DOL Issues New FLSA Opinion Letters

APPLIES TO As Indicated

EFFECTIVE MAY 29, 2026

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

 

Quick Look An employee who holds both an exempt and a nonexempt role in the same workweek may still qualify for an overtime exemption if the exempt role remains the employee’s primary duty. Bonus pool arrangements that compare each employee’s total earnings to the pool’s total are permissible under the FLSA. Employees do not need to be compensated for meal breaks even when the distance or layout of a worksite makes it difficult to leave for a meal during the allotted break time. Compensability of certain pre- or post-shift activities remains a fact-specific determination. Employers should expect close scrutiny of disregarded time under the de minimis standard.

Discussion

On May 29, 2026, the U.S. Department of Labor’s (DOL) Wage and Hour Division published four opinion letters addressing certain wage-and-hour issues under the Fair Labor Standards Act (FLSA), including meal breaks, pre- and post-shift activities, dual-role employee classification, and overtime-compliant bonus pools. 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. Key takeaways from each are summarized below.

 

FLSA2026-5 | Dual-Role Employee. The DOL addressed whether an employee who primarily holds an overtime-exempt role may also perform additional work in a nonexempt capacity without losing exempt status. In the scenario prompting the opinion letter, an academic medical center had nursing professional development specialists (a typically exempt role) sometimes perform work as staff nurses (a nonexempt role). The DOL clarified that when an employee works in both exempt and nonexempt capacities in the same workweek, the employee may retain exempt status if the exempt role constitutes the employee’s primary duty.

 

In the scenario presented, the specialists spent approximately 62–77% of their total weekly hours in the exempt role, which the DOL determined to satisfy the “substantial majority” standard for the primary duty test in this case. The salary basis requirement was also satisfied because the specialists received their guaranteed salary at or above the required minimum level regardless of hours worked, and the FLSA expressly permits employers to provide exempt employees additional compensation for hours beyond the normal workweek without violating the salary basis requirement. Notably, the DOL indicated that the additional compensation for nonexempt work need not be paid on an hourly basis, instead suggesting that it may be paid as a flat sum or on any other basis. Employers should keep in mind that this will remain a fact-specific determination that may vary from case to case.

 

FLSA2026-6 | Bonus Pools. When calculating overtime pay for nonexempt workers, an employee’s regular rate of pay must include all remuneration for employment paid in the workweek, divided by total hours worked, and nondiscretionary bonuses must be factored into that calculation. However, a re-computation of the regular rate is not required when a bonus qualifies as a “percentage of total earnings” bonus, meaning one where the overtime premium is already embedded in the formula by virtue of including both straight-time and overtime earnings in the calculation base. The DOL addressed a quarterly bonus pool arrangement under which each employee’s share was determined by comparing that employee’s total gross compensation (straight-time plus overtime) to the aggregate gross compensation of all employees in the pool, with each participant receiving a proportionate share. The DOL confirmed this arrangement qualifies as a permissible percentage-of-total-earnings bonus and does not require a regular rate re-computation, even though each employee receives a different percentage of the pool. Employers should note, however, that if a bonus arrangement merely claims to be a “total earnings” bonus without evidence that the calculation genuinely includes both straight-time and overtime earnings, the DOL will scrutinize whether it is being used as a device to evade the FLSA’s overtime requirements.

 

FLSA2026-7 | Meal Breaks. Under the FLSA, a bona fide meal break is not compensable time when a nonexempt employee is completely relieved of all work duties. In response to a question from an employer operating a large facility with controlled access points and work areas located far from parking, the DOL confirmed that employees are not entitled to compensation for meal periods simply because the facility’s physical layout makes it difficult to leave the premises during the break. The DOL noted that being required to eat on-site, or being subject to minimal restrictions during the break, does not convert a meal period into compensable time. Employers are also not required to extend a standard thirty-minute meal period to account for travel time within or away from the worksite. Employers should be aware that applicable state meal break laws may impose stricter requirements.

 

FLSA 2026-8 | Pre-Shift and Post-Shift Activities. Under the FLSA, employees must be compensated for pre- or post-shift activities that are integral and indispensable to their principal work duties. In this particular scenario, the DOL addressed a hospital setting in which workers performed several pre-shift activities, including receiving patient handoff reports, locating work assignments, completing accountability documentation, and being assigned to work locations via communication devices. The DOL clarified that some of these activities, specifically, receiving handoff reports and locating work assignments, are likely compensable time because they are integral and indispensable to the employee’s principal duties. However, the DOL noted it was unable to draw broad conclusions regarding other pre-shift administrative activities without a fuller understanding of the employees’ specific principal job duties, underscoring that this remains a highly fact-specific analysis.

 

The opinion letter also addressed the employer’s practice of rounding early clock-ins up to the scheduled shift start time. The DOL identified two conditions that must be met for such rounding to be permissible: (1) no compensable pre-shift work is performed during the rounding window, and (2) an evaluation of the rounding practice over time demonstrates that it does not systematically undercompensate employees. The DOL further noted that the employer’s prohibition on early clock-outs was not problematic in this instance because there was no indication that employees were performing compensable work after their paid shifts ended. On the de minimis doctrine, the DOL cautioned that where employees perform compensable pre-shift work on a daily, predictable basis, such time is “unlikely” to qualify as de minimis. Employers should also be aware that technological advances have made it increasingly practicable to track employee work time with precision, meaning reliance on the de minimis doctrine will face greater scrutiny going forward. Importantly, this opinion letter addresses federal law only, so employers should be mindful of state laws that may be more restrictive.

 

Action Items

1. Review dual-role employee classifications with legal counsel.
2. Review bonus pool structures for compliance.
3. Review meal break policies and practices for compliance with compensability requirements.
4. Audit pre-shift and post-shift activity practices for compliance with compensability requirements.
5. Consult with legal counsel on time rounding practices.
6. Have appropriate personnel trained on applicable wage and hour requirements.

 

DOL Reinforces English Language Proficiency Requirements for Foreign CMV Drivers

APPLIES TO As Indicated

EFFECTIVE JUN 13, 2026

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

 

Quick Look The DOL’s Office of Foreign Labor Certification issued guidance clarifying that all job orders and labor certification applications for positions requiring foreign workers to operate a commercial motor vehicle must include an English language proficiency standard consistent with established federal requirements.

Discussion

On May 14, 2026, the DOL’s Office of Foreign Labor Certification (OFLC) issued Frequently Asked Questions (FAQs) clarifying employer obligations when hiring foreign workers to operate commercial motor vehicles (CMVs). The guidance is set to take effect on June 13, 2026, and applies prospectively to filings made on or after that date.

 

Under existing federal regulations, the Federal Motor Carrier Safety Administration (FMCSA) prohibits individuals, including foreign nationals, from operating a CMV unless they satisfy a specific set of qualifications, one of which is the ability to read and speak English sufficiently to converse with the general public, understand highway traffic signs and signals in English, respond to official inquiries, and make entries on reports and records. The OFLC’s new guidance clarifies that this English language proficiency (ELP) standard must be explicitly stated in all job orders and applications for temporary or permanent labor certification for positions that involve CMV operation. While many employers already include some iteration of the ELP standard in their filings, the guidance is intended to ensure uniformity across all employers seeking to hire foreign workers as CMV operators.

 

The FAQs provide model language that satisfies the ELP requirement, explaining that a compliant job order or labor certification application should state: “The worker must be able to read and speak the English language sufficiently to converse with the general public, understand highway traffic signs and signals in English, respond to official inquiries, and make entries on reports and records.” Employers may also include additional details, such as an advisement that prospective drivers will not be permitted to use translation tools, including interpreters, smart phone applications, I-Speak cards, or cue cards, during the ELP assessment.

 

If a job order or labor certification application involves a position requiring CMV operation and does not include a compliant ELP standard, the DOL will issue a Notice of Deficiency. If the employer does not correct the filing, the application may be denied under the regulations governing the applicable program (e.g., H-2A, H-2B, CW-1, and PERM programs).  Employers should also be aware that although FMCSA regulations provide certain exemptions from commercial driver’s license (CDL) requirements, particularly in the agricultural industry, the ELP standard continues to apply to all drivers operating a CMV in interstate commerce, regardless of whether a CDL is required.

 

Action Items

1. Review and update covered job orders, labor certifications, and job descriptions for compliance with ELP requirements.
2. Consult with legal counsel on specific ELP application questions.
3. Have appropriate personnel trained on the requirements.

 

 

DOL Issues Enforcement Guidance for Pension Benefit Statements

On May 12, 2026, the DOL’s Employee Benefits Security Administration (EBSA) issued Field Assistance Bulletin (FAB) No. 2026-02, providing temporary enforcement relief for retirement plan administrators navigating the new paper pension benefit statement requirements added by the SECURE 2.0 Act of 2022. Effective for plan years beginning after December 31, 2025, SECURE 2.0 requires defined contribution plans to furnish at least one pension benefit statement on paper per calendar year, and defined benefit plans to furnish at least one paper statement every three calendar years. The DOL issued a proposed rule on February 25, 2026, addressing these requirements, but final regulations have not yet been issued. Under the temporary enforcement policy established by the FAB, the DOL will not take enforcement action against plan administrators that make good faith efforts to comply with a reasonable interpretation of either the proposed rule or Section 105(a)(2)(E) of ERISA pending final guidance. The existing electronic delivery safe harbors continue to apply for participants and beneficiaries who became eligible on or before December 31, 2025. For those who became eligible on or after January 1, 2026, the proposed rule contemplates a one-time initial paper notice informing them of their right to request that all documents be furnished on paper before electronic delivery of pension benefit statements begins.

 

DOL Restores 2019 Salary Thresholds for FLSA Overtime Exemptions

On May 14, 2026, the DOL’s Wage and Hour Division (WHD) announced a technical amendment formally rolling back the 2024 salary thresholds for the FLSA and restoring the 2019 salary levels. The 2024 rule had substantially raised the salary thresholds for the executive, administrative, and professional exemptions as well as the highly compensated employee exemption, but was vacated by a federal district court in November 2024. The DOL subsequently dismissed its appeal in anticipation of this amendment. As a practical matter, this technical amendment does not alter current enforcement posture, as the WHD has applied the 2019 thresholds since the 2024 rule was vacated. That said, it does provide formal regulatory certainty as to the applicable salary levels. Under the restored regulations, executive, administrative, and professional employees must be paid a salary of at least $684 per week, and highly compensated employees must receive a minimum threshold of $107,432 per year.

 

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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. © 2026 ManagEase

SCOTUS Defines Interstate Transportation Under the FAA

APPLIES TO All Employers

EFFECTIVE MAY 28, 2026

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

 

Quick Look The test for determining participation in the interstate transportation of goods under the Federal Arbitration Act is whether the worker is an integral part of an interstate commercial journey.

Discussion

In Flowers Foods, Inc. v. Brock, the U.S. Supreme Court said that employees may be involved in interstate commerce for purposes of the Federal Arbitration Act (FAA) if they participate in some aspect of the interstate transportation of goods, even if the actual employees themselves do not travel interstate.

 

Here, an employee working for a franchise distributor picked up baked goods from a warehouse in Colorado and delivered them to local stores — all without ever crossing state lines. When the employee sued the employer for allegedly underpaying him, the employer tried to enforce his arbitration agreement. However, the employee claimed he was exempt from the FAA and therefore couldn’t be compelled to arbitrate.

 

The FAA generally requires courts to enforce arbitration agreements. However, Section 1 of the FAA carves out an exception for workers whose employment contracts involve “interstate commerce,” meaning the movement of goods or people across state lines. The Supreme Court unanimously said that a worker doesn’t have to physically cross state lines, or even touch a vehicle that does, in order to be “engaged in interstate commerce.” What matters is whether the worker plays a direct, active, and necessary role in an unbroken chain of commerce that moves goods from one state to another. Because the employee’s deliveries were the final leg of an interstate journey that began at out-of-state bakeries, he qualified for the exemption, meaning that his claims could not be forced to arbitration.

 

In this case, the Court resolved a split of authority between Circuit Courts that either said interstate commerce involves a person crossing state lines or a person who was involved at some point in the continuous transportation of interstate goods.  Looking at precedent, the Court found there to be a history of workers and vehicles operating entirely within one state but still being considered as part of interstate commerce when they are a necessary link in a cross-border delivery chain. The Court used a simple hypothetical: if three different drivers each handle one leg of a delivery crossing state lines, it would be absurd to say only the one who crosses the border is “engaged in interstate commerce.”

 

The Court did not resolve every question about who qualifies for the FAA Section 1 exemption. For example, the Court noted, but did not decide, whether the exemption applies differently when a worker operates through a business entity, or when a worker actually purchases and resells goods rather than simply transporting them. Those questions remain open for future cases. For now, the key takeaway is that crossing a state line is not the test. Instead, what matters is whether the worker is an integral part of an interstate commercial journey. This means that certain employees may be exempt from employer arbitration agreements based on their involvement in interstate transportation. These employees may still be subject to arbitration agreements, but only based on state laws rather than the FAA, which is significant because state arbitration laws may vary from the provisions of the FAA. Employers should consult with legal counsel on managing these situations.

 

Action Items

1. Review arbitration agreements with legal counsel in the context of participation in interstate commerce to determine enforceability.

 

Third Circuit: FLSA Does Not Recognize Overtime Gap Time Claims

On June 3, 2026, the Third Circuit Court of Appeals ruled in Secretary of United States Department of Labor v. Comprehensive Healthcare Management Services, LLC, that the FLSA does not recognize claims for overtime “gap time,” meaning uncompensated straight-time hours worked during a pay period in which the employee also worked overtime. The court held that while the FLSA requires payment of minimum wage and overtime, it does not require employers to pay employees at their regular rate for all straight-time hours before calculating overtime, ultimately declining to defer to longstanding DOL guidance suggesting otherwise. The court also clarified that FLSA overtime exemptions must be given a “fair reading” rather than construed narrowly against the employer, and that an employer’s burden to establish exempt status is satisfied by a preponderance of the evidence, reflecting a deviation from the less demanding standard that other courts have previously applied. While the decision is binding only in the Third Circuit, covering Pennsylvania, New Jersey, and Delaware, employers elsewhere should be aware that the DOL has historically pursued gap time claims aggressively, and the circuit courts remain split on the issue.

 

Fifth Circuit: Permanent Remote Work is Rarely a Reasonable Accommodation

APPLIES TO All Employers with Employees in LA, MS, and TX

EFFECTIVE MAY 8, 2026

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

 

Quick Look The Fifth Circuit ruled that remote work is not always a feasible accommodation under the ADA. Although the employer allowed telework temporarily during the COVID-19 pandemic, this did not mean that the employer permanently changed the job’s essential functions.

Discussion

In Hayes v. GStek, Inc., the Fifth Circuit Court of Appeals ruled that remote work is not always a feasible reasonable accommodation under the Americans with Disabilities Act (ADA). Here, the plaintiff was an IT systems administrator at a U.S. Army Network Enterprise Center. After returning to the office following the COVID-19 pandemic, the plaintiff was diagnosed with autism, major depressive disorder, and social anxiety disorder. He then requested to telework full time as an accommodation. The employer denied the request because the Army found allowing contractor employees to telework full time was not in their best interests. Eventually, the defendant was allowed to telework two to three days per week. The plaintiff then had a mental breakdown and was terminated for absenteeism. The plaintiff then sued for failure to accommodate, disability discrimination, and retaliation under the ADA.

 

In reaching its ruling, the court looked to whether the plaintiff could prove: (1) the plaintiff is a qualified individual with a disability; (2) the disability and its consequential limitations were known by the covered employer; and (3) the employer failed to make reasonable accommodations for such known limitations. A plaintiff can show that he is qualified if he shows: (1) he could perform the essential functions of the job in spite of his disability or (2) that a reasonable accommodation of his disability would have enabled him to perform the essential functions of the job. In concluding that permanent remote work was not a reasonable accommodation here, the court focused on several key facts: in-person attendance was an essential function of the plaintiff’s job; other employees working under the plaintiff did not receive teleworking accommodations; Army contractors were not authorized to telework; and although the employer had allowed telework temporarily during the COVID-19 pandemic, that temporary measure did not permanently change the essential functions of the job.

 

Because the plaintiff could not perform the essential in-person functions of the job while working remotely full time, the court found he was not a qualified individual under the ADA. In any case, the employer satisfied its obligation to provide a reasonable accommodation by allowing telework two to three days per week. As such, the plaintiff was also unable to prove disability discrimination or retaliation.

 

Action Items

1. Review procedures for granting reasonable accommodations in the workplace.
2. Review terminations, adverse actions, and accommodation denials with legal counsel.
3. Have appropriate personnel trained on workplace accommodation requirements.

 

Ninth Circuit: Religious Accommodation Undue Hardship is a Factual Determination

APPLIES TO Employers with 15+ Employees in AK, AZ, CA, HI, ID, MT, NV, OR, WA, Guam, and the Northern Mariana Islands

EFFECTIVE MAY 6, 2026

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

 

Quick Look Undue hardship under Title VII of the Civil Rights Act may include nonmonetary costs, such as health and safety costs and operational burdens. Whether an accommodation constitutes an undue hardship is a factual determination.

Discussion

In Williams v. Legacy Health, the Ninth Circuit Court of Appeals said that real and substantial hardship under Title VII of the Civil Rights Act may include nonmonetary costs, such as health and safety costs and operational burdens. In applying this standard, it said that each accommodation does not need to be individually evaluated if no accommodation is possible without causing substantial harm, and that the information used to evaluate the potential undue hardship at the time, rather than information in hindsight, is what is relevant. A key aspect of the court’s evaluation was that the employer provided substantial evidence to support its undue hardship position based on this standard.

 

In this case, a regional hospital system employer introduced a mandatory COVID-19 vaccination policy in August 2021 in response to the surge caused by the Delta variant. Employees who worked at one of the employer’s medical centers, including nurses, respiratory therapists, physician assistants, and technicians, applied for religious exemptions from the vaccine requirement. The employer denied all of their requests, placed them on administrative leave, and ultimately terminated most of them. The employees then filed suit, claiming religious discrimination under both Title VII and Washington state law.

 

Title VII of the Civil Rights Act requires employers to make reasonable accommodations for employees’ sincerely held religious beliefs, unless doing so would cause the employer “undue hardship.” For many years, courts interpreted this loosely, finding that even a small or minimal cost to the employer was enough to excuse them from accommodating a religious belief. However, in 2023, the Supreme Court raised the bar in Groff v. DeJoy, ruling that undue hardship must be “substantial in the overall context of the employer’s business.”

 

Here, the Ninth Circuit found that the employer clearly met the Groff standard. The employer presented strong evidence that, at the time it denied the exemptions, allowing unvaccinated workers to remain in close contact with patients and colleagues posed serious and realistic risks, not just theoretical ones. These risks included: (1) employees becoming ill and creating staffing shortages; (2) spreading infection to other healthcare workers; and (3) transmitting COVID-19 to already vulnerable patients with preexisting conditions. The employer also presented expert evidence showing that alternative safety measures like masking and regular testing were not adequate substitutes for vaccination in a hands-on healthcare environment. Importantly, the court emphasized that “undue hardship” doesn’t have to mean financial hardship alone; health and safety costs count too, and in this case, they were decisive.

 

The employees argued that the employer issued blanket denials without truly considering individual accommodation options and therefore shouldn’t be able to claim undue hardship. The court rejected this, explaining that if no accommodation is possible without causing substantial harm, an employer doesn’t have to go through the motions of evaluating each one individually. The employees also argued that the employer relied on outdated, pre-vaccine data and that other hospitals had successfully granted religious exemptions. The court dismissed both points, noting that employers are judged on the information available to them at the time of their decision, not in hindsight, and declaring that what other hospitals did is irrelevant — the analysis is specific to this employer’s own circumstances and patient population.

 

Ultimately, the Ninth Circuit upheld the lower court’s ruling that the employer would have faced undue hardship to accommodate the requests. Because the employer provided substantial evidence that accommodating the unvaccinated employees would have posed a substantial risk to patient safety, staff health, and its core mission of providing quality healthcare, it was legally justified in denying the religious exemptions, even if that meant terminating the employees who refused vaccination. The court made clear that this was a fact-specific determination, and the employer’s detailed, evidence-based showing met what the law required.

 

Action Items

1. Have legal counsel evaluate undue hardship denials of religious accommodation to ensure compliance with applicable standards.
2. Maintain appropriate documentation supporting undue hardship determinations.
3. Have appropriate personnel trained on managing religious accommodation requests.

 

Tenth Circuit: One Racial Sensitivity Training Was Insufficient to Claim Discrimination

APPLIES TO Employers with 15+ Employees in CO, KS, NM, OK, UT, and WY

EFFECTIVE MAY 11, 2026

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

 

Quick Look A single racial sensitivity training by itself is insufficient to support a discrimination claim. Employers should consider including admonitions in racial sensitivity training to support appropriate treatment of such trainings. Speculation about potential future harm is insufficient to show actual adverse treatment sufficient to create a discrimination claim.

Discussion

In Young v. Colorado Department of Corrections, the Tenth Circuit Court of Appeals said that one racial sensitivity training without any factual allegations of how it negatively impacted his terms and conditions of employment was insufficient for an employee to claim discrimination.

 

Here, a White employee of the Colorado Department of Corrections was required to attend a racial sensitivity training program. He found the training deeply offensive, believing it made sweeping, negative generalizations about White people and that it created a discriminatory work environment against him. He sued under Title VII of the Civil Rights Act and a related federal statute, claiming the training constituted racial harassment and that the hostile environment it created ultimately forced him to quit.

 

The Tenth Circuit acknowledged that Title VII’s protections against racial discrimination apply to all races, including White employees. However, to win a “hostile work environment” claim, an employee must meet an extremely high standard. The workplace must be so filled with discriminatory intimidation, ridicule, and insult that it fundamentally changes the terms or conditions of employment. An environment that is merely offensive or uncomfortable does not meet this standard; the conduct must be truly abusive and pervasive. A few isolated incidents are not enough. The court evaluated whether the employee’s allegations, even when read in the most favorable light possible, met that demanding threshold.

 

The court examined each of the employee’s specific complaints and found none of them to be sufficient. The glossary used in the training (which included terms like “white fragility” and “white exceptionalism”) was offensive to the employee, but he never explained how it actually affected his job duties. The training’s guidance on running meetings and its recommended videos were similarly objectionable to him, but again, he couldn’t show how they altered his day-to-day work. Notably, in his prior appeal to the Tenth Circuit, the court had previously concluded that the glossary and videos didn’t render the workplace “permeated with abuse.”

 

The employee also raised five new arguments in this lawsuit, including that future trainings were planned, that he was required to endorse race-based ideology, that supervisors used the training in disciplinary decisions, that the training compromised prison security, and that his employer failed to investigate his complaints. The court rejected each of these as either speculative, unsupported by specific facts, or legally insufficient on their own. Importantly, the training included admonitions that employees didn’t need to change their values or beliefs and should discuss questions and challenges from the training. Given these admonitions, the employee’s general allegations did not plausibly allege a pattern of abuse against White employees who disagreed with the training.

 

The employee also argued that the hostile environment had effectively forced him to resign. Because the court found he hadn’t established a hostile work environment in the first place, this claim automatically failed as well.

 

While the court acknowledged that DEI training can, in theory, cross the line into unlawful racial discrimination, it found that the employee’s specific allegations simply did not rise to the level of a workplace “permeated” with discriminatory abuse. He attended a single training session, left four months later, and could not point to concrete ways the training actually changed his working conditions.

 

Action Items

1. Employers may continue to provide racial sensitivity training, but should evaluate the course material, including admonitions, to verify its appropriateness.
2. Have DEI programs reviewed by legal counsel for compliance.

 

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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. © 2026 ManagEase

California: Executive Order Plans for AI Guardrails

APPLIES TO All Employers with Employees in CA

EFFECTIVE MAY 21, 2026

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

 

Quick Look Executive Order N-6-26 does not create any obligations for employers but indicates a broader potential strategy on how the state will seek to balance AI innovation with worker protections.

Discussion

Governor Newsom recently signed Executive Order (EO) N-6-26 to address AI’s impact within California. While acknowledging the benefits of the AI industry in the state, the EO also says that AI’s explosive growth presents real risks to workers, communities, and the broader economy. The EO seeks to find balance between the benefits of AI and protection of workers to ensure that AI is developed and used responsibly, and that its economic benefits are shared broadly. Although the EO is not binding on employers, it highlights a strategic shift in changes that may impact workers in the future.

 

A central concern driving this order is the potential for AI to displace workers across many industries. The Governor directs multiple state agencies to study how AI is already affecting California’s labor market, with special attention to which demographic groups may be hit hardest. Within 90 days, a dashboard will be launched to track AI’s impact on employment using unemployment insurance data. Within 180 days, the state will review and recommend updates to California’s Worker Adjustment and Retraining Notification (WARN) Act to make it more responsive to the fast-moving changes AI is bringing to the workforce.

 

The order also directs the state to review and strengthen its safety net programs for workers who lose their jobs due to technological change. This includes examining severance practices, expanding awareness of the Work Sharing program (which helps businesses avoid layoffs by temporarily reducing hours), and exploring service opportunities for those facing long-term unemployment. The state will also look at how other countries handle worker displacement and draw on those best practices. Additionally, agencies are directed to better connect unemployed workers to retraining and upskilling opportunities, including through community colleges and workforce development programs.

 

Recognizing that the private sector alone may not deploy AI in ways that serve the public good, the order directs the Government Operations Agency to develop recommendations for changing the incentive structures around AI development. This could include public-private partnerships, requiring AI companies to direct a portion of their revenues toward socially beneficial AI projects, or securing dedicated computing resources for public-interest AI research. The order also calls for exploring and expanding worker ownership models, such as employee-owned companies, so that productivity gains from AI can translate into wealth-building for everyday workers, not just shareholders and executives.

 

The order emphasizes the importance of preparing California’s workforce for an AI-driven economy through targeted education and training programs. Universities and community colleges are asked to expand on-the-job training, apprenticeships, and programs that connect graduates directly to employers. The state will also develop an “AI playbook” to help workers displaced by AI find new opportunities, and will work with small businesses to adopt AI tools responsibly and competitively. Higher education institutions are encouraged to ensure their programs align with growing industries so students graduate with skills that are actually in demand.

 

Finally, the order emphasizes the importance of public input. Governor Newsom launched a new round of California’s deliberative democracy platform, called Engaged California, specifically focused on AI’s economic and labor impacts, and all state agencies are directed to incorporate feedback from that process into their work. The state is also working to make it easier for Californians to navigate government services by building a single online platform that helps residents identify all the benefits and programs they may be eligible for.

 

The EO reflects a growing trend among some states to look for ways to responsibly manage AI impacts in the workplace. While the EO does not create any current changes for employers, it is a window into future changes that we may see. Although there is no immediate call to action, employers should consider ways to harness AI for employees’ benefit and minimize potential workforce disruptions through strategies like training and upskilling.

 

Action Items

1. Monitor for ongoing updates related to the recommendations in the EO.

 

California: No Discrimination Where Employer Doesn’t Know About Disability

APPLIES TO Employers with 5+ Employees in CA

EFFECTIVE MAY 21, 2026

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

 

Quick Look An employer could not have violated the California Fair Employment & Housing Act for discrimination and failure to accommodate where the employer had no knowledge of an employee’s disability condition. When an employee does not disclose their disability but simply behaves erratically, an employer is not required to automatically infer that a disability is the cause.

Discussion

In Husband v. Target Corp., the California Court of Appeals said that an employer could not have violated the California Fair Employment & Housing Act (FEHA) for discrimination and failure to accommodate where the employer had no knowledge of an employee’s disability condition. An employee simply behaving erratically does not automatically point to a disability as the cause.

 

Here, a Target employee had two serious incidents after working without incident for almost two years. First, the employee arrived for his shift appearing distressed, began hitting himself in the head, claimed that inventory orders were “laughing at him,” and yelled at a coworker. The next night, he told his supervisor he thought he had “killed” his stepmother by speaking a word and asked coworkers if he had killed anyone at the store. His supervisor found the behavior deeply disturbing, sent him home, and recommended he see a doctor or mental health professional. Target ultimately fired him shortly thereafter for violating its workplace violence policy. At no point before his termination had the employee ever told Target that he had been diagnosed with Bipolar I disorder.

 

The employee subsequently sued Target under FEHA claiming disability discrimination and failure to provide reasonable accommodation. However, to be liable, the employer must actually be aware of the disability before any of its obligations kick in. The employee claimed that even though he never told Target about his bipolar disorder, Target should have figured it out based on his erratic behavior and therefore should be held liable. Under California law, an employer can be deemed to “know” about an undisclosed mental disability, but only if the observed behavior has no other reasonable explanation and a mental disability is the only reasonable interpretation of the facts.

 

The court said that while the employee’s behavior was alarming and unusual, it could also reasonably be explained by other causes, such as the influence of drugs, a reaction to medication, or severe sleep deprivation. Because there were multiple plausible explanations for his conduct, a mental disability was not the only reasonable interpretation, and Target could not be legally presumed to have known about his bipolar disorder. The employee claimed that his supervisor’s comment that he “needed help” and should see a “psych professional” proved Target knew about a mental disability, but the court disagreed, stating that one supervisor’s untrained, personal opinion does not meet the legal standard, which requires an objective assessment of the facts. The court also firmly rejected the idea that any “unusual” or “bizarre” behavior automatically puts an employer on notice of a mental disability. Importantly, the court also noted that several Target employees indicated they would have accommodated the employee’s condition had they known about it, underscoring that the outcome might have been very different had he simply disclosed his disability. This case reinforces the concept that an employer’s obligations begin when it knows or has reason to know about an employee’s disability.

 

Action Items

1. Implement processes to manage identification of disabilities and initiation of the interactive process.
2. Have appropriate personnel trained on managing disability accommodations.

 

California: Employee Arbitration Failure May Mean Dismissal of PAGA Claims

APPLIES TO All Employers with Employees in CA

EFFECTIVE MAR 3, 2026

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

 

Quick Look When an employee loses claims brought in arbitration, they preclude the employee from being a representative under the California Private Attorneys General Act (PAGA) for those same claims.

Discussion

In Sorokunov v. Netapp, Inc., the California Court of Appeals said that when an employee loses on claims brought in arbitration, they preclude the employee from being a representative under the California Private Attorneys General Act (PAGA) for those same claims.

 

Here, an employee filed a lawsuit claiming his employer had improperly withheld earned wages, and he also sought penalties under PAGA, which allows employees to sue on behalf of the state to enforce labor laws. The employer moved to send the employee’s individual (non-PAGA) claims to private arbitration based on a dispute resolution clause in his compensation plan. The arbitrator ultimately ruled in the employer’s favor on every individual claim. After the arbitrator ruled against the employee on his individual claims, the trial court dismissed his PAGA claim as well, finding that he lacked “standing,” meaning he no longer had the legal right to bring the case. Under PAGA, only an “aggrieved employee” (e.g., someone who personally suffered a Labor Code violation) can sue on behalf of the state. Because the arbitrator had already determined that the employee had not suffered any Labor Code violations, the court applied a legal doctrine called “issue preclusion,” which prevents the same issue from being relitigated once it has been finally decided, including for pursuing PAGA penalties based on the same alleged violations.

 

The appeals court affirmed every ruling in the employer’s favor. The arbitration agreement was valid; the employee’s individual Labor Code claims failed on the merits; and because those claims failed, he had no standing to pursue PAGA penalties. The court was careful to note, however, that its ruling was limited in scope, indicating it did not prevent California’s Labor and Workforce Development Agency from independently investigating or pursuing claims against the employer, nor did it bar other employees at the company from bringing their own claims. Nonetheless, this case highlights the importance of arbitration agreements as a potential means to manage PAGA claims.

 

Action Items

1. Have arbitration agreements reviewed by legal counsel and disseminated to employees for signature.

 

 

California: Arbitration Agreement Does Not Apply to Third-Party Non-Signers

On May 5, 2026, in Toothman v. Redwood Toxicology Laboratory, Inc., the California Court of Appeals said that a staffing company’s arbitration agreement with its employee did not apply to the subsequent employer, given that the third-party employer was not a party to the agreement and the agreement did not address claims by the employee to the third-party employer. In this case, when the employee left the staffing company and was subsequently hired by the placed employer, the new employer did not have the employee sign their own arbitration agreement, and so the employer unsuccessfully attempted to use the staffing company’s arbitration agreement as a shield. Employers hiring an employee originally placed or provided by a staffing company should have their own agreements, including arbitration agreements, executed by the new employee to ensure enforceability.

 

California: Updated Cal/OSHA Notice

The “Safety and Health Protection on the Job“ notice was recently updated by California Division of Occupational Safety and Health (Cal/OSHA) with minor revisions to Cal/OSHA’S contact information including updated contact information for the Santa Barbara and San Francisco offices. Cal/OSHA did not change any substantive information on the poster. As a reminder, California law requires employers to display at least one Safety and Health Protection on the Job notices in a conspicuous place at each physical location where business is conducted. Employers should review and post the updated notice in compliance with Cal/OSHA’s requirements.

Los Angeles, CA: Hotel and Airport Worker Minimum Wage Change

Effective June 29, 2026, the annual Los Angeles City hotel and airport worker minimum wage rate adjustments will slow. Previously, covered workers were to receive $30 per hour by 2028; now, covered workers will reach $30 per hour in 2030. Similarly, adjustments were also made to the minimum health care benefit requirement. As of July 1, 2026, covered workers must receive $25 per hour for all time worked, and $4.25 per hour worked toward health care benefits. Covered employers should prepare to adjust wage rates and health care benefits for compliance.

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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. © 2026 ManagEase

Connecticut: Legislative Updates

APPLIES TO As Indicated

EFFECTIVE As Indicated

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

 

Quick Look Connecticut’s governor signed Public Act No. 26-12, a sweeping omnibus bill making far-reaching changes to the state’s workplace laws across wages, pay transparency, workers’ compensation, disability accommodations, lactation breaks, contractor liability, and more. Most provisions take effect October 1, 2026, with others phased in through July 1, 2027.

Discussion

 

On May 11, 2026, Connecticut’s governor signed Public Act No. 26-12, An Act Concerning Workforce Development and Working Conditions in the State. The Act combines provisions from dozens of individual bills introduced during the 2026 legislative session and represents the most comprehensive overhaul of Connecticut’s workplace laws in recent years. Key provisions affecting private employers are summarized below.

 

Job Posting Disclosures. Effective October 1, 2026, all employers, regardless of size, must include the wage or wage range and a general description of benefits in all public and internal job postings. The Act revises the definition of “wage range” to mean a range the employer “sets in good faith,” aligning Connecticut with similar statutes in other jurisdictions. The requirement extends to out-of-state positions that report to a Connecticut-based supervisor, office, or worksite. Employers must also disclose pay and benefits information to current employees and to any applicant to whom a job posting has not been made available. Punitive damages are eliminated, though compensatory damages and attorneys’ fees remain available for violations.

 

Paycheck Transparency Guide. Also effective October 1, 2026, employers with 100 or more employees must create a plain-language guide explaining pay codes used for overtime and commonly used pay differentials, such as shift differentials, on-call pay, hazard pay, call-back pay, and holiday or weekend pay. The guide must include at least 10 pay codes (if applicable), be posted on the employer’s website in English, Spanish, and any other languages commonly spoken by the workforce, and identify a contact for employee questions about timekeeping and pay calculations. The guide must be updated whenever a new pay code is added. Employers must provide the website address to employees at hire and include it on each pay statement. Employers using third-party payroll services may comply by referring employees to a compliant guide published by that provider.

 

Employment Promissory Notes. Effective October 1, 2026, Connecticut’s existing prohibition on employment promissory notes, such as agreements requiring employees to repay training costs, sign-on bonuses, or relocation expenses if they leave before a specified period, is extended to all employers regardless of size. The prior law applied only to employers with 26 or more employees. Voluntary repayment agreements and certain enumerated exceptions remain permissible.

 

Minimum Wage at Cannabis Establishments. Effective October 1, 2026, employers operating cannabis establishments, dispensary facilities, or production facilities may no longer apply a tip credit toward minimum wage obligations. These employers must pay employees at least the full Connecticut minimum wage.

 

Prevailing Wage Recordkeeping. Effective October 1, 2026, employers working on prevailing wage projects must maintain daily attendance records for all workers on covered job sites, including project name and location, date, worker name and trade license number (if applicable), and arrival and departure times. Those records must be submitted weekly to the contracting agency, and are subject to public disclosure under the Freedom of Information Act.

 

Disability Accommodation and ADA Notice. Effective October 1, 2026, employers must provide written notice of employees’ right to reasonable accommodation under the Americans with Disabilities Act (ADA) to new employees at the start of employment, to existing employees within 120 days (by January 29, 2027), and to any employee within 10 days of notifying the employer of a disability. Employers may satisfy this requirement by posting a notice created by the labor commissioner in a conspicuous, accessible location. The labor commissioner is authorized to issue additional regulations on the method of noticing.

 

Lactation Accommodation. Effective October 1, 2026, employers must provide reasonable break time for employees to breastfeed or express milk, not limited to the employee’s regular meal or break periods. This expands Connecticut’s existing lactation accommodation requirements, which previously required only that employers make reasonable efforts to accommodate nursing employees during scheduled breaks.

 

Workers’ Compensation for Assaulted Health Care Workers and Teachers. Effective October 1, 2026, the Act expands workers’ compensation benefits for health care providers and teachers who are unable to work as a result of a physical or negligent assault in the performance of their duties. These employees are entitled to wage replacement equal to 100% of their average weekly wage, with no cap on the benefit amount, for periods of partial or total incapacity resulting from the assault. Reasonably incurred medical expenses and lost wages due to court appearances related to the assault are also covered, and related absences may not be charged against the employee’s accrued paid time off.

 

Contractor Liability for Unpaid Wages. Effective January 1, 2027, general contractors will be jointly and severally liable for wages left unpaid by their subcontractors on construction, renovation, or rehabilitation projects in Connecticut. Before bringing a claim against a general contractor, employees must provide 30 days’ written notice, unless the employee has previously raised a violation by the same subcontractor with the general contractor. General contractors may include subcontract provisions authorizing unpaid wages to be satisfied from retainage, but such provisions do not limit employees’ right to bring a claim against the general contractor.

 

Retention of Service Contract Workers. Effective July 1, 2027, successor employers taking over certain service contracts at covered locations must retain covered service contract employees for at least 90 days, provided each employee worked at least 16 hours per week for at least 60 days during the prior 90-day period. Covered locations include higher education facilities, multifamily residential buildings with 50 or more units, commercial buildings exceeding 75,000 square feet, cultural centers, airports, train stations, shopping malls, and warehouses. Covered employees cannot be terminated during the retention period absent just cause. After the 90-day period, the successor employer must provide each retained employee with a written performance evaluation and, if satisfactory, an offer of continued employment.

 

Action Items

1. Review and update job postings to include required disclosures.
2. Begin preparing a paycheck transparency guide, as applicable, in all required languages.
3. Review existing promissory note agreements with legal counsel.
4. If operating a cannabis establishment, update payroll practices to eliminate tip credits.
5. If working on prevailing wage projects, implement daily recordkeeping and weekly reporting procedures.
6. Provide required ADA accommodation notices to existing employees by required deadline.
7. Update onboarding processes to provide new employees with required ADA accommodation notices.
8. Review and update lactation accommodation policies and practices.
9. Review workers’ compensation practices for covered employees who are victims of assault, as applicable.
10. Review subcontractor agreements with legal counsel, as applicable.
11. Review service contract terms with legal counsel, as applicable.
12. Have appropriate personnel trained on the new and updated requirements.

 

Connecticut: New Artificial Intelligence Law

APPLIES TO All Employers with Employees in CT

EFFECTIVE As Indicated

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

 

Quick Look Connecticut’s new AI law regulates the use of automated employment-related decision technology in hiring, promotion, discipline, termination, and other employment decisions. Employers using AEDT must provide real-time interaction disclosures and pre-decision notices to affected employees and applicants. Violations are enforceable by the Connecticut attorney general as unfair trade practices.

Discussion

Connecticut has enacted SB 5, a comprehensive law regulating the use of artificial intelligence in employment decisions. Key provisions take effect October 1, 2026, with a pilot program for independent verification organizations launching July 1, 2027.

 

Coverage. The law applies to any system that processes personal data and produces outputs, such as predictions, scores, rankings, classifications, or recommendations, that are a “substantial factor” in making or materially influencing an employment decision, including decisions related to hiring, promotion, discipline, and termination. These systems are referred to as Automated Employment-related Decision Technology, or AEDT. Generic software tools such as spreadsheets and word processors, and tools used only incidentally or for descriptive or statistical purposes, are excluded. The definition is focused on predictive AI technologies and the potential for algorithmic bias, though it will likely be read broadly enough to include generative AI where its use could cause discriminatory harm.

 

Bias Testing. The law amends Connecticut’s existing anti-discrimination framework to expressly provide that the use of an automated system is not a defense to a discrimination claim under state law. However, evidence of bias testing, including the quality, scope, and recency of testing efforts, the results, and how findings were addressed, may be considered by courts or agencies when evaluating liability.

 

Developer vs. Deployer Obligations. The law divides compliance responsibilities between developers (those who build AEDT) and deployers (employers and other entities that use it). The primary compliance burden falls on deployers. Developers must provide deployers with sufficient information to enable compliance with the law’s requirements, where the technology is marketed or intended to materially influence employment decisions. The law does not specify what types of information developers are required to create, which may create practical challenges if deployers request information that developers have not documented.

 

Notice and Disclosure Requirements. The law imposes two distinct notice obligations on deployers. First, deployers must inform employees or applicants in plain language when they are interacting with an AEDT in real time. This disclosure is not required where it would be obvious to a reasonable person that the interaction involves an automated system. Second, before any employment decision is made using AEDT output, the deployer must provide the affected individual with a written pre-decision notice disclosing: (1) the fact that an AEDT is being used; (2) the purpose of the technology and the type of employment decision involved; (3) the trade name of the system; (4) the categories of personal data processed and how those data are assessed; (5) the sources of the personal data; and (6) contact information for the deployer. Developers may contractually assume these notice and disclosure obligations on behalf of deployers.

 

Independent Verification Organizations. Beginning July 1, 2027, the law establishes a pilot program under which the Connecticut Department of Consumer Protection may approve up to five independent verification organizations to assess whether AI systems meet defined risk mitigation and safety standards. These organizations do not confer regulatory approval or create a presumption of compliance. Their assessments may be used as evidence in certain civil cases but do not provide a safe harbor or defense in enforcement actions. The program is set to sunset in 2030 and is designed as a testbed for potential future AI auditing or certification requirements.

 

Enforcement. Violations are deemed to be unfair or deceptive trade practices under the Connecticut Unfair Trade Practices Act (CUTPA) and are enforceable exclusively by the Connecticut attorney general, meaning there is no private right of action. A temporary cure period through December 31, 2027, may be available at the attorney general’s discretion.

 

Action Items

1. Identify covered AEDT systems currently in use or under consideration for employment-related decisions.
2. Implement interaction and pre-decision disclosures and notices, as applicable.
3. Review vendor and developer agreements with legal counsel.
4. Consider bias testing protocols.
5. Review and update internal governance frameworks for AEDT use.
6. Monitor regulatory updates from the Connecticut attorney general’s office and Department of Consumer Protection.
7. Have appropriate personnel trained on the requirements for AEDT use.

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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. © 2026 ManagEase