Fourth Circuit Joins Sixth Circuit in Rejecting Contractually Shortened Filing Deadlines for Title VII and ADA Claims

By Stephen S. Zashin*

The Fourth Circuit Court of Appeals recently joined the Sixth Circuit in holding that employers cannot enforce contractual provisions that shorten the time employees have to bring claims under Title VII of the Civil Rights Act of 1964 and the Americans with Disabilities Act (“ADA”).

In Thomas v. EOTech, LLC, the Fourth Circuit reversed a lower court decision upholding a contractual provision requiring an employee to bring any employment-related claims—including termination, discrimination, and wage claims—within 180 days of the challenged event or action, even where federal law provided for a longer filing period. 169 F.4th 259 (4th Cir. 2026).

The Fourth Circuit explained that allowing employers to shorten statutory filing deadlines would undermine Congress’s “carefully integrated remedial scheme,” make the administrative remedy process more difficult for employees to navigate and could improperly influence how the Equal Employment Opportunity Commission (“EEOC”) prioritizes cases. Id. at 265-267.

However, the Fourth Circuit clarified that parties may still agree to shortened filing deadlines where there is no controlling statute to the contrary, provided that the shortened period is reasonable, and the agreement is not procured through fraud or duress. Id. at 269. The Fourth Circuit also distinguished its holding in Thomas from contractual provisions shortening the time-period to initiate arbitration, emphasizing that federal policy favors arbitration agreements. Id. at 267.

What Should Employers Do Now?

Employers—particularly those in the Fourth and Sixth Circuits—should review their employment agreements and other employment-related contracts for provisions that shorten filing deadlines for federal discrimination claims and revise accordingly.

Further, with both the Fourth and Sixth Circuits now aligned on this issue, multistate employers should consider adopting a uniform national policy that does not rely on contractual limitations periods for federal anti-discrimination claims, as other circuits may soon follow suit.

*Stephen Zashin, an OSBA Certified Specialist in Employment & Labor Law, regularly advises clients on all employment related matters, including employment discrimination matters. If you have questions about employment agreements or any employment law questions, please contact Stephen at ssz@zrlaw.com or (216)696-4441.

Do Not Paste Counsel’s Advice Into AI

By Scott Coghlan and Dylan Brown*

HR professionals and managers use generative AI every day. They use it to rewrite emails, summarize employee complaints, organize investigation notes, compare discipline options, and draft talking points for difficult conversations. That convenience creates a serious problem when someone drops counsel’s analysis, a draft response, witness summaries, or internal facts about a workplace dispute into an AI tool.

Once HR or management does that, the company may disclose privileged information to a third party, create a new discoverable record, and store sensitive strategy on a platform the company does not control. Put differently, if HR or management takes legal advice from counsel, copies it into an AI tool, and asks the tool to summarize it, rewrite it, or analyze it, the company may have just undercut the very privilege that protected that advice in the first place. That is the point employers need to understand: AI is not a secure extension of counsel, and it should not become the place where the company recycles attorney communications for a “quicker” answer.

AI Can Turn Routine HR Activity Into Discovery Material

The law in this area is still developing, and the early cases show why employers cannot rely on any clear or uniform rule. Courts have started applying ordinary privilege and work-product principles to AI use, but they have not applied those principles the same way in every case. That uncertainty creates its own risk. Employers do not know how the next court will treat a prompt, an output, or an AI-generated summary that includes legal advice or sensitive employment information.

HR or management creates that risk when it takes communications/documents from counsel, or facts gathered for counsel, and feeds that material into an AI tool for a summary, rewrite, or analysis. At that point, the employer may have disclosed privileged legal advice to a third party, weakened any claim that the communication remained confidential, and created a new record of the company’s legal strategy that an adversary may later be able to obtain.

In United States v. Heppner, No. 25 Cr. 503 (JSR), 2026 U.S. Dist. LEXIS 32697, 2026 WL 436479 (S.D.N.Y. Feb. 17, 2026), a federal court held that exchanges with an AI platform were not protected by attorney-client privilege or the work-product doctrine. The defendant used the platform on his own, without counsel’s direction, and the platform’s terms allowed the provider to collect, retain, and disclose user data. On those facts, the court found no protected attorney-client communication, no reasonable expectation of confidentiality, and no work product that counsel prepared or directed.

In Warner v. Gilbarco, Inc., No. 2:24-cv-12333, 2026 U.S. Dist. LEXIS 27355, 2026 WL 373043 (E.D. Mich. Feb. 10, 2026), another federal court reached a different result. There, the court protected AI-assisted material under the work-product doctrine because the plaintiff was proceeding pro se and was effectively acting as her own counsel in preparing for litigation. The court also rejected the argument that using ChatGPT automatically waived work-product protection. But Warner did not create blanket protection for AI use. It turned on its own facts, and it addressed work product, not a broad safe harbor for privilege.

Taken together, those decisions send a clear message. Courts will not treat AI as a special zone with special protections. They will look closely at how the user employed the tool, whether counsel directed the use, what type of protection the party claimed, what the platform’s terms allowed, and whether the circumstances supported a real expectation of confidentiality. That fact-specific approach gives employers no straight path and no room for casual use of AI with sensitive workplace material.

That risk matters in employment cases because HR documents often decide the case. A prompt asking AI whether a complaint sounds like retaliation, whether a termination looks defensible, how to explain a pay disparity, or how to answer an employee’s lawyer (or an employer’s own) can become harmful evidence. The problem gets worse when employees use AI notetakers or transcription tools in investigations, discipline meetings, accommodation discussions, or calls with counsel. Those tools can create searchable transcripts, summaries, and action items that expand the evidentiary record and complicate privilege, privacy, and consent issues.

Employers Need Guardrails Now

Employers should draw a bright line now. HR personnel, supervisors, and executives should not paste legal advice, draft attorney communications, draft attorney documents, investigation notes, interview summaries, proposed discipline, termination rationales, severance terms, or other sensitive material into AI tools. Employers should also keep AI notetakers and transcription bots out of privileged or sensitive meetings unless the company has approved the tool, reviewed the vendor terms, addressed consent requirements, and set strict controls on retention, access, and use.

The problem here is not futuristic. It is already sitting in inboxes, meeting invites, and browser tabs. A manager who runs counsel’s advice through AI for a quicker summary may waive privilege. A note-taking bot in a sensitive HR meeting may create a transcript the company never wanted. A well-meaning employee who uploads internal compensation, investigation, or performance information may create a discovery fight the company cannot undo. Because courts have not offered a single clear answer, employers should follow best practices now: update AI-use policies, train HR and management, restrict AI use for sensitive employment matters, and route legally sensitive workplace issues to counsel before a routine prompt becomes Exhibit A.

*Scott Coghlan chairs Zashin & Rich’s Workers’ Compensation Practice. He has more than 20 years of experience representing employers in all areas of workers’ compensation law, including administrative proceedings, premium rating disputes, and appeals all the way up to the Ohio Supreme Court. Dylan C. Brown represents public and private employers in all facets of labor and employment law.

EEOC Mandates End to Enforcement of Disparate Impact Claims

By Lauren M. Drabic*

As a latest example of its shift in enforcement priorities, according to an internal memo obtained by Bloomberg Law, the Equal Employment Opportunity Commission (“EEOC”) has directed its investigators to close all pending charges alleging disparate impact discrimination by September 30, 2025. This directive comes in response to President Trump’s April 23, 2025, Executive Order entitled “Restoring Equality of Opportunity and Meritocracy,” which directed all federal agencies to “deprioritize enforcement of all statutes and regulations to the extent they include disparate-impact liability.”

Unlike claims of disparate treatment, which involve allegations that an employer intentionally discriminated against an employee because of his or her race, sex, age, national origin, disability, or other protected characteristic, intent is irrelevant disparate impact claims. Instead, disparate impact claims challenge employment practices that appear neutral on their face, but that nonetheless adversely impact - i.e., disproportionately harm - individuals in a protected class. Under this theory, employers may be liable for discrimination if a facially neutral practice causes a significant, adverse effect on a protected group, unless the policy or practice is job-related and essential to business operations. Historically, employees have successfully challenged practices including pre-employment testing, height and weight requirements, physical strength tests, criminal background checks, and educational requirements when those practices did not relate to the requirements of the job and had no business necessity.

The current administration has targeted disparate impact liability as a hindrance on the ability of employers to make hiring and other employment decisions based on merit. As a result, of the EEOC’s directive, the agency will close out all charges of disparate impact discrimination by September 30, 2025. However, this will not fully extinguish these claims. Instead, individuals who have filed charges alleging only disparate impact discrimination will receive a Notice of Right to Sue letter, which will allow them to pursue their claims in court within a specified timeframe. This could lead to a short-term influx of disparate impact claims in federal court. For charges alleging both disparate impact and disparate treatment, the EEOC will proceed with its investigation but focus exclusively on the disparate treatment claims.

The EEOC’s memo marks the latest example of the current administration’s shift in priorities and the ever-changing landscape of Title VII (Z&R has highlighted other recent examples here and here). However, it does not change the state of the law. Disparate impact discrimination remains unlawful under both Title VII and Ohio’s anti-discrimination statutes. Z&R will continue to monitor developments and stands ready to assist employers with strategic guidance on all matters related to Title VII.

*Lauren M. Drabic is an OSBA-certified specialist in labor and employment law and has extensive experience representing employers in discrimination, harassment, and other workplace enforcement matters. If you have questions about the changes occurring under Title VII, contact Lauren M. Drabic (lmd@zrlaw.com) by email or at 216.696.4441.

Patch Now; New Cybersecurity Compliance Deadlines Are About to Take Effect for Ohio’s Political Subdivisions

By Ami J. Patel and Dylan C. Brown*

On June 30, 2025, Ohio Governor Mike DeWine signed House Bill 96, a wide-ranging measure that touches multiple areas of state law. One part of that bill—codified at Ohio Rev. Code § 9.64—creates multiple cybersecurity mandates for Ohio’s political subdivisions. For purposes of the new requirements, a political subdivision includes any county, township, municipal corporation, or other local government entity smaller than the state itself.

Taking primary effect on September 30, 2025, Section 9.64 imposes three major obligations on every political subdivision: (1) mandatory incident notifications; (2) restrictions on ransomware payments, and; (3) the adoption of a cybersecurity program. This alert highlights those requirements and what they mean for political subdivisions. If preparation has not yet begun, political subdivisions should act quickly—the deadlines are firm, and the obligations are substantial.

Incident Reporting – Effective September 30, 2025

Beginning September 30, 2025, Section 9.64 requires the reporting of any “cyber security incident,” defined to include: (a) a substantial loss of confidentiality, integrity, or availability of a political subdivision’s information system or network; (b) a serious impact on the safety and resiliency of operational systems and processes; (c) a disruption of the ability to conduct operations or deliver services; or (d) unauthorized access to systems or non public information caused by a compromise of a cloud/managed service or a supply-chain compromise. On discovery of a cybersecurity incident, a political subdivision must notify Ohio Homeland Security’s Executive Director through the Ohio Cyber Integration Center (OCIC) as soon as possible but no later than seven (7) days, and must notify the Auditor of State as soon as possible but no later than thirty (30) days.

While OCIC’s online intake is evolving, the Auditor of State now provides a Cyber security Reporting Form that requests, at minimum:

• Point of contact (name, title, email, phone)
• Government entity type
• Date and time of the incident and the type of incident
• Whether any data was compromised
• Whether funds were lost, and the amount
• Whether a ransom was demanded, and whether it was paid
• If a ransom was paid, the ordinance or resolution approving payment
• Whether policies and procedures were in place at the time of the event

A link to the Ohio Auditor’s form can be found here. The OCIC will likely upload its report forms once developed here. The OCIC can be reached regarding cyber security-incident reporting at 614-387-1089 or OCIC@dps.ohio.gov, and the Auditor of State can be reached at 866-FRAUD-OH or cyber@ohioauditor.gov.

Ransomware Payments – Effective September 30, 2025

Ransomware attacks continue to grow more common and costly. While Ohio officials have generally discouraged ransom payments, the statute now sets specific rules for how political subdivisions may respond. Starting September 30, 2025, a political subdivision experiencing a ransomware incident shall not pay or otherwise comply with a ransom demand unless the subdivision’s legislative authority formally approves the payment or compliance in a resolution or ordinance that specifically states why doing so is in the subdivision’s best interest.

A ransomware incident is defined by the statute as a malicious cybersecurity incident in which a person or entity introduces software that gains unauthorized access to or encrypts, modifies, or otherwise renders unavailable a political subdivision's information technology systems or data and thereafter the person or entity demands a ransom to prevent the publication of the data, restore access to the data, or otherwise remediate the impact of the software.

These situations often necessitate rapid decisions because critical systems—such as payroll, emergency communications, or utility services—can be locked down without warning, leaving officials with limited time to weigh operational, financial, and security consequences. In such cases, R.C. § 121.22(F) permits an emergency meeting with less than twenty-four hours’ notice while still complying with Ohio’s Open Meetings Act.

Cybersecurity Program Requirement – Effective January 1, 2026 (Counties and Cities) / July 1, 2026 (All Other Subdivisions)

The statute’s most demanding requirement is the adoption of a formal cybersecurity program. While it allows the longest timeline for compliance—January 1, 2026 for counties and cities, and July 1, 2026 for all other political subdivisions—subdivisions cannot wait to begin preparing. Building a compliant program will take time, resources, and coordination.

The statute requires each political subdivision to adopt a program that safeguards its data, information technology, and technology resources to ensure availability, confidentiality, and integrity. The program must align with generally accepted best practices, such as the National Institute of Standards and Technology (NIST) Cybersecurity Framework and the Center for Internet Security (CIS) Controls. A well-designed program should:

• Identify and address the critical functions and cybersecurity risks of the political subdivision.
• Identify the potential impacts of a cybersecurity breach.
• Specify mechanisms to detect potential threats and cybersecurity events.
• Specify procedures for the political subdivision to establish communication channels, analyze incidents, and take actions to contain cybersecurity incidents.
• Establish procedures for the repair of infrastructure impacted by a cybersecurity incident, and the maintenance of security after the incident.
• Establish cybersecurity training requirements for all employees of the political subdivision; the frequency, duration, and detail of which shall correspond to the duties of each employee.

The statute also makes clear that annual cybersecurity training provided by the state—including the free Ohio Persistent Cyber Improvement (O-PCI) program delivered through the Ohio Cyber Range Institute—satisfies this requirement. This program offers tailored online, hybrid, and in-person training to equip employees with the skills needed to defend against cyberattacks.

Exactly what a compliant program looks like will vary depending on the size, resources, and existing safeguards of any political subdivision. The Auditor of State previously reviewed select cybersecurity practices in audits, but Section 9.64 now expands and transforms those expectations into binding law. Now is the time for subdivisions to evaluate what they have in place and identify the gaps.

The Road to Compliance

Information technology evolves quickly, while the law often lags behind. Federal statutes like Health Insurance Portability and Accountability Act (HIPAA), the Gramm–Leach–Bliley Act (GLBA), and the Federal Trade Commission Act impose security duties in certain sectors, but most entities have faced only a patchwork of state requirements. Ohio has now added to the patchwork.

If preparation has not yet begun, political subdivisions should act quickly. Section 9.64 represents a significant shift in Ohio law, moving cybersecurity expectations from best practices into binding obligations. Compliance will not be as simple as adopting a single policy or filling out a form. Subdivisions may need to designate a coordinator for incident reporting, map and evaluate their current information technology infrastructure, identify critical systems and risks, and implement new training requirements for staff. For some entities this will mean building entirely new programs; for others, it will mean reshaping existing practices to align with statutory standards. Either way, the process will take time, resources, and careful coordination across departments, elected officials, and outside vendors.

At Zashin & Rich, we understand that these new requirements can feel daunting. The deadlines are firm, the technical issues are complex, and the risks of missteps are real. We can help you break this down into manageable steps. Our team can advise on what the statute requires, draft internal policies and ransomware protocols, prepare ordinances or resolutions for Council approval, and connect you with our trusted cybersecurity partner to conduct assessments and implement a compliant program. Now is the time to get on the road to compliance, and we can be your driver.

*Ami J. Patel Z&R’s Practice Leader for Trade Secrets/Non-competes. She has years of experience representing clients in matters heavily influenced by information technology. Dylan C. Brown represents public and private employers in all facets of labor and employment law. For more information on House Bill 96, Ohio Rev. Code § 9.64, and its impact on political subdivisions, contact Ami J. Patel (ajp@zrlaw.com) or Dylan C. Brown (dcb@zrlaw.com) by email or at 216.696.4441.

Non-Competes Are Alive and Well: FTC Abandons Appeals of Non-Compete Ban Rule

By Ami J. Patel and Stephen S. Zashin*

The legal battle over the FTC’s nationwide non-compete ban has reached a decisive turning point. On September 5, 2025, the FTC dismissed its appeals of two federal court decisions that struck down the FTC’s purported Non-Compete Rule (“Rule”) and announced that it will instead pursue case-by-case enforcement actions.

As mentioned in our previous Alerts, the Federal Trade Commission adopted a rule in April 2024 banning most non-compete agreements. The Rule faced immediate challenges. On August 14, 2024, the U.S. District Court for the Middle District of Florida issued a preliminary injunction in Properties of the Villages Inc. v. FTC, blocking enforcement against a single employer. Days later, on August 20, 2024, the U.S. District Court for the Northern District of Texas went further in Ryan LLC v. FTC, holding that the FTC lacked statutory authority and setting aside the Rule nationwide. The FTC appealed both rulings to the Eleventh Circuit and Fifth Circuit.

In January 2025, Andrew Ferguson was appointed as FTC Chairman, shifting the agency’s posture toward the Rule. On March 7, 2025, the FTC asked the Fifth and Eleventh Circuits to hold its appeals in abeyance for 120 days. Ferguson, who dissented when the FTC first adopted the Rule in April 2024, reiterated that the Rule was unlawful.

The FTC’s shift is now seemingly finalized, as on September 5,2025, the FTC voluntarily dismissed its appeals in Ryan LLC v. FTC and Properties of the Villages Inc. v. FTC, abandoning its defense of the nationwide non-compete ban. Chairman Andrew Ferguson confirmed that the FTC would not continue “tilting at windmills” and instead will target non-competes through case-by-case enforcement. The agency pointed to its recent settlement with Gateway Services Inc., which barred enforcement of non-competes against 1,800 workers, and launched a request for public input to identify additional practices for investigation. Democratic Commissioner Rebecca Kelly Slaughter dissented, criticizing the majority for discarding a rule supported by more than 25,000 public comments.

Employers should not view the dismissal of these appeals as the complete end of FTC scrutiny—but close. The Commission has made clear that it will continue to challenge non-compete agreements on a case-by-case basis. At the same time, some state-level restrictions continue to expand. Employers should take this moment to review their restrictive covenants, confirm they are narrowly tailored to protect legitimate business interests, and ensure they remain defensible under state law. Zashin & Rich stands ready to help employers evaluate and strengthen their agreements in this evolving legal landscape.

*Ami J. Patel is Z&R’s Practice Leader for Trade Secrets/Non-competes. She works extensively in trade secret and restrictive covenant litigation. Stephen Zashin is Z&R’s Managing Partner and also has worked extensively representing clients in trade secret and restrictive covenant litigation. For more information on matters concerning the FTC Rule or non-compete agreements generally, contact Ami J. Patel (ajp@zrlaw.com) or Stephen S. Zashin (ssz@zrlaw.com) via email or by phone at 216.696.4441.

Sixth Circuit Breaks from Other Courts: Intent Required for Employer Liability in Third-Party Harassment Cases

By Lauren M. Drabic and Stephen S. Zashin*

Since the United States Supreme Court’s recent shift away from deference to agency interpretations, the U.S. Court of Appeals for the Sixth Circuit has wasted no time charting its own course. On August 8, 2025, it upended its evaluation of claims of harassment by customers, vendors, and other non-employees under Title VII. In Bivens v. Zep, Inc., the Sixth Circuit Court of Appeals rejected the negligence-based standard provided for under EEOC Guidelines and that most other federal circuits follow, and instead required proof that the employer intended the harassment to occur. This shift makes it more difficult for an employee to establish a claim against an employer for third-party harassment in Kentucky, Michigan, Ohio, and Tennessee.

Bivens Background and the Court’s Analysis

Dorothy Bivens worked as a sales representative for Zep, Inc., visiting customers in the Detroit area. A few months into the job, she met with a motel client whose manager locked the office door and asked her to date him. When she refused and asked to leave, the manager unlocked the door. Bivens reported the incident to her supervisor, who reassigned the account so she would not interact with the client again. Weeks later, Zep included her in a company-wide reduction in force. Bivens sued, claiming the client’s conduct created a hostile work environment under Title VII and Michigan law, and alleging retaliation and race discrimination.

In its decision, the Sixth Circuit found “no legal bridge between the client’s intent and Zep’s responsibility” because the customer was not an agent of the company. Without an agency relationship, the court concluded that the only path to liability was direct liability for Zep’s own actions—which required intent. Citing to Staub v. Proctor Hosp., the Sixth Circuit stated that intent exists when an employer “either ‘desire[d] to cause’ [the] harassment or was ‘substantially certain’ that it would ‘result from’ its actions.”

Applying that standard, the Sixth Circuit concluded that “[n]one of this would allow a jury to conclude that Zep ‘desired’ such an interaction to occur or was ‘substantially certain’ that it would,” where the incident happened only once and Zep reassigned the account immediately after learning of it. The Court rejected the EEOC’s guidelines as nonbinding and “unpersuasive,” and emphasized that the Supreme Court’s 2024 decision in Loper Bright required courts “to independently interpret the statute.”

What This Means Now for Employers

Within the confines of the Sixth Circuit, this decision raises the bar for plaintiffs and gives employers more protection from third-party harassment cases. For multi-state employers, it adds complexity because most other circuits still apply negligence-based liability. The Sixth Circuit’s reliance on Loper Bright to move away from EEOC interpretations signals a willingness to re-examine agency-driven standards more broadly—leaving open the question of what other long-standing guidance the Sixth Circuit might reject next. That uncertainty makes it even more important for employers to set policies that meet the most demanding standard, apply them consistently, and respond immediately and decisively to any report of customer or vendor misconduct.

In light of Bivens, we can review your harassment-prevention policies, train managers on handling third-party misconduct under differing standards, and ensure your complaint-handling process can withstand scrutiny in any jurisdiction. Reach out to us with your questions—we can help you prepare, respond, and stay ahead of the evolving law.

*Lauren M.Drabic has years of experience representing employers in all areas of employment and labor law. She regularly defends and advises employers against claims of harassment, discrimination, and retaliation in federal and state court and before administrative agencies. Stephen Zashin is Z&R’s Managing Partner and also has worked extensively representing clients in harassment, discrimination, and retaliation claims. For more information on matters involving harassment prevention, third-party misconduct, and compliance with evolving federal and state law, contact Lauren M. Drabic (lmd@zrlaw.com) or Stephen S. Zashin (ssz@zrlaw.com) by email or at 216.696.4441.

Supreme Court Erases Sixth Circuit’s Extra Burden on Majority-Group Plaintiffs

By David P. Frantz and Stephen S. Zashin*

Today, in another significant shift for Title VII of the Civil Rights Act of 1964, the United States Supreme Court has unanimously vacated the Sixth Circuit’s decision in Ames v. Ohio Department of Youth Services, rejecting the Sixth Circuit’s long-standing “background circumstances” requirement.

The Sixth Circuit, whose jurisdiction includes Ohio, has long required majority-group Title VII plaintiffs to clear an extra hurdle before proceeding under the familiar McDonnell Douglas framework (the burden-shifting test courts apply when discrimination is alleged only via circumstantial evidence). This “background circumstances” rule—also followed in the Seventh, Eighth, Tenth, and D.C. Circuits—required white, male, heterosexual, or other majority-group employees to show additional evidence, such as statistics indicating a pattern of bias against majority employees or proof that a minority decisionmaker made the challenged employment decision, before a court would infer discrimination. Writing the lead opinion for the Court, Justice Jackson observed that Congress “establish[ed] the same protections for every ‘individual’—without regard to that individual’s membership in a minority or majority group,” leaving “no room for courts to impose special requirements on majority-group plaintiffs.” The Court remanded for application of the ordinary prima-facie standard.

The most intriguing part of the opinion perhaps stems from the concurrence by Justices Thomas and Gorsuch. They question whether McDonnell Douglas remains a useful framework. Such a dialogue signals that the Supreme Court could pursue even more far-reaching changes to Title VII down the road.

Today’s decision removes an evidentiary hurdle that existed only within the above-named Circuits and aligns majority- and minority-plaintiff claims under the same threshold test. Employers in Ohio and elsewhere should expect courts to assess termination, promotion, demotion, and hiring disputes involving majority employees without the now-defunct background circumstances prerequisite.

Ames arrives as Title VII doctrine continues to evolve rapidly. As covered in our recent alerts, a Texas federal court has just vacated key portions of the EEOC’s harassment guidance, and the Trump Administration continues to curtail DEI programs through executive orders and agency memoranda. With Title VII’s rules and enforcement in flux, employers should revisit every corner of their compliance program—policies, job postings, promotion and discipline files, RIF plans, complaint procedures, and training materials—to ensure they withstand the next challenge. Zashin & Rich can conduct a top-to-bottom review, fortify weak spots, and guide decision-makers before a new lawsuit or EEOC charge.

*David P. Frantz (an Ohio State Bar Association Certified Specialist in Labor and Employment Law) and Stephen S. Zashin (Z&R’s Managing Partner) have extensive experience representing employers in discrimination, harassment, and other workplace enforcement matters. If you have questions about the changes occurring under Title VII, please contact David P. Frantz (dpf@zrlaw.com) or Stephen S. Zashin at (ssz@zrlaw.com) via email or by phone at 216.696.4441.

Texas Court Clears Path for Rollback of EEOC Gender Identity Guidance

By Ami J. Patel and Stephen S. Zashin*

On May 15, 2025, the U.S. District Court for the Northern District of Texas vacated portions of the EEOC’s Enforcement Guidance on Harassment in the Workplace, holding that the agency exceeded its statutory authority by interpreting Title VII’s prohibition on sex discrimination to include harassment based on gender identity. The court found that the EEOC's guidance was contrary to Title VII’s plain text by expanding the definition of “sex” to include “sexual orientation and gender identity” which is according to the court, “beyond the biological binary: male and female.” Next, the court found that the EEOC guidance “contravenes Title VII by defining discriminatory‘ harassment’ to include transgender bathroom, pronouns, and dress preferences. ”Therefore, the court found that the EEOC’s guidance went beyond summarizing existing law and instead “fundamentally expands Title VII to include harassment based on gender identity,” specifically by treating the denial of access to bathrooms aligned with a person’s gender identity, enforcement of dress codes inconsistent with gender identity, and the intentional use of names or pronouns inconsistent with a person’s gender identity as unlawful harassment. The court described the EEOC’s Guidance’s reliance and interpretation of Bostock v. Clayton County as a “misreading of Bostock.” (Note: Bostock is the case which held that terminating an employee for being homosexual or transgender violates Title VII’s prohibition on sex discrimination).

Following the court’s May 15, 2025 ruling, the EEOC announced that it could not rescind or revise the Guidance due to the Commission’s lack of quorum—a procedural issue that has persisted since the start of the new administration. In the meantime, the EEOC has labeled and shaded the vacated provisions on its website and is currently reviewing other materials for consistency with the court’s decision.

Employers should take note that while the vacated provisions no longer carry legal weight, the underlying issues remain active and contested. EEOC investigators and plaintiffs may continue to explore similar theories under other frameworks, and state or local laws may impose independent obligations related to sexual orientation or gender identity. While the exact contours of Title VII continue to grow hazy, Employers should continue to handle complaints involving gender identity thoughtfully, with an emphasis on consistency, documentation, and awareness of jurisdiction-specific requirements. Zashin & Rich will continue to monitor developments in Title VII enforcement and is available to assist with any questions regarding compliance or policy updates.

*Ami J. Patel (Z&R’s Practice Leader for Trade Secrets/Non-competes) and Stephen S. Zashin (Z&R’s Managing Partner) have extensive experience representing employers in discrimination, harassment, and other workplace enforcement matters. If you have questions about the changes occurring under Title VII, please contact Ami J. Patel (ajp@zrlaw.com) or Stephen S. Zashin at (ssz@zrlaw.com) via email or by phone at 216.696.4441.

Leveling the “Paying” Field: Cleveland Mandates Salary-Range Transparency and Bans Salary-History Inquiries

By Dylan C. Brown and Rose A. Hayden*

Employers with Cleveland-based staff should take note: the City of Cleveland (City) is joining Columbus, Cincinnati, and a growing roster of jurisdictions in imposing pay-transparency requirements. On April 28, 2025, the Cleveland City Council adopted Ordinance No. 104-2025, which adds Chapter 669, “Unlawful Discriminatory Salary Practices,” to the Cleveland Codified Ordinances. Mayor Justin Bibb signed the measure as an emergency ordinance, with hopes it will assist in closing the gender pay gap, and it will take effect in 180 days (October 25, 2025).

Key Requirements Under Ordinance No. 104-2025

The new ordinance applies to any private employer—whether organized for profit or not—who employs fifteen (15) or more people in the City. While the ordinance excludes any unit of local, state, or federal government, the City of Cleveland itself is not excluded. Those meeting the broad definition of employer must:

• Post a pay range. Every notification,advertisement, or formal posting that offers an opportunity to apply for employment in the City must display a salary range or scale.
• Refrain entirely from asking about prior pay. Employers can no longer inquire about the salary history of any applicant for employment.Employers are likewise barred from refusing to hire, disfavoring, or retaliating against an applicant for refusals to disclose their prior financial compensation.
• Avoid salary-based decisions. Employers cannot screen applicants based on their current or prior salary history, and they cannot rely solely on an applicant’s prior compensation when making hiring or pay determinations.
• Recognize the carve-outs. The ordinance’s requirements and prohibitions do not apply to:
• actions another federal, state, or local law expressly authorizes to rely on salary history;
• applicants seeking an internal transfer or promotion with their current employer;
• voluntary, unprompted disclosures of salary history by an applicant;
• incidental disclosure of salary history uncovered during verification or background checks (however employers may not rely solely on that information to set pay);
• rehires when the employer already possesses the applicant’s prior salary data;
• positions whose compensation is set through collective-bargaining procedures; and,
• federal, state, or local governmental employers—other than the City of Cleveland.

Questions about salary history do not cover objective productivity metrics—revenue, sales, or similar production data. Employers may still discuss an applicant’s compensation expectations, including unvested equity or deferred pay the applicant would forfeit, but they must not request, screen on, or rely solely upon the applicant’s salary history when hiring or setting pay.

Compliance Oversight & Penalties

For any alleged violation of the above requirements, applicants or employees will be able to file complaints with the City’s newly revived Fair Employment Wage Board (FEWB or Board) within 180 days of the alleged violation. FEWB first attempts conciliation. If an employer does not cure a violation within ninety days, FEWB may impose civil penalties of up to $1,000 for a first offense, $2,500 for a second offense, and $5,000 for each additional offense within a five-year window.The Board adjusts these amounts each year to match the inflation reflected in the consumer price index for all Urban Consumers (CPI-U), which is published by the Department of Labor. Employers may appeal adverse rulings to the City’s Director of Finance and then to the Board of Zoning Appeals.

Next Steps for Cleveland Employers

Cleveland’s Ordinance arrives amid a national surge in pay-transparency laws—already on the books in California, Colorado, Illinois, New York, Washington, Columbus, Cincinnati, Toledo, and other jurisdictions. Council sponsors cited data from Columbus and Cincinnati showing post-enactment wage gains for women and emphasized the ordinance’s role in closing persistent pay gaps. With momentum clearly on the side of transparency, Cleveland employers cannot assume this is a passing trend.

The six-month countdown to October 25, 2025, has started. Cleveland employers must audit every posting for a compliant salary range, strip salary-history inquiries from hiring materials, and train recruiters before applicants—and the City’s revived Fair Employment Wage Board—start watching. Noncompliance risks immediate complaints, escalating fines, and reputational damage. Navigating this patchwork of local and multistate rules can feel daunting, but the Employment & Labor team at Zashin & Rich has guided organizations of every size through similar transitions and stands ready to help you get compliant—and stay ahead of the next wave.

*Dylan C. Brown & Rose A. Hayden represent public and private employers in all facets of labor and employment law. For more information or assistance with Cleveland’s pay-transparency ordinance or other employment-law issues matters, contact Dylan (dcb@zrlaw.com) or Rose (rah@zrlaw.com) via email or by phone at 216.696.4441.

THE DIE HAS BEEN CAST ON DEI: EEOC & DOJ Issue new Technical Assistance Documents Targeting “DEI-Related” Discrimination

By Lauren M. Drabic and Dylan C. Brown*

Backlash against Diversity, Equity, and Inclusion (DEI) programs has risen in recent years. The Trump administration has made restricting DEI a clear priority, issuing multiple Executive Orders and memoranda targeting DEI programs in the federal government and striving to limit DEI in the private sector. Yesterday, the Equal Employment Opportunity Commission (EEOC) and Department of Justice also weighed in on DEI, issuing two joint technical assistance documents aimed at educating employees and employers about unlawful discrimination related to DEI in the workplace.

The first document (available here), entitled “What to Do if You Experience Discrimination Related to DEI at Work,” is a one-page overview. It states, “DEI policies, programs, or practices may be unlawful if they involve an employer or other covered entity taking an employment action motivated—in whole or in part—by an employee’s race, sex, or another protected characteristic.” The document advises that DEI initiatives may lead to unlawful disparate treatment if an employer takes “an employment action motivated (in whole or in part) by” an individual’s protected class, including as to: “hiring, firing, promotion, demotion, compensation, fringe benefits, exclusion form training, exclusion from mentoring or sponsorship programs, exclusion from fellowships, [and] selection for interviews (including placement on candidate slates).” The guidance also advises that employers are prohibited from “limiting, segregating, and classifying" employees based on protected characteristics “in a way that affects their status or deprives them of employment opportunities,” and that, “[d]epending on the facts, DEI training may give rise to a colorable hostile work environment claim.” It emphasizes that “Title VII’s protections apply equally to all racial, ethnic, and national origin groups, as well as both sexes,” and urges affected employees to promptly contact the EEOC due to “strict time limits for filing a charge.”

The second document (available here), entitled “What You Should Know About DEI-Related Discrimination at Work,” is structured as a detailed question-and-answer guide that provides clarity on how DEI programs and initiatives might conflict with Title VII. Here, the EEOC states its position that there is “no such thing as ‘reverse ’discrimination,” and advises that the EEOC will apply “the same standard of proof” to all claims regardless of an individual’s race or other protected status. It further states that employers cannot defend discriminatory practices by citing business interests in diversity or client preferences, as Title VII explicitly rejects a “business necessity” defense to intentional discrimination. Additionally, it states that employers may violate Title VII by segregating employees during DEI training or restricting workplace opportunities based on protected traits. These ideas extend beyond employees to cover applicants, interns, apprentices, and participants in training programs.

Notably, these guidance documents do not create new laws. Rather, they serve as guidance about rights as they relate to DEI based on the current state of the law under Title VII, EEOC regulations, and Supreme Court precedent.

Does This Mean DEI Programs Are Now Illegal?

The short answer is no. As long as an employer’s DEI program complies with Title VII and other federal and state laws prohibiting discrimination, it remains lawful. As was the case before the issuance of these assistance documents and President Trump’s Executive Orders, employers cannot discriminate against applicants or employees based on their race, sex, national origin, age, disability, or other protected class – regardless of whether the employees are in the majority or minority of their protected class. This means that any DEI program or policy that has the purpose or effect of giving preferential treatment to employees in hiring, training, or other employment decisions is unlawful under Title VII. For example, DEI programs that require employers to meet certain hiring quotas or to consider an employee’s race, sex, or other membership in a protected class in employment decisions is unlawful. However, DEI policies that simply aim to expand opportunities to create a more diverse workforce, implement policies and procedures that apply equitably to all employees, and foster an environment of inclusion do not violate the law.

What Should Employers Do Now?

Many employers remain committed to DEI as part of their core values. Maintaining a DEI program may open employers to potential exposure for claims of discrimination by employees/applicants if they believe the policy resulted in adverse employment practices against them. However, such programs are not inherently unlawful, and there are steps that employers who wish to maintain these programs can take to decrease legal risk. For example, employers should ensure that their DEI programs do not have the purpose or effect of giving preferential treatment to candidates or employees who are members of acertain protected class when it comes to making employment decisions. Employers should also be mindful about focusing on all aspects of DEI, including emphasizing the importance of “equity” and “inclusion” in addition to “diversity.” As it relates to diversity, rather than aiming for diversity in and of itself as an end result, employers should focus on removing barriers and increasing opportunities for diverse candidates. In addition, employers should ensure any training, educational programming, resource groups, and other DEI-related activities are inclusive and not restricted to members of a certain group.

Zashin & Rich will continue monitoring DEI developments and can assist employers with strategic guidance on moving forward with DEI questions or concerns.

*Lauren M. Drabic has years of experience representing employers in all areas of employment and labor law. She regularly defends employers against claims of discrimination and retaliation in federal and state court and before administrative agencies and advise employers, including on DEI policies. Dylan C. Brown represents public and private employers in all facets of labor and employment law. For assistance in navigating the evolving landscape surrounding DEI programs, compliance with Title VII, and anti-discrimination laws at both the federal and state levels, contact Lauren M. Drabic (lmd@zrlaw.com) or Dylan C. Brown (dcb@zrlaw.com) via email or by phone at 216.696.4441.

A Change of Course? FTC Requests Abeyance in Non-Compete Rule Appeals

By Ami J. Patel and Stephen S. Zashin*

As mentioned in our previous Alerts, the Federal Trade Commission issued a purported Rule banning employers from enforcing non-competes against “workers,” with limited exceptions. The Rule was set to go into effect on September 4, 2024. However, it faced immediate legal challenges. On August 14, 2024, the U.S. District Court for the Middle District of Florida granted a preliminary injunction blocking enforcement against a single employer. Shortly after, on August 20, 2024, the U.S. District Court for the Northern District of Texas set aside the Rule nationwide, holding that the FTC lacked statutory authority. The FTC appealed both rulings.

The FTC Rule’s next major legal challenge is coming from within the FTC itself. On January 20, 2025, President Trump appointed Andrew Ferguson as the new FTC Chairman. Ferguson, who previously voted against the Rule while serving as a commissioner, has consistently questioned the agency’s authority to implement such a sweeping restriction. Words have now become action, as on March 7, 2025, the FTC requested a 120-day abeyance in the Fifth and Eleventh Circuits to “reconsider its defense of the challenged rule.” And while the Eleventh Circuit has yet to act, on March 12, the Fifth Circuit granted the FTC’s motion.

The abeyance motions cite the change in administration and Ferguson’s view that “the Commission . . . basically needs to decide whether it’s a good idea [and] it’s in the public interest to continue defending this rule. . . . I’m going to be presenting at some point” to “my colleagues the decision about whether to continue defending this Rule.” The likely outcome of Ferguson’s decision is perhaps foreshadowed in his dissenting statement when the Rule was first adopted:

“Whatever the Final Rule’s wisdom as a matter of public policy, it is unlawful. Congress has not authorized us to issue it. The Constitution forbids it. And it violates the basic requirements of the Administrative Procedure Act.”

Although many anticipate the FTC will eventually retract the rule outright, employers should remain vigilant, as the legal landscape surrounding non-competes continues to evolve at the state-level. States such as California, North Dakota, Oklahoma, and Minnesota have enacted bans on non-compete agreements. In New York, a proposed ban was vetoed by Governor Kathy Hochul in December 2023, though revised legislation may be introduced in the future. Similarly, Ohio is considering a bipartisan bill, Senate Bill 11, introduced on January 22, 2025, aiming to prohibit employers from entering into non-compete agreements with workers. As legal uncertainty persists, employers should take the time now to review their restrictive covenants for compliance with state laws and ensure their agreements are narrowly tailored to protect their legitimate business interests.

Zashin & Rich will continue monitoring the FTC’s actions under this new administration and stands ready to assist employers with strategic guidance on the agency’s rule and evolving state-level non-compete laws.

*Ami J. Patel is Z&R’s Practice Leader for Trade Secrets/Non-competes. She works extensively in trade secret and restrictive covenant litigation. Stephen S. Zashin is Z&R’s Managing Partner and also has worked extensively representing clients in trade secret and restrictive covenant litigation. For more information on matters concerning the FTC Rule or non-compete agreements generally, contact Ami J. Patel (ajp@zrlaw.com) or Stephen S. Zashin (ssz@zrlaw.com) via email or by phone at 216.696.4441.

Ohio’s Senate Bill 11 is Aiming to Ban Non-Competes

By Ami J. Patel and Stephen S. Zashin*

Although the Federal Trade Commission’s proposed rule banning non-compete agreements remains stuck in political limbo, states have, in recent years, begun passing or strengthening laws which ban or restrict these clauses. Now Ohio may soon follow suit, as its Senate is considering a total ban on non-compete agreements.

The Bill as Introduced

Senate Bill 11 was introduced by Ohio Senators Louis W. Blessing, III (R) and William P. DeMore (D) on January 22, 2025. Its proposed language prohibits employers from requiring or enforcing any agreement that restricts or penalizes “workers” (defined broadly to include employees, independent contractors, interns, and volunteers) for seeking or accepting new employment or operating a business after their employment ends. This includes agreements that:

• Prevent workers from working for another employer for a specific period, within a certain geographic area, or in a role similar to their previous position.
• Require workers to pay lost profits, lost goodwill, or liquidated damages if they terminate the employment relationship.
• Impose a fee or cost—such as a replacement hire fee, retraining fee, or reimbursement for immigration or visa-related costs—when workers choose to leave.
• Demand reimbursement for expenses (e.g., training, orientation, or evaluation) that were intended to provide or improve the worker’s skills during employment.

Notably, Senate Bill 11 includes no exception related to the sale of a business.

Additionally, the proposed Bill voids any agreement entered into, modified, or extended on or after its effective date which requires a worker who primarily resides and does business in Ohio to adjudicate claims outside Ohio or deprives them of any of the State’s substantive legal protections. However, the Bill does provide an exception for this if, at the time of negotiation, the worker is independently represented by legal counsel (not chosen or paid by the employer) and the worker personally designates the venue or forum for any dispute or the governing law.

In terms of penalties, Senate Bill 11 permits workers or prospective workers to bring a civil action against an employer for any violation, with the possibility of recovering costs and reasonable attorney’s fees, actual damages, punitive damages up to five thousand dollars, and injunctive relief. A worker or prospective worker may also file a complaint with the attorney general or the director of commerce. If the attorney general or director investigates and determines that a violation likely occurred, the attorney general may bring an action on behalf of the worker or prospective worker, and if successful, the court must award the same remedies to the attorney general.

As of this Article’s writing, Senate Bill 11 has been referred to the Ohio Senate’s Judiciary Committee, where it will go through debate and amendment. The first hearing on the Bill is scheduled for February 12, 2025. Anyone looking to testify before the Committee in regard to the Bill should begin that process now.

What Now for Employers

If the Bill is enacted, Ohio will join the growing group of states that have effectively banned non-compete agreements, with Minnesota being the most recent to do so in 2023. The Bill’s current language is notably strict, lacking any salary thresholds and containing no provision for grandfathering existing agreements. Its prohibition on “enforcement” makes clear that any previously signed non-competes would be rendered unenforceable once the legislation takes effect.

While the Bill moves through the legislative process, employers should remain vigilant and start reviewing their existing agreements in preparation for what may be a sweeping overhaul of restrictive covenants in Ohio. If the Bill becomes law, any attempt to enforce a non-compete once it takes effect will result in significant legal and financial consequences. As a result, employers will likely need to invest substantial effort in devising new ways to protect their business interests, trade secrets, and client relationships without relying on non-compete restrictions. It is critical to consult legal counsel now to evaluate existing contracts, explore alternative protective measures, and develop contingency plans in anticipation of Senate Bill 11’s potential enactment.

Zashin & Rich will continue monitoring Senate Bill 11 as it progresses and stands ready to assist employers with strategic guidance and compliance.

*Ami Patel is Z&R’s Practice Leader for Trade Secrets/Non-competes. She works extensively in trade secret and restrictive covenant litigation. Stephen Zashin is Z&R’s Managing Partner and also has worked extensively representing clients in trade secret and restrictive covenant litigation. Ami and Stephen have brought numerous trade secret cases to verdict. For more information on matters concerning Senate Bill 11 or non-compete agreements generally, contact Ami J. Patel (ajp@zrlaw.com) or Stephen S. Zashin (ssz@zrlaw.com) via email or by phone at 216.696.4441.

Legislative Update: New Legal Requirements and Protections for Employers

By Ken Hurley*

In January 2025, Governor Mike DeWine signed more than two dozen bills into law. These bills spanned a wide array of topics, from changes to Ohio’s Public Records Law to updating penalties for certain criminal offenses. Of these newly enacted laws, employers may be particularly interested in two specific items.

The Paystub Protection Act

House Bill 106, dubbed the Paystub Protection Act, enacts Section 4113.14 of the Ohio Revised Code. The Act requires employers to provide its employees with a statement of the employee’s wages and deductions for each pay period. Those statements must include the employee’s name and address, the employer’s name, the total gross wages and net wages earned by the employee over that pay period, the amount and reason for each deduction from the employee’s wages, the dates of the pay period and payday, and, for hourly employees, the total number of hours worked during the pay period, the hourly wage for the employee, and any hours worked over 40 hours in a workweek. Violations of this act do not carry legal liability alone, but employers should nevertheless ensure that their payroll practices comply with the Act’s requirements.

The Uniform Public Expression Protection Act

Senate Bill 237, also known as the Uniform Public Expression Protection Act, enacts Chapter 2747 of the Ohio Revised Code. The new Chapter provides immunity from lawsuits based on a person’s constitutionally protected speech, assembly, association, and press on matters of public concern. Public employers should take special note of these new protections, as the law also applies to communications made in legislative, executive, or administrative proceedings. The extent of these protections is not yet known, and the outer limits of these protections will likely be the subject of litigation in the coming years. Employers may be able to invoke these protections in certain actions to receive an early dismissal of cases against them. While these protections do not apply to every claim asserted against an employer, the Act provides necessary safeguards against the abuse of the legal process.

*Ken Hurley represents public and private employers in all facets of labor and employment law. If you have questions about these changes to Ohio law or any employment or labor law questions, please contact Ken at kjh@zrlaw.com or (614) 224-4411.

DEAD ON ARRIVAL: Federal Affirmative Actions Plans Ended

By Scott DeHart and Ken Hurley*

With the stroke of a pen, President Trump demolished a sixty-year cornerstone of federal anti-discrimination law that required federal government contractors to prepare and adhere to affirmative action plans.

The Executive Order titled “ENDING ILLEGAL DISCRIMINATION AND RESTORING MERIT-BASED OPPORTUNITY” was signed by the President on the evening of his first full day in office, Tuesday, January 21st. Among other changes, the EO formally revokes “Executive Order 11246 (Equal Employment Opportunity)” which was signed by President Lyndon B. Johnson on September 24,1965. EO 11246 has long prohibited federal contractors and federally assisted construction contractors and sub contractors, who do over $10,000 in Government business per year, from discriminating in employment decisions on the basis of race, color, religion, sex, gender identity or national origin. EO 11246 also imposed the requirement on such contractors to take affirmative action to ensure that equal opportunity is provided in all aspects of their employment. President Barack Obama in 2014 amended that order via Executive Order 13672, which added “sexual orientation or gender identity” to the list of protected classes.

The Office of Federal Contract Compliance Programs (OFCCP), an agency within the United States Department of Labor (DOL), has been the federal entity primarily responsible for ensuring that employers comply with EO 11246. OFCCP also enforces Section 503 of the Rehabilitation Act of 1973, which provides disability protections for federal workers, and the Vietnam Era Veterans Readjustment Assistance Act of 1974. OFCCP has promulgated and enforced its detailed regulations, requiring federal contractors to prepare and follow annual “affirmative action plans.” The revocation of EO 11246 substantially curtails the authority and the scope of responsibilities of the OFCCP.

“The [OFCCP]……shall immediately cease: Promoting ‘diversity’; holding Federal contractors and subcontractors responsible for taking ‘affirmative action’; and allowing or encouraging Federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin,” Trump’s order reads.

Sweeping changes to federal-level affirmative action and DEI programs were widely anticipated after Trump’s electoral victory in November 2024. During the first Trump administration (2017-2021), many had predicted the demise of OFCCP and the downfall of EO11246. However, OFCCP remained active during Trump’s presidency, instituting new types of audits and issuing new Directives and regulations that were widely seen as contractor-friendly. Many of these efforts were predictably rescinded at the outset of the Biden administration. This time, President Trump has taken more immediate and decisive action, essentially obliterating the OFCCP. Trump’s order came just a day after he rescinded multiple Biden-era executive orders, including several others pertaining to diversity and affirmative action.

The impact of Trump’s rescission of EO 11246 (and subsequent EOs that modified and expanded it) is enormous. President Trump has given contractors 90 days to continue their compliance with the existing regulatory scheme, but the recission of EO 11246 all-but certainly marks the end of mandatory “affirmative action plans” for federal government contractors (for at least the next four years). President Trump’s EO also requires each federal government contractor “to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.”

President Trump’s Executive Order may present a lose-lose decision for government contractors. While his Order effectively renders a contractor’s affirmative action plan or DEI policy unlawful, Ohio law still requires contractors to develop affirmative action plans. Section 153.59 of the Ohio Revised Code prohibits the Department of Development from expending capital funds appropriated by the General Assembly unless the project to receive those funds develops an affirmative action plan. Specifically, the statute requires contractors to develop “an affirmative action program for the employment and effective utilization of disadvantaged persons whose disadvantage may arise from cultural, racial, or ethnic background, or other similar cause, including, but not limited to, race,religion, sex, disability or military status as defined in section 4112.01 of the Revised Code, national origin, or ancestry.” Section 125.111 of the Revised Code implements the same requirements for contracts with cities, villages, counties, townships,and any other political subdivision. President Trump’s order creates a dilemma for businesses that work on government contracts: their affirmative action efforts, which will still be necessary to comply with state contracts, will likely place these contractors into noncompliance with their federal contracts.

Employers who do business with the federal government should remain attentive to the fast-paced and sweeping changes that are underway in the early days of the second Trump presidency.

*Scott DeHart represents public and private sector employers in all aspects of labor and employment law including employment discrimination, collective bargaining, union avoidance and affirmative action plans. Ken Hurley represents public and private employers in all facets of labor and employment law. For assistance in navigating the landscape of affirmative action, DEI, and anti-discrimination law at the federal and state levels, contact Scott DeHart (shd@zrlaw.com) or Ken Hurley (kjh@zrlaw.com) at 614-224-4411.

NLRB Cracks Down on Employer “Captive Audience” Meetings

By George S. Crisci*

In a decision released last week, the National Labor Relations Board (“NLRB) jettisoned nearly eight decades of its own precedent, ruling that an employer violates the National Labor Relations Act when it requires its employees — under threat of discipline or discharge — to attend meetings in which the employer expresses its views on unionization. In holding that these so-called “Captive Audience” meetings are unlawful, the Board unceremoniously discarded a 76-year precedent established by Babcock & Wilcox Co., 77 NLRB 577 (1948).

The Board’s hotly anticipated decision in Amazon.com Services LLC, represents a forceful crack-down on one of the most effective and commonly used tactics by private sector employers who face a union organizing drive. For decades, these “captive audience” meetings have been a fixture of union elections – an opportunity and forum in which employers can express their view of the potential negative effects that unionizing may have on the general workforce. The Board’s decision comes on the heels of a significant ruling earlier this month in Siren Retail Corp., NLRB Case No. 19-CA-290905, in which the Board overturned a nearly 40-year precedent and held that employers are no longer permitted to categorically tell workers that unionization will negatively impact their relationship with management.

The Board majority explained that captive audience meetings violate Section 8(a)(1) of the NLRA because they have a reasonable tendency to interfere with and coerce employees in the exercise of their collective bargaining rights. However, the Board majority explained that employers can still lawfully hold meetings with workers to express the employer’s views on unionization if certain guardrails are in place: (1) the workers must have advance notice of the subject of the meeting, (2) attendance must be voluntary with no adverse consequences for failure to attend, and (3) no attendance records of the meeting may be kept. The Board majority also made clear that its decision applies only prospectively, clearly a recognition that employers have reasonably relied on the Babock & Wilcox standard and the numerous NLRB decisions upholding “captive audience” meetings as permissible for nearly eight decades.

NLRB General Counsel Jennifer Abruzzo first identified “captive audience” meetings as a violation of NLRA rights in a memo issued in April 2022, signaling her intention to challenge this practice in proceedings before the Board and to ask the Board to overrule Babcock & Wilcox. Last week’s decision marks the culmination of GC Abruzzo’s efforts.

However, with the impending inauguration of President-elect Donald J. Trump on January 20,2025, GC Abruzzo’s service as the NLRB General Counsel – and her triumph today over “captive audience” meetings – are likely to be short-lived. President Biden unceremoniously terminated GC Abruzzo’s predecessor, Peter Robb, on the very afternoon of his presidential inauguration, January 20, 2021. Absent GC Abruzzo’s resignation, history is likely to repeat itself and bring a swift end to GC Abruzzo’s tenure.

Although GC Abruzzo’s successor will undoubtedly identify today’s decision on his or her agenda and ask that it be reconsidered and reversed by the Board, employers should not expect an immediate return to the Babcock & Wilcox standard in January 2025 and possibly not until after August 2026. The expirations of the five-year terms of current Board members are staggered on an annual basis, and a reversal of today’s decision will depend on new appointments by the President altering the composition of the current Board. One Board seat (held by Chair McFerran) expires next month, and President Biden has nominated her for reappointment during the current lame-duck Congress. If the Senate approves her reappointment, then the earliest that the Board composition could change from a Democratic to a Republican majority would be August 2026 because the seat that expires in 2025 is held by the only Republican Board member. If the Senate fails to reappoint Chair McFerran, then majority control could switch during the first few months of next year, when President Trump would nominate (and the Republican-majority Senate likely would confirm) replacements for the seat currently held by Chair McFerran and another vacant seat formerly held by John Ring. After that, it will take a period of time that cannot be accurately quantified for the new Republican-majority Board to identify a suitable pending case to issue a decision that reverses the Board’s decisions.

Until the Board (hopefully) restores its Babcock & Wilcox standard, employers are well-advised to refrain from holding “captive audience” meetings. Employers are still free to communicate with employees about the downsides of unionization and to express their views about organizing drives; however, employees must have advance notice of the topic of such meetings, attendance must be voluntary, and no attendance records may be kept.

*If you have questions relating to these recent NLRB decisions and the changed prohibited employer actions, please contact Zashin & Rich’s experienced Labor attorneys: George Crisci (gsc@zrlaw.com) at (216) 696-4441, and Jonathan Downes (jjd@zrlaw.com) or Scott DeHart (shd@zrlaw.com) at(614) 224-4411.

Texas Court Vacates DOL 2024 Salary Threshold Rule Nationwide

By Michele L. Jakubs*

The United States District Court for the Eastern District of Texas vacated the Department of Labor’s (“DOL”) 2024 Rule that would have rendered millions of executive, administrative and professional employees nonexempt on January 1, 2025. The DOL 2024 Rule would have increased the salary threshold required for the most commonly used exemptions under the FLSA. Employees are exempt from overtime if they are paid on a salary basis and meet the duties requirements for one of these exemptions: executive, administrative, or professional.

The Court, in Texas v. DOL, previously issued a preliminary injunction preventing the DOL from enforcing the July 1, 2024 salary increase ($844 per week) for Texas as an employer only. On Friday, the Court ruled that the DOL did not have the authority to enact a rule that essentially replaced the duties tests for exempt status with a salary test and vacated the DOL rule nationwide. The Court stated that the exemptions require “that an employee’s status turn on duties—not salary—and because the 2024 Rule’s changes make salary predominate over duties for millions of employees, the changes exceed the Department’s authority to define and delimit the relevant terms.” The Court went on to state: “When a third of otherwise exempt employees who the Department acknowledges meet the duties test are nonetheless rendered nonexempt because of an atextual proxy characteristic—the increased salary level—something has gone seriously awry.”

Ultimately, the Court vacated the DOL’s 2024 Rule in its entirety. The DOL may appeal the decision or issue a revised rule. For now, however, the salary threshold for the executive, administrative and professional exemptions remains at the pre-2024 level of $684 per week or $35,568 per year and at $107,432 per year for highly compensated employees.

*If you have questions relating to the DOL’s new rule, or any other labor and employment law issues, please contact Zashin & Rich’s Wage and Hour Practice Leader, Michele Jakubs (mlj@zrlaw.com) at (216) 696-4441.

DOL SERVED A LOSS: U.S. Court of Appeals Vacates DOL 80/20/30 Tip Rule

By Michele L. Jakubs*

The Fifth Circuit Court of Appeals, in a 3-0 decision, vacated the Department of Labor’s (“DOL”) 2021 Final Rule that restricted when an employer could apply a tip credit, finding it arbitrary and capricious. Under the Fair Labor Standards Act (“FLSA”), an employer may take a tip credit, paying tipped employees at a rate below the applicable minimum wage in anticipation of tips making up the difference. In 2021, the DOL issued a Final Rule limiting when an employer could utilize the tip credit to time for work that directly produced tips (i.e., work that directly supported tips provided that work did not exceed 20% of the work time and did not exceed thirty consecutive minutes). The Fifth Circuit found that the “Final Rule is attempting to answer a question that DOL itself, not the FLSA has posed. … The FLSA does not ask whether duties composing that given occupation are themselves each individually tip-producing.”

The Fifth Circuit stated that the “Final Rule replaces the Congressionally chosen touchstone of the tip-credit analysis – the occupation – with one of DOL’s making – the timesheet,” seemingly recognizing the insurmountable burden placed on employers of parsing each minute of time worked by a tipped employee to determine its applicable category. The issue is “only whether the employee is engaged in an occupation in which he receives tips.”

The Fifth Circuit’s decision vacating the Final Rule allows employers to apply the tip credit as intended by Congress – to employees engaged in an occupation in which the employee receives tips. If the employee is performing duties unrelated to that occupation, such as a server fixing the plumbing in a restaurant, however, the employee must receive at least the full minimum wage.

*If you have questions relating to the DOL’s new rule, or any other labor and employment law issues, please contact Zashin & Rich’s Wage and Hour Practice Leader, Michele L. Jakubs (mlj@zrlaw.com) at (216) 696-4441.

UPDATE: Texas Court Prohibits Enforcement of FTC’s Non-Compete Ban Rule Nationwide

By Ami J. Patel and Kimana A. Bowen*

As you know based on our prior Alerts, the Federal Trade Commission issued a purported Rule banning employers from enforcing non-competes against “workers” with some limited exceptions. The FTC Rule was set to go into effect on September 4, 2024. However, there have been several court challenges to the FTC’s authority and the validity of the Rule.

The Texas Court Prohibits Enforcement of the Rule

On August 20, 2024, the United States District Court for the Northern District of Texas issued a decision against the FTC, prohibiting the enforcement of the FTC’s Rule—nationwide. The court agreed with the Plaintiffs in Ryan LLC, et al v. Federal Trade Commission, finding that Plaintiffs are entitled judgment on their claims under the Administrative Procedure Act (“APA”) and the Declaratory Judgment Act because: (1) the FTC lacks authority to create substantive rules; and (2) the FTC’s rule is arbitrary and capricious since it is overbroad, a one-size-fits-all, with no end date and fails to consider alternatives and the benefits of non-competes.

Because the Texas Court concluded that the FTC exceeded its statutory authority and that the FTC Rule is arbitrary and capricious, under APA § 706(2)(A)–(C), the Texas Court must “hold unlawful” and “set aside” the FTC’s Rule. According to the Texas Court, the APA has nationwide effect because it is “not party-restricted,” and “affects persons in all judicial districts equally.” As such, the Texas Court’s decision applies nationwide and is not limited to just the Plaintiffs in the Texas case.

While the September 4, 2024 effective date for the FTC Rule is set aside, we anticipate that the FTC will challenge this decision.

Florida’s Recent Ruling on the FTC Non-Compete Ban Rule

The Texas court ruling comes just days after a Florida Federal District Court also preliminarily enjoined the FTC from enforcing its Rule on non-competes against a real estate broker. The Florida Court found that the FTC will not face substantial harm if the status quo is maintained until a final decision on the Rule’s validity is made and that there was a substantial likelihood of success based on the “major questions doctrine.”

The major questions doctrine asserts that when an agency claims authority to issue rules of extraordinary economic and political significance, it must point to “clear congressional authorization” for such power. The court concluded that, given the Rule’s extensive application, including its purported application to existing contracts, it is “substantially likely that the rule presents a major question as defined by the Supreme Court.”

What Now for Employers

Sit Tight. For now, employers have a good-faith basis that the Rule will not go into effect on September 4, 2024. However, employers should use this issue as an opportunity to assess whether their current agreements protect their business, information, and interests as desired. Employers should work with experienced trade secret and non-compete lawyers to evaluate whether their workers have well-drafted agreements in place and to revise stale ones.

*Please contact Z&R’s Practice Leader of its Non-Compete/Trade Secret practice, Ami J. Patel (ajp@zrlaw.com) at 216-696-4441 or Kimana A. Bowen (kab@zrlaw.com), if you have any questions about the effect of these decisions on the FTC’s purported Non-Compete Rule or need assistance with review of your existing documents or how to draft new agreements.

A Checklist Guide for Employers on How to Prepare for the Potential Non-Compete Ban Rule by the FTC

By Ami J. Patel and Kimana Bowen*

Understand the Texas and Pennsylvania Courts’ Rulings and Their Potential Impact

• The Texas Court
  On July 3, 2024, the U.S. District Court for the Northern District of Texas granted a stay and preliminary injunction against the Federal Trade Commission’s (“FTC”) Rule banning non-competes. The court found that Ryan LLC (“Ryan”) and the Chamber of Commerce of the United States of America, Business Roundtable, Texas Association of Business, and Longview Chamber of Commerce (collectively the “Chamber”)are likely to succeed on the merits, face irreparable harm without the injunction, and that the balance of harms and public interest favor the injunction.
  
  While the FTC’s Rule is stayed for Ryan and the Chamber, the court has not blocked the Rule nationwide. A final decision on the merits is expected by August 30,2024, which may affect the scope of the injunction.
  
  Be on the lookout for our Alert on the Texas Court’s August 30thruling as it may modify this checklist.

• The Pennsylvania Court
  On July 23, 2024, the United States District Court for the Eastern District of Pennsylvania declined to issue a preliminary injunction enjoining the Federal Trade Commission (“FTC”) from enforcing its Rule banning non-competes. The court found that ATS Tree Services, LLC failed to prove irreparable harm or likelihood of success on the merits.

Know What the Final Rule Requires

The final Rule will invalidate all non-compete clauses for workers who are not senior executives. Existing non-competes for senior executives will remain in effect, but employers cannot require new non-competes for senior executives after the Rule’s effective date. The Rule prohibits:

1. Entering into or attempting to require an employee to enter into a non-compete clause.
2. Enforcing or attempting to enforce a non-compete clause.
3. Representing that a worker is subject to a non-compete clause.

• Non-Compete Clause
  The Rule defines a “non-compete clause” as “a term or condition of employment that prohibits worker from, penalizes a worker for, or functions to prevent a worker from:

1. seeking or accepting work in the United States with a different person where such work would begin after the conclusion of the employment that includes the term or condition; or
2. operating a business in the United States after the conclusion of the employment that includes the term or condition.”

A “term or condition of employment” includes, but is not limited to, a contractual term or workplace policy, whether written or oral.

The final Rule defines “worker” as “a natural person who works or who previously worked, whether paid or unpaid, without regard to the worker’s title or the worker’s status” under any other state or federal law.

Accordingly, “worker” includes employees, independent contractors, externs, interns, volunteers, apprentices, or sole proprietors who provide services to a person.

Know the Exceptions to the Rule

The FTC Rule has the following exceptions:

Bona fide sales of business. The Rule (ban) does not apply to a noncompete clause that is “entered into by a person pursuant to a bona fide sale of a business entity, of the person’s ownership interest in a business entity, or of all or substantially all of a business entity’s operating assets.”

Existing causes of action. The Rule (ban) does not apply “where a cause of action related to a non-compete clause accrued prior to the effective date.”

Good faith. The Rule (ban) does not apply “where a person has a good-faith basis to believe that the Rule is inapplicable.”

Review your contracts with non-competes and the existing status of the cases to determine if any of these exceptions apply.

Continue to Enforce Existing Non-Competes with Senior Executives

Even if enforced, the FTC Rule permits enforcement of current non-competes with senior executives. The final Rule defines “senior executive” as “a worker who:

• Was in a policy-making position; and
• Received for employment:

1. a total annual compensation of at least $151,164 in the preceding year; or
2. a total compensation of at least $151,154 when annualized if the worker was employed during only part of the preceding year; or
3. a total compensation of at least $151,164 when annualized in the preceding year prior to the worker’s departure if the worker departed from employment prior to the preceding year and the worker is subject to a non-compete clause.”

Consider Non-Solicitation and Non-Disclosure/Confidentiality Agreements

As the FTC’s Rule is litigated and set to take effect on September 4, 2024, employers should review their employee contracts and consider the benefits of using or revising non-solicitation and confidentiality provisions to protect their legitimate business interests and their confidential, proprietary and trade secret business information.

• Non-Solicitation Agreements
  An effectively drafted non-solicitation agreement can successfully prevent former employees from soliciting current employees and customers after leaving the company. Such agreements must be reasonable and narrowly tailored to protect legitimate business interests. Review your current agreements to determine if they remain valid under the new Rule and to ensure that they effectively protect your business.
  
  
• Non-Disclosure/Confidentiality Agreements
  Non-Disclosure/Confidentiality Agreements are contracts or provisions where a current or former employees agree not to disclose certain types of valuable business information. Review your current agreements to determine if they remain valid under the new Rule and to ensure that they effectively protect your confidential and valuable business information.
  
  

Consider Drafting Notices (but hold off on sending them out)

The Rule requires employers to notify non-senior executive workers with existing non-competes that their non-competes are no longer enforceable.

The final Rule includes a model for employers to use to draft compliant notices. The model notice from the FTC advises employers to inform employees of the following: (1) they may seek or accept a job with any company or any person - even if they compete with the employer; (2) they may run their own business - even if it competes with the employer; and, (3) they may compete with the employer following their employment.

The final Rule also requires that the notice provide the following: (1) the name the person who agreed to the non-compete clause with the worker, and (2) a notice on paper by hand to the worker, or sent by mail to the worker’s last known personal street address, or emailed to an address belonging to the worker, including the worker’s current work email address or last known personal email address, or texted to a mobile number belonging to the worker.

While employers should assess and identify which employees should receive these notices, employers should wait on sending those notices due to the ongoing litigation, which could significantly impact the Rule’s enforceability.

First, as previously stated, one of the exceptions to the final Rule is having a good-faith basis to believe that the Rule is inapplicable. There is a split in the Federal Circuit Courts between Pennsylvania, Texas, and potentially others. Accordingly, if the employer is similarly situated to the Texas Plaintiffs and has a good-faith belief that the Texas Court ruling is the correct interpretation of the law, then the exception could apply. In that scenario, the employer could have a defense to enforcement of the FTC Rule and its notice requirements.

Second, with the Circuit split and the upcoming election, there is a real possibility that the final Rule may be rendered unconstitutional or eliminated.

Continue to Monitor the Alerts from Z&R

As the situation continues to evolve, employers should familiarize themselves with the moving parts, this Checklist, and begin identifying the employees and agreements subject to the potential Rule (ban of non-competes). Once identified, employers should evaluate what types of protections are in the employer’s best interest. While the FTC’s new Rule has been enjoined from enforcement (in one Court) and its validity continues to be litigated, employers should prepare but continue to wait for further guidance as this matter develops. Continue to stay tuned and Z&R will update you.

*Please contact ZR’s Practice Leader of its Non-Compete/Trade Secret practice, Ami J. Patel (ajp@zrlaw.com) at 216-696-4441 or Kimana Bowen (kab@zrlaw.com) if you have any questions about any of the items on the check list regarding the FTC’s new Non-Compete Rule or need assistance with review of your existing and new agreements.

UPDATE: The Court Enjoins the FTC From Enforcing The Non-Compete Ban. We Told You Not To Panic!

By Ami J. Patel* and Kimana Bowen

On July 3, 2024, the United States District Court for the Northern District of Texas, Dallas Division, partially granted a stay and preliminary injunction against the Federal Trade Commission’s (“FTC’s”) rule banning non-competes. The court found that Ryan LLC(“Ryan”) and Chamber of Commerce of the United States of America, Business Roundtable, Texas Association of Business, and Longview Chamber of Commerce (collectively the “Chamber”) are likely to succeed on the merits, will suffer irreparable harm without the injunction, and that the balance of harms and public interest favors granting the injunction.

Likelihood of Success on the Merits

While the court’s injunction is not a final decision, the court gave us a preview of the grounds under which it asserts that Ryan and the Chamber will succeed on the merits. First, the court found that the FTC lacks statutory authority to enforce the rule. Although the FTC can create rules concerning unfair methods of competition, the court concluded that the FTC, under Section 6(g) of Federal Trade Commission Act, can only create "housekeeping," procedural rules, not substantive ones as it tried to do here.

Additionally, the court found that the FTC's actions likely violated the Administrative Procedure Act (APA), which requires courts to set aside agency actions deemed arbitrary, capricious, an abuse of discretion or otherwise not in accordance with the law. Ultimately, the court found that Ryan and the Chamber will likely be able to demonstrate that the FTC's rule is overly broad, lacks a reasonable explanation, and imposes a “one-size-fits-all” approach without addressing alternatives, making it arbitrary and capricious.

Irreparable Harm and Public Interest

The court also determined that Ryan and the Chamber were able to articulate irreparable harm if an injunction was not granted. In particular, the court found that the nonrecoverable costs of complying with the FTC rule, which it determined will likely be invalidated, are irreparable.

The court asserts that granting the preliminary injunction serves the public interest by maintaining the status quo and preventing substantial economic impact, while inflicting no harm on the FTC. The FTC rule, if enforced, would make long-standing contractual agreements, recognized as beneficial to the public interest, unenforceable.

What’s Next for Employers?

The September 4,2024 effective date of the FTC’s non-compete rule is stayed, and the FTC is enjoined from implementing or enforcing its non-compete rule against Ryan and the Chamber. The court intends to issue a merits disposition on this action on or before August 30, 2024, and it is unclear if that ruling will block the FTC rule nationwide or continue to be limited to Ryan and the Chamber. There are other challenges to the FTC rule that will be decided soon.

As the situation continues to evolve, do not panic. While the FTC’s new rule has been enjoined from enforcement and its legitimacy is being litigated, employers should wait for further guidance as this matter develops. Continue to stay tuned and Z&R will continue to update you.

*Please contact ZR’s Practice Leader of its Non-Compete/Trade Secret practice, Ami J. Patel (ajp@zrlaw.com) at 216-696-4441 if you have questions relating to the FTC’s new Non-Compete Rule and need assistance with review of your existing agreements.