United States: Senators Unveil Crypto Market Structure Principles in Lead-up to the Senate’s Version of the CLARITY Act
On the heels of the House Financial Services Committee’s introduction of the CLARITY Act, Republican senators who serve on the Senate Banking Committee introduced their “Crypto Market Structure Principles” (the Principles) to establish a “baseline” for negotiating the Senate’s version of its market structure bill. Shortly after releasing the Principles, the Digital Assets Subcommittee of the Senate Banking Committee held a hearing on market structure.
Despite making this forward progress, it is unclear when the Senate will put pen to paper on a market structure bill. House Financial Services Chair French Hill has indicated that he would like to pass the CLARITY Act with stablecoin legislation, with the support of House Majority Whip Tom Emmer, who stated that “market structure is essential to any congressional action on digital assets. I expect the GENIUS Act has a path in the House, so long as it’s accompanied by the CLARITY Act.”
Despite the House’s approach, the Senate and President Trump are calling on the House to pass a clean version of the GENIUS Act as soon as possible so the stablecoin legislation can move forward irrespective of the status of the market structure bill. We expect to see whose vision for timing wins out in the coming weeks.
In the meantime, the Senate is exploring market structure legislation of its own. According to Senator Cynthia Lummis, the Principles will “ensure the US remains at the helm of global financial advancement.” The Principles provide that legislation should provide a distinction between digital asset securities and digital asset commodities and clearly allocated regulatory authority to avoid advancing an “all-encompassing regulator”. Themes of the Principles include fostering innovation, establishing clear guidance to enable financial institutions to operate in the digital asset space with regulatory certainty, and protecting customers.
Maryland Sales Tax Multiple Points of Use Exemptions: Is the Juice Worth the Squeeze?
In the waning days of its 2025 session, the Maryland Legislature passed the Budget Reconciliation and Financing Act, and Governor Wes Moore signed it into law.[1] This bill expands the sales tax base to include sales of various data and information technology and cloud computing services.[2] The sales tax rate on these new categories of taxable services is 3% as opposed to the prevailing state-wide tax rate of 6%. Imposition of the tax on sales of these new categories is effective starting July 1, 2025.
Putting aside the unworkable nature of keying the imposition to North American Industry Classification System codes and the obvious Internet Tax Freedom Act preemption of the imposition on web hosting and data storage, the Maryland Comptroller recently issued interim guidance that adds new, unwarranted complexity in the administration of multiple points of use (MPU) exemption certificates.
The new law takes effect July 1, and many taxpayers are scrambling to interpret and implement it. On June 10, the Comptroller issued a bulletin providing guidance on many of its more technical components,[3] which introduces a distinction between installment sales of and subscriptions to the newly taxable categories of services. This distinction has implications for managing MPU exemption certificates.
Included with the guidance are provisions that give buyers of these newly taxable services (if they plan on using the services in more than one jurisdiction) the option of providing the seller with an MPU exemption certificate.[4] Receipt by the seller of an MPU exemption certificate relieves the seller of the obligation to collect and remit Maryland sales tax on the sale, shifting the obligation of paying the use tax to the buyer.[5] The applicable tax the buyer must pay is determined using a reasonable method of apportionment of the use within Maryland as compared to all the locations of use of the service. Relevant headcount is a reasonable method of apportionment.[6] The presentation of an MPU exemption certificate by the buyer to the seller is optional.
In an installment sale context, there is one sale transaction that occurs at the time of contract execution. Buyers electing into the MPU process would need to supply only one certificate to the vendor that would cover all subsequent installment payments under the contract. Subscriptions are treated differently. Many of these newly taxable categories of computer-related services often are sold on a subscription basis. Under the guidance, each subscription payment is considered a separate sale requiring the issuance of a separate MPU exemption certificate for each subscription payment.[7] We told the Comptroller’s staff that requiring a separate MPU exemption certificate for each subscription payment is unnecessary. The staff responded saying that the rigidity of the process they’ve outlined in this context is under consideration and may be updated in subsequent guidance. (Vendors and buyers concerned about the practical implications of the MPU regime outlined are encouraged to contact the authors of this blog post for more details.)
The process suggested in the guidance for issuing MPU exemption certificates is unnecessarily burdensome. First, before tendering an MPU exemption certificate to the seller, the buyer “must apply to the Comptroller’s Office for authorization to issue an MPU certificate for each transaction.”[8] If the services are provided on a monthly subscription basis, the buyer may have to go through the online authorization process once a month for each vender to which it has tendered an MPU exemption certificate.
There are hurdles for the seller, too. To accept an MPU exemption certificate, the seller must verify its authenticity online.[9] There does not appear to be any current automation of these buyer certificate authorization and seller verification processes. Presumably, the buyer will have to manually have certificates authorized and the seller will have to manually verify them.
While implementation of the legislation does not mention anything about having MPU exemption certificates preauthorized and verified, it does require that certificates include all the information required by the Comptroller. Presumably, the Comptroller has authority from the legislature to impose these requirements. However, the tax administration objectives further requiring separate MPU exemption certificates for subscriptions are not obvious. It may be that the Comptroller lacks the headcount needed to administer the MPU exemption regime in such short order and is erecting administrative barriers to its use by taxpayers.
What happens if the buyer does not give the vendor an MPU exemption certificate? The vendor will collect the tax at the 3% tax rate on an unapportioned basis and remit it to the Comptroller. The buyer presumably would owe use tax to the other jurisdictions where the services will be used (if they are taxable there). The buyer could apply for refunds of tax paid on the portion of the service used outside Maryland. The Comptroller’s emergency regulations and current guidance contemplate this.[10]
What happens if (1) after clearing the authorization and verification hurdles, (2) the buyer tenders a certificate and the seller accepts it on the first payment on a multiyear subscription where payments are due monthly, (3) neither party does anything about following up with additional MPU exemption certificates on a monthly basis, (4) the vendor doesn’t collect tax on the future payments and the buyer apportioned and paid the tax and (5) the vendor gets audited? On this set of facts, the emergency regulations provide some breathing room. Upon notice from the Comptroller that it intends to assess tax on transactions for which the vendor doesn’t have MPU exemption certificates, the vendor has 60 days to obtain them from the buyer.[11] If the vendor has the certificate from the first subscription payment that automatically repeats each month, one wonders what an auditor would hope to accomplish by making the vendor clear this additional paperwork hurdle.
The quickly issued MPU exemption guidance initially seems simple enough, but when one layers on the administrative hurdles proposed by the Comptroller through its guidance, whether to make use of it requires a practical lens and an analysis of the impact on customer relations. If the customer is big enough and wants it bad enough, the vendor will undertake the periodic verification requirements. The buyer, too, will have to weigh whether the refund procedure or current MPU procedure is the lesser of two evils.
We anticipate that the Comptroller will go through the usual administrative procedure and seek public comment on the forthcoming permanent proposed regulations (to date, only temporary emergency regulations and informal guidance exists). Interested parties should be on the lookout for them and weigh in on the subscription/separate sale issue in the context of MPU exemptions. We hope the Comptroller will take industry feedback into consideration and soften the current stance on requiring additional certificates for each transaction in the subscription context.
[1] House Bill 352, passed April 7, 2025, and signed into law by Governor Moore on May 20, 2025.
[2] See Proposed Emergency Regulations COMAR § 03.06.01.48.A(2)(g)-(i).
[3] Tech. Bull. No. 56 (June 10, 2025).
[4] Id. at ¶28.
[5] Id.
[6] Id. at ¶32.
[7] Id. at ¶29.
[8] Id. at ¶30.
[9] Id. at ¶31.
[10] Proposed Emergency Regulations COMAR § 03.06.01.49.D(3).
[11] Id., § 03.06.01.49.F.
Interim Statement on ‘54 Act Reform
Summary
The Law Commission has issued an interim statement on the reform of the Landlord and Tenant Act 1954 (the Act). Its initial consultation addressed the “contracting-out” model, types of tenancy and duration of tenancy.
Background
The Act is 70 years old, and some consider it outdated for today’s real estate market. It has not undergone a major overhaul for over 20 years. The explosion of e-commerce, effects of the 2008 financial crisis and shifts in government priorities have rendered parts of the Act outdated, cumbersome and unclear. Landlords and tenants frequently “contract out” of the Act’s protections, as the associated formalities can be complex and slow, which can cause delay. The Law Commission launched its first consultation in November 2024. The interim statement represents the first major update since its initial consultation that closed in February 2025.
The Law Commission’s Provisional Conclusions
In light of the responses received, the Law Commission has reached the following provisional conclusions:
The existing “contracting-out” model received broad support and is favoured to be retained.
Current exclusions for certain tenancies, like agricultural tenancies which have their own statutory regime, are considered to be appropriate and will continue.
There is support for increasing the threshold from which security of tenure applies from a fixed term of six months to a term of two years.
These provisional conclusions will shape the next consultation paper and final recommendations, the timing of which is to be confirmed by the Law Commission in due course. This will focus on the technical details of how the Act might be reformed in light of the provisional conclusions of the first consultation to ensure that the Act works for the modern commercial leasehold market.
MPCA Will Postpone January 1, 2026, Reporting Deadline On Products Containing Intentionally Added PFAS
This week the Minnesota Pollution Control Agency (MPCA) posted Parts One and Two of its response to pre-hearing and hearing comments. Part One states that 67 commenters submitted written comments on the April 2025 proposed rule. During the May 22, 2025, hearing on the proposed rule, 11 stakeholders presented verbal testimony. According to the document, MPCA has reviewed the comments and “has identified some parts of the proposed rule that require clarification, or that the agency would consider minor, non-substantive changes to.” MPCA “does not believe that these potential changes will result in rules that are ‘substantially different.’” Part Two of the response to comments notes that the Commissioner of the Pollution Control Agency “has clear authority to extend the deadline if more time is needed for manufacturers to comply.” According to the document, MPCA “has decided outside of the rulemaking process to issue an extension to the initial due date to ensure program success.” MPCA will provide more information on the extension of the January 1, 2026, reporting deadline “in the near future.” MPCA will respond to comments received during the post-hearing comment period in a future rebuttal document. More information on the proposed rule and May 2025 hearing is available in our memoranda.
What to Know About Illinois’s 2025 Amnesty Programs
On May 31, 2025, the Illinois General Assembly passed House Bill 2755, which contains three amnesty programs the state estimates will substantially increase its coffers. Illinois Governor JB Pritzker signed the bill into law on June 16, 2025.
General Amnesty Program (35 ILCS 745/10)
The Illinois Department of Revenue (IDOR) will run a general amnesty program from October 1, 2025, through November 15, 2025. During this period, taxpayers who pay “all taxes due” to the State of Illinois for any taxable period ending after June 30, 2018, and before July 1, 2024, will have all associated interest and penalty charges waived.
IDOR regulations provide key details, including:
“Eligible tax liabilities” include any taxes (other than the motor fuel use tax) that are imposed by the State of Illinois and collected by IDOR.
Taxpayers can selectively participate in the program by paying all taxes due for an eligible tax liability (e.g., income tax but not sales tax) or for a particular tax period (e.g., 2022 but not 2023).
Specific procedures for amnesty participation by taxpayers under audit, with disputes pending in the Fast Track Resolution Program or before the Informal Conference Board.
Amnesty can also be granted to taxpayers with civil cases pending in state courts, in administrative hearings, or at the Illinois Independent Tax Tribunal, provided the litigation is dismissed before the end of the amnesty period by agreed order entering judgment in favor of IDOR.
Taxpayers can participate by making estimated payments of the taxes due, including additional Illinois taxes that will result from a federal change that has not become final.
Taxpayers participating in the amnesty program may claim a refund for an overpayment of an established liability based on an issue that is not an amnesty issue or of an estimated payment, including one based on an estimated federal change.
We expect IDOR to publish additional guidance and forms on its website prior to the program’s October 1, 2025, inception.
Franchise Tax Amnesty Program (805 ILCS 8/5-10)
The Illinois Secretary of State will run a franchise tax amnesty program from October 1, 2025, through November 15, 2025. The program applies to franchise taxes or license fee liabilities for any tax period ending after June 30, 2019, and on or before June 30, 2025. Payment of all franchise taxes and license fees due for any taxable period will result in abatement of any associated interest or penalties.
Notes:
There are no regulations related to the Franchise Tax Amnesty Program.
The Franchise Tax Amnesty Program has much more limited eligibility than IDOR’s General Amnesty Program. Taxpayers who have received interrogatories from the secretary’s Department of Business Services or that are a party to any civil, administrative, or criminal investigation or litigation for nonpayment of franchise tax or license fees are not eligible to participate.
The Secretary may publish additional guidance and forms on his website prior to the program’s October 1, 2025, inception.
Remote Retailer Amnesty Program (35 ILCS 120/2-13)
IDOR will run a remote retailer amnesty program from August 1, 2026, through October 31, 2026. During this time, IDOR will waive all interest and penalties associated with a remote retailer’s payment of a “simplified retailers occupation tax rate” for taxes due for January 1, 2021, through June 30, 2026.
Notes:
The “simplified retailers occupation tax rate” is a blended rate equal to 9% for sales subject to the state’s general 6.25% tax, and 1.75% for sales subject to the 1% tax (generally food and drug items).
Taxpayers must pay all taxes due at a simplified rate for the relevant period to obtain a penalty and interest waiver, either up front or via an approved repayment plan.
Registration with IDOR and payment of taxes on a going-forward basis is required.
Participating taxpayers must file returns for the relevant period but do not have to complete Form ST-2, an often-burdensome form that requires reporting of sales by specific locality.
Local units of government do not play a role in the acceptance of applications and do not have the ability to make assessments in addition to accepted payments.
Participation in the program would eliminate a remote retailer’s ability to challenge the constitutionality of IDOR’s assessment of destination-based local tax for the time period resolved by amnesty.
We expect IDOR to issue regulations and publish forms on its website prior to the program’s August 1, 2026, inception.
New York Expands Legal Protections to Models in the Fashion Industry
Effective June 2025, New York began implementing significant changes for the fashion industry with respect to the practices of model engagement under the provisions of the new Fashion Workers Act (FWA).1 While the name of the new law suggests applicability to a broad range of creative talent and labor across the fashion supply chain, the scope of FWA focuses exclusively on models.
FWA is the first U.S. law to introduce transparency requirements for model contracts, impose fiduciary duties on model management companies, and establish new workplace protections for models working in New York State. This article discusses the history of fashion regulation and the main requirements under FWA, and makes recommendations for how fashion businesses should address compliance with FWA.
History of Fashion Regulation
Generally, the fashion industry does not have any significant industry-specific regulation, at least not when it comes to engaging models or other creative talent. Fashion industry participants may instead be governed by a patchwork of more general laws pertaining to labor and employment, data privacy, advertising, environmental, trade and import/export, antitrust and competition, intellectual property (IP including those protecting trademarks, copyrights, and patents), and right of publicity, as well as emerging laws pertaining to generative AI technology that may be used to replicate models’ likenesses (often referred to as “Deep Fakes”).
Unlike talent agencies, modeling agencies have historically classified themselves as management companies under New York General Business Law § 171(8) and models as independent contractors instead of employees. This classification exempted modeling agencies from following New York’s labor protection requirements, such as minimum wage, overtime, or safety requirements. Individual model contracts would often include difficult to understand compensation and fee structures, unclear payment deadlines, and multi-year term durations that would tie the model to the agency. At the same time, models – typically young people that may lack legal and business experience or support structures – working in New York City would have to deal with high rents and costs of living. While lacking clarity on when and how much they would be paid, models were frequently required to work long hours without adequate breaks or overtime pay. This imbalance of power is further compounded by a possible requirement to pose nude and related safety issues; being asked to wear garments or pose in settings that may present a risk of physical injury; and the proliferation of the use AI-generated portraits of models for which the model may not be compensated.
Concerns about potential exploitation of young people working as models were increasingly brought to the attention of legislators by activists and consumers related to transparency and environmental, social, and governance (ESG) accountability in the fashion industry. New York’s new FWA, enacted in response to the concerns raised by members of the public, is a comprehensive novel framework in the fashion industry with which participants need to become familiar.
The Fashion Workers Act
The legislative justification memo accompanying FWA emphasizes New York’s central role in the U.S. fashion industry: it is home to world-renowned creative talent, leading production companies, and top fashion and design schools. The memo states that New York’s fashion industry employs 180,000 people, accounting for 6 percent of the New York City’s workforce, and generates a total of $10.9 billion in wages. A prime example of its significant economic impact is New York Fashion Week, a semiannual series of events where designers showcase their collections to buyers, the press, and the general public. The enterprise brings in nearly $600 million in income each year.
The legislative justification memo further states that despite the massive success of New York’s fashion industry, the creative workforce behind the industry’s success – specifically, models, influencers, and performing artists – are generally not afforded basic labor protections in New York. The new Act aims to address the persistent inequity in New York’s modeling sector, such as unfair contracts and payment practices, and create a system that imposes various requirements and prohibitions on model management companies and clients.
FWA defines the following terms:
“Client” means a retail store, a manufacturer, a clothing designer, an advertising agency, a photographer, a publishing company, or any other such person or entity that receives modeling services from a model, directly or through intermediaries.
“Model” means an individual, regardless of the individual’s status as an independent contractor or employee, who performs modeling services for a client and/or model management company or who provides showroom, parts, or fit modeling services.
“Model management company” means any person or entity, other than a person or entity licensed as an employment agency under article 11 of the general business law, that:
Is in the business of managing models participating in entertainments, exhibitions or performances
Procures or attempts to procure, for a fee, employment or engagements for persons seeking employment or engagements as models
Renders vocational guidance or counseling services to models for a fee.
FWA applies to model management companies that engage in business in New York or enter into any arrangement with a client or model for the purpose of providing services in New York. In other words, this Act applies to any entity using a fee-based structure to hire models in New York, including model management companies and fashion businesses working with them, as well those who engage models directly for photoshoots and other ad campaigns in New York.
Key requirements and prohibitions on model management companies (or agencies):
Starting December 21, 2025, and no later than June 19, 2026, agencies representing models and creatives will be required to register with the New York Department of Labor (NYDOL). The registration must be renewed every two years. Agencies with five or fewer employees must pay a $500 registration fee, and agencies with more than five employees must pay a $700 registration fee.
Agencies shall:
Be deemed to have fiduciary duties to act in good faith, with utmost honesty and in their models’ best interests. This fiduciary duty includes all aspects of the agency’s representation, such as negotiations, contracts, financial management, and the protection of the models’ legal and financial rights
Conduct due diligence to ensure that models are not at risk of unreasonable danger
Use best efforts to procure paid employment and other opportunities for their signed models
Ensure any work requiring nudity or sexually explicit material is voluntarily consented to by the model, in accordance with section 52-C (3) of the Civil Rights Law (which sets forth requirements for consent to the creation, disclosure, dissemination, or publication of sexually explicit material)
Prior to the start of a model’s engagement, provide the model with copies of a deal memo as well as the final agreement outlining terms of employment the agency negotiated for the model, which must include compensation terms
Specify any items that will be initially paid for by the agency, but ultimately deducted from the model’s compensation, itemizing how each charge shall be computed, as well as provide supporting documentation validating all charges on a quarterly basis
Disclose any financial relationship that may exist between the agency and the client
Notify models no longer represented by the agency if the agency is collecting any royalties that may be due to the model
Post a physical copy of the agency’s certificate of registration in the agency’s physical office and a digital copy on its website
Include the agency’s registration number in any advertisement for the purpose of soliciting models as well as in any contract with a model or a client
Obtain clear written consent, separate from the representation agreement, before agencies can use, license, or sell a model’s digital replica.2
Agencies shall not:
Require or collect any fee or deposit from a model for entering into an agency agreement
Procure an accommodation for which the model will have to pay without providing a written disclosure of the rate charged in advance of the model’s stay
Deduct or offset any fee or expense other than the agreed upon commission laid out in the contract or any other items advanced by the agency that were previously disclosed to and approved by the model
Advance the cost of travel or visa-related costs without the model’s informed consent
Require a model to sign an agency contract for a term greater than three years
Require a model to sign an agency contract that renews without the model’s affirmative written consent
Impose a commission fee greater than 20 percent of the model’s compensation
Engage in discrimination or harassment against a model because of any protected status
Retaliate against models filing complaints or declining to participate in castings or bookings based on reasonable, good faith concerns over ongoing FWA violations
Create, alter, or manipulate a model’s digital replica using artificial intelligence without clear written consent from the model.
Key requirements and prohibitions for clients:
Clients shall:
Pay models for overtime hours for any engagement exceeding 8 hours in a 24-hour period, at an hourly rate at least 50 percent higher than the contracted hourly rate
Provide at least one 30-minute meal break for any engagement exceeding 8 hours in a 24-hour period
Only offer employment to a model that does not pose an unreasonable risk of danger to the model
Ensure any employment involving nudity or sexually explicit material complies with section 52-C (3) of the Civil Rights Law
Permit the model to be accompanied by their agent, manager, chaperone, or other representative to any engagement
Provide liability insurance to cover and safeguard the health and safety of models
Obtain clear, prior written consent for any creation or use of a model’s digital replica.
NYDOL will be the primary enforcer of the FWA. Violators may be subject to a civil penalty for up to $3,000 for a first violation and $5,000 for a second or subsequent violation. Models have the right to file an action in court or a complaint with the NYDOL within six years of the alleged violations. The New York State Attorney General also will have a right to file an action to enforce FWA if there is a reasonable cause to believe that a model management company, a model management group, or a client has repeatedly engaged in illegal or fraudulent business practices.3
Impact of the Act
This Act will be a big change for models and modeling agencies in New York, holding agencies accountable and providing models with basic labor rights. Outside New York, no other U.S. state has adopted a fashion industry–specific law regulating agencies or protecting models in a similarly comprehensive way. Because New York is so influential in the fashion industry, it is likely that it will be a trailblazer for other states, such as California, to introduce similar protections for fashion workers in their states.
Conclusion
Agencies and fashion businesses should start preparing now in order to comply with the new law. Some key points of the law and issues to consider may include:
Agencies must register with the NYDOL starting December 21, 2025 (and must be registered by June 19, 2026).
Clients should consider confirming for themselves that agencies are properly registered before entering contracts.
Both agencies and clients should assess their existing policies and practices, and maintain ongoing compliance checks.
Agencies should review their standard agreements with models for compliance with the FWA framework, as many terms of existing contracts may violate FWA.
Agencies should itemize all deductions and fees that are going to be charged to the model up front.
Agencies should provide models with (1) deal memos listing total compensation and (2) final agreements negotiated with clients at least 24 hours before the model begins the engagement.
Agencies should establish and/or assess existing antiharassment policies and safe reporting mechanisms.
Clients should extend these protections to their sets and events, including training staff on workplace safety.
This is not an exhaustive list, nor does failing to comply with each point render the agency or client noncompliant with FWA. Every situation is different and action should be taken after consultation with a lawyer familiar with the industry.
1 FWA is available at https://legislation.nysenate.gov/pdf/bills/2023/s2477a.
2 The term “digital replica” is defined in FWA as “a significant, computer-generated or artificial intelligence-enhanced representation of a model’s likeliness, including but not limited to, their face, body or voice, which substantially replicates or replaces the model’s appearance or performance, excluding routine photographic edits such as color correction, minor retouching, or other standard post-production modifications.” Notably, if the AI enforcement moratorium that is currently part of the pending federal budget reconciliation bill ultimately passes – and it is poised to pass – enforcement of state law requirements pertaining to generative AI may be suspended for ten (10) years.
3 New York State Fashion Workers Act FAQ, available at https://dol.ny.gov/new-york-state-fashion-workers-act-faqs.
Texas SB 1318: Changes to Healthcare Non-Competes Effective September 1, 2025
Healthcare employers in Texas face new requirements for non-competition agreements following the passage of Senate Bill 1318. The Texas Legislature passed this legislation on May 28, 2025, and on June 20, 2025, Governor Abbott signed the bill into law.
The legislation modifies existing requirements for physician non-competes under Section 15.50 of the Texas Business & Commerce Code and creates a new Section 15.501, which extends certain non-compete restrictions to dentists, nurses, and physician assistants for the first time.
Key Takeaways
Effective Date: September 1, 2025 – applies to non-competes entered into or renewed on or after September 1, 2025.
New Coverage: Dentists, nurses, and physician assistants are now subject to certain non-compete restrictions.
Buyout Cap: All non-compete buy-outs are capped at annual salary and wages.
Geographic Limit: Maximum five-mile radius restriction.
Duration Limit: Maximum one-year non-compete period.
“Good Cause” Voidance: Physician non-competes are “void and unenforceable” if the physician is involuntarily discharged without good cause.
When Does SB 1318 Take Effect?
The law takes effect September 1, 2025, and applies only to non-compete agreements “entered into or renewed” on or after that date. Non-compete agreements entered into or renewed before September 1 are governed by the law in effect on the date the covenant was entered into or renewed. The statute does not define what constitutes a “renewal.”
What Does SB 1318 Change for Physicians?
SB 1318 makes several significant modifications to existing Texas law in Section 15.50 of the Texas Business & Commerce Code regarding physician non-compete agreements:
New Buyout Cap and Geographic Limits: The law now requires all physician non-competes to include a buyout provision capped at the physician’s total annual salary and wages at the time of termination. Previously, the law allowed buyouts at a “reasonable price” or at an amount determined through arbitration. The geographic scope is also now strictly limited to no more than a five-mile radius from the location where the physician primarily practiced before termination.
New Duration Cap: The duration of physician non-competes is now capped at one year from the date of contract or employment termination. The previous law did not specify a maximum duration.
New Automatic Voidance Provision: SB 1318 establishes a provision that renders non-compete agreements “void and unenforceable” if a physician is involuntarily discharged from contract or employment “without good cause.” This is an entirely new requirement. The statute defines “good cause” as “a reasonable basis for discharge of a physician from contract or employment that is directly related to the physician’s conduct, including the physician’s conduct on the job or otherwise, job performance, and contract or employment record.”
New Writing Requirement: The “terms and conditions” of a physician non-compete must now be “clearly and conspicuously stated in writing.” The previous law contained no such writing requirement.
Administrative-Role Exception: SB 1318 adds a new provision in Section 15.50(b-1) stating that “managing or directing medical services in an administrative capacity for a medical practice or other health care provider” does not qualify as the “practice of medicine” for purposes of triggering the physician non-compete requirements in Section 15.50(b) of the Texas Business & Commerce Code. These administrative activities still remain subject to the broader non-compete requirements that apply to all employees under Section 15.50(a).
The existing exception in Section 15.50(c) exempting a physician’s “business ownership interest” in hospitals or ambulatory surgical centers from the non-compete requirements in Section 15.50(b) is unchanged.
Unchanged Requirements: SB 1318 maintains the existing requirements for patient access provisions, including access to patient lists and medical records, and continues to prohibit restrictions on providing continuing care during acute illnesses.
Who Is Covered Under the New § 15.501?
Senate Bill 1318 creates Section 15.501 to Texas Business & Commerce Code, which extends certain non-compete restrictions to non-physician “health care practitioners” for the first time in Texas. Health care practitioners include:
Dentists licensed by the State Board of Dental Examiners
Professional and vocational nurses licensed under Chapter 301 of the Texas Occupations Code
Physician assistants licensed under Chapter 204 of the Texas Occupations Code
SB 1318 Non-Compete Requirements for Other Practitioners: Non-competes for these healthcare practitioners are now subject to some of the same core restrictions placed on physician non-competes, including:
Buyout options capped at their annual salary and wages at termination
One-year maximum duration limit
Five-mile geographic restriction
Terms that must be clearly and conspicuously stated in writing
Previously, Texas law contained no specific restrictions on non-compete agreements for dentists, nurses, or physician assistants.
Preemption of Other Law (§ 15.52)
Expanded Preemption: SB 1318 amends Section 15.52 to make the criteria in both Sections 15.50 and 15.501 exclusive, displacing any common-law or equitable bases for enforcing healthcare non-competes. The procedures and remedies in Section 15.51 also remain exclusive.
Cross-Reference Updates: Various sections of the law have been updated to reference both the existing Section 15.50 and the new Section 15.501, ensuring the new healthcare practitioner restrictions are integrated into Texas’s overall non-compete framework.
Conclusion
Senate Bill 1318, effective September 1, 2025, amends § 15.50 and adds § 15.501 to impose buy-out caps, geographic and duration limits, voidance rules, and writing requirements on non-competes for physicians and selected healthcare practitioners.
UK Data Act 2025: Key Changes Seek to Streamline Privacy Compliance
The UK’s Data (Use and Access) Act 2025 (the Act) officially came into law on June 19.
The Act seeks to modernize the UK’s data protection and e-privacy regimes. It aims to help support the economy, improve public services, and make everyday life and business compliance easier by encouraging secure data sharing between consumers and third parties.
Updates to Current Legislation
The Act introduces amendments to the UK General Data Protection Regulation (GDPR), the Data Protection Act 2018, and the Privacy and Electronic Communications Regulations 2003, impacting areas such as legitimate interests, direct marketing, data subject access requests (DSARs), and automated decision-making, notably:
A new lawful basis for data processing in the form of “recognized legitimate interests.” These are specific types of processing activities that are automatically considered lawful, for example, fraud detection and prevention, information security, crime prevention, and public health and safety.
Relaxed rules around automated decision-making and cookie consent. Notably, explicit consent will no longer be required for certain types of cookies, including analytics, site optimization, and website functionality. With respect to automated decision-making, prior rules regarding individual rights not to be subject to decisions based solely on automated processing have now been relaxed to apply only when the decision involves special category data such as health, race, region, or biometric data.
Provides broader flexibility in connection with data subject access requests. In practice, these changes only reflect the existing guidance of the Information Commissioner’s Office (ICO), which many controllers have followed in recent years. This includes codifying the requirement for the controller’s search for personal data concerning the data subject to be (no more than) a “reasonable and proportionate search.”
Impact on Organizations
For financial services organizations, the Act may streamline their ability to process data without always needing a legitimate interests assessment (LIA), for example in connection with fraud prevention, IT security, intra-group administration, and direct marketing.
The Act may reduce several administrative burdens that prior UK privacy laws placed on all organizations by removing opt in consent requirements for functional and analytics cookies used on websites, potentially offering greater flexibility for data subject access requests, and reducing the requirement for legitimate interest assessments in certain cases.
The Act also lays the foundation for data initiatives that would enable data portability in certain key sectors, including transport, finance (outside of retail banking), healthcare, and energy. These purpose of these initiatives is to encourage greater innovation in these sectors, similar to Open Banking, which already exists for retail banking. Linked to this, there are also provisions for digital IDs, which might simplify know your customer (KYC) processes and remote ID verification. These changes may, in part, enable customers to switch more easily between suppliers, the aim of which is to drive more innovation through increased competition.
Although these changes may benefit UK organizations, they do not change requirements under the broader GDPR. UK organizations should carefully assess their compliance programs to ensure that any changes made to UK operations do not result in compliance gaps under GDPR and other EU member state laws.
Considerations for Companies
UK organizations should assess their compliance programs and, more generally, their data strategy to determine whether or not these remain “fit for purpose” in light of the changes the Act introduces. For example, companies should consider:
Reviewing data processing activities to identify where the new “recognized legitimate interests” basis for processing may be relied upon;
Updating DSAR processes;
Reassessing cookie and marketing compliance to take advantage of opt out for low-risk cookies;
Preparing for smart data schemes where relevant; and
Preparing for digital ID and verification frameworks.
Colorado Enhances Wage Enforcement Measures
Colorado has taken another significant step to combat wage theft and worker misclassification with the enactment of House Bill 25-1001 (HB25-1001), which amends Colorado’s chief wage statute, the Colorado Wage Act.
The legislation significantly strengthens enforcement mechanisms and increases financial penalties for employers that misclassify workers as independent contractors. However, the legislation also offers a reprieve to employers who promptly pay wages owed following receipt of a formal demand filed with the Colorado Department of Labor and Employment (CDLE), Division of Labor Standards and Statistics (DLSS).
The new law is part of Colorado’s broader initiative to close wage enforcement gaps and protect employees while allowing employers a path to remedy violations without automatically facing steep fines.
Quick Hits
Colorado’s HB25-1001 significantly increases penalties for employers that misclassify workers as independent contractors, with fines up to $50,000 for repeated violations.
The new law provides a safe harbor for employers, allowing them to avoid automatic penalties if they pay owed wages within fourteen days of a formal complaint filed with the Colorado Department of Labor and Employment (CDLE).
HB25-1001 expands the CDLE’s jurisdiction to investigate wage claims up to $13,000 and mandates public disclosure of certain wage violations, enhancing transparency and enforcement.
Steeper Penalties for Worker Misclassification
Employers that misclassify employees as independent contractors will now face increased liability. Specifically, beginning January 1, 2028, an employer that misclassifies a worker in a way that impacts the employer’s obligation to pay wages or reporting obligations at the federal, state, and local levels may face the following penalties:
$5,000 fine for a willful violation
$10,000 fine if the violation is not corrected within sixty days of a determination by the CDLE
$25,000 fine for a second or subsequent willful violation within five years
$50,000 if a second or subsequent willful violation is not corrected within sixty days
These penalties are available in addition to, and not in lieu of, potential liability and fines that often arise from the misclassification of workers, such as unpaid wages and overtime, rest breaks, and sick leave violations. The director of the CDLE will adjust these fines on January 1, 2028, and every other year thereafter.
Safe Harbor: A Lifeline for Employers
Under the Wage Act, an employer is liable for automatic penalties if it fails to pay all wages owed within fourteen days of receipt of a written demand for unpaid wages. For nonwillful violations, the penalty is the greater of twice the unpaid amount or $1,000. For willful violations, the penalty increases to the greater of three times the amount owed or $3,000.
Prior to the amendments, automatic penalties applied no matter how the employee tendered a wage payment demand, even if tendered via an informal method such as an email or text message. However, under the amendments, the DLSS may waive the automatic penalties if an employer remits payment for the full amount of wages owed within fourteen days of receipt of a formal wage complaint filed with the DLSS. This safe harbor applies even if the employee had previously tendered informal, internal written wage payment demands. This provision promotes swift resolution of wage disputes after formal filing without penalizing employers that promptly rectify the issue.
Limited Availability of Attorneys’ Fees for Employers; Expanded Remedies for Employees
Prior to the amendments, an employer could recover attorneys’ fees and costs associated with defending a claim for unpaid wages if the employee recovered less than the amount the employer tendered. Now, under the amendments, an employer may only recover attorneys’ fees and costs if the court finds that the employee’s claim(s) for wages lacks substantial justification.
While the amendments raise the standard for recovery of attorneys’ fees and costs for employers, it expands the remedies available to aggrieved employees. An employee bringing a claim under Colorado’s wage and hour statutes and regulations may now pursue equitable relief, including back pay, reinstatement of employment or front pay, injunctive relief, compensatory damages, and a penalty of $50 per day for each employee and each day of violation, to deter future violations and prevent unjust enrichment.
Expanded Agency Jurisdiction
The amendments expand the CDLE’s jurisdiction to investigate and adjudicate complaints of unpaid wages. Previously, the CDLE’s jurisdiction was limited to claims for unpaid wages of $7,500 or less. Beginning July 1, 2026, this amount is increased to claims for unpaid wages of up to $13,000. Beginning January 1, 2028, the director of the CDLE will increase the CDLE’s authority annually by at least $1,000.
In addition, HB25-1001 now requires the DLSS to publicize citations, rulings, and written findings related to Wage Act violations on the CDLE’s website. The publications must identify the name of the employer and specify whether the violation was willful. Furthermore, the DLSS must report employers incurring a willful violation that is not remedied within sixty days to a government licensing authority with authority to limit or impose conditions on an employer’s license, registration, or permit, which may lead to suspension, restriction, or revocation of the same. Likewise, the DLSS may, but is not required to, report any employer that is found to have violated a wage and hour law to a government body with the power to deny, revoke, or restrict an employer’s license.
Expanded Definition of ‘Employer’
The amendments expand the definition of “employer” under the Wage Act to include individuals with at least 25 percent ownership or control of a business unless the individual has delegated all authority to manage day-to-day operations.
Enhanced Retaliation Protections
Under the Wage Act, an employer may not retaliate against an employee or worker for engaging in protected activity, which includes filing a wage complaint or testifying or providing evidence in a proceeding relating to a violation of the Wage Act. The amendments expand protected activity to include good faith complaints about compliance with wage and hour laws and providing information regarding rights and remedies under wage and hour laws.
In addition, the amendments expand potential remedies for an individual who has been retaliated against under the Wage Act. In addition to back pay, the wages withheld, interest, penalties, liquidated damages, and attorneys’ fees and costs, an aggrieved individual may now also recover compensatory damages for economic and noneconomic losses stemming from the retaliation.
Finally, the amendments require a fact finder consider the temporal proximity between the protected activity and the adverse action in determining whether retaliation occurred. A period of ninety days or less may be sufficient to establish retaliation.
Ultimately, employers may want to closely monitor compliance with Colorado’s strict wage and hour laws to avoid facing steep penalties and exposure to wage and retaliation complaints. However, the new provisions allowing for penalty waiver if payment is made within fourteen days of formal DLSS wage complaints come as welcome relief for employers struggling with how to handle internal, informal wage demands.
General Mills and Kraft Heinz Announce Voluntary Phase Outs of Synthetic Color Additives
On June 17, 2025, General Mills announced its plans to remove certified color additives from all of its U.S. cereals and what the company referred to as its K-12 school portfolio by summer 2026. Certified color additives authorized for use in food in the United States are found in FDA’s color additive regulations, specifically 21 CFR part 74, subpart A.
The same day, Kraft Heinz similarly pledged to remove the certified color additives from its U.S. portfolio before the end of 2027. Jeff Harmening, chairman and CEO of General Mills, calls the company’s scheduled change an example of meeting “evolving consumer needs.”
These moves come a few months after the U.S. Food and Drug Administration (FDA) and the Department of Health and Human Services (HHS) encouraged the food industry to phase out the use of certified color additives (see previous blog here). FDA has not initiated any formal regulatory process to revoke the authorizations for synthetic color additives, but instead will likely continue to encourage voluntary phase outs and possibly state bans (see here).
Texas AI Governance Law Signed by Governor
On June 22, 2025, Texas Governor Greg Abbott signed the Texas Responsible AI Governance Act (TRAIGA) into law. Despite the ongoing debate in the U.S. Senate over the provision in the reconciliation bill that declares a moratorium on the ability of states to legislate artificial intelligence (AI), the signing of HB 149 is a declaration that states will continue to legislate when it comes to consumer protection and the AI use unless such is preempted by a final passed reconciliation bill. That bill is pending in the Senate as of this writing.
According to Abbott’s office:
“By enacting the Texas Responsible AI Governance Act, Gov. Abbott is showing Texas-style leadership in governing artificial intelligence. During a time when others are asserting that AI is an exceptional technology that should have no guardrails, Texas shows that it is critically important to ensure both innovation and citizen safety. Gov. Abbott’s support also highlights the importance of the states as bipartisan national laboratories for nimbly developing AI policy.”
The bill seeks to: “facilitate and advance the responsible development and use of artificial intelligence systems; protect individuals and groups of individuals from known and reasonably foreseeable risks associated with artificial intelligence systems; provide transparency regarding risks in the development, deployment, and use of artificial intelligence systems; and provide reasonable notice regarding the use or contemplated use of artificial intelligence systems by state agencies.”
TRIAGA applies to developers and deployers of AI systems, including government entities. A developer and deployer of AI is broadly defined as one who “develops or deploys an artificial intelligence system in Texas.” It requires government entities to provide clear and conspicuous notice, to consumers, before or at the time of interaction, that the consumer is interacting with AI, which can be done through a hyperlink. It prohibits government entities from using AI to assign a social score, including evaluating an individuals based on personal characteristics of social behavior, or uniquely identify a consumer using biometric data without the individual’s consent.
TRIAGA further prohibits any person from developing or deploying an artificial intelligence system that “intentionally aims to incite or encourage a person to: (1) commit physical self-harm, including suicide; (2) harm another person; or (3) engage in criminal activity.” It further prohibits developing or deploying an AI system with the “sole intent” to “infringe, restrict, or otherwise impair an individual’s rights guaranteed under the United State Constitution,” or “unlawfully discriminate against a protected class,” or “producing, assisting or aiding in producing, or distributing” sexually explicit content and child pornography, including deep fakes.
The Texas Attorney General has exclusive jurisdiction over enforcement of TRIAGA and can levy civil penalties after court determination, depending on the intent and failure to cure violations in amounts of between $10,000 and $200,000, with a continued violation subject to penalties of not less than $2,000 and not more than $40,000 “for each day the violation continues.”
The law goes into effect January 1, 2026, so now is the time to determine whether it applies to you, and what measures to take to comply.
Florida Legislature Passes Bill to End Sales Tax Exemption for Sub-100 MW Data Centers
The Florida legislature has passed a bill that would end the data center sales tax exemption for existing data centers with a critical IT load of less than 100 megawatts (MW), effective Aug. 1, 2025. This may materially impact existing sub-100 MW data center owners and tenants, in addition to developers who are currently developing and constructing sub-100 MW data centers.
HB 7031: Understanding the New 100 MW Threshold for Sales Tax Exemption
The Florida data center exemption currently allows the owner, tenants, and construction contractors to purchase necessary equipment and materials to construct, equip, and operate a data center free of the states’ 6% sales tax (plus local option tax of typically 1% to 1.5%). Whether it was the legislative intent to end the sales tax exemption for existing and under construction sub-100 MW data centers is unclear, but this appears to be the practical effect of HB 7031, the legislature’s 200-page 2025 tax bill.
This exemption’s termination as of Aug. 1, 2025, may materially impact continuing operations even though all of the data center equipment and components have been purchased tax-free prior to Aug. 1, because the sales tax exemption applies not only to construction and equipment purchases but also to ongoing purchases of electricity. Since the exemption was meant to be permanent, and the benefit thereof was intended to be passed through to data center tenants, the loss of the exemption for electricity may hinder landlords’ ability to keep existing tenants and attract new ones to their data centers. The loss of the exemption might also result in a material breach of the owner’s covenants under some existing leases with tenants and possibly their loan agreement with lenders, ultimately impacting the underwriting and valuations attributable to these assets.
The language would eliminate, as of Aug. 1, 2025, the exemption for existing sub-100 MW data centers because the exemption statute requires a data center owner to go through a review process every five years to maintain their permanent exemption certificate. As part of this review process, the owner must certify that the data center’s critical IT load is 100 MW or higher. This means that when a sub-100 MW data center goes through its five-year review process after the Aug. 1, 2025, effective date, it would not be able to provide this certification and lose the exemption. Furthermore, the statute provides that in the event of a sales tax audit, if tax-free purchases were made after the data center lost its eligibility for the exemption, then the owner and tenants must pay back taxes, penalties, and interest on a retroactive basis. Since the new 100 MW requirement takes effect Aug. 1, then all purchases that owners and tenants of sub-100 MW data centers make after the effective date would appear to be subject to sales tax. The amendment to the exemption statute provides no grandfather rule for existing sub-100 MW data centers.
Potential Implications for Existing Data Center Owners, Tenants, and Contractors
As for sub-100 MW data centers currently under construction, this change would also impact the contractors and subcontractors constructing the projects. The data center exemption law allows contractors to also use this sales tax exemption when purchasing materials to “construct, outfit, operate, support, power, cool, dehumidify, secure, or protect a data center and any contiguous dedicated substations.” Under Florida sales tax law – for most types of construction contracts – the contractor (including a subcontractor) is considered the ultimate consumer of the materials they purchase, and therefore the contractor must pay sales tax on their purchases to carry out their contract. As a result, a contractor on a data center project under construction may have priced their bid on the assumption that no sales tax would be paid on many of the items purchased to fulfill their contract. If this bill is signed into law, contractors may no longer be able to purchase items tax-free after Aug. 1, and new developments may see higher costs. Data center operators with projects currently under development in the state should review their construction agreements to determine who bears the risk.
This amendment did not become a part of HB 7031 until a few days before the legislature passed this 200-page bill on June 16, and there is no detail in the bill’s staff analysis. Furthermore, HB 7031 also repealed the sales tax on commercial leases in Florida, which tenants must pay on their data center lease payments (typically 3% – 3.5% of the lease payment, depending on the county), which might have been a justification for the legislature to terminate the data center exemption for equipment and electricity.
Key Takeaways
Even if the legislature addresses this concern in next year’s legislative session, this may leave sub-100 MW data centers in limbo until that occurs. If the lease agreement with a data center tenant provides that the loss of the sales tax exemption is a breach thereunder, some tenants might use that as a reason to terminate their lease or further amend to the terms thereof.
This data center exemption is a small portion of HB 7031. Because this tax bill is integral to the legislature’s budget bill, which must be enacted by July 1, it is included among several provisions that are expected to move forward. It is possible that, if concerns are raised, Gov. DeSantis might instruct the Department of Revenue to consider issuing guidance delaying the enforcement of the loss of exemption for existing sub-100 MW data centers until after the legislature has the opportunity to address this next year.