Labor & Employment – Page 6

Old North State Report – April 21, 2025

UPCOMING EVENTS
April 22, 2025
NC Chamber Spring Member Roundtable – Asheville
April 24, 2025
RTAC – Association of Corporate Counsel Spring Reception – (Raleigh)
April 28, 2025
Thinkers Lunch: Rob Christensen
May 13, 2025
NC Chamber Business Summit on Mental Health
June 5, 2025
Triangle Business Journal 2025 State of Health Care in the Triangle
LEGISLATIVE NEWS
SENATE PASSES BUDGET PLAN
On Monday, the North Carolina Senate unveiled Senate Bill 257, their budget plan for state spending, which includes raising pay for teachers and state workers, advancing income tax cuts, and allocating funds for future Hurricane Helene recovery efforts. The GOP’s budget plan, spanning 440 pages, promises to cut out “waste” and “bloated” spending. The proposed budget for the next two years totals $32.6 billion for 2025-26 and $33.3 billion for the following year.
The budget designates $700 million for Hurricane Helene response and an additional $1.1 billion for the state’s “rainy day fund,” which could be used for more Helene aid or other expenses. This adds to the $1.5 billion already spent on recovery since the storm occurred six months ago.
Most state employees would receive a raise of 1.25% next year, along with $3,000 in bonuses over two years. Some employees in specific roles, especially correctional staff and law enforcement, would receive even larger raises with average increases set at 3.3% for teachers, 8.9% for correctional officers, 9.2% for Highway Patrol, and 14.4% for Alcohol Law Enforcement and SBI officers. The budget plan would include a review of state government spending, led by State Auditor Dave Boliek.
Other highlights from the proposal include:

An overall increase in funding for health care, including sizeable investments in the Medicaid Contingency Reserve, reflective of Medicaid expansion.
A $535.5 million investment in a new 500-bed pediatric hospital with UNC Health and Duke Health.
$25 million to reinstate coverage of GLP-1 weight-loss drugs for certain state workers.
Overhauls to NCInnovation’s funding model, asking for the return of $500 million the organization received from the state in 2023.
Additional funds for teacher signing bonuses, mentorship programs, and initiatives to improve reading scores.
Doubling the tax rate for sports betting operators from 18% to 36%.
Allocating $3.5 billion over two years to the State Capital Infrastructure Fund, which finances construction initiatives at universities.
Reducing the income tax rate to 3.49% in 2027 and 2.99% in 2028, with potential for further reductions.
Increasing unemployment benefits to $400 per week.
Establishing a fund for state veterans’ cemeteries within the Department of Military and Veterans Affairs.
Restoring the “Rainy Day” reserves fund to $4.75 billion.
Allocating $110 million for PFAS monitoring through the Department of Environmental Quality.
Designating $1.5 billion in federal funds for rural broadband internet.
Would Repeal the state’s Certificate of Need Law

The Senate passed the budget proposal on Thursday morning with a vote of 30-15, which included four Democrats voting with the Republican majority. The House is expected to release their proposed budget in May, with negotiations between the chambers following thereafter.
Read more be NC Newsline
Read more by WRAL News (Doran) (4/15/25)
Read more by WRAL News (Doran) (4/17/25)
Read more by News & Observer (4/15/25)
Read more by News & Observer (4/16/25)
HOUSE PASSES REINS ACT
The North Carolina House of Representatives has passed House Bill 402, known as the “Regulations from the Executive in Need of Scrutiny (REINS) Act. ” This bill increases legislative control over state agency rulemaking, requiring approval from the North Carolina General Assembly for any regulation with economic impacts over $1 million. The House passed the bill with a 68-44 vote, gaining support from all Republicans and one Democrat.
Representative Allen Chesser (R-Nash) stated that the bill makes lawmakers accountable for significant regulatory decisions, providing citizens with someone to hold responsible. “Right now, we’ve got over 110,000 regulations on the books in North Carolina, and almost 100% of them pass through our current system,” Chesser explained on the House floor. “Very few would cross this threshold to where it comes into our body, where we get to get to review it. What we’re saying is that the people should have someone to hold accountable, and that should be us.”
Bill sponsors in the North Carolina General Assembly claim the REINS Act increases government accountability in regulatory reform, giving more power to the people and their representatives.
Chesser mentioned in committee that the final version is less intrusive than the original draft. However, Democrats opposing the bill raised concerns about possible constitutional issues regarding the separation of powers.
Read more by The Carolina Journal
MORE ACTION ON ENERGY POLICY
In 2021, the General Assembly required the Utilities Commission to take all reasonable steps to reach a 70% reduction in carbon dioxide emissions from electric public utilities in North Carolina by 2030 and carbon neutrality by 2050. Senate Bill 261, passed by the Senate on March 13, would eliminate the interim 70% goal. The bill would also allow public utilities to increase base rates to recapture costs for construction work in process outside the general rate case process. Language similar to Senate Bill 261 was included in the Senate’s proposed budget.
Read more by The Carolina Journal
Read more by NC Newsline
EMPLOYMENT PREFERENCE FOR MILITARY VETERANS COULD EXPAND
A bill to expand hiring preferences for military veterans, their spouses, and dependents in state government received a favorable hearing in the Committee on Homeland Security and Military and Veterans Affairs. House Bill 114 aims to improve current law by:

Removing the requirement that service must relate to a war period.
Including those on active duty.
Including members of the U. S. Armed Forces Reserve.
Including spouses or dependents of qualified individuals.

Representative Charles Smith (D-Cumberland), a co-sponsor, stated that the bill modernizes outdated laws, as veterans currently must have served during wartime, with the Vietnam War defined as the last such conflict. “Time has passed, and so to expand that preference to a greater pool of veterans, it strips away that language [defining the Vietnam War as the nation’s last],” Smith said.
Expanding preferences could help fill job vacancies in the state government. The veteran unemployment rate was 3.7% in March, with 84,900 civilian federal employees in North Carolina, including 28,000 veterans and 33,200 spouses of veterans or active-duty members. A quarter of the VA’s 482,000 employees are veterans.
The bill has been sent to the House Committee on Commerce and Economic Development.
Read more by NC Newsline
HOME GAMING LEGISLATION ADVANCES
House Bill 424 aims to make home card and dice games legal, although some critics worry it could lead to high-stakes gambling. The bill states that North Carolina’s gambling rules do not apply to recreational games in private homes or clubhouses.
The bill’s sponsor, Representative David Willis (R-Union), introduced it after a HOA board complaint about a card game at a public clubhouse. It allows people to play games for money in a private setting, but no mechanical devices can be used, and only personal winnings are allowed.
The bill, which passed a committee on April 1, has new restrictions for charitable game nights, limiting them to 24 per year and no more than two per week. An amendment was suggested to limit high-stakes gambling. The updated bill was approved and sent to the Rules Committee.
Read more by State Affairs Pro
BILL BANNING SOCIAL MEDIA FOR MINORS PASSES HOUSE COMMITTEE
A bill to ban social media for minors under age 14 has passed the House Commerce and Economic Development Committee. House Bill 301 requires parental consent for teens aged 14 and 15 to create social media accounts. The bill holds social media platforms accountable for removing unauthorized accounts and deleting personal data.
Platforms must verify user ages and can face fines up to $50,000 for violations. The NC Department of Justice can investigate and enforce compliance, with proceeds from penalties funding the state’s Civil Penalty and Forfeiture Fund.
The bill’s sponsor, Jeff Zenger (R-Forsyth), pointed out the strong support for the bill from parents of different political views. “One thing that’s been interesting is the overwhelming support from parents across the political spectrum. I didn’t expect such unanimous approval, but it’s been clear that parents are fully behind this.”
Some lawmakers are concerned about enforcement, but Zenger argues that action is necessary for children’s safety.
Read more by The Carolina Journal

Utah, West Virginia, and Wyoming Enact Laws Defining Male and Female

Utah, West Virginia, and Wyoming recently passed laws aligning with recent executive orders issued by President Donald Trump defining sex as binary and immutable.

Quick Hits

Utah, West Virginia, and Wyoming lawmakers recently enacted state laws recognizing only two genders, male and female.
The state legislators acted after President Donald Trump issued an executive order establishing that the federal government’s new policy is to recognize only two sexes, male and female, despite contravening federal law.
The three states restrict transgender and nonbinary individuals from using public school bathrooms and locker rooms that align with their gender identity.

Utah, West Virginia, and Wyoming joined Iowa and other states in passing state laws redefining gender as binary (e.g., male and female only) and immutable, thus attempting to reject governing Supreme Court of the United States case law recognizing gender identity as a protected characteristic under Title VII of the Civil Rights Act of 1964.
The Supreme Court ruled in Bostock v. Clayton County, Georgia that the firing of an employee because of the employee’s sexual orientation or gender identity constituted unlawful sex discrimination under Title VII. Various courts have since applied Bostock to prohibit discrimination on the basis of gender identity by protecting rights to use bathrooms corresponding to gender identity and to use pronouns reflecting one’s gender identity. Despite the fact Bostock remains good law, on January 20, 2025, President Trump signed an executive order to define sex as binary and immutable. The laws in Utah, West Virginia, and Wyoming track the executive order.
Utah Law
On January 30, 2025, Utah Governor Spencer Cox signed a law requiring transgender and nonbinary people to use bathrooms, locker rooms, and showers that correspond with their sex assigned at birth. The new law applies only to government buildings and public schools, but took effect immediately.
The new law defines female as “an individual whose biological reproductive system is of the general type that functions in a way that could produce ova.” It defines male as “an individual whose biological reproductive system is of the general type that functions to fertilize the ova of a female.”
As of September 1, 2024, Utah’s legal code defines sex as being “male or female, at birth, according to distinct reproductive roles as manifested by sex and reproductive organ anatomy; chromosomal makeup; and endogenous hormone profiles.”
West Virginia Law
On March 18, 2025, West Virginia Governor Patrick Morrisey signed into law a bill establishing only two sexes, male and female, under state law. It defines female as “an individual who naturally has, had, will have through the course of normal development, or would have but for a developmental anomaly, genetic anomaly, or accident, the reproductive system that at some point produces, transports, and utilizes ova for fertilization.” It defines male as “an individual who naturally has, had, will have through the course of normal development, or would have but for a developmental anomaly, genetic anomaly, or accident, the reproductive system that at some point produces, transports, and utilizes sperm for fertilization.” This law will take effect on June 16, 2025.
The law also states there must be a reasonable accommodation, such as a single-occupancy restroom or changing area, for people who are not willing or able to use the facility assigned to their biological sex.
Wyoming Law
On March 5, 2025, the Wyoming legislature passed a bill that defines sex as being male or female at birth. It defines female as “a person who has, had, will have or would have had, but for a congenital anomaly or intentional or unintentional disruption, the reproductive system that at some point produces, transports and utilizes eggs for fertilization.” It defines male as “a person who has, had, will have or would have had, but for a congenital anomaly or intentional or unintentional disruption, the reproductive system that at some point produces, transports and utilizes sperm for fertilization.”
This bill became law on March 14, 2025, without the governor’s signature. It took effect immediately.
On March 3, 2025, Governor Mark Gordon signed a different bill into law that requires public school students to use bathrooms and locker rooms that align with their sex assigned at birth.
That law took effect immediately.
Next Steps
Amid the changes in federal guidance and state law, Bostock remains good law and prohibits harassment and discrimination based on sexual orientation and gender identity. Further, the U.S. Equal Employment Opportunity Commission’s (EEOC) sex harassment guidelines voted on by the EEOC and issued in April 2024 remains active guidance. The EEOC’s acting chair, Andrea Lucas, has stated she wants to rescind all or part of the earlier guidance related to gender identity, in particular bathroom and pronoun usage, once a quorum exists as the EEOC.
Employers in public schools and government buildings in Utah, West Virginia, and Wyoming may wish to review their policies and practices to ensure employees have safe access to single-sex facilities, as required under the Occupational Health and Safety Act’s general duty clause, and carefully evaluate compliance with all applicable, federal, state, and local laws regarding access to bathrooms, locker rooms, dorms, and showers. The restrictions passed in the states do not apply to private employers in private buildings.

Taming the Tariffs: Employee Benefit Issues for Employers During Times of Economic Uncertainty – Group Employee Terminations

Many companies are scrambling to quickly assess how to reduce the business impact of the upheaval to U.S. manufacturing and trading with the recent onslaught of tariffs threatened or imposed by the United States and the related global response. Similar to the COVID-19 pandemic, employers may now be looking for ways to manage the impending financial impact of tariffs on their business, including trying to lower HR-related costs and obligations through larger-scale employee group terminations.
This article provides reminders of some of the employee benefits issues to consider if your company is considering group terminations as a way to tackle the business impact of tariffs. In our experience, employers often provide enhanced benefits for employees losing their employment as part of a group termination. While the enhanced benefits may add to the employer’s costs on a temporary basis, it is still less expensive in the long run than the ongoing costs of maintaining a larger active workforce.
Another cost-saving option an employer may consider is to reduce or suspend employer contributions to retirement plans, which is further discussed here.
This article does not address the employment aspects of a group termination, such as whether the group termination triggers federal or state WARN notice or other similar requirements and employers should consult their labor & employment counsel and advisors whenever considering a group termination of employees.
What Are the Impacts to Our 401(k) Plan for a Group Termination?
Vesting. When an employee terminates employment (whether in a single or group employee termination context), he or she will become eligible to receive a distribution of any vested benefit under the company’s 401(k) plan. While 401(k) plans rarely provide for full vesting when an employee experiences an employer-initiated termination of employment, if the group of terminated employees is large enough, then the 401(k) plan may experience a “partial plan termination,” which requires certain 401(k) plan accounts to become fully vested.
A 401(k) plan has a “partial plan termination” during a plan year if there is a significant change to the plan or a significant corporate event that affects the right of employees to vest in their plan benefits. While determining if a partial plan termination has occurred is a facts & circumstances test, current IRS guidance presumes that there is a partial plan termination when at least 20% of the 401(k) plan’s active participants experience an employer-initiated termination of employment (outside of a company’s “ordinary course” turnover) during a plan year or in connection with the same corporate event (e.g., a planned or coordinated reduction in force). When a partial plan termination occurs, the employer must fully vest any employee who left employment during the relevant plan year, including people who voluntarily left employment. There are several nuances to this analysis so we recommend that a company discuss any planned larger-scale reductions in force with its 401(k) plan recordkeeper and legal advisors to determine the application of the partial plan termination rules in that circumstance.
If a partial plan termination is not occurring, then you may also wish to consider whether to voluntarily vest 401(k) plan accounts for individuals affected by an employer-initiated group termination, provided the employee group is not disproportionately highly compensated (as defined under IRS rules). This will require a plan amendment and coordination with your 401(k) plan recordkeeper to administer the change.
Employer Annual Contributions. If your 401(k) plan provides employer contributions that require either a specific number of hours of service during the year and/or a last day of the year employment requirement as a condition for receipt of this contribution, you may wish to consider whether to waive those requirements for the employees affected by the group termination, provided the employee group is not disproportionately highly compensated. This will require a plan amendment; however, this plan provision need not be preserved in the plan going forward; for example, the amendment could be drafted to apply to employees experience a group termination only during a limited window of time (e.g., 2025) or so it applies only to terminations at a specific plant or location.
Eligible Plan Compensation. One other item to remember is that if severance benefits are provided to employees, severance pay may never be subject to 401(k) plan deferrals or, generally, be considered to determine employer contributions under a 401(k) plan. That contrasts with certain regular post-termination payments related to final pay or benefits for services provided (e.g., final paycheck or vacation cashout) that may be subject to 401(k) deferrals and related employer contributions, depending on how your 401(k) plan defines compensation. Coordinate with your 401(k) plan recordkeeper and payroll processers to make sure 401(k) plan deferrals and employer contributions are only applied to eligible compensation.
What About Severance?
Employers that either rarely offer severance benefits or that do so on an ad hoc basis will often adopt a more formal severance program in connection with group terminations. This can be especially helpful if there is an expectation that employees work through a specific date to receive severance; the promise of severance benefits can serve as a retention tool. Typical severance benefits include severance pay and sometimes outplacement benefits and subsidized COBRA premiums (see the next question for more about COBRA). Whether a severance program is considered a plan subject to ERISA rules depends on whether there is an “administrative scheme.” The rule of thumb is that if the severance benefits will be paid overtime under normal payroll practices, rather than in a lump sum, we recommend that the severance program be set up to be ERISA compliant. An ERISA compliant severance program needs to be in writing, include specific claims and appeals procedures, and provide a summary plan description (which can often also serve as the written plan document) to eligible employees. If the program covers over 100 employees, a Form 5500 would also need to be filed.
Unlike many ERISA benefits, there are no rules that require equal severance benefits, so highly compensated employees can receive richer severance benefits than lower-paid employees, or the benefits can vary by location or position. In addition, there is no legal requirement that the severance plan be continued indefinitely – it can remain in effect only for a finite period.
What Happens to Health Coverage for Employees Who Are Terminated?
In the normal course, terminated employees enrolled in an employer’s group health plan (whether that be medical, prescription drug, dental, vision, or health flexible spending accounts) can continue this coverage generally for up to 18 months under federal COBRA rules, or for smaller employers under state-specific “mini-COBRA” laws, by paying the full cost of such coverage.
Sometimes employers may choose (or be required under an employment contract or severance policy) to subsidize all or part of the terminated employee’s premium costs for COBRA continuation coverage. For example, you may let terminated employees continue to pay active employee rates for COBRA coverage. In that case, you need to be mindful of whether your health plan is a self-insured or fully-insured plan as there could be different tax reporting obligations on such subsidies based on how benefits are provided. If your health plan is fully insured, there are no tax consequences to the terminated employees because of the subsidized COBRA premiums. If your health plan is self-insured, however, and the subsidized COBRA premiums favor highly compensated employees, the amount of that subsidy may need to be treated and taxed as compensation. Note that if you choose to provide the subsidy as a cash payment regardless of whether the former employee spends it on COBRA coverage or otherwise, it is always considered taxable compensation even if they actually use it to buy COBRA coverage. Companies should take care to properly communicate, document, and tax report and withhold from any COBRA coverage subsidy benefits.
How Are Outstanding Stock Options or Other Equity Incentive Plan Awards Treated?
You will need to check the equity incentive plan documents and individual award agreements to properly determine any impact on outstanding awards in the event of an employee termination. In addition, you can’t stop there— you also need to make sure there are no other rules that may apply to an employee’s equity awards under an existing employment agreement, applicable severance policy, or any other individual contract. Unless the award provides for accelerated vesting on a termination of employment, any outstanding and unvested equity awards would typically be forfeited at termination of employment. In a group termination situation, employers often consider whether to provide for additional vesting if the plan or award agreement does not already require it. If additional vesting is desired, remember to check the equity plan or award agreement to determine the necessary process to approve the additional vesting, for example, whether approval of the board of directors or an officer is required to make that change.
Will the Company Need to Make Payments on Deferred Compensation Plans?
Possibly, depending on the terms of the deferred compensation plan. A termination from employment (called a “separation from service” under the Code Section 409A rules) is one of the permissible payment events under Code Section 409A for nonqualified deferred compensation plans. To the extent any terminated employees are participating in a deferred compensation plan, you will need to carefully review the plan and award agreements to determine any impact from the termination on vesting or payment obligations. If separation from service is a payment triggering event, the company will need to be ready to make those required payments, which will come from the company’s general assets unless the company has set up one of the limited ways that a company may set aside certain funds for deferred compensation obligations. The cash outlay for making these payments will need to be considered as part of the overall costs of a group termination.
Do the Same Considerations Apply for Employees Who Are Covered under a Collective Bargaining Agreement?
When considering employee terminations for any employees represented by a union, you should always first check the terms of the applicable collective bargaining agreements and consult with your labor advisors on the company’s obligations in connection with a group termination. While the summaries above do apply generally for employer-sponsored retirement and welfare benefits, there may be specific provisions in a collective bargaining agreement or under union-sponsored benefit plans that will require certain company actions or require the company to further bargain with the union in the event of a planned reduction in force.
Don’t Forget About Releases!
If you decide to provide enhanced benefits to employees in connection with a group termination, consider whether to condition those enhanced benefits on the impacted employees executing a general release of claims. It is difficult to condition enhanced 401(k) benefits on the provision of a release, but releases otherwise work well in connection with the other benefit enhancements discussed above. You should coordinate with your employment and benefits advisors for the appropriate form of any release of claims that employees will provide in connection with a group termination.

Supreme Court’s E.M.D. Sales v. Carrera Decision: A Victory for Employers Navigating FLSA Exemptions

A January 15, 2025, U.S. Supreme Court opinion brought welcome news for employers defending claims of worker exempt status misclassification under the Fair Labor Standards Act (FLSA). In the case at issue, E.M.D. Sales, Inc. v. Carrera, the court clarified the applicable standard of proof, ruling that employers need only demonstrate by a “preponderance of the evidence,” the standard used in most civil cases, that an employee qualifies for an FLSA exemption, rather than the higher more stringent “clear and convincing evidence” standard previously applied by the Fourth Circuit Court of Appeals.
Background of the Case
E.M.D. Sales (“E.M.D.”), a food distributor in the Washington, D.C. area, employed sales representatives who managed inventory and took orders at grocery stores. These employees sued the company, alleging violations of the FLSA’s overtime provisions. E.M.D. contended that the sales representatives were exempt from overtime pay as “outside salesmen” under the FLSA. The district court ruled in favor of the employees, finding that E.M.D. failed to prove the exemption by clear and convincing evidence. On appeal, the Fourth Circuit upheld this decision, prompting the company to seek review from the Supreme Court.
Supreme Court’s Ruling
Justice Kavanaugh, writing for the court, emphasized that the less-exacting “preponderance of the evidence” standard (which would only have required E.M.D. to prove that it was more likely than not that the exemption applied) is the default in civil litigation, absent specific statutory or constitutional mandates for a higher burden of proof. The court identified three narrow exceptions where a heightened standard might apply:

Statutory Directive: When Congress explicitly requires a higher standard.
Constitutional Mandate: In certain First Amendment and Due Process cases.
Extraordinary Government Action: Such as denaturalization or expatriation.

Since none of these exceptions applied to the FLSA exemptions, the court concluded that the preponderance standard governs such disputes.
Impact on Employers
This decision marks a pivotal shift in the legal landscape for employers, particularly those operating in the Fourth Circuit, which includes Maryland, Virginia, West Virginia, North Carolina, and South Carolina. Previously, employers in this jurisdiction faced the challenging task of proving FLSA exemptions by clear and convincing evidence — a higher bar than the preponderance standard. With the Supreme Court’s ruling, employers now have a more consistent and manageable standard to meet across all federal circuits.
Employers relying on the FLSA’s “white-collar” exemptions, such as professional, executive, administrative, and outside sales roles, can now classify employees under these exemptions, knowing that the evidentiary threshold makes these classifications more defensible. This clarity can lead to reduced litigation risks and potential cost savings in defending against wage and hour claims.
Considerations for Employers
While the Supreme Court’s decision provides a more favorable framework for employers, it does not grant carte blanche to misclassify employees. Employers must still ensure that job duties and compensation align with the specific criteria outlined in the FLSA for each exemption. Misclassification can lead to significant legal and financial repercussions.
We continue to see a substantial amount of FLSA litigation, so employers should take care to ensure they are properly applying FLSA exemptions to their workforce. This includes reviewing job descriptions, compensation structures, and actual job duties to ensure compliance with FLSA requirements. Proactively consulting with legal counsel allows employers to ensure employees are properly classified as well as ensure that employers have sufficient documentation and evidence to support such classifications should litigation arise.

Not So Fast: DOL Releases Annual Funding Notice Guidance Just Before the Distribution Due Date

Takeaway

Plan administrators should review their plan’s 2024 annual funding notice against the model notice and determine whether their plan’s 2024 annual funding notice is compliant. If not, plan administrators are expected to take corrective action.

New Jersey Supreme Court Confirms: Commissions Are Wages Under the New Jersey Wage Payment Law

In a decision with significant implications for employers and employees alike, the New Jersey Supreme Court on March 17, 2025, clarified that commissions constitute wages under the New Jersey Wage Payment Law (“NJWPL”).
In Musker v. Suuchi, Inc. et al., the Court reversed the rulings of both the trial court and the Appellate Division, holding that commissions paid for an employee’s labor or services “always constitute a wage under the WPL.”
In drawing its conclusion, the court focused on the NJWPL’s definition of “wages,” which is defined as “direct monetary compensation for labor or services rendered by an employee, where the amount is determined on a time, task, piece, or commission basis.” N.J.S.A. 34:11-4.1(c) (emphasis added).
Case Background
Rosalyn Musker, the plaintiff in the case, was a sales employee at Suuchi, Inc., a technology-driven fashion supply chain platform. Her compensation included an $80,000 base salary and sales commissions under Suuchi’s Sales Commission Plan. Traditionally, she sold software subscriptions to apparel companies.
However, as the COVID-19 pandemic hit in 2020, Suuchi pivoted its business model and began selling personal protective equipment (PPE)—and Musker was tasked with selling it. While the company did not formally update the commission plan to reflect this new line of business, it did send an email outlining sales terms for PPE transactions.
Musker delivered results. Yet, when it came time for commission payments, she alleged that the company failed to fully compensate her. She filed a lawsuit under the NJWPL, asserting that her unpaid PPE commissions constituted “wages” that were wrongfully withheld.
Suuchi disagreed, characterizing the commissions as “supplementary incentives”—a term that the NJWPL explicitly excludes from the definition of wages.
The Lower Courts’ Takes
At both the trial and appellate levels, the courts sided with Suuchi. The judges found that because Musker already received a base salary, the PPE commissions were not essential compensation for her services, but rather “extras”—in other words, not protected wages.
But the New Jersey Supreme Court saw it differently—and laid down a clear and employee-friendly interpretation of the law
The New Jersey Supreme Court’s Decision
The NJWPL defines “wages” as “direct monetary compensation for labor or services rendered by an employee, where the amount is determined on a time, task, piece, or commission basis.” (N.J.S.A. 34:11-4.1(c)). The law excludes “supplementary incentives and bonuses” that are calculated independently of regular wages.
The Supreme Court found this statutory language to be “clear and unambiguous.” To reinforce its interpretation, the Court turned to dictionary definitions—focusing on the terms “labor,” “services,” and “commission.” It found that “commission” payments are indeed direct compensation for the labor or services an employee performs—making them squarely within the NJWPL’s definition of wages.
In contrast, “supplementary incentives” are payments meant to motivate employees beyond their required duties. And that’s the critical distinction: commissions like Musker’s were tied to services she was obligated to perform as part of her sales role. Selling PPE became part of her job, even if it was a new product offering. Thus, the Court concluded that Musker’s commissions were wages, not optional incentives.
Takeaways
If an employee earns a commission for work required as part of their job, it is a wage—and must be paid accordingly. For companies operating in fast-moving industries—where roles, duties, and compensation structures shift quickly—this ruling is a timely reminder to reassess how compensation is structured and documented. Informal changes to compensation plans, like the email Suuchi sent regarding PPE commissions, do not absolve employers of their legal obligations.
The consequences for non-compliance with the NJWPL are steep. Employers who fail to pay wages—including commissions—may face not only the amount owed but also liquidated damages (up to 200% of the unpaid wages) and attorneys’ fees.
Jessica Hajdukiewicz, a Law Clerk – Pending Admission (not admitted to the practice of law) in the firm’s New York office, contributed to the preparation of this post.

Increased Workplace Protections for Veterans: Dole Act Amends USERRA

Takeaways

The Dole Act modifies USERRA’s anti-retaliation provisions, potential remedies, and more.
It expands safeguards for veterans transitioning back to civilian life and returning to work.
The Dole Act is the most recent enhancement to USERRA, but it is unlikely to be the final one.

California’s Workplace Violence Law, Part I: Lessons Learned One Year Into SB 553 [Podcast]

In part one of our three-part series on California’s new workplace violence prevention law, Robert Rodriguez (shareholder, Sacramento) and Karen Tynan (shareholder, Sacramento) discuss the lessons employers have learned about workplace violence inspections during the law’s first year of implementation. Karen and Robert, who are co-chairs of the firm’s Workplace Violence Prevention Practice Group, explore how the enforcement of the new law, which took effect on July 1, 2024, is being managed and offer insights into Cal/OSHA’s approach to these inspections. The discussion highlights practical tips for employers, the importance of customized training, and the role of the Bureau of Investigation in incidents of workplace violence.

Privacy and Security in AI Note-Taking and Recording Tools, Part I: Risks and Considerations [Podcast]

In the first part of this two-part series, Ben Perry (shareholder, Nashville) and Lauren Watson (associate, Raleigh) discuss the use of artificial intelligence (AI)-powered note-taking and recording tools in the workplace. Lauren and Ben (who is co-chair of the firm’s Cybersecurity and Privacy Practice Group) explore the benefits of these tools, such as automated transcription and meeting summaries, while also addressing the legal risks and compliance issues, including wiretapping laws, consent requirements, and the potential for data breaches, emphasizing the importance of robust internal policies. The conversation also touches on the need for proper employee training and the implications of using AI tools in compliance with state-specific regulations.

The Employment Strategists: Beyond the Menu, Serving Employment Strategies for the Restaurant Industry [Podcast]

Join your hosts, attorneys David Harmon and Mariya Gonor, as they address challenges faced by both employers and employees. From hiring to termination, this podcast offers insights into the evolving employment relationship. Tune in for engaging and entertaining discussions to help navigate these complex employment-related issues.

Think ADA Recovery Is Limited to Employees With Disabilities? The Seventh Circuit Says Think Again

On April 1, 2025, the Seventh Circuit Court of Appeals clarified the remedies available to nondisabled employees subjected to improper medical examinations or inquiries under the Americans with Disabilities Act (ADA).
The court’s decision in Nawara v. Cook County establishes that nondisabled employees may recover back pay if subjected to improper medical examinations or inquiries.
Quick Hits

The Seventh Circuit reiterated that the ADA’s limitation on medical exams and inquiries applies to all employees, not just those with a disability under the ADA.
Hence, a nondisabled employee subjected to unlawful medical exams or inquiries may recover back pay if, for instance, the employee is off work without pay for some period or is discharged for refusing to undergo an improper medical examination.
The court’s ruling highlights the importance of properly determining whether to require an employee to undergo a medical or mental health exam, i.e., to ensure that any such exam or inquiry is job-related and consistent with business necessity.

Correctional officer John Nawara had several heated altercations with his supervisor and a heated interaction with human resources and a nurse. The Cook County sheriff’s office placed Nawara on paid leave and mandated he undergo a fitness-for-duty examination and sign medical authorization forms before he could return to work. Nawara refused, and when his paid leave expired, he was placed on unpaid leave. Four months later, Nawara decided to return to the sheriff’s office and returned the authorization forms and underwent a fitness-for-duty examination. Nawara was declared fit for duty and returned to work as a correctional officer.
While on leave, Nawara sued Cook County and the sheriff, alleging the compulsory fitness-for-duty examination and inquiry into his mental health violated §12112(d)(4) of the ADA, which provides:
[An employer] shall not require a medical examination and shall not make inquiries of an employee as to whether such an employee is an individual with a disability or as to the nature or severity of the disability, unless such examination or inquiry is shown to be job-related and consistent with business necessity.

A jury found for Nawara, determining that requiring him to have a fitness-for-duty exam and to complete medical authorization forms violated the ADA, but it awarded no damages. Nawara subsequently moved the district court to reinstate his seniority and award him back pay. The district court restored Nawara’s seniority but declined to award him back pay, finding that a plaintiff must have a disability under the ADA for a violation of §12112(d)(4) to constitute discrimination on account of disability and, thereby, support back pay.
The Seventh Circuit affirmed the judge’s determination on seniority but reversed on the denial of back pay. The court first noted the ADA provides: “No [employer] shall discriminate against a qualified individual with a disability ….” Id. §12112(a). Second, “[t]he prohibition against discrimination … in subsection (a) shall include medical examinations and inquiries.” Id. §12112(d)(1). And, as to current employees, this means: “[An employer] shall not require a medical examination … of an employee …, unless such examination … is shown to be job-related and consistent with business necessity.” Id. §12112(d)(4)(A) (emphasis added).
The Seventh Circuit read these provisions together to mean that “to prove a violation of §12112(d)(4) is to prove discrimination on the basis of disability under §12112(a).” In other words, because the restriction on medical exams applies to “an employee,” not just disabled employees, and an improper medical exam constitutes discrimination on account of disability under the ADA, nondisabled employees may recover back pay for the ADA violation. The Seventh Circuit remanded the case to the district court to determine back pay.

NYC’s Aggressive Enforcement of the Earned Safe and Sick Leave and Fair Workweek Laws [Podcast]

In this podcast, Diana Nehro (shareholder, New York/Boston) sits down with Jamie Haar (of counsel, New York) to discuss the New York City Department of Consumer and Worker Protection’s (DCWP) rigorous enforcement of the Earned Safe and Sick Leave Law and the Fair Workweek Law. Jamie and Diana provide an overview of these laws, including their requirements, compliance challenges, and the significant penalties for violations. Diana and Jamie also offer best practices for employers to mitigate risks and discuss the DCWP’s audit and investigatory processes.