Litigate or Arbitrate? Sixth Circuit Decision Looks at Timing of Sexual Harassment Claim
Can you compel arbitration with an employee who is alleging sexual harassment? You may recall that in 2022, Congress enacted the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA), which precludes employers from requiring employees to arbitrate sexual harassment claims. But what if the alleged harassment occurred before the EFAA effective date? A recent Sixth Circuit opinion, Memmer v. United Wholesale Mortgage, LLC, answered this question.
EFAA Background
Congress passed the EFAA on the heels of the #MeToo movement, which highlighted that arbitration could be used to hinder public awareness of sexual harassment claims and potentially deter employees from pursuing claims, including class actions. Under the EFAA, an employee may voluntarily agree to proceed with arbitration of a sexual harassment claim, but an employer cannot compel as much.
The EFAA applies “with respect to any dispute or claim that arises or accrues on or after the date of enactment of this Act [March 3, 2022].”
But what does this language actually mean? Is it possible for the EFAA to apply to an instance of sexual harassment that occurred prior to March 3, 2022? If the employee left employment before the effective date, can you compel arbitration?
The Memmer Decision Sheds Some Light
Kassandra Memmer quit her job several months before the enactment date of the EFAA and filed a lawsuit alleging a variety of discrimination claims, including sexual harassment. Given her termination date, the alleged harassment occurred prior to March 3, 2022. Not surprisingly, the defendant moved to compel arbitration based on a valid agreement, arguing that the EFAA did not apply to the plaintiff’s claims. The district court agreed, and Memmer appealed.
The majority opinion, authored by Judge Karen Moore and joined by Judge Eric Clay, focused on the EFAA’s language in a statutory note, specifically Congress’s disjunctive language choice, “dispute or claim.” Given Congress’s use of both words, the Court held it had to ascribe a separate meaning to each word. On the one hand, a “claim” accrues when the cause of action accrues, meaning certain elements are in place to form an injury or legal claim ripe for vindication. As for the word “dispute,” the Court held that there is no “set legal framework” to determine when a dispute arises. Instead, the question involves determining exactly when the parties became adverse to one another.
By giving distinct meanings to the words “dispute” and “claim,” the Court held that even though the plaintiff’s claims accrued prior to the enactment date of the act, the dispute between the parties may have transpired after the enactment date of the EFAA. Accordingly, the Court remanded to the district court for consideration of exactly when the dispute arose between the parties.
Based on the Memmer case, employers who seek to compel arbitration of sexual harassment claims cannot rely only on the employee’s separation date. Instead, an employer must also consider when the dispute arose, or when some type of opposition between the parties transpired. The operative dates could be when the employee complains of harassment, when the employer investigates (or does not investigate) the sexual harassment complaint, when the plaintiff files an EEOC charge, or even when the plaintiff files a lawsuit. In the words of the Sixth Circuit, “[u]ltimately, when a dispute arises is a fact-dependent inquiry” that depends on the specific context of each case.
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President Trump Issues Executive Order Aimed at Eliminating Disparate Impact Liability Under Anti-Discrimination Laws
On April 23, 2025, the White House issued an Executive Order (“EO”) entitled “Restoring Equality of Opportunity and Meritocracy,” which aims to “eliminate the use of disparate-impact liability in all contexts to the maximum degree possible.”
First recognized under Title VII of the Civil Rights Act of 1964 (“Title VII”) by the U.S. Supreme Court in Griggs v. Duke Power Co. (1971), disparate impact liability provides that a policy or practice that is facially neutral and applied without discriminatory intent may nevertheless give rise to a claim of discrimination if it has an adverse effect on a protected class, such as a particular race or gender. Disparate impact liability has also been recognized under fair housing laws and in other contexts.
The EO characterizes disparate impact liability as creating “a near insurmountable presumption of unlawful discrimination . . . where there are any differences in outcomes in certain circumstances among different races, sexes, or similar groups, even if there is no facially discriminatory policy or practice or discriminatory intent involved, and even if everyone has an equal opportunity to succeed.” The EO further states that disparate impact liability “all but requires individuals and businesses to consider race and engage in racial balancing to avoid potentially crippling legal liability” and “is wholly inconsistent with the Constitution.”
To that end, the EO, among other things:
directs all executive departments and agencies to “deprioritize enforcement of all statutes and regulations to the extent they include disparate-impact liability,” including but not limited to Title VII;
orders the Attorney General, within 30 days of the EO, to report to the President “(i) all existing regulations, guidance, rules, or orders that impose disparate-impact liability or similar requirements, and detail agency steps for their amendment or repeal, as appropriate under applicable law; and (ii) other laws or decisions, including at the State level, that impose disparate-impact liability and any appropriate measures to address any constitutional or other legal infirmities”;
orders the Attorney General and the Chair of the EEOC, within 45 days, to “assess all pending investigations, civil suits, or positions taken in ongoing matters under every Federal civil rights law within their respective jurisdictions . . . that rely on a theory of disparate-impact liability, and [] take appropriate action” consistent with the EO;
orders all agencies, within 90 days, to “evaluate existing consent judgments and permanent injunctions that rely on theories of disparate-impact liability and take appropriate action” consistent with the EO;
orders the Attorney General, in coordination with other agencies, to “determine whether any Federal authorities preempt State laws, regulations, policies, or practices that impose disparate-impact liability based on a federally protected characteristic such as race, sex, or age, or whether such laws, regulations, policies, or practices have constitutional infirmities that warrant Federal action, and [] take appropriate measures” consistent with the EO; and
orders the Attorney General to initiate action to repeal or amend regulations contemplating disparate impact liability under Title VI of the Civil Rights Act of 1964, which prohibits race, color, and national origin discrimination in programs and activities receiving federal financial assistance.
The EO also orders the Attorney General and the Chair of the EEOC to “jointly formulate and issue guidance or technical assistance to employers regarding appropriate methods to promote equal access to employment regardless of whether an applicant has a college education, where appropriate.”
Takeaways
This EO is the latest evidence of shifting enforcement priorities by the federal agencies tasked with enforcing civil rights laws, including the EEOC. The ultimate scope of the EO’s impact remains to be seen, particularly as it relates to the potential for preemption of disparate impact liability under state or local anti-discrimination laws. Congress has the authority to amend any federal statutes to specifically address a disparate impact theory of liability, and the courts will continue to have the ultimate say on whether and to what extent such a theory is cognizable under particular statutes. We anticipate further updates in this area and will continue to monitor and report on these updates.
GeTtin’ SALTy Episode 51 | Overview of Washington’s 2025 Legislative Session: Tax Policy Challenges and Business Impacts [Podcast]
In this episode of GeTtin’ SALTy, host Nikki Dobay is joined by Max Martin, Director of Tax and Fiscal Policy at the Association of Washington Business, to discuss Washington’s legislative session and its implications for state tax policy.
With COVID relief funds dwindling and a projected budget shortfall of up to $20 billion, policymakers are exploring a range of revenue-raising measures, from B&O tax increases and a new surcharge on large business to the creation of a statewide payroll tax and even a potential wealth tax.
Max provides insights into these proposals, Governor Ferguson’s stance, and the challenges businesses face in navigating Washington’s evolving tax landscape.
As the session nears its end, Nikki and Max explore the balance between maintaining competitiveness and funding critical state programs.
Lastly, they share their favorite things about spring in the Pacific Northwest.
Employers Must Adapt to Worksite Raid Surge: Sanctuary Cities Face Intensified Enforcement Efforts
Takeaways:
Increased Worksite Enforcement: Businesses can expect a surge in ICE raids and I-9 audits at workplaces.
Impact on Sanctuary Cities: Federal agents will target sanctuary cities for immigration enforcement operations.
Employer Preparedness: Businesses, especially those operating in sanctuary cities, should have an action plan ready for potential ICE enforcement actions.
Tom Homan, President Donald Trump’s border czar, has announced a significant escalation in the administration’s interior immigration enforcement strategy to increase deportation of undocumented immigrants. The initiative involves deploying more federal agents to places of work, particularly those in “sanctuary cities.”
Targeting Sanctuary Cities
Although there is no official definition, in general a sanctuary city limits its cooperation with federal immigration enforcement agencies often to protect undocumented immigrants from deportation. Limited cooperation can take many forms, such as refusing to share information about undocumented immigrants with federal authorities or restricting local law enforcement’s involvement in immigration enforcement. These cities often refuse to detain undocumented immigrants who have not committed serious crimes, which has been a point of contention between local and federal authorities.
Homan’s announcement underscores the administration’s frustration with these jurisdictions. He stated that if federal agents cannot arrest individuals in jails, they will do so on the streets, and if they cannot do so on the streets, they will do so in targeted worksite enforcement operations. This approach is part of the federal government’s broader strategy to expedite removal of undocumented individuals regardless of whether they have committed serious crimes.
Immediate Implications for Employers
Homan outlined a two-pronged approach. First, there will be a higher presence of federal agents in sanctuary cities. This means that Immigration and Customs Enforcement (ICE) agents will be more visible and active in these jurisdictions, conducting operations aimed at identifying and detaining undocumented immigrants.
Second, Homan emphasized worksite enforcement operations. “If we can’t do it in the streets, then we’re going to increase worksite enforcement operations in those sanctuary cities. We’re going to flood worksite enforcement operations,” he said.
Increased Worksite Enforcement
Businesses can expect a substantial increase in I-9 audits and raids at workplaces. Employers should prepare for ICE enforcement actions, including audits of employment records and I-9s, raids, and arrests of undocumented workers and even the employers who hire them. Employers need to prepare well beyond routine I-9 Notices of Inspection from ICE, although I-9 audits are trending up as well.
Employer Preparedness
Employers, especially those in sanctuary cities, should be vigilant and prepared for increased ICE audits and raids and potential business disruptions. Understanding the broader context of the rising enforcement efforts can help businesses navigate the complexities of immigration compliance and enforcement.
Washington State Makes Key Changes to Amend Equal Pay and Opportunities Act
On April 22, 2025, the Washington State Senate passed Substitute Senate Bill 5408, as amended by the House on April 15, 2025 (“Amended SSB 5408”), making substantial changes to the Equal Pay and Opportunities Act related to pay and benefit information in job postings, a law that has resulted in hundreds of class action lawsuits since summer 2023.
Amended SSB 5408 makes significant changes to the law as it relates to procedures and potential damages, but it maintains the pay transparency in job posting requirements.
Quick Hits
Under SSB 55408, which amends the Equal Pay and Opportunities Act, Washington employers may now list a fixed pay amount instead of a wage range if only one amount is offered, including for internal transfers; postings that are replicated without employer consent are not considered official job postings.
Between the law’s effective date and July 27, 2027, employers have five business days to correct a noncompliant posting after receiving written notice and can avoid penalties if the posting is timely corrected.
The amended law further defines and clarifies two separate remedies, each of which is exclusive: administrative remedies (civil penalties up to $1,000 and statutory damages between $100 and $5,000 per violation) or remedies via private civil actions, including statutory damages between $100 and $5,000 per violation. Each permits statutory damages and considers factors such as willfulness and employer size.
Key Updates to RCW 49.58.110
The key updates to RCW 49.58.110 follow below.
Wage Scale or Salary Range
The wording of the previous statute appeared to require a “wage scale or salary range,” even if all individuals employed in that position had the same pay or the same starting pay. Amended SSB 5408 permits employers that offer only a fixed amount of pay to list only that fixed amount, and they are not required to provide a wage scale or salary range that does not really exist. This also applies for internal transfers where the employer only offers a fixed wage amount.
Definition of “Posting”
Amended SSB 5408 makes clear that a posting does not include a “solicitation for recruiting job applicants that is digitally replicated and published without an employer’s consent.”
Cure Period
For postings between the effective date of Amended SSB 5408 and July 27, 2027, employers must be given the opportunity to correct a job posting that does not meet the requirements of the law. Under the new law, any person may provide “written notice” to the employer that they believe a posting fails to comply with the job pay transparency requirements, and the employer has five (5) business days from the receipt of the written notice to correct the posting and notify any third-party posting entity to correct the posting. The cure opportunity must be provided before the individual may seek any remedy under the law, and if the posting is timely cured, no damages, penalties, or other relief may be assessed.
Damages/Relief
RCW 49.58.110 previously relied on damages sections that arose from the equal pay law as it existed prior to the job posting wage transparency laws. Amended SSB 5408 now further defines and clarifies two separate remedies, each of which is exclusive.
Administrative remedies. Amended SSB 5408 permits an investigation, encourages conference and conciliation, and, if that fails, permits the director to assess a civil penalty of $500 for a first violation and up to $1,000 for repeat violations, or up to ten percent of the damages. In addition to the civil penalty, costs, and other relief for the affected job applicant or employee, the department may “order the employer to pay each affected job applicant or employee statutory damages of no less than $100 and no more than $5,000 per violation.” Amended SSB 5408 provides factors to be considered when assessing the penalty, including the willfulness of the violation or whether it was a repeated violation; the employer’s size; the amount necessary to deter noncompliance; the purposes of the law; and other factors deemed appropriate.
Private civil action. Amended SSB 5408 leaves in place an affected job applicant or employee’s right to bring a private right of action. The new law, however, provides that an affected job applicant or employee may be “entitled to statutory damages of no less than $100 and no more than $5,000 per violation, plus reasonable attorneys’ fees and costs.” The court, in assessing statutory damages, may consider the same factors as the agency.
Advancing the IRS Whistleblower Program
The director of the IRS Whistleblower Office (the Office) released the Office’s first multi-year operating plan outlining its guiding principles, strategic priorities, achievements, and efforts to advance the program. As part of its plan, the Office’s mission and vision statements were enhanced. The mission states it is to effectively administer the Whistleblower Program by ensuring:
the IRS compliance functions receive and consider specific, timely and credible claims that identify non-compliance with the tax and other laws administered by the IRS;
whistleblowers receive required notifications timely; and
awards are fairly determined and paid
The IRS Whistleblower Office states its vision is “to effectively promote voluntary compliance and reduce the tax gap by providing excellent service to whistleblowers, taxpayers and other stakeholders.”
With the intention of making the Whistleblower Program a success, the plan is framed around six strategic priorities:
1.
Enhance the claim submission process to promote greater efficiency.
2.
Use high-value whistleblower information effectively.
3.
Award whistleblowers fairly and as soon as possible.
4.
Keep whistleblowers informed of the status of their claims and the basis for IRS decisions on claims.
5.
Safeguard whistleblower and taxpayer information.
6.
Ensure the workforce is supported with effective tools, technology, training, and other resources.
Each of these strategic proprieties sets forth its priority efforts for 2025 and, separately, for 2026-2027.
Apart from increasing processing efficiencies, expanding the use of data analytics, adjusting staffing and other procedural efforts to enhance the program, the plan proposes significant improvements for whistleblower claimants. It updated and improved Form 211 (Application for Award for Original Information), including an updated list of alleged violations to select from, and includes a new option for multiple whistleblowers to file jointly. It is developing a digital portal to make claim submission easier. It also is developing a new approach for the initial analysis of claims to ensure high-value submissions are identified and prioritized to improve and speed up the evaluation of claims for awards.
The Plan and its implementation will make it easier and faster to obtain a reward while still preserving confidentiality and protection of whistleblower records and taxpayer information. It also provides for improved communication with whistleblowers during the pendency of their claims.
Changes at the OFCCP: Enforcement Employees Placed on Administrative Leave Amid Federal Workforce Cuts
Employees in the Office of Federal Contract Compliance Programs (OFCCP) across the country have been placed on administrative leave. The move is part of the Administration’s broader federal workforce reduction efforts.
The email communication, sent Wednesday, April 16, by newly appointed OFCCP Director Catherine Eschbach, notified staff in the agency’s enforcement division—both at the national office and in five of six U.S. regional offices—of their change in status. Eschbach cited a “significantly reduced scope of mission” as the reason behind the administrative action.
The OFCCP, which monitors federal contractors for compliance with anti-discrimination and, prior to the rescinding of Executive Order 11246, affirmative action laws, has been a key target in the Administration’s plan to streamline the Department of Labor (DOL). Executive Order 14173 issued in January 2025, which rescinded Executive Order 11246, curtailed the agency’s authority by eliminating or reducing key legal and oversight powers.
As discussed in our prior blog post, a February 25 memo from the DOL outlined plans to ultimately eliminate up to 90% of OFCCP’s workforce. The April 16 notice to OFCCP employees came two days after a final deadline for staff to opt into voluntary exit programs, including deferred resignation and early retirement.
The administrative leave impacts primarily the enforcement staff, meaning the national office’s policy, operations, and administrative branches will remain as well as the Southwest and Rocky Mountain (SWARM) regional office, according to Eschbach’s message.
Employers should work with outside counsel to stay abreast of government changes and understand how they may impact their companies.
“Just Do It” May Sell Shoes, but Can It Revolutionize Bureaucracy?
There are a variety of accounts on the progress and success of the first days of the Trump Administration. Some put special significance on a new administration’s first 100 days, but is this the first 100 days or four years + 100 days?
In particular, appearing April 21, 2025, in The Washington Post, there is a report tracing what has happened to the “Five Things” mandate coming from Elon Musk and the DOGE (Department of Government Efficiency) effort. This was a “mandate” to report every federal employee’s work achievements at the risk of losing their job. Apparently, that reporting mandate has now withered away into a range of requirements widely varying by agency.
Some employees are reported to respond with repetitive boilerplate or curt (and sometimes offensive) language. An earlier Bergeson & Campbell, P.C. (B&C®) blog post provided advice about how one might respond to the requirement. Some agencies have told employees to ignore it, some have continued the requirement but do not appear to do anything with the information, and a few continue to mandate reporting and claim to make use of it in employee evaluations.
So catchy phrases (“You’re fired”), props (chainsaws), Executive Orders (take your pick), and even 900-page blueprints (Project 2025) may not be enough to impose fundamental change on “the system.” More benign is the realization that the workforce of two-plus million federal workers is hard to manage with only the 1,000 or so most senior appointees arriving with the new Administration.
One lesson from the President’s first term might have been to realize the utility of fostering some level of confidence (or even trust) in the employees of any agency or program, even if seeking fundamental reforms or impactful budget and staff cuts. Instead, the DOGE effort has seen what appear to be ad hoc personnel cuts without following required procedures or a semblance of planning (example: getting a notice that you no longer have a job when you try to enter the building on a Monday morning), and has raised even more distrust and contempt beyond that which was widely reported during the first Trump term.
Change is difficult even among friends, perhaps more so if you are trying to be a demanding boss (especially one demanding program and staff cuts). Respect for the person, respect for the program’s mission generally, and some semblance of process might reduce some of the upset. In another time and place, a reform plan might have included suggestions from the staff about what should be changed, or even how a significant cut (say 25-50 percent) could be imposed and still maintain the organization.
Such a suggestion box would include everything from old grievances, ode to the status quo, and “cuts for thee not me” ideas. The advantage that may be among the suggestions could be ideas from those employees who “know where the bodies are buried” — outdated practices or procedures, staffing imbalances, or program areas in need of trimming (at least with a pruning saw, however less fetching on social media).
Viable suggestions coming from the incumbent staff are impossible when the staff is afraid and confused by the swirl of e-mails from questionable authority. Surprise cuts to your program or the end of your career coming from press releases and reports of the latest Executive Order is not good for morale. The apparent rationale for the chainsaw metaphor is a “move fast and break things” approach. This is evocative of some strategies used in the Vietnam war, summarized as: “burn down the village to save it.”
Even if big moves and fundamental changes are the order of the day, the private sector and government functions are different in ways that matter. Failed mergers resulting in a drastic drop in stock prices are impactful in different ways than a drastic impairment of important government functions the public depends on — including clean water or safe food and social security checks delivered on time (and that do not bounce).
More respect for the staff and more understanding of the agency mission and how procedures or budgets evolved into today’s program (warts and all) would have served the reform taskmasters more effectively than the progress reported until now.
Wyoming Joins the List of States Banning Some Noncompete Agreements
On March 19, 2025, Wyoming became one of the latest states to enact legislation banning noncompete agreements.
The new law, which goes into effect July 1, 2025, voids “[a]ny covenant not to compete that restricts the right of any person to receive compensation for performance of skilled or unskilled labor.” The law applies only to contracts entered into on or after July 1, 2025, and specifically states that nothing in the law alters, amends or impairs “any contract or agreement entered into before July 1, 2025.”
The law, as drafted, broadly applies to any agreement containing a noncompete clause, such as an employment agreement, independent contractor agreement, or some other type of agreement. The law does not impact or address non-solicitation agreements.
Though the new law appears on its face to be far-reaching, it contains notable exceptions that effectively narrow the scope of noncompetes impacted by the law, discussed below.
Trade Secret Exception
The Wyoming noncompete ban does not include covenants not to compete “to the extent the covenant provides for the protection of trade secrets as defined by W.S. 6-3-501(a)(xi).” Under W.S. 6-3-501(a)(xi), “trade secret” is broadly defined as:
the whole or a portion or phase of a formula, pattern, device, combination of devices or compilation of information which is for use, or is used in the operation of a business and which provides the business an advantage or an opportunity to obtain an advantage over those who do not know or use it. “Trade secret” includes any scientific, technical or commercial information including any design, process, procedure, list of suppliers, list of customers, business code or improvement thereof. Irrespective of novelty, invention, patentability, the state of the prior art and the level of skill in the business, art or field to which the subject matter pertains, when the owner of a trade secret takes measures to prevent it from becoming available to persons other than those selected by the owner to have access to it for limited purposes, the trade secret is considered to be:
(A) Secret;
(B) Of value;
(C) For use or in use by the business; and
(D) Providing an advantage or an opportunity to obtain an advantage to the business over those who do not know or use it.
The breadth of Wyoming’s statutory definition of “trade secret” arguably leaves employers with a fair amount of leeway to structure their restrictive covenants so that they fall under this exception.
Executive and Management Personnel Exception
The law also excludes noncompete agreements entered into with executive and management personnel and officers and employees who constitute professional staff to executive and management personnel. The law does not define the terms “executive and management personnel” or “officers and employees who constitute professional staff to executive and management personnel,” potentially providing employers relatively wide latitude in determining which employees may fit within this exception.
Physicians
The law also voids covenants not to compete in employment, partnership or corporate agreements between physicians that restrict the rights of a physician to practice medicine as that term is defined under Wyoming’s Medical Practice Act. All other provisions of a physician’s agreement that are “enforceable at law shall remain enforceable.”
Additionally, physicians will be permitted to disclose their “continuing practice of medicine and new professional contact information to any patient with a rare disorder as defined in accordance with the national organization for rare disorders, or a successor organization, to whom the physician was providing consultation or treatment before termination of the employment, partnership or corporate affiliation.” Physicians, and their new employers, shall not be liable for any damages resulting from the disclosure or from the physician’s treatment of the patient following the termination of the agreement or the physician’s employment, partnership or corporate affiliation.
Expense Repayment Provisions
Contractual provisions for recovering the “expense of relocating, educating and training an employee” are also exempt from the new law pursuant to the following statutory repayment provisions based on how long the employee has worked for the employer:
(A) Less than 2 years: Recovery up to 100% of expenses
(B) At least 2 years but less than 3 years: up to 66% of expenses
(C) At least 3 years but less than 4 years: 33% of expenses
(D) 4 or more years: 0% of expenses
Contract for the Purchase and Sale of a Business or Its Assets
Finally, the law also excludes covenants not to compete that are contained in a contract for the purchase and sale of a business or the assets of a business.
Key Takeaways
Employers wishing to enter into noncompete agreements on or after July 1, 2025 may only do so if the noncompete falls within one or more of the law’s specific carveouts. Notably, the law does not provide for any statutory damages or penalties, such as an attorneys’ fee-shifting or “loser pays” penalty, should a party choose to challenge the validity of a noncompete agreement. The law’s lack of a damages or penalties provision could potentially diminish the law’s impact as employers may perceive little risk in asserting a noncompete provision which falls under one or more of the law’s more expansive exceptions, such as the trade secret exception or executive and management personnel exception.
As Wyoming joins the growing list of jurisdictions considering and adopting legislation governing noncompetes, we will continue to report on key legislative updates and trends
EEOC Breaks Silence on 2024 EEO-1 Filing Cycle and Plans Shortened Filing Period
After a long silence, the U.S. Equal Employment Opportunity Commission (EEOC) has taken steps to move forward with the 2024 EEO-1 Component 1 data collection by submitting documents for approval to the White House Office of Management and Budget. The proposed 2024 EEO-1 Component 1 Data Collection Instruction Booklet states that the 2024 EEO-1 filing platform will open on May 20, 2025, and close on June 24, 2025.
Quick Hits
The 2024 EEO-1 data collection is set to open on May 20, 2025, and close at 11:00 p.m. (EDT) on June 24, 2025.
The proposed 2024 Instruction Booklet requires filers to indicate their federal contractor status and requires federal contractor employers with fifty or more employees (but with fewer than one hundred employees) to file EEO-1 reports.
The proposed 2024 Instruction Booklet removes the option to provide information about non-binary employees.
Shortened Reporting Period
The proposed 2024 Instruction Booklet provides for a shortened reporting period—down to five weeks—from the platform opening date of May 20, 2025, to the filing deadline of June 24, 2025.
Changes to Reporting by Sex
The proposed 2024 Instruction Booklet eliminates the option to report non-binary employees, stating that the reporting provides “only binary options (i.e., male or female) for reporting employee counts.” This change is tied to Executive Order 14168, “Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government.”
Reporting Based on EO 11246 Continues
Despite the rescission of Executive Order 11246 on January 21, 2025, the proposed 2024 Instruction Booklet and sample 2024 EEO-1 report provide that federal contractors with fifty or more employees are still required to file EEO-1 reports for the 2024 cycle.
Conclusion
Based on documents submitted by the EEOC, the 2024 EEO-1 Component 1 data collection site will open on May 20, 2024, and close on June 24, 2025. In addition, the proposed EEO-1 Instruction Booklet eliminates all references to non-binary employees. Due to the shortened filing period, EEO-1 filers may want to consider working now toward gathering the data necessary for the filings.
Employment Law This Week Episode – Non-Competes Eased, Anti-DEI Rule Blocked, Contractor Rule in Limbo [Video, Podcast]
This week, we’re covering the relaxation of state-level non-compete rules, the recent block of Executive Order 14173’s diversity, equity, and inclusion (DEI)-related certification requirement, and a federal appeals court’s decision to pause a challenge to the Biden-era independent contractor rule.
Non-Competes Eased in Kansas and Virginia
Kansas has enacted a law permitting non-competes while setting requirements for non-solicit provisions. Additionally, effective July 1, 2025, Virginia will prohibit non-compete agreements for non-exempt employees.
Federal Contractor DEI Rule Blocked
In a lawsuit brought by Chicago Women in Trades, a federal judge paused a rule from Executive Order 14173 requiring federal contractors to certify that they don’t operate DEI programs that violate anti-discrimination laws, citing unclear definitions of “illegal” DEI programs.
Independent Contractor Rule in Limbo
The U.S. Court of Appeals for the Fifth Circuit paused a challenge to the 2024 independent contractor rule, allowing the U.S. Department of Labor time to consider revising or replacing it. For now, the Biden-era rule remains in effect.
Second Circuit Reinstates Discrimination Lawsuit of Employee Fired for Unauthorized Removal of Cash From Register
The U.S. Court of Appeals for the Second Circuit recently reinstated a former laundromat employee’s discrimination lawsuit against her employer, even though her employment had been terminated for taking cash from the cash register.
The decision in Knox v. CRC Management Co., LLC, No. 23-121 (2d Cir. 2025), underscores the importance of promptly addressing employee complaints, providing training to supervisors, and ensuring policies are reduced to writing and enforced consistently in the workplace.
Quick Hits
The Second Circuit Court of Appeals reversed a district court’s entry of summary judgment that had been granted in favor of a defendant employer and reinstated the plaintiff’s employment discrimination lawsuit, finding that genuine disputes of material fact existed as to each of the plaintiff’s claims and that the plaintiff was entitled to present the claims to a jury.
The plaintiff, a former laundromat employee whose employer had discharged her for removing cash from the register and refusing to return it, filed a lawsuit in federal court alleging discriminatory and retaliatory termination, hostile work environment, refusal to accommodate a disability, and unpaid wages.
The case highlights for employers the value of carefully addressing employee complaints of discrimination and harassment, enforcing workplace policies consistently, and providing training for supervisors.
Background
Natasha Knox, a Black woman of Jamaican descent, was employed as a customer service attendant at three Clean Rite Center laundromats in the Bronx from December 2018 until her employment was terminated in April 2019. During her employment, Knox allegedly experienced derogatory comments from her supervisor. The supervisor allegedly criticized Knox for being “too hood” and “ghetto” to work at Clean Rite. Knox reported these comments to her district lead, who allegedly took no action.
In late January or early February 2019, Knox sustained a broken thumb in a car accident, and in early March, she was instructed by her doctor not to lift more than twenty-five pounds. Knox’s subsequent requests for accommodation in conformance with her doctor’s instruction were allegedly dismissed. One supervisor reportedly told Knox that she “shouldn’t have this job” if she required an accommodation, and her new district lead also made derogatory comments, including that Knox “looked like Aunt Jemima” and “talk[ed] Jamaican” when she became “upset.” Knox further alleged that she was not compensated for extra shifts that she worked at other Clean Rite locations and that she had filed a formal complaint with the new district lead, who did not follow up on her claims.
On April 14, 2019, after taking a taxi to work, Knox took $15 from the cash register to reimburse herself for the taxi fare and placed her taxi receipt in the register, believing she had permission to do so. She was later confronted by her new supervisor, who asked her to return the money—a request Knox refused. Following this incident, the district lead terminated Knox’s employment, citing her removal of cash from the register and her refusal to return it as the reason for the termination.
The Second Circuit Revives Knox’s Claims
Knox filed a lawsuit in the U.S. District Court for the Southern District of New York against Clean Rite and her supervisors. She alleged racial discrimination, failure to accommodate her disability, retaliation, and unpaid wages.
The district court granted summary judgment in favor of the defendants. The district court concluded that Knox had not provided sufficient evidence beyond her own testimony to demonstrate that Clean Rite’s reason for terminating her employment—specifically, her alleged theft of money—was discriminatory. Additionally, the district court determined that Knox’s testimony and sworn affidavit alone were inadequate to establish factual disputes regarding her claims, including those related to unpaid wages.
On April 9, 2025, the U.S. Court of Appeals for the Second Circuit issued a decision reviving the case, holding that Knox had presented sufficient evidence to survive summary judgment on all her claims. In doing so, the court emphasized that Knox had presented evidence of discriminatory comments near in time to her employment termination that could reasonably support an inference of unlawful discrimination. The court also pointed out that Knox’s supervisors had not taken any action in response to her internal complaints of workplace discrimination, which were protected conduct under Title VII of the Civil Rights Act of 1964.
Importantly, the Second Circuit reasoned that Knox had testified in her deposition that other employees had been permitted to take cash from the register to pay for their taxi fares, so long as they left receipts. This, according to the Second Circuit, was sufficient to create an issue of fact concerning whether the reasons provided by Clean Rite were a pretext for unlawful discrimination.
As for the disability discrimination claims, the Second Circuit focused on Knox’s disclosure of her injury and lifting restrictions and the fact that her accommodation request had been denied, even though arguably she could perform other essential functions of the job.
Finally, the Second Circuit held that Knox’s affidavit stating she had been subjected to daily harassment from her supervisor and had worked hours for which she was not paid was sufficient to create an issue of fact relating to her hostile-work-environment and unpaid-wages claims.
Guidance for Employers
The Knox decision provides a helpful reminder to employers of the importance of ensuring that all complaints of discrimination, harassment, and retaliation are taken seriously and investigated promptly. Knox’s complaints to supervisors about racial harassment and failure to accommodate her disability were allegedly ignored, contributing to the Second Circuit’s decision to reinstate her claims.
The Second Circuit’s decision does not alter the “sham affidavit” rule, which prevents a party from creating a genuine issue of material fact by submitting an affidavit that contradicts prior deposition testimony. In Knox’s case, the court found that her affidavit was consistent with her deposition testimony and other evidence presented. This underscores the importance of maintaining consistent and truthful documentation throughout all legal proceedings.
Employers should consider providing regular training to supervisors and managers on antidiscrimination laws, reasonable accommodations, and the proper handling of employee complaints. In Knox’s case, alleged derogatory comments and inconsistent treatment by supervisors played a significant role in the appellate court’s decision. Training can help prevent such behavior and ensure consistency in a respectful workplace.
Finally, employers may want to regularly review and update their antidiscrimination, harassment, and accommodation policies to ensure they comply with current laws and best practices. Clear policies and procedures can help guide employees and managers in handling complaints and accommodation requests appropriately. Relatedly, clear, written policies and procedures concerning items such as expense reimbursement may help reduce or eliminate allegations of selective enforcement, such as those at issue in the Knox case.