Michigan Overhauls Paid Sick Leave and Minimum Wage Laws
On February 21, 2025, Governor Gretchen Whitmer signed into law two bills amending the state’s Wage Act and Earned Sick Time Act (ESTA).
As we previously explained, absent those amendments, February 21 would have been the effective date for those laws as ordered by the Michigan Supreme Court. Below, we share highlights of the new bills as preliminary guidance.
Changes to the Wage Act
Steeper Minimum Wage Hikes, Faster
Senate Bill 8 (SB 8), the bill that amended the Wage Act, retains the $12.48 per hour minimum wage rate set to take effect February 21. Thereafter, minimum wage will rise again on January 1, 2026 (and on the first of the year annually thereafter) to $13.73, a higher wage rate than the originally scheduled hourly rate of $13.29. The 2027 increase will also be larger than scheduled, jumping to an hourly rate of $15.00.
In short, minimum wage earners will see bigger hikes, sooner, under SB 8. The main takeaway for Michigan employers concerned about compliance as of February 21 is that the statewide minimum wage as of that date is $12.48 per hour.
Smaller Tip Credit Reductions, No Abolishment, Plus Enforcement
SB 8 will not gradually phase out tip credits, which would have occurred under the state Supreme Court Order. Instead, the proportional maximum credit will diminish by 2% annually through 2031, when a tipped worker’s minimum wage would equal 50% of the full minimum wage.
Effective today, employers must ensure that tipped workers receive a minimum rate of $4.74, which is 38% of the full minimum wage. Note that this is meaningfully lower than what the Order required ($6.49 per hour, or 48% of the full minimum wage).
SB 8 also adds a maximum civil fine of $2,500 on employers who fail to comply with the minimum wage scheme for tipped workers.
Changes to ESTA
House Bill 4002 (HB 4002), the bill that amended ESTA, significantly modified the Supreme Court’s Order. The key changes from the Order are as follows:
A revised definition of “small business” from “fewer than 10” to “10 or fewer” employees, along with a delay of mandatory paid earned sick time accrual and usage for small business employees until October 1, 2025.
Excluding the following individuals from paid earned sick time eligibility: trainees or interns and youth employees, as well as employees who schedule their own working hours and are not subject to disciplinary action if they do not schedule a minimum number of working hours.
Clarification that paid earned sick time does not accrue while an employee is taking paid time off, and that employers may cap usage and carryover of accrued paid leave at 72 hours per year, or at 40 hours per year if they are a small business.
Express permission to frontload paid earned sick time, including detailed instructions about how to frontload part-time employees’ leave and waiving requirements to track accruals, carryover unused time or pay out the value of unused time at the end of the year for frontloading employers.
Changes to language regarding an employee’s request for an “unforeseeable” need to use paid earned sick time, including requiring employee to give notice as soon as “practicable” or in accordance with the employer’s policy related to requesting or using sick time or leave (assuming the employer has provided a copy of the policy to the employee and the policy permits the employee to request leave after becoming aware of the need), and permitting employers to take adverse action against employees who do not comply with notice requirements.
Added language permitting an employer to take adverse personnel action against an employee if the employee uses paid earned sick time for a purpose other than a purpose sanctioned by ESTA, or who violates the ESTA’s notice requirements.
Elimination of a private right of action, but expansion of potential civil penalties that the state’s Department of Labor and Economic Opportunity (LEO) may impose through an administrative proceeding, including, but not limited to, a civil penalty up to eight (8) times the employee’s normal hourly wage.
What Should Michigan Employers Do?
Employers must immediately comply with the Wage Act and pay non-exempt workers a general minimum wage of at least $12.48 per hour and tipped workers a rate of at least $4.74 per hour.
As for ESTA, “small employers” can wait until October 2025 to begin providing benefits, but all employers should take steps to comply. Many of the ESTA amendments clarify the initial version of Supreme Court’s Order, so steps employers have likely taken to prepare for the February 21 effective date will be a helpful starting point. Epstein Becker Green soon will publish more detailed insights about ESTA and its relationship to other leave laws.
FDA Continues Push to Improve Food Labeling Practices in the United States
In September 2022, former President Biden convened the White House Conference on Hunger, Nutrition, and Health, during which the White House introduced its National Strategy on Nutrition and Health (National Strategy). The National Strategy called for creating more accessible food labeling practices to empower consumers to make healthier choices, among other laudable public health-focused goals. Prior to the January 2025 transition from the Biden to the Trump administration, the Food and Drug Administration (FDA) took concrete steps to address this particular National Strategy priority through both formal rulemaking and informal guidance. This blog post summarizes FDA’s actions at the end of the Biden administration intended to modernize food labeling practices and move them forward in today’s more consumer-focused marketplace.
Proposed Rule for Front-of-Package Nutrition Labeling
In the National Strategy, the development of front-of-package (FOP) labeling schemes was discussed as one way to promote equitable access to nutrition information and healthier choices. On January 16, 2025, FDA published in the Federal Register a proposed rule that would require a front-of-package nutrition label on packaged foods (Proposed Rule). The Proposed Rule would require manufacturers to add a “Nutrition Info” box on the principal display panel of each packaged food product, which would list the Daily Value (DV) percentage of saturated fat, sodium, and added sugars in a serving of that food. The DV percentage would list how much of the nutrient in a serving contributes to a person’s total daily diet. In addition, each of those nutrients would include corresponding “interpretative information” that would signal to consumers whether the food product contains a low, medium, or high amount of those nutrients. An example of the proposed FOP nutrition information graphic is below. And although the Proposed Rule would not require it, manufacturers could voluntarily include a calorie count on the front of the food package, per existing FDA regulations.
The Proposed Rule does deviate from certain suggestions made in the National Strategy, which advocated for FOP “star ratings” and “traffic light schemes” to promote equitable access to nutrition information. Specifically, the National Strategy considered how to best help consumers with lower nutrition literacy more readily identify foods that comprise a healthy diet. Instead of a front-of-packaging labeling system that would rely on imagery, however, FDA’s proposal opted for written information about the nutrients contained in the food. Both the preamble to the Proposed Rule and FDA’s press release announcing its publication explain that in focus groups conducted in 2022, participants reported confusion over the traffic light system in particular (e.g., when a food contained both nutrients that should be limited but also nutrients for which higher consumption is recommended) and that “the black and white Nutrition Info scheme with the percent [DV] performed best in helping consumers identify healthier food options.”
It will be interesting to see whether comments to the Proposed Rule will remark on FDA’s choice of the written “Nutrition Info” box versus a FOP labeling system that would be more reliant on imagery. FDA is accepting comments on the Proposed Rule until May 16, 2025 (Docket FDA-2024-N-2910). As currently envisioned, if the proposal for FOP nutrition information is adopted, most food product manufacturers would have three years from the effective date to bring labels into compliance (smaller manufacturers would be given four years).
As a result of President Trump’s administrative freeze and new executive orders governing the work of regulatory agencies such as FDA, the fate of this Proposed Rule is currently uncertain. However, newly confirmed Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. has articulated that his agenda is to “make America healthy again” (MAHA) and the presidential MAHA Commission was recently established to begin informing the Administration’s work on Mr. Kennedy and President Trump’s priorities in this space. Although Mr. Kennedy did not address food labeling during his Senate confirmation hearings and the executive order creating the MAHA Commission does not speak directly to food labeling or nutrition information accessibility for consumers, interested stakeholders should monitor the upcoming work of the Commission – including whether any opportunities for public comments may be made available – as well as its future “Make Our Children Healthy Again Strategy” that is due in approximately six months. Further, under a deregulatory executive order signed on January 31, 2025, President Trump has directed agencies to eliminate 10 “regulations” for each new regulation to be promulgated, with the term “regulation” expansively defined to include memoranda, guidance documents, policy statements, and interagency agreements. This “one-in, 10-out” order may make the prospect of an FOP nutrition labeling final rule less likely, at least for the foreseeable future.
Final Rule for Use of The Term “Healthy” on Food Labeling
Another recent FDA action related to food labeling was the agency’s finalization of a proposed rule from 2022 that involved a lengthy public consultation and information collection process (see our prior coverage here). On December 27, 2024, FDA published in the Federal Register its Final Rule regarding the use of the term “healthy” in food labeling. The Final Rule updates the definition established 30 years ago for the nutrient content claim “healthy” to be used in food labeling. In President Biden’s National Strategy, one highlighted priority was ensuring that food packages bearing this claim align with current nutrition science and the Dietary Guidelines for Americans (Dietary Guidelines). To advance this goal, FDA was charged with updating the standards for when a company can use the “healthy” claim on its products (work on which was already ongoing at the agency), creating a symbol that can be used to reflect that the food is “healthy, and developing guidance on the use of Dietary Guideline statements on food labels.
The original regulatory definition of “healthy” (codified at 21 C.F.R. § 101.65(d)) sets limits on total fat, saturated fat, cholesterol, and sodium content should a food be labeled as healthy, and requires that the food contain at least 10% of the DV for vitamin A, vitamin C, calcium, iron, protein, and fiber. Under the Final Rule, total fat and dietary cholesterol are no longer factors to be considered when evaluating whether a food is eligible for this particular nutrient content claim. Instead, the agency has established limits on saturated fat, sodium, and added sugars in accordance with the Dietary Guidelines. Additionally, rather than focusing on vitamin A, vitamin C, calcium, iron, protein, and fiber, the Final Rule requires that the food product contain a certain amount of food from at least one of the food groups or subgroups recommended by the Dietary Guidelines, such as fruit, vegetables, grains, dairy, and proteins.
Perhaps most notably, the prior regulatory scheme allowed for foods that were high in added sugars, such as yogurts, breakfast cereals, and fruit snacks, to technically qualify as “healthy” despite not aligning with the definition of “nutrient-dense” foods from the Dietary Guidelines, which specifically applies to certain foods “when prepared with no or little added sugars, saturated fat, and sodium.” Consistent with generally accepted nutritional best practices, the National Strategy also promoted lowering the sodium content in food and decreasing the consumption of added sugars –shared goals of new HHS Secretary Kennedy and the broader MAHA agenda.
The Final Rule does not establish a “healthy” symbol that can be used on food packaging, but FDA has indicated that this symbol may also be on the horizon. In its press release announcing the Final Rule, FDA noted that it is “continuing to develop” this symbol, adding that such a symbol would further FDA’s goal of helping consumers more easily identify healthier food products.
The Final Rule’s effective date (which as of publication of this blog post, has not been changed by the Trump Administration) is February 25, 2025, and the compliance date for manufacturers is February 25, 2028 – three years after the new regulatory definition becomes effective.
Draft Guidance for Industry: Labeling of Plant-Based Alternatives to Animal-Derived Foods
Finally, while not specifically called out in the National Strategy, FDA has been working for several years to develop labeling recommendations for plant-based foods that are being developed and marketed as alternatives to conventional animal products. On January 7, 2025, FDA released the Draft Guidance for the Labeling of Plant-Based Alternatives to Animal Derived Foods (Draft Guidance), in response to the growing demand for plant-based food alternatives in the United States. According to the Plant-Based Food Association, 70% of Americans are consuming plant-based foods. The scope of the newly released guidance encompasses alternatives to poultry, meat, seafood, and dairy products that fall under FDA’s jurisdiction. It expressly excludes plant-based milk alternatives, as separate guidance on that subject was released in February 2023.
The Draft Guidance notes that rather than simply identifying a product as a “plant-based” alternative food, the specific plant source should be disclosed on the food product’s label. This would enable consumers to make more informed choices about purchasing plant-based alternatives. For example, rather than labeling a plant-based cheese solely as such, the cheese’s label should more clearly disclose “soy-based cheese” to reflect its primary ingredients. The Draft Guidance also recommends that if a plant-based alternative food is derived from several different plant sources, the primary plant sources should be identified in the food’s name. The agency provides the examples of “Black Bean Mushroom Veggie Patties” and “Chia and Flax Seed Egg-less Scramble” to illustrate this concept. For labeling purposes, FDA also recommends companies avoid exclusively naming products with “vegan,” “meat-free,” or “animal-free.”
Public comments on the Draft Guidance should be submitted by May 7, 2025 (Docket FDA-2022-D-1102).
Conclusion
One primary goal of the National Strategy was to empower Americans to make healthier, informed choices about their nutrition and food consumption. In the United States, diet-related diseases, such as hypertension, obesity, and diabetes, are on the rise. Under the Biden administration and the leadership of former Commissioner Dr. Robert Califf, FDA sought to fight these alarming trends and to improve public health by increasing access to nutritional information and promoting transparency in food labeling.
Further, while the Proposed Rule, Final Rule, and Draft Guidance all focus on labeling packaged food products that can be purchased in stores, it will be interesting to see how these initiatives influence FDA’s recommendations for food labeling practices in online grocery shopping. On April 24, 2023, FDA published the notice Food Labeling in Online Grocery Shopping; Request for Information (Docket No. FDA-2023-N-0624-0002), which received 31 electronically submitted comments from various stakeholders, including grocer organizations, food scientists, and individual consumers. Indeed, the December 2024 press release for the Final Rule noted that FDA “has already entered into a partnership with Instacart to make it even easier for consumers to find products with the ‘healthy’ claim through online grocery shopping filters and a virtual storefront.” In the wake of the agency actions summarized in this post and the Instacart partnership, we wonder if FDA will move in the future to provide manufacturers and retailers with definitive guidance on online food labeling practices. We will be watching to see how FDA, as well as the work of the MAHA Commission and HHS Secretary Kennedy, may continue to improve food labeling practices in the future.
What is Medical Malpractice?
Certain criteria must be met for a claim to be classified as medical malpractice. These typically include:
1. Duty of Care
The healthcare provider had a legal obligation to provide care to the patient. This relationship is established when a patient seeks treatment and the provider agrees to offer it.
2. Breach of Duty
The provider failed to meet the accepted standard of care. This standard varies depending on the specifics of the case and is often determined by comparing the actions of the provider to those of other competent practitioners in similar situations.
3. Causation
The breach of duty directly caused injury to the patient. This means that the harm suffered was a direct result of the healthcare provider’s negligence or inadequate care.
4. Damages
The patient must have suffered harm, which can include physical injury, emotional distress, or financial loss.
Common Examples of Medical Malpractice
Medical malpractice can occur in a variety of ways, including but not limited to:
Surgery Errors: Mistakes made during surgery, like operating on the wrong place or leaving surgical tools inside a patient.
Misdiagnosis or Delayed Diagnosis: Failing to diagnose a condition or giving an incorrect diagnosis can delay necessary treatment and ultimately worsen the patient’s condition.
Medication Errors: Administering the wrong medication, incorrect dosages, or not accounting for a patient’s allergies can lead to serious health complications.
Childbirth Injuries: Negligence during labor and delivery can result in injuries to both the mother and the child, with lifelong consequences.
Legal Process
If you believe you have been a victim of medical malpractice, it is important to understand your options. Below are some steps to consider:
1. Consultation:
Speak with an experienced attorney who specializes in medical malpractice cases. They can assess the details of your situation and provide guidance on potential next steps.
2. Gather Evidence:
Collect all relevant medical records, bills, and correspondence with healthcare providers. This documentation will be essential in building your case.
3. Expert Testimony:
In many malpractice cases, expert testimony from other medical professionals is necessary to establish the standard of care and demonstrate how it was breached.
4. Filing a Claim:
Your attorney will help you file a claim within the appropriate timeframe, as there are statutes of limitations that dictate how long you have to take legal action. They will walk you through the legal process and handle the necessary steps.
Conclusion
Medical malpractice is a serious issue that can have harmful effects on patients and their families. If you or a loved one have been injured in a medical malpractice accident, do not hesitate to reach out to a medical malpractice attorney. They will provide the support you need and seek justice while you are on your road to recovery.
Michigan’s Earned Sick Time Act Amended: Employer Takeaways
On February 20, 2025, Michigan lawmakers voted to amend the Earned Sick Time Act (ESTA) to provide greater clarity and flexibility to both employees and employers with respect to paid time off, taking immediate effect. This action followed earlier votes this week by the Michigan legislature on the minimum wage law. Governor Whitmer has now signed both pieces of legislation into law.
Key changes to ESTA as of February 21, 2025, are as follows:
Employers are expressly permitted to frontload at least 72 hours of paid sick time per year, for immediate use, to satisfy ESTA’s leave requirement. Employers who frontload hours do not need to carry over unused paid sick time year to year and do not have to calculate and track the accrual of paid sick time for full-time employees. For part-time employees, frontloading in lieu of carryover is also an option, including frontloading a prorated number of hours. Employers choosing to frontload a prorated amount must follow notice, award amount, and true-up requirements.
If paid sick time is not frontloaded, employees still must accrue 1 hour of paid sick leave for every 30 hours worked, but employers may cap usage at 72 hours per year. Only 72 hours of unused paid sick time is required to roll over from year to year for employers who provide leave via accrual.
New hires can be required to wait until 120 days of employment before they can use accrued paid sick time, which could potentially benefit seasonal employers. This waiting period appears to be permitted for frontloading and accruing employers alike, although the bill’s language with respect to frontloading employers is somewhat unclear. This may be an issue for clarification by the Department of Labor and Economic Opportunity, which under the amendment will be responsible for all enforcement of the law.
ESTA now provides several exemptions, including:
An individual who follows a policy allowing them to schedule their own hours and prohibits the employer from taking adverse personnel action if the individual does not schedule a minimum number of working hours is no longer an “employee” under ESTA.
Unpaid trainees or unpaid interns are now exempt from ESTA.
Individuals employed in accordance with the Youth Employment Standards Act, MCL 409.101-.124, are also exempt from ESTA.
Small businesses, defined as those with 10 or fewer employees, are only required to provide up to 40 hours of paid earned sick time. The additional 32 hours of unpaid leave, required under the original version of ESTA, is no longer required. Small businesses, like other employers, are permitted to provide leave via a frontload of this entire applicable amount or to provide the time via accrual. If small businesses use the accrual method (1 hour of paid sick time for every 30 hours worked), they may cap paid sick time usage at 40 hours per year and only permit carryover of up to 40 hours of unused paid sick time year to year. Small businesses have until October 1, 2025, to comply with several ESTA requirements, including the accrual or frontloading of paid earned sick time and the calculation and/or tracking of earned sick time.
Employers can now use a single paid time off (PTO) policy to satisfy ESTA. Earned sick time may be combined with other forms of PTO, as long as the amount of paid leave provided meets or exceeds what is otherwise required under ESTA. The paid leave may be used for ESTA purposes or for any other purpose.
The amendments clarify that an employee’s normal hourly rate for ESTA purposes does not include overtime pay, holiday pay, bonuses, commissions, supplemental pay, piece-rate pay, tips or gratuities.
The amendments specify that the Department of Labor and Economic Opportunity is responsible for enforcement of the Act. Prior provisions that included a private right of action for employees to sue their employers for possible ESTA violations have been removed.
The amendments remove a “rebuttable presumption” of retaliation that was contained in the original Act.
ESTA now permits employers to choose between one-hour increments or the smallest increment used to track absences as the minimum increment for using earned sick time.
The amendments allow a means for employers to require compliance with absence reporting guidelines for unforeseeable ESTA use. To do this, an employer must comply with steps outlined in the amendment including disclosure of such requirements to employees in writing.
The amendments specify that employers must provide written notice to employees including specified information about the Act within 30 days of the effective date. This would mean a date of March 23, 2025.
The amendments allow for postponement of the effective date of ESTA for employees covered by a collective bargaining agreement that “conflicts” with the Act. The effective date for such employees is the expiration date of the current collective bargaining agreement.
The amendments likewise allow for the postponement of ESTA’s effective date for employees who are party to existing written employment agreements that “prevent compliance” with the Act. Reliance on such provisions requires notification to the state.
Some provisions of the bill give rise to continuing confusion or ambiguity, including:
The amended law continues to contain a provision requiring the display of a poster from the Department of Labor and Economic Growth, which appears to be effective immediately upon the date the bill is signed into law. However, no updated poster exists.
The statute’s reference to “conflict” between a collective bargaining agreement and ESTA is not well defined, including how this provision will apply to a collective bargaining agreement that, perhaps intentionally through prior negotiations, includes no current provisions for sick time.
Whether the amended law is intended to exclude nonprofit organizations from the scope of covered employers is unclear. The reference to nonprofits was stricken, but there is no affirmative language excluding them from the broad “employer” definition that remains in the law.
The availability of a 120-day waiting period for a frontloading employer is somewhat unclear, due to the provisions that frontloaded time must be “available for immediate use.”
The date employees may first use earned sick time, in relation to the time frame for employers to finalize and issue policies, would benefit from clarification. The amendment states that accrual begins on the effective date of the Act, and time may be used “when it is accrued.” However, employers appear to have a 30-day time frame to finalize and issue policies defining how they choose to provide ESTA’s benefits.
The extent of employer recordkeeping and/or inspection obligations are unclear under the current law. Previous provisions detailing such requirements are no longer included.
Additional Authors: Luis E. Avila, Francesca L. Parnham, and Carolyn M.H. Sullivan
Hold on Tight: Last-Minute Changes to the Earned Sick Time Act
Michigan’s Earned Sick Time Act (ESTA), scheduled to take effect on February 21, 2025, was amended on February 20, 2025, to provide additional clarity and administrative ease. Yesterday, both chambers of the legislature reached an agreement on an amendment to the ESTA, introducing several changes the day before its scheduled effective date. Many employers have been patiently anticipating this amendment—and that anticipation has finally become a reality.
Quick Hits
Michigan Governor Whitmer is expected to sign an amendment to the Earned Sick Time Act, one day before the act’s effective date, providing several employer-friendly changes.
Employers with fewer than ten employees now have until October 1, 2025, to comply.
Highlights of the amendment include clarifications regarding covered employer qualifications, benefit accruals, employee eligibility, and benefit amounts.
Quick History
In 2019, Michigan enacted the Paid Medical Leave Act (PMLA) in response to an adopted ballot initiative that originally called for the ESTA. At that time, employers implemented changes to their paid time-off policies to comply with the PMLA. However, after the PMLA’s implementation, litigation ensued challenging the adopt-and-amend procedure used by the legislature to move from the ESTA to the PMLA. On July 31, 2024, the litigation reached the Michigan Supreme Court, which, in a 4–3 decision, ruled that the adopt-and-amend approach was unconstitutional. The Michigan Supreme Court confirmed that the ESTA should have taken effect and set its implementation date for February 21, 2025. The ESTA represents a vast departure from the PMLA.
Where Are We Now?
Since the Michigan Supreme Court’s decision, Michigan’s lawmakers have been working to amend the ESTA before its implementation date. Down to the wire, that amendment has now passed and takes effect February 21, 2025; however, employers ten or fewer employees have until October 1, 2025, to comply. The amendment makes several employer-friendly changes, provides more clarity on the ESTA’s requirements, and makes the law easier to administer.
While the official amendment contains further changes, here are some highlights:
Provision
PMLA
ESTA
ESTA as Amended on February 20, 2025
Covered Employers
Applies to employers with 50 or more employees (small business exemption).
Applies to employers, but small employers with fewer than 10 employees must provide slightly different benefit. No exemption.
Applies to all employers, but employers with 10 or fewer employees must provide slightly different benefits. Exempts new business start-ups for 3 years.
Benefit Accrual
Explicitly permits frontloading or minimum accrual of 1 hour paid leave for every 35 hours worked.
No frontloading provided explicitly; frontloading employers still need to track accrual and comply with carryover requirements. Minimum accrual of 1 hour paid leave for every 30 hours worked.
Provides for frontloading at the beginning of a year for immediate use. When frontloading is used, employers do not need to calculate and track accrual. Additional written notice requirements when time is frontloaded for part-time employees. Accrual rate remains 1 hour paid leave for every 30 hours worked.
Eligibility
Excludes exempt, seasonal, temporary, and other employees.
Does not exclude any employees. Expands “family member” to include domestic partners (defined in the act) and “any other individual related by blood or affinity whose close association with the employee is equivalent to a family member.”
Excludes (1) employees that can set their own working hours (with conditions), (2) unpaid interns or trainees, and (3) youth employees as defined under the Youth Employment Standards Act. Definition of “family member” eliminates individuals related by affinity, but recognizes individuals in close relationships that are equivalent to a family relationship.
Benefit Amount
40 hours of paid sick leave.
72 hours of paid sick leave. Employers with fewer than 10 employees must provide 40 hours of paid leave and 32 hours of unpaid leave.
72 hours of paid sick leave per year 40 hours of paid sick leave per year for employers with 10 or fewer employees.
Use of Other Paid Time Off
May comply with the act by providing other paid time off available for statutory purposes.
Same/unchanged.
Same/unchanged.
Carryover
Must carry over up to 40 hours if using the accrual method. No carryover for frontloading.
Must carry over any balance (without regard to the method used to award the time).
No carryover if employers choose to frontload. Employers using an accrual method must carry over up to 72 unused hours (40 hours for employers with 10 or fewer employees).
Cap on Use
May cap at 40 hours of use per year.
May cap use at 72 hours per year.
May cap use at 72 hours per year. Employers with 10 or fewer employees may cap use at 40 hours per year.
Increment of Use
The employer may set the increment.
The smaller of 1 hour or the smallest increment of time the employer uses to track other absences.
Either 1-hour increments or the smallest increment the employer uses to account for absences of use of other time.
Supporting Documentation
If requested, employees must provide within 3 days.
Can only be requested if the employee is absent for more than 3 consecutive days. If requested, the employee must provide in a “timely manner,” and the employer must pay for any out-of-pocket expenses incurred in obtaining the documentation.
Same/unchanged—requires employees to provide documentation within 15 days.
Retaliation
No specific prohibition on retaliation.
Prohibits retaliation with a rebuttable resumption of retaliation, if adverse action is taken against an employee within 90 days of certain activity protected by the act.
No rebuttable presumption of retaliation. Adverse personnel action may be taken against an employee for using earned sick time for a purpose other than that provided in the act or if the employee violates the notice requirements of the act.
Remedies
Administrative complaint only. Must be filed within 6 months. No private cause of action.
Provides a private cause of action with no administrative exhaustion requirement. Can still file an administrative complaint. 3-year statute of limitations on private action.
Administrative complaint only. No private cause of action. 3-year statute of limitations.
Effect on Collective Bargaining Agreements (CBAs)
Did not override a CBA then in effect. Subsequent CBAs need to comply.
Same/unchanged.
Same/unchanged. Also provides a similar exception for certain employment contracts.
Waiting Period
Employers may require employees to wait 90 days after hire to use their sick time.
Employers may require an employee hired after the effective date to wait until the 120th calendar day after hire to use accrued sick time.
Calculation
Earned sick time is paid at the employee’s normal hourly wage.
Clarifies that the rate of pay does not include overtime, holiday pay, bonuses, commissions, supplemental pay, piece rate pay, tips or gratuities in the calculation.
Effect on Termination, Transfer, and Rehire
The employer must reinstate any unused sick time if rehired within 6 months of separation.
The employer must reinstate any unused sick time if rehired within 2 months of separation unless the value of the sick pay was paid out at time of termination or transfer.
Employee Notice
Rely on usual and customary rules.
The employer may create a policy on requesting sick leave if the employer provides the employee a copy of the written policy and the policy allows the employee to provide notice after the employee is aware of the need for earned sick time.
Employer Notice
Written notice must be provided to an employee at the time of hire or not later than 30 days after the effective date of the amendatory act, whichever is later, including: the amount of earned sick time to be provided; the employer’s choice of how to calculate the year; the terms under which sick time may be used, retaliatory personnel action is prohibited; and the employee’s right to file an administrative complaint.
These changes will likely be welcomed by many employers. Employers can now confidently adjust and administer their existing paid time-off policies to comply with the amended ESTA.
HHS’s Proposed Security Rule Updates Will Require Adjustments to Accommodate Modern Vulnerability and Incident Response Issues
In this week’s installment of our blog series on the U.S. Department of Health and Human Services’ (HHS) HIPAA Security Rule updates in its January 6 Notice of Proposed Rulemaking (NPRM), we discuss HHS’s proposed rules for vulnerability management, incident response, and contingency plans (45 C.F.R. §§ 164.308, 164.312). Last week’s post on the updated administrative safeguards is available here.
Existing Requirements
HIPAA currently requires regulated entities to implement policies and procedures to (1) plan for contingencies and (2) respond to security incidents. A contingency plan applies to responses to emergencies and other major occurrences, such as system failures and natural disasters. When needed, the plan must include a data backup plan, disaster recovery plan, and an emergency mode operation plan to account for the continuation of critical business processes. A security incident plan must be implemented to ensure the regulated entity can identify and respond to known or suspected incidents, as well as mitigate and resolve such incidents.
Existing entities — especially those who have unfortunately experienced a security incident — are familiar with the above requirements and their implementation specifications, some of which are “required” and others only “addressable.” As discussed throughout this series, HHS is proposing to remove the “addressability” distinction making all implementation specifications that support the security standards mandatory.
What Are the New Technical Safeguard Requirements?
The NPRM substantially modifies how a regulated entity should implement a contingency plan and respond to security incidents. HHS proposes a new “vulnerability management” standard that would require regulated entities to establish technical controls to identify and address certain vulnerabilities in their respective relevant electronic information systems. We summarize these new standards and protocols below:
Contingency Plan – The NPRM would add additional implementation standards for contingency plans. HHS is proposing a new “criticality analysis” implementation specification, requiring regulated entities to analyze their relevant electronic information systems and technology assets to determine priority for restoration. The NPRM also adds new or specifying language to the existing implementation standards, such as requiring entities to (1) ensure that procedures are in place to create and maintain “exact” backup copies of electronic protected health information (ePHI) during an applicable event; (2) restore critical relevant electronic information systems and data within 72 hours of an event; and (3) require business associates to notify covered entities within 24 hours of activating their contingency plans.
Incident Response Procedures – The NPRM would require written security incident response plans and procedures documenting how workforce members are to report suspected or known security incidents, as well as how the regulated entity should identify, mitigate, remediate, and eradicate any suspected or known security incidents.
Vulnerability Management – HHS discussed in the NPRM that its proposal to add a new “vulnerability management” standard was to address the potential for bad actors to exploit publicly known vulnerabilities. With that in mind, this standard would require a regulated entity to deploy technical controls to identify and address technical vulnerabilities in its relevant electronic information systems, which includes (1) automated vulnerability scanning at least every six months, (2) monitoring “authoritative sources” (e.g., CISA’s Known Exploited Vulnerabilities Catalog) for known vulnerabilities on an ongoing basis and remediate where applicable, (3) conducting penetration testing every 12 months, and (4) ensuring timely installation of reasonable software patches and critical updates.
Stay Tuned
Next week, we will continue Bradley’s weekly NPRM series by analyzing justifications for HHS’s proposed Security Rule updates, how the proposals may change, and areas where HHS offers its perspective on new technologies. The NPRM public comment period ends on March 7, 2025.
Please visit HIPAA Security Rule NPRM and the HHS Fact Sheet for additional resources.
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McDermott+ Check-Up: February 21, 2025
THIS WEEK’S DOSE
Senate Passes Budget Resolution. The “skinny” bill was put on the Senate floor shortly after President Trump expressed support for the House’s version.
Administration’s Federal Workforce Cuts Hit HHS. Thousands of employees were let go across the divisions of the US Department of Health and Human Services (HHS).
President Trump Issues Several EOs. The executive orders (EOs) relate to in vitro fertilization, COVID-19 vaccine mandates, independent agencies, deregulation, and the federal workforce.
Legal Challenges Continue to Block Gender-Affirming Care EO. A federal judge issued a second 14-day stay as the court considers the legality of the order.
CONGRESS
Senate Passes Budget Resolution. Last week, the Senate and House Budget Committees each passed separate, and very different, budget resolutions as their first steps toward negotiating a unified budget resolution that must pass both bodies in order for work to proceed on reconciliation. These resolutions reflected each chamber’s preferred approach. The Senate is moving a two-part reconciliation strategy by advancing a “skinny” resolution that only addresses immigration, energy, and defense priorities (but which still may utilize healthcare as a pay for). The Senate would act later to advance a separate resolution to extend the 2017 tax cuts. The Senate’s goal is to provide President Trump with a quick win, then take the additional time members think will be necessary to pass a reconciliation package tackling tax cuts. In contrast, the House is proceeding with a budget resolution that includes tax cuts and a minimum of $1.5 trillion in spending reductions. The House approach clearly puts healthcare on the table for significant cuts. Medicaid is a particular focus given that the resolution would require the House Energy & Commerce Committee to come up with $880 billion in savings.
While the House was in recess this week, Senate Majority Leader Thune (R-SD) scheduled a vote on the recently advanced Senate budget resolution. Then, on February 19, President Trump endorsed the House’s one-big-bill approach. This Senate still moved forward with the scheduled vote, passing the resolution 52 – 48 and indicated that doing so will provide a backstop if House efforts fail. Senator Paul (R-KY) was the only Republican to vote no.
House Republican leaders plan to bring their budget resolution to the House floor as soon as next week, but the timing is uncertain as several Republican members of Congress have expressed hesitation about supporting it. Some are Republicans in swing districts who are concerned about the magnitude of Medicaid cuts. Others are members who oppose voting to increase the debt limit, which is also included in the budget resolution.
ADMINISTRATION
Administration’s Federal Workforce Cuts Hit HHS. Over the weekend, the Trump administration reduced HHS’s workforce by several thousand employees across several agencies, including the US Food & Drug Administration, the Centers for Medicare & Medicaid Services (CMS), the Centers for Disease Control and Prevention, and the National Institutes of Health. Many who were let go had probationary status (meaning they were hired or promoted less than a year ago) or temporary status (which could include employees who have spent years in their role). The laid-off employees had worked on a variety of issues, such as Medicare and Medicaid quality initiatives, medical device approvals, public health preparedness, and artificial intelligence. At this time, there is no transparency as to the positions eliminated or even the overall counts. Per a recent EO, the agencies could be restricted from adding staff, as the EO permits hiring of no more than one employee for every four employees that depart.
President Trump Issues Several EOs. The administration continues to highlight and implement its agenda through EOs. Relevant EOs issued this week include the following:
IVF. This EO directs the assistant to the president for domestic policy to submit a list of policy recommendations to protect in vitro fertilization (IVF) access and reduce the out-of-pocket and health plan costs for the treatment. The fact sheet can be found here. Like many other EOs, additional steps would need to be taken before any changes occurred.
COVID-19 Vaccine Mandates. This EO mandates the withholding of federal funds from educational entities that require students to receive a COVID-19 vaccination to attend in-person education programs. It requires the secretaries of education and HHS to issue guidelines for compliance, a report on noncompliant entities, and a planned process for each agency’s implementation. The fact sheet can be found here. It is unclear how much practical impact this EO may have, because most of these directives have ceased to be enforced.
Independent Agencies. This EO requires independent agencies, including the Federal Trade Commission, to submit proposed regulations to the Office of Information and Regulatory Affairs before publication in the Federal Register. The EO directs the Office of Management and Budget (OMB) to establish performance standards and management objectives for independent agencies and to review independent agency actions for consistency with the president’s priorities. The EO also states that only the president and attorney general can provide interpretations of law for the executive branch.
Deregulation. This EO directs agency heads to work in coordination with Department of Government Efficiency team leads and OMB to review all regulations subject to their jurisdiction for consistency with law and administration policy. Within 60 days, agencies must submit to OMB a list of certain regulations, including those that are unconstitutional, are not authorized by statutory authority, and impose undue burdens on small businesses. The EO states that agencies should deprioritize actions that enforce regulations that go beyond the powers vested by the Constitution and should ensure that enforcement actions are compliant with law and administration policy. The EO also directs OMB to issue implementation guidance.
Federal Workforce. This EO requires HHS to terminate the secretary’s advisory committee on long COVID-19, and CMS to terminate the health equity advisory committee. It also directs non-statutory components and functions of certain foreign affairs governmental entities to be eliminated, as allowed under applicable law, and directs such entities to submit a report stating whether components of the entity are statutorily required.
COURTS
Legal Challenges Continue to Block Gender-Affirming Care EO. Lawsuits continue to be filed against actions taken by the Trump administration, including EOs and other administrative announcements. This includes a lawsuit filed by the attorneys general of Washington, Oregon, Colorado, and Minnesota, along with three doctors who provide gender-affirming care to youth. On February 14, a federal judge issued a two-week temporary restraining order that blocks the withholding of funds to healthcare entities that provide gender-affirming care to patients under 19. This is the second judge to take action on this EO. On February 13, another judge issued a two-week temporary restraining order blocking enforcement of the EO.
QUICK HITS
CBO Publishes Explainer on Scoring. The document explains how the Congressional Budget Office (CBO) prepares cost estimates for legislation. This process is top of mind for stakeholders as the budget reconciliation process (which is expected to include healthcare-related budgetary offsets) continues.
NEXT WEEK’S DIAGNOSIS
Congress will be in session next week, with the House potentially voting on its budget resolution. The Senate will continue work to confirm President Trump’s nominees, including a nomination hearing for Dan Bishop as deputy director of OMB. Health-related hearings include:
A House Energy & Commerce Health Subcommittee hearing on pharmacy benefit managers.
A House Veterans’ Affairs Committee hearing on electronic health record modernization.
A House Oversight and Government Reform Committee hearing on the US Government Accountability Office’s 2025 high-risk list.
A Senate Special Committee on Aging hearing on the opioid epidemic.
We expect the administration to continue taking executive actions related to healthcare.
HIPAA VIOLATIONS?: Health Insurance Company Allegedly Tracks and Shares Private Health Information
Hey, CIPAWorld! The Baroness here. Happy Friday everyone
Believe it or not, even health insurance companies are facing litigation for allegedly tracking and sharing consumer information. Just yesterday, Blue Cross Blue Shield of Massachusetts (BCBS) and its subsidiary removed such a case to the District of Massachusetts. Vita v. Blue Cross & Blue Shield of Mass., Inc., No. 1:25-cv-10420 (D. Mass. Feb. 20, 2025).
In the Amended Complaint, Plaintiff Vita claims that she lives in Massachusetts and obtains health insurance from BCBS. She claims that BCBS’s Website, https://ww.bluecrossma.org/, offers consumers general information about insurance plan offerings by BCBS and individualized information about consumers’ insurance plans. Notably, Plaintiff states that the website includes a “Find a Doctor” function that enables users to search by condition, specialty, gender, language, and location; a “24/7 Nurse Line” through which consumers can communicate with nurses employed by BCBS; allows consumers to access their insurance information, including services and medications obtained, amounts paid, and benefits available; and it allows consumers to access their private medical information through the MyBlue patient portal.
Vita argues that BCBS Website users have legitimate expectations of privacy and that BCBS will not share with third parties their communications with BCBS without consent. She alleges that these expectations are supported by Massachusetts state law and HIPAA, which prohibit healthcare companies from using or disclosing individuals’ protected health information without valid authorization from the individual.
Additionally, Vita references multiple statements in BCBS’s online policies in which it explicitly states that BCBS’s cookies, clear gifs, and other web monitoring technologies do not collect any personally identifiable information. Because of this, Vita claims that healthcare consumers would not anticipate that their communications with BCBS would be intercepted and shared with third parties, like Google, Facebook, Twitter, and LinkedIn for marketing purposes, and that BCBS did not inform consumers of this via a pop-up notification or otherwise.
Despite this expectation, Vita alleges that BCBS’s Website is designed with tracking technology that permits third parties such as Google and Facebook to intercept consumers’ interactions with BCBS, and that the information intercepted includes private health information. Vita claims that BCBS uses or has used tracking technologies such as Google Analytics, Google DoubleClick, Meta Pixel, and others, and that such tracking is injected into the code of almost all of the pages on BCBS’s Website, including the MyBlue patient portal. The Amended Complaint is detailed, going so far as to include screenshots of the code of the Website with portions highlighted to show tracking.
Based on these facts, Vita seeks to represent the following class:
All Massachusetts residents who, while in the Commonwealth of Massachusetts, accessed any portion of the website at bluecrossma.org between three years prior to the date of the filing of the initial complaint in this action and September 29, 2023.
Based on these facts, Vita alleges that BCBS violated the ECPA, 18 USC § 2511, which prohibits the intentional interception of the content of any electronic communications, as well as HIPAA, which imposes a criminal penalty for knowingly disclosing individually identifying health information to a third party. 42 USC § 1320d-6(a)(3). Second, Vita claims that BCBS violated M.G.L. c. 93A §§ 2, 9, which proscribes unfair competition and unfair or deceptive acts in trade or commerce, by falsely stating that its website does not capture personally identifiable information. Third, Vita brings a cause of action for violating the Massachusetts Right to Privacy Act, M.G.L. c. 214 § 1B, which confers a private right of action to Massachusetts citizens for privacy violations. Vita also brings claims for negligence, breach of confidence, breach of contract, and unjust enrichment.
Because this case was just removed, it is still in its nascent stage. We will be sure to keep you folks updated as the case progresses.
ESTA Amendment Submitted to Gov. Whitmer- What it Means for Employers This Morning
The Michigan House and Senate recently agreed on bills to amend both the Michigan Improved Workforce Opportunity Wage Act and the Earned Sick Time Act (ESTA). The bills have been submitted to Governor Whitmer for signature.
Varnum attorneys are analyzing these changes that are expected to be approved and signed into law. Stay tuned for a more comprehensive advisory regarding these changes to follow.
In the meantime, employers who planned to roll out ESTA policies and programs today should pause their efforts in light of this development. The ESTA amendments may impact many employer policies and approaches to ESTA compliance. More will be clear shortly based on the Governor’s review and analysis of the changes.
Charlotte E. Jolly, Francesca L. Parnham, and Carolyn M.H. Sullivan also contributed to this article.
Location Data as Health Data? Precedent-Setting Lawsuit Brought Against Retailer Under Washington My Health My Data Act
An online retailer was recently hit with the first class action under Washington’s consumer health data privacy law alleging that it used advertising software attached to certain third-party mobile phone apps to unlawfully harvest the locations and online marketing identifiers of tens of millions of users. This case highlights how seemingly innocuous location data can become sensitive health information through inference and aggregation, potentially setting the stage for a flood of similar copycat lawsuits.
Quick Hits
An online retailer was hit with the first class action under Washington State’s My Health My Data Act (MHMDA), claiming that the retailer unlawfully harvested sensitive location data from users through advertising software integrated into third-party mobile apps.
The lawsuit alleges that the retailer did not obtain proper consent or provide adequate disclosure regarding the collection and sharing of consumer health data; a term that is defined incredibly broadly as personal information that is or could be linked to a specific individual and that can reveal details about an individual’s past, present, or future health status.
This case marks the first significant test of the MHMDA and could provide a roadmap for litigants in Washington and other states.
On February 10, 2025, Washington resident Cassaundra Maxwell filed a class action lawsuit in the U.S. District Court for the Western District of Washington alleging violations of Washington’s MHMDA. The suit alleged that the retailer’s advertising software, known as a “software development kit,” or SDK, is licensed to and “runs in the background of thousands of mobile apps” and “covertly withdraws sensitive location data” that cannot be completely anonymized.
“Mobile users may agree to share their location while using certain apps, such as a weather app, where location data provides the user with the prompt and accurate information they’re seeking,” the suit alleges. “But that user has no idea that [the online retailer] will have equal access to sensitive geolocation data that it can then exfiltrate and monetize.”
The suit brings claims under federal wiretap laws, federal and state consumer protection laws, and violations of the MHMDA, making it a likely test case for consumer privacy claims under the MHMDA. This case evokes parallels to the surge over the past several years of claims under the California Invasion of Privacy Act (CIPA), a criminal wiretap statute. Both involve allegations of unauthorized data collection and sharing facilitated by digital tracking technologies. These technologies, including cookies, pixels, and beacons, are often embedded in websites, apps, or marketing emails, operating in ways that consumers may not fully understand or consent to.
As we previously covered, hundreds if not thousands of lawsuits relating to similar technologies were brought pursuant to CIPA after a California district court denied a motion to dismiss such claims in Greenley v. Kochava, Inc. Given the parallels and the onslaught of litigation that CIPA entailed, the MHMDA case may set important precedents for how consumer health data privacy is interpreted and enforced in the digital age, similar to the impact CIPA litigation has had on broader privacy practices. Like CIPA, the MHMDA also allows for the recovery of attorneys’ fees, but unlike CIPA (which provides for statutory damages even without proof of actual harm), a plaintiff must prove an “injury” to his or her business or property to establish an MHMDA claim.
Consumer Health Data
As many companies working in the retail space likely know, the MHMDA imposes a host of new requirements for companies doing business in Washington or targeting Washington consumers with respect to the collection of “consumer health data.” The law broadly defines “consumer health data” as any personal information that can be linked or reasonably associated with an individual’s past, present, or future physical or mental health status. The MHMDA enumerates an entire list of data points that could constitute “health status,” including information that would not traditionally be thought of as indicative of health, such as:
biometric data;
precise location information that could suggest health-related activities (such as an attempt to obtain health services or supplies);
information about bodily functions, vital signs, and symptoms; and
mere measurements related to any one of the thirteen enumerated data points.
Critically, even inferences can become health status information in the eyes of the MHMDA, including inferences derived from nonhealth data if they can be associated with or used to identify a consumer’s health data.
For instance, Maxwell’s suit alleges the retailer collected her biometric data and precise location information that could reasonably indicate an attempt to acquire or receive health services or supplies. However, the complaint is light on factual support, alleging only that the data harvesting conducted via the retailer’s SDK couldreveal (presumably via inference in most cases) “intimate aspects of an individual’s health,” including:
visits to cancer clinics;
“health behaviors” like visiting the gym or fast food habits;
“social detriments of health,” such as where an individual lives or works; and
“social networks that may influence health, such as close contact during the COVID 19 pandemic.”
Notice and Consent
The suit further alleges that the retailer failed to provide appropriate notice of the collection and use of the putative class members’ consumer health data and did not obtain consent before collecting and sharing the data. These allegations serve as a timely reminder of the breadth and depth of the MHMDA’s notice and consent requirements.
Unlike most other state-level privacy laws, which allow different state-mandated disclosures to be combined in a single notice, the Washington attorney general has indicated in (nonbinding) guidance that the MHMDA “Consumer Health Privacy Policy must be a separate and distinct link on the regulated entity’s homepage and may not contain additional information not required under the My Health My Data Act.” Said differently, businesses in Washington cannot rely upon their standard privacy policies, or even their typical geolocation consent pop-up flows with respect to consumer health data.
Additionally, at a high-level, the MHMDA contains unusually stringent consent requirements, demanding the business obtain “freely given, specific, informed, opt-in, voluntary, and unambiguous” consent before consumer health data is collected or shared for any purpose other than the provision of the specific product or service the consumer has requested from the business, or collected, used, or shared for any purpose not identified in the business’s Consumer Health Privacy Policy.
Next Steps
The Maxwell lawsuit is significant as it is the first to be filed under Washington’s MHMDA, a law that has already spawned a copycat law in Nevada, a lookalike amendment to the Connecticut Data Privacy Act, and a whole host of similar bills in state legislatures across the country—most recently in New York, which has its own version of the MHMDA awaiting presentation to the governor for signature. The suit appears to take an expansive interpretation that could treat nearly all or essentially all location data as consumer health data, inasmuch as conclusions about an individual’s health that can be drawn from the data. And, while the MHMDA does use expansive language, the suit appears likely to answer still lingering questions about the extent of what should be considered “consumer health data” subject to the rigorous requirements of the MHMDA.
As this suit progresses, companies targeting Washington consumers or otherwise doing any business in Washington may want to review their use of SDKs or similar technologies, geolocation collection, and any other collection or usage of consumer data with an eye toward the possibility that the data could be treated as consumer health data. Also, their processors may wish to do the same (remember, the Washington attorney general has made it clear that out-of-state entities acting as processors for entities subject to MHMDA must also comply). Depending on what they find, those companies may wish to reevaluate the notice-and-consent processes applicable to the location data they collect, as well as their handling of consumer rights applicable to the same.
‘What Is a Woman?’ Alabama Governor Signs Bill Declaring There Are Only Two Sexes
On February 13, 2025, Alabama Governor Kay Ivey signed into law Senate Bill 79 / Act 2025-3, declaring that there are only two sexes, male and female. Originally introduced on February 4, 2025, the legislation amends Alabama Code § 1-1-1, which defines certain words used throughout the Alabama Code. Officially codified as the “‘What Is a Woman?’ Act,” the act carries implications for various aspects of public policy, legal definitions, data collection, and protections of sex-based rights and spaces.
Quick Hits
Alabama’s “‘What Is a Woman?’ Act” applies “wherever state law classifies individuals on the basis of sex or otherwise mentions individuals as being male or female, men or women, or boys or girls.”
According to the act, there are only two sexes: male and female.
Under the act, public entities may establish certain single-sex spaces or environments without running afoul of anti-discrimination laws.
The act becomes effective on October 1, 2025.
About the Act
The act follows President Donald Trump’s Executive Order 14168, titled, “Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government,” declaring there are two sexes. The act applies throughout the Alabama Code where the law classifies individuals based on sex or as “male” or “female” and proclaims that men and women “are legally equal but not physically the same.” It aims to prevent “unjust sex discrimination” while “maintaining safety, privacy, and fairness for both sexes.”
These definitions apply for purposes of applying the act’s provisions:
“(1) Boy. A human male who has not yet reached adulthood.
(2) Father. The male parent of a child or children.
(3) Female. When used in reference to a natural person, an individual who has, had, will have, or would have, but for a developmental anomaly, genetic anomaly, or accident, the reproductive system that at some point produced ova.
(4) Girl. A human female who has not yet reached adulthood.
(6) Male. When used in reference to a natural person, an individual who has, had, will have, or would have, but for a development anomaly, genetic anomaly, or accident, the reproductive system that at some point produces sperm.
(7) Man. An adult human of the male sex.
(9) Mother. The female parent of a child or children.
(10) Person. Includes an individual, corporation, partnership, company, or other business entity.
(14) Sex. When the term is used to classify or describe a natural person, the state of being male or female as observed or clinically verified at birth.
(18) Woman. An adult human of the female sex.”
The act allows public entities to establish single-sex spaces or environments “when biology, privacy, safety, or fairness” are at stake. The law explicitly provides that school districts, public schools, state agencies, and political subdivisions that “collect[] vital statistics related to sex as male or female for the purpose of complying with anti-discrimination laws …” shall identify individuals as “either male or female.”
Implications
The act reflects an ongoing push to define sex and gender identity in the United States. The bill’s sponsor, Senator April Weaver (R-Alabaster), said the law is a necessary measure “for clarity, certainty and uniformity in the courts and in the laws of Alabama,” and Governor Ivey called the act “common sense.” Detractors of the act say it does not protect women and is a restrictive approach relying on gender stereotypes that discriminates against transgender Alabamians. Nine states have similar laws, and several others are pushing to enact similar laws this year.
This act may change the way public employers are currently collecting and reporting data from employees, students, and others, and may implicate issues relating to bathrooms, locker rooms, and other typically sex-segregated spaces. The act affects any aspect of Alabama law where the law classifies individuals based on sex or as “male” or “female,” which could implicate state anti-discrimination laws and other employment laws for both public and private employers. The implications for private employers are less clear than those for public employers, but the act could affect any required reporting to public entities where individuals may be classified based on sex. As with any legislative change, the act may spark discussions about its implications, but it remains to be seen how this law will shape the legal and social landscape in Alabama.
California: Private Equity Management of Medical Practices Again Appears in Proposed Legislation
The California legislature recently introduced legislation, SB 351, that would impact private equity or hedge funds managing physician or dental practices in California. The bill is similar to a portion of California legislation from last year, AB 3129, which targeted private equity group and hedge fund management of medical practices. Last year, AB 3129 passed in the legislature but was vetoed by the Governor before becoming law. The introduction of SB 351 is part of a continuing trend in California and across the country in examining the influence of private equity investment in medical practices.
What Does SB 351 Do?
SB 351 is intended to ensure health care providers maintain control of clinical decision-making and treatment choices and to limit the influence of private equity or hedge fund influence or control over care delivery in the state.
SB 351 would codify and reinforce existing guidance relating to the prohibition on the corporate practice of medicine and dentistry. Specifically, SB 351 would prohibit a private equity group or hedge fund involved in any manner with a California physician or dental practice from interfering with professional judgment in making health care decisions or exercising control of certain practice operations.
Under the proposed legislation, prohibited activities include: determining the diagnostic tests appropriate for a particular condition; determining the need for referrals to other providers; being responsible for the ultimate care or treatment options for the patient; and determining the number of patient visits in a time period or how many hours a physician or dentist may work. Exercising control over a practice would include the following types of activities: owning or determining the content of patient medical record; selecting, hiring, or firing physicians, dentists, allied health staff, and medical assistants based on clinical competency; setting the parameters of contracts with third-party payors; setting the parameters for contracts with other physicians or dentists for care delivery; making coding and billing decisions; and approving the selection of medical equipment and supplies.
In addition, SB 351 would limit the ability of a private equity or hedge fund to restrict a provider or practice from engaging in competitive activities. SB 351 would prohibit a private equity group or hedge fund from explicitly or implicitly barring any practice provider from competing with the practice in the event of a termination or resignation of that provider from that practice. The bill would also prohibit a private equity group or hedge fund from barring a provider from disparaging, opining, or commenting on issues relating to quality of care, utilization, ethical or professional changes in the practice of medicine or dentistry, or revenue-increasing strategies employed by the private equity group or hedge fund. The California Attorney General would be entitled to injunctive relief and other equitable remedies for enforcement of the provisions of SB 351.
SB 351 contains some of the provisions that were included in AB 3129 relating to management of physician and dental practices but does not include the same breadth of limitations that were in AB 3129. Notably, SB 351 does not require the notice to and consent of the California Attorney General for certain private equity health care transactions. SB 351 also does not extend to hedge fund or private equity involvement with psychiatric practices. The scope is limited to private equity or hedge fund involvement with a physician or dental practice.
What Happens Next?
SB 351 will continue to make its way through the California legislature this year and may undergo further amendments throughout the process. Similar to AB 3129, SB 351 may garnish sufficient support to be passed by the California legislature.
The reintroduction of this legislation in California demonstrates the continuing national focus on private investment in medical practices across the country and the limitation on restrictive covenants. Management organizations and professional entities in California should review their existing arrangements to ensure compliance with applicable laws and existing corporate practice restrictions. Given the continued interest in the California legislature in addressing these issues, it may be prudent to proactively align those arrangements with the limitations in SB 351. We will continue tracking SB 351’s progress.