As explained in a prior blog post, on January 21, 2025, President Trump signed Executive Order 14173 (“Ending Illegal Discrimination and Restoring Merit-Based Opportunity”) (the “EO”), establishing new requirements for federal contractors and grant recipients to agree that their compliance with federal anti-discrimination laws is “material to the government’s
Continue Reading Federal Appeals Court Reinstates Provisions of DEI Executive Orders
President Trump’s “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” Executive Order Targets Federal Contractors and the Private Sector
On January 21, 2025, President Trump issued the Ending Illegal Discrimination and Restoring Merit-Based Opportunity Executive Order (the “EO”), which revokes Executive Order 11246, a 60-year-old Civil Rights-era directive that prohibited federal contractors from discriminating on the basis of race, color, religion, sex, sexual orientation, gender identity, or national origin, and required federal contractors to take affirmative action to provide equal opportunity in employment. The EO seeks to “end[] illegal preferences and discrimination” and “promote individual initiative, excellence, and hard work” by ending the use of “dangerous, demeaning, and immoral race- and sex-based preferences under the guise of so-called ‘diversity, equity, and inclusion’ (DEI) or ‘diversity, equity, inclusion, and accessibility’ (DEIA)” programs. The EO does so by prescribing required contract provisions for federal contracts and by requiring specific reports from the heads of federal agencies, including identification of private entities for potential investigation, as described further below. The provisions of the EO do not apply to federal or private sector employment and contracting preferences for veterans. Federal contractors and grant recipients have until April 21, 2025 to comply with the EO’s revocation of affirmative action requirements. However, federal contractors, subcontractors, and grant recipients may become subject to the new contract provision requirements imposed by the EO without delay.1
Elimination of Federal Contractor Affirmative Action Requirements & DEI References
In addition to revoking Executive Order 11246, the EO requires the Office of Federal Contract Compliance Programs (“OFCCP”), which has been responsible for administering and enforcing Executive Order 11246 for many years, to “immediately cease” promoting diversity, enforcing affirmative action requirements, and allowing or encouraging federal contractors and subcontractors to engage in “workforce balancing” based on race, color, sex, sexual preference, religion, or national origin. The EO explicitly prohibits federal contractors or subcontractors from considering race, color, sex, sexual preference, religion, or national origin in employment, procurement, or contracting practices. Although OFCCP will no longer enforce affirmative action requirements, the EO delays implementation of this prohibition for current federal contractors through April 21, 2025, so contractors have until this date to sunset any affirmative action programs, absent judicial intervention.2
The EO also directs the Director of the Office of Management and Budget (“OMB”) and the Attorney General to review and revise, as appropriate, all government-wide processes, directives, and guidance; remove references to DEI principles from federal acquisition, contracting, grants, and financial assistance procedures; and terminate “all DEI-related mandates, requirements, programs, or activities,” which the EO does not define.Continue Reading President Trump’s “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” Executive Order Targets Federal Contractors and the Private Sector
New Pay Transparency Laws Effective in 2025
Five states have joined the growing number of states with pay transparency laws requiring employers to include compensation information in job postings. An Illinois law and a Minnesota law took effect on January 1, 2025, and New Jersey, Vermont, and Massachusetts laws will take effect later this year. While the new laws differ in their specific requirements, they generally mirror pay transparency statutes passed in recent years in other states, including California, Colorado, and New York, that require employers to disclose pay ranges, and sometimes benefits information and other compensation, in job postings.
The new laws are summarized below:
- The Pay Transparency Amendment to the Illinois Equal Pay Act of 2003 (effective January 1, 2025) requires employers with 15 or more employees to include in job postings a wage or salary range and a general description of the benefits and other compensation (including bonuses, stock options, etc.) for the position. The law applies to positions that will be physically performed, at least in part, in Illinois, or will be performed outside Illinois but the employee reports to a supervisor, office, or other work site in Illinois. Also, when an employer posts a job externally, the employer also must, within 14 days, announce, post, or otherwise make known to all current employees such posting to the extent it would represent an opportunity for promotion for existing employees. Employers must preserve records of job postings for at least five years.
- The Minnesota Omnibus Labor and Industry Policy Bill (effective January 1, 2025) requires employers with 30 or more employees in Minnesota to disclose in job postings the starting pay range and a general description of all benefits (including health and retirement benefits) and other compensation offered for the position. The law is silent as to whether it applies to jobs performed outside Minnesota.
- New Jersey Senate Bill No. 2310 (effective June 1, 2025) will apply to employers with ten or more employees over 20 calendar weeks in a given year that do business, employ workers, or take applications for employment in New Jersey; the law does not specify whether all ten employees must be located in New Jersey. These employers will be required to include in job postings the hourly wage or salary range and a general description of benefits and other compensation programs for which the employee would be eligible. The law also will require employers to make “reasonable efforts” to announce, post, or otherwise make known to current employees opportunities for promotion that are advertised internally or externally prior to making a promotion decision. The law is silent on whether it will apply to jobs performed outside New Jersey.
- Vermont H.704 (effective July 2025) will apply to employers with five or more employees, but does not specify whether all five employees must be located in Vermont. Covered employers must include in job advertisements the compensation or range of compensation for the job opening. For roles that will be paid on a commission basis, employers must only note in the job advertisement that the role will be paid on commission and need not disclose the compensation or range of compensation. The law will apply to job advertisements for positions that will be physically located in Vermont and to remote positions that will predominantly perform work for an office or work location physically located in Vermont.
- The Massachusetts Frances Perkins Workplace Equity Act (effective October 29, 2025) will require employers with 25 or more employees in Massachusetts to disclose pay ranges in job postings. Employers also must disclose pay ranges to employees offered promotions, transfers, or new positions with different responsibilities. The law is silent as to whether it applies to jobs performed outside Massachusetts. The law separately will require employers that have 100 or more employees and are subject to federal EEO-1 reporting obligations to file the EEO-1 wage data report with the state.
Continue Reading New Pay Transparency Laws Effective in 2025
Federal District Court Vacates Biden’s DOL Overtime Rule
As discussed in our prior post, the U.S. Department of Labor (DOL) issued a final rule earlier this year that increased the salary thresholds required to classify certain employees as exempt from overtime pay requirements under the Fair Labor Standards Act (FLSA). On November 15, 2024, the federal district
Continue Reading Federal District Court Vacates Biden’s DOL Overtime RuleNLRB General Counsel: “Make-Whole Relief” for Non-Competes and No More “Stay-or-Pay”
National Labor Relations Board General Counsel (“GC”) Jennifer Abruzzo recently issued Memorandum GC 25-01 (“Memorandum”), suggesting new remedies for non-competes found to violate the National Labor Relations Act (“NLRA”) and proposing that the National Labor Relations Board (“NLRB”) presume “stay-or-pay” provisions to be unlawful. Although the Memorandum is not binding law, employers should expect GC Abruzzo to direct the NLRB’s regional offices to bring complaints and seek remedies consistent with the Memorandum. The NLRA generally only extends protections to nonsupervisory and nonmanagerial employees, and therefore the Memorandum is not applicable to non-compete or stay-or-pay provisions for employees who are supervisors or managers under the NLRA.
Make-Whole Relief for Unlawful Non-Competes
Part I of the Memorandum expands upon a May 2023 memo in which GC Abruzzo outlined her position that, except in limited circumstances, non-compete provisions violate the NLRA. In the new memo, GC Abruzzo asserts that the financial harms for employees subject to unlawful non-competes extend beyond costs associated with discipline or legal action and include “more pernicious harms” associated with attempted compliance, such as foregoing higher-paying job opportunities or incurring relocation costs. Arguing that rescission—the typical remedy for offending non-compete provisions—fails to address these harms, GC Abruzzo proposes “make-whole relief” for employees impacted by unlawful non-competes. Make-whole relief would include any wage and benefits differential caused by the non-compete restriction; costs of finding new employment that complied with the non-compete, such as lost wages due to being out of work longer or accepting a lower-paying job, or moving or retraining costs; and legal fees associated with defending against a claim regarding an unlawful non-compete.
“Stay-or-Pay” Provisions Framework
Part II of the Memorandum proposes that the NLRB adopt a new framework for assessing so-called “stay-or-pay” provisions, to presume that any such provision is unlawful regardless of whether it was entered into voluntarily. Stay-or-pay provisions are “any contract under which an employee must pay their employer if they separate from employment” and include training or educational repayment provisions, quit fees, damages clauses, and sign-on-bonuses or other types of cash payments tied to a mandatory stay period.Continue Reading NLRB General Counsel: “Make-Whole Relief” for Non-Competes and No More “Stay-or-Pay”
Is Your Workplace Election Ready? Voting Leave Laws Across the States
With Election Day just weeks away, employers should quickly brush up on laws that permit employees to take time off to vote. There is no federal law permitting time off to vote, but a majority of states and the District of Columbia have some form of voting leave law, with
Continue Reading Is Your Workplace Election Ready? Voting Leave Laws Across the StatesCalifornia Joins Growing List of States Prohibiting Employer Action Against Employees Who Refuse Political or Religious Communications
On Friday, California Governor Gavin Newsom signed SB 399, the “California Worker Freedom from Employer Intimidation Act” (the “Act”) that should be of interest to any company with employees in the state. The Act, which takes effect on January 1, 2025, adds a new section to the California Labor Code to prohibit employers from taking or threatening adverse employment action against an employee because the employee refuses to attend employer meetings about, or to participate in, receive, or listen to, any communications about the employer’s opinion on religious or political matters. The law is similar to, but broader than, laws in several other states that attempt to decrease the influence of “captive audience” meetings communicating an employer’s political or religious opinions.
Captive audience laws are frequently promoted by labor organizations that aim to limit employer communications related to unionization. However, the new California law is broader and applies to meetings and communications related to employers’ opinions on “political matters” or “religious matters,” both of which are defined terms in the Act.
“Political matters” are “matters relating to elections for political office, political parties, legislation, regulation, and the decision to join or support any political party or political or labor organization.” While the state will likely sharpen the contours of the law through regulation, as drafted this includes not only electoral and partisan political matters, but also issue-based activity, such as meetings about an employer’s position on proposed regulations or efforts to “activate” employees on a grassroots level to contact legislators about pending legislation. The definition of “political matters” also would cover union organizing.
“Religious matters” are “matters relating to religious affiliation and practice and the decision to join or support any religious organization or association.”Continue Reading California Joins Growing List of States Prohibiting Employer Action Against Employees Who Refuse Political or Religious Communications
Texas District Court Enjoins FTC’s Rule Banning Non-Compete Clauses
July 10, 2024, Covington Alert
On July 3, 2024, Judge Ada Brown of the United States District Court for the Northern District of Texas granted the motions for a preliminary injunction—filed by Ryan LLC (“Ryan”) and several trade associations, including the U.S. Chamber of Commerce (“Chamber”)—to prevent the FTC’s rule banning non-compete clauses from going into effect, but the court’s order only applies to the named plaintiffs (i.e., it is not a nationwide injunction). The court has indicated that it will issue a final order on the merits by August 30, 2024, just a few days before the FTC’s rule is scheduled to go into effect on September 4. It is possible that Judge Brown enjoins the non-compete ban nationwide in her final order.
Background
In April, the FTC issued a final rule banning almost all non-competes with U.S. workers, with narrow exceptions, pursuant to its claimed authority to issue competition-related rules under Sections 5 and 6(g) of the FTC Act. That same day, Ryan challenged the FTC’s rule and, shortly thereafter, filed a motion to stay and preliminarily enjoin the rule, arguing that the FTC has no statutory authority to promulgate the rule, that the rule is the product of an unconstitutional exercise of power, and that the FTC’s acts were arbitrary and capricious. The Chamber and other trade groups intervened as plaintiffs on May 8, making substantially the same arguments.
The Order
In its Order, the court found that the Plaintiffs had demonstrated a likelihood of success that (1) the FTC does not have the statutory authority to engage in competition-related rulemaking, (2) the non-compete rule is arbitrary and capricious, and (3) the plaintiffs and intervenors had satisfied the standard to obtain injunctive relief.Continue Reading Texas District Court Enjoins FTC’s Rule Banning Non-Compete Clauses
Changes to WA’s Non-Compete Law Require Employers to Take Action
Since 2020, with the adoption of Washington state’s non-compete statute (Chapter 49.62 of the Revised Code of Washington (“RCW 49.62”)), Washington has imposed significant restrictions on employer use of non-compete agreements with employees and independent contractors, permitting such agreements only subject to certain statutory and common-law requirements, including without limitation, a minimum annual earnings threshold (the 2024 limits are $120,559.99 for employees and $301,399.98 for independent contractors), and a Washington forum for any disputes.
Now, Senate Bill 5935 (“SB 5935”) – which takes effect on June 6, 2024 – amends the non-compete statute to further restrict the use of non-compete provisions and expand the types of agreements that may be considered non-competes. As a result, employers will need to take quick action to review their employment agreements and hiring processes to ensure compliance with the new law.
However, as discussed in our Covington Alert, on April 23, 2024 the Federal Trade Commission issued a final rule purporting to ban the use of non-competes with most U.S. workers. The FTC Rule – should it become effective – would supersede inconsistent state laws. The earliest the FTC Rule would take effect is late August 2024, and pending legal challenges may result in court orders that could delay or stay enforcement of the FTC Rule. Accordingly, employers with workers in Washington State should take steps to comply with SB 5935 before it takes effect on June 6, 2024. Employers should also consider consulting with employment and executive compensation counsel for assistance with navigating the evolving non-compete landscape.
Here is an overview of the key changes under SB 5935:Continue Reading Changes to WA’s Non-Compete Law Require Employers to Take Action
Avoiding Layoffs In an Uncertain Economy
As interest rates rise and the threat of a recession looms, many employers are beginning to struggle with balancing the cost of maintaining their workforce with an expected decrease in profits. The frequent result of such a balancing act is a mass layoff. While a reduction in workforce may be
Continue Reading Avoiding Layoffs In an Uncertain Economy