SCOTUS rejects a heightened evidentiary standard to prove FLSA exemptions, the US SEC cites breach of whistleblower protections, and the US DOL recovers more than US$7 million from FLSA violations – plus other key updates.
Lexology PRO explores some of the most useful articles published on Lexology and externally across areas of US employment law in the past week to help businesses stay abreast of key issues.
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Litigation
The US Supreme Court unanimously ruled in E.M.D. Sales v Carrera on 15 January 2025 that the preponderance-of-the-evidence standard applies when an employer seeks to prove an employee is exempt from the minimum wage and overtime pay provisions of the Fair Labor Standards Act 1938 (FLSA). The court reversed a Fourth Circuit decision that had applied the more stringent clear-and-convincing-evidence standard to find the company liable for overtime. The court’s ruling ensures that employers will not face a heightened evidentiary standard when claiming FLSA exemptions.
Enforcement
The US Equal Employment Opportunity Commission (EEOC) announced on 16 January 2025 that TKO Construction Services, a staffing company that provides temporary employees for various construction companies, will pay US$300,000 in a discrimination lawsuit filed by the agency. The suit alleged TKO violated Title VII of the Civil Rights Act 1964 by intentionally excluding women from construction jobs, Black workers in certain areas, and older workers based on client requests. In addition to providing monetary relief, TKO will implement new hiring and recruitment policies and report any complaints of discrimination to the EEOC.
Two Arizona drywall and painting companies agreed on 15 January 2025 to pay US$7.45 million in back wages and damages to settle the US Department of Labor’s (DOL) allegations that they had denied overtime pay to more than 1,400 employees. The US District Court for the District of Arizona found Apodaca Wall Systems and Empire Wall Systems in violation of the FLSA by wrongfully issuing multiple checks at straight-time rates and hiring workers through brokers, paying them in cash at the same rates. Additionally, both companies were ordered to pay the DOL US$125,000 in penalties.
The US Securities and Exchange Commission (SEC) announced a settlement on 16 January 2025 with investment adviser Two Sigma resolving the allegations that Two Sigma violated the Commission’s whistleblower protection rule, among other securities law violations. Two Sigma will pay US$90 million in civil penalties. The SEC had alleged that Two Sigma improperly required departing employees to state as fact that they had not filed a complaint with any government agency, a practice that could unlawfully identify whistleblowers and prohibit them from receiving post-separation payments and benefits.
The US Occupational Safety and Health Administration (OSHA) cited AFCO, a manufacturing subsidiary of the cleaning product company Zep, Inc., on 14 January 2025 for failing to protect its workers from a July 2024 toxic chemical exposure. AFCO now faces US$161,310 in federal penalties due to the investigation conducted by OSHA that found the company took no action to prevent or respond to the dangerous release of nitrogen dioxide gas. The incident sent a dozen employees to the hospital.
In an opinion letter dated 14 January 2025, the DOL Wage and Hour Division (WHD) clarified that the Family and Medical Leave Act 1993 (FMLA) rules on the substitution of paid leave apply when employees take leave under state paid family leave programs. While the WHD noted that employers and employees may agree to substantiate benefits under certain leave programs with paid leave, employers may not force employees to substitute accrued paid time off while on FMLA-based leave.
The DOL reached an agreement with JBS Foods USA on 13 January 2025 in which the meat packing processor will direct US$4 million to individuals and communities affected by unlawful child labour practices. JBS acknowledged the existence of these practices in elements of its supply chain, third-party contractors, and service providers, wherein children were assigned dangerous jobs and overnight shifts in four states. JBS is also initiating an advertising campaign to raise awareness about child labour practices in the US.
The EEOC announced two settlements on 13 January 2025. Kanes Furniture, a Florida-based furniture retail company, will pay almost US$1.5 million to resolve allegations of a recruitment policy that intentionally screened out female applicants for driver and warehouse positions. In addition to providing monetary relief, Kanes will address the Title VII violation by implementing new hiring practices and reporting any complaints of discrimination to the EEOC. Northern Virginia Surgery Center settled a disability and age discrimination lawsuit with the agency, which alleged the outpatient surgery centre fired an older worker while she was on medical leave and replaced her with two younger, less-qualified employees. Northern Virginia Surgery Center will pay US$50,000 and revise its policies and practices on the Age Discrimination Employment Act 1967 and the Americans with Disabilities Act 1990.
Policy
US President Donald Trump issued an executive order, Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government, on 20 January 2025. The order declares that the Trump administration will only recognise biological sex, seek to eradicate the use of the word “gender” in all federal policy, and move to revoke all prior guidance documents inconsistent with his agenda in pursuit of defending women’s rights. The order applies to the federal government and its employees, but it may have ancillary effects on private employers. In light of Trump's order, the EEOC decided on 22 January 2025 to vacate a hearing scheduled for 27 January 2025 that would have addressed a complaint regarding the agency's recent guidance on gender identity accommodations in the workplace.
The US Department of Homeland Security’s final rule to modernise and improve the efficiency of the H-1B program took effect on 17 January 2025. Major provisions include a revised definition of “speciality occupation,” accommodations for a broader range of qualifying degree fields relating to job duties, and greater benefits for non-profit and government research organisations.
The US Environmental Protection Agency’s (EPA) final rule for regulating trichloroethylene (TCE) in the workplace took effect on 16 January 2025. The rule prevents consumer access to the chemical and sets strict protection requirements for using TCE before it is completely banned. The toxic chemical is commonly found in industrial and commercial workplaces and has been linked to several types of cancer.
On 16 January 2025, the US Department of Justice (DOJ) and US Federal Trade Commission (FTC) issued a joint document, Antitrust Guidelines for Business Activities Affecting Workers. The guidelines are intended to replace the 2016 Guidance for Human Resources Professionals and explain how both agencies determine whether business practices affecting workers violate antitrust laws. The joint guidelines follow the FTC’s Enforcement Policy Statement on Exemption of Protected Labor Activity by Workers from Antitrust Liability, which was issued on 14 January 2025 and addresses the protections given to independent contractors and gig workers from antitrust liability when participating in collective bargaining.
The DOL’s annual inflation adjustments to civil penalties for 2025 took effect on 15 January 2025. The updated penalties, announced on 9 January 2025, will now apply to all future violations occurring on or after the effective date.
OSHA announced its termination of Covid-19 healthcare rulemaking on 15 January 2025. The administration noted the most “effective and efficient use of agency resources” to protect healthcare workers from occupational exposure to the virus is to adopt an Infectious Diseases protocol to address current and future strains.
Moves
The EEOC announced on 21 January 2025 that Trump named Commissioner Andrea R. Lucas Acting Chair of the agency. Lucas has served as a commissioner since 2020 and echoed support for some of Trump’s recent executive orders while accepting her nomination. She noted plans to roll back on diversity, equity, and inclusion policies, combat anti-American discrimination practices and refute gender-identity accommodations in the workplace.
The US National Labor Relations Board (NLRB) announced Trump’s appointment of Marvin E. Kaplan as chair on 21 January 2025. Kaplan has served as a member of the board since 2017 and served as chair during Trump’s first term. In 2020, the Senate confirmed Kaplan for another five-year term expiring in August 2025.
Trump appointed Keith Sonderling as Deputy Secretary of Labor on 14 January 2025. Sonderling, an experienced labour and employment attorney, held several roles in Trump’s first administration and was chosen to become one of five EEOC commissioners in 2020. He will now be serving as second-in-command under the president’s pick for Secretary of Labor, Lori Chavez-DeRemer.
Save the date
Ahead of the Massachusetts wage transparency reporting deadline on 3 February 2025, Massachusetts has published FAQs about the Massachusetts Salary Range Transparency Act 2024 and its reporting requirements. The FAQs clarify that employers do not need to make changes to their existing EEO-1 reports, nor must the reports include pay data. Massachusetts also made clear in the FAQs that individual data will not be publicised.
The Michigan Earned Sick Time Act 2018 will take effect on 21 February 2025. The Michigan Supreme Court issued an opinion in July 2024 resulting in changes to the state’s existing earned sick time laws and establishing the act. Provisions include updated policies about the accrual of paid medical leave and the permissible uses of such leave.
The US Supreme Court is set to hear oral arguments in the case of Ames v Ohio Department of Youth Services on 26 February 2025, which will determine whether an employee must show background circumstances when trying to prove their employer discriminates against their majority group. The US Court of Appeals for the Sixth Circuit previously ruled against the plaintiff, who sued her employer for reverse discrimination under Title VII but was found to lack the necessary evidence to support her claims.