OBBB

IRS Issues FAQs on Qualified Overtime Deduction

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All Employers

EFFECTIVE

JAN 23, 2026

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  • New IRS FAQs clarify the definition of “qualified overtime” under the One, Big, Beautiful Bill and outline employer reporting requirements for tax years 2025 and 2026.

Discussion

The IRS has released a new set of Frequently Asked Questions (FAQs) addressing the implementation of the qualified overtime deduction created under the One, Big, Beautiful Bill Act (OBBB). Although the deduction is available to employees on their individual tax returns, several of the FAQs contain important information for employers. Key aspects are summarized below.

 

  • Definition of Qualified Overtime Compensation. The FAQs clarify how overtime compensation qualifies for the deduction, explaining that “qualified overtime compensation” is the portion of overtime required under Section 7 of the Fair Labor Standards Act (FLSA) that exceeds an employee’s regular rate of pay. For example, if an employee receives time‑and‑a‑half for an hour of overtime, only the “half‑time” premium represents qualified overtime compensation. Importantly, only overtime required by the FLSA can be considered “qualified overtime” compensation. If an employer pays above the FLSA minimum (for example, double time), only the amount needed to satisfy the FLSA requirement counts toward the deduction.
  • Reporting Clarification. The IRS confirms that for tax year 2025, employers are not required to separately report qualified overtime compensation on Forms W‑2, 1099‑NEC, or 1099‑MISC. Employers may voluntarily provide separate reporting using Form W‑2 box 14, an online portal, or a separate statement. That said, the FAQs indicate that, beginning in tax year 2026, employer reporting becomes mandatory. Forms W‑2, 1099‑NEC, and 1099‑MISC will be updated to include designated fields for qualified overtime compensation. Employers should monitor IRS updates and ensure payroll systems are configured appropriately for the 2026 reporting year.

 

The FAQs also highlight that employees who qualify for the deduction but do not receive separate reporting for tax year 2025 may need to determine their own amount of qualified overtime compensation using IRS instructions or payroll records. Employers may therefore see an increase in employee inquiries related to overtime calculations, which they should be ready to address. Although employers are not obligated to calculate the deduction for employees, payroll departments may need to assist employees in locating or interpreting payroll data.

 

Action Items

  1. Update payroll practices and platforms for appropriate tracking and reporting of qualified overtime for tax year 2026.
  2. Prepare for employee questions regarding qualified overtime calculations.
  3. Monitor additional guidance from the IRS and Treasury Department.

 


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. © 2026 ManagEase

Immigration Updates

USCIS Pauses Immigration Benefits and Increases Premium Processing Fees

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All Employers

EFFECTIVE

As Indicated

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  • USCIS issued a policy memo placing a hold on certain pending immigration benefits for individuals from 19 designated countries.
  • The hold includes a comprehensive re-review of approved benefits which may result in workforce disruption for employers.
  • USCIS published a final rule raising premium processing fees for certain applications to account for inflation.

Discussion

USCIS Pauses Certain Immigration Benefits

 

U.S. Citizenship and Immigration Services (USCIS) issued a policy memo on December 2, 2025 which: (1) placed a hold on all Forms I-589 (Application for Asylum and for Withholding of Removal) for immediate review; (2) placed a hold on pending benefit requests for individuals from 19 designated countries; and (3) required a comprehensive re-review of approved benefit requests from individuals from 19 designated countries who entered the U.S. on or after January 20, 2021.

 

The memo cites Executive Order 14161, Protecting the United States from Foreign Terrorist and Other National Security and Public Safety Threats, as the primary source of the need for the pause on immigration benefits and re-review of approved benefits. The Executive Order’s purpose was to “safeguard U.S. citizens from aliens who may seek to commit terrorist acts, pose threats to national security, promote hateful ideologies, or exploit immigration laws for malicious purposes.” In furtherance of the Executive Order’s purpose, Presidential Proclamation 10949, Restricting the Entry of Foreign Nationals To Protect the United States From Foreign Terrorists and Other National Security and Public Safety Threats, identified 19 countries of concern from a national security perspective. The entry into the U.S. of nationals of the following countries is suspended and limited:

 

·       Afghanistan ·       Cuba ·       Laos ·       Togo
·       Burma (Myanmar) ·       Equatorial Guinea ·       Libya ·       Turkmenistan
·       Burundi ·       Eritrea ·       Sierra Leone ·       Venezuela
·       Chad ·       Haiti ·       Somalia ·       Yemen
·       Republic of the Congo ·       Iran ·       Sudan  

 

The pause in benefits may result in delays for work authorization, obtaining or maintaining nonimmigrant status, and progressing through employment-based application processes. The following benefits will be impacted (but the memo makes clear the list is non-exhaustive):

 

Benefit Category Description
Form I-90 Application to Replace Permanent Resident Card
Form I-129 Petition for Nonimmigrant Worker
Form I-131 Application for Travel Documents, Parole Documents, and Arrival/Departure Records
Form I-140 Immigrant Petition for Alien Workers
Form I-485 Application to Register Permanent Residence or Adjust Status
Form I-539 Application to Extend/Change Nonimmigrant Status
Form I-751 Petition to Remove Conditions on Residence
Form I-765 Application for Employment Authorization
Form N-470 Application to Preserve Residence for Naturalization Purposes

 

Employers should plan for workforce disruptions including onboarding of individuals pending nonimmigrant visa approval or renewal and renewal of employment authorization documents (EADs). Employers should proactively audit their Forms I-9 for EAD expiration dates and provide advance notice to employees. USCIS has not stated how long the pause will be in place.

 

USCIS Increases Processing Fees

 

Effective March 1, 2026, USCIS is increasing its premium processing fees to account for inflation. The published final rule provides for the following increases:

 

Form Current Fee New Fee

(March 1, 2026)

Form I-129, Petition for a Nonimmigrant Worker, H-2B or R-1 nonimmigrant status $1,685 $1,780
Form I-129, Petition for a Nonimmigrant Worker, all other available Form I-129 classifications:

·       E-1, E-2, E-3

·       H-1B

·       H-3

·       L-1A, L-1B

·       LZ

·       O-1, O-2

·       P-1, P-1S, P-2, P-2S, P-3, P-3S

·       Q-1

·       TN-1, TN-2

$2,805 $2,965
Form I-140, Immigrant Petition for Alien Worker, employment-based classifications:

·       E11, E12, E13, E21 (NIW and non-NIW), E31, E32, EW3

$2,805 $2,965
Form I-539, Application to Extend/Change Nonimmigrant Status, requesting:

·       F-1, F-2

·       J-1, J-2

·       M-1, M-2

$1,965 $2,075
Form I-765, Application for Employment Authorization, for certain eligible applications (OPT and STEM-OPT Classifications) $1,685 $1,780

 

Action Items

  1. Review Forms I-9 for pending EAD expiration dates and notify employees of requirement for updated EADs.
  2. Consult with legal counsel regarding pending nonimmigrant visa applications (e.g., H-1B, etc.).
  3. Provide revised premium processing fees for new applications, as applicable.

 

 

Ninth Circuit: DHS Exceeded Authority in Terminating TPS for Venezuela and Haiti

On January 28, 2026, in National TPS Alliance v. Noem, the Ninth Circuit Court Appeals agreed with a lower court ruling that the Department of Homeland Security (DHS) exceeded its authority when it vacated Temporary Protected Status (TPS) for Venezuela and Haiti. In reaching its ruling, the court found that DHS did not follow proper procedure when reaching its determination that conditions in Venezuela and Haiti no longer met the conditions for TPS designation. Employers should note this ruling does not restore TPS protections for beneficiaries from Venezuela and Haiti since a U.S. Supreme Court order from October 2025 is still in place preventing emergency relief to TPS beneficiaries. In addition, DHS is likely to appeal the court’s ruling to the U.S. Supreme Court.

 

USCIS Announces H-1B Initial Registration Period

USCIS announced that the initial registration period for the fiscal year 2027 H-1B cap will open at 12 p.m. ET on March 4, 2026 and run through 12 p.m. ET on March 19, 2026. H-1B petitioners subject to the H-1B cap must register each beneficiary using a USCIS online account. Registration is required for the selection process, as well as a $215 registration fee for each registration. Representatives of multiple petitioners can use a single account to add company clients. USCIS anticipates sending selection notifications by March 31, 2026, to users’ USCIS online accounts.

 


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. © 2026 ManagEase

Department of Labor Updates

DOL Updates: New Guidance, Proposed Rules and Compliance Tools

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As Indicated

EFFECTIVE

As Indicated

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  • New FLSA and FMLA opinion letters clarify exemption standards, regular rate calculations, compensable work time, school closure impacts on FMLA leave, and travel time for medical appointments.
  • The DOL has advanced a new independent contractor rule, expanding its scope across multiple statutes.
  • The WHD has released new compliance assistance tools, including updated websites, FMLA videos, and refreshed industry-specific toolkits.

Discussion

The U.S. Department of Labor (DOL) has begun the year with several notable regulatory and interpretive actions impacting employers, including new opinion letters under the Fair Labor Standards Act (FLSA) and Family and Medical Leave Act (FMLA), progress on a proposed independent contractor rule, and the release of updated compliance‑assistance tools. Key updates are summarized below.

 

FLSA Opinion Letters

 

On January 5, 2026, the DOL’s Wage and Hour Division (WHD) issued four new opinion letters interpreting key provisions of the FLSA. While not binding law and typically tied to specific fact patterns, these opinion letters reflect the agency’s interpretation and provide insight into potential enforcement strategies.

 

  • Learned Professional Exemption (FLSA2026-1). The WHD considered whether a Licensed Clinical Social Worker, recently relieved of supervisory duties and reclassified from exempt to nonexempt, continued to meet the learned professional exemption under the FLSA. The WHD concluded that supervisory responsibilities are not a component of the applicable duties test, and instead, the focus remains on whether the employee performs “work requiring advanced knowledge,” such as clinical assessments, treatment planning, and documentation. The letter reiterates that employers may lawfully classify an employee as nonexempt even if the employee satisfies the exemption criteria.
  • Nondiscretionary Bonuses and Regular Rate (FLSA2026-2). The second letter addressed whether incentive bonuses tied to an employer’s detailed “Safety, Job Duties, and Performance” plan qualify as discretionary. The WHD concluded they do not, reasoning that because the plan establishes defined, objective criteria that automatically triggers the bonus once met, the employer does not exercise sole discretion over the decision to award the payments or their amount. As a result, the WHD said these bonuses must be included in employees’ regular rate of pay for overtime purposes.
  • Pre-Shift “Roll Call” Time Under CBA (FLSA2026-3). The WHD also clarified that a union‑negotiated, mandatory 15‑minute roll‑call period for emergency dispatch employees constituted compensable work time and must be included when calculating overtime. The union sought guidance on whether these 15 minutes could be excluded from overtime calculations to align employees’ total hours with the 2,080‑hour annual standard. The WHD rejected that approach, reaffirming that actual hours worked, not annualized schedules, control FLSA overtime applicability. Notwithstanding, the WHD noted that employers may negotiate collective bargaining agreements be structured to take advantage of partial overtime exemptions under FLSA sections 7(b)(1) or 7(b)(2), which allow overtime premiums only after 12 hours in a day or 56 hours in a week. The letter provides examples illustrating how such schedules may be designed to reduce overtime exposure.
  • Minimum Wage Rate for 7(i) Exemption (FLSA2026-4). The final opinion letter resolves longstanding uncertainty regarding which minimum wage applies when determining whether a commissioned retail or service employee satisfies the minimum pay standard under the 7(i) exemption. The WHD confirmed that the federal minimum wage (currently $7.25/hour) controls, even in states with higher minimum wage rates. Employers must therefore ensure the employee’s regular rate exceeds 1.5 times the federal minimum wage (e.g., $10.875/hour) to satisfy the exemption’s first prong. The letter also clarifies that, for purposes of meeting the requirement that more than 50% of an employee’s compensation consists of commissions, tips generally do not qualify as “compensation.” However, where an employer takes a tip credit toward minimum wage obligations, that credited amount does count as compensation for 7(i) analysis.

 

FMLA Opinion Letters

 

In addition to the Opinion Letters above addressing the FLSA, the DOL issued two letters interpreting pieces of the FMLA, specifically providing guidance on how school closures affect the calculation of FMLA leave for school‑based employees and whether employees may use FMLA leave for travel time to and from medical appointments.

 

  • School Closures and the FMLA (FMLA2026-1): The DOL clarified that the impact of a school closure of less than a full week depends primarily on (1) whether the employee is taking full‑week or intermittent leave, and (2) whether the employee would have been scheduled to work during the closure. For school employees taking intermittent FMLA leave, employers may deduct only the actual workdays missed (not the entire week) when a partial closure occurs. Conversely, if the school is closed on days for which an employee had already planned to take FMLA leave, those closure days cannot be counted against the employee’s FMLA entitlement because the employee would not have been expected to work. If an employee is on continuous, full‑week FMLA leave and the school closes for a portion of that week, the entire week may still be counted against the employee’s FMLA allotment. The DOL also emphasized that these principles apply regardless of whether the closure was planned or unplanned, and whether the missed instructional days are later made up.
  • Travel Time for Medical Appointments (FMLA2026-2): The second opinion letter confirms that employees may use FMLA leave for reasonable travel time associated with attending medical appointments for a serious health condition, whether for themselves or a qualified family member. The DOL noted that travel time is a natural and necessary part of obtaining treatment, and therefore falls within the scope of leave protected by the statute. Travel time, however, must be directly connected to the medical appointment; time spent on unrelated personal errands during the trip is not protected. The DOL also clarified that medical certifications do not need to include specific information about travel time, meaning health care providers are not required to document or separately certify the need for travel. Employers should rely on existing medical documentation to support leave for both the appointment and the associated travel.

 

DOL Advances New Independent Contractor Rule

 

On January 8, 2026, the DOL submitted a new proposed independent contractor rule to the White House, as part of the early-stage rulemaking process. Although details of the rule are not yet public, the scope of the proposed rule appears broader than initially expected, now referencing the FMLA and the Migrant and Seasonal Agricultural Worker Protection Act in addition to the FLSA.

 

For now, the agency has paused enforcement of the 2024 Biden‑era independent contractor rule and is instructing investigators to rely on earlier, more business‑friendly guidance from 2008 and 2019. While it remains unclear whether the DOL will reinstate the 2021 Trump‑era rule or introduce a new standard, employers should expect potential changes and continue monitoring the rulemaking as it progresses.

 

DOL Releases New Compliance Assistance Tools

 

On January 26, 2026, the WHD released new compliance‑assistance resources aimed at helping employers understand and meet their obligations under federal labor laws. The updates include a redesigned compliance‑assistance webpage, new FMLA video tutorials, and updated industry‑specific toolkits. The WHD emphasized that these tools are designed to support proactive compliance, reduce enforcement risk, and make it easier for employers to access cleat, user-friendly explanations on federal requirements.

 

Action Items

  1. Review employee exemptions, bonus plans, and overtime practices for compliance.
  2. Review FMLA leave administration practices.
  3. Have appropriate personnel trained on applicable wage and hour and leave administration requirements.
  4. Review updated compliance assistance tools for additional guidance.
  5. Monitor additional guidance and instruction from the DOL on worker classifications.

 


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. © 2026 ManagEase

Other Federal Agency Updates

EEOC Updates

APPLIES TO

All Employers with 15+ Employees

EFFECTIVE

JAN 22, 2026

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  • The EEOC rescinded its harassment enforcement guidance; however, federal and state requirements remain in effect.
  • The EEOC signals its intention to more actively pursue litigation against employers by shifting its internal authority.

Discussion

 

Since the Equal Employment Opportunity Commission (EEOC) has reached quorum, it has begun taking action. There was some recent activity of note to employers.

 

Harassment Guidance

 

The EEOC formally rescinded the entirety of its Enforcement Guidance on Harassment in the Workplace. The Guidance was last updated in 2024 to consolidate legal updates and other guidance. In 2025, a federal court blocked portions of the Guidance regarding sexual orientation and transgender status from being enforced on the basis that the EEOC exceeded his rulemaking authority. Rescission of the entire document reflects current Chair Lucas’ previously stated intention to remove or change the guidance. It is unclear at this time whether the EEOC will replace the Guidance. Regardless, employers should note that the EEOC’s rescission of its own guidance does not change federal or state law or the potential for employers to be sued under federal and state law for unlawful harassment.

 

Litigation Intervention

 

The EEOC issued a Resolution Concerning the Commission’s Authority to Commence or Intervene in Litigation, outlining when the agency will commence or intervene in pending litigation. Although Congress has long authorized the EEOC to intervene, the agency has for decades delegated most of that authority to its General Counsel, resulting in relatively few interventions. This new Resolution generally shifts authority back to the Commission itself, specifically requiring a majority vote following receipt of a recommendation from the EEOC’s General Counsel (e.g., in large expenditure cases, when taking a position contrary to precedent, when taking a position on unsettled or controversial law, or for any other reason). Employers should note that the EEOC is signaling its intention to more actively pursue litigation against employers.

 

If employers receive a claim from or litigation by the EEOC, employers should immediately engage their legal counsel to appropriate defend against the claim.

 

Action Items

  1. Have personnel trained on harassment and discrimination prevention requirements.
  2. Review claims with legal counsel for appropriate response.

 

 

DOJ Launches AI Litigation Task Force

In December 2025, President Trump issued an Executive Order directing the U.S. Attorney General to establish an Artificial Intelligence (AI) Litigation Task Force to challenge state laws that are considered to be “inconsistent” with federal AI policy. On January 9, 2026, Attorney General Pam Bondi announced the Task Force’s launch in an internal Department of Justice (DOJ) memorandum, indicating that the Task Force will review and challenge state AI requirements on grounds including federal preemption and interstate commerce concerns. The Task Force will be led by Bondi or her designee, and will include representatives from several senior DOJ offices. Announcement of the Task Force follows broader administration efforts to shift AI governance toward a centralized federal framework and reevaluate state-level AI regulations. Employers should continue to monitor the Task Force’s enforcement efforts.

 

OSHA Extends Compliance Dates for Hazard Communication Standard

The Occupational Safety and Health Administration (OSHA) has extended all compliance deadlines associated with the 2024 updates to the Hazard Communication Standard (HCS) by four months. The first deadline for manufacturers, importers, and distributors to update labels and Safety Data Sheets (SDSs) for substances has moved from January 19, 2026, to May 19, 2026, and the corresponding employer deadline for workplace labeling, safety program updates, and training has shifted from July 20, 2026, to November 20, 2026. For mixtures, the manufacturer/importer/distributor deadline is now November 19, 2027 (formerly July 19, 2027), and the employer deadline has been extended to May 19, 2028 (formerly January 19, 2028). OSHA explained that these extensions allow time for the agency to finalize and publish guidance materials before the revised requirements take effect.

 


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. © 2026 ManagEase

Federal Court Updates

Ninth Circuit: Religious Nonprofits May Require Non‑Ministerial Staff to Share Their Beliefs

APPLIES TO

Qualified Religious Employers with Employees in AK, AR, CA, HI, ID, MT, NV, OR, WA, Guam, and Northern Mariana Islands

EFFECTIVE

JAN 6, 2026

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  • The Ninth Circuit ruled that the First Amendment’s church‑autonomy doctrine protects a religious nonprofit’s decision to hire only co‑religionists for non‑ministerial roles when tied to its faith‑based mission.

Discussion

In Union Gospel Mission of Yakima Washington v. Brown, the Ninth Circuit Court of Appeals upheld a preliminary injunction preventing enforcement of the state’s anti-discrimination law against a Christian ministry in connection with the organization’s hiring of non-ministerial employees.

 

The case arose after the Mission received an application for a non-ministerial position from an individual who openly expressed beliefs and conduct that were inconsistent with the organization’s religious teachings on marriage and sexuality. Because adherence to its statement of faith is required of all staff, the Mission ultimately declined to hire the applicant and later filed suit, arguing that Washington’s updated anti-discrimination law interfered with the organization’s ability to maintain a faith-based workforce.

 

As part of employment, the Mission required all employees, including administrative, IT, and operations staff, to participate in prayer and chapel services and to follow its religious teachings. The organization emphasized that these shared beliefs were essential to its internal faith community and its service-based ministry.  The Court agreed, holding that, beyond the ministerial exception, the First Amendment’s broader church-autonomy doctrine also protects a religious organization’s ability to require non-ministerial staff to adhere to the organization’s sincerely held religious beliefs when those beliefs are central to the organization’s mission.

 

The Court’s ruling prevents the state from enforcing the Washington Law Against Discrimination against the Mission’s religious-based hiring criteria, confirming that religious nonprofits may rely on the church-autonomy doctrine when making faith-based hiring decisions for non-ministerial roles, when such criteria is tied to their religious identity and mission.

 

Action Items

  1. Review hiring practices for compliance with applicable federal and state requirements.
  2. Consult with legal counsel regarding application of religious-based hiring criteria.
  3. Have appropriate personnel trained on employer hiring practices and applicable requirements.

 

 

Ninth Circuit: Misleading Communications May Render Arbitration Agreement Unenforceable

Applies to:          All Employers with Employees in AK, AR, CA, HI, ID, MT, NV, OR, WA, Guam, and Northern Mariana Islands

Effective:            JAN 28, 2026

 

Quick Look

v  Class action courts have authority to deny enforcement of arbitration agreements where they impact the class process.

v  Arbitration agreements may not be enforced due to an employer’s misleading communications.

 

Discussion

 

In Avery v. TEKsystems, Inc., the Ninth Circuit Court of Appeals said that an employer’s communications about signing a mandatory arbitration agreement during a class action lawsuit from employees were misleading, giving the lower court a basis on which to deny arbitration enforcement for class members.

 

Here, a lawsuit against the employer for alleged wage and hour violations of its California employees was in the process of seeing class action certification. While this was happening, and near the winter holidays, the employer sent two emails – (1) notifying all employees of a mandatory arbitration agreement and requesting that it be signed even though the language of the communication indicated that a signature was unnecessary, and (2) notifying potential class employees that they could opt out of the arbitration agreement in favor of class action participation, but that they needed to sign the opt out to do so. However, the potential class employees had no knowledge yet of the lawsuit or pending class certification, and the employer’s communication failed to sufficiently address this information. There were also two different deadlines for each action.

 

Moreover, the employer repeatedly disparaged the efficacy of class actions and claimed that class actions are “wasteful, inefficient means for resolving disputes” that “tend to enrich only attorneys rather than the individuals who may have legitimate claims.” Further, the employer inaccurately stated that a class action “requires [the employer] to ignore individual employee issues and concerns.” The communications also said that employees could consult with their own legal counsel but also said they were not allowed to share the emails.

 

The Ninth Circuit said that a district court in a class action has “the broad authority to exercise control over a class action and to enter appropriate orders governing the conduct of counsel and parties,” including to control the opt-out process. The court said that the employer’s actions ultimately sought to interfere with statutory opt-out procedures by changing it from an opt-out process to an opt-in process through the arbitration agreement and through misleading communications sent to employees.

 

Action Items

  1. Review arbitration agreements and communications around arbitration agreements with legal counsel.

 

 

Eleventh Circuit: McDonnell Douglas Standard Isn’t the Only Hurdle in Discrimination Cases

Applies to:          All Employers with Employees in AL, FL, and GA

Effective:            DEC 5, 2025

 

Quick Look

v  The McDonnell Douglas standard of proof does not eliminate the need for a broader “convincing mosaic” standard in the context of a motion for summary judgment.

v  Even if an employer can show it had a legitimate reason for its actions, a totality of the circumstances approach may cause its motion to fail.

 

Discussion

 

In Ismael v. Roundtree, the Eleventh Circuit Court of Appeals said that the McDonnell Douglas framework does not necessarily apply in the context of a summary judgment motion. The McDonnell Douglas standard says that a plaintiff must prove their case on its face, which then shifts the burden to the defendant to show a legitimate business reason for their action, and finally allows the plaintiff to show that the employer’s reason was just pretext. Here, the court found the McDonnell Douglas standard to be too rigid in the context of a summary judgment motion, saying that a “convincing mosaic” standard was appropriate under the circumstances.

 

Here, an employee filed a discrimination claim against his employer, who then made a motion for summary judgment. The district court found that, even though the plaintiff proved his case on its face, the employer met its burden under the McDonnell Douglas standard and granted the motion. However, there was significant additional evidence presented indicating that the employer’s presented evidence was unreliable and that the employer treated the plaintiff differently from other employees.

 

The appellate court indicated that lower courts should use a convincing mosaic standard in summary judgment, which has its own procedural standard of proof. Specifically, a convincing mosaic standard means “(1) that a plaintiff will always survive summary judgment if he presents circumstantial evidence that creates a triable issue concerning the employer’s discriminatory intent,” and (2) that a “triable issue of fact exists if the record, viewed in a light most favorable to the plaintiff, presents a convincing mosaic of circumstantial evidence that would allow a jury to infer intentional discrimination by the decisionmaker.” The court said that the pretext standard under McDonnel Douglas should not be confused with the convincing mosaic standard that should apply in the context of a summary judgment motion.

 

Ultimately, the broader convincing mosaic standard means greater potential scrutiny over employer actions in litigation. Although this case focuses on legal procedure, it highlights the need for employers to be consistent in their policy enforcement and discipline and to document their legitimate business reasons for disciplinary action.

 

Action Items

  1. Have appropriate personnel trained on employer policies and consistent enforcement.
  2. Implement processes to consistently document legitimate business reasons for disciplinary action.

 


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. © 2026 ManagEase

California

California: Whistleblower Protections for Misunderstandings of the Law

APPLIES TO

All Employers with Employees in CA

EFFECTIVE

DEC 15, 2025

QUESTIONS?

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Quick Look

  • Whistleblower protections may still apply to reasonably mistaken understandings of (1) the law, (2) the facts, or (3) the law and the facts.

Discussion

In Contreras v. Green Thumb Produce, Inc., the California Court of Appeal said that an employee may receive whistleblower protection even if they are mistaken about the law. Labor Code § 1102.5 merely requires that an “employee has reasonable cause to believe that the information discloses a violation of state or federal statute.”

 

In this case, an employee believed he was being paid less than other employees for similar work, although not on the basis of any protected category. He presented his case to his employer, but was sent home and ultimately terminated. A lower court dismissed his whistleblower claim because of his misunderstanding of the Equal Pay Act. The Equal Pay Act does not prohibit pay variances, only discriminatory variances in pay.

 

For purposes of whistleblowing protection, “the relevant inquiry is not whether the conduct ‘actually violated’ any specific statute or regulation, but whether the plaintiff ‘reasonably believed that there was a violation.’” The court specifically said, “The employee could be mistaken about his or her understanding of (1) the law, (2) the facts, or (3) the law and the facts.” Ultimately, the court found that there was sufficient evidence presented at trial for the jury to find that the employee reasonably believed that a legal violation occurred, notwithstanding his misunderstanding of the law.

 

This case highlights the caution employers must take when terminating an employee who believes they are reporting a legal violation. Even if the employee is incorrect about the law, they may still receive whistleblower protections. Employers should consult with legal counsel before taking adverse action against an employee under these circumstances.

 

Action Items

  1. Implement an internal process for managing whistleblower claims.
  2. Have appropriate personnel trained on managing whistleblower complaints.
  3. Review whistleblower complaints with legal counsel for compliant management.

 

 

California: Outdated Agreement Terminology was Not Intended to Follow Current Arbitration Enforcement

 

APPLIES TO

All Employers with Employees in CA

EFFECTIVE

DEC 24, 2025

QUESTIONS?

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Quick Look

  • Old arbitration agreements effective before current PAGA case law could not have been created with the intent to comply with court rulings that had not yet been issued.

Discussion

In LaCour v. Marshalls of CA, LLC, the California Court of Appeals looked to the intention of the parties in an arbitration agreement to determine its enforceability. There, the court reviewed an arbitration agreement from 2014, which preceded much of the Private Attorneys General Act (PAGA) waiver analysis in arbitration agreements that employers must navigate today. This meant that the age of the agreement was determinative of the parties’ intent, in that they could not have intended compliance with court rulings that had not yet been issued.

 

There, an employee brought representative-only PAGA claims in court. In response, the employer attempted to compel the employee’s individual PAGA claims in arbitration in light of Viking River’s rule allowing the split of individual versus non-individual PAGA claims in arbitration. However, the agreement had older terminology, stating broadly that the parties agreed to bring individual claims in arbitration and waived class, collective, or PAGA representative claims, and a provision severing invalid portions of the agreement and requiring in that instance that PAGA claims be brought in court. The court said that the parties could not have intended to distinguish individual and non-individual PAGA claims for purposes of arbitration based on a legal standard that did not yet exist, and therefore found that the employee’s individual PAGA claims could not be compelled to arbitration.

 

This case highlights the need for employers to periodically have employees sign updated arbitration agreements to indicate their intent to comply with the latest court rulings and interpretations of enforceability of arbitration agreements.

 

Action Items

  1. Have arbitration agreements regularly reviewed and updated by legal counsel for employees to sign.

 

 

California: New Paid Sick Leave Poster 2026 

Governor Gavin Newsom signed AB 406 in 2025, which made technical updates to California’s paid sick leave law to clarify that employees may use paid sick leave during certain types of leave. California employers must now update their workplace postings to include the newly revised Healthy Workplaces/Healthy Families Act (HWHFA) paid sick leave poster issued by the DLSE in January 2026. This new poster reflects recent legislative changes clarifying that paid sick leave may be used during victims’ leave, court-related leave, and jury duty. It also reiterates employees’ rights to use paid sick leave for their own or a family member’s health care and confirms that retaliation or discrimination for using paid sick leave is prohibited. Employers should ensure that the updated poster is displayed in a conspicuous place where employees can easily see and read it.

 

REMINDER | California: Know Your Rights Act Notice Required as of February 1, 2026

As of February 1, 2026, pursuant to SB 294, all employers must provide employees with a stand-alone written notice of rights to each current employee through personal service, email, text message, or other method if it can reasonably be expected to be received by the employee within one business day of sending. The written notice must also be provided to each new employee upon hire and annually to existing employees. Employers must keep records of compliance for three years, including the date that each written notice is provided or sent.

 

California: Pay Data Reporting for Year 2025 

California Gov’t Code § 12999 requires employers with 100 or more payroll or labor contractor employees, with at least one employee in California, to annually submit data on the pay, hours worked, and demographics of their employees to the California Civil Rights Department (CRD). The reporting portal opened on February 2, 2026, with a deadline for submission by May 13, 2026. In anticipation of this year’s reporting cycle, the CRD has released updated Excel templatesinstructionsuser guideemployer handbook, and FAQs.

 


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. © 2026 ManagEase

Florida

Florida: Updated Screening Rules for Employers Hiring Sensitive Positions

As of January 1, 2026, Florida’s HB 531 will require employers hiring individuals to work with children or vulnerable adults in positions that are subject to mandatory level two employment screening to include a link to the Florida Agency for Health Care Administration’s clearinghouse website in all job advertisements and postings.

 


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. © 2026 ManagEase

Maine

Maine: New Regulations on Employee Surveillance

APPLIES TO

All Employers with Employees in ME

EFFECTIVE

TBD (Anticipated Summer 2026)

QUESTIONS?

Contact HR On-Call

(888) 378-2456

Quick Look

  • Maine has enacted a comprehensive employee-surveillance statute that restricts permissible workplace monitoring activities.
  • The law imposes new employer notice obligations and authorizes enforcement by the Maine Department of Labor.

Discussion

Maine’s new law, enacted under LD 61 and titled An Act to Regulate Employer Surveillance to Protect Workers, positions Maine among the few states with statutory surveillance requirements, but goes much further than the notice-only approaches adopted in other states.

 

LD 61 regulates “employer surveillance,” broadly defined as monitoring employees through computers, phones, radios, or other electronic systems, including electromagnetic, photoelectronic, and photo‑optical tools. The statute applies to both public and private employers, and its definition of “employee” includes any individual who provides services in exchange for wages or remuneration, suggesting that the law may reach certain contract workers as well. The law does include several exclusions, such as employer use of surveillance cameras for safety or security purposes, GPS or safety systems installed on employer‑owned vehicles, and certain monitoring activities in “personal care services” settings where surveillance may be conducted by employers, clients, patients, or unpaid caregivers.

 

Under the law, employers are prohibited from engaging in surveillance in an employee’s home, on the employee’s personal property, or in the employee’s personal vehicle, unless such surveillance is genuinely required for the employee’s job duties. The law also prohibits employers from requiring employees to install data‑collecting or monitoring software on their personal devices. Employees have a statutory right to refuse such requests, a limitation that may significantly impact bring‑your‑own‑device policies and the design of remote‑work technology systems.

 

In addition to these prohibitions, LD 61 imposes several notice obligations for employers. Specifically, employers must:

  • Inform employees before implementing any form of electronic surveillance;
  • Disclose their monitoring practices to job applicants during the interview or hiring process; and
  • Provide employees with an annual written notice confirming that surveillance is being conducted.

Notably, however, the law does not require a workplace posting, nor does it require employers to collect written acknowledgments from employees.

 

The Maine Department of Labor has authority to enforce the statute, and violations carry civil penalties ranging from $100 to $500 per violation. There is no private right of action, meaning employees cannot sue directly under the law, but the penalty structure still creates meaningful compliance risk for employers with large workforces or widespread monitoring tools.

 

The Act will become effective 90 days after the close of Maine’s current legislative session, with an anticipated effective date sometime in summer 2026.

 

Action Items

  1. Audit existing use of employee surveillance tools and identify systems that may require modification under the new requirements.
  2. Prepare for employee and applicant notice requirements.
  3. Have appropriate personnel trained on employee surveillance requirements.

 


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. © 2026 ManagEase

Maryland

Discussion

Baltimore, MD: Requirement for Pregnancy Accommodations in Effect for Employers

As of January 10, 2026, Ordinance 25‑078 requires Baltimore employers with two or more employees to provide reasonable accommodations for pregnancy, recovery from pregnancy, or a related condition. Examples of reasonable accommodations include, but are not limited to: (1) offering an eligible employee more frequent or longer breaks; (2) acquiring or modifying accessible equipment or seating; (3) temporarily transferring an eligible individual to a less strenuous or hazardous position, if available, with return to the current position after pregnancy or recovery; (4) restructuring of an eligible individual’s job; (5) assigning an eligible individual light duty; (6) providing an eligible individual with assistance for manual labor; and (7) allowing an eligible employee to take a modified work schedule. Employees have protections from adverse actions for requesting or using a reasonable accommodation. Employers are also required to develop and implement a written pregnancy accommodation policy and include it in a handbook, if one is provided.


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. © 2026 ManagEase

New Jersey

New Jersey: Expanded Leave Obligations, Reporting Requirements, and Public Works Regulations

APPLIES TO

As Indicated

EFFECTIVE

As Indicated

QUESTIONS?

Contact HR On-Call

(888) 378-2456

Quick Look

  • New Jersey’s Family Leave Act is significantly expanded to cover more employers and add additional employee protections.
  • In accordance with amendments to New Jersey’s Unemployment Compensation Law, all employers must report all employee separations electronically to NJDOL through the Employer Access portal.
  • Public entities must include a project labor agreement in all public works projects, regardless of the project cost.

Discussion

Expansion of Family Leave Act

 

Effective July 17, 2026, A2451/S2950 significantly expands New Jersey’s Family Leave Act (NJFLA). The most notable changes are:

 

  • More Employers Are Covered. The law will apply to employers with 15 or more employees instead of just those with 30 or more employees. One year after the effective date of the law, it will apply to employers with ten or more employees. The following year, it will apply to employers with five or more employees.
  • Expanded Employee Eligibility. Employees are eligible for family leave after three months of employment and 250 hours worked.
  • Coordination with Other State Benefits. If employees are eligible for paid sick leave under the New Jersey Earned Sick Leave Act, Temporary Disability Insurance (TDI) benefits, or family temporary disability leave, they have the right to choose which benefits to use and when to use them. Employees are still limited to only taking one paid benefit at a time.

 

The law has also created some confusion regarding job protection which is awaiting additional clarification. It states that individuals receiving TDI benefits for their own medical condition are entitled to job protection. Since NJFLA does not provide for job protection, there are questions around whether this means a new job-protected medical leave entitlement is being created. Employers should monitor the state’s Department of Labor & Workforce Development (NJDOL) website for additional guidance.

 

Mandatory Reporting of Employee Separations

 

Effective December 8, 2025, in accordance with amendments to New Jersey’s Unemployment Compensation Law, all employers must report all employee separations electronically to NJDOL through the Employer Access portal. Separations include layoffs, terminations, resignations, and retirements. Reporting is required immediately after an employee is separated. Failure to provide the required reporting will result in penalties for employers.

 

Project Labor Agreement Required on All Public Works Projects

 

Effective January 20, 2026, A3970 requires public entities to include a project labor agreement in all public works projects regardless of the project cost. The requirement applies to municipalities, countries, school districts, and fire districts and other similar public entities. A project labor agreement is a pre-hire collective bargaining agreement that incorporate, by reference, the separate labor contractors of union members working on the project. Public contractors should review the requirement with their legal counsel to determine the law’s impacts.

 

Action Items

  1. Review and update leave of absence policies.
  2. Update procedures for separation of employment to include immediate reporting to NJDOL.
  3. Review project labor agreements with legal counsel, if applicable.
  4. Have appropriate personnel trained on the updated requirements.

 

 

New Jersey: Attorney General Guidance for Discrimination Based on Language or Accent

The New Jersey Attorney General provided guidance for the treatment of discrimination based on an individual’s language or accent. Although the state’s Law Against Discrimination does not address language bias, the Attorney General’s guidance stated that such discrimination can be linked to other protected traits like religion or national origin, which is expressly prohibited by the law. That said, the guidance makes clear that language by itself is not a protected characteristic. As an example, the guidance states that a New Jersey employer who does not stop workers from harassing an employee on their accent could face a discrimination claim. Employers should update their discrimination and harassment policies accordingly.

 


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. © 2026 ManagEase