The California Civil Rights Council and the California Privacy Protection Agency have recently passed regulations that impose requirements on employers who use “automated-decision systems” or “automated decisionmaking technology,” respectively, in employment decisions or certain HR processes. On the legislative side, the California Legislature passed SB 7, which would impose additional obligations on employers who use these technologies; the bill is currently on the Governor’s desk. And, the Governor has signed SB 53, which provides certain employee whistleblower rights with respect to AI safety. Below, we discuss some of the key requirements in the new regulations and legislation.Continue Reading Navigating California’s New and Emerging AI Employment Regulations

On July 29, 2025, Attorney General Pam Bondi issued a memorandum titled “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination.”  The memorandum purports to offer “guidance” and “Best Practices” to recipients of federal funding, including “non-binding suggestions to help entities comply with federal antidiscrimination laws and avoid legal pitfalls.”  The Attorney General’s memorandum follows Executive Order 14173 (“Ending Illegal Discrimination and Restoring Merit-Based Opportunity”), which calls for “ending illegal discrimination and preferences, including DEI” in the private sector, as well as two “technical assistance” documents titled “What You Should Know About DEI-Related Discrimination at Work” and “What To Do If You Experience Discrimination Related to DEI at Work” issued by the Equal Employment Opportunity Commission (“EEOC”).  We previously discussed EO 14173 here and the EEOC technical assistance here.Continue Reading DOJ Issues Memorandum for Federal Funding Recipients Addressing “Unlawful Discrimination” Practices

On June 5, 2025, the U.S. Supreme Court altered the landscape for employers facing “reverse discrimination” Title VII lawsuits in the Sixth, Seventh, Eighth, Tenth, and DC Circuits, by striking down a rule that had required plaintiffs from “majority groups” to allege additional “background circumstances” to state a prima facie case of employment discrimination.  Examples of “background circumstances to support the suspicion that the defendant is that unusual employer who discriminates against the majority” included statistical data that the employer had engaged in a pattern of discrimination against majority groups or a member of the relevant minority group made the employment decision that allegedly harmed the member of the majority group.   In the other circuits, no such additional pleading requirement was required in reverse discrimination lawsuits.  Justice Jackson authored the Court’s 9-0 opinion, Ames v. Ohio Dept. of Youth Servs., No. 23-1039, and Justice Thomas filed a concurring opinion, joined by Justice Gorsuch.Continue Reading Supreme Court Holds That All Employment Discrimination is Equal: Ames v. Ohio Dept. of Youth Servs.

On May 19, 2025, Deputy Attorney General Todd Blanche issued a memorandum establishing a DOJ Civil Rights Fraud Initiative.  The Initiative will use the False Claims Act (“FCA”) to “investigate and . . . pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws.”  Educational institutions, federal contractors, grantees, and other entities that receive federal funding should take note of the latest FCA Initiative.  Similar FCA initiatives, such as those focused on collusion and cybersecurity fraud, have resulted in significant related FCA enforcement.Continue Reading Justice Department Establishes Civil Rights Fraud Initiative, Using False Claims Act to Target DEI

On April 17, 2025, the Supreme Court issued its opinion in Cunningham v. Cornell University, No. 23-1007, 604 U.S. ___ (2025), a case addressing the pleading standard for prohibited-transaction claims under § 406(a) of the Employee Retirement Income Security Act of 1974 (ERISA).  Section 406(a) proscribes certain transactions between plans and “parties in interest” absent a statutory exemption enumerated under ERISA § 408.  The core question on appeal was whether plaintiffs must allege, as an element of a prohibited-transaction claim under § 406(a), that an exemption under § 408 does not render the challenged transaction lawful.

In a decision that is expected to have wide-ranging implications, the Court held that exemptions under § 408 provide affirmative defenses to liability under § 406(a).  Consequently, plaintiffs need not allege that any of the exemptions set forth in § 408 are unavailable to state a plausible claim for relief.  Rather, the burden falls on plan fiduciary defendants to plead and prove that an exemption under § 408 nullifies a plaintiff’s claim.

The Court recognized that its decision in Cunningham could make it more difficult for defendants to secure the dismissal of prohibited-transaction claims by invoking a statutory exemption.  If so, plan sponsors (and other fiduciaries) could be forced to engage in costly discovery defending transactions that ERISA expressly permits, effectively penalizing them for providing valuable and necessary services to participants.

Provided below is a more detailed discussion of Cunningham, divided into three parts.  The first part briefly discusses the legal framework governing prohibited-transaction claims.  The second part summarizes the Court’s analysis.  The third part concludes with an overview of potential mitigation strategies.Continue Reading A Closer Look:  Supreme Court Rejects Heightened Pleading Standard for Prohibited-Transaction Claims under ERISA § 406(a)

On January 21, 2025, President Trump issued Executive Order 14173, titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (“EO 14173”), which, among other things, revoked Executive Order 11246 (“EO 11246”), a 60-year-old Civil Rights-era directive that prohibited federal contractors from discriminating on the basis of race, color, religion, sex, sexual orientation, gender identity, or national origin and required federal contractors to take affirmative action to provide equal opportunity in employment. Continue Reading The Executive Order 11246 Grace Period Ends Today (April 21)

            On April 3, 2025, 10 former Equal Employment Opportunity Commission (“EEOC”) officials, including former commissioners, general counsel, and Chairs Charlotte A. Burrows and Jenny R. Yang, issued a public letter responding to the recent EEOC technical assistance document, “What You Should Know About DEI-Related Discrimination at Work,” which we described in a previous blog post.  The public letter, “Statement of Former Equal Employment Opportunity Commission (EEOC) Officials on Employer Diversity, Equity, and Inclusion Efforts,” refers to the technical assistance document as the “Acting Chair’s document” since that document was issued by Acting Chair Lucas without a Commission vote and thus represents Lucas’s views. Continue Reading Former EEOC Officials Respond to EEOC Technical Assistance Document “What You Should Know About DEI-Related Discrimination at Work”

The German Federal Labor Court (Bundesarbeitsgericht – BAG) has issued two new decisions impacting virtual stock option plans (VSOPs).  In a March 19, 2025 decision (BAG, March 19, 2025 – 10 AZR 67/24), BAG ruled that virtual stock options (“phantom shares”) are not speculative options/opportunities, but rather part of the remuneration already earned and, therefore, forfeiture clauses in VSOPs are invalid.  The new decision is a reversal of the court’s prior position on these virtual shares.  In the other new decision, issued on March 27, 2025 (BAG, March 27, 2025 – 8 AZR 63/24), BAG ruled that phantom shares exercised while an employee is still employed have to be considered when calculating the compensation owed for the employee’s compliance with a post-contractual non-compete covenant.  Below is an overview of the new cases and steps employers can take to ensure their plans are in compliance.Continue Reading German Federal Labor Court Rules on Phantom Shares; What Employers Need to Know

On March 29, United States embassies across Europe began sending letters and an accompanying “Certification regarding compliance with applicable federal anti-discrimination law” to companies in Belgium, Bulgaria, Denmark, France, Italy, Luxembourg, and Spain.  This certification purports to apply Executive Order (“EO”) 14173 (“Ending Illegal Discrimination and Restoring Merit-Based Opportunity”) to U.S. government suppliers and contractors based in Europe “regardless of their nationality and the country in which they operate.”  As we wrote in a prior alert, the Trump administration intends for EO 14173 to end what it considers to be “illegal preferences and discrimination” including those “under the guise of so-called ‘diversity, equity, and inclusion’ (DEI) or ‘diversity, equity, inclusion, and accessibility’ (DEIA)” programs by prescribing required provisions for federal contracts. Continue Reading European Companies Wrestle with U.S. Government’s Anti-DEI Push

On March 19, 2025, the Equal Employment Opportunity Commission (“EEOC”) released two “technical assistance” documents titled, “What You Should Know About DEI-Related Discrimination at Work” and “What To Do If You Experience Discrimination Related to DEI at Work” (“technical assistance”).  The technical assistance follows President Trump’s issuance of Executive Order 14173 (“Ending Illegal Discrimination and Restoring Merit-Based Opportunity”) on January 21, 2025, in which the president called for “ending illegal discrimination and preferences, including DEI” in the private sector.  The EEOC and Department of Justice announced in a press release that the purpose of the technical assistance is “to help educate the public about how well-established civil rights rules apply to employment policies, programs, and practices—including those labeled or framed as ‘DEI.’”Continue Reading EEOC Technical Assistance: “What You Should Know About DEI-Related Discrimination at Work”