Federal Court Concludes States Have Standing to Challenge EEOC’s Pregnant Workers Fairness Act Rule (US)
The U.S. Court of Appeals for the Eighth Circuit ruled on February 20, 2025, in Tennessee v. Equal Employment Opportunity Commission, that seventeen (17) State attorneys general have standing to challenge the EEOC’s Final Rule interpreting the Pregnant Workers Fairness Act (the “PWFA” or “the Act”). In the first federal appellate court decision to consider the issue, the Eighth Circuit panel held that the plaintiff-States have a sound jurisprudential basis to challenge the Final Rule because the States “are the object of the EEOC’s regulatory action.”
Congress enacted the PWFA in 2023. The Act requires covered employers to provide employees or applicants with reasonable accommodation to known limitations related to, affected by or arising out of “pregnancy, childbirth, or related medical conditions,” unless the accommodation will cause the employer undue hardship. 42 U.S.C. § 2000gg(4). Critical to understanding this employer obligation is the embedded term “related medical conditions,” which Congress left undefined, choosing instead to delegate to the Equal Employment Opportunity Commission (EEOC) the responsibility to “provide examples of reasonable accommodations addressing known limitations related to pregnancy, childbirth, or related medical conditions.” 42 U.S.C. § 2000gg-3(a).
In April 2024, after notice-and-comment rulemaking, the EEOC issued regulations broadly defining what constitutes “limitations related to, affected by, or arising out of pregnancy, childbirth or related medical conditions,” including within its examples, among others, lactation, miscarriage, stillbirth and “having or choosing not to have an abortion.” 29 C.F.R. Part 1636 & app. A. Numerous religious organizations voiced dissent to the EEOC’s broad definition of limitations related to pregnancy and childbirth. Even within the EEOC, there was vocal disagreement about the proposed regulations. Andrea Lucas—who at the time was an EEOC Commissioner but who, on January 20, 2025, was designated by President Trump as the Acting Chair of the EEOC shortly before he terminated two of the three Democratic Commissioners on the five-seat EEOC—vociferously objected to the agency’s broad interpretation of the phrase “pregnancy, childbirth, or related medical conditions,” claiming the phrase conflated accommodations to pregnancy and childbirth with accommodations to the female sex, including female biology and reproduction. Over Ms. Lucas’s objection, the EEOC’s Final Rule issued, with the broad definition of pregnancy-related limitations intact.
Less than one week after the Final Rule took effect, seventeen State Attorneys General, all hailing from Republican states, challenged the Final Rule on behalf of State employers, contending the EEOC exceeded its authority under the PWFA when it included abortions within the scope of pregnancy “related medical conditions.” At oral argument, the States conceded there may be some situations when a State employer should reasonably accommodate an employee obtaining an abortion, such as in the case of an incomplete miscarriage, ectopic pregnancy or when pregnancy-related medical conditions (such as diabetes) imminently threaten the health of the pregnant employee. However, the States objected, the Final Rule also purports to require accommodation for elective abortions “prompted exclusively by the woman’s choice, where no ‘physical or mental condition related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions…’ exists, but where getting the abortion creates some limitations on the employee’s ability to do her job.” The States argued that, in many jurisdictions they represented, elective abortions—indeed, almost all abortions—are illegal; therefore, a regulation requiring accommodation for an illegal medical procedure created a non-speculative injury to the State-employers. The EEOC retorted that the States’ request to enjoin the regulation was unwarranted and the States lacked standing to bring the case because the States’ asserted injuries were purely speculative, both with respect to any individual accommodation and the overall cost of compliance with the regulation.
The federal court for the Eastern District of Arkansas agreed with the EEOC and held, on June 14, 2024, that the States lacked standing to challenge the Final Rule. The district court held the Plaintiff-States had not asserted a redressable injury-in-fact, pointing specifically to the EEOC’s inability to bring enforcement actions against State employers and the vagary around the compliance costs the States argued they would bear implementing the regulation. On appeal, however, the Eighth Circuit Court of Appeals reversed, concluding that “[t]he imposition of a regulatory burden itself causes injury.” The appellate court reasoned:
Covered entities must comply with the Rule, and we presume that the States will follow the law as long as the Rule is in effect. An employer cannot meet its obligations under the Rule without taking steps to ensure that its employees know their rights and obligations under the Rule. As a practical matter, the Rule requires immediate action by the States to conform to the Rule, and this action produces an injury in fact.
The case now returns to the district court to hear the States’ arguments on the merits. Should the States prevail on the merits, the Final Rule is likely to be substantially revised. Although EEOC Acting Chair Lucas lacks the authority unilaterally to rescind or modify the Final Rule, she has indicated that the EEOC will reconsider portions of the Final Rule that are “unsupported by the law” once a quorum is re-established. We will continue to monitor and update with developments.
President Trump Executive Order on Supervision of ‘Independent’ Agencies
Amidst a blitz of executive action, on February 18, President Donald Trump signed an executive order entitled “Ensuring Accountability for all Agencies” (Executive Order) exerting more direct control over “independent regulatory agencies.” President Trump cited the “often-considerable authority” of these independent regulatory agencies as the rationale for needing this additional supervision and control. Furthermore, due to perceived congressional inaction, the Executive Order, coupled with previous ones,[1] forms another part of President Trump’s deregulatory agenda and his efforts to have the executive speak with one voice.
Among other things, the Executive Order requires independent regulatory agencies to submit draft regulations and strategic plans to the president and the Office of Management and Budget (OMB) for review. Additionally, OMB will review independent regulatory agencies’ actions for consistency with the president’s policies and these agencies must establish a White House Liaison to presumably report to the president, although the duties of this position are not defined.
This post sets forth more details on the requirements of the Executive Order, highlights its potential impacts for independent agency regulation and discusses whether the Executive Order could be subject to challenge.
Requirements of the Executive Order
The Executive Order requires all independent regulatory agencies to submit for review all proposed and final significant regulatory actions to the Office of Information and Regulatory Affairs (OIRA) within OMB before publication in the Federal Register. Broadening agencies subjected to regulatory review, the Executive Order references the definition of “independent regulatory agency” from 44 U.S.C. § 3502(5), which includes the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC), among 20 total agencies and a catchall provision to include any other similar agency designated by statute as a federal independent agency or commission.[2] There is a carveout for the Board of Governors of the Federal Reserve System and the Federal Open Market Committee regarding actions related to monetary policy. OIRA currently engages in a limited review of proposed and final rules by independent regulatory agencies. The Executive Order expands the scope of OIRA’s review.
OMB Establishment of Performance Standards and Management Objectives
The Executive Order empowers the director of OMB to provide guidance on the Executive Order’s implementation and how independent regulatory agencies should structure their submissions. The deadline for these agencies to submit their regulatory actions is either 60 days from the Executive Order or upon completion of the OMB guidance.
OMB Review of Independent Regulatory Agencies’ Activities and Spending
Pursuant to the Executive Order, OMB will continually review independent regulatory agencies’ obligations for consistency with the president’s policies and priorities. The review process will enable the president to make possible adjustments to agency operations and regulatory actions. For example, OMB review could be used to steer independent regulatory agencies to prohibit or limit spending on particular activities, functions, or projects to the extent that such prohibition or limitation is consistent with US law.
Additional Coordination and Consultation With the Executive Office of the President
The Executive Order requires independent regulatory agency chairpersons to regularly consult with and coordinate policies and priorities with OMB directors, the White House Domestic Policy Council and the White House National Economic Council. There is no further detail on how often these meetings are expected to occur. Additionally, the Executive Order requires each agency to have a White House Liaison, who will presumably shepherd the communications between the agency and the president.
This requirement is a divergence from precedent as no longer can chairpersons set their own strategic plans; they must submit their agency strategic plans developed pursuant to the Government Performance and Results Act of 1993 to the director of OMB for clearance prior to finalization.
Centralizing All Executive Branch Interpretations of the Law
Under Section 7 of the Executive Order, the president and attorney general will set forth all official executive branch interpretations of the law. Executive branch employees including agency general counsel, when acting in their official capacity, are prohibited from presenting any legal interpretation as the official position of the United States if it conflicts with the legal opinions of the president or the attorney general. This restriction applies to all actions, including issuing regulations, providing guidance and advocating positions in litigation.
This level of coordination and determination already occurs when, for example, a case is pending before the Supreme Court and the Department of Justice seeks the views of independent regulatory agencies in determining the government’s litigation position before the court. The Executive Order suggests that such coordination will potentially expand to include agency positions taken before district and appellate courts, as well as legal positions taken as part of an agency’s rulemaking. It may also slow the pace of regulatory and enforcement action of independent regulatory agencies to account for the additional time to engage with other parts of the executive.
Possible Court Challenge?
Congressional statutes grant the president authority to issue executive orders to help them implement federal laws. Article II of the Constitution prohibits the president from making laws; the president has authority only to enforce and implement laws. When an executive order is written too broadly, it can be found, in certain situations, to be seen as the president exercising legislative powers that are strictly reserved for Congress.
Federal courts have the authority to strike down presidential executive orders for two reasons: (1) where the president lacks authority to issue the order; and (2) the order is prima facie unconstitutional in substance. In the past, executive orders have been challenged via statutory and constitutional grounds.[3] However, federal courts have been cautious to overstep into the powers of another branch.
The Executive Order’s directive regarding independent regulatory agencies is unprecedented because past presidents have explicitly excluded these agencies from similar oversight. For example, President Reagan’s Executive Order 12291 and President Clinton’s Executive Order 12866 both required regulatory review for certain agencies but notably exempted independent regulatory agencies from most of these mandates.[4]
Impact on Independent Regulatory Agencies
Historically, even though the president appoints the commissioners, the CFTC and SEC have operated with some degree of autonomy from the president. This aligns with how independent regulatory agencies were conceived by Congress; to have some protection from direct presidential control. The Executive Order seeks to more directly influence the regulatory agenda of independent agencies.
Indeed, President Trump is asserting broad powers to remove Senate-confirmed members of multimember boards. President Trump has removed members of the National Labor Relations Board (NLRB) and the Equal Employment Opportunity Commission (EEOC). The Supreme Court has recently found that other limitations on the president’s removal power violate the Constitution. In a 2020 case, Seila Law LLC v. CFPB, the Court found that the limitations on the president’s ability to remove the director of the Consumer Financial Protection Bureau (CFPB) violated the Constitution’s separation of powers. In that case, the Court did not explicitly address removal protections for multimember commissions like the CFTC and SEC. Although last year the Supreme Court denied certiorari on a case regarding the Consumer Product Safety Commission (CPSC) that raised these issues, it may get another opportunity based on President Trump’s recent actions. The outcome of such a case could have a significant impact on the president’s ability to directly control independent regulatory agencies.
In the meantime, the Executive Order and the president’s agenda may increase the president’s influence on enforcement actions and investigations, as independent regulatory agencies could give additional weight to broader presidential policies in their decisions to prosecute civil wrongdoing or pursue investigations. This new dynamic may prompt registrants to closely monitor new executive orders to anticipate shifts in enforcement priorities.
As independent regulatory agencies oversee self-regulatory organizations (SROs), such as the SEC and Financial Industry Regulatory Authority (FINRA), changes in agency priorities could affect SRO operations. Although SROs typically focus on technical and operational matters, an independent regulatory agency’s shift to align its policies with the president’s agenda may introduce political considerations into market regulations that were previously apolitical.
An independent regulatory agency’s programs and initiatives that are misaligned with the president’s policies face additional risk under the Executive Order for reduced funding or elimination. As these activities become more visible to the Trump administration, they may face increased scrutiny, potentially impacting budgeting and long-term planning.
Conclusion
The Executive Order’s purpose of expanding presidential oversight over independent regulatory agencies raises several legal questions. The Executive Order contemplates additional interaction between independent regulatory agencies and OMB, with an increased emphasis on implementing the president’s priorities. The Executive Order, along with the anticipated litigation over the president’s removal power, may serve to reshape the relationship between independent regulatory agencies and the president.
Footnotes
[1] UNLEASHING PROSPERITY THROUGH DEREGULATION, The White House (Jan. 31, 2025), https://www.whitehouse.gov/fact-sheets/2025/01/fact-sheet-president-donald-j-trump-launches-massive-10-to-1-deregulation-initiative/.
[2] “Independent regulatory agency” includes the following: the Board of Governors of the Federal Reserve System, the Commodity Futures Trading Commission, the Consumer Product Safety Commission, the Federal Communications Commission, the Federal Deposit Insurance Corporation, the Federal Energy Regulatory Commission, the Federal Housing Finance Agency, the Federal Maritime Commission, the Federal Trade Commission, the Interstate Commerce Commission, the Mine Enforcement Safety and Health Review Commission, the National Labor Relations Board, the Nuclear Regulatory Commission, the Occupational Safety and Health Review Commission, the Postal Regulatory Commission, the Securities and Exchange Commission, the Bureau of Consumer Financial Protection, the Office of Financial Research, Office of the Comptroller of the Currency, and any other similar agency designated by statute as a Federal independent regulatory agency or commission. 44 U.S.C. § 3502(5).
[3] Federal Judicial Center, Judicial Review of Executive Orders, Fed. Jud. Ctr., https://www.fjc.gov/history/administration/judicial-review-executive-orders (last visited Feb. 23, 2025).
[4] President Reagan’s Executive Order 12291 authorized OIRA to review regulatory actions of Cabinet departments and independent agencies, excluding independent regulatory agencies, requiring cost-benefit analyses for major rules. President Clinton’s Executive Order 12866, replacing it in 1993, maintained the exclusion of independent regulatory agencies and narrowed OIRA’s review to specific rule types. See Exec. Order No. 12,291, 3 C.F.R. 127 (1981), reprinted as amended in 5 U.S.C. § 601 app. at 431 (1982) and Exec. Order No. 12,866, 3 C.F.R. 638 (1994), reprinted as amended in 5 U.S.C. § 601 app. at 557 (1994).
Opioids and Common Law Liability for Indirect Economic Harm
Earlier this month, the Law Court weighed in on a hot-button legal issue—the potential liability of opioid manufacturers for the costs of the drug epidemic. In Eastern Maine Medical Center v. Walgreen Company, the Law Court affirmed a decision granting a motion to dismiss hospitals’ claims for negligence, public nuisance, unjust enrichment, fraud and negligent misrepresentation, fraudulent conspiracy, and civil conspiracy. The Court’s opinion reinforced several important principles circumscribing the scope of potential liability for economic harm under the common law.
The basic theory of the complaint was that various opioid sellers (pharmaceutical manufacturing and sales companies, and retail pharmacies and distributors) had created an epidemic of opioid misuse that required the plaintiff hospitals to incur high costs that were only partially reimbursed.
Before reaching the merits of the complaint, the Law Court first addressed Maine Rule of Civil Procedure 8, which requires a “short and plain statement” of a plaintiff’s claim. The complaint was anything but short—it was 509 pages, with over 1,800 paragraphs. Without resolving the case on this basis, the Law Court noted that the complaint was “decidedly not short or plain,” but was instead unnecessarily filled with “eye-watering detail” and repetition that would justify dismissal of the complaint. The Court’s discussion is an important reminder, in an age where complaints are growing (needlessly) ever longer, that Rule 8’s limitations have real teeth.
On the merits, the Court concluded—in an admirably concise opinion—that the hospitals’ theories of liability were insufficient because the hospitals had not directly suffered the harm allegedly caused by the opioid sellers. Instead, they had suffered only indirect and purely economic harm. Importantly, the Court observed that
[A]n actor has no general duty to avoid the unintentional infliction of economic loss on another.
Among the notable limits to economic liability reaffirmed by the Law Court were the following:
Under principles of duty and proximate causation, a hospital cannot assert an independent negligence claim to recover the costs of treating a victim injured by a negligent act.
A claim for fraud, fraudulent concealment, or negligent misrepresentation cannot be maintained absent a good faith allegation of reliance on the misrepresentation.
A public nuisance claim can be maintained by a private plaintiff only if the nuisance “infringe[d] on a right particular to the plaintiff” and “cause[d] injury different in kind from the injury to the public generally”—requirements that are not satisfied when the claim is based on widespread economic injury broadly affecting the public.
Given the increasing prevalence of negligence, fraud, and public nuisance claims for alleged instances of widespread harm, EMMC will provide an important guidepost for both plaintiffs and defendants in cases involving private causes of action. Time will tell whether it will cause such injuries to be addressed primarily through actions by government officials on behalf of the public.
Eighth Circuit Rules States May Challenge PWFA’s Inclusion of Abortion as a ‘Related Medical Condition’
Seventeen Republican-led states can continue their lawsuit challenging parts of the federal Pregnant Workers Fairness Act (PWFA) after the U.S. Court of Appeals for the Eighth Circuit recently ruled the states have standing to sue and remanded the case back to the lower court.
Quick Hits
The U.S. Equal Employment Opportunity Commission (EEOC) published a final rule for implementing the PWFA , which took effect on June 18, 2024. Several legal challenges to the rule’s inclusion of abortion as a “related medical condition” have been filed.
The Eighth Circuit recently revived a case that seventeen states brought to challenge provisions in the PWFA regarding accommodations for employees seeking an abortion after the district court found the states lacked standing.
The case will proceed at the district court level.
Changes in federal policy under the new presidential administration may impact the trajectory of the case.
On February 20, 2025, the U.S. Court of Appeals for the Eighth Circuit ruled that seventeen states—Alabama, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Missouri, Nebraska, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Utah, and West Virginia—had standing to challenge parts of the PWFA related to reasonable accommodations for employees seeking an abortion.
The PWFA requires employers to provide reasonable accommodations for employees with pregnancy-related health conditions, which include miscarriage, stillbirth, and abortion under the final rule. In the lawsuit, the states argued that the EEOC exceeded its authority in how it defined “pregnancy-related health definitions.” The states claimed the PWFA regulations would hinder their ability to regulate abortions and their interests in maintaining a pro-life message in dealing with state employees. The states also argued the PWFA regulations would subject them to economic harm because of compliance costs.
On June 14, 2024, the U.S. District Court for the Eastern District of Arkansas denied the states’ request for a preliminary injunction. It ruled that the states lacked standing because they did not show a likelihood of irreparable harm from the PWFA regulations. The risk of enforcement is speculative because “unlike in situations involving private employers, the EEOC cannot bring enforcement actions against state employers,” the district court stated.
The Eighth Circuit disagreed and found the states are employers under the PWFA and the final rule. They would be required to provide accommodations, change employment practices and policies, and refrain from messaging that would be arguably prohibited under the rule. The court went on to find that the imposition of a regulatory burden action alone causes injury. Therefore, the states had standing.
Next Steps
This case was remanded to the U.S. District Court for the Eastern District of Arkansas. President Donald Trump recently removed two commissioners from the EEOC, and the agency has signaled a change in enforcement policies, and plans to do so when the Commission has a quorum. The agency could issue new regulations for the PWFA or change how it is approaching this case.
In the meantime, private and public employers may wish to review their policies and practices around reasonable accommodations for pregnancy-related conditions, so they continue to adhere to state and federal laws.
“Claims” Under the FCA, §1983 Claim Denials on Failure-to-Exhaust Grounds, and Limits to FSIA’s Expropriation Exception – SCOTUS Today
The U.S. Supreme Court decided three cases today, with one of particular interest to many readers of this blog. So, let’s start with that one.
Wisconsin Bell v. United States ex rel. Heath is a suit brought by a qui tam relator under the federal False Claims Act (FCA), which imposes civil liability on any person who “knowingly presents, or causes to be presented, a false or fraudulent claim” as statutorily defined. 31 U. S. C. §3729(a)(1)(A). The issue presented is a common one in FCA litigation, namely, what is a claim? More precisely, in the context of the case, the question is what level of participation by the government in the actual payment is required to demonstrate an actionable claim by the United States. The answer, which won’t surprise many FCA practitioners, is “not much.”
The case itself concerned the Schools and Libraries (E-Rate) Program of the Universal Service Fund, established under the Telecommunications Act of 1996, which subsidizes internet and other telecommunication services for schools and libraries throughout the country. The program is financed by payments by telecommunications carriers into a fund that is administered by a private company, which collects and distributes the money pursuant to regulations set forth by the Federal Communications Commission (FCC). Those regulations require that carriers apply a kind of most-favored-nations rule, limiting them to charging the “lowest corresponding price” that would be charged by the carriers to “similarly situated” non-residential customers. Under this regime, a school pays the carrier a discounted price, and the carrier can get reimbursement for the remainder of the base price from the fund. The school could also pay the full, non-discounted price to the carrier itself and be reimbursed by the fund.
The relator, an auditor of telecommunications bills, asserted that Wisconsin Bell defrauded the E-Rate program out of millions of dollars by consistently overcharging schools above the “lowest corresponding price.” He argued that these violations led to reimbursement rates higher than the program should have paid. His contention is that a request for E-Rate reimbursement qualified as a “claim,” a classification that requires the government to have provided some portion of the money sought. Wisconsin Bell moved to dismiss, arguing that there could be no “claim” here because the money at issue all came from private carriers and was administered completely by a private corporation.
Affirming the U.S. District Court for the Eastern District of Wisconsin, the U.S. Court of Appeals for the Seventh Circuit rejected Wisconsin Bell’s argument, holding that there was a viable claim because the government provided all the money as part of establishing the fund. Less metaphysically, it also held that the government actually provided some “portion” of E-Rate funding by depositing more than $100 million directly from the U.S. Treasury into the fund.
Justice Kagan delivered the unanimous opinion of the Supreme Court, affirming the Seventh Circuit on the narrower ground that “the E-Rate reimbursement requests at issue are ‘claims’ under the FCA because the Government ‘provided’(at a minimum) a ‘portion’ of the money applied for by transferring more than $100 million from the Treasury into the Fund.” It is important to recognize that this amount was quite separate from the funds involved in the core program at issue. Instead, it constituted delinquent contributions collected by the FCC and the U.S. Department of the Treasury, as well as civil settlements and criminal restitution payments made to the U.S. Department of Justice in response to wrongdoing in the program. This nonpassive role by the government was enough to satisfy the Court that the money was sought through an actionable “claim.”
Rather blithely, Justice Kagan analogizes these government transfers to “most Government spending: Money usually comes to the Government from private parties, and it then usually goes out to the broader community to fund programs and activities. That conclusion is enough to enable Heath’s FCA suit to proceed.”
This conclusion suggests that quibbling about what constitutes a “claim,” where government participation in payment is peripheral, is unlikely to provide an effective avenue for defending FCA lawsuits. But wait! Before closing the discussion, we must turn to the concurring opinion of Justice Thomas, who was joined by Justice Kavanaugh and, in part, by Justice Alito. They note that the Court has left open the questions of whether the government actually provides the money that requires private carriers to contribute to the E-Rate program and whether the program’s administrator is an agent of the United States. Thomas’s suggestion, in attempting to reconcile various Circuit Court opinions as to the fund, is that an FCA claim must be based upon a clear nexus with government involvement. Thomas then goes on to describe a range of cases where, although the arrangements at issue might be prescribed by the government, the absence of government money would be fatal to holding that there was a justiciable FCA claim. In other words, the kind of government payments into the fund that we see in the instant case are the likely minimum that the Court would countenance.
Perhaps a bigger storm warning is the additional concurrence of Justice Kavanaugh, joined by Justice Thomas, in noting that today’s opinion is a narrow one. However, the FCA’s qui tam provisions raise substantial questions under Article II of the Constitution. The Court has never ruled squarely as to Article II, though it has upheld qui tam cases as assignments to private parties of claims owned by the government, something like commercial relationships. Two Justices augured that potential unresolved constitutional challenges to the FCA’s qui tam regime necessarily will mean that any competent counsel will raise the point in any future FCA case not brought by the government alone. But note that Justice Alito did not join Kavanaugh’s opinion, though he did in the Thomas concurrence. Nor did any other conservative Justice. It still takes four to grant cert. But the future is a bit hazier, thanks to Justice Kavanaugh.
Justice Kavanaugh finds himself on the opposite side of Justice Thomas in the case of Williams v. Reed. Writing for himself, the Chief Justice, and Justices Sotomayor, Kagan, and Jackson, Justice Kavanaugh ruled in favor of a group of unemployed workers who contended that the Alabama Department of Labor unlawfully delayed processing their state unemployment benefits claims. They had sued in state court under 42 U. S. C. §1983, raising due process and federal statutory arguments, attempting to get their claims processed more quickly. The Alabama Secretary of Labor argued that these claims should be dismissed for lack of jurisdiction because the claimants had not satisfied the state exhaustion of remedies requirements.
Holding against the Secretary, the Court’s majority opined that where a state court’s application of a state exhaustion requirement effectively immunizes state officials from §1983 claims challenging delays in the administrative process, state courts may not deny those §1983 claims on failure-to-exhaust grounds. Citing several analogous precedents, the majority decided what I submit looks like a garden-variety supremacy case. After all, as Kavanaugh notes, the “Court has long held that ‘a state law that immunizes government conduct otherwise subject to suit under §1983 is preempted, even where the federal civil rights litigation takes place in state court.’” See Felder v. Casey, 487 U. S. 131 (1988).
Justice Thomas and his conservative allies didn’t see it that way at all. Quoting himself in dissent in another case, Justice Thomas asserts that “[o]ur federal system gives States ‘plenary authority to decide whether their local courts will have subject-matter jurisdiction over federal causes of action.’ Haywood v. Drown, 556 U. S. 729, 743 (2009) (THOMAS, J., dissenting).” Well, he didn’t persuade a majority then, and he didn’t do so now in this §1983 case.
Finally, in Republic of Hungary v. Simon, a unanimous Court, per Justice Sotomayor, considered the provision of the Foreign Sovereign Immunities Act of 1976 (FSIA) that provides foreign states with presumptive immunity from suit in the United States. 28 U. S. C. §1604. That provision has an expropriation exception that permits claims when “rights in property taken in violation of international law are in issue” and either the property itself or any property “exchanged for” the expropriated property has a commercial nexus to the United States. 28 U. S. C. §1605(a)(3).
The Simon case involved a suit by Jewish survivors of the Hungarian Holocaust and their heirs against Hungary and its national railway, MÁV-csoport, in federal court, seeking damages for property allegedly seized during World War II. They alleged that the expropriated property was liquidated and the proceeds commingled with other government funds that were used in connection with commercial activities in the United States. The lower courts determined that the “commingling theory” satisfied the commercial nexus requirement in §1605(a)(3) and that requiring the plaintiffs to trace the particular funds from the sale of their specific expropriated property to the United States would make the exception a “nullity.”
The Supreme Court didn’t quite agree, holding that alleging the commingling of funds alone cannot satisfy the commercial nexus requirement of the FSIA’s expropriation exception. “Instead, the exception requires plaintiffs to trace either the specific expropriated property itself or ‘any property exchanged for such property’ to the United States (or to the possession of a foreign state instrumentally engaged in United States commercial activity).”
The three cases decided today bring the total decisions of the term to eight. Stay tuned because a torrent might be on the horizon.
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.