President Trump Eliminates Affirmative Action for Federal Contractors and Subcontractors – What You Need to Know
On January 21, 2025, President Trump issued a broad executive order titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” which among other things, rescinded Executive Order (“EO”) 11246 – the authority underpinning affirmative action for federal contractors and subcontractors.
WHAT IS EO 11246?
EO 11246 was issued by President Lyndon B. Johnson in 1965. Under EO 11246, federal government contractors and subcontractors with at least 50 employees and a federal contract or subcontract of at least $50,000 were obligated to develop affirmative action programs, perform annual audits of the organization’s placement and pay practices, and assess their outreach and recruitment programs for underrepresented members of their workforce.
WHAT CHANGES FOR FEDERAL CONTRACTORS?
Under President Trump’s new executive order, the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP), which had been the government’s affirmative action enforcement arm, must “immediately cease” (1) promoting “diversity,” (2) holding federal contractors and subcontractors responsible for taking “affirmative action,” and (3) “[a]llowing or encouraging [f]ederal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin.” In addition, all future federal government contracts and grants must include terms by which the contractor or grant recipient certifies it is no longer carrying out DEI initiatives in violation of federal law. The order does not provide more detail on what this certification will entail.
The order revokes EO 11246 in its entirety, including a contractor’s or subcontractor’s obligation to annually develop and maintain affirmative action plans with respect to race and gender, along with the other requirements mandated by EO 11246—such as self-audits of an organization’s placement and pay practices, and certain outreach recruitment obligations. Importantly, the order permits federal contractors to phase out their affirmative action programs over the next 90 days.
Importantly, neither Section 503 of the Rehabilitation Act nor the Vietnam Era Veterans Readjustment Assistance Act (VEVRAA), nor their implementing regulations, are affected by President Trump’s order. Both statutes create their own affirmative action obligations for federal contractors and subcontractors concerning individuals with disabilities and protected veterans, respectively. However, while neither statute is explicitly mentioned, President Trump’s order does prohibit OFCCP from “promoting diversity” or “holding federal contractors and subcontractors responsible for taking ‘affirmative action,’” which arguably covers OFCCP’s authority to enforce both the Rehabilitation Act and VEVRAA in any meaningful way.
WHAT CHANGES FOR ALL EMPLOYERS?
Federal contractors and subcontractors: (1) are no longer required to comply with EO 11246 and the OFCCP’s affirmative action requirements; and (2) cannot carry out DEI initiatives that violate any applicable federal anti-discrimination laws.
Notably, President Trump’s order does not change the various laws prohibiting employment discrimination on the basis of race, color, national origin, religion, gender, gender identity, sexual orientation, pregnancy, disability, and age. However, employers can expect increased federal government scrutiny on DEI programs (including companies having diversity officers and departments) as President Trump revamps the Equal Employment Opportunity Commission (EEOC) and rolls out additional DEI restrictions.
Unions By the Numbers: 2025 Edition
It’s that time of year again when the Bureau of Labor Statistics (BLS) releases its annual report detailing, at least numerically, where unions stood in America in 2024. Notwithstanding many big labor headlines in recent years – the Starbucks campaign, the UAW strikes and favorable labor agreements at the Big 3, etc. – the 2024 data overall wasn’t good news for unions. Indeed, their numbers on a percentage basis of the American workforce have dropped, again, to historic lows.
According to the BLS press release: “The union membership rate – the percent of wage and salary workers who were members of unions – was 9.9 percent in 2024 [down from 10 percent in 2023], little changed from the prior year, the U.S. Bureau of Labor Statistics reported today. The number of wage and salary workers belonging to unions, at 14.3 million, also showed little movement over the year. In 1983, the first year for which comparable data are available, the union membership rate was 20.1 percent and there were 17.7 million union members.”
Some other key data points from the report include:
Public sector union membership ticked down a bit to 32.2 percent (from 32.5 in 2023), but still far outpaces the percentage of private sector workers belonging to unions, which trickled down to 5.9 percent – the lowest percentage ever on record.
The occupations seeing the highest unionization percentages were education, training, and library occupations (32.3 percent) and protective service occupations (29.6 percent).
While the gender class has closed significantly in recent years, men (10.2 percent) continue to have a higher unionization rate than women (9.5 percent).
Union density in states largely remains the same as in prior, recent years. Hawaii and New York had the highest union membership rates (26.5 percent and 20.6 percent, respectively), while the lowest rates were in North Carolina (2.4 percent), South Dakota (2.7 percent), and South Carolina (2.8 percent).
The continued decline in union numbers is noteworthy given recent legal developments that make it easier for unions to organize workplaces; the number of union election petitions in the last few years has skyrocketed, and union win rates at the ballot box have been astronomical on a percentage basis. Based on that, it doesn’t appear their numbers are poised to make a comeback anytime soon. We’ll see what 2025 brings.
Unlocking Transparency: New DOL Guidance Clarifies Gag Clause Prohibition Rules Helping Health Plans Secure Their Claims Data
On January 14, 2025, the U.S. Department of Labor (DOL), Health and Human Services (HHS) and Treasury Department jointly issued new guidance in a FAQ format (Guidance) regarding compliance with certain provisions of Title I (No Surprises Act) and Title II (Transparency) of the Consolidated Appropriations Act, 2021.
This Guidance provides important clarifications on the Gag Clause Prohibition rules that will help group health benefit plans ensure that the federal government’s transparency mandates are complied with and that requests for claims data from health insurance carriers are obeyed.
Background
The Gag Clause Prohibition, enacted under the Consolidated Appropriations Act of 2021 (CAA), includes a set of federal regulations and rules that were designed to promote transparency in the employee benefit and healthcare insurance industries. These regulations prohibit group health benefit plans and health insurance carriers from entering into contracts that restrict access to critical claims data and cost or quality information, or otherwise prevent group health benefit plans or insurance carriers from disclosing such claims data and information to plan participants, beneficiaries, or enrollees; plan sponsors (e.g., employers); or to a plan’s business associate, such as a third-party administrator (TPA) or vendor, consistent with applicable privacy regulations.
Despite the clear mandates of the Gag Clause Prohibition rules, for the last four years, some health insurance carriers have repeatedly obstructed or refused to adequately comply with the federal transparency mandates. Specifically, some health insurance carriers who own healthcare provider networks and who essentially rent such networks to group health benefit plans have continuously refused to share a complete and accurate set of health claims data either with the plan sponsor or the plan’s business associates.
Likewise, if a group health benefit plan engaged its own independent TPA with the expectation that they would separately contract with the health insurance carrier who owns the provider network the plan wants access to, the health insurance carrier would refuse to allow the TPA to share a complete and accurate set of health claims data either with the plan sponsor or the plan’s business associates.
In both instances, health insurance carriers would justify their refusal on the basis that their separate “downstream” agreements with their participating provider networks took precedence over the federal Gag Clause Prohibition rules. In essence, they argued their private contractual rights, and confidentiality or data restriction provisions stated therein, allowed them to sidestep the transparency obligations imposed by the federal government.
As a result, group health benefit plans, their sponsors, TPAs and vendors have been advocating for additional guidance or clarification on the federal transparency rules. Some group health benefit plans and plan sponsors have even initiated lawsuits against carriers who refused to provide the plan and plan sponsor their claims data. See e.g., Trustees of the International Union of Bricklayers and Allied Craftworkers Local 1 Connecticut Health Fund et al v. Elevance, Inc. et al, Docket No. 3:22-cv-01541 (D. Conn. Dec 05, 2022); Owens & Minor, Inc. et al v. Anthem Health Plans of Virginia, Inc., Docket No. 3:23-cv-00115 (E.D. Va. Feb 13, 2023).
Updated Guidance
The new Guidance provides the following clarifications:
All separate “downstream agreements” that restrict a group health benefit plan or health insurance carrier from providing, electronically accessing, or sharing critical claims data and cost or quality information with a plan sponsor, its participants or beneficiaries, or the plan’s business associates are prohibited.
Likewise, owners of provider networks cannot use discretionary language or self-serving contractual provisions (e.g., only allowing de-identified claims data to be shared at “its discretion”) in their agreements with group health benefit plans, providers, TPAs or other service providers which have the practical effect of preventing disclosure of critical claims data, and cost or quality information data, to a plan sponsor or a plan’s business associates, consistent with applicable privacy regulations.
Health insurance carriers and provider networks cannot place any limitation on the “scope, scale or frequency of electronic access to de-identified” claims data when requested as part of an audit or claims review.
Lastly, most group health benefit plans are likely aware of the Gag Clause Prohibition through compliance with the annual attestation requirement. The Guidance makes clear that plan sponsors, when submitting their annual attestation of compliance, can essentially report any other vendor or carrier who refuses to remove a gag clause in any separate “downstream” agreements if the plan sponsor has taken steps to ensure their own compliance, including requesting the gag clause be eliminated.
Action Steps
In light of the new Guidance, group health benefit plans, plan sponsors and plan vendors should consult counsel to assist with obtaining plan claims data and cost or quality information from carriers, healthcare providers, TPAs or others with control over that data. They should also review their contracts with those entities to help identify and eliminate gag clauses or other restrictive provisions that run afoul of the federal government’s transparency rules.
To the extent any group health benefit plan or plan sponsor receives pushback from a carrier or provider, this new Guidance can be leveraged to challenge the restrictive practices in place and refute any arguments by such insurance carriers and/or providers who may be attempting to sidestep the federal transparency rules.
Additional Author: Justin Wolber
Employer Group Sues to Block Mental Health Parity Rules
Only weeks after the principal effective date for the final 2024 federal mental health parity rules for employer-sponsored health benefit plans, those rules—and specifically some key features that are frustrating employers—are being challenged as examples of regulatory overreach.
Quick Hits
A large employer advocacy group sued three federal agencies over their final rules implementing the federal mental health parity law applicable to employer-sponsored health plans.
The industry group argues the federal agencies did not have the authority to create a benefit mandate.
The federal agencies have until March 17, 2025, to respond to the complaint. They have argued that the mental health parity rules are not a benefit mandate.
The ERISA Industry Committee (ERIC), a large employer advocacy group, is asking a federal court to vacate certain provisions or the entire 2024 final regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA), as well as permanently enjoin enforcement of the specific provisions or the regulations overall.
The complaint was filed on January 17, 2025, in the U.S. District Court for the District of Columbia against the U.S. Departments of Health and Human Services, Treasury, and Labor.
In its complaint, ERIC specifically criticizes requirements in the MHPAEA rules, including those that:
require named fiduciaries to make certifications regarding the “comparative analysis” prepared for the plan;
require plans to comply with the final rules generally as of January 1, 2025 (less than four months following publication of the final rules); and
require fiduciaries to determine whether a service provider is “qualified” to do a comparative analysis.
ERIC generally argues that these 2025 requirements, as well as several requirements that would take effect in 2026, exceed the agencies’ authority to implement the MHPAEA and related statutes, or are too imprecise to serve as a legitimate basis for enforcement against employer-sponsored health plans.
On September 23, 2024, the federal agencies published final rules requiring group health plans to provide “meaningful benefits” for mental health or substance use disorders in coverage categories where medical or surgical benefits are also provided. Meaningful benefits cover core treatments, defined as standard treatments or interventions indicated by “generally recognized independent standards of current medical practice.”
The bulk of the final rules took effect on January 1, 2025, with some provisions scheduled to take effect on January 1, 2026. The meaningful benefits requirement is slated to become effective on January 1, 2026.
The lawsuit argues that the meaningful benefits requirement exceeds the federal agencies’ authority because it imposes a benefits mandate. It also claims the federal agencies violated the Administrative Procedure Act’s notice and comment requirements.
“All that is required is parity in particular plan terms and their application, not parity in access to mental health/substance use disorder benefits, much less provision of particular benefits,” the lawsuit states. “Congress has repeatedly made clear that the MHPAEA is not a benefits mandate, and it therefore does not require health plans to provide any particular mental health/substance use disorder benefits, or even to provide mental health/substance use disorder benefits at all.”
It also argues that the meaningful benefits requirement is antithetical to the Employee Retirement Income Security Act (ERISA), which governs most private health plans.
In the final rule, the federal agencies emphasized that the meaningful benefits requirement “is not a coverage mandate, but rather another approach to ensuring parity between mental health or substance use disorder benefits and medical/surgical benefits in a classification.”
Next Steps
The meaningful benefits requirement is scheduled to take effect on January 1, 2026. It is unclear what the federal court will ultimately decide in this case. If the court finds in favor of the ERISA Industry Committee, then the obligation to provide “meaningful benefits” for mental illness and addiction could become moot.
In the meantime, employers may want to review the terms of their group health plans for compliance with the mental health parity requirements and work closely with their plan administrators and other professionals to document their analysis of how the plan meets the mental health parity requirements in operation based upon available data and guidance.
The Domestic Worker Bill of Rights: A Guide for Employers
The Domestic Worker Bill of Rights (California Assembly Bill 241 and Senate Bill 1015), enacted in 2013, is a California law that grants overtime pay rights to personal attendants who were not previously entitled to overtime pay under California law. Personal attendants covered by this law are entitled to overtime pay at 1.5 times their regular rate of pay for any hours worked in excess of nine hours in a day or 45 hours in a week.
Which Employers Are Covered?
The Domestic Worker Bill of Rights defines a “domestic work employer” as any person, including corporate officers and executives, who directly or through an agent (such as temp services or staffing agencies) employs or controls the wages, hours, and working conditions of domestic workers. However, certain employers are excluded from this law. Excluded employers include domestic worker registry or referral agencies that satisfy specific requirements under the Civil Code and Unemployment Insurance Code.
Who is Considered a Domestic Worker?
Under the law, a domestic worker is defined as someone who provides services related to the care of people in the home or maintains private households or their premises. This includes nannies, childcare providers, caregivers, personal attendants, housekeepers, cooks, and other household workers.
Who is a Personal Attendant?
A personal attendant is someone employed by a private household or any third-party employer recognized in the healthcare industry to work in a private household. The duties of a personal attendant include supervising, feeding, and dressing a child or person who needs assistance due to advanced age, physical disability, or mental deficiency. If a domestic worker spends more than 20 percent of their time performing work other than supervising, feeding, and dressing a child or person who needs supervision, they are not considered a personal attendant.
Overtime Protections for Personal Attendants
Personal attendants are entitled to overtime pay for any hours worked over nine hours per day or over 45 hours per week. However, there are certain exclusions. For example, family members (parents, grandparents, spouses, siblings, or children of the employer), individuals under the age of 18 employed as babysitters, and casual babysitters – those who babysit on an irregular or intermittent basis – are not covered by this law.
Ninth Circuit Buys a Circuit Split on Available Remedies Under the NLRA
On January 21, 2025, the U.S. Court of Appeals for the Ninth Circuit enforced a National Labor Relations Board (“NLRB” or the “Board”) order requiring Macy’s to provide workers with heightened remedies in response to an unfair labor practice (“ULP”) charge. As reported here, the Court’s ruling creates a split with the Third Circuit on available remedies under the National Labor Relations Act (“NLRA” or the “Act”).
Background and Thryv Decision
In September 2020, the Union went on strike after rejecting the Final Offer provided by Macy’s on a successor collective bargaining agreement. Three (3) months later, the Union made an unconditional offer to return to work. Macy’s asked for additional time to evaluate this “unexpected offer,” but the Union refused, and the employees reported to work. Macy’s then locked out the Union employees in support of its bargaining position. In response to that action, the Union filed a ULP charge claiming that Macy’s violated Sections 8(a)(1) and 8(a)(3) of the NLRA by locking out the Union employees.
The Administrative Law Judge (“ALJ”) agreed with the Union, holding that the lockout violated the NLRA because Macy’s failed to provide employees “with a timely, clear, or complete offer, which sets forth the conditions necessary to avoid the lockout.” Concerning remedies, the ALJ recommended reinstatement and make-whole remedies for “any losses of pay and benefits that they may have suffered by reason of the lockout,” including “search-for-work and interim employment expenses, regardless of whether those expenses exceed interim earnings.”
The Board affirmed the ALJ’s ruling and adopted the ALJ’s recommended order. However, the Board amended the “make-whole remedy” to provide that Macy’s also be required to “compensate the employees for any other direct or foreseeable pecuniary harms incurred as a result of the unlawful lockout….” As reported here, that language follows the Board’s decision in Thryv., Inc., 372 NLRB No. 22 (2022), which held that, in cases involving remedies of make-whole relief, the respondent must compensate affected employees for “all direct or foreseeable pecuniary harms” resulting from the ULP.
Macy’s petitioned for review of the Board’s Decision and Order in the Fifth Circuit, while the Union filed its petition for review in the Ninth Circuit. Pursuant to 28 U.S.C. § 2112, the Ninth Circuit was selected to hear the case. The NLRB also filed an application for Enforcement of its Order.
Ninth Circuit Ruling
Merits of the Underlying ULP Charge
The Ninth Circuit initially held that substantial evidence supported the Board’s holding that the lockout was unlawful. It found similarly to the Board that Macy’s “did not inform the Union of its demands or conditions” ahead of the lockout, as is required under Board law. This prevented the Union “from having a fair opportunity to evaluate any bargaining proposals for either lockout or reinstatement purposes.”
Expanded Remedies Under Thryv
The Ninth Circuit also upheld the remedies issued by the Board.
The Court first noted that, given the Board’s “primary responsibility and broad discretion to devise remedies,” it would not disturb the Board’s Order on remedies unless it attempted to “achieve ends other than those which can fairly be said to effectuate the policies of the Act.” In declining to disturb the Order, the Court reasoned that the Thryv remedies “further the policy of the NLRA” because they are “directly targeted” at unlawful conduct and “aimed at restoring the economic strength that is necessary to ensure a return to the status quo ante.”
The Court further addressed the position of Macy’s that Thryv remedies constitute “full compensatory damages,” resembling the “adjudication of private rights,” which is outside the administrative purview of the NLRB. In response to this argument, the Court concluded that “the Board’s invocation of Thryv’s make-whole relief here vindicates a public right.” Any resemblance to compensation for private injury was viewed by the Court to be “merely incidental to ‘the effectuation of the policies of the Act’” because the remedy was “designed to aid in achieving the elimination of industrial conflict,” thus vindicating public rather than private rights.
The Court likewise addressed the issue of the expanded remedies potentially being outside the purview of the NLRA, which does not permit an award of pecuniary damages.
Macy’s relied in part on United States v. Burke, 504 U.S. 229 (1992)—a U.S. Supreme Court case involving backpay under Title VII of the Civil Rights Act of 1964—to assert that the Thryv remedies were prohibited consequential damages. While not binding, the Burke decision concerned Title VII, which has a similar remedial scheme to the NLRA.
Both Macy’s and the Partial Dissent referenced Burke for the proposition that the NLRA, similar to Title VII, “does not allow awards for compensatory or punitive damages.” Instead, both statutes “limit[] available remedies to backpay, injunctions, and other equitable relief,” which restore individuals “to the wage and employment positions they would have occupied” absent the unlawful conduct.
However, the Ninth Circuit reconciled Burke with its decision by citing to Title VII opinions holding that the statute was “directed…to the consequences of employment practices” with an aim of making individuals whole, “in a pecuniary fashion.” The Court analogized these cases to NLRA decisions holding that the Board’s authority over remedies was aimed at “removing or avoiding the consequences of violation[s]” of the Act. According to the Ninth Circuit, the NLRB’s Thryv remedies fit within this remedial power, by restoring “the situation, as nearly as possible, to that which would have occurred but for the violation.”
Takeaways
The Ninth Circuit’s decision sets up a split with the Third Circuit on the issue of available remedies under the NLRA. In its analysis of the issue, the Third Circuit held that the Board’s remedial authority does not extend to the imposition of consequential damages orders, like the ones issued in Thryv as well as the instant Ninth Circuit decision. As a result, Board decisions that order compensation for direct or foreseeable pecuniary harms will be conclusively enforceable in Alaska, Arizona, California, Guam, and Hawaii, and enforceable (for now) in all states and territories outside of Pennsylvania, New Jersey, Delaware, and the U.S. Virgin Islands.
It remains to be seen whether the U.S. Supreme Court will take on a Board case addressing this issue. However, with President Trump’s recent inauguration, and the significant shakeup we have seen at the NLRB (including the expected firing of NLRB General Counsel Jennifer Abruzzo and the less expected dismissal of NLRB Member Wilcox) (discussed here), it is unclear whether the Acting General Counsel (and subsequent General Counsel) will continue to seek the expansive remedies under Thryv. Moreover, when the NLRB achieves a quorum in the future, the Thryv decision seems ripe to be overturned.
HHS’s Proposed Security Rule Updates Could Require Group Health Plan Document Changes and New Plan Sponsor Security Practices
Proposed regulations may require employers to invest additional resources to safeguard group health plan participants’ protected health information.
In this installment of our blog series on the U.S. Department of Health and Human Services’ (HHS) HIPAA Security Rule updates in its January 6 Notice of Proposed Rulemaking (NPRM), we will explore the impact the NPRM could have for sponsors of group health plans.
As HIPAA-covered entities, group health plans that share protected health information (PHI) with employer plan sponsors must already include provisions in the plan documents reflecting the plan sponsors’ obligations to:
Establish and maintain administrative, physical, and technical safeguards to ensure ePHI confidentiality, integrity, and availability;
Limit access to ePHI to only authorized members of the plan sponsor’s workforce;
Require agents of the plan to establish reasonable and adequate security measures to protect ePHI; and
Report to the group health plan any security incident.
What’s New for Group Health Plans and Plan Sponsors?
So, what’s new in the NPRM? First, HHS proposes that group health plan documents tie the establishment of safeguards by plan sponsors and plan agents expressly to the corresponding provisions that apply to covered entities and business associates. In addition, new plan document language would specifically refer to the kind of contingency plan that is required to be established and maintained by covered entities and to report to the group health plan when the contingency plan is activated by a security incident. The NPRM would require plan documents to provide that plan sponsors will report to plans “without unreasonable delay” but not later than 24 hours after activation of its contingency plan in response to a real or suspected data security incident. (This specific reference to contingency plans is in addition to the existing requirement to report to the group health plan any security incident of which the plan sponsor becomes aware.)
While the NPRM may ignore the reality that plan sponsors are already largely responsible for the HIPAA compliance of their group health plans, including maintaining adequate policies and procedures, the proposed provisions would require existing plan documents to be amended to reflect the new language and references embedded in the applicable NPRM provisions. As a practical matter, however, it remains to be seen whether, if finalized, the NPRM would require new policies and procedures that diligent plan sponsors do not already have in place as part of an effective HIPAA compliance framework on behalf of its group health plans.
HHS has requested comments as to an appropriate deadline for group health plan documents to be amended as described by the NPRM and whether to permit a transition period for existing plan documents (such a transition period is proposed in the NPRM for business associate agreement changes that are required by the NPRM). Group health plan sponsors should also be aware of the proposed changes to business associate agreements described in our earlier post in the series.
Next Time
In our next two posts in this series, we will summarize what to expect from the NPRM’s proposed changes to the HIPAA Security Rule’s technical and administrative safeguards. In particular, we will discuss the revised rule’s provisions concerning encryption and multi-factor authentication (MFA), as well as administrative controls such as asset inventory, workforce clearance, access management, and more.
President’s Termination of NLRB General Counsel and Member – What Does This Mean?
As expected, the Trump administration has shifted the National Labor Relations Board (“NLRB”) into a new era marked by notable changes that will reshape the Board.
The first and most significant of these changes is the termination of Board Member Gwynne Wilcox. The second is the termination of General Counsel Jennifer Abruzzo. The removal of Wilcox leaves the NLRB down to two Members, a Democrat and a Republican, and without a quorum for decision making and other actions until the President fills at least one of the three current vacancies. These changes raise many questions as to what is in store for the NLRB and its ability to perform its main functions.
As discussed further below, employers should consider the impact of these decisions on pending cases before the Board, consider asserting affirmative and procedural defenses early and often, and stay aware of rapidly developing changes expected to take effect over the coming months.
The Termination of Board Member Wilcox
President Trump’s unprecedented termination of Board Member Gwynne Wilcox is significant for several reasons. Wilcox was one of the two Democratic Members of the Board following the expiration of the terms of former Chair Lauren McFerran, who the Senate failed to confirm for a new term last month, and the vacancy created by the expiration of Member John Ring’s term in December 2022. Wilcox began her most recent term in September 2023, which was set to terminate in August 2028. Her termination after serving less than two years has left many questions as to the validity of her departure and the future of the Board.
The National Labor Relations Act (“NLRA”) permits the removal of a Board Member upon notice and a hearing for “neglect of duty or malfeasance in office, but for no other cause.” Such a statutory restriction on removal from office was affirmed by the Supreme Court in 1935, in Humphrey’s Executor v. United States. Certain news outlets have reported that the White House offered its legal position on the termination in a private letter dated January 28, 2024 by the Office of Presidential Personnel. The Letter argued that the limitation in the NLRA to remove a Board Member conflict with the President’s Article 2 Constitutional duty to take care that laws are faithfully executed. Trump’s position in the letter cites to the Supreme Court’s 2020 decision in Seila Law LLC v CFPB, which held that removal shields are applicable to multi-member agency boards that are balanced on partisan lines and perform legislative and judicial functions, but that do not exercise executive powers. The White House argues that the NLRB is not balanced on partisan lines and exercises executive power, so the statutory protection is therefore not effective for the NLRB.
Abruzzo Out, Rutter In (for now)
In the early morning of January 28, 2025, Abruzzo was terminated from her role as General Counsel of the NLRB. While many expected Trump to terminate Abruzzo on his first day in office, her termination was nevertheless expected and came as no surprise. Abruzzo was one of the most aggressive General Counsel in recent memory, pushing her union-friendly agenda with a Democrat-majority Board. Her pro-labor policy memos sought to make “captive audience” meetings unlawful (GC 22-04 ), limit employers’ use of restrictive covenants GC 23-05, GC 23-08, GC 25-01), and expand the types of relief available to workers in unfair labor practice cases in a manner far more extensive than at any time in the NLRB’s ninety year history (GC 21-06, GC 21-07 & GC 24-04). Many of her positions have been adopted by the Board in its decisions, so reversals will need to be sought by way of future Board decisions.
Abruzzo memorialized her departure in a statement posted on the NLRB website. In her statement, Abruzzo also announced Jennifer Rutter as the now Acting General Counsel of the NLRB. Rutter was previously appointed as Deputy General Counsel in November 2024, by Abruzzo. If history is any predictor of what comes next, there is a good chance that the President will remove Rutter from the Acting General Counsel role in the near future. For now, we will wait to see who the Administration will appoint as the new General Counsel. Whoever the Administration appoints, it is likely the new General Counsel will seek reversal of many of the decisions reached by the NLRB that adopted Abruzzo’s policies and otherwise eliminated longstanding Board precedents.
Lack of a Board Quorum
With only two remaining Board Members, the NLRB currently lacks a quorum, and as a result, cannot issue decisions or carry out many other actions unless and until at least one more Member is nominated by the President and confirmed by the Senate.
Under New Process Steel, L.P. v. N.L.R.B., the Supreme Court majority held in 2010 that Section 3(b) of the NLRA requires that a delegee group must maintain a minimum membership of three Members in order to exercise the delegated authority of the Board, noting that the two Board Members in office at that time could not exercise delegated authority.
The NLRB is the only independent federal agency that does not have a mandated partisan structure, and yet, has managed to maintain one for years. Traditionally, the Board is composed of five Members, with a 3-2 balance between Members of the President’s party and a minority of Members from the opposition. Unlike the FTC and the SEC, there is no statutory requirement that the NLRB maintain bipartisanship, although each appointment would need to be approved by the Senate which could, through the approval, process continue the longstanding practice.
It remains to be seen if Trump will end the tradition of the bipartisan Board and seek to make it wholly Republican, or perhaps choose to not fill any of the vacancies and instead leave the Board without a quorum while the issue of the NRLA’s constitutionality is pending.
Impact on Employers Going Forward
The dramatic changes taking place at the Board raise numerous questions for how employers should address pending and future cases at the NLRB. We advise employers to be mindful of the following potential issues and strategies moving forward:
Anticipate Pending Actions. Employers may be wondering about the fate of their pending cases or election petitions. Until there is at least one additional Board Member nominated by President Trump and confirmed by the Senate, there will not be any new decisions coming from the Board. Whenever that occurs, we can expect to see a wave of employer favorable decisions from the GOP majority (perhaps super majority) controlled Board.
Assert New or Additional Affirmative Defenses to Preserve Them. Until issues as to the legality of Wilcox’s termination and the appointment of a new Board Member, which would allow the NLRB to act with a quorum, and new General Counsel are finally resolved, employers should plead affirmative defenses challenging the authority of the Board to act in order to preserve (and not waive) the issues for later assertion and argument. Similarly, in the election context, employers should assert objections pre and post-election to the Regional Director’s authority to act on behalf of the Board to process election petitions, conduct elections, rule on election objections and certify election results while the Board currently lacks a quorum of at least three Members, and arguably may be without a lawfully appointed quorum even once Wilcox’s seat is filled by President Trump. Depending on how the President chooses to fill the General Counsel’s vacancy, challenges may also be appropriate to the authority of the Acting or Appointed General Counsel.
Stay Aware of Changes. When President Trump appoints a new General Counsel and restores the Board to a quorum (lawful or not), employers can expect to see drastic changes that will likely dismantle the NLRB’s decisions and regulations under General Counsel Abruzzo and the Biden nominated majority Board. Still, some of these changes will take time to accomplish or undo. For example, it takes time to revise and implement changed rules and regulations under the process required by the Administrative Procedures Act and there are often court challenges to implemented rule changes, etc. Also, it will take time for the new Trump appointed General Counsel to find and litigate new test cases to the Trump majority appointed Board to reverse the precedent of the Board’s decisions under President Biden. We advise employers to remain cognizant and prepared to adjust to these changes accordingly.
EEOC, Like NLRB, Lacks Quorum, Stalling Rulemaking Under New Administration
On Monday, January 27, 2025, President Trump removed Equal Employment Opportunity Commission (the “EEOC” or the “Commission”) commissioners Charlotte A. Burrows and Jocelyn Samuels, the two confirmed in separate statements. The move, which may face legal challenges, marks the first time that a president has removed an EEOC commissioner without cause prior to the expiration of their five-year term. The removals leave the EEOC, a five-member Commission, with only two remaining commissioners: Andrea R. Lucas, a Republican tapped by President Trump last week to serve as Acting Chair, and Kalpana Kotagal, a Democrat appointed by former President Biden, whose term is set to expire on July 1, 2027. The final seat on the Commission has been vacant since July 1, 2024, when former Commissioner Keith Sonderling, who was recently nominated by President Trump to serve as deputy labor secretary, completed his five-year term.
President Trump also fired EEOC General Counsel Karla Gilbride, who confirmed her dismissal on Tuesday, January 28, 2025. Gilbride, who was nominated by former President Biden and confirmed by the Senate in October 2023, was slated to serve a four-year term set to expire in 2027.
Removal of EEOC Commissioners
Title VII of the Civil Rights Act of 1964 created the EEOC, which functions as a bi-partisan, independent commission. The law provides that commissioners are nominated by the President and confirmed by the Senate to five-year staggered terms. In addition, Title VII establishes that no more than three of the commissioners may be members of the same political party. Notably, Title VII does not specify any grounds for removal of EEOC commissioners. In the past, however, after a new administration has entered the White House, commissioners have served out the remainder of their five-year term.
Burrows, who served as Chair of the Commission under the Biden Administration, was confirmed by the Senate to a third term in November 2023 that was set to expire on July 1, 2028. Samuels, who was appointed by President Trump during his first term, was later nominated by former President Biden for a second term that was set to expire on July 1, 2026. In separate statements, Burrows and Samuels expressed their disagreement with the President’s “unprecedented” actions and vowed to explore the “legal options” available to them.
Implications for EEOC Actions Moving Forward
In the absence of any removals by President Trump, Democrats would have maintained a majority on the Commission until the expiration of Samuels’ term in 2026. Now, with only two members left in Lucas and Kotagal, the Commission lacks a quorum. Under Title VII, the EEOC must have three commissioners to form a quorum. Without a quorum, the EEOC cannot initiate formal rulemakings and cannot issue, modify, or revoke formal guidance. As a result, without a quorum, EEOC guidance remains effectively at a standstill.
As Proskauer previously covered, on Tuesday, January 21, 2025, newly appointed Acting Chair Lucas issued a statement setting forth her enforcement priorities. On Tuesday, January 28, 2025, Lucas issued another statement announcing that the EEOC “is returning to its mission of protecting women from sexual harassment and sex-based discrimination in the workplace by rolling back the Biden administration’s gender identity agenda” consistent with President Trump’s Executive Order 14166, “Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government.”
The statement, however, noted that Acting Chair Lucas “cannot unilaterally remove or modify certain ‘gender identity’ related documents subject to the President’s directives in the [aforementioned] executive order” without a majority vote of the Commission. For the time being, Acting Chair Lucas is precluded from formally rescinding any EEOC guidance that she deems to be inconsistent with Executive Order 14166, including the EEOC’s April 2024 guidance, entitled “Enforcement Guidance on Harassment in the Workplace.” Lucas, however, noted that she voted against this guidance and stated that while she “currently cannot rescind portions of the agency’s harassment guidance that are inconsistent with Executive Order 14166, [she] remains opposed to those portions of the guidance.”
In the wake of these removals, it is anticipated that President Trump will seek to appoint two commissioners, in addition to Lucas, to reach a Republican majority on the Commission. And, if that occurs, the Republican Commissioners would then have the majority vote needed to issue new rulemakings and revoke formal guidance. When that occurs, employers should expect Acting Chair Lucas to formally rescind “Enforcement Guidance on Harassment in the Workplace” as directed by the Executive Order.
President Trump’s EEOC removals came just hours after President Trump removed National Labor Relations Board General Counsel Jennifer A. Abruzzo and Democratic Board member Gwynne A. Wilcox in a similarly unprecedented move that left the NLRB without a quorum.
Delia Karamouzis contributed to this article
Biden’s Executive Order on Project Labor Agreements Violates CICA
In a recent decision, the Court of Federal Claims (COFC) ruled on bid protests filed by 12 construction companies challenging the implementation of a February 4, 2022, Executive Order 14063 that mandated the use of project labor agreements (PLAs). FAR Council implemented EO 14063 in January 2024, and it was the first executive mandate to use PLAs for all large-scale government contracts (see FAR 22.503 (Jan. 2, 2024) and FAR 22.501 (Jan. 2, 2024)). The purpose of these PLAs is to limit the prime contractor to the use of union labor to perform the subject contract. EO 14063 defines “project labor agreement” as “a pre-hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project and is an agreement described in 29 U.S.C. 158(f).”
Plaintiffs argued (among other things) that Biden’s EO FAR regulations violated the Competition in Contracting Act’s (CICA) “full and open competition” requirements because it served as a blanket disqualification for offerors who would otherwise be considered responsible. Citing to National Government Services, Inc. v. United States, 923 F.3d 977 (Fed. Cir. 2019), the COFC agreed that Biden’s EO violated CICA’s “full and open competition” requirements and that the PLA mandates “have no substantive performance relation to the substance of the solicitations at issue…”
The COFC further determined that the PLA did not qualify for any exceptions to the full and open competition requirement. In particular, the court looked at § 3301(a), which provides for an exception to the CICA’s “full and open competition” requirements where there are “procurement procedures otherwise expressly authorized by statute…” The COFC rejected the government’s argument that the FAR provisions fall within the “expressly authorized by statute” language of § 3301(a) and therefore no exception applied.
Particularly noteworthy in this decision was the evidence that many of the agencies that were subject to this protest conducted market research that indicated PLAs would not contribute to the economy or efficiency of the subject project, or that a PLA would reduce competition, increase costs, and create inefficiencies for contractors and procurement officials. The agencies’ 2024 implementation of the mandate ignored their own market research that had concluded PLAs would be anticompetitive. Instead, these agencies relied solely on the executive order presidential policy – which the COFC found to be arbitrary and capricious.
By February 3, 2025, the parties are to file a joint status report explaining the agencies’ plans for each solicitation moving forward.
EEOC Acting Chair Rolls Back Guidance Related to Unlawful Discrimination and Harassment Based on Gender Identity
On January 28, 2025, U.S. Equal Employment Opportunity Commission (EEOC) Acting Chair Andrea R. Lucas rolled back much of the EEOC’s Biden-era guidance related to issues of gender identity discrimination and harassment against LGBTQ+ individuals, marking a policy shift aligned with President Donald Trump’s recent executive order (EO) on gender.
Quick Hits
EEOC Acting Chair Andrea R. Lucas rolled back much of the EEOC’s guidance on gender identity, leaving in place certain documents that were issued with majority approval of the five-member Commission.
In line with President Trump’s recent executive order on gender, the EEOC’s policy shift prioritizes biological definitions of “sex” in compliance and enforcement actions, removes gender identity–related resources, and ends the use of non-binary gender markers and honorifics in EEOC processes.
The EEOC’s January 28, 2025 announcement outlined a shift in sexual harassment and sex-based discrimination compliance and enforcement policy under Acting Chair Lucas, whom President Trump tapped for her new role on January 21, 2025.
The EEOC is now moving away from what is being referred to as “gender ideology,” aligning with President Trump’s EO 14168, titled “Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government,” which the president signed on January 20, 2025, Inauguration Day. That EO directed federal agencies to “enforce laws governing sex-based rights, protections, opportunities, and accommodations to protect men and women as biologically distinct sexes.”
The EEOC confirmed it is removing materials on such concepts from its internal and external websites and references from other public documents, including webpages, statements, social media, forms, and training.
The announcement came a day after news broke that President Trump had removed Democratic Commissioners Charlotte A. Burrows and Jocelyn Samuels from the EEOC and discharged EEOC General Counsel Karla Gilbride.
Removing Gender Identity
To implement EO 14168, Acting Chair Lucas has:
made defending biological and binary definitions of sex and related rights an agency priority for compliance, investigations, and litigation;
removed the agency’s “pronoun app” for network profiles, which had enabled EEOC employees to identify and display their pronouns in both internal and external communications;
removed the “X” gender marker for filing a discrimination charge and the prefix “Mx.” as an option for filing discrimination charges and related forms;
initiated a review of the EEOC’s “Know Your Rights” poster, which was last revised in June 2023 and lists “sexual orientation” and “gender identity” as bases for unlawful discrimination;
removed information “promoting gender ideology” from the EEOC’s internal and external websites and media platforms; and
added banners to publicly accessible documents explaining why they “cannot be immediately removed or revised” and have “not yet brought into compliance.”
The EEOC noted that certain documents, despite being subject to the EO 14168, could not be removed or modified unilaterally since they had been approved by a majority of the Commission. Currently, the EEOC lacks a quorum to act following the removals of Commissioners Burrows and Samuels, and it will continue to lack a quorum until new Commissioners are confirmed. Those documents include the EEOC’s:
“Enforcement Guidance on Harassment in the Workplace,” which was issued by a 3–2 vote in April 2024;
“Strategic Plan 2022–2026,” which was issued by a 3–2 vote in August 2023; and
“Strategic Enforcement Plan Fiscal Years 2024–2028, which was issued by a 3–2 vote in September 2023.
New Priorities
In recent years, the EEOC has issued several guidance documents interpreting the Supreme Court of the United States’ 2020 holding in Bostock v. Clayton County, Georgia, in which the court held that protection against discrimination as a result of firing an employee on the basis of sex pursuant to Title VII of the Civil Rights Act of 1964 prohibits discrimination on the basis of sexual orientation and gender identity.
Acting Chair Lucas reiterated her opposition to the portions of the EEOC’s “Enforcement Guidance on Harassment in the Workplace” to the extent that the guidance took the enforcement position that unlawful harassment under Title VII included the “denial of access to a bathroom or other sex-segregated facility consistent with [an] individual’s gender identity” and the “repeated and intentional use of a name or pronoun inconsistent with [an] individual’s known gender identity.”
Acting Chair Lucas said in her statement, “It is neither harassment nor discrimination for a business to draw distinctions between the sexes in providing single-sex bathrooms or other similar facilities which implicate these significant privacy and safety interests. And the Supreme Court’s decision in Bostock v. Clayton County does not demand otherwise: the Court explicitly stated that it did ‘not purport to address bathrooms, locker rooms, or anything else of the kind.’”
Next Steps
The EEOC’s recent policy shift prioritizes biological definitions of sex in compliance and enforcement actions, removing resources related to gender identity and ending the use of non-binary gender markers. The change contrasts with the previous administration’s stance, particularly following the Bostock decision.
Moreover, while Acting Chair Lucas is unable to rescind guidance previously approved by the majority of the five-member Commission, President Trump’s recent removal of two commissioners (with new commissioners due to be nominated and confirmed) may ultimately provide the votes needed to rescind all the EEOC’s guidance regarding gender identity. Without the removals, the Democrats would have retained a majority on the Commission through the end of Commissioner Samuels’s term in July 2026.
President Trump’s Immigration-Related Executive Orders: Potential Impact on Employers
Following his inauguration on Jan. 20, 2025, President Trump issued a number of immigration-related Executive Orders (EOs) sure to have impact on employers and their business operations. So far, the focus in the media has been on border security, asylum, refugees, removal of undocumented aliens (deportation) and birthright citizenship. However, there are other aspects covered by the EOs that will have far more impact on U.S. employers and could potentially impact business operations. While we anticipate court challenges to some or all of the EOs, we anticipate that many of the EOs will withstand litigation and will be implemented substantially. Below is a summary of the EOs:
Banning Birthright Citizenship
This EO directs federal agencies to refuse to recognize U.S. citizenship for children born in the U.S. to mothers in the country without authorization or who are present in the United States on nonimmigrant visas, if the father is not a U.S. citizen or green card holder. The order will deny U.S. citizenship, including passports, to children born in the United States 30 days from Jan. 20, 2025, if at least one parent is not an American citizen or green card holder. It is not clear what immigration status, if any, these children would hold at birth or if these children would be issued U.S. birth certificates.
Please note: Several lawsuits have been filed challenging this EO. Following a suit filed in U.S. District Court in Seattle by the attorneys general of Washington State, Oregon, Arizona and Illinois, Judge John Coughenour enjoined enforcement of this order, calling it “blatantly unconstitutional.”
Potential Impact on Employers if Upheld
Increased visa sponsorship costs if the employer covers dependent visa legal and filing fees;
Potential travel delays for visa employees traveling with family for holidays or vacations as U.S.-born children will require passports of the parents’ home country, dependent visas issued by U.S. consular posts abroad and outbound visas to visit and transit countries that do not typically require visas for U.S. citizens; and
These children will lose lawful immigration status at age 21, the age at which children are no longer deemed dependents for immigration purposes, potentially impacting long-term colleague retention. This could be a particular concern for visa employees from countries like India and China, where foreign-born children often age-out due to lengthy green card backlogs.
Enhanced Visa Vetting
President Trump has signed an order to enhance vetting and screening of undocumented aliens, suspend entry of migrants from countries of particular concern and re-establish a uniform baseline for visa screening and vetting standards and procedures consistent with the baseline that existed during the last Trump administration. During his first administration, President Trump banned travel from countries, including Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen for 90 days with certain exceptions. The bans were challenged in court, but the Supreme Court ultimately upheld them.
Potential Impact on Employers
Lengthy visa processing delays related to background checks for traveling work visa employees;
Disrupted business travel for citizens of banned countries, preventing them from leaving the U.S. for fear of becoming stranded outside the country;
Difficulty filing extension of status and change of status petitions for citizens of these countries; and
Disrupted business travel for all visa employees with temporary work visas.
Recission of President Biden’s EO Designed to Limit Requests for Evidence and Denials
One of President Trump’s EOs revoked 78 Biden EOs, including President Biden’s EO Number 14012 (Restoring Faith in Our Legal Immigration Systems and Strengthening Integration and Inclusion Efforts for New Americans) which established USCIS deference to prior decisions in certain cases, for instance H-1B extensions; streamlined the naturalization process; and reduced the number of Requests for Evidence and denials received by employers and individuals applying for immigration benefits. The Trump EO will lead to reinstatement of USCIS adjudication practices in place during the first Trump administration.
Potential Impact on Employers
Increased scrutiny of employer visa petitions and denials, including the end of deference to prior adjudications/decisions;
Increased costs and processing times associated with non-immigrant and immigrant visa petitions;
Limited number and scope of individuals employers are able to sponsor for immigrant and nonimmigrant visas;
Disrupted HR and other internal operations;
Increased Requests for Evidence, Notices of Intent to Revoke or Deny. Denials can create uncertainty about visa employees’ ability to remain with the business and, in some cases, impact an individual’s work authorization;
Anticipated changes to the H-1B program such as re-defining “specialty occupation,” increasing wage requirements, and prioritizing H-1B cap registrations based on compensation levels could further limit employers’ ability to sponsor foreign nationals for H-1B visas; and
Anticipated restrictions on F-1 Optional Practical Training (OPT), termination of certain work authorization programs, such as H-4 EADs might force employers to reevaluate their talent acquisition pools and strategies.
Potential Recission of Humanitarian Parole and Temporary Protected Status
President Trump signed an EO on enforcement of U.S. immigration laws which, among other focus areas, aims to limit Humanitarian Parole to individuals who demonstrate “urgent humanitarian reasons for a significant public benefit derived from their … continued presence in the United States.” The EO also seeks to ensure “that designations of Temporary Protected Status are consistent with the provisions of section 244 of the INA (8 U.S.C. 1254a), and that such designations are appropriately limited in scope and made for only so long as may be necessary to fulfill the textual requirements of that statute.” Furthermore, the EO seeks to ensure “that employment authorization is provided in a manner consistent with section 274A of the INA (8 U.S.C. 1324a), and that employment authorization is not provided to any unauthorized alien in the United States.”
During President Trump’s initial term, he attempted to terminate TPS designations for Sudan, Nicaragua, Haiti, El Salvador, Nepal and Honduras. These terminations faced court challenges that resulted in injunctions against the termination of TPS designations.
If President Trump attempts to terminate TPS designations for any of the currently designated countries, similar legal challenges and injunctions are anticipated.
Individuals granted Humanitarian Parole and TPS are permitted to live and work in the U.S. in usually granted one-year increments.
Potential Impact on Employers
Employees authorized to work pursuant to Humanitarian Parole may be unable to renew their parole and related work authorization or they may receive Requests for Evidence requesting evidence of their need for Humanitarian Parole. (Renewal of Humanitarian Parole is within DHS’s discretion.) Barring legal challenges or work authorization through alternative avenues such as a pending asylum application, these workers may be terminated for lack of work authorization.
Workers from countries facing TPS termination would need to monitor pending litigation, including when and how to renew TPS. Relevant information about pending litigation, injunctions and steps DHS takes to comply with injunctions is communicated through Federal Register Notices for each country, available at Temporary Protected Status | USCIS.
Employers would need to monitor employment authorization expiration dates, including automatic extensions, for TPS holders that may be impacted by litigation and conduct I-9 re-verifications accordingly.
Creating “Homeland Security Task Forces”
President Trump has signed an EO to establish “federal homeland security task forces” to enable federal, state and local law enforcement to cooperate in removing gang members, criminals and undocumented individuals. The EO also prioritizes execution of the immigration laws against all inadmissible and removable aliens.
We also anticipate increased ICE enforcement actions, including I-9 audits and investigations, employer site visits and raids at workplaces or in immigrant communities to find undocumented workers.
Employers should have an action plan in place in the event of an ICE enforcement action. This is particularly true for employers in industries that employ large numbers of workers who may be undocumented or who have temporary work authorization.
Potential Impact on Employers
Worksite disruptions and absences as undocumented workers or those living in mixed-status families may be concerned about coming to work;
Workers fear detention under the new Laken Riley Act because they have had prior arrests, have been charged with a crime — even if they have not been convicted, or are under investigation for a criminal offense;
In the event of an I-9 audit or investigation, an employer could face civil fines up to $2,789 per form and up to $5,579 for knowingly hiring undocumented workers, for a first offense;
Criminal charges and penalties of up to 10 years and fines of up to $250,000 for harboring undocumented workers;
Debarment from federal contracts; and
Operational disruptions and public relations challenges.