Discussion

In Lawson v. Spirit AeroSystems, Inc., the Tenth Circuit upheld a forfeiture-for-competition clause under Kansas law, affirming that such a provision—when it applies only to future compensation—does not require the same level of judicial scrutiny as a traditional noncompete agreement.

The dispute arose from an agreement between Spirit AeroSystems and its former CEO. Under the terms of a retirement agreement, the executive could continue to receive cash payments and vest in stock awards if he worked as a consultant and honored a noncompete clause. When the executive contracted with a hedge fund engaged in a proxy contest against a Spirit supplier, Spirit deemed the activity competitive and ceased future payments and vesting. Importantly, Spirit did not attempt to claw back previously paid compensation or vested shares—only unvested awards were forfeited.

The Tenth Circuit found that this forfeiture did not constitute a penalty. Instead, it offered a financial incentive to comply with the noncompete. The court drew a clear distinction between enforcing a covenant not to compete through legal penalties (e.g., damages or injunctions) and using a compensation-based incentive model. Because the former CEO knowingly accepted the risk of forfeiture in exchange for potential compensation, and because he was a sophisticated party advised by counsel, the court found no policy basis to impose a reasonableness test.

This ruling, though only binding on federal courts applying Kansas law, adds weight to a growing body of case law distinguishing between noncompete penalties and forfeiture incentives. As a result, employers operating in jurisdictions that recognize this distinction may retain some leverage in negotiating noncompetition agreements.

Action Items

1. Review noncompete 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. © 2025 ManagEase

Discussion

On May 14, 2025, the Missouri State Legislature approved HB 567 which will repeal Proposition A in its entirety. Proposition A was a voter enacted paid sick leave law from the November 2024 election which went into effect on May 1, 2025. It required nearly all employers in the state to provide one hour of paid sick leave for every 30 hours worked.

The bill has been delivered to the Governor but has not yet been signed. He has indicated his support for the bill. Notably, the bill did not include a clause to repeal Proposition A effective immediately. This means that the paid sick leave requirements are still effective for employers as of May 1, 2025 but would end August 28, 2025, the effective date of the bill. Employers who have modified their leave policies and procedures to comply with the law should consult with their legal counsel prior to changing their policies since the law is technically still in effect until August 28, 2025, pending the Governor’s signature.

Action Items

1. Read the bill here.
2. Consult with legal counsel regarding changes to sick leave policies.

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

Discussion

Effective July 2, 2025, amendments to New York City’s Earned Safe and Sick Time Act Rules (Rules) clarify the Paid Prenatal Leave requirements which went into effect on January 1, 2025. The most significant updates are summarized below.

Defining Paid Prenatal Leave. Paid prenatal leave is clarified to have the same definition as that of paid prenatal personal leave in the New York Labor Law. This definition is “leave taken for the health care services received by an employee during their pregnancy or related to such pregnancy, including physical examinations, medical procedures, monitoring and testing, and discussions with a health care provider related to the pregnancy.”

Minimum Usage. A written policy can require minimum usage of one hour per day.

Notice. Employers can require employees to provide reasonable notice of the need to use paid prenatal leave as long as the requirements are reasonable and detailed in a written policy. Procedures for when the need for leave is foreseeable and unforeseeable should be included. The requirements for unforeseeable leave cannot include that an employee appear in person or deliver any document to the employer prior to using leave. Leave is foreseeable when the employee is aware they need leave seven days or more before such use.

Documentation. Reasonable written documentation can be required when paid prenatal leave results in an absence of three or more consecutive workdays only. Reasonable written documentation is written documentation signed by a licensed clinical social worker, licensed mental health counselor, or other licensed health care provider indicating the need for the amount of time taken. Documentation cannot require disclosure of details except the dates the employee needs to use leave. An employee has a minimum of seven days from the date they return to work to obtain documentation. If a fee is required for such documentation, the employer shall reimburse the employee for the fee.

Wage Statements. For each pay period that an employee uses paid prenatal leave, the employer must inform the employee of the amount of paid prenatal leave used during the relevant pay period and the total balance of paid prenatal leave available for use, either on the pay statement or other form of written documentation required by Section 20-919(c) or in separate written documentation. This is in addition to the requirement to provide the total balance of the employee’s safe and sick time available for use.

Rate of Pay and Overtime. The regular rate of pay for paid prenatal leave shall not be less than the highest applicable rate of pay to which the employee is entitled. If leave is taken during hours that would have been designated as overtime, the employer is not required to pay the overtime rate of pay. Pay must be provided no later than the payday for the next regular payroll period beginning after the leave was used by the employee.

Written Policy. A written policy must be provided to employees upon the start of employment, within 14 days of the effective date of any changes, and upon an employee’s request. A written policy must include:

• Method of calculating sick and safe time;
• The availability of a separate bank of 20 hours of paid prenatal leave;
• Limitations or conditions on its use;
• Notice and documentation requirements;
• Minimum increment for usage;
• Discipline for misuse of leave;
• A statement that the employer will not ask the employee to provide details about the medical condition that led the employee to use leave and that any information disclosed will be kept confidential; and
• Treatment of unused sick and safe time.

Interaction with Other Leaves. Unless there is a conflict with state or federal laws, an employer cannot require an employe to use other leave in lieu of paid prenatal leave, exhaust other leave before using paid prenatal leave, or use or exhaust paid prenatal leave before using other leave.

Employers with employees in New York City should update their leave policies and administration of paid prenatal leave as soon as possible since the effective date of the amended Rules is around the corner.

Action Items

1. Read the amended Rules here.
2. Revise paid prenatal leave policies.
3. Update payroll processes.
4. Have appropriate personnel trained on the 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. © 2025 ManagEase

Discussion

In a surprising move, Texas has jumped ahead of other states—including California—in passing one of the first comprehensive state laws regulating artificial intelligence. The Texas Responsible Artificial Intelligence Governance Act (TRAIGA) (HB 149), approved by state lawmakers on June 1, now awaits Governor Greg Abbott’s signature. Barring a veto, the law will take effect on January 1, 2026, positioning Texas among a growing group of states, including Colorado and Illinois, that are beginning to shape the legal framework for AI in employment and commercial contexts.

TRAIGA takes a relatively light-touch approach to regulation, balancing emerging concerns about AI misuse with an emphasis on minimizing compliance burdens for businesses. One of TRAIGA’s most important provisions clarifies that it is illegal to intentionally use AI to discriminate against protected classes under Texas law. While this mirrors existing anti-discrimination statutes, the law makes explicit that AI cannot be a tool for purposeful bias. Notably, it also states that disparate impact alone is not enough to establish a violation—aligning with a broader shift in federal regulatory policy under recent executive directives.

The law also bans a handful of high-risk or manipulative AI uses. These include tools designed to incite self-harm or violence, AI systems that conduct “social scoring” based on personal attributes or behavior, and any AI that limits political expression or access to political content.

The law makes important disclosure distinctions between private sector and public agencies. While Texas government entities must notify individuals when interacting with AI, private employers and businesses are not subject to the same transparency mandates.

On biometric data, the law clarifies that public availability of images or audio is not equivalent to consent for AI-based biometric data collection. However, it also includes broad exemptions: AI used solely for training purposes, financial institutions collecting voice data, and tools used for security or legal compliance are largely unaffected.

To support innovation, TRAIGA creates an “AI sandbox” program, allowing businesses to test their AI systems in a monitored environment for up to three years, provided they submit regular reports. The law also establishes a Texas Artificial Intelligence Council, tasked with advising the state on AI governance and innovation policy. Importantly for employers, TRAIGA does not create a private right of action. Only the Texas Attorney General can enforce the law, meaning that individual employees or consumers cannot bring lawsuits based on its provisions.

Action Items

1. Evaluate AI Systems for bias risks.
2. Monitor additional state and federal developments on AI regulation.

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

REMINDER: EEO-1 Reporting Window is Closing June 24, 2025!

The Equal Employment Opportunity Commission (EEOC) opened the 2024 EEO-1 data collection portal effective May 20, 2025, with the deadline for submissions set for June 24, 2025. This year’s reporting window is shorter than past cycles, so covered employers should promptly gather the workforce data necessary to complete their 2024 reports.

New Federal “Take It Down” Act

The newly enacted federal “Take It Down” Act makes it a crime to knowingly publish sexually explicit images, whether real or AI-generated, without explicit consent. Under the law, “covered platforms” must establish a notice-and-removal process where individuals (or authorized representatives) can report nonconsensual intimate depictions of themselves. Upon receiving a valid notice, the platform must remove the content as soon as possible, within 48 hours, and make reasonable efforts to remove any known identical copies. The law was signed by President Trump on May 19 and went into effect immediately. While not specifically stated as a “covered platform,” schools may need to review and update their student conduct policies and procedures to address violations involving nonconsensual intimate imagery and digital forgeries involving students, faculty or parents, and prepare to cooperate with law enforcement investigations related to the Act.

NLRB: Wilcox Back Out, NLRB Again Without Quorum

In a closely watched decision, the U.S. Supreme Court has temporarily blocked former NLRB Member Gwynne Wilcox from returning to her position with the NLRB, upholding President Trump’s controversial removal of the Democrat appointee while the legal battle over presidential authority to dismiss leaders of independent agencies without cause continues to play out. The 6–3 ruling means the NLRB is left without the three-member quorum it needs to issue rulings, effectively halting Board adjudications. The case now returns to the D.C. Circuit Court for full briefing and argument, likely setting the stage for a return to the Supreme Court in the 2025–2026 term. Although the impasse has halted NLRB decision-making for the time being, it is anticipated that President Trump will nominate at least one Republican member to build a working quorum at the NLRB in the near future.

NLRB: Narrowed Remedies for Employers

On May 16, NLRB Acting General Counsel William Cowen issued Memorandum GC-25-06, signaling a shift toward a more flexible and practical approach to resolving unfair labor practice (ULP) cases. This memorandum reverses several policies from the previous Board administration, restoring significant discretion to regional directors in negotiating settlements, including through the use of non-admission clauses and the removal of mandatory default language. Cowen also recommended a narrower, more clearly defined standard for awarding consequential damages in ULP cases, aligning with a dissenting view in the 2022 Thryv case. Under this standard, employees should be made whole for losses indirectly caused by a ULP only when the causal link between the loss and the ULP is sufficiently clear.

First Circuit: Clarification on 90-Day Right to Sue

In García-Gesualdo v. Honeywell Aerospace of Puerto Rico, Inc., the First Circuit held that electronic notification from the EEOC triggering the 90-day right to sue period for Title VII or ADA cases must include some notification of the case status to trigger the 90 days. In this case, the plaintiff’s counsel received an email that only said a document was uploaded to the portal on the plaintiff’s case. After the plaintiff and plaintiff’s counsel experienced technical issues, the EEOC emailed a copy of the final determination letter several days later, which the Appeals Court found to effectuate notice.

California: Disability Rights Handbook Updated

On May 7, 2025, California Attorney General Rob Bonta, through the California Department of Justice’s Disability Rights Bureau, announced the release of the fifth edition of “Legal Rights of Persons with Disabilities,” a publication that provides information regarding the rights of people with disabilities in California. The section discussing employment rights reviews major California and federal laws that protect people with disabilities from discrimination, harassment, and retaliation in employment. It also describes an employer’s obligations to engage in the interactive process and provide reasonable accommodations.

California: New Age Discrimination Fact Sheet

In May 2025, the California Civil Rights Department (CRD) released a new fact sheet reinforcing age discrimination protections in the workplace. The guidance outlines prohibited practices, such as asking about a job applicant’s age, giving lower wages or benefits, or denying someone a promotion because of age, and layoffs or forced retirement of older workers. The guidance also provides examples of what more subtle forms of age discrimination and/or harassment might look like, including but not limited to the use of age-related language in job postings, limited experience requirements, or using terms like “digital native.” Additionally, the guidance confirms that even subtle comments or jokes can contribute to a hostile work environment. Employers should review hiring practices, job descriptions and postings, as well as workplace culture to ensure compliance with anti-discrimination laws, including those protecting individuals based on age.

Colorado: Limit on Restrictive Covenants for Healthcare Providers

Colorado is set to significantly limit the use of restrictive covenants for healthcare providers under SB 25-083, which is expected to be signed by the Governor and will take effect on August 6, 2025. The new law will prohibit noncompete and non-solicitation agreements for a broad range of licensed healthcare professionals, including physician assistants, advanced practice registered nurses, certified midwives, and dentists. It also bars employers from restricting these providers from informing patients about their new practice locations or contact information. This marks a major shift from prior law, which allowed such agreements under certain conditions, and will require healthcare employers to revise their employment contracts and compliance strategies accordingly.

Hawaii: Tenant Has Claim for Workers’ Compensation Against Landlord

In Borrson v. Weeks, the Hawaii Supreme Court upheld a tenant’s workers’ compensation claim against his landlord after finding that the tenant’s work repairing, maintaining and improving the property was integral to the landlord’s rental business, and so their agreement for this work created an employer-employee relationship under Hawaii law.

Maryland: PFML Program Delayed

Maryland’s Governor Wes Moore signed HB 102, which delays implementation of the paid family and medical leave insurance program (FAMLI). Now, contributions will begin January 1, 2027 with benefits starting January 3, 2028. The Governor and State Legislature cited uncertain economic conditions which would strain employers and employees if contributions began as originally scheduled in 2026. In light of the delay, the Maryland Department of Labor has removed the proposed regulations from its website. It is unclear if the proposed regulations will be altered or republished. The bill’s changes went into effect June 1, 2025.

Ohio: Certain Labor Law Notices Can Be Posted Online

Effective July 21, 2025, SB 33 allows Ohio employers to post certain labor law notices online. The following Ohio labor law notices are eligible for online posting instead of just posting them conspicuously in the employer’s place(s) of employment: (1) Minor Labor Law; (2) Minimum Fair Wage Standards Law; (3) Civil Rights Law; (4) Prevailing Wage Law; (5) Workers’ Compensation Law; and (6) Public Employment Risk Reduction Program Law.

Oregon: Increased Age Discrimination Protections

HB 3187 amends Oregon’s age discrimination law to prohibit employers from inquiring about an applicant’s age, date of birth, or when they graduated from an educational institution prior to completing an initial interview or making a conditional offer of employment. Exceptions to the prohibition apply when the inquiry is made to confirm meeting a bona fide occupational qualification or comply with other federal, state, or local laws. The amendment has been signed by Governor Kotek and goes into effect on the 91st day after the current legislative session adjourns. Employers will need to update their job applications and train hiring managers on prohibited inquiries.