What Legal Services Providers Need to Learn from OFSI’s Legal Services Threat Assessment
In its first-ever threat assessment of the UK legal sector, the UK’s Office of Financial Sanctions Implementation (OFSI) has raised red flags with regards to suspected sanctions breaches involving UK legal services providers since February 2022 (the Assessment).
Why Did OFSI Focus on Legal Services Providers?
Legal services providers play a crucial role in ensuring UK and international clients (including UK Designated Persons (DPs)) comply with UK financial sanctions. All legal services providers must ensure compliance not only with the Russian sanctions regime but also other threats to compliance relevant to the United Kingdom, including the UK’s sanctions regimes applicable to Libya, Belarus, Iran and South Sudan, amongst others.
OFSI’s Key Findings
The Assessment sets out four key findings relevant to UK legal services providers from February 2022 to present.
1. Underreporting of Breaches
OFSI found it was highly likely that UK trust and company services providers (TCSPs) may not fully disclose suspected breaches due to inconsistent detection policies and the failure to monitor clients’ sanctions status.
Since the reporting time frame of February 2022 until the publishing of this Assessment, OFSI identified that 16% of the total number of suspected breach reports received have come from the legal services sector (compared with 65% submitted by the financial services sector). 98% of these were submitted by law firms and barristers, while TCSPs and other types of legal services providers submitted only 2%. OFSI considered this as strongly suggestive that TCSPs were under-reporting.
2. Compliance Failures
OFSI stated that it was almost certain that most non-compliance by UK legal services providers has occurred due to the following:
Improper maintenance of frozen assets.
All DPs accounts, funds and resources, including those held by entities owned or controlled by DPs, must be operated in accordance with asset freeze prohibitions and OFSI licence permissions. OFSI observed legal services providers failing to adhere to asset freeze prohibitions, including delays in freezing funds belonging to DP clients and transferring frozen funds into accounts other than those specified in OFSI licences.
Breaches of specific and general OFSI licence conditions.
Receiving payment for legal services rendered to DPs, including services provided on credit, requires an OFSI licence. Specific compliance issues included billing sanctioned DPs more than the value limits set in the relevant licence or receiving payments after the relevant licence has expired.
Reporting.
OFSI encourages legal services providers to review licence reporting requirements, including making a report within 14 days of receiving payment under a general licence and providing relevant documentation that sets out the obligation under which the payment has been made.
Wind-down of Russia related operations.
Many UK legal services providers, including law firms, wound down their operations in Russia following its invasion of Ukraine and advised clients regarding the same. OFSI identified that legal services providers must ensure these activities were conducted in line with general and specific licence permissions and to report any suspected breaches which may have occurred as a result. The recent financial penalty imposed on HSF by OFSI in relation to the activities of HSF Moscow highlights these risks.
3. Complex Ownership and Control Structures
OFSI considered it was almost certain that complex corporate structures, including trusts, linked to Russian DPs and that their family members have concealed the ownership and control of assets which should have been frozen under UK financial sanctions. The Assessment encourages legal service providers to identify and report any suspected breaches, including those arising from non-designated individuals or entities dealing with frozen assets held through these complex structures.
4. Post-designation Ownership and Control Transfers
OFSI considered it likely that Russian DPs have sought to recoup frozen assets and even dissipate them beyond the reach of UK financial sanctions to non-designated individuals and entities. This generally requires the involved of other parties enabling these activities, including:
Professional enablers which provide professional services that enable criminality.
Non-professional enablers, such as family members, ex-spouses or associates.
Legal service providers need to ensure that they are not, directly or indirectly, enabling such activity by DPs or by non-professional enablers acting in support of DPs.
Intermediary Countries
Approximately 23% of the suspected breach reports identified by OFSI as involving UK legal services providers are connected to intermediary jurisdictions. The Assessment highlights a series of red flags for lawyers to look out for when dealing with jurisdictions such as: the British Virgin Islands, Guernsey, Cyprus, Switzerland, Austria, Luxembourg, United Arab Emirates and Turkey, as well as the Isle of Man, Jersey and the Cayman Islands.
Practical Steps
Legal services providers are obliged to make Suspicious Activity Reports to the National Crime Agency (NCA) under Part 7 of the Proceeds of Crime Act 2002 and the Terrorism Act 2000 if money laundering or terrorist financing activities are known or suspected. Further information about reporting to the NCA and OFSI can be found here and here.
Legal service providers should take the following steps, amongst others, to ensure compliance with the UK sanctions regime:
Monitor and identify any red flags;
Update client due diligence beyond basic ID checks to check beneficial owners and connected parties;
Screen every transaction against OFSI’s consolidated list (see here);
Complete a tailored risk assessment, incorporating the above findings, and undertake any remedial activities; and
Identify and comply with any applicable licence requirements.
Conclusion
OFSI’s Assessment builds on previous and related publications issued by OFSI and UK government partners, including the Financial Services Threat Assessment published by OFSI in February 2025 (see our corresponding alert here). OFSI encourages legal services providers to both report now and retrospectively, where appropriate and proportionate, if they suspect a breach linked to the content of this Assessment.
EPA Postpones Effective Date of Certain Provisions of TCE Risk Management Rule to June 20, 2025
On April 2, 2025, the U.S. Environmental Protection Agency (EPA) announced that it is postponing the effectiveness of certain provisions of its December 17, 2024, final risk management rule for trichloroethylene (TCE) until June 20, 2025. 90 Fed. Reg. 14415. After EPA issued the final rule in December 2024, it received multiple petitions for an administrative stay of the effective date. EPA denied the requests, and the companies submitted renewed petitions to stay the effective date of the rule, or, in the alternative, for an administrative stay of certain workplace conditions. As reported in our January 30, 2025, blog item, 13 petitions for review of the final rule were filed in various federal appellate courts. On January 13, 2025, the Fifth Circuit Court of Appeals granted a petitioner’s motion to stay temporarily the rule’s effective date. The petitions were then consolidated and transferred to the Third Circuit Court of Appeals. The Third Circuit issued a January 16, 2025, order leaving the temporary stay of the effective date in place pending briefing on whether the temporary stay of the effective date should remain in effect.
EPA states in the April 2, 2025, notice that, in light of the pending litigation, it has reconsidered its position from its earlier denial of an administrative stay pending judicial review and determined that justice requires a 90-day postponement of the effective date of the conditions for each of the TSCA Section 6(g) exemptions. According to EPA, petitioners allege that because the interim workplace conditions would require petitioners to reduce TCE exposure levels to the interim existing chemical exposure limit (ECEL) of 0.2 parts per million (ppm), the final rule effectively requires the use of personal protective equipment (PPE) “that cannot feasibly be worn all day, and therefore could cause petitioners to cease operations.” EPA notes that although it does not concede these allegations, “petitioners have raised significant legal challenges and allege significant harms as a result of the workplace conditions required by the final rule’s TSCA section 6(g) exemptions.” EPA states that “[m]oreover, a limited postponement that maintains the status quo for these uses appropriately balances the alleged harm to petitioners and other entities with critical uses against the public interest in the health protections that will be afforded by the broader TCE prohibitions and workplace protections going into effect.”
UAE Real Estate in 2025: AML Compliance and Investment Trends for Developers
The UAE’s real estate sector has experienced significant growth and development in recent years, becoming one of the world’s most active real estate markets. As with other developing global markets, growth may bring challenges. With the residential and commercial appeal of UAE real estate attracting buyers from around the world, one of these challenges is maintaining vigilance against money-laundering. Efforts to detect and prevent illicit flows of money remain a priority for the UAE since its removal from the FATF Grey List in April 2024. Given the influx of investment and the increasing number of high-value transactions, the UAE government has expanded its oversight and controls around the real estate sector, which impacts all industry stakeholders.
Throughout 2024, a series of regulatory updates reinforced the need for diligence across real estate purchases. Now, all regulated real estate companies must carry out enhanced due diligence for high-risk buyers, including foreign investors from jurisdictions with weak anti-money laundering (AML) controls. Know-your-client (KYC) protocols must include full verification of buyer identities and their source of funds, and company or entity purchasers must disclose their ultimate owners. Companies that fail to meet these requirements may face penalties, increased regulatory scrutiny, and potential operational restrictions.
These regulatory changes apply to real estate brokers, agents, and other businesses concluding property transactions on their customers’ behalf. While some developers may not fall directly within the UAE’s AML framework, businesses accepting cash and cryptocurrency for real estate assets must also be aware of their potential exposure to money laundering activity, as they may be liable for money laundering offences and may face operational difficulties if they are used as a conduit for criminal activity.
Continued Growth of the UAE’s Real Estate Sector
The UAE real estate market remains attractive to global investors. Key factors driving demand include strong foreign investment from Russian, Chinese, Indian, and European buyers, as well as golden visa-linked property investments with long-term residency incentives attached to purchases of over AED 2 million.
The Dubai Economic Report from the Dubai Economic Department shows that the real estate market in Dubai contributes between 5-7% to annual GDP, with 2024 set to reflect further highs. Dubai’s real estate market continues its upward trajectory, with residential prices increasing by 20.7% year-on-year as of March 2024. Off-plan sales grew 23.9%, outpacing the 15.2% rise in secondary market transactions.
Investment, Compliance, and Cryptocurrency
The question remains whether regulatory-driven due diligence and accelerating property transactions can both continue at the same rate. This is particularly relevant in the context of the sector’s shift towards digitalization. The UAE is seeing a growing trend in the use of cryptocurrency in property transactions. To enhance transparency and security with respect to these transactions, under the UAE Central Bank AML & CFT Regulations 2024, real estate transactions involving virtual assets must now be processed through a licensed virtual asset service provider, which seeks to ensure all funds are traceable and compliant with AML standards.
The Ministry of Economy has repeatedly confirmed its commitment to global AML safeguards, as well as its support for advancing real estate digitalization and broader blockchain integration. Modernization in the real estate sector may be an opportunity for the UAE authorities to show how they can enforce AML laws while maintaining investor confidence.
Key Takeaways
While the UAE has established itself as a well-regulated investment hub, the real estate sector remains attractive for investment. To stay competitive, businesses should adapt to evolving AML regulations. Those who do not may experience issues.
Safety First: Legal Implications of Faulty Products and Product Liability Claims
No one expects to be injured by a product they thought was safe, but knowing your rights is key when it happens. Product liability laws exist to protect consumers and ensure that companies are held accountable when they cut corners or overlook safety standards.
In this post, we’ll break down what product liability means, how these claims work, and what steps to take if a defective product injures you or a loved one.
What Is Product Liability?
Product liability refers to a manufacturer or seller being held legally responsible for placing a defective product into the hands of a consumer. These claims typically fall into three main categories:
Design Defects: These are flaws in the product’s blueprint. Even if made perfectly, the product is dangerous by design.
Manufacturing Defects: These happen during the production process, where something went wrong when the product was being made or assembled.
Marketing Defects (Failure to Warn): If a product does not include adequate warnings or instructions and causes injury as a result, this is also grounds for a claim.
Common Examples
Product liability cases range from various industries. Some common examples include:
A car with faulty airbags.
A kitchen appliance that overheats and starts a fire.
Prescription drugs with harmful side effects that were not disclosed.
Children’s toys with choking hazards not labeled on the packaging.
In each case, the core issue is the same: a product that should have been safe caused harm.
Who is Held Liable?
Depending on the case, several parties could be responsible:
The product manufacturer
The parts manufacturer
The company that assembled or installed the product
The retailer that sold the product
Under the legal principle of strict liability, a consumer does not always need to prove negligence—just that the product was defective and caused injury.
What To Do If You Have Been Injured
If you or someone you love has been injured by a defective product, here are the steps to take:
Seek medical attention immediately.
Keep the product—do not throw it away, as it may be important evidence.
Document everything: injuries, medical treatment, product packaging, purchase receipts.
Speak with a product liability attorney. These cases can be complex, and having experienced legal guidance can make all the difference.
Conclusion
Product liability laws are there to protect consumers and to encourage companies to prioritize safety over shortcuts. If you’ve been harmed by a faulty product, you have rights.
The Lobby Shop: CATO’s Scott Lincicome Returns to Talk Tariffs [Podcast]
CATO’s Scott Lincicome—one of the most informed and outspoken voices on trade and tariffs—returns to The Lobby Shop to unpack the Trump administration’s recent wave of tariff announcements. The group dives into the effectiveness of tariffs as a tool for reshoring manufacturing and addressing trade deficits, as well as the business community’s relatively muted response. Listen for an entertaining and insightful conversation with the always engaging Scott Lincicome!
Outlining Critical MTS Cybersecurity Requirements
On January 17, 2025, the US Coast Guard published a final rule titled “Cybersecurity in the Marine Transportation System,” setting a baseline for cybersecurity standards. This rule, which is set to take effect on July 16, 2025, introduces mandatory cybersecurity measures for US-flagged vessels, Outer Continental Shelf facilities, and certain facilities regulated under the Maritime Transportation Security Act of 2002.
This article I co-authored with Andy Lee for MarineLink highlights the implications of the rule on the maritime transportation system. We recommend industry participants begin evaluating their current capabilities and developing comprehensive compliance strategies.
The integration of digital technologies and interconnected systems within the MTS has heightened vulnerability to cyber threats. Recognizing these risks, the USCG’s rule sets a baseline for cybersecurity standards, ensuring entities within the MTS can effectively detect, respond to, and recover from cyber incidents.
www.marinelink.com/…
Illinois Amends One Day Rest in Seven Act to Prohibit Retaliation
The One Day Rest in Seven Act is an Illinois law providing employees with the right to meal breaks and one full day of rest each work week.
On March 21, Governor JB Pritzker signed SB 3180 into law prohibiting retaliation under the Act. The amendment adds a provision barring employers and their agents from taking adverse action against employees for (1) exercising their rights under the Act, (2) making a complaint to the employer or the Illinois Department of Labor (IDOL), or (3) initiating an investigation or proceeding, or testifying at an investigation or proceeding, related to the Act.
There is no private right of action for violations of the Act. Instead, employees can file a complaint with the IDOL for violations and the IDOL can pursue an action. Violation of the anti-retaliation provision can result in recovery to the employee of “all legal and equitable relief as may be appropriate,” plus penalties and fees provided to the Child Labor and Day and Temporary Labor Services Enforcement Fund. The amount of penalties and fees for violation of the anti-retaliation provision is unstated. For employers with 25 or more employees, each violation of the underlying meal break and day of rest obligations carries the potential for damages paid to the employee of up to $500 and penalties paid to the IDOL of up to $500. For employers with fewer than 25 employees, the maximum penalties and damages per violation is $250 each.
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When Do Blue Sky Laws Apply?
In my experience, many securities lawyers are well versed in the federal securities laws, but have little experience with state securities laws. This is understandable because federal law in many cases preempts state qualification/registration requirements, even with respect to offerings that are exempt from registration under the Securities Act of 1933. For those looking for a quick and easy summary of which exempt offerings are potentially subject, I recently came across the following table on the SEC’s website:
Securities Act Exemption
Under the Securities Act, is the offering potentially subject to state registration or qualification?
Section 4(a)(2)
Yes
Rule 506(b)
No
Rule 506(c)
No
Rule 504
Yes
Regulation Crowdfunding
No
Regulation A – Tier 1
Yes
Regulation A – Tier 2
No
Rules 147 and 147A
Yes
Rule 701
Yes
Note that the table uses the terminology “potentially subject”. It is possible that these offerings are also exempt under state law. For example, it is common for issuers to rely on the exemption from qualification in California Corporations Code Section 25102(o) in Rule 701 offerings. However, compliance with Rule 701 does not automatically meet the conditions of the Section 25102(o) exemption.
It is also important to understand that an offering that is not subject to state registration or qualification requirements is not subject to other state securities law requirements. For example, California and other states require a notice filing in respect of offerings made in reliance upon Rule 506. See Cal. Corp. Code § 25102.1. These offerings may also be subject to state securities fraud prohibitions.
New Illinois Labor and Employment–Related Laws Cover E-Verify, ‘Captive Audience Meetings,’ Noncompetition, AI, and More
The Illinois General Assembly had a busy year in 2024 drafting new legislation that was signed by Governor J.B. Pritzker and took effect on January 1, 2025. The following article summarizes important legal advancements in Illinois that every employer won’t want to miss.
Quick Hits
Illinois Governor Pritzker signed several new labor and employment–related laws into effect, such as “E-Verify Limits Under Right to Privacy in Workplace Act” and the “Worker Freedom of Speech Act.”
Amendments to current laws, such as the Illinois Human Rights Act, the Illinois Personnel Review Act, and the Illinois Wage Payment and Collections Act, expand the rights of employees.
Most notably, the statute of limitations for actions brought under the Illinois Human Rights Act was extended from 300 calendar days to two years after an alleged violation of the act.
New Illinois Employment Laws
Senate Bill 508 (SB 508), or the “E-Verify Limits Under Right to Privacy in the Workplace Act,” amends Illinois’s Right to Privacy in the Workplace Act and prohibits employers from imposing work authorization verification or reverification requirements greater than those required by federal law.
SB 508 also enacts greater responsibility for employers to provide employees with specific documentation when either (1) the employer contends there is a discrepancy in an employee’s employment verification; or (2) when an employer receives notice from a federal or state agency, such as the Social Security Administration, of a discrepancy as it relates to work authorization.
Additionally, SB 508 requires employers to provide a notice to each employee, by posting in English and any other language commonly used in the workplace, of any inspections of I-9 Employment Eligibility Verification forms within seventy-two hours after receiving notice of the inspection from a government agency. Further, SB 508 provides for civil penalties for noncompliance for failure to adhere to the notice provisions.
Senate Bill 3649 (SB 3649), or the “Worker Freedom of Speech Act,” prohibits an “employer, or an employer’s agent, representative, or designee, to either discharge, discipline, or otherwise penalize, or threaten to discharge, discipline, or otherwise penalize an employee (1) because an employee declines to attend or participate in an employer-sponsored meeting or declines to receive or listen to communications from the employer or the agent, representative, or designee … if the meeting or communication is to communicate the opinion of the employer about religious matters or political matters; (2) as a means of inducing an employee to attend or participate in meetings or receive or listen to communications” that express the opinion of the employer about religious matters or political matters; or (3) “because the employee, or another person acting on behalf of the employee, makes a good faith report of a violation or a suspected violation” of the Worker Freedom of Speech Act. This law effectively bans employers from holding mandatory meetings with employees concerning religious or political matters, including discussions on union representation.
Note the law excludes nonprofit and advocacy groups where such topics may be part of the job responsibilities.
SB 3649 provides a private right of action and for a class action by an employee on or behalf of themselves and other employees similarly situated. Within thirty days after the effective date of the act, employers shall post a notice of employee rights under the act where other public notices are generally posted.
Senate Bill 3646 (SB 3646), or the “Child Labor Law of 2024,” replaced Illinois’s existing child labor law. SB 3646 covers minors under sixteen years of age and prohibits minors thirteen years old and younger from being employed “in any occupation or at any work site” unless explicitly authorized by or exempted under the act. Exemptions for minors thirteen years old and younger include work on family farms or as a babysitter.
Under SB 3646, employers must obtain an employment certificate authorizing a minor’s work. To obtain a certificate, an employer must first provide the minor with a notice of intention to employ, which then must be submitted by the minor to their school’s issuing officer, along with an application for the employment certificate, which must be filled out by the minor and the minor’s parent or guardian. The law limits the hours that a minor may work each week, including setting a limit of no more than eighteen hours per week during the school year, and no more than forty hours per week when school is not in session, and each day with a limit of eight hours per day of work and school combined.
The Child Labor Law also identifies thirty categories of work minors may not perform, including factory work; construction; and work with lead, chemicals, dust, or gases dangerous to humans. Minors are also required to have a supervisor at least twenty-one years of age and thirty-minute lunch breaks during every five consecutive hours of work. Employers are also required to post a notice regarding the Child Labor Law in the workplace and report any workplace injuries to minors to the Illinois Workers’ Compensation Commission, the Illinois Department of Labor, and the minor’s school.
Expansion of Current Illinois Employment Laws
Senate Bill 3310 (SB 3310) amends the Illinois Human Rights Act to extend the date to file a charge of discrimination with the Illinois Human Rights Commission from 300 calendar days to two years for an alleged violation under the act.
Senate Bill 2737 (SB 2737) amends the Illinois Freedom to Work Act to prohibit noncompetition and nonsolicitation agreements for certain mental health professionals. This amendment prohibits these agreements for professionals licensed in Illinois “who provide mental health services to veterans and first responders.” “First responders” are defined as emergency medical services personnel as defined in the Emergency Medical Services (EMS) Systems Act, firefighters, and law enforcement officers. SB 2737 is not retrospective and will only apply to agreements entered into after January 1, 2025.
Senate Bill 3208 (SB 3208) amends the Illinois Wage Payment and Collection Act (IWPCA) to provide employees greater access to wage payment records. Upon request by a current or former employee, which an employer may require to be in writing, an employer must provide the employee with a copy of the employee’s pay stubs within twenty-one calendar days of the employee’s request. Such requests are limited to two times in a twelve-month period.
SB 3208 also requires employers to retain records of names, addresses, and wages paid to each employee and furnish each employee a pay stub for each period, which reflects the hours worked, gross wages earned, deductions from wages, and unused balance of paid time off available to the employee, amending the prior requirement of furnishing an itemized statement of deductions made from the employee’s wages for each pay period. Employers are now required to retain pay stubs for both current and former employees for at least three years after the date of payment. Additionally, if an employer retains pay stubs in a manner that is not accessible by former employees during the year after the separation of their employment, SB 3208 requires employers to offer to furnish a newly separated employee with all the employee’s pay stubs for the year prior to the date of separation.
SB 3208 adds a civil penalty of up to $500 per violation of failing to provide a current or former employee with his or her requested pay stubs or any other violation of the IWPCA.
House Bill 2161 (HB 2161) amends the Illinois Human Rights Act (IHRA) to prohibit discrimination based on an employee’s “family responsibilities,” which is defined as “an employee’s actual or perceived provision of care to a family member, whether in the past, present, or future.” In addition, HB 2161 provides that it is a violation of the IHRA for a person, or two or more persons, “to conspire to retaliate against a person because he or she has opposed that which he or she reasonably and in good faith believes to be discrimination based on family responsibilities.”
Importantly, HB 2161 provides that nothing in the IHRA obligates an employer, employment agency, or labor organization to make accommodations or modifications to reasonable workplace rules or policies for employees based on family responsibilities, such as accommodations or modifications related to leave, scheduling, productivity, attendance, absenteeism, timeliness, work performance, referrals from a labor union hiring hall, and benefits, as long as the employer’s rules and policies are in accordance with the IHRA.
House Bill 4867 (HB 4867) amends the Illinois Human Rights Act (IHRA) to prohibit discrimination based on “reproductive health decisions.” Under HB 4867, reproductive health decisions are defined as “a person’s decisions regarding the person’s use of contraception; fertility or sterilization care; assisted reproductive technologies; miscarriage management care; healthcare related to the continuation or termination of pregnancy; or prenatal, intranatal, or postnatal care.”
House Bill 3763 (HB 3763) amends the Illinois Personnel Record Review Act (IPRRA) and expands employees’ right to inspect and copy personnel-related documents. HB 3763 adds additional documents that an employer must provide an employee, after the employee’s request, to include documents used to determine an employee’s benefits, any employment-related contracts or agreements that the employer maintains are legally binding on the employee, any employee handbooks the employer made available to the employee or the employee acknowledged receiving; and any written employer policies or procedures the employer contends the employee was subject to and that concern qualifications for employment, promotion, transfer, compensation, benefits, discharge, or other disciplinary action.
HB 3763 adds the requirement that an employee’s written request to inspect, copy, and receive copies of personnel-related records must be “made to a person responsible for maintaining the employer’s personnel records, including the employer’s human resources department, payroll department, the employee’s supervisor or department manager, or to an individual as provided in the employer’s written policy.” Similarly, HB 3763 adds the requirement that an employee’s written request must (1) identify which personnel records the employee is requesting or if the employee is requesting all records allowed to be requested under the IPRRA; (2) “specify if the employee is requesting to inspect, copy, or receive copies of the records”; (3) “specify whether records be provided in hardcopy or in a reasonable and commercially available electronic format”; (4) “specify whether inspection, copying, or receipt of copies will be performed by that employee’s representative, including family members, lawyers, union stewards, other union officials, or translators”; and (5) “if the records being requested include medical information and medical records, include a signed waiver to release medical information and medical records to that employee’s specific representative.”
HB 3763 also prohibits employers from imputing the cost of time spent duplicating the information, the purchase or rental of copying machines, the purchase or rental of computer equipment, the purchase, rental, or licensing of software, or other similar expenses to the requesting employee.
House Bill 3773 (HB 3773) amends the Illinois Human Rights Act (IHRA) to expressly prohibit the use of artificial intelligence (AI) in a manner that results in illegal discrimination in employment decisions and employee recruitment as defined under state law. HB 3773 prohibits the use of artificial intelligence by an employer in Illinois that has the effect of subjecting employees to unlawful discrimination based upon legally protected classes, “[w]ith respect to recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure, or the terms, privileges, or conditions of employment.” Furthermore, HB 3773 mandates that employers must notify employees when using artificial intelligence for any of the purposes described above. HB 3773 does not go into effect until January 1, 2026.
House Bill 5561 (HB 5561) amends the Illinois Whistleblower Act (IWA) to expand liability for employers. HB 5561 amends the definition of covered “employers” and “employees” under the Act. Further, HB 5561 provides that an employer is prohibited from taking retaliatory action, or threatening to take retaliatory action, “against an employee who discloses or threatens to disclose to a public body conducting an investigation, or in a court, an administrative hearing, or any other proceeding initiated by a public body, information relating to an activity, policy, or practice of the employer where the employee has a good faith belief that the activity, policy, or practice” either (1) violates a federal, state, or local law; or (2) “poses a substantial and specific danger to employees, public health, or safety.”
HB 5561 adds additional damages and penalties for employers found in violation of the IWA, including permanent or preliminary injunctive relief and liquidated damages up to $10,000. HB 5561 provides that the terms of this amendment only apply to claims arising or complaints filed on or after January 1, 2025.
House Bill 3129 (HB 3129) amends the Equal Pay Act of 2003 and requires employers to include the pay scale and benefits for a position in any job posting (or disclose this information when requested by an applicant). HB 3129 defines pay scale and benefits as “the wage or salary, or the wage or salary range, and a general description of the benefits and other compensation, including, but not limited to, bonuses, stock options, or other incentives the employer reasonably expects in good faith to offer for the position, set by reference to any applicable pay scale, the previously determined range for the position, the actual range of others currently holding equivalent positions, or the budgeted amount for the position, as applicable.”
Key Takeaways
Employers may want to evaluate their existing employment practices and determine if any new laws will require revisions in their company policies or practices.
UK Employment Rights Bill: Amendments Employers Should Know
On Thursday, March 6, 2025, amendments to the UK government’s Employment Rights Bill were announced. The bill was laid before the UK Parliament in October 2024, but further amendments have now been made as a result of the published responses to the four statutory consultations that were commenced since then. We have summarised some of the changes below.
Quick Hits
On March 6, 2025, the UK government announced amendments to the Employment Rights Bill, which outlined updates to the bill relating to zero-hours and agency workers, changes to statutory sick pay (SSP), and expanded bereavement leave entitlements.
The amended Employment Rights Bill proposes the establishment of a Fair Work Agency with the authority to enforce employment rights and issue underpayment notices, potentially imposing penalties for unpaid wages, holiday pay, and SSP.
The bill, which has passed its first and second readings in the House of Lords, is expected to become law by summer 2025, with many changes anticipated to take effect from spring 2026, subject to further consultations and amendments.
Zero Hours Measures: Extension to Agency Workers
The initial draft of the bill included complex provisions granting zero hours and low hours workers the right to a guaranteed hours contract, reasonable shift notice, and compensation for cancelled, shortened, or rescheduled shifts. Although there is no longer a proposal for an outright ban on “exploitative” zero contracts, a series of protections are set to be introduced.
Through consultation and mounting criticism by trade unions, these zero hours provisions have now been extended to include agency workers. New clauses in the bill would insert a new schedule into the Employment Rights Act 1996 which would mean that end hirers must also offer guaranteed hours to qualifying agency workers, although the minimum number of hours remains unconfirmed. Responsibility for providing guaranteed hours would be shared between employment agencies and end hirers.
Employment agencies would also be required to compensate workers for shifts cancelled or changed at short notice. This includes agency work arrangements made more than two months before the bill comes into force, as they may be eligible to recover certain backdated costs from end hirers. For arrangements made after the bill is enacted, cost recoveries would be subject to negotiation between agencies and end hirers.
Statutory Sick Pay
Statutory sick pay (SSP) has also been amended, with the original proposal to remove the lower earnings limit now scrapped during consultations.
This amendment seeks to achieve a balance whereby lower earners are excluded from the scheme, but equally are not financially better off receiving SSP than they are while at work. Therefore, workers earning less than the lower earnings limit (currently £123 per week) would have the right to SSP at 80 percent of their normal weekly earnings or the existing flat rate of SSP whichever is lower. This change would only take effect after further secondary regulations are published, likely coming into force in 2026.
The bill is also set to abolish the “waiting days” rule, meaning SSP would be payable from the first day of absence (instead of after the first three days, as is the current rule).
Fair Work Agency
It was previously stated in the bill that a Fair Work Agency (FWA) would be established. Further consultations have now expanded on this area and clarified the powers the FWA may hold, including the power to bring employment tribunal proceedings on an employee’s behalf and provide legal assistance during proceedings.
Initially, the FWA’s powers will take over specific areas that are already covered by existing enforcement agencies, with the addition of holiday pay enforcement for inaccurate records. The bill would also grant the government a broad authority to expand the FWA’s mandate to include other forms of work rights.
However, under the amended bill, the secretary of state would also gain new powers to issue underpayment notices for unpaid wages, holiday pay, and SSP. This could result in penalties of 200 percent of the sum due (capped at £20,000 per individual) being payable to the secretary of state, if the payment is not resolved within the timeframe.
The FWA is unlikely to be fully functional before Autumn 2026 at the earliest.
Right to Switch Off
There is speculation that the proposed “right to switch off,” which was featured in the original bill, may now be scrapped due to concerns that it will negatively impact business activities, however, no formal announcement has been made.
Day One Rights
New day one rights, such as for unfair dismissal, would apply from the first day of employment, although an “initial period of employment” would allow for a lighter-touch dismissal process. This period is expected to range from three to nine months, though the exact duration has not yet been announced and will be examined further in a separate consultation.
The changes to day one rights are unlikely to come into effect before Autumn 2026 at the earliest.
Bereavement Leave
Bereavement leave was set to be expanded in the original bill, as the amendments propose to grant one week of leave for all grieving employees. Further regulations are expected to set out eligibility for this leave and how the leave can be taken.
Currently, employees have a right to take two paid weeks off work for the death of a child under the age of eighteen or for pregnancy loss after twenty-four weeks of pregnancy. The bill may extend this to provide two weeks of leave for mothers and their partners who experience pregnancy loss before twenty-four weeks of pregnancy. The amendments to the bill could now mean the right could encompass a wider scope of employees who have experienced bereavements, including those who suffer pregnancy loss as a result of a miscarriage, ectopic pregnancy, molar pregnancy or termination, or unsuccessful in vitro fertilization (IVF) as a result of embryo transfer loss.
Next Steps
The bill has now progressed through its first and second readings in the House of Lords and will proceed to the committee stage on 29 April 2025. Subject to further consultations and possible amendments, the bill is expected to be given Royal Assent and to become the Employment Rights Act in the summer of 2025, with many changes expected to come into force from spring 2026. The bill will continue to undergo extensive parliamentary scrutiny before it can be passed. Consultations on most reforms are due later this year, and it is likely that more details will be addressed in secondary legislation. This topic is therefore likely to continue evolving for some time.
The current bill amendments signal a move towards enhanced agency worker protections, but they also impose substantial new responsibilities on employers, whether through day one rights, expanded leave entitlements, SSP changes, or compliance obligations under the FWA. Employers should continue to keep aware of the possible changes and may want to review their current policies and procedures to ensure their compliance with any changes.
OMB RFI Seeks Proposals to Rescind or Replace Regulations
On April 11, 2025, the Office of Management and Budget (OMB) published a request for information to solicit ideas for deregulation. 90 Fed. Reg. 15481. OMB seeks proposals to rescind or replace regulations “that stifle American businesses and American ingenuity,” including regulations “that are unnecessary, unlawful, unduly burdensome, or unsound.” According to the notice, “comments should address the background of the rule and the reasons for the proposed rescission, with particular attention to regulations that are inconsistent with statutory text or the Constitution, where costs exceed benefits, where the regulation is outdated or unnecessary, or where regulation is burdening American businesses in unforeseen ways.” Comments are due May 12, 2025.
Earlier in the week, on April 9, 2025, President Trump issued the following memorandum and Executive Orders (EO) regarding federal regulations:
Presidential Memorandum Regarding Directing the Repeal of Unlawful Regulations: EO 14219, “Ensuring Lawful Governance and Implementing the President’s ‘Department of Government Efficiency’ Deregulatory Initiative,” directed the heads of all executive departments and agencies to identify certain categories of unlawful and potentially unlawful regulations within 60 days and begin plans to repeal them. The April 9, 2025, memorandum directs executive departments and agencies to prioritize evaluating each existing regulation’s lawfulness under the following U.S. Supreme Court decisions: Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024); West Virginia v. EPA, 597 U.S. 697 (2022); SEC v. Jarkesy, 603 U.S. 109 (2024); Michigan v. EPA, 576 U.S. 743 (2015); Sackett v. EPA, 598 U.S. 651 (2023); Ohio v. EPA, 603 U.S. 279 (2024); Cedar Point Nursery v. Hassid, 594 U.S. 139 (2021); Students for Fair Admissions v. Harvard, 600 U.S. 181 (2023); Carson v. Makin, 596 U.S. 767 (2022); and Roman Cath. Diocese of Brooklyn v. Cuomo, 592 U.S. 14 (2020).
EO on Reducing Anti-Competitive Regulatory Barriers: The EO begins the process for “eliminating anti-competitive regulations to revitalize the American economy,” directing agency heads, in consultation with the Chair of the Federal Trade Commission (FTC) and the Attorney General, to complete a review of all regulations subject to their rulemaking authority and identify those that:
Create, or facilitate the creation of, de facto or de jure monopolies;
Create unnecessary barriers to entry for new market participants;
Limit competition between competing entities or have the effect of limiting competition between competing entities;
Create or facilitate licensure or accreditation requirements that unduly limit competition;
Unnecessarily burden the agency’s procurement processes, thereby limiting companies’ ability to compete for procurements; or
Otherwise impose anti-competitive restraints or distortions on the operation of the free market.
EO on Zero-Based Regulatory Budgeting to Unleash American Energy: The EO directs certain agencies to incorporate a sunset provision into their regulations governing energy production to the extent permitted by law, “thus compelling those agencies to reexamine their regulations periodically to ensure that those rules serve the public good.”
Dutch Government Issues Draft Pay Transparency Legislation
EU member states have until 7 June 2026 to introduce local legislation implementing the Pay Transparency Directive. As per our recent blog, to date there have been very few developments on this front, but we are now starting to see the publication of draft legislation.
The Dutch government recently issued a Bill aimed at implementing the Directive (Wetsvoorstel implementatie richtlijn loontransparantie). The Bill does not include any provisions other than those that are strictly necessary to ensure compliance with the Directive – some good news for employers at least!
The Ministry of Social Affairs and Employment plans to submit the Bill in Quarter 3 of 2025 to the House of Representatives, although this timescale may be subject to change. It is currently subject to an online consultation process, which will close on 7 May 2025. The Bill is due to come into force on 7 June 2026, i.e. in line with the deadline for compliance by member states.
The Netherlands already has legislation in place that meets some of the obligations imposed by the Pay Transparency Directive, but the Bill introduces various new measures that are intended to reduce the wage gap between men and women by increasing transparency about pay and to strengthen the rights of employees who wish to exercise their right to equal pay. The transparency measures are also intended to serve as an incentive for employers to reward their staff objectively and demonstrate good employer practices. The key measures are as follows:
Pay structures: Employers must have pay structures in place that are based on objective and gender-neutral criteria. These criteria should enable the determination of the value of work and the renumeration linked to it.
Pay transparency before hiring: Job applicants will have the right to request and receive information from a (potential) future employer about their starting pay or pay range. Employers will no longer be allowed to ask applicants about their previous pay history.
Transparency of remuneration and remuneration progression policies: Employers must provide employees with easy access to the criteria used to determine their pay. Pay is defined as the compensation owed by the employer to the employee for their work, consisting of the base salary and any supplementary or variable components. Employers with 50 or more employees must also provide information with respect to the criteria used for pay progression.
Right to information: Employees will have the right to receive written information about their pay, as well as the gender-disaggregated average pay levels of employees performing equal (or equivalent) work.
Pay gap reporting obligations: Employers with 250 or more employees must report annually on any gender pay gap, whereas employers with 100 to 249 employees must report every three years. In line with the Directive, the first pay reporting date will be 7 June 2027. There is no reporting obligation for employers with fewer than 100 employees. This represents a significant change for Dutch employers, as the Netherlands does not currently require employers to carry out gender pay gap reporting.
Joint pay assessment: In line with the Directive, if the pay report reveals an unjustified difference of at least 5% in the average pay between female and male employees performing equal (or equivalent) work, and this difference is not rectified within six months after submitting the report, employers will be required to conduct a joint pay assessment with their employee representatives.
Measures for legal protection: The provisions on legal protection in the Directive largely align with the existing Dutch system. For example, employees in the Netherlands already have the ability to bring legal proceedings and the right to claim damages. Three new provisions are being introduced: a (further) reversal of the burden of proof in cases of non-compliance with these new transparency obligations; protection for employees against retaliation; and the possibility for a court to order an employer to pay the legal costs of the proceedings even if the employer is successful, if there were valid reasons to file the claim (in the context of equal pay claims).
Although the Bill will not come into effect until 7 June 2026, it is essential that employers start preparing now considering the scope of the upcoming changes. This is particularly important given that, starting in June 2026, the burden of proof will shift in favour of employees, placing employers at a disadvantage. Employers can take proactive steps by, for example, reviewing their current job evaluation method (or implementing one if none exists), auditing recruitment procedures, and establishing processes to monitor and analyse the pay disparity between male and female employees from the outset.
Lastly, in the Netherlands, companies with 50 or more employees are legally required to set up a works council. The works council is expected to play a key role in ensuring compliance with the upcoming pay transparency rules. Employers that meet the 50-employee threshold but have not established a works council will find themselves unable to fulfil certain obligations under the new legislation. The Dutch legislator has deliberately chosen not to provide an alternative mechanism for such situations. This means that if no works council has been established and there are 50 or more employees, it is crucial for companies to act promptly and take the appropriate steps towards the establishment of a works council.