Pivotal Labor and Employment Law Issues in 2025: Healthcare
Employers in the healthcare industry will navigate a landscape marked by rapid change and evolving challenges over the course of 2025, including those related to labor organizing, workplace safety, noncompete agreements, pay transparency, and immigration.
Quick Hits
Healthcare employers will have to navigate several labor and employment law issues in 2025, including a potential continued rise in union organizing, new restrictions on the use of noncompete agreements, emerging workplace safety risks, compliance concerns, additional pay transparency laws, and immigration regulatory and enforcement changes.
The issues arise as the new presidential administration seeks to shift federal policy on several of the key issues, including labor relations and immigration.
Healthcare employers may want to monitor these developments and consider steps to adapt to this evolving landscape and remain compliant and competitive.
Here is a close look at critical issues that will shape the current environment and are poised to significantly impact the industry’s future.
Labor Organizing Efforts
Organizing efforts among healthcare professionals, notably including physicians, have been gaining momentum in recent years, in part brought on by COVID-19 pandemic. In addition, several healthcare union contracts are set to expire in 2025, meaning many healthcare employers will be engaged in negotiations that will likely impact the industry for years to come.
The National Labor Relations Board (NLRB) has issued several union-friendly rulings over the past two years, making it more difficult for employers to challenge majority union representation status and express concerns about the impact of unionization on workplace dynamics. However, President Donald Trump, who was sworn into office on January 20, 2025, has taken actions to shift the NLRB’s political leadership and policy priorities.
Restrictions on Noncompete Agreements
The use of noncompete agreements, which restrict doctors, nurses, and other healthcare employees from working for competing healthcare facilities for certain periods of time and in specific geographic areas after leaving their current employers, has faced increased scrutiny in recent years. In April 2024, the Federal Trade Commission (FTC) sought to ban nearly all noncompete agreements in employment, though federal district courts enjoined that effort in Florida and Texas (currently being considered on appeal). However, it is not expected that the new presidential administration will seek to continue with this rule.
In the meantime, states have increasingly sought to regulate noncompete agreements and restrictive covenants in employment in recent years in ways that will impact healthcare employers. Notably, Pennsylvania Governor Josh Shapiro, in July 2024, signed a law to prohibit certain noncompete agreements with doctors. The law, which went into effect on January 1, 2025, prohibits “noncompete covenant[s]” with time periods of more than one year entered into by healthcare practitioners and employers, as well as imposes certain notification requirements on healthcare employers. Notably, Pennsylvania was previously one of a dozen states with no laws restricting noncompete agreements.
Emerging Workplace Safety Challenges
Workplace safety has always been a paramount concern in the healthcare industry, given the inherent risks associated with patient care. However, recent developments in the wake of the COVID-19 pandemic have brought new challenges and heightened awareness of the importance of comprehensive safety protocols.
The U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) and a growing number of states have made protecting doctors, nurses, and other healthcare workers who have direct patient interaction from workplace violence a priority. OSHA has been preparing a proposed standard on workplace violence prevention in healthcare settings, which had been slated to be released in December 2024.
Healthcare employers may want to review their workplace safety practices and ensure they address emerging risks. Updates can include additional physical safety measures, such as improved personal protective equipment (PPE) and infection control protocols, initiatives that support the mental health and well-being of healthcare workers, new technologies for risk mitigation, and continued safety training and planning.
Pay Transparency Compliance Obligations
Pay transparency compliance is also becoming an increasingly important issue in the healthcare industry as healthcare organizations strive to attract and retain top talent. A growing list of more than a dozen states and the District of Columbia have enacted pay transparency laws, requiring employers to disclose in postings for new jobs and internal promotions details such as pay ranges, benefits, bonus structures, and other compensation information. New laws in Illinois and Minnesota already took effect on January 1, 2025, with laws in New Jersey, Vermont, and Massachusetts set to take effect later in the year.
New Immigration Regulations and Enforcement
Immigration is a critical issue for the healthcare industry, which relies heavily on international talent to fill various roles, from physicians and nurses to researchers and support staff. Potential changes to U.S. immigration laws and regulations—including changes to visa requirements, work authorization processes, and other programs—in 2025 may significantly impact the ability of healthcare employers to recruit and retain skilled professionals from abroad.
Notably, the U.S. Department of Homeland Security (DHS) revamped the process for H-1B “specialty occupation” visas with a new rule that took effect on January 17, 2025. Further, in his first days in office, President Trump signed several executive orders (EO) seeking to implement more restrictive U.S. immigration policies.
Cal/OSHA Provides Guidance for Managing Post-Fire Cleanup Efforts
In light of the ongoing and devastating fires in Los Angeles County, Cal/OSHA released new guidance to ensure the safety and health of workers involved in fire damage cleanup.
Of note, Cal/OSHA’s standards may apply to some household domestic service workers. Historically, domestic service workers have not been subject to Cal/OSHA’s standards while cooking, cleaning, and providing childcare for a family. Cal/OSHA reminded employers that household domestic service workers are governed by Cal/OSHA’s standard if the workers are engaged in fire cleanup work, such as removing ash and debris and cleaning fire-damaged structures. As such, it is important for those employers who have employees performing post-fire cleaning to take note of the Cal/OSHA guidance.
As a reminder and unrelated to this recent guidance, effective July 1, 2025, Cal/OSHA will gain control over workplace safety for some household domestic services.
Key Points to Note:
Employers are required to identify and evaluate potential hazards in fire-damaged areas. This includes assessing risks such as unstable structures, hazardous materials, and environmental dangers like ash and soot.
Proper training and instruction must be provided to employees before they begin cleanup work. This training should cover the specific hazards they may encounter and the safety measures they need to take.
Employers must ensure that workers have access to and use appropriate PPE. This includes NIOSH-certified respirators, gloves, eye protection, and other necessary gear to protect against inhalation of harmful substances and physical injuries.
Cal/OSHA emphasizes the importance of adhering to existing health and safety standards. This includes regulations on heat illness prevention, confined space entry, and handling of hazardous materials.
Employers must establish and communicate clear emergency procedures. This includes protocols for evacuations, first aid, and reporting unsafe conditions.
DEI and Affirmative Action Programs Blitzed, While Executive Order 11246 Is Revoked
In one of his first acts as President in his second term in office, Donald Trump signed an executive order on January 21, 2025, entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (“Order”).
Claiming that “critical and influential institutions of American society … have adopted and actively use dangerous, demeaning, and immoral race- and sex-based preferences under the guise of so-called ‘diversity, equity, and inclusion’ (DEI), or ‘diversity, equity, inclusion, and accessibility’ (DEIA),” the Order directs all executive departments and agencies of the federal government to terminate “all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements.” Departments and agencies are also directed to enforce the country’s long-standing civil rights laws and to combat “illegal” private-sector DEI preferences, mandates, policies, programs, and activities. As part of the reset, President Trump revoked Executive Order 11246 (“EO 11246”), which contractually required covered federal government contractors and subcontractors (collectively, “contractors”) to meet certain affirmative action obligations.
Termination of “Illegal” Discrimination in the Federal Government
As part of the Order, President Trump revoked a number of prior executive orders that addressed diversity and equal opportunity in employment.[1] In addition, the Order requires the head of each federal agency to include in every contract or grant award (i) a term requiring all contractual counterparty or grant recipients to agree that their compliance in all respects with all applicable federal anti-discrimination laws is “material” to the government’s payment decisions, and (ii) a term requiring the counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any applicable federal anti-discrimination laws. This is a highly significant representation to be required of all contractors and grantees.
The Trump administration has repeatedly emphasized a disdain for DEI programs. President Trump signed a second executive order entitled “Ending Radical and Wasteful Government DEI Programs and Preferencing,” which requires the Director of the Office of Management and Budget (OMB), assisted by the Attorney General (AG) and the Director of the Office of Personnel Management, to coordinate the termination of all discriminatory programs, including illegal DEI and DEIA mandates, policies, programs, preferences, and activities in the federal government. This order directs the OMB Director to review and revise, as appropriate, all existing federal employment practices, union contracts, and training policies or programs to comply with this order. The order also requires that federal employment practices, including federal employee performance reviews, will reward individual initiative, skills, performance, and hard work and will not under any circumstances consider DEI or DEIA factors, goals, policies, mandates, or requirements. Further, the order mandates agency, department, and commission heads, within 60 days, to terminate all DEI and DEIA offices and positions; all “equity action plans”; all “equity” actions, initiatives, or programs; all “equity-related” grants or contracts; and all DEI or DEIA performance requirements for employees, contractors, or grantees.
Private Sector Encouraged to End Illegal DEI Discrimination and Preferences
President Trump’s Order aimed at ending illegal discrimination also targets the private sector’s DEI programs by encouraging the private sector to “end illegal discrimination and preferences.” According to the Order, illegal DEI and DEIA policies violate federal civil rights laws, undermining national unity and threatening the safety of Americans “as they deny, discredit, and undermine the traditional American values of hard work, excellence, and individual achievement in favor of an unlawful, corrosive, and pernicious identity-based spoils system.”
To that end, the Order directs the heads of all agencies “to advance in the private sector the policy of individual initiative, excellence, and hard work.” In addition, the Order directs the AG to consult with agency heads to propose a strategic enforcement plan that identifies (i) “sectors of concern” within each agency’s jurisdiction, (ii) the “most egregious and discriminatory DEI practitioners in each sector of concern,” and (iii) specific measures to “deter DEI programs or principles (whether specifically denominated “DEI” or otherwise) that constitute illegal discrimination or preferences.” The Order specifically requires that the AG’s report include recommendations from every federal agency that identify up to nine potential civil compliance investigations of publicly traded corporations, large nonprofit corporations or associations, foundations with assets of $500 million or more, state and local bar and medical associations, and institutions of higher education with endowments over $1 billion. It also seeks recommendations for other strategies to encourage the private sector to “end illegal DEI discrimination and preferences and comply with all Federal civil-rights laws,” including litigation that would be “potentially appropriate for Federal lawsuits, intervention, or statements of interest” and potential regulatory action and sub-regulatory guidance.
Revocation of Executive Order 11246
The Order revoked EO 11246, citing a need to ensure that the federal contracting process is “streamlined” to enhance speed and efficiency and reduce costs, and still require contractors to comply with civil rights laws.
Signed into law by President Lyndon B. Johnson on September 24, 1965, nearly 60 years ago, and a year after the passage of the Civil Rights Act of 1964, EO 11246 was intended to complement Title VII and require contractors to take positive steps to ensure that all individuals had an equal opportunity in employment, without regard to race, color, religion, sex, and national origin (the specific characteristics of sexual orientation and gender identity were added by President Barack Obama on July 21, 2014). To accomplish this, EO 11246 required contractors to create affirmative action programs (AAPs) that would serve as a management tool with the central premise that, absent discrimination, over time, a contractor’s workforce would reflect the gender, racial, and ethnic profile of the labor pools from which the contractor recruited and selected its employees.
Federal law, under Title VII, continues to require that all qualified candidates have equal opportunities for employment. However, by revoking EO 11246, the Trump administration has eliminated contractors’ affirmative action obligations. Contractors have until April 21, 2025 (90 days from the Order’s date of issuance) to wind down their AAPs. In addition, the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP), which enforced EO 11246, must immediately cease promoting “diversity,” holding contractors responsible for taking “affirmative action,” and permitting contractors to engage in “workforce balancing based on race, color, sex, sexual preference, religion, or national origin.”
While a Fact Sheet addressing the Order “directs all [federal] departments and agencies to take strong action to end private sector illegal DEI discrimination, including civil compliance investigations,” it remains to be seen how the OFCCP will operate moving forward. This includes its enforcement of the affirmative action provisions of the Rehabilitation Act of 1973 (the “Rehabilitation Act”) and the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA), neither of which are addressed in the Order and, as a result, presumptively remain in effect.
What Employers Should Do Now
Private-sector employers should expect the Trump administration’s efforts to eliminate DEI programs to fuel legal challenges to DEI efforts, including via “reverse discrimination” lawsuits.
Private-sector employers should promptly review any DEI/DEIA plans, programs, and policies, as well as their AAPs, to determine whether they contain any aspects that could be deemed unlawful under Title VII or any other federal, state, or local civil rights law, and consider whether to take any action to modify such plans, programs, or policies, including the names of such plans, programs, or policies, in consultation with employment counsel.
Employers that include affirmative action and/or DEI/DEIA goals as a rating factor in employees’ (and particularly managers’ or supervisors’) performance or salary reviews should consider removing any such factors.
Contractors should take steps to ensure that they are able to wind down their EO 11246-required AAPs and seek direction from counsel as we await clarification about the OFCCP’s authority, how the Rehabilitation Act and VEVRAA AAPs will be monitored and enforced, the status of pending compliance reviews, and how reporting obligations will be addressed. This could include EEO-1 reports, which are required pursuant to Title VII but are shared with and used by the OFCCP.
Employers that are state and municipal contractors should keep in mind that they may have some remaining obligations around affirmative action under their government contracts.
Although affirmative action as we knew it pursuant to EO 11246 may no longer exist, Title VII remains the law of the land and all employment decisions should continue to be made without consideration of race, color, religion, sex, or national origin, as well as other factors protected by federal, state, and local law. Employers should continue to ensure that management and staff are providing equal opportunity in employment and are being trained accordingly.
Employers should be advised that nothing in President Trump’s executive orders bars employers from taking race- and gender-neutral steps in connection with recruiting, such as casting a broad applicant net considering applicants’ varied experiences, perspectives, and viewpoints, or offering scholarships or work/study programs based on financial need, so long as any such strategies and programs do not promote preferences to applicants based on factors such as race or sex.
There is clearly more to come, including the possible elimination of the OFCCP. Stay tuned—we will update you as further developments unfold and outstanding questions are addressed.
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Staff Attorney Elizabeth A. Ledkovsky contributed to the preparation of this Insight.
ENDNOTE
[1] The Order revoked the following executive orders: (i) Executive Order 12898 (Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, February 11, 1994); (ii) Executive Order 13583 (Establishing a Coordinated Government-wide Initiative to Promote Diversity and Inclusion in the Federal Workforce, August 18, 2011); (iii) Executive Order 13672 (Further Amendments to Executive Order 11478, Equal Employment Opportunity in the Federal Government, and Executive Order 11246, Equal Employment Opportunity, July 21, 2014); and (iv) The Presidential Memorandum (Promoting Diversity and Inclusion in the National Security Workforce, October 5, 2016).
Breaking: In a Novel Move, President Trump Fires National Labor Relations Board Member and, following Biden precedent, the NLRB General Counsel
On January 27, 2025, President Trump fired National Labor Relations Board (“NLRB” or “Board”) Member Gwynne A. Wilcox, marking the first time that a president has ever attempted to remove a Board member prior to the end of their five-year term. The move – if it withstands court scrutiny – leaves the Board with only two (2) remaining members: Chair Marvin E. Kaplan and Member David M. Prouty and without a quorum to rule on matters, as covered here. See New Process Steel, L.P. v. NLRB, 560 U.S. 674 (2010). Chair Kaplan’s term lasts through August 27, 2025, and Member Prouty’s term lasts through August 27, 2026.
This came soon after President Trump fired NLRB General Counsel Jennifer A. Abruzzo. As reported here, the firing of GC Abruzzo was expected and has been held to be lawful in various Circuit Courts. However, the firing of Board Member Wilcox sets up a constitutional fight regarding President Trump’s removal power.
Section 3(a) of the NLRA states that “[a]ny member of the Board may be removed by the President, upon notice and hearing, for neglect of duty or malfeasance in office, but for no other cause,” which has led prior presidents to refrain from firing sitting Board members. It is expected that the administration will argue that this removal requirement is unconstitutional under Article II, which requires that the president “shall take Care that the Laws be faithfully executed,” meaning the president cannot be prohibited from hiring and firing certain administrative officials, such as Board members, at will. Employers have made similar arguments as to the alleged unconstitutional nature of the NLRA’s removal requirements, as previously reported here, here, and here.
President Trump will likely appoint an Acting General Counsel in the near future and nominate a new General Counsel soon after, subject to Senate approval. It is less certain what President Trump will do concerning the three (3) vacant seats on the Board, who also would need to be nominated subject to Senate approval. Historically, the administration’s party has had three (3) of the five (5) seats. If President Trump does choose to appoint new members, there is an obvious question of whether he will continue this precedent or rather appoint only Republican members to the seats.
While in the short term, some parties with matters pending before the Board may have some relief, the longer term implications of a complete standstill at the Board and the resulting uncertainty can actually be very difficult for organizations looking to move forward and make decisions on both day-to-day employment matters and large scale initiatives.
The AI Workplace: Understanding the EU Platform Work Directive [Podcast]
In this episode of our new podcast series, The AI Workplace, Patty Shapiro (shareholder, San Diego) and Sam Sedaei (associate, Chicago) discuss the European Union’s (EU) Platform Work Directive, which aims to regulate gig work and the use of artificial intelligence (AI). Patty outlines the directive’s goals, including the classification of gig workers and the establishment of AI transparency requirements. In addition, Sam and Patty address the directive’s overlap with the EU AI Act and the potential consequences of non-compliance.
How to Survive the Administration’s Focus on Deporting Illegal Immigrants
As reported in all forms of media, the Trump administration has launched a nationwide blitz of immigration enforcement that is not likely to abate in the short term. Raids, which the administration has characterized as focused on detaining and deporting those who pose a threat to public safety and national security, have been conducted in New York City, Chicago, Newark, New Jersey, the suburbs of Atlanta, Boston, Denver, Los Angeles, San Francisco, and Austin and San Antonio, Texas, among other places. More than 2,000 arrests have been reported by Immigration and Customs Enforcement (“ICE”), with close to 1,000 detainers (a request that a law enforcement agency hold an inmate for another agency) lodged since this past weekend. Significantly, while immigration enforcement was typically handled almost exclusively by ICE, the recent raids have seen participation by agents of the Federal Bureau of Investigation (“FBI”), Drug Enforcement Administration (“DEA”), the Bureau of Alcohol, Tobacco, Firearms and Explosives, as well as the U.S. Marshals Service.
In another development, ICE has reversed a policy in place during the Biden administration and now permits its agents to raid “sensitive locations” including schools, hospitals, and churches, leading the U.S. Conference of Catholic Bishops to condemn the new policy as “contrary to the common good” and to declare that it would “turn places of care, healing, and solace into places of fear and uncertainty for those in need, while undermining the trust between pastors, providers, educators, and the people they serve,” and “will not make our communities safer.”
It is inevitable that the administration’s focus on securing the borders and preserving employment opportunities for individuals who are lawfully authorized to work in the country will spill over to the workplace, especially in industries that traditionally employ significant numbers of immigrant workers. We anticipate that there will be enhanced enforcement of the Immigration Reform and Control Act of 1986 (“IRCA”), with emphasis on audits of I-9 forms and removal of undocumented individuals from the workplace. Enforcement actions focusing on the employment relationship can take the form of scheduled document (I-9) audits, which are preceded by receipt of a Notice of Inspection that gives the employer three business days to provide requested documents, as well as unscheduled workplace raids. The remainder of this alert will provide guidance to employers when an agent of ICE, or other law enforcement personnel, show up at a worksite seeking documents or access to the entity’s workers.
WHAT TO DO BEFORE IMMIGRATION AGENTS SHOW UP AT YOUR DOOR
There are certain action items all employers should take now in anticipation of a visit from ICE or Customs and Border Protection (“CBP”). They include:
Appoint a person with authority to be the primary contact in the event of a visit by ICE/CBP or other federal, state, or local law enforcement agencies and conduct necessary training to ensure the point person is prepared to:
Review warrants,
Contact counsel for advice, and
Monitor agents while they are on site and document what occurs during the visit.
Perform an internal audit of I-9s and other documents that an agent may request to review.
Confirm you have I-9s for all current employees and those who recently have been terminated from employment (and ensure that they have been properly completed and that the forms, as well as any documents that the employee presented in support of their I-9 declarations and maintained by the employer, are stored apart from personnel files), destroying those forms that the employer is no longer required to maintain;
Make sure you have a list that contains the names of all current employees and should have access to payroll records as well as quarterly wage and hour reports;
To the extent you use E-Verify, have confirmations available.
Consider utilizing E-Verify, a web-based system that allows enrolled employers to confirm the eligibility of their employees to work in the United States, for all new hires.
If you utilize contractors, leased workers, or temporary employees, review your vendor contract to ensure the requisite safeguards are in place confirming service providers are legally authorized to work in the United States.
To the extent you have a question about an employee’s immigration status, do not panic or jump to conclusions. Have a conversation with the employee and come up with a plan of action.
IF YOU RECEIVE A NOTICE OF INSPECTION (BY CERTIFIED MAIL OR DELIVERED IN PERSON)
Review the Notice of Inspection to identify what documents are being requested and share with counsel to review what needs to be produced. Don’t panic.
Gather the documents requested in the Notice within the three-business day window and do not plan to offer any additional documents or information other than those required for inspection; do not waive your right to the three-day waiting period.
Make copies of all documents being made available for inspection, as the ICE agent will want to review originals.
Make a record of all documents that are provided to the agent for inspection.
Make notes of any alleged noncompliance raised by the agent during the inspection and do not make any untruthful statements about the company’s immigration policies or I-9 collection processes.
Review any identified compliance issues with counsel.
IF AN ICE AGENT OR AGENT OF ANOTHER FEDERAL, STATE, OR LOCAL ENFORCEMENT AGENCY SHOWS UP AT YOUR DOOR
Demand to see a judicially issued warrant permitting a search. If there is none, then you can refuse ICE/CBP entry into your workplace.
If there is a warrant, then review it with counsel to ensure it is valid. This includes checking that it is signed by a judge or magistrate, has the correct address for the workplace to be searched, provides a duration for the search, and describes the scope of the search.
There are different types of warrants or subpoenas that might come into play, including:
A judicial warrant, which allows ICE/CBP to conduct any search as authorized by the warrant. You must comply with a valid judicial warrant.
An administrative warrant, which allows ICE/CBP to conduct an arrest or seizure. Administrative warrants do not authorize searches and therefore you do not need to permit a search in this instance.
A judicial subpoena, which allows an enforcement agency to request information and/or documents from third parties, like you the employer. Unless you have a legitimate basis to oppose the subpoena, you should generally comply with it.
An administrative subpoena, which similarly allows ICE/CBP to request information and/or documents from third parties, like you the employer. You do not need to comply with an administrative subpoena, penalties may occur only after the issuer takes additional steps to enforce the subpoena in federal court.
If the judicial warrant is valid, you should comply with the request for inspection.
During the inspection, you should watch the agent the entire time.
Document everything:
Record the names and ID numbers of all agents, and
Memorialize any conversations with agents.
If any employee is arrested, ask the agent where the employee is being taken.
The Administration’s emphasis on enforcement of immigration laws can be costly for employers, since fines and penalties for I-9 noncompliance are significant, and the disruption of work caused by removal of employees from the workforce can be devastating.
The Growth of AI Law: Exploring Legal Challenges in Artificial Intelligence
Artificial intelligence (AI) is reshaping industries, decision-making processes, and creative fields. Its influence spans healthcare, transportation, communication, and entertainment, introducing unique challenges for existing legal systems.
Traditional laws often fail to address the complexities AI introduces, resulting in the rise of a specialized legal field: AI law. Attorneys in this area must tackle intricate issues, such as regulating machine-generated content, ensuring data privacy, and assigning accountability when AI systems fail.
What Is AI Law?
Generally, AI law deals with the legal implications of artificial intelligence. In practice, his specialty focuses on any legal areas that AI interacts with, including intellectual property disputes, privacy regulations, bias in algorithms, and liability concerns. AI’s integration into business and daily life drives the need for legal professionals with deep expertise in both law and technology. Lawyers in AI law often work with companies developing AI tools, governments crafting regulations, and individuals affected by AI-driven decisions.
AI law also bridges gaps between technological advancements and ethical considerations. For example, legal systems must decide how to handle decisions made by autonomous systems, which are neither human nor bound by the same rules. This evolving area provides a unique opportunity for legal professionals to influence the future of technology policy.
Key Challenges in AI Law
Ownership of AI-Generated Content
AI systems like ChatGPT and DALL-E generate creative works, but questions remain about who owns these outputs. Current copyright laws require human authorship for protection. For example, the U.S. Copyright Office recently adopted a policy that purely AI-generated art cannot be copyrighted. Under Copyright Office policy, applicants for registration have a “duty to disclose the inclusion of AI-generated content in a work submitted for registration.”
Ownership disputes complicate business operations. Developers, users, and organizations may all claim rights to AI-generated works. Attorneys must draft contracts clarifying these rights to prevent litigation. This issue also raises broader questions about whether existing intellectual property laws need reform to accommodate AI.
Data Privacy Issues
AI depends on vast amounts of data to function, much of which is personal and sensitive. For instance, AI-powered healthcare tools analyze patient data to predict diseases, while social media platforms use algorithms to infer user preferences. These applications expose gaps in current privacy laws, which were designed without AI’s capabilities in mind.
Lawyers specializing in AI law must address compliance with regulations like GDPR and CCPA while considering AI-specific risks. For example, an AI tool might infer health risks from social media activity, bypassing traditional privacy safeguards. Attorneys help organizations balance innovation with consumer trust by drafting policies that align with legal requirements and ethical standards.
Algorithmic Bias and Accountability
Bias in AI algorithms presents a serious legal and ethical challenge. Historical data used to train AI often reflects societal inequalities, which AI systems can perpetuate. For example, hiring algorithms may favor male candidates over females, while predictive policing tools disproportionately target minority communities.
Accountability for biased outcomes is unclear. Should the blame fall on developers, organizations deploying the AI, or those who provided the data? Attorneys working in this field advocate for greater transparency in AI decision-making processes. They also push for policies requiring regular audits of algorithms to identify and mitigate bias.
Liability for AI Failures
As AI systems gain autonomy, determining liability becomes increasingly complex. When a self-driving car causes an accident, who is responsible—the manufacturer, the software developer, or the owner? Similar dilemmas arise in healthcare, where AI tools assist in diagnosis and treatment but may provide harmful advice.
Current liability frameworks are not designed for these scenarios. Lawyers specializing in AI law must navigate these gaps, helping establish clear rules for assigning responsibility. They also work with insurers to develop policies that account for AI-related risks.
Why AI Law Requires Specialization
AI law requires a unique blend of legal expertise, technological knowledge, and ethical insight. Traditional legal training does not fully prepare attorneys to address AI’s complexities, making specialization essential. Lawyers must understand how AI systems work, interpret evolving regulations, and address ethical implications.
Education for AI Lawyers
Leading universities now offer courses focusing on AI and its legal challenges. For example, the University of California, Berkeley, provides specialized training to equip legal professionals with the skills needed in this emerging field through the Berkeley Law AI Institute and the Berkeley AI Policy Hub. Continuing education is also critical, because AI evolves rapidly, and attorneys must stay updated on technological advancements and regulatory changes. Seminars, certifications, and workshops help legal professionals remain effective in this dynamic area.
Ethics in AI
Ethics play a central role in AI law. The American Bar Association released its first ever guidance for lawyers on the use of AI on July 29, 2024. Beyond ensuring compliance, lawyers must advise clients on responsible AI use. This includes promoting fairness, preventing harm, and aligning technology with societal values. For instance, attorneys may recommend policies to increase transparency in decision-making algorithms, fostering trust between companies and users. Ethical considerations also influence regulatory frameworks. Governments and organizations are increasingly prioritizing ethical AI practices, making expertise in this area crucial for legal professionals.
Opportunities for Lawyers in AI Law
As AI continues to develop, knowledgeable AI lawyers become more necessary, and opportunities for lawyers to apply this specialization grow. “This is an emerging and necessary practice area in law, spurred by rapid development and integration of AI into society and business at all levels,” urges Jay McAllister, CEO of Paragon Tech, Inc. “Attorneys who opt to ignore these developments will find themselves at an ever-increasing disadvantage when compared to those who embrace AI and seek to understand its mechanics and implications.”
Advising Companies
Businesses adopting AI face complex legal and ethical challenges. From data privacy compliance to intellectual property disputes, companies need guidance to navigate these issues. Lawyers specializing in AI law help organizations develop governance frameworks, draft contracts, and manage risks. Startups and tech companies often seek legal advice during the development of AI tools. Attorneys play a key role in ensuring that these technologies comply with regulations while maintaining ethical standards. This advisory role is essential for fostering innovation in a responsible manner.
Resolving Legal Disputes
Disputes involving AI are becoming more common. These range from copyright claims over AI-generated content to liability cases involving autonomous vehicles. Lawyers with expertise in AI law handle these cases, often setting new legal precedents. For example, they may argue whether a user’s input into an AI system constitutes co-authorship, shaping how courts interpret intellectual property laws.
Shaping Policy
AI law is still in its infancy, and legal frameworks are far from complete. Lawyers have the opportunity to influence how these regulations are written. By participating in policy discussions, they help ensure that AI technologies are governed in a way that balances innovation with accountability. Policy work also includes advocating for greater transparency and fairness in AI systems. Legal professionals can contribute to creating guidelines that protect individual rights while fostering technological progress.
The Future of AI Law
AI law is a rapidly growing field with immense potential. It challenges lawyers to adapt traditional legal principles to a technology-driven world. Attorneys must combine legal expertise with technical literacy and ethical awareness to address AI’s unique challenges.
The demand for AI law specialists is only expected to grow as AI becomes more integrated into society. Legal professionals in this field have the chance to shape how AI is developed, regulated, and used. By addressing key issues in data privacy, bias, and liability, they ensure that AI serves society responsibly.
AI law represents a transformative opportunity for the legal profession. Attorneys who embrace this field can lead in creating policies and frameworks that protect human rights while enabling technological progress. The journey to commit to this developing area of legal practice requires dedication and collaboration, but a career in AI law could offer the chance to make a lasting impact on society.
Complying with the ACA Disclosure Requirements Just Got a Whole Lot Easier!
New legislation liberalizing certain disclosure requirements under the Affordable Care Act (“ACA”) was passed at the end of 2024.
Effective for 2024 reporting, mailing a paper copy of Forms 1095-C/1095-B is no longer required if the employer timely provides employees with proper notice by January 31, 2025.
Under the ACA, Applicable Large Employers (ALEs) are required to provide minimum essential health care coverage to at least 95% of their full-time employees that meets “minimum value” and “affordability” standards, or potentially pay a penalty to the Internal Revenue Service (“IRS”) under the ACA’s employer shared responsibility provisions. In connection with this requirement, health insurers and ALEs are required to provide full-time employees and employees with health care coverage with an annual IRS Form 1095-C/1095-B that discloses the coverage.
ALEs are no longer required to do a mass mailing of these forms to their employees if the employer meets certain notice requirements. If an employer posts a clear, conspicuous and accessible notice informing employees that any individual to whom Form 1095-C/1095-B would otherwise be required to be provided may request a copy of the applicable forms, a broad mailing to all employees is not required. There has not been subsequent guidance on what will qualify as “clear, conspicuous and accessible,” so for purposes of complying with the notice condition this year, employers are left to make a good-faith and reasonable interpretation of the standards.
Deadline – January 31: The notice must be posted no later than January 31 following the year of the reporting. For the 2024-year reporting, the notice must be posted by Friday, January 31, 2025.
Responding to Requests: Upon request, employers must provide the requested IRS Form 1095-C/1095-B to the employee by the later of January 31 or 30 days after receiving the employee’s request.
Employers still need to complete and file Forms 1095-C and 1094-C with the IRS. If filed electronically, the forms are due no later than March 31, 2025; if filed in paper form, the forms are due no later than February 28, 2025.
Next Steps for Employers:
If an employer wishes to take advantage of this reprieve, the employer should prepare and conspicuously post an accessible notice to employees informing them of their right to request a Form 1095-C/1095-B. The notice must be posted by January 31, 2025.
Employers should adopt a process for managing employee requests for forms.
Employers should continue to prepare and submit required ACA forms with the IRS.
DOJ Announces Largest Employee Retention Credit Fraud Indictment
Overview
On January 22, 2025, the US Department of Justice (DOJ) announced the indictment of seven individuals in the largest Employee Retention Credit (ERC) fraud scheme to date. According to the indictment, the defendants filed more than 8,000 refund claims for ERCs and Sick and Family Leave Credits (SFLCs), totaling more than $600 million.
In Depth
The ERC and SFLC programs were designed to help businesses retain employees on the payroll during the COVID-19 pandemic. Prosecutors allege that the defendants exploited these programs by submitting fraudulent claims on behalf of ineligible businesses, inflating employee numbers, and misrepresenting wages. DOJ asserted that the defendants concealed their involvement by not identifying themselves as preparers on the returns, using virtual private networks and through other means.
ERC fraud has been a top priority of DOJ and the Internal Revenue Service (IRS), and this indictment can be added to a growing list of ERC-related enforcement actions. As of October 2024, the IRS Criminal Investigation division initiated 504 criminal investigations involving more than $5.5 billion in ERC claims. There have been more than 45 cases resulting in federal charges, with 27 resulting in convictions. A specialized unit within DOJ, called the “Fraud Strike Force,” has also been initiating investigations into potential ERC fraud, stating that such enforcement will “occupy a substantial portion of DOJ attention for years to come.”
On the civil enforcement front, the IRS has strengthened its efforts to examine and disallow improper ERC claims. The IRS announced in mid-2024 that it had issued approximately 28,000 disallowance notices on claims aggregating $5 billion. According to the IRS, these claims “showed a high risk of being incorrect.” The IRS described these disallowances as the “first significant wave,” and with at least 1 million claims still outstanding, practitioners expect more disallowances. The IRS has also announced that it will be sending 30,000 “clawback” letters seeking to reclaim ERC funds that have already been paid.
We have seen an aggressive examination campaign from the IRS targeting ERC claims. These exams, numbering into the thousands, have often involved more typical questions of taxpayer eligibility (e.g., number of employees and wages amount) but have also inquired about whether there has been “double dipping” with respect to other COVID-19-era stimuli, such as the Paycheck Protection Program. The IRS is also focused on governmental orders and the effects these orders had on taxpayers’ business operations.
Besides taxpayers, accountants and other tax professionals have also been a target of IRS enforcement activity. The IRS Office of Promoter Investigations “has received hundreds of referrals from internal and external sources” concerning individuals and businesses that it deems as potentially having facilitated fraudulent ERC claims. The IRS has the authority to impose civil penalties on alleged promoters under Internal Revenue Code Section 6700. DOJ may pursue criminal cases against individuals and entities it believes are promoting false ERC claims. This enforcement activity may even target individuals or principals of a firm after it has long ceased operations.
Practice Point: DOJ’s announcement makes clear that ERC fraud remains an enforcement priority for 2025. Taxpayers and tax professionals should prepare now to defend their ERC claims, including by compiling and maintaining substantiation to support each claim, and be ready to take immediate steps should they receive an IRS audit notice, a request for documentation or information, or are otherwise contacted by the government.
How Risky Are DEI Programs Under Trump 2.0?
President Trump’s January 21, 2025, executive order titled “Ending Discrimination and Restoring Merit-Based Opportunity” (“Executive Order”) directs the termination of federal government practices and policies that protect and promote diversity and inclusion; the Executive Order also addresses diversity and inclusion initiatives in the private sector. Less than a week later, an internal memo from the White House budget office “temporarily paused” grants and loans by the federal government while the government assesses whether the distributions are consistent with certain executive orders and other Trump administration objectives.
The Executive Order specifically targets diversity, equity, and inclusion (DEI) and diversity, equity, inclusion, and accessibility (DEIA) programs, describing them as “dangerous, demeaning, and immoral,” which “violate the text and spirit of our longstanding Federal civil-rights laws” and “undermine our national unity, as they deny, discredit, and undermine the traditional American values of hard work, excellence, and individual achievement in favor of an unlawful, corrosive, and pernicious identity-based spoils system.” The Executive Order uses broad, sweeping language and does not describe the types of DEI or DEIA initiatives that violate existing federal civil rights laws, leaving uncertainty as to which programs the administration will target but leaving no uncertainty about the chilling effect the Executive Order will have.
The Executive Order Targets Large Companies
The Executive Order requires the attorney general to submit a report within 120 days (May 21, 2025) that includes a proposed strategic enforcement plan identifying, among other things, (i) key sectors of concern within each agency’s jurisdiction, (ii) the most egregious and discriminatory DEI practitioners in each sector of concern, and (iii) a plan of specific steps or measures to deter DEI programs or principles (whether specifically denominated “DEI” or otherwise) that constitute illegal discrimination or preferences. Moreover, the Executive Order directs, “As a part of this plan, each agency shall identify up to nine potential civil compliance investigations of publicly traded corporations, large non-profit corporations or associations, foundations with assets of 500 million dollars or more, State and local bar and medical associations, and institutions of higher education with endowments over 1 billion dollars.” As such, large or otherwise prominent organizations should be particularly on guard.
The Executive Order has immediately impacted the broader enforcement context. For example, on January 23, 2025, Texas Attorney General Ken Paxton and nine other state attorneys general warned several major financial institutions that DEI and environmental, social, and governance (ESG) commitments could lead to enforcement actions if they are found to violate state or federal laws. Following the release of the attorney general report described above, we may see an uptick in warnings made by other state attorneys general and/or similar warnings issued to organizations in sectors of concern identified in the forthcoming attorney general’s report.
To be sure, existing federal antidiscrimination law controls. That means while the Trump administration may view certain DEI programs as unlawful, it does not mean judges will. Read on for specific takeaways for entities with DEI programs.
The Executive Order Targets Recipients of Government Funding
Recipients of federal government funding already should be familiar with the False Claims Act (FCA), 31 U.S.C. §§ 3729 – 3733, which provides that any person who knowingly submits, or causes to submit, false claims to the federal government is liable for three times the government’s damages, plus penalties.
The Executive Order uses the FCA to target DEI initiatives of government funding recipients. First, federal contractors and subcontractors are prohibited from considering race, color, sex, sexual orientation, religion, or national origin in their employment, procurement, and contracting practices. Second, every contract or grant award issued by a federal agency — which will include government contractors as well as health care entities that participate in federal health care programs, and research institutions that receive federal grant money — must include the following provisions:
“A term requiring the contractual counterparty or grant recipient to agree that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes of [the FCA];” and
“A term requiring such counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.”
With these provisions, the Department of Justice or private qui tam relators could pursue an FCA case utilizing a false certification theory, meaning a party could be held liable under the FCA for submitting false or fraudulent claims to the government if the party falsely certifies that it has complied with federal requirements when, in fact, they have not. For a claim to be fraudulent under this theory, the false certification must be material to the government’s decision to pay the claim.
The Executive Order essentially requires parties who wish to do business with the government to agree that a violation of a federal antidiscrimination law — e.g., maintaining a DEI program that violates federal antidiscrimination laws — is material to the government’s decision to pay under the FCA. However, it is unclear that “agreeing” a requirement is material makes it so. For “materiality,” compliance with the provision actually must be material to the government’s decision to pay the claim or its decision to award the contract. In 2016, the Supreme Court held that “designating” a “legal requirement an express condition of payment” is not sufficient to establish materiality under the FCA. Universal Health Services, Inc. v. United States ex rel. Escobar, 579 U.S. 176, 192 (2016). However, the Trump administration will likely argue that its recent halting of federal funding, as the government takes stock of whether the spending complies with its executive orders and policies, is evidence that the antidiscrimination requirement is material to the government’s decision to pay. Crucially, however, the halt of federal funding does not apply to Medicare, nor does it direct that payment be terminated to a contractor for the reason of their DEI program. It does direct the termination of payment as related to DEI actions, initiatives, or programs.
As so often occurs in the FCA arena and elsewhere, many practices targeted by the Department of Justice or relators ultimately will be defensible. In the DEI context, absent a settlement, a court would have to determine the DEI program in question violates current federal antidiscrimination law, and the Department of Justice or relator would have to prove each element of an FCA violation, including materiality and scienter (that the defendant knew or recklessly disregarded or deliberately ignored in its certification that its representation of compliance with federal antidiscrimination laws was false).
As such, it is yet to be seen what kind of teeth the Executive Order will ultimately have. The administration could be counting on a chilling effect, with the potential costs of investigations, enforcement action, and litigation outweighing companies’ willingness to go to battle for their DEI programs in court.
Takeaways for Companies with DEI Programs
We expect more details from the administration, such as regulatory and sub-regulatory actions, in the days and months to come. In the meantime, we recommend companies take action now to mitigate potential risk, even if their programs are ultimately defensible. For example, we recommend the following immediately:
Companies — federal contractors and private sector alike — should consult DEI and labor and employment experts to assess whether their DEI policies and practices may be construed to be out of compliance with existingfederal antidiscrimination laws under a Trump-era lens and what changes (if any) in their policies and practices are necessary to ensure compliance or mitigate risk.
Companies should be cognizant of new developments as they arise under the Trump administration. To assist in this endeavor,
Companies should reach out to legal counsel to discuss how the Executive Order, and likely future orders, may impact their businesses and what specific steps should be taken now to best protect them from any future liability and enforcement actions.
New Era of Uncertainty for U.S. Visa Holders
President Trump’s decision to suspend visa services at the U.S. Embassy in Colombia on Sunday, January 26th as part of an effective effort to pressure the government of Colombia to agree to accept flights of Colombian citizens being deported from the United States, makes it more likely that the same tactic will be used with other countries who fail to comply with U.S. immigration directives and policies. This approach could also be deployed to pressure countries that resist other U.S. demands unrelated to immigration. While the dispute with Colombia was resolved, the fallout lingers, and normal visa operations in Bogota have not resumed as of today (Tuesday, January 28, 2025). When they are restored, delays in obtaining appointments will continue and likely worsen.
Presidential authority under section 212(f) of the Immigration and Nationality Act to order the suspension of visa services to individuals and groups, including specific nationalities, is broad and has been upheld by the courts. Should the administration decide to shut down or severely limit visa services to other countries or groups of individuals in the future, there will likely be little notice, and the potential disruption to normal travel for citizens of those countries will be significant. Possession of valid visas will not insulate these individuals, as the President also has the authority to instruct the Department of State to cancel previously issued visas and to instruct immigration officers at the border to deny entry to them.
Although the cancellation of a valid visa does not automatically serve to terminate the lawfully admitted status of persons already in the United States, it would mean that if those persons had to depart the U.S. for any reason they would not be able to return in valid status until such time as the administration determined to rescind the ban against issuing new visas to them.
This new era of uncertainty poses serious challenges for employers and their employees holding valid employment-authorizing nonimmigrant visas, even those from countries closely allied to the United States. With visa operations now subject to sudden interruption, personal and professional travel outside the United States could become problematic. Both groups must now ask themselves — is this trip really necessary?
NLRB Shake-up: President Trump Removes Board Member, Discharges General Counsel
President Donald Trump removed National Labor Relations Board (NLRB) member Gwynne Wilcox in a move that leaves the Board without a quorum to hear cases. The president also, as expected, discharged NLRB general counsel Jennifer Abruzzo.
Quick Hits
President Trump removed NLRB member Gwynne Wilcox and discharged NLRB general counsel Jennifer Abruzzo, marking a significant shift in the Board’s leadership.
Wilcox’s removal leaves the NLRB without a quorum (minimum of three members) to hear cases, raising questions about the legality of the dismissal and potential court challenges.
According to media reports, President Trump removed Wilcox, a President Biden Democratic appointee to the Board, on January 27, 2025. Her term was not set to expire until August 27, 2028. Abruzzo, who commenced a four-year term as general counsel in July 2021, confirmed her discharge in a statement released by the NLRB on January 28, 2025.
President Trump’s removal of Wilcox, whom the Senate confirmed to a second five-year term in September 2023, puts the NLRB at a current standstill. The five-member Board needs at least a quorum of at least three members to decide cases.
Wilcox’s removal leaves the Board with only two sitting members: Republican appointee Marvin Kaplan, whom President Trump named the NLRB Chair on his first day in office, and Democratic appointee David Prouty, whose term is set to end in August 2026.
This is the first time a president has removed a sitting NLRB member, and the move is likely to be challenged in court. While the president’s authority to remove federal officers has been upheld by the Supreme Court of the United States, the removal of a sitting member of the NLRB, an independent federal agency, without an identified cause, is unclear.
Under the National Labor Relations Act, the president has the power to appoint NLRB members “with the advice and consent of the Senate” to five-year terms and may remove “any member … upon notice and hearing, for neglect of duty or malfeasance in office, but for no other cause.”
On the other hand, President Trump’s discharge of NLRB general counsel Abruzzo, who began serving a four-year term under President Biden in July 2021, was expected. The move follows President Biden’s termination of former NLRB general counsel Peter Robb, the general counsel during President Trump’s first term in office, shortly after taking office in 2021. That discharge was upheld in the courts.
Deputy general counsel Jessica Rutter is now acting general counsel.
Next Steps
The NLRB shake-up is in line with President Trump’s policies in his first week in office, which seek to reshape the federal government and overturn many of his predecessor’s actions. Wilcox’s removal is likely to lead to a lengthy court case that could ultimately land before the Supreme Court and could have lasting effects on the NLRB’s makeup.
While we anticipate changes in federal labor policy to be forthcoming, only some changes in approach under the new administration can likely happen swiftly. For example, the incoming NLRB general counsel will likely take enforcement approaches that are more favorable to management, although the specifics of those approaches remain unclear and will likely be detailed in a forthcoming memorandum from a new general counsel.
On the other hand, without a quorum of Board members, current NLRB rules, such as the recently revised election rules, are likely to remain in effect in the short term. Additionally, without a quorum to decide new cases, recent major changes in NLRB precedent remain the law, such as the recent decisions concerning captive audience meetings and lawful management statements, as well as, the recent decision that changed aspects of the union organizing process.