meet deadlines. This departs from the Biden-era rule as well, which stated that several of these things could be considered evidence of control in appropriate circumstances.

Next Steps

The public has until April 28, 2026, to submit comments on the DOL’s proposed rule, which could be finalized later this year.

The adoption of the proposed rule could provide employers with more certainty over worker classification. It is likely that applying this proposed rule will result generally in more workers being classified as independent contractors, whereas applying the Biden-era rule generally resulted in more employee classifications. However, courts will not be bound by any rule adopted by the DOL, and independent contractor relationships will continue to face strict scrutiny in the courts, as well as government agencies. 

Companies that use independent contractors may wish to assess their current worker classification and review their written contracts, policies, and practices to ensure that individuals retained as independent contractors satisfy the requirements for such classification under the law. Employers that misclassify workers as independent contractors may face federal or state fines and liability for unpaid wages, overtime pay, unpaid taxes, or workers’ compensation.

Ogletree Deakins’ Wage and Hour Practice Group will continue to monitor developments and will provide updates on the Class Action, Trucking and Logistics, and Wage and Hour blogs as new information becomes available. This article and more information on how the Trump administration’s actions impact employers can be found on Ogletree Deakins’ Administration Resource Hub.

Information on state and federal independent contractor laws is also available on the Ogletree Deakins Client Portal. If this proposed rule is adopted, the Client Portal will provide updates in the Federal Independent Contractors law summary. Snapshots and updates are available for all registered client users. Detailed information is available for Premium and Advanced subscribers. For more information on the Client Portal or a Client Portal subscription, please reach out to clientportal@ogletree.com.

Margaret Santen is a shareholder in Ogletree Deakins’ Charlotte office.

Catherine D. Catoe is an associate in Ogletree Deakins’ Charlotte 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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