The U.S. Department of Labor’s (“DOL”) Wage and Hour Division announced a proposed rule on April 22, 2026, to address how “joint employer” status is determined under the Fair Labor Standards Act (“FLSA”), Family and Medical Leave Act (“FMLA”), and Migrant and Seasonal Agricultural Worker Protection Act (“MSPA”). The DOL’s previous attempt at a joint employer rule, issued in 2020, was rescinded in 2021 following its partial invalidation in New York federal court. The proposed rule was published in the Federal Register on April 23.
The DOL’s new proposal—which appears to be a practical effort at clarification rather than an attempt to blaze new trails—would set a unified standard across the FLSA, FMLA, and MSPA for when two or more entities share responsibility for the same workers. Companies using staffing agencies, subcontractors, franchise models, or other multi-employer arrangements should take note.
On Friday, April 10, 2026, the Department of Justice (“DOJ”) announced a $17 million False Claims Act (“FCA”) settlement with International Business Machines (“IBM”), based on the company’s alleged violations of federal anti-discrimination laws. The settlement is the first under the DOJ’s Civil Rights Fraud Initiative, created last May with the objective of investigating and prosecuting “illegal DEI” practices, primarily through an FCA lens. Coupled with a new Executive Order—issued on March 26—that imposes contract prohibitions on “racially discriminatory DEI activities” in federal government contracts and subcontracts, the IBM settlement signals an escalation in the government’s focus on DEI programs and employment policies.
The DOJ Press Release and Settlement Agreement
The Alleged “Covered Conduct” Identifies Specific Problematic Practices.
DOJ alleged that IBM improperly made employment decisions based on protected characteristics through specific programs and actions, described as the “Covered Conduct” for purposes of the settlement agreement:
Compensation Incentives: A “diversity modifier” linking bonus compensation to demographic targets
Hiring and Promotion Criteria: Basing interview eligibility or prioritization on race, sex, or national origin
Demographic Goals for Business Units: Developing race and gender targets tied to employment decisions
Limited-Access Programs: Limiting training, mentoring, and leadership development to employees meeting specific demographic criteria, such as minorities.
California’s Assembly Bill (“AB”) 692 took effect on January 1, 2026, significantly limiting the use of commonplace “stay-or-pay” clauses in offer letters and agreements, which require employees or prospective employees to repay certain costs if their employment ends.
AB 692 underscores California’s commitment to limit the use of contractual provisions restricting or disincentivizing workforce mobility. Although the new law does not apply retroactively (essentially grandfathering in “stay-or-pay” clauses entered into before January 1, 2026), employers must audit agreements and practices, and plan for compliance to avoid significant potential liability going forward.
On May 27, 2025, Mayor Cherelle Parker signed the Protect Our Workers, Enforce Rights (“POWER”) Act into law, which expands the Philadelphia Department of Labor’s enforcement options for violations of the City’s expanding roster of worker protection laws. Under this new ordinance, which is now in effect, workers in Philadelphia have expanded protection against labor infractions; and employers face a host of new and enhanced compliance requirements.
On February 21, 2025, a federal judge in the District Court of Maryland granted a temporary injunction blocking portions of President Trump’s Executive Orders “Ending Illegal Discrimination and Restoring Merit Based Opportunity” (“14173”) and “Ending Radical and Wasteful Government DEI Programs” (“14151”) (collectively the “EOs”). To learn more about each EO’s directives read Blank Rome’s previous coverage on 14173 here and 14151 here. This is a temporary nationwide ban on certain portions of the EOs.
After pointing out that the Trump Administration has declared “DEI to be henceforth illegal”, the Court found the EOs do not “define any of the operative terms” such as “illegal DEI”, “equity-related”, “promoting DEI”, or “illegal discrimination or preferences”. This vagueness fails to provide companies and organizations with proper notice as to what types of programs are prohibited. Further, the Court found that the EOs likely violate the First Amendment by expressly threatening “the expression of views supportive of equity, diversity and inclusion.” This is a nationwide ban.
It is nearly impossible to think about the Federal Trade Commission (“FTC”) without thinking about the chaos caused by the non-compete ban it approved last year over vociferous dissent only to have the ban vacated and set aside nationwide by the Northern District of Texas. Curiosity remains about what the impact of the change in administration will have on the FTC’s approach to this issue of paramount importance to employers. But with President Trump’s appointment of Andrew Ferguson to lead the FTC, what follows is some insight on the current state of play and the FTC’s probable mindset.
Where We Were Last Year
As a recap, the FTC’s “Final Rule” announced on April 23, 2024, would have banned nearly all non-compete provisions and provisions functioning as non-competes (in the FTC’s view). That Final Rule, which was set to go into effect on September 4, 2024 (the “Effective Date”), would have impacted not only traditional restrictive covenant agreements with employees and contractors but likely also agreements with employee equity holders as well as claw-back and repayment agreements with employees presented with signing bonuses or training and education opportunities.
As expected, businesses and trade organizations swiftly challenged the Final Rule, with lawsuits filed against the FTC in Pennsylvania, Florida, and Texas seeking to set aside the Final Rule: a lawsuit brought by a tree-service company, ATS Tree Services, LLC in the Eastern District of Pennsylvania; a lawsuit brought by the Properties of Villages Inc.in the Middle District of Florida, and lawsuits brought by tax-advisory firm Ryan, LLC and the U.S. Chamber of Commerce in the Northern and Eastern Districts of Texas, respectively. The lawsuits yielded distinct outcomes. The Texas court preliminarily enjoined enforcement of the Final Rule as to the plaintiff only, pending a final ruling on the merits. The Pennsylvania court upheld the Final Rule. The Florida court preliminarily enjoined the Final Rule as to the plaintiff only, on similar but not identical grounds to the Texas court, even while accepting some of the Pennsylvania court’s analysis.
The limited holdings and contradictory outcomes made the chaos sewn by the FTC even worse in the weeks leading up to the Effective Date. Ultimately, the Texas court provided clarity, issuing its final ruling on the merits and vacating and setting aside the Final Rule nationwide holding that its issuance was outside FTC’s authority granted by Congress and that the Final Rule was otherwise arbitrary and capricious under the Administrative Procedure Act. The FTC has appealed both the Florida and Texas rulings, and the plaintiff in the Pennsylvania ruling voluntarily dismissed its lawsuit after the Texas court ruling.
Salary threshold. . .$35,568.00. . .the Eastern District of Texas. . .not the classic answers you expect to hear from your loved ones around the Thanksgiving table when you ask, “Hey guys, what are you most thankful for?” While family, friends, food, and a roof over your head are all great, the fact that the United States District Court for the Eastern District of Texas shot down the Department of Labor’s (“DOL”) attempt at increasing the overtime salary threshold to $58,656.00 is right up there for employers.
The DOL’s Not-So-Final “Final Rule”
Back on April 23, 2024, the DOL announced their “final rule,” which entailed a multi-phase increase of the “white-collar exemption” (the executive, administrative, and professional employees (“EAP”)) salary threshold from $35,568.00 to $43,888.00, starting on July 1, 2024, and then up to $58,656.00, starting on January 1, 2025 (with increases automatically occurring every three years thereafter). Notably absent were any changes to the DOL’s “duties” test, which must be analyzed in conjunction with a salary when determining whether an EAP employee is exempt from overtime. At the time of its announcement, the DOL projected their final rule would make four million workers newly eligible for overtime payments and cost employers nationwide roughly $1.4 billion in the first year alone. Being thankful for a $35,568.00 threshold is looking more and more understandable now, isn’t it?
We’ve all known this day was coming—it was just a matter of time. From the moment the Biden Department of Labor (“DOL”) announced that the Trump DOL’s 2020 increase to the Fair Labor Standards Act salary threshold for the so-called “white collar” exemptions (primarily the executive, administrative, and professional exemptions (“EAP”)) was not good enough, it became crystal clear that a new rule was in the works.
Although it took the DOL some time to put its thoughts together, it issued the proposed new rule in September 2023, and awaited public comments—33,000 of those followed. After reviewing each of the comments, the DOL announced its final rule yesterday. Here are the basics:
It will be effective as of July 1, 2024.
There are no changes to the duties tests (perhaps the only positive news).
The new salary thresholds for the EAP exemptions and the highly compensated employee (“HCE”) exemption essentially will be phased in beginning on July 1, 2024, and then fully implemented on January 1, 2025.
Note: On July 1, 2024, the DOL is implementing an interim increase to the thresholds (as noted below) that is based on current earnings data using the methodology established in the Trump DOL’s final rule.
Then, on January 1, 2025, the DOL will use the new methodology to establish the full salary thresholds.
Beginning on July 1, 2027, and every three years thereafter, the DOL will update the salary thresholds to align with the then-current earnings data.
Here’s a chart based on the DOL’s FAQ that provides the relevant data points:
DATE
STANDARD SALARY LEVEL
HCE ANNUAL COMPENSATION THRESHOLD
Before 7/1/2024
$684/wk ($35,568/yr)
$107,432
7/1/2024
$844/wk ($43,888/yr)
$132,964
1/1/2025
$1,128/wk ($58,656/yr)
$151,164
1/1/2027 (and every three years thereafter)
TBD based on 35th percentile of full-time salaried earnings in lowest Census region
TBD based on 85th percentile of full-time salaried employees nationally
Where’s the good news for employers, you ask? Uh, there really isn’t any … except maybe that the new salary threshold is not immediately rising to $60,000 and the expectation that any one of a number of business organizations is likely to challenge the new rule, perhaps using a number of the theories raised in the fighting that ultimately resulted in the rule being blocked by Judge Mazzant in the federal court in the Eastern District of Texas.
If the above did not wake you up, please keep in mind that the DOL has projected that costs for employers in the first year of this new rule will be about $1.4 billion and the rule will make four million workers newly eligible for overtime pay (unless their employer intervenes in some fashion).
So, what do you do? Grab your popcorn and watch the challenges to the new rule roll in? Maybe—but you should start considering those currently exempt employees who fall in the “danger zone” between $35,568 annually and $43,888 annually and evaluate whether you can consider a raise to the new threshold or instead need to potentially reclassify them to non-exempt status. Fortunately, that danger zone (leading up to July 1, 2024) is somewhat narrow when compared to what will come on January 1, 2025. At least the phased implementation provides a longer window to watch the anticipated legal challenges unfold. As an added note of caution, you should remember that current state law minimum salary thresholds like those that exist in New York and California, which are significantly higher than those in the DOL rule, continue to apply. Don’t touch that dial!
This year brings significant legislative updates recently passed in New York that may impact your business operations. Three of these laws, and a recent Court of Appeals decision, introduce important changes that require attention and potential adjustment of your employment practices.
Worker’s Bill of Rights
Effective July 1, 2024, New York City employers must post and distribute a “Worker’s Bill of Rights” notice, informing employees of their rights under federal, state, and local workplace laws—regardless of immigration status. Some of these rights include: Paid Safe and Sick Leave, Minimum Wage, Temporary Schedule Changes, Fast Food Worker Rights, and right to organize.
Employers must provide this notice in English and any other language that is spoken as a primary language by at least five percent of their employees. Failing to meet notice and posting requirements could subject employers to a civil penalty of up to $500.
On June 29, 2023, the United States Supreme Court (“Court”) issued a unanimous opinion in Groff v. DeJoy, finding that the employer-friendly de minimis standard for determining whether an employer would suffer an undue hardship by granting a religious accommodation to an employee is incompatible with the text of Title VII, and that federal law requires employers to instead show that such an accommodation would impose “substantial additional costs” on the employer.
After the United States Postal Service (“USPS”) began delivering packages for Amazon on Sundays in 2013, Gerald Groff, a former mail carrier with the USPS, requested a religious accommodation, claiming that according to his Evangelical Christian faith, Sundays were to be devoted to worship and rest, and that delivering packages on Sundays would violate his religious convictions. The USPS, however, continued to schedule him for Sunday shifts and, when he continued to refuse to work on Sundays, the USPS redistributed those shifts to other USPS staff and issued Groff progressive discipline for his refusals to work. Eventually, Groff resigned his position and sued the USPS, claiming that it could have accommodated his religious practice without an undue hardship on the conduct of its business.
