Launch of the Civil Rights Fraud Initiative
Shortly after taking office, President Trump signed the executive order titled, Ending Illegal Discrimination and Restoring Merit-Based Opportunity. As discussed previously, that order, among other things, directed the Attorney General to identify (a) means “to encourage the private sector to end illegal discrimination and preferences, including DEI,” (b) litigation and potential regulatory action that can be taken, and (c) no more than nine civil investigations that can be initiated into public companies, “large non-profit corporations, . . . foundations with” more than 500 million in assets, medication associations, and other entities.
Following that executive order, Attorney General Bondi released a memo titled, Ending Illegal DEI and DEIA Discrimination and Preferences. Citing the Supreme Court’s decision in Students for Fair Admissions, Inc. v. President & Fellows of Harvard Coll., the Attorney General noted that DEI and DEIA policies “violate the text and spirit of our longstanding Federal civil-rights laws.” She directed the Civil Rights Division of the Department of Justice (DOJ) to “investigate, eliminate, and penalize illegal DEI and DEIA preferences, mandates, policies, programs, and activities in the private sector.” Bondi noted that the DOJ is focused on “programs, initiatives, or policies that discriminate, exclude, or divide individuals based on race or sex.” Conversely, Bondi clarified that federal civil rights laws do “not prohibit educational, cultural, or historical observances . . . that celebrate diversity, recognize historical contributions, and promote awareness without engaging in exclusion or discrimination.”
The federal government has taken a number of steps to implement these directives. For example, the Federal Communications Commission and the U.S. Department of Health and Human Services Office for Civil Rights have initiated multiple DEI-related investigations. Similarly, various federal agencies have taken steps to remove DEI mandates from contracts. The federal government has also cancelled certain contracts in response to President Trump’s executive order.
On May 19, the DOJ took another step to effectuate the current administration’s DEI-related directives. Specifically, Deputy Attorney General Todd Blanche released a memo detailing the DOJ’s Civil Rights Fraud Initiative (Initiative). In the memo, Blanche echoed the DOJ’s commitment “to enforcing federal civil rights laws and ensuring equal protection under the law.” Blanche cautioned that several companies are still using “racist policies and preferences” that are “camouflaged with cosmetic changes that disguise their discriminatory nature.”
To achieve the current administration’s DEI-related goals, Blanche explained that the DOJ would vigorously use the False Claims Act (FCA) “against those who defraud the United States by taking its money while knowingly violating civil rights laws.” Among other things, Blanche explained that the treble damage and substantial penalties available under the FCA will be helpful tools in this enforcement initiative.
Blanche provided several examples of situations that could trigger FCA liability. Those include:
A university receiving federal funding while permitting antisemitism, failing to “protect Jewish students,” allowing “men to intrude into women’s bathrooms,” or requiring “women to compete against men in” sports; and
Recipients of federal funding or government contractors certifying compliance with federal civil rights laws while using “racist preferences, mandates, policies, programs, and activities.”
The Initiative will be led by the Fraud Section and the Civil Rights Division. In addition, an Assistant United States Attorney from each U.S. Attorney’s Office will be tasked to support the Initiative. The Initiative will also meet and share information with the Criminal Division, other federal agencies, state attorneys general, and local law enforcement. Blanche “strongly” encouraged private parties to file FCA lawsuits to address civil rights fraud and also asked that “anyone with knowledge of discrimination by federal-funding recipients” report that information to the federal government.
The Civil Division reported that it recovered more than $2.9 billion in fiscal year 2024 for FCA-related settlements and judgments. If the Initiative is successful in using the FCA, companies should expect a significant increase in the risks stemming from their DEI-related efforts. So, companies (especially those who receive federal funding or otherwise work with the federal government) should ensure they have taken the necessary reviews of their DEI-related initiatives. All signs indicate that this will not be the last action taken by the federal government in this sector. It is thus essential that companies remain abreast of developments in this area, including guidance from the federal government concerning what constitutes illegal DEI programs and policies.
Missouri’s Repeal of Paid Sick Leave and Portions of Minimum Wage: What’s Next for Proposition A
On May 14, 2025, the Missouri Senate voted 22-11 to repeal portions of Proposition A, the voter-approved initiative that increases the state’s minimum wage and requires employers to provide earned paid sick leave.
The legislation repeals two key pieces of Proposition A:
The earned paid sick time requirement, which requires employers to provide employees with one hour of earned paid sick time for every 30 hours worked, took effect on May 1.
The increase to the state’s minimum wage based on inflation and a rise in the cost of living.
Employers who implemented policy changes to meet the paid sick leave requirements now will face the choice of rolling those changes back or leaving them in place.
Although Missouri’s minimum wage increased on January 1 of this year and will again increase at the beginning of 2026, these minimum wage increases were not set to increase based on the Consumer Price Index (CPI) until 2027. Accordingly, the increases to minimum wage this year and again in 2026 remain unchanged.
Proposition A passed in November 2024 but has faced significant legislative and legal challenges. For instance, several entities brought a lawsuit, alleging the statute violated the Missouri Constitution, among other things. However, on April 29, 2025, the Missouri Supreme Court ruled to uphold Proposition A in Raymond McCarty, et al. v. Missouri Secretary of State, et al., Case No. SC100876. See our earlier blogs on these issues here and here.
In the wake of the Missouri Supreme Court’s ruling, Senate Republicans used a rare procedural move to force a vote on the legislation. The bill, passing unchanged through the Senate from the House, will now advance to Governor Kehoe’s desk, and he is expected to sign the legislation into law. If signed, the repeal will become effective on August 28, 2025. Until then, employers must continue to abide by the law as currently written.
Gradual Implementation of the National Code of Civil and Family Procedure in Mexico City: Key Dates and Broader Impact
Although the National Code of Civil and Family Procedure (CNPCyF) was enacted on June 8, 2023, its implementation will be gradual. At both the federal and state levels, its entry into force depends on each judicial branch requesting the corresponding declaration of enforceability from the federal or local congress. The deadline for this to happen is April 1, 2027. At the federal level, this declaration has not yet been issued.
In Mexico City, the declaration has already been published, which resulted in the abrogation of the local Code of Civil Procedure. However, the CNPCyF will be applied gradually, with a distinction between civil and family matters. In civil matters, the key effective dates are:
December 1, 2024: applicable to oral special mortgage and oral residential lease proceedings.
June 1, 2025: applicable to voluntary jurisdiction, interim relief, and oral executive proceedings.
November 15, 2025: applicable to ordinary oral civil proceedings, enforcement proceedings, and all other cases not previously mentioned. This date will also mark the start of its supplementary application to other laws.
Additionally, on November 29, 2024, a decree was published amending various legal provisions in Mexico City to harmonize them with the CNPCyF. This reform is significant, as it lays the groundwork for the Code to be applied on a supplementary basis in administrative proceedings, including at the federal level. However, its concrete implementation in this area remains pending and will require close monitoring.
Four Trump Administration Steps to ‘Deregulate’ With a Reduced Workforce
For decades, businesses have focused on “doing more with less,” maximizing efficiency by optimizing resources and streamlining processes to achieve greater output with fewer inputs. This effort often involves leveraging technology, improving productivity, and reducing waste to maintain or enhance performance.
The second Trump Administration will likely be remembered for its Department of Government Efficiency (DOGE) initiative, which is working toward reorganizing federal agencies, canceling contracts, and reducing the government workforce. The Trump Administration is working on other regulatory reform efforts as well. Here, we break out various efforts the Administration has undertaken in furtherance of its deregulatory agenda.
Regulatory Background
The federal Administrative Procedure Act (APA) requires government agencies to follow certain procedures to adopt, amend, or repeal regulations. As we have discussed, the APA grants agencies the discretion to implement policy changes so long as they follow applicable procedural and substantive requirements. (For more see here.) Generally, the APA provides a structured process for creating regulations under which agencies draft proposed rules that are then published in the Federal Register to invite public comment by a set date. After reviewing feedback, agencies may revise the rules before finalizing them. The final rules are published, becoming legally binding unless challenged in court.
The Trump Administration argues that the certainty that historically flowed from the languid pace of regulations also generated inertia under which regulated entities suffered. Specifically, the Administration’s “Unleashing Prosperity Through Deregulation” order asserts that “[t]he ever-expanding morass of complicated Federal regulation imposes massive costs on the lives of millions of Americans, creates a substantial restraint on our economic growth and ability to build and innovate, and hampers our global competitiveness.”
Using standard procedures, repealing regulations often takes time. As one example, the APA provides that a regulation established using notice-and-comment procedures can be revised in most circumstances only by using the same procedures and even then, the revisions can be subject to litigation. Thus, eliminating regulations the Administration has targeted for repeal could take years. Accordingly, it is unsurprising that President Trump is attempting to use alternative means to accomplish his regulatory objectives.
Below, we explain four different procedures the Administration has indicated that it may deploy.
Deregulation After Request
The first method of deregulation may be the simplest; the Administration seeks to work with the regulated community to remove pressure points.
One way of doing this is through the typical government relations process in which businesses or trade associations seek meetings with government officials and share their concerns and ways the government might address them. Government relations attorneys (including ourselves) and colleagues can assist in framing requests to regulators and providing focused and appropriate information.
A second means involves technology. Shortly after taking office, regulations.gov was modified to include a page for “Deregulation suggestions.” The page — styled as a submission form — asks for regulatory background; an indication of what kind of regulatory recission is requested (e.g.,notice of proposed rulemaking, final rule, direct final rule, etc.); a justification as to why recission is required; and information on the involved agency. Direct outreach in this manner is one means to address regulated community concerns and to solicit deregulatory ideas.
Compelled Deregulation
The Administration might also compel agencies to winnow back regulations. Two concepts embraced by the Trump Administration illustrate this approach.
Ten-For-One: Executive Order (EO) 13771, signed in 2017 during President Trump’s first term, aimed to reduce regulation and control regulatory costs by requiring agencies to repeal at least two existing regulations for each new one issued, and by imposing a regulatory budget that capped the total incremental costs of new regulations. This “two-for-one” rule and regulatory budget were intended to encourage agencies to be more cost-conscious in their regulatory activities. In his second term, President Trump quintupled this requirement requiring that 10 rules be repealed for every new rule issued.
Zero-Based Budgeting: In the EO entitled “Zero-Based Regulatory Budgeting to Unleash American Energy,” the Administration requires agencies to reexamine regulations that may sit on the books unexamined for long periods of time. For agencies touching on energy and environmental issues (e.g., US Environmental Protection Agency, the US Army Corps of Engineers, and the US Department of Energy), agencies must promulgate a “sunset rule” rendering a wide swath of regulations invalid no more than five years in the future unless the director of the White House Office of Management and Budget determines that the regulation or amendment “has a net deregulatory effect.”
Automatic Deregulation
Another method the Administration appears willing to explore is deregulation after a demonstration (by whom?) that the regulation has been effectively superseded by intervening case law. In these circumstances, the APA’s “good cause” exemption may allow notice-and-comment procedures to be avoided in favor of using other tools like “interim final rules” or “direct final rules” to deregulate faster. (For more on this, see here.)
Amongst its suite of EOs and related memoranda released in early April, the Trump Administration released an order, “Directing the Repeal of Unlawful Regulations.” The order notes that several recent US Supreme Court decisions have limited the power of federal agencies, including Loper Bright Enterprises v. Raimondo (reducing deference given to agency interpretations of statutes), West Virginia v. EPA (preventing agencies from resolving “major” economic or political questions), and Sackett v. EPA (narrowing the definition of water bodies subject to federal Clean Water Act regulation), and suggests that agencies should take steps to “effectuate the repeal” of any identified “potentially unlawful regulations.” Where possible, these steps could include invoking the APA’s “good cause” exception on the grounds that notice and comment is “unnecessary” where the existing regulations are inconsistent with binding precedent. In practice, recent Trump Administration guidance related to the social cost of carbon builds on this approach by referring to a principle of “nonacquiescence,” which provides that lower court decisions that are inconsistent with agency preferences can be viewed as nonbinding. (For more see here.) If the executive branch is permitted to limit the effects of non-Supreme Court decisions on federal regulations, the need for formal deregulation may be minimized.
Deregulation by Algorithm
Finally, a recent Wired article noted that a DOGE operative, who most recently had been a third-year student at the University of Chicago, has been tasked with using artificial intelligence to rewrite US Department of Housing and Urban Development (HUD) regulations. The article reports that the operative “appears to be leading an effort to leverage artificial intelligence to review HUD’s regulations, compare them to the laws on which they are based, and identify areas where rules can be relaxed or removed altogether.” This effort, purportedly, has resulted in an Excel spreadsheet with proposed changes that requires past regulations’ “overreach” to be reviewed by HUD staffers for submission to HUD’s Office of General Counsel for approval.
Preparing for Deregulation
The regulated community can best position itself for business impacts — positive or negative — flowing from deregulation by first conducting a holistic review of regulatory pressure points and then (with counsel and a strong government relations team) develop a plan to maximize benefits and minimize potential downside impacts through business, government affairs, and legal efforts. While some of the Administration efforts outlined above may be subject to challenges in litigation, it is also possible that US Congress could render permanent some deregulatory efforts through legislation.
Financial Services and Technology: Florida Changes Law to Make Clear that Collection-Related Emails Are Not Included in the Prohibition on After-Hours Communications
On May 16, Governor Ron DeSantis signed bill CS/CS/SB 232 into law. The bill includes modifications to the Florida Consumer Collection Practices Act (FCCPA) to make clear that the prohibition on communications between “9 p.m. and 8 a.m. without prior consent of the debtor” does not include emails. The financial services plaintiffs’ bar has so far had a field day suing banks, consumer finance companies, and debt collectors for allegedly violating the FCCPA by sending routine loan and account-related emails after 9 p.m. These changes will be welcomed by financial service providers. The Section 559.72(17) changes are set forth below:
Minneapolis Expands Workplace Civil Rights Protections and Reasonable Accommodation Obligations
On May 1, 2025, Minneapolis, Minnesota’s city council passed several amendments to its civil rights ordinance (the “Ordinance”), which prohibits discriminatory practices in employment, among other areas. With regard to employment, the amendments add new protected classes, expand the definition of race, familial status, and disability, and increase protections for pregnant workers and religious observance.
New Protected Classes in Employment
Justice-Impacted Status: One of the most notable amendments is the addition of “justice-impacted status” as a protected class in employment. This is defined to mean the state of having a criminal record or history, including any arrest, charge, conviction, period of incarceration, or past or current probationary status. Employers will be required to ensure that any adverse employment decisions based on justice-impacted status are reasonably related to the job’s requirements and consider factors such as the nature of the crime, whether the employee was convicted, age of the employee at the time of the crime, time elapsed, evidence of rehabilitation, and any unreasonable risk to property or to the safety of specific individuals or the general public. Employers will further be precluded from making an adverse employment decision based on a not-currently-pending arrest not resulting in a conviction. However, actions taken when permitted by, and made in accordance with state or federal law, regulation, rule or government contract (such as related to positions in law enforcement or that involve working with children) do not constitute violations of law.
Housing Status: The amendments also add housing status as a protected class. The amendments define “housing status” as those who may or may not have “a fixed, regular, and adequate nighttime residence,” and provide that, except as required or authorized by federal or state law, regulation, rule or government contract, it is unlawful for an employer to refuse to hire or terminate an applicant or employee based on their housing status unless such action is because of a legitimate business justification not otherwise prohibited by law.
Height and Weight: The amendments also prohibit discrimination based on body height, weight, or size. This category encompasses, but is not limited to, both actual numerical measurement (including ratios or other metrics measuring the body in whole or in part) and the impression of a person as tall or short and/or fat or thin regardless of their numerical measurement. An affirmative defense is available to employers if an individual’s height or weight: (i) prevents them from performing the essential functions of their job and there is no reasonable accommodation available without placing an undue hardship on the employer; (ii) fundamentally alters the essential nature of the entity’s programs or services; or (iii) poses a direct threat to the health and/or safety of the individual or others. The protections also do not apply to an employment action where such action is required by federal, state, or local law or regulation.
Expanded Definitions
Race: The amendments broaden the definition of race under the Ordinance to include traits historically associated with race or perceived to be associated with race, such as skin color, certain physical features, hair texture, and protective hairstyles (such as afros, braids, locks and twists).
Familial status: The amendments also expand the definition of familial status (which is an existing protected category under the Ordinance) to now include not only having legal status or custody over one or more minors as a parent or legal guardian, but residing with and caring for individual(s) who lack the ability to meet essential requirements for physical health, safety, or self-care because of an “inability to receive and evaluate information or make or communicate decisions.”
Disability: The amendments broaden the definition of disability (also an existing protected category under the Ordinance and currently defined as a physical, sensory or mental impairment limiting one or more major life activities, having a record of such an impairment, or being perceived as having such an impairment) to now include impairments that are episodic or in remission and that would materially limit a major life activity of the individual when active. The amendments also codify that employers must initiate an “informal interactive process” with a qualified employee to determine an appropriate reasonable accommodation related to either disability or pregnancy-related limitations (discussed further below).
Pregnancy-Related Protections
The amendments will now require employers to engage in an informal interactive process and provide appropriate reasonable accommodations for the “known pregnancy-related conditions” of a qualified employee. “Known pregnancy-related limitation” is defined as “any physical or mental condition related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions that the employee or employee’s representative has communicated to the employer whether or not such condition meets the definition of disability” under the Ordinance. Employers shall not be required to provide an accommodation that imposes an undue hardship. Employers shall not be permitted to require a pregnant employee to take leave if another reasonable accommodation can be provided, nor can an employer take adverse action against an employee for requesting or receiving a pregnancy-related accommodation.
Religious Observance
The amendments will now require employers to accommodate employees’ “known sincerely held religious beliefs or practices” unless doing so imposes an undue hardship.
Key Takeaways These amendments will apply to any complaint or charge filed under the Ordinance on or after August 1, 2025 unless superseded by subsequent amendments. Minneapolis employers are advised to review their policies and practices to ensure compliance with the new amendments.
The Trump Administration Takes Aim at Regulatory Overcriminalization
On May 9, 2025, President Donald Trump issued an Executive Order entitled “Fighting Overcriminalization in Federal Regulations.” The Order takes aim at what the President calls “regulatory crimes,” with the intended purpose of easing the “regulatory burden on everyday Americans” and to “ensure no American is transformed into a criminal for violating a regulation they have no reason to know exists.” The Order marks another step taken by the Trump Administration to deregulate various industries and sectors of the economy.
Over the years, federal agencies have promulgated a vast number of regulations, many of which carry civil monetary penalties or even criminal punishments. While the exact number is unknown, despite concerted efforts to find out, reasonable estimates of the total number of regulations that carry criminal penalties are upwards of 300,000, with the Federal Register now spanning over 175,000 pages. The result is it is impossible for an ordinary person to apprise themselves of all of them.1 To that end, the EO recognizes this problem and seeks to clear the muddy waters of federal regulations as follow:
Prosecution of Criminal Regulatory Offenses are Disfavored.The Executive Order makes it the official policy of the United States that criminal enforcement of “criminal regulatory offenses” in general is “disfavored.” The Order states that if criminal regulatory offenses are to still be prosecuted, it is “most appropriate” for individuals and companies “who know or can be presumed to know what is prohibited or required by the regulation and willingly choose not to comply.”
Prosecution of Strict Liability Regulatory Offenses Specifically are Disfavored.In addition to disfavoring prosecuting criminal regulatory offenses, the Executive Order specifically addressed regulatory offenses that attach strict liability. Strict liability exists when a defendant is liable for committing an action, regardless of intent or mental state when committing the action. Most federal crimes, and in particular white-collar crimes, require the government to prove mental culpability (called mens rea), whether it involves acting willfully, knowingly, purposefully, recklessly, or with negligence. Strict liability offenses require none of the above. As such, even if a person is either unaware of a federal regulation or that they are in violation of it, they can be charged with a crime for violating a regulation they did not know, and had no reason to know, existed. The order calls for prosecutors to resolve strict liability regulatory offenses through civil penalties, not criminal prosecution.
Better Transparency. Within one year of the date of the Executive Order, each executive agency must produce a list of regulatory criminal offenses available to the public on the agencies’ webpages. For each offense on the list, the agency must include any potential criminal penalties for violations and the applicable mens rea standard. Any criminal enforcement of regulatory offenses that are not listed is “strongly discouraged.” Moving forward, any proposed regulations that might carry criminal penalties “should explicitly describe the conduct subject to criminal enforcement, the authorizing statutes, and the mens rea standard applicable to those offenses.”
Default Mens Rea Requirement. The Executive Order directs the head of each executive agency to coordinate with the Attorney General to determine whether there is authority to adopt a “default” mens rea standard for criminal regulatory offenses that do not state a mens rea standard. In addition, the heads of agencies shall examine whether existing mens rea standards are authorized by statute and they shall present a plan for changing the current standards to a generally applicable standard. This marks an effort by the Trump Administration to consolidate varying levels of scienter requirements into a more uniform standard. 2
Clear Guidance for Criminal Referrals to the DOJ. The Executive Order requires each department or agency to publish guidance in the Federal Register on its process for deciding whether to make a criminal referral to the Department of Justice for violations of federal regulations. The guidance should include factors such as: (a) the harm or risk of harm, pecuniary or otherwise, caused by the alleged offense; (b) the potential gain to the putative defendant that could result from the offense; (c) whether the putative defendant held specialized knowledge, expertise, or was licensed in an industry related to the rule or regulation at issue; and (d) evidence, if any is available, of the putative defendant’s general awareness of the unlawfulness of his conduct as well as his knowledge or lack thereof of the regulation at issue.
Exclusions. The Executive Order explicitly excludes immigration enforcement and national security functions from its provisions. This is consistent with previous Executive Orders by President Trump regarding deregulation.3
Key Takeaways
Watch for Additional Agency-Level Information. As discussed above, within a year, executive agencies will be required to create a list of their regulations that carry criminal penalties. These lists will serve as valuable resources for those seeking to navigate affected industries.
Impact on Highly Regulated Industries. Those who operate in highly regulated industries are often presumed to have knowledge of the statutes and regulations that govern that industry. Because the Executive Order maintains that prosecution of criminal regulatory offenses is most appropriate in cases where the defendants know or are presumed to know the law, it will likely have a more limited impact on those operating in highly regulated industries.
Impact on Existing Doctrines. The executive order may weaken enforcement of regulations under the Park Doctrine (also called the “Responsible Corporate Officer Doctrine”). The Park Doctrine allows for criminal liability to be imposed on “responsible corporate officers” for violations of law and regulations committed by corporations. Because the Doctrine allows for liability even without proof of the specific officer knowing of the violation, these violations are effectively treated as strict liability offenses. The theory is that such executives were in positions to prevent the public from being harmed and therefore their failure to do so is sufficient.
More Opportunities for Settlement/Alternative Resolution. There may now be more opportunities for those facing both civil and criminal liability for regulatory offenses to avoid criminal prosecution through negotiating non-prosecution agreements, deferred prosecution agreements, and/or settling the matter civilly. Agencies might be more likely to seek deferred prosecution of offenses now that criminal prosecution of regulatory crimes is disfavored, which offers more leverage to those in harm’s way.
However, be aware of other ways that some executive agencies may use to punish those who they have targeted. For example, the Office of the Inspector General may exclude practitioners from federal healthcare programs for a litany of reasons, and while exclusion is severe, it is not considered criminal punishment for the purpose of the Order.
1 For an example of how this affects an ordinary person, see Mike Fox, The Vindictive Prosecution of a Champion Runner, Cato Institute (Mar. 17, 2025), https://www.cato.org/commentary/vindictive-prosecution-champion-runner/. See also Jacob Sullum, The Federal Government’s 175,000 Pages of Regulations Turn the Rule of Law into a Cruel Joke, Reason Magazine (May 14, 2025) https://reason.com/2025/05/14/the-proliferation-of-regulatory-crimes-turns-the-rule-of-law-into-a-cruel-joke/.
2 Scienter requirements for criminal offenses have been subject to different interpretations. For example, in Ruan v. United States, 597 U.S. 450 (2022), the Court narrowed the definition of a knowing violation of the Comprehensive Drug Abuse Prevention and Control Act (CSA). Specifically, the CSA prohibits a provider from, “except as authorized[,] … for any person knowingly or intentionally … to manufacture, distribute, or dispense … a controlled substance.” The Court deviated from past interpretations and held that the “knowing” mens rea requirement applied to the “except as authorized” language despite its placement in the statute, meaning that the defendant must know that their behavior is outside of the boundaries of authorization. This is just one example of how unclear statutory and regulatory language regarding scienter requirements can lead to confusion upon application.
3 See Exec. Order No. 14,219, 90 C.F.R. 10583.
4 For more information on the RCO Doctrine, see Michael Clark, The Responsible Corporate Officer Doctrine, J. of Health Care Compliance, Jan.-Feb. 2012.
EPA Reconsiders Air Regulations Amid a Major Reorganization of the Air Office
The EPA’s Office of Air and Radiation (“OAR”), responsible for most of the EPA’s major air regulatory and policy efforts, will be restructured in the months to come. This shakeup comes on the heels of the EPA’s announcement in March that it will be reconsidering over a dozen significant air regulations. We trace these changes in the EPA landscape through their potential impacts on three important issues named in EPA’s reconsideration announcement:
Regulation of hydrofluorocarbons (“HFCs”) in refrigeration;
New Source Performance Standards and Emission Guidelines for oil and gas; and
Regional Haze planning.
Regulation of HFC Refrigerants:
Since Congress passed the American Innovation and Manufacturing Act in 2020, the EPA has issued a suite of regulations addressing commonly used HFC refrigerants. These regulations affect retail refrigeration, comfort cooling, and refrigerated transport, among various other industries. The EPA has been busy implementing measures to phase down HFC imports and production, manage the use (including leaks) of HFCs, and force transitions in technology through, for instance, limits on the global warming potential of refrigerants that can be used in various systems and appliances.
It’s this last measure, the Technology Transition Rule, that the EPA has announced it will be reconsidering. As of now, the EPA has not mentioned plans for its rules addressing the HFC phasedown or the Management Rule, which mandates leak detection and repair for HFC systems, among other requirements.
All of these regulations were originally prepared by the EPA’s Stratospheric Protection Division, the same office that regulated HFC’s predecessors, ozone depleting substances. The Stratospheric Protection Division is part of the Office of Atmospheric Protection, which the EPA reportedly intends to eliminate. This office also houses EPA’s divisions of Clean Air and Power, Climate Protection Partnerships, and Climate Change.
The EPA has not said where this HFC work will go with the potential elimination of the Office of Atmospheric Protection, but its March reconsideration suggests it will not disappear. In the meantime, the EPA’s HFC regulations remain on the books and compliance deadlines are in force and approaching.
Standards for Oil and Gas:
Other regulations on the EPA’s March reconsideration list include new source performance standards regulating greenhouse gas and other emissions from the oil and gas industry (“NSPS OOOOb”) and emission guidelines for states to develop plans to address emissions from existing oil and gas sources (“EG OOOOc”). These regulations address various potential sources of emissions across the industry from well sites to gas plants and transmission compressor stations.
To date, these regulations have come out of the EPA’s Office of Air Quality Planning and Standards, another office the EPA reportedly intends to disband. Many of the staff who have worked on these regulations have deep institutional knowledge of oil and gas regulations, dating back to the promulgation of NSPS OOOO over a decade ago, and other similar regulations. Where this reorganization will leave this institutional knowledge and these rules are open questions.
These changes come in the middle of the EPA’s reconsideration of certain issues in these standards as described in a rule the EPA proposed in January 2025 but has yet to finalize. Industry and states should coordinate with EPA contacts as compliance and state planning deadlines approach under the current regulations.
Regional Haze:
Regional haze presents a slightly different picture. In its March announcement, the EPA indicated it would be “restructuring the Regional Haze Program.” The Clean Air Act’s regional haze program seeks to protect visibility in certain areas that include national parks and wilderness (referred to as “Class I” areas). States develop plans in ten-year planning periods to show how they will make progress towards visibility goals for Class I areas. Historically, rules governing the state planning process, like the 2017 Regional Haze Rule, have come from the Office of Air Quality Planning and Standards, which again is reportedly being eliminated in the EPA’s planned reorganization.
When the EPA says it is restructuring the regional haze program, that likely includes the 2017 Regional Haze Rule. In 2018, the EPA announced similar efforts to overhaul regional haze planning in the Regional Haze Reform Roadmap. While some efforts of the Roadmap came to pass during President Trump’s first administration, the rule revisions did not. The EPA’s March announcement likely revives these efforts amid this office shuffling.
Even though the EPA’s OAR (specifically the Office of Air Quality Planning and Standards) has typically been responsible for setting national regional haze policy, decisions on approval or disapproval of actual state plans come from one of the EPA’s ten regional offices. These lines of EPA decision-making are already blurring. For instance, EPA Region 3 recently announced a change in regional haze policy when it proposed approving West Virginia’s state implementation plan for the second implementation period on April 18, 2025. There, the EPA announced a new agency policy that when visibility conditions for Class I areas are below the uniform rate of progress and a state has considered the four statutory factors, the state has presumptively demonstrated reasonable progress. This seemingly new national policy was then applied in EPA Region 8’s proposal to approve South Dakota’s plan on May 14.
New Offices, New Names
While the EPA works out all the concrete details of its reorganization of the OAR (and at least three other offices, including the Office of Water), it has announced the creation of two new offices within the OAR:
Office of State Air Partnerships; and
Office of Clean Air Programs.
The EPA explains that the Office of State Air Partnerships will focus on state implementation plans and air permitting to ensure national consistency. This could mean that decisions historically left to regional offices, like regional haze plan approvals, could become much more centralized in this new office. The EPA explains that the new Office of Clean Air Programs will “align statutory obligations and mission essential functions based on centers of expertise to ensure more transparency and harmony in regulatory development” but the exact work of this office remains to be seen.
North Carolina Bill Would Expand Workplace Violence Prevention Act
North Carolina’s Senate Bill (SB) 484, sponsored by Senators Timothy Moffitt, Warren Daniel, and Danny Britt, would amend the Workplace Violence Prevention Act by allowing employers to seek restraining orders against “mass picketing” that blocks access to businesses and public roads.
Quick Hits
North Carolina is one of several states that have specific workplace violence prevention laws.
North Carolina’s Workplace Violence Prevention Act, N.C. Gen. Stat. Chapter 95, Article 23 (WVPA) allows employers to pursue certain protections on behalf of their employees who face “unlawful conduct” (i.e., physical violence or threats thereof), including by obtaining civil no-contact orders, and to prevent discrimination and retaliation against employees who miss work because of domestic violence or other harassment.
Recently introduced legislation would amend the WVPA’s definition of “unlawful conduct” to include mass picketing that would hinder or prevent the “pursuit of any lawful work or employment,” obstruction of entrances to or from the place of employment, and mass picketing that would obstruct the use of public roads, streets, and other areas of travel.
The amendments would also allow employers to seek civil no-contact orders on behalf of the employer itself, instead of a specific employee.
The bill exempts peaceful demonstrations, informational picketing, and legally protected labor activity—unless they involve violence, threats, or intentional obstruction.
Senate Bill 484: Workplace Violence Prevention/Mass Picketing
North Carolina’s Workplace Violence Prevention Act, N.C. Gen. Stat. Chapter 95, Article 23 (WVPA) allows employers to pursue certain legal remedies on behalf of their employees who face “unlawful conduct” by obtaining civil no-contact orders against the perpetrators on behalf of the employee. The WVPA also prevents discrimination and retaliation against employees who are absent from work because of domestic violence or other harassment.
The current iteration of the WVPA defines unlawful conduct as threats or actual instances of physical violence. Senate Bill 484 would amend the WVPA by expanding the definition of “unlawful conduct” at the workplace to include certain forms of mass picketing, allowing employers to obtain civil no-contact orders against mass picketers on behalf of employees as well as the employer. The bill defines “mass picketing” as:
[p]icketing, with or without signs, that constitutes an obstacle to the ingress and egress to and from the premises being picketed or any other premises, or upon the public roads, streets, highways, or other ways of travel or conveyance, either by obstructing by their persons or by placing of vehicles or other physical obstructions.
The bill would add three new behaviors to the list of unlawful conduct: (1) hindering or preventing lawful work or employment through “mass picketing, unlawful threats, or force”; (2) obstructing entrances and exits to a workplace via mass picketing; and (3) obstructing public roads, highways, or transport systems through similar tactics. These amendments would prohibit “obstructions” of the workplace, which the SB 484 defines as “sustained or deliberate physical blockage that substantially and materially prevents ingress or egress that causes demonstrable disruption to operations or public safety.”
Additionally, the current iteration of the WVPA allows employers to obtain civil no-contact orders specifically on behalf of the employee, that is, to obtain an order prohibiting a perpetrator from contacting a specific employee. SB 484 would amend the WVPA to allow employers to file for a civil no-contact order on behalf of itself, thereby prohibiting mass picketers from accessing the employer’s place of employment, provided that the conduct in question occurs at or affects the workplace. The amendment also states that no physical injury or property damage is required to obtain such an order, and it mandates that respondents be notified before permanent orders are issued.
SB 484 states that the bill is not intended to conflict with the North Carolina State Constitution, and that the WVPA, as amended, would not apply to peaceful demonstrations, informational picketing, or labor activity protected by the National Labor Relations Act or the North Carolina Constitution.
Key Takeaways
SB 484 aims to strengthen workplace safety laws in North Carolina by specifically addressing disruptions caused by mass picketing. If passed, it would broaden the scope of North Carolina’s Workplace Violence Prevention laws by defining “mass picketing” and “obstruction” in a way that targets activities that physically block or interfere with access to workplaces or public roads. The bill allows employers not only to act on behalf of employees but also to seek legal remedies for their own protection through civil no-contact orders. The bill was amended in the Senate Judiciary Committee, and on May 8, 2025, was referred to the Committee on Rules, Calendar, and Operations of the House.
The One Big Beautiful Bill: Tax Reform 2025
On May 18, 2025, the House Budget Committee approved the legislation entitled, “The One, Big, Beautiful Bill” (the “House Bill”). The bill is expected to be revised by the House Rules Committee before being sent to the House floor for a vote.
The House Bill extends a number of provisions from the 2017 Tax Cuts and Jobs Act (“TCJA”) and enacts a number of new provisions. The following is a summary of some of the key provisions from the currently available version of the House Bill:
Business Provisions:
163(j) Deductions. The definition of “adjusted taxable income” under section 163(j) is based on EBITDA (which is more favorable for taxpayers than EBIT under current law) for taxable years 2025 to 2028.
Section 199A. The deduction for qualified business income under Section 199A is increased to 23% (from 20%) for an effective rate of 28.49% (from 29.6%) and made permanent. Section 199A is also expanded to apply to the portion of dividends representing net interest income paid by a “business development company” (“BDC”) taxable as a regulated investment company. This expansion will reduce the effective rate of interest income earned through a BDC from 37% to 28.49% and will increase the attractiveness of BDCs as vehicles for credit funds. Dividends from real estate investment trusts (“REITs”) have had the benefit of Section 199A deductions.
GILTI Provisions Made Permanent. The global intangible low-taxed income (“GILTI”) and foreign-derived intangibles income (“FDII”) provisions are made permanent at the current rate of 10.5% (instead of increasing to 12.5% after 2025).
BEAT Made Permanent at Lower Rate. The current tax rate on the base-erosion and anti-abuse tax (“BEAT”) is made permanent at the current rate of 10.5% (instead of increasing to 12.5% after 2025).
Qualified Production Property Deductions. Taxpayers can deduct 100% of “qualified production property” costs immediately for certain newly constructed or acquired nonresidential real property in the United States. These properties must be in connection with the manufacturing, agricultural and chemical production, or refining of a qualified product.
Opportunity Zones Reestablished. A second round of Opportunity Zones (“OZs”) are established for taxable years 2027 through 2033, with similar but modified benefits in temporary deferral of capital gains taxes, basis step-up, and exclusion of taxable income on new gains. The first round of OZs is set to expire in 2026. There is a greater focus on rural areas, such as the offer of higher basis step-up of 30% for investments in qualified rural opportunity funds (as opposed to 10% from the first round of OZs).
Limitation for Qualified Depreciable Property Deductions. The deduction limitation from qualified depreciable property as business assets is increased to $2.5 million (from $1 million). The phase-out threshold is raised from $2.5 million to $4 million.
Deduction for Excessive Employee Compensation. An aggregation rule is added to the 162(m) limitation for executive compensation so that compensation paid by all entities within a covered corporation’s “controlled group” is counted for purposes of the $1 million limit.
Limitation of Amortization Deductions for Sports. The 15-year amortization of a professional sports franchise and related intangible assets is limited to 50% of the adjusted tax basis of those assets. This change is effective for assets acquired after the date of the enactment of the tax legislation. Please see this blogpost for more information..
Excess Business Losses Extended. The limitation on excess business losses for noncorporate taxpayers is made permanent and are carried forward to future taxable years. The maximum amount of business loss taken in a year is based on an inflation adjusted threshold, with $313,000 for single filers and $626,000 for joint filers in 2025.
Charitable Donation Limitation. A C corporation’s charitable contributions are subject to a 1% floor.
Increased Taxes on Residents of Countries Imposing a UTPR. The individuals, entities, and governments of countries that impose an undertaxed profits rule (“UTPR”), digital services tax, diverted profits tax, and, (subject to regulations) an extraterritorial tax, discriminatory tax, or any other “unfair” foreign tax enacted with a public or stated purpose that the tax will be economically borne, directly or indirectly, disproportionately by U.S. persons are subject to an increased rate of U.S. taxes, generally increased by 5% for each year of the unfair foreign tax up to 20% maximum.
Clean Energy Credits Rolled Back. The IRA clean electricity tax credit will begin to phase out after 2028 and finish by the end of 2031, including clean electricity production tax credits, clean electricity investment tax credits, and nuclear electricity production tax credits. Hydrogen production credits will be repealed for facilities beginning construction after 2025.
Taxable REIT Subsidiary Asset Test. Taxable REIT subsidiaries may represent 25% of the value of the REIT’s total assets (rather than 20% under current law).
No Carried Interest Provision. There is no provision affecting carried interest.
Tax-Exempt Provisions
Increased Excise Tax on Private University Endowments and Private Foundations. The current 1.4% excise tax on net investment income of private colleges and universities is replaced with a tiered system based on an institution’s “student-adjusted endowment”. For such schools with a student-adjusted endowment of more than $2 million, the excise tax is increased to 21%. The scope of “net investment income” would also be expanded. Additionally, the current 1.39% excise tax on private foundations is replaced with a tiered system based on the foundation’s total size of assets. For purposes of calculating a private foundation’s assets for purposes of this test, the assets of certain related organizations are treated as assets of the private foundation. The excise tax rate would be 5% for private foundations with gross assets of at least $250 million but less than $5 billion, and 10% for private foundations with gross assets equal to or more than $5 billion.
UBTI for qualified transportation fringe benefits. UBTI is increase by any amount incurred for any qualified transportation fringe benefit or any parking facility that is not directly connected to any unrelated trade or business that is regularly carried on by the organization.
Tax on Excessive Employee Compensation. The $1 million limit applies to any employee or former employee of a tax-exempt organization, and for purposes of determining the $1 million limit, all compensation paid to a related person (including a related taxable entity) is included. The change applies to taxable years beginning after December 31, 2025.
For more information on provisions that affect tax–exempt taxpayers, please see this blogpost.
Individual Provisions
Ordinary Income Tax Rates. The maximum rate of 37% for individuals is made permanent.
Standard Deductions. For tax years of 2025 to 2028, the standard deduction is increased to $26,000 for joint filers (from $24,000), to $19,500 for head of household filers (from $18,000), and to $13,000 for all other filers (from $12,000).
Personal Exemption Elimination. Thepersonal exemption is repealed permanently.
Section 199A. As mentioned above, the deduction for qualified business income is increased to 23% for an effective rate of 28.49% and made permanent. Individuals may also benefit from these lowered effective rates for dividends representing net interest income from BDCs.
Itemized Deduction Limits. Itemized deductions (which were disallowed under the TCJA) are allowed and made permanent and the “Pease rule”,whichitemized deductions, is replaced by a rule that reduces itemized deductions by 2/37 of the lesser of 1) the amount of itemized deductions and 2) the amount of taxable income of the taxpayer for the taxable year that exceeds the dollar amount at which the 37% bracket begins with respect to such taxpayer (the 37% bracket begins at $751,600 for married couples filing joint returns in 2025). Effectively, this rule creates an additional 39% tax bracket equal to itemized deductions in excess of the 37% bracket threshold.[1]
SALT Deduction Cap Increased; SALT Denied for Various Service Professionals. The SALT deduction cap is made permanent and raised to $30,000, going down to $10,000 at a rate of 20% beginning at income of $200,000 for single filers and $400,000 for joint filers. Certain House Republicans voted no during the House Budget Committee vote as they support raising the cap significantly. Pass-through entity tax (“PTET”) deductions are denied for individuals who perform services in the fields of health, law, accounting actuarial science, performing arts, consulting, athletics, financial services, brokerage services, investing services, investment management services, and trading or dealing in securities, partnership interests, or commodities, or any trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees. Therefore, under the House Bill, asset managers who are partners in partnerships will not be permitted to deduct their share of state and local taxes. In addition, the House Bill seems to disallow deductions for taxes imposed on the partnership (such as the New York City unincorporated business tax. Please see this blogpost for more information.
Deductions for Tips. Taxpayers earning $160,000 or less in 2025 (adjusted in the future for inflation) are permitted a deduction for cash tips from an occupation that “traditionally and customarily received tips” to the extent the gross receipts of the taxpayer from the trade or business of receiving the tips exceeds the sum of the cost of goods sold allocable to the receipts and other expenses, losses, or deductions properly allocable to those receipts. This deduction is allowed for tax years 2025 through 2028.
Overtime Compensation Deductions. Deductions are allowed for overtime compensation for itemizers and non-itemizers for tax years 2025 through 2028.
Deductions for Car Loan Interest. Deductions (up to $10,000) of interest payments on car loans from 2025 through 2028. These deductions are allowed for itemizers and non-itemizers. The deduction phases out for single taxpayers earning $100,000 ($200,000 for joint returns).
Expansion of Childcare Credits. Employer-provided childcare credits are further expanded from 25% to 40% (and up to 50% for eligible small businesses). The maximum annual credit is also increased from $150,000 to $500,000 for employers (up to $600,000 for eligible small businesses).
Family and Medical Leave Credits Expanded. Employer-provided paid family and medical leave credits are expanded by giving employers the option to choose between credit paid for wages paid during the employee’s leave or credit for insurance premiums paid on policies that provide paid leave. The family and medical leave cannot be already mandatory from state and local laws.
Adoption Tax Credits. Up to $5,000 of adoption tax credits are refundable, which makes the credit available to lower-income families who do not earn sufficient income to pay tax.
Scholarship-Granting Tax Credits. Tax credits are allowed for contributions by individuals to scholarship-granting organizations. The credits may not exceed the greater of 10% of the taxpayer’s adjusted gross income for the taxable year, or $5,000.
Expansion of Qualified Tuition Programs. Qualified tuition programs that are exempt from federal tax are expanded to include tuition and material expenses for elementary, secondary, and home school expenses. Qualified higher education expenses are also expanded to include tuition and expenses in connection with a recognized postsecondary credential program.
Extension of Increased Alternative Minimum Tax Exemption from TCJA. The increased exemptions and increased exemption phase-outs from the individual alternative minimum tax are made permanent.
The $750,000 Limitation on Qualified Residence Interest Deduction Is Made Permanent. The $750,000 limitation on deductions for qualified residence interest is made permanent.
Personal Casualty Loss Relief Further Extended. The requirement that personal casualty loss deductions exceed 10% of adjusted gross income for taxpayers to benefit from deductions is waived for qualified disasters that occurred between December 2019 until 2025 (extended from 2020) and allows taxpayers to claim both a standard deduction and qualified disaster-related personal casualty losses.
Qualified Bicycle Commuting Reimbursements Are Taxable. Reimbursements of bicycle commuting expenses are subject to income tax. Before the TCJA, the reimbursements were not taxable.
Reimbursements for Personal Work-Related Moving Expenses Are Taxable. Before the TCJA, deductions were given to certain personal moving expenses for employment purposes and gross income did not include qualified moving expense reimbursements from employers. The deductions are permanently repealed, and the reimbursements are permanently taxable.
Student Loan Discharged on Death or Disability Made Tax-Free Permanently. Discharged student loans on the account of death or disability is extended permanently.
Child Tax Credits Made Permanent. The child tax credit is made permanent, and the maximum child tax credit is temporarily increased to $2,500 (from $2,000) from 2025 to 2028 (subsequent years will be $2,000). Social security numbers for the child will be required to qualify for child tax credit benefits.
Creation of “MAGA” Accounts. Money Account for Growth Advancement (“MAGA”) accounts are tax-exempt trust accounts that can be created for U.S. citizens under age 18. The funds from the MAGA accounts can be used for qualified expenses of the beneficiary such as higher education and first-time home purchases. The House Bill provides a one-time $1,000 federal credit per eligible child born between 2025 and 2028, which will be deposited directly into the child’s MAGA account.
[1] Assume a married couple filing jointly has taxable income of $851,600 ($100,000 more than the 37% bracket threshold and a charitable deduction of $100,000 (and no other itemized deductions). The House Bill reduces the couple’s deduction by $5,405.41 (2/37*$100,000) and increases the couple’s tax bill by $2,000 ($5,405.41*37%, which is equal to an additional 2% tax (i.e., total of 39%) on the couple’s incremental $100,000 over the 37% bracket threshold.
Seo Kyung (Rosa) Kim, Martin T. Hamilton, Christine Harlow, Muhyung (Aaron) Lee & Amanda H. Nussbaum also contributed to this article.
New York Enacts Amendment to Limit Frequency of Pay Damages for Manual Workers
On May 9, 2025, Governor Hochul signed a budget bill into law that includes an amendment (“the Amendment”) to the New York Labor Law (NYLL).
This Amendment took immediate effect, applies to pending and future actions, and dramatically changes the relief employees can seek for first-time violations the pay frequency provisions for “manual workers” found in NYLL Section 191.
The Amendment substantially reduces potential damages from 100% liquidated damages to lost interest on delayed payments for first-time violations of the NYLL’s frequency of pay requirements where employers otherwise paid manual workers’ wages on regular pay days, no less frequently than semi-monthly. For future violations, liquidated damages will only be available for a second or subsequent violation if there is a finding and order by the New York State Department of Labor (“NYS DOL”) or court of competent jurisdiction of a prior violation for employees performing the same work.
What is a “Manual Worker”?
NYLL Section 191(1)(a) requires that employers pay “manual workers” on a weekly basis, with limited exceptions. The Labor Law defines a manual worker as a “mechanic, workingman or laborer.” The NYS DOL takes a long-standing position that “individuals who spend more than 25% of working time engaged in ‘physical labor’ fit within the definition of ‘manual worker.’” The term “physical labor” has likewise been interpreted broadly to include “countless physical tasks performed by employees.”
The New York Industrial Board of Appeals, the independent body within the NYS DOL that reviews petitions concerning orders, determinations, rules, and regulations issued by the Commissioner of Labor, looks at not only the time spent performing the physical labor, but also the type of labor performed (i.e., whether it is the type of interchangeable physical labor that can be done by multiple individuals with little to no skill or practice). In short, the determination of whether an employee is considered a “manual worker” is a fact intensive inquiry that must be determined on a case-by-case basis, making it difficult for employers to ensure compliance with the law’s requirements.
If a business’ workforce is large enough[1], it can seek an authorization from the NYS DOL to pay manual workers less frequently than weekly. To obtain the authorization for this variance, employers must submit an application to the NYS DOL with specific documentation. The NYS DOL considers a number of factors, including documents related to the financial stability of the employer and a history of compliance under the Labor Law. Where the manual workers are represented by a labor organization, a variance will not be granted without consent from that organization.
Background on Frequency of Pay Claims
As we have reported previously, New York’s appellate courts have been divided as to whether NYLL § 191 was intended to provide litigants with a private right of action for pay frequency claims. On September 10, 2019, the Appellate Division of the New York Supreme Court for the First Department held in Vega v. CM & Associates Construction Management, LLC that a private right of action does exist for NYLL’s frequency of pay provisions and that employees could seek to recover liquidated damages equal to all late-paid wages for violations of the law. The decision in Vega prompted the filing of hundreds of private court actions claiming companies failed to pay “manual workers” on time pursuant to Section 191.
On January 17, 2024, the Appellate Division of the New York Supreme Court for the Second Department held in Grant v. Global Aircraft Dispatch, Inc. that no private right of action exists, thereby creating a split between New York State Appellate Divisions. A request for review of the Grant decision by the New York Court of Appeals (New York’s highest court) is pending.
The confusion created by these conflicting decisions and the potential for employers’ significant exposure to damages set the backdrop for the legislative action.
What the Amendment Does
The budget bill (SB 3006C)[2] adds language to NYLL Section 198(1-a), which provides for the costs, remedies, and recoverable damages an employee or the New York Commissioner of Labor can seek for wage claims. The new language substantially reduces the amount of potential damages from 100% liquidated damages to lost interest (currently at an interest rate of 16% per annum) on delayed payments for first-time violations where employers otherwise paid manual workers wages on regular pay days, no less frequently than semi-monthly.
For future violations, liquidated damages equal to 100% of late-paid wages will only be available for a second or subsequent violation if there is a finding and order by the NYS DOL or a court of competent jurisdiction of a prior violation for manual workers performing the same work.
Although the Amendment is not the panacea employers wished for,[3] it is welcome news for the hundreds of employers subject to litigation or threatened litigation that have otherwise paid their manual workers’ wages on a regular basis, albeit not weekly.
What Employers Should Do Now
The Amendment is by no means the end of pay frequency litigation, and the potential for significant exposure is still possible, particularly if an employer has a finding and order issued against it and is found to have subsequently violated the frequency of pay requirements for the same group of workers again. As such, there are steps employers can take immediately to ensure compliance with the Labor Law’s frequency of pay requirements.
In addition, because of the fact intensive nature of determining whether an employee is a “manual worker,” it is important that employers ensure they are complying with the frequency of pay requirements in the first instance by auditing their pay practices, ideally with the assistance of counsel, to analyze whether certain categories of employees fall within the broad definition of “manual worker,” and, if so, to ensure that all manual workers are paid properly. Employers should also take this opportunity to consult with counsel to determine whether they meet the requirements to obtain a variance from the NYSDOL in order to pay manual workers less frequently than weekly.
ENDNOTES
[1] i.e., has an average of 1,000 employees in New York for the three years preceding the application, or an average of 3,000 out of state employees for the three years preceding, and an average of 1,000 employee in New York for the year preceding the application.
[2] The relevant text of the amendment to the NYLL can be found in Part U of the NYS Budget Bill, S3006-C.
[3] Governor Hochul’s Executive Budget Proposal for fiscal year 2025 (see “Part K”) had included proposed language that would have eliminated liquidated damages as a remedy altogether for manual worker frequency of pay claims.
Healthcare Preview for the Week of: May 19, 2025 [Podcast]
MAHA and More Medicaid
Late Sunday night, May 18, 2025, the House Budget Committee voted to advance the reconciliation package drafted by the Energy and Commerce Committee and Ways and Means Committee last week. The four Freedom Caucus members who voted against the bill last Friday changed their votes to “present” on Sunday, which allowed the bill to move forward with a 17 – 16 majority in committee while still acknowledging their desire for additional federal savings.
The package moves to the House Committee on Rules next, which is scheduled to convene at 1:00 am on Wednesday (yes, am). The Rules Committee has already released a revised version of the package in a format that highlights the changes made. Additional modifications are expected in order to garner the near unanimity required for passage through the House. Anticipated changes impacting healthcare include implementing work requirements earlier than 2029. Republican leaders hope to have the bill on the House floor later this week, before Congress breaks for the Memorial Day recess.
Two subcommittees within the Senate Committee on Appropriations will meet this week to review portions of the president’s budget request for fiscal year 2026. US Department of Health and Human Services Secretary Robert F. Kennedy Jr. will appear before the Subcommittee on Labor, Health and Human Services, Education, and Related Agencies on Tuesday, and US Food and Drug Administration Commissioner Martin A. Makary will appear before the Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies on Thursday.
Outside of Congress, the Administration’s Make America Healthy Again Commission is anticipated to release its initial assessment and strategy this week, likely on Thursday. The commission, established in February and chaired by Secretary Kennedy, was instructed to develop a report that, among other things:
Reviews childhood chronic disease in the United States compared to other countries.
Assesses the threat of potential overutilization of medication and certain food ingredients and chemicals.
Identifies best practices for preventing childhood health issues.
Evaluates the effectiveness of existing educational programs.
Evaluates existing federal programs and funding.
Restores the integrity of science, including by eliminating undue industry influence.
Today’s Podcast
In this week’s Healthcare Preview, Rodney Whitlock and Debbie Curtis join Julia Grabo to discuss what happened over the weekend with the House’s budget reconciliation bill and what to pay attention to moving forward.