Disparate Impact Liability Under Fire
On Wednesday, April 23, 2025, President Trump signed EO 14281, titled Restoring Equality of Opportunity and Meritocracy (EO), stating a new Trump Administration policy “to eliminate the use of disparate-impact liability in all contexts to the maximum degree possible . . . .”
We, along with several of our colleagues, already explained this EO, but this shift in federal policy – barely noticed by most people amidst myriad controversies, memes, and crypto schemes, as well as a number of other executive orders – is important enough to warrant further consideration by anyone who manages workplaces and those of us who advise employers about civil rights laws. As a cover story in the Sunday, May 11, 2025 issue of the New York Times observed, the EO’s directive to curtail the use of disparate impact liability is part of a larger effort to “purge the consideration of diversity, equity and inclusion, or D.E.I., from the federal government and every facet of American life. . . .” and focuses on “the nation’s bedrock civil rights law.”
The Genesis of Disparate Impact Liability
In 1971, the Supreme Court of the United States (SCOTUS) recognized in Griggs v. Duke Power Co. that Title VII of the Civil Rights Act of 1964 “proscribes not only overt discrimination but also practices that are fair in form, but discriminatory in operation.” Thus, in the first case in which SCOTUS addressed such a Title VII claim on the merits, the Court approved disparate impact as a theory of liability under Title VII; i.e., that a plaintiff can establish a prima facie case of discrimination by showing that a facially neutral employment policy disproportionately excluded members of a protected class at a statistically relevant level.
Two years after the Supreme Court held in Wards Cove Packing Co. v. Atonio that employers defending a disparate impact claim need only “produce evidence of a legitimate business justification” for the policy in question, Congress amended Title VII with the Civil Rights Act of 1991 (CRA). The CRA requires defendants to prove that a neutral employment policy with a statistically significant adverse impact on a protected class was job related and consistent with business necessity, a more difficult standard to meet than the standard set in Wards Cove. See 42 U.S.C. § 2000(e)-2 (k), the statutory provision on “Burden of proof in disparate impact cases” that Congress created and President George H.W. Bush approved.
In 2009, in Ricci v. DeStefano, a divided SCOTUS addressed whether an employer that engages in “disparate treatment” can justify doing so to avoid “disparate impact” liability. The majority held that an employer may do so only if it can prove its reasoning under a “strong-basis-in evidence” standard.
Concurring with the majority, Justice Scalia amplified the argument that the disparate impact provisions in Title VII are at odds with the Constitution’s equal protection clause. This viewpoint has won favor in certain corners of legal scholarship. See, for example, a Harvard Journal of Law & Public Policy discussion of disparate impact by Pacific Legal Foundation Fellow Alison Slomin, and an article posted by the Federalist Society asking whether the disparate impact doctrine is unconstitutionally vague.
The Actual Impact of “Disparate Impact”
The EO takes such arguments even further, calling disparate-impact liability “a near insurmountable presumption of unlawful discrimination [that] exists 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.” Case law, however, indicates that establishing this “near insurmountable presumption” is not so easy.
Title VII requires an employer to prove the business necessity for a policy in question only after a plaintiff has met the burden of proving that a disparate impact exists to a statistically significant degree. And — as Mark Twain said — “There are three kinds of lies: lies, damned lies and statistics.”
A good statistics expert for the defense can stop a disparate impact claim in its tracks by identifying statistical fallacies in a plaintiff’s alleged statistical proof of disparate impact. A plaintiff must also demonstrate that the policy in question caused the disparity, which is no easy task.
Further, a mere finding of disparate impact does not mean that the plaintiff wins the lawsuit. Rather, establishing the existence of a statistically significant disparate impact establishes only a prima facie case of discrimination, not liability under Title VII (or any other anti-discrimination statute).
If a disparate impact plaintiff establishes a prima facie case, the burden of persuasion then shifts to the defendant to prove that the policy is job related and consistent with business necessity. The defendant’s burden can be simplified to one inquiry: whether the policy concerns an essential job function. For example, is it an essential function of a lifeguard to be able to swim?
Indeed, scholars have argued that disparate impact liability has proven to be a fairly limited tool for plaintiffs claiming discrimination.
Seeking a “Colorblind” Meritocracy, But What About Other Protected Classes?
The EO asserts 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 concludes that disparate-impact liability is unconstitutional. The disparate impact theory, however, is not limited just to race. The EO does not mention that the disparate impact theory is available in other Title VII cases based on sex, national origin, color and religion. To a lesser extent, it can apply to cases brought under the Age Discrimination in Employment Act (ADEA) and the Americans with Disabilities Act (ADA), too. However, an employer’s burden to defend against an ADEA claim is only to establish a reasonable factor other than age. Further, because of the detailed factual showing required in ADA cases, disparate impact ADA claims are not often available.
The EO also declares that treating people as individuals “encourages meritocracy and a colorblind society” as opposed to “race- or sex-based favoritism.” Notably, while Title VII makes it illegal to discriminate against any individuals on the basis of a protected class, the first sentence of the EO states that equal treatment of all citizens is a bedrock principle of the United States.
Under Title VII, it is illegal for employers to discriminate against any individual based on race, color, religion, sex, or national origin. The Equal Employment Opportunity Commission (EEOC) issued Enforcement Guidance on National Origin Discrimination in 2016, along with a Q&A that notes that Title VII’s “protection against national origin discrimination extends to all employees and applicants for employment in the United States, regardless of their place of birth, authorization to work, citizenship, or immigration status.” When the EEOC has a quorum of Trump appointees, that Guidance may be reconsidered, although a change to the statute will still require an act of Congress.
What it All Means, in Practice
Title VII as amended (including the Civil Rights Act of 1991) is still the law of the land, and the laws of many states may permit or require that adverse impact analyses be performed in certain circumstances. It thus still makes good sense to continue utilizing adverse impact analyses as a risk mitigation tool, under the privileged guidance of counsel.
In addition, with the EO’s overt message on federal government enforcement policy with respect to Title VII (and, for that matter, Title VI), employers should be able to rely on the EO to stop a federal government investigation that centers on an employment practice or policy allegedly causing a disparate impact in violation of Title VII. For example, employers now should be able to convince the EEOC to dismiss a race charge of discrimination as to a facially neutral policy or practice attacked only under a disparate impact theory.
Moreover, while the EO does mention the word “age,” it does not mention “disability” and does not cite to either the ADEA, 29 U.S.C. § 621, et seq., or the ADA, 42 U.S.C. § 12101, et seq. It seems likely that, given the EO’s clear position as to the disparate impact theory of discrimination, this Administration will also not continue an investigation or litigation premised on a disparate impact theory in violation of these laws. Accordingly, employers may likewise be able to get the EEOC or the U.S. Department of Justice to stop investigations of such claims.
Many of the (thus far) 147 executive orders issued since January 20, 2025, have been challenged in court; as of May 7, 2025, at least 228 actions have been filed, many resulting in preliminary injunctions blocking all or parts of these actions. It is unclear whether this EO will also garner a lawsuit, or if Congress will propose legislation to amend Title VII, or if the Administration will try to persuade the Supreme Court to agree with its declaration regarding the constitutionality of disparate impact theory. There is much to keep an eye on.
Belgium’s Private Investigations Act: Is Your Internal Investigations Service in Focus?
In December 2024, the new Private Investigations Act came into force. The Act replaced the Private Detectives Act of 1991 and was long overdue, considering how much has changed in the world of private investigations. The 1991 law focused on detectives as sole practitioners, think Columbo or Magnum P.I., a world of uncertain ethics, periodic violence and grubby raincoats, most of which no longer exists outside the small screen. The new Act aims to modernise the applicable legal framework in light of new investigation methods and bring it into line with the General Data Protection Regulation (GDPR), though sadly not to address the traditional private detective issues of implausible dialogue and unhappy dress choices.
The Act imposes a number of obligations on employers instructing investigations on their employees, and we will discuss these changes at length in future blogs, but there is a more pressing issue we need to deal with first, and that regards your internal investigations service. The Act extends its scope from solo private detectives to all types of investigations companies but more importantly, also to internal investigations services. An internal investigations service is defined by the Act as ‘any service organised by a natural or legal person for its own purposes for the systematic performance of private investigation activities’. This definition is very wide and has prompted the legislator to exclude a number of roles and functions, such as lawyers, bailiffs and auditors.
The legislator has taken into account that in practice, internal services are often organised at group level and has therefore provided that investigation activities still qualify as internal when they are performed for the benefit of companies in the same group structure. What the legislator has seemingly not considered, however, is that international groups will often have an investigations team in one location, which is not necessarily Belgium, that will conduct all investigations for the group, including those concerning employees located in Belgium. This means that the Belgian legislator has probably also not fully realised that the registration obligation imposed by the Act may thus also extend to these internal investigations services located outside of Belgium, if their remit extends to this country.
The Act provides an exception for members of the HR team “who carry out private investigation activities on behalf of their own employer within the framework of incident investigations [not defined] involving employees of that employer”. The HR team will not be considered to perform the activities of an internal investigations service, so the registration obligation will not apply to them. The criterion of distinction would be the focus of the team: is it day-to-day HR activities, with an exceptional side activity of investigative work, or is investigation work the main focus for the team?
So what does this registration obligation entail? Internal investigations services must obtain a prior authorisation or licence from the Ministry of Interior to lawfully conduct private investigations in Belgium. The licence is granted for a renewable period of five years. It will only be awarded if the members of the team have a clean criminal record (minus some minor offences), they have undergone specific training and are Belgian nationals or have their main residence in the EEA or Switzerland. This would seem to suggest the end of investigations being carried out more or less remotely by the US parents of local subsidiaries, though it is unclear at this stage just how much (substantial) advisory input into the investigation process and/or decisions there can still be from abroad so long as the team is fronted by someone satisfying the above conditions. The members of the team should also have a certain “desired profile”, meaning that they will honour individuals’ fundamental rights, be loyal and discrete, and not entertain suspicious relations with criminal organisations, etc.
The license is awarded by the Ministry of Interior, which may or should in some cases seek the prior advice of the public prosecutor.
If an internal investigations service was already validly performing private investigation activities on the date of entry into force of the Act, 16 December 2024, they may continue to perform such services, but they will need to make a request to obtain a licence by 16 June 2025. The members of these teams will have 18 months after their company obtained a license to undergo the required training and obtain a licence card. The specific training requirements are in fact still to be defined by Royal Decree.
California Court Turns Up the Heat: PG&E Case Requires Employees Claiming Defamation to Prove Damages Beyond Their Termination
Employees may believe they can premise a defamation case on their employment termination. However, Hearn v. Pac. Gas & Elec. Co., 108 Cal. App. 5th 301 (2025), holds otherwise.
Background
On Jan. 24, 2025, California’s First District Court of Appeal reversed a $2.1 million jury verdict against PG&E for a defamation claim brought by a former employee. In doing so, the court clarified the applicable legal standard for the recovery of tort remedies in the employment context. The court held that employees cannot bring tort claims against employers premised upon the same conduct giving rise to a termination where the damages are solely related to the loss of employment.
The plaintiff in this case was a former lineman at a PG&E facility in Napa, California. The plaintiff was investigated for misuse of company time and falsified timecards, and he was terminated thereafter. He disputed the investigation findings and claimed he was targeted in retaliation for safety concerns he previously reported to management. The employee brought claims against PG&E for retaliation, wrongful termination, and defamation. The defamation claim concerned the alleged false accusations forming the basis of his termination. At trial, the jury rejected his retaliation claim but ruled in his favor on the defamation claim, awarding $2.1 million in damages. PG&E appealed on the grounds that the defamation claim was precluded because it was based on the same conduct giving rise to his termination.
The court agreed with PG&E and reversed the $2.1 million jury verdict on the defamation claim. Reviewing California Supreme Court precedent on the issue of tort liability in the employment context, the court held that tort claims related to employment terminations are only actionable where (1) the tort is based on conduct other than that giving rise to the employment termination; and (2) the damages sought do not exclusively result from the termination itself.
The court found that neither requirement was met here. First, the defamation claim concerned allegedly false accusations and statements made in an investigation report that formed the basis of the plaintiff’s termination. The court stated that the alleged harm was indistinguishable from an ordinary wrongful termination claim. Second, the plaintiff did not seek any damages separate from his loss of employment, such as distinct reputational damages or damages arising from republication to third parties. Accordingly, the plaintiff could not recover on his claim for defamation.
Takeaway
Hearn serves as another reminder that when an employee’s defamation claim is a recast of his or her wrongful termination claim, an employer may avoid liability when the alleged defamation arises “from the same conduct giving rise to his termination and the only result is the loss of his [or her] employment.” While a positive decision for California employers, we note that this case may be teed up for review by the California Supreme Court in light of a strong dissenting opinion from Presiding Justice Alison M. Tucher.
New York’s 2025–26 Budget Includes Immediate Labor Law Reforms, Important Changes to Pay Frequency Laws
New York’s governor and state legislature have finally stumbled to completion of this year’s budget negotiations and enacted legislation as part of the 2025–26 state budget, which includes significant amendments to the New York Labor Law (NYLL).
Quick Hits
The 2025–26 New York state budget includes significant amendments to the New York Labor Law, impacting wage-and-hour enforcement, liquidated damages, and child labor penalties.
The amendments bring long-awaited clarity to New York pay frequency claims, including interest-only damages for a first violation.
The amendments grant the New York State Department of Labor (NYSDOL) enhanced enforcement powers, including the ability to impose a 15 percent surcharge on unsatisfied wage judgments and allow employees to enforce wage orders directly.
The budget also mandates a comprehensive overhaul of minor employment certification and recordkeeping, centralizing the process under the NYSDOL, effective May 9, 2027.
The amendments to the NYLL are now law, effective immediately, and apply to pending and future actions unless otherwise specified. The legislation significantly recalibrates wage-and-hour enforcement, modifies liquidated damages, expands enforcement powers, and increases penalties for child labor violations. Moreover, the legislation overhauls employment certification and recordkeeping for minors, though these changes take effect in two years (on May 9, 2027).
The NYLL was modified to expressly acknowledge a private right of action for violations of NYLL § 191(1)(a)—which requires employers to pay “manual workers” on a weekly basis. The Labor Law has also been amended to narrow the potential liquidated damages exposure that currently accompanies the requirement that “manual workers” be paid on a weekly basis—a hot-button issue that has spawned a wave of class action litigation against employers who pay “manual workers” on a biweekly basis rather than every week.
The NYLL was also amended to dramatically expand the New York State Department of Labor’s (NYSDOL) enforcement toolkit by giving the labor commissioner “quasi-sheriff” powers, authorizing the NYSDOL to impose an additional 15 percent penalty on unsatisfied wage judgments, and—most notably—allowing employees themselves to step into the shoes of the labor commissioner to docket and execute collection action on wage orders directly. The amendments also include significant increases to civil penalties for child labor violations.
Finally, the budget includes a comprehensive overhaul of the minor employment certification process. Under the new provisions of the NYLL, minor employment certifications will be centralized under the NYSDOL, which must develop and implement a new electronic database system for child labor certification. While this major overhaul was long overdue, it will become effective in two years (May 9, 2027).
Modifications to NYLL § 198(1-a)
NYLL § 198(1-a) now provides the following:
Liquidated damages for most underpayment violations remain capped at 100 percent of the total amount of wages found to be due, and up to 300 percent for willful violations of NYLL § 194 (requiring equal pay based on gender).
For violations of the pay frequency requirement under NYLL § 191(1)(a) (requiring weekly wage payment to “manual workers”), where the employer paid wages on a regular payday at least semi-monthly:
For a first-time violation, if the employer had a good-faith basis for its pay practice, liquidated damages are limited to no more than 100 percent of the lost interest on the delayed wages (not the late wages themselves), calculated daily at the rate set by Banking Law § 14-a (currently 16 percent per annum).
For repeat violations (after a final, unappealed order for the same violation covering employees performing the same work), liquidated damages are 100 percent of the total amount of late wages found to be due (along with interest on that amount).
These changes are now in effect and apply to all pending and future cases.
Modifications to NYLL §§ 218–219 (Civil Penalties)
Modifications to §§ 218–219 of the NYLL include the following, and are now in effect and apply to future cases:
The NYSDOL commissioner may file wage orders with the county clerk, which immediately become liens with a civil judgment’s full force and effect.
The commissioner is authorized to add a 15 percent surcharge to any outstanding amount when filing a wage order.
The commissioner has all the powers of a sheriff under Article 25 of the Civil Practice Law and Rules to levy and sell an employer’s assets, but without the customary marshal or sheriff fees.
At an employee’s request, the commissioner must assign the wage, supplement, interest, and liquidated damages portion of the order to the employee, who may then docket and enforce the order personally, including levying property and garnishing bank accounts.
These provisions also apply to wage supplement claims (e.g., vacation pay, expense reimbursement).
Increased Civil Penalties for Child Labor Violations (NYLL § 141)
The maximum civil penalties for violations of child labor laws have been significantly increased:
Up to $10,000 for a first violation.
$2,000–$25,000 for a second violation.
$10,000–$55,000 for a third or subsequent violation.
For violations involving serious injury or death of a minor, penalties range from $3,000–$30,000 for a first violation, $6,000–$75,000 for a second, and $30,000–$175,000 for a third or subsequent violation.
Overhaul of Minor Employment Certification and Recordkeeping
The budget agreement also includes the following changes to the state requirements for minor employment certification and recordkeeping:
The NYSDOL, in consultation with the New York Department of Education, will create and maintain a confidential database for the employment of minors.
Employers hiring minors under eighteen years of age will be required to register in the database, providing detailed information about the business and the minors employed.
Employers will be required to file employment certificates or permits electronically or physically at the place of employment, accessible to authorized persons.
Minors will be required to register in the database and update their employment certificate or permit for each employer.
Employment certificates and permits will be issued electronically within the database.
The labor commissioner, rather than school officials, will be responsible for issuing and revoking employment certificates and permits.
Employers will be required to destroy any physical or electronic copies of a minor’s employment certificate upon termination of employment.
Temporary service employers will be required to keep employment certificates on file and provide copies to each establishment where a minor is assigned.
The modifications regarding minor employment incorporate necessary changes to the State Education Law (to remove responsibility for issuing employment certificates from local school officials).
These modifications will go into effect in two years (May 9, 2027).
Overview of the New York Labor Law Amendments
The wage-and-hour component of the budget legislation (found in Part U of the ELFA Bill) strikes a new balance between employer certainty and employee recoverability. By simultaneously softening damages for technical pay-frequency missteps and arming workers with streamlined collection mechanisms, lawmakers appear intent on reducing litigation volume while ensuring that bona fide wage theft is swiftly remedied.
Limiting Liquidated Damages for Frequency-of-Pay Violations
Under current law, an employer that pays manual workers on a biweekly basis—even where the correct amount is ultimately paid—may be liable for liquidated damages equal to 100 percent of the late-paid wages (plus 9 percent statutory interest and attorneys’ fees). The First Department’s 2019 decision in Vega v. CM & Associates Construction Management, LLC, upended many employers over a century-long belief that NYLL § 191(1)(a) did not provide for a private right of action, spurning enormous class-action litigation (and potential exposure) for what many employers view as a technical timing infraction. A competing decision issued in 2024 by New York’s Second Appellate Department in Grant v. Global Aircraft Dispatch, Inc., resulted in a split among the state’s appellate divisions, creating further uncertainty in this legal landscape. This judicial split has now been resolved, with the legislature clarifying that employees can assert a cause of action for violating NYLL § 191(1)(a).
The NYLL has also been modified as follows:
Preserves the commissioner’s and courts’ ability to award up to 100 percent liquidated damages for most underpayment violations, and up to 300 percent for willful equal-pay violations; but
Carves out frequency-of-pay cases where the employee was, in fact, paid on a regular payday on a semimonthly or faster cadence.
For a first-time violation, where the employer had a “good-faith basis” for believing its pay practice was lawful, liquidated damages would be limited to interest only, calculated daily at the rate established by Banking Law § 14-a 16 percent) per annum); and
Employers with a prior, final, and unappealed order for the same violation (covering employees who perform “the same work”) to 100 percent liquidated damages on the underlying wages for subsequent infractions.
By tethering first-offense damages to lost interest rather than duplicating principal wages, the law seeks to curtail outsized settlements in pay frequency cases while preserving meaningful deterrence for repeat violators. These changes went into effect on May 9, 2025, and apply to pending actions and any future litigated frequency-of-pay cases.
Expanding NYSDOL and Employee Enforcement Powers
The amendment to NYLL §§ 218-219 (found in Part V of the Education, Labor and Family Assistance (ELFA) Bill) allows the labor commissioner to repurpose long-standing tax-collection tools for wage enforcement, including the following.
Automatic Judgment Liens. Once an order to comply is issued by the NYSDOL (or a final decision rendered by the Industrial Board of Appeals) and is docketed with a county clerk, it “shall have the full force and effect of a judgment.” The lien attaches immediately to the employer’s real and personal property.
15 percent) “Non-Payment” Surcharge. If the employer fails to satisfy the order to comply before filing, the labor commissioner may unilaterally increase the amount due by 15 percent).
Sheriff-Style Levy Authority. Whether executed through county sheriffs or NYSDOL personnel, the labor commissioner may impose a levy on and sell an employer’s assets as if executing on a court judgment—without paying the customary marshal or sheriff fees.
Mandatory Assignment to Employees. Upon request, the labor commissioner must assign to the employee “without consideration or liability” the order’s wage, supplement, interest, and liquidated-damages portion. The employee may docket and enforce the order personally, including levying property and garnishing bank accounts, all under the Civil Practice Law and Rules.
Parallel Provisions for Unpaid Wage Supplements. Identical language appears in amended NYLL § 219, which governs wage-supplement claims (e.g., vacation pay, expense reimbursement).
In effect, these amendments reduce agency workload while incentivizing employers to resolve wage matters promptly.
Increased Civil Penalties for Child Labor Violations
The maximum civil penalties for violations of child labor laws have been significantly increased. For a first violation, the penalty is up to $10,000; for a second violation, $2,000–$25,000; and for a third or subsequent violation, $10,000–$55,000. Where a violation involves serious injury or death of a minor, penalties range from $3,000–$30,000 for a first violation, $6,000–$75,000 for a second, and $30,000–$175,000 for a third or subsequent violation.
Overhaul of Minor Employment Certification and Recordkeeping
The amendment to the provisions of the NYLL and State Education Law (found in Part X of the ELFA Bill) requires the NYSDOL, in consultation with the Department of Education, to create and maintain a confidential database for the employment of minors.
Employers hiring minors under eighteen years of age must register in the database, providing detailed information about the business and the minors employed. Employers must file employment certificates or permits electronically or physically at the place of employment, accessible to authorized persons. Minors must register in the database and update their employment certificate or permit for each employer. Employment certificates and permits are now issued electronically within the database.
Rather than school officials, the labor commissioner will become responsible for issuing and revoking employment certificates and permits. Employers must destroy any physical or electronic copies of a minor’s employment certificate upon termination of employment. Temporary service employers must keep employment certificates on file and provide copies to each establishment where a minor is assigned.
Several sections of the Education Law relating to minor employment certification, procedures, and recordkeeping have been repealed or amended to align with the new NYLL requirements, since the process for issuing, revoking, and maintaining employment certificates will be centralized under the NYSDOL. These changes to the employment of minors will go into effect in two years (on May 9, 2027).
Practical Impact on Employers
These profound modifications to the NYLL create a two-tiered enforcement climate:
Reduced Class-Action Leverage in Pay Frequency Cases. Plaintiffs’ counsel may find it less lucrative to pursue frequency-of-pay class actions now that the maximum liquidated-damages exposure is limited to interest for first-time violators; however, willful or repeat offenders would be liable for 100 percent of liquidated damages and will no longer be able to rely on the current uncertainty in the law to leverage better settlements.
Recordkeeping and Good-Faith Defense. Demonstrating a “good-faith basis” will be critical to avoid wage-doubling damages in first-time pay frequency cases. Employers may want to document reliance on agency guidance, legal opinions, or industry practice.
Strategic Settlement Considerations. Once the NYSDOL issues an order, the prospect of a swift, judgment-like lien may tilt settlement negotiations in the employee’s favor, encouraging earlier resolution.
Heightened Collection Risk on Substantive Wage Claims. Employers that ignore NYSDOL orders could face accelerated enforcement, immediate liens, and asset levies initiated either by the commissioner or directly by employees, now sweetened by a 15 percent) surcharge.
New Requirements for Employment of Minors. Once these changes go into effect on May 9, 2027, employers of minors must register with the NYSDOL’s database and comply with the new electronic recordkeeping and certification requirements.
Next Steps
Employers may want to consider the following steps:
Auditing Pay Frequencies. Employers—particularly those with “manual worker” populations—may want to confirm that pay schedules comply with the requirements set forth in NYLL § 191.
Preparing for Enhanced Post-Order Collection. Consider reviewing asset-protection strategies and ensure prompt payment procedures for NYSDOL orders to avoid the 15 percent surcharge and immediate liens.
Updating Wage and Hour Policies. Consider incorporating the proposed damages framework into internal compliance manuals and manager training, emphasizing the continuing risks for willful or repeat violations.
The enactment of the 2025–26 state budget represents a sweeping overhaul of New York’s wage and hour laws, enforcement mechanisms, and minor employment regulations. Most changes are already in effect and apply to pending and future matters.
“Somebody’s Watching Me” – What You Need to Know About California’s Proposed AI Employee Surveillance Laws
California continues to police artificial intelligence (“AI”) in the workplace. Following proposed rulemaking on the use of AI for significant employment decisions, as we reported here, Assemblymember Isaac Bryan introduced Assembly Bill 1221 (“AB 1221”) this legislative session. The bill aims to regulate workplace surveillance tools, including AI, and use of employee data derived therefrom. Applicable to employers of all sizes, AB 1221 could present significant challenges for businesses.
Key Provisions of AB 1221
If enacted, AB 1221 would regulate workplace surveillance tools and the data they collect. The bill broadly defines a “workplace surveillance tool” to encompass any system or device that actively or passively collects or facilitates the collection of worker data, activities, communications, biometrics and behaviors and includes incremental time-tracking tools, geolocation, and photo-optical systems, among others. The bill has several key provisions that will impact businesses:
Notice: Employers will be required to provide written notice to employees 30 days before using any surveillance tool, detailing the data collected, its purpose, frequency, storage, employment-related decisions, and workers’ rights to access and correct their data.
Data Security: The bill also sets forth robust measures to protect employee data, including required provisions in employer contracts with vendors they engage to analyze or interpret employee data.
Prohibited Technologies: The bill bans the use of facial, gait, neural data collection, and emotional recognition technologies.
No Collection of Protected Characteristics: AB 1221 prohibits employers altogether from using surveillance tools to infer an employee’s immigration status, veteran status, ancestral history, religious or political beliefs, health or reproductive status, history, or plan, emotional or psychological state, neural data, sexual or gender orientation, disability status, criminal record, credit history, or any other status protected under California’s Fair Employment and Housing Act.
Limited Use in Disciplinary Actions: Employers are prohibited from relying exclusively on surveillance tools to make disciplinary decisions; to the extent they wish to rely on surveillance data at all for such decisions, employers must notify workers, allow data correction, and adjust personnel decisions within 24 hours if data challenged by the employee warrants it.
Penalties and Civil Liability: AB 1221 delegates enforcement to the California Labor Commissioner and provides for a $500 civil penalty per employer violation. In addition, AB 1221 would create a separate private right of action for employees, pursuant to which they could obtain damages, injunctive relief, punitive damages, and attorneys’ fees and costs.
Areas of Uncertainty
While AB 1221 aims to establish a framework for workplace surveillance, several aspects of the bill remain ambiguous. For instance, the requirement to provide notice for “significant updates or changes” to surveillance tools is not clearly defined. Additionally, the bill does not specify who is responsible for determining what constitutes an “up-to-date cybersecurity safeguard.”
Also, “injured” employees presumably would be able to recover their “noneconomic” damages for alleged “physical pain and mental suffering” associated with violations of this statute, which is a common remedy sought in employment cases that could substantially increase the liability for employers. These ambiguities could lead to inconsistent enforcement and legal challenges, creating costly uncertainty for employers.
Current Status
As of May 7, 2025, the bill is headed back to the Assembly Appropriations Committee. If passed and signed by Governor Newsom, AB 1221 would establish some of the broadest workplace privacy regulations in the nation. We will continue to monitor its progress.
Following AIIA Lawsuit, USCIS Releases Detailed I-526/I-526E Petition Data Through Jan. 31, 2025
In response to a Freedom of Information Act request the American Immigrant Investor Alliance (AIIA) filed, USCIS released updated statistics on I-526 and I-526E petition receipts. This data provides insights into the demand for EB-5 visas across different targeted employment area (TEA) categories and countries of chargeability for visa backlog prediction purposes, covering the period between April 1, 2022 (the EB-5 Reform and Integrity Act of 2022 passage date), and Jan. 31, 2025.
According to the data, USCIS received a total of 9,878 I-526/I-526E petitions, categorized as follows:
Rural TEAs accounted for 44% of petitions, with China leading the category (2,684 petitions), followed by India (847 petitions) and the rest of the world (798 petitions).
High unemployment TEAs comprised 53% of petitions, with 2,380 from China, 883 from India, and 1,928 from other countries.
Infrastructure TEAs saw no petitions filed.
Other TEAs represented 4% of petitions, with 98 from China, 60 from India, and 200 from the rest of the world.
In total, China dominated the petition count with 5,162 petitions (52%), India followed with 1,790 petitions (18%), and the rest of the world accounted for 2,926 petitions (30%).
Continuing Demand for EB-5 Visas in Set-Aside Categories
The data released to AIIA continues to show strong demand in the set-aside categories. Between April 1, 2022, and Jan. 31, 2025:
A total of 5,191 investors filed petitions in the high unemployment area (HUA) set-aside category.
4,329 investors filed petitions in the rural TEA category.
Predicting the length of a potential visa backlog in these categories is difficult, but some experts agree that each EB-5 investor has two dependents also immigrating to the United States who also get counted against the annual visa numbers available in the EB-5 categories. With only 1,000 HUA set-aside visas and 2,000 rural set-aside visas available annually, the program may face significant backlogs in these set-aside categories. However, the State Department has not yet instituted a cut-off date for visa availability in the set-aside categories, potentially because USCIS has approved an insufficient number of I-526 and I-526E petitions in each fiscal year to warrant a backlog. Unless and until USCIS speeds up the processing of I-526/I-526E Petitions associated with the set-aside categories, the State Department may not establish a cut-off date.
Shifting Trends and Country-Specific Dynamics
Country-specific demand trends remain consistent, with China, India, and Vietnam ranking as the top three countries for EB-5 petition filings. Due to country-specific visa allocation limits, investors from India and China face the longest wait times under the EB-5 program. In contrast, investors from other countries typically experience shorter wait times, which might make the program more attractive for applicants outside of mainland China and India. The newly released USCIS data underscores the continued high demand for EB-5 visas, particularly in set-aside categories, despite potential visa availability constraints. This demand, coupled with country-specific limits, continues to create challenges for investors from high-demand countries like China and India. For those considering an investment under the EB-5 program, understanding these dynamics is crucial for planning and managing expectations.
New York State Senate Bill Would Make Fast-Food Franchisors Jointly and Severally Liable for Certain Labor Law Violations
On April 8, 2025, the New York State Legislature took up Senate Bill S7289, which, if enacted, would amend the New York Labor Law (NYLL) by adding a new article 35-A, otherwise known as the “New York State Fast Food Franchisor Accountability Act,” and impose joint and several liability on fast-food franchisors for certain labor law violations.
Quick Hits
The proposed New York State Fast Food Franchisor Accountability Act would make fast-food restaurant franchisors jointly and severally liable for violations of Chapter 31 of the New York Labor Law, as well as the New York State Human Rights Law and applicable workers’ compensation laws, to the same extent that they may be enforced against fast-food restaurant franchisees.
The proposed act aims to enhance accountability for fast-food restaurant franchisors and further protect workers’ rights in the fast-food industry.
SB S7289 would make fast-food restaurant franchisors responsible for ensuring that their franchisees are compliant with “applicable employment, worker safety, public health and safety laws and orders and any rules or regulations” to the same extent that those laws are enforceable against fast-food restaurant franchisees. In effect, if a fast-food restaurant franchisee became liable for a violation of applicable employment and worker protection laws, the fast-food restaurant franchisor would be “jointly and severally liable for any penalties or fines” in connection with any violation of laws set forth in the act and any regulations or rules related thereto.
Overview of the Proposed Fast Food Franchisor Accountability Act
The Fast Food Franchisor Accountability Act would apply to “fast food chain[s],” defined in the legislation as “a set of restaurants consisting of fifty or more establishments nationally that either share a common brand or are characterized by standardized options for decor, marketing, packaging, products, and services” and that operate “fast food restaurant[s],” defined as “any establishment in the state that is part of a fast food chain and that, in its regular business operations, primarily provides food or beverages according to all of the following”:
(a) For immediate consumption, either on or off the premises;
(b) To customers who order or select items and pay before eating;
(c) With items prepared in advance, including items that may be prepared in bulk and kept hot, or with items prepared or heated quickly; and
(d) With limited or no table service. For purposes of this section, “table service” shall not include orders placed by a customer on an electronic device.
Further, a “fast food restaurant franchisor” would mean “a person or entity who grants or has granted a fast food restaurant franchise.” The legislation defines a “fast food restaurant franchisee” as “a person or entity to whom a fast food restaurant franchise is granted.”
If enacted, the act would hold fast-food restaurant franchisors accountable for complying with various employment, worker safety, and public health and safety laws in New York State. These would include the New York State Human Rights Law, applicable workers’ compensation laws, and various laws found in Chapter 31 of the NYLL, such as the New York State Paid Sick Leave Law, New York Prenatal Leave Law, New York Lactation Accommodation Law, and minimum wage and overtime pay requirements. Additionally, the act would apply to emergency executive orders issued by the governor concerning employment standards or worker safety, as well as orders issued by a county or municipality on such matters. If a franchisor’s terms prevent or create substantial barriers to the franchisee’s compliance with these laws, the proposed amendment would allow the franchisee to file an action against the franchisor for monetary or injunctive relief.
The proposed Fast Food Franchisor Accountability Act also provides that a franchisor would not be permitted to waive any part of the act through an agreement or allow the franchisee to indemnify the franchisor for any liability it caused.
Although the act is only a bill and not yet law, fast-food employers with thirty or more fast-food establishments nationally and with operations in New York City are already required to follow New York City’s Fair Workweek Law, which sets forth requirements for predictive scheduling, premium pay, and processes and procedures for discharging employees or reducing their scheduled hours.
Next Steps
Fast-food employers with operations in New York that would be subject to the proposed act may want to review the bill to determine what additional obligations they may face if it is enacted in substantially the same form as currently proposed.
Compliance with Meet and Confer Obligations Under the Federal Rules
In Wilbert v. Pyramid Healthcare, Inc., d/b/a Silvermist Recovery Center, et al., the plaintiff filed suit alleging pregnancy-based discrimination and harassment, culminating in her termination. According to the court, the parties never agreed on how to handle the discovery of electronically stored information (ESI) in connection with the litigation. For purposes of this blog post, the parties were before the court on a motion to compel filed by the plaintiff.
In this decision, the district judge provided an in-depth discussion of parties’ meet-and-confer obligations prior to filing a motion.
First, the court cited Rule 26’s requirements of relevance and proportionality: “Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case.”[1] The court then referred to Federal Rule of Evidence 401 on relevance, explaining that information is relevant if “it has any tendency to make a fact more or less probable than it would be without the evidence” and “the fact is of consequence in determining the action.” The court also noted that Rule 37 provides the procedural mechanism for adjudicating discovery disputes and returned to Rule 26’s limitations on accessibility and duplicative discovery before addressing the requirement that parties meet and confer in planning for discovery.
As part of this planning discussion, the court emphasized the topics the parties “must discuss,” which include:
preserving discoverable information;
developing a joint proposed discovery plan, where counsel must engage in good faith to agree on the plan; and
submitting to the court a written report outlining the plan.
The discovery plan, according to the court, must state the parties’ views and proposals on several topics listed in Rule 26(f), including issues related to the disclosure, discovery, or preservation of ESI, as well as the forms in which ESI should be produced. The court highlighted that the Federal Rules empower it to order parties to meet and confer in person and permit it to require a party or its attorney to pay the other party’s reasonable expenses if they fail to participate in the process in good faith.
Case Analysis
After detailing the applicable rules, the court analyzed whether the plaintiff complied with those rules. As a preliminary matter the court noted that “[f]rom the inception of this action, Counsel for the parties could not agree on the scope and methodology of ESI discovery.” While counsel participated in a Rule 26(f) conference, plaintiff’s counsel proposed a 30-page “mandatory” discovery plan that imposed extensive ESI protocol requirements far exceeding the district court’s checklist for meet-and-confer sessions. The court observed that plaintiff’s counsel framed elements of the proposed ESI plan in an argumentative and non-negotiable manner, suggesting an unwillingness to cooperate during the required conferral process.
These issues—including the overbreadth of the requests, the scope of custodians, and search report requirements—were discussed during a case management conference. The court issued an order requiring counsel to confer meaningfully on the issues. However, the parties failed to resolve the issues and, months later, submitted a joint letter to the court. Subsequently, the court granted plaintiff’s counsel leave to file the motion to compel (“Motion”) but required counsel to include a certification of conferral and specify the factual basis for each claim and discovery issue, supported by affidavits or declarations.
Although plaintiff’s counsel filed the motion, he failed to comply with the court’s order by omitting the required factual support and specificity for each discovery issue.
Court Findings
As a preliminary matter, the Court noted the plaintiff’s Motion failed to satisfy its order in “certain material respects.” Notably absent from the Motion were affidavits or unsworn declarations substantiating each factual assertion. The court further determined that the Motion failed on the merits for several reasons.
Overbreadth of Requests and Custodians: The court found the plaintiff’s requests overly broad and criticized plaintiff’s counsel for failing to explain the relevance of the proposed custodians. Defense counsel had attempted to confer, but plaintiff’s counsel either ignored their overtures or imposed “egregious barriers to doing so.” As such, the Motion failed to meet the burden of demonstrating relevance and was denied.
Hit Reports: Plaintiff’s counsel insisted defendants generate “hit reports” on all search terms before determining their relevance. The court rejected this approach, calling it “backwards and inappropriate” in a straightforward, non-document-intensive employment discrimination case. The court noted that counsel had chosen to ignore its observations and persisted in demanding that defendants expend significant time, effort, and resources to search the computers and phones of a wide swath of custodians (whether relevant or not) for an extensive list of search terms (whether relevant or not) overly an overly broad time period (whether relevant or not). Counsel relied on the apparent authority of his own ESI Plan, which emphatically but erroneously stated: “Without a hit report, generated by software, there is no accepted methodology to certify that a competent search was done. Furthermore, there is no possibility to reasonably meet and confer on any objections that defense counsel may have, i.e., if defense counsel objects that a search term would generate overly broad results, then we must refer to a hit report.”
The court further found that the proposed temporal search period and search terms had not been established as relevant and offered no credible explanation for why emails and texts sent or received prior to plaintiff’s pregnancy should be included in the search or ESI. In essence, the court determined that counsel had failed to identify an appropriate time period and scope of discovery that aligned with the allegations in the complaint. Plaintiff’s counsel had also defied the court’s order regarding the scope of the matter. As a result, the court found that the unsupported Motion did not satisfy that burden under Rule 37[2] and, in denying the motion, stated:
“The Court is also of the view that [counsel’s] self-proclaimed “mandatory” approach to ESI discovery in employment cases not only contravenes several provisions of the Federal Rules of Civil Procedure and this District’s Local Rules, but [his] unilateral imposition of such ESI protocols in all such cases also defies the requirement that even relevant discovery must be:… proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the party’s resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.”
The court emphasized that, in this case, plaintiff’s counsel has ignored his duty to refrain from discovery efforts that were unreasonable, unduly burdensome, or expensive in light of the proportionality factors.
The court also took issue with plaintiff’s counsel’s (Attorney Ward’s) behavior, noting:
The conferral obligation is not a bargaining chip to be offered in exchange for a concession on a disputed discovery process or requested item. Conferral is expected for all discovery planning and dispute resolution and is a precondition to seeking court intervention. A party may also not impose unreasonable conditions or barriers on their willingness to meet and confer. Here, Defense Counsel contends that Attorney Ward insisted that he would only meet in person to confer if Defense Counsel acquiesced to his demand that such meeting be recorded. Such obdurate behavior in this case lacks justification, defies the bounds of expected professional behavior, and was seemingly deployed to harass Defense Counsel and thwart any meaningful and constructive attempts at resolving the parties’ disputes.”
As a result of Ward’s behavior, defense counsel refused to meet in person under the proposed conditions and continued conferral efforts in writing. Despite this, Attorney Ward affixed a certificate of meet and confer to his motion, as required by Rule 37(a).[3] The court found that Attorney Ward did not satisfy his obligation to confer in good faith and ordered him to show cause why he and his law firm should not be sanctioned for (1) failing to participate in good faith in developing and submitting a proposed discovery plan as required by Rule 26(f) and all related court rules, and (2) misrepresenting to the court that he had satisfied his conferral obligations in good faith before filing the motion to compel as required by Rule 37.
Conclusion This decision by Judge Hardy serves as a strong reminder of the standard of cooperation and good faith expected of every party and counsel to facilitate discovery. Parties have an obligation to participate in the meet-and-confer process and to be cooperative and collaborative during the process. Adversaries—and courts alike—have little patience for delay tactics, failures to disclose timely information relevant to discovery, and misstatements of fact.
[1] For determining proportionality, courts consider “the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.” Id. “The parties and the court have the collective responsibility to consider the proportionality of all discovery and consider it in resolving discovery disputes.” Fed. R. Civ. P. 26(b)(1).
[2] Rule 37 governs motions to compel discovery. According to the court, the moving party bears the initial burden to prove that the requested discovery falls within the scope of discovery as defined by Rule 26(b)(1). If the moving party meets this initial burden, the burden then shifts to the opposing party to demonstrate that the requested discovery (i) does not fall within the scope of discovery contemplated by Rule 26(b)(1), or (ii) is not sufficiently relevant to justify the burden of producing the information.
[3] In addition to citing a number of local rules relevant to discovery issues, District Judge Hardy pointed to the presiding judicial officer’s published practices and procedures for the proposition that no discovery motions are to be filed until after the parties jointly contact chambers to request an informal conference, except in the cases of emergency, as certified by counsel. Counsel is also required, under the presiding judicial officer’s practices and procedures, to file a certification “that the movant has discussed the matter with all other parties and to expressly indicate whether the opposing party consents to or opposes the motion and whether such party intends to file a response.”
Cross-Border Catch-Up: Understanding Chile’s Karin Law on Harassment and Violence [Podcast]
In this episode of our Cross-Border Catch-Up podcast series, Goli Rahimi (Chicago) and Lina Fernandez (Boston) discuss Chile’s new Karin Law, officially known as Law Number 21.647, and break down the law’s key provisions and its implications for employers. Lina and Goli explain how this comprehensive legislation aims to prevent and address workplace harassment and violence by establishing clear definitions, procedures, and preventive measures to promote safer and more respectful work environments. They also outline the responsibilities of employers to create internal protocols, educate employees on how to report misconduct, and investigate complaints in a timely manner.
EPA Receives TSCA Section 21 Petitions Seeking Reconsideration of Exemption Conditions in Final Trichloroethylene Rule
The U.S. Environmental Protection Agency (EPA) recently updated its website to include two petitions submitted under Section 21 of the Toxic Substances Control Act (TSCA) that seek reconsideration of exemption provisions of EPA final risk management rule for trichloroethylene (TCE). On March 24, 2025, PPG Industries, Inc. (PPG) submitted a petition seeking an amendment to the December 2024 final rule’s exemption for the industrial and commercial use of TCE as a processing aid for specialty polymeric microporous sheet materials manufacturing that would allow PPG to meet an interim existing chemical exposure limit (ECEL) of five parts per million (ppm) and an action level of 2.5 ppm. According to the petition, “[o]ne of PPG’[s] specialty materials is the Teslin substrate, a unique polymeric microporous sheet material that is a fundamental component of a wide range of products used in everyday life.” PPG notes that although EPA “granted a 15-year TSCA Section 6(g) exemption for Teslin on the basis that PPG’s use of TCE in the Teslin manufacturing process is a critical and essential use for which no technically and economically feasible safer alternative is available in accordance with TSCA Section 6(g)(1)(A),” the final rule “also imposes an unachievable interim ECEL of 0.2 ppm on PPG during the exemption period, as well as an action level of 0.1 ppm.” EPA’s May 9, 2025, letter acknowledging receipt of the petition states that it will either grant or deny the portions of the petition eligible for TSCA Section 21 within 90 days of the date the petition was received (i.e., by June 22, 2025).
On April 30, 2025, the Alliance for a Strong U.S. Battery Sector (Alliance) and Microporous, LLC (collectively, Petitioners) submitted a TSCA Section 21 petition for reconsideration of and revisions to the final TCE rule. According to the petition, because there is no feasible alternative to TCE in manufacturing lead-acid battery separators, EPA determined that banning the use would “significantly disrupt national security and critical infrastructure.” While the final rule granted U.S. battery-separator manufacturers a 20-year exemption from the TCE ban, the exemption “includes such onerous conditions on the continued use of TCE that it effectively functions as a total ban.” To continue using TCE, battery-separator manufacturers must either reduce TCE exposure levels to the interim ECEL of 0.2 ppm, “a level roughly 30 times below what European regulators allow and what can be achieved using state-of-the-art engineering and administrative controls — or else equip exposed workers in respiratory personal protective equipment (“PPE”) that EPA admits creates health and safety hazards and that the record demonstrates cannot feasibly be worn all day, every day by employees in these manufacturing settings.” Petitioners request that EPA revise the final rule to increase the interim ECEL to six ppm and extend the length of the duration from 20 to 25 years to account for the time required to research, develop, test, and obtain approvals for any alternative to TCE in battery-separator manufacturing. EPA’s May 9, 2025, letter acknowledging receipt of the petition states that it will either grant or deny the portions of the petition eligible for TSCA Section 21 within 90 days of the date the petition was received (i.e., by July 30, 2025).
New Era for Workplace Violence Reporting in Virginia: Healthcare Employers Must Act Now
Takeaways
Effective 07.01.25, most healthcare employers in Virginia must implement a new reporting system that tracks incidents of workplace violence, notify all employees of the system, and provide guidelines on when and how to report incidents of workplace violence.
Employers must implement a policy prohibiting discriminating or retaliating against any employee for reporting incidents of workplace violence.
Virginia healthcare employers must take immediate steps to create and implement a workplace violence incident reporting system.
Beginning July 1, 2025, healthcare employers in Virginia will be required to create workplace violence prevention plans or reporting systems. Employers must document, track, and analyze incidents of workplace violence and maintain records of incidents for at least two years.
On March 24, 2025, Governor Glenn Youngkin signed into law identical bills, House Bill 2269 and Senate Bill 162, creating the new reporting requirements. The law aims to enhance the safety of healthcare workers through continuing education, de-escalation training, risk identification, and violence prevention planning. The bills amend Section 31.1-127 of the Code of Virginia.
California, Connecticut, Illinois, Louisiana, Maine, Maryland, Minnesota, New Jersey, New York, Oregon, Texas, and Washington already have such requirements.
Definitions
Hospital. Although the amended Section 31.1-127 and its underlying legislation use the term “hospital,” this term is a bit of a misnomer because it encompasses most healthcare employers in Virginia. The term is defined by Section 32.1-123 of the Code of Virginia and includes “any facility licensed” pursuant to “Article 1. Hospital and Nursing Home License” and “in which the primary function is the provision of diagnosis, of treatment, and of medical and nursing services, surgical or nonsurgical, for two or more nonrelated individuals.”
Employee of the hospital and employee. “Employee” under amended Section 31.1-127 means “an employee of the hospital or any health care provider credentialed by the hospital or engaged by the hospital to perform health care services on the premises of the hospital.” Incidents that include any staff member, not just those providing healthcare services, must be captured in the new reporting system.
Workplace violence. Under amended Section 31.1-127, “workplace violence” includes “any act of violence or threat of violence, without regard to the intent of the perpetrator, that occurs against an employee of the hospital while on the premises of such hospital and engaged in the performance of his duties.” This includes threats or use of physical force against an employee that may result in injury, psychological trauma, or stress, “regardless of whether physical injury is sustained.”
Reporting, Tracking Requirements
Qualifying hospitals’ systems must document, track, and analyze any reported incidents of workplace violence. The incident reporting system must include the following components:
Date and time of the incident;
Description of the incident, including the affected employees’ job titles;
Perpetrator’s identity (patient, visitor, employee, or other person);
Location of the incident;
Type of incident (physical attack, threat, sexual assault, other);
Response and consequences of the incident; and
Reporter’s information (name, job title, and the date of completion).
Amended Section 31.1-127 also requires hospitals to report the data they collect, at a minimum, quarterly to the hospital’s chief medical officer and chief nursing officer. Hospitals must send an annual report without personally identifiable information to the Department of Health that includes the number of incidents reported.
Notice, Policy, Continuing Education Requirements
Qualifying healthcare employers must notify all employees about the workplace violence incident reporting system, including any new employees during orientation. Employers must also provide training on when and how to report incidents of workplace violence to their employer, security agencies, and appropriate law-enforcement authorities.
Amended Section 31.1-127 requires qualifying healthcare employers to adopt a policy that prohibits any person from discriminating or retaliating against any employee for “reporting to, or seeking assistance or intervention from, the employer, security agencies, law-enforcement authorities, local emergency services organizations, government agencies, or others participating in any incident investigation.”
Employers must also analyze the data to make improvements in preventing workplace violence. Amended Section 31.1-127 expressly identifies how such improvements can be made, including by providing continuing education in targeted areas, such as de-escalation training, risk identification, and violence prevention planning.
Steps for Healthcare Employers in Virginia
With the July 1 effective date fast approaching, qualifying Virginia healthcare employers must take immediate steps to create and implement a workplace violence incident reporting system. Steps employers can take to comply with the new law:
Review employee handbooks and standalone workplace violence and safety policies or implement such policies.
Review and update onboarding documents for new employees.
Review employee trainings and continuing education to determine whether they sufficiently address de-escalation, risk identification, and violence prevention planning.
Stay up to date on potential changes as the new law directs the Virginia Secretary of Health and Human Resources to “convene a stakeholder work group” that includes various state agencies and trade groups “for the purpose of making recommendations on the workplace violence reporting system and policies.” Additional statutes, regulations, and administrative guidance can be expected in the coming years.
Income Not Recognized on Jail Funds Invested in Ponzi Scheme
A former Sheriff of Morgan County, Alabama, purchased an 18-wheeler truck full of corn dogs for $500 and fed the corn dogs to inmates at each meal. He did so because in Alabama, the State provided each county sheriff with a monthly food allowance for each of their prisoners. The sheriff could keep any surplus but was responsible for any shortfall in feeding the prisoners.
The inmates filed a class action lawsuit alleging inhumane treatment. In 2008, the Court ordered the county to provide a nutritionally adequate diet to inmates and directed the Sheriff to maintain a separate account for jail food money.
When Ana Franklin was elected Sheriff of Morgan County, Alabama, in November 2011, she gained authority over the jail food money bank account. In 2015, the jail population doubled due to an increase in methamphetamine arrests, changes in Alabama sentencing law and the closure of municipal jails. Sheriff Franklin was concerned that because of the increase in the jail population, she would lack adequate funds to feed the inmates.
Sheriff Franklin’s boyfriend and county police officer, Steve Ziaja, told the her that she could lend $150,000 to Priceville Partners, LLC for 30 days and earn 17% interest. Mr. Ziaja offered to serve as guarantor for the loan. In June 2015, the Sheriff withdrew $155,000 from the jail food money bank account. She delivered $150,000 to Priceville Partners, LLC as a loan and retained $5,000 in the office safe as petty cash.
The loan to Priceville turned out to be part of a Ponzi scheme. Priceville Partners, LLC closed in November 2015 and filed bankruptcy in March 2016. In December 2016, Mr. Ziaja made good on his guarantee and repaid the $150,000 to the Sheriff who then returned the money to the jail food money bank account.
In January 2017, after learning that the Sheriff removed money from the jail food account, the class action members filed a motion for contempt. The Court found the Sheriff to be in civil contempt and sanctioned her $1,000. In December 2018, the Department of Justice filed charges against the Sheriff for willful failure to file her personal income tax return. The Sheriff pleaded guilty and was sentenced to 24 months’ probation. The IRS then issued a Notice of Deficiency asserting that the $155,000 removed from the jail food money bank account constituted taxable income as proceeds from embezzlement.
In Franklin v. Commissioner, T.C. Memo 2025-8, the Court ruled that the $155,000 was not taxable income. The Court reasoned that the withdrawal was an unauthorized loan since there was a consensual recognition of an obligation to repay the funds and not embezzlement. The Court relied on the facts that the loan was actually repaid; that the Sheriff was never charged criminally with embezzlement; that the Sheriff was only held in civil contempt and fined $1,000; and that the Sheriff was motivated to increase the jail food money bank account to properly feed the inmates. The Court declared that the Sheriff received no accession of wealth because she had a corresponding obligation to repay the funds back to the jail food money bank account.