Supreme Court Narrows Scope of Injunctions in Birthright Citizenship Case: Employer Considerations
On June 27, 2025, the U.S. Supreme Court issued a decision in Garland v. CASA de Maryland that narrows federal courts’ authority to issue nationwide injunctions. The ruling comes in the context of legal challenges to Executive Order 14160, which seeks to limit birthright citizenship for children born in the United States to undocumented immigrants and nonimmigrant visa holders.
Although the Court did not decide whether the executive order is constitutional, it held that lower courts may only provide injunctive relief to the actual parties involved in litigation. This change restricts the use of nationwide blocks on federal policy and has practical implications for U.S. employers whose workforce includes foreign nationals or mixed-status families.
Background: Executive Order 14160
President Trump issued Executive Order 14160 on Jan. 20, 2025. It directs federal agencies to deny U.S. citizenship to children born in the United States unless at least one parent is a U.S. citizen, lawful permanent resident, or active-duty member of the U.S. Armed Forces. The order prompted multiple lawsuits challenging its constitutionality under the Fourteenth Amendment.
While several federal district courts issued preliminary injunctions blocking the order’s enforcement, the Supreme Court has now clarified that such injunctions cannot extend beyond the named plaintiffs or organizational members specifically covered in each case.
To avoid immediate disruption, the Court granted a 30-day pause before the order may be enforced in jurisdictions not protected by an active lawsuit.
Where Is the Executive Order Currently Blocked?
Active injunctions cover the following 22 states, plus the District of Columbia and the city of San Francisco, based on their participation in multi-state litigation. Individuals born in these jurisdictions remain protected from the executive order for now:
Covered States:
Arizona
California
Colorado
Connecticut
Delaware
Hawaii
Illinois
Maine
Maryland
Massachusetts
Michigan
Minnesota
Nevada
New Jersey
New Mexico
New York
North Carolina
Oregon
Rhode Island
Vermont
Washington
Wisconsin
Covered Municipalities:
District of Columbia
City of San Francisco
These jurisdictions joined one of four key lawsuits filed in federal courts in Massachusetts, Maryland, Washington, and New Hampshire. Those cases remain active and are expected to proceed to full hearings on the merits of the executive order’s constitutionality.
States Not Covered by Active Legal Challenges
In contrast, the following 28 states did not join any of the pending lawsuits and are not currently protected by court-ordered injunctions. Barring further legal action, the executive order may be enforced in these states after the 30-day delay expires:
Uncovered States:
Alabama
Alaska
Arkansas
Florida
Georgia
Idaho
Indiana
Iowa
Kansas
Kentucky
Louisiana
Mississippi
Missouri
Montana
Nebraska
North Dakota
Ohio
Oklahoma
Pennsylvania
South Carolina
South Dakota
Tennessee
Texas
Utah
Virginia
West Virginia
Wisconsin
Wyoming
While Wisconsin joined earlier litigation, its standing under the narrowed injunction framework may be subject to review depending on how lower courts interpret organizational and class membership post-ruling.
Are More Lawsuits Expected?
Given the Court’s limitation on nationwide relief, additional lawsuits may be filed in states not currently covered. Civil rights organizations, advocacy groups, and affected individuals may bring new legal challenges to extend protections on a state-by-state or plaintiff-by-plaintiff basis.
Employers should be aware that the legal landscape may shift rapidly, especially as courts clarify who qualifies for relief under existing injunctions and whether new cases will result in further geographic coverage.
Key Considerations for Employers
While the executive order does not impose direct compliance obligations on employers, its implementation may impact a future generation of U.S.-born children whose eligibility for citizenship—and later work authorization—may be called into question.
Avoid Unlawful Inquiries: Employers may not inquire into an employee’s or applicant’s immigration or parental status in ways that could violate anti-discrimination provisions of the Immigration and Nationality Act or Title VII.
Stay Informed on State-Level Variations: Multistate employers should track litigation in the states where they operate. Birthright citizenship—and the documentation associated with it—might vary across jurisdictions.
Plan for HR and Benefits Questions: Employees may seek guidance regarding their children’s eligibility for health insurance, dependent care, or other benefits. HR teams should refer legal or immigration-related questions to counsel.
Support Affected Employees: Where lawful and appropriate, employers may wish to provide access to legal resources or employee assistance programs to help affected families understand their rights.
Coordinate with Legal Counsel: Companies with operations in uncovered states may wish to assess risk exposure and prepare for possible requests for documentation, public benefits eligibility verification, or identity validation linked to the order.
Takeaways
The Supreme Court’s decision redefines how federal policy can be challenged—and where. While it does not determine the fate of birthright citizenship under the Fourteenth Amendment, it limits the reach of lower court rulings, shifting the burden of protection to individual states and plaintiffs.
Nonsolicitation Agreement Forfeiture Clause Falls Outside Massachusetts Noncompetition Act
In a June 2025 opinion, the Massachusetts Supreme Judicial Court (SJC) clarified that the Massachusetts Noncompetition Agreement Act’s scope does not extend to a forfeiture clause tied to the breach of a nonsolicitation agreement.
Case Overview: Miele v. Foundation Medicine, Inc.
An employee was bound by an agreement not to solicit employees of Foundation Medicine. The employee later affirmed her nonsolicitation obligations in a separation agreement, which provided that the employee’s severance benefits would be forfeited in the event she breached her contractual obligations.
Foundation Medicine subsequently ceased paying severance benefits based on its claim that the employee had violated her nonsolicitation agreement. The employee filed suit and alleged that the forfeiture provision ran afoul of the Massachusetts Noncompetition Act, which places strict limitations on the use of noncompetition agreements, which, in turn, are defined to include “forfeiture for competition agreements.”
The trial court agreed with the employee’s position that the Massachusetts Noncompetition Act prohibited the forfeiture clause and ruled in favor of the employee on a motion for judgment on the pleadings.
SJC Opinion
In Miele, the SJC overturned the lower court’s decision based on a reading of plain statutory language. The Court ruled that under the Noncompetition Act, “(1) noncompetition agreements do not include nonsolicitation agreements, and (2) forfeiture for competition agreements are a subset of noncompetition agreements.” Therefore, according to the SJC, “[i]t follows, by necessary implication, that forfeiture for competition agreements also exclude nonsolicitation agreements. To conclude otherwise would contradict the statute’s express exclusion of non solicitation agreements from the broader category of noncompetition agreements.”
The SJC drew a distinction between the nature of the underlying agreement and the remedy for a violation, noting that pairing a nonsolicitation agreement with a forfeiture clause does not convert it to a noncompetition agreement. “A non solicitation covenant remains just that – regardless of whether the remedy for breach involves forfeiture of benefits. Because the act expressly excludes non solicitation covenants, and the forfeiture at issue is triggered solely by breach of such a covenant, the act does not apply.”
Key Consideration for Massachusetts Employers
The Miele decision clarifies that employers in Massachusetts may utilize nonsolicitation agreements without worrying that a forfeiture remedy may bring the agreement within the Massachusetts Noncompetition Act’s purview.
E-Verify Begins Notifying U.S. Employers of Terminations Under the CHNV Parole Program
The U.S. Department of Homeland Security (DHS) may exercise its authority to terminate parole or other humanitarian programs and revoke Employment Authorization Documents (EADs) at any time.
Revoked EADs may still appear facially valid.
E-Verify will no longer issue Case Alerts to notify employers of revoked EADs.
E-Verify employers must use Form I-9, Supplement B to reverify affected employees and complete the reverification process within a reasonable period of time.
DHS recently terminated humanitarian parole and work authorization for nationals of Cuba, Haiti, Nicaragua and Venezuela (CHNV). As a result, affected individuals have received direct correspondence from DHS informing them of the termination of their parole and revocation of their EADs. Importantly, some revoked EADs may still appear facially valid for a period of time following revocation.
As of June 20, 2025, E-Verify has issued updated guidance intended to put employers on notice of their obligations to immediately identify any current employees whose work authorization may have been revoked, and complete reverification of those employees’ work authorization within a reasonable time.
Previously, E-Verify issued “Case Alerts” to notify employers of EADs that had been revoked by DHS. Under the new guidance, Case Alerts will no longer be used. Instead, E-Verify employers are now responsible for regularly generating Status Change Reports to identify cases involving revoked EADs. Data concerning employees whose work authorization was revoked between April 9 and June 13, 2025, became available in the E-Verify system on June 20.
What E-Verify Employers Need to Know
E-Verify employers must immediately use Form I-9, Supplement B to reverify employees identified in the Status Change Report as having a revoked EAD within a reasonable amount of time.
Employers must follow up on all entries in the Status Change Report and reverify affected employees using Form I-9, even if the EAD appears active.
Employees may still be authorized to work based on an alternative status and may provide other acceptable Form I-9 documentation to demonstrate employment authorization.
Form I-9 Reverification for E-Verify Employers
Affected employees must provide unexpired documentation from List A or List C of the Lists of Acceptable Documents.
Employers should not reverify List B identity documents.
Employers may not accept revoked EADs based on the Status Change Report, even if that EAD appears to be unexpired.
Employers must allow employees to choose which acceptable documentation to present for reverification.
Employers should not create a new E-Verify case when completing the reverification process for affected employees.
Compliance Reminder
E-Verify employers should be aware that a failure to reverify potentially affected employees within a reasonable period of time may lead to liability. For more information, please contact the Barnes & Thornburg attorney with whom you work.
Workplace Wrap – July 2025
As we find ourselves in the new financial year, a number of the key financial thresholds relating to employees have changed. Click here to view our summary of the key thresholds for the 2025/2026 financial year.
From 1 July 2025, the national minimum wage has increased by 3.5% to AU$24.94 per hour.
Award minimum wages have also risen by 3.5%.
In reaching its conclusion as to the national minimum wage, the Fair Work Commission has cited its principal consideration as a reduction in the real value of wages for employees.
The Fair Work Commission notes this reduction has been driven by the spike in inflation beginning in 2021 and peaking in late 2022. The result, in the eyes of the Fair Work Commission, has been that the lower paid have experienced greater difficulties in meeting their everyday needs.
Therefore, the Fair Work Commission has sought to temper real wage decline without contributing to higher inflation.
The Fair Work Commission notes its wage decision this year has been moderated by the upcoming increase in the Superannuation Guarantee contribution rate, and the uncertainties caused by the influence of the United States trade policies. However, the Fair Work Commission considered the wage increase determined is sustainable in a labour market that remains strong overall.
The Fair Work Commission also observed that workforces that are reliant on modern awards for their wage rates are disproportionately female, with more than half being casual employees and more than a third being low-paid employees. The Fair Work Commission also noted that it intends to continue with its targeted review of particular award classifications to eliminate gender-based undervaluation of work and ensure that female workers receive equal remuneration for work of equal or comparable value.
From 1 July 2025, the Superannuation Guarantee rate will increase to 12%.
The maximum contribution base per quarter has been reduced from AU$65,070 for the 2025 income year, to AU$62,500 for the 2026 income year so as to accommodate the increased contribution rate but noting that the annual concessional cap remains at AU$30,000.
This means that once an employee’s ordinary time earnings exceed AU$62,500 per quarter, employers are not required to make further superannuation contributions under the Superannuation guarantee legislation. If separate contractual obligations to pay superannuation apply, these obligations are unaffected.
The changes will apply from the first full pay period starting on or after 1 July 2025.
We note that whilst the Australian Taxation Office will begin making superannuation contributions on government-funded Parental Leave Pay, parental leave paid by an employer will continue to not fall within the definition of ordinary time earnings such that employers are not required to pay superannuation on these amounts.
The Fair Work Act’s high income threshold will also be indexed and from 1 July 2025, has increased to AU$183,100. Non-award and non-enterprise agreement covered employees who earn in excess of AU$183,100 will be unable to bring an unfair dismissal claim.
There has been no change in the value of penalty units applicable to the Fair Work Act which remain at AU$330 per unit.
What You Should Be Doing From 1 July?
Employers should:
Review annualised salary arrangements to ensure that the annualised wage rate is sufficient to meet or exceed the employees’ minimum award or minimum wage entitlements taking into account the 3.5% increase.
Update payroll systems and processes to ensure the increased wages and superannuation contribution are paid from the first full pay period starting on or after 1 July 2025 and note the change to the maximum contribution base.
Review enterprise agreement pay rates (where applicable) and ensure the pay rates do not fall below the applicable modern award base rate or the national minimum wage (as applicable).
Ensure all employees who are eligible are being paid the appropriate super guarantee.
Be mindful of the new high income threshold of AU$183,100.
Workplace Risks Meet Holistic Legal Solutions – One-on-One with Adam Tomiak [Video]
How can today’s workplace challenges be addressed with strategies that are both legally sound and business-focused?
For general counsel and human resources (HR) executives, a holistic approach addresses legal, operational, and organizational risks to ensure advice is both comprehensive and actionable.
In this one-on-one interview, Epstein Becker Green attorney Adam Tomiak sits down with fellow attorney George Whipple. Adam discusses how his in-house experience shapes his ability to deliver thoughtful, practical solutions. Additionally, Adam explains how listening to clients, understanding their challenges, and integrating various risk factors all add up to legal strategies that align with business realities.
From creating robust compliance frameworks to responding effectively to high-pressure issues, Adam highlights key steps employers can take to balance diverse risks and safeguard their operations. This interview is an invaluable resource for general counsel and HR leaders looking to strengthen their organizations’ operations while staying ahead of legal complexities.
New York Expands Legal Protections to Models in the Fashion Industry
Effective June 2025, New York began implementing significant changes for the fashion industry with respect to the practices of model engagement under the provisions of the new Fashion Workers Act (FWA).1 While the name of the new law suggests applicability to a broad range of creative talent and labor across the fashion supply chain, the scope of FWA focuses exclusively on models.
FWA is the first U.S. law to introduce transparency requirements for model contracts, impose fiduciary duties on model management companies, and establish new workplace protections for models working in New York State. This article discusses the history of fashion regulation and the main requirements under FWA, and makes recommendations for how fashion businesses should address compliance with FWA.
History of Fashion Regulation
Generally, the fashion industry does not have any significant industry-specific regulation, at least not when it comes to engaging models or other creative talent. Fashion industry participants may instead be governed by a patchwork of more general laws pertaining to labor and employment, data privacy, advertising, environmental, trade and import/export, antitrust and competition, intellectual property (IP including those protecting trademarks, copyrights, and patents), and right of publicity, as well as emerging laws pertaining to generative AI technology that may be used to replicate models’ likenesses (often referred to as “Deep Fakes”).
Unlike talent agencies, modeling agencies have historically classified themselves as management companies under New York General Business Law § 171(8) and models as independent contractors instead of employees. This classification exempted modeling agencies from following New York’s labor protection requirements, such as minimum wage, overtime, or safety requirements. Individual model contracts would often include difficult to understand compensation and fee structures, unclear payment deadlines, and multi-year term durations that would tie the model to the agency. At the same time, models – typically young people that may lack legal and business experience or support structures – working in New York City would have to deal with high rents and costs of living. While lacking clarity on when and how much they would be paid, models were frequently required to work long hours without adequate breaks or overtime pay. This imbalance of power is further compounded by a possible requirement to pose nude and related safety issues; being asked to wear garments or pose in settings that may present a risk of physical injury; and the proliferation of the use AI-generated portraits of models for which the model may not be compensated.
Concerns about potential exploitation of young people working as models were increasingly brought to the attention of legislators by activists and consumers related to transparency and environmental, social, and governance (ESG) accountability in the fashion industry. New York’s new FWA, enacted in response to the concerns raised by members of the public, is a comprehensive novel framework in the fashion industry with which participants need to become familiar.
The Fashion Workers Act
The legislative justification memo accompanying FWA emphasizes New York’s central role in the U.S. fashion industry: it is home to world-renowned creative talent, leading production companies, and top fashion and design schools. The memo states that New York’s fashion industry employs 180,000 people, accounting for 6 percent of the New York City’s workforce, and generates a total of $10.9 billion in wages. A prime example of its significant economic impact is New York Fashion Week, a semiannual series of events where designers showcase their collections to buyers, the press, and the general public. The enterprise brings in nearly $600 million in income each year.
The legislative justification memo further states that despite the massive success of New York’s fashion industry, the creative workforce behind the industry’s success – specifically, models, influencers, and performing artists – are generally not afforded basic labor protections in New York. The new Act aims to address the persistent inequity in New York’s modeling sector, such as unfair contracts and payment practices, and create a system that imposes various requirements and prohibitions on model management companies and clients.
FWA defines the following terms:
“Client” means a retail store, a manufacturer, a clothing designer, an advertising agency, a photographer, a publishing company, or any other such person or entity that receives modeling services from a model, directly or through intermediaries.
“Model” means an individual, regardless of the individual’s status as an independent contractor or employee, who performs modeling services for a client and/or model management company or who provides showroom, parts, or fit modeling services.
“Model management company” means any person or entity, other than a person or entity licensed as an employment agency under article 11 of the general business law, that:
Is in the business of managing models participating in entertainments, exhibitions or performances
Procures or attempts to procure, for a fee, employment or engagements for persons seeking employment or engagements as models
Renders vocational guidance or counseling services to models for a fee.
FWA applies to model management companies that engage in business in New York or enter into any arrangement with a client or model for the purpose of providing services in New York. In other words, this Act applies to any entity using a fee-based structure to hire models in New York, including model management companies and fashion businesses working with them, as well those who engage models directly for photoshoots and other ad campaigns in New York.
Key requirements and prohibitions on model management companies (or agencies):
Starting December 21, 2025, and no later than June 19, 2026, agencies representing models and creatives will be required to register with the New York Department of Labor (NYDOL). The registration must be renewed every two years. Agencies with five or fewer employees must pay a $500 registration fee, and agencies with more than five employees must pay a $700 registration fee.
Agencies shall:
Be deemed to have fiduciary duties to act in good faith, with utmost honesty and in their models’ best interests. This fiduciary duty includes all aspects of the agency’s representation, such as negotiations, contracts, financial management, and the protection of the models’ legal and financial rights
Conduct due diligence to ensure that models are not at risk of unreasonable danger
Use best efforts to procure paid employment and other opportunities for their signed models
Ensure any work requiring nudity or sexually explicit material is voluntarily consented to by the model, in accordance with section 52-C (3) of the Civil Rights Law (which sets forth requirements for consent to the creation, disclosure, dissemination, or publication of sexually explicit material)
Prior to the start of a model’s engagement, provide the model with copies of a deal memo as well as the final agreement outlining terms of employment the agency negotiated for the model, which must include compensation terms
Specify any items that will be initially paid for by the agency, but ultimately deducted from the model’s compensation, itemizing how each charge shall be computed, as well as provide supporting documentation validating all charges on a quarterly basis
Disclose any financial relationship that may exist between the agency and the client
Notify models no longer represented by the agency if the agency is collecting any royalties that may be due to the model
Post a physical copy of the agency’s certificate of registration in the agency’s physical office and a digital copy on its website
Include the agency’s registration number in any advertisement for the purpose of soliciting models as well as in any contract with a model or a client
Obtain clear written consent, separate from the representation agreement, before agencies can use, license, or sell a model’s digital replica.2
Agencies shall not:
Require or collect any fee or deposit from a model for entering into an agency agreement
Procure an accommodation for which the model will have to pay without providing a written disclosure of the rate charged in advance of the model’s stay
Deduct or offset any fee or expense other than the agreed upon commission laid out in the contract or any other items advanced by the agency that were previously disclosed to and approved by the model
Advance the cost of travel or visa-related costs without the model’s informed consent
Require a model to sign an agency contract for a term greater than three years
Require a model to sign an agency contract that renews without the model’s affirmative written consent
Impose a commission fee greater than 20 percent of the model’s compensation
Engage in discrimination or harassment against a model because of any protected status
Retaliate against models filing complaints or declining to participate in castings or bookings based on reasonable, good faith concerns over ongoing FWA violations
Create, alter, or manipulate a model’s digital replica using artificial intelligence without clear written consent from the model.
Key requirements and prohibitions for clients:
Clients shall:
Pay models for overtime hours for any engagement exceeding 8 hours in a 24-hour period, at an hourly rate at least 50 percent higher than the contracted hourly rate
Provide at least one 30-minute meal break for any engagement exceeding 8 hours in a 24-hour period
Only offer employment to a model that does not pose an unreasonable risk of danger to the model
Ensure any employment involving nudity or sexually explicit material complies with section 52-C (3) of the Civil Rights Law
Permit the model to be accompanied by their agent, manager, chaperone, or other representative to any engagement
Provide liability insurance to cover and safeguard the health and safety of models
Obtain clear, prior written consent for any creation or use of a model’s digital replica.
NYDOL will be the primary enforcer of the FWA. Violators may be subject to a civil penalty for up to $3,000 for a first violation and $5,000 for a second or subsequent violation. Models have the right to file an action in court or a complaint with the NYDOL within six years of the alleged violations. The New York State Attorney General also will have a right to file an action to enforce FWA if there is a reasonable cause to believe that a model management company, a model management group, or a client has repeatedly engaged in illegal or fraudulent business practices.3
Impact of the Act
This Act will be a big change for models and modeling agencies in New York, holding agencies accountable and providing models with basic labor rights. Outside New York, no other U.S. state has adopted a fashion industry–specific law regulating agencies or protecting models in a similarly comprehensive way. Because New York is so influential in the fashion industry, it is likely that it will be a trailblazer for other states, such as California, to introduce similar protections for fashion workers in their states.
Conclusion
Agencies and fashion businesses should start preparing now in order to comply with the new law. Some key points of the law and issues to consider may include:
Agencies must register with the NYDOL starting December 21, 2025 (and must be registered by June 19, 2026).
Clients should consider confirming for themselves that agencies are properly registered before entering contracts.
Both agencies and clients should assess their existing policies and practices, and maintain ongoing compliance checks.
Agencies should review their standard agreements with models for compliance with the FWA framework, as many terms of existing contracts may violate FWA.
Agencies should itemize all deductions and fees that are going to be charged to the model up front.
Agencies should provide models with (1) deal memos listing total compensation and (2) final agreements negotiated with clients at least 24 hours before the model begins the engagement.
Agencies should establish and/or assess existing antiharassment policies and safe reporting mechanisms.
Clients should extend these protections to their sets and events, including training staff on workplace safety.
This is not an exhaustive list, nor does failing to comply with each point render the agency or client noncompliant with FWA. Every situation is different and action should be taken after consultation with a lawyer familiar with the industry.
1 FWA is available at https://legislation.nysenate.gov/pdf/bills/2023/s2477a.
2 The term “digital replica” is defined in FWA as “a significant, computer-generated or artificial intelligence-enhanced representation of a model’s likeliness, including but not limited to, their face, body or voice, which substantially replicates or replaces the model’s appearance or performance, excluding routine photographic edits such as color correction, minor retouching, or other standard post-production modifications.” Notably, if the AI enforcement moratorium that is currently part of the pending federal budget reconciliation bill ultimately passes – and it is poised to pass – enforcement of state law requirements pertaining to generative AI may be suspended for ten (10) years.
3 New York State Fashion Workers Act FAQ, available at https://dol.ny.gov/new-york-state-fashion-workers-act-faqs.
Texas SB 1318: Changes to Healthcare Non-Competes Effective September 1, 2025
Healthcare employers in Texas face new requirements for non-competition agreements following the passage of Senate Bill 1318. The Texas Legislature passed this legislation on May 28, 2025, and on June 20, 2025, Governor Abbott signed the bill into law.
The legislation modifies existing requirements for physician non-competes under Section 15.50 of the Texas Business & Commerce Code and creates a new Section 15.501, which extends certain non-compete restrictions to dentists, nurses, and physician assistants for the first time.
Key Takeaways
Effective Date: September 1, 2025 – applies to non-competes entered into or renewed on or after September 1, 2025.
New Coverage: Dentists, nurses, and physician assistants are now subject to certain non-compete restrictions.
Buyout Cap: All non-compete buy-outs are capped at annual salary and wages.
Geographic Limit: Maximum five-mile radius restriction.
Duration Limit: Maximum one-year non-compete period.
“Good Cause” Voidance: Physician non-competes are “void and unenforceable” if the physician is involuntarily discharged without good cause.
When Does SB 1318 Take Effect?
The law takes effect September 1, 2025, and applies only to non-compete agreements “entered into or renewed” on or after that date. Non-compete agreements entered into or renewed before September 1 are governed by the law in effect on the date the covenant was entered into or renewed. The statute does not define what constitutes a “renewal.”
What Does SB 1318 Change for Physicians?
SB 1318 makes several significant modifications to existing Texas law in Section 15.50 of the Texas Business & Commerce Code regarding physician non-compete agreements:
New Buyout Cap and Geographic Limits: The law now requires all physician non-competes to include a buyout provision capped at the physician’s total annual salary and wages at the time of termination. Previously, the law allowed buyouts at a “reasonable price” or at an amount determined through arbitration. The geographic scope is also now strictly limited to no more than a five-mile radius from the location where the physician primarily practiced before termination.
New Duration Cap: The duration of physician non-competes is now capped at one year from the date of contract or employment termination. The previous law did not specify a maximum duration.
New Automatic Voidance Provision: SB 1318 establishes a provision that renders non-compete agreements “void and unenforceable” if a physician is involuntarily discharged from contract or employment “without good cause.” This is an entirely new requirement. The statute defines “good cause” as “a reasonable basis for discharge of a physician from contract or employment that is directly related to the physician’s conduct, including the physician’s conduct on the job or otherwise, job performance, and contract or employment record.”
New Writing Requirement: The “terms and conditions” of a physician non-compete must now be “clearly and conspicuously stated in writing.” The previous law contained no such writing requirement.
Administrative-Role Exception: SB 1318 adds a new provision in Section 15.50(b-1) stating that “managing or directing medical services in an administrative capacity for a medical practice or other health care provider” does not qualify as the “practice of medicine” for purposes of triggering the physician non-compete requirements in Section 15.50(b) of the Texas Business & Commerce Code. These administrative activities still remain subject to the broader non-compete requirements that apply to all employees under Section 15.50(a).
The existing exception in Section 15.50(c) exempting a physician’s “business ownership interest” in hospitals or ambulatory surgical centers from the non-compete requirements in Section 15.50(b) is unchanged.
Unchanged Requirements: SB 1318 maintains the existing requirements for patient access provisions, including access to patient lists and medical records, and continues to prohibit restrictions on providing continuing care during acute illnesses.
Who Is Covered Under the New § 15.501?
Senate Bill 1318 creates Section 15.501 to Texas Business & Commerce Code, which extends certain non-compete restrictions to non-physician “health care practitioners” for the first time in Texas. Health care practitioners include:
Dentists licensed by the State Board of Dental Examiners
Professional and vocational nurses licensed under Chapter 301 of the Texas Occupations Code
Physician assistants licensed under Chapter 204 of the Texas Occupations Code
SB 1318 Non-Compete Requirements for Other Practitioners: Non-competes for these healthcare practitioners are now subject to some of the same core restrictions placed on physician non-competes, including:
Buyout options capped at their annual salary and wages at termination
One-year maximum duration limit
Five-mile geographic restriction
Terms that must be clearly and conspicuously stated in writing
Previously, Texas law contained no specific restrictions on non-compete agreements for dentists, nurses, or physician assistants.
Preemption of Other Law (§ 15.52)
Expanded Preemption: SB 1318 amends Section 15.52 to make the criteria in both Sections 15.50 and 15.501 exclusive, displacing any common-law or equitable bases for enforcing healthcare non-competes. The procedures and remedies in Section 15.51 also remain exclusive.
Cross-Reference Updates: Various sections of the law have been updated to reference both the existing Section 15.50 and the new Section 15.501, ensuring the new healthcare practitioner restrictions are integrated into Texas’s overall non-compete framework.
Conclusion
Senate Bill 1318, effective September 1, 2025, amends § 15.50 and adds § 15.501 to impose buy-out caps, geographic and duration limits, voidance rules, and writing requirements on non-competes for physicians and selected healthcare practitioners.
New Jersey Bill Would Introduce Sweeping Noncompete and No-Poach Restrictions: Strategic Implications for Employers
As anticipated, New Jersey has joined the growing list of state legislative efforts aimed at prohibiting or restricting the use of noncompetes and no-poach agreements.
On May 22, 2025, the New Jersey Legislature introduced S4385/A5708 (the “Bill”), a comprehensive proposal that, if enacted, would significantly limit the enforceability of noncompetes and ban no-poach agreements in New Jersey. The Bill is currently pending in the Senate Labor Committee, but its potential impact on business operations, talent strategy, and contractual practices is already drawing close attention from legal and executive leadership.
The Bill broadly prohibits an “employer,” defined to include business entities, nonprofit organizations, and public sector employers, from seeking, requiring, or enforcing a noncompete or no-poach agreements with a “worker.” The term “worker” includes non-senior employees and executives, independent contractors, volunteers, externs and interns, apprentices, and sole proprietors, without regard to compensation status or classification under state or federal law.
Noncompetes: Unenforceable Except as To Senior Executives In a Policy-Making Position
If passed, the Bill would render most existing “non-compete clauses” with a worker who is not a “senior executive” as unenforceable, and after the effective date, it would prohibit an employer from seeking or requiring a worker who is not a senior executive to execute a noncompete. Thus, if enacted into law, the Bill would apply both retroactively and prospectively, thereby prohibiting the enforcement of all noncompetes with limited exceptions. Additionally, employers would be required to notify their workers within 30 business days of the law’s effective date that their noncompete is no longer valid or enforceable. The notification would need to be provided in a “clear and conspicuous” manner and delivered electronically or in-person.
The Bill defines a “non-compete clause” as “any agreement arising out of an existing or anticipated employment relationship between an employer and a worker, including an agreement regarding severance pay, to establish a term or condition of employment that prohibits the worker from, penalizes a worker for, or functions to prevent or hinder in any way, the worker from seeking or accepting work with a different employer after the employment relationship ends, or operating a business after the employment relationship ends.” Thus, the Bill presumably does not prohibit employers from enforcing, or entering into, other restrictive covenants, such as customer non-solicitation agreements, employee non-solicitation agreements, or confidentiality/non-disclosure agreements.
The Bill would provide a limited exception for existing non-compete clauses with “senior executives,” defined as an individual in a “policy-making position” who earned at least $151,164 in the previous year. The compensation threshold includes salary, commissions, and bonuses, but excludes board, lodging, or other fringe benefits. “Policy-making position” is defined as “a business entity’s president, chief executive officer or the equivalent, any other officer of a business entity who has policy-making authority, or any other individual who has policy-making authority for the business entity similar to an officer with policy-making authority. An officer of a subsidiary or affiliate of a business entity that is part of a common enterprise who has policy-making authority for the common enterprise may be deemed to have a policy-making position for purposes of this paragraph.”
If passed, the Bill would prohibit non-compete clauses for all workers, including senior executives, entered into after the effective date.
If a noncompete with a senior executive exists prior to the Bill’s effective date, any such noncompete would need to satisfy several stringent conditions to be enforceable, including but not limited to:
The employer shall disclose the terms of the non-compete clause in writing to the worker not more than 30 business days after the effective date, as well as “all revisions made in the provisions of the non-compete clause necessary for compliance with the requirements of this section.” If the non-compete clause is revised, the revised non-compete clause must be signed by the employer and the worker, and the disclosure shall expressly state that the worker has the right to consult counsel prior to signing.
The clause is narrowly tailored to protect legitimate and related business interests, including the employer’s trade secrets or other confidential information.
The restricted period must not exceed 12 months post-termination.
The restriction must be reasonable in geographic reach and limited to geographic areas where the executive had a material presence during the two years preceding termination, and the geographic reach shall not prohibit the worker from seeking employment in other states.
The clause is limited to services provided by the worker during the previous two years of employment.
The non-compete must not penalize a worker for challenging the validity or enforceability of the noncompete.
The noncompete cannot contain a choice-of-law clause that has the effect of avoiding the requirements of the Bill.
The worker must not be required to waive any substantive, procedural, or remedial rights provided under the act, any other act or regulation, or the common law.
The noncompete must not restrict a worker from providing a service to a customer or client of the employer, if the worker does not initiate or solicit the customer or client.
The noncompete shall not be unduly burdensome on the worker, injurious to the public, or inconsistent with public policy.
The noncompete states that it shall be void if the employer does not provide written notice to the worker of the employer’s intent to enforce the non-compete clause within 10 days after the termination of an employment relationship between the employer and the worker, but the notice is not required if the worker has been terminated for “misconduct.” The Bill defines “misconduct” as conduct that “is improper, intentional, connected with the individual’s work, within the individual’s control, not a good faith error of judgment or discretion, and is either a deliberate refusal, without good cause, to comply with the lawful and reasonable employer rules made known to the worker, or a deliberate disregard of standards of behavior the employer has a reasonable right to expect, including reasonable safety standards and reasonable standards for a workplace free of drug and substance abuse.”
The noncompete provides that during any period after the employment relationship ends in which the worker is prevented from engaging in work or taking employment because of restrictions imposed by the non-compete clause, the employer, unless the worker is terminated for misconduct or there is a breach by the worker, shall pay the worker an amount equal to 100 percent of the pay to which the worker would be entitled for the work during that period; and make any benefit contributions needed to maintain the fringe benefits to which the worker would be entitled during that period.
Any noncompete that fails to meet these standards would be deemed void. Furthermore, any noncompete made with a senior executive after the Bill’s effective date will be deemed unenforceable.
As with similar legislative efforts in other states, the Bill provides an exception for noncompetes in connection with the bona fide sale of a business, ownership interest, or substantially all operating assets. It also allows for the enforcement of a noncompete where a cause of action arose before the Bill’s effective date.
No-Poach Agreements: A Violation of Public Policy
In addition to restricting noncompetes, the Bill explicitly declares no-poach agreements to be contrary to public policy and that “any no-poach agreement shall be void.” The Bill defines a “no-poach agreement as “any agreement between employers or between an employer acting as a contractor and any legal person acting as a contractee that restricts or hinders the ability of an employer to hire, or contract for the services of, a worker, or hinders a worker from obtaining employment.”
The Bill provides a private right of action for workers subject to or affected by a noncompete or a no-poach agreement. If passed, the Bill would enable workers to sue for injunctive relief, liquidated damages of up to $10,000, lost compensation, and attorneys’ fees. In addition, employers would be required to post a copy of the statute or an approved summary in a prominent workplace location. Repeated violation of these obligations may result in fines of up to $10,000.
Takeaways
While the Bill’s fate remains uncertain, its introduction reflects the continuing legislative trend aimed at restricting the use of noncompetes. Although on its face, the New Jersey Bill appears to allow for some exceptions to the use of noncompetes, in practicality, the Bill would not protect against unfair competition if passed as presently drafted. As one example, if a candy company employed a top executive in New Jersey with access to its secret formula to an everlasting gobstopper, and that executive sought employment with a rival candy company but that position was in New York, then presumably the noncompete would be unenforceable under the Bill because a senior executive could seek employment in another state. As written, the Bill’s exceptions are in name only and if the Bill is enacted would place New Jersey in largely the same position as only four other states that ban noncompetes (California, Minnesota, North Dakota, and Oklahoma).
New Jersey businesses and those employers with employees located in New Jersey should stay tuned for updates here on New Jersey because, if the Bill is passed, employers would be required to both identify their senior executives and amend their noncompetes with their senior executives. New Jersey employers would also need to prepare and send notices regarding any existing noncompetes with workers who are not senior executives.
Employers should remain attentive to developments and consider proactive legal review of their noncompetes and other restrictive covenants, particularly those employers with operations in multiple states.
Ariana Tagavi contributed to this article
Colorado Enhances Wage Enforcement Measures
Colorado has taken another significant step to combat wage theft and worker misclassification with the enactment of House Bill 25-1001 (HB25-1001), which amends Colorado’s chief wage statute, the Colorado Wage Act.
The legislation significantly strengthens enforcement mechanisms and increases financial penalties for employers that misclassify workers as independent contractors. However, the legislation also offers a reprieve to employers who promptly pay wages owed following receipt of a formal demand filed with the Colorado Department of Labor and Employment (CDLE), Division of Labor Standards and Statistics (DLSS).
The new law is part of Colorado’s broader initiative to close wage enforcement gaps and protect employees while allowing employers a path to remedy violations without automatically facing steep fines.
Quick Hits
Colorado’s HB25-1001 significantly increases penalties for employers that misclassify workers as independent contractors, with fines up to $50,000 for repeated violations.
The new law provides a safe harbor for employers, allowing them to avoid automatic penalties if they pay owed wages within fourteen days of a formal complaint filed with the Colorado Department of Labor and Employment (CDLE).
HB25-1001 expands the CDLE’s jurisdiction to investigate wage claims up to $13,000 and mandates public disclosure of certain wage violations, enhancing transparency and enforcement.
Steeper Penalties for Worker Misclassification
Employers that misclassify employees as independent contractors will now face increased liability. Specifically, beginning January 1, 2028, an employer that misclassifies a worker in a way that impacts the employer’s obligation to pay wages or reporting obligations at the federal, state, and local levels may face the following penalties:
$5,000 fine for a willful violation
$10,000 fine if the violation is not corrected within sixty days of a determination by the CDLE
$25,000 fine for a second or subsequent willful violation within five years
$50,000 if a second or subsequent willful violation is not corrected within sixty days
These penalties are available in addition to, and not in lieu of, potential liability and fines that often arise from the misclassification of workers, such as unpaid wages and overtime, rest breaks, and sick leave violations. The director of the CDLE will adjust these fines on January 1, 2028, and every other year thereafter.
Safe Harbor: A Lifeline for Employers
Under the Wage Act, an employer is liable for automatic penalties if it fails to pay all wages owed within fourteen days of receipt of a written demand for unpaid wages. For nonwillful violations, the penalty is the greater of twice the unpaid amount or $1,000. For willful violations, the penalty increases to the greater of three times the amount owed or $3,000.
Prior to the amendments, automatic penalties applied no matter how the employee tendered a wage payment demand, even if tendered via an informal method such as an email or text message. However, under the amendments, the DLSS may waive the automatic penalties if an employer remits payment for the full amount of wages owed within fourteen days of receipt of a formal wage complaint filed with the DLSS. This safe harbor applies even if the employee had previously tendered informal, internal written wage payment demands. This provision promotes swift resolution of wage disputes after formal filing without penalizing employers that promptly rectify the issue.
Limited Availability of Attorneys’ Fees for Employers; Expanded Remedies for Employees
Prior to the amendments, an employer could recover attorneys’ fees and costs associated with defending a claim for unpaid wages if the employee recovered less than the amount the employer tendered. Now, under the amendments, an employer may only recover attorneys’ fees and costs if the court finds that the employee’s claim(s) for wages lacks substantial justification.
While the amendments raise the standard for recovery of attorneys’ fees and costs for employers, it expands the remedies available to aggrieved employees. An employee bringing a claim under Colorado’s wage and hour statutes and regulations may now pursue equitable relief, including back pay, reinstatement of employment or front pay, injunctive relief, compensatory damages, and a penalty of $50 per day for each employee and each day of violation, to deter future violations and prevent unjust enrichment.
Expanded Agency Jurisdiction
The amendments expand the CDLE’s jurisdiction to investigate and adjudicate complaints of unpaid wages. Previously, the CDLE’s jurisdiction was limited to claims for unpaid wages of $7,500 or less. Beginning July 1, 2026, this amount is increased to claims for unpaid wages of up to $13,000. Beginning January 1, 2028, the director of the CDLE will increase the CDLE’s authority annually by at least $1,000.
In addition, HB25-1001 now requires the DLSS to publicize citations, rulings, and written findings related to Wage Act violations on the CDLE’s website. The publications must identify the name of the employer and specify whether the violation was willful. Furthermore, the DLSS must report employers incurring a willful violation that is not remedied within sixty days to a government licensing authority with authority to limit or impose conditions on an employer’s license, registration, or permit, which may lead to suspension, restriction, or revocation of the same. Likewise, the DLSS may, but is not required to, report any employer that is found to have violated a wage and hour law to a government body with the power to deny, revoke, or restrict an employer’s license.
Expanded Definition of ‘Employer’
The amendments expand the definition of “employer” under the Wage Act to include individuals with at least 25 percent ownership or control of a business unless the individual has delegated all authority to manage day-to-day operations.
Enhanced Retaliation Protections
Under the Wage Act, an employer may not retaliate against an employee or worker for engaging in protected activity, which includes filing a wage complaint or testifying or providing evidence in a proceeding relating to a violation of the Wage Act. The amendments expand protected activity to include good faith complaints about compliance with wage and hour laws and providing information regarding rights and remedies under wage and hour laws.
In addition, the amendments expand potential remedies for an individual who has been retaliated against under the Wage Act. In addition to back pay, the wages withheld, interest, penalties, liquidated damages, and attorneys’ fees and costs, an aggrieved individual may now also recover compensatory damages for economic and noneconomic losses stemming from the retaliation.
Finally, the amendments require a fact finder consider the temporal proximity between the protected activity and the adverse action in determining whether retaliation occurred. A period of ninety days or less may be sufficient to establish retaliation.
Ultimately, employers may want to closely monitor compliance with Colorado’s strict wage and hour laws to avoid facing steep penalties and exposure to wage and retaliation complaints. However, the new provisions allowing for penalty waiver if payment is made within fourteen days of formal DLSS wage complaints come as welcome relief for employers struggling with how to handle internal, informal wage demands.
New Hires More Likely to Fall for Phishing + Social Engineering Attacks
When assessing cybersecurity risk in your organization, it is important to understand your users and their behavior. A new study by Keepnet sheds light on new hire behavior concerning phishing susceptibility. According to its recent survey, the 2025 New Hires Phishing Susceptibility Report, a whopping “71% of new hires click on phishing emails within 3 months” of starting their position. New hires are 44% more likely to fall for phishing and social media attacks than seasoned employees.
The survey is based on responses from 237 companies in various industries. The report’s findings reveal that new employees are at a significantly higher risk of becoming phishing and social engineering victims because they do not get enough security training during their onboarding process, and they are less experienced than veteran staff. The survey shows that new hires are unfamiliar with the organization’s protocols and are eager to respond to requests to make a good impression. Attacks that come from the CEO or HR are particularly effective against new hires. The research found that new employees were “45% more likely than experienced staff to click on phishing emails that impersonated the CEO, showing how vulnerable they are in their first few months.”
Another interesting statistic cited is that if a company provides “adaptive phishing simulations and behavior-based training” to employees, phishing risk fell 30% after onboarding.
The key lesson to take away here is to train new employees on cybersecurity protocols early and often. Understand that they are trying to impress their superiors and that they are more vulnerable to attacks. Give them the tools to feel comfortable identifying and reporting suspicious messages and instill in them with the confidence and understanding that they are an important team member for the security of the organization.
IRS Roundup: June 3 – 17, 2025
Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for June 3, 2025 – June 17, 2025.
Commissioner update
June 16, 2025: Billy Long was sworn in as the 51st IRS Commissioner after having been confirmed by the US Senate on June 12. Long served as a US Representative for Missouri’s 7th congressional district from 2011 to 2023. His term will run through November 12, 2027.
IRS guidance
June 12, 2025: The IRS has announced that it is experiencing a delay in processing electronic payments and that some taxpayers are receiving notices indicating a balance due even though payments were timely made.
Taxpayers who receive a balance due notice but electronically paid the tax they owed in full and on time do not need to respond. The IRS has said that any associated penalties and interest will be automatically adjusted once the payment(s) are applied correctly.
June 12, 2025: The IRS released Tax Tip 2025-39, reminding businesses about the Childcare Tax Credit. Taxpayers may receive a credit of up to $150,000 per year to offset 10% of qualified childcare resource and referral costs and 25% of qualified childcare facility costs.
To be eligible for the credit, an employer must have paid or incurred qualified childcare costs during the tax year to provide childcare services to employees. Employers should complete Form 8882, Credit for Employer-Provided Childcare Facilities and Services, to claim the credit. The credit is subject to the carryback and carryover rules for business credits.
June 12, 2025: The IRS issued Notice 2025-33, extending for an additional year the transitional relief provided in Sections 3.01, 3.02, and 3.06 of Notice 2024-59. Notice 2025-33 provides transitional relief from penalties with respect to certain information reporting obligations under Section 6045 and provides transitional relief from the liability for the payment of backup withholding tax required to be withheld under Section 3406 and its accompanying regulators.
This notice also provides transitional relief from penalties for brokers who fail to pay that tax with respect to certain sales of digital assets required to be reported under Section 6045, as well as a digital asset sale relief for certain customers that have not been previously classified by the broker as US persons.
June 13, 2025: The IRS issued Notice 2025-35, providing guidance on the corporate bond monthly yield curve, corresponding spot segment rates under Internal Revenue Code (Code) Section 417(e)(3), and the 24-month average segment rates under Code Section 430(h)(2). The notice also provides guidance on the interest rate for 30-year Treasury securities under Code Section 417(e)(3)(A)(ii)(II) (for plan years in effect before 2008) and the 30-year Treasury weighted average rate under Code Section 431(c)(6)(E)(ii)(I).
June 17, 2025: The IRS issued Revenue Ruling 2025-13, providing prescribed rates for federal income tax purposes for July 2025, including but not limited to:
Short-, mid-, and long-term applicable federal rates for July 2025 for purposes of Code Section 1274(d).
Short-, mid-, and long-term adjusted applicable federal rates for July 2025 for purposes of Code Section 1288(b).
The adjusted federal long-term rate and the long-term tax-exempt rate, as described in Code Section 382(f).
The federal rate for determining the present value of an annuity, an interest for life, a term of years, a remainder, or a reversionary interest for purposes of Code Section 7520.
June 17, 2025: The IRS published improvements to its Pre-Filing Agreement (PFA) program to provide greater tax certainty for large business and international taxpayers. The PFA program allows taxpayers under the Large Business and International Division jurisdiction to resolve potential tax issues before filing their return. The program is meant to offer certainty, reduce audit risk, and encourage voluntary compliance.
Key enhancements include:
A redesigned PFA landing page with program statistics, a streamlined process overview, and direct navigation to dispute prevention resources.
New step-by-step instructions to submit a PFA request, including response time expectations and post-submission next steps.
A dedicated PFA page regarding Likely Suitable Issues and Relevant Documents will help taxpayers identify if a PFA request is appropriate for their situation.
Updated program guidelines to help businesses strategically align their PFA submissions with tax filing deadlines.
The IRS also released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums, and Chief Counsel Advice).
Lindsay Keiser, a summer associate in the Washington, DC, office, also contributed to this blog post.
The State of Employment Law: More Than Half of U.S. States Now Have a CROWN Law
While many of these posts focus on a single state or small group of states, this post focuses on a movement that has now spread to a majority of states. Efforts have been in place for years to introduce legal protections related to hairstyles commonly worn by Black individuals and other people of color. A group of advocacy organizations has lobbied both the federal government and state governments across the country to pass CROWN (Create a Respectful and Open Workplace for Natural Hair) laws.
California was the first state to pass such a law in 2019, and as of late 2024, 27 states and the District of Columbia had passed such laws. Passage of CROWN laws does not necessarily depend on a state’s political leanings. While states such as California, Illinois, and New York have unsurprisingly passed such laws, states such as Alaska, Arkansas, and Tennessee have CROWN laws in effect as well, and CROWN legislation has been introduced in several states where such laws are not yet in effect.
As an example of such a law, Illinois’ CROWN Act, which was enacted on January 1, 2023, expanded the Illinois Human Rights Act’s definition of race to include “traits associated with race, including, but not limited to, hair texture and protective hairstyles such as braids, locks, and twists.” While the federal government currently has not passed a CROWN law, the EEOC has previously issued guidance stating that adverse action against an employee because of hair texture may constitute evidence of race discrimination.
Even though not all states currently have CROWN laws, such laws are being enacted quickly and likely will soon be in place in most of the country. Employers should review their dress code and appearance policies to ensure that they do not prohibit hairstyles historically associated with race.