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.
May v. Must – The Scope of Agency Permitting Review under Statutory Standards
The Law Court recently issued a decision in Eastern Maine Conservation Initiative v. Board of Environmental Protection that contains an enlightening discussion of what an agency must consider—as opposed to what an agency may consider—in issuing a permit. In so doing, it adopted an important limit on how far agencies must go in reviewing a project’s downstream impacts.
The case involved an appeal of a permit issued by the Department of Environmental Protection for an aquaculture facility. The permit, upheld by the Board of Environmental Protection, authorized construction of the aquaculture facility under the state Site Location of Development Law (Site Law) and installation of intake and outfall pipes under the Natural Resources Protection Act (NRPA).
Opponents of the project argued that the agency erroneously failed to conduct an independent assessment under NRPA of the harm that the project would cause to wildlife habitats. NRPA specifies that certain enumerated activities require a permit, including construction and dredging. These proposed activities must then meet various standards, including that the activity will not “unreasonably harm” wildlife habitat. Petitioners did not challenge the agency’s assessment of the impacts of construction and dredging; instead, they argued that the agency should have analyzed the effects of effluent discharge—an activity that is not enumerated in NRPA—on wildlife habitat.
The Law Court rejected this argument based on the plain language of NRPA. The Court concluded that only enumerated “activities” trigger agency review in an application for a permit under NRPA. Because the discharge of treated wastewater is not an enumerated activity, the Court held that the agency did not err by declining to analyze the issue in approving the permit.
Most interestingly, the Law Court went on to distinguish one of the cases relied upon by the petitioners, Hannum v. Board of Environmental Protection. In that case, the Law Court had upheld a denial of a NRPA permit for installation of a pier and floating dock. The agency had concluded that the use of the dock—not just its construction—would disturb tern and seal colonies. The Court affirmed because it concluded that the Board has the power to deny a permit based on its proposed use. In Eastern Maine Conservation Initiative, the Court distinguished the case as follows:
To be clear, in Hannum we did not say that the agency is obligated under NRPA to consider the expected effects on wildlife of the intended use of a structure or facility. Rather, Hannum held that it was within the agency’s discretion to take those impacts into consideration in evaluating compliance with the standard in [NRPA].
In the Court’s view, then, Hannum establishes that (at least in certain circumstances) DEP may consider activities other than those enumerated in NRPA. As an aside, it may be reasonable to question the holding in Hannum—after all, if NRPA specifically identifies the relevant activities whose impacts must be considered, the expressio unius est exclusio alterius canon of statutory interpretation would seem to suggest that the agency may not go any further. Regardless, Eastern Maine Conservation Initiative makes clear that Hannum only goes so far—simply because it may consider certain unenumerated activities, the agency at the very least does not have to consider unenumerated activities that may follow from NRPA-regulated conduct (and which had separately been reviewed under a different statutory scheme). This is an important limitation on the required scope of agency review for environmental permits.
Thailand Launches Public Hearing on Draft Act to Promote Solar Power Usage
Recently, Thailand’s Department of Alternative Energy Development and Efficiency (“DEDE”) announced that they are to hold a public hearing on the draft Act on Promotion of Solar Power Usage (the “Draft Act”).
Key takeaways
Simplification of Regulatory Processes: The Draft Act aims to promote solar PV energy system installations by simplifying regulatory procedures, reducing unnecessary expenses and complex documentation.
Benefits for Commercial and Industrial Owners: The new law will benefit commercial and industrial building owners who install solar PV systems for self-consumption, as well as developers offering build-transfer-operate services as it streamlines the regulatory procedures.
Support for Sustainable Energy Goals: The Draft Act is designed to address rising electricity prices, reduce energy costs, cut fuel imports, improve access to clean energy, lower carbon dioxide emissions, and align with Thailand’s national strategy for sustainable growth.
Draft Act to Promote Solar Power Usage
As Thailand looks to reduce energy costs for both individuals and businesses, the Draft Act intends to cut down on the procedural steps required under current legislation, which can sometimes result in unnecessary expenses and complex docuentation. Recently, the government introduced a Ministerial Regulation that eliminates the need to obtain a factory license (commonly known as a Ror. Ngor. 4) from the authorities for all solar rooftop power generation installations located outside of industrial estates, regardless of their production capacity. In contrast, the Draft Act is not limited to just rooftop solar power facilities.
In line with Thailand’s aim to be carbon neutral by 2050, the government is emphasizing the growth of renewable energy, including solar power. Despite the progress, only 15 percent of Thailand’s energy currently comes from renewable sources, indicating that there is still significant room for improvement and investment throughout the country. Based on the draft Power Development Plan (PDP) 2024–2037 which is still yet to be fully finalized, renewable energy is expected to account for 51 percent of total electricity generation, with solar energy contributing 16 percent. This marks a strong increase in the share of clean energy sources in the electricity sector from 36 percent under the PDP 2018 (Revision 1) to 51 percent.
The Thai government’s increasing measures to expand renewable energy projects and harmonize various rules and regulations represent a positive step forward in Thailand’s journey to become carbon neutral. By proactively expanding renewable energy sources in its power mix, Thailand will continue to be an attractive destination for foreign direct investment.
Potential benefits to commercial and industrial building owners
The new law in its current form should benefit commercial and industrial building owners who wish to install solar PV systems for self-consumption. Additionally, it will benefit developers offering build-transfer-operate services (such as EPC and O&M models, rather than PPA models).
As Thailand aims to address the challenges of rising electricity prices, reduce energy costs, cut down on fuel imports, improve public access to clean energy, lower carbon dioxide emissions, and align with the national strategy for sustainable and eco-friendly growth, it is anticipated that the Draft Act will support the country in achieving these goals.
Overview of the Draft Act
The Draft Act consists of the following five sections:
Section 1: General provisions
Section 2: Installation of solar power systems
Section 3: Control and disposal of solar power systems
Section 4: Administrative duties
Section 5: Penalties
Please find below a brief overview of each section of the Draft Act.
Section 1: General provisions
Section 1 of the Draft Act outlines the general provisions, emphasizing the enhanced promotion of solar power system installations in a more efficient and streamlined manner.
Section 2: Installation of solar power systems
The Draft Act applies only to solar power system installations for self-consumption. However, it allows the sale of electricity to a governmental utility (i.e., the Electricity Generating Authority of Thailand, the Metropolitan Electricity Authority, the Provincial Electricity Authority, or organizations designated by the Minister).
According to the Draft Act, if there is any sale, distribution, exchange, or provision of electricity, it must comply with the purchase rates and criteria announced by the Director-General and approved by the Minister.
It is important to note that, according to the intention of the Draft Act as announced by the DEDE in the hearing materials on 26 March 2025, all license requirements for installation of solar power systems, including an approval for grid synchronization, are exempted. However, the installer must notify the DEDE at least 30 days prior to the installation of the solar PV system.
Section 3: Control and disposal of solar power systems
To ensure the safe collection, disposal, or destruction of solar energy system equipment, such activities must follow the criteria set by the DEDE.
For businesses that are involved in the collection and/or disposal of solar energy equipment, they must be permitted by the Director-General of DEDE to carry out such activities. Further, licensed electronic waste disposal facilities are considered authorized establishments for solar energy system equipment disposal, and they must notify the Director-General and comply with the relevant criteria.
Section 4: Administrative duties
According to the Draft Act, officials have the relevant authority to access premises for inspecting the installation of solar energy systems to ensure that they are in compliance with the Draft Act. The primary objective is to ensure that the installation of solar energy systems is conducted safely and without any hazards.
Section 5: Penalties
Further, the Draft Act also details potential penalties for acts that violate the Draft Act.
Activities that do not comply with the provisions of the Draft Act can result in imprisonment of up to three years and/or fines up to THB 100,000.
Next steps
In conclusion, the Draft Act is structured into five sections: (1) general provisions; (2) installation of solar power systems; (3) control and disposal of solar power systems; (4) administrative duties; and (5) penalties.
It aims to promote efficient solar power installations, regulate the sale and distribution of electricity to the governmental utility, ensure safe disposal of solar equipment, empower officials to inspect installations for compliance, and impose penalties for violations, thereby supporting Thailand’s sustainable energy goals.
The Energy and Infrastructure team at Hunton will continue to monitor future developments to determine whether this law will expand to include or benefit developers who provide build-operate-transfer model (i.e., PPA model).
Jidapa Songthammanuphap and Joseph Willan contributed to this article
Noncompetes in Flux: What Else Can Employers Do to Protect Themselves?
As we continue to report, noncompete agreements have been subject to unprecedented scrutiny over the past few years. Last April, the Federal Trade Commission (FTC) finalized a rule (“Final Rule”) ostensibly banning noncompetes, which has been mired in significant legal challenges. Additionally, four states have banned noncompetes (California, Minnesota, North Dakota, and Oklahoma), and the list continues to grow, with Ohio recently joining the list of states with proposed bans. In light of these developments, we have provided guidance to employers seeking to incorporate noncompete provisions in their employment agreements. However, employers in states with existing or proposed noncompete bans can still protect their legitimate business interests through other tools, even without ordinary noncompetition agreements.
Noncompetes Incident to the Sale of a Business:For starters, even if ordinary employment-based noncompetes are banned, there may be exceptions to the general prohibition. For example, the FTC’s ban on noncompetes contains an express carveout for the “bona fide sale of a business entity, of the person’s ownership interest in a business entity, or of all or substantially all of the business entity’s operating assets.” Even California — widely regarded as one of the most hostile jurisdictions toward noncompetes — will enforce noncompetes when they are part of the sale of a business or its associated goodwill and the dissolution of a partnership or limited liability company. Employers must exercise caution in determining whether a specific transaction, along with the individual’s involvement, meets the criteria for the relevant state’s sale of business exception.
Non-Solicits: If employers are prohibited from implementing noncompetes in their employment agreements, the FTC’s Final Rule and many states with noncompete bans nevertheless permit certain non-solicitation agreements. Of course, employers will want to carefully review the laws of each state in which they operate to ensure that their non-solicitation agreements are reasonable and enforceable. Some non-solicitation or “no-poaching” agreements, particularly those that apply to customers, might be deemed similar to a noncompete and rendered unenforceable. By contrast, non-solicits applicable to employees generally survive stricter scrutiny. Regardless, employers must narrowly tailor their non-solicitation agreements to protect the employer’s legitimate business interests and must ensure they are reasonable terms of duration and scope. Employers should also be careful about adding new non-solicitation obligations to existing employees, as some states require existing employees to receive new consideration, including material elevations in position or stock awards, for the new obligations to stick.
Non-Disclosure (NDAs) and Confidentiality Agreements: Despite the turbulence surrounding noncompetes, employers may still protect their legitimate business interests through NDAs and confidentiality agreements. NDAs generally limit employees from using, sharing, or disclosing confidential information and trade secrets obtained from their employers during and after employment. While similar to NDAs, confidentiality agreements tend to be broader and focus specifically on protecting sensitive information. Employers should understand, however, that NDAs included in certain settlement agreements may be subject to heightened scrutiny and regulation.
Non-Disparagement Agreements: Employers should also consider implementing reasonable non-disparagement provisions in their employment agreements. Such provisions generally prohibit or limit employees from making negative statements about their employers during and after employment. While such provisions can help protect an employer’s image and mitigate fallout from turbulent terminations, employers should be careful not to draft their non-disparagement agreements to be overly one-sided or impose unfair burdens on a single party. Employers should also be cognizant that non-disparagement agreements included within severance agreements tend to be subject to stricter scrutiny and regulation.
Liquidated Damages: Finally, employers may reduce the administrative burden of protecting their legitimate business interests by including reasonably tailored liquidated — or stipulated — damages provisions. These provisions specify a predetermined amount as damages for an employee’s breach of their restrictive covenants. Generally, a liquidated damages provision will be upheld where it would be impracticable or extremely difficult to calculate the actual damages for the breach of a provision when the contract was made and the amount set as liquidated damages represents a reasonable estimate of fair compensation for the loss sustained. Accordingly, a liquidated damages provision could greatly expedite any litigation resulting from a breach of a restrictive covenant by shortcutting the otherwise time-consuming and expensive process of identifying an employer’s actual damages resulting from a breach. To ensure these provisions are reasonable, however, employers should carefully draft liquidated damages provisions for each restrictive covenant at issue, as some courts may find that universally applicable liquidated damages do not accurately estimate the damages sustained if they proscribe the same remedy for breaches of materially different covenants.
While the legality and enforceability of noncompetes may be in flux, employers still have several tools to protect their legitimate business interests upon an employee’s departure.
CNIPA Reminds Applicants Not to Include Political Content in Patent Applications
On April 11, 2025, China’s National Intellectual Property Administration (CNIPA) issued the Business Reminder on Further Standardizing the Requirements for Drafting Patent Application Documents (关于进一步规范专利申请文件撰写要求的业务提醒). The Reminder states that the background section of the specification specifically should not introduce political content not directly related to the technology and only use official maps from China’s Ministry of Natural Resources “to ensure accuracy, legality and authority of the map.” However, this represents difficulties for foreign applicants as the Ministry’s map website appears to be unavailable for foreigners.
A full translation follows. The original text can be found here (Chinese only).
In order to further improve the standardization of patent application documents and save the application and authorization procedures, the following reminders are made for the writing of patent application documents in accordance with the relevant provisions of the “Patent Examination Guidelines”:1. The core of the patent application document is the technical solution it records, and the introduction of content unrelated to the technical solution should be avoided as much as possible, especially the background technology and drawings of the specification.2. The background technology part of the specification should state the background technology and corresponding documents that are useful for understanding, searching, and reviewing the invention or utility model. When explaining the problems and shortcomings in the background technology, it should focus on the technical content and try to avoid introducing political, economic, cultural and other information that is not directly related to the technology.3. For the drawings of the specification, it is recommended to introduce maps only when they are closely related to the scope of protection. When it is necessary to introduce, the applicant should use standard maps, such as those obtained through the “Standard Map Service System” (http://bzdt.ch.mnr.gov.cn/ ) on the website of the Ministry of Natural Resources to ensure the accuracy, legality and authority of the map. When making drawings based on standard maps, relevant laws, regulations and departmental regulations should be observed.
NEW NPRMS ON THE FCC’S UPCOMING APRIL AGENDA: Non-IP Caller ID Authentication Solutions and Clarifying Foreign Ownership Rules
Just last week the FCC announced the agenda for the upcoming April meeting on the 28th. During the meeting, the commission will review for consideration a couple of Notice of Proposed Rulemaking (NPRM), and two stood out to me.
First is considering an NPRM centered around Caller ID authentication for non-IP networks to block robocalls.
The FCC summarized the NPRM as, “proposes to develop a framework for evaluating whether non-IP caller ID authentication solutions are developed and reasonably available, as required by the TRACED Act, proposes to conclude that certain existing solutions satisfy those requirements, and proposes to require that providers that continue to rely on non-IP networks implement non-IP caller ID authentication solutions.”
The NPRM would aim to set in motion the following items:
Propose to establish criteria for evaluating whether non-IP caller ID authentication frameworks are developed, reasonably available, and effective, as required by the TRACED Act.
Propose to conclude, applying those criteria, that frameworks based on two existing non-IP caller ID authentication standards meet the TRACED Act’s requirements, and seek comment on frameworks based on a third standard.
Propose to repeal the continuing extension from caller ID authentication requirements granted to providers that rely on non-IP technology.
Propose to require that voice service providers, gateway providers, and non-gateway intermediate providers implement non-IP caller ID authentication frameworks in their non-IP networks and certify in their Robocall Mitigation Database filings that they have implemented such frameworks.
Propose to give providers that continue to rely on non-IP technology two years from the effective date of the rules to implement one or more non-IP caller ID authentication frameworks, and seek comment on how the proposed
The second is an NPRM to clarify foreign ownership rules, summarized by the FCC “that would set clear expectations about the Commission’s review under section 310(b) of the Act of foreign investment in common carrier wireless, aeronautical radio, and broadcast licensees to reduce unnecessary burdens on industry while continuing to protect the public interest, including national security, law enforcement, foreign policy, and trade policy.”
The fact sheet states the FCC has already adopted many of the practices outlined in the NPRM but has not codified them as legal rules. The NPRM is seeking to “codify definitions and concepts underlying the foreign ownership rules and practice and to streamline our review processes.”
The NPRM is hoping to clarify and codify the following for both broadcasters and common carrier licensees:
Propose to codify existing policy regarding which entity is the controlling U.S. parent;
Propose to codify the Commission’s advance approval policy regarding certain deemed voting interests;
Propose to require identification of trusts and trustees;
Propose to extend the remedial procedures and methodology to privately held companies;
Propose to add requirements regarding the contents of remedial petitions;
Seek comment on requiring the filing of amendments as a complete restatement to petitions for declaratory ruling;
Propose to clarify U.S. residency requirements; and
Seek comment on other potential opportunities to alleviate unnecessary regulatory burdens in the context of our foreign ownership review under section 310(b) of the Act.
It will be interesting to see if these two both move forward, we will be tuning in. You can check out the FCC meeting agenda here.
U.S. Implements Federal Registration Requirement for Noncitizens
Federal registration requirement for noncitizens physically present in the U.S. is now in full effect.
All noncitizens must carefully comply with requirements, such as maintaining updated records and promptly reporting address changes.
Reminder: Noncitizens are required to carry evidence of valid immigration status on person at all times.
A newly effective federal registration requirement now requires noncitizens physically present in the U.S. to register with the U.S. government and carry evidence of their valid immigration status on their person at all times. As of Friday, April 11, noncitizens—other than those already deemed registered by virtue of their nonimmigrant and immigrant vista processes—must create an account with the U.S. Citizenship and Immigration Service (USCIS) and take certain steps, including attending a biometric appointment, to register as a noncitizen.
Affected noncitizens who must take action to comply with the registration requirements include:
Noncitizen children turning 14 while in the U.S., or those who have already turned 14 but have not previously registered;
Canadian visitors without a valid I-94 record who have stayed or intend to stay in the U.S. for more than 30 days;
Noncitizens without an Employment Authorization Document (also known as an “EAD” or work permit) or proof of registration, including applicants and recipients of Deferred Action for Childhood Arrivals (“DACA”), Temporary Protected Status (“TPS”), and other humanitarian forms of relief; and
Any noncitizen who entered the U.S. without inspection, admission, or parole, or otherwise lacks documentation.
Noncitizens who are already considered registered and do not need to take any action to comply with the registration requirements include:
Nonimmigrants with a valid I-94 record or admission stamp;
Permanent residents;
Nonimmigrants in possession of a valid EAD or work permit;
Adjustment of status applicants; and
Canadian and Mexican nationals in possession of a valid border crossing card.
Those required to register must create an account with USCIS through the myUSCIS portal and complete the following five steps:
1) Complete Form G-325R.
Through this online form accessible in the myUSCIS portal, noncitizens will provide select biographic information. There is no charge to complete Form G-325R.
2) Attend a biometrics appointment.
Following the receipt and processing of Form G-325R, USCIS will schedule an appointment for the registrant to submit fingerprints, photos, and signatures. Select noncitizens who are required to register may be exempt from fingerprinting, including Canadian visitors and children under the age of 14.
3) Print the registration certificate.
After the biometrics appointment, registrants will gain access to a registration certificate through the myUSCIS account. Registrants must download and print the “Proof of Alien Registration” document.
4) Retain proof of registration.
At all times, registrants over the age of 18 must carry the Proof of Alien Registration, together with any original Form I-94, permanent resident card, or EAD.
5) Maintain current address records.
Noncitizens must report changes of address to USCIS within 10 days of moving to ensure correspondence and benefits are received without delay. Form AR-11 may be filed via mail or within the myUSCIS account platform. This reporting requirement does not apply to A and G visa holders and visa waiver visitors.
6) Carry proof of status on person at all times.
Every noncitizen who is 18 years old and over is required to carry evidence of their immigration “registration documents” at all times. The term noncitizen includes green card holders and other nonimmigrants in the U.S. “Registration documents” if in reference to valid immigration documents. Documents that noncitizen employees should carry with them (if applicable) are as follows:
Permanent resident card (green card)
Employment Authorization Card (EAD)
Unexpired foreign passport with valid visa stamp
I-94 Arrival/Departure Record and unexpired I-797 nonimmigrant petition approval notices from USCIS
Other receipt notices from USCIS (Form DS-2019, Form I-20, I-485 receipt notices)
Barnes & Thornburg LLP anticipates most of its clients will experience minimal disruptions, if any, to international workforces as a result of the registration requirement. However, for affected employees, a failure to comply with the registration requirement may prompt individual fines, detention, and a risk of removal.
Micro-Captive Reportable Transaction Deadline Effectively Extended
IRS Notice 2025-24: Waiver of Penalties if Micro-captive Reportable Transaction Disclosures Filed by July 31, 2025
On Friday, April 11, 2025, the Internal Revenue Service issued Notice 2025-24 (the “Notice”), which waives applicable penalties under the Internal Revenue Code to participants in, and material advisors to, reportable micro-captive insurance transactions so long as requisite disclosure statements are filed by July 31, 2025.
Required Disclosure Statements
The Treasury Department and the Internal Revenue Service (“IRS”) published final regulations on January 14, 2025 that deemed certain micro-captive insurance transactions as listed transactions and others as transactions of interest (the “Final Regulations”; see 26 CFR 1.6011-10 and 1.6011-11.) Participants in these reportable transactions are required to file disclosure statements with the IRS Office of Tax Shelter Analysis (“OTSA”) within 90 days, by April 14, 2025. Materials advisors to the reportable transactions are required to file disclosure statements with the OTSA by April 30, 2025. You can view our prior alert covering the disclosure obligations here.
Industry Request for Relief
To evaluate applicability of the Final Regulations to prior and existing micro-captive insurance transactions, affected industry participants must review up to 10 years of financial and business records per transaction to determine whether disclosures must be filed, and if so, the information to include in the disclosures. The disclosures’ due dates required this analysis during the height of tax season for practitioners who were already preparing annual federal and state tax returns due April 15, 2025.
In response to the Final Regulations’ fast-approaching compliance deadline, captive insurance associations and advocacy groups submitted letters to then-Acting Commissioner of the IRS, Melanie Krause, seeking an extension of time to file disclosures. The letters urged the IRS to extend the disclosure due dates by an additional ninety days to allow for sufficient time to produce carefully considered reporting and provide a more reasonable compliance period for the small- and mid-sized businesses that primarily utilize micro-captive insurance companies for risk management.
Limited Waiver of Penalties
The Notice effectively grants the captive insurance industry the requested extension of time to comply with the Final Regulations by waiving penalties under 26 U.S.C. § 6707 and 26 U.S.C. § 6707A for material advisors and participants, respectively, if disclosures are filed by July 31, 2025. The IRS stated in the Notice that the penalties are waived through July 31, 2025 in response to stakeholders’ concerns and due to “potential challenges associated with preparing disclosure statements during tax return filing and in the interest of sound tax administration.”
Please note that the waiver of penalties does not apply under 26 CFR 1.6011-4(e)(1) requiring a taxpayer to file a copy of a disclosure statement with the OTSA at the same time that any disclosure statement is first filed by the taxpayer pertaining to a particular reportable transaction. For example, if a taxpayer’s micro-captive insurance transaction was categorized as a reportable transaction for the first time for the taxpayer’s 2024 tax return, then the penalty waiver does not apply, and the tax return and required disclosures are due April 15, 2025. In such situations, the Notice states that taxpayers concerned about the April 15, 2025 deadline may request an extension of the due date for their tax return to obtain additional time to file the related disclosures.
Taxpayers that may be subject to the Final Regulations should consult professional advisors for detailed review and guidance on potential reporting requirements.
Burdensome Portion of TCPA Rule Delayed Through April 2026
Last year, the Federal Communications Commission (“FCC”) issued a rule amending a portion of the Telephone Consumer Protection Act (“TCPA”). The amendments to rules [47 CFR 64.1200 § (a)(10)] were set to become effective on April 11, 2025 and designed to strengthen consumers’ ability to revoke consent under the TCPA by making the revocation process simple and easy. The rule change, however, was far-reaching and required callers to apply a revocation request made in response to one type of message to all future calls and texts.
In response to industry comments (particularly from financial institutions and healthcare organizations), the FCC has extended the effective date of Section 64.1200(a)(10), a specific and narrow portion of the amended rules through April 11, 2026, “to the extent that it requires callers to apply a request to revoke consent made in response to one type of message to all future robocalls and robotexts from that caller on unrelated matters.” See the Order, In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, No. DA 25-312 (Apr. 7, 2025).
The FCC repeatedly refers to this as a limited waiver, so the remaining portions of the rule and the other changes to Section 64.1200(a)(10) will go into effect as planned on Friday April 11, 2025.
There is some ambiguity as to what requirements are extended because the FCC’s announcement did not include an amendment showing how Section 64.1200(a)(10) would be codified. Based on the Order’s plain language, by April 11, 2025 callers will still need to:
process requests for which the party is seeking an opt-out within a reasonable time not to exceed 10 business days, as opposed to the current outer limit of 30 days;
recognize and process the expanded list of opt-out commands (“STOP”, “QUIT”, “END”, etc.) and any other opt-out request made using any reasonable method to clearly express a desire not to receive further calls or texts;
allow users to opt out of exempted texts or calls if they request an opt-out in response to one of those messages; and
provide a clear, conspicuous disclosure and an alternate, reasonable method of opting out if two-way texting isn’t supported, so that the party knows how to opt out in response to a text.
Fortunately, by extending the portion of the rule that would have required callers to apply a revocation request made in response to one type of message to all calls and texts messages from that caller, the FCC has deferred the most onerous portion of the 47 C.F.R. § 64.1200(a)(10) changes. Despite the extension, callers should confirm that they are in compliance with the remaining portions as of April 11, 2025 and continue preparing for the 2026 effective date of the deferred revocation requirements.
Recent DCSA Updates Regarding Expansion of FOCI Requirements to Unclassified Government Contracts
The Defense Counterintelligence and Security Agency (DCSA) has provided new updates about the highly anticipated changes that will apply foreign ownership, control or influence (FOCI) mitigation requirements to unclassified contracts.
DCSA recently posted updates to a central webpage dedicated to the forthcoming expansion of FOCI reviews to contractors seeking to perform on certain unclassified contracts pursuant to Section 847 of the FY20 National Defense Authorization Act (NDAA) (Section 847). According to the DCSA’s update, Section 847 is likely be implemented in the next 12 to 18 months, following publication of the corresponding Defense Federal Acquisition Regulation Supplement (DFARS) clause.1 The corresponding Department of Defense (DoD) Instruction 5205.87 was published last year – see our client alert from July entitled “Foreign Ownership, Control or Influence (FOCI) Mitigation Specifically for Unclassified Contracts”.
When implemented, Section 847 requires DCSA to assess beneficial ownership (i.e., individuals or entities who ultimately control a contractor, even if indirectly) for FOCI concerns, and mitigate those concerns if deemed necessary by the agency. This assessment will be conducted for contractors prior to contract award (for unclassified contracts), and again post-award if there are material changes to the information originally submitted during this phase or during the contract performance phase. For cases that may require mitigation, DCSA will leverage a commitment letter and interim measures in order to permit contract award, while governance and operational mitigations are negotiated. This is similar to the process for protecting facility security clearances in cases of foreign acquisitions of cleared contractors today.
Notably, the webpage states that classified contractors will still undergo FOCI review and mitigation post-award (versus pre-award).
Section 847 is widely considered to be massive change, not only for industry, but for government acquisition personnel and DCSA. DCSA states that, respecting FOCI matters, it currently processes about 2,000 cases per year. DCSA estimates that, when fully implemented, Section 847 will result in processing approximately 41,000 cases annually (for classified and unclassified contract awards), and adding security requirements for up to US$200 billion worth of acquisitions. To meet this demand, DCSA has been adding and training personnel, who will not only process the cases but also provide training and customer service to contractors.
1 Per the open DFARS cases (as of April 3, 2025), the Defense Acquisition Regulations Council (DARC) Director tasked the Acquisition Technology & Information Team to draft the proposed DFARS rule for “Mitigation Risks Related to Foreign Ownership, Control or Influence.” That report is due on May 14, 2025, but that could be extended by the DARC Director.
Circuit Split on Anti-Kickback Causation Poses Complications for Whistleblowers, But First Circuit Ruling Also Provides a Path Forward
In February, a panel of three judges in the U.S. Court of Appeals for the First Circuit issued a decision in United States v. Regeneron Pharmaceuticals, Inc. ruling that “but-for” causation is the proper standard for False Claims Act (FCA) cases alleging improper kickbacks and referrals in violation of a 2010 amendment to the Anti-Kickback Statute (AKS). This decision deepens a circuit split on the issue, as the Sixth Circuit and Eighth Circuit have adopted a but-for causation standard, while the Third Circuit ruled that the kickback only needs to be a contributing factor.
The circuit split is likely to be resolved by the Supreme Court, but in the meantime, its impact on FCA enforcement poses complications for whistleblowers looking to report kickbacks under the FCA’s qui tam provisions.
However, the First Circuit panel in Regeneron also clarified that there still exists a key route for whistleblowers and the government to pursue AKS-based FCA cases under the implied false certification theory. The court held that there still remains FCA liability when compliance with the AKS is a recognized precondition of payment under a federal healthcare program and a provider falsely certifies compliance with those requirements to get a claim paid by Medicare or Medicaid. Notably, the court held that there is no but for causation required when such an implied false certification claim is pursued under the FCA.
The Anti-Kickback Statute, False Claims Act and Whistleblowers
Dating back to the Civil War, the False Claims Act targets fraud among government contractors. It holds that any person who knowingly submits, or causes to submit, false claims to the government is liable for three times the government’s damages plus a penalty.
A key element of the FCA is its qui tam provisions, which empower whistleblowers with knowledge of FCA violations to come forward and file lawsuits on behalf of the government, which then has the option to intervene and take over the lawsuit. Regardless of whether the government intervenes, whistleblowers whose qui tam suits result in successful cases are eligible to receive between 15-30% of the funds collected in the case.
The Anti-Kickback Statute prohibits the exchange (or the offer to exchange) of any form of remuneration to induce or reward referrals for services or items reimbursable by federal healthcare programs. In violating the AKS, a company or individual can also be liable under the FCA. While the AKS imposes criminal liability on violations, the FCA adds civil liability.
Over the years, the government and whistleblowers have aggressively enforced violations of the AKS and FCA in tandem. For example, in July 2024, the Department of Justice announced that DaVita Inc., a healthcare company providing kidney dialysis services, agreed to pay $34 million to settle allegations that it violated the FCA through the illegal payments of kickbacks to induce referrals to DaVita’s dialysis centers and DaVita Rx, a former subsidiary that provided pharmacy services for dialysis patients. The settlement resolved a qui tam whistleblower suit filed by Dennis Kogod, a former Chief Operating Officer of DaVita Kidney Care, who received a $6,370,000 whistleblower award from the settlement proceeds. Over the years, many of the largest False Claims Act whistleblower recoveries have been based on alleged AKS violations in the health care industry.
First Circuit Ruling and Circuit Split
The First Circuit’s ruling in Regeneron centered around a provision in the 2010 amendments to the AKS which states that “a claim that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim for purposes of [the FCA].” (Emphasis added)
In Regeneron, the government alleged that drug manufacturer Regeneron Pharmaceuticals paid tens of millions of dollars in kickbacks for its macular degeneration drug Eylea by using a foundation as a conduit to cover Medicare co-pays for Eylea.
The issue before the First Circuit in Regeneron was the level of causation required to satisfy the “resulting from” language. The First Circuit ruled that that “but-for” causation is the proper standard, meaning that there is no FCA liability if the claim would have been submitted regardless of the illegal kickback.
In Regeneron therefore, the Court ruled that Regeneron Pharma was not liable under the FCA because the government could not prove that doctors prescribing Eylea would not have done so “but for” the alleged kickbacks covering the co-pay cost.
According to the First Circuit, “The Supreme Court has held that a phrase like ‘resulting from’ ‘imposes… a requirement of actual causality,’” and “Accordingly, ‘it is one of the traditional background principles ‘against which Congress legislate[s]’ that a phrase such as ‘result[ing] from’ imposes a requirement of but-for causation.” While the Court notes that textual or contextual indications may suggest a different standard of causation, it ruled that none were present in the 2010 AKS amendment.
The First Circuit ruling deepens a circuit split on the issue. The Sixth and Eighth Circuits had also previously adopted the more stringent “but-for” causation standard for AKS-based FCA claims. The Third Circuit on the other hand has rejected the “but-for” causation standard and instead adopted a broader standard allowing for FCA liability if the kickback was merely a contributing factor to the submission of the claim.
Implications and Routes Forward for Whistleblowers
The circuit split on the causation standard for AKS-based FCA claims poses some complications for whistleblowers looking to hold fraudsters accountable through qui tam lawsuits. Firstly, the split will cause confusion about what standard applies for which justifications. But even more importantly, the “but-for” causation standard will make it much harder for whistleblowers and the government to prove False Claims Act liability in kickback cases.
There still remains a key route for whistleblowers and the government to pursue AKS-based FCA cases: the false certification theory. Under the false certification theory, a violation of the AKS can give rise to FCA liability when compliance with the AKS is a recognized precondition of payment under a federal healthcare program and a provider falsely certifies compliance with the law when it submits a claim, or causes the submission of a false claim.
The false certification theory predates the 2010 amendments at issue and is considered a distinct pathway towards proving FCA liability. In Regeneron, the First Circuit clearly states that “claims under the 2010 amendment run on a separate track than do claims under a false-certification theory” and that “there is nothing in the 2010 amendment that requires proof of but-for causation in a false certification FCA case.”
Barring a Supreme Court decision striking down “but-for” causation or a Congressional amendment clarifying a different standard of causation, FCA whistleblower claims can still survive if they can file qui tam suits based upon the false certification theory. Additionally, many whistleblower qui tam FCA cases alleging illegal kickbacks and violations of the AKS can meet the but for causation test. Consequently, whistleblowers and their counsel will need to evaluate the possible routes available when there are allegations of illegal kickbacks being paid in the context of providing health care that is reimbursed by Medicare, Medicaid or other government healthcare programs.
The government has made AKS enforcement a major FCA priority in recent years and the Deputy Assistant Attorney General Michael Granston recently promised that under the Trump administration the Department of Justice “plans to continue to aggressively enforce the False Claims Act.”
Individuals looking to blow the whistle on illegal kickbacks should contact an experienced False Claims Act whistleblower attorney.
Geoff Schweller also contributed to this article.
United States: The SEC Takes Another Key Step Toward Crypto Clarity
On the heels of other guidance issued by the US Securities Exchange Commission’s (SEC) Division of Corporation Finance (Division), the Division released a statement (Statement) on 10 April 2025 addressing its views about, among other things, certain disclosure requirements for certain registration forms under the Securities Act of 1933, including Form S-1, and registration forms under the Securities Exchange Act of 1934, including Form 10. As Form S-1 is used by commodity based exchange-traded products (ETPs), including spot bitcoin and ether ETPs, the Division’s guidance will impact such ETPs and others that follow a similar registration path.
The Division cautioned that the Statement, which also includes a summary of certain observations about issuer practices, does not address all material disclosure items, that the topics covered may not be relevant for all issuers, and that each issuer should consider its own facts and circumstances when preparing its disclosures.
The Statement included, among other things, the following guidance:
Disclosure should be tailored to the issuer’s business, presented clearly and concisely, “without overly relying on technical terminology or jargon”;
Disclosure should address risks relating to a material associated network or application; and
Investors should understand what the security represents. In the context of crypto assets, the disclosure could address, as applicable, (i) supply, (ii) rights, obligations and preferences, and (iii) technical specifications.
The Division included a footnote clarifying that nothing in the Statement was intended to convey that registration or qualification is required in connection with an offering of a crypto asset if the asset is not a security and not part of or subject to an investment contract.