Arbitration Agreement Was Not Substantively Unconscionable
Vo v. Technology Credit Union, 108 Cal. App. 5th 632 (2025)
Thomas Vo sued his former employer (TCU) for violations of the FEHA; TCU responded with a motion to compel arbitration. The trial court denied TCU’s motion on the ground that that it was unconscionable due to the arbitrator’s inability to compel prehearing third-party discovery. The Court of Appeal held because there was only a “minimal degree of procedural unconscionability” associated with the “standard pre‑employment paperwork,” the arbitration agreement was not invalid on that ground. As for whether the agreement was substantively unconscionable, the Court held that “the JAMS Rules incorporated into the arbitration agreement here provide an arbitrator the authority to permit nonparty discovery to allow fair arbitration of Vo’s statutory claims.” Consequently, the agreement was not substantively unconscionable, and the motion to compel arbitration should have been granted.
H-2B Cap Met for Second Half of FY 2025; Options Still Exist for Employers Seeking Temporary Workers
On March 25, 2025, U.S. Citizenship and Immigration Services (USCIS) announced that the H-2B cap for the second half of fiscal year (FY) 2025 was met on March 5, 2025. Employers seeking to employ H-2B workers to meet their labor demands will need to hire cap-exempt workers or H-2B workers who meet the criteria under the supplemental allocation.
Quick Hits
USCIS announced that the second half of the H-2B cap was met for FY 2025 on March 5, 2025.
The announcement stated that cap-subject H-2B petitions received on or after March 6, 2025, would be rejected.
The agency will continue to accept properly filed cap-exempt petitions and petitions for workers qualifying under the supplemental allocation.
The H-2B program allows employers to hire foreign national workers to meet their temporary, seasonal, one-time occurrence, or peak load nonagricultural labor needs when there is a shortage of willing, able, and qualified U.S. workers. Each year, 66,000 new H-2B visas are available under the annual cap. The cap is split evenly between the first and second halves of the fiscal year.
For FY 2025, the U.S. Department of Labor (DOL) and U.S. Department of Homeland Security (DHS) allocated an additional 64,716 H-2B visas for FY 2025 due to an increased need for H-2B workers. Under this supplemental allocation, additional H-2B cap spots were allocated for citizens of certain countries and returning H-2B workers who were previously counted under the caps of prior years.
Cap-Exempt H-2B Workers
Employers seeking to fill H-2B spots for the remainder of 2025 can sponsor cap-exempt H-2B workers or petition to use the supplemental allocation.
Workers exempt from the congressionally mandated H-2B cap include the following categories:
Individuals who are currently in the United States working in H-2B status and wish to extend their stay, amend the terms of their employment, or change employers
Individuals who have already been counted against the H-2B cap in the same fiscal year (FY 2025)
Individuals who will work as fish roe processors, fish roe technicians, or fish roe processing supervisors
Individuals who will be employed in the Commonwealth of the Northern Mariana Islands or Guam
Supplemental Allocation
Employers may also petition to hire workers under the supplemental allocation. To qualify for the supplemental visas, the petitioning employer must attest that they are suffering or will suffer irreparable harm if they are not able to hire H-2B workers. The workers must qualify under the returning workers allocation or the country-specific allocation.
Under the returning workers allocation:
44,716 visas are reserved for individuals who were issued a H-2B visa or held H-2B status in any of the past three fiscal years, regardless of nationality.
The returning worker visas are divided between the first half of FY 2025, the early second half of FY 2025, and the late second half of FY 2025, depending on the worker’s start date.
Under the country-specific allocation:
20,000 H-2B visas are reserved for nationals of Colombia, Costa Rica, El Salvador, Ecuador, Guatemala, Haiti, and Honduras. These individuals do not need to be classified as returning workers.
The speed and regularity with which the annual cap is met underscores the essential role of H-2B workers in the economy. H-2B workers are employed in diverse industries across the United States, from hospitality and landscaping to fishing and manufacturing. In the second half of FY 2024, the cap was met on March 7, 2024.
Looking Ahead
Employers relying on H-2B workers may need to look for cap-exempt workers, returning workers, or workers from specific countries to meet their labor demands. Employers may also want to begin planning for the FY 2026 H-2B cap, as demand continues to increase in this visa category.
Employee’s Attorney And Expert Witnesses Were Properly Disqualified For Use Of Employer’s Privileged Information
Johnson v. Department of Transp., 2025 WL 829714 (Cal. Ct. App. 2025)
After Christian L. Johnson sued his employer (Caltrans), an attorney for Caltrans sent a confidential email about the litigation to Nicholas Duncan (Johnson’s supervisor). Duncan then sent an image of the email to Johnson who shared it with his attorney and several retained experts and other individuals. The trial court granted Caltrans’s request for a protective order on the ground that the email was covered by the attorney-client privilege. The trial court also ordered Johnson and his attorney to destroy or return all copies of the email and to refrain from any further dissemination of the email. The trial court subsequently granted Caltrans’s motion to disqualify Johnson’s attorney and retained experts with whom the email had been shared based upon various violations of the protective order. The Court of Appeal affirmed the order. See also Cahill v. Insider Inc., 2025 WL 838264 (9th Cir. 2025) (district court had authority to order media organizations to return or destroy confidential documents that had been inadvertently disclosed).
Employer Did Not Violate FEHA By Denying Employee Disability Retirement Benefits
Lowry v. Port San Luis Harbor Dist., 109 Cal. App. 5th 56 (2025)
John Lowry was employed as a harbor patrol officer before suffering a permanently disabling on-the-job injury. His treating psychiatrist concluded that Lowry suffered from PTSD as a result of the accident and was not fit to return to work and instead should be “medically retired.” Lowry was subsequently terminated because he could not perform the essential job duties of Harbor Patrol Officer III with or without accommodation. Lowry sued for disability discrimination under the FEHA based on the District’s denial of disability retirement benefits. The trial court granted summary judgment to the District on the ground that disability retirement “does not qualify as a term, condition, or privilege of employment.” The Court of Appeal affirmed. See also Mandell-Brown v. Novo Nordisk Inc., 2025 WL 718890 (Cal. Ct. App. 2025) (trial court properly granted employer’s motion for summary after plaintiff failed to file an opposition after receiving two continuances to do so).
Sexual Harassment Lawsuit Cannot Be Compelled To Arbitration
Casey v. Superior Court, 108 Cal. App. 5th 575 (2025)
Kristin Casey, a former employee of D.R. Horton, Inc., sued the company and one of its employees, Kris Hansen, for sexual harassment, sex discrimination, retaliation and failure to prevent discrimination and harassment in September 2023. D.R. Horton attempted to enforce an arbitration agreement in Casey’s employment contract, which included a choice-of-law provision applying California law. Casey opposed arbitration, arguing that the federal Ending Forced Arbitration Act (the EFAA) gave her the right to pursue her claims in court.
The EFAA, enacted in 2022, provides that a “person alleging conduct constituting a sexual harassment dispute” may elect that “no predispute arbitration agreement . . . shall be valid or enforceable with respect to the case filed under federal, tribal or state law and relates to the sexual harassment dispute.” The trial court upheld the arbitration agreement, enforcing the terms to which Casey had agreed. But on a writ petition, the Court of Appeal reversed, holding that the EFAA preempts state law so long as the employment relationship involves interstate commerce (a low hurdle). The court further determined that an employer cannot rely on a choice-of-law clause to avoid the effect of the EFAA.
$2.16 Million Defamation Verdict Is Voided On Appeal
Hearn v. Pacific Gas & Elec. Co., 108 Cal. App. 5th 301 (2025)
In this case, the Court of Appeal reaffirmed the principle that an employee’s tort claim is not separately actionable against an employer when it is premised upon the same conduct that gave rise to the termination of employment and where the damages sought are solely related to the loss of employment. The Court relied upon case law going back as far as Foley v. Interactive Data Corp., 47 Cal. 3d 654 (1988), which delineates the ability of an employee to recover tort damages.
Todd Hearn went to trial on claims for (1) retaliation in violation of section 1102.5 of the California Labor Code and (2) defamation. Hearn’s former employer (PG&E) terminated Hearn based on findings from an investigation into various violations of the employee code of conduct. At trial, the jury found against Hearn on the retaliation claim but found in his favor on the defamation claim, awarding him $2.16 million in compensatory damages. The jury specifically found that the investigative report that resulted in Hearn’s termination was the source of the purportedly defamatory statements. PG&E moved for JNOV on the ground that Hearn had conceded that his damages for the alleged defamation were simply his termination-related damages – i.e., that he had suffered no distinct reputational harm or other damages specifically attributable to the allegedly defamatory conduct. The trial court denied PG&E’s JNOV motion.
In a 2-to-1 ruling, the Court of Appeal reversed the trial court’s judgment entered in Hearn’s favor on the defamation cause of action, agreeing with PG&E that Hearn could not pursue a tort claim against PG&E based on the same conduct and seeking no distinct damages from his unsuccessful wrongful termination claim. In so ruling, the Court reaffirmed the long‑standing principle against an employee bringing a duplicative tort claim against an employer which is simply a wrongful termination claim by another name.
USPS Employee’s Hostile Work Environment Claim Can Proceed
Lui v. DeJoy, 129 F.4th 770 (9th Cir. 2025)
Dawn Lui, the former postmaster of the United States Post Office in Shelton, Washington, alleged she was targeted because of her race, sex and national origin. Lui alleged disparate treatment and retaliation in violation of Title VII. The district court granted summary judgment to the Postmaster General, but the Ninth Circuit reversed in part, holding that Lui’s disparate treatment claim should not have been dismissed. The Court concluded that Lui had satisfied the McDonnell Douglas test for establishing a prima facie case by showing she was removed from her position as Postmaster, demoted and replaced by a white man. The Court further held that there is a genuine dispute of material fact about whether the decisionmaker’s decision to demote Lui was independent or influenced by a biased subordinate and that Lui had properly exhausted her administrative remedies. As for Lui’s claim of retaliation, the Court affirmed summary judgment on the ground that Lui failed to establish a causal connection between any protected conduct and the demotion decision.
Another Court Blocks DEI-Related Certification Requirement
On March 27, 2025, U.S. District Judge Matthew Kennelly of the United States District Court for the Northern District of Illinois issued a temporary restraining order (TRO) prohibiting the Department of Labor (DOL) from enforcing certain provisions of Executive Orders 14173 (Ending Illegal Discrimination and Restoring Merit-Based Opportunity) and 14151 (Ending Radical and Wasteful Government DEI Programs and Preferencing) against Chicago Women in Trades (CWIT), a domestic nonprofit that receives federal funding from the DOL. The court found that Executive Order (EO) 14173’s certification provision, which sought to require CWIT to certify that it does not operate any programs “promoting DEI that violate any applicable Federal anti-discrimination laws,” is problematic because the EO does not define what constitutes “illegal” DEI activities, and that the CWIT is likely to succeed on the merits of their claim that the certification provision violates the First Amendment of the U.S. Constitution. The court precluded the federal government from initiating any False Claim Act enforcement action against CWIT pursuant to the certification provision.[1]
Furthermore, the court determined that the federal government’s enforcement of its policy through EO 14151’s “termination provision,” which — as relevant to the court’s TRO — orders the government to “terminate, to the maximum extent allowed by law . . . all ‘equity action plans,’ ‘equity’ actions, initiatives, or programs, ‘equity-related’ grants or contracts” would cause irreparable harm to CWIT.
While the court’s ruling on EO 14151’s termination provision applies only to CWIT, its ruling on EO 14173’s certification provision extended to all grants and contracts controlled by the DOL, stating that the DOL “shall not require any grantee or contractor to make any ‘certification’ or other representation” contemplated by the provision. The TRO does not extend to other federal agencies.
The TRO will remain in effect for 28 days, and a hearing is scheduled for April 10, 2025, to determine whether the TRO should be converted into a preliminary injunction.
Compliance Obligations Under EOs 14151 and 14173
As previously reported, President Trump signed EO 14151 and EO 14173 on January 20 and 21, 2025, revoking various earlier executive orders, including EO 13985 (a Biden administration executive order requiring federal agencies submit “Equity Action Plans”) and EO 11246 (a longstanding executive order that required certain federal contractors to maintain affirmative action plans). As we noted articles published on February 24 and March 17, the courts have been asked to address the EO’s application and implications to various employers and businesses.
Of particular concern has been the language in EO 14173 requiring contracts and grants to include a term that “compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for the purpose of section 3729(b)(4) of title 31, United States Code” (the False Claims Act)” as well as requiring contractors and grant recipients “to certify, that [they do] not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.”
Consistent with the requirements of EO 14173, some government agencies have begun to issue DEI self-certification forms to contractors and grant recipients to complete and return.
Compliance Implications
Organizations that contract with or seek to contract with the federal government should take proactive steps to ensure compliance with EO 14173 and EO 14151. This includes conducting risk assessments to identify potentially noncompliant DEI or DEIA policies. Organizations should also review and update internal training programs to reflect current obligations under the civil False Claims Act, ensuring training is tailored to relevant operational roles.
[1] This reporting adds to our previous article published on April 3, 2024.
Appeals Court Says Disability Not Required in Order to Recover Back Pay for Violation of ADA’s Medical Inquiry and Examination Provisions
Most employers are aware that, under the Americans with Disabilities Act (ADA), disability-related inquiries and medical examinations of employees may only be required when such inquiries and examinations are “job-related and consistent with business necessity.” However, employers may be less familiar with the fact that the ADA’s limitations on medical inquiries and examinations apply to both employees with a disability and employees without a disability. Indeed, a recent appeals court decision highlights the fact that employers may be liable for monetary damages and other relief for violating the ADA’s medical inquiry and examination limitations, even if the employee subjected to the medical inquiry or examination does not have a disability or perceived disability.
In Nawara v. Cook County, John Nawara, a correctional officer for the Cook County Sheriff’s Office, was involved in multiple heated interactions with his supervisor, Human Resources, and an occupational nurse. Based on these incidents, the Sheriff’s Office placed Nawara on paid leave and required him to provide signed medical authorization forms and undergo a fitness-for-duty examination before returning to work. Nawara refused to submit the requested medical authorization forms and, as a result, was eventually transitioned to unpaid leave.
While on leave, Nawara filed suit alleging that the Sheriff’s Office had violated the ADA’s restrictions on medical inquiries and examinations for employees. After a trial, the jury concluded that the Sheriff’s Office’s requests for Nawara’s medical records and fitness-for-duty examination requirement violated the ADA, but it chose not to award any damages to Nawara. Nawara then asked the trial court to order the Sheriff’s Office to pay him back pay and restore his seniority. The trial court granted Nawara’s request to restore his seniority but denied his request for back pay, concluding that Nawara was required to have a disability or perceived disability in order to obtain back pay for a violation of the ADA’s medical inquiry and examination provisions. Both parties appealed the trial court’s decision.
On appeal, the U.S. Court of Appeals for the Seventh Circuit (which covers Illinois, Indiana, and Wisconsin) noted that, during trial, Nawara had never claimed that he was disabled or that the Sheriff’s Office perceived him to be disabled. Nevertheless, the Seventh Circuit concluded that an employer’s violation of the ADA’s medical inquiry and examination provisions is discrimination on the basis of disability regardless of whether the employee has a disability or perceived disability. Consequently, the Seventh Circuit found that the ADA’s remedies applied to Nawara, and Nawara was authorized to recover back pay and have his seniority restored.
The Nawara case serves as a reminder that situations involving mandatory medical inquiries or examinations for employees are complex and are often difficult for employers to navigate. Employers with questions regarding the permissibility of medical inquiries or examinations should consult with experienced employment counsel before requiring an employee to provide medical information or submit to a medical examination to ensure that such actions do not violate the ADA.
BREAKING: Full D.C. Circuit Restores Status Quo Ante, for a Second Time, at the NLRB
As the firing carousel continues, on April 7, 2025, the full United States District Court of Appeals for the D.C. Circuit vacated the panel’s stay and ordered the reinstatement of National Labor Relations Board (“NLRB” or “Board”) Member Gwynne A. Wilcox. The Board has now regained a quorum for the second time and can resume ruling on pending appeals from ALJ decisions and address requests for review.
As reported here and here, this reinstatement follows (i) a D.C. federal judge’s March 6, 2025, reinstatement of Member Wilcox, after President Trump’s unprecedented firing; and (ii) a D.C. Circuit panel’s March 28, 2025, stay of Member Wilcox’s reinstatement, pending appeal.
The full D.C. Circuit split along appointed-party lines, with seven (7) Democrat-appointed judges making up the majority and four (4) Republican-appointed judges dissenting. The majority again relied upon Humphrey’s Executor v. United States, 295 U.S. 602 (1935), as well as Wiener v. United States, 357 U.S. 349 (1958), which the Court said “unanimously upheld removal restrictions for government officials on multimember adjudicatory boards.” While the Seila Law LLC v. Consumer Financial Protection Bureau, 591 U.S. 197 (2020), and Collins v. Yellen, 594 U.S. 220 (2021), decisions held removal certain restrictions to be unconstitutional as applied to two (2) specific agencies, the majority indicated that the Court was still required to follow “extant Supreme Court precedent unless and until that Court itself changes it or overturns it.” As neither Selia nor Collins expressly overturned Humphrey’s Executor or Wiener, the Court concluded that it was required to follow that extant precedent.
The Court further noted that it set a “highly expedited” schedule for resolution of the merits of the government’s appeals, which seemed intended to mitigate any potential harm from Member Wilcox’s reinstatement. That also might have advised the Court’s decision to deny a 7-day stay of Member Wilcox’s reinstatement for the government to seek relief from the Supreme Court. This issue nevertheless seems to be headed for the Supreme Court, which would be faced with the decision of whether to (i) prohibit Presidents from firing NLRB members; (ii) narrowly permit Presidents to fire NLRB Members; or (iii) overturn Humphrey’s Executor and Wiener to allow Presidents to fire any agency head(s), at will.
We will continue to monitor the Wilcox appeal and its continued impact upon the NLRB.
Virginia Strengthens Ban on Non-Competes for “Low-Wage Employees”
On March 24, 2025, Virginia Governor Glenn Younkin signed into law S.B. 1218, which amended Virginia’s non-compete law to expand the definition of “low-wage employees” with whom employers may not enter into non-competition agreements.
A “low-wage employee” previously was defined as any employee whose average weekly earnings fell below the Virginia average weekly wage. For 2025, this equated to $1,463 per week, or $76,081 annually. The amendment expands the definition of “low-wage employee” to include any employee who, regardless of their average weekly earnings, is entitled to overtime compensation under the federal Fair Labor Standards Act (“FLSA”) (for hours worked over 40 hours in a given week). The amendment will take effect on July 1, 2025.
The other provisions of Virginia’s non-compete statute, Virginia Code § 40.1-28.7:8, were not modified, and contain several noteworthy features. The statute provides a private right of action for low-wage employees against any employer who attempts to enforce a non-compete in violation of the statute, and if they prevail, the statute authorizes a court to award liquidated damages, lost compensation, and attorneys’ fees. Employers may also be subject to a civil penalty of $10,000 for each violation of the statute. Also, employers must post a copy of the statute or a summary approved by the Virginia Department of Labor and Industry alongside other federal or state required notices, or risk civil penalties.
Employers with employees in Virginia should revisit their non-competition agreements for compliance in light of the recent amendment.
CMS Confirms Relocation of Physician-Owned Hospital Does Not Jeopardize Stark Law Exception
CMS confirmed that a physician-owned hospital proposing to move eight miles away from its original site and add an emergency department would continue to meet the whole hospital exception, provided all other conditions remain met.
CMS emphasized that the hospital must remain the same legal and operational entity post-relocation, with no changes in ownership or Medicare provider agreement.
The decision reflects CMS’s continued scrutiny of, yet possibly softening stance towards, physician-owned hospitals and the structural safeguards in place to protect against self-referral risks.
The Centers for Medicare & Medicaid Services (CMS) recently released Advisory Opinion No. CMS-AO-2025-1, addressing whether a physician-owned hospital’s proposed full-site relocation and addition of an emergency department would jeopardize its ability to continue to rely on the Stark Law’s “whole hospital exception.” In the advisory opinion, CMS concluded that relocation, by itself, is not necessarily disqualifying — and that no single factor is dispositive. Instead, the agency took a holistic approach in assessing whether the hospital remained the same entity post-relocation for purposes of the exception.
By retaining the same ownership, provider agreement, licensure, services, name, patient base, and bed count, CMS concluded that the hospital would remain the “same hospital” under Stark requirements and continue to qualify under the “whole hospital exception”— enabling the hospital to retain its protection for physician referrals.
This Advisory Opinion — the first issued since 2021 — provides noteworthy guidance and important considerations for hospital administrators, compliance officers, and legal counsel of physician-owned hospitals currently taking advantage of the exception considering structural changes or expansions.
Background and Legal Analysis
The Stark Law “Whole Hospital Exception”
In 2010, the Affordable Care Act tightened Stark Law rules to prevent the creation of new physician-owned hospitals (with limited exceptions) and restrict the expansion of existing ones.
According to the CMS Advisory Opinion, the hospital at issue had met the Stark Law’s whole hospital exception before the 2010 cutoff by having physician ownership and a Medicare provider agreement in place. The hospital requested that CMS confirm it would still qualify as the “same hospital” and remain in compliance with the Stark Law exception, despite its plans to relocate eight miles away and to add an emergency department.
The Hospital’s Proposal: A Relocation Without Disruption
CMS took a holistic approach in its analysis and reviewed the hospital’s comprehensive certification of facts in light of factors previously outlined in its CY 2023 OPPS/ASC proposed rule and reaffirmed in the FY 2024 IPPS final rule, namely:
Continuity of state licensure and Medicare provider agreement;
Consistent use of Medicare provider number and tax ID;
Same services and patient base;
No changes to ownership or scope of services (with some flexibility, such as adding an emergency room);
Same state regulatory framework.
The hospital certified that it had maintained physician ownership and a Medicare provider agreement continuously since December 31, 2010; the aggregate number of operating rooms, procedure rooms, and beds had remained the same since March 23, 2010 (and would remain unchanged post-relocation); the hospital’s services and patient base would remain unchanged; the hospital would continue to operate under the same name, branding, and tax ID number; there would be no ownership or leadership changes; and the hospital would continue under the same Medicare provider agreement.
Additionally, the hospital certified that its state’s law did not require a certificate of need for new construction, but any structural changes required prior notice and approval from that state’s health department. The requesting hospital also affirmed that discussions with its state officials confirmed the facility could maintain its existing state licensure after relocation.
Based on the certifications and documentation provided by the hospital, CMS concluded that neither the relocation of the facility or the addition of an emergency department would run afoul of the Stark Law’s referral and billing prohibitions. Specifically, the hospital would continue to meet the condition at 42 C.F.R. § 411.362(b)(1) as set forth in Stark’s Whole Hospital Exception.
Five Key Considerations for Hospital Leadership
One of the leading takeaways from the advisory opinion is CMS’s emphasis on a hospital’s continuity in legal identity, services, structure, and ownership when making a “whole hospital exception” determination. But beyond its specific facts, the opinion also serves as an important reminder for hospital administrators, compliance officers, and legal counsel of physician-owned hospitals that even operational changes—like relocation or new departments—can trigger significant legal and regulatory scrutiny.
Here are five strategic considerations hospital leadership should keep in mind:
Maintain Continuity: Ensure Medicare provider agreements, tax IDs, and licensure remain uninterrupted during transitions.
Document Everything: Detailed certifications and planning are crucial for regulatory assurance.
Avoid Ownership Changes: Even minor shifts in physician ownership could threaten compliance with the Whole Hospital Exception.
Engage Regulators Early: Involve CMS and state departments of health well in advance of any move or structural change.
Seek Advisory Opinions: Where doubt exists, requesting a formal CMS advisory opinion can offer clarity and protection.