APPLIES TO All Employers Receiving Federal Funding

EFFECTIVE July 29, 2025

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

Quick Look In the July 29, 2025 memo Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination, the Department of Justice provided additional clarification on what constitutes unlawful discrimination in programs and initiatives of recipients of federal funding, with a particular focus on Diversity, Equity, and Inclusion (DEI) programs. The memo provides both examples of programs considered unlawful and best practices for compliance with federal anti-discrimination laws.

Discussion

In the July 29, 2025 memo Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination, the Department of Justice provided additional clarification on what constitutes unlawful discrimination in programs and initiatives of recipients of federal funding. The memo particularly focuses on DEI programs. The guidance specifies that the recommendations are non-binding but are examples of how to comply with federal requirements. It applies to all entities that receive federal financial assistance and are subject to federal anti-discrimination laws including educational institutions, state and local governments, and public and private employers. The memo’s guidance is broken down into both examples of unlawful practices and best practices.

 

Examples of Unlawful Practices

 

Most of the examples address programs and initiatives typically found in institutions of higher education. However, all employers should review the examples for parallels to existing or future planned programs and initiatives. The complete examples can be found in the memo. Select examples of unlawful practices are summarized below.

 

Race-Based Scholarships or Programs. A university’s DEI program establishing a scholarship fund exclusively for students of a specific racial group violates federal civil rights law by discriminating against otherwise qualified individuals based solely on race or treating people differently based on a protected characteristic regardless of the program’s intent to promote diversity. This example does leave the door open for such programs by citing that race-conscious programs must meet strict legal standards.

 

Preferential Hiring or Promotion Practices. A policy that prioritizes candidates from underrepresented groups for admission, hiring, or promotion where the preferred underrepresented groups are determined on the basis of a protected characteristic like race.

 

Access to Facilities or Resources Based on Race or Ethnicity. Designating a safe space or lounge exclusively for students of a specific race or ethnic group.

 

Sex-Based Selection for Contracts. A DEI policy that prioritizes awarding contracts to women-owned businesses, automatically advancing female vendors or minority-owned businesses over equally or more qualified businesses without preferred group status.

 

Trainings That Promote Discrimination Based on Protected Characteristics. A federally funded school district requires teachers to complete a DEI training that includes statements stereotyping individuals based on protected characteristics – such as “all white people are inherently privileged” or “toxic masculinity.”

 

Unlawful Proxies and Unlawful Segregation

 

Unlawful proxies (i.e., the use of neutral criteria as a substitute for explicit consideration of protected characteristics) are also considered unlawful when: (1) they are selected because they correlate with, replicate, or are used as substitutes for protected characteristics; or (2) they are implemented with the intent to advantage or disadvantage individuals based on protected characteristics. Segregation based on protected characteristics is also unlawful except in cases where federal law expressly permits race-based remedies for specific, documented acts of past discrimination or in specialized contexts like correctional facilities. The memo cites failing to maintain sex-separated athletic competitions and intimate spaces is another exception to unlawful segregation because it can create a hostile environment under Title VII and Title IX of the Civil Rights Act of 1964. Examples of unlawful practices include:

 

Cultural Competence Requirements. Job applicants are required to demonstrate “cultural competence,” “lived experience,” or “cross-cultural skills” in ways that evaluate the candidate’s race or ethnic background rather than objective qualification.

 

Race-Based Training Sessions. DEI training programs that require participants to separate into race-based groups for discussions.

 

Segregation in Facilities or Resources. Designating a “BIPOC-only study lounge” and facially discouraging access by students of other races, even if access is technically open to all, creates a perception of segregation and may foster a hostile environment. Single-sex based facilities to protect privacy or safety are excluded from being unlawful.

 

Best Practices

 

The memo’s best practices primarily describe existing requirements and limitations on using protected characteristics as a factor in programs and initiatives. However, in some cases, they narrowly interpret existing legal precedent. If implemented incorrectly, an entity could inadvertently violate other federal and state requirements, like providing lawful harassment or discrimination training. For this reason, and since these are non-binding best practices, recipients of federal funding should review the recommendations with their legal counsel before applying them. The memo’s recommendations are:

 

• Ensure all workplace programs, activities, and resources should be open to all qualified individuals, regardless of protected characteristics. Same-sex separation is necessary where biological differences implicate privacy, safety, or athletic opportunity.
• Base selection decisions on specific, measurable skills and qualifications directly related to job performance or program participation.
• Prohibit demographic-driven criteria by discontinuing any program or policy designed to achieve discriminatory outcomes, even those using facially neutral means.
• Document legitimate rationales unrelated to protected characteristics in hiring, promotions, or selecting contracts that might correlate with protected characteristics.
• Rigorously evaluate and document whether facially neutral criteria are proxies for protected characteristics.
• Eliminate diversity quotas and focus solely on performance metrics. Discontinue policies that mandate representation of specific racial, sex-based, or other protected characteristics in candidate pools, hiring panels, or final selections.
• Ensure trainings are open to all qualified participants regardless of protected characteristics and avoid segregating participants into groups based on protected characteristics.
• Incorporate nondiscrimination clauses in grant agreements, contracts, or partnership agreements and specify that federal funding cannot be used for programs that discriminate based on protected characteristics.
• Implement and communicate policies that prohibit retaliation against individuals who engage in protected activities, such as raising concerns, filing complaints, or refusing to participate in potentially discriminatory programs. Provide confidential, accessible channels for individuals to report concerns about unlawful practices.

 

Action Items

1. Consult with legal counsel to determine if programs, policies, and contracts are compliant with federal anti-discrimination laws prior to making changes.

 

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

APPLIES TO All Federal Contractors and Subcontractors

EFFECTIVE July 2, 2025

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

Quick Look On July 2, 2025, the U.S. Secretary of Labor Lori Chavez-DeRemer lifted the pause on the Office of Federal Contract Compliance Programs (OFCCP) enforcement actions. The effect of the Secretary’s Order 08-2025 is to resume enforcement activity against federal contractors and subcontractors for their compliance with Section 503 of the Rehabilitation Act, which protects individuals with disabilities, and the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA), which protects veterans.

Discussion

On July 2, 2025, the U.S. Secretary of Labor Lori Chavez-DeRemer issued Secretary’s Order 08-2025 lifting the hold on the January 24, 2025 Secretary’s Order 03-2025, previously issued by then-Acting Secretary Vincent Micone, ordering OFCCP to cease and desist investigative and enforcement activity. The instruction is to effect compliance with Executive Order 14173 which ordered OFCCP to immediately cease holding federal contractors responsible for taking affirmative action or allowing workforce balancing based on certain protected classes. Executive Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity, revoked Executive Order 11246 which required federal contractors to develop affirmative action plans and prohibited discrimination in employment based on race, color, religion, sex, sexual orientation, gender identity, and national origin by encouraging workforce balancing.

 

Executive Order 14173 directed federal agencies to eliminate any illegal diversity, equity, and inclusion (DEI) related programs and focus on merit. It specifically excluded contracting preferences for veterans and certain individuals with disabilities. The effect of Secretary’s Order 08-2025 is to resume enforcement activity against federal contractors and subcontractors for their compliance with Section 503 of the Rehabilitation Act, which protects individuals with disabilities, and the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA), which protects veterans. The Secretary’s Order notifies federal contractors and subcontractors of the following actions:

 

• Section 503 and VEVRAA complaints will immediately resume being processed. Affected parties will be promptly notified.
• OFCCP will administratively close all pending compliance reviews of invalidated Executive Order 11246 requirements.
• The affirmative action program certification period remains closed.
• OFCCP renewed the Veterans Affairs Health Benefits Program (VAHBP) enforcement moratorium until May 7, 2027.

 

The Secretary’s Order makes clear that OFCCP requirements to comply with Section 503 and VEVRAA remain in effect and contractors should continue to comply.

 

Action Items

1. Review Section 503 and VEVRAA compliance obligations with legal counsel.

 

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

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

EFFECTIVE June 23, 2025

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

Quick Look In Miller Plastic Products Inc. v. National Labor Relations Board, the Third Circuit Court of Appeals adopted a totality of the evidence approach when determining whether an individual’s action qualifies as protected concerted activity under the National Labor Relations Act (NLRA). Protected concerted activity can involve the actions of one person when seeking to initiate or prepare for group action on matters that affect the group. The concerted activity is not required to be successful to qualify for protection.

Discussion

In Miller Plastic Products Inc. v. National Labor Relations Board, the Third Circuit Court of Appeals adopted a totality of the evidence approach when determining whether an individual’s action qualifies as protected concerted activity under the NLRA.

 

There, an employee was terminated early in the COVID-19 pandemic following complaints made to management about the employer’s COVID-19 protocols. He discussed with other workers that the company was not an essential business and encouraged another worker to speak to management about being vulnerable to the virus because of his health issues. He communicated his concerns to management about not having proper safety protocols in place to reduce the risk to employees. Although he was a highly skilled employee, he was spoken to about being overly social and using his phone while working. He was terminated a week after his safety comments “for poor attitude, talking, and lack of profit.”

 

The National Labor Relations Board (NLRB) took the position that the employer violated the NLRA, using a totality-of-the-evidence approach to determine whether the employee had engaged in protected concerted activity. Section 7 of the NLRA protects the rights of employees “to self-organiz[e], to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose  of  collective  bargaining or  other  mutual  aid  or protection.” Conduct by a single employee can be “concerted” if it is sufficiently related to group concerns.

 

The Third Circuit said that concerted activity occurs when a lone employee acts “not solely . . . on behalf of the employee himself,” but by “seek[ing]to initiate or to induce or to prepare for group action. . . [or by] bringing truly group complaints to the attention of management.” The court rejected using a specific set of factors to evaluate concerted activity, looking instead to follow a more “holistic” approach by looking at the totality of the evidence. In its evaluation, the court said there is no ironclad requirement that employees coordinate before raising concerns to management, even if there is an opportunity to do so. Similarly, it is not necessary that multiple employees even be present for the discussion with management; but these are still factors to be considered. Additionally, concerted activity does not require the lone employee to have succeeded in galvanizing colleagues to act alongside them.  The NLRA must protect successful attempts to raise group concerns, as well as unsuccessful attempts to do so.

 

Ultimately, the court determined that the employee’s activities were sufficient to qualify as concerted activity in that they addressed work safety concerns applicable to all employees in group settings, and in individual settings with management, which was an extension of his other concerted activity. Employers must take care when seeking to terminate employees who have engaged in concerted protected activity to ensure that disciplinary actions are defensible and unrelated to the protected activity.

 

Action Items

1. Review potential terminations with legal counsel involving employees who have engaged in protected concerted activity.

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

APPLIES TO All Employers with Employees in CA Who are Subject to the CCPA

EFFECTIVE As Indicated

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

Quick Look On July 24, 2025, the California Privacy Protection Agency (CPPA) finalized regulations to address the use of automated decision-making technology (ADMT) in employment decisions. ADMT refers to any technology that processes personal information and uses computation to replace human decision making or substantially replaces human decision making.

Discussion

On July 24, 2025, the CPPA finalized regulations to address the use of ADMT in employment decisions. The regulations are part of the enforcement of the California Consumer Privacy Act (CCPA), which already restricted how employers collect and use the personal information of employees. These regulations go further to limit unlawful employment actions that may be caused by the use of ADMT technology. The regulations are now before the Office of Administrative Law, which has 30 days to review the final regulations. The CCPA applies to all private businesses (regardless of location) with annual gross revenues exceeding $25 million or who buy, sell, or share consumers’ personal information at certain thresholds; it also protects employees of covered businesses.

 

ADMT refers to any technology that processes personal information and uses computation to replace human decision-making or substantially replaces human decision-making. A business that uses ADMT must now also provide consumers with a pre-use notice in accordance with the CCPA. The pre-use notice must also include a link through which a consumer can opt-out of the use of ADMT. Consumers also have the right to access information about the ADMT’s use and logic. A consumer’s rights under the CCPA have also been expanded to include the right not to be retaliated against for exercising privacy rights conferred by the CCPA when the consumer is an employee, job applicant, or independent contractor.

 

These requirements will only apply if significant decisions are made by the use of ADMT concerning a consumer. This includes employment or independent contracting opportunities or compensation. Employment or independent contracting opportunities or compensation includes hiring; allocation or assignment of work for employees, whether salaried, hourly, or per-assignment compensation, including incentive compensation; promotion; and demotion, suspension, and termination.

 

Before using ADMT, businesses must conduct a risk assessment since the use of ADMT presents a significant risk to consumers’ privacy. A risk assessment must be conducted when:

 

1. ADMT processing is used to infer or extrapolate performance at work when a consumer is acting in their capacity as a job applicant, employee, or independent contractor for the business;
2. ADMT processing is used to infer or extrapolate performance at work based on that consumer’s presence in a sensitive location; and
3. Training an ADMT for identifying verification or profiling of a consumer (e.g., biometric security).

 

The finalized regulations also updated the practical examples used throughout to include the applicability of ADMT. Employers using ADMT have until January 1, 2027 to comply with the notice requirements. Risk assessments of ADMT must be submitted to the CPPA no later than April 1, 2028. Although the final regulations are pending review, employers should begin working on compliance immediately since the requirements can be difficult to implement.

 

Action Items

1. Review finalized regulations here.
2. Continue monitoring the CPPA website for updates on approval of finalized regulations.
3. Review use of ADMT and prepare for implementing notice and risk assessment requirements.

 

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

APPLIES TO All Employers with Employees in KS

EFFECTIVE July 1, 2025

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

Quick Look SB 241 provides new enforceability presumptions and mandates judicial modification of overly broad restrictive covenants and agreements.

Discussion

As of July 1, 2025, SB 241 amends Kansas’ Restraint of Trade Act to provide clearer standards for enforceability and to reduce the uncertainty that previously surrounded non-compete and non-solicitation clauses. Under the prior version of the law, restrictive covenants were presumed enforceable if they were “reasonable in view of all the facts and circumstances” and did not violate public welfare. However, the open-ended nature of the reasonableness test left much discretion to judges, often making it difficult for employers to predict whether a covenant would ultimately be upheld.

 

SB 241 addresses this problem by introducing two key changes. First, the law sets out specific scenarios in which certain restrictive covenants will be presumed enforceable, most notably, for non-solicitation agreements and provisions requiring an owner to give advance notice before selling or transferring their ownership stake. To qualify, covenants must meet specific scope and duration limits, including coverage of “material contact customers” and defined relationships between parties.

 

Second, the law provides a backstop for overly broad covenants that do not qualify for one of the new presumptions. Rather than striking those covenants down entirely, courts are now required to modify them, but only to the extent reasonably necessary to protect the employer’s legitimate business interests.

 

While the updates under SB 241 offer a more reliable legal framework for Kansas businesses seeking to enforce post-employment restrictions, these types of agreements are still subject to challenges in court and courts will consider defenses raised by employees. Employers should work with their legal counsel to ensure that any restrictive covenant or agreement is in compliance with these updated requirements.

 

Action Items

1. Review restrictive covenants and agreements with legal counsel.

 

 

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