Beltway Buzz, January 17, 2025
The Beltway Buzz is a weekly update summarizing labor and employment news from inside the Beltway and clarifying how what’s happening in Washington, D.C., could impact your business.
Day One Predictions. Monday, January 20, 2025, is Inauguration Day (as well as Martin Luther King Jr. Day). At the Buzz, we are well stocked with coffee and protein bars, as it is expected to be a busy day. We will obviously have a lot to discuss next week, but here are some policy issues that are on our radar.
Immigration. This is obviously a priority issue for Republicans, and President-elect Donald Trump could issue multiple executive orders on the topic. For example, establishing new policies relating to the southern border, travel restrictions, temporary protected status, and “Buy American, Hire American,” could all be the subject of executive orders next week.
Diversity, Equity, and Inclusion (DEI). President-elect Trump and Vice President-elect J.D. Vance, as well as other members of the incoming administration, have been critical of DEI. The Buzz expects an executive order targeting DEI offices and programs within the federal government that could also implicate similar programs for federal contractors.
National Labor Relations Board. President Biden established a new precedent by firing former National Labor Relations Board (NLRB) general counsel Peter Robb on his first day in the White House. In turn, President-elect Trump is expected to fire the current National Labor Relations Board (NLRB) general counsel, Jennifer Abruzzo. Who will step up as acting general counsel in Abruzzo’s place remains to be seen.
Dates and Deadlines We Are Watching. Inauguration Day isn’t the only date we are watching here at the Buzz, and we already have our eyes on the following key dates and deadlines:
OSHA—Proposed Heat Standard. As the Buzz noted last week, January 14, 2025, was the deadline for stakeholders to submit comments in response to the Occupational Safety and Health Administration’s (OSHA) proposed heat standard. The Buzz does not expect to hear much anytime soon about the fate of the standard under the incoming Trump administration. Of course, a final rule may never issue during the next four years, and it is possible that the new administration could issue a much narrower, more flexible version of the proposed standard at some point in the future.
New provisions of the Biden administration’s H-1B modernization rule became effective on January 17, 2025.
Subminimum Wage for Individuals With Disabilities. The comment docket for the U.S. Department of Labor’s (DOL) proposal to eliminate the subminimum wage for individuals with disabilities closed on January 17, 2025. Former chair of the House Committee on Education and the Workforce, Virginia Foxx (R-NC), has blasted the proposal as “misguided and irresponsible.”
Trump Nominates Employment Policy Veteran. This week, President-elect Trump announced that he will nominate Keith Sonderling as deputy secretary of Labor. Sonderling most recently served as commissioner on the U.S. Equal Employment Opportunity Commission (EEOC), where he led the Commission’s artificial intelligence policy efforts. Prior to his role on the Commission, Sonderling served as acting and deputy administrator of the DOL’s Wage and Hour Division. As such, Sonderling is well-attuned to the employment policy issues facing the business community.
Republican Senator Pushes Labor Reform. Senator Josh Hawley (R-MO) is circulating a framework for labor reform legislation on Capitol Hill. The unusual move would codify some of the much-maligned labor reform ideas that both Democrats and labor union bosses have pushed over the last several years. While no legislation has actually been introduced, according to the framework that is being circulated, the bill would:
require employers to post a notice of National Labor Relations Act (NLRA) rights. The NLRB tried doing this via regulation in 2011 (at the time, Hawley worked as both a law professor and an attorney at a religious nonprofit organization). The uproar from the employer community was incredible, and the regulation was struck down;
prohibit “unsafe work speed quotas” in warehouses. This is taken from the ill-conceived Warehouse Worker Protection Act;
prohibit mandatory employee meetings during which the pros and cons of unionization are discussed;
require an “ambush election” in less than twenty days;
require contract negotiations to begin within ten days after a representation election; and
enact civil penalties, increased damages, and allow for a private right of action.
Even if a bill is introduced, its chances of passage in this congressional session are slim. Still, that a Republican senator from a state that voted twice for President-elect Trump is pushing such changes to federal labor law is a sign of the populist influence in today’s Republican Party.
OSHA Withdraws Proposed COVID-19 Standard. Three years and two days after the Supreme Court of the United States effectively put an end to the Occupational Safety and Health Administration’s (OSHA) COVID-19 vaccination and testing emergency temporary standard (ETS), OSHA announced that it is withdrawing its proposed COVID-19 rule (that would have been permanent, as opposed to temporary). A final version of the rule sat at the White House’s Office of Information and Regulatory Affairs since December 2022. In an accompanying press release, OSHA stated it withdrew the proposed rule “because the most effective and efficient use of agency resources to protect healthcare workers from occupational exposure to COVID-19, as well as a host of other infectious diseases, is to focus its resources on the completion of an Infectious Diseases rulemaking for healthcare.”
DHS Extends TPS. Late last week, the U.S. Department of Homeland Security (DHS) extended Temporary Protected Status (TPS) designations for individuals from El Salvador (from March 10, 2025, to September 9, 2026), Venezuela (from April 3, 2025, through October 2, 2026), Ukraine (from April 20, 2025, through October 19, 2026), and Sudan (from April 20, 2025, through October 19, 2026). The secretary of Homeland Security can terminate TPS designations by providing notice in the Federal Register at least sixty days prior to expiration.
Cut to the Chase. On January 13, 1808, Salmon P. Chase was born in Cornish, New Hampshire. Chase was an attorney and anti-slavery activist who helped establish both the Free Soil Party (which fought against the expansion of slavery in the territories) and then the Republican Party. Chase served as senator from Ohio from 1849 to 1855 and then served as governor of Ohio from 1856 to 1860. He was elected to the U.S. Senate again in 1860, but soon resigned to become President Abraham Lincoln’s treasury secretary. After the 1864 death of Supreme Court Chief Justice Roger B. Taney (who authored Dred Scott v. Sanford), Lincoln nominated Chase to take his seat, and he was confirmed by the Senate on the same day. With this resume, Chase is one of a handful of politicians to have served in all three constitutional branches of government and as a state governor. Some other facts about Chase:
Paper currency first appeared during Chase’s tenure as treasury secretary. He—rather immodestly—put his own picture on the $1 bill. Chase is also often given credit for ordering the phrase “In God We Trust” to be engraved on U.S. coins.
Chase’s visage later appeared on the $10,000 bill, which was publicly circulated between 1928 and 1946. It is the largest denomination of U.S. currency ever circulated.
Chase presided over the impeachment proceedings of President Andrew Johnson in 1868.
Chase died of a stroke in 1873 while still serving as chief justice. The Court subsequently draped his chair and the bench with a black wool crêpe—a tradition that has since been followed at the Court following the death of a sitting justice.
CFPB Proposes Rule to Protect Consumers from Unfair Contract Clauses
On January 13, 2025, the CFPB announced a proposed rule aimed at prohibiting companies from including in consumer agreements terms that operate to waive consumers’ legal rights, allow companies to unilaterally change key terms, or restrict consumers’ lawful free expression. The CFPB has made a preliminary determination that the use of such terms may constitute an unfair or deceptive act or practice under the Consumer Financial Protection Act (CFPA). See 12 U.S.C. 5531(b).
In its proposal, the CFPB expresses concern that certain contract clauses can force consumers to waive important rights or face restrictions on their freedom of speech and are presented to consumers on a “take it or leave it” basis. The Bureau is particularly focused on contract clauses buried in fine print that it alleges suppress free speech, rule of law, or undermine due-process. The Bureau asserts that these types of clauses can create an unfair advantage for companies and ultimately deceive and harm consumers. (We previously discussed the CFPB’s treatment of fine print terms here and here).
Specifically, the proposed rule aims to prevent companies from using contract terms that:
Undermine the Rule of Law. The proposed rule prohibits the use of clauses that force consumers to opt out of statutes passed by Congress or state legislatures, including protections for servicemembers, preventing elder abuse, or ensuring corporate accountability.
Suppress Speech. The rule proposes to prohibit companies from imposing fines, initiating lawsuits, or removing users from platforms based on consumer comments, reviews, or political or religious beliefs. The Bureau stated that consumers’ First Amendment rights allow them to share negative feedback without facing repercussions.
Unilaterally Amend Key Terms. The rule seeks to prevent companies from altering contracts without consumer consent, ensuring consumers have a clear and consistent understanding of their rights and obligations under agreements they have entered into.
Unfair Credit Practices The CFPB is proposing to codify existing prohibitions under the FTC’s Credit Practices Rule including against confessions against judgment, an executory waiver or a limitation of exemption from attachment, execution, or other process on real or personal property held, assignment of wages, and a non-possessory interest in household goods. See Credit Practices Rule, 49 FR 7740 (Mar. 1, 1984). The Bureau does not anticipate that this provision of the rule will have a substantial material effect on the market, as covered persons are already likely to be in compliance with the relevant requirements.
Putting It Into Practice: With Chopra’s term drawing to a close, the CFPB continues its last-minute push to propose and enact rulemaking. It remains to be seen whether the Trump administration will share this focus and ultimately finalize the rule. Consumer finance companies should nonetheless review their existing consumer contracts and identify any clauses that may fall under the categories outlined in the proposed rule.
Listen to this post
Maryland’s FAMLI Program, Part I: An Overview of The Law
In 2022, the Maryland General Assembly overrode Governor Larry Hogan’s veto to enact the law that created the Family and Medical Leave Insurance (FAMLI) program. Applicable to all employers with Maryland employees and starting July 1, 2026, the program will provide most employees in Maryland with twelve weeks of paid family and medical leave, with the possibility of an additional twelve weeks of paid parental leave. Contributions from employers and employees to fund the program will begin July 1, 2025.
Quick Hits
Maryland’s Family and Medical Leave Insurance (FAMLI) program provides most Maryland employees with up to twelve weeks of paid leave, with some eligible for an additional twelve weeks, starting July 1, 2026, funded by contributions from both employers and employees beginning July 1, 2025.
The Maryland Department of Labor has released two sets of proposed regulations for the FAMLI program.
Under the FAMLI program, employees in Maryland will be eligible for paid leave for various family and medical reasons, and if they take leave for their own medical reasons, they will be eligible for an additional twelve weeks for parental bonding purposes.
There is much that employers may need to do to prepare. That preparation will depend on regulations issued by the Maryland Department of Labor (MDOL) to implement the law. Thus far, the MDOL has released two sets of proposed regulations, with more to come. The first set, released in October 2024, covers general provisions, contributions, equivalent-private insurance plans, and claims, while the second set, released on January 13, 2025, and currently open for public comment, covers dispute resolution. Part one of this multipart series explains the law, with parts two and three summarizing the proposed regulations, as well as employer concerns.
The law sets forth a general framework for the program, consisting of the following elements:
Leave Amount and Reasons for Leave
Effective July 1, 2026, all employees who have worked at least 680 hours in Maryland over the prior twelve months will be eligible to receive up to twelve weeks of paid leave for their own serious health condition, to care for a family member’s serious health condition, for parental bonding (including kinship care), to care for an injured or ill military servicemember who is next of kin, or for certain qualifying exigency reasons related to a servicemember’s active duty. If an employee has taken FAMLI leave for their own serious health condition, they may receive an additional twelve weeks for parental bonding purposes (and vice versa). The law requires employees to take leave in a minimum of four-hour increments.
Family members include the child of the employee or their spouse, the parent of the employee or their spouse, the employee’s spouse or domestic partner, and the employee’s grandparent, grandchild, or sibling. These include biological, adopted, foster, step, legal guardian, and in loco parentis relationships.
Contributions
The benefits will be administered through a state program, which will be funded through contributions from employers and employees, starting July 1, 2025. The rate of contribution will be determined annually by the Maryland secretary of labor, but is capped at 1.2 percent of an employee’s wages, up to the Social Security wage base (which will be $176,100 in 2025). The law splits contributions 50-50, unless the employer elects to make the employee share of the contribution as well. The law does not require small employers (those with fewer than fifteen employees) to submit the employer portion of the contribution (although employee contributions are still required), and the Maryland Department of Health will reimburse certain licensed/certified community health providers for up to the full amount of their share of the premium.
Employer Notice to Employees
The law requires covered employers to provide written notice to employees of their rights and duties under the law upon hire, annually, and within five days when leave is requested or when the employer knows leave may qualify.
Employee Notice to Employers
If the need for leave is foreseeable, the law requires employees to provide employers with at least thirty days’ written notice of their intention to take leave. If it is not foreseeable, they must provide notice as soon as practicable and generally comply with the employer’s absence-reporting requirements. If intermittent leave is required, the employee must make a reasonable effort to schedule the leave to not unduly disrupt business operations.
Employee Application for Benefits
Employees may apply for benefits up to sixty days before and sixty days after the anticipated start date of the leave, although the MDOL may waive the filing deadlines for good cause. Employers have five days to respond to an application.
Interaction With Other Benefits
FAMLI leave will run concurrently with federal Family and Medical Leave Act (FMLA) leave. Employers may not require employees to use vacation, sick leave, or other paid time off before or while receiving FAMLI benefits, although employers may permit employees to use such leave to bridge the difference between FAMLI benefits and full pay. However, if an employer provides paid leave specifically for purposes of parental bonding, family care, military leave, or disability, the employer may require employees to use such leave concurrently or coordinated with FAMLI leave. Employees receiving unemployment insurance benefits or workers’ compensation benefits (other than for a permanent partial disability) are not eligible for FAMLI benefits.
Job Protection and Health Benefits
During FAMLI leave, the law states that employers may discharge employees only for cause. They must otherwise be reinstated to their job, unless the employer determines that reinstatement will cause “substantial and grievous economic injury” to their operations and has notified the employee of that fact. In addition, the law requires employers to maintain the employee’s health benefits during FAMLI leave.
Private Employer Plans
Employers may establish their own plan or utilize a certified third-party insurance plan that meets or exceeds the rights, protections, and benefits provided to employees under the law. For such private employer plans to be valid, the MDOL, which is directed to establish “reasonable criteria” for such plans, must approve the plan.
Out with a Bang: President Biden Ends Final Week in Office with Three AI Actions — AI: The Washington Report
President Biden’s final week in office included three AI actions — a new rule on chip and AI model export controls, an executive order on AI infrastructure and data centers, and an executive order on cybersecurity.
On Monday, the Department of Commerce issued a rule on responsible AI diffusion limiting chip and AI model exports made to certain countries of concern. The rule is particularly aimed at curbing US AI technology exports to China and includes exceptions for US allies.
On Tuesday, President Biden signed an executive order (EO) on AI infrastructure, which directs agencies to lease federal sites for the development of large-scale AI data centers.
On Thursday, Biden signed an EO on cybersecurity, which directs the federal government to strengthen its cybersecurity systems and implement more rigorous requirements for software providers and other third-party contractors.
The actions come just days before President-elect Trump begins his second term. Yet, it remains an open question whether President Trump, who has previously supported chip export controls and data center investments, will keep these actions in place or undo them.
In its final week, the Biden administration issued three final actions on AI, capping off the administration that took the first steps toward creating a government response to AI. On Monday, the Biden administration announced a rule on responsible AI diffusion through chip and AI model export controls, which limit such exports to certain foreign countries. On Tuesday, President Biden signed an Executive Order (EO) on Advancing United States Leadership in Artificial Intelligence Infrastructure, which directs agencies to lease federal sites for the development of AI data centers. And on Thursday, Biden signed an Executive Order on Strengthening and Promoting Innovation in the Nation’s Cybersecurity, which directs the federal government to strengthen its cybersecurity operations.
The new AI actions come just days before President-elect Trump takes the White House. What Trump decides to do with Biden’s new and old AI actions, as we discuss below, may provide the first indication of the direction of his second administration’s approach to AI.
Rule on Responsible Diffusion of Advanced AI Technology
On Monday, the Department of Commerce’s Bureau of Industry and Security announced a sweeping rule on export controls on chips and AI models, which requires licenses for exports of the most advanced chips and AI models. The rule aims to allow US companies to export advanced chips and AI models to global allies while also preventing the diffusion of those technologies, either directly or through an intermediary, into countries of concern, including China and Russia.
“To enhance U.S. national security and economic strength, it is essential that we do not offshore [AI] and that the world’s AI runs on American rails,” according to a White House fact sheet. “It is important to work with AI companies and foreign governments to put in place critical security and trust standards as they build out their AI ecosystems.”
The rule divides countries into three categories, with different levels of export controls and licensing requirements for each category based on their risk level:
Eighteen (18) close allies can receive a license exception. Close allies are “jurisdictions with robust technology protection regimes and technology ecosystems aligned with the national security and foreign policy interests of the United States.” They include Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, South Korea, Spain, Sweden, Taiwan, and the United Kingdom.
Countries of concern, including China and Russia, must receive a license to export chips. A “presumption of denial” will apply to license applications from these countries.
All other countries are allowed to apply for a license, and “license applications will be reviewed under a presumption of approval.” But after a certain number of chips are exported, certain restrictions will apply for these countries.
The rule’s export controls fall into four categories depending on the country, its security standards, and the types of chips being exported.
Orders for chips of up to 1,700 advanced GPUs “do not require a license and do not count against national chip caps.”
Entities headquartered in close allies can obtain “Universal Verified End User” (UVEU) status by meeting high security and trust standards. With this status, these countries “can then place up to 7% of their global AI computational capacity in countries around the world — likely amounting to hundreds of thousands of chips.”
Entities not headquartered in a country of concern can obtain “National Verified End User” status by meeting the same high security and trust standards, “enabling them to purchase computational power equivalent to up to 320,000 advanced GPUs over the next two years.”
Entities not headquartered in a close ally and without VEU status “can still purchase large amounts of computational power, up to the equivalent of 50,000 advanced GPUs per country.”
The rule also includes specific export restrictions and licensing requirements for AI models.
Advanced Closed-Weight AI Models: A license is required to export any closed-weight AI model —“i.e., a model with weights that are not published” — “that has been trained on more than 1026 computational power.” Applications for these licenses will be reviewed under a presumption of denial policy “to ensure that the licensing process consistently accounts for the risks associated with the most advanced AI models.”
Open-Weight AI Models: The rule does “not [impose] controls on the model weights of open-weight models,” the most advanced of which “are currently less powerful than the most advanced closed-weight models.”
The new chip export controls build on previous export controls from 2022 and 2023, which we previously covered.
Executive Order on AI Infrastructure
On Tuesday, Biden signed an Executive Order on Advancing United States Leadership in Artificial Intelligence Infrastructure. The EO directs the Department of Defense and Department of Energy to lease federal sites to the private sector for the development of gigawatt-scale AI data centers that adhere to certain clean energy standards.
“These efforts also will help position America to lead the world in clean energy deployment… This renewed partnership between the government and industry will ensure that the United States will continue to lead the age of AI,” President Biden said in a statement.
The EO requires the Secretary of Defense and Secretary of Energy to identify three sites for AI data centers by February 28, 2025. Developers that build on these sites “will be required to bring online sufficient clean energy generation resources to match the full electricity needs of their data centers, consistent with applicable law.”
The EO also directs agencies “to expedite the processing of permits and approvals required for the construction and operation of AI infrastructure on Federal sites.” The Department of Energy will work to develop and upgrade transmission lines around the new sites and “facilitate [the] interconnection of AI infrastructure to the electric grid.”
Private developers of AI data centers on federal sites are also subject to numerous lease obligations, including paying for the full cost of building and maintaining AI infrastructure and data centers, adhering to lab security and labor standards, and procuring certain clean energy generation resources.
Executive Order on Cybersecurity
On Thursday, President Biden signed an Executive Order on Strengthening and Promoting Innovation in the Nation’s Cybersecurity. The EO directs the federal government to strengthen the cybersecurity of its federal systems and adopt more rigorous security and transparency standards for software providers and other third-party contractors. It directs various agencies — with some deadlines as soon as 30 days from the EO’s issuance — to evaluate their cybersecurity systems, launch cybersecurity pilot programs, and implement strengthened cybersecurity practices, including for communication and identity management systems.
The EO also aims to integrate AI into government cybersecurity operations. The EO directs the Secretary of Energy to launch a pilot program “on the use of AI to enhance the cyber defense of critical infrastructure in the energy sector.” Within 150 days of the EO, various agencies shall also “prioritize funding for their respective programs that encourage the development of large-scale, labeled datasets needed to make progress on cyber defense research.” Also, within 150 days of the EO, various agencies shall pursue research on a number of AI topics, including “human-AI interaction methods to assist defensive cyber analysis” and “methods for designing secure AI systems.”
The Fate of President Biden’s AI Actions Under a Trump Administration?
It remains an open question whether Biden’s new AI infrastructure EO, cybersecurity EO, and chip export control rule will survive intact, be modified, or be eliminated under the Trump administration, which begins on Monday. What Trump decides to do with the new export control rule, in particular, may signal the direction of his administration’s approach to AI. Trump may keep the export controls due to his stated commitment to win the AI race against China, or he may get rid of them or tone them down out of concerns that they overly burden US AI innovation and business.
Come Monday, Will It Be Alright? How Companies May Be Impacted by Immigration Priorities Under the New Trump Administration
With the inauguration of President-elect Trump on a cold Monday morning next week, there are several things that companies and their staff may want to keep in mind in preparing for possible Executive Orders and policy changes.
1. Continuity of Business Operations
Trump has vowed to crack down on illegal immigration on Day 1. This includes an aggressive push for mass deportations.
At first glance, companies may think this will not affect business since many companies use E-Verify and do not hire undocumented workers. If that’s the case, then the business may have less to worry about—but do not presume this is a worry-free zone. There are questions to ponder:
Does the company utilize the services of contractors? If so, how are the hiring practices of the contracting company? If that company was raided, could that upset the continuity of your business operations?
When did the company enroll in E-Verify? Employers who use E-Verify must begin using E-Verify for all new hires on the date the company signs the memorandum of understanding. If the company could have undocumented workers that were more easily hired prior to the use of E-Verify, and if those employees were picked up or deported, what would happen to the continuity of business operations?
2. Employee Travel – Tax and Monetary Implications
For companies in existence during the first Trump administration, you may remember that travel bans were quickly imposed by Executive Order. Although this point could also fall under the guide of business continuity, it created another unanticipated issue for companies related to taxation and costs.
One can expect based on what we learned during the first administration, any employee who is outside the U.S. and is not a U.S. citizen or permanent resident (green card holder) at the time any potential travel ban is enacted may not be able to return to the U.S. in short order.
If an employee is stuck outside the U.S., will they be in a jurisdiction where they have work authorization?
If yes, are they going to be outside the U.S. for so long that their working remotely from another country would create tax implications for the company?
If no, is the company going to sponsor that employee for work authorization where they are or cover the cost of the employee to setup shop where they are? Is there any risk in doing so?
If there are exceptions to a travel ban, and your company employs foreign workers, will the company financially support efforts to provide immigration advice to the workers on how to fall under an exception and how to make that argument?
3. Specialty Occupation Workers, Intracompany Transferees, and More
For companies that sponsor foreign nationals in various visa categories such as H-1B, L-1, TN, O-1 or others, the company may need to plan for additional resources to support such employees. Questions to ask may include:
Will the government take longer to make decisions on cases? If government processing times slow down, has the company sought to initiate cases or extensions early enough to ensure the employee and the business are protected? Should cases be initiated earlier?
Will employees who travel be subject to extreme vetting at consular appointments? This question goes to whether companies employ counsel or anyone who will prep employees for their visa interviews and whether additional support is needed in that regard. If someone is denied a visa, this rolls back up to the above point. Can the employee work remotely from a different country? What cost, tax, or other implications are there if they are unable to return to work as planned?
Will companies sponsor employees for green cards as soon as possible? With nervousness about travel bans, possible changes in how things are adjudicated or how quickly they are adjudicated, employees may seek to have the employer start the green card process as quickly as possible. Does the company have a green card policy regarding when they will be initiated? Should that be revised? Is the company prepared to pay the costs related to a possible increased number of green card requests?
The above are just a few of the things that companies may want to consider before Monday.
Michigan’s Earned Sick Time Act – Legislative Update
There are only 36 days before the Earned Sick Time Act (ESTA) takes effect on February 21, 2025. Presently, both the state House and Senate have introduced bills to amend the ESTA. The House acted quickly convening a committee to hear testimony on House Bill 4002 and proposed amendments to the minimum wage law (HB 4001). Varnum’s Labor and Employment team has been closing monitoring the progress of these amendments.
Varnum attorney Ashleigh Draft testified before the House Select Committee on Protecting Michigan Employees and Small Businesses in support of House Bill 4002. To date, the Senate has not yet convened a committee to discuss the Senate Bill. A summary of both the House and Senate bills follow:
House Bill (HB 4002)
The House Bill includes crucial amendments to make the Act more workable for both employees and employers, including:
Clarifies the definition of employees eligible for the benefits of the ESTA. Independent contractors, out of state employees, seasonal workers (working 25 weeks or less in a year), part-time employees (working 25 hours or less per week) and variable hour workers are not eligible for benefits under the Act.
Exempts small businesses (employers with less than 50 employees) from ESTA.
Employers may limit increment of use to 1 hour.
Retains the accrual method of 1 hour for every 30 hours worked, with usage capped at 72 hours per year, and limiting carryover to 72 hours.
Recognizes that employers that frontload 72 hours per year are in compliance with the Act and do not need to carryover time from one benefit year to the next.
Permits employers to provide a single PTO bank that can be used for all purposes including ESTA.
Allows employers to require employees to take ESTA time concurrently with FMLA, ADA or any other applicable law.
Senate Bill (SB 15)
The bill pending in the Senate proposes the following amendments:
Defines small business as an employer with fewer than 25 employees.
Allows small businesses to frontload 40 hours of paid and 30 hours of unpaid earned sick time at the beginning of the year.
Employers may limit increment of use to 1 hour.
Retains the accrual method of 1 hour for every 30 hours but permits frontloading of 72 hours as an alternative to the accrual method, while retaining the carryover from year to year.
The amount of accrued sick time that an employee may carry over from year to year may be limited to 144 hours if the employer pays the employee the value of the employee’s unused sick time before the end of the year. If the employer does not pay out the value of the employee’s unused sick time, carryover may be capped at 288 hours.
Charlotte E. Jolly contributed to this article
Trump’s Second Term: Implications for Tariffs and Enforcement in the Solar Industry
As President-elect Trump prepares to take office for a second term, his presidency will undoubtedly reshape US international trade policy, impacting US and foreign manufacturing. We can expect that his administration will implement new and increased tariffs. Whether those tariffs come in the form of universal tariffs, tariffs targeted to a few countries, industries or products, or tariffs targeted to certain companies will likely be known once Trump assumes office. The solar industry, particularly solar products originating from China, is expected to be a focus point of potential future tariff measures.
In addition to potential tariff increases, the solar industry is likely to continue to be a high priority sector for forced labor enforcement under the Uyghur Forced Labor Prevention Act (UFLPA) by US Customs and Border Protection (CBP), particularly due to the significant use of polysilicon, a key raw material in solar panels, which is often sourced from Xinjiang, a region in China where forced labor concerns is prevalent.
How Tariffs Could Impact the Solar Industry
As President-elect Trump prepares to take office, the specific tariff actions he may pursue remain uncertain. Historically, tariff increases have followed extensive investigations by US government agencies under statutory authorities like Section 301 and Section 232. However, it is plausible that Trump could leverage alternative powers, such as the International Emergency Economic Powers Act (IEEPA), to swiftly enhance protections for domestic solar manufacturers. This could involve the rapid imposition of targeted tariffs on imports of solar panels and components.
These targeted tariffs could take various forms. For instance, they might focus solely on imports from China or extend to other regions with growing photovoltaic (PV) panel production, such as Vietnam, Malaysia, and Thailand. As developments unfold, we will continue to monitor and provide updates on potential impacts to the solar industry.
Solar Imports Will Continue to Be an Enforcement Priority for CBP
Silica-based products, particularly polysilicon, continue to be classified as “High Priority” sectors for forced labor enforcement by CBP. Indeed, an analysis of CBP’s enforcement data from FY 2023 and FY 2024 reveals that solar goods and components have been a significant target of enforcement actions.
The incoming Trump Administration’s stringent stance on Chinese imports, combined with US Congress’s proactive oversight of UFLPA enforcement, is expected to sustain the momentum of forced labor enforcement within the solar industry. Companies in the solar industry, therefore, should consider conducting regular due diligence of their supply chains to ensure compliance with the UFLPA and other forced labor laws.
How Can We Help?
As the solar industry braces for potential shifts in trade policy and enforcement under President-elect Trump’s second term, it is imperative for companies to remain vigilant and proactive. Our team is here to support your business in navigating these changes.
With the expected increase in tariffs and the ongoing focus on forced labor enforcement, we understand the challenges and opportunities that lie ahead for solar manufacturers and importers. We are committed to keeping you informed and prepared to thrive amidst these developments.
IRA Developments to Watch in the EV and Battery Supply Chain for 2025
The incoming Trump Administration’s approach to the Inflation Reduction Act (IRA) and tax policies is generating significant interest within the electric vehicle (EV) sector.
Generally, reports indicate that some Republican politicians, including individuals connected with the Trump Administration, intend to repeal or limit certain IRA tax incentives. US Congress could limit tax incentives by capping a tax credit, for example, or narrowing the activity or outputs eligible for a tax credit.
However, Republican states have invested substantial amounts into projects that benefit from IRA tax incentives. Accordingly, the repeal or limitation of many of the IRA tax incentives could negatively affect Republican constituents, and the Republican-controlled Congress and Trump Administration may seek to avoid such a result.
While exact policy directions are still unfolding, here are some critical areas to follow.
Key Points to Watch in 2025
1. Changes to EV Tax Credits
Reports indicate that Trump’s transition team aims to eliminate the $7,500 consumer tax credit for EV purchases, which was enacted as part of the IRA.
However, other reports suggest that Republicans might leave the IRA largely untouched because Republican states and constituencies have largely benefited from the IRA.
Modifications to the EV tax credits could make EVs more expensive for consumers, potentially slowing adoption and affecting industry growth. The outcome will depend on legislative negotiations and pressures from various constituencies.
2. FEOC Restrictions
Under the IRA, Foreign Enemy of Concern (FEOC) restrictions prevent taxpayers from claiming the $7,500 consumer tax credit if certain critical minerals contained in the EV battery of the purchased EV were extracted, processed, or recycled by an FEOC. Reports indicate that the Trump Administration may extend such FEOC restriction to other IRA tax incentives.
For example, it has been suggested that Congress impose FEOC restrictions on the IRA tax credit available to manufacturers under Section 45X (Advanced Manufacturing Production Credit).
Revisions to the FEOC restrictions under the Trump Administration might impact trade dynamics.
3. FEOC Equity Thresholds
The FEOC restriction limits eligibility for the $7,500 consumer tax credit for EV purchases if certain critical minerals contained in the battery of such EV were extracted, processed, or recycled by a foreign entity that is owned by, controlled by, or subject to the direction of another entity connected with certain foreign governments (generally, China, Russia, Iran, and North Korea). A foreign entity is owned by, controlled by, or subject to the direction of another entity if 25% or more of the entity’s board seats, voting rights, or equity interests are held by the other entity.
The Trump Administration may choose to maintain or adjust the current 25% equity threshold for FEOC entities.
If the Trump Administration opts to make the FEOC rules more stringent or tightens other investment regulations for FEOC entities, the Trump Administration may prevent such FEOC entities from benefitting from certain IRA tax incentives.
Investments by these entities in free trade agreement countries or the United States could face additional scrutiny or restrictions, although the extent of permissible equity stakes in such ventures remains uncertain and could be influenced by broader trade considerations, national security, and economic priorities. The Trump Administration’s stance on China and related economic strategies will significantly influence these policies.
4. National Security and IRA Coverage
Changes to the IRA’s coverage of components and constituents, particularly in the context of battery-related products, could be influenced by national security considerations. The Trump Administration might prioritize restrictions on Chinese-made energy storage systems (ESS) and related components due to their strategic importance in critical infrastructure and grid security.
The new Republican Congressional majority could seek amendments through tax reform aiming to address these concerns, potentially modifying or phasing out certain IRA incentives related to clean energy and battery production.
As discussed above, the Trump Administration may seek to impose FEOC restrictions on certain IRA incentives and may cite to national security concerns as a reason for imposing restrictions at certain points in the supply chain through changes to these incentives. However, specific policy directions will also depend on the Trump Administration’s assessment of risks and priorities at the time of such legislative developments.
The Lobby Shop: Awaiting Trump’s Second Inauguration: GOP Challenges, Party Divisions, and What Lies Ahead [Podcast]
In the Lobby Shop’s first episode of 2025, co-hosts Liam Donovan, Caitlin Sickles and Dylan Pasiuk convene to analyze the political environment ahead of President-elect Trump’s second inauguration. The group explores the challenges facing Speaker Johnson in a very narrowly divided Congress, the enduring influence of Trump on the Republican Party and the Democrats’ growing sense of resignation in legislative struggles. The discussion also highlights the ongoing confirmation hearings and the outsized role of figures like Elon Musk in shaping party dynamics. As they look ahead to the next administration, the hosts wonder what these developments mean for Republicans’ leadership and direction.
Navigating Tariff Threats Under the Trump Administration, Challenges Ahead for the EV and Battery Supply Chain
As President-elect Donald Trump prepares to assume office on January 20, numerous tariff proposals have already been put forward that could significantly impact the electric vehicle (EV) and battery supply chain industry. Differentiating between the potential for immediate tariff actions and those requiring more time to implement is critical for companies that are in preparation of such actions.
In general, the imposition of new duties or tariffs typically requires congressional oversight and findings from relevant government agencies, a process that can extend over several months. This includes mechanisms such as the Section 301 tariffs on imports of China-origin products, where tariffs on EVs, battery parts, and critical minerals were recently increased, along with future increases on semiconductors, natural graphite, and permanent magnets that are scheduled for action. Expanding these existing actions would take time for the administration to implement.
However, President-elect Trump may seek to expedite tariff impositions through alternative legal avenues such as the International Emergency Economic Powers Act (IEEPA). While unprecedented, these actions would align with the upcoming administration’s proposals, including potential duty increases on imports from Mexico and Canada, where reports suggest implementation as early as the President-elect’s first day in office.
Such measures could significantly impact the EV supply chain and related industries, necessitating close monitoring of these developments during 2025.
What to Watch in 2025 and Beyond
1. Tariff Increases and Trade Policies: The Trump Administration’s trade policies are expected to focus on increasing tariffs, particularly on imports from China. The continuation or expansion of Section 301 tariffs on EVs, battery parts, and critical minerals could raise costs and disrupt supply chains. The administration may expedite tariff impositions through legal avenues like the IEEPA, potentially impacting imports from a host of US trading partners. Close monitoring of policy developments is the first step. Understanding their transactional impact can mitigate tariff exposure and corporate uncertainty.
2. Global Competitiveness and Supply Chain Dependencies: The administration’s protectionist stance may bolster domestic production but could also increase manufacturing costs and limit vehicle choices. The emphasis on “decoupling” from China suggests a continuation of aggressive tariff strategies, particularly on critical minerals essential for EV batteries. Industry stakeholders seeking to explore a diversified supply chains will need strategic advice prior to launching new production sites or supply partners.
3. USMCA: The United States-Mexico-Canada Agreement (USMCA) is scheduled for a trilateral review and renegotiation during 2026. Key provisions in the pact are particularly important for the EV supply chain into the United States. Some of President-elect Trump’s tariff proposals on Mexico and Canada could be tactics for leverage in the lead-up to these negotiations and provide opportunities for the Trump Administration to negotiate Free Trade Agreements (FTAs) with other countries, potentially affecting the EV and battery supply chain. Industry leaders should take stock of their current use of the USMCA tariff preference opportunities and what potential changes in the minutiae of trade rules could mean for both suppliers and customers. While 2026 is the year of USMCA talks, 2025 will be the year of industry consultations by Ottawa, Washington, and Mexico City.
4. FTAs and Trade Negotiations: The Trump Administration may prioritize renegotiating existing FTAs and pursuing new agreements with countries that align to the administration’s goals for domestic EV and battery production. The direction of such potential FTA developments will likely be impacted by the upcoming USMCA renegotiations. The US-Japan Trade Agreement could also serve as a framework for limited bilateral FTAs with new partners. FTA’s bring tariff preferences but they also require a sophisticated understanding of country-of-origin rules and other trade calculations that are far from intuitive. Stakeholders may wish to seek our advice on particular FTAs with key US trade partners to be best prepared to understand company-specific implications and to work with Washington during the negotiation stages.
5. Legal and Political Challenges in Trade Policy: While the president has some authority to influence trade agreements, unilateral withdrawal from FTAs could face legal and political challenges from Congress. The administration may use national security exceptions to modify duty-free provisions, but such actions would require careful justification. The potential for uncertainty and long-term risk exposure is high for companies involved in the EV manufacturing industry.
New Year Resolutions Triggered by Senate Bill 382
After the North Carolina General Assembly overrode Governor Cooper’s veto of Senate Bill 382, which became Session Law 2024-57 (the “New Law”), we published a client alert describing the state-wide effect of the New Law.
With the General Assembly’s 2024 Session concluded, some interested parties hope the General Assembly might repeal or amend the New Law in 2025. But regardless of the General Assembly’s future action, the New Law controls today.
Our first alert detailed the new limitations imposed on local government zoning authority, highlighting that the New Law applies to all zoning laws adopted after June 14, 2024 (the “Effective Date”).
This alert identifies practical New Year Resolutions for local governments and property owners to consider making because of the New Law.
Resolutions for Local Governments
Because the New Law invalidates all “down-zonings” adopted after the Effective Date and a down-zoning is a law which (1) reduces density, (2) reduces the number of permitted uses, or (3) creates a nonconformity on non-residential property, local governments should consider the following:
1. Review and Categorize: Consider identifying zoning regulations adopted after the Effective Date and divide them into three categories: (A) laws that are down-zoning under the New Law, (B) laws that might be down-zoning under the New Law, and (C) laws that are not down-zoning under the New Law. For laws falling into category (A), the local government should direct staff to not enforce these laws at this time. For regulations falling within category (B), the answer is uncertain, but enforcement of these regulations may trigger litigation, including claims for attorney fees and monetary claims.
Simple. Right? Of course not!
Note the Distinctions: Some local land use regulations are authorized by the General Assembly as zoning regulations and as local police authority regulations. For example, the General Assembly adopted statutes enabling local floodplain regulations and water supply watershed regulations.
Authorized by the General Assembly (N.C.G.S. §160D-103), many local governments have simplified and unified local land use regulations for citizen convenience through adopting and codifying all land use regulations together in a unified development ordinance. The New Law applies to “zoning regulations,” but does the New Law apply to zoning regulations when such regulations are separately authorized by the General Assembly? The New Law does not expressly answer this question.
2. Consider Moratoria: While waiting (and perhaps hoping) for action by the General Assembly, development moves forward. Under the New Law, the right to develop is vested as permitted on the Effective Date. Can the General Assembly later modify this right? The answer is beyond the scope of this alert.
But let’s assume the General Assembly has authority to remove or modify this right by new legislation. For projects where an applicant has submitted an application for a development permit or approval after the Effective Date, the applicant secures a separate, independent vested right via the permit choice statutes.
Is there anything a local government can do to, perhaps, minimize vesting under the New Law by permit choice while the General Assembly might be considering changes to the New Law? Local governments may consider adopting a targeted moratorium on issuing development approvals to lessen obvious adverse impacts to public health and safety.
The possible advantage of adopting a moratorium would be to stay processing of applications for development approvals and issuing development approvals. As N.C.G.S. § 160D-107 is worded, permit choice may only apply to complete applications submitted before the moratorium became effective.
When, specifically, might a moratorium be appropriate? When a local government adopted new FEMA flood maps after the Effective Date. Local governments do not create these federal government maps but do adopt them so their citizens may purchase federal flood insurance. A moratorium provides “breathing room” for local governments to adopt standalone flood hazard regulations outside the reach of the New Law while awaiting clarifying action by the General Assembly.
But even a moratorium doesn’t provide breathing room for all development within newly identified flood prone areas. Local governments lack authority to adopt a moratorium on “development regulations governing residential uses.” N.C.G.S. § 160D-107.
Therefore, local governments have many potential New Year Resolutions but none of them restore the status quo existing before the New Law.
Resolutions for Property Owners and Developers
Local governments have many New Year Resolutions to consider, but for property owners and developers, New Year Resolutions are fewer and simpler:
1. Verify Zoning Laws: Property owners have a vested right in the zoning laws existing on the Effective Date. Like a contract, these laws establish specific rights. While most times, an electronic copy of zoning regulations is available on local government websites, frequently they are not completely current. Property owners should consider seeking a certified copy from the local government of all land use laws existing on the Effective Date. These are the terms of the property owners’ contract.
2. Expedite Development Plans: Property owners and developers who started designing a development and who like the terms of their contract should consider expediting their design and planning activity to submit a complete application and vest their development rights via permit choice. This will provide certainty that they can move forward under the version of zoning regulations existing on the Effective Date.
Like most significant changes in law, the New Law adds to the “to do” list for a New Year and the New Year brings potential for changes to the New Law. Stay tuned.
Jordan Love contributed to this article
5 Trends to Watch: 2025 Energy Regulation and Development
As a new administration takes office in 2025, several new energy policy trends are expected to emerge, reflecting the inherent tension that often exists between political desires and economic realities. For example, while the incoming Trump administration has expressed a desire to claw back subsidies made available under the Inflation Reduction Act (IRA), Republican states have also been significant beneficiaries under the IRA. In other areas such as import tariffs, bipartisan support could emerge, with each party supporting the same result for entirely different reasons. Five trends that could result are discussed below.
Carbon-Related Tariffs Could Reshape Global Trade and Business Strategy. The convergence of increased bipartisan support for import tariffs, albeit for different reasons, could result in a significant shift in international trade dynamics and potential costs for energy companies. President-elect Donald Trump has frequently expressed support for import tariffs as a tool to boost domestic manufacturing, increase revenues, or to create leverage for international negotiations. Democrats have supported adoption of carbon tariffs and mechanisms like the Carbon Border Price Adjustment Mechanism (CBAM) that is being implemented in the European Union to level the playing field for businesses investing in emissions reduction. Adoption of the European Union’s CBAM has created new operational challenges for companies throughout the world, and similar measures in the United States would add to that already complex legal and business landscape. Companies invested in renewable energy projects or reliant on imported components like solar panels and batteries should ensure transparency and awareness of their supply chains, monitor ongoing developments, and prepare for potential cost increases and supply chain disruptions.
IRA Tax Credit Future Critical for Energy Investment Decisions. While Trump has expressed opposition to the IRA, the established tax credits present a complex economic and political challenge. Republican-controlled states have been significant beneficiaries of investments generated by IRA tax credits, and many traditional energy companies have already made substantial investments based on these incentives, particularly in energy production and carbon sequestration projects. This creates significant economic pressure to maintain existing credits. However, uncertainty looms over funds yet to be distributed by the government, as well as details of future Internal Revenue Service guidance on IRA tax credits. This creates the potential to impact short- and mid-term investment decisions and may create a temporary chilling effect on new investments as stakeholders await additional clarity on implementation guidelines. Companies should closely monitor these developments, particularly those with pending applications or planning future projects dependent on IRA incentives.
Support for Clean Hydrogen Production Tax Credit Requires a Balancing of Interests. The clean hydrogen market has experienced record investment growth, catalyzed by the IRA’s tax credits. Many of these investments are being made by traditional energy companies. However, uncertainty remains over whether and to what extent the IRS will adopt stringent requirements advocated by many environmental organizations. These would require the renewable electricity to be produced from newly constructed generation (additionality), in the same hour as hydrogen is produced (temporal matching), and in the same region as hydrogen is produced (geographic matching). How the IRS resolves these issues could have a material impact on future green hydrogen investments. Here, the Trump administration will again be confronted by tension between its more general desire to claw back IRA incentives and the economic reality of significant investment to date along with support by traditional energy companies for continued future investments and increased financial certainty. This balancing of interests may result in adoption of technology neutral policies that are intended to reduce barriers to entry and increase economic certainty for investors.
Carbon Sequestration Gains Momentum Across Political Spectrum. Carbon sequestration offers traditional energy companies and carbon emitters a rare point of bipartisan consensus in energy policy, offering traditional energy companies a pathway to sustainability while maintaining core operations. With former North Dakota Gov. Doug Burgum, a prominent carbon capture and storage (CCS) advocate, announced as Trump’s nominee to lead the Interior Department, the technology could see expanded support. Carbon sequestration appeals to many environmental advocates seeking emissions reductions and to fossil fuel companies seeking to leverage their existing expertise in pipeline construction and drilling to create new opportunities in a transitioning energy market. This dual benefit of maintaining energy security while reducing carbon footprint positions CCS as a critical component in the energy transition landscape and will continue to attract support from both environmental advocates and traditional energy producers in 2025.
Renewed Support for Conventional Energy Production. A significant transformation in federal energy policy is anticipated in 2025, with renewed support for conventional energy development, including through expanded availability of federal oil leases, reduced regulation, and reconsideration of regulations that have been adopted to increase the cost of fossil fuel energy production. The Bureau of Land Management’s current restrictions on coal mining are expected to be reversed, while federal leasing for oil, uranium, and other mineral resources is likely to accelerate. This shift extends beyond mere leasing policies, however, as the Department of Justice will likely adopt a more industry-friendly stance overall. For example, enforcement of environmental regulations, particularly regarding methane emissions and associated royalty payments, is likely to become less stringent. These changes could substantially reduce operational costs for natural gas producers and other conventional energy operators, potentially stimulating increased domestic energy production.