Federal Judge Reinstates NLRB Member Wilcox Removed by President Trump
National Labor Relations Board (NLRB) Member Gwynne Wilcox, removed by President Donald Trump during his first days in office, has been reinstated by a federal judge of the U.S. District Court for the District of Columbia. The judge ruled that the president does not have the authority to remove a sitting NLRB member without cause.
Quick Hits
A federal judge in Washington, D.C., reinstated NLRB Member Wilcox, reversing President Donald Trump’s removal.
The judge held that the president lacks authority to remove NLRB members at will.
The decision is likely to be appealed, as it raises constitutional and separation of powers questions, the answers to which could significantly impact the Trump administration’s actions.
On March 6, 2025, U.S. District Judge Beryl A. Howell ordered that Wilcox be reinstated to the Board and complete her five-year term, which expires on August 27, 2028.
President Trump removed Wilcox—a Democratic appointee to the NLRB and briefly the NLRB chair—from the Board on January 27, 2025, leaving the Board with only two sitting members and without a quorum to hear cases. Wilcox later filed a lawsuit challenging the legality of her removal, alleging her removal violated the National Labor Relations Act (NLRA) because it was without notice or a hearing and without an alleged cause.
Judge Howell granted summary judgment for Wilcox on the claims and enjoined NLRB Chair Marvin Kaplan, whom President Trump had tapped to replace Wilcox as chair, from “removing [Wilcox] from her office without cause,” “treating [her] as having been removed from office,” or “impeding in any way her ability to fulfill her duties as a member of the NLRB.”
“The President does not have the authority to terminate members of the National Labor Relations Board at will, and his attempt to fire plaintiff from her position on the Board was a blatant violation of the law,” Judge Howell wrote in a thirty-six-page memorandum opinion. “Defendants concede that removal of plaintiff as a Board Member violates the terms of the [NLRA], … and because this statute is a valid exercise of congressional power, the President’s excuse for his illegal act cannot be sustained.”
Wilcox’s legal challenge has raised significant constitutional and separation of powers issues, and Judge Howell’s decision is likely to be appealed. In 1935, the Supreme Court of the United States, in Humphrey’s Executor v. United States, upheld restrictions on the president’s authority to remove officers of certain types of independent agencies—in that case, a commissioner of the Federal Trade Commission. The Wilcox case, however, is the first attempt to remove an NLRB member by the president without alleged cause.
The NLRA provides the president with the power to appoint NLRB members “with the advice and consent of the Senate” to five-year terms and to remove “any member … upon notice and hearing, for neglect of duty or malfeasance in office, but for no other cause.”
Judge Howell rejected the Trump administration’s argument that removal protections presented an “extraordinary intrusion on the executive branch,” finding “NLRB Board members’ removal protections … consistent with the text and historical understandings of Article II, as well as the Supreme Court’s most recent pronouncements.”
“That Congress can exert a check on the President by imposing for-cause restrictions on the removal of leaders of multimember boards or commissions is a stalwart principle in our separation of powers jurisprudence,” Judge Howell wrote.
Next Steps
If not stayed by a federal appeals court, the decision will reinstate Wilcox to the NLRB, at least for now, as the case is likely to be appealed and could potentially land at the Supreme Court, given the constitutional questions. Wilcox’s removal had left the NLRB with only two sitting members: Republican-appointee Kaplan and Democratic-appointee David Prouty. Without a quorum, the NLRB had been unable to hear a growing backlog of cases.
The reinstatement reverses President Trump’s apparent move to shift labor policy away from the union-friendly priorities of his predecessor. The same day he removed Wilcox, President Trump also discharged NLRB General Counsel Jennifer Abruzzo. The president later appointed William B. Cowen as the NLRB’s acting general counsel. Cowen has rescinded many of the former general counsel’s memoranda that laid out her aggressive policy agenda.
New York’s Proposed Employment Contract Reforms: What Employers Need to Know
If two bills recently introduced in the New York State Legislature become law, employers across the state could face new restrictions on including certain common provisions in their employment-related agreements.
Quick Hits
S4424/A5411 would invalidate any contractual provision waiving or otherwise limiting any employee’s substantive or procedural rights, remedies, or claims.
A636/S4996 would define certain terms in standard form contracts as unconscionable, effectively rendering them illegal and unenforceable.
Waiver of Employment Rights
Senate Bill No. 4424, introduced on February 4, 2025 (and the identical Assembly Bill No. 5411, introduced on February 13, 2025), would amend the New York Labor Law and the New York State Human Rights Law to add new Sections 219-e and 302, respectively. Under these sections, contractual provisions waiving or limiting “any employee’s substantive or procedural rights, remedies, or claim” would be invalid.
Significant exceptions to this general rule would exist for waivers mutually agreed to and included in “the settlement of any good faith bona fide dispute in which an employee raises a claim against their employer” or “an agreement entered upon or following the termination of an employee’s employment.”
The bill clarifies that the “provisions of this subdivision shall not apply where application of such provisions would be preempted by federal law.”
Unconscionable Contract Terms
Assembly Bill No. 636, introduced on January 8, 2025, would amend the New York General Business Law (GBL) to add a new section 349-h which would invalidate the inclusion of unconscionable terms in standard form contracts regarding dispute resolution. An identical bill, Senate Bill No. 4996, was introduced on February 14, 2025.
The bill defines a “standard form contract” as “any contract to which only one of the parties is an individual and that individual does not draft the contract.” According to the sponsor’s memo for the bill, the proposed amendment to the GBL is intended to apply to employment-related agreements.
The bill outlines a rebuttable presumption that the following contractual terms are substantively unconscionable when included in a standard form contract:
a requirement to resolve legal claims in an inconvenient venue, which is defined as “a place other than the county where the individual resides or the contract was consummated” for state claims and “a place other than the federal judicial district where the individual resides or the contract was consummated” for federal claims;
a waiver of the right to assert claims or seek remedies under state or federal law;
a waiver to seek punitive damages;
a requirement to bring an action prior to the expiration of the applicable statute of limitations; and
a requirement to pay fees and costs to bring a legal claim substantially in excess of the fees and costs to initiate a federal or state court action.
In addition to the terms outlined above, the bill provides that standard form contracts must advise an individual to consult with an attorney of his or her choosing concerning the contract and provide a reasonable time in which to review the contract with such attorney.
According to the bill, the inclusion of an unconscionable contractual term in a standard form contract is an unfair and deceptive practice, which may be prosecuted by the Office of the New York State Attorney General. The bill also provides for a private right of action and statutory damages of $1,000 per violation.
One critical aspect of the bill is its failure to provide a criterion for courts to determine when unconscionable terms are permissible or severable from a standard form contract, although the sponsor’s memo suggests an intent that the bill “create[] a presumption that such terms are not severable from the contract.” Additionally, the bill does not specify how much time an individual must have to consult with an attorney.
Insights for Employers
While it is too early to tell if these bills will become law, their introduction shows that there is still interest in the New York State Legislature in further restricting the scope of permissible terms under employment-related agreements.
As these bills progress during this year’s legislative session, employers may wish to consider reviewing their New York employment contract agreements to ensure compliance with these bills and to confirm the enforceability of those agreements, if the bills are enacted.
BREAKING: District Court Restores Status Quo Ante At NLRB
On March 6, 2025, a D.C. federal judge reinstated former National Labor Relations Board (“NLRB” or “Board”) Member Gwynne A. Wilcox, restoring the Board to a quorum, which under the National Labor Relations Act (“NLRA” or the “Act”) requires at least three members. See New Process Steel, L.P. v. NLRB, 560 U.S. 674 (2010).
In doing so, Judge Beryl Howell found that President Trump violated Section 3(a) of the Act, which stipulates that, “Any member of the Board may be removed by the President, upon notice and hearing, for neglect of duty or malfeasance in office, but for no other cause.” 29 U.S.C. 153(a).
Wilcox was fired by President Trump on January 27, 2025, prior to which no president had ever terminated a Board member before the end of their five-year term, as we reported here. Wilcox now returns to the Board alongside Chair Marvin E. Kaplan and Member David M. Prouty.
The Trump administration will likely appeal Wilcox’s reinstatement based on oral arguments, where it indicated that it views Section 3(a)’s removal protections as conflicting with Seila Law LLC v. Consumer Financial Protection Bureau, 591 U.S. 197 (2020) and Humphrey’s Executor v. United States, 295 U.S. 602 (1935), the 90-year-old Supreme Court precedent affirming Congress’ power to limit the president’s ability to remove officers of independent administrative agencies created by legislation, as we reported here.
During oral arguments, the Trump administration argued that the Act’s removal protections are unconstitutional under Article II, which requires that the president “shall take Care that the Laws be faithfully executed,” meaning the president cannot be prohibited from hiring and firing certain administrative officials, such as Board members, at will. Judge Howell spent much of her time during oral arguments asking both parties for their interpretations of Humphrey’s Executor, which was reflected in her decision’s focus on the case.
Employers have made similar arguments that the Act’s removal protections for members (and administrative law judges [“ALJs”]) are unconstitutional, as we reported here, here, and here.
In the short term, now that the Board has regained a quorum, it can resume ruling on pending appeals from ALJ decisions and address requests for review regarding, for example, regional director decisions on union elections.
However, in the long term, the Trump administration will likely appeal this decision to the Supreme Court and seek to use it as a vehicle to overturn Humphrey’s Executor.
Antitrust Under Trump: Initial Policies and Actions
As the Trump administration’s approach to antitrust takes shape through political appointments, policy statements, speeches, and enforcement actions, our team is tracking new developments and will provide important updates on issues pertinent to clients. This client alert is not intended to be a comprehensive review of specific actions or cases, but rather an at-a-glance review of relevant policies as they are being created.
In Depth
NOMINATIONS AND CONFIRMATIONS
Appointment of Federal Trade Commission (FTC) Chairman
President Donald Trump appointed FTC Commissioner Andrew Ferguson as the new chairman of the FTC on January 20, 2025.
Ferguson views antitrust enforcement as a facilitator of innovation and believes that because markets are not self-correcting, government intervention on behalf of human flourishing and the protection of workers is necessary.
Despite his intention to “reverse” former Chair Lina Khan’s war on mergers and anti-business agenda, Ferguson has expressed concern with the market power of Big Tech and other large companies being leveraged to gain social or political control.
Confirmation Hearing for AAG Nominee Gail Slater
President Donald Trump nominated Gail Slater as the Assistant Attorney General (AAG) of the US Department of Justice’s (DOJ) Antitrust Division on December 4, 2024.
On February 12, 2025, Slater appeared before the Senate Judiciary Committee for her nomination hearing. The committee advanced her nomination on February 27 with a vote of 20-2.
Slater has expressed a desire to continue enforcement actions against Big Tech and to return to using merger remedies in the form of consent decrees and settlements to address competitive harm.
Confirmation Hearing for FTC Commissioner Nominee Mark Meador
President Trump appointed Mark Meador to the FTC on December 10, 2024.
On February 25, 2025, Meador appeared before the Senate Committee on Commerce, Science, and Transportation for his confirmation hearing.
He echoes Slater’s view that pursuit of Big Tech should remain a priority for the agencies, as should combatting noncompete agreements that overly burden workers and prevent employees from leaving to work for a competitor.
GENERAL UPDATES
Musk Supports Consolidating Antitrust Enforcement Agencies
Responding to a comment by Sen. Mike Lee (R-Utah), who expressed hope that the new administration would consider consolidating the FTC and DOJ, Elon Musk said, “Sounds logical,” appearing to agree with the idea.
Lee referenced the One Agency Act, a bill he proposed in 2021 that would strip the FTC of its antitrust authority and transfer it to the DOJ. When discussing the bill, Lee has compared the current two-agency system to having two presidents.
Agencies Keep 2023 Merger Guidelines
FTC Chairman Ferguson and Omeed Assefi, Acting Assistant Attorney General of the DOJ’s Antitrust Division, announced on February 18, 2025, that the FTC and DOJ will continue to use the 2023 Merger Guidelines as the framework for their merger review process.
Ferguson cited the time and expense associated with creating new guidelines, as well as his desire to create stability for the parties and the agencies, as the rationale for adhering to the 2023 Guidelines. He did note that “no Guidelines are perfect” and indicated portions could be revisited later.
Ferguson Supports New Hart-Scott-Rodino (HSR) Rules
FTC Chairman Ferguson expressed his support for the new HSR rules, stating that “updates were long overdue” and would “prevent unlawful deals from slipping through the cracks.”
He has previously stated his approval of the new rules, calling them a “lawful improvement over the status quo” in his concurring statement accompanying the rules’ announcement.
Holyoak Sets Out FTC Goals for New Administration
In remarks at the GCR Live conference on January 30, 2025, FTC Commissioner Melissa Holyoak outlined three areas of focus for antitrust under the Trump administration. She explained that the FTC will focus on (i) making the merger review process better and more predictable, (ii) ensuring that antitrust concerns will not impede artificial intelligence innovation, and (iii) fighting against Big Tech censorship.
In later remarks, Holyoak said that she expects the return of early termination, improving staff communication and transparency with the parties in the merger review process, bringing back remedies as a method of resolving merger issues – as well as continuing enforcement actions against Big Tech – and abandoning FTC rulemaking authority.
Meador Targets Anticompetitive Effects of Vertical Mergers
At his confirmation hearing on February 25, 2025, FTC Commissioner nominee Meador indicated that he would address the consumer welfare issues raised by vertical mergers. He noted that vertical integration can allow for increased prices, a reduction in quality, and market foreclosure. He went onto say that he would address these concerns where they arise.
FTC Will Continue to Fight Anticompetitive Behavior in Labor Markets
FTC Chairman Ferguson has emphasized a continuing priority of protecting workers using antitrust laws.
He cited no-poach, wage-fixing, and noncompete agreements, as well as deceptive or misleading hiring practices, as examples of conduct the FTC will fight against to combat labor monopsonies and general harm to workers.
The FTC will approach these issues based on individual cases, not rulemaking (like the Biden administration’s noncompete ban).
Agencies Indicate Return of Merger Remedies
Statements from FTC Commissioner Holyoak and AAG nominee Slater indicate that both the FTC and DOJ will become more open to evaluating merger remedies under the new administration.
Holyoak has stated that the agencies should consider remedies like divestitures when such remedies can successfully preserve competition lost by a merger. Similarly, Slater has stated that when merger remedies are “done right,” they can remove competitive harm from a merger.
FTC Issues Policy to Avoid Staff Participation in the American Bar Association (ABA) Antitrust Section Activities
In response to the ABA’s criticism of the new Trump administration’s recent actions, on February 14, 2025, FTC Chairman Ferguson prohibited FTC political appointees from holding leadership positions in the ABA, participating in or attending ABA events, and renewing ABA memberships.
Ferguson pointed to several historical examples of what he asserts have been ABA political partisanship and leftist advocacy to support his decision, as well as views on the ABA’s loyalty to the interests of Big Tech.
Ferguson Intends to Pursue Diversity, Equity, and Inclusion (DEI), Environmental, Social, and Governance (ESG) Collaborations as Section One Violations
In a document laying out his policy priorities created prior to his appointment to chairman, FTC Chairman Ferguson explained he intends the FTC to “investigate and prosecute collusion on DEI, ESG, advertiser boycotts, etc.,” suggesting the agency may focus its investigations on companies participating in industry groups or other collaborative ventures intended to address social issues or manage industry risks associated with environmental, labor, or diversity issues.
Uncertainty Prevails Over Future FTC Enforcement of the Robinson-Patman Act
FTC Commissioner nominee Meador has written favorably of federal enforcement of the Robinson-Patman Act, a statute prohibiting discriminatory pricing which was largely ignored until the last years of the Biden administration.
Meador suggested that the law should be enforced, particularly in the grocery and consumer packaged goods industries. Ferguson and Holyoak have written in recent FTC dissents that the FTC’s resources would be better served by enforcing the law in appropriate cases where the alleged price discrimination harms competition (e.g., involving actors with market power using price discrimination to monopolize).
Until Meador is confirmed, it is uncertain whether and how Robinson-Patman will be enforced.
OFCCP Proposes Plan to Satisfy Workforce Reduction Mandate
On February 25, 2025, Acting Director Michael Schloss of the Office of Federal Contract Compliance Programs (OFCCP) issued a memorandum addressing the OFCCP’s proposed strategy for reducing its workforce by 90 percent, as instructed by the Office of the Secretary.
The proposed strategy aims to shift the OFCCP’s focus to the work required by Section 503 of the Rehabilitation Act (“Section 503”) and the Vietnam Era Veterans Readjustment Assistance Act (“VEVRAA”). Federal contractors are still obligated to comply with these statutes, the outline requirements related to veterans and individuals with disabilities, following President Trump’s revocation of Executive Order 11246.
As part of its proposed reduction, the OFCCP will close 51 of its current 55 offices, keeping one office in four designated regions. The proposal also cuts the OFCCP’s staff down to 50 employees. Those 50 employees would prioritize carrying out the Section 503 and VEVRAA compliance requirements.
Further, the OFCCP’s National Office, which establishes all policy and program operations implemented by the regions, would be reduced to 14 employees. Those remaining employees would be scattered across four divisions: the Front Office, the Policy Division, the Operations and Enforcement Division, and the Administrative Division.
Finally, to achieve its desired reduction, the OFCCP used the proposal memorandum to ask permission to use the Voluntary Early Retirement Authority (“VERA”) and the Voluntary Separation Incentive Program (“VSIP”). The OFCCP proposed offering VSIP to all retirement eligible and early retirement eligible employees.
The OFCCP’s proposal will surely see movement in the coming weeks as it seeks to abide by the Office of the Secretary’s mandate to reduce its workforce, which could have big implications for federal contractors. Employers should work with their counsel to assess compliance strategies in response to the myriad of changes and enforcement priorities at federal agencies.
SB21: Delaware Responds In The DExit Battle
The annual DGCL amendments this year carry a little more urgency than before. SB21 was rushed through to the Delaware Senate in mid-February, bypassing the normal process that involves recommendation by the Council of the Corporation Law Section of the Delaware State Bar Association (the “CLC”). At the legislature’s request, the CLC is weighing in with recommended changes to SB21, and that version is the current front runner to get approved by the legislature and adopted this year, and is the version (as currently available) described below. Delaware’s hurried process can be seen as a response to a gathering movement by corporations to reincorporate in other jurisdictions, dubbed “DExit”, which threatens Delaware’s mantle as the undisputed leader in state corporate law, and a material revenue source for the State. The movement seems to have at least two underlying causes. One is cyclical. Delaware’s judge made law periodically either swings too far in the pro-plaintiff direction, or otherwise produces controversial decisions, alienating companies incorporated in Delaware. This is followed by a course correction, sometimes judicial and sometimes legislative. A second cause is jurisprudence around the level of judicial scrutiny applied to actions taken by controllers, with particularly pronounced criticism coming from companies with “rockstar” CEOs and founders.[1]
There were several decisions in 2023 that provoked backlash, including Moelis,[2] which invalidated a controller’s stockholder agreement in a decision that was sharply at odds with prevailing M&A practice, and Activision,[3] some aspects of which were unusually formalistic and ran contrary to common M&A practices. Both decisions were legislatively overturned in the 2024 DGCL amendments. Another decision, Palkon v. Maffei,[4] applied the entire fairness standard of review to a reincorporation transaction, eliciting the ire of controllers given the speculative nature of the purported controller benefit. That decision was overturned by the Delaware Supreme Court this year. But perhaps the biggest judicial catalyst for DExit is Tornetta v. Musk[5], where in 2024 the Court of Chancery invalidated Elon Musk’s performance award at Tesla, despite its having received board and minority stockholder approval. The value of the award ($56 billion at the time of litigation), the size of the fee award to plaintiff’s counsel ($345 million), and the profile of the company and its CEO, guaranteed that the judicial decisions emanating from the dispute would receive a lot of attention, particularly from other large founder-led tech companies.[6]
SB21 seeks to recalibrate through expanding DGCL Section 144, which regulates the voidability of contracts and transactions in which officers and directors are interested, to also regulate challenges to controlling stockholder contracts and transactions, and to expand applicability of the rule to fiduciary duty challenges. SB21 also seeks to recalibrate through tightening up DGCL Section 220, the rule governing inspection of books and records, which has been a vehicle for a significant increase in litigation in the last few years. In tandem with SB21, the Delaware Senate introduced Senate Concurrent Resolution 17 (“SCR17”), requesting that the CLC prepare a report with recommendations for legislative action relating to excessive awards of attorney’s fees in certain corporate litigation cases.
Amendments to DGCL Section 144
Current paragraph (a) of Section 144 protects against the voidability of contracts and transactions due to the interest of one or more officers or directors, where the contract or transaction is authorized in good faith by the board or a board committee by a majority of the disinterested directors, is approved by the stockholders (in each case with knowledge of the material facts) or is fair to the corporation. As amended, paragraph (a) would protect against equitable relief or damages awards. It thus would expand from a narrow focus on validity to serve as a broad shield against fiduciary duty challenges. Approval by the board requires a majority of disinterested directors, and if a majority of board members are not disinterested, approval of a committee of two or more members, all of whom are independent.
New paragraphs (b) and (c) would for the first time bring controlling stockholders within the ambit of Section 144. One of the criticisms of current case law is that to avoid an entire fairness standard of review and obtain the shielding effect of the business judgment standard of review, controllers must comply with the narrow strictures of In re MFW[7] and its progeny,[8] including obtaining approval of both (i) a special committee composed of disinterested and independent directors, and (ii) disinterested stockholders. Paragraph (b) significantly relaxes the procedural hurdles for controllers to obtain the liability shield outside of going private transactions. Under paragraph (b), for a controlling stockholder transaction to be protected against equitable relief or damages awards, either (i) or (ii) is required, but not both. As for paragraph (a), the special committee must have two or more members, all of whom are independent. The approval of disinterested stockholders must be by a majority of votes cast, in contrast to the majority of shares held by disinterested stockholders currently required under MFW.
For public companies, the amendments provide that a director is presumed to be disinterested with respect to a transaction to which the director isn’t a party, if the board has determined that the director satisfies the criteria for determining independence from the corporation and, if applicable, the controlling stockholder, under stock exchange rules. The presumption is “heightened and may only be rebutted by substantial and particularized facts that such director has a material interest in such act or transaction or has a material relationship with a person with a material interest in such act or transaction.” Moreover, being the nominee of someone with a material interest does not, by itself, show that a director is not disinterested. This new test addresses scope creep that occurred through a series of Delaware cases, where the test has expanded in recent years to include social ties.[9]
Under new paragraph (c), for going private transactions, approval of both a special committee and disinterested stockholders is required. But, given the liberalization of the stockholder approval requirement described above, the test is easier to meet than under existing case law. Moreover, paragraph (c) does not incorporate the “ab initio” requirement under MFW, but merely provides that the transaction “is conditioned on a vote of the disinterested stockholders at or prior to the time it is submitted to stockholders for their approval or ratification.” For public companies, a “going private transaction” is a “Rule 13e-3 transaction” as defined under the Securities Exchange Act of 1934. For non-public corporations, it is, generally stated, an M&A transaction pursuant to which all or substantially all of the shares of capital stock held by disinterested stockholders are cancelled or acquired.
Another criticism of existing case law is the expanding definition of who can be deemed to be a controlling stockholder. This is also addressed in the amendments, through introduction of a specific definition of a “controlling stockholder” as a person that, together with affiliates and associates, either (i) owns or controls a majority in voting power of outstanding voting stock of the corporation entitled to vote in the election of directors, (ii) has the contractual or other right to cause the election of nominees constituting a majority of members of the board, or (iii) has the power functionally equivalent to such a majority owner, and holds at least one-third in voting power of outstanding voting stock of the corporation. The one-third threshold is an important bright line that is likely to lead to a reduction in litigation against controllers.
The amendments also override recent case law holding that controlling stockholders owe a fiduciary duty of care to the corporation,[10] by introducing the functional equivalent of exculpation under DGCL Section 102(b)(7), but without the need to opt in. The amendments provide that controlling stockholders are not liable in that capacity to the corporation or to its stockholders for monetary damages for breach of fiduciary duty, other than for breach of the duty of loyalty, acts or missions not in good faith, or derivation of an improper personal benefit.
The amendments to Sections 144 and 220 apply to all acts and transactions (including book and records demands) before, on or after the date the Governor signs them into law, but do not apply to any judicial proceeding that is completed or pending on or before February 17, 2025. The synopsis states that this lack of retroactivity “shall not in any way affect the ability of a court, by reference to existing case law, to reach an outcome consistent with one that would be dictated by this Act.”[11]
Amendments to DGCL Section 220
Amendments to Section 220 delineate, through a “books and records” definition, the documents that stockholders can obtain, including items such as a charter and bylaws (and instruments incorporated by reference), minutes of meetings of stockholders, emails to stockholders within the last 3 years, minutes of meetings of the board and board committees and information packages for those meetings, agreements under DGCL 122(18), annual financial statements, and D&O independence questionnaires. Importantly, this does not include emails or text messages among directors, officers, or managers, access to which has allowed plaintiff’s attorneys to engage in sometimes expansive fishing expeditions. The amendments limit a court’s ability to order the production of a broader set of books and records, but they do provide that a court can require production of additional records if the corporation does not have minutes of meetings of stockholders, boards or board committees, or annual financial statements. This underscores the importance for corporations of maintaining good minutes in order to limit the scope of document productions in books and records actions.
The amendments also limit the time period for which a shareholder can inspect books and records (that is, only books and records within three years of the date of the demand) and impose conditions on a stockholder’s ability to inspect and copy the books and records themselves. A stockholder’s demand must be “made in good faith and for a proper purpose” and describe “with reasonable particularity the stockholder’s purpose and the books and records the stockholder seeks to inspect.” The books and records sought must be “specifically related to the stockholder’s purpose.” This change appears to replace the currently low standard requiring only a “credible basis,” but the CLC’s recommended changes to the amendments in SB 21 permit shareholders to request a broader set of documents in the event that the shareholder can show a “compelling need for an inspection of such records to further the stockholder’s proper purpose” and the shareholder has shown “by clear and convincing evidence that such specific records are necessary and essential to further such purpose.” Whether this change to the amendments is incorporated into the final bill remains to be seen.
The amendments permit the corporation to impose reasonable restrictions on the “confidentiality, use, or distribution” of the books and records, to redact unrelated material, and to require that the stockholder incorporate by reference the books and records into any complaint the stockholder files. This change codifies what has been Delaware courts’ current practice.
SCR 17
SCR 17 focuses on the trade-off between preventing excessive attorney’s fees in stockholder litigation, and appropriately incentivizing law firms to bring actions on a contingent fee basis that protect stockholder rights. The Resolution requests the Council of the Corporation Law Section of the Delaware State Bar Association to:
prepare, on or before March 31, 2025, a report with recommendations for legislative action that might help the Delaware Judiciary ensure that awards of attorney’s fees provide incentives for litigation appropriately protective of stockholders but not so excessive as to act as a counterproductive toll on Delaware companies and their stockholders that threatens to make the overall “benefit-to-cost” ratio of corporate litigation negative.
The Resolution specifically requests the Council to consider the utility of fee caps. Foley & Lardner LLP will continue monitoring the progress of SB 21 and SCR 17 as they progress. Both are moving quickly. The Senate Judiciary Committee has scheduled a hearing on the proposed amendments on March 12, 2025.
[1] To the extent that rockstar founders/CEOs seek the same level of autonomy controlling corporations as they could have managing limited liability companies, that is not the focus of the proposed amendments, and it is difficult seeing the Delaware legislature granting their wish. It would undermine Delaware’s goal of navigating between being a business-friendly jurisdiction and protecting the rights of stockholders, and would undermine one of its competitive advantages, which is the sophistication of its judiciary. The CLC recommendations appear to dial back some of the loosening of procedural constraints under SB21.
[2] W. Palm Beach Firefighters’ Pension Fund v. Moelis & Co., 311 A.3d 809 (Del. Ch. 2024).
[3]Sjunde AP-Fonden v. Activision Blizzard, Inc., 2024 WL 863290 (Del. Ch. 2024).
[4] Palkon v. Maffei, 311 A.3d 255 (Del. Ch. 2024), rev’d, 2025 WL 384054 (Del. 2025).
[5] See, e.g. Tornetta v. Musk, 310 A.3d 430 (Del. Ch. 2024).
[6] For example, Tesla, SpaceEx and The Trade Desk have reincorporated out of Delaware. Meta and DropBox are both reportedly considering reincorporating out of Delaware. There are also several very large tech companies that are likely to go public in the near future.
[7] In re MFW S’holders Litig., 67 A.3d 496 (Del. Ch. 2013), aff’d, 88 A.3d 635 (Del. 2014)
[8] In re Match Grp., Inc. Deriv. Litig., 315 A.3d 446 (Del. 2024) (holding that where a controlling stockholder stands on both sides of a transaction with its controlled corporation, the standard of review does not change to business judgment unless both of MFW’s procedural devices – that is, using a special committee and a majority-of-the-minority vote – are used).
[9] See, e.g. In re Dell Technologies Inc. Class V S’holders Litig., 2020 WL 3096748 (Del. Ch. 2020)
[10] See In re Sears Hometown and Outlet Stores, Inc. S’holder Litig., 309 A.3d 474 (Del. Ch. 2024).
[11] Some legal commentators have viewed this as paving the way for the Tornetta decision to be overturned on appeal.
Copper Crisis? The Economic Impacts of a Copper Import Tariff
On February 25, 2025, President Trump signed an executive order directing the Secretary of Commerce to investigate an alleged national security threat to the copper supply chain under Section 232 of the Trade Expansion Act and to report his findings and remediation recommendations.[1]
Why Copper?
Copper is crucial for defense, infrastructure, electronics, and emerging technologies, making it the U.S. Defense Department’s second-most used material. While the United States maintains significant copper reserves, it only produces half of the refined copper it consumes, making it heavily reliant on foreign suppliers. China controls approximately 50% of global smelting and refining capacity, although the United States sources the majority of its foreign copper from Canada, Chile, and Mexico.[svc2] This reliance, along with potential foreign market manipulation, is believed to pose a national security risk to America’s supply of raw copper, copper concentrates, refined copper, copper alloys, scrap copper, and copper derivative products.[3] Currently, no tariffs or quotas exist on copper imports.
What is Section 232?
Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. § 1862) specifically allows the President of the United States to impose import restrictions if certain imports are found to threaten national security. The U.S. Government relies on the Section 232 investigation process to evaluate the threat posed by imports. An application from an interested party or a request from a government department or agency or the Secretary of Commerce can initiate 232 investigations.
Investigative Process
The 232 investigation will evaluate several key aspects of the U.S. copper supply chain. These include the current and projected demand for copper in critical sectors like defense, energy, and infrastructure, as well as the ability of domestic production, smelting, refining, and recycling to meet this demand. The investigation will also examine the role of foreign supply chains, particularly major exporters, and the risks associated with the concentration of U.S. copper imports from a small number of suppliers. It will assess the impact of foreign government subsidies, overcapacity, and predatory trade practices on U.S. competitiveness, as well as the economic effects of artificially suppressed copper prices through dumping and overproduction. The investigation will explore the potential for foreign nations to restrict exports or weaponize their control over refined copper, and whether increasing domestic copper mining and refining capacity could reduce reliance on imports. Finally, it will review the impact of current trade policies and whether measures such as tariffs or quotas are necessary to safeguard national security.
Under U.S. law, the Commerce Department must consult with the Secretaries of Defense, Interior, and Energy, as well as other relevant agencies, during the investigation. Once initiated, the Secretary of Commerce has 270 days to present findings on whether copper import dependence threatens national security, along with recommendations to mitigate these risks, including tariffs, export controls, or incentives for domestic production. The Secretary will also provide policy suggestions for strengthening the copper supply chain through strategic investments, permitting reforms, and enhanced recycling efforts. While the public may have an opportunity to comment on the investigation, it is not required by statute; the Department of Commerce may gather additional information from surveys of industry stakeholders and other external resources. If the Secretary concludes that imports threaten national security, the President has up to 90 days to decide whether to implement trade restrictions based on these findings.
Potential Outcomes
If President Trump decides to act on the 232 investigation results, adjusting imports of copper to mitigate the perceived national security threat, all measures must be implemented within 15 days. Possible actions include new tariffs and quotas, which would not ban the importation of copper, only limit the import amounts and make them more expensive. The 232 investigation results will help determine the tariff rate.
If President Trump seeks to limit or restrict imports, and either no agreement is reached within 180 days or an agreement fails to address the national security threat, he may take additional actions under Section 232. The President must submit a written statement to Congress explaining his decisions within 30 days and publish notice of all actions in the Federal Register.
If President Trump decides action is unnecessary, he must submit a written statement to Congress within 30 days explaining his reasons. He must also publish this determination and the accompanying explanation in the Federal Register.
Correlating Policies and Next Steps
As part of his America First Trade Policy, President Trump signed proclamations to close loopholes and exemptions, restoring a true 25% tariff on steel and raising the aluminum tariff to 25%. He also raised the general tariff on Chinese imports to 20% in response to China’s alleged role in the fentanyl crisis. Shifting focus to protect a strategic mineral like copper appears consistent with this administration’s trade strategy.
While publishing the executive order signals a meaningful action, it merely initiates the 232 investigation. However, given the administration’s current approach to trade strategy, it seems likely this exercise will lead to additional tariffs—potentially reaching the 25% rate applied to steel and aluminum. New tariffs will almost certainly prompt foreign governments to protest and likely bring challenges before the World Trade Organization. And make no mistake – copper import tariffs will impact the U.S. economy. From defense to electronics to automotive, all major U.S. corporations that depend on copper will feel the pinch.
[1] https://www.federalregister.gov/documents/2025/02/28/2025-03439/addressing-the-threat-to-national-security-from-imports-of-copper
[2] https://www.statista.com/statistics/254877/us-copper-imports-by-major-countries-of-origin/
[3] The definition of copper derivate products will likely be the same used for steel and aluminum derivative products found in Section 232 of the Trade Expansion Act of 1962.
What to Watch in Nevada’s 2025 Legislative Session: Key Employment-Related Bills
On February 3, 2025, the Nevada state legislature kicked off its latest legislative session, and state lawmakers are poised to consider several bills that could impact employers and employees, from last day pay provisions to paid leave and work restrictions for minors. Here is a recap from the first month in session.
Quick Hits
The Nevada state legislature commenced its latest legislative session on February 3, 2025.
State lawmakers are considering multiple bills that could impact employment law in the Nevada.
Employers may want to take note of these legislative developments, which, if passed and enacted, could result in significant changes to Chapters 608 and 613 of the Nevada Revised Statutes (NRS).
Here is a breakdown of some of the key bills in this legislative session.
SB 198: Changes to Last Day Pay Provisions
Senate Bill (SB) 198 would revise the last day pay provisions under NRS 608.030. Under existing law, employers are required to pay discharged employees their earned and unpaid wages immediately. Similarly, employees placed on nonworking status must be paid immediately, and those who resign or quit must be paid by their next regular payday or within seven days, whichever is earlier. Penalties for the failure to pay final wages and compensation do not attach for three days from the date the wages and compensation are due, which is commonly referred to as the “three day grace period.”
The new bill would expand the definition of compensation to include fringe benefits and increase penalties for noncompliance. Further, the bill would eliminate the “three day grace period.” Instead, employers would only have until 5:00 p.m. the day following the date wages and compensation are due to the employee. The bill would also increase the penalties to an amount equal to eight hours of work at 1.5 times the employee’s hourly wage for each day the payment is delayed, up to thirty days. The bill would also mandate that cannabis establishments comply with all federal and state labor laws, with violations resulting in license revocation.
AB 112: Sick Leave Policy Changes
Assembly Bill (AB) 112 would remove the exemption for employees covered by a collective bargaining agreement (CBA) from the provisions of NRS 608.01975. Under current law, employers are not required to allow employees covered by a CBA to use accrued sick leave for family medical needs. The bill would eliminate that exemption, making the requirement applicable to all employers, regardless of CBA coverage. However, the changes would not apply during the current term of any CBA entered into before October 1, 2025. Still, they would apply to any extensions, renewals, or new agreements made on or after that date.
AB 166: Work Hour Restrictions for Minors
AB 166 would extend the limitations on the number of hours workers under the age of sixteen are allowed to work to workers under the age of eighteen and reduce the number of allowable work hours from forty-eight hours in a week to forty hours in a week. The bill would maintain the daily limit of eight hours. Additionally, the bill would prohibit minors enrolled in school from working before 5:00 a.m. on school days and after 10:00 p.m. on nights preceding school days. Exceptions would remain for work as performers in motion pictures and work on farms.
AB 179: Extension of Paid Leave Statute
Nevada’s existing paid leave statute requires private employers with fifty or more employees in the state to provide at least 0.01923 hours of paid leave for each hour worked, but it does not apply to employers that provide such a paid leave policy “pursuant to a contract, policy, collective bargaining agreement or other agreement.” AB 179 would eliminate that exception to the statute. Further, the bill clarifies specific actions that would constitute unlawful “retaliation” under the statute against an employee who takes paid leave.
AB 255: Prohibiting Repayment Obligations in Employment Contracts
AB 255 would prohibit employers from requiring an employee or independent contractor to repay the employer any sums if the employee terminates employment before a specified period of time expires. This could include training expenses, relocation expenses, or sign-on bonuses with repayment obligations, which are tied to an employee or independent contractor satisfying a length of service first. AB 255 could be enforced by the labor commissioner or the attorney general, and would also create a private right of action.
SB 160: Realignment of Nevada Equal Rights Commission and Enhance Scope of Authority
SB 160 would remove the Nevada Equal Rights Commission (NERC) from the Department of Employment, Training and Rehabilitation, and move it to the Office of the Attorney General. It permits NERC to consider “historical data” related to the employer’s discriminatory practices. There is declarative language in this legislation about nondiscrimination being a public policy of the state, which could open the door to wrongful termination in violation of public policy claims based on discriminatory acts, which is not currently the law. The bill also details a penalties structure for employers that are deemed to have committed “willful” violations of the statute.
Deregulation: Uncertainty and Opportunity
The Trump administration has issued Executive Orders that direct federal agencies to review, rescind, or modify current regulations deemed unconstitutional, overly burdensome, or contrary to the national interest.
Agencies are tasked with identifying regulations that conflict with principles like the non-delegation doctrine, major question doctrine, and those previously upheld under Chevron deference, as well as those imposing significant costs not justified by their public benefits.
Agencies have a 60-day timeline to identify suspect regulations and work with the Office of Information and Regulatory Affairs to revise the regulatory framework. Businesses should monitor these developments closely.
The Trump administration has recently issued a series of Executive Orders on “deregulation,” directing federal agencies to review, rescind, and modify existing federal regulations. This regulatory overhaul presents both challenges and opportunities for regulated businesses.
The rules under which many industries currently operate may undergo significant change in the coming months. Recission or modification of regulations could also spur litigation, adding to the uncertainty. But these deregulation plans also provide an opportunity for businesses to help administrative agencies identify regulations that should be rescinded and shape new rules.
60-Day Review Period
On February 19, 2025, President Trump issued an executive order titled “Ensuring Lawful Governance and Implementing the President’s ‘Department of Government Efficiency’ Deregulatory Initiative.” The EO directs agencies to identify, within 60 days, regulations that should be rescinded or modified because they are unconstitutional or not in the national interest. Agencies are also directed to de-prioritize the enforcement of such regulations. The EO contains a list of the types of regulations to be identified for rescission. In addition to identifying “unconstitutional regulations and regulations that raise serious constitutional concerns” generally, the EO identifies several categories of constitutionally suspect regulations based on recent Supreme Court decisions that have limited regulatory authority.
The Non-Delegation Doctrine
The EO directs agencies to identify “regulations that are based on unlawful delegation of legislative power.” This criteria invokes the non-delegation doctrine, which has been largely dormant since the New Deal era. The doctrine currently only requires that Congress provide the agency with an “intelligible principle” to guide its rulemaking. Several Supreme Court justices are interested in developing a more robust non-delegation doctrine, and the Supreme Court is set to hear a case this term regarding whether the FCC’s Universal Service Fund is unconstitutional under the non-delegation doctrine. (Regardless of the outcome of that case, Trump’s Executive Order is designed to identify regulations that raise non-delegation concerns.
Loper Bright and Chevron
Agencies are also directed to identify “regulations that are based on anything other than the best reading of the underlying statutory authority or prohibition.” This category refers to the Supreme Court’s decision last term in Loper Bright Enterprises v. Raimondo, which overruled Chevron deference. (See our previous client alert). Instead of deferring to an agency’s reasonable interpretation of ambiguous statutory language, courts are now required to “exercise their independent judgment” when interpreting statutory authority of agency action.
In his ruling, Chief Judge Robert explicitly stated that the Court was not overruling prior cases upholding regulations under the Chevron framework, such as the Clean Air Act which was at issue in Chevron. Those cases are still binding precedent. But Trump’s executive order calls into question regulations that were previously upheld under Chevron because agencies are directed to self-evaluate whether any of their existing regulations are “based on anything other than a best reading of the underlying statutory authority,” regardless of past precedent.
Major Question Doctrine
The last category of legally suspect regulations that agencies are to identify are “regulations that implicate matters of social, political, or economic significance that are not authorized by clear statutory authority.” This category refers to the “major question doctrine,” a principle of statutory interpretation which has recently received increased attention from the Supreme Court. The doctrine requires a clear statement by Congress to delegate regulatory authority over questions of major political or economic significance. For example, in 2022’s West Virginia v. EPA, the Supreme Court struck down EPA emissions regulations under major questions doctrine. The following year, Biden v. Nebraska struck down a student loan forgiveness program).
Cost-Benefit Analysis
The rest of the categories listed in the Executive Order are based on policy or practical considerations, rather than constitutional concerns. Agencies are to identify:
(v) “regulations that impose significant costs upon private parties that are not outweighed by public benefits.”
(vi) “regulations that harm the national interest by significantly and unjustifiably impeding technological innovation, infrastructure development, disaster response, inflation reduction, research and development, economic development, energy production, land use, and foreign policy objections;” and
(vii) “regulations that impose undue burdens on small businesses and impede private enterprise and entrepreneurship.”
These categories focus on the traditional cost-benefit analysis that goes into agency rulemaking, although the executive order focuses its attention on economic growth and potential costs and burdens on businesses.
Next-Steps
Agencies are to identify such regulations within 60 days and are instructed to work with the Administrator of the Office of Information and Regulatory Affairs (OIRA) to develop a regulatory agenda that seeks to rescind or modify these regulations. Presumably agencies will then begin the process of rescinding or modifying the rules which they have identified as suspect, which would include notice and public comment under the Administrative Procedures Act (APA).
10 to 1 Repeal
This deregulation order follows on the heels of a January 31, 2025 Executive Order providing that for every new regulation any agency proposes to enact, the agency must identify “at least” 10 existing regulations to be rescinded. In addition, together with the Office of Management and Budget, agencies must determine the incremental costs imposed by new regulations and ensure that the net costs – new costs minus the cost savings of rescinded regulations – are “substantially” less than zero. See accompanying Fact Sheet.
Both Executive Orders apply generally to all executive agencies, except regulations that address military or foreign affairs functions, homeland security or immigration-related initiatives.
What This Means For Your Business
In the short term, regulated businesses should be prepared for uncertainty regarding the future of the rules governing their industries. To get ahead of the curve, companies should review the entire landscape of federal regulations which govern their operations and consider whether any regulation falls within the categories specified in the Executive Order. Companies should consider how a change would affect the competitive landscape of their business and consider how to prepare for such change. It will also be important to monitor proposed changes and participate in public comment periods.
Moreover, if a regulation is particularly burdensome (or helpful), there is an opportunity to highlight the need for reform (or maintaining the status quo) directly to the governing agency and Congress. Businesses and their trade associations can prepare white papers or engage in direct advocacy to rescind or modify harmful regulations and to keep helpful regulations.
Together with recent changes in regulatory law announced by the U.S. Supreme Court, the new administration’s deregulatory agenda represents a once-in-a-generation opportunity for American business to participate in reshaping the regulatory landscape.
President’s Remarks Keep the Pressure on Congress to Deliver on Taxes
President Trump used his 4 March 2025 address to the joint session of Congress to remind the American public and Congressional leaders that he is serious about adding his imprimatur to the tax code—and in the process adding to the pressure that Republican leadership and tax committee chairs already face as they attempt to extend the 2017 tax cuts using budget reconciliation.
The President highlighted several tax policies he has championed during his campaign and in the weeks following his inauguration. On the business side, he touted a reduced tax rate on US manufacturers and 100% full expensing retroactive to 20 January 2025, (Inauguration Day). In addition to making the 2017 Tax Cuts and Jobs Act tax cuts permanent, he listed no taxes on tips, overtime, social security, and deductibility of car loan interest if the vehicle is produced in the United States, for individuals. Notably, he did not mention his proposal to lift the cap on state and local taxes (SALT), an issue that continues to divide the Republican caucus.
Each of these proposals has a cost, increasing the amount of revenue offsets that the tax writers must find to pay for them, or increasing the deficit if they do not, assuming a current law baseline. Indeed, some of the President’s other proposals would be offsets, which he also did not mention during his remarks. These include scaling back on the ability of sports team owners to amortize the cost of player contracts and taxing carried interest as ordinary income.
Congressional Republicans are in the midst of the arcane budgetary practice called budget reconciliation to enact tax reform without having to negotiate with or rely on Democrats. Because it is, in fact, a budgetary maneuver, the cost of tax reforms will be restricted by budget reconciliation instructions included in a budget resolution. The House resolution limits a decrease in revenue to US$4.5 trillion—barely enough to extend the 2017 tax cuts let alone accommodate the President’s own priorities, which House members view as something that they must address, especially after the President highlighted them in his joint session remarks. They do have some flexibility since Mr. Trump has not been particularly specific about most details, but when they have no room to spare to begin with that may be a distinction without a difference. These challenges are exacerbated by extremely tight margins in the House, intraparty tensions about cuts in benefits, adding to the deficit, and other assumptions that are part of the budget reconciliation process.
Although he did not specifically mention taxes of foreign jurisdictions during his remarks about imposing reciprocal tariffs—as some of his executive orders do—the President may have indirectly implicated certain foreign taxes and information-reporting regimes when he referred to “non-monetary” tariffs. He gave Speaker Johnson permission to use tariff revenues to reduce the deficit or for “anything you want to;” perhaps to help pay for tax cuts in budget reconciliation.
The President’s remarks reinforced his commitment to his campaign and post-inaugural tax proposals. It will be up to his House and Senate counterparts to sharpen their pencils and their elbows to successfully figure out how to accommodate President Trump’s priorities as part of the budget reconciliation process.
Mandatory Captive Rules in Limbo for California Employers – 2 Federal Lawsuits Challenge SB 399 and Looming Issue Before the NLRB
As discussed in our recent article, the introduction of SB 399 in California (approved and added as California Labor Code section 1137) sparked significant discussion and concern among California employers with union employees. The legislation, which became effective January 1, 2025, restricts so-called “captive audience meetings” by prohibiting employers from discharging or disciplining employees for refusing to attend mandatory employer-sponsored meetings. Many employers believe the law unnecessarily restrains their ability to communicate effectively and transparently with employees about important issues.
In response to SB 399, the California Chamber of Commerce and the California Restaurant Association filed a federal lawsuit in the United States District Court for the Eastern District of California on December 31, 2024 (the “Lawsuit”). The Lawsuit challenges the constitutionality of SB 399, arguing it infringes on employers’ free speech rights and is otherwise preempted by the National Labor Relations Act (“NLRA”). On February 11, 2025, the Liberty Justice Center and California Justice Center filed a second federal lawsuit in the same court, raising similar constitutional arguments (“Second Lawsuit” and collectively “the Lawsuits”). The Lawsuits seek to enjoin SB 399 and restore employer free speech rights across the state of California.
Relatedly, on February 14, 2025, the Acting General Counsel of the National Labor Relations Board (“NLRB”) William B. Cowen issued his first General Counsel Memorandum (“GC Memo”) GC 25-05, rescinding multiple policies issued by the previous NLRB General Counsel. Among others, the GC Memo rescinded prior federal guidance concerning the right to refrain from captive audience and other mandatory meetings under the NLRA, GC 22-04.
The California Worker Freedom from Employer Intimidation Act
SB 399, or the California Worker Freedom from Employer Intimidation Act (the “California Act”), prohibits employers from taking adverse actions against employees who choose not to attend meetings where opinions on religious or political matters, including unionization, are expressed. Previously, employers were permitted to require employee attendance at such meetings. The California Act is currently enforced by the Division of Labor Standards Enforcement and is ostensibly designed to protect employees from presumably coercive tactics that could influence their decisions regarding union policies.
The California Act follows a larger trend among several states that have enacted similar captive audience bans.
The Constitutional Challenge to the California Act
The Lawsuits in the Eastern District of California challenge the California Act on essentially two grounds. First, the Lawsuits argue the California Act violates the First and Fourteenth Amendments of the United States Constitution. Second, the Lawsuits argue the California Act is preempted by the NLRA.
The Lawsuits contend the California Act unfairly targets employers’ viewpoints on political matters by regulating the content of their communications and suppressing their ability to speak freely, in violation of the First and Fourteenth Amendments. Specifically, by restricting speech on “matters relating to elections for political office, political parties, legislation, regulation, and the decision to join or support any political party or political or labor organization,” the Lawsuits argue that the California Act is overbroad and constitutes unconstitutional content-based discrimination aimed at chilling employers’ speech. The Lawsuits also claim the California Act will potentially leave workers without a full understanding of the implications of unionization.
Additionally, the Lawsuits argue the California Act is preempted by the NLRA, as the NLRA already provides a comprehensive framework for labor relations. Specifically, the Lawsuits argue that the California Act conflicts with and intrudes on an area that the federal government has decided to exclusively regulate, as evidenced by NLRA Section 8(c), which protects employers’ rights to express views on unionization, provided there are no threats or promises of benefits.
The Lawsuits ask for a temporary and permanent injunction blocking enforcement of the California Act.
Federal Law – The Looming NLRA Issue Under the NLRB
On November 13, 2024, the NLRB overturned decades of precedent by finding that requiring employees “to attend a meeting at which the employer expresses its views on unionization” violates the NLRA. That NLRB ruling was appealed and is pending before the United States Court of Appeals for the Eleventh Circuit.
This NLRB ruling and its applicability to state-sponsored “captive audience” meeting ban laws, including the California Act, may be short-lived once the five-member NLRB regains a Republican majority. However, the NLRB currently lacks a quorum after Trump fired former NLRB Member, Gwynne Wilcox, leaving the NLRB with one Democrat, one Republican, and three vacancies. The termination of former Member Wilcox is currently being litigated.
In addition, on February 14, 2024, the new Acting General Counsel of the NLRB signaled a new policy direction for federal labor law under the Trump administration by issuing GC Memo 25-05, rescinding over a dozen policies endorsed by previous leadership, including GC Memo 22-04 concerning captive audience meetings. (We discussed GC Memo 25-05 here.) While GC memos are not binding law, they act to inform Regional NLRB offices of the General Counsel’s priorities in enforcing the NLRA. Significantly, GC Memo 25-05 does not reverse the current application of the NLRB’s November 13, 2024 decision concerning captive audience meetings, but it does indicate a new NLRB may view the current rule of federal labor law differently.
Key Takeaways for California Employers
The outcome of the Lawsuits are uncertain and the NLRB is in a state of flux. California employers should reassess meeting policies and practices and develop an approach that makes sense for their individual business and risk profile given the current state and federal law considerations. California employers should monitor developments in this area, and companies with questions concerning SB 399 should contact experienced labor counsel.
Assembly Bill 3 Proposes to Raise Jurisdictional Cap on Nevada Diversion Program
Jurisdictional changes may be coming to Nevada’s court annexed non-binding arbitration program, which currently involves most civil cases where the amount in controversy is $50,000 or less. Nevada’s courts have proposed AB 3, which is currently before the Assembly’s judiciary committee. This bill would change the NRS 38.310(1)(a) jurisdictional cap for that program from $50,000 to $100,000, effective for cases filed on or after January 1, 2026. The arbitration program was created in 1992 with an original cap of $25,000. That cap was increased to $40,000 in 1995 and raised to $50,000 in 2005. The Bureau of Labor Statistics Consumer Price Index Inflation Calculator estimates that the buying power of $50,000 in February 2005 equates to approximately $83,000 of buying power in January 2025.
Proponents of AB 3 testified at a committee hearing that the percentage of civil cases entering the program has dropped by nearly 20% in recent years due to inflationary pressures negatively impacting medical bills, property damage repairs, and other types of damages. If fewer cases enter the program, the caseload for the district courts increases. Proponents assert that by increasing the cap to $100,000, the number of cases entering the program should return to historical averages.
AB 3 generally appears to benefit defense clients. The arbitration program was expressly designed to streamline discovery and reduce litigation costs, allowing lower-value disputes to be litigated on their merits. Raising the jurisdictional cap to $100,000 would benefit litigants by enabling more cases to enter the program. Another benefit of program participation is that principal damages are capped at the jurisdictional maximum.
At a committee hearing on February 17, several attorneys testified in support of AB 3, but there was no participation from broker or carrier lobbying groups. Notably, the plaintiff-oriented Nevada Justice Association (NJA) testified that while it presently opposes AB 3, it is willing to work with the bill’s proponents to reach a compromise. However, the NJA did not hint regarding what it may want in return for supporting AB 3.
The judiciary committee did not vote on AB 3 at the February 17 hearing but is expected to continue consideration of AB 3.