Virginia Enacts Law Protecting Reproductive and Sexual Health Data
On March 24, 2025, Virginia Governor Youngkin signed into law S.B. 754, which amends the Virginia Consumer Protection Data Act (“VCDPA”) to prohibit the collection, disclosure, sale or dissemination of consumers’ reproductive or sexual health data without consent.
The law defines “reproductive or sexual health information” as “information relating to the past, present, or future reproductive or sexual health” of a Virginia consumer, including:
Efforts to research or obtain reproductive or sexual health information services or supplies, including location information that may indicate an attempt to acquire such services or supplies;
Reproductive or sexual health conditions, status, diseases, or diagnoses, including pregnancy, menstruation, ovulation, ability to conceive a pregnancy, whether an individual is sexually active, and whether an individual is engaging in unprotected sex;
Reproductive and sexual health-related surgeries and procedures, including termination of a pregnancy;
Use or purchase of contraceptives, birth control, or other medication related to reproductive health, including abortifacients;
Bodily functions, vital signs, measurements, or symptoms related to menstruation or pregnancy, including basal temperature, cramps, bodily discharge, or hormone levels;
Any information about diagnoses or diagnostic testing, treatment, or medications, or the use of any product or service relating to the matters described above; and
Any information described above that is derived or extrapolated from non-health-related information such as proxy, derivative, inferred, emergent, or algorithmic data.
“Reproductive or sexual health information” does not include protected health information under HIPAA, health records for the purposes of Title 32.1, or patient-identifying records for the purposes of 42 U.S.C. § 290dd-2.
These amendments to the VCDPA will take effect on July 1, 2025.
Opinion: DEI & Bullying – Where Law, Politics and Business Need to Align
The recent news that Trump rescinded the executive order issued six days earlier against law firm Paul Weiss is a striking example of the intersections between politics, law, and business. According to Business Insider, “… since Trump’s earlier order to revoke its security clearances, the law firm has lost clients” and their government contracts were put at risk. The law firm’s security clearance has been reinstated after an agreement was reached with the Trump Administration.
For the legal profession, it seems to be the tip of the iceberg. Covington & Burling and Perkins Coie were issued separate executive orders on February 25 and March 6. And, on March 25 and 27, two more executive orders targeting prestigious firms were issued – Addressing Risks from Jenner & Block and Addressing Risks from WilmerHale.
Who’s next? Is the White House bullying law firms over DEI practices?
These incidents are part of a broader narrative unfolding across America, where political shifts are influencing business practices, and law firms, corporations, and elected officials find themselves at the crossroads of political ideologies and corporate responsibilities. In light of these developments, there is a growing concern about the broader implications for the workplace and business ethics.
For decades, DEI initiatives have functioned as guardrails in the corporate world, ensuring fair treatment in hiring, promoting inclusivity, and fostering environments where bias is actively mitigated. These practices, designed to level the playing field, were never about special advantages. Instead, they emphasized fairness—hiring and promoting the right person for the right job, regardless of their background.
Corporate America in the pre-DEI era was a very different place, often characterized by unchecked biases, discrimination, and exclusion. Although we’ve made significant progress, there are individuals and organizations that still foster a negative professional culture.
Pressure on law firms to drop DEI practices comes amid broader efforts to scale back DEI across corporate America, including sectors that have seen significant benefits from inclusive hiring. According to Business Insider, “… companies like Walmart, Meta, and Lowe’s have all rolled back their DEI programs.”
The erosion of protections that have improved workplaces over the past 20 years will reverse much of the progress made over the past few decades – but will not erase it. There are too many people—managers, employees, customers, investors—who believe in the practice, whether supported by policy or not.
And, these protections have not only created safer, more inclusive environments but have also contributed to better business outcomes. Diverse teams, after all, produce more innovative solutions, offer broader perspectives, and serve diverse client bases more effectively. And, even with DEI in place, many corporations misbehave, particularly under the guise of “business as usual.”
Employees are the lifeblood of any organization. Creating a happy, productive, and safe work environment is essential to the success of any company. DEI initiatives—and a movement toward a safe, fair workplace—have been an essential part of fostering these environments, ensuring that all employees have the opportunity to succeed, regardless of their background or company culture.
However, if companies are allowed to abandon these initiatives, I fear that we will see a return to the corporate cultures of the past, rife with discrimination, exclusion, bias and bullying.
“In the words of William Edward Demming, ‘a bad system will always beat a good person’,” said Sharon Mahn, Esq., a leading legal recruiter and workplace expert. “Equality in the workplace means ensuring that everyone, regardless of their background or characteristics, has the same opportunity and is treated fairly.”
Even with DEI and legal protections in place, some corporations seem to behave badly. Without these checks and balances, this type of behavior will become more widespread.
The intersection of politics and law in business is unavoidable. Political decisions, such as Trump’s executive orders, can have wide-reaching effects on corporate practices, and law firms are forced to make very difficult decisions for the sake of multiple stakeholders. Legal structures, on the other hand, provide the mechanisms for enforcing fairness.
When politics and law fail to align with business ethics, the consequences for employees and organizations alike can be catastrophic.
The opinions expressed in this article are those of the author and do not necessarily represent those of The National Law Review.
Virginia Governor Vetoes Rate Cap and AI Regulation Bills
On March 25, Virginia Governor Glenn Youngkin vetoed two bills that sought to impose new restrictions on “high-risk” artificial intelligence (AI) systems and fintech lending partnerships. The vetoes reflect the Governor’s continued emphasis on fostering innovation and economic growth over introducing new regulatory burdens.
AI Bias Bill (HB 2094)
The High-Risk Artificial Intelligence Developer and Deployer Act would have made Virginia the second state, after Colorado, to enact a comprehensive framework governing AI systems used in consequential decision-making. The proposed law applied to “high-risk” AI systems used in employment, lending, and housing, among other fields, requiring developers and deployers of such systems to implement safeguards to prevent algorithmic discrimination and provide transparency around how automated decisions were made.
The law also imposed specific obligations related to impact assessments, data governance, and public disclosures. In vetoing the bill, Governor Youngkin argued that its compliance demands would disproportionately burden smaller companies and startups and could slow AI-driven economic growth in the state.
Fintech Lending Bill (SB1252)
Senate Bill 1252 targeted rate exportation practices by applying Virginia’s 12% usury cap to certain fintech-bank partnerships. Specifically, the bill sought to prohibit entities from structuring transactions in a way that evades state interest rate limits, including through “rent-a-bank” models, personal property sale-leaseback arrangements, and cash rebate financing schemes.
Additionally, the bill proposed broad definitions for “loan” and “making a loan” that could have reached a wide array of service providers. A “loan” was defined to include any recourse or nonrecourse extension of money or credit, whether open-end or closed-end. “Making a loan” encompassed advancing, offering, or committing to advance funds to a borrower. In vetoing the measure, Governor Youngkin similarly emphasized its potential to discourage innovation and investment across Virginia’s consumer credit markets.
Putting It Into Practice: The vetoes of the High-Risk Artificial Intelligence Developer and Deployer Act (previously discussed here) and the Fintech Lending Bill signal Virginia’s preference for a more flexible, innovation friendly-oversight. This development aligns with a broader pullback from federal agencies with respect to oversight of fintech and related emerging technologies (previously discussed here and here). Fintechs and consumer finance companies leveraging AI should continue to monitor what has become a rapidly evolving regulatory landscape.
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McDermott+ Check-Up: March 28, 2025
THIS WEEK’S DOSE
Senate Confirms FDA, NIH Nominations, Advances CMS Nomination. The Senate confirmed US Food and Drug Administration (FDA) Commissioner Martin Makary and National Institutes of Health (NIH) Director Jayanta Bhattacharya, and the Senate Finance Committee advanced Mehmet Oz’s nomination as Centers for Medicare & Medicaid Services (CMS) administrator to the full Senate.
House Oversight Committee Discusses Government Reform Legislation. The committee advanced three bills related to government reorganization, the Federal Employees Health Benefits Program, and pandemic response.
CBO Projects US Will Reach Debt Limit in August or September 2025. The Congressional Budget Office (CBO) estimate will factor into the timing of a budget reconciliation package, as Republican leaders appear to be in agreement to include a debt limit increase in that forthcoming package.
HHS Announces Reorganization. The US Department of Health and Human Services (HHS) plans to eliminate 10,000 employees and consolidate multiple agencies.
President Trump Makes Additional Healthcare Nominations. Nominated positions include CDC director, HHS inspector general, HHS assistant secretary for health, and HHS assistant secretary for the Administration for Children and Families.
CONGRESS
Senate Confirms FDA, NIH Nominations, Advances CMS Nomination. On March 25, 2025, the Senate confirmed Martin Makary, MD, as the next FDA commissioner by a 56 – 44 vote. Sens. Durbin (D-IL), Hassan (D-NH), and Shaheen (D-NH) were the sole Democrats to vote yes, along with all Republicans. Jayanta Bhattacharya, MD, was also confirmed as the next NIH director by a 53 – 47 party line vote. The Senate Finance Committee advanced the nomination of Mehmet Oz, MD, to be CMS administrator by a 14 – 13 party line vote. Oz’s full Senate confirmation vote could be as early as next week, and he is expected to be confirmed.
House Oversight Committee Discusses Government Reform Legislation. The markup included discussion of nine bills, three of which pertained to healthcare and the federal workforce and advanced out of the committee:
H.R. 1295, the Reorganizing Government Act of 2025, would renew and extend through December 2026 the president’s authority to propose a government reorganization plan that Congress must consider via an up or down vote on a joint resolution of approval within 90 calendar days.
Passed 23 – 20 along party lines, with Republicans voting in support.
H.R. 2193, the FEHB Protection Act of 2025, would require federal agencies to verify that an employee is eligible to add a family member to their Federal Employees Health Benefits (FEHB) Program plan.
Passed 29 – 15, with support from Republicans as well as Reps. Connolly (D-VA), Lynch (D-MA), Brown (D-OH), Min (D-CA), Norton (D-DC), and Subramanyam (D-VA).
H.R. 2277, the Federal Accountability Committee for Transparency Act of 2025, would extend the Pandemic Response Accountability Committee through December 2026 and rename it the Fraud Prevention and Accountability Committee.
Passed unanimously, 44 – 0.
Links to all bills discussed during the markup can be found here.
CBO Projects US Will Reach Debt Limit in August or September 2025. The CBO “X date” projection is that the United States will default on its debt in August or September 2025 if the debt limit remains unchanged. If the government’s borrowing needs are greater than CBO projections, the debt limit could be reached as early as May or June 2025. Republicans aim to raise the debt limit as part of the reconciliation process in the coming months, but if a reconciliation package is not enacted by the X date, separate legislation may be required to raise the debt limit. Legislation outside the reconciliation process would require support from Democrats to pass. The US Department of the Treasury is expected to release its own X date estimate in May 2025.
ADMINISTRATION
HHS Announces Reorganization. In response to the executive order on the Department of Government Efficiency (DOGE) Workforce Optimization Initiative, HHS announced a “dramatic restructuring” that includes the elimination of 10,000 employees. This follows the voluntary departure of 10,000 employees that has already occurred. Taken together, these two workforce reductions will shrink HHS by 25% to 62,000 employees. The agency projects that the reorganization will save $1.8 billion and make the agency more efficient.
Major actions of the restructuring plan include:
Consolidating 28 divisions into 15, eliminating five of the 10 regional offices, and centralizing core administrative functions.
Eliminating 10,000 workers, including 3,500 employees from the FDA; 2,400 employees from the Centers for Disease Control and Prevention (CDC); 1,200 employees from the NIH; and 300 employees from CMS.
Creating a new Administration for a Healthy America subdivision, which will combine the Office of the Assistant Secretary for Health, the Health Resources and Services Administration, the Substance Abuse and Mental Health Services Administration (SAMHSA), the Agency for Toxic Substances and Disease Registry, and the National Institute for Occupational Safety and Health.
Moving programs for older adults from the Administration for Community Living to other agencies, including CMS, the Assistant Secretary for Planning and Evaluation, and the Administration for Children and Families (ACF).
Read the press release here, and the fact sheet here.
President Trump Makes Additional Healthcare Nominations. After the White House abruptly withdrew Dave Weldon’s nomination for CDC director, President Trump nominated acting CDC director Susan Monarez, PhD, to be the permanent director. She previously worked as deputy director of the Advanced Research Projects Agency for Health. Additional HHS nominations include:
HHS inspector general: Thomas March Bell, general counsel for House Republicans.
HHS assistant secretary for health: Brian Christine, MD, urologist.
HHS assistant secretary for ACF: Alex Adams, director of the Idaho Department of Health and Welfare.
QUICK HITS
Senate Finance Democrats Release Report on MA Marketing Tactics. The report found that Medicare Advantage (MA) plans are increasingly using marketing strategies to enroll beneficiaries, and includes eight recommendations to increase oversight of these actions.
Senate Democrats Hold Forum on NIH Research Cuts. The forum, hosted by Sens. Baldwin (D-WI) and Welch (D-VT), featured a panel of researchers, patients, and former NIH Director Monica Bertagnolli, MD. Discussion focused on how cuts or delays of NIH research could harm cancer and Alzheimer’s research.
HHS Cancels $12 Billion in State Infectious Disease, Substance Use Grants. Congress appropriated the now-cancelled CDC and SAMHSA state grants through September 2025 during the COVID-19 pandemic. The grants focused on infectious disease tracking, mental health services, and substance use disorder treatment. House Appropriations Committee Ranking Member DeLauro (D-CT) criticized the cancellations.
Department of Justice Launches Anticompetitive Regulations Task Force. As part of the president’s deregulatory initiative, the task force aims to eliminate anticompetitive state and federal laws and regulations, including in the healthcare sector. Public comments to support the task force’s efforts are due May 26, 2025.
BIPARTISAN LEGISLATION SPOTLIGHT
The Bipartisan Senate 340B Working Group announced the addition of Sens. Kaine (D-VA), Mullin (R-OK), and Hickenlooper (D-CO). They join Sens. Moran (R-KS), Baldwin (D-WI), and Capito (R-WV). The new additions replace former Sens. Stabenow (D-MI) and Cardin (D-MD), who retired, and Sen. Thune (R-SD), who stepped back from the working group when he became Senate majority leader. Last Congress, the working group released a conceptual discussion draft and request for information on proposed changes to the 340B program. It is now completing its review of stakeholder feedback with the intention of releasing a formal legislative draft.
NEXT WEEK’S DIAGNOSIS
The House and Senate are both in session next week. Republicans will continue conversations on a reconciliation strategy, as they aim to strike a deal on a unified budget resolution before the Easter recess in mid-April. A Senate vote on a unified budget resolution could occur as early as next week, and Senate nomination hearings and confirmation votes are expected to continue. The Senate Judiciary Committee will discuss drug patent legislation. The House Energy and Commerce Committee has a busy week with a Health Subcommittee hearing on over-the-counter monograph drugs, an Oversight and Investigations Subcommittee hearing on cybersecurity vulnerabilities in legacy medical devices, and an expected full committee markup. Both the Inpatient Prospective Payment System (IPPS) proposed rule and the final rate notice for MA and Part D plans are expected in early April 2025. Read our previews for the IPPS proposed rule here and the final rate notice here.
Illinois Moving Forward with BVO Ban
Illinois is moving forward with the Illinois Food Safety Act to ban brominated vegetable oil (BVO), potassium bromate, propylparaben, and Red No. 3, despite FDA’s BVO ban that went into effect in July 2024 with a one-year compliance period. We previously blogged about Illinois’ bill and the FDA revocation of BVO.
According to Illinois Secretary of State Alexi Giannoulias, FDA’s ban left enforcement gaps, including lingering sales of BVO-containing products. The Illinois bill would ensure that “families aren’t stuck with unsafe leftovers while the feds catch up.” The Illinois ban is intended to enforce the BVO ban at the retail level and “tackle additional chemicals, potentially setting a precedent for stricter state oversight.”
Illinois is not the only state pushing for stricter food additive bans. California banned four additives in 2023, and other states including New York and New Jersey have proposed similar laws. According to the Environmental Working Group, states are “tired of waiting” for FDA to review additives and are “forcing the FDA’s hand.” However, states could face lawsuits claiming federal preemption for the banned chemicals.
States Take Action to Regulate and Limit PFAS in Industrial Effluent Despite Federal Inaction
On January 21, 2025, the U.S. Environmental Protection Agency’s (EPA) proposed rule seeking to set effluent limitation guidelines for certain per- and polyfluoroalkyl substances (PFAS) under the Clean Water Act (CWA) was withdrawn from Office of Management & Budget (OMB) review following President Trump’s Executive Order implementing a regulatory freeze. Federal action may be halted, but states are beginning to enact legislation that seeks to address PFAS contained in industrial effluent. These laws are currently sparse, with Maryland being the most recent state to establish a robust framework that requires industrial sources to limit PFAS in effluent. A handful of other states have laws establishing monitoring and reporting protocols for PFAS in industrial effluent, and other states have similar frameworks planned for future implementation. While these efforts are not yet widespread, heightened scrutiny of PFAS use suggests that more and more states will seek to monitor and limit PFAS in industrial effluent.
Maryland’s Framework
In May 2024, the Maryland legislature enacted the Protecting State Waters from PFAS Pollution Act. The Act charges the Maryland Department of the Environment (MDOE) with setting PFAS action levels and monitoring and testing protocols. MDOE appears behind schedule for rulemaking to promulgate these requirements, but a regulatory program is on the horizon. Once rulemaking is complete, certain industrial discharges of PFAS will be subject to a range of requirements seeking to monitor and reduce PFAS in effluent.
The Act only implicates discharges of PFAS from Significant Industrial Users (SIU), which MDOE was tasked with identifying by October 1, 2024. An SIU is defined under the Act as an industrial user that is:
subject to 40 C.F.R. Part 403.6;
discharges an average of 25,000 gallons per day to a publicly owned treatment works (POTW); and
contributes a certain percentage of processed wastewater at a POTW; or
is designated an SIU based on potential harm its discharges may cause or due to past violations.
The new monitoring and testing requirements apply only to SIUs “currently and intentionally using PFAS chemicals” that operate under a pretreatment permit.
Once the program is fully established, SIUs regulated under the program will be required to track and reduce the amount of PFAS contained in discharge. SIUs will be tasked with both initial and ongoing monitoring to determine the level of PFAS discharged to POTW and will need to report those monitoring results to MDOE. SIUs will also need to create plans to address PFAS in their effluent through identifying ways to reduce, move away from, and safely dispose of PFAS.
Limitation of PFAS in Industrial Effluent in Other States
Maryland is not the only state looking to limit discharges containing PFAS from industrial sources. New York and Massachusetts, for example, are pursuing monitoring and disclosure requirements for SIU. The New York legislature is currently considering S.B. 4574, which seeks to enact the “PFAS Discharge Disclosure Act” to create a monitoring protocol for “certain industrial dischargers” and for POTWs. The bill includes language requiring that monitoring results under this protocol be made public.
States such as Michigan have enacted compliance procedures to address PFAS discharged from industrial facilities to surface water or to POTWs. Under this guidance, both new and existing industrial facilities are evaluated to determine their potential to discharge PFAS. Facilities determined to have a reasonable potential to discharge PFAS are required to follow monitoring and sampling protocols. Facilities discharging PFAS above certain levels will be asked to enter into a compliance order to address and reduce the PFAS levels.
Other states, such as Colorado and Kansas, are in the beginning stages of studying the impact of discharges containing PFAS from industrial facilities to POTWs with the intention of limiting PFAS in industrial discharges in the future. Kansas has identified PFAS as an area of concern within industrial discharges and is conducting preliminary sampling at certain industrial facilities to learn more about PFAS contamination in the state.
Most of the effluent limitations and pretreatment requirements relate to state National Pollutant Discharge Elimination System (NPDES) programs, but some upcoming rules regarding SIUs and PFAS discharges may stem from other state and federal requirements. Virginia, for instance, plans to require facilities causing or contributing to exceedances of Safe Drinking Water Act (SDWA) levels for PFAS at Public Water Systems to pretreat and address effluent causing impacts to drinking water. Maryland contemplates adding requirements and limitations for SIUs under its groundwater and stormwater programs, as well.
Commentary
As Maryland and other states bring their programs online, additional states are likely to follow suit. This is especially likely if there is a perception of federal government inaction in this sphere, which is probable. Given that more and more states may take similar action as PFAS continues to be a hot topic, companies intentionally using or manufacturing products with PFAS should consider the implications of compliance moving forward. Reducing or eliminating use of PFAS and substances containing PFAS, when possible, may be a good policy decision as increasing disclosure requirements make the public aware of PFAS usage. Companies unable to move away from PFAS use should closely monitor the status of PFAS regulation in states where they manufacture and process materials and should prepare to address concern that may arise from public disclosure of their PFAS use.
Catherina D. Narigon also contributed to this article.
Wyoming’s New Non-Compete Law Starts in July: Employers Need to Look at Their Agreements Now
Takeaways
Effective 07.01.25, Wyoming law significantly restricts how and when employers can use covenants not to compete and renders most new non-compete agreements unenforceable.
The law allows exceptions for the sale or purchase of a business, trade secret protection, the recovery of training and relocation expenses, and executives and key professional staff.
The law voids non-compete provisions for physicians, giving them full rights to communicate their new practice location and information to patients with rare disorders without risk of litigation.
Article
On Mar. 19, 2025, Wyoming Governor Mark Gordon signed Senate Bill 107 into law, fundamentally reshaping the landscape for non-compete agreements in a major legislative move that will impact employers across Wyoming. Effective July 1, 2025, the new law significantly restricts how and when employers can use covenants not to compete and makes most traditional non-compete agreements executed on or after the effective date unenforceable.
What Has Changed?
Previously, Wyoming allowed employers considerable flexibility in drafting non-compete agreements. Under the new statute, non-compete agreements that restrict an employee’s ability to earn a living, either in skilled or unskilled labor, are generally void.
Important Exceptions
While the general rule is clear — non-competes are mostly unenforceable — there are important exceptions employers must understand:
1. Sale or Purchase of a Business: Non-competes remain valid when they accompany the sale or transfer of a business or its assets. This preserves protections for buyers and sellers in significant business transactions.
2. Trade Secrets Protection: Wyoming businesses can still protect legitimate trade secrets through narrowly tailored non-compete agreements. Importantly, these agreements must strictly adhere to statute. Wyo. Stat. § 6‑3‑501(a)(xi) defines “trade secret” as “the whole or a portion or phase of a formula, pattern, device, combination of devices or compilation of information which is for use, or is used in the operation of a business and which provides the business an advantage or an opportunity to obtain an advantage over those who do not know or use it.” Employers should carefully draft language reflecting this precise statutory definition.
3. Recovery of Training and Relocation Expenses: Employers can recover expenses incurred from training, education, or relocating employees, provided clear terms are outlined:
Up to 100% if employment lasted less than two years
Up to 66% if employment was between two and three years
Up to 33% if employment was between three and four years
4. Executives and Key Professional Staff: Non-compete agreements can remain valid for “[e]xecutive and management personnel and officers and employees who constitute professional staff to executive and management personnel.” This phrase is not defined in the statute. Employers should carefully consider which roles legitimately fit within this category and craft agreements accordingly.
Special Rules for Physicians
Wyoming’s legislature gave special attention to non-compete agreements involving physicians. Any provision that restricts a physician’s practice after their employment termination is now void. Although all other provisions of their agreements remain enforceable, the new law gives physicians full rights to communicate their new practice location and information to patients with rare disorders (as defined by the National Organization for Rare Disorders) without risk of litigation. This specific patient-focused exception reflects public policy prioritizing patient care continuity over contractual restrictions.
Applicability of the New Law
The statute applies only prospectively and only covers contracts executed on or after July 1, 2025. Existing non-compete agreements, and all those signed before July 1, 2025, will remain unaffected and enforceable according to their original terms.
Recommended Employer Action
Given this significant legislative shift, employers must carefully review and update employment agreements to comply with Wyoming’s new legal landscape. It is critical for businesses to:
Review and Revise: Carefully audit your existing employment agreement templates and policies to ensure compliance with the new law before July 2025.
Identify Exceptions: Evaluate which roles within your company may legitimately fall under permitted exceptions and update specific contract language accordingly.
Collaborate with Employment Counsel: Seek strategic advice from experienced employment counsel to mitigate risks, ensure full compliance, and protect your company’s interests.
Virginia Governor Vetoes Artificial Intelligence Bill HB 2094: What the Veto Means for Businesses
Virginia Governor Glenn Youngkin has vetoed House Bill (HB) No. 2094, a bill that would have created a new regulatory framework for businesses that develop or use “high-risk” artificial intelligence (AI) systems in the Commonwealth.
The High-Risk Artificial Intelligence Developer and Deployer Act (HB 2094) had passed the state legislature and was poised to make Virginia the second state, after Colorado, with a comprehensive AI governance law.
Although the governor’s veto likely halts this effort in Virginia, at least for now, HB 2094 represents a growing trend of state regulation of AI systems nationwide. For more information on the background of HB 2094’s requirements, please see our prior article on this topic.
Quick Hits
Virginia Governor Glenn Youngkin vetoed HB 2094, the High-Risk Artificial Intelligence Developer and Deployer Act, citing concerns that its stringent requirements would stifle innovation and economic growth, particularly for startups and small businesses.
The veto maintains the status quo for AI regulation in Virginia, but businesses contracting with state agencies still must comply with AI standards under Virginia’s Executive Order No. 30 (2024), and any standards relating to the deployment of AI systems that are issued pursuant to that order.
Private-sector AI bills are currently pending in twenty states. So, regardless of Governor Youngkin’s veto, companies may want to continue proactively refining their AI governance frameworks to stay prepared for future regulatory developments.
Veto of HB 2094: Stated Reasons and Context
Governor Youngkin announced his veto of HB 2094 on March 24, 2025, just ahead of the bill’s deadline for approval. In his veto message, the governor emphasized that while the goal of ethical AI is important, it was his view that HB 2094’s approach would ultimately do more harm than good to Virginia’s economy. In particular, he stated that the bill “would harm the creation of new jobs, the attraction of new business investment, and the availability of innovative technology in the Commonwealth of Virginia.”
A key concern was the compliance burden HB 2094 would have imposed. Industry analysts estimated the legislation would saddle AI developers with nearly $30 million in compliance costs, which could be especially challenging for startups and smaller tech firms. Governor Youngkin, echoing industry concerns that such costs and regulatory hurdles might deter new businesses from innovating or investing in Virginia, stated, “HB 2094’s rigid framework fails to account for the rapidly evolving and fast-moving nature of the AI industry and puts an especially onerous burden on smaller firms and startups that lack large legal compliance departments.”
Virginia Executive Order No. 30 and Ongoing AI Initiatives
Governor Youngkin’s veto of HB 2094 does not create an AI regulatory vacuum in Virginia. Last year, Governor Youngkin signed Executive Order No. 30 on AI, establishing baseline standards and guidelines for the use of AI in Virginia’s state government. This executive order directed the Virginia Information Technologies Agency (VITA) to publish AI policy standards and IT standards for all executive branch agencies. VITA published the policy standards in June 2024. Executive Order No. 30 also created the Artificial Intelligence Task Force, currently comprised of business and technology nonprofit executives, former public servants, and academics, to develop further “guardrails” for the responsible use of AI and to provide ongoing recommendations.
Executive Order No. 30 requires that any AI technologies used by state agencies—including those provided by outside vendors—comply with the new AI standards for procurement and use. In practice, this requires companies supplying AI software or services to Virginia agencies to meet certain requirements with regard to transparency, risk mitigation, and data protection defined by VITA’s standards. Those standards draw on widely accepted AI ethical principles (for instance, requiring guardrails against bias and privacy harms in agency-used AI systems). Executive Order No. 30 thus indirectly extends some AI governance expectations to private-sector businesses operating in Virginia via contracting. Companies serving public-sector clients in Virginia may want to monitor the state’s AI standards for anticipated updates in this quickly evolving field.
Looking Forward
Had HB 2094 become law, Virginia would have joined Colorado as one of the first states with a broad AI statute, potentially adding a patchwork compliance burden for firms operating across state lines. In the near term, however, Virginia law will not explicitly require the preparation of algorithmic impact assessments, preparation and implementation of new disclosure methods, or the formal adoption of the prescribed risk-management programs that HB 2094 would have required.
Nevertheless, companies in Virginia looking to embrace or expand their use of AI are not “off the hook,” as general laws and regulations still apply to AI-driven activities. For example, antidiscrimination laws, consumer protection statutes, and data privacy regulations (such as Virginia’s Consumer Data Protection Act) continue to govern the use of personal information (including through AI) and the outcomes of automated decisions. Accordingly, if an AI tool yields biased hiring decisions or unfair consumer outcomes, companies could face liability under existing legal theories regardless of Governor Youngkin’s veto.
Moreover, businesses operating in multiple jurisdictions should remember that Colorado’s AI law is already on the books and that similar bills have been introduced in many other states. There is also ongoing discussion at the federal level about AI accountability (through agency guidance, federal initiatives, and the National Institute of Standards and Technology AI Risk Management Framework). In short, the regulatory climate around AI remains in flux, and Virginia’s veto is just one part of a larger national picture that warrants careful consideration. Companies will want to remain agile and informed as the landscape evolves.
Parole Programs for Cuban, Haitian, Nicaraguan, and Venezuelan Nationals Terminated by DHS
On March 25, 2025, the U.S. Department of Homeland Security (DHS) published a notice in the Federal Register announcing the immediate termination of the Cuba, Haiti, Nicaragua, and Venezuela (CHNV) parole programs. As a result, approximately 532,000 individuals in the United States who were paroled under these programs will lose their parole authorizations and any associated benefits, including work authorizations, within thirty days of the date of publication of the notice, or by April 24, 2025.
Quick Hits
On March 25, 2025, the U.S. Department of Homeland Security (DHS) announced the immediate termination of the Cuba, Haiti, Nicaragua, and Venezuela (CHNV) parole programs, affecting approximately 532,000 individuals who will lose their parole and associated benefits by April 24, 2025.
The Trump administration has decided to end these programs, citing a lack of significant public benefit and inconsistency with foreign policy goals.
Because CHNV beneficiaries will lose ancillary benefits such as employment authorization, employers will need to reverify the work authorization of affected employees by the April 24, 2025, deadline.
Background
Parole allows noncitizens who may otherwise be inadmissible to enter the United States for a temporary period and for a specific purpose. Section 212(d)(5)(A) of the Immigration and Nationality Act authorizes the secretary of homeland security, at the secretary’s discretion, to “parole into the United States temporarily under such conditions as [the secretary] may prescribe only on a case-by-case basis for urgent humanitarian reasons or significant public benefit any alien applying for admission to the United States.”
The Biden administration implemented a temporary parole program for Venezuelan nationals in October 2022 to discourage irregular border crossings and later expanded the parole programs to include Cuban, Haitian, and Nicaraguan nationals in January 2023. The CHNV parole programs permitted up to 30,000 individuals per month from Cuba, Haiti, Nicaragua, and Venezuela to enter the United States for a period of up to two years. Until January 22, 2025, approximately 532,000 individuals arrived in the United States by air under the CHNV parole programs.
The Biden administration announced in October 2024 that it would not extend legal status for individuals permitted to enter the United States under the CHNV parole programs but encouraged CHNV beneficiaries to seek alternative immigration options. On January 20, 2025, President Donald Trump announced his intention to terminate the parole programs in Executive Order 14165, “Securing Our Borders.” Consistent with that executive order and the secretary of homeland security’s discretionary authority, Secretary Kristi Noem is now terminating the CHNV parole programs, having found the programs no longer “serve a significant public benefit, are not necessary to reduce levels of illegal immigration, … and are inconsistent with the Administration’s foreign policy goals.”
What This Means for Employers
According to the notice, any employment authorization derived through the CHNV parole programs will terminate on April 24, 2025. This will impact persons with Employment Authorization Documents (EADs) in the (c)(11) category. Individuals without a valid alternative basis to remain in the United States are expected to depart the country upon the termination of their paroles on April 24, 2025.
CHNV beneficiaries may have already updated their Form I-9s with EAD cards with a validity date beyond April 24, 2025. Employers are expected to reverify affected employees’ work authorizations by April 24, 2025, to ensure continued compliance with Form I-9 employment eligibility verification rules. However, identifying which employees are impacted by this change prior to the April 24, 2025, expiration date may be challenging, since the public interest parolee EAD category code (c)(11) is typically not entered in the I-9 form or other personnel records.
In the Federal Register notice, DHS indicated it may use the expedited removal (deportation) process for any CHNV beneficiaries who do not depart the United States or obtain another lawful status by April 24, 2025. Under sections 235(b)(1) and 212(a)(9)(A)(i) of the Immigration and Nationality Act, expedited removal orders may not be appealed, and those removed through such means are subject to a five-year bar on reentry to the United States.
A lawsuit challenging the termination of CHNV parole has been filed.
Ensuring Employee Selection Procedures Comply with California Law
California’s Fair Employment and Housing Act (FEHA) prohibits discrimination both in the selection of employees and during employment based on certain protected characteristics. Federal law provides similar protections under Title VII of the Civil Rights Act of 1964. Consequently, California employers must ensure their employee selection process is free from discrimination.
Any selection policy or practice that disproportionately impacts individuals based on the protected characteristics enumerated below is unlawful unless it is job-related and consistent with business necessity.
Employers must design and implement their selection procedures, including tests and interviews, to make certain they are fair and equitable. FEHA prohibits any non-job-related inquiries of applicants or employees, either verbally or through the use of an application form, that express, directly or indirectly, a limitation, specification, or discrimination as to race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, age, or sexual orientation, or any intent to make such a limitation, specification, or discrimination.
Employers should also be cognizant of the following requirements under FEHA:
Requests for Transfer or Promotion: Employers must consider such requests and must not restrict information on promotion and transfer opportunities in a way that discriminates based protected categories.
Training: Employers must provide training opportunities equitably.
No-Transfer Policies: Policies maintaining segregation based on protected categories are prohibited.
CA employers must also comply with laws such as the Fair Chance Act, which requires specific procedures when conducting background checks of applicants and prohibits employers with five or more employers from asking candidates about their conviction history before making a job offer.
How to Remain Compliant: Navigating the Post-Affirmative Action Landscape for Federal Contractors
On January 21, 2025, President Trump issued an Executive Order targeting diversity, equity, and inclusion (DEI) and diversity, equity, inclusion, and accessibility (DEIA) programs.1 Among other things, Executive Order 14173 (EO 14173), titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” revoked Executive Order 11246. We unpacked the key provisions of E.O. 14173 in a previous alert. How will this development impact federal contractors, subcontractors and other companies?
Overview of E.O. 11246
E.O. 11246, now revoked, provided much of the basis for regulations implementing the requirement that federal contractors and subcontractors engage in affirmative action efforts to ensure that contractors and subcontractors refrained from discrimination against any employee or applicant for employment because of race, creed, color, or national origin. EO 11246 also required federal contractors and subcontractors that met specified jurisdictional thresholds to develop written affirmative action plans. These federal contractors and subcontractors, and private employers with at least 100 employees, must also submit workforce data annual report (“EEO-1”) to the Equal Employment Opportunity Commission (the “EEOC”). Thereafter, the government added two additional equal opportunity mandates: Section 503 of the Rehabilitation Act of 1973 (“Section 503”), which covers individuals with disabilities and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (“VEVRAA”), which covers protected veterans. Note that VEVRAA requires covered contractors and subcontractors to submit to the EEOC an annual VETS-4212 report, which is a workforce data report specific to protected veterans.
On February 21, 2025 the United States District Court for the District of Maryland enjoined the Trump administration from implementing E.O. 14173 and another Executive Order ending DEI programs within the federal government. (E.O. 14151). As we summarized in a previous alert, the Court found that certain provisions of these two executive orders violate the First and Fifth Amendments to the United States Constitution in that they are unconstitutional content-based and viewpoint-discriminatory restrictions on protected speech (First Amendment) and deny Plaintiffs protection under the Fifth Amendment right to Due Process.
A panel of the United States Court of Appeals for the Fourth Circuit lifted the injunction on March 14. As we wrote in a previous alert, in lifting the injunction the panel noted that the challenged executive orders directed government agencies to take certain actions, and there was not yet a basis to conclude that the agencies would do so in an unconstitutional manner.
What Happened?
On January 24, acting U.S. Department of Labor (DOL) Secretary Vincent Micone released an agency Order directing DOL employees to stop “all investigative and enforcement activity” related to E.O. 11246. Secretary Micone stated that the DOL “no longer has any authority” under the rescinded order. The Order also ordered Section 503 and VEVRAA components of any ongoing review or investigation be held in abeyance pending further guidance.
Additionally, news outlets reported that on February 25, 2025, in response to Trump’s mandate to reduce all agency workforces, acting director of OFCCP, Michael Schloss sent a memo to Secretary Micone detailing Schloss’ plans for a reduction in force at OFCCP.
Undoubtedly, the revocation of E.O. 11246, the planned reduction in force at OFCCP, and a host of other executive orders and agency activities are causing confusion among employers and federal contractors and subcontractors who are perplexed about whether to collect, report, or store demographic data about their employees and prospective employees as required in Section 709(c) of Title VII of the Civil Rights Act of 1964 and implementing regulations (including FAR 22.8). On the one hand, the status of the executive orders issued by President Donald Trump is in flux as courts across the country are addressing challenges raised to the legality of the orders; on the other hand federal contracting and subcontracting entities are confronted with managing the legal and business risks associated with “illegal DEI and DEIA policies.” Federal contracting agencies have also begun to announce Federal Acquisition Regulation (FAR) Class Deviations to FAR 22.8 in order to implement the recent executive orders related to DEI. These FAR Class Deviations will result in modifications to existing and future federal contracts, affecting both federal contractors and subcontractors.
What Should Federal Contractors and Subcontractors Do?
Continue Compliance with Other Federal and State Law
Federal contractors and subcontractors must still fulfill obligations under federal and state laws, like those requiring submission of workforce and/or pay data under applicable federal and state law.
Permissive and Mandatory Steps
Federal contractors may continue to comply with the regulatory scheme implementing E.O. 11246 for 90 days from the date EO 14173 was published. How to determine whether to continue developing and maintaining affirmative action plans through April 21, 2025, is a business decision that should be made on a case-by-case basis.
Additionally, OFCCP still has authority to investigate and enforce claims under Section 503 of the Rehabilitation Act or VEVRAA brought by a federal contractor or subcontractor employee.
Ongoing Affirmative Action Obligations
Federal contractors and subcontractors who were in the process of drafting or implementing affirmative action policies should be mindful that E.O. 14173 did not revoke the federal contractor and subcontractor mandates under Section 503 or VEVRAA to take affirmative action for individuals with disabilities and protected veterans. Accordingly, business with at least 50 employees (or those expecting to grow to that size) and with contracts valued at least $50,000 (for coverage under Section 503, or $150,000 under VEVRAA) should continue with instituting affirmative action plans for individuals with disabilities and protected veterans. As referenced above, however, OFCCP has been directed to hold review and enforcement proceedings in abeyance.
Next Steps
Overall, federal contractors and subcontractors should thoughtfully review their employment policies and practices to ensure that decisions, and records about employment decisions, accurately reflect merit-based employee selection and advancement processes. We also recommend waiting for additional details from the agency and seeking legal counseling before making any changes to your existing policies.
Before making any changes to current candidate or employee data collection practices, federal contractors and subcontractors should review their policies and procedures to determine compliance with both federal and state anti-discrimination laws, as well as for data reporting requirements.
GeTtin’ SALTy Episode 49 | Conformity—Policy or Politics? [Podcast]
In this episode of GeTtin’ SALTy, host Nikki Dobay dives into the complex and timely topic of tax conformity with two state tax guests, Shail Shah, Greenberg Traurig shareholder based in San Francisco, and Jeff Newgard, President and CEO of Peak Policy. The discussion centers on the challenges and implications of how states align—or don’t align—with the federal Internal Revenue Code (IRC).
Key topics include:
Oregon’s Proposed Shift to Static Conformity
California’s Static Conformity Challenges
Administrative and Compliance Impacts
Broader Implications for Tax Policy
Future Outlook
In a lighthearted conclusion, Nikki, Shail, and Jeff reveal which Muppet or Sesame Street character best represents their tax policy personas!
This episode is a must-listen for anyone navigating the intricacies of state and local tax policy, offering a deep dive into conformity issues and their broader implications for taxpayers and state governments alike.