March Legal Updates
IL OT Calculations
In Mercado v. S&C Electric Co., 2025 IL 129526 (Jan. 24, 2025), the IL Supreme Court held employers violate overtime law by not including non-discretionary bonus payments when calculating employees’ overtime rate. This means that IL law now holds that the OT rate must include all bonuses not in the nature of gifts.
The challenge now is that this ruling may conflict with the FLSA. If it only applies to production bonuses (vs. bonuses unrelated to hours or production), it is consistent with the FLSA because a number of non-discretionary bonuses are excluded from the OT rate as unrelated to hours worked, production or efficiency. See 29 CFR Chapter 778. Examples include service awards for longevity; reporting pay (we only needed you for 1 hour, so we are sending you home, but paying you for the full 8 hours of your shift), signing bonuses that do not require continued employment, and “suggestion box” bonuses.
WA Court Ruling Shows Non-Compete Challenges
The WA Supreme Court held that noncompete agreements for employees earning less than twice the minimum wage must be reasonable and narrowly construed. The court found that prohibiting employees from providing any kind of assistance to competitors exceeds the statutory duty of loyalty that an employee owes to their employer.
Note that RCW 49.62.070(1), for the most part, ban a WA employer from restricting, restraining, or prohibiting an employee who earns “less than twice the applicable state minimum hourly wage from having an additional job” and from restricting the employee from “supplementing their income by working for another employer, working as an independent contractor, or being self-employed.” At the same time, the employee still has a “common law duty of loyalty” to the employer.
The case is Springer v. Freedom Vans LLC.
5th Circ. Supports Biden's Gov Contractor Wage Hike
On Tuesday, the Fifth Circuit reversed a ruling that blocked an executive order increasing the minimum wage for federal contractors to $15 per hour, saying former President Joe Biden acted within his authority when he put forward the regulation because it was intended to promote economy and efficiency.
Trump Fires EEOC Commissioners
In an unprecedented move, President Trump fired EEOC commissioners Charlotte A. Burrows and Jocelyn Samuels without cause. The appointment or dismissal of commissioners are not supposed to be political moves, the EEOC functions as a bi-partisan, independent commission. The law provides that commissioners are nominated by the President and confirmed by the Senate to five-year staggered terms. In addition, Title VII establishes that no more than three of the commissioners may be members of the same political party.
Now, with only two members left, the Commission lacks a quorum. Under Title VII, the EEOC must have three commissioners to form a quorum. Without a quorum, the EEOC cannot initiate formal rule making and cannot issue, modify, or revoke formal guidance. As a result, without a quorum, EEOC guidance remains effectively at a standstill.
I also expected lawsuits to be filed over the dismissals. In fact, fired National Labor Relations Board member Gwynne Wilcox sued in D.C. federal court on Wednesday, arguing the National Labor Relations Act blocked her unjustified ouster in a test of 90-year-old U.S. Supreme Court precedent. I can see the ousted EEOC members doing the same.
Then, the EEOC:
In response to Trump’s EO 14168 “Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government,” which the president signed on inauguration day), EEOC Acting Chair Andrea R. Lucas has:
- made defending biological and binary definitions of sex and related rights an agency priority for compliance, investigations, and litigation;
- removed the agency’s “pronoun app” for network profiles, which had enabled EEOC employees to identify and display their pronouns in both internal and external communications;
- removed the “X” gender marker for filing a discrimination charge and the prefix “Mx.” as an option for filing discrimination charges and related forms;
- initiated a review of the EEOC’s “Know Your Rights” poster, which was last revised in June 2023 and lists “sexual orientation” and “gender identity” as bases for unlawful discrimination;
- removed information “promoting gender ideology” from the EEOC’s internal and external websites and media platforms; and
- added banners to publicly accessible documents explaining why they “cannot be immediately removed or revised” and have “not yet been brought into compliance.”
DOL Contractor Rule Update
The Biden-era independent contractor rule is facing five legal challenges, with courts delivering varying outcomes as business groups seek the rule's cancellation and worker advocates push for its defense. Now, the US Court of Appeals for the 5th Circuit has granted a delay for the DOL to review litigation while the Trump administration has paused its legal defense, requesting time for new leadership to reassess the rule.
EEOC Adds Extra Layer Of Review For Trans Bias Charges
Discrimination claims that might conflict with President Donald Trump's executive orders, including one declaring that "sexes are not changeable," will now get reviewed by the EEOC's headquarters.
Latest on CTA Saga – Back On
You can read the latest here:
State AGs Push Back on Trump’s EO on DEI
Last Thursday, a group of state attorneys general (AGs) announced that private-sector efforts to seek and support diverse, equitable, inclusive (DEI) and accessible workplaces are not illegal, and the federal government can't prohibit such efforts in the private sector through executive order.
Massachusetts Attorney General Andrea Campbell and 15 of other AGs issued guidance to help businesses, nonprofits and other organizations understand the "viability and importance" of DEI and accessibility policies in "creating and maintaining legally compliant and thriving workplaces."
DOL Penalties Increased
The U.S. Department of Labor (DOL) has issued the Federal Civil Penalties Inflation Adjustment Act Annual Adjustments for 2025.
Form 5500
The penalty for failure to file Form 5500 has increased from $2,670 to $2,739 every day the form remains unfiled.
Summary of Benefits and Coverage (SBC)
Plans that fail to provide plan participants with a Summary of Benefits and Coverage could now pay up to $1,433, up from $1,406 last year.
GINA Violations
Violations of the Genetic Information Nondiscrimination Act, which include using genetic information to determine eligibility for coverage, can now result in penalties of $145 per participant per day, increasing from $141 per participant per day.
Medicaid or CHIP Violations
A group health plan’s failure to disclose the availability of Medicaid or children’s health insurance program assistance can also lead to penalties of $145 per participant per day, up from $141.
401(k) Plan Disclosures, Recordkeeping, and Reporting
Plans with automatic contribution arrangements must provide plan participants with a required ERISA preemption notice. Failure to provide the notice to participants can result in a penalty that has increased from $2,112 to $2,167 per day.
Failing to provide blackout notices for periods in which participants cannot change their investments, obtain loans on their accounts, or take distributions from their accounts also has led to an increased penalty amount. The penalty has risen from $169 per day to $173 per day. The same penalty also applies to a plan’s failure to provide notice of diversification rights.
Recordkeeping and reporting requirement violations will increase to a maximum penalty of $38 from $37 per employee.
Multiple Employer Welfare Arrangement (MEWA) Filing
Failing to meet the required filings for MEWAs, such as origination filings and annual Form M-1 filings, have risen from $1,942 to $1,992 per day.
Wire Fraud on the Rise
My partners, Stuart Panensky and Liz Veys recently published this article on wire fraud liability. We have seen a surge of matters involving wire fraud in the last year and we believe that you need to be aware of what’s happening so that you do not fall prey to fraud.
Posterpalooza
Here’s a link to all of the required posters that have been updated for 2025:
Alaska
California
- Updated Minimum Wage Poster
- Updated Employment Discrimination/Harassment Poster
- Updated CFRA Pregnancy Poster
- Updated Whistle Blower Poster
Colorado
Connecticut
Indiana
Idaho
Kansas
Massachusetts
Michigan
Nevada
New York
Vermont
Virginia
Washington D.C.
Wisconsin
SCOTUS Allows Age Case Refiling
On Wednesday, SCOTUS unanimously ruled in favor of a former employee of Halliburton Energy Services seeking to revive his federal age-discrimination lawsuit. The employee, Gary Waetzig, had made the mistake of voluntarily dismissing his lawsuit (instead of seeking a stay) against Halliburton pending arbitration. After losing in arbitration, he went back to the court to reopen the proceedings under Federal Rule of Civil Procedure 60(b), which allows courts to issue relief from a "final judgment, order, or proceeding." The federal district court granted the Rule 60(b) request to reopen and later vacated the arbitration award, but the Tenth Circuit reversed that ruling, reasoning that Waetzig's original voluntary dismissal did not qualify as a "final proceeding" under 60(b).
The Supreme Court reversed the appeals court on Wednesday in a victory for the plaintiff. "We hold that such a dismissal counts as a 'final judgment, order, or proceeding,' and thus qualifies for Rule 60(b) relief," Justice Sameul Alito Jr. wrote in his opinion for the majority.
NY Passes Amendment to Safety Act
Per NY: “On February 4, 2025, the New York State Legislature passed an anticipated amendment to the New York Retail Worker Safety Act. Governor Kathy Hochul is expected to sign the amendment into law .
The amendment includes the following key changes:
- Replaces the term “panic button” with “silent alarm button” throughout the Act.
- Modifies employer coverage by requiring businesses with 500 or more retail employees statewide (previously nationwide) to provide each retail employee with a silent response button for immediate assistance from a security officer, manager, or supervisor (previously law enforcement) in case of an emergency. The button may be installed in an accessible location, in a wearable, or on mobile phone.
- Adjusts training requirements so that employers with fewer than 50 retail employees must provide workplace violence prevention training upon hire and once every two years (previously required annually).
- Directs the commissioner to develop model workplace violence prevention program templates in the 12 most common non-English languages spoken by limited-English-proficient individuals in the state.
If signed by the Governor, the Act will take effect on June 2, 2025 (instead of March 4, 2025), while the silent response button requirement maintains an effective date of January 1, 2027.
Even if the amendment is signed into law, employers’ written plans will not require significant changes.
We recommend that employers continue with their current compliance efforts as planned.”
Acting NLRB GC Withdraws Non-Compete Memo
The NRLB’s acting general counsel withdrew a memorandum issued under the Biden Administration that stated that some non-compete agreements violated federal labor laws. This move likely ends federal efforts to restrict non-competition agreements - at least for now.
EEOC To Protect “American” National Origin
Acting EEOC Chair Andres Lucas issued a press release stating that the agency would go after businesses who discriminate against applicants and employees of American national origin. Lucas announced that:
“The EEOC is putting employers and other covered entities on notice: if you are part of the pipeline contributing to our immigration crisis or abusing our legal immigration system via illegal preferences against American workers, you must stop. The law applies to you, and you are not above the law. The EEOC is here to protect all workers from unlawful national origin discrimination, including American workers.”
This initiative applies to staffing agencies as well as employers.
