Labor & Employment – Page 3

In the Fight Against Noncompete Agreements, Florida Chooses Employers

The Florida Legislature passed the “Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth (CHOICE) Act” last month to provide employers two new outlets for protecting confidential information and client relationships from departing employees. Notably, the CHOICE Act does not change or limit Florida’s existing restrictive covenant law but rather expands it to provide a covered garden leave agreement and a covered noncompete agreement. If signed by Gov. Ron DeSantis, the law will go into effect on July 1, 2025.
Key Highlights

The act creates a presumption that garden leave agreements and noncompete agreements adhering to its “covered” guidelines are enforceable and do not violate public policy.
The act requires courts to issue a preliminary injunction against employees who seek to violate a “covered” agreement.
To have the injunction dissolved or modified, the “covered” employee must establish either:

The employee will not perform similar work during the covered period or use the confidential information or customer relationships of the covered employer.
The employee will not engage in the same business or activity as the covered employer within the restricted area.
The employer has failed to pay the covered employee the compensation contemplated under the covered agreement and has had a reasonable amount of time to cure the deficiency.

Who Is Covered?
A “covered employee” is defined as an employee or individual who earns or is reasonably expected to earn a salary greater than twice the annual mean wage of either: (1) the county in which the employer has its principal place of business or (2) if the employer’s principal place of business is not in Florida, the county in which the individual resides. However, the law will not apply to healthcare practitioners licensed under Florida law.
A “covered employer” is defined as an entity or individual who employs or engages a covered employee.
What Are the Requirements?
Covered Garden Leave Agreement
A garden leave agreement allows an employer to prevent a departing employee from engaging in other employment provided the employee is still being paid. The period between the employee’s resignation and dissolution from the employer’s payroll is known as the “notice period.” Under the CHOICE Act, a garden leave agreement is enforceable if:

The employee cannot be required to provide services to their employer after the first 90 days of the notice period.
The employee may engage in nonwork activities at any time, including during normal business hours, during the remainder of the notice period.
The employee may work for another employer while still employed by the covered employer with the covered employer’s permission.
The employer will pay the employee their regular base salary plus benefits for the duration of the notice period.
The notice period will not extend beyond four years. However, an employer may choose to shorten the notice period at its discretion by providing the employee with 30 days advance written notice.

Covered Noncompete Agreements
Noncompete agreements prohibit an employee from providing services similar to the services provided to their employer for a period of time within a specific geographic region after the end of their employment. Under the CHOICE Act, a noncompete agreement is enforceable if:

The employee was provided the agreement seven days before the agreement or offer of employment expired and was advised in writing of their right to seek counsel.
The employee acknowledges in writing they will receive confidential information or customer relationships during their employment.
The noncompete period does not exceed four years.
The noncompete period is reduced for the duration of any non-working portion of the notice period of any applicable garden leave agreement between the covered employee and covered employer.

What Should Employers Do?

Review existing agreements for compliance with the act and consider revisions.
Remember these agreements may be introduced during the course of employment provided the employee still has seven days to consider signing the agreement before the offer expires.

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Costco’s Internal Investigation Confidentiality Restrictions Deemed Unlawful

On May 5, 2025, an Administrative Law Judge (“ALJ”) for the National Labor Relations Board (“NLRB” or the “Board”) ruled that retailer Costco Wholesale Corp. (“Costco”) violated the National Labor Relations Act (“NLRA” or the “Act”) when it asked employees involved in an internal investigation regarding sexual harassment allegations to sign a confidentiality agreement prohibiting them from discussing details concerning the investigation. The ALJ’s decision highlights considerations employers ought to take into account when balancing their interests in maintaining the integrity of internal investigations and complying with the NLRA.
A female employee at Costco’s Winston-Salem, North Carolina location submitted an internal complaint in August 2022, accusing a male coworker of sexual harassment. The employee spoke with several of the store’s managers about her complaint, one of whom presented the employee with a copy of Costco’s Acknowledgement of Confidentiality for Investigations form (the “Acknowledgment”) to sign. The Acknowledgment included a provision stating that the employee agreed “to maintain the confidentiality regarding this ongoing investigation.” The Acknowledgment also contained a provision requiring the employee to represent that she did not record any part of the investigation interview, as well as a provision stating that any violation of the terms of the Acknowledgment by the employee “may result in disciplinary action up to and including termination.”
Costco investigated the employee’s complaints in the following weeks and presented each employee interviewed with an identical copy of the Acknowledgment to sign. Costco concluded its investigation in March 2023, at which time a Costco Vice President sent the employee who submitted the complaint a letter advising her of the results of the investigation, including that the employee accused of harassment was no longer employed, and requesting that the employee treat the information in the letter as confidential.
The General Counsel for the NLRB alleged that the provisions in the Acknowledgment requiring the employees to maintain confidentiality of the investigation and refrain from recording any part of the investigation interviews, as well as the Costco Vice President’s confidentiality request in his March 2023 letter, violated Section 8(a)(1) of the NLRA by interfering with, restraining, and/or coercing employees in the exercise of their rights under Section 7 of the Act. The ALJ agreed with the General Counsel, holding in a May 5, 2025, decision that the complained-of provisions in the Acknowledgment were overly broad and that the Costco Vice President’s instructions in his letter impermissibly prevented the employee from disclosing or discussing matters affecting her and/or other employees’ terms and conditions of employment, both in violation of the Act.
The ALJ applied the Board’s Stericycle standard to the confidentiality provision in the Acknowledgment. Under the Stericycle standard, there is no presumption that an employer’s interest in maintaining the confidentiality of its internal investigations outweigh the impact a policy or work rule may have on employees’ exercise of Section 7 rights. Rather, the General Counsel must “prove that a challenged rule has a reasonable tendency to chill employees from exercising their Section 7 rights.” If the General Counsel carries this burden, the rule is presumptively unlawful, and the employer may only avoid a finding that it violated the act if it shows that the rule “advances a legitimate and substantial business interest and that the employer is unable to advance that interest with a more narrowly tailored rule.”
Applying the Stericycle standard, the ALJ concluded that the confidentiality provision in the Acknowledgment had a reasonable tendency to chill employees in the exercise of their Section 7 rights, highlighting that the Acknowledgment contained a blanket prohibition regarding employee communications about the ongoing investigation and warned employees of disciplinary consequences for failing to comply with the confidentiality restrictions. The ALJ also rejected Costco’s argument that the confidentiality provision was necessary to protect the integrity of its investigation, reasoning that its terms were (1) unlawfully overbroad because they required the employees to maintain confidentiality regarding information beyond the scope of what they learned or provided to Costco during the investigation process, and (2) not appropriately limited in time, as they could reasonably be interpreted as extending confidentiality restrictions beyond the conclusion of the investigation.
The ALJ similarly held that the Vice President’s instructions in his March 2023 letter violated the Act because they required the employee who submitted the harassment complaint to keep information about the investigation confidential after its conclusion. Further, the ALJ explained that the no-recording provision of the Acknowledgement violated the Act because it was broad enough to prohibit not only recording of the investigation interviews, but also any other conversations between employees and management, subject to the threat of discipline.
This decision adds to the recent scrutiny of employers’ confidentiality practices and raises additional considerations employers must balance in their efforts to protect the integrity of internal investigations while complying with federal labor law. Employers should examine their practices regarding employee obligations in connection with internal investigations to determine whether they are appropriate and reasonable in scope and time.
Employers should also continue monitoring for developments to Board law on this topic, as it is not yet clear how the Board’s approach to employers’ confidentiality practices will shift under the new administration. Though the Board currently applies the Stericycle standard to determine the legality of workplace rules, the new administration will likely overturn the Biden-era Stericycle decision, which was issued in 2023, and revert to the more employer-friendly Boeing standard that was established in 2017, during the first Trump Administration.
Under Boeing, the Board assesses whether work rules are lawful to maintain by analyzing the nature and extent of the rule’s potential impact on employees’ rights and the employer’s legitimate business justifications for the rule. Based on this analysis, the Board uses the Boeing standard to place rules in one of three categories—Category 1, 2, or 3—depending on whether they are always lawful to maintain, require case-by-case analysis, or are always unlawful to maintain. Unlike under Stericycle, the Board does not presume that a work rule is unlawful if the General Counsel proves that the rule has a reasonable tendency to chill employees from exercising their Section 7 rights when applying the Boeing standard. Employers favor the Boeing standard because it provides them with predictability and certainty when drafting work rules and gives greater weight to employers’ interests in maintaining workplace order through those rules.
While the Board’s reinstatement of the Boeing standard would be a welcome change for employers, it would not eliminate the concerns raised by the Costco decision entirely. Regardless of the standard in place governing the legality of work rules, employers will need to carefully consider how to appropriately balance promoting legitimate confidentiality interests and employees’ rights under the NLRA in order to avoid infringing upon those rights.

No Tax on Tips Provision Included in the House Ways and Means Committee’s 2025 Tax Bill

On May 14, the House Ways and Means Committee approved the Make American Families and Workers Thrive Again Act, which contains a no tax on tips provision. This Ways and Means Committee bill is the starting point in what may be an arduous journey through Capitol Hill, so the final version of no tax on tips may look different than this committee bill. Some no tax on tips highlights include:

Eligible employees would be able to deduct “qualified tips” to determine taxable income.
Qualified tips are cash tips (whether paid by cash, credit card, or debit card) in an occupation that traditionally and customarily received tips.
The secretary of the Treasury would be required to publish a list of traditional tip-receiving occupations within 90 days of the president signing the Act.
Qualified tips must be paid voluntarily without any consequence in the event of nonpayment, may not be subject to negotiation, and must be determined by the payor.
The recipient of the tips must not be a “highly compensated employee,” which for 2025 is an employee who earns $160,000 or more.
The deduction for qualified tips would be allowed for non-itemizers.
Because no tax on tips would be structured as an employee deduction, tips would continue to be included in the base for FICA taxes (Social Security or Medicare tax).
The employer would still be required to report the qualified tips on the W-2 provided to the employees.
This deduction for qualified tips would be allowed for the 2025 through 2028 tax years (four years only).

While the bill does not limit the amount of tips that may be deducted (i.e., subject to tax-free treatment), as bills previously introduced, it does eliminate the deduction for highly compensated employees as discussed above.
The bill has other details, including a limitation provision on persons who engage in a trade or business who also receive tips – for example, a chef who cooks the food for a dinner party at a private residence. In such a case, such person’s deduction for tips would be limited to the amount that their gross receipts exceed the cost of providing the service, such as food and beverage cost.
Once again, this is subject to change as Congress may look to reduce the cost of this and the other tax cuts in the bill. But, if the current no tax on tips bill is passed and signed into law without material changes, there may be a scramble during the 90 days after it is signed for the Treasury Department to determine which occupations traditionally receive tips and would be allowed the benefit of no tax on tips.
State Tax Issues

Considering the potential revenue implications of the Act, states would have to decide whether to conform (or decouple) from any change in the federal policy. Depending on the revenue implications, not all states may choose to conform, creating additional compliance and administration issues as state and federal taxing authorities would use divergent definitions of income.
Despite the revenue and compliance challenges a no tax on tips policy may create, almost a dozen states have introduced proposed bills at the state level for consideration during the 2025 legislative session (Arizona,1 Kentucky,2 Kansas,3 Maryland,4 Nebraska,5 New Jersey,6 New York,7 North Carolina,8 Oregon,9 South Carolina,10 and Virginia11). To date, none of these proposals have passed.

Other Issues and Industry-Specific Considerations

Regardless of how any no tax on tips initiative(s) takes shape, any change in tip taxation would impact reporting. The IRS estimates that tips are underreported to the tune of tens of billions of dollars every year. Enacting such a policy may create an incentive to broaden the understanding of a gratuity as much as possible. This may lead to reporting inconsistencies regarding the proper wage/tip classifications.
The no tax on tips promise might also lead to friction among the different classifications of employees in a very industry-specific manner. In the restaurant industry, for example, highly tipped employees, such as front of house restaurant, bar workers, or employees participating in a tip pool in a restaurant with significant tips would seem to be the most significant beneficiaries of the legislation. “Lightly tipped” employees, such as tipped quick service and fast casual restaurant workers, may receive modest or no benefits. In addition, non-tipped employees and restaurant managers, who may be legally precluded from receiving tips due to laws and regulations prohibiting tip sharing with management-level personnel, would receive no benefits from the legislation. Restaurant employers may be faced with requests for compensation increases from these employees, or a declining interest from restaurant workers in working their way up into management-level roles, if the compensation and income boost from tax-free tips is more attractive than the management compensation.
The change of a no tax on tips policy—either at the federal or state level—should be of interest for restaurant employers of tipped employees. Although the policy may benefit some restaurant workers, the legislation may present challenges to restaurant owners/operators who have experienced significant price and wage inflation, including historic increases in wages and benefits in many parts of the country over the past several years, while operating expenses and pressures have increased considerably. In addition, “tip credits,” which permit an employer to pay tipped employees a reduced hourly wage based upon the tips received by such employees in most U.S. states, have been challenged in parts of the country.

While the no tax on tips policy may provide significant tax savings to select tipped workers, the legislation may create challenges for restaurant owners and other businesses with workers designated by the Treasury Secretary to be a traditional tip-receiving occupation. As this policy begins to unfold, restaurant owners should be aware of and engage—at both the federal and state level—to try and shape these policies to address these issues.

1 See HB 2081, which would exempt tips for state income tax purposes.
2 See HB 26, which would exempt tips and overtime compensation for state income tax purposes through 2029.
3 See HB 277, which would exempt up to $25,000 of tips for state income tax purposes starting in 2026.
4 See HB 1400/SB 0823, which would have exempted tips for state income tax purposes.
5 See LB 28, which would have created a deduction for tips from taxable income for state income tax purposes starting in 2025.
6 See S 3741/A 5006, which would exempt tips for state income tax purposes starting in 2026.
7 See S 587/A 05856, which would exempt tips for state income tax purposes starting in 2025.
8 See HB 11, which would exempt tips, overtime pay and up to $2500 of an annual bonus for state income tax purposes.
9 See SB 560, which would exempt tips for state income tax purposes from 2026 through 2031.
10 See H 3520/S 0534, which would exempt tips for state income tax purposes.
11 See HB 1965, which would provide a deduction for tips and overtime from state taxable income starting in 2025.

Updated New York Retail Worker Safety Act Takes Effect Soon

As we explained in a previous blog post, last fall, Governor Kathy Hochul signed the New York Retail Worker Safety Act (NYRWSA) into law, obligating employers to provide certain safety measures for retail workers by early March of this year.
But just a few months later, a temporary reprieve came, when lawmakers introduced a bill (“S740” or “the Amendments”) to modify specific details of the original NYRWSA. Just weeks before the original version was to take effect, Governor Hochul signed off on the Amendments, which not only changed some of the law’s original requirements, but also delayed mandatory policy, training, and notice requirements until June 2, 2025.
While portions of our blog post from October 2024 remain accurate, some details have changed. New York retail employers should read on to learn what NYRWSA requires of them, and by when.
Which Obligations Still Stand?
As we detailed, the NYRWSA requires covered employers to:

implement a written workplace violence prevention policy;
conduct trainings on the policy; and
provide written notice about the policy in English and other applicable languages.

What did the Amendments Change?
Training Requirements Eased for Smaller Employers
The NYRWSA generally covers any employer with at least ten “retail employees,” defined as employees working at a retail store. Among the law’s requirements is a workplace violence prevention training program that employers must provide to all employees upon hiring and annually thereafter.
The Amendments permit employers with fewer than fifty retail employees to provide workplace violence prevention training just once every two years, instead of annually, after the initial training for new hires.
No Panic Buttons
The Amendments also change requirements for large employers: specifically, they eliminate the need for panic buttons and reduce the number of businesses that will need to comply with an obligation to provide a safety communications tool for retail workers.
The original law required employers with 500 or more retail employees nationwide to install “panic buttons” throughout workplaces or provide employees with wearable mobile phone-based panic buttons.
Under the Amendments, only employers with 500 or more retail employees statewide will need to provide a “silent response button” for all retail employees.
A silent response button must allow employees to request immediate assistance from a security officer, manager, or supervisor while the employee is on duty. Employers may provide the button in the form of an easily accessible device installed within the workplace, or via a wearable item like a mobile phone.
Unchanged are NYRWSA’s requirements that employers may only install alert buttons through employer-provided equipment and may not use any wearable or mobile phone devices to track employee locations, unless triggered by the button during an emergency.
New Modified Written Notice Requirements
Also unchanged are NYRWSA’s requirements that all covered employers provide retail employees with a written notice of their retail workplace violence prevention policy, both in English and in the language identified by each employee as their primary language. Employers must provide these written notices to covered employees upon hire and at each annual or bi-annual training.
As of this post, the New York State Department of Labor (NYSDOL) has not published a model workplace violence prevention policy, model training materials, or any other guidance in any language.
Conclusion
We recommend that employers take necessary steps to comply with these obligations by the upcoming June 2, 2025 effective date. We will continue monitoring NYSDOL and advise further if the agency provides more guidance and materials.

Cleveland’s Pay Transparency and Compensation History Law: Breaking Down the New Employer Requirements

Takeaways

The new law goes into effect on 10.27.25. It requires employers to include salary ranges and scales when advertising job openings and bars them from inquiring about applicants’ compensation history.
The law applies to private employers that employ at least 15 people within the city.
Employers should review their practices and start preparing for the new requirements now.

EDPB and EDPS Support GDPR Record-Keeping Simplification Proposal

On May 8, 2025, the European Data Protection Board (“EDPB”) and the European Data Protection Supervisor (“EDPS”) adopted a joint letter addressed to the European Commission regarding the upcoming proposal to simplify record-keeping obligations under the EU General Data Protection Regulation (“GDPR”). This proposal aims to amend Article 30(5) of the GDPR, simplifying the record-keeping requirements and reducing administrative burdens while maintaining robust data protection standards.
The European Commission proposed the following changes to Article 30(5) of the GDPR:

Exemptions for Small Mid-Cap Companies: Extending the derogation which currently applies to enterprises or organizations with fewer than 250 employees (including small and medium-sized enterprises or SMEs), to also cover “small mid-cap companies,” i.e., companies with fewer than 500 employees and with a defined annual turnover, as well as organizations such as non-profits with fewer than 500 employees.
Expansion of Application: Modifying the derogation so it would not apply if the processing is “likely to result in a high risk to the rights and freedoms of natural persons,” as opposed to the current provision, which only mentions processing likely to result in a “risk,” therefore broadening the ability to use the derogation.
Limiting Record-Keeping Exceptions: Removing certain exceptions to the record-keeping derogation, including references to occasional processing and possibly special categories of data.
Employment, Social Security or Social Protection Law Exception: Introducing a recital clarifying that the obligation to maintain records of processing activities would not apply to the processing of special categories of data to comply with legal obligations in the field of employment, social security or social protection law in accordance with Article 9(2)(b) of the GDPR.

In their joint letter, the EDPB and EDPS express “preliminary support to this targeted simplification initiative,” noting that they support the retention of a risk-based approach in respect of processing, and observing that “even very small companies can still engage in high-risk processing.” Both parties welcome the opportunity for a formal consultation to take place after the publication of the draft legislative change.

District Court Holds Pension Fund Misapplied Prior Partial Withdrawal Liability Credit

A federal district court in Illinois became the first court to rule that an employer’s credit for a prior partial withdrawal should be applied at the end of the statute’s “waterfall” for calculating withdrawal liability. The case is Consumers Concrete Corp. v. Central States, S.E. and S.W. Areas Pension Fund, Nos. 23-cv-2695 & 23-cv-3005, 2025 WL 1001799 (N.D. Ill. Apr. 3, 2025).
Statutory Background
An employer’s withdrawal from a multiemployer pension plan may be “complete” if it permanently ceases to have an obligation to contribute to the plan, or “partial” if (a) the employer’s obligation ceases with respect to one (but not all) collective bargaining agreements or facilities, or (b) if there is a 70% reduction in the employer’s contribution over a three-year period. The employer’s partial withdrawal liability is a percentage of what its liability would have been if it effected a complete withdrawal from the plan (e.g., 80% of $1 million, or $800,000). If an employer assessed with partial withdrawal liability subsequently effects a complete withdrawal, it will receive a credit for the prior partial withdrawal liability, subject to certain reductions, and only be liable for the balance (e.g., $2 million minus $800,000).
Disputes often arise over the point in the calculation at which this credit is applied. The Multiemployer Pension Plan Amendments Act (MPPAA) provides that an employer’s withdrawal liability is calculated by determining the employer’s share of the fund’s unfunded vested benefits pursuant to the allocation method selected by the plan’s trustees, and then reducing that amount in four sequential steps: (i) for de minimis amounts, (ii) for partial withdrawals, (iii) to reflect the twenty-year cap on payments, and (iv) for employers whose withdrawal is the result of insolvency or a sale of substantially all assets to a third-party. Courts, including the Ninth Circuit, have held that an employer’s credit for a prior partial withdrawal should be applied at the second step of the statutory waterfall of reductions. In so holding, they have rejected as unpersuasive a 1985 PBGC opinion letter stating that the statutory waterfall did not encompass the credit at all, and that it should thus be applied only after all four reductions.
District Court’s Decision
Consumers Concrete Corporation was a contributing employer to the Central States Pension Fund. The employer partially withdrew from the plan in 2017 and was assessed $11.38 million in partial withdrawal liability. When the employer completely withdrew in 2019, the plan assessed it with $12.18 million in complete withdrawal liability, which was calculated by applying the credit for the prior partial withdrawal liability at the second step of the statutory waterfall. The employer commenced arbitration to challenge the calculation, arguing that the plan should have instead applied the credit at the end of the statutory waterfall, consistent with the PBGC’s opinion letter, which would have reduced its complete withdrawal liability from $12.18 million to $11.44 million.
The arbitrator ruled in the plan’s favor, and the District Court reversed. Based on a “holistic[]” reading of the statute, the Court concluded that the statute requires the credit to reduce an employer’s “withdrawal liability,” which the Court held is what an employer owes after the waterfall of exceptions is applied. The Court distinguished past rulings as overlooking the statutory distinction and also pointed to the PBGC opinion letter for support.
Proskauer’s Perspective
The order in which the partial withdrawal liability credit is applied can have a significant impact on the amount an employer owes in withdrawal liability upon a complete withdrawal. The few decisions to have considered the issue have held that the credit should be applied as part of the statutory waterfall of exceptions. The ruling in Consumers Concrete Corp. means that, at least in one jurisdiction, a different rule may apply. Because the issue is likely to remain an open question in most jurisdictions, employers and plans should coordinate with their legal counsel to assess the impact of these decisions on existing or forthcoming withdrawal liability assessments.

FDA to Rehire Some Staff

FDA is “set to rehire some of the staff that was let go during mass firings in the past three months.” Earlier this year around 3,500 FDA employees, or around 20 percent of its workforce, was let go without cause, and many more left due to retirement, voluntary buyout, and resignation.
While FDA and the Department of Health and Human Services have not detailed exactly which positions or programs were cut during the mass layoffs, many included food and medical device reviewers, communications staff, and scientists, as well as travel bookers who coordinate trips for inspectors.
Many of the travel bookers have been reported to be on the reinstatement list, according to two anonymous FDA staffers. In addition, food scientists have been told they will be reinstated, and some of the communications staff, including some who worked in the FOIA office, will be rehired.
Keller and Heckman will continue to report on staffing and other organizational developments at FDA.

BIS Issues Four Key Updates on Advanced Computing and AI Export Controls

On May 13, 2025, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) announced four significant policy developments under the Export Administration Regulations (“EAR”), affecting exports, reexports, and in-country transfers of certain advanced integrated circuits (“ICs”) and related computing items with artificial intelligence (“AI”) applications. These actions reflect the Trump administration’s first moves to address national security risks associated with exports of emerging technologies, and to prevent use of such items in a manner contrary to U.S. policy. Below is a summary of each development and its practical implications.
1. Initiation of Rescission of the “AI Diffusion Rule”
As explained in a press release, BIS has begun the process to rescind the so-called “AI Diffusion Rule,” issued in the closing days of the Biden administration and slated to go into effect on May 15. That rule would have imposed sweeping worldwide controls on specified ICs and set up a three-tiered system for access to such items by countries around the world. The rescission is intended to streamline U.S. export controls and avoid “burdensome new regulatory requirements” and strain on U.S. diplomatic relations.
It will be important to monitor developments for BIS’s anticipated issuance of the formal rescission and for the control regime that BIS will likely implement in its place. In the meantime, all IC-related controls preceding the AI Diffusion Rule remain in effect.
2. New End-Use Controls for Advanced Computing Items
BIS has issued a policy statement informing the public of new end-use controls targeting the training of large AI models. Specifically, the statement provides that the EAR may impose restrictions on the export, reexport, and in-country transfer of certain advanced ICs and computing items when there is knowledge or reason to know that the items will be used for training AI models for or on behalf of weapons of mass destruction or military-intelligence end-uses in or end-users headquartered in China and other countries in BIS Country Group D:5. Furthermore, U.S. persons are prohibited from knowingly supporting such activity.
This development underscores the importance of robust due diligence and end-use screening for companies involved in exports, re-exports, and transfers of such items, especially to Infrastructure as a Service providers.
3. Guidance to Prevent Diversion: Newly Specified Red Flags
To assist industry in preventing unauthorized diversion of controlled items to prohibited end-users or end-uses, BIS has published updated guidance identifying new “red flags” that may indicate a risk of such diversion. The guidance provides practical examples and scenarios, such as unusual purchasing patterns, requests for atypical technical specifications, or inconsistencies in end-user information. Companies are encouraged to review and update their compliance programs to incorporate these new red flags and to ensure that employees are trained to recognize and respond to potential diversion risks.
4. Prohibition of Transactions Involving Certain Huawei “Ascend” Chips Under “General Prohibition Ten”
BIS has released guidance regarding the use of and transactions in certain Huawei “Ascend” chips meeting the parameters for control under Export Control Classification Number (“ECCN”) 3A090, clarifying the application to such activities of “General Prohibition Ten” under the EAR. This prohibition restricts all persons worldwide from engaging in a broad range of dealings in, and use of, specified Ascend chips that BIS alleges were produced in violation of the EAR.
Regarding due diligence in this context, BIS has provided the following guidance:
If a party intends to take any action with respect to a PRC 3A090 IC for which it has not received authorization from BIS, that party should confirm with its supplier, prior to performing any of the activities identified in GP10 to ensure compliance with the EAR, that authorization exists for the export, reexport, transfer (in-country), or export from abroad of (1) the production technology for that PRC 3A090 IC from its designer to its fabricator, and (2) the PRC 3A090 IC itself from the fabricator to its designer or other supplier.
Key Takeaways for Industry
It is important to keep in mind that the BIS actions focus on dealings in ICs and advanced computing items meeting the control parameters of ECCN 3A090 and related ECCNs. With that in mind, the following steps are recommended:

Review and update compliance programs: Impacted companies should promptly assess their export control policies and procedures in light of these developments, with particular attention to end-use and end-user screening.
Monitor regulatory changes: The rescission of the AI Diffusion Rule and the introduction of new end-use and General Prohibition Ten controls may require adjustments to licensing strategies.
Enhance employee training: Incorporate the newly specified red flags and guidance into training materials for relevant personnel.

BIS’s latest actions reflect a dynamic regulatory environment for national security regulation of advanced computing and AI technologies. Companies operating in these sectors should remain vigilant and proactive in managing compliance risks, as there are likely to be more developments in this area in the months ahead.

Changes to EEO-1 Report Approved

As an update to our previous post, the EEOC’s request for a non-substantive change to remove the option for employers to voluntarily report non-binary data on the EEO-1 data collection has been approved without change.
We are now waiting to see when EEOC will open the 2024 EEO data collection portal. In the proposed instructions filed with the requested change, EEOC indicated May 20, 2025 as the anticipated opening.
We are continuing to monitor the situation and will report back with any updates.

Florida’s Proposed Choice Act to Add Significant Teeth to Enforcement of Non-Compete Agreements

Recently, the Florida legislature passed the “Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth (CHOICE) Act.” For certain employees earning higher salaries, the CHOICE Act will make it much easier to enforce non-compete agreements in Florida and allow companies to enforce longer non-compete periods. It is expected that Governor DeSantis will sign the legislation soon, and the new law will take effect on July 1, 2025.
HIGHLIGHTS OF THE NEW LAW

It applies to “Covered Employees” which includes employees and independent contractors who either:

Work primarily in Florida; or
Work for an employer whose principal place of business is in Florida and their agreement is expressly governed by the Florida law.

A “Covered Employee” must also earn or be reasonably expected to earn a salary greater than twice the annual mean wage of the county in this state in which the covered employer has its principal place of business, or the county in this state in which the employee resides if the covered employer’s principal place of business is not in this state. Notably, “salary” includes the annualized base wage, salary, professional fees, and “other compensation for personal services” as well as “the fair market value of any benefit other than cash.” But “salary” does not include things such as health care benefits, severance pay, retirement benefits, expense reimbursement, discretionary incentives/awards, “distribution of earnings and profits not included as compensation for personal services,” or anticipated but indeterminable compensation such as tips, bonuses, or commissions.
”Health care practitioners” are exempted, but remain subject to current law, section 542.335.
The Act permits non-compete agreements up to four years in length. In contrast, under Florida’s current non-compete statute, employee-based non-competes lasting longer than 2 years are presumed to be unreasonable and unenforceable.
To fit under the Choice Act:

The employee must be advised in writing of the right to seek counsel before signing;
The employee must acknowledge in writing that the employee will receive confidential information or customer relationships during their employment;
If the employee has a garden-leave agreement, the non-compete period is reduced day-for-day “by any non-working portion of the notice period”; and
The employer must provide at least 7 days’ notice of the non-compete before an offer of employment expires or 7 days’ notice before the date that an offer to enter into a “covered non-compete agreement” expires.

The CHOICE Act also addresses Covered Garden Leave Agreements, which require employers to keep paying an existing employee for a certain period of time (up to 4 years) even though the employee is not required to perform any work. Garden Leave Agreements are common in sales and other customer relationship-based jobs as a way for employers to solidify and secure a departing employee’s client relationships before he or she starts a new job. Similar to Covered Non-compete Agreements, the Covered Garden Leave Agreements also require a seven-day notice period prior to signing, notice that advises the employee of the right to seek counsel, and an acknowledgment that the employee will receive access to confidential information or customer relationships.
For those covered, the CHOICE Act requires strict enforcement and makes it much easier for employers to obtain injunctions. Courts are required to preliminarily enjoin a Covered Employee from providing competing services to any business, entity, or individual during the non-compete period. Covered Employees can only modify or dissolve the injunction if they prove by clear and convincing evidence that (1) they are not in a competing role or will not use the employer’s confidential information or customer relationships, (2) the employer failed to pay or provide the consideration provided in the non-compete agreement following a reasonable opportunity to cure, or (3) the new employer seeking to hire the covered employee is not engaged in and is not planning or preparing to engage in business activity similar to the enforcing employer in the geographic area specified in the non-compete agreement.
The statute also requires courts to enjoin the new business or individual employing the employee subject to a non-compete or garden leave agreement, at which point the burden shifts to the new employer in the same manner as it shifts to the employee (although the new employer may not be allowed to claim “failure to pay” – i.e., the second defense noted above). Thus, businesses that are not parties to the non-compete agreement can still be subject to lawsuits and injunctive relief.
Notably, the Choice Act does not modify existing law, including Florida’s current non-compete law in section 542.335. Employees who are not “Covered Employees” under the CHOICE Act or who otherwise have not signed a non-compete that complies with the new Act can still have enforceable restrictive covenants under existing Florida law. But because section 542.335 places a significantly higher barrier on enforcing restrictive covenants, employers relying on non-compete agreements should obtain legal advice to determine whether to modify their agreements to take advantage of this new law.

NEXT STEPS FOR EMPLOYERS

Anyone with employees in Florida or with non-compete agreements that choose Florida law should contact an attorney to determine whether existing agreements should be revised in light of the CHOICE Act, and whether new agreements should take advantage of its provisions. It is likely that current agreements do not have certain language or meet the new notice requirements required under the Act.
Parties contemplating corporate transactions involving Florida businesses or Florida employees that include restrictive covenants may now wish to rely on a Florida choice-of-law provision (if applicable) rather than the law of a foreign jurisdiction, such as Delaware, which would not be affected by the CHOICE Act.
Companies should carefully review their current confidentiality policies and procedures to ensure that they are properly documenting employees’ receipt of and agreements to protect company confidential information and customer relationships.
Companies should review employee compensation to ensure that the employees whom the company desires to be subject to non-competes under the new law meet the “salary” threshold.

DOL Shelves Independent Contractor Rule

On May 1, 2025, the U.S. Department of Labor’s (DOL) Wage and Hour Division (Division) issued Field Assistance Bulletin (FAB) No. 2025-1 (“FAB 2025-1”), announcing that it is currently working to reformulate the test as to how independent contractor status is determined under the Fair Labor Standards Act (“FLSA”).
Although it is unclear what contours the revised rule will eventually take, FAB 2025-1 signals a clear intention to make it easier for businesses to classify workers as independent contractors.
The rulemaking process will take time. FAB 2025-1 accordingly provides that, during the interim, the DOL will no longer enforce a 2024 rule established under the Biden administration. The 2024 rule, which consisted of a non-exhaustive multi-factor test, is largely viewed as placing a difficult hurdle with respect to independent contractor classification.
FAB 2025-1 relaxes the DOL enforcement standard by reverting to the “economic reality” framework outlined in Fact Sheet #13 (July 2008), as informed by Opinion Letter FLSA2019-6. The “economic reality” framework asks whether the worker is an independent contractor in business for themselves, or an employee economically dependent on the business they serve. While this does not involve a single rule or test, significant factors include:

The extent to which the services rendered are an integral part of the principal’s business.
The permanency of the relationship.
The amount of the alleged contractor’s investment in facilities and equipment.
The nature and degree of control by the principal.
The alleged contractor’s opportunities for profit and loss.
The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor.
The degree of independent business organization and operation.

As compared to the 2024 rule, many believe that the “economic reality” framework provides more flexibility and favors independent contractor classification. The Division’s press release accompanying FAB 2025-1 states that going back to this “longstanding” framework “provides greater clarity for businesses and workers navigating modern work arrangements while legal and regulatory questions are resolved.”
Although this change in DOL enforcement policy is a welcome change for businesses, caution when making classification decisions is still appropriate, for the following reasons:
First, businesses should remain mindful that state law may apply and have stricter classification requirements with respect to independent contractors.
Second, the 2024 rule, which is currently facing multiple legal challenges in federal court, will remain in effect for the purposes of private litigation. However, the Division is reconsidering the rule, including whether to rescind and replace it with a different standard.
Third, the independent contractor pendulum may swing right back to a stricter test if a Democrat next takes the White House.
As the Division’s approach to worker classification continues to unfold, employers should closely follow new developments and consult legal counsel for guidance on worker classification matters.