APPLIES TO All Employers

EFFECTIVE January 20, 2025

QUESTIONS? Contact HR On-Call (888) 378-2456

Quick Look On February 5, 2025, the U.S. District Court of Maryland issued a nationwide preliminary injunction blocking the Executive Order suspending birthright citizenship. Employers and employees should plan for delays in recruiting and hiring foreign workers due to heightened vetting procedures. Certain individuals with TPS status may lose work authorization. The Department of Homeland Security is increasing its enforcement actions including Form I-9 audits and worksite raids.

Discussion:

Several Executive Orders have taken aim at the existing immigration process. All of the Executive Orders face legal challenges, and some courts have already responded. Below is a summary of the Executive Orders impacting employers.

 

Protecting the Meaning and Value of American Citizenship

 

The purpose of the Executive Order is to end automatic citizenship to those born in the United States: (1) when that person’s mother was unlawfully present in the United States and the father was not a United States citizen or lawful permanent resident at the time of said person’s birth, or (2) when that person’s mother’s presence in the United States at the time of said person’s birth was lawful but temporary (e.g., visiting on a student, work, or tourist visa) and the father was not a United States citizen or lawful permanent resident at the time of said person’s birth. It would apply to infants who are born on or after February 19, 2025.

 

Legal challenges immediately questioned the constitutionality of the Executive Order. The Fourteenth Amendment to the U.S. Constitution states, “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States.” Supreme Court precedent dates back to 1898 in United States v. Wong Kim Ark, where the Court affirmed that birthright citizenship extended to all children born in the United States regardless of their parents’ citizenship.

 

On January 23, 2025, the U.S. District Court for the Western District of Washington issued a 14-day preliminary injunction against the Executive Order. This was extended to a nationwide preliminary injunction on February 6, 2025 until the resolution of the lawsuit at issue or until a higher court overturns the injunction. On February 5, 2025, the U.S. District Court of Maryland also issued a nationwide preliminary injunction also citing the Fourteenth Amendment and Supreme Court precedent. This injunction means it will remain in effect until the lawsuit is resolved or the injunction is overturned by a higher court.

 

Other legal challenges to the Executive Order are ongoing. It is likely the matter will end up before the Supreme Court. Until then, the Executive Order is not in effect.

 

Protecting the United States from Foreign Terrorists and Other National Security and Public Safety Threats

 

The Executive Order instructs the Secretary of State, Attorney General, Secretary of Homeland Security, and the Director of National Intelligence to increase vetting and screening of noncitizens entering or already in the United States “to the maximum degree possible.” Individuals from regions or nations with known security risks are to be especially scrutinized. There may also be travel bans from countries that are considered high risk.

 

The Executive Order mirrors policy language from the first Trump administration where consular visa applications, requests for immigration benefits, and H-1B, L-1, TN, and other nonimmigrant petitions required additional documentation. This led to challenges for both employers and employees to respond to the new standards. This also led to a slowdown in processing times for green card applications. In particular, employment-based applicants had to undergo an in-person USCIS interview. Employers and employees should plan for delays in recruiting and hiring foreign workers.

 

Realigning the United States Refugee Admissions Program

 

The Executive Order indefinitely suspended the U.S. Refugee Assistance Program (USRAP) on January 27, 2025. USRAP was a refugee resettlement program through which individuals and families applied for admission into the United States. All refugee arrivals are suspended under the Executive Order including those who were admitted and scheduled to arrive prior to the Executive Order. Industries that depend on refugee labor, like food processing, logistics, and agriculture are most likely to be affected.

 

Protecting the American People Against Invasion

 

The Department of Homeland Security (DHS) is directed to create new enforcement policies to address illegal entry, unlawful presence, and expedited removal of individuals unlawfully present in the United States. Granting of humanitarian parole, designations of Temporary Protected Status, and employment authorization are to be limited. The Executive Order also denies access to federal funding of “sanctuary” jurisdictions that do not comply with federal enforcement operations. DHS can also authorize state and local law enforcement to investigate, apprehend, and detain aliens.

 

The Executive Order also states that federal agencies should not grant employment authorization for individuals who are unauthorized to be in the United States. Such individuals include but are not limited to: (1) those seeking asylum, (2) recipients of the Deferred Action for Childhood Arrivals program (“Dreamers”), and (3) individuals granted Temporary Protected Status. Employees with expired work authorizations may not get their documents renewed disrupting business operations.

 

One major impact will be to individuals designated Temporary Protected Status (TPS). DHS is authorized to limit the scope and duration of the TPS program including the issuance of Employment Authorization Documents (EADs) for TPS individuals. Normally, TPS individuals are authorized to live and work in the United States for the duration of their designation. Employers with TPS employees from Afghanistan, Burma (Myanmar), Cameroon, El Salvador, Ethiopia, Haiti, Honduras, Lebanon, Nepal, Nicaragua, Somalia, South Sudan, Sudan, Syria, Ukraine, Venezuela, and Yemen will likely be affected.

 

Following the Executive Order, the Acting Director of DHS issued a directive on January 21, 2025 to rescind the Biden administration’s guidelines limiting Immigration and Customs Enforcement (ICE) or Customs and Border Protection (CBP) enforcement actions in sensitive locations like schools, churches, hospitals, and other previously protected areas. Where the Biden administration focused on civil enforcement, the DHS intends to pursue more streamlined deportations, expedited deportations, and increased Form I-9 audits and worksite raids.

 

Securing Our Borders

 

The Executive Order allows the DHS to take all appropriate action to construct temporary and permanent physical barriers on the southern border, deploy military personnel to the southern border, and eliminating parole programs for Cubans, Haitians, Nicaraguans, and Venezuelans. Employers with foreign national workers from these areas should expect increased entry requirements.

 

Action Items

1. Audit and correct Forms I-9.
2. Review pending visa applications with legal counsel.
3. Consult with legal counsel regarding appropriate actions in the event of an enforcement action.

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Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2025 ManagEase

APPLIES TO All Employers

EFFECTIVE January 20, 2025

QUESTIONS? Contact HR On-Call (888) 378-2456

Quick Look The federal government will interpret “sex” to refer only to the male and female biological designations. Gender ideology is erased from all aspects of the federal government that the Executive Branch commands. Federal funding cannot be used to promote gender ideology.

Discussion:

In “Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government,” the White House is seeking to distinguish “sex” from “gender” in every aspect of the federal government, from federally-issued identification documents to anti-discrimination protections.

 

What Does the Executive Order Do?

 

The Executive Order defines “sex” as an individual’s biological classification, recognized only as “male” and “female” as determined at conception. “Sex” specifically does not include “gender identity.” The Order also categorizes “gender ideology” as “self-assessed gender identity” that is “disconnected from one’s sex.”

 

Federal agencies are directed to enforce federal laws based on this definition of sex, using the term “sex” rather than “gender,” and must take appropriate action to ensure that “intimate spaces” designated for females and males are designated by sex and not identity. Federal agencies tasked with enforcement of the Civil Rights Act of 1964 “shall prioritize investigations and litigation to enforce the rights and freedoms identified.”

 

All references to gender ideology are to be removed from the federal government and a number of federal guidance publications are rescinded, including those addressing LGBTQ+ in education and the Equal Employment Opportunity Commission’s “Enforcement Guidance on Harassment in the Workplace” (April 29, 2024). Moreover, “[f]ederal funds shall not be used to promote gender ideology.”

 

The Order seeks to counter “ideologues who deny the biological reality of sex” by using legal and other socially coercive means to “permit men to self-identify as women and gain access to intimate single-sex spaces and activities designed for women, from women’s domestic abuse shelters to women’s workplace showers.”

 

What is the Current Law?

 

Title VII of the Civil Rights Act prohibits discrimination on the basis of sex. In 2020, the U.S. Supreme Court in Bostock v. Clayton County said that Title VII protections for “sex” include sexual orientation and transgender status. The Court stated that “[a]n employer who fires an individual for being homosexual or transgender fires that person for traits or actions it would not have questioned in members of a different sex.” The Supreme Court acknowledged that Title VII was likely not written with the intent of protecting sexual orientation or transgender status, but it was also not likely originally written to protect discrimination on the basis of motherhood or prohibit the sexual harassment of male employees – yet it has been interpreted to protect individuals on these bases. The Supreme Court stated that “the limits of the drafters’ imagination supply no reason to ignore the law’s demands.”

 

For clarity, the Supreme Court said that “the question isn’t just what ‘sex’ meant, but what Title VII says about it.” Specifically, Title VII prohibits employers from taking certain actions “because of” sex, which also includes the meanings “by reason of” or “on account of.” So long as the plaintiff’s sex was one but-for cause of that decision, that is enough to trigger the law.” (Emphasis added.) For example, “an employer with two employees, both of whom are attracted to men. The two individuals are, to the employer’s mind, materially identical in all respects, except that one is a man and the other a woman. If the employer fires the male employee for no reason other than the fact he is attracted to men, the employer discriminates against him for traits or actions it tolerates in his female colleague.”

 

Additionally, most state laws prohibit discrimination and harassment on the basis of gender identity and/or transgender status, including but not limited to, California, Colorado, Connecticut, Delaware, D.C., Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Utah, Vermont, Virginia, and Washington. A number of local laws also protect gender identity and/or transgender status.

 

Further, a number of courts and states recognize “gender dysphoria” as a qualified disability under the Americans with Disabilities Act (ADA) and similar state disability protection laws. Gender dysphoria refers to the psychological distress that can happen when a person’s gender identity differs from their sex assigned at birth. This means that, regardless of any protections under Title VII, employers are required to engage in the interactive process to determine whether a reasonable accommodation can be made based on a person’s qualified disability, absent undue hardship to the employer.

 

Ultimately, the Executive Order does not override or change existing legislation and judicial rulings on discrimination prohibitions. Employers still cannot discriminate on the basis of sexual orientation or transgender status.

 

What Does this Mean for Employers?

 

Employers must still follow federal and state anti-discrimination and anti-harassment laws. However, the Executive Order has indicated this Administration’s intention to prosecute those who interpret Title VII (and Title IX) to protect gender identity in the context of “intimate spaces,” such as bathrooms and changing rooms. This position directly conflicts with a number of state laws that require the opposite. Employers should consult with legal counsel on how to address internal employee conflicts related to gender identity and transgender status.

 

For any employer who receives federal funds, like grants and federal contracts, funding will likely be withheld for adhering to or otherwise supporting “gender ideology.” To the extent that businesses can track and distinguish the use of federal funds within their operations, they may still be able to benefit from federal funding and adhere to existing law. Employers should consult with legal counsel to determine enforceability of federal contracts. The Executive Order is currently being challenged in court, so employers should continue to watch this topic for further development.

 

Action Items

1. Review anti-discrimination requirements with legal counsel.
2. Locate and review anti-discrimination and disability accommodation policies.
3. Evaluate anti-harassment training provided to employees.
4. Have appropriate personnel trained on current legal requirements.

 

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Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2025 ManagEase

APPLIES TO All Employers

EFFECTIVE As Indicated

QUESTIONS? Contact HR On-Call (888) 378-2456

Quick Look Following recent terminations by the President, the EEOC and NLRB lack the required members in their respective agencies in order to take action. Expect delays in regulatory changes and enforcement of recent executive orders.

Discussion:

Following the Inauguration, President Trump took quick action to dismiss a number of federal employees and appointees. Most notably, there were significant changes at the Equal Employment Opportunity Commission (EEOC) and National Labor Relations Board (NLRB).

 

At the EEOC, President Trump fired General Counsel Karla Gilbride and dismissed two of the agency’s three Democratic commissioners, leaving two commissioners remaining. More recently, Andrew Rogers was appointed as acting General Counsel. The EEOC requires at least three of the five possible members to be installed in order to take action, like issuing guidance, approving regulations, or changing EEO-1 requirements. This means that the recent executive orders issued by the President cannot be enforced by the EEOC until there are enough members. Existing litigation is expected to continue, and new cases may be filed if they do not require a Commission vote.

 

Similarly, at the NLRB, President Trump fired General Counsel Jennifer Abruzzo, acting general counsel Jessica Rutter, and board member Gwynne Wilcox, leaving only two remaining members. Recently, William B. Cowen was appointed as Acting General Counsel. Like the EEOC, the NLRB consists of a five-member board that requires at least three members in order to adjudicate or prosecute cases, or issue guidance or regulations. However, union activity will be processed and unfair labor practice investigations and claims will continue to be processed in the field.

 

There is already pending litigation over the firings with the potential for more lawsuits. Some of the firings were unprecedented, which may lead to a judicial determination on whether or not the President has the power to take these actions. Continue to look for updates on appointees at these agencies, which will signal a return to their fully functioning status and lead to a wave of changes.

 

Action Items

1. Continue to comply with existing law.
2. Review pending and anticipated cases with legal counsel for next steps.

 

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Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2025 ManagEase

APPLIES TO All Employers

EFFECTIVE January 8, 2025

QUESTIONS? Contact HR On-Call (888) 378-2456

Quick Look The Internal Revenue Service (IRS) issued Revenue Ruling 2025-3 and Revenue Procedure 2025-10 to address the application of Sections 530, 3509, and 7346 of the Internal Revenue Code to employment misclassification disputes. The Revenue Ruling’s guidance addresses five common employment scenarios.

Discussion:

The Internal Revenue Service (IRS) issued Revenue Ruling 2025-3 and Revenue Procedure 2025-10 to address the application of Sections 530, 3509, and 7346 of the Internal Revenue Code. These three sections address employment misclassification disputes, and the Revenue Ruling examines their treatment under five separate scenarios.

 

Section 530

 

If an employer failed to pay employment taxes for a worker the IRS determined to be an employee rather than an independent contractor, Section 530 allows the employer to avoid employment tax liability by meeting specific requirements:

 

• The employer timely filed all required federal tax returns related to the belief the worker was an independent contractor (e.g., filed Forms 1099-NEC).
• The employer did not treat the worker, or those holding a substantially similar position, as an employee at any time after December 31, 1977.
• The employer had a reasonable basis for not treating the worker as an employee due to the reliance of one of the following safe harbors:
  • A prior audit showed there were no employment taxes attributable to the worker;
  • The employer relied on industry practice that the worker was not an employee;
  • The employer relied on judicial precedent, a published ruling, or a letter ruling to treat the worker as an independent contractor.

 

Advice of legal counsel, favorable state decisions, or reasonable application of common law can also be relied on if the above safe harbors do not apply.

 

Section 3509

 

If the employer cannot meet the requirements of Section 530, Section 3509 allows the employer to remit unpaid taxes at a reduced rate because of the belief the worker was not an employee. Employers cannot use this section if the worker was treated as an employee and the dispute is only towards the characterization of the tax payments.

 

Section 7436

 

Section 7436 allows the United States Tax Court to review tax determinations made by the IRS. Tax Court review requires the following:

 

• The IRS conducted an examination in connection with an audit;
• The audit determination found:
  • One or more individuals performing services are employees; or
  • The employer is not entitled to relief under Section 530;
• An actual controversy exists involving the determination as a part of an examination; and
• An appropriate pleading is filed in the Tax Court.

 

When the first three elements are met, the IRS will issue a Section 7436 Notice. The employer must meet the fourth element by filing a timely petition with the Tax Court.

 

New Guidance Scenarios

 

The following are summaries of the factual scenarios the IRS provides in its new guidance. Review the Revenue Ruling in its entirety for additional application of the scenarios.

 

Scenario 1. The employer treated a worker as an independent contractor and did not withhold or pay federal employment taxes and reported total payments on Form 1099-NEC. The IRS determines the worker is an employee, and the employer does not qualify for relief under Section 530. Under the new guidance, the employer is eligible for Section 530 relief if the statutory requirements are met. If not, then the employer could be eligible for reduced rate relief under Section 3509. Under this scenario, a Section 7436 Notice would also be issued.

 

Scenario 2. The employer pays a worker a weekly fixed amount and bonus and withholds and pays employment taxes. However, the bonus is reported on Form 1099-NEC. The IRS finds the bonus amount to be wages and assesses federal employment taxes on the payments. Under the new guidance, Sections 530 and 3509 do not apply because the IRS is not reclassifying the worker as an employee. A Section 7436 Notice will be issued at the conclusion of the audit or appeals if no agreement is reached between the parties.

 

Scenario 3. The facts are the same as Scenario 2, but the employer does report the bonus on Form 1099-NEC. Under the new guidance, Sections 530 and 3509 do not apply because the IRS is not reclassifying the worker as an employee. A Section 7436 Notice will be issued at the conclusion of the audit or appeals if no agreement is reached between the parties.

 

Scenario 4. The facts are the same as Scenario 2, but the employer does report the bonus on Form 1099-NEC and does not claim they satisfied Section 530. Under the new guidance, Sections 530 and 3509 do not apply because the IRS is not reclassifying the worker as an employee. A Section 7436 Notice will not be issued at the conclusion of the audit or appeals if no agreement is reached between the parties because the employer did not claim it was entitled to relief under Section 530. As such, there is no controversy between the parties.

 

Scenario 5. The employer enters into a contract with a worker to pay weekly salary and withhold and pay federal taxes in addition to filing tax returns. A bonus amount is issued but the employer does not withhold or pay federal employment taxes or report the amounts. The IRS determines the bonus amounts are wages and proposes to assess taxes. The employer claims it satisfies the requirements for Section 530 relief. Under the new guidance, Sections 530 and 3509 do not apply because the IRS is not reclassifying the worker as an employee. A Section 7436 Notice will be issued at the conclusion of the audit or appeals if no agreement is reached between the parties.

 

Additional Information

 

Revenue Procedure 2025-10 clarifies the definition of an employee. “Employee” now includes corporate officers, individuals under common law rules, statutory employees, individuals under Section 218 or 218A agreements of the Social Security Act, and state or local government officials.

 

It also expands the guidelines under which an employer can “treat” a worker in determining if they are an employee. This includes, but is not limited to, withholding taxes, filing employment tax returns, filing Schedule H, issuing Form W-2s, or contracting with a third party to perform employer acts.

 

The guidance also clarifies that Section 530 does not apply to technical service workers, such as engineers, designers, drafters, and programmers, whose employment status is determined under common law rules.

 

The purpose of the Revenue Ruling and Revenue Procedure is to make it more difficult for employers to apply these safe harbor provisions in the event of misclassification. Employers should prioritize auditing their workers for misclassification issues and preparing for corrections with advice of their legal counsel and tax professional.

 

Action Items

1. Review the Revenue Ruling here and Revenue Procedure here.
2. Audit independent contractors for potential misclassification.
3. Consult with a tax professional and legal counsel to address any misclassifications.

 

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Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2025 ManagEase

APPLIES TO All Employers

EFFECTIVE As Indicated

QUESTIONS? Contact HR On-Call (888) 378-2456

Quick Look The Department of Labor announced inflation adjustments to OSHA civil penalties, which take effect for violations issued on or after January 15, 2025. OSHA has announced withdrawal of its COVID-19 proposed rule.

Discussion:

Increased Civil Penalties

 

On January 9, 2025, the Department of Labor (DOL) announced inflation adjustments to OSHA civil penalties, which take effect for violations issued on or after January 15, 2025. The new maximum penalties are as follows: serious, other-than-serious, and posting violations increased from $16,131 to $16,550 per violation; failure to abate violations increased from $16,131 to $16,550 per day beyond the abatement date; and willful or repeated violations increased from $161,323 to $165,514 per violation.

 

State workplace safety agencies must align their penalty amounts with OSHA’s increases to maintain effective penalty levels. These adjustments are mandated by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, which requires annual adjustments based on inflation and the federal cost-of-living increases.

 

Withdrawal of Proposed Rules for COVID-19 and Infectious Diseases

 

On January 15, 2025, OSHA announced it was withdrawing its proposed rule, “Occupational Exposure to COVID-19 in Healthcare Settings,” and instead plans to focus on creating an infectious disease standard for healthcare workers. This shift aims to prioritize a broader, more comprehensive approach to workplace safety, rather than focusing on COVID-19 specifically. The agency had already submitted a proposed rule to the White House’s Office of Information and Regulatory Affairs (OIRA) for review in November 2024, but the rule was also withdrawn in January 2025, leaving uncertainty about OSHA’s next steps. Employers should continue to monitor OSHA activity regarding infectious diseases for future developments.

 

Action Items

1. Review worksite for safety concerns and take corrective action, as appropriate.
2. Consult with legal counsel regarding regulatory changes.

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Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2025 ManagEase