February 2025 Compliance Update

EXECUTIVE SUMMARY

The screening compliance landscape recently witnessed some major changes that have been documented in this month’s SCREENING COMPLIANCE UPDATE. Below is an EXECUTIVE SUMMARY of some of the new developments at the FEDERAL, STATE, and INTERNATIONAL levels.

• FEDERAL DEVELOPMENTS: The American Trucking Associations is calling on lawmakers to assist in efforts to expand safe truck parking and drug testing for truck drivers. Testifying during a House Highways and Transit Subcommittee hearing on January 22, 2025, ATA Chair Dennis Dellinger said lawmakers can help advance industry safety via legislation on various long-standing trucker concerns.
• STATE DEVELOPMENTS: Effective January 1, 2025, Illinois employers face updated regulations under Public Act 103-0879, altering the landscape of E-Verify and Form I-9 compliance. This law applies to companies located in Illinois and any employer with employees working in Illinois, regardless of where the company is headquartered.
• INTERNATIONAL DEVELOPMENTS: Spanish leaders are on the brink of legalizing medical marijuana and allowing tens of millions of adults to access the controversial drug. A Royal Decree that is expected to be signed and delivered before next summer will legalize medical cannabis in the country, adding Spain to the list of over 40 nations that have legalized the drug for either medical or recreational use.

I hope you find this month’s SCREENING COMPLIANCE UPDATE both informative and helpful in keeping up with establishing and maintaining a compliant background screening program.

Nicolas S. Dufour
ClearStar Executive Vice President, General Counsel & Corporate Secretary

FEDERAL DEVELOPMENTS

Trucking Group Pushes Lawmakers for Action on Safe Parking and Drug Testing

The American Trucking Associations is calling on lawmakers to assist in efforts to expand safe truck parking and drug testing for truck drivers.

Testifying during a House Highways and Transit Subcommittee hearing on Jan. 22, weeks after the 119th Congress kicked off, ATA Chair Dennis Dellinger said lawmakers can help advance industry safety via legislation on various long-standing trucker concerns.

“Promoting safety for the motoring public and our drivers is a high priority for the trucking industry,” Dellinger said, “and that’s reflected in the fact that motor carriers invest over $14 billion annually in safety-related systems and training.

“But this is bigger than us; we need Congress to help build on that progress, from increasing truck parking that would alleviate dangerous situations where truckers are forced to park in unauthorized locations to ensuring that effective and robust drug testing protocols remain intact to keep drivers who are under the influence off our roads.”

In October, a lack of safe places for truck drivers to stop and rest ranked second on the American Transportation Research Institute’s annual list of top trucking industry concerns. ATRI is the research arm of ATA.

In his written testimony, Dellinger reiterated ATA’s support for a previous bill introduced by Rep. Mike Bost (R-IL) that would have empowered the transportation secretary to issue grants for projects that create truck parking. Bost, a former truck driver and subcommittee member, suggested during the hearing that he’ll reintroduce the legislation during the new Congress.

Bost asked if states would seek funding for truck parking if Congress established a grant program. Jim Tymon, executive director of the American Association of State Highway and Transportation Officials, responded: “If there was a grant program for truck parking, states would be interested in that.”

He added: “I would say that it’s not just availability of funding on the state DOT side. A lot of the right-of-way the state DOTs have control of, there is a restriction as to what they can do within that right-of-way, including establishing new rest areas and commercializing them to be able to support truck parking.”

Dellinger’s written testimony criticized “regulatory limbo” that has slowed a Department of Transportation final rule that established oral fluid drug testing as an approved method for truck drivers and other transportation workers in safety-sensitive positions.

A revised DOT final rule that went into effect Dec. 5 states that employers can’t implement oral fluid testing until the Department of Health and Human Services has certified at least two laboratories to conduct it. A notice HHS published Jan. 3 indicates that no labs have been certified.

Under a proposed rule published Dec. 9, DOT would temporarily revise drug testing procedures to require employers to directly observe urine tests “in situations where oral fluid tests are currently required but oral fluid testing is not yet available.” These include if an original sample “was invalid without adequate medical explanation” or testing is for a worker’s return to duty. DOT accepted comments on the proposal through Jan. 8.

“Federal acceptance of both oral fluids and hair testing as independent, alternative testing methods would allow employers to identify a greater number of safety-sensitive employees who violate federal drug laws and keep these unsafe drivers off the road,” Dellinger wrote.

Source: Safety+Health, a NSC Publication

STATE, CITY, COUNTY AND MUNICIPAL DEVELOPMENTS

Illinois Employers: Navigating New E-Verify and I-9 Compliance Requirements

Effective January 1, 2025, Illinois employers face updated regulations under Public Act 103-0879, altering the landscape of E-Verify and Form I-9 compliance. This law applies to companies located in Illinois and any employer with employees working in Illinois, regardless of where the company is headquartered. It does not extend to employees working outside of Illinois for an Illinois-based company. The Illinois Department of Labor has clarified that the law does not prohibit private employers from using E-Verify. However, it does reaffirm current federal E-Verify requirements and impose several additional obligations to protect workers and ensure fair practices. Key Compliance Updates:

Expanded Employee Protections:

• Employers must notify employees when their work eligibility or documentation is questioned.
• Employers are required to inform the entire workforce in case of a federal I-9 audit.

Prohibited Practices:

• E-Verify cannot be used to prescreen applicants.
• Employers cannot act on tentative non-confirmations without following federal procedures.
• Employers must follow specific state and federal guidelines if they receive tentative non-confirmation notifications to ensure fair treatment and due process for all their employees.

State Penalties for Non-Compliance:

• Violations of the law may lead to penalties, emphasizing the importance of strict adherence.

Conclusion:

Contrary to some misconceptions, the law does not prevent private employers from using E-Verify. Rather, it regulates its use to uphold anti-discrimination policies, safeguard worker rights, and protect businesses. A number of the law’s provisions mirror those that have always been part of the E-Verify program, but employers (especially those in Illinois or with employees working in Illinois) should review their practices to ensure compliance with the state and federal requirements.

Source: Lexology – Hunton Andrews Kurth LLP- Dalina Callaghan and Brooke Hollmann

Kansas City makes it illegal to discriminate against people for having criminal records

The Kansas City Council passed an ordinance adding formerly incarcerated people to the city’s list of protected classes in Kansas City, Missouri. The move means that people can’t be denied employment, housing, or business for having criminal backgrounds.

Formerly incarcerated people are now a protected class in Kansas City, Missouri. The Kansas City Council passed an ordinance Thursday outlawing discrimination against people with criminal backgrounds in employment, housing, and business.

Source: KCUR – Kate Mays

Bill proposes changes to Utah’s sex offender registry

A controversial bill proposing changes to Utah’s sex offender registry was met with both support and criticism on Capitol Hill Friday.

When SB155 was first released by Senator Todd Weiler last week it was met with harsh criticism, on Friday a substitute bill was presented in the Senate Judiciary, Law Enforcement, and Criminal Justice Committee. The original version of SB155 focused on moving certain criminal offenses with a lifetime sex offender registration to the list of offenses only requiring a 10-year registration.

But now this substitute bill focuses on reducing the length of time on the registry before a sex offender, after serving their full sentence, can request a risk assessment and go before a judge to ask to be removed from the registry.

“I think in those rare circumstances where someone maybe got onto the database with unusual circumstances or they’re on the database and they truly have reformed their lives they should have the chance to make that case before a judge,” said Senator Todd Weiler (R-Wood Cross), Chief Sponsor of HB155.

During a public comment period on Friday, those in support and opposition to the bill spoke before the committee.

“Are we a society that believes in redemption,” said Steve Burton, a defense attorney who spoke in favor of the bill.

“By the time someone is asking for removal they have already done time,” added Mark Moffitt, who is also a defense attorney.

HB 155 looks to allow those with a lifetime registration to appeal to a judge 12 years after their sentence, not the current 20. And those with a 10-year registration sentence to appeal after 5-years, instead of 8.

Those in opposition to the bill asked the committee Friday to recognize the lifetime impact sex abuse crimes have on victims. Several expressed outrage that Utah’s lawmakers would even consider such a bill.

“We can forgive but we should never forget,” Patrice Patterson said. “This bill, even as amended, says a message to victims that we care more about the perpetrators then we do about them.”

“The damage done to survivors doesn’t end in 10, 12 years, it doesn’t end in 20 years,” Delanie England said.

Several of the lawmakers on the committee who voted to send the substitute bill to the full senate did so saying they didn’t necessarily support it as stands right now but wanted to give the full body a chance to debate it. The substitute bill passed 5-3 and now moves to the Senate Floor.

Source: KSL News Radio – Shara Park

Saint Paul, Minnesota enacts “wage theft” ordinance

Beginning January 1, 2025, the City of St. Paul, Minnesota’s Wage Theft Ordinance went into effect. The Ordinance largely incorporates the State of Minnesota’s existing wage theft legislation. However, similar to the Minneapolis Wage Theft Prevention Ordinance, effective in 2020, the City of St. Paul’s new Ordinance contains additional employer obligations for employers with employees working within the geographic boundaries of the City of St. Paul.

Employee Notice Information Required

Minnesota state law requires employers to provide detailed information, in writing, to Minnesota employees at the start of their employment and provide written notice of related changes to employees during employment. As of January 1, 2025, pursuant to Ordinance the notice for covered St. Paul employees must contain the following additional information:

• The date on which employment is to begin;
• A notice of the City of St. Paul’s minimum wage rates and an employee’s entitlement to such rates;
• If applicable to the employee, a statement that the sharing of gratuity is voluntary; and
• The overtime policy applicable to the employee’s position, if any, including when overtime must be paid and at what rate[s].

Under the Ordinance, employers may provide the information in the notice by reference to an employee handbook, collective bargaining agreement, or similar document, provided the employee is directed to the specific sections in which such information is contained.

In addition to providing the notice to all new hires, employers must provide the notice to all current, covered employees starting January 1, 2025, if the employer has not already provided the information contained in the notice to the employee. Similar to the state notice, the St. Paul notice must be signed by the employee and any change must be provided to the employee in writing before the change takes effect. Per the Ordinance, however, employers must additionally retain a copy of the initial notice as well as any written changes and records of when the employee received the notice(s).

Employers must provide employees with the notice in the language previously used for communication, or in a different language if the employer is aware the employee prefers it, as long as the Department has published notices in that language.

New Notice Poster Requirements

Annually, employers are required to notify employees of their right under the Ordinance. Employers are also required to post a notice of employees’ rights at the workplace/jobsite, in English and any language spoken by employees at the workplace/jobsite. Where the notice cannot be placed at the workplace/jobsite, employers may satisfy their obligations under the Ordinance by providing physical or electronic copies to each employee or posting the notice of rights on a web or app-based platform.

Additionally, employers must include a notice of employee rights in any handbook provided to employees.

Employers should assess their compliance obligations under the Ordinance and revise any existing handbooks and notices accordingly. Jackson Lewis attorneys are ready to assist with any compliance questions.

Source: Lexology – Jackson Lewis PN- Hadley M. Simonett, Gina K. Janeiro and Trey Gutierrez

A New Protected Category in Illinois: Family Responsibility

Effective January 1, 2025, Illinois protects from discrimination employees who provide personal care to family members. In so doing, Illinois joins several other states that provide a cause of action to employees who believe they face discrimination on the basis of “family responsibilities.”

The Law

House Bill 2161 amends Illinois’ existing Human Rights Act, the state’s version of Title VII of the Civil Rights Act of 1964. Prior to House Bill 2161, the Illinois Human Rights Act (“IHRA”) prohibited discrimination and harassment on the basis of actual or perceived race, color, religion, national origin, ancestry, age, sex, marital status, order of protection status, disability, military status, sexual orientation, pregnancy, unfavorable discharge from military service, citizenship status, or work authorization status. Now, effective in 2025, “family responsibilities” has been added to the list of protected categories.

The law defines family responsibilities as “an employee’s actual or perceived provision of personal care to a family member.” To define “family member” and “personal care,” the law references the existing definitions in the Illinois Employee Sick Leave Act. Under that law, covered family members are an employee’s child, stepchild, spouse, domestic partner, sibling, parent, mother-in-law, father-in-law, grandchild, grandparent, or stepparent. And “personal care” includes, but is not limited to, taking a family member to doctor appointments, tending to a family member’s medical, hygiene, nutritional, or safety needs, and providing emotional support to a family member with a serious health condition who is receiving inpatient or home care.

In addition to the discrimination and harassment protection, employees with family responsibilities, as defined under the law, also have protection from retaliation if they have made a report of discrimination on the basis of family responsibilities.

To guard against potential overbreadth of the law, Illinois added a provision that states employers are not obligated to “make accommodations or modifications to reasonable workplace rules for an employee based on family responsibilities” such as those related to leave, scheduling, productivity, attendance, absenteeism, timeliness, performance, and benefits. This is true, however, so long as these workplace rules are “applied in accordance with the [IHRA].” It is difficult to discern exactly how this limitation will interact with claims for familial responsibility discrimination, but this provision does make clear that the new law does not independently obligate employers to provide accommodations for familial responsibilities akin to, for example, the interactive process for disability discrimination claims, so long as the existing workplace rules are reasonable and enforced appropriately.

Steps Employers Should Take

Illinois employers should take note of this new protection for employees with family responsibilities and consider whether their actions or policies may be construed to discriminate on the basis of familial responsibilities – whether those responsibilities are actual or perceived. The law should also remind employers nationwide that the federal American with Disabilities Act provides protection to employees on the basis of their “association” with a disabled individual, such as a close family member or friend. Moreover, other states have laws with caregiver protections like Illinois – including Alaska, Delaware, Minnesota, and New York.

Employers should stay abreast of continued developments at the state and local level regarding familial and caregiver discrimination.

Source: Lexology – Hunton Andrews Kurth LLP- Daniel J. Butler and Holy H. Williamson

New York Data Breach Notification Law Updated

New York Governor Kathy Hochul recently signed into law several bills (S2659B and S2376B) modifying the state’s data breach notification law. The amendments revise the timing requirements for notice to affected individuals, expand the list of regulators to be notified, and add new data elements to New York’s definition of “private information.”

• Timing Requirements: Before the amendment, New York’s breach notification law required notification to affected New York residents “in the most expedient time possible and without unreasonable delay.” As of December 21, 2024, the law requires affected individuals to be notified no later than 30 days after discovery of the breach, except “for the legitimate needs of law enforcement.”
• Additional Regulator Notice Requirements: Also effective December 21, 2024, the law now requires notice to the New York Department of Financial Services. Previously, the law required notice to the New York State Attorney General, the New York Department of State, and the Division of State Police.
• Revised Definition of “Private Information:” Effective March 25, 2025, the definition of “private information” subject to the law’s notification requirements will include (1) medical information (i.e., any information regarding an individual’s medical history, mental or physical condition, or medical treatment or diagnosis by a health care professional) and (2) health insurance information (i.e., an individual’s health insurance policy number or subscriber identification number, any unique identifier used by a health insurer to identify the individual or any information in an individual’s application and claims history, including, but not limited to, appeals history).
• HIPAA Exemption: Pursuant to the law’s HIPAA exemption, a breach of protected health information would not trigger additional notification requirements to affected individuals. However, the law still requires notice to certain regulators, including the New York State Attorney General, the New York Department of State, and the Division of State Police. Notably, the HIPAA exemption was not amended and does not reflect the law’s new general requirement to notify the New York Department of Financial Services.

Source: Lexology – Hunton Andrews Kurth LLP

Oregon removes nearly 50K eviction records from background checks

Oregon’s state courts have cleared about 47,000 residential eviction records from people’s backgrounds, a significant step toward reducing barriers to housing access under a new state law.

The law, ORS 105.164 (House Bill 2001, 2023), requires courts to “set aside” and “seal” past residential evictions that meet specific criteria. These sealed evictions will no longer appear in background checks, legally treated as if they never occurred.

Judicial department staff manually reviewed approximately 160,000 eviction cases dating back to 2014 to determine eligibility. The December clearance represents the first phase of a broader effort to address housing challenges.

“An eviction can affect a renter’s ability to qualify for another rental and can have downstream effects on homelessness and transitory housing arrangements, health, and/or employment,” according to a 2023 bill summary from the House Committee on Housing and Homelessness.

The law applies to eviction cases where a court entered a judgment after Jan. 1, 2014, with additional specific eligibility requirements detailed on the judicial department’s website.

Court officials emphasized that the 47,000 records sealed in December are just the beginning. An additional backlog of approximately 50,000 cases remains under review, with a goal of completing those by the end of 2025.

Moving forward, state courts will automatically set aside eligible cases annually, creating a more streamlined process for record clearance.

Source: KGW-TV Portland

COURT CASES

Supreme Court to address class certification and Article III standing

On January 24, 2025, the U.S. Supreme Court agreed to answer a hotly contested question in class action litigation: “Whether a federal court may certify a class action pursuant to Federal Rule of Civil Procedure 23(b)(3) when some members of the proposed class lack any Article III injury.” The answer to that question has been the subject of intense litigation, and there is currently a three-way circuit split over the issue. The Supreme Court’s decision will thus significantly impact the class certification analysis in cases where, for one reason or another, there is reason to believe that some members of the proposed class are not injured within the meaning of Article III. Because different jurisdictions currently take different approaches, the Supreme Court’s resolution of this question may provide an opportunity for both plaintiffs and defendants to revisit class certification rulings in pending cases.

The case at issue is called Laboratory Corporation of America Holdings, dba Labcorp v. Luke Davis, et al., Case No. 22-55873. Plaintiffs are visually impaired individuals who claim they were denied equal access to touchscreen check-in kiosks at Labcorp facilities. Plaintiffs brought claims—individually and on behalf of a class of thousands of other allegedly similarly situated visually impaired individuals—against Labcorp. Plaintiffs seek damages under the Americans with Disabilities Act, California’s Unruh Act, and other related statutes.

Plaintiffs moved to certify a damages class under Rule 23(b)(3) that included “all legally blind individuals in California who visited a Labcorp patient service center in California and were denied full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations due to Labcorp’s failure to make its e-check-in kiosks accessible to legally blind individuals.”

In opposing class certification, Labcorp argued that Plaintiffs could not show Article III standing for each class member, because they could not demonstrate that each class member personally encountered—and were unable to use or discouraged from using—Labcorp’s kiosks. The District Court nevertheless certified the damages class.

On interlocutory appeal under Rule 23(f), Labcorp argued that the District Court should not have certified the class because it could not show that all putative class members had suffered an Article III injury. Labcorp cited the Supreme Court’s statement in TransUnion LLC v. Ramirez that “[e]very class member must have Article III standing in order to recover individual damages.” 594 U.S. 413, 431 (2021). Labcorp explained that certification was inappropriate because there was reason to believe that a substantial portion of individuals falling within the class definition are uninjured and thus lack standing under Article III.

The Ninth Circuit affirmed class certification, ruling that it did not matter “that some potential class members may not have been injured” because, under Ninth Circuit law, Rule 23 does not bar “certification of a class that potentially includes more than a de minimis number of uninjured class members.” Davis v. Lab’y Corp. of Am. Holdings, No. 22-55873, 2024 WL 489288, at *2 n.1 (9th Cir. Feb. 8, 2024). According to the Ninth Circuit, as long as the named plaintiff suffered an individual Article III injury, that was sufficient for class certification.

The Ninth Circuit’s ruling is but one of many decisions in recent years taking different approaches to evaluating whether a class may be certified when some of the proposed class members have not suffered an Article III injury. Indeed, as Labcorp describes it in its Petition for a Writ of Certiorari:

Broadly speaking, when faced with the question of how many uninjured people can be in a putative class, the circuits break into three camps. Some say none, holding that Article III bars certification where the class includes anyone who lacks standing; others say just a de minimis amount, holding that Rule 23(b)(3) permits nothing greater; and the rest say anything less than a really big number, holding that problems involving uninjured class members can usually be resolved down the road.

The Supreme Court is now tasked with deciding which approach is best or crafting a new approach to address the issue. Whichever way the Supreme Court rules, it is likely to impact a large swath of pending class actions. In the short term, district courts may delay ruling on class certification where a putative class contains uninjured members. If the Supreme Court holds that a class may not be certified that contains uninjured class members, it may make class certification more difficult in jurisdictions—such as the Seventh and Ninth Circuits—that have permitted such classes to be certified. Conversely, if the Supreme Court holds that a class may be certified that contains uninjured class members, it may make class certification easier in jurisdictions—such as the First Circuit and the D.C. Circuit—that have taken a more restrictive view of class certification. The Supreme Court’s decision may provide an opportunity to revisit class certification in cases where a class has already been certified, including by providing grounds for a motion for decertification under Rule 23.

The Supreme Court has set an expedited briefing schedule so that it may decide the case this Term. Petitioner’s opening brief is due on March 5, 2025; Respondents’ briefs are due on March 31, 2025; and Petitioner’s reply brief is due on April 21, 2025. For parties interested in providing their views in this important case, amicus briefs in support of Petitioners will be due on March 12, and amicus briefs in support of Respondents will be due on April 7. The Court has not yet set a date for argument, but we expect argument to take place in late April, with a decision issued by the end of June.

Source: Lexology –  Hogan Lovells- Adam K. Levin, Katie Wellington and James Yates

INTERNATIONAL DEVELOPMENTS

PLEASE NOTE: Spellings of words in International articles such as those written in the British English format are native to the original author and differ from the spellings of words in the American English format.

Spain is on the Brink of Legalizing Medical Marijuana

Spanish leaders are on the brink of legalizing medical marijuana and allowing tens of millions of adults to access the controversial drug. A Royal Decree that is expected to be signed and delivered before next summer will legalize medical cannabis in the country, adding Spain to the list of over 40 nations that have legalized the drug for either medical or recreational use.

But while marijuana enthusiasts in Spain have declared their approval of the move, some critics say the medical marijuana legalization measure is half-baked and could have achieved more. The European Commission received Spain’s draft Royal Decree for medical marijuana legalization from the Spanish Ministry of Health and will have three months to approve the Decree before forwarding it to the Council of State.

If there are no roadblocks, Spain could roll out the final decree in a little under half a year, finally capping the country’s long and often frustrating journey to cannabis reform. Political resistance from the Socialist Party (PSOE) was largely responsible for Spain’s glacial pace in cannabis reform compared to other countries in the European Union (EU).

Legalization opponents raised concerns about the side effects and safety of cannabis as well as the drug’s overall impact on Spanish society. Even so, patient campaigners and cannabis advocacy groups consistently campaigned for cannabis reform until the Parliament allowed research into medical marijuana in 2021, finally bringing the country a step closer to legalization.

Several countries, including dozens of states in the U.S., and Canada have already approved the use of medical marijuana in the treatment of over a dozen qualifying medical conditions. Spain’s medical marijuana proposal would include the following in its qualifying conditions list; chronic therapy-resistant pain, chemotherapy-caused nausea and vomiting, severe, therapy-resistant epilepsy, and other conditions that are scientifically proven to respond to cannabis-based treatments.

Even though the Ministry of Health has indicated that the list could expand in the future as scientific evidence of marijuana’s medical benefits grows, patient groups say it is way too limited already. However, this seems to be a feature rather than a bug as the Royal Decree lays out a program with major restrictions. The Spanish Ministry of Health seeks to launch a tightly regulated medical marijuana program that doesn’t allow cannabis flower or home cultivation for medical cannabis patients.

Rather than cannabis flower, patients will have to purchase cannabis-infused products from pharmacies, a fact that has raised questions over affordability and availability. The Decree also seems to contradict existing cannabis cultivation laws. While Spain allows home cultivation for personal use as long as the plants are kept out of public view on private property, the medical cannabis proposal prohibits home cultivation for medical marijuana patients.

The most apt interpretation would be that medical cannabis patients won’t be allowed to grow marijuana at home for medical use while recreational users can continue growing the drug as long as they follow Spain’s strict marijuana cultivation laws, suggesting a medical marijuana program that would be more restrictive than Spain’s adult use policies.

If Spain finally launches its medical marijuana program, business opportunities could open up for international firms like TerrAscend Corp. (TSX: TSND) (OTCQX: TSNDF) that may be looking to expand their footprint in different markets.

Source: CNW

MISCELLANEOUS DEVELOPMENTS

New Executive Order Revokes 60-Year Old Executive Order 11246 and Targets “Illegal” DEI Efforts: What This Means for Employers

Real World Impact: On January 21, 2025, on his second day in office, President Trump issued an Executive Order entitled “Ending Illegal Discrimination And Restoring Merit-Based Opportunity” (the “Executive Order”). The Executive Order revokes, among other things, Executive Order 11246, and calls for the end of “illegal” and “immoral” “diversity, equity, inclusion, and accessibility (DEIA)” preferences and discrimination that “can violate the civil-rights laws of this Nation.”

Federal contractors have 90 days from the date of the Order during which they “may” continue complying with Executive Order 11246.

Background

Executive Order 11246, signed into law by Lyndon B. Johnson in 1965 to combat employment discrimination and thereafter amended multiple times, required federal contractors and subcontractors to “take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, sexual orientation, gender identity, or national origin.” EO 11246 was included in virtually all government contracts and many financial assistance agreements. The Office of Federal Contract Compliance Programs (OFCCP), a federal agency under the DOL, was charged with enforcing Executive Order 11246, along with the Vietnam Era Veterans’ Readjustment Act of 1974 (VEVRAA) and Section 503 of the Rehabilitation Act of 1972 (Section 503). In doing so, OFCCP conducted audits of neutrally selected contractors and subcontractors, as well as complaint investigations, to enforce these nondiscrimination requirements and ensure contractors and subcontractors were taking action to recruit diverse, qualified applicants.

Requirements of the Order “Ending Illegal Discrimination and Restoring Merit-Based Opportunity”

The Executive Order directs the OFCCP to “immediately cease” all of the following:

(A) Promoting “diversity”;

(B) Holding federal contractors and subcontractors responsible for taking “affirmative action”; and

(C) Allowing or encouraging federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin.

Following on the heels of the Executive Order, Acting Secretary of Labor Vincent Micone issued a Secretary’s Order, effective immediately, ordering all DOL employees, including the OFCCP, Office of Administrative Law Judges, and the Administrative Review Board, to “immediately cease and desist all investigations and enforcement activity under the rescinded Executive Order 11246.” As a result, all pending cases, conciliation agreements, investigations, complaints, and any other enforcement-related or investigative activity was halted. Contractors and subcontractors with open reviews or investigations should be receiving notification by January 31, 2025, that the EO 11246 portion of the review or investigation has been closed, and the Section 503 and VEVRAA components of the review or investigation are being held in abeyance pending further guidance.

Statutory Obligations Remain in Place

Although the full impact of the new Executive Order remains to be seen, it is important to note that the OFCCP’s enforcement of VEVRAA and Section 503 is not impacted by the Executive Order. As Section 503 and VEVRAA are statutory, they remain in effect and must continue to be followed. Likewise, federal contractors and subcontractors must continue complying with nondiscrimination, antiharassment and antiretaliation obligations under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act and the Equal Pay Act.

Annual Federal Reporting Obligations Remain in Place

All employers, including contractors and subcontractors, with at least 100 employees must continue filing annual EEO-1 reports, and contractors with federal contracts or subcontracts valued at $150,000 or more must continue filing annual VETS-4212 reports.

New Certification Obligation

As previously mentioned, in addition to rescinding EO 11246, the Executive Order also speaks to ending “illegal” race- and sex-based preferences allegedly contained in DEIA programs that may violate civil rights laws. Specifically, it seeks to eliminate DEIA initiatives that preference a specific race or gender/ethnicity, and requires the heads of every government agency to include in contracts and grant awards a term requiring the contractual counterparty or grant recipient to (a) agree that its compliance “in all respects” with all applicable federal antidiscrimination laws “is material to the government’s payment decisions for purposes of section 3729(b)(4) of title 31, United States Code”; and (b) “certify” that it does not “operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.” Based on these certifications, if a contractor is found to have submitted a request for payment while maintaining an “illegal” DEIA program, it could be subject to False Claims Act liability. It remains to be defined which types of programs or activities may be considered “illegal” DEIA under the Executive Order.

Implications for Private Employers

Although the Executive Order does not apply to private employers generally, it includes a provision titled “Encouraging the Private Sector to End Illegal DEI Discrimination and Preferences.” This provision directs the heads of all agencies, with the assistance of the Attorney General, to take action to advance in the private sector the policy of “individual initiative, excellence, and hard work.” To accomplish this, the Executive Order requires recommendations and a proposed strategic enforcement plan within 120 days for enforcing federal civil rights laws and encouraging the private sector to end illegal discrimination and preferences, including DEI, which should identify:

1. key sectors of concern within each agency’s jurisdiction;
2. “[t]he most egregious and discriminatory DEI practitioners in each sector of concern”;
3. a specific plan to deter DEI programs or principles (whether or not they are officially called “DEI”) that constitute “illegal” discrimination or preferences;
4. identification of up to 9 potential civil compliance investigations of publicly traded corporations, large non-profit corporations or associations, foundations with assets of $500 million or more, state and local bar and medical associations, and institutions of higher education with endowments of over $1 billion;
5. identification of litigation that would be potentially appropriate for federal lawsuits, intervention or statements of interest; and
6. proposals for potential regulatory action and sub-regulatory guidance.

For a more detailed discussion of the potential impact of the president’s recent Executive Orders on private employers’ DEI programs and initiatives, please see our January 27, 2025 Alert, Will the Elimination of Efforts in the Federal Sector to “Build a Workforce That Reflects the Diversity of America” Impact the Private Sector?

Next Steps for Employers

• Continue preparing VEVRAA and Section 503 Affirmative Action Plans and abide by state and local affirmative action statutory or contractual requirements.

The Executive Order does not revoke VEVRAA or Section 503 obligations and does not impact state and local affirmative action requirements. Therefore, contractors and subcontractors should continue to prepare annual VEVRAA and Section 503 AAPs. Contractors should also consider whether they want to continue analyzing personnel activity data annually (hires/promotions/terminations) in the context of confirming compliance with antidiscrimination laws, or in relation to any obligations that may exist outside of EO 11246. Without the restrictions of analyzing data by job groups, as was required under EO 11246, contractors have flexibility to review their data in groupings that make the most sense based on how they make employment-related decisions. Also, contractors should continue engaging in their privileged pay analysis practices to support compliance with existing federal law and state pay transparency and pay reporting requirements.

• Audit DEIA initiatives and programs to confirm legal compliance.

It appears from the Executive Order that there is a presumption that affirmative action efforts and DEIA programs are necessarily the equivalent of illegal quotas or preferences. This is not, however, the case. Indeed, it has always been unlawful under Title VII to have race-, gender- or ethnicity-based preferences in employment.

DEIA efforts generally exist to make available opportunities for historically underrepresented groups to be considered for opportunities – based on their individual initiative, excellence and hard work – with the best qualified candidate being selected for the position or promotion, without regard to the individual’s race, gender or ethnicity.

With this in mind, DEIA programs that focus on equity in opportunity (not outcome), mentorship and leadership development programs that do not involve preferential treatment remain legally permissible. Programs that are race and gender neutral also continue to be legally permissible, such as scholarships or mentoring programs supporting individuals with disabilities, first generation college graduates, or internships for disadvantaged college students, or professional development opportunities for veterans.

On the other hand, DEIA programs that create explicit race-, gender- or ethnicity-based preferences, targeted diversity scholarship or internship programs that focus on a specific race, gender or ethnicity, and other programs that either prioritize or exclude specific demographic groups will likely face scrutiny. In addition, employers should not financially incentivize managers or other members of leadership to meet diversity goals, as EEOC has publicly stated that such incentives can be evidence of discriminatory intent.

Employers with DEIA programs should take stock of their programs, initiatives and trainings and conduct a privileged review to confirm they are in compliance with the Executive Order and legal precedent. In the end, all employers should remember that they should always hire and promote the most qualified candidate and treat employees and candidates as individuals with their own unique strengths, weaknesses and life experiences. Removing barriers to inclusion remains a legally compliant way to promote DEIA.

• Remain vigilant in keeping up to date with new legal and executive order developments.

Right now, it is unclear when and how EO 11246 requirements will be removed from existing federal contracts, and when related FAR clauses may be rescinded. It is also unclear at this time what federal contracting and grant clauses might say in the future regarding discouraging “illegal” DEI programs and how they will be enforced, not to mention what specifically might be deemed “illegal” DEI. We anticipate additional guidance as OFCCP’s mission is defined by the current Administration, and as the agencies and Attorney General create the aforementioned strategic enforcement plan, and the new certification requirement is fleshed out.

Source: Lexology – FordHarrison – Nancy Van der Veer Holt and Erica Johnson

Ohio’s Pay Stub Protection Act: What Employers Need to Know

Effective April 9, 2025, the Pay Stub Protection Act, codified as Ohio Revised Code Section 4113.14, mandates that every employer in the state provide each of their employees with a written or electronic pay statement that includes the employee’s earnings and deductions for each pay period, on the employer’s regular paydays. The pay statement must also include:

1. The employee’s name;
2. The employee’s address;
3. The employer’s name;
4. The total gross wages earned by the employee during the pay period;
5. The total net wages paid to the employee for the pay period;
6. A listing of the amount and purpose of each addition to or deduction from the wages paid to the employee during the pay period;
7. The date the employee was paid and the pay period covered by that payment; and
8. For an employee who is paid on an hourly basis, all of the following information:
   1. The total number of hours the employee worked in that pay period;
   2. The hourly wage rate at which the employee was paid; and
   3. The employee’s hours worked in excess of 40 hours in one workweek.

Employers can be penalized for failing to comply with this requirement. However, unlike in some other states, Ohio employees do not have an independent cause of action against their employer for failing to provide this pay stub. Instead, if an employer fails to provide the required paystub and more than 10 days have passed after the employee requests such paystub, the employee may submit a report of the violation to the Ohio director of commerce, who will investigate and may issue a written notice of violation to the employer, which must post the notice of violation for 10 days.

In anticipation of the April 9, 2025 effective date, Ohio employers, including HR and payroll teams, should prepare pay stubs or review current paystubs to ensure compliance with these new requirements.

Source: Lexology – Little Mendelson PC – Andrew Klaben -Fingold