FTC Publishes Annual Merger Notification Jurisdictional Threshold and Filing Fee Adjustments
On January 10, 2025, the Federal Trade Commission (FTC) released increased jurisdictional thresholds, filing fee thresholds, and filing fee amounts for merger notifications made pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act).
Merger Notification Threshold Changes
The HSR premerger notification regime requires transacting parties to notify the FTC and US Department of Justice (DOJ) of their intent to consummate a transaction that meets or exceeds certain jurisdictional thresholds, unless an exemption applies. The adjusted thresholds apply to all transactions that close on or after the effective date, which will be 30 days after the notice is published in the Federal Register.
The HSR thresholds are adjusted annually based on gross national product (GNP). The threshold changes are as follows:
The base statutory size-of-transaction threshold, the lowest threshold requiring notification, will increase to $126.4 million.
The upper statutory size-of-transaction test, requiring notification for all transactions that exceed the threshold (regardless of the size-of-person test being satisfied), will increase to $505.8 million.
The statutory size-of-person lower and upper thresholds (which will apply to deals valued above $126.4 million but not above $505.8 million) will increase to $25.3 million and $252.9 million, respectively.
HSR Filing Fee Changes
The FTC is also required to update filing fee thresholds and amounts on an annual basis. Filing fee thresholds are adjusted based on the percentage change in GNP and filing fee amounts are adjusted based on the percentage change in the Consumer Price Index. These changes will also take effect 30 days after publication of the notice in the Federal Register.
The adjusted filing fee thresholds and fee amounts are provided in the table below.
The Impact of Trump’s Tariffs on the Wine Industry: Past and Future
The wine industry faced significant challenges due to tariffs imposed by President Trump’s first administration. During the presidential campaign, and since his election on November 5, 2024, President Trump has made it clear that he will enact higher tariffs as a key part of the political agenda of his second administration. A few days ago, he nominated Jamieson Greer as his pick for U.S. Trade Representative as the nation’s top trade official, who served as chief of staff to Robert Lighthizer, then U.S. Trade Representative during Trump’s first term; if confirmed by the U.S. Senate, Mr. Greer is expected “to pursue an ambitious trade agenda.” This post highlights the history of Trump’s tariffs on wine, their effects, and what might be expected in his new term.
Trump’s First Term: A Retrospective
In October 2019, the Trump administration imposed a 25% tariff on still wines under 14% alcohol by volume from France, Germany, Spain, and the United Kingdom. These tariffs were part of a broader trade dispute with the European Union over subsidies to aerospace companies. The tariffs led to increased costs for importers, distributors, and ultimately consumers, causing significant disruption in the wine market.
Notable Effects of the 2019 Tariffs:
Increased Prices: The cost of European wines in the U.S. rose, leading to higher prices for consumers. The tariffs specifically targeted alcoholic beverages. However, supplies such as barrels and other equipment were not subject to them.
Market Shifts: Some European producers adjusted their products to avoid tariffs, such as by increasing the alcohol content of their wines.
Economic Impact: The tariffs strained relationships with European trade partners and led to retaliatory tariffs on American products. For instance, the European Union imposed a 25% tariff on American whiskey and Harley-Davidson motorcycles.
Potential Tariffs in Trump’s New Term
As Trump begins his new term, there is speculation about the potential for new tariffs and their impact on the wine industry. Trump has indicated a willingness to impose even higher tariffs on a broader range of products. Here are some possibilities:
Broader Tariffs: Trump has suggested tariffs as high as 100% on goods from China and 25% on goods from Mexico and Canada. When Trump imposed tariffs on China in his first administration, in April 2018, China retaliated by imposing a 15% tariff on U.S. wine. Thus, broader tariffs in Trump’s second administration could impact (directly or indirectly) the wine industry.
Economic Consequences: Higher tariffs could lead to a “long-term war” in trade, affecting thousands of jobs and causing economic instability.
Industry Response: The wine industry is already preparing for potential disruptions. Importers and retailers are considering stockpiling European wines to hedge against future price increases.
The Broader Economic Context
The potential for new tariffs comes at a time when the global economy is already facing significant challenges. The COVID-19 pandemic had already disrupted supply chains and led to economic slowdowns worldwide. In this context, additional tariffs could exacerbate existing problems and create new ones.
Supply Chain Disruptions: The wine industry relies on a complex global supply chain. Tariffs can disrupt this chain by increasing costs and creating uncertainty.
Consumer Behavior: Higher prices for imported wines may lead consumers to switch to domestic alternatives or reduce their overall wine consumption.
Global Trade Relations: Tariffs can strain relationships between countries and lead to retaliatory measures, further complicating international trade.
Industry Strategies and Adaptations
The wine industry has shown resilience in the face of past challenges and is likely to adapt to new tariffs as well. Some strategies that industry stakeholders might employ include:
Diversifying Supply Chains: Importers may seek to diversify their sources of wine to reduce reliance on countries subject to tariffs.
Product Adjustments: Producers might adjust their products to avoid tariffs, such as by changing the alcohol content or packaging size.
Advocacy and Negotiation: Industry groups may engage in advocacy efforts to influence trade policy and negotiate for more favorable terms.
Conclusion
The wine industry faces significant uncertainty as President Trump begins his new term. The tariffs imposed during his first term had far-reaching effects, and new tariffs could exacerbate these challenges. Industry stakeholders are bracing for potential economic fallout and preparing strategies to mitigate the impact. As the situation evolves, the wine industry will need to navigate these complexities to maintain stability and growth.
The future of the wine industry under Trump’s new term remains uncertain, but one thing is clear: the industry will need to remain adaptable and resilient in the face of ongoing challenges. By understanding the potential impacts of new tariffs and preparing accordingly, the wine industry can continue to thrive despite the obstacles it may encounter.
Healthcare Preview for the Week of: January 13, 2025 [Podcast]
Final Week of Biden Administration
During the Biden Administration’s final week, congressional Republicans are moving full steam ahead with Senate confirmation hearings for Trump-nominated officials and with ongoing budget reconciliation discussions. Nomination hearings this week include Doug Collins for secretary of Veterans’ Affairs and Russell Vought for Office of Management and Budget (OMB) director. Hearings have yet to be scheduled for Robert F. Kennedy Jr., nominated for Health and Human Services (HHS) secretary, and other HHS agencies.
We are waiting to see if certain Biden Administration proposed rules, some of which have cleared OMB review, will be finalized this week, before President-elect Trump is inaugurated on January 20, 2025. These proposed regulations include the Marketplace Notice of Benefit and Payment Parameters, a regulation that would require coverage of over-the-counter contraception without cost-sharing or a prescription, and a rule on telemedicine prescribing of controlled substances, among others. Other proposed regulations with comment periods still open, including the 2026 Medicare Advantage policy and technical rule, could be substantially changed when Trump takes office.
Looking ahead to the new Administration, congressional Republicans are eyeing healthcare policies as potential savers for their forthcoming budget reconciliation, which is expected to target significant cuts in federal spending. At a December 2024 Republican conference meeting, $2.5 trillion in mandatory spending cuts were put on the table in exchange for a $1.5 trillion increase in the debt limit. The Congressional Budget Office (CBO) recently released options for reducing the deficit; CBO periodically releases such options, providing legislators with price tags for various policies. Healthcare options outlined by CBO include a version of Medicare site neutral payment reforms, Medicaid per capita caps, and a reduction in payment rates for 340B entities. The House Budget Committee also circulated a spending reform options document late last week detailing up to $5.7 trillion in savings. Healthcare is a primary target for savings as it makes up almost $3.5 trillion of the total figure, with $2.3 trillion coming solely from Medicaid savings.
The key House and Senate healthcare committees (Senate Finance; Senate Health, Education, Labor and Pensions; House Energy and Commerce; and House Ways and Means) are officially formed for the 119th Congress, with new members on both sides of the aisle for all four committees. The House Rules Committee is still without a chair, however, and other committees, including the House Education and Workforce Committee, are not yet formed.
Today’s Podcast
In this week’s Healthcare Preview podcast, Debbie Curtis joins Maddie News to discuss the final week of the Biden administration and the week ahead in the 119th Congress, with the Senate focused on confirmation hearings for Trump-nominated officials, and Congressional Republicans eyeing healthcare policies as potential savers for upcoming legislation.
NHTSA Adopts Final Rule to Formalize its Whistleblower Program under the Motor Vehicle Safety Whistleblower Act
On December 17, 2024, the National Highway Traffic Safety Administration (“NHTSA” or “Agency”) adopted a final rule to formalize its whistleblower program under the Motor Vehicle Safety Whistleblower Act (Whistleblower Act).[1] Under the final rule, which adopts the April 14, 2023[2] proposed rule without significant changes, whistleblowers who share original information related to violations of NHTSA’s regulations could receive an award between 10% and 30% of any civil penalties over $1 million paid by the violating entity.
To qualify for this bounty, the whistleblower must provide original information – information that is derived from independent knowledge or analysis that is not already known to the U.S. Department of Transportation (U.S. DOT) or NHTSA. The information cannot be exclusively derived from an allegation made in a judicial or administrative proceeding or other outside source (such as a government report or investigation, or a media report). Whistleblowers must also first report the information through internal channels, except in limited circumstances, such as for good cause shown.
Therefore, manufacturers should act now to ensure they have internal policies in place that, among other things, provide reporting processes that include clear protections against retaliation for whistleblower actions. Fostering a culture of vehicle safety throughout the manufacturing process further reduces the risk of civil penalties and bounties for whistleblowers.
“Original Information”
Under the final rule, a whistleblower who submits “original information” to NHTSA related to violations of NHTSA’s regulations may receive a monetary award in the form of a percentage of any civil penalties over $1 million paid by the violating entity. NHTSA’s final rule clarified that any restitution required of the violating entity is not considered a “civil penalty” for purposes of determining the amount of civil penalties assessed against the violating entity.
Under the Whistleblower Act, Congress defined “original information” as information:
derived from the independent knowledge or analysis of an individual;
that is not known to NHTSA from any other source (unless the whistleblower is the original source); and
that is not exclusively derived from an allegation made in a judicial or an administrative action, in a governmental report, a hearing, an audit, or an investigation, or from the news media, unless the whistleblower is a source of the information.
However, whistleblowers are not required by the final rule to “have direct, first-hand knowledge of potential violations.” Rather, whistleblowers “may have ‘independent knowledge’ of information even if that knowledge derives from facts or other information that has been conveyed by third parties.”
NHTSA excludes from consideration certain categories of information submitted by whistleblowers, including information:
Derived solely from attorney-client privileged communications;
Derived solely from attorney work product; or
Obtained in violation of Federal or State criminal law, as determined by a court.
Therefore, manufacturers should properly mark all attorney-client privileged communications and any attorney work product to prevent them from forming the basis for whistleblower reporting.
Whistleblower Reporting Requirements
To be eligible for the bounty, a potential whistleblower must file a claim for a whistleblower award by completing the WB-AWARD form and submitting it to NHTSA no later than 90 calendar days from the date NHTSA publishes a “Notice of Covered Action,” which notifies the public of its intent to assess civil penalties against a violating entity.
The potential whistleblower must also first report original information through the violating entity’s internal procedures, when such procedures are in place, unless[3]:
The whistleblower reasonably believed that such an internal report would have resulted in retaliation, notwithstanding 49 U.S.C. 30171(a);
The whistleblower reasonably believed that the information: (A) was already internally reported; (B) was already subject to or part of an internal inquiry or investigation; or (C) was otherwise already known to the motor vehicle manufacturer, part supplier, or dealership; or
The Agency has good cause to waive this requirement.
Thus, manufacturers should take steps now to implement internal reporting procedures and foster a culture of vehicle safety to increase the likelihood that they will first receive reports of suspected violations and have an opportunity to act, reducing the potential for civil penalties assessments and whistleblower fees.
Next Steps for Manufacturers
Manufacturers should remember that the best defense against Safety Act violations and civil penalties is to foster a culture of vehicle safety throughout their organizations. Consistent and clear messages that vehicle safety is a priority, coupled with robust internal processes and procedures that encourage reporting and proper evaluation of potential safety issues, can mitigate a manufacturer’s risk on multiple fronts, including the emergent risk associated with NHTSA’s whistleblower program and the risk of civil penalties assessments.
Manufacturers should also ensure that they have internal policies that provide clear protections against retaliation (including protections for whistleblowers, such as an anonymous reporting option) for anyone that reports a potential violation, as well as an appropriate level of transparency for the reporter (such as confirming an issue is being investigated by the relevant safety team). These policies and messages are important steps for fostering a safety culture and should be part of the manufacturer’s regular training programs. Finally, all documents that are subject to the attorney-client privilege or protected under the work product doctrine should be properly marked and stored.
[1] The Whistleblower Act is part of the Fixing America’s Surface Transportation (FAST) Act, signed into law by President Obama in 2015.
[2] See NHTSA Publishes Proposed Rule to Formalize its Whistleblower Program under the Motor Vehicle Safety Whistleblower Act for a discussion of the proposed rule.
[3] See 49 C.F.R. 513.7(g)
Reform to Mexico’s Federal Labor Law Related to Digital Platforms
Go-To Guide:
Mexico updates its Federal Labor Law to regulate digital platforms, ensuring standardized labor conditions and rights for gig economy workers.
The amendments introduce new definitions and rules, including flexible work schedules, digital contracts, and algorithmic management transparency.
Employers must provide social security, profit sharing, and training, while workers gain union rights and protection against discrimination.
Non-compliance with the new regulations may result in fines, with a phased implementation.
On Dec. 24, 2024, Mexico published amendments to its Federal Labor Law regarding digital platforms. These changes take effect 180 days after publication.
This GT Alert highlights significant modifications to the law and details the new definitions, penalties, and implementation timelines.
I.
Purpose
The amendments seek to establish a regulatory framework for digital platforms in Mexico that standardizes labor conditions for the employees working through these platforms. This includes compensation, effective access to social security, provision of benefits, implementation of security measures, and profit sharing. The regulation seeks to ensure that digital platform employees’ labor rights are protected under a legal framework.
The initiative focuses on regulating the “gig economy” platforms, meaning income generation outside a traditional work scheme. Nonetheless, these regulations have implications for other similar business models operating under unconventional work schemes. The regulation seeks not only to standardize working conditions for employees working for these types of platforms, but also to potentially apply to any company with a similar business model, ensuring wider labor protection within the digital industry.
II.
New Definitions
Chapter IX B is incorporated into the Federal Labor Law, which addresses the topic of work on digital platforms, along with the following definitions related to this modality:
1.
Digital platform: Computer systems that assign tasks or services to workers for third parties using information technologies as defined in article 330-A of the Federal Labor Law.
2.
Work on digital platforms: A subordinate employment relationship where workers provide physical services managed by a person or company through a digital platform.
3.
Employee: An individual who works on digital platforms, earning at least one monthly minimum wage in Mexico City.
4.
Effective working time: The period from when a worker accepts a task until they complete it. Employees who do not generate a monthly net income exceeding the amount specified in the preceding paragraph will be considered independent contractors.
5.
Algorithm: Automated decision-making systems that control and supervise digital platform workers.
III.
Changes
Employment Contract: Employers must use approved contract templates and can sign them digitally. Employers must submit the contract template to the Federal Center for Conciliation and Labor Registration for approval.
The contract should establish the equipment and work supplies provided, the percentage and amount the employer will pay the employee for each task service, work, or job, any bonuses that may be applicable, and health and safety obligations, among others.
Work Schedule: Schedules are flexible and discontinuous, with employment existing only during effective working time.
Salary: Pay is set per task and includes proportional amounts for rest days, vacations, and bonuses.
Social Security: Tips that individuals generate on digital platforms will not be considered part of the base salary for social security purposes. Employers must cover occupational risks during effective working time.
Profit Sharing: Workers with over 288 annual hours can participate in profit sharing.
Union Freedom: Workers can form or join unions.
Algorithmic Management: Employers must inform workers about how algorithms affect their employment.
Employer Obligations: Special obligations are included for digital platform employees, as well as for employers and individuals who manage or operate services through digital platforms.
Review Mechanisms: Digital platforms must provide employees with mechanisms to review decisions affecting their access to or connection with the platform. Autonomous personnel, not algorithms, must manage these mechanisms.
Special Causes of Termination: New reasons for justified termination include:
–
submitting false data and;
–
compromising user security;
–
engaging in acts of dishonesty or misconduct, acts of violence, threats, insults, harassment, and/or sexual harassment, mistreatment, discriminatory acts, or other similar acts during and due to work; and
–
repeatedly failing to comply with the accepted tasks, services, works, jobs, or work-related instructions without justified cause.
Training: Employers must provide necessary training and tools.
Gender Perspective: Companies must protect workers from gender-based discrimination and violence.
IV.
Fines
Violations will be subject to additional fines calculated based on the Unidad de Medida y Actualizacion (Unit of Measurement and Update UMA), which is the economic reference in pesos used to determine the amount of payments for obligations and scenarios outlined in federal laws, state laws, and any legal provisions arising from them. For 2025, the UMA is valued at $113.14 Mexican pesos.
2,000-25,000 UMAs for failing to register contracts before the Federal Center for Conciliation and Labor Registration.
1,000-25,000 UMAs for failing to issue or report modifications in the algorithmic management policy document.
250-5,000 UMAs for violating the provisions of Article 291-K concerning administrating and managing services through digital platforms.
500-25,000 UMAs for failing to implement the mechanisms outlined in Article 291-P regarding actions related to autonomous personnel rather than algorithms.
V.
Implementation Deadlines
This regulation will be implemented gradually.
The law becomes enforceable 180 days after its publication in the OGF.
Before being enforceable, the Mexican Social Security Institute and the National Housing Fund Institute for Employees will issue guidelines through a mandatory pilot test to be conducted five days after the law takes effect. The guidelines will establish general rules on employers’ contributions for employees hired through digital platforms.
The Mexican Social Security Institute will have 180 days from the rules’ publication date, to consider the results of the pilot test prepare additional compliance initiatives, which will be presented to the Legislative Branch for discussion.
The Ministry of Labor must, within five days of the rules’ effective date, establish the general provisions governing the net income calculation for employees, which is currently determined by tasks, services, or work performed.
Read in Spanish/Leer en español.
FTC’s “Click to Cancel” Rule to Simplify Subscription Cancellations Becomes Effective
The final text of the amended Negative Option Rule, featuring the new “Click to Cancel” program, goes into effect this week on Wednesday, January 15, 2025, and should become enforceable approximately four months later on Wednesday, May 14, 2025. The FTC believes that this rule will help the FTC get money back to people who are misled by sellers who don’t tell the truth or leave out necessary information, people who get billed when they didn’t agree to pay, and sellers who make it hard, or impossible, to cancel. According to FTC Commission Chair Lina M. Khan, “Too often, businesses make people jump through endless hoops just to cancel a subscription. The FTC’s rule will end these tricks and traps, saving Americans time and money. Nobody should be stuck paying for a service they no longer want.”
This rule is part of the FTC’c ongoing review of its 1973 Negative Option Rule, which the agency is modernizing to combat unfair or deceptive practices related to subscriptions, memberships, and other recurring-payment programs in an increasingly digital economy where it’s easier than ever for businesses to sign up consumers for their products and services.
What is a negative option?
Negative options refer to transactions that include automatic renewals, continuity plans, and free- or fee-to-pay conversion offers where a buyer’s silence or failure to affirmatively act to either reject a good or service or to cancel the transaction is interpreted as continuing acceptance of the plan or offer. In other words, if the buyer does not cancel or take action to suspend the transaction’s recurring nature, they will continue to be periodically charged for the goods and services they may not have intended to purchase.
Scope of the amended rule
The amended rule applies to sellers of nearly all negative option programs (regardless of whether they originated online, via phone, or in-person), and the rule applies to both business-to-business and business-to-consumer transactions.
What does the Negative Option Rule prohibit?
The rule prohibits: (1) misrepresentations of any material fact made while marketing using negative option features; (2) requires sellers to provide important information prior to obtaining consumers’ billing information and charging consumers; (3) requires sellers to obtain consumers’ unambiguously affirmative consent to the negative option feature prior to charging them; and (4) requires sellers to provide consumers with simple cancellation mechanisms to immediately halt all recurring charges.
One of the biggest concerns of the FTC is for sellers that give free-trial subscriptions to consumers and then those consumers complain that they didn’t know the details of the subscription obligations and/or the consumers have been unable to cancel the subscription. The rule requires important information to be truthful, clear, and easy to find. Consumers have to know what they’re agreeing to before they are signed up. Sellers have to be able to show that the consumers knew what they agreed to before they signed up. The rule requires there be a way to cancel any subscription that is as quick and easy as it was to sign up.
Potential enforcement
The rule indicates that violators can be held responsible for redress and other civil penalties. Sellers can expect litigation over the following allegations involving negative options for: 1) misrepresenting any material fact made while marketing goods or services; 2) failing to clearly and conspicuously disclose material terms prior to obtaining a consumer’s billing information; 3) failing to obtain a consumer’s express informed consent before charging the consumer; and, 4) failing to provide a simple mechanism to cancel and immediately halt charges. The rule requires sellers to implement a framework that prevents the aforementioned, and violations can result in not just having to refund the consumer’s fees, but also being held responsible for civil penalties.
Rule is not popular with everyone
The rule faces multiple overlapping legal challenges across the country, such as in the Fifth Circuit Court of Appeals. The rule also faces a change in administration, and one of the most relevant concerns may be the sharp dissent from recently appointed FTC Commissioner Melissa Holyoak.
Remember the state rules
In addition to the FTC rule, negative option sellers should be mindful that automatic renewals remain a priority for state regulators. California, for example, updated its specific requirements four times in the last 14 years, the latest text of which explicitly applies to “free-to-pay conversions” of the type regulated in the updated federal rule, among other textual similarities. The state’s recent stringent update to the law will become effective on July 1, 2025, and mirrors, and in some aspects goes beyond, the FTC rule.
Listen to this post
Telecom Alert: 6th Circuit Net Neutrality Decision; Updated Application Fees; January Open Meeting; Rip and Replace Funding; RMD Filing Requirements [Volume XXII, Issue 2]
6th Circuit Overturns Net Neutrality Order
The 6th Circuit issued an opinion on January 2nd rejecting FCC arguments to uphold its statutory authority to impose net-neutrality policies and declaring that commercial broadband providers are not “telecommunications services” subject to Title II regulations under the Communications Act. The Court, relying on “the traditional tools of statutory construction,” instead classified broadband providers as offering an “information service” which escapes common-carrier regulations. The Court also rejected once long-standing deference to the FCC’s technical and policy expertise under the Chevron doctrine, citing the recent Loper Bright decision which permits courts to use their own judgment to interpret laws.
FCC Announces 2025 Application Fee Schedule
The FCC adopted rule changes to its Schedule of Application Fees at the end of the year to reflect Consumer Price Index (CPI) changes in even-numbered years. Commissioner Carr noted that the CPI increased by 17.41% since the last adjustment in 2022, which in part was related to rising inflation. While the rule changes do not implement proposed fee alterations in open rulemakings, the Order raised fees for Section 214 authorizations and cable landing licenses, wireless and experimental licensing, among other applications.
FCC Announces January Open Meeting
FCC Chairwoman Rosenworcel announced the Commission will hold an Open Meeting on January 15, 2025. In contrast to past meetings, the upcoming Open Meeting will have four panels attended by different bureaus, each providing summaries on their accomplishments over the past administration, as well as goals for the future. Topics from the bureaus will include expanding connectivity and access, competition in the marketplace, national security and public safety initiatives, and the future of communications.
FCC Proposes Auction Rules to Fund Rip and Replace Program
Following the passage of the National Defense Authorization Act, the FCC now has authority to fully fund its Rip and Replace Program, designed to reimburse companies for replacing equipment and services manufactured by entities deemed threats to national security. Within the NDAA, the Spectrum and Secure Technology and Innovation Act allows the FCC to borrow up to $3.08 billion to fund the program. To repay the borrowed funds, Chairwoman Rosenworcel hopes the Commission will expedite consideration of a Notice of Proposed Rulemaking updating the competitive bidding rules for the AWS-3 spectrum bands, whose proceeds will be directed to the Rip and Replace Program.
FCC Adopts New Filing Requirements for Robocall Mitigation Database
In efforts to combat illegal robocalls on voice service provider networks, the FCC has adopted new filing requirements for providers on its Robocall Mitigation Database (RMD). The RMD is an extensive public database which tracks provider compliance with STIR/SHAKEN and robocall mitigation rules. The new rules now require providers to annually re-certify the accuracy of their mitigation plans and pay a $100 filing fee. Additionally, a new reporting mechanism for deficient filings as well as enhanced two-factor authentication will be implemented and managed by the Wireline Competition Bureau.
Casey Lide, Thomas B. Magee, Tracy P. Marshall, Sean A. Stokes, and Wesley K. Wright also contributed to this article.
Illinois Human Rights Act Now Protects Employees With “Family Responsibilities”
As of January 1, 2025, Illinois became the latest in a minority of states and municipalities to expand employment protections for employees who act as family caregivers. House Bill 2161, which passed in August 2024, amends the Illinois Human Rights Act (the IHRA or “the Act”) to additionally prohibit discrimination against employees based on their “family responsibilities.”
The phrase “family responsibilities” is defined broadly, including an employee’s “actual or perceived provision of personal care to a family member.” “Personal care” includes activities that ensure a covered family member’s basic medical, hygiene, nutritional, or safety needs are met as well as transporting family members to medical appointments, if the family member is unable to meet such need(s) for themselves.
As amended, the Act makes it unlawful for any employer to “refuse to hire, to segregate, to engage in harassment . . . or to act with respect to recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure or terms, privileges or conditions of employment on the basis of . . . family responsibilities.” In addition, employment agencies are prohibited from failing or refusing to properly classify, accept applications and register for employment referral or apprenticeship referral, refer for employment, or refer for apprenticeship on the basis of family responsibilities.
Although the IHRA amendments increase protections for employees serving as caregivers, they also make clear that employers, employment agencies, or labor organizations are not required to make accommodations or modifications to workplace rules or policies for an employee based on family responsibilities, including accommodations or modifications related to leave, scheduling, productivity, attendance, absenteeism, timeliness, work performance, referrals from a labor union hiring hall, and benefits, so long as the employer’s rules or policies do not otherwise violate the Act.
Illinois employers should review their current handbooks and anti-discrimination/harassment policies — and consult their regular employment counsel — to ensure that these new protections are incorporated.
New Jersey Attorney General: NJ’s Law Against Discrimination (LAD) Applies to Automated Decision-Making Tools
This month, the New Jersey Attorney General’s office (NJAG) added to nationwide efforts to regulate, or at least clarify the application of existing law, in this case the NJ Law Against Discrimination, N.J.S.A. § 10:5-1 et seq. (LAD), to artificial intelligence technologies. In short, the NJAG’s guidance states:
the LAD applies to algorithmic discrimination in the same way it has long applied to other discriminatory conduct.
If you are not familiar with it, the LAD generally applies to employers, housing providers, places of public accommodation, and certain other entities. The law prohibits discrimination on the basis of actual or perceived race, religion, color, national origin, sexual orientation, pregnancy, breastfeeding, sex, gender identity, gender expression, disability, and other protected characteristics. According to the NJAG’s guidance, the LAD protections extend to algorithmic discrimination (discrimination that results from the use of automated decision-making tools) in employment, housing, places of public accommodation, credit, and contracting.
Citing a recent Rutgers survey, the NJAG pointed to high levels of adoption of AI tools by NJ employers. According to the survey, 63% of NJ employers use one or more tools to recruit job applicants and/or make hiring decisions. These AI tools are broadly defined in the guidance to include:
any technological tool, including but not limited to, a software tool, system, or process that is used to automate all or part of the human decision-making process…such as generative AI, machine-learning models, traditional statistical tools, and decision trees.
The NJAG guidance examines some ways that AI tools may contribute to discriminatory outcomes.
Design. Here, the choices a developer makes in designing an AI tool could, purposefully or inadvertently, result in unlawful discrimination. The results can be influenced by the output the tool provides, the model or algorithms the tool uses, and what inputs the tool assesses which can introduce bias into the automated decision-making tool.
Training. As AI tools need to be trained to learn the intended correlations or rules relating to their objectives, the datasets used for such training may contain biases or institutional and systemic inequities that can affect the outcome. Thus, the datasets used in training can drive unlawful discrimination.
Deployment. The NJAG also observed that AI tools could be used to purposely discriminate, or to make decisions for which the tool was not designed. These and other deployment issues could lead to bias and unlawful discrimination.
The NJAG notes that its guidance does not impose any new or additional requirements that are not included in the LAD, nor does it establish any rights or obligations for any person beyond what exists under the LAD. However, the guidance makes clear that covered entities can violate the LAD even if they have no intent to discriminate (or do not understand the inner workings of the tool) and, just as noted by the EEOC in guidance the federal agency issued under Title VII, even if a third-party was responsible for developing the AI tool. Importantly, under NJ law, this includes disparate treatment/impact which may result from the design or usage of AI tools.
As we have noted, it is critical for organizations to assess, test, and regularly evaluate the AI tools they seek to deploy in their organizations for many reasons, including to avoid unlawful discrimination. The measures should include working closely with the developers to vet the design and testing of their automated decision-making tools before they are deployed. In fact, the NJAG specifically noted many of these steps as ways organizations may decrease the risk of liability under the LAD. Maintaining a well thought out governance strategy for managing this technology can go a long way to minimizing legal risk, particularly as the law develops in this area.
Navigating the New H-2A and H-2B Rule: What Employers and Workers Need to Know
The Department of Homeland Security (DHS) has issued a Final Rule for the H-2A and H-2B temporary worker programs that will become effective on Jan. 17, 2025.
The Rule is aimed at modernizing the regulations governing the H-2A and H-2B temporary worker programs — programs that are essential for U.S. employers seeking foreign labor for temporary agricultural (H-2A) and non-agricultural (H-2B) work when domestic labor is unavailable.
Below are the main takeaways.
Improving Program Efficiency:
Elimination of Eligible Countries List: Employers are able to hire workers from any country. DHS will no longer be publishing annual lists of H-2 eligible countries, streamlining the process for employers.
Simplified Period of Stay Calculations: The Rule standardizes the period that resets a worker’s three-year maximum stay in the United States to a uniform absence of at least 60 days, eliminating complex “interrupted” stay provisions.
Increasing Flexibility for Workers:
Grace Period Extensions: H-2 workers are granted a 10-day grace period before employment begins and up to 30 days after employment ends. Additionally, a new grace period of up to 60 days is introduced following employment cessation, allowing workers to seek new employment or prepare for departure without violating their status. The worker remains in status but does not have work authorization during the grace period.
Employment Portability: Eligible H-2 workers can commence new employment with a different employer upon the filing of a non-frivolous H-2 petition, providing greater job mobility. This is a dramatic change; previously, the H-2 worker needed to wait for the petition to be approved before starting work with the new employer.
Strengthening Worker Protections and Increasing Program Integrity:
Prohibition of Fees: The Rule reinforces the ban on charging certain fees to H-2 workers and introduces penalties for employers who violate this provision.
Mandatory Denial Grounds: USCIS is authorized to deny H-2 petitions from employers found to have committed specific labor violations or misused the H-2 programs.
Whistleblower Protections: H-2 workers have protections comparable to those in the H-1B program, safeguarding them against retaliation for reporting violations.
Compliance Reviews and Inspections: The Rule clarifies USCIS’s authority to conduct compliance reviews and site inspections, ensuring adherence to program requirements.
An H-2A rule that was finalized in April 2024 and rolled out incrementally offered additional worker protections. The rule faced lawsuits and patchwork injunctions covering various states and organizations before being enjoined nationwide by the U.S. District Court for the Eastern District of Kentucky in November.
Non-Competes: New Limits for Pennsylvania Health Care Practitioners
Pennsylvania’s new law, the Fair Contracting for Health Care Practitioners Act (the Act) went into effect on January 1, 2025. This law restricts the ability of employers and health care practitioners to enter into non-compete agreements. Governor Josh Shapiro signed the Act on July 23, 2024, aiming to ensure continuity of care between patients and their health care practitioners. The Act marks a notable change in employment practices for health care professionals in Pennsylvania, reflecting a broader movement to scrutinize restrictive covenants, especially in the health care sector. Its key goals include retaining health care talent, enhancing patient care, and promoting a competitive health care market.
The new law bans new non-compete covenants longer than a year for “Health Care Practitioners,” defined to include medical doctors, doctors of osteopathy, certified registered nurse anesthetists, certified registered nurse practitioners, and physician assistants. Certain non-competes entered into after January 1, 2025, are deemed “contrary to public policy and void and unenforceable by an employer.” However, non-compete provisions limited to one year or less are enforceable if the Health Care Practitioner terminates the employment relationship or if they are connected to the sale of a practice.
Key Provisions
Non-Compete Restrictions: Non-compete clauses that hinder Health Care Practitioners from treating or accepting patients are void and unenforceable. However, non-compete clauses lasting up to one year may still be enforced if the practitioner voluntarily resigns. These agreements become unenforceable if the employer terminates the practitioner’s employment, even if for cause.
Cost Recovery for Employers: Employers can recoup reasonable expenses, such as relocation, training, or patient acquisition costs, incurred within three years before a Health Care Practitioner voluntarily leaves.
Non-Competes in Business Sales: Non-compete agreements remain valid when tied to the sale or transfer of a business if the Health Care Practitioner is a party to the transaction.
Patient Notification: Employers must notify patients within 90 days if a practitioner with whom they have had a two-year outpatient relationship departs from the employer’s practice. The notice must explain the practitioner’s departure, how to transfer medical records, and options for continuing care with the employer or another provider.
Effective Date: Non-compete agreements executed before January 1, 2025, remain unaffected. Employers and health care practitioners should review existing agreements to prepare for the Act’s implications.
Moving Forward
Pennsylvania is among a growing number of states, including Iowa, Maryland, and Louisiana, that are restricting non-compete clauses in or health care providers’ employment agreements, joining over a dozen states have introduced similar measures. Although, the Federal Trade Commission’s proposed ban on non-compete agreements, which is currently facing legal challenges, does not apply to not-for-profit entities, such as many hospital systems. Now, Pennsylvania not-for profit health care organizations along with those in the private sector will have to consider this law when seeking to place covered Practitioners under post-employment restrictions.
FDA Finalizes Lead Restrictions in Processed Foods for Babies and Young Children
On January 6, 2025, the U.S. Food & Drug Administration (FDA, or the Agency) issued a final guidance ,“Action Levels for Lead in Processed Food Intended for Babies and Young Children: Guidance for Industry” which aims to regulate lead levels in processed foods for infants and toddlers under two years old.
As we have previously blogged, in 2021, FDA initiated its Closer to Zero policy which identified actions the Agency will take to reduce exposure to toxic elements, including lead, to as low as possible while maintaining access to nutritious foods.
As part of this initiative, FDA has also evaluated mercury, cadmium, and arsenic in foods intended for babies and young children, as well as lead in juices. Under this initiative, FDA has prioritized babies and young children as they are especially vulnerable to lead exposure, which accumulates in the body over time.
Lead is naturally present in the environment, but human activities have also released elevated levels of lead, contaminating soil, water, and air. This contamination can affect crops used in food production.
Lead exposures can lead to developmental harm to children by causing learning disabilities, behavioral difficulties, lowered IQ, and may be associated with immunological, cardiovascular, and reproductive and or/developmental effects.
To address this concern, FDA established the following action levels in the final guidance for processed foods intended for babies and young children:
10 parts per billion (ppb) for fruits, vegetables (excluding single-ingredient root vegetables), mixtures (including grain- and meat-based mixtures), yogurts, custards/puddings, and single-ingredient meats;
20 ppb for single-ingredient root vegetables; and
20 ppb for dry infant cereals.
If a processed food intended for babies and young children reaches or exceeds the aforementioned levels of lead, the product will be considered adulterated within the meaning of section 402(a)(1) of the Federal Food, Drug, and Cosmetic Act (FD&C Act).
After publishing the final action levels, the Agency will establish a timeframe for assessing industry’s progress toward meeting the action levels and resume research to determine whether the scientific data supports efforts to further adjust the action levels.