Discussion

NLRB Issues New Memos Narrowing NLRA Interpretation

APPLIES TO All Employers Subject to the NLRA

EFFECTIVE JUN 26, 2026

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

 

Quick Look Employee nonsolicitation agreements and cooperation agreements that only apply after employment ends do not violate the NLRA. Noncompetition agreements  generally do not implicate NLRA rights, and confidentiality provisions are typically read as protecting legitimate business interests rather than restricting protected activity. Even where certain nonsolicitation, inducement-of-third-parties, and non-disparagement provisions were technically unlawful, the claim was dismissed because the employer never actually enforced them against employees.

Discussion

On June 26, 2026, the National Labor Relations Board (NLRB) released several advice memoranda addressing when employer agreements and workplace conduct fall within the protections of the National Labor Relations Act (NLRA). Advice memos are guidance issued by the NLRB General Counsel’s office to regional offices. Although they are not binding Board decisions, they do offer useful insight into how the agency is currently interpreting the law and periodizing enforcement.

 

Across the memos, the NLRB drew a consistent distinction: activity or contract language that only takes effect after employment ends generally does not restrict protected activity under the NLRA. The NLRB also confirmed that even where a contract provision is technically unlawful, a violation will not be found if the employer never enforced that provision against employees. Each memo is summarized below.

 

Nonsolicitation and Cooperation Clauses. In BAYADA Home Health Care, the NLRB reviewed a nonsolicitation-of-employees clause and a cooperation clause contained in a separation agreement. The NLRB found the nonsolicitation clause lawful under the McLaren Macomb standard (the current framework the Board uses to evaluate whether severance agreement terms unlawfully restrict NLRA rights) because it appeared in a separation agreement and applied only after employment ended, meaning it did not restrict any protected activity during employment. The NLRB also found the cooperation clause lawful. That clause required the former employee to assist with the employer’s legal or investigative matters. The NLRB reasoned that: (1) no prior precedent has held this type of clause unlawful; (2) any related questioning would occur after employment ended, when NLRA protections no longer apply; and (3) the clause was reasonably limited to matters like providing information or attending meetings, rather than compelling testimony against coworkers.

 

Noncompete and Confidentiality Provisions. In Biotricity, Inc., the NLRB reviewed a noncompete agreement, along with a related state-court lawsuit and arbitration proceeding brought in part to enforce that agreement. The NLRB found the noncompete and confidentiality provisions lawful, reasoning that noncompete clauses generally do not affect employees’ rights under Section 7 of the NLRA, and that the confidentiality clause would reasonably be understood as protecting the employer’s competitive business interests rather than restricting employees’ protected communications. As for the nonsolicitation, inducement-of-third-parties, and non-disparagement provisions, the NLRB said that even though portions of the provisions were unlawful, the claim should be dismissed on ”noneffectuation grounds,” meaning that because the employer never actually enforced these provisions against employees, there was no practical harm for the Board to remedy. As for the related lawsuit and arbitration, the NLRB found no NLRA violation, concluding the legal actions were not retaliatory, lacked any unlawful objective, and did not conflict with the NLRA because no protected activity was actually at issue in the underlying claims.

 

Overtime Policy Change and Termination for Recording a Meeting. In Sutherland Global Services, the NLRB considered both a change to the employer’s overtime policy, and a termination following an employee’s secret recording of a meeting with a supervisor. The NLRB found insufficient evidence of an NLRA violation in either instance. On the overtime policy, the NLRB acknowledged that the employee’s escalation of concerns about unpaid wages could arguably be tied to earlier protected group activity. However, there was not enough evidence to show the employer knew the complaint was raised on behalf of a group of employees, or that the policy change was made in retaliation. On the termination, the NLRB found insufficient evidence that the secret recording itself qualified as protected concerted activity. The employer stated it terminated the employee for violating its Clean Desk Policy, which requires personal items such as cell phones to be stored away to protect client confidential information.

 

While these rulings shed light on the NLRB’s interpretation of NLRA protections and enforcement strategy, employers must still take care when managing employee agreements and policies as they may be subject to more restrictive state laws. For any adverse employment activity that may implicate NLRA rights, employers should consult with legal counsel for compliance.

 

Action Items

1. Review employment agreements with legal counsel for compliance.

---

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

Discussion

Supreme Court Rules on Several Immigration Matters

APPLIES TO All Employers

EFFECTIVE As Indicated

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

 

Quick Look The INA allows border officers to “parole” a returning lawful permanent resident upon returning to the U.S., rather than admitting them outright if there is a pending charge of an inadmissible offense. The Department of Homeland Security is permitted to end Temporary Protected Status for foreign nationals from Haiti and Syria. The automatic grant of birthright citizenship under the Fourteenth Amendment is reaffirmed.

Discussion

Within an eight-day span, the U.S. Supreme Court issued three significant immigration rulings addressing lawful permanent resident reentry rights, humanitarian protections, and citizenship. Some of these rulings have immediate impacts on employers.

 

Lawful Permanent Residents Suspected of Committing Offenses May Be Paroled at Reentry

 

On June 23, 2026, in Blanche v. Lau, the Court ruled the Immigration and Nationality Act (INA) allows border officers to “parole” a returning lawful permanent resident (LPR) upon returning to the U.S. rather than admitting them outright if there is a pending charge of an inadmissible offense. Parole allows a noncitizen to physically enter and be present in the U.S. without formal admission under the INA. They are then still treated legally as if they are still at the border, which creates a lower threshold for removal from the U.S.

 

In this case, an LPR had a pending charge of trademark counterfeiting. He traveled abroad while the charge was pending, and when he returned to the U.S., he was not admitted but instead paroled based on the pending charge. After he pled guilty to the charge, his status was changed to inadmissible with a removal order.

 

In its ruling, the Court found that the INA does not impose a clear-and-convincing evidence requirement for border officers. It looks only to the commission of a crime, not conviction. The Court also noted that border officers must make “quick judgments on the spot,” which further weighs against imposing a heightened evidentiary burden. In this case, the pending charge involved moral turpitude, which can independently serve as a basis for inadmissibility.

 

Employers with LPRs who have pending charges may wish to consult immigration legal counsel before those workers depart on international travel. Reentry now carries greater risk and could lead to unexpected operational disruptions if an employee is paroled or found inadmissible upon return.

 

End of TPS Benefits for Haiti and Syria

 

On June 25, 2026, in Mullin v. Doe, the Court ruled that the Department of Homeland Security (DHS) could end Temporary Protected Status (TPS) for foreign nationals from Haiti and Syria. TPS allows DHS to designate foreign nationals as eligible to remain and work in the U.S. when conditions in their home country make it unsafe for them to return (e.g., natural disasters, armed conflict, or other extraordinary and temporary circumstances). Haiti and Syria had previously met these conditions. However, in 2025, DHS determined that conditions no longer met the TPS threshold and that TPS could be terminated – Syria’s on September 22, 2025 and Haiti’s on November 28, 2025. Several TPS holders filed lawsuits that temporarily suspended the terminations pending the results of the legal challenges.

 

In reaching its ruling, the Court considered whether (1) the courts were prohibited from reviewing the DHS Secretary’s TPS termination decisions; and (2) whether the Haitian TPS holders could prove a sufficient likelihood of success on their equal protection claim that the termination was motivated by racial bias against black Haitians. The Court found that 8 U.S.C. Section 1254a(b)(5)(A) of the INA categorically bar courts from reviewing the DHS Secretary’s TPS termination decisions, including review of procedural violations, such as whether the Secretary adequately consulted the State Department about conditions in Syria and Haiti. The Court also found no racial animus against black Haitians, acknowledging that although the administration used “heated language” when referencing Haiti and Haitians, the statements were not racial and reflected policy views grounded in race-neutral considerations. The ruling sends the individual legal challenges back to the lower courts to align with the Court’s decision.

 

This ruling has immediate impacts for employers with Haitian and Syrian workers who hold TPS-based work authorization. Employers should review applicable Employment Authorization Documents (EADs) for termination dates. DHS previously stated that TPS-related work authorization extensions for Haiti and Syria would expire on July 1, 2026. However, alerts from the U.S. Citizenship and Immigration Services (USCIS) on July 10, 2026 indicate different EAD expiration dates: July 17, 2026, for Syria and July 24, 2026, for Haiti. Employers should consult with immigration legal counsel to determine next steps regarding impacted workers with TPS-based work authorization.

 

Birthright Citizenship Upheld

 

On June 30, 2026, in Trump v. Barbara, the Court reaffirmed the automatic grant of birthright citizenship under the Fourteenth Amendment. The ruling struck down Executive Order 14160 which sought to limit birthright citizenship (automatic U.S. citizenship attained by virtually all children born on U.S. soil) by requiring children to have at least one parent who is a U.S. citizen or lawful permanent resident in order to obtain U.S. citizenship at birth.

 

In reaching its ruling, the Court found no support for the administration’s argument that a child’s parents must owe “primary allegiance” to, or have established domicile in, the United States. Rather, the Court pointed to a lengthy history reflecting the Fourteenth Amendment’s intent to permanently constitutionalize birthright citizenship without regard to shifting political majorities. The only narrow historical exception recognized is for children of accredited diplomats or occupying enemy forces.

 

While Justice Kavanaugh agreed with the result of invalidating the Executive Order, he relied on the argument that it violated 8 U.S.C. Section 1401(a) of the INA, which provides that a person born in the U.S. is a national and citizen of the U.S. He argued that the Executive Order did not violate the Fourteenth Amendment itself, contending the issue was less settled than the majority’s opinion suggested. He reasoned that neither precedent nor the Amendment would prevent Congress from legislating new exceptions to birthright citizenship, noting that the Amendment’s drafters could not have anticipated the modern immigration system.

 

It remains to be seen whether Congress will take up legislation to restrict birthright citizenship. The Executive Order has been blocked by multiple courts since 2025 and has never taken effect, so there is no immediate action required of employers as a result of this decision.

 

Action Items

1. Consult with immigration legal counsel regarding expiration of TPS-based EADs and the risks of international travel for workers who are LPRs.

 

Federal Court Strikes Down Suspension of Immigration Benefit Requests

APPLIES TO All Employers

EFFECTIVE JUN 5, 2026

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

 

Quick Look A federal district court struck down four USCIS policies nationwide that had suspended or delayed adjudication of immigration benefits, including asylum, adjustment of status, employment authorization, and naturalization, for nationals of countries subject to the travel ban.

Discussion

In Dorcas International Institute of Rhode Island v. USCIS, the U.S. District Court for the District of Rhode Island ruled that four USCIS policies were unlawful and vacated them nationwide. All four policies suspended review and/or granting of immigration benefits. The policies are as follows:

 

• Benefits Hold Policy (PM-602-0192 and PM-602-0194). Placed an indefinite hold on final adjudication of pending applications for adjustment of status, employment authorization, and naturalization for nationals of the 39 countries affected by the travel ban.
• Global Asylum Hold Policy (PM-602-0192). Placed a hold on all pending asylum and withholding-of-removal applications regardless of the applicant’s nationality. Required a “comprehensive review” without defining the parameters.
• Comprehensive Re-Review Policy (PM-602-0192). Directed USCIS officers to re-review previously approved benefit grants like asylum, adjustment of status, employment authorization, and naturalization for nationals of the 39 countries affected by the travel ban. This was based only on nationality and date of entry and not an individualized indicator of risk.
• Country-Specific Factors Policy (Policy Alert PA-2025-26). Required adjudicators to consider insufficient vetting and screening information as a significant negative factor in any discretionary immigration benefit decision for nationals of the 39 countries affected by the travel ban.

 

In its ruling, the court found that the policies were contrary to law and arbitrary and capricious under the Administrative Procedures Act (APA). INA Section 212(f) grants the President power to restrict entry at the border but does not allow freezing domestic adjudication of benefits for those already present in the U.S. The INA already imposes nondiscretionary duties on USCIS to adjudicate benefits, and USCIS cannot use internal memos to override those statutory mandates.

 

The court also found that USCIS’s memos relied on only two isolated incidents, yet applied that reasoning broadly to noncitizens from the 39 affected countries, without demonstrating the reasoned decision-making required under the APA. Further undermining the stated national security rationale, USCIS had carved out exceptions for certain athletes and physicians from the affected countries, while the President and Secretary Noem had made public statements expressing hostility toward immigrants generally, which the court found inconsistent with a genuine security justification.

 

As a result of the ruling, employers with workers whose adjustment applications, EAD renewals, or other immigration benefits placed on hold may begin to see movement on processing. Employers should still exercise caution and consult with immigration legal counsel on next steps, since USCIS has not yet issued revised guidance addressing the ruling.

 

Action Items

1. Consult with immigration legal counsel regarding work authorizations contingent upon pending USCIS processing.

 

 

Trump Administration Appeals Court Decision to End H-1B Visa Fee

On June 11, 2026, the Trump Administration filed a notice of appeal to the First Circuit Court of Appeals challenging the decision to vacate Proclamation 10973 which imposed a $100,000 fee for new H-1B petitions filed for beneficiaries located outside of the U.S. The U.S. District Court for the District of Massachusetts had struck down the fee on June 8, 2026, but the district court issued an administrative stay of its own ruling on June 12, 2026, which reinstated the fee while the government pursues relief from the First Circuit. On June 18, 2026, the government formally asked the First Circuit to extend the stay for the duration of the appeal. As a result, USCIS is currently permitted to continue collecting the $100,000 fee for qualifying H-1B petitions involving consular processing while the appeal proceeds. Employers should continue to monitor the USCIS website and consult immigration counsel, as further changes to the fee’s status are likely as the litigation continues.

 

DHS Proposes Increase to Naturalization Application Fees

On June 23, 2026, the Department of Homeland Security (DHS) issued a proposed rule to increase the application fee for naturalization applications. The paper filing fee would increase from $760 to $1,330 and online filing fees would increase from $710 to $1,280. DHS would also eliminate the $380 reduced fee option for low-income applicants and end fee waivers. Public comments to the proposed rule must be submitted on or before August 24, 2026.

 

USCIS Updates Section 5 of M-274

On July 7, 2026, USCIS updated the M-274 Handbook for Employers. Specifically, Section 5 has been updated to reflect the changes to automatic extensions of TPS and EADs as a result of federal register notices unique to certain countries, the DHS interim final rule eliminating the automatic extension period, and other changes resulting from the One Big Beautiful Bill Act. Employers should be sure to review the updated Section 5 prior to reviewing and completing Form I-9.

 

OFLC Publishes List of Randomized H-2B Applications for H-2B Workers

On July 8, 2026, the Department of Labor’s Office of Foreign Labor Certification (OFLC) published a list of randomized H-2B applications submitted during the July 3-5, 2026 filing window for H-2B workers with a work start date of October 1, 2026. OFLC cited a large number of applications filed requiring cases to be split into two groups. Group A cases are being assigned to the National Processing Center for notices of Acceptance or Deficiency. Employers were notified on July 6, 2026 of the group assignment for their application.

 

USCIS Updates EAD Expiration Dates for TPS Beneficiaries

On July 10, 2026, USCIS issued an update regarding the expiration of Employment Authorization Documents (EADs) related to Temporary Protected Status (TPS) for certain countries. DHS had previously terminated TPS designations for these countries, prompting multiple lawsuits in federal district courts that temporarily blocked the terminations. While that litigation was pending, DHS initially set a placeholder EAD expiration date of July 1, 2026, which was later extended to July 10, 2026, following the Supreme Court’s decision in Mullin v. Doe upholding DHS’s authority to terminate TPS. USCIS has now removed the July 10, 2026 expiration date and established new expiration dates of July 24, 2026, for TPS-related EADs for nationals of Haiti, and July 17, 2026, for nationals of Burma, Somalia, Yemen, Syria, Ethiopia, and South Sudan. Further changes to these dates are anticipated. Employers with employees from these countries should consult immigration counsel to confirm accurate EAD expiration dates and ensure compliance with federal 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

Discussion

Third Circuit: Retaliation Standard Under ADA and FMLA

APPLIES TO All Employers with Employees in DE, NJ, PA, and the U.S. Virgin Islands

EFFECTIVE JUN 24, 2026

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

 

Quick Look The Third Circuit adopted the “materially adverse” standard for retaliation claims under the ADA and FMLA, aligning with the broader standard already applied to Title VII retaliation claims. Under this standard, an action is materially adverse if it could dissuade a reasonable employee from engaging in protected activity, meaning it is not limited to formal changes in job status or compensation structure.

Discussion

On June 24, 2026, the Third Circuit issued a decision in Steidle v. United States Liability Insurance Co., Inc., clarifying the scope of actionable retaliation under the Americans with Disabilities Act (ADA) and the Family and Medical Leave Act (FMLA). In this case, an employee claimed that his employer retaliated against him for requesting FMLA leave and workplace accommodations by giving him lower-than-expected bonuses and salary increases. The district court had granted summary judgment to the employer, finding that the plaintiff had not suffered an “adverse employment action” and failed to establish causation. The Third Circuit considered whether ADA and FMLA retaliation claims are limited to traditional employment actions affecting compensation or job status, or whether they are instead governed by the broader “materially adverse” standard the U.S. Supreme Court set for Title VII retaliation claims in Burlington Northern & Santa Fe Railway Co. v. White.

 

In making its decision, the court adopted the broader standard, holding that an employer’s action is materially adverse if it could dissuade a reasonable employee from engaging in protected activity, such as requesting leave or an accommodation. Applying this standard, the court rejected a narrow interpretation that would have excluded discretionary compensation decisions from scrutiny, instead concluding that reduced bonuses and salary increases, particularly when closely tied in time to protected activity, may constitute actionable retaliation.

 

This decision means that compensation decisions, including discretionary bonuses and merit increases, now squarely fall within the scope of potential ADA and FMLA retaliation exposure. This ruling also emphasizes the importance of maintaining well-documented, consistent, and objective criteria for compensation decisions, particularly for employees who have recently requested leave or an accommodation.

 

Action Items

1. Review compensation decision-making processes for consistent, objective, performance-based criteria.
2. Consult with legal counsel when compensation decisions closely follow an employee’s leave or accommodation request.

 

Fourth Circuit: Employee Dissatisfaction with Accommodation Is Not a Failure to Accommodate

APPLIES TO Employers with 15+ Employees in MD, NC, SC, VA, and WV

EFFECTIVE MAR 3, 2026

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

 

Quick Look The ADA’s interactive process does not guarantee employees their preferred accommodation, and employee dissatisfaction with a reasonable accommodation does not amount to a failure to accommodate. Employers retain the “ultimate discretion” to select an effective accommodation from among the reasonable options available; employees may not unilaterally dictate the terms of their accommodation.

Discussion

In Redding v. Noem, the Fourth Circuit affirmed the dismissal of a failure-to-accommodate claim brought under the Rehabilitation Act (the federal-employee analog to the ADA), reinforcing key principles that apply equally to ADA accommodation claims in the private sector.

 

In this case, the plaintiff worked as a federal air marshal for the Transportation Security Administration (TSA) for more than seven years. After developing certain medical conditions over time, she was placed on temporary “light duty” status. Eventually, TSA informed her that she could no longer meet the agency’s medical standards for her position and recommended she seek reassignment. In requesting reassignment, the employee herself acknowledged her “inability to perform the essential duties” of her position. With no open positions available within TSA, the employee applied for and was reassigned, at her own selection, to a position at another federal agency. After struggling in the new role, she sought reconsideration of her assignment, but TSA advised it could no longer assist her since she was no longer a TSA employee. She then sued, arguing TSA should have kept her permanently in the light-duty position.

 

The Fourth Circuit affirmed dismissal on two independent grounds. First, the employee’s own admission that she could not perform the essential functions of her position meant she was not a “qualified individual” under the Rehabilitation Act/ADA framework. Second, even setting that aside, the court found TSA had provided a reasonable accommodation when it placed her on light duty, searched for vacant positions within TSA when she could no longer perform even the adjusted duties, and ultimately facilitated a reassignment to another agency.  Critically, because the employee herself had identified and selected the reassignment position, her later dissatisfaction with that choice did not retroactively make TSA’s accommodation “unreasonable.” As the court put it, the interactive process gives employees “a meaningful voice” but does not guarantee them their preferred outcome, and TSA’s accommodation obligations ended once the reassignment was completed.

 

For employers, this case emphasizes the importance of maintaining accurate documentation throughout the interactive process. This includes, but is not limited to, accommodation offers, employee responses, and reasons for rejecting or pursuing a particular accommodation option. Job descriptions should also clearly and accurately define essential functions, as courts give considerable deference to an employer’s judgment on what functions are essential to a role.

 

Action Items

1. Review job descriptions for clear and accurately defined essential functions.
2. Maintain accurate documentation of interactive process for all accommodation requests.
3. Have appropriate personnel trained on ADA requirements.
4. Consult with legal counsel when evaluating reassignment or other accommodations of last resort.

 

Eight Circuit: Vaccine Mandates Are Not “Essential Job Functions” Under the ADA

APPLIES TO All Employers with Employees in AR, IA, MN, MO, NE, ND, and SD

EFFECTIVE JUN 15, 2026

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

 

Quick Look The court rejected the employer’s attempt to argue that a vaccine policy was itself an “essential job function.” A vaccine exemption was found to be a form of accommodation, not an essential job function.

Discussion

In Klimek v. CentraCare Health System, the Eighth Circuit ruled that the plaintiff’s ADA disability discrimination claim, based on a request for a medical exemption from a COVID-19 vaccine mandate, could move forward. Here, Klimek was a CentraCare nurse who suffered a workplace injury leading to Reflex Sympathetic Dystrophy (RSD) which caused chronic pain, nausea, and vertigo. In 2016, CentraCare required all employees to receive the MMR vaccine for which Klimek applied for a medical exemption. CentraCare approved the exemption and said she was permanently exempt from live vaccinations while being treated for RSD. In 2021, Klimek then moved to a position as a clinical documentation integrity specialist which was 100% remote with no in-patient contact. That same year, CentraCare required all employees to obtain a COVID-19 vaccine absent a medical or religious exemption. Klimek requested a medical exemption like she had in the past, but CentraCare denied it without explanation – even after she submitted a letter explaining that she was 100% remote with no coworker or patient contact. CentraCare then placed Klimek on involuntary unpaid leave of absence which effectively ended her employment.

 

A lower court initially granted summary judgment in favor of CentraCare; however, the Eighth Circuit reversed. In reaching its decision, the court rejected CentraCare’s argument that its vaccine policy itself qualified as an “essential job function,” explaining that a vaccine exemption is an accommodation, not an essential function, and that treating the two as the same would run contrary to the ADA. Instead, the relevant question was whether in-person patient care was an essential function of Klimek’s job, and the court found that it was not. The court also found that CentraCare had knowledge of her disability based on her prior vaccine exemption requests and had received sufficient medical documentation to trigger the interactive process, which CentraCare failed to engage in.

 

This case serves as a reminder for healthcare employers that vaccine policies cannot be treated as an essential job function on their own, but must instead be tied to the specific duties of the role in question. It also underscores that once an employer has sufficient information indicating a disability, it must engage in the interactive process in good faith.

 

Action Items

1. Review vaccine policies and practices for compliance with medical and religious exemptions.
2. Review procedures for engaging in the interactive process when the need for a medical accommodation is known.
3. Have appropriate personnel trained on workplace accommodation requirements.

 

Ninth Circuit: Compelling Arbitration

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

EFFECTIVE JUN 9, 2026

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

 

Quick Look The court, not the arbitrator, must determine whether the FAA, or any exceptions, apply to arbitration agreements before compelling arbitration.

Discussion

In Orr v. United Parcel Service, Inc., the Ninth Circuit said the district court erred by compelling arbitration of an employee’s individual claims without specifying the source of its authority to do so. Specifically, the U.S. Supreme Court previously held in New Prime Inc. v. Oliveira that the district court, not an arbitrator, must decide whether the Federal Arbitration Act (FAA) applies to an agreement before ordering arbitration.

 

Here, an employer sought to compel arbitration of a former employee’s claims filed in court. The district court said that the employee’s claims must proceed to arbitration regardless of the applicable law, so the court did not need to determine whether the federal or state arbitration law applies. In ordering the claim to arbitration without further ruling, it would have left the determination of applicable arbitration law to the arbitrator.

 

The Ninth Circuit reiterated New Prime’s instruction to courts to determine the basis of their authority to compel claims to arbitration, which was not done here. Additionally, the arbitration agreement at issue selected the FAA as controlling law unless the FAA “does not apply to a particular dispute or to one or both parties.” To enforce the agreement by its terms, the district court had to decide whether the FAA or state law supplied its authority to compel arbitration. Because the district court did not decide the contractual question (e.g., whether the FAA is applicable) the arbitrator would need to, which New Prime forbids.

 

Action Items

1. Review arbitration agreements with legal counsel for compliance.

---

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

Discussion

Alabama: New Hiring Preferences for Veterans and Their Spouses

Effective January 1, 2027, HB 307 allows private employers to voluntarily adopt hiring and promotion preference policies for veterans, spouses of veterans, and spouses of active-duty service members. An active-duty service member is defined as on active duty as a member of the National Guard or a reserve or active component of the Armed Forces of the United States. A veteran is an individual who has ever served in the National Guard or a reserve or active component of the Armed Forces of the United States and has been honorable discharged. All preferential policies must be in writing and uniformly applied.

 

---

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

Discussion

California: Court Discretion to Reduce PAGA Penalties

APPLIES TO All Employers with Employees in CA

EFFECTIVE JUL 1, 2026

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

 

Quick Look A court has discretion to reduce PAGA penalties; there is no statutory method for reducing a maximum civil penalty.

Discussion

In Taduran v. Glidewell, the California Court of Appeals said that the trial court has discretion to reduce Private Attorneys General Act (PAGA) penalties. The Labor Code does not mandate any particular method for reducing a maximum civil penalty.

 

In this case, an employee sued his former employer for a series of Labor Code violations, resulting in a finding of liability against the employer. Although the theoretical maximum PAGA penalties totaled tens of millions of dollars, the trial court exercised its statutory discretion to reduce the penalties, ultimately awarding about $516,000. It calculated most reductions on a per-employee basis (except the bonus pay issue, where it imposed the full penalty), reasoning that imposing the maximum would be “unjust, arbitrary, and oppressive” given factors like the lack of actual unpaid wages on some claims, the employer’s good-faith practices, and its willingness to correct the problems and repay affected workers.

 

On appeal, the employee argued that the trial court was legally required to reduce penalties on a per-pay-period basis rather than a per-employee basis. The appellate court rejected this, holding that the Labor Code simply authorizes a “lesser amount” without mandating any particular reduction formula. While the maximum penalty is initially calculated per pay period, nothing in the statute dictates how the court must apply a reduction, meaning a court may reasonably use a percentage, per-pay-period, or per-employee method. Ultimately, the appellate court found no abuse of discretion in either the method used or the size of the reduction.

 

While this ruling may give hope to employers looking for a reduced penalty, the case still highlights the need to maintain good-faith practices to pay wages appropriately and promptly correct any errors. Having policies and practices that support a compliant culture can go a long way, even when errors are found.

 

Action Items

1. Review wage and hour policies and practices for compliance.
2. Implement a regular audit schedule to verify wage and hour compliance.
3. Consult with legal counsel when implementing wage and hour corrections.
4. Have appropriate personnel trained on applicable wage and hour requirements.

 

California: Federal FAA Exceptions Adopted

APPLIES TO All Employers with Employees in CA

EFFECTIVE JAN 1, 2027

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

 

Quick Look A new law adopts exclusions to arbitration under the Federal Arbitration Act (FAA) into the California Code.

Discussion

AB 2155 adopts exclusions to arbitration under the Federal Arbitration Act (FAA) into the California Code. The FAA specifically excludes contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce, and the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (9 U.S.C. Sec. 401 et seq.), including claims that relate to a sexual harassment dispute or sexual assault dispute. These exclusions cannot be forced to arbitration, even with a signed agreement.

 

By adopting the FAA’s exclusions into California law, it closes a previously existing loophole where some claims could not be forced to arbitration under federal law but may be compelled under state law. Employers with employees who may be in the excluded class should review arbitration agreements with legal counsel to determine whether they will still be enforceable. Similarly, such employers may need to rethink their arbitration strategy altogether.

 

Action Items

1. Have arbitration agreements reviewed by legal counsel.

 

California: FMCSA Preempts Meal and Rest Requirements for Passenger-Carrying Drivers

APPLIES TO All Employers with Employees in CA

EFFECTIVE JUN 4, 2026

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

 

Quick Look State meal and rest requirements for passenger-carrying drivers are preempted by the FMCSA.

Discussion

In California v. Federal Motor Carrier Safety Administration, the State of California challenged a 2020 decision by the Federal Motor Carrier Safety Administration (FMCSA) that preempted California’s meal and rest break (MRB) rules as applied to drivers of passenger-carrying commercial motor vehicles (such as buses). The Ninth Circuit Court of Appeals denied California’s petition for review and upheld the preemption. Under the Motor Carrier Safety Act, the Secretary of Transportation reviews state commercial-vehicle safety laws and may preempt any that are “additional to or more stringent than” federal regulations if the state law provides no safety benefit, is incompatible with federal rules, or imposes an unreasonable burden on interstate commerce.

 

California’s MRB rules, contained in state wage orders, require a 30-minute meal period for shifts over five hours (plus a second meal period for shifts over ten hours), along with a 10-minute rest break for every four hours worked, and penalty pay for noncompliance. These requirements are more demanding than the federal hours-of-service (HOS) regulations, which cap consecutive driving and on-duty hours for bus drivers but, unlike the rules for freight drivers, do not mandate a mid-shift 30-minute break.

 

In 2020, the FMCSA determined that California’s MRB rules were preempted by federal law. The agency found that the rules qualified as regulations “on commercial motor vehicle safety” and were more stringent than the federal HOS rules. It further concluded that the MRB rules provided no measurable safety benefit beyond the federal framework, and could even create unsafe conditions when drivers struggle to find safe parking to comply. The FMCSA also found the rules incompatible with the flexibility built into the federal framework, and that they imposed an unreasonable burden on interstate commerce by creating a “patchwork” of differing state requirements.

 

Reviewing the agency’s decision under the deferential arbitrary-and-capricious standard of the Administrative Procedure Act, the court found that its earlier decision in International Brotherhood of Teamsters, Local 2785 v. FMCSA (2021) (which upheld the FMCSA’s parallel 2018 preemption of California’s MRB rules for freight drivers) largely foreclosed California’s arguments. The court rejected California’s contention that the rules fell outside the FMCSA’s authority because they are laws of general applicability rather than being “specifically directed at” commercial motor vehicle safety, explaining that Teamsters had already held such rules qualify when they cover the same subject matter as existing federal regulation.

 

The court also rejected California’s narrower argument that the FMCSA could not preempt mid-shift break rules for bus drivers because the agency had not itself promulgated specific break regulations for passenger-carrying vehicles—holding that California read Teamsters too narrowly, since the MRB rules fall within the FMCSA’s regulatory domain and the same subject matter is already federally regulated. Finally, the court found the FMCSA did not act arbitrarily or capriciously in concluding the rules imposed a significant operational burden on interstate commerce, which alone was sufficient to justify preemption. Accordingly, the panel denied the petition and upheld the FMCSA’s preemption determination.

 

Action Items

1. Have meal and rest policies reviewed and updated for compliance.
2. Have appropriate personnel trained on the requirements.

California: New CRD Fact Sheet

On May 20, 2026, California’s Civil Rights Department (CRD) issued a new fact sheet on religious discrimination and workplace accommodations. Governed by the Fair Employment and Housing Act (FEHA) and the Workplace Religious Freedom Act of 2012 (WRFA), California’s protections extend beyond federal Title VII, covering interns and volunteers in addition to employees, and reaching both perceived religious beliefs and associational discrimination (adverse treatment based on a connection to someone of a particular faith). Unlawful conduct can include hostile work environment harassment, religious stereotyping, discriminatory dress and grooming policies, and retaliation against employees who raise faith-based objections or accommodation requests. Employers with California employees should review religious accommodation policies and train managers on these broader protections.

 

California: Documentation Defeats Alleged Protected Activity

On June 26, 2026, in Han v. Pfizer, a federal district court said that historical documentation supporting an employer’s decision to terminate within two months of an employee making an alleged whistleblowing claim showed the legitimate, independent reasons for termination. Specifically, the employer had long documented the employee’s performance issues, given weekly negative feedback on performance, and was in process of preparing a notice of underperformance. The documentation showed that the employer would have terminated the employee even if he had not engaged in the alleged whistleblowing. This case highlights the need for consistent performance documentation to support legitimate business decisions, including but not limited to, employee terminations.

---

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