Louisiana Voters Overwhelmingly Reject Governor Landry’s Constitutional Amendments
On March 29, 2025, four constitutional amendments were on the ballot for Louisiana voters’ consideration. Constitutional Amendment No. 2, (CA No. 2) which passed the Louisiana legislature during the November 2024 special fiscal session as House Bill No. 7, included changes to personal income tax rates, governmental spending caps, education funding, and teacher pay raises. Also included were amendments to the Constitution that would allow local taxing authorities to exempt or reduce the assessment rate of parish property taxes on business inventory located in their parishes. However, despite strong support from the Governor and his administration, the voters of Louisiana rejected that amendment by over 60% of the ballots cast.
As CA No. 2 was an important component of the Governor’s modernization of Louisiana’s taxation system and would have provided the legislature with more flexibility in collecting and distributing revenue, it is likely that more work will have to be done during the upcoming regular fiscal session scheduled to begin on April 14 with a conclusion date of June 12.
One important component of CA No. 2 was the ability of local taxing jurisdictions to lower the assessment rate of business inventory or exempt it altogether. Under current law, local taxing jurisdictions do not have the authority to do either, and the legislature retains the sole authority to make those determinations. Because the legislature repealed the credit for property taxes paid on business inventory (the repeal of which was not tied to the passage of CA No. 2), that credit will still sunset with no apparent relief from the current local taxes levied on business inventory.
As noted above, with the upcoming fiscal session beginning soon, legislators have until the close of business on April 4 to file “general subject” bills that do not address fiscal matters. Legislators have until April 23 to file bills with a fiscal impact. It is highly likely that legislation will be proposed to address some of the issues that CA No. 2 would have amended.
As noted above, with the upcoming fiscal session beginning soon, legislators have until the close of business on April 4th to file “general subject” bills that do not address fiscal matters.
No Rest for the Weary: The Trump DOL Indicates Yet Another Change to Its Independent Contractor Classification Rule Is on the Horizon
Exactly a year ago, we wrote about the final rule issued by the Biden-era U.S. Department of Labor (DOL) regarding the test for determining whether a worker is an employee covered by the Fair Labor Standards Act (FLSA), or an independent contractor exempt from FLSA coverage. The final rule became effective on March 11, 2024 (the “2024 rule”) and replaced the DOL’s independent contractor test that was adopted in 2021 during the first Trump administration (the “2021 rule”), which made it made it easier to classify workers as independent contractors. We previously wrote about the 2021 rule here.
Recent developments suggest that, under new leadership, the DOL may abandon the short-lived 2024 rule and implement changes to its guidance on this issue in the near future.
Recent Developments Suggest the DOL’s New Leadership May Abandon the 2024 Biden-Era Rule
Soon after the Biden-era’s publication of the 2024 rule, several lawsuits were filed against the agency arguing that it exceeded its authority in adopting the 2024 rule. The leading case, Frisard’s Transp., LLC v. United States DOL, No. 24-30223, is currently pending on appeal before the Fifth Circuit. The case originated when Frisard’s Transportation, LLC, along with other plaintiffs, filed a lawsuit, in the U.S. District Court for the Eastern District of Louisiana on February 8, 2024 (Case No. 2:24-cv-00347). The plaintiffs sought a preliminary injunction to block the rule, but on March 27, 2024, the district judge denied the motion, finding the plaintiffs could not show immediate irreparable harm because the rule’s impact on their business was speculative at that stage. Following this denial, the plaintiffs appealed to the Fifth Circuit on April 8, 2024, arguing that the district court erred in denying the preliminary injunction. Several amicus briefs supporting the plaintiffs were filed by organizations such as the U.S. Chamber of Commerce, the Manhattan Institute, and others, emphasizing the rule’s broad economic implications.
The Fifth Circuit was scheduled to hear oral arguments on the appeal in the Frisard’s case on February 5, 2025; however, the DOL requested to delay the scheduled argument to allow sufficient time for its newly confirmed leadership to familiarize themselves with the issues presented in the case and “determine how they wish to proceed.” The Fifth Circuit initially ordered the DOL to file a status report no later than March 25, 2025, stating its position regarding the litigation under its new leadership, but that deadline was recently extended to April 7, 2025.
Confirmation of Secretary of Labor Creates Some Difficulty in Predicting the DOL’s Next Steps
If we were asked to predict the fate of the 2024 rule on November 6, 2024, we would not have hesitated in forecasting a return to the more employer-friendly 2021 rule adopted during the first Trump administration. The subsequent nomination and senate confirmation of U.S. Secretary of Labor Lori Chavez-DeRemer, however, leaves us less confident in making that prediction. Chavez-DeRemer served as the U.S. representative for Oregon’s 5th congressional district between 2023 and 2025. Though a member of the Republican Party, Chavez-DeRemer has an unusually pro-labor congressional record as one of only three House Republicans to co-sponsor the Protecting the Right to Organize (PRO) Act, proposed legislation that would strengthen employee rights under the National Labor Relations Act and other labor laws. Significant to the question of independent contractor classification, the PRO Act would impose California’s ABC test for determining independent contractor status and make it even more difficult to classify workers as independent contractors for purposes of questions under the NLRA.
While Chavez-DeRemer has not made any specific commitments regarding the 2024 rule, she walked back her support for the PRO Act, acknowledging on several occasions that the PRO Act was “imperfect.” She also agreed that worker flexibility and independent contractors were key to growing the economy and committed to reviewing all of the DOL’s regulations to determine whether they support President Trump’s agenda.
In light of Chavez-DeRemer comments during her senate confirmation hearing, we anticipate that the DOL will ultimately rescind the 2024 rule and drop its defense of the rule in the Frisard’s case and the other pending legal challenges. Following that, the DOL may restore the more employer-friendly 2021 rule, or it might not adopt any replacement rule and simply let courts analyze questions regarding independent contractor classification under their own case precedents, without agency guidance.
What This Means for Employers
Despite the anticipated employer-friendly changes at the DOL, employers should continue to proceed with caution in classifying workers as independent contractors. Notably, the Supreme Court’s watershed decision in Loper Bright means that any new DOL guidance defining the test for distinguishing employees from independent contractors under the FLSA may not be entitled to judicial deference anyway. Employers would therefore be wise to continue evaluating the following key questions when deciding whether workers may be classified as independent contractors:
What is the nature and degree of the control that the worker has over their own work? For example, does the worker control how and when the job will be performed and the pricing for the services?
What is the worker’s opportunity for profit and loss? Is the worker required to make their own investments to perform the services?
Does the work require a special or unique skillset?
Is the work integral to the company’s core business?
Is the worker’s relationship with the company non-exclusive and are the services provided on a project-specific or sporadic basis, rather than indefinitely or continuously?
Does the company have employees performing the same services as the worker?
Employers should also keep in mind that other federal laws (such as the Family and Medical Leave Act and the Internal Revenue Code) may impose different standards for distinguishing employees from independent contractors and that courts may differ by jurisdiction in their interpretation of these standards. Additionally, many states have adopted their own standards for distinguishing employees from independent contractors under state employment laws.
Update: The NLRB Has Lost Its Quorum – DC Circuit Stays District Court’s Reinstatement of Board Member Gwynne Wilcox – and a New General Counsel Has Been Nominated
On March 28, 2025, a divided three-judge panel of the United States Court of Appeals for the District of Columbia Circuit ruled that President Donald Trump likely has the authority to remove National Labor Relations Board (NLRB) member Gwynne Wilcox, as well as Merit Systems Protections Board (MSPB) member Cathy Harris, without cause.
In granting the Government’s motion for an emergency stay of the reinstatement orders of the United States District Court for the District of Columbia, the appeals court has once again left the NLRB without a quorum.
The Future of Humphrey’s Executor Remains Unresolved
In a two-to-one decision, the panel held that the President likely had the legal authority to remove Wilcox and Harris from their positions, notwithstanding that the Executive did not show that the removals were for cause, as required under the statutes that created the agencies. In so ruling, the Court has added to the list of cases that appear to further narrow the application of the Supreme Court’s holding in Humphrey’s Executor v. United States, 295 U.S. 602 (1935). There, the Court unanimously held that the President lacked the power to remove executive officials of a quasi-legislative or quasi-judicial administrative body for reasons other than what is allowed by Congress.
In the instant case, the Trump administration argued that Humphrey’s Executor was not good law and should no longer be followed. However, the D.C. Circuit did not go so far, but rather concluded that Humphrey’s Executor did not apply because of the differences between the NLRB and the MSPB on the one hand, and the Federal Trade Commission, the agency at issue in Humphrey’s Executor, on the other.
In her dissent, Judge Patricia Millett disagreed with the majority about the applicability of Humphrey’s Executor to the NLRB and the MSPB, noting that the decision “marks the first time in history that a court of appeals, or the Supreme Court, has licensed the termination of members of multimember adjudicatory boards statutorily protected by the very type of removal restriction the Supreme Court has twice unanimously upheld.” She called the majority’s decision “a hurried and preliminary first-look ruling by this court to announce a revolution in the law that the Supreme Court has expressly avoided,” and one which would “trap in legal limbo millions of employees and employers whom the law says must go to these boards for the resolution of their employment disputes.”
What Happens Now While the NLRB Again Lacks a Quorum?
As we previously reported, while without a quorum, i.e., at least three Board members, the NLRB is not able to issue decisions or engage in rulemaking. Nevertheless, the Board has indicated it will continue to perform other functions, citing the NLRB’s 2011 “Order Contingently Delegating Authority to the General Counsel” contained at 76 FR 69768, which includes the ability to initiate and prosecute proceedings under Section 10(j) or Section 10(e) or (f), and contempt proceedings pertaining to the enforcement of or compliance with any order of the Board, even though this delegation has been challenged in the past.
Of course, the President retains the ability to submit nominations for the other two vacant seats on the five-member NLRB to the Senate. Confirmation of one new member would reestablish a quorum. When and whether that will happen remains to be seen. And, as to the question of the continued viability of Humphrey’s Executor, it is virtually certain that the Supreme Court will opine during its current term, either with regard to Ms. Wilcox or in other pending cases that raise the issue.
The President Has Nominated a New General Counsel for the NLRB
On March 25th, the White House announced the nomination of Crystal Carey, a management side labor lawyer, for the role of NLRB General Counsel (GC). The nomination is subject to confirmation by the Senate and it is not known when the nomination will be considered and acted upon. In the meantime, the role of the GC remains covered by William Cowen, who was named Acting General Counsel on March 3rd, following the President’s termination of Jennifer Abruzzo, a longtime NLRB attorney who served as GC under President Biden.
Epstein Becker Green Staff Attorney Elizabeth A. Ledkovsky assisted with this publication.
Virginia Governor Recommends Amendments to Strengthen Children’s Social Media Bill
On March 24, 2025, Virginia Governor Glenn Youngkin asked the Virginia state legislature to strengthen the protections provided in a bill (S.B. 854) passed by the legislature earlier this month that imposes significant restrictions on minors’ social media use.
The bill would amend the Virginia Consumer Data Protection Act (“VCDPA”) to require social media platform operators to (1) use commercially reasonable methods (such as a neutral age screen) to determine whether a user is a minor under the age of 16; and (2) limit a minor’s use of the social media platform to one hour per day, unless a parent consents to increase the limit. The bill would prohibit social media platform operators from altering the quality or price of any social media service due to the law’s time use restrictions.
The Governor declined to sign the bill and recommended that the legislature make the following amendments to enhance the protections in the bill: (1) raise the covered user age from 16 to 18; and (2) require social media platform operators to, in addition to the time use limitations, also disable (a) infinite scroll features (other than music or video the user has prompted to play) and (b) auto-playing videos (i.e., where videos automatically begin playing when a user navigates to or scrolls through a social media platform), absent verifiable parental consent.
Can Common Interest Communities Ban Religious Displays On Doors And Doorframes?
The Nevada legislature is currently considering a bill, SB 201, that would restrict, with certain exceptions, an association or unit’s owner who rents or leases his or her unit from prohibiting a unit’s owner or occupant of a unit from engaging in the “display of religious items”. The bill defines “display of religious items” as “an item or combination of items: (1) Made of wood, metal, glass, plastic, cloth, fabric or paper; and (2) Displayed or affixed on any entry door or doorframe of a unit because of sincerely held religious beliefs”. At the Senate Committee on Judiciary the bill was amended to, among other things, expand its application to include apartments.
The reference to doorframes caused me to think of mezuzot. A mezuzah consists of a case containing a small piece of parchment inscribed by hand with the first two sections of the Shema. The fixing of mezuzah to a doorframe is governed by a number of specific rules, including a requirement that it be visible (or there be a symbol indicating the presence of the mezuzah).
As noted, an item must be displayed “because of sincerely held religious beliefs”. Mezuzot and doorposts should meet this requirement because are specifically mentioned in Deuteronomy 6:9 (“וּכְתַבְתָּ֛ם עַל־מְזֻז֥וֹת בֵּיתֶ֖ךָ וּבִשְׁעָרֶֽיךָ׃ {ס} inscribe them on the doorposts of your house and on your gates”). In obedience of this divine command, Jews affix mezuzot to every doorway in their homes (other than bathrooms and small closets).
What about religious symbols of other faiths? The bill does not specifically refer to any particular faith or symbols (including a mezuzah). Crosses or crucifixes are generally recognized as Christian symbols and nothing in the bill excludes either. However, they do raise a question of what is meant by “sincerely held religious beliefs”. Does this simply require that the owner or occupant sincerely hold a belief in Christianity or does it require that the owner or occupant specifically believe that the display is religiously mandated? If the latter requirement is imposed, then it may be difficult for an owner or occupant to meet it, for I know of no Christian canon similar to Deuteronomy 6:9 that mandates a display of a cross or crucifix on a door or doorframe (if any reader is aware of such a requirement, please let me know). Thus, a Christian may choose to affix a cross to his or her doorway because they are a sincere believer, but they may not believe that they are required by their religion to do so.
I therefore find the requirement of a “sincerely held religious belief” to be problematical because it invites owners associations, landlords, and ultimately the courts to delve into religious law and belief. In addition, the requirement could invite challenges to the sincerity of an owner’s belief.
The bill also excludes, among other things, a display that “promotes discrimination or discriminatory belief”. As a content-based restriction on speech, this exclusion is highly problematical from a First Amendment perspective.
While SB 201 is well-intentioned, it does serve to illustrate how difficult it is to draft legislation that affects religious practices without entangling the government in questions of religious belief.
What are the Odds that FanDuelDraftKingsBet365 Can Save Tax-Exempt Bonds?
A document leaked earlier this year and attributed to the House Ways and Means Committee included the repeal of tax-exempt bonds[1] as a source of revenue to help defray the cost of extending the provisions of the Tax Cuts and Jobs Act that otherwise will expire at the end of 2025. Apoplexy ensued.
This consternation is fueled by the notion that Congress has the untrammeled authority to prevent states, and the political subdivisions thereof, from issuing obligations the interest on which is excluded from gross income for federal income tax purposes. This notion appears to ignore a line of precedent that culminated in making Bet365, DraftKings, FanDuel, et al. indistinguishably omnipresent.
Curious? Read on after the break.
The concern that Congress has the unfettered right to proscribe the issuance of all tax-exempt bonds emanates from the U.S. Supreme Court’s (the “Court”) decision in South Carolina v. Baker.[2] The Court held in that case that Congress violated neither the principles of intergovernmental tax immunity[3] nor the Tenth Amendment to the U.S. Constitution by enacting a prohibition against the issuance of tax-exempt bearer bonds.
The portion of the Court’s opinion pertaining to the Tenth Amendment cited Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528 (1985), for the proposition that the political process establishes the limitations under the Tenth Amendment on Congressional authority to regulate the activities of the states and their political subdivisions. Under this formulation of Tenth Amendment jurisprudence, the courts do not define spheres of Congressional conduct that pass or fail constitutional muster. The Court concluded that the political process functioned properly in this instance and did not fail to afford adequate protection under the Tenth Amendment to South Carolina.
The Court also rejected the contention that Congress had, in violation of the Tenth Amendment, commandeered the South Carolina legislature by prohibiting the issuance of tax-exempt bearer bonds and questioned whether the concept of anti-commandeering originally contained in FERC v. Mississippi, 456 U.S. 742 (1982), survived the Court’s decision in Garcia.
Aside from the portion that dealt with the Tenth Amendment, Justice Antonin Scalia joined the opinion of the Court, and Chief Justice William Rehnquist concurred in the Court’s judgment but did not join the Court’s opinion. In the view of Justices Rehnquist and Scalia, the Court should have upheld the prohibition against the issuance of tax-exempt bearer bonds because it had a de minimis effect on state and local governments, which would have ended the analysis under the Tenth Amendment. They asserted that the Court’s opinion regarding the Tenth Amendment mischaracterized the holding of Garcia and unnecessarily cast doubt on whether the Tenth Amendment prohibits Congress from dictating orders to the states and their political subdivisions.
Justice Sandra Day O’Connor dissented and stated that “the Tenth Amendment and principles of federalism inherent in the Constitution prohibit Congress from taxing or threatening to tax the interest paid on state and municipal bonds.” In Justice O’Connor’s view, the prohibition against the issuance of tax-exempt bearer bonds intruded on state sovereignty in contravention of the Tenth Amendment and the structure of the Constitution. This incursion would have negative effects on state and local governmental budgets and activities – effects she said that would only metastasize as Congress enacted further restrictions on the issuance of tax-exempt obligations, including, potentially, the elimination of such obligations.[4]
Four years later, when confronted anew with an anti-commandeering question in New York v. United States,[5] the Court demonstrated that it was receptive to the argument that the protection of state prerogatives under the Tenth Amendment is not limited to the political process. The Court held that Congress cannot compel a state government to take title to radioactive waste or, alternatively, assume liability for such waste generated within the state’s borders, because the Tenth Amendment forbids the issuance of orders by the federal government to the various state governments to carry out regulatory schemes adopted by the federal government.
In her opinion for the Court in New York, Justice O’Connor developed the themes articulated in her dissent in Baker. Namely, the Tenth Amendment was ratified to ensure that the federal government adhered to the federalist structure devised by the Constitution, a structure that contrasted starkly with the Articles of Confederation that the Constitution replaced. Under the Articles of Confederation, the federal government had limited, if any, power to govern the citizens of the various states. Instead, the Articles of Confederation constrained the federal government to acting upon the state governments, and state governments were the sole sovereign with respect to their citizens. Under this constraint, the federal government could not tax the citizens; it could only issue requisitions to the state governments to raise funds.
The federal government at that time did not possess the wherewithal to enforce the dictates and requisitions it had imposed upon the states. As a result, the United States was hardly a cohesive whole. The Constitution was ratified to create a more robust federal government and, thus, a truly unified United States. Under the Constitution, the federal government may use the powers conferred upon it to directly govern the citizens. Justice O’Connor observed that the Tenth Amendment guarantees adherence to the Constitutional structure, because it prohibits the federal government from issuing orders, dictates, and requisitions to the state governments, as the federal government could do under the Articles of Confederation.
The Court applied the foregoing rationale to hold in Printz v. United States[6] that the Tenth Amendment precludes the federal government from commandeering state officials to carry out a federal regulatory program. The Court once again followed this rationale when it held in Murphy v. National Collegiate Athletic Association[7] that, where Congress had not prohibited sports gambling throughout the United States, the Tenth Amendment barred Congress from preventing a state legislature from enacting laws that permit sports gambling within the state. As a result of Murphy, 39 states now allow sports gambling, and the FanDuelDraftKingsBet365 Borg has relentlessly endeavored to assimilate us.
This durable line of Tenth Amendment precedent should give one pause before concluding that Congress can completely repeal the ability of state and local governments to issue tax-exempt bonds. As noted above, a complete repeal of tax-exempt bonds is projected to generate $364 billion in revenue to the federal government over a 10-year period. Under New York, Printz, and Murphy, Congress clearly cannot issue a requisition to the states seeking remittance of $364 billion to help finance a federal income tax cut. The elimination of tax-exempt bonds is the economic equivalent of such a requisition by the federal government to the states and their political subdivisions. State and local governments will be required to pay bondholders higher, taxable interest rates on debt obligations that they issue.[8] If the projections noted above are accurate, $364 billion of this increased interest paid by state and local governments will be remitted by the bondholders to the federal government.[9]
Does the Tenth Amendment allow the federal government to impose an indirect requisition on state and local governments that the federal government cannot issue directly? Does the legal incidence of the tax on the bondholders suffice to avoid the anti-commandeering principle developed by New York, Printz, and Murphy? If it does, would the Court distinguish its holding in Baker on the basis that prohibiting the issuance of tax-exempt bearer bonds has a trivial effect on state and local governmental sovereignty, while a full elimination has a much more profound effect? If Congress eliminates tax-exempt bonds, will one or more states invoke the right of original jurisdiction[10] to present these questions directly to the U.S. Supreme Court?
With all this on the table, it might be a bad bet to conclude that Congress can parlay the elimination of tax-exempt bonds into a revenue offset to help pay for a federal tax cut.
[1] The document scored the repeal of tax-exempt bonds as raising $250 billion over 10 years and the repeal of “private activity bonds” as generating $114 billion over the same timeframe. The reference in that document to “private activity bonds” means “qualified bonds” under Section 141(e) of the Internal Revenue Code of 1986, as amended. Qualified bonds are private activity bonds that would, absent legislative enactment by Congress, constitute taxable bonds. Some common examples of qualified bonds include qualified 501(c)(3) bonds (which are frequently issued to finance educational, healthcare, and housing facilities owned or operated by 501(c)(3) organizations), exempt facility airport bonds (which are issued to finance improvements to terminals and other airport facilities in which private parties, such as airlines, hold leasehold interests or other special legal entitlements), and exempt facility qualified residential rental project bonds. For ease, references to “tax-exempt bonds” in this post are to both tax-exempt governmental use bonds and tax-exempt qualified bonds.
[2] 485 U.S. 505 (1988).
[3] In so holding, the Court overruled Pollock v. Farmers’ Loan & Trust Co., 157 U.S. 429 (1895). The Court in Pollock espoused the doctrine of intergovernmental tax immunity to conclude that the federal government lacks the authority under the U.S. Constitution to tax the interest on obligations issued by state or local governments.
[4] Justice O’Connor was quite prescient.
[5] 505 U.S. 144 (1992).
[6] 521 U.S. 898 (1997).
[7] 584 U.S. 453 (2018).
[8] The Public Finance Network estimates that the repeal of tax-exempt bonds will raise borrowing costs for state and local governments by $823.92 billion between 2026 and 2035, which will result in a state and local tax increase of $6,555 per each American household.
[9] It should be noted that taxing the interest paid on state and local debt does not, as some claim, result in an economic charge imposed on the wealthy. As an initial matter, retirees and others of more modest means hold a significant amount of currently outstanding tax-exempt bonds, because they want to allocate a portion of their savings to a secure investment. Assuming arguendo that tax-exempt bondholders tend to be wealthier, they will be compensated for the tax in the form of increased interest rates. They will suffer no economic detriment because their after-tax return on taxable state and local bonds will equal the return available on tax-exempt bonds. State and local governments will, however, need to raise taxes or limit governmental services so that they can pay the higher interest rates demanded on taxable obligations. Less wealthy constituents will bear the brunt of this. The less wealthy tend to be the recipients of more governmental services than the wealthy. Moreover, the less wealthy devote a larger share of their income to the payment of sales tax (the form of taxation on which state and local governments increasingly rely) than is the case with wealthier constituents. Consumption taxes, such as sales taxes, are by their nature regressive, because the less wealthy spend a greater percentage of their income than do the wealthy, who can save a larger share of their income. These savings are not subjected to a consumption tax.
[10] U.S. Const. Art. III, Sec. 2.
Utah Pioneers App Store Age Limits
Utah’s governor recently signed the first law which puts age restrictions on app downloads. The law (the App Store Accountability Act, SB 142), was signed yesterday (Wednesday, April 26, 2025). We anticipate that the law may be challenged, similar to NetChoice’s challenge to the Utah Social Media Regulation Act and other similar state laws.
Once in effect, the law will apply to both app stores and app developers. There are various effective dates – May 7, 2025, May 6, 2026 and December 31, 2026— as outlined below. Among its requirements are the following:
Age Verification: Under the new law, beginning May 6, 2026, app stores will need to verify the age of any user located in the state using “commercially reasonable” measures. Prior to that time, the Division of Consumer Protection will need to create rules that outline how age can be verified. Also starting May 2026, app developers will need to verify age categories “through the app store’s data sharing methods.” Age categories are children (users under age 13), younger teenagers (users between the ages of 13 and 15), older teenagers (users aged 16 or 17), and adults (users aged 18 and up).
Parental Consent/Notification: Beginning May 6, 2026, app stores will need parental before a minor can download or purchase an app, or make in-app purchases. Consent is to be obtained through a parental account that links to the child’s account. At the same time, app developers will need to verify that app stores have parental consent for minors’ accounts. They also have to notify app stores of any significant changes to their apps. When this happens, the app stores will need to notify users and parents of these changes and get parents’ renewed consent. App stores will also need to notify developers any time parents revoke their consent.
Contract Enforcement: Under the new law, beginning May 6, 2026, app stores will not be able to enforce contracts against minors unless they already have consent from the minors’ parents. This applies to app developers as well, unless they verify that the app store has consent from the minor’s parents.
Safe Harbor: The new law contains safe harbor provisions for app developers. Developers won’t be responsible for violating this law if they rely in good faith on information provided by the app store. This includes age information as well as confirmation that parents provided consent for minors’ account. For the safe harbor to apply, developers also need to follow the other rules set out for them by the law (described above).
Putting it into Practice: While we anticipate that this law will be challenged, it signals that states are continuing their focus on laws relating to children in the digital space. This is the first law that is focused on app stores, but we expect to see more in the future.
James O’Reilly contributed to this post.
Ghost Guns and the Bankruptcy Code: Neither Provides Ammunition for Dismissing Actions – SCOTUS Today
The Supreme Court decided two cases today, continuing the release of opinions on which the Court is not deeply divided. The tougher ones are yet to come.
Despite the fact that today’s cases come from highly specialized areas of practice—firearms control and bankruptcy—both are interesting because they involve the interpretation of text, as Justices of all stripes continue to apply textual, literalist principles of interpretation rather than couching their views in a broader, arguably political, analysis of implied congressional intent.
The more closely watched of today’s two cases is Bondi v. Vanderstok, in which an interesting array of Justices—Justice Gorsuch wrote for himself and six other members of the Court (with Justices Thomas and Alito dissenting)—upheld a 2022 regulation of the Biden administration governing the sale and possession of so-called “ghost guns,” i.e., firearms made from kits constructed from untraceable parts. The regulation in question subjects the do-it-yourself “ghost gun” kits to the same requirements as fully assembled firearms, requiring serial numbers, background checks, and records of sales or transfers to private buyers. The Gorsuch opinion endorsed the position that the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) had the authority to issue the rule under the Gun Control Act of 1968 (GCA). The law “embraces, and thus permits ATF to regulate, some weapon parts kits and unfinished frames or receivers,” Gorsuch wrote. One notes that the Trump administration took no position in the case. The 7-2 decision keeps in force the 2022 regulation. Justice Gorsuch’s leadership as to the decision—a rare reversal of the U.S. Court of Appeals for the Fifth Circuit—is particularly interesting because of his alignment with three conservatives (Chief Justice Roberts, the increasingly independent Justice Barrett, and Justice Kavanaugh) and the Court’s three liberals.
Turning to the stated language of the GCA, Justice Gorsuch writes that the GCA authorizes ATF to regulate “any weapon . . . which will or is designed to or may readily be converted to expel a projectile by the action of an explosive.” This language creates two requirements. First, there must be a “weapon.” Second, the weapon “must be able to expel a projectile by the action of an explosive, designed to do so, or susceptible of ready conversion to operate that way.” According to the Court, “[A]t least some kits will satisfy both.” Rejecting the application of the rule of lenity and the rule of constitutional avoidance, Justice Gorsuch held that neither of those rules “has any role to play where ‘text, context, and structure’ decide the case. . . . The GCA embraces, and thus permits ATF to regulate, some weapons parts kits and unfinished frames or receivers, including those we have discussed. Because the court of appeals held otherwise, its judgment is reversed, and the case is remanded for further proceedings consistent with this opinion.”
Justice Thomas dissented, arguing that the statutory terms did not cover the unfinished frames in the parts kits and that those kits, by themselves, did not fit the definition of a “firearm.” Justice Alito argued that the majority decided the case on grounds that were not raised or decided in the courts below. Both dissents are swamped by the strong bipartisan majority that, as Justice Gorsuch made clear, was conscious of the regulation’s origin in the wake of the assassination of Dr. Martin Luther King, Jr.
From a Court “politics” standpoint, the other case decided today, United States v. Miller, is just as interesting. In this case, Justice Jackson’s majority opinion was joined by all of the other Justices, save for Justice Gorsuch, who dissented. The case involved the power of a bankruptcy trustee under the Bankruptcy Code, 11 U.S.C. §544(b)(1), to set aside, or “avoid,” certain fraudulent transfers of a debtor’s assets. The Court held that the Bankruptcy Code’s waiver of sovereign immunity only waives sovereign immunity with respect to the federal cause of action created by Section 544(b), which gives the trustee the power to avoid certain transfers that would be “voidable under applicable law”—that is, voidable outside of bankruptcy proceedings. However, it doesn’t encompass sovereign immunity for state law claims nested within that federal claim. Ultimately, the case is remanded to allow the courts below to consider an argument based on state law that was not briefed or considered by the Supreme Court.
Again, we note that the Court continues to deal with the “easy” stuff. There remain more than a few storm clouds on the horizon. So, keep your rubber boots on and look out for lightning in the days to come.
Safety Perspectives From the Dallas Region: The DOJ’s New Position on ALJs—What Employers Need to Know [Podcast]
In this episode of our Safety Perspectives From the Dallas Region podcast series, shareholders John Surma (Houston) and Frank Davis (Dallas) discuss the U.S. Department of Justice’s (DOJ) recent statement concluding that the removal restrictions for administrative law judges (ALJs) are unconstitutional. Frank and John explore the implications of this decision for employers, particularly those facing OSHA citations, and examine its broader impact on the evolving legal landscape of OSH Act enforcement.
Trump Administration’s Executive Orders Attempt To Reset Sex & Gender Identity Issues in Women’s Sports
In January 2025, the Republican Party took control of both houses of Congress and the White House, portending seismic policy shifts around women’s and college sports, as previously reported here. Indeed, in the days immediately following his inauguration, President Trump issued a slew of Executive Orders, including Executive Order 14201 (Keeping Men Out of Women’s Sports) (February 5, 2025) (“EO 14201”). EO 14201 declared it would now be the policy of the United States to rescind funding from educational programs that permit transgender women or girls to compete on female sports teams or in female sports (the “EO 14201”).
The Trump Administration’s Department of Education immediately followed EO 14201 by making two significant policy announcements concerning the application of Title IX of the Education Amendments of 1972 (“Title IX”), signaling that President is already following through on his campaign pledge to reset Biden-era rules and regulations regarding women’s sports.
Below, we review EO 14201 and subsequent developments to discern their meaning and assess their immediate and long-term impact on women’s sports.
Key Provisions of the Executive Order
EO 14201 is effectively an extension into women’s sports of the Trump Administration’s interpretation of biological sex pursuant to Executive Order 14168 (Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government), which declared that it is the policy of the Unites States to recognize two sexes, male and female. EO 14201 states that participation of males (i.e., transgender women) in female sports “is demeaning, unfair, and dangerous to women and girls, and denies women and girls the equal opportunity to participate and excel in competitive sports.” Accordingly, it is the United States’ policy to “rescind all funds from educational programs that deprive women and girls of fair athletic opportunities, which results in the endangerment, humiliation, and silencing of women and girls and deprives them of privacy” and “oppose male competitive participation in women’s sports more broadly, as a matter of safety, fairness, dignity, and truth.”
In furtherance of its stated policies, EO 14201 includes directives to:
The Department of Education (“DOE”), to (i) comply with a recent federal court ruling vacating the Biden Administration’s Final Rule that broadened Title IX’s prohibitions against discrimination on the basis of sex to include gender identity, (ii) take action, including through litigation, review of federal funding, rulemaking and policy, to protect “all-female athletic opportunities and all-female locker rooms” in the interest of securing the equal opportunity guarantees of Title IX and ensuring “women’s sports are reserved for women.”
The Assistant to the President for Domestic Policy, to (i) engage with large athletic organizations and governing and harmed female athletes in support of EO 14201’s purpose, and (ii), convene State Attorneys General to identify best practices to define and enforce equal opportunity for women in sports.
The Secretary of State – among other government officials – to (i) engage in a variety of acts, including but not limited to rescinding support for programs that categorize competition based on identity rather than sex and promote international rules governing sport to protect a female sports category that is sex-based; (ii) review and adjust immigration policies that would admit males to the United States to participate in women’s sports, and (iii) take efforts to ensure that the International Olympic Committee amend standard to protect women and eligibility for Olympic competition is determined by sex, not gender identity or testosterone reduction.
Related Developments
The effects of EO 14201 were immediate.
On February 4, 2025, the DOE followed through and issued a “Dear Colleague” letter stating that it would be enforcing Title IX, not under the above-referenced, recently vacated 2024 Rule, but rather under the 2020 Rule, which was promulgated during the prior Trump Administration and aligns with EO 14201’s biological definitions of sex, excluding gender identity.
On February 6, 2025, and pursuant to EO 14201, the NCAA implemented a new participation policy limiting competition in women’s sports only to student-athletes assigned female at birth, while allowing student-athletes either (x) assigned male at birth, or (y) assigned female at birth who has begun gender-affirming hormone therapy (e.g., hormone therapy) to practice with women’s teams.
Less than a week later, on February 12, 2025, the Department of Education announced that it was rescinding guidance issued by the Biden DOE on January 16, 2025, which had warned NCAA schools that payments to student-athletes for use of their name, image, and likeness (“NIL”), whether distributed by schools or third parties (e.g., collectives or brands), qualified as “financial assistance” and must be distributed under Title IX on a nondiscriminatory basis.
By rescinding that guidance, the Trump Administration appears to be signaling that the protection of women in sports does not extend to NIL pay and that disparities in NIL pay between male and female athletes will not trigger Title IX scrutiny, at least not from the DOE. Thus, at least in the eyes of Trump’s DOE, if and when schools ever begin making NIL or revenue-sharing payments to student-athletes, Title IX will not restrict them from directing those funds in disproportionate amounts to athletes in revenue-generating sports, which are predominantly male.
Looking Ahead
EO 14201 was unsurprising given President Trump’s stated positions during the 2024 election campaign. Also unsurprising is the wide-ranging responses to EO 14201, which will likely face legal challenges in implementation given conflicting state laws and deep political divide. Its practical impact will likely differ based on level of competition (e.g., youth versus college sports) and whether federal funding is involved in any particular circumstance. In the meantime, organizations involved in women’s or girls’ sports would be wise to consider its potential impact on their polices and practices and keep an eye out for related developments.
Wisconsin Court of Appeals Finds Taxpayer-Funded College Grant Program to Be Unconstitutional
On February 26, 2025, the Wisconsin Court of Appeals, District II, determined that a program that provided taxpayer-funded educational grants to financially needy students of specific racial, national origin, and ancestry groups was unconstitutional.
Quick Hits
On February 26, 2025, a Wisconsin appellate court ruled that a taxpayer-funded educational grant program for minority students is unconstitutional, citing the U.S. Supreme Court’s decision in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College (SFFA).
The court’s decision to halt the Minority Undergraduate Retention Program underscores the broader implications of the SFFA ruling, suggesting that race-based considerations in state-funded educational assistance programs may also violate the Equal Protection Clause of the U.S. Constitution.
Legal scholars and post-secondary institutions are closely monitoring the impact of the court’s decision and the federal government’s recent guidance, which indicates that the SFFA ruling could extend beyond university admissions to other areas, including employment-related decision-making.
Background
In April 2021, five Wisconsin taxpayers filed a lawsuit against the Higher Educational Aids Board (HEAB) and its executive secretary, Connie Hutchinson. HEAB and Hutchinson administer the Minority Undergraduate Retention Program, which was created by the Wisconsin legislature in 1985 to offer grants to certain undergraduate minority students. To be eligible for the grants, the students must be Black American, American Indian, Hispanic, or have ancestors who were formerly citizens of Laos, Vietnam, or Cambodia. In the case, Rabiebna v. Higher Educational Aids Board, the taxpayers claimed that the eligibility criteria (i.e., limiting eligibility to students of these specific racial or ethnic backgrounds) violated both the Equal Protection Clause of the U.S. Constitution and Article I of the Wisconsin Constitution.
The circuit court granted summary judgment in favor of the HEAB and Hutchinson. The taxpayers then appealed the decision. After the parties’ appellate briefs were filed, the Supreme Court of the United States issued its decision in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, 600 U.S. 181 (2023). In SFFA, the Supreme Court ruled that two universities violated the Equal Protection Clause of the U.S. Constitution by considering an applicant’s race as part of the applicant’s admissions processes. Therefore, both parties in the HEAB case submitted additional briefing to the appeals court articulating the impact of the SFFA case on its review of the Minority Undergraduate Retention Program in Wisconsin.
The Decision
After evaluating the Wisconsin statutory language and considering the parties’ arguments, the appeals court reversed the circuit court’s ruling, finding instead that the Minority Undergraduate Retention Program violates the law. Notably, the court relied heavily on the SFFA opinion to support its conclusion, citing to it more than one hundred times in its fifty-three-page decision. The court’s analysis also closely tracked the overarching legal framework provided by SFFA. As a result of this decision, the HEAB and Hutchinson are currently enjoined from further administering the grant program and distributing any funds from it.
Implications of the Decision
Some legal scholars initially interpreted the Supreme Court’s SFFA decision narrowly, arguing that it was limited to university admissions policies. However, the HEAB opinion signals that some courts are willing to utilize SFFA’s Equal Protection analysis in other contexts where race is a consideration, including state-funded educational assistance programs. Indeed, the Wisconsin appeals court, citing to SFFA, emphasized that no state has the authority under the Equal Protection Clause to use race as a factor in offering “educational opportunities.” (Emphasis in original.)
The HEAB decision also appears to align with the U.S. Department of Education’s “Dear Colleague” letter dated February 14, 2025, which explicitly states that the SFFA decision “applies more broadly” than just to university admissions decisions. Given this letter and the recent confirmation of Linda McMahon as the new secretary of education, post-secondary institutions may want to consider closely monitoring developments in the federal government’s interpretations of the law post-SFFA, and its subsequent enforcement actions.
Finally, it appears that the SFFA decision will have impacts beyond the realm of education. For example, there are already cases pending in various jurisdictions around the country that cite to the SFFA case to challenge an employer’s consideration of race in hiring or other employment decisions. Therefore, employers may also want to consider following these cases, along with litigation over the Trump administration’s executive orders regarding diversity, equity, and inclusion, to see whether and how the SFFA decision is implicated and whether courts will extend SFFA’s reasoning to cover employment-related decision-making.
Québec’s Restrictive Approach to Biometric Data Poses Challenges for Businesses Working on Security Projects
The recent decision by the Commission d’accès à l’information du Québec (CAI) regarding a popular grocer’s biometric data project in Quebec has far-reaching implications for other businesses considering or currently using biometric technologies. This pivotal decision not only highlights the CAI’s stringent approach to privacy protection but also sets a significant precedent for any company utilizing or considering utilizing biometric technologies in Quebec. Businesses will want to closely monitor developments to ensure compliance with Quebec’s privacy laws and adapt their practices accordingly.
Quick Hits
The CAI emphasized the broad interpretation of “identity” and “verification” under Quebec’s privacy laws.
The decision highlights the quasi-constitutional nature of privacy protection in Quebec.
The CAI emphasized that if consent involving the capture and comparison of biometric data for identification purposes cannot be obtained, a project—even one focused on security—may not be approved in Quebec.
A prominent grocery store in Quebec proposed implementing a biometric data bank for facial recognition to combat theft and fraud in its stores. The system aimed to identify individuals involved in shoplifting or fraud by comparing surveillance footage with a database of biometric data. However, the CAI’s investigation focused on the project’s compliance with Quebec’s privacy laws, specifically the Act respecting the protection of personal information in the private sector and the Act to establish a legal framework for information technology.
Distinction Between Verification and Identity
A critical aspect of the CAI’s decision was the broad interpretation of “identity” and “verification” under Quebec’s privacy laws. The CAI determined that the grocer’s facial recognition system constituted a form of identity verification, as it involved capturing and comparing biometric data to identify individuals. This interpretation means that any process involving the capture and comparison of biometric data for identification purposes requires explicit consent from the individuals concerned, as mandated by Article 44 of the Act to establish a legal framework for information technology.
The CAI rejected the grocer’s argument that their system did not constitute identity verification because it did not confirm the exact identity of every individual entering the store but rather identified those who matched the biometric profiles of known offenders. The CAI clarified that the act of identifying individuals based on biometric data, even if it is to determine if they belong to a specific group (e.g., known shoplifters), still falls under the category of identity verification.
Explicit Consent Requirement
The CAI highlighted that under Article 44 of the Act to establish a legal framework for information technology, any process that involves the verification of identity through the capture and comparison of biometric data requires the explicit consent of the individuals concerned. The CAI noted that the grocer’s project did not plan to obtain such explicit consent, thereby violating the legal requirements. This requirement for explicit consent is a critical point for other businesses to consider. Any business using biometric technologies may want to confirm that they obtained explicit consent from individuals before collecting and using their biometric data. Failure to do so could result in significant legal repercussions and potential prohibitions on the use of such technologies.
Quasi-Constitutional Nature of Privacy Protection
The CAI’s decision highlights the quasi-constitutional nature of privacy protection in Quebec. Privacy laws in Quebec are designed to offer robust protection to individuals, and the CAI has broad powers to enforce these laws. This means that businesses may want to be particularly diligent in their compliance efforts, as the CAI is likely to take a restrictive approach to the use of biometric data and other sensitive personal information.
Next Steps
The CAI’s decision on the grocer’s biometric data project has significant implications for other businesses using biometric technologies. This development is important as it highlights the necessity of strict adherence to privacy laws, especially when handling sensitive biometric data. Specifically, the broad interpretation of “identity” and “verification,” the explicit consent requirement, and the quasi-constitutional nature of privacy protection in Quebec all provide cause for businesses to be diligent in their compliance efforts. Businesses may want to ensure they obtain explicit consent from individuals before collecting and using biometric data. The CAI’s decision on the grocer’s project serves as a critical reminder that privacy protection is taken very seriously in Quebec, and businesses may want to be proactive in ensuring their practices comply with the stringent requirements of the law. Given the CAI’s broad powers and the quasi-constitutional nature of privacy protection in Quebec, businesses can expect more restrictive decisions in the future.