One Year Later, FTC’s Noncompete Ban Remains on Life Support, as FTC Mulls Pulling the Plug
As readers of this blog will recall, last April, the Federal Trade Commission (FTC) voted along party lines to finalize a rule (the Noncompete Ban) that would have banned the vast majority of employee noncompete agreements across the country. Shortly after the FTC’s vote, the Noncompete Ban was challenged in three separate lawsuits: first in Texas, then in Pennsylvania, and then in a third case in Florida. The court in Pennsylvania ruled for the FTC, finding the Noncompete Ban lawful and supported by the FTC’s administrative record. By contrast, the courts in Texas and Florida ruled against the FTC, both finding the Noncompete Ban to be unlawful (albeit on somewhat different grounds). And, importantly, the Texas court issued a broad, universal order, preventing the Noncompete Ban from taking effect nationwide.
In the closing months of the Biden Administration, the FTC appealed the Texas and Florida decisions to the Fifth and Eleventh Circuit Courts of Appeals, respectively. Since Inauguration Day, however, the Trump administration has brought rapid changes to the makeup and direction of the FTC. Within hours of taking office, President Trump appointed a Republican, Andrew Ferguson, to serve as FTC Chair. Two weeks later, the Democratic former FTC Chair, Lina Khan, resigned her seat at the FTC, leaving the FTC with two Republican Commissioners and two Democratic Commissioners. Then, on March 18, President Trump fired the two remaining Democrats — a controversial move that is being challenged in court. Most recently, on April 10, President Trump’s nominee to serve as the third Republican Commissioner, Mark Meador, was confirmed by the Senate, giving the Republicans control of the FTC.
All the while, the fate of the Noncompete Ban still remains with the Fifth and Eleventh Circuits. Given the rapid changes to the FTC, on March 7, the FTC asked the two courts to hold the appeals “in abeyance” for 120 days, to allow the FTC to reassess whether to continue defending the Noncompete Ban. Both courts granted these requests, ordering the FTC to submit a “status report” by July 10 (in the Fifth Circuit) and July 18 (in the Eleventh Circuit) to advise on how the FTC intends to move forward.
Given that both now-Chair Ferguson and his Republican colleague, Commissioner Melissa Holyoke, opposed the vote last year on the Noncompete Ban on grounds that they found it unlawful, it seems like only a matter of time before the FTC’s defense of the Noncompete Ban is officially abandoned. Given the uncertainty over President Trump’s termination of the two Democratic Commissioners, there was speculation that Chair Ferguson was waiting for the Senate to confirm Mark Meador as the third Republican Commissioner before moving forward with an official vote to abandon the appeal. Now that Commissioner Meador has been confirmed, such a vote could happen in the near future, in which case the Noncompete Ban will officially be dead.
Even if the FTC pulls the plug on the Noncompete Ban, Chair Ferguson has made clear that the FTC intends to continue its efforts to promote competition in labor markets. In February, in announcing the appointment of Daniel Guarnera as Director of the FTC’s Bureau of Competition, Chair Ferguson cited Guarnera’s “experience using the antitrust laws to promote competition in labor and healthcare markets—two of my top priorities.” Chair Ferguson added that Guarnera would help “fulfill President Trump’s promise … to protect the interests of American workers.” Later that same month, Chair Ferguson directed the formation of a “Labor Markets Task Force” to “prioritize rooting out and prosecuting unfair labor-market practices that harm American workers.” In addition to noncompete agreements, the Labor Markets Task Force is charged with investigating and challenging conduct like “no poach” agreements, “wage-fixing” agreements, unfair or deceptive trade practices that harm gig economy workers, and false or deceptive job advertisements. Interestingly, Chair Ferguson also directed the Labor Markets Task Force to investigate and challenge labor practices that implicate more traditionally conservative issues such as “harmful occupational licensing requirements” and “collusion or unlawful coordination on DEI metrics.” Therefore, even if the Noncompete Ban seems unlikely to survive in its current form, you can expect the FTC to continue policing labor practices on a case-by-case basis as vigorously as ever.
President Trump Orders Closure of the Department of Education: What Schools and EdTech Companies Need to Know About FERPA
On March 20, 2025, President Donald Trump issued Executive Order 14242 directing the Secretary of Education “to the maximum extent appropriate and permitted by law, [to] take all necessary steps to facilitate the closure of the Department of Education[.]” This long-expected but dramatic move has educational institutions and education technology (EdTech) vendors—companies that provide services such as online homework, grade tracking, and teaching materials—wondering what now happens to the millions of students’ education records they maintain. More importantly for would-be brokers of student data, does the sudden disappearance of the main enforcer of the Family Educational Rights and Privacy Act of 1974 (FERPA) make student data a gold mine or a minefield?
Quick Hits
FERPA is a federal law that sets out a number of requirements educational institutions that receive federal funding must meet for the protection of student educational records.
A recent Executive Order diminishes the federal government’s power to enforce FERPA, heightening concerns that EdTech vendors could use student education data in prohibited ways.
However, vendors would do so at their own risk, as the legal landscape surrounding student education records requires compliance with more than just FERPA.
What Is FERPA?
FERPA requires educational institutions that receive federal funding to protect student educational records. FERPA applies to all public and private K-12 schools, as well as post-secondary educational institutions, that receive federal funding. Specifically, FERPA requires such educational institutions to: (i) obtain consent prior to releasing education records, (ii) permit parents and eligible students to access and correct their records, (iii) provide annual notice of rights, (iv) maintain reasonable measures to keep education records secure, and more.
While FERPA does not apply directly to EdTech companies, vendors are typically required by their contracts with individual educational institutions to comply fully with FERPA’s obligations and restrictions. FERPA does not contain a private right of action. Instead, aggrieved parents and eligible students can file complaints with the U.S. Department of Education, which investigates and enforces alleged violations. If the Department finds a FERPA violation, the relevant educational institution can be disciplined, up to and including the loss of federal funding.
A Student Data Gold Mine …
The Department has long been criticized for failing to adequately enforce FERPA. As of 2025, the Department has never imposed a financial penalty on an institution for violating FERPA, instead working with violators to achieve voluntary, monitored compliance. Many have expressed concerns that abolishing or substantially changing the structure of the Department could further erode the likelihood of strong FERPA enforcement at the federal level.
The prospect of a “Wild West” environment in the absence of the Department of Education may have schools and EdTech vendors salivating at the prospect of buying, selling, sharing, using, or otherwise processing the data of the millions of students (and former students) in the United States. Student data is a treasure trove. According to a report issued by the International Trade Administration in 2020, the EdTech market was estimated to be worth $89.49 billion, and it is projected to grow at a compound annual growth rate of 19.9 percent until 2028.
A FERPA exception already permits school officials to disclose education records to EdTech vendors if the vendor has a legitimate educational interest, the vendor is subject to the school’s supervision, and the school contractually prohibits the vendor from further disclosure. However, a federal enforcement vacuum may encourage such vendors to think they can ignore the FERPA obligations to which they have agreed when processing student data. It may also encourage third parties, contractors, consultants, and other organizations that do not fit within this exception to think they can bypass FERPA entirely.
… or a Regulatory Minefield?
Despite the potential decrease in enforcement at the federal level, (1) the existence of other FERPA regulators, (2) bipartisan interest in reform, and (3) uncertainty regarding the extent of the Department’s closure cut against any argument that FERPA compliance will be less important in the coming days.
First, FERPA does not preempt state or local laws. The Executive Order even emphasizes returning “authority over education to the States and local communities.” Nearly all states have enacted at least one state-level student privacy law that supplements FERPA with additional privacy safeguards. These will persist regardless of what happens federally. In California, for example, the Student Online Personal Information Protection Act prohibits the use of student data for targeted advertising. Many states, like Illinois, have transposed FERPA into state statutes. Other states, like Virginia, incorporate FERPA by reference, essentially making compliance a state requirement as well as a federal requirement. Keeping aware of state-level obligations is of paramount importance for both educational institutions and EdTech providers, especially because in some states, like Wyoming, civil actions for damages may be permitted under public records laws if parents or students are knowingly or intentionally denied the right to inspect public school records.
Moreover, there appears to be a strong bipartisan interest in FERPA reform, with commentators associated with the current administration indicating that they support amending FERPA to facilitate enforcement in the Department’s absence. These commentators have taken the position that “[r]ather than preserving a failing federal system, a potential reorganization of the Department of Education presents a critical opportunity to … protect student data[.]” Some interested parties have proposed a private right of action for FERPA violations, while others want to explore other avenues to fill in regulatory gaps in student privacy, including by transferring many of the Department of Education’s responsibilities to other agencies.
Finally, the true extent to which the Department will be shuttered remains to be seen, as full closure may require an act of Congress. And, it is vital to remember that FERPA is a federal law, not a Department of Education regulation. Therefore, even if the Department were to close entirely, that would not make FERPA liability vanish forever. FERPA would remain in effect, and a future administration may reinitiate enforcement.
Next Steps
Despite the potential closure of the Department of Education, schools and EdTech vendors that ignore FERPA’s obligations regarding student data nevertheless face a number of continued risks. The Department has traditionally pursued only patterns of noncompliance and egregious violations, and ignoring FERPA over the next three and a half years could be construed as just that. Moreover, for EdTech vendors, FERPA noncompliance could give rise to breach of contract claims, while enforcement by other regulators may cause the school with which the EdTech vendor is working to lose funding—and, by extension, risk the vendor missing payday. Businesses operating in the education space may want to remain mindful of the full breadth of their obligations and act accordingly, even as changes take place within the federal education (and EdTech) landscape.
SEC Staff Offers Crypto Disclosure Guidelines
On April 10, 2025, the SEC’s Division of Corporation Finance issued a nonbinding statement explaining the general application of existing disclosure requirements under the federal securities laws to crypto asset offerings, and provided example disclosures under certain requirements. The statement provided the following guidance concerning disclosures in crypto asset offering documents.
Description of Business. Regarding material information about the business, blockchain companies may include current or proposed business plans and the purpose of the applicable blockchain network or application and its operations. The staff stated that disclosures should generally avoid technical jargon and descriptions of crypto technologies immaterial to the business and should be consistent with other public disclosures, such as technical white papers.
Risk Factors. Blockchain-related business risk disclosure may relate to planned operations, cybersecurity, and reliance on another network or application. Risks relating to the crypto asset may include its form, price volatility, rights, valuation, liquidity, supply, and custody. Regulatory risks may include those regarding money transmission laws or federal or registration requirements with other federal or state regulators.
Description of Securities. Descriptions of the crypto asset should include its terms, rights, and specific characteristics. For example, disclosure of the rights, obligations, and preferences may include voting rights, dividend entitlements, network effects, transferability, and how these rights are memorialized. Technical specifications may include information on the blockchain technology used and its relation to alteration of rights, wallets and keys, transaction fees, asset divisibility, and whether such technology has been subject to third-party audit. Risk disclosure may also relate to the total supply of crypto tokens and how supply is controlled or maintained, as well as any contemplated arrangements with market makers.
Directors, Executive Officers, and Significant Employees. Disclosure regarding a third party performing critical functions may be included even if not a director, officer, or employee of the issuer. For example, directors and officers of a spot crypto exchange’s sponsor may perform functions similar to directors and officers of the exchange itself. Disclosure related to such a third party may be included, as well as any fees paid to such third parties.
Financial Statements. Issuers may contact the SEC with specific questions on financial statement requirements, especially those regarding unusual, complex, or innovative transactions.
Exhibits. If the rights, preferences and obligations of holders of subject securities are memorialized in smart contracts or otherwise contained in code, the issuer may file the code of the smart contract as an exhibit.
The Division emphasized that its statement does not address all material disclosure items, and that each issuer should consider its own facts and circumstances when preparing disclosures.
Weekly Bankruptcy Alert April 14, 2025 (For the Week Ending April 13, 2025)
Covering reported business bankruptcy filings in Massachusetts, Maine, New Hampshire, and Rhode Island, and Chapter 11 bankruptcy filings in New York and Delaware listing assets of more than $1 million.
Chapter 11
Debtor Name
BusinessType1
BankruptcyCourt
Assets
Liabilities
FilingDate
Best Choice Trucking, LLC(Dedham, MA)
Not Disclosed
Boston(MA)
$1,000,001to$10 Million
$1,000,001to$10 Million
4/7/25
Tallulah’s Taqueria, LLC(Providence, RI)
Restaurants and Other Eating Places
Providence(RI)
$50,001to$100,000
$1,000,001to$10 Million
4/7/25
Solid Financial Technologies, Inc.(Palo Alto, CA)
Not Disclosed
Wilmington(DE)
$1,000,001to$10 Million
$1,000,001to$10 Million
4/7/25
40 Starr Lane LLC(Warren, RI)
Not Disclosed
Providence(RI)
$1,000,001to$10 Million
$1,000,001to$10 Million
4/8/25
Royal Interco, LLC(Phoenix, AZ
Converted Paper Product Manufacturing
Wilmington(DE)
$100,000,001to$500 Million
$100,000,001to$500 Million
4/8/25
Sun Paper Company, LLC(Duncan, SC)
Converted Paper Product Manufacturing
Wilmington(DE)
$100,000,001to$500 Million
$100,000,001to$500 Million
4/8/25
Royal Paper Converting, LLC(Phoenix, AZ)
Converted Paper Product Manufacturing
Wilmington(DE)
$100,000,001to$500 Million
$100,000,001to$500 Million
4/8/25
Doubletree Paper Mills, LLC(Gila Bend, AZ)
Converted Paper Product Manufacturing
Wilmington(DE)
$100,000,001to$500 Million
$100,000,001to$500 Million
4/8/25
Publishers Clearing House LLC(New York, NY)
Other Professional, Scientific and Technical Services
Manhattan(NY)
$1,000,001to$10 Million
$50,000,001to$100 Million
4/9/25
Colonial Mills, Inc.(Rumford, RI)
Textile Furnishings Mills
Providence(RI)
$0to$50,000
$100,001to$500,000
4/9/25
Annalee Dolls, LLC(Meredith, NH)
Not Disclosed
Concord(NH)
$1,000,001to$10 Million
$1,000,001to$10 Million
4/11/25
Deqser LLC(Kearny, NJ)
Management of Companies and Enterprises
Wilmington(DE)
$1,000,001to$10 Million
$1,000,001to$10 Million
4/10/25
KNY 26671 LLC(Kearny, NJ)
Drycleaning and Laundry Services
Wilmington(DE)
$10,000,001to$50 Million
$10,000,001to$50 Million
4/10/25
180 La Pata 2020, LLC(San Clemente, CA)
Not Disclosed
Wilmington(DE)
$1,000,001to$10 Million
$50,000,001to$100 Million
4/11/25
Chapter 7
Debtor Name
BusinessType1
BankruptcyCourt
Assets
Liabilities
FilingDate
Bancroft Holding LLC(Lancaster, MA)
Not Disclosed
Worcester(MA)
$50,001to$100,000
$1,000,001to$10 Million
4/7/25
Innovation Studio, Inc.(Roxbury, MA)
Other Schools and Instruction
Boston(MA)
$0to$50,000
$500,001to$1 Million
4/8/25
Martell Diagnostic Laboratories, Inc.(Natick, MA)
Scientific Research and Development Services
Boston(MA)
$0to$50,000
$1,000,001to$10 Million
4/8/25
1Business Type information is taken from Bankruptcy Court filings, which may include incorrect categorization by the debtor or others.
HHS Restructuring and Workforce Reductions – Key Implications for the Health Care Industry
As spring arrived in the mid-Atlantic region, the Department of Health and Human Services (HHS) under Robert F. Kennedy, Jr. followed through with a previously announced Reduction in Force (RIF) that reduced the department’s workforce by a reported 10,000 employees and started the process of restructuring the organization as a whole. Now that the dust is starting to settle, we are beginning to analyze the RIFs and how they could impact key health care stakeholders, including Medicare Advantage Plans, providers, and biopharmaceutical and medical device manufacturers. This post provides a brief overview of the restructuring to date, HHS’s reduction in workforce, and their potential impacts. We will continue to monitor these developments and provide future updates to Mintz clients and friends.
Overview of Restructuring & Workforce Reductions
As part of the department-wide restructuring plan, HHS is in the process of consolidating 28 different divisions into 15 divisions. As of April 4, 2025, it had also reduced the number of Regional Offices from ten to five. The March 27th press release initially announcing the restructuring stated that the current HHS organization contains many “redundant” units and that the restructuring plan will “centralize core functions” of the department, such as Human Resources, Information Technology (IT), Procurement, External Affairs, and Policy. Separately, on March 14th, HHS published an announcement about a reorganization with its Office of the General Counsel (HHS-OGC).
Although HHS has not released a comprehensive list of the offices directly impacted by the RIF as of the date of this post, HHS or independent news outlets have reported the following:
HHS Regional Offices: As noted above, HHS has reduced the number of Regional Offices to five. The remaining offices include those located in Philadelphia, Denver, Kansas City, Dallas, and Atlanta. Accordingly, it appears that HHS has closed its Regional Offices in New York, Boston, Chicago, Seattle, and San Francisco. The HHS-OGC also closed its office in Dallas.
Centers for Medicare & Medicaid Services (CMS): CMS reportedly lost approximately 300 employees. CNN reported that the RIFs included the entire Office of Equal Opportunity and Civil Rights. The Medicare-Medicaid Coordination Office lost its office of Models, Demonstrations and Analysis. At this time, it appears that the CMS central office divisions directly responsible for overseeing and setting policy for Medicare and Medicaid policy were not significantly impacted by the RIF. Further, numerous staff of the Administration of Community Living were terminated and that particular office may end up being shuttered.
Food & Drug Administration (FDA): The HHS press release announced that 3,500 full-time employees – or about 19% of FDA’s workforce – would be cut. All of the agency’s product centers experienced staffing reductions when the RIF began, with the drug, biologic, device, and tobacco centers hit particularly hard. Many of the individuals in longstanding FDA career leadership positions either have been terminated or have departed as part of the recent RIF or in the weeks leading up to it, including directors of the Center for Biologics Evaluation and Research (CBER), the Office of New Drugs within the Center for Drug Evaluation and Research (CDER), and the Digital Health Center of Excellence within the Center for Devices and Radiological Health (CDRH). HHS also terminated the FDA Chief Information Officer, a new leadership position created by the agency through planned modernization activities. Between the recent RIFs, voluntary retirements, and the earlier firings of probationary workers, CDER has apparently lost more than 1,000 employees over the past three months. Reports emerging from affected FDA staff also indicate that artificial intelligence experts have been disproportionately affected, with approximately 40 individuals out of the over 260 fired from CDRH coming from CDRH’s recently established Digital Health Center of Excellence, where very little knowledge redundancies existed. Policy-focused offices such as CDER’s Office of Medical Policy, CBER’s Office of Regulatory Operations, the CDRH Office of Women’s Health, and the Division of Policy Development within the Office of Generic Drug Policy, have been rendered effectively non-functional and are expected to be terminated during the departmental restructuring.
Centers for Disease Control and Prevention (CDC): Reports indicate that the CDC lost divisions related to workplace health and safety, HIV, injury prevention, reproductive health, smoking, and violence prevention, among others. All of the CDC’s staff working to process Freedom of Information Act (FOIA) requests were also terminated, per CBS reporting.
National Institutes of Health (NIH): There were a reported 1,300 employees laid off at the NIH, with NPR reporting that most of the cuts were to individuals with support positions such as communications, IT, and human resources. Grant and contract management officers were also affected, which may make it more difficult for research grantees – including those that are part of large academic medical centers – to obtain timely responses and information from the NIH.
In addition to these recent actions taking place within HHS, detailed agency-specific restructuring plans were due to be submitted to the White House Office of Management and Budget (OMB) on April 14, 2025, per an OMB memorandum issued in late February.
Potential Near-Term Impact on Selected Stakeholders
The RIFs and large-scale restructuring of HHS will impact the entire health care industry, with certain stakeholders facing more of the brunt in the short term. We address each of those stakeholder groups briefly below.
Medicare Advantage and Part D Plans
As of the date of this post, we understand that most CMS offices addressing Medicare Part C and Part D operations remain intact and were not significantly impacted by the RIF. However, all Medicare Advantage plans’ account managers are located in the HHS Regional Offices. Many Medicare Advantage (MA) and Part D plans likely lost their account managers and will need to be assigned new ones. This will result in those remaining account managers having increased caseloads, and being responsible for more plans. This is likely to result in delays in communication with account managers.
Health Care Providers
The consolidation of the Regional Offices will likely impact provider enrollment processes, provider surveying, Change of Ownership (CHOW) determinations and approvals, and the processing of CMS-specific enforcement activities, including reasonable assurance determinations. While CMS had previously transitioned certain Regional Office enrollment and survey functions for some provider types to CMS’s Center for Program Integrity and to the Medicare Administrative Contractors (MACs), the Regional Offices still play a key role in enrollment, surveys, and CHOW functions. For example, the Regional Offices of HHS-OGC advise on challenging CHOW questions and issues. HHS Regional Offices also still process and determine reasonable assurance periods. The consolidation of Regional Offices could create delays and bottlenecks for CHOW approvals, especially with more challenging CHOWs that require input from HHS-OGC.
The Regional Office consolidation will also impact provider audits performed by MACs, Unified Program Integrity Contractors, and other contractors. HHS-OGC provides oversight and training to these contractors and helps ensure uniformity in enforcement across regions. Consolidation and reduction in legal support to these entities may result both in delays in enforcement and inconsistent enforcement across providers.
Biopharmaceutical and Medical Device Manufacturers
The cuts to date of FDA staff have caused profound disruption at the agency and, in the short term, will almost certainly result in delays and longer timelines for approving new drugs, biological products, and innovative medical devices. With the firings of staff focused on digital health and artificial intelligence, it also seems likely that FDA will become more conservative when it comes to making policy, regulatory, and enforcement decisions in that space, depending upon the level of uncertainty at play. Developers of gene therapies, cell therapies, and rare disease treatments – who had benefitted from FDA’s increasing willingness to exercise “regulatory flexibility” and approve such products in the face of scientific uncertainty – also may see a marked shift now that the agency’s institutional expertise and leadership in those areas have been decimated. This puts more cutting-edge and innovative products at greater risk of not receiving FDA marketing approvals than they had pre-RIF. Concerns about delays in medical product reviews and a potential increase in denied applications are being exacerbated by the likelihood that developers will have a more difficult time getting informal and formal feedback from the agency, as a result of fewer employees and the fact that reviewers will no longer have regulatory policy, research, or administrative colleagues (among others) to support that complex work. Indeed, around April 11, 2025 a nonpartisan and highly experienced group of investors and executives from the medical products research and development enterprise sent a letter to Senate leadership expressing their alarm at what is occurring at FDA and describing slowdowns and bottlenecks that are already manifesting as a result of the RIF.
In addition, although HHS’s restructuring announcement stated that “those with roles in drug, medical device or food reviews or inspections” would not be adversely affected, in reality, the continuity and timeliness of both review activities and inspections will be harmed by the loss of nearly 25% of FDA’s workforce since January 2025. For example, inspections of manufacturing facilities cannot take place if the teams can’t get to the site – but press reports indicate that support staff in the Office of Inspections and Investigations that handle travel and other logistics have been terminated. Facility inspections occur not only to monitor the safety of American foods, medicines, and devices but also to support new product approvals, so delays in the agency’s inspectional functions may negatively affect the approval and launch of medical products. The ability to convene advisory committee meetings, which in some cases are required by law prior to a new product approval, is also likely to be adversely impacted without support staff to organize such large-scale events.
Finally, from a general FDA mission standpoint, the apparently haphazard nature of the RIF also means that industry complaints about non-compliance by competitors will likely go un-investigated and enforcement actions will decrease across the board. While the possibility of less enforcement may sound good to a regulated company, in practical effect a weaker FDA will make patient injuries, tort lawsuits, and expensive legal challenges by competitors much more likely. And the significant loss of FOIA and public communications staff from the agency will make obtaining documents about competitors, similar products, FDA’s analyses of certain regulatory issues, and other such valuable information much slower, if not impossible, for industry and the public alike.
Coalition Agreement for New German Government: Real Estate Industry Implications
On 9 April 2025, the Christian Democrats (CDU and CSU) and the Social Democrats (SPD) announced an agreement to form a new government in Germany and presented their coalition agreement (Koalitionsvertrag). The CSU has already approved the agreement, while the CDU and SPD plan to finalize their approval the end of April following party conventions and a member survey. The new chancellor is expected to be elected in early May, with the new federal government taking office shortly thereafter.
The coalition agreement includes several key initiatives impacting the real estate industry:
Rent Control and Tenant Protections
Prolongation of the rent price brake (Mietpreisbremse) for new lettings by four years, through the end of 2029.
Enhanced regulation of indexed rents for apartments in distressed housing markets (angespannte Wohnungsmärkte).
Tightened regulation of furnished apartments and short-term lettings in distressed housing markets.
Expert group proposal (due by the end of 2026) to introduce penalty fines for violations of the rent price brake and to tighten rent usury (Mietwucher) regulations.
Adjustment of the modernization levy (Modernisierungsumlage) to ensure better “affordability” of rents whilst maintaining sufficient investment incentives.
Increase in the threshold for the simplified modernization levy procedure from €10,000 to €20,000 by the end of 2025.
Introduction of a “shared apartment guarantee” (WG Garantie) for trainees and students.
Implementation of national rent surveys.
Strengthening of consumer protection rights for tenants.
No reduction of the cap (Kappungsgrenze) on rent increases in existing leases.
Building Law Reform
Introduction of a “construction turbo” (Bauturbo) and simplified noise protection regulations within the first 100 days of the new government’s term. According to a proposal made in the last legislative period, the “construction turbo” aims to enable greater flexibility in building and zoning law requirements.
Subsequent implementation of a fundamental building law reform, including:
–
Adjustments to technical guidelines for noise emissions (TA Lärm) and air protection (TA Luft) to better resolve conflicts between residential, commercial, and agricultural uses.
–
Simplification of building standards.
–
Facilitation of serial and modular construction.
–
Protection of building type E.
–
Exclusion of defects when deviating from technical standards (anerkannte Regeln der Technik).
Municipal Preemption Rights
Measures to prevent circumvention of municipal preemption rights (Vorkaufsrechte) through share deals.
Extension of municipal preemption rights in milieu protection areas (Milieuschutzgebiete).
Ban on Condominium Conversion
Extension of the ban on converting properties into condominiums in distressed housing markets for another five years, through end of 2030.
Milieu Protection Areas
Facilitation of building measures to improve barrier-free access and energy efficiency.
Exemption of private owners from milieu protection regulations.
ESG Initiatives
Repeal of existing heating law (Heizungsgesetz).
Introduction of more technology-neutral provisions into the Buildings Energy Act (Gebäudeenergiegesetz).
Promotion of flexible, urban quarter-based heat planning (Wärmeplanung).
Initiative to postpone the implementation deadline for the EU Energy Performance of Buildings Directive (EPBD), currently scheduled for May 2026.
Support for the EU omnibus initiative to reduce the scope of sustainability reporting (CSRD) and supply chain due diligence (CSDDD).
Tax Incentives and Public Subsidies
Establishment of a specialized investment fund for housing construction, combining private capital with public guarantees (e.g., via the Kreditanstalt für Wiederaufbau – KfW).
Tax measures to promote home ownership for families, as well as new construction and refurbishments.
Federal initiatives to reduce financing costs for apartments in distressed housing markets at rents below €15 per sqm (through guarantees).
Increased funding for social housing.
Tax incentives for letting apartments at low rents.
Restructuring of KfW funding into two programs: “new construction” and “modernization.”
Support for housing cooperatives (Wohnungsbaugenossenschaften).
Simplification of rent subsidies (Wohngeldprogramme) by the federal states.
Mixed Signals for the Real Estate Industry
The coalition agreement sends mixed signals to the real estate industry. While regulatory tightening – especially in the residential market – is evident, there is also a commitment to more flexible building regulations, increased tax incentives, and enhanced subsidy programs. However, many of the initiatives lack specific details, leaving their scope and impact dependent on subsequent actions by federal ministries and parliamentary committees. The real estate industry can engage with these developments by voicing its interests and priorities through industry associations.
SEC Issues Crypto Securities Disclosure Statement as IRS DeFi Broker Rule Repealed
The Securities and Exchange Commission (SEC) Division of Corporation Finance issued a new statement about SEC staff’s experience with SEC disclosure requirements for crypto-related offerings that qualify as securities. The statement distinguishes between tokens that are themselves securities, those sold as part of investment contracts, and those falling completely outside SEC jurisdiction, but does not purport to give guidance on the application of the Howey test. This statement follows the SEC’s recent statements on memecoins, proof-of-work mining and stablecoins, continuing the SEC’s efforts to provide incremental clarity on the regulation and classification of digital assets.[1]
Separately, President Donald Trump eliminated the controversial Internal Revenue Service (IRS) digital asset broker reporting rule, which would have required decentralized finance (DeFi) platforms (including front-ends) to collect and report taxpayer information like traditional brokers, despite their fundamental technological differences.[2]
SEC Division of Corporation Finance Provides Disclosure Information for Crypto Securities
The SEC’s Division of Corporation Finance issued a statement sharing its observations and recommendations on disclosure practices for crypto-related securities. Rather than creating new requirements, the Division explained how existing disclosure frameworks apply to two scenarios: companies issuing traditional (debt or equity) securities while operating in the crypto space, and offerings involving cryptoassets that constitute investment contracts.
Notably, the Division clarified that “[n]othing in this statement is intended to suggest that registration or qualification is required in connection with an offering of a crypto asset if the crypto asset is not a security and not part of or subject to an investment contract,” acknowledging the diverse nature of cryptoassets and again confirming that coins or tokens can be offered outside the SEC registration regime.
The Division’s observations focused on how companies have applied disclosure requirements across various SEC forms and regulations to crypto offerings (including forms used by foreign private issuers and Regulation A offerings). For business description disclosures, the Division has observed effective practices that explain network architecture, consensus mechanisms, transaction validation, and governance systems. Similarly, for risk factor disclosures, companies have addressed technology vulnerabilities, cybersecurity concerns and regulatory uncertainties specific to crypto operations.
Regarding securities descriptions, the Division highlighted examples of effective practices it has observed, including detailed explanations of holder rights, technical specifications for accessing and transferring assets, and information about token supply mechanisms. The guidance also addressed disclosures about directors and executive officers, noting that even if a crypto entity lacks traditional management roles, disclosure about those performing similar functions is still required.
Commissioner Hester Peirce issued a separate statement characterizing the Division’s observations as “a small step in identifying relevant disclosures so that investors have material information about the projects and businesses in which they are investing.” She noted that the statement might be helpful for four specific categories of companies: (1) those developing a blockchain and issuing debt or equity; (2) those registering the offering of an investment contract in connection with initial coin offerings; (3) those issuing crypto assets that themselves are securities; and (4) those integrating non-fungible tokens into video games and is issuing debt or equity.
Presidential Action Ends Controversial IRS DeFi Broker Rule
President Trump signed legislation eliminating the IRS’s digital asset broker reporting rule, becoming the first US president to sign a crypto-specific bill into law. The rule, finalized in the closing days of the Biden administration, would have required DeFi platforms to comply with tax reporting requirements designed for traditional brokers. The rule had previously been challenged in a December 2024 lawsuit filed by three digital asset organizations, which argued it violated the Fourth and Fifth Amendments and exceeded the IRS’s statutory authority.[3]
[1]See Katten’s Quick Reads posts on the Division’s recent guidance here and here.
[2]See Katten’s Quick Reads post on the IRS digital asset broker reporting rule here.
[3]Id.
The Sunflower State (Kansas) Passes Employer-Friendly Restrictive Covenant Legislation
Consistent with our previous reporting that states would continue to address noncompete issues even after the apparent end of the FTC Noncompete Rule, Kansas has joined the growing list of jurisdictions to pass or introduce legislation addressing restrictive covenants.
The difference between Kansas and the other states’ legislation and proposed legislation is that Kansas’s legislation is employer friendly.
On April 8, 2025, Kansas enacted a law “concerning restraint of trade; relating to restrictive covenants; providing that certain restrictive covenants are not considered a restraint of trade and shall be enforceable; amending K.S.A. 2024 Supp. 50-163” (the “Kansas Law”). Pursuant to the Kansas Law, Kansas’s “restraint of trade act shall not be construed to apply to … any franchise agreements or covenants not to compete.”
Although the Kansas Law sets forth requirements for non-solicit provisions (as discussed below), it does not place requirements or restrictions on the use of noncompetes. Thus, it is likely that noncompetes will continue to be enforced consistent with Kansas case law. The “freedom to contract” and “wide discretion” for parties to entered into employment agreements “extends to restrictive covenants in employment contracts. Doan Family Corp. v. Arnberger, 522 P. 3d 364, 369-70 (Kan. App. 2022) (citing Foltz v. Struxness, 215 P. 2d 133 (Kan. 1950)). Under Kansas law, “noncompete agreements are ‘valid and enforceable if the restraint on competition is reasonable under the circumstances and not adverse to the public welfare.’” Id. at 370 (quoting Weber v. Tillman, 913 P. 2d 84 (Kan. 1996)).
Under the Kansas Law, customer non-solicits that seek to limit a former employee’s ability to provide or offer any product or service that is competitive with those provided by the employer “shall be conclusively presumed to be enforceable and not a restraint of trade[,]” provided that the customer non-solicit “is limited to material contact customers and the covenant is between an employer and an employee and does not continue for more than two years following the end of the employee’s employment[.]” The statute broadly defines “material contact customers” as any “customer or prospective customer that is solicited, produced or serviced, directly or indirectly, by the employee” or any customer or prospective customer about whom the employee, directly or indirectly, had confidential business or proprietary information or trade secrets in the course of the employee’s relationship with the customer.” Customer non-solicits must be in writing.
Employee non-solicits must also be in writing. The Kansas Law states that employee non-solicits “shall be conclusively presumed to be enforceable and not a restraint of trade if the covenant is between an employer and one or more employees[,]” and the covenant: (i) seeks, on the part of the employer, to protect the employer’s confidential or trade secret business information or customer or supplier relationships, goodwill or loyalty; or (ii) is not for a period longer than two years following the end of the employee’s employment. Thus, as long as the restricted period of the employee non-solicit is no longer than two years, then the non-solicit covenant is presumed to be enforceable.
For covenants that are not presumed to be enforceable and are determined to be overbroad or otherwise not reasonably necessary to protect a business entity’s legitimate business interest, a “court shall modify the covenant, enforce the covenant as modified and grant only the relief necessary to protect such interests.” Thus, the Kansas Law explicitly authorizes courts to modify overbroad restrictive covenants, thereby further demonstrating the legislature’s intention that restrictive covenants be enforced to the fullest extent permitted by law.
We expect other states to continue to restrict noncompetes, including a recently passed Wyoming law that we will report on soon, as well as pending legislation in Texas and New York. Stay tuned for our posts on those bills. The Kansas Law is an example of a jurisdiction enacting an employer-friendly restrictive covenant law. It remains important for employers to review their restrictive covenants to ensure they are complying with applicable law.
UK Venues Face New Security Requirements Under ‘Martyn’s Law’
Go-To Guide:
The Terrorism (Protection of Premises) Act 2025, also known as “Martyn’s Law,” requires UK venues and events to implement security measures against terrorist attacks.
The Act introduces a tiered approach based on venue capacity.
The Act defines “responsible persons” who must address compliance.
Penalties for non-compliance include fines up to £18 million or 5% of worldwide revenue for some premises.
On 3 April, the Terrorism (Protection of Premises) Act 2025 received Royal Assent. The Act, also known as “Martyn’s Law” in tribute to Martyn Hett, one of the 22 people killed in the 2017 Manchester Arena attack, is intended to improve protective security and organisational preparedness for terrorist attacks at public venues across the UK.
The Act comes at a time when the Government considers the threat level from terrorism in the UK to be “substantial” as well as “less predictable and harder to detect and investigate.”
Pursuant to the Act, those responsible for certain premises and events will now be legally obliged to consider the risk and take reasonably practicable measures to mitigate the impact of a terrorist attack.
Background
The Act’s provisions were developed following engagement with the Martyn’s Law campaign team, expert security partners, businesses, and local authorities, as well as via learnings from the Manchester Arena Inquiry (a statutory public inquiry to investigate the deaths of the victims of the 2017 Manchester Arena attack) and the London Bridge Inquest (an inquest into the 2017 terror attack at London Bridge and Borough Market), which both recommended introducing legislation to protect the public and clarify venue owners’ duties regarding protective security.
The Act also forms part of the Government’s broader counter-terrorism strategy (CONTEST) 2023. At a time when the nature and threat of a terrorist attack is complex and unpredictable, the Government is aiming to enhance the UK’s readiness and protection by ensuring a wide a range of premises and events are legally obliged to be better equipped and ready to respond to a terrorist attack.
Key Provisions
Those responsible for certain premises or events will now be required to implement reasonably practicable public protection procedures and/or measures, depending on the capacity of the premises or event.
Tiered Approach
The Act establishes a tiered approach, linked to the number of individuals reasonably expected to be present on the premises at the same time. Smaller premises (200-799 individuals) fall within the standard tier and will be required to put in place simple procedures to reduce the risk of physical harm to individuals who may be present. Larger premises and events (800 individuals plus) fall within the enhanced tier, with additional procedural requirements in recognition of the potentially higher impact of a successful terrorist attack.
Types of Premises & Events
Premises include a building, part of a building, a group of buildings, or a building and other land – for example, a hotel plus its grounds where the same are used for dining or events.
Premises must be wholly or mainly used for one or more specified use(s), including shops, bars, pubs, restaurants, hotels, healthcare, education and childcare facilities, entertainment venues such as nightclubs, theatres and cinemas, halls, leisure, sports grounds, libraries, museums, galleries, transport stations, visitor attractions, and places of worship.
Events reasonably expected to have 800-plus individuals in attendance at the same time are also captured and subject to enhanced tier requirements so long as the event is publicly accessible and meets the “express permission” criteria (employees or individuals checking conditions of entry to the event are satisfied by attendees).
Standard v Enhanced Tier Requirements
Persons responsible for standard tier premises (or “standard duty premises”) will be required to implement appropriate and reasonably practicable public protection procedures for staff to follow in the event of a terrorist attack at the premises or in the immediate vicinity, including procedures to (i) provide information to individuals on the premises and (ii) evacuate, invacuate, or lockdown the premises. For these smaller venues there is no expectation to incur costly or implement physical measures.
Enhanced tier premises (or “enhanced duty premises”) will also be required to comply with the requirements above, but appropriate and reasonably practicable public protection procedures must also be documented and provided to the regulator (see below), including procedures that may be expected to reduce the vulnerability of the premises or event to an act of terrorism. This might include the monitoring of premises and their immediate vicinity, controlling the movement of individuals into, out of, and within the premises or event, and physical safety and security. It also includes measures relating to the security of information which may reveal vulnerabilities and assist in the planning, preparation, or execution of acts of terrorism, particularly what is appropriate to share, where, and with whom.
The requirement for procedures to be “reasonably practicable” allows those responsible persons to factor in the nature of the qualifying premises or event, encouraging a tailored approach whilst complying with the Act’s requirements.
Who Is the ‘Responsible Person’?
The responsible person must ensure the legislative requirements are met.
For a qualifying premises, the responsible person is the person who has control of the premises in connection with its use. Where premises are let, this would typically be the tenant. However, if qualifying premises form part of other qualifying premises, for example a department store within a shopping centre, then both the tenant and the property owner would each be responsible persons. In this case, the property owner and tenant would be required, so far as is reasonably practicable, to coordinate to enhance individual and cumulative compliance.
For a qualifying event, the responsible person is the person who has control of the premises at which the event is taking place in connection with its use for that event. For example, if a hotel hosted a public event in its grounds and maintained control of the premises for the purposes of that event, the hotel is the responsible person irrespective of the involvement of any contracting organisations. Responsibility cannot be delegated to contracted services.
For enhanced tier premises or an event, the responsible person is required to appoint a designated senior individual (DSI), i.e., someone with high-level management responsibility such as a director or partner, with responsibility for meeting the relevant requirements.
The responsible person will also be required to notify the regulator when they become and cease to be responsible for the premises (regulations will set out further details of timings and exactly what information must be provided).
Where the responsible person is the tenant, the requirement to comply with the Act is caught by the tenant obligation in most market standard leases where a tenant is typically required to comply with all laws relating to the premises and the occupation and use of the same by the tenant. Where the responsible person is the landlord, for example with a shopping centre, then a landlord may be obliged to meet its obligations via the provision of services.
Co-Operation
There is a requirement for persons with control over enhanced tier premises or events but not being the responsible person (for example, the freeholder where premises are let) to co-operate so far as reasonably practicable with the responsible person to facilitate the responsible person’s compliance with the Act.
The Government gives examples in its additional guidance where a freeholder as landlord would be obliged to consider the above to a reasonably practicable level. One example is when receiving requests from the responsible person to carry out alterations pursuant to the terms of its lease to meet their legal obligations. Where tenant alterations require landlord’s consent not to be unreasonably withheld or delayed, this would simply be part of the landlord’s decision-making process. Another example is where the responsible person has identified certain mitigations required to meet their legal obligations but the lease may state that landlord’s permission is required and the landlord should contribute a certain percentage of costs to ensure premises remain fit for purpose. The freeholder as landlord would be obliged to consider such requests from the tenant to a reasonably practicable level.
Enforcement & Sanctions
To support the Act’s enforcement, the regulator function will be delivered as a new function of the Security Industry Authority (SIA).
The SIA will have inspection and information-gathering powers and will be able to issue a range of civil sanctions, including compliance notices and restriction notices for non-compliance resulting in the temporary closure of enhanced tier premises or prohibiting an event from taking place.
The SIA can issue monetary penalties up to a maximum of £10,000 for standard tier premises and £18 million or 5% of worldwide revenue for enhanced tier premises or events. Daily penalties (up to £500 per day for standard tier premises and £50,000 per day for enhanced tier premises or events) may also be imposed where non-compliance continues.
It will be a criminal offence to fail to comply with an information, compliance, or restriction notice, provide false or misleading information, or obstruct the SIA. Further, the offender might be liable to imprisonment and/or a fine.
For enhanced tier premises, senior officers (including the DSI) may be liable to prosecution if the responsible person commits an offence, and it is proven that the offence was committed with their consent or connivance.
Next Steps
The Act received Royal Assent on 3 April; however, its provisions have not yet come into effect and will only require compliance once activated through regulations. Implementation is expected to take approximately two years, allowing time for the SIA to establish itself, for the Home Office and the SIA to develop guidance, and for those responsible for qualifying premises and events to familiarise themselves with their new obligations. Conclusion
The Act delivers on the Government’s manifesto commitment to “bring in Martyn’s Law to strengthen the security of public events and venues,” ensuring they are better prepared and ready to respond to terrorist attacks.
Whilst many owners and occupiers of premises may have already proactively considered the risk that acts of terrorism pose and have plans and procedures in place, this Act mandates for the first time who exactly is responsible for considering the risk and taking appropriately proportionate protection measures, applying a consistent level of security standards across qualifying events and premises. Both owners and occupiers should monitor the Government’s progress on guidance and regulations related to the Act, using the implementation timeframe as an opportunity to plan and prepare for compliance with the upcoming legislative changes.
Cross-Border Catch-Up: Flexible Global Hiring—The Non-Resident Employer Approach [Podcast]
In this episode of our Cross-Border Catch-Up podcast series, Patty Shapiro (San Diego) and Shirin Aboujawde (London), both of whom are members of the firm’s Cross-Border Practice Group, discuss what it means to be a non-resident employer, including the benefits and challenges associated with employing staff abroad without establishing a legal entity. Shirin and Patty address key legal and compliance risks, such as the importance of adhering to local employment laws and managing tax liabilities. They also explore the flexibility that being a non-resident employer offers, such as the relative ease of hiring employees in foreign markets without the lengthy process involved in setting up or dismantling a local entity.
DOJ Issues Guidance, FAQs and Implementation Policy on Bulk Transfers of Sensitive U.S. Personal and Government Data
On April 11, 2025, the U.S. Department of Justice (“DOJ”) issued a compliance guide, FAQs and an Implementation and Enforcement Policy to assist organizations to comply with the DOJ’s final rule implementing Executive Order 14117 (Preventing Access to Americans’ Bulk Sensitive Personal Data and United States Government-Related Data by Countries of Concern). The guidance comes just days after certain of the final rule’s provisions became effective on April 8, 2025.
Compliance Guide
The compliance guide identifies best practices for complying with the final rule and offers guidance on defined terms, prohibited and restricted transactions and requirements for building a compliance program. The guide also provide best practices for complying with the final rule’s audit and recordkeeping requirements, which go into effect on October 6, 2025.
FAQs
The FAQs aim to provide further clarity on the DOJ’s final rule. In particular, the FAQs provide general information about the DOJ final rule and address a number of different issues related to the rule, including prohibited, restricted and exempt transactions, compliance requirements and DOJ advisory opinions under the rule. The FAQs reflect feedback and common issues the DOJ addressed through the rulemaking process. The DOJ will update the FAQs as necessary to address additional questions raised by the public.
Implementation and Enforcement Policy
Under the new Implementation and Enforcement Policy, the DOJ recognizes that companies may need to take steps to determine whether the final rule applies to their activities and to create new or update existing policies and other compliance processes. While certain of the rule’s provisions became effective on April 8, 2025, the DOJ will not prioritize civil enforcement actions against any person for violations of the rule that occur from April 8 through July 8, 2025, provided the person is taking measures to comply with the rule during that time.
Final Approval for Simplification – Council of the European Union Formally Approves to “Stop-the-Clock” on Sustainability Reporting and Diligence Requirements
On 14 April 2025, the Council of the European Union (the “Council”) has given the greenlight for the “Stop-the-clock” proposal, which will postpone the application of sustainability reporting and diligence requirements. This marks the final approval for delaying the application of the Corporate Sustainability Reporting Directive (“CSRD”) and Corporate Sustainability Due Diligence Directive (“CSDDD”). For further details on the key aspects of this delay please see our alert here.
The approved delay forms part of the Omnibus package to simplify the European legislation in the field of sustainability. The focus will now shift to the second stage of the Omnibus package: simplifying the substantive reporting obligations under the CSRD. To support this, the European Commission has mandated the EFRAG Sustainability Reporting Board (“EFRAG SRB“) to provide technical advice. EFRAG SRB is expected to inform the European Commission of its internal timeline for simplifying the European Sustainability Reporting Standards (“ESRS“) on 15 April 2025.
Next Steps
The legislation underlying the “Stop-the-clock” proposal is a European directive. It will be published in the EU’s Official Journal and will enter into force the day following the publication. EU Member States must transpose this directive into their national legislation by 31 December 2025.