If an employer decides to take action based on social media use, that action should align with applicable law, company polices, company culture, the severity of the offense, and decisions the employer will make in the future.  

Federal, state and local laws govern whether an employer can take an employment action based on social media use, even when the use disrupts business.  For example, some state and local laws specifically safeguard employees’ conduct (whether on-duty or off-duty) related to their political views.  Others protect employees’ off-duty conduct, including social media use, requiring employers to link the conduct to the job before taking disciplinary action. While federal laws do not directly protect political affiliation or speech in the private employment context, anti-discrimination laws may be implicated when employee speech involves a protected characteristic (e.g., race, color, sex, religion, age, disability, veteran status, etc.), and federal law protects employees who engage in concerted activities to improve the terms and conditions of their employment.

Company policies may prohibit certain conduct and/or promise protection for political speech or off-duty conduct. Companies should honor their policies and apply them consistently. Now would be a good time to refresh relevant policies and training (social media, code of conduct, safety, etc.) and consider a reminder to employees about the importance of following the law and company policies with respect to communications inside and outside of work.

Each situation must be considered on its own facts and in light of the employer’s risk tolerance and cultural priorities. For example, action may be appropriate if a social media post promotes violence, is egregiously offensive, or targets a person’s or group’s protected characteristics (e.g., age, race, sex or ethnicity), but a post that civilly expresses one’s opinion on a loaded political issue (e.g., gun control, abortion, or immigration), even if different from the company’s views, might not warrant action.  And, employers should consider the precedent they may be setting when they make a decision in an individual case, even when the action they want to take is not specifically prohibited by applicable law.

There are a wide variety of potential responses to these situations, depending on the circumstances.  We can help businesses sort through the complications and find an appropriate course of action.

The post Employment Law Alert – Reacting to Employee Social Media Posts appeared first on Morningstar Law Group.

Within two weeks after the issuance of those two EOs, federal courts in Washington and Maryland issued orders restraining the enforcement of certain provisions of the EOs, on grounds of vagueness, fair notice, and freedom of speech.[1] On February 28, the Washington court converted its nationwide temporary restraining order to a preliminary injunction covering only 4 states: Colorado, Minnesota, Oregon and Washington.[2] The Maryland court’s nationwide preliminary injunction still stands.  Just yesterday (March 3) the Maryland court issued an order refusing to stay its injunction while the government appeals to the Fourth Circuit Court of Appeals to overturn the injunction.[3]  It is expected that the administration will issue additional guidance in short order, attempting to remedy some or all of the deficiencies underlying the injunctions, which may nor may not provide relief or greater clarity to employers.  Meanwhile, the provisions of the EOs that were not enjoined remain in full force and effect.

Obviously, this is a rapidly evolving situation. So, should we do anything now, or wait?

Does your organization need to update its DEI initiatives and stop affirmative action plans?

Yes!  But don’t panic.  If your organization is subject to federal anti-discrimination laws[4] and has not already done so, it needs to update its DEI statements, policies, and programs now – not necessarily to abandon them, but to strengthen their focus and tidy up commonly used loose language that could increase the risk of unnecessary disputes.

And, if your organization is a federal government contractor, April 20 is its deadline for stopping all affirmative action programs previously required for federal government contracting.    This obligation was not enjoined by the injunction issued February 21, 2025.

What has changed with respect to DEI programs and AA plans since January 20, 2025?

Most DEI programs are compliant with existing anti-discrimination law, which has not changed.  So, what has changed?   Here’s what the EOs changed (among other things):

• Executive Order 14173 directed federal agencies to root out DEI from public and private employment:
  • (Section 2) directed all federal executive departments and agencies to “enforce our longstanding civil-rights laws and to combat illegal private-sector DEI preferences, mandates, policies, programs, and activities” (Agency enforcement actions under this provision are currently enjoined nationwide by order of the Federal District Court for the District of Maryland);
  • (Section 4) directed all federal executive departments and agencies to “take all appropriate action” to “advance in the private sector the policy of individual initiative, excellence and hard work identified in section 2 of this order”; and
  • (Section 4) deputized the US Attorney General to submit a report containing recommendations “for enforcing Federal civil-rights laws and taking other appropriate measures to encourage the private sector to end illegal discrimination and preferences, including DEI,” with specific directives to identify key sectors of concern and the “most egregious DEI practitioners in each sector”; for each agency to “identify up to nine potential civil compliance investigations of publicly traded corporations, large non-profit corporations or associations, foundations with assets of 500 million dollars or more, State and local bar and medical associations, and institutions of higher education with endowments over 1 billion dollars”; and to suggest to the administration investigations, litigation, and regulatory actions;
• Executive Order 14173 changed contracting requirements for federal government contractors (Section 3):
  • Revoked the affirmative action requirement for federal contractors and other nondiscrimination requirements under Executive Order 11246 of September 24, 1965 (Equal Employment Opportunity), giving federal contractors a grace period of 90 days (i.e., until April 20, 2025) to dismantle their compliance with EO 11246;  and,
  • Ordered every federal government contract to be revised to require the contracting party “to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws” and to make compliance with those laws material to the government’s payment decision, leveraging the enforcement tools of the False Claims Act, which allows lawsuits to be brought by private citizens (including disgruntled employees) for the benefit of the government and be awarded a bounty on the recovery.  (The certification requirement, contract revisions, and False Claims Act enforcement under the EO currently are enjoined nationwide by order of the Federal District Court for the District of Maryland, at least for the named parties – a motion for clarification has been filed to determine whether the injunction applies to all agency requests for certification or just those directed to the named parties); and,
• Executive Order 14151 ended diversity, equity, inclusion, and accessibility initiatives of government agencies and programs, including ordering the termination of all “equity-related” government grants and contracts within 60 days (This provision is currently enjoined nationwide by order of the Federal District Court for the District of Maryland).

Although several provisions of these Executive Orders have been temporarily enjoined nationwide by a federal district court (1:25-cv-00333-ABA (D. Md. Feb. 21, 2025)) (enjoined provisions are noted in italics above), the injunction does not negate or otherwise affect:

• The requirement for federal contractors to end affirmative action programs by April 20, 2025;
• The directive to the Attorney General to prepare reports and conduct investigations into “illegal DEI” programs;
• Enforcement actions by federal agencies such as the Equal Employment Opportunity Commission (EEOC) under their existing authority (not under EO 14173); and
• Individual EEOC charges and lawsuits based on “Illegal DEI.”

The administration has neither defined the term “illegal DEI” nor provided specific guidance regarding the practices it intends to target with enforcement actions (other than “affirmative action” and “preferences”).  However, employers may take steps to mitigate the risk of litigation or adverse regulatory action. 

Action Steps to Take Now

• All employers covered by federal anti-discrimination laws need to review their EEO initiatives for compliance and clarity.  Here are some priority focus areas:
  • Eliminate affirmative action plans and programs (except those required by state or local regulations), quotas, preferences, set-asides, and programs and benefits for which inclusion or exclusion is based on protected status;
  • Review DEI positions and functions, DEI-related goals and targets, diverse slates, supplier diversity programs, employee resource groups (ERGs), targeted mentoring and training programs, participation in external surveys, corporate sponsorships, and other DEI-focused programs, which are neither per se legal nor illegal (depending on how the programs are published and operate);
  • Strengthen and clarify EEO language in contract terms, public filings, ESG statements, DEI statements, ERG information and documents, recruiting materials, websites, codes of ethics, and employment handbooks; and,
  • Review and ensure purposeful and compliant EEO data collection and reporting.
• Federal government contractors:
  • If the organization is subject to state or local government contracting regulations, determine their specific requirements (about half of the states have their own affirmative action and reporting requirements that remain in effect[5]);
  • Cease all affirmative action plans and programs, except those required for compliance with state or local government regulations;
  • Watch for agency and contractor inquiries regarding DEI-related contract terms and seek counsel regarding responding (even to informal inquiries), as these can result in False Claims Act liability regardless of the outcome of the ongoing litigation regarding the certification requirement; and
  • Take steps to be positioned to make certifications if and when required. 

Bottom line:

Federal anti-discrimination statutes and regulations have not changed.  Federal agencies’ interpretations of the statutes and regulations have changed, along with their enforcement focuses and resources.

Morningstar Law Group can help your organization update its statements and programs for compliance with the law while mitigating against the risk of enforcement proceedings and lawsuits.  Based on our understanding of the law, published materials and statements by the administration, ongoing litigation regarding the EOs, and historical trends, we have a strong understanding of the risk areas that employers need to focus on for compliance and risk avoidance.

[1] Mem. Op., PFLAG, Inc. et al. v. Trump et al., Civ. No. 25-337-BAH (D. Md. Feb. 14, 2025); Washington et al. v. Trump et al., No. 2:25-cv-244-LK (W.D. Wash.), ECF No. 158 (Feb. 14, 2025).

[2] Order Granting in Part and Denying in Part Motion for Preliminary Injunction, Washington et al. v. Trump et al., No. 2:25‑cv‑244-LK (W.D. Wash.) (Feb. 28, 2025).

[3] The Trump administration has appealed to the United States Court of Appeals for the Fourth Circuit to overturn the injunction, with briefing due April 8 and May 8.  On March 3, the Maryland District Court refused to stay the injunction pending appeal.

[4] Most organizations with 15 or more employees are subject to federal anti-discrimination laws, including Title VII of the Civil Rights Act, and the Americans with Disabilities Act.  Organizations with 1 or more employees are subject to the Equal Pay Act.  Contact us if you have questions about what laws apply to your organization.

[5] If your organization is both a state or local government contractor and a federal contractor and faces conflicting requirements, your organization should seek counsel regarding navigating that scenario.

The post Employment Law Update – DEI and Affirmative Action Plans, Action Steps to Take Now appeared first on Morningstar Law Group.

Our 2025 Super Lawyers®.

• Keith Anthony
• Bill Brian
• Amie Flowers Carmack
• Chris Graebe
• Chris Jackson
• Gene Jones
• Shannon Joseph
• John Kivus
• Michael Ovsievsky
• Mack Paul

Our 2025 Rising Stars®.

• Nick Bogdash
• Will Graebe
• Kenzie Rakes
• Britney Weaver

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Petitioner Sgt. Jatonya Clayborn Muldrow worked as a plainclothes officer for the St. Louis Police Department for nine years in its specialized Intelligence Division.  During this time, she showed strong performance, worked with high-ranking officials, and had a consistent weekday schedule, along with access to FBI credentials, an unmarked take-home vehicle, and the authority to pursue investigations outside of St. Louis.  In 2017, the Intelligence Division commander transferred Muldrow out of the unit and into a uniformed position and replaced her with a male officer.  Though her rank and pay remained the same in her new role, her perks, scheduling, responsibilities, status, and professional relationships did not.   

Muldrow sued the City of St. Louis under Title VII, claiming that the transfer was a discriminatory employment action.  The District Court held, and the U.S. Court of Appeals for the Eighth Circuit affirmed, that Muldrow was required and had failed to show “significant” change in her working conditions, because the transfer caused only minor changes that did not reduce her title, salary, or benefits.  The case made it to the Supreme Court, which ultimately vacated the lower courts’ judgment, holding that a job transfer can be deemed discriminatory even if the employee’s pay and title remain the same, and that a loss of perks, change of duties, and transfer to a position of less favorable status are enough to demonstrate the level of harm required for a discriminatory employment action.  The Court found that the language of Title VII only required Muldrow to show that the transfer brought about some “disadvantageous” change in an identifiable term or condition of her employment based on her protected characteristic(s), and that Muldrow was not required to show an elevated threshold of harm or that the injury incurred satisfied a “significance” test, as “Title VII’s text nowhere establishes that high bar,” and requiring such would demand more of Title VII plaintiffs than the law as written requires.  Accordingly, while Muldrow represents a victory for Title VII claimants, it also represents another victory for the principles of textualism in statutory interpretation, whereby courts must interpret and apply a statute’s express and plain language and may not add limitations or additional proof requirements not contained within the text.  

When making employment decisions, employers should remember that keeping an employee’s title/rank the same and/or maintaining their salary at the same level, while making other changes to their role, compensation opportunities, or benefits, will not be enough alone to stave off a discrimination claim.  All changes will need to be considered.  In addition to Title VII discrimination claims, the Muldrow standard of harm could also apply to discrimination claims in the context of ADA accommodation discrimination and failure to accommodate claims.

If you have any questions, please do not hesitate to contact our firm. 

Special Thanks to Legal Intern, Alexandra Carmack

The post Employment Law Alert: “Materially Significant Disadvantage” No Longer Required for Race or Gender Discrimination Claims (Muldrow v. St. Louis) appeared first on Morningstar Law Group.

Ongoing Litigation:  On July 3, 2024, the United States District Court for the Northern District of Texas postponed the effective date of the Final Rule.  The Court is currently hearing the case filed against the FTC by Ryan LLC and its intervenors (Chamber of Commerce of the United States of America, Business Roundtable, Texas Association of Business, and Longview Chamber of Commerce), and the judge has announced that she intends to issue a decision about whether to permanently enjoin the rule by August 30, 2024.  While the current preliminary injunction applies only to the named Plaintiffs, Judge Brown’s final decision on August 30^th may apply to non-parties as well under Fifth Circuit precedent.  The presiding Judge requested that the parties brief the issue of nationwide application of the injunction before she issues her merits disposition.  Ryan LLC v. Federal Trade Commission.  There are differing opinions among experts as to whether a federal circuit court has the authority to enter a nationwide injunction, so it’s possible the case could ultimately go to the Supreme Court, leaving a nationwide stay of enforcement in the grey zone for a longer period. 

Opponents of the rule argue that the FTC has exceeded its rule-making authority conveyed by the Administrative Procedure Act (APA) and intruded on an area usually legislated by state governments.  They claim that non-competes safeguard companies’ trade secrets, protect them from client losses, and ultimately help workers by increasing retention of highly trained employees.   

Proponents (workers’ rights organizations, etc.) claim that non-competes are exploitative, that non-disclosure and solicitation agreements are sufficient to protect businesses, and that banning non-competes will increase workers’ wages, innovation from locked up talent, and new startups. 

Either Way, the Ball Bounces:  Regardless of the outcome in the Texas Court, it is likely that there will be continued activity on this issue as public support for advancing workers’ bargaining positions is growing.  If the Final Rule is invalidated, it’s likely that the FTC will propose a new version that more closely mirrors certain existing state laws, which limit the applicability of non-competes, for example, with salary thresholds.   

Looking Ahead: Now is a good time to reassess your approach to restrictive covenants in case the Final Rule is not blocked.     

• Focus non-compete requirements on categories of workers with intimate access to competitive information and relationships, and the types of covenants that protect those assets.   

• Be sure covenants are narrowly tailored for enforceability based on the Final Rule’s language, and severable so that language found to be invalid will not invalidate other language.   

• Since non-competes with senior executives (those with over $151,164 annual compensation and in a policy making position for the business) and those entered in the context of a bona fide sale of a business interest (requiring sufficient bargaining power in the transaction) will be grandfathered, but new ones prohibited, make sure you have those in place before the Final Rule’s new effective date (TBD). 

• Stay up-to-date with the ongoing litigation surrounding the Final Rule, particularly the decision set to come August 30, 2024, and prepare to notify employees that their non-compete covenants will be unenforceable if the Court is unable to block the FTC’s non-compete ban

Should you need assistance with any of these matters, please do not hesitate to contact our firm.

Special Thanks to Intern, Alexandra Carmack

The post Employment Law Alert: FTC’s Non-Compete Ban Stayed by Court appeared first on Morningstar Law Group.

Higher FLSA Salary Level Thresholds for Exempt Employee Status – Effective July 1^st

As of July 1, 2024, substantially more employees became eligible for minimum wage and overtime requirements as a result of the Department of Labor’s (DOL) increases in the Salary Level Thresholds for exempt status under the Fair Labor Standards Act (FLSA). Final Rule – 29 CFR 541.

Exempt employees must be paid on a predetermined salary basis, regardless of the quality or quantity of their work:

• New Standard Salary Level Threshold
  • $844 per week ($43,888 annualized)
• New Highly Compensated Employee Total-Compensation Threshold
  • $132,964 per year, including at least $844 per week

The thresholds will increase again in January 2025, and beginning in July 2027 will be updated every three years based on DOL earnings data.

Action to Take Now:  Assess the classifications of all employees and either (i) adjust salaries as needed to meet the minimum threshold, or (ii) reclassify employees who no longer meet the minimum threshold as non-exempt and take the necessary steps to record their worktime and pay overtime as appropriate.

New FLSA Independent Contractor Classification Test

In March 2024, the DOL changed its requirements for a worker to be classified as an independent contractor for minimum wage and overtime purposes. 

The old standard focused on two main factors (the nature and degree of the worker’s control over the work, and the worker’s opportunity for profit or loss) out of a set of five factors.  The new standard weighs six factors equally to produce a more holistic (totality-of-the-circumstances) assessment of workers’ economic realities and dependence on employers as the basis for determining whether the worker is an employee or an independent contractor, regardless of any agreement between the worker and employer.  The new standard is weighted toward finding employee status, so that more workers will have access to minimum wages and overtime pay. 

The Final Rule (89 FR 1638) provides a list of the 6 factors necessary to prove independent contractor status, along with commentary explaining how each will be evaluated:

1. Opportunity for profit or loss depending on managerial skill,
2. Investments by the worker and the employer,
3. Permanence of the work relationship,
4. Nature and degree of control,
5. Whether the work performed is integral to the employer’s business, and
6. Skill and initiative.

This change is representative of the surge of public opinion (and state law changes) on independent contactor status, and is expected to have significant implications in the construction, transportation, and gig economies as companies navigate the classifications of their workers.  

Businesses using independent contractors should review their relationships with workers in light of the new DOL rule, as well as other federal agency rules (e.g., IRS) and applicable state laws and regulations limiting independent contractor status.  

Should you need assistance with any of these matters, please do not hesitate to contact our firm.

Special Thanks to Intern, Alexandra Carmack

The post Employment Law Alert: New Rules for Worker Classifications appeared first on Morningstar Law Group.

What’s New?  To be considered non-exempt under FLSA regulations, a position must meet three tests: the salary basis test, the salary level test, and the duties test.  There are two salary level tests that set the minimum amount an employee can earn to be considered exempt from FLSA overtime protections: the standard salary test and the highly compensated employee total-compensation test.

While the salary basis and duties tests remain unchanged, the DOL’s new final rule increases the compensation thresholds for both the standard salary level test and the highly compensated employee test as explained below:

New Standard Salary Level Threshold

• Before July 1, 2024:  $683 per week ($35,568 annualized)
• Effective July 1, 2024:  $844 per week ($43,888 annualized)
• Effective January 1, 2025:  $1,128 per week per week ($58,656 annualized)

New Highly Compensated Employee Total-Compensation Threshold

• Before July 1, 2024:  $107,432 per year, including at least $684 per week paid on a salary or fee basis
• Effective July 1, 2024:  $132,964 per year, including at least $844 per week paid on a salary or fee basis
• Effective January 1, 2025:  $151,164 per year, including at least $1,128 per week paid on a salary or fee basis

After 2025, the final rule provides for updates of these thresholds every three years beginning on July 1, 2027 to reflect current earnings data.

Anything to do now?  Now is a good time to reassess the classification of all employees.  Before July 1, 2024, prepare to (i) raise salaries as needed to meet the minimum threshold or (ii) reclassify employees who will no longer meet the minimum threshold as non-exempt and take the necessary steps to begin paying overtime as appropriate. Should you have any questions regarding these updates, please do not hesitate to contact our firm.

Should you have any questions regarding this ruling, please do not hesitate to contact our firm.

The post Employment Law Alert: DOL Updates / Revises Fair Labor Standards Act (FLSA) Regulations appeared first on Morningstar Law Group.

Contact Amie, Hank, or Britney with any questions or to discuss your employment law needs.

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No New Non-competes: In short, the final rule is a comprehensive ban on new non-competes with all workers at all levels (including employees, independent contractors, interns, volunteers, etc.), effective 120 days after publication of the Final Rule in the Federal Register, which we expect to occur very soon.

Existing Non-competes only for Senior Execs: The rule allows existing non-competes with senior executives to remain, while declaring existing non-competes with other workers to be unenforceable, and requires companies to inform those worker that their non-compete covenants will not be enforced.

Sale of Business Exception: A non-compete entered into pursuant to a “bona fide sale” is not prohibited by the rule. The FTC drew some blurry lines in the sand: “In general, the Commission considers a bona fide sale to be one that is made between two independent parties at arm’s length, and in which the seller has a reasonable opportunity to negotiate the terms of the sale. So-called “springing” non-competes and non-competes arising out of repurchase rights or mandatory stock redemption programs are not entered into pursuant to a bona fide sale because, in each case, the worker has no good will that they are exchanging for the non-compete or knowledge of or ability to negotiate the terms or conditions of the sale at the time of contracting. Similarly, sham transactions between wholly owned subsidiaries are not bona fide sales because they are not made between two independent parties.”

Will it Stand? Many have argued that the FTC has exceeded its rule-making authority. Court challenges are already underway, and likely the Rule will be stayed pending a final court ruling. However, as noted by Morningstar Government Actions Partner, Swain Wood, “[t]here is evidence that political support for advancing workers’ bargaining position with employers may be growing in some quarters. As a result, even if legal challenges to the new FTC rule prove successful, there will likely be continued activity on this issue in state and federal legislative arenas and among State Attorneys General.” So, stay tuned.

Anything to do now? Now is a good time to review and update your restrictive covenants. If the Rule becomes effective in its current form, non-competes entered with senior executives prior to the effective date will remain in force, so make sure you have those in place. Many confidentiality and nonsolicitation covenants will need to be tweaked to avoid being swept under the auspices of the Rule. And, for all workers and all restrictive covenants, it is important that covenants be severable in case the court carves down the Rule and so that a covenant found to be invalid will not invalidate other covenants.

Should you have any questions regarding this ruling, please do not hesitate to contact our firm.

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