Intro to Federal and Multi-State Labor Laws

The Equal Employment Opportunity Commission (EEOC) has recently released guidance clarifying what diversity, equity, and inclusion (DEI) programs may be considered illegal in the workplace. Aligning with previous executive orders, the guidance emphasizes that using race, sex, or other protected characteristics as a deciding factor in employment decisions is discriminatory. Training and mentoring programs must be open to all, and employee resource groups should be inclusive to avoid potential legal issues.

Employers should review the EEOC's new technical assistance documents to understand their interpretations and enforcement priorities and make adjustments as needed.

On March 20, 2025, the IRS updated its FAQs to clarify how the Employee Retention Tax Credit (ERTC) affects business income tax returns. When claiming the credit, you must reduce deductible wage expenses on your company’s income tax return in the applicable tax year by wages used for the ERTC credit. If you already filed your tax return for 2020 or 2021 without reducing wages but later received the credit, you need to report it as gross income in the year you received your refund. If your ERTC claim was denied after reducing wages, you can adjust those expenses back to wage expenses. The IRS also shared how to report ERTC fraud or withdraw improper claims. Employers should consult their tax advisors to ensure their tax credits are reported appropriately on their business income tax returns and related flow-through K-1s where applicable.

The new Acting General Counsel of the NLRB has rescinded multiple memos from the previous General Counsel, reversing over a dozen NLRB positions. The reversals affect previous NLRB stances that most noncompete agreements generally violate the National Labor Relations Act and that “stay-or-pay” provisions infringe on employees’ rights. Employers should monitor for further updates and work with legal counsel to understand if these changes affect your business.

The Senator Elizabeth Dole 21st Century Veterans Healthcare and Benefits Improvement Act (Dole Act), enacted in January 2025, significantly expands protections for service members and veterans under the Uniformed Services Employment and Reemployment Rights Act (USERRA). Key changes include broader anti-retaliation protections, allowing service members to seek injunctions early in lawsuits, increased liquidated damages for employers who knowingly fail to comply with USERRA (with a minimum award of $50,000), and mandatory awards of attorney fees to prevailing claimants. The Dole Act also clarifies protections for career military members, ensuring that long-term service members receive the same safeguards as reservists.

Employers should review and update their USERRA compliance policies to reflect these changes.

On February 21, 2025, a federal district court issued a preliminary injunction temporarily stopping the Trump administration from enforcing aspects of its recent Executive Orders against “illegal DEI (diversity, equity and inclusion).” The injunction provides a reprieve to employers, allowing continuation of existing DEI programs pending further legal proceedings. Employers should assess the legal risks associated with maintaining or modifying DEI initiatives during this period of uncertainty.

On March 2, 2025, the U.S. Department of the Treasury announced major changes to the enforcement and scope of the Corporate Transparency Act (CTA), specifically regarding Beneficial Ownership Information (BOI) reporting. When the Department's new rules go into effect, U.S. citizens, domestic businesses, and their owners will no longer be subject to the BOI reporting. This means they will no longer face penalties or potential jail time for failing to report BOI. The Treasury also plans to propose a new rule that restricts BOI reporting requirements to foreign companies only.