December Legal Updates

As agencies continue to navigate shifting federal priorities, courts refine long-standing standards, and states adopt new worker protections, employers face another month of significant regulatory activity. Below is a comprehensive roundup of the most important national developments and state-level updates employers should be tracking now.

National Updates

EEOC Shutdown Contingency Plan

The EEOC has implemented a shutdown contingency plan that furloughs roughly 93% of its workforce and pauses most agency functions. Investigations, mediations, hearings, FOIA responses, and new litigation are suspended. A limited intake team continues processing new charges to preserve statutory filing deadlines, and right-to-sue timelines remain unchanged.

Employers should prepare for:

• Potential increases in state-agency filings

• A surge of EEOC activity post-shutdown

• Longer investigation timelines and possible backlog-driven right-to-sue issuances

Employers with open EEOC matters should maintain current deadlines or request documented extensions through the Respondent Portal.

EEOC Disparate Impact Enforcement Shift

Following Executive Order 14281 and the EEOC’s September 2025 Disparate Impact Rule, the agency has stopped pursuing disparate-impact charges. All pending matters were closed as of September 30. The policy shift is now the subject of litigation in Cross v. U.S. EEOC, which challenges the agency’s process and authority.

Fertility Benefits as ACA Excepted Benefits

Federal agencies issued FAQs clarifying how fertility benefits—including fertility HRAs, standalone fertility insurance, and coaching programs—can qualify as ACA excepted benefits. Employers now have more flexibility to offer fertility support without triggering ACA market reforms, provided benefits meet defined structural and coordination criteria. Further rulemaking is expected.

IRS: Transition Penalty Relief for 2025 (Notice 2025-62)

For the 2025 tax year, the IRS will not assess penalties under §§6721 or 6722 for W-2s that do not separately report cash tips, occupation, or qualified overtime—provided total wages remain accurate. The agency still encourages transparent reporting via portals, statements, or Box 14.

IRS Interim Guidance: Tips & Overtime Deductions (Notice 2025-69)

The IRS issued temporary rules for claiming the new Qualified Tips Deduction (§224) and Qualified Overtime Deduction (§225) created by the Big Beautiful Bill Act. For 2025, employees may rely on existing wage records and tip documentation because new reporting systems will not be in place until 2026.

Sixth Circuit: Timing Alone Doesn’t Prove Discrimination

Two decisions—Welch v. Heart Truss and Kovacs v. University of Toledo—confirm that temporal proximity between a protected activity and an adverse action is insufficient to establish discrimination or retaliation. Courts require additional evidence of intent or pretext.

NLRB’s Expanded Monetary Remedies Rejected

The Sixth Circuit ruled that the NLRA does not authorize the broader compensatory damages introduced under the NLRB’s Thryv framework. While Starbucks was found to have unlawfully terminated an employee, expanded “foreseeable harms” remedies were overturned.

DOL Abandons Appeal of Fiduciary Rule

The Department of Labor requested dismissal of its own appeal defending the 2024 fiduciary rule, signaling its intent to rewrite the rule under the Trump administration’s priorities. Future guidance is expected to expand access to alternative investments and revisit ESG regulations.

State & Local Updates

Indiana (IN) — Earned Wage Access Law

Effective January 1, 2025, Indiana has enacted a comprehensive regulatory framework for Earned Wage Access providers. The law requires licensing, reporting, and fee transparency and mandates at least one no-cost EWA option for employees. Employers offering EWA directly are exempt from licensing.

Nevada (NV) — Portal-to-Portal Act Not Incorporated

In Amazon.com Servs. LLC v. Malloy, the Nevada Supreme Court held that Nevada wage law does not incorporate the federal Portal-to-Portal Act. Time spent in mandatory COVID-19 screenings may be compensable, and the ruling reinforces that Nevada’s wage protections are broader and independent of federal law.

Ohio – Cuyahoga County — CROWN Act

Effective November 13, 2025, Cuyahoga County’s new CROWN Act prohibits discrimination based on natural hair texture or style. The Human Rights Commission will manage enforcement, including investigations and civil penalties.

Ohio – Columbus — Salary History & Pay Transparency Law

Columbus adopted a salary history ban and pay transparency requirement applicable to employers with 15+ employees. Effective December 3, 2025 (enforceable January 1, 2027), employers must provide salary ranges in public job postings and refrain from requesting, relying on, or using salary history in hiring decisions.

New York – Rochester — Sanctuary City & Anti-Discrimination Ordinance

Rochester codified and expanded its sanctuary city policy and broadened non-discrimination protections across public accommodations. City contractors and businesses serving the public will need to comply with enhanced protections related to immigration status and equal access.

California (CA)

Paid Family Leave (Designated Person Expansion)

Beginning July 1, 2028, California PFL will cover care for a “designated person”—a non-relative with a family-like bond. This aligns PFL with other California leave laws that already recognize designated persons.

Equal Pay Act & Pay Transparency Updates (SB 642)

Effective January 1, 2026, SB 642 expands the definition of wages to include all forms of compensation for equal pay claims and strengthens pay transparency with more precise job posting requirements. The “continuing violation” doctrine is reinstated, enabling employees to pursue longer-term pay inequities.

Colorado (CO) — FAMLI State Tax Clarification

Colorado confirmed that federal IRS guidance does not affect state taxation of FAMLI benefits. FAMLI payments remain non-taxable for Colorado state income tax purposes, and employers should not increase state-taxable wages on W-2s due to FAMLI.

New York City (NYC) — Safe & Sick Time + Schedule Change Amendments

Effective February 22, 2026, NYC’s Earned Safe and Sick Time Act (ESSTA) expands leave entitlements, adds 32 hours of unpaid sick/safe time, broadens permitted uses, and codifies paid prenatal leave. Amendments to the Temporary Schedule Change Act remove the requirement to grant two schedule changes annually but preserve retaliation protections.

Puerto Rico (PR) — OSHA Penalty Updates

PR OSHA has aligned its penalties with federal OSHA, increasing fines for workplace safety violations. Employers should reassess safety programs to ensure compliance.

Final Thoughts

This month’s developments demonstrate continued momentum in federal enforcement and meaningful state-level shifts that will influence employer obligations heading into 2026. Employers should remain proactive by auditing current policies, updating notice requirements, and monitoring wage changes across jurisdictions.

If you need help preparing for January 1 compliance deadlines or updating internal policies, our team is here to support you.