What Federal Contractors and Grant Recipients Need To Know About EO 14173’s Certification and Non-Discrimination Requirements Concerns
Executive Order (EO) 14173 “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” creates new obligations that could carry significant risks for any organization doing business with the United States federal government. Federal contractors, subcontractors and recipients of federal grant money are or will soon be subject to potential liability under the False Claims Act (FCA).
Quick Hits
EO 14173 is raising potential compliance concerns for organizations during business with the federal government under the FCA, subject to civil and criminal penalties.
Organizations doing business with the federal government now have obligations to certify that they do not operate any programs promoting diversity, equity and inclusion that violate any applicable Federal anti-discrimination laws..
These same organizations also must agree that their compliance with all federal nondiscrimination laws in any federal contract, subcontract, or grant recipient and makes that certification a “material” term for purposes of the FCA.
Organizations doing business with the federal government may want to consider steps to take to minimize compliance risks under the FCA, which can open the door to civil and criminal exposure.
EO 14173, which was signed on January 21, 2025, and other executive actions have raised questions for employers doing business with the federal government as to what programs the government may target and whether efforts to maintain compliance with still-existing federal civil rights and antidiscrimination laws could pull them within federal regulators’ crosshairs. Notably, EO 14173 appears to implicate potential civil or criminal liability for private companies and federal contractors under the FCA, one of the government’s primary tools for combating fraud against the federal government.
The FCA imposes liability on individuals or companies that defraud the federal government by making materially false or fraudulent statements to influence the government to pay out. Those statements must be material to the government’s decision to make the payment. It also includes a “qui tam” provision that allows private individuals, known as “relators” or “whistleblowers,” to file lawsuits on behalf of the government and potentially receive a portion of any recovered damages.
The U.S. Department of Justice (DOJ) has said it collected more than $2.9 billion in settlements and judgments in all fraud claims brought under the FCA in the last fiscal year ending on September 30, 2024, with more than $2.4 billion stemming from qui tam suits.
Specifically, EO 14173 states that agency heads must “include in every contract or grant award: A term requiring the contractual counterparty or grant recipient to agree that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes” of the FCA.
That language requires organizations doing business with the government to certify that they do not have any DEI programs that are unlawful under federal antidiscrimination laws and seeks to make such a certification a material term for purposes of the FCA. Of particular concern is that such claims under the FCA could come not only from the government but also from individuals inside and outside of the organization in qui tam suits.
Next Steps
These actions put employers doing business with the federal government on notice that the new administration is empowering interested individuals, such as applicants, employees, and others to join or possibly replace traditional federal employment agencies, such as the Equal Employment Opportunity Commission (EEOC) and the Office of Federal Contract Compliance Programs (OFCCP), as watchdogs on compliance obligations.
Employers may want to review or audit all their existing DEI or Diversity, Equity, Inclusion, and Accessibility (DEIA) programs or initiatives and to determine if they align with lawful practices under applicable federal anti-discrimination laws.
Employers doing business with the federal government may also want to consider options to create active, robust, and ongoing compliance programs to assist with this new obligation and certification under the FCA. Employers may consider thorough analysis protected by the attorney-client privilege as part of these compliance programs.
New York Federal Court Ruling Highlights a Potential Pitfall in Settlement Agreement Enforcement
On January 8, 2025, the U.S. District Court for the Eastern District of New York held that an employee’s refusal to sign a confidentiality and nondisparagement acknowledgment form annexed to a settlement agreement resolving discrimination and retaliation claims invalidated the entire agreement.
Quick Hits
New York’s General Obligations Law (GOL) § 5-336 and Civil Practice Law and Rules (“CPLR”) § 5003-B both impose strict requirements on nondisclosure clauses in matters involving discrimination claims, including that the inclusion of such clauses in a settlement agreement be at the plaintiff’s preference.
The U.S. District Court for the Eastern District of New York recently held that an unsigned GOL § 5-336 and CPLR § 5003-B acknowledgment form annexed to a settlement agreement did not constitute a separate settlement agreement; rather, it was “a material component of the broader [s]ettlement [a]greement,” as its execution was required to make the settlement agreement “effective.”
Employers may want to consider how they structure settlement agreements involving discrimination claims subject to GOL § 5-336 and CPLR § 5003-B and ensure all material components of such agreements are fully executed to avoid settlement enforceability issues.
Separ v. County of Nassau: Background and Ruling
In Separ v. County of Nassau, the parties entered into a settlement agreement to resolve allegations of discrimination and retaliation. The agreement complied with New York’s statutory requirements under GOL § 5-336 and CPLR § 5003-B by including provisions for a twenty-one–day consideration period and a seven-day revocation window, both exercisable by the plaintiff, Anne Separ. However, the settlement’s enforceability hinged on the execution of an acknowledgment form annexed to the agreement documenting Separ’s preference for confidentiality and nondisparagement. While Separ signed the agreement itself, she refused to sign the acknowledgment, leading the employer to seek judicial enforcement of the agreement.
The U.S. District Court for the Eastern District of New York rejected the employer’s argument that the acknowledgment was “separate and apart” from the settlement agreement and “ha[d] no bearing on whether the [a]greement itself [was] binding and enforceable on the parties.”
Finding that the acknowledgment was a material component of the broader agreement and that enforceability depended on all required components being fully executed, the court held that the execution of the acknowledgment acted as a condition precedent to effectuate the settlement per the “effective date” provision contained in the agreement.
Considerations for Employers
The Separ decision emphasizes the importance of careful drafting and execution of settlement agreements, particularly when including nondisclosure provisions subject to GOL § 5-336 and CPLR § 5003-B. Moving forward, employers in New York may wish to review and update their internal settlement templates to ensure compliance with the Separ framework to avoid unintended pitfalls. Some suggestions include:
considering how the settlement agreement is structured;
ensuring all material components of the settlement agreement that require execution are fully executed; and
ensuring compliance with the consideration and revocation periods mandated by both GOL § 5-336 and CPLR § 5003-B.
EuGH zur Zukunft der (Datenschutz-)Betriebsvereinbarungen: Was ändert sich?
Der Europäische Gerichtshof (EuGH) hat festgestellt, dass Kollektivvereinbarungen (wie bspw. Betriebsvereinbarungen) nur dann eine rechtliche Grundlage für die Verarbeitung von Beschäftigtendaten darstellen können, wenn sie strenge Kriterien erfüllen. Wir stellen Ihnen die EuGH-Entscheidung vom 19. Dezember 2024 (Aktenzeichen C-65/23) im Folgenden genauer dar.
Warum ist das wichtig?
Das Urteil betrifft eine der großen Fragen im Beschäftigtendatenschutz der letzten Jahre: Nach Art. 88 DSGVO, § 26 Abs. 4 können personenbezogene Daten von Beschäftigten auch auf Grundlage von Kollektivvereinbarungen (z.B. Betriebsvereinbarungen) verarbeitet werden. Unklar war bisher jedoch, ob und ggf. welcher Spielraum den Betriebsparteien bei der Gestaltung der Betriebsvereinbarung (und damit der Verarbeitung personenbezogener Daten) zusteht. Kann relativ frei auf spezifische Besonderheiten des Unternehmens eingegangen werden oder ist lediglich eine Konkretisierung der DSGVO-Vorschriften möglich, sodas der Handlungsspielraum der Betriebsparteien bei Erstellung von Betriebsvereinbarungen nur sehr begrenzt wäre?
Was sagt der EuGH?
Betriebsvereinbarungen sollen keine Umgehung der Verpflichtungen des Verantwortlichen oder gar des Auftragsverarbeiters bezwecken oder bewirken können. Anderenfalls wäre das Ziel der DSGVO, ein hohes Schutzniveau für die Beschäftigten im Fall der Verarbeitung ihrer personenbezogenen Daten im Beschäftigungskontext sicherzustellen, beeinträchtigt. Daraus folgt für den EuGH:
Ja, Betriebsvereinbarungen und Kollektivvereinbarungen können eine Rechtsgrundlage für die Verarbeitung personenbezogener Daten darstellen.
Es ist ein „Ja, aber“, denn: Der Spielraum ist sehr begrenzt, auch Betriebsvereinbarungen, so der EuGH, müssen die allgemeinen Anforderungen der Art. 5, Art. 6 Abs. 1 sowie Art. 9 Abs. 1, 2 der DSGVO erfüllen. Das bedeutet u.a., dass immer auch eine allgemeine Rechtsgrundlage nach Art. 6 Abs. 1 S. 1 DSGVO gegeben sein muss.
Insbesondere gilt dies auch für die Einhaltung des Kriteriums der Erforderlichkeit der Verarbeitung. Betriebsparteien haben einen eng umgrenzten Verhandlungsspielraum. Betriebsvereinbarungen dürfen gerade nicht dazu führen, dass die Voraussetzung der Erforderlichkeit weniger streng angewandt wird oder gar darauf verzichtet wird.
Allerdings: Die Betriebsparteien kennen ihren Betrieb, die Mitarbeiterinnen und Mitarbeiter und deren Aufgaben sowie die spezifischen Herausforderungen, die sich im Unternehmen stellen. Sie verfügen also über eine grundsätzlich gute Expertise für die Beurteilung, ob eine Verarbeitung von Beschäftigtendaten in einem konkreten beruflichen Kontext „erforderlich“ im Sinne der DSGVO ist. Insoweit besteht allerdings auch eine umfassende gerichtliche Kontrolle, um die Einhaltung aller Voraussetzungen und Grenzen der DSGVO zu gewährleisten.
Was sollten Sie jetzt beachten?
Klar ist jetzt: Betriebsvereinbarungen sind für sich genommen keine eigenständige Rechtsgrundlage. Sie können stets nur zusammen mit einer der Rechtsgrundlagen des Art. 6 Abs. 1 S. 1 DSGVO die Verarbeitung von Beschäftigtendaten regeln. Daher sollte bei Neuverhandlungen und Überarbeitungen von (bestehenden) Betriebsvereinbarungen immer ausdrücklich aufgenommen werden, welche DSGVO-Rechtsgrundlage die Betriebsparteien für anwendbar halten. Aufgrund des Urteils des EuGH ist auch die Erforderlichkeit der Verarbeitung von Beschäftigtendaten kritisch zu hinterfragen. Die Erwägungen der Betriebsparteien, weshalb sie die Verarbeitung für erforderlich halten, sollten sich ebenfalls in der Betriebsvereinbarung wiederfinden.
Schließlich sollte auch die „Bürokratie“ rund um die Betriebsvereinbarung nicht vergessen werden. Sofern a) in den Datenschutzinformationen für Beschäftigte und b) im Verarbeitungsverzeichnis bisher allein die Betriebsvereinbarung als Rechtsgrundlage genannt ist, muss dies konsequenterweise um die zusätzliche allgemeine DSGVO-Rechtsgrundlage (z.B. Begründung, Durchführung oder Beendigung eines Arbeitsvertrages oder Wahrung berechtigter Interessen) ergänzt werden.
DEI and Government Contractors: A High-Stakes Shift
While much of the focus on President Trump’s recent Executive Order on Ending Illegal Discrimination and Restoring Merit-Based Opportunity (the “EO”) has been on its elimination of race and sex-based affirmative action requirements for federal contractors, another provides carries even greater potential implications. The EO also introduces new contractual obligations related to diversity, equity, and inclusion (“DEI”) efforts and signals an intent to use the False Claims Act (FCA) as a tool to target government contractors for what it views as “illegal” DEI initiatives—potentially subjecting those companies to substantial financial and even criminal penalties.
Government contractors are no strangers to being test subjects for Executive policy initiatives. Past administrations have leveraged the federal government’s immense purchasing power to enforce requirements that couldn’t gain traction in Congress. From paid leave and minimum wage mandates to COVID-related requirements, federal contractors have consistently faced unique obligations and consequences that don’t apply to their non-contractor counterparts. The same practice is playing out here.
Although the exact details of the new contractual requirements are still pending, government contractors are urged to begin preparations now to minimize potential business disruptions and significant liability risk. Below is a Q&A to further clarify these developments.
Q: What exactly is this new contractual requirement?
A: The EO includes a provision stating that “[t]he head of each agency shall include in every contract or grant award:
(A) A term requiring the contractual counterparty or grant recipient to agree that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes of section 3729(b)(4) of title 31, United States Code; and
(B) A term requiring such counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.”
So, breaking this down, there are two components at issue. First, contractors will have to certify to the federal government that they do not operate programs “promoting DEI” that violate federal anti-discrimination laws.
Second, contractors will have to agree in their contracts – either new contracts or potentially in modifications to existing contracts – that their compliance “in all respects” with all applicable federal anti-discrimination laws is “material” to their receipt of money from the federal government.
Taken together, this means contractors, as a condition of receiving federal funds from the federal government, will have to certify that any programs they have that “promote DEI” do not violate federal anti-discrimination laws.
Q: Why is this such a big deal?
A: The reference to the U.S. Code in the EO is to a provision of the False Claims Act (“FCA”) which establishes liability for anyone who “knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.” (emphasis added).
So, the EO, by requiring contractors to agree that compliance with the terms of Federal anti-discrimination laws is material to the government’s payment decisions, seeks to establish that a false DEI certification will constitute a false claim under the FCA and subject the contracting entity to the FCA’s penalties.
Q: Can anyone besides the contractor be held liable for FCA violations?
A: Yes. In addition to the contractor, “any person” (e.g., an employee) who makes a false certification, statement, or record, could be individually liable for FCA violations.
Q: What kind of penalties are involved?
A: Under the FCA, those submitting false statements are subject to a civil fine between $14,308 and $28,619 per violation, as well as “3 times the amount of damages which the Government sustains because of the act of that person.”
Moreover, businesses and individuals can also be held criminally liable under the FCA. Potential penalties include prison sentences of up to 5 years, as well as fines of up to $250,000 for individuals and $500,000 for businesses for each felony offense, and $100,000 to $200,000 for misdemeanors.
Finally, as a result of an FCA violation, a contractor could face potential suspension or debarment from the federal contract award process.
Q: What damages could the government incur due to an inaccurate statement regarding a contractor’s DEI efforts?
A: It appears that the current Administration is taking the position that any decision by the federal government to make a payment to a contractor is “influenced” (that’s how “material” is defined by the FCA) by the contractor’s compliance with federal anti-discrimination laws. As a recent GSA memorandum stated: “compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes of section 3729(b)(4) of title 31, United States Code.” The EO provides that contractors will be required to agree that such compliance is a material to all payments.
It is possible the government will argue that damages should be measured based on the total value of the contract under the theory that the federal government was fraudulently induced into entering a contract, or continued to pay during the term of the contract, due to the contractor’s misrepresentation about its DEI efforts and/or compliance with anti-discrimination laws.
Q: Is there much risk here? How does the government determine if a certification is false?
A: Well, among other ways, the FCA contains a bounty program. The law permits individuals to bring what are called “qui tam” actions on behalf of the government as qui tam “relators.” To bring a qui tam suit, a plaintiff must file a complaint under seal in the name of the government. Within 60 days of receiving the complaint and any “material evidence and information,” the government must decide whether to intervene in the action or pursue the claim through an alternative remedy (such as an administrative proceeding). If the government declines to intervene in the action, it must notify the court, “in which case the person bringing the action [will] have the right to conduct the action.”
Individuals are incentivized to bring qui tam claims because they can personally receive a significant percentage – up to 30% – of the government’s total recovery.
So, employees or others with non-public information who have a basis to assert a contractor’s DEI efforts are discriminatory can bring a relator claim alleging that the contractor is promoting illegal DEI and is not in material compliance with federal anti-discrimination laws.
Q: What exactly will contractors be certifying?
A: That’s a good question and something we won’t know for sure until we see further government action. The EO isn’t clear on what “programs promoting DEI” means, though it specifically calls out “preferences,” “mandates,” and “workforce balancing” as prohibited activities.
In another Executive Order, the Administration defined “Discriminatory equity ideology” as “an ideology that treats individuals as members of preferred or disfavored groups, rather than as individuals, and minimizes agency, merit, and capability in favor of immoral generalizations.” A different Executive Order defined “DEI office” as one that is established for the purpose of “influencing hiring or employment practices at the institution with respect to race, sex, color, or ethnicity, other than through the use of color-blind and sex-neutral hiring processes.” Other statements from the Administration indicate that DEI may be considered to mean any effort that could be seen as conferring some benefit or preference based in some part on a protected characteristic. For example, in a recent statement, the White House described DEI in hiring and promotion as relating to “factors that favor some Americans over others.” In addition, on February 5, 2025, newly-appointed Attorney General Pam Bondi defined the term “illegal DEI and DEIA preferences, mandates, policies, programs” in a memorandum on “Ending Illegal DEI and DEIA Discrimination and Preferences” as “programs, initiatives, or policies that discriminate, exclude, or divide individuals based on race or sex.”
Given that the EO requires agencies to submit a plan identifying potential “regulatory action and sub-regulatory guidance” to “encourage the private sector to end illegal discrimination and preferences, including DEI,” we are likely to see agency guidance issued in the coming weeks or months that provides at least some clarity to contractors on the types of efforts that may be considered unlawful.
Q: How will contractors actually make this certification?
A: It hasn’t been announced. In the past, contractors have used the OFCCP’s Contractor Portal to certify compliance with various OFCCP obligations, but they also submit separate certifications through the Government’s SAM system.
Q: Have these changes already taken effect?
A: No. Agency heads are ordered to include the new provisions in contracts and grant awards, but the provisions do not appear to have been developed yet. Typically such provisions are developed by the Federal Acquisition Regulatory Council.
It is also important to note that the EO speaks to including the new terms in “every contract or grant award.” It is unclear whether this means the new provisions will apply only to future contracts, or if agencies will issue modifications to existing contracts as well.
Q: Are there additional risks posed by this EO?
A: Yes. Employees can bring claims under the FCA against an employer alleging they have been “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against” because of their protected activity under the FCA, which includes taking acts in furtherance of an FCA action or other efforts to stop a violation of the FCA.
Successful claimants are entitled to remedies including (i) “reinstatement with the same seniority [the whistleblower] would have had but for the discrimination;” (ii) twice the amount of back pay and interest on the back pay; and (iii) compensation for “any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys’ fees.”
Accordingly, federal government contractors will have to be attuned to employee complaints about DEI efforts, understanding that, in addition to other concerns, they may constitute protected activity under the FCA and create additional liability risk.
Q: What should contractors do now?
A: Contractors would be well-advised to start preparing now for this new development. At a minimum, contractors should carefully account for and evaluate their DEI programs and initiatives to determine the risks attendant to each and ensure they feel comfortable certifying that those programs are in compliance with anti-discrimination laws. Contractors should consider conducting these assessments in consultation with legal counsel to preserve privilege associated with their review.
Contractors should also be sure to inform anyone at their companies who is involved in government contracting or who may receive a modification order of the new development and instruct them to look for and notify appropriate personnel should the new term be included in a new contract or modification order to avoid a circumstance where contractors become subject to the new requirements without full organizational knowledge and awareness.
End of an Era: Cal/OSHA’s COVID Non-Emergency Standard Sunsets
As of February 3, 2025, most of Cal/OSHA’s COVID-19 Prevention Non-Emergency Standards have officially come to an end. This marks a significant shift for California employers who have been navigating these regulations and their predecessor emergency temporary standards for the past four years.
Despite the expiration of most obligations under this standard, employers are required to comply with certain recordkeeping requirements under Title 8, Subsection 3205(j) until February 3, 2026. As a practical matter, what does this require? There is some ambiguity in how the regulation is drafted.
To set the stage: While the Non-Emergency Standards were in effect, employers were required to keep detailed records of all COVID-19 cases, including the employee’s name, contact information, occupation, workplace location, last day at the workplace, and the date of the positive COVID-19 test or diagnosis.
Going forward, the requirement that employers comply with recordkeeping requirements through February 3, 2026, could be interpreted in either of two ways:
First, the simplest reading is:
With respect to COVID-19 cases that occurred up to February 3, 2025, employers must maintain these detailed records for two years or until February 3, 2026, whichever date comes first.
Alternatively, a more conservative reading of the regulation leads to the following:
Employers must continue to record and track COVID-19 cases that occur through February 3, 2026. Records of COVID-19 cases must be kept for two years. For example, records of a COVID-19 case in January 2026 would need to be maintained through January 2028.
The second interpretation raises additional questions. For instance, why would employers need to record and track COVID-19 cases when all of the related requirements from the Non-Emergency Regulations have expired (such as notifying employees, providing testing, etc.)?
Absent further guidance on this point, the answer is unclear. Cal/OSHA could be expecting employers to keep track of COVID-19 trends and respond to safety concerns through California’s Injury and Illness Prevention Program (IIPP) requirement.
To that point, even though the specific COVID-19 prevention regulations have ended, employers must still adhere to general workplace safety requirements:
Employers are required to maintain a safe and healthful workplace as mandated by Labor Code section 6400.
Employers must continue to implement and maintain an effective IIPP as required by Title 8, California Code of Regulations, sections 1509 (Construction) and 3203 (General Industry).
If COVID-19 is identified as a workplace hazard, employers must evaluate and correct any unsafe conditions, work practices, or procedures associated with it.
While the end of Cal/OSHA’s COVID-19 Prevention Non-Emergency Standards signifies a return to pre-pandemic regulatory conditions, employers must remain vigilant in maintaining workplace safety and complying with ongoing recordkeeping requirements.
Summary of Tax Proposals in Leaked Document Detailing Policy Proposals
I. Introduction
On January 17, 2025, news sources reported that Republican members of Congress circulated a detailed list of legislative policy options, including tax proposals. This blog post summarizes some of the tax proposals and corresponding revenue estimates mentioned in the list.
II. Individuals
(a) SALT Reform Options
The $10,000 cap on the deductibility of state and local tax (“SALT”) from federal taxable income for most non-corporate taxpayers is set to expire at the end of the year. The list includes several alternative proposals for SALT deductibility going forward.
Repeal SALT Deduction: The SALT deduction would be repealed for individual and business tax filers. This would raise $1 trillion over ten years, as compared to extending the current TCJA deduction cap.
Make $10,000 SALT Cap Permanent but Double for Married Couples: The current TCJA deduction cap for individual and business tax filers would remain, but the cap would be raised for married couples to $20,000 at an estimated cost of $100-200 billion over 10 years, as compared to extending the current TCJA deduction cap.
$15,000/$30,000 SALT Cap: The current SALT deduction cap would be increased to $15,000 for individual taxpayers and $30,000 for married couples, with an estimated cost of $500 billion over 10 years, as compared to extending the current TCJA deduction cap.
Eliminate Income/Sales Tax Deduction Portion of SALT: Only property taxes would be eligible for the SALT deduction, and the deduction would not be capped. This proposal would cost $300 billion over 10 years, as compared to extending the current TCJA deduction cap.
Eliminate Business SALT Deduction: This policy option would eliminate the SALT deduction for business filers only, while maintaining the TCJA deduction cap for individuals. It would raise $310 billion over 10 years.
(b) Repeal or Reduce Mortgage Interest Deduction
The TCJA lowered the amount on which homeowners may deduct home mortgage interest to the first $750,000 ($375,000 if married filing separately) of indebtedness. One proposal would repeal the deduction on primary residences, which would raise $1.0 trillion over 10 years dollars, as compared to extending current TCJA deduction caps.A second proposal would lower the cap on the deduction to the first $500,000 of indebtedness. This proposal would raise $50 billion over 10 years, as compared to extending current TCJA deduction caps. Both savings estimates are Tax Foundation scores.
(c) Repeal Exclusion of Interest on State and Local Bonds
Under current law, interest earned on bonds issued by states and municipalities is excluded from federal taxable income.One proposal would repeal this exclusion, which would raise $250 billion over 10 years. Interest on certain “private activity bonds” is also exempt from federal income tax. A second proposal would repeal the exemption for private activity bonds, Build America bonds, and other non-municipal bonds. It would raise $114 billion over 10 years.
(d) Repeal the Estate Tax
Estates are generally subject to federal tax. The TCJA raised the estate tax exclusion to $13,990,000 in 2025. The list includes a complete repeal of the estate tax. The proposal would cost $370 billion over 10 years.
(e) Exempt Americans Abroad from Income Tax
The foreign earned income exclusion allows U.S. citizens who are residents of a foreign country or countries for an uninterrupted tax year to exclude up to $130,000 in foreign earnings from U.S. taxable income in 2025. The list suggests the limit could be raised, or that all foreign earned income could be exempted from U.S. tax. The Tax Foundation has estimated that the cost is $100 billion over 10 years, though it is not clear which proposal the estimate is related to. This is a Tax Foundation Score.
III. Businesses
(a) Corporate Income Tax
The current corporate income tax rate is 21%. The list posits reductions in the rate to either 15% (at a cost of $522 billion over 10 years) or 20% (at a cost of $73 billion over 10 years).
(b) Repeal the Corporate Alternative Minimum Tax
The Inflation Reduction Act of 2022 (“IRA”) imposed a 15% corporate alternative minimum tax (“CAMT”) on the adjusted financial statement of certain very large corporations. One proposal would repeal the CAMT, at a cost of $222 billion over 10 years.
(c) Repeal Green Energy Tax Credits
The IRA enacted various “green” tax credits, including for clean vehicles, clean energy, efficient building and home energy, carbon sequestration, sustainable aviation fuels, environmental justice and biofuel. These tax credits are proposed to be repealed. The repeal would save up to $796 billion over 10 years.
(d) End Employee Retention Tax Credit
The Employee Retention Tax Credit (“ERTC”) was established under the Coronavirus Aid, Relief, and Economic Security Act in 2020. The ERTC provided “Eligible Employers” with a refundable tax credit for wages paid between March 12, 2020 and January 1, 2021 for keeping employees on payroll despite economic hardship related to COVID-19.The proposal would extend the current moratorium on processing claims for credits, eliminate the credit for claims submitted after January 31, 2024 and impose stricter penalties for fraud related to the credit at an estimated savings of $70-75 billion over 10 years.
IV. Nonprofits
(a) Endowment Tax Expansion for Private Colleges and Universities
The TCJA imposed a 1.4% excise tax on total net investment income of private colleges and universities with endowment assets valued at $500,000 or more per student (other than assets used directly in carrying out the institution’s exempt purpose). One proposal would increase the excise tax to 14%, which would raise $10 billion over 10 years. A related but separate proposal would change the counting mechanism for the per student endowment calculation to include only students who are U.S. citizens, permanent residents or are able to provide evidence of being in the country with the intention of becoming a citizen or permanent resident. This proposal would raise $275 million over 10 years.
(b) Repeal Nonprofit Status for Hospitals
Generally, hospitals are eligible for federal tax-exempt status. The list proposes to eliminate tax-exempt status for hospitals. The Committee for a Responsible Federal Budget has estimated that the proposal would raise $260 billion over 10 years.
V. Enforcement
Repeal IRA’s IRS Enforcement Funding
The IRA resulted in supplemental funding to the IRS, for enforcement purposes. The list states that if this funding is repealed, outlays would be reduced by $20 billion and revenues by $66.6 billion, for a net cost of $46.6 billion over 10 years.
Mary McNicholas and Amanda H. Nussbaum also contributed to this article.
Top Tips for Companies to Prepare for an Immigration Visit
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Here are our top tips to assist companies and institutions in preparing for visits by immigration officials. The second Trump administration has set robust enforcement of the immigration laws as a top-level priority. On January 20, 2025, President Trump issued an executive order that directed all executive branch departments and agencies to “employ all lawful means” to ensure “total and efficient” enforcement of federal immigration laws. As an initial step, the Department of Homeland Security (DHS) terminated its prior “sensitive location” policy that prevented immigration enforcement activities in or near areas such as schools, medical facilities, places of worship, social service centers, daycare centers, or shelters without agency headquarters approval or exigent circumstances. In commenting on the new policy, the DHS spokesperson stated, “Criminals will no longer be able to hide in America’s schools and churches to avoid arrest. The Trump Administration will not tie the hands of our brave law enforcement, and instead trusts them to use common sense.” While we have not heard any confirmed reports of enforcement in these spaces since the rescinding of the Biden-era guidance, it would be prudent for businesses to be prepared and have a lawful response plan for visits from immigration authorities, including local police authorities, U.S. Immigration and Customs Enforcement (ICE), U.S. Customs and Border Protection (CBP), and other agencies empowered to enforce the immigration laws.
Review Your Policies. Keep in mind that immigration authorities are specialized law enforcement. Many companies already will have policies in place that instruct employees how to respond generally to inquiries by law enforcement. Therefore, companies should ensure employees are properly trained on company policies concerning how to interact with ICE or other immigration enforcement agents. If your company does not have such a policy and is in a category of spaces no longer protected as “sensitive locations,” now may be the time to study and potentially adopt appropriate policies. Companies should consider appointing “liaisons,” or other point persons at each company location, who are specially trained and authorized to interact with law enforcement. This will ensure consistency of process and help relieve stress of others who may be directly impacted by these immigration encounters.
Identify Public versus Private Areas. Companies should decide whether they want to have policies or procedures indicating a clear delineation between their public and private spaces. Immigration agents generally do not need permission to enter public areas of a business. Public spaces are general areas that are accessible not only to clients, staff, patients, or students but are accessible and available to the general public. These can include parking lots, waiting areas, hallways, lobbies, or entrances. Areas that are not open and accessible to the public are generally considered private areas, where law enforcement is accordingly not permitted without legal authority. To go beyond these public spaces into private areas, enforcement agents may need to show a warrant (more on this below), not only to apprehend a person but also to enter and search any non-public spaces of a business absent permission from the business. Given that the previous guidance prevented enforcement near protected areas without agency headquarters approval or exigent circumstances, enforcement agents likely will take advantage of accessing public spaces before seeking access to private spaces. Businesses should consider whether they wish to specifically designate public and private areas to help manage engagement with law enforcement.
Review the Warrant. If the enforcement agent is seeking access to a private space and the company decides not to consent voluntarily to such access, then an employee will need to ask to see the warrant; if the agent presents a warrant, the best place to start is to read the scope and wording of the warrant. There are several different types of warrants that can be used in immigration enforcement situations, so a lawyer or trained layperson may need to review the warrant to know what type of warrant the enforcement officer is presenting to gain access. (Samples are included at the end of this piece.)
Judicial Warrant: This is a formal written order, issued by a judicial officer, that authorizes law enforcement to make an arrest or conduct a search. This is issued by a court — typically a federal court — so you will see something like “U.S. District Court” at the top of the warrant and a signature from a judge or magistrate judge at the bottom. Pay close attention to whether the warrant allows for (1) just an arrest of a person named in the warrant, (2) a search for items on the identified person’s body, or (3) a search of a location for listed items or persons. An arrest warrant does not give law enforcement permission to enter a particular private space but does permit the agent to arrest someone listed in the warrant. A search warrant, by contrast, permits the specified enforcement agency to search a specified area (including public and private spaces) for papers, data, property, or persons and seize such listed items or identified persons. Companies should be observant during law enforcement activities on their premises, and carefully and thoroughly document law enforcement actions at all times while they are on company premises.
Administrative Warrant: An administrative warrant authorizes a law enforcement officer from a federal agency, such as ICE or CBP, to make an arrest or remove/deport someone from the country, depending on the type of administrative warrant utilized. This type of warrant is issued by a federal agency, such as ICE, not a court, and can therefore be signed by an “immigration judge” or “immigration official.” Importantly, this warrant does not authorize a search of a private area. Practically speaking, an administrative warrant does not allow agents to enter a private area to apprehend a person named in the warrant or to search an area or seize private property or information, even if the agents reasonably believe the person to be located in that area. Absent changes to the law, administrative warrants cannot be used to search premises.
“Blackie’s” Warrant: This judicial warrant, named after the case Blackie’s House of Beef v. Castillo, is a specific type of judicial warrant that does not always name or even describe the person or people sought. A Blackie’s warrant is a civil search warrant issued by a magistrate judge, which authorizes immigration agents to enter private premises for the purpose of enforcing the civil/administration provisions of law relating to exclusion and deportation. While this warrant has fallen out of favor in many jurisdictions, we may begin to see more of its use going forward. Again, this warrant may provide legal authority for enforcement agents to search a private space, without the owner’s consent, for persons unlawfully in the United States.
Consider Privacy Laws. To the extent the company is a covered entity or business associate subject to the Health Insurance Portability and Accountability Act (HIPAA), or a similar entity subject to state laws, the company will need to review a law enforcement request to ensure compliance with applicable privacy laws. Protected health information can be disclosed under HIPAA and state law in limited circumstances. HIPAA permits (but does not require) disclosing protected health information in compliance with, and as limited by the relevant requirements of, a court order or court-ordered warrant, a subpoena, or a summons. HIPAA also permits disclosure pursuant to administrative requests for which response is required by law, including an administrative subpoena or summons, a civil or an authorized investigative demand, or similar process authorized under law provided all of the following are true: (1) the information sought is relevant and material to the law enforcement agency, (2) requested information is specific and limited in scope as reasonably practicable, and (3) de-identified information could not be reasonably used. There also are federal and state privacy protections in place for certain sensitive types of health information. State law can be more restrictive, so make sure your policies on responding to law enforcement take into account any relevant state law(s). The company’s existing policies and procedures should address the production of this type of information in response to law enforcement requests.
Triage. The company should request from law enforcement a reasonable amount of time to review and perform an initial assessment of the warrant, to appropriately escalate to legal counsel or a point person as needed. If it is something new or unfamiliar, seek advice from legal counsel, who should carefully review the warrant to determine the company’s obligations in interacting with law enforcement. Provide training to staff and leadership to ensure they read any paperwork provided and triage the situation. Again, appointing “liaisons” at each worksite who are specially trained and designated with authority to interact with enforcement agencies may be advisable.
Avoid Obstructing Law Enforcement. Importantly, employees should avoid obstructing law enforcement’s activities. Even if such activities appear to go beyond the scope of the warrant, interfering is not helpful and can risk criminal charges. Legal remedies for law enforcement overstepping, including unlawful searches and seizures, can be addressed later in the process. Interfering with law enforcement while they are onsite often will serve only to escalate the situation.
The immigration landscape is quickly changing under the Trump administration, but preparing for potential enforcement in advance and training employees on these issues can help your company know how best to respond to unfamiliar situations. Constitutional law provides companies with important protections from unreasonable searches and seizures by law enforcement, so consultation with legal counsel to understand those rights and obligations is critical to ensuring compliance with the law.
Please contact a member of Foley’s Immigration, Government Enforcement or Labor & Employment teams with questions for help preparing for immigration enforcement action on site or for further information about the federal government’s new immigration-related policies.
Samples of Warrants
Judicial Warrant for a search:
Judicial Warrant for an arrest only:
Administrative Warrant (Warrant of Removal/Deportation)
Administrative Warrant (Warrant for Arrest)
Employment Law This Week- Federal Agencies Begin Compliance Efforts Under Trump Administration [Video} [Podcast]
This week, we’re highlighting notable employment law updates from federal agencies and the courts, including the Equal Employment Opportunity Commission (EEOC), the Department of Labor (DOL), and the U.S. Court of Appeals for the Fifth Circuit.
EEOC Releases FAQs on the State of the Agency
The EEOC, under the leadership of Acting Chair Andrea Lucas, recently released answers to frequently asked questions (FAQs) following President Trump’s series of executive orders affecting the agency.
DOL Halts OFCCP Activity Under Rescinded Executive Order
Acting Secretary of Labor Vince Micone recently issued an order directing the Office of Federal Contract Compliance Programs (OFCCP) to stop all enforcement activity under rescinded Executive Order 11246.
DOL Independent Contractor Rule Paused
The Fifth Circuit recently granted the DOL’s request to delay oral arguments, and it seems likely that the independent contractor rule will be short-lived.
The Buckeye State To End Employer Noncompetes?: Ohio Introduces Bill That Would Ban Employers From Entering Into Noncompetes
Consistent with our previous reporting that states would continue to address noncompete issues even after the apparent end of the FTC Noncompete Rule, Ohio has joined the growing list of jurisdictions seeking to restrict the use of noncompetes.
On February 5, 2025, Ohio state Senators Louis W. Blessing (R) and William P. DeMora (D) introduced Senate Bill (SB) 11 (the “Bill”), that, if enacted, would prohibit employers from entering into a noncompete agreement with a “worker” or “prospective worker”.
The Bill defines “worker” as “an individual who provides services for an employer[,]” including, among others, employees, independent contractors, externs, interns, and volunteers. The Bill does not define “prospective worker.”
If enacted as introduced, the Bill would prohibit employers from enforcing agreements that prohibit or penalize workers from seeking or accepting work with a person, or operating a business, after the conclusion of the relationship between the employer and worker, including any of the following:
Prohibiting the worker from working for another employer for a specified period of time, in a specified geographic area, or from working for another employer in a capacity similar to his or her work for the employer;
Requiring that the worker pay for lost profits, lost goodwill, or liquidated damages because the worker terminates his or her relationship with the employer;
Imposing a fee or cost on a worker for terminating the work relationship; and
Requiring a worker who terminates his or her employment to reimburse the employer for expenses incurred for training, orientation, evaluation, or other services to improve the workers’ performance.
The Bill does not address confidentiality or non-solicit agreements, so presumably those agreements would remain permissible if the Bill is enacted.
One open issue is whether the Bill will have retroactive effect to noncompete agreements entered before the effective date. Although one could interpret the intent of the Bill as applying to only those noncompete agreements entered after the effective date, the present language of the Bill could apply to existing noncompetes between employers and workers. Section 4119.02(A) of the Bill states that “[b]eginning on the effective date of this section, no employer shall enter into, attempt to enter into, present to a worker or prospective worker as a term of hire, or attempt to enforce an agreement, or part of an agreement that prohibits the worker” from competing with the employer. (emphasis added). Thus, the plain language of the Bill suggests that, if enacted as written, employers would be prohibited from seeking to enforce existing noncompetes with workers, including noncompetes entered into before the effective date.
The Bill also addresses choice-of-law and forum selection provisions and would apply to “any agreement” between an employer and worker that is entered, modified, or extended on or after the effective date of the Bill, not just noncompetes. If a worker primarily resides and does business in Ohio, employers are prohibited from requiring the worker to adjudicate a claim arising in Ohio in a forum other than Ohio. Furthermore, the agreement cannot seek to enforce a choice-of-law provision that attempts to circumvent the protections under Ohio law. The Bill provides an exception if the worker is individually represented by independent legal counsel in negotiating the terms of the agreement and the worker chooses a choice-of-law and/or forum outside of Ohio.
The Bill would allow a worker or prospective worker to bring a civil action against an employer for a violation of the Bill’s restrictions. If the worker prevails in such a civil action, the worker will be entitled to an award of attorney’s fees, and may also be awarded actual damages, punitive damages, or injunctive relief.
As we previously reported, several other state legislatures, including New York, Maine, and Rhode Island, have been unsuccessful in their attempts to pass legislation barring noncompetes between employers and employees. If enacted, Ohio, which has long recognized the enforceability of noncompetes and has generally been regarded as an employer-friendly state, would completely reverse course by enacting a complete ban to noncompetes. It would become only the fifth state (joining California, Minnesota, Oklahoma, and North Dakota) to ban noncompetes between employers and workers.
The fact that Ohio’s Bill is co-sponsored by one Republican and one Democrat state senator may be an attempt by those lawmakers to signal bipartisan support for the Bill. It remains questionable as to whether the Bill will gain support in the legislature or whether Ohio Governor Mike DeWine would support a complete ban on noncompetes in the State of Ohio.
H-1B Lottery Insights Part 2: Filing Options and Key Strategies for FY2026 [Podcast]
In the second part of our two-part podcast series on H-1B visa applications, Kara Lancaster (shareholder, Raleigh) and Meagan Dziura (of counsel, Raleigh) begin with a deep dive into the process of how individuals selected in the H-1B lottery file petitions (including related travel restrictions) the filing options for those selected (including change of status and consular notification), and the timeline for when individuals can enter the United States. Kara and Meagan touch on special provisions for F-1 students, the importance of considering L-1 visa holders, and other visa categories that may also benefit from entering the lottery. The speakers also cover recent updates from U.S. Citizenship and Immigration Services (USCIS), the impact of increased fees, and strategies for managing various employee visa situations.
Listen to part one here.
Blast from the Past: The Potential Ripple Effect of the ‘Return to In-Person Work’ Executive Order on the Private Sector and Key Considerations for Employers
President Donald Trump’s “Return to In-Person Work” executive order (EO) mandates that federal employees return to full-time office work. This EO effectively ended the widespread hybrid and remote work arrangements that had become common in the government sector. Federal agencies must now “take all necessary steps” to enforce in-person attendance. While the EO does not apply to the private sector, it may encourage private employers to implement similar policies. Although employers generally have the right to require in-person work, they must ensure that such requirements comply with the law.
Reasonable Accommodations & Remote Work
One of the most pressing legal issues tied to return-to-office mandates is the question of reasonable accommodation under federal and state disability laws. The Americans with Disabilities Act (ADA) requires employers to provide reasonable accommodations for employees with disabilities. In recent years, many employees with disabilities requested remote work as an accommodation. Pre-COVID-19, many employers were skeptical of remote work. In the wake of the pandemic shutdown that necessitated remote work, many employers had to revisit this issue and determine whether remote work might be a reasonable accommodation.
Key Considerations for Employers When Providing Reasonable Accommodations
The duty to accommodate under the ADA arises once the employer is aware of an employee’s disability. While the employee generally bears the responsibility to request accommodation, some courts require employers to provide accommodations if they knew or should have known about the disability and need for accommodation. You have to engage in the interactive process in making your determination. In doing so, employers should consider the following:
Essential Job Functions
The key factor in evaluating whether remote work is a reasonable accommodation of an employee’s disability is whether the employee can perform the essential job functions remotely. You should review job descriptions to determine if in-office presence is necessary. If you think it is, you may request medical documentation to confirm the disability and why remote work is medically necessary (and for how long). Remember that you do not have to remove any essential job functions. You should also make sure that other employees are not currently performing this job remotely (and have not done so in the past).
Undue Hardship
Employers must determine if remote work would cause an undue hardship by considering:
The nature and cost of the accommodation
The facility’s financial resources, workforce size, and expenses
The employer’s overall resources, size, and locations
The impact on operations and workforce structure
The effect on facility operations
Frankly, proving an undue hardship, particularly in connection with a remote work request, is an uphill battle.
The Choice is Yours
As organizations implement return-to-office policies, it’s crucial to balance business needs with compliance under the ADA. Employers should enforce in-person attendance but should not automatically reject an employee’s request for remote work as an accommodation. Have a good process in place to ensure all requests are evaluated in accordance with the law.
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OSH Law Primer, Part XI: Understanding and Contesting OSHA Citations: An Overview
This is the eleventh installment in a series of articles intended to provide the reader with a very high-level overview of the Occupational Safety and Health (OSH) Act of 1970 and the Occupational Safety and Health Administration (OSHA) and how both influence workplaces in the United States.
By the time this series is complete, the reader should be conversant in the subjects covered and have developed a deeper understanding of how the OSH Act and OSHA work. The series is not—not can it be, of course—a comprehensive study of the OSH Act or OSHA capable of equipping the reader to address every issue that might arise.
The first article in this series provided a general overview of the OSH Act and OSHA; the second article examined OSHA’s rulemaking process; the third article reviewed an employer’s duty to comply with standards; the fourth article discussed the general duty clause; the fifth article addressed OSHA’s recordkeeping requirements; the sixth article covered employees’ and employers’ respective rights; the seventh article addressed whistleblower issues; the eighth article covered the intersection of employment law and safety issues; the ninth article discussed OSHA’s Hazard Communication Standard (HCS); and the tenth article examined voluntary safety and health self-audits. In this eleventh article in the series, we focus on OSHA’s citation process.
Quick Hits
The OSH Act requires that OSHA detail violations with specific reference to the standards breached and descriptions of the noncompliant conditions or conduct found.
OSHA classifies a citation as one of four categories—“willful,” “repeat,” “serious,” and “other”—each with a degree of severity and associated penalties, adjusted annually for inflation.
An employer receiving an OSHA citation must first post the citation in a prominent place, at or near the worksite referenced in the citation.
The employer may contest the citation within fifteen working days (during which OSHA typically schedules an informal conference) and settle the case with OSHA at any time via a signed, written agreement that addresses all material terms and resolves all contested issues. The parties must file the notice of settlement with an administrative law judge of the Occupational Safety and Health Review Commission (OSHRC).
No employer wants to be inspected; if inspected, every employer hopes to escape citation. However, the Occupational Safety and Health Administration (OSHA) frequently issues citations at the conclusion of inspections. What does a citation mean for an employer, and what can an employer do with it once received?
Understanding the Alleged Violation and Potential Consequences
The Occupational Safety and Health (OSH) Act requires the agency to “describe with particularity” the violation(s), which consists of a reference to the standard(s) believed to have been violated and usually a one- or two-paragraph description—called the “alleged violation description” (AVD)—of the noncompliant condition or conduct found.
Along with the violation and AVD, OSHA classifies citations into one of four categories: (1) “Willful”; (2) “Repeat”; (3) “Serious”; and (4) “Other.” Willful violations are the most severe classification of violation. A violation is “willful” if it is “an act done voluntarily with either an intentional disregard of, or plain indifference to, the OSH Act’s requirements.”While the OSH Act does not define the term “Repeat Violation,” courts typically require proof that the respondent violated the same standard on an earlier occasion in a substantially similar fashion. The OSH Act does not limit how far back OSHA may look for a Repeat violation, but the agency currently confines itself to a five-year lookback with regard to an employer’s citation history nationwide. Serious violations are the most commonly cited violations. OSHA classifies a violation as “Serious” when the hazard created by the violated standard has a substantial probability of causing death or serious physical harm to an employee. “Other” violations, sometimes also referred to as “Other Than Serious” violations, are cited when an employer violates a standard, but the hazard is not capable of causing death or serious physical harm. OSHA typically reserves “Other” violations for paperwork violations, such as failures to keep proper OSHA 300 logs.
A citation will also contain a proposed penalty. The amount can vary depending on the gravity and severity of the violation, including the likelihood of severe injury and the number of employees exposed to the hazard. Pursuant to the Federal Civil Penalties Inflation Adjustment Act of 2015, OSHA increases the penalty amounts every year based on the annual inflation rates. As of January 15, 2025, the maximum penalties increased to $165,514 for Willful and Repeat violations, and $16,550 for Serious and Other Than Serious violations.
To reward and incentivize good-faith efforts to implement an effective safety and health management system in the workplace, the agency may reduce a penalty. In considering good faith, OSHA reviews the employer’s overall safety and health program. If the agency determines the employer has an effective written safety and health program, covering all relevant OSHA standards, OSHA may reduce the proposed penalty by up to 25 percent.However, OSHA will not reduce penalties for willful and repeat violations.
Typically, OSHA proposes one penalty for each OSHA regulation (or “standard”) violated, even though multiple employees may have been exposed to the violation and even though an employer may have multiple instances of the same violation. For example, an employer’s failure to install safety guards on ten identical machines is ordinarily cited and penalized as one violation, not ten. Furthermore, OSHA normally would propose one penalty for a machine guarding violation, regardless of the number of employees using the machine. However, under a policy OSHA developed for “egregious” violations, the agency may treat each instance of a violation as a separate violation, thus multiplying the potential penalty amount.
Abatement Requirements
The OSH Act requires employers to abate, or correct, violative conditions. The citation will provide a deadline for the employer to abate the citation. It will not include any directive or recommendation for abatement, unless the citation is for a violation of the General Duty Clause, also known as Section 5(a)(1) of the OSH Act. Employers must provide proof of abatement to OSHA by the deadline, although an employer can receive an extension if it can persuade OSHA or OSHRC to grant one. OSHA commonly accepts photographs of corrective action, but sometimes a statement from the employer detailing the abatement methods can suffice. When in doubt, a telephone call to the compliance officer or area director can often clarify the ambiguity and provide guidance on required actions needed to satisfy abatement.
Addressing an OSHA Citation
Any employer receiving a citation must first post the citation in a prominent place, at or near the worksite referenced in the citation. Typically, posting on the employee bulletin board containing the mandatory U.S. Department of Labor (DOL) postings relating to minimum wage, etc., will suffice. OSHA permits an employer to redact the penalty amounts.
Companies not familiar with OSHA are often unsure of their rights to contest a citation. An invoice is attached to the citation; many assume they cannot appeal the matter and simply pay the penalty. While accepting the citation is one possible resolution, the employer has the right to challenge (called “contest”) any citation it receives.
If the employer decides the citation is valid, or at least not worth litigating, the employer need do nothing but abate the hazard within the time specified on the citation and remit the penalty amount to OSHA.
If the employer requests one, OSHA will conduct an informal conference. These conferences are typically scheduled during the fifteen–working-day contest period and allow the employer and the agency to discuss the citations in an informal setting, usually with an area director or assistant area director. The agency will usually make a settlement offer, generally consisting of lower penalty amounts; sometimes the agency withdraws one or more violations, but the agency has the authority to change classifications and AVD language, too.
Importantly, the informal conference does not suspend or delay the fifteen-working-day deadline for an employer to contest a citation.
If the employer sends OSHA a notice of contest, it may still settle the case at any time, very similar to the manner done at informal settlement. The only prerequisite required is that OSHA and the employer reach an agreement on all material terms and reduce their understanding to a signed, written document. Once the parties reach a full settlement agreement—resolving all issues contested—they file a notice of settlement with the administrative law judge (i.e., an OSHRC judge), which terminates the case.