NEWS Archive - Castle Publications, LLC

FEDERAL EMPLOYEE REINSTATEMENT IN QUESTION AFTER SUPREME COURT RULING

After a series of legal and political challenges, the U.S. Supreme Court recently intervened to pause a federal court order that mandated the reinstatement of tens of thousands of probationary federal workers. These workers were terminated from six federal agencies under an initiative by the Trump Administration under the auspices of maximizing governmental efficiency and productivity. Despite the U.S. Supreme Court ruling, there is still ongoing litigation that not only continues to question the boundaries of executive power but also highlights critical issues of federal employee rights and judicial overreach.

1. The Mass Firing Of Government Employees

The legal battles began on February 13, 2025, when the Office of Personnel Management (“OPM”) issued a directive as part of President Trump’s broader effort to streamline federal operations. This directive led to the termination of tens of thousands of federal employees, a move justified by the Trump Administration as a measure to dramatically improve workforce efficiency. Probationary employees, typically those in the first year or two of their federal employment, were disproportionately affected.

The directive was promptly challenged by many non-profits and advocacy groups, including the American Federation of Government Employees and the American Federation of State, County, and Municipal Employees. These groups argued that OPM exceeded its statutory authority under the Administrative Procedure Act by directing terminations across multiple federal agencies without congressional approval. They further argued that the substantial loss of federal employees would adversely affect the services they rely on and harm their workers.

2. Preliminary Injunction In The Northern District Of California

The legal challenge gained significant momentum when Judge William Alsup of the U.S. District Court for the Northern District of California issued a preliminary injunction on March 13, 2025. Basing his decision only on the challengers’ arguments, Judge Alsup concluded that the OPM’s actions were “ultra vires,” meaning beyond its legal authority, as the power to hire and fire federal employees is vested in individual agencies, not the OPM. In his detailed ruling, Judge Alsup emphasized that the mass terminations were orchestrated without proper authorization and violated statutory requirements. The injunction mandated the immediate reinstatement of roughly 16,000 employees from the departments of Agriculture, Defense, Energy, Interior, Treasury, and Veterans Affairs.

3. The Supreme Court’s Pause On Reinstating Federal Employees

On April 8, 2025, the U.S. Supreme Court intervened, granting an emergency application filed by the OPM to stay Judge Alsup’s order. By a 7-2 vote, the Justices agreed the nine non-profit organizations challenging the terminations lacked standing—a legal right to sue—thereby halting the reinstatement process. Providing little explanation, the unsigned order stated, “[t]he District Court’s injunction was based solely on the allegations of the nine non-profit-organization plaintiffs in this case. But under established law, those allegations are presently insufficient to support the organizations’ standing.”

Justices Sonia Sotomayor and Ketanji Brown Jackson dissented, arguing that the standing issue should not have been addressed at this stage.

4. A Maryland Court Order

While the U.S. Supreme Court’s decision paused the Northern District of California’s preliminary injunction, a separate ruling from a Maryland court remains in effect. There, Judge James K. Bredar of the U.S. District Court for the District of Maryland sided with a number of states that challenged the OPM’s directive and held that the mass terminations violated federal reduction-in-force statutes. Judge Bredar ordered the reinstatement of employees across 20 agencies. This order applies to a broader range of federal agencies in 19 states and the District of Colombia.

Because this order remains effective, it adds a layer of complexity to the legal proceedings as it is currently under appeal at the Fourth Circuit.

5. Where Things Stand Now

The U.S. Supreme Court’s intervention provided temporary relief to the Trump Administration, allowing it to pause the reinstatement of federal employees while the litigation unfolds. The case now heads back to the Ninth Circuit, which had previously rejected a similar request to pause the order on March 17. The Ninth Circuit’s forthcoming review of the preliminary injunction will be pivotal in determining the future of the affected employees. Meanwhile, the Maryland court order offers some protection until there is a ruling in the Fourth Circuit.

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About The Author

Luke Bickel is an attorney in Sheppard Mullin’s Labor and Employment Practice Group in the firm’s San Diego (Del Mar) office. Mr. Bickel defends employers of all sizes in matters involving discrimination, retaliation, harassment, wrongful termination, and wage and hour. He has experience defending all aspects of employment-related claims, from single plaintiff to class and PAGA matters, in state and federal court. Beyond the realm of litigation, Luke advises clients on employment issues ranging from wage and hour compliance to federal OSHA and Cal/OSHA investigations. Luke’s experience also includes helping clients obtain workplace violence restraining orders and conducting workplace investigations.

Luke is a consistent contributor to Sheppard Mullin’s Labor & Employment Law Blog, Trade Secrets Law Blog, and the California Labor and Employment ALERT.

Mr. Bickel received his law degree from the USC Gould School of Law and his undergraduate degrees from Cal Poly State University, San Luis Obispo, magna cum laude.

WHAT EMPLOYERS SHOULD KNOW ABOUT RESPONDING TO ICE ENFORCEMENT ACTIONS

With the Trump Administration’s renewed focus on immigration, many companies are asking what to expect, and how to respond to a potential raid on their facilities by Immigration and Customs Enforcement (“ICE”). As enforcement activities continue to unfold, employers should take proactive steps to prepare for possible ICE visits or audits.

ICE is charged with the arrest, detention and removal of certain non-citizens. Most employers are already aware that ICE conducts occasional I-9 audits. But the new administration signals an increased likelihood of ICE visiting worksites to arrest non-citizens who are subject to removal from the U.S. These actions are typically based on a civil administrative warrant, although occasionally they arise from a judicial criminal warrant. Most likely though, the Enforcement & Removal Operations (“ERO”) division of ICE will focus on non-citizens with serious criminal convictions and those who were ordered removed by an Immigration Judge but have failed to depart the U.S.

Additionally, we anticipate an increase in I-9 audits in the coming years. However, due to limited agency resources and the likely economic impact, we do not expect mass raids. While some I-9 audits will be randomly selected, others will be based on a broader investigation that ICE may be conducting of that company.

Below is some guidance to prepare employers for possible ICE visits or audits.

1. ICE Priorities

The Enforcement & Removal Operations division of ICE has announced that it will target non-citizens with serious criminal convictions and those who were ordered removed by an Immigration Judge but failed to depart the U.S.

2. Civil Arrests With An Administrative Warrant From ICE

Most immigration status violations are a civil matter, not criminal. ICE has authority to issue civil administrative warrants to take custody of individuals that it has probable cause to believe are removable from the U.S. These are signed by ICE immigration officers.

3. Federal Criminal Arrests With A Warrant From A Federal Judge

Individuals are subject to criminal arrest by ICE if they have:

• Been ordered removed but never departed the U.S.;

• Re-entered the U.S. after being removed;

• Used false documents to obtain employment in the U.S.;

• Knowingly hired an individual who is not work authorized (this is reserved for a pattern/practice);

• Retained an employee after ICE informed the employer that the employee is not work authorized; or

• Any federal crime that happens to come under the jurisdiction of ICE.

4. ICE Raids

As discussed further below, we do not anticipate many mass raids by ICE. Rather, ERO will conduct targeted enforcement actions. This is because of a number of reasons.

a. Resources And Logistics: ICE has a limited number of agents, detention space, airplanes, and funds with which to conduct removal operations. In addition, almost all individuals who are arrested by ICE are entitled to a hearing before an Immigration Judge before they can be removed. Therefore, ICE has to conduct targeted operations, not mass raids.

b. Private Property: ICE may not enter private property including the private portions of commercial establishments without permission, absent the rare circumstance where there is a criminal warrant issued by a Judge.

c. Hospitals: Even though it has recently reversed a policy prohibiting this, it is very unlikely that ICE will enter a hospital to make a civil administrative arrest. ICE understands that patients are undergoing medical treatment and the agents do not want to take custody of a patient who requires medical treatment. Moreover, hospitals understandably will not release confidential data due to HIPPA requirements.

d. Schools And Churches: Unless a school or church has a pattern and practice of promoting illegal immigration and/or harboring large numbers of migrants from ICE, it is highly unlikely ICE will enter these facilities.

e. Homes: With civil administrative warrants, absent exigent circumstances, ICE must knock on the door and cannot enter without permission. However, if there is no cooperation, ICE will consider asking a Judge for a criminal arrest warrant if there are grounds to do so. In addition, if ICE encounters challenges to completing the arrest, they may be more likely to want to arrest other non-citizens in the home that lack legal status in the U.S.

5. Right To Remain Silent

Individuals, including non-citizens, may invoke their right to remain silent when questioned by ICE. Any statements they make may be used against them. That said, employers may choose to cooperate with ICE so as to avoid complications with the agency. Consult with legal counsel prior to admitting any liability.

6. ICE Request For Immigration Papers

When in public, immigration officers may ask a non-citizen for their immigration papers. The non-citizen is required to have such papers with them and to provide them to the officer. Failure to do so can lead to a $100 fine and/or up to 30 days in jail.

7. Data Analytics

To assist in their investigations, ICE has access to a host of data including state and federal arrests and convictions, employer quarterly federal payroll reports, Social Security information, U.S. passport databases, lawful permanent resident (green card) databases, Employment Authorization Document (“EAD,” or work permit) databases, I-94 databases and birth certificate information from some states.

8. I-9 Notice Of Inspection vs. I-9 Raid

Most I-9 audits involve Homeland Security Investigations (“HSI”, a different division of ICE from ERO), which drops off a Notice of Inspection and then collects the company’s I-9’s. In some states, like California, once a federal I-9 audit has commenced, the state requires that the employer post the Notice of Inspection and notify any union. An employer is liable for missing I-9’s or I-9’s that have substantive errors. However, they are not liable if an employee’s documents looked real at the time of hire but turn out to be fake. Toward the end of the audit, if ICE finds missing or false papers, it traditionally has issued a Notice of Suspect Documents advising the employer to terminate individuals on that list. However, going forward it’s possible ICE may sometimes bypass issuing the Notice of Suspect Documents and simply arrive at the worksite with civil warrants for the arrest of those employees. However, we believe this will not be the norm, due to limited agency resources.

9. Cooperation With ICE

While an employer does not have to cooperate with a civil administrative warrant, there is a risk that the agency could commence an I-9 audit if they felt an employer was obstructing their need to arrest a non-citizen employee, or in some cases obtain a criminal warrant from a Judge if they feel the conduct supports it.

10. Avoid Discrimination In Hiring

Do not ask an applicant for employment about their immigration status. You may ask if they require visa sponsorship to work for you now or in the future. After a job offer has been extended, you may give them an I-9 form to complete, in order to confirm that they are authorized to work. If you are not sure if someone is work authorized, consult with counsel. Denying employment when someone is work authorized can create substantial liability for the company.

11. Navigating The Maze

Please find a decision tree below which may be used if immigration officers visit your facility. This diagram is for general informational purposes and should not be construed as individual legal advice. Always consult legal counsel to ensure compliance and avoid liability.

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About The Authors

Greg L. Berk is a Partner in the law firm of Sheppard, Mullin, Richter & Hampton LLP in the firm’s Orange County office. He leads the Firm’s immigration practice and is a Certified Specialist in Immigration and Nationality Law by the State Bar of California Board of Legal Specialization>. He has over 25 years of experience advising on all aspects of U.S. immigration matters. He assists employers worldwide with the hiring and retention of foreign national executives and highly talented individuals that are needed in their U.S. workforce. He also works with investors on E-2, L-1, and EB-5 matters. He also handles I-9 and other immigration compliance matters.

Greg frequently lectures on immigration issues and is a regular contributor to the California Labor and Employment ALERT Newsletter and Sheppard Mullin’s Labor & Employment Law blog. Mr. Berk received his J.D. from Western State University College of Law, his M.B.A. from George Washington University and his B.A. from California State University.

Jonathan Meyer is a Partner in the Governmental Practice Group with the law firm of Sheppard, Mullin, Richter & Hampton LLP in the firm’s Washington DC offices. He counsels clients on their interactions with federal and state government, as well as national and homeland security, Congressional oversight, cybersecurity, AI, high tech, and transportation security, among other issues.

Prior to returning to Sheppard Mullin, Jon was nominated by President Biden and confirmed by the Senate as the Sixth General Counsel of the U.S. Department of Homeland Security, serving from 2021 to 2024.

Jon is regularly sought out by the media – including CBS News, NPR, The Wall Street Journal, The New York Times, The Washington Post and Politico – on issues including national security, homeland security, government investigations, cybersecurity, immigration, politics and Congress.

U.S. SUPREME COURT HOLDS EMPLOYERS MUST ESTABLISH FLSA EXEMPTIONS UNDER PREPONDERANCE-OF-EVIDENCE STANDARD

The federal Fair Labor Standard Act (“FLSA”) guarantees covered employees minimum wages and overtime pay. It also establishes a number of exemptions from the overtime pay requirements, including an exemption for outside salesmen who primarily work away from their employer’s place of business. The law places the burden on the employer to show that the exemption applies.

1. The Overtime Exemption Issue

The U.S. Supreme Court addressed the evidence standard applicable to FLSA exemptions on January 15, 2025. In E. M. D. Sales, Inc. v. Carrera, ___U.S.___ (2025), several sales representatives who manage inventory and take orders at grocery stores sued their employer, EMD, which distributes food products in the Washington D. C. area. The employees claimed they were unlawfully denied overtime pay. In response, the employer argued they were exempt outside salesmen and thus not entitled to overtime pay.

2. The Lower Court Decisions Applied The Clear And Convincing Evidence Standard

The federal district court found EMD liable for overtime because it did not prove by “clear and convincing evidence” that the sales representatives were outside salesmen. On appeal, EMD argued that the district court should have used the less stringent “preponderance-of-the-evidence” standard instead of the clear and convincing evidence standard. The Fourth Circuit Court of Appeals disagreed with EMD and affirmed the district court’s judgment.

3. The Supreme Court Disagreed

After agreeing to hear the case, the U.S. Supreme Court unanimously held that the predominance-of-the-evidence standard applies when an employer seeks to demonstrate that an employee is exempt from the minimum wage and overtime pay provisions of the FLSA. It reasoned that the FLSA was enacted in 1938, when the preponderance-of-the-evidence standard was the default in American civil litigation, and it remains so today. Where a statute, like the FLSA, does not specify a standard of proof for exemptions, courts typically apply the preponderance standard. The Supreme Court thus found the employees’ policy-laden arguments for a heightened standard unconvincing. It reversed the Fourth Circuit’s decision and returned the case to the court of appeals to determine whether the employees would fail to qualify as outside salesman even under a preponderance standard.

4. Practical Considerations

The Supreme Court’s E.M.D. Sales decision is extremely important. It reinforces the rule that employers bear the burden of establishing the application of minimum wage and overtime exemptions under the FLSA. It identifies the correct evidentiary standard that applies in cases where the outside salesman exemption is litigated. It follows that the preponderance-of-the-evidence standard will also apply in cases where other exemptions are litigated, e.g., for executive, administrative, and professional employees.

The exemptions are reviewed at length in Chapter 10 of the Wage and Hour Manual for California Employers by Attorney Richard J. Simmons of Sheppard Mullin. The discussion emphasized the governing legal standards and many differences between the California law and the FLSA standards. The Manual is available through Castle Publications, LLC.

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About The Author

Richard J. Simmons is a Partner in the law firm of Sheppard, Mullin, Richter & Hampton LLP in Los Angeles. He represents employers in various employment law matters involving litigation throughout the country and general advice regarding state and federal wage and hour laws, employment discrimination, wrongful discharge, employee discipline and termination, employee benefits, affirmative action, union representation proceedings, and arbitrations. Mr. Simmons received his B.A., summa cum laude, from the University of Massachusetts, where he was a Commonwealth Scholar and graduated in the Phi Kappa Phi Honor Society. He received his J.D. from Berkeley Law at the University of California at Berkeley where he was the Editor-in-Chief of the Industrial Relations Law Journal, now the Berkeley Journal of Employment and Labor Law.

Mr. Simmons argued the only case before the California Supreme Court that produced a victory for employers and business in 2018. He was recently recognized as the Labor and Employment Attorney of the Year by the Los Angeles Business Journal and was inducted into the Employment Lawyers Hall of Fame. He has lectured nationally on wage and hour, employment discrimination, wrongful termination, and other employment and labor relations matters. He is a member of the National Advisory Board to the Berkeley Journal of Employment and Labor Law, published by Berkeley Law at the University of California at Berkeley. He was also appointed by the California Industrial Welfare Commission as a member of three Minimum Wage Boards for the State of California.

LEGAL CHALLENGES MOUNT AGAINST TRUMP’S EXECUTIVE ORDERS ON DEI PROGRAMS

In January 2025, President Trump issued a series of executive orders aimed at dismantling Diversity, Equity, and Inclusion (“DEI”) programs within the federal government and among federal contractors. These actions have sparked significant legal challenges, raising questions about executive authority, constitutional protections, and the future of DEI initiatives in the United States.

1. Executive Orders Issued

a. Executive Order 14151: Titled “Ending Radical and Wasteful Government DEI Programs and Preferencing,” this order mandates the termination of all DEI and DEIA (Diversity, Equity, Inclusion, and Accessibility) programs within federal agencies. It also prohibits federal contractors from implementing DEI initiatives, asserting that such programs violate federal civil rights laws.

b. Executive Order 14173: Known as “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” this order revokes previous directives that required federal contractors to adopt affirmative action plans promoting diversity.

2. District Of Maryland Issues Nationwide Injunction

On February 21, 2025, the U.S. District Court for the District of Maryland issued a preliminary injunction halting the enforcement of certain provisions of the executive orders. This injunction came in response to a lawsuit filed by federal employees who contend that the orders improperly targeted DEI-related training and programs, which they argued were essential for creating inclusive, non-discriminatory work environments. They also asserted that the orders violated their free speech rights, as these programs often involved the free exchange of ideas on race, sex, and other social justice issues.

The District Court judge found that the plaintiffs had raised serious legal questions, particularly regarding the vagueness of the executive orders’ language on “divisive concepts.” The judge ruled that the broad scope of the orders could result in the suppression of protected speech and disproportionately affect minority employees, particularly those in historically marginalized groups. As a result, the judge granted the injunction, temporarily blocking the orders’ enforcement while the case moved forward in court.

3. Fourth Circuit Court Of Appeals Ruling

On March 14, 2025, the Fourth Circuit Court of Appeals lifted the nationwide injunction that had been previously granted by the Maryland District Court. This ruling effectively allowed the Trump Administration’s anti-DEI executive orders to be enforced while legal challenges continued.

The Fourth Circuit determined that the Trump Administration had likely acted within its authority to issue the executive orders, citing the president’s broad powers over federal agencies and contractors. The court concluded that the plaintiffs had not demonstrated sufficient harm to justify a nationwide block on the orders, which had been issued as part of the president’s effort to curb federal spending on DEI programs.

While the ruling allowed the executive orders to proceed, it did not definitively resolve the underlying constitutional issues. The case is expected to continue its way through the legal system, with further challenges likely to be heard by the U.S. Supreme Court in the coming months.

4. EEOC Issues Guidance

Most recently, on March 19, 2025, the Equal Employment Opportunity Commission (“EEOC”) issued new guidance regarding the DEI executive orders. The guidance emphasized that while the executive orders aimed to restrict certain DEI programs, they did not outright ban all diversity-related activities. Specifically, the EEOC noted that programs focused on preventing discrimination and promoting equal opportunity—core principles under Title VII of the Civil Rights Act of 1964—would still be permissible, even under the new restrictions.

The EEOC set forth the steps for employees who wish to file a lawsuit arguing they were discriminated against through an employer’s use of DEI programs. The EEOC made clear that employers cannot use a protected characteristic, e.g., race, gender, etc. in making employment determinations, even if the protected characteristic is not the sole determinative factor.

The EEOC clarified that federal employers could still conduct training aimed at preventing workplace discrimination, as long as the content did not promote “divisive” concepts, as outlined in the executive orders. However, the EEOC did note that DEI training can create a hostile work environment if an employee can prove the training was discriminatory in some way.

The legal and practical landscape of the anti-DEI executive orders is rapidly and frequently changing. There are likely to be myriad challenges to the orders and there may be conflict between the judiciary and the executive branch.

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About The Author

Tyler J. Johnson is a Partner in Sheppard Mullin’s Labor and Employment Practice Group in the firm’s Los Angeles office. Mr. Johnson represents employers in every stage of the litigation process, from prelitigation disputes to class certification hearings and trials. He represents businesses of every size, and has extensive experience in the healthcare, agricultural, fashion, and temporary staffing industries. Tyler defends employers against claims of discrimination, harassment, and retaliation, and has prevailed at trial in a pregnancy discrimination case. Tyler also routinely represents businesses in complex litigation, including proposed class actions and representative actions under the Private Attorneys General Act. Tyler has defeated class certification in a number of cases and frequently obtains summary judgment for employers.

Tyler is a co-author of the Private Attorneys General Act (PAGA) Litigation and Compliance Manual as well as a contributing author of the ALERT Newsletter.

Mr. Johnson received his law degree from the Pepperdine Caruso School of Law and his undergraduate degree from University of Maryland.

CAL/OSHA’S COVID-19 PREVENTION NON-EMERGENCY STANDARDS HAVE LARGELY ENDED

As discussed in the January 2023 and March 2023 editions of the ALERT, the California Division of Occupational Safety and Health’s (“Cal/OSHA”) COVID-19 Prevention Non-Emergency Regulations (“Non-Emergency Standards”) became effective on February 3, 2023, with an expected sunset date of February 3, 2025. On February 4, 2025, Cal/OSHA issued a press release confirming that “most” of the requirements under the Non-Emergency Standards expired on February 3, 2025.

1. Employers Are No Longer Required To Document And Follow Certain COVID-19 Prevention Procedures

Under the Non-Emergency Standards, California employers were required to identify their COVID-19 procedures which address COVID-19 as a workplace hazard in either their written Injury and Illness Prevention Program (“IIPP”) or a separate standalone document, similar to the COVID-19 Prevention Program (“CPP”) required under Cal/OSHA’s COVID-19 Emergency Temporary Standards, which were in effect earlier during the pandemic. The Non-Emergency Standards also required employers to follow certain procedures for notifying “close contacts” of potential exposure and for responding to an “outbreak” of three or more COVID-19 cases within an exposed group over a 14-day period. With the sunset of the Non-Emergency Standards, these specific requirements have expired and are no longer required.

2. Remaining COVID-19 Related Obligations

Cal/OSHA’s press release notes that although there is no longer a specific set of COVID-19 prevention regulatory requirements, California employers must still:

• Maintain a safe and healthful place of employment as required by Labor Code Section 6400.

• Establish, implement, and maintain an effective IIPP as required by Title 8, California Code of Regulations, Section 3203.

• Identify, evaluate, and correct any unsafe or unhealthy conditions, work practices, or work procedures associated with COVID-19 if they identify COVID-19 as a workplace hazard at their place of employment.

In addition to the above, certain COVID-19 reporting and recordkeeping requirements under the Non-Emergency Standards remain in effect until February 3, 2026. Under these requirements, employers must:

• Keep a record of and track all COVID-19 cases with the employee’s name, contact information, occupation, location where the employee worked, the date of the last day at the workplace, and the date of the positive COVID-19 test and/or COVID-19 diagnosis. Notably, these records must be retained for an additional two years.

• Provide information on COVID-19 cases to the local health department with jurisdiction over the workplace, such as the CDPH, Cal/OSHA, and NIOSH, immediately upon request, and when required by law.

3. Practical Considerations

Employers with an IIPP containing specific COVID-19 related procedures should update their IIPP to eliminate any procedures that are no longer required. Similarly, employers with a standalone CPP are no longer required to maintain the CPP. That said, employers should ensure they continue to comply with the obligations outlined above, especially where COVID-19 is a workplace hazard.

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About The Author

Robert K. Foster is an Associate with Sheppard, Mullin, Richter & Hampton LLP in the firm’s San Diego (Del Mar) Office. Mr. Foster represents employers in various types of employment litigation, including class action wage and hour claims; PAGA claims; and discrimination, wrongful termination, harassment and retaliation lawsuits. In addition, he also provides strategic advice to employers on a wide range of employment issues, including wage and hour compliance, employee classification, and OSHA matters. He is a frequent contributor to the California Labor and Employment ALERT Newsletter and several other articles and is the co-author of the Employer’s Guide to Workplace Violence Prevention.

Robert litigates actions involving trade secret claims, unfair competition and enforcement of restrictive covenants and non-competes. He also handles various commercial litigation disputes, including breach of contract, breach of fiduciary duty, fraud, tortious interference with contract, unfair competition and shareholder derivative claims.

INCREASE IN CALIFORNIA MINIMUM WAGE RESULTS IN MULTIPLE CHANGES TO STATE LAW THAT ARE MORE COMPLICATED THAN EVER

California employment laws are not only rigid, they are becoming increasingly complicated and tricky. While it was once simple to identify the state minimum wage governing virtually all employers, the California legislature has no regard for consistency, clarity, or uniformity.

1. California Now Has Many Different Minimum Wage Rates

Now, the minimum wage rules vary based on a variety of factors, such as an employer’s size, industry (such as the fast food and health care rules that differ from the generally applicable minimum wage rules), and the counties and cities where they operate businesses and employ workers. As examples, some health care and fast food workers are covered by minimum wage rules that differ from the rules applicable to other health care and restaurant employees, as well the general minimum wage standards in effect for all other industries. To complicate the analysis, dozens of cities and counties across the state have adopted minimum wage ordinances that differ from the state and federal rules. This has caused the California Department of Industrial Relations to state: “Effective January 1, 2025, the minimum wage is $16.50 per hour for all employers, not otherwise covered by a higher minimum wage specific to an industry or a locality.” Bottom line: The devil is in the details. It is no longer easy to identify, let alone figure out, the governing minimum wage for specific employees.

2. The General Minimum Wage Increased On January 1

In 2024, the generally applicable state minimum wage was $16.00 an hour. On January 1, 2025, the state minimum wage increased to $16.50 for most employers. Variations nevertheless exist in jurisdictions subject to local minimum wage rules, for some fast food industry employers covered by special rules, and for some health care industry employers. Some cities and counties’ ordinances enacted higher local minimum wage rates for 2025.

It should also be remembered that increases in the California’s state minimum wage (as distinguished from changes mandated by local ordinances) have a direct and immediate impact on nine other features of California law, including the minimum salary rules in the white-collar exemptions, the minimum hourly rate that union employees must be paid to qualify for a state overtime exemption, the minimum sums commissioned employees covered by Wage Orders 4 and 7 must receive to meet an overtime exemption, the split-shift premium rule, and meal and lodging credits, among other rules. The derivative consequences of minimum wage increases are explained in Section 6.4(b) of the Wage and Hour Manual for California Employers (27th Edition), by Attorney Richard J. Simmons of Sheppard, Mullin, Richter & Hampton.

3. California’s Minimum Salary Level Increased For Exempt Employees

One of the most significant rules that automatically change whenever the state minimum wage increases involves the “salary level” requirements applicable to exempt executive, administrative and professional employees based on Labor Code Section 515. Because the statute establishes a minimum salary requirement that is a product of 80 times the state minimum wage, the minimum salary was $1,280 a week ($16 x 80) in 2024, i.e., $66,560 a year. When the minimum wage increased to $16.50 an hour on January 1, 2025, the minimum salary level increased to $1,320 a week (which equates to $68,640 a year) on the same date. The salary level for employees covered by a higher state minimum wage, such as some fast food and health care employees, is even higher. Employers were required to be vigilant in order to budget for and implement salary increases, where necessary, that comported with the new rules when they took effect.

4. Meal And Lodging Credits

Some employers may credit the value of meals or lodging provided to employees pursuant to a voluntary written agreement when meeting their state minimum wage obligations. The amount that can be credited is subject to strict limitations established by the Wage Orders. The maximum amounts that can be credited increased on January 1. They are listed in Section 3 of the new Minimum Wage poster (MW – 2025).

5. Posting Rules

Employers are required to post a new Minimum Wage poster along with the Wage Order applicable to their employees. The Minimum Wage notice (MW-2025) and applicable Wage Order can be obtained and downloaded from the Department of Industrial Relations’ website.

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About The Author

EMPLOYERS MUST COMPLY WITH DOL AND USCIS RULES WHEN LAYING OFF H-1B VISA EMPLOYEES

Terminating an H-1B worker requires the employer to take additional steps beyond the normal termination process. The general rule is that visa sponsorship does not alter the at-will employment relationship, however, the employer does have wage and reporting obligations with sponsoring H-1B’s. What are an employer’s obligations and what issues should they be on the lookout for?

1. Overview Of The Employer’s Obligations

First, employers should offer to pay employees for one-way return airfare to their home country. This is a U.S. Department of Labor (“DOL”) requirement. If the employee declines the offer, the employer is relieved of this obligation.

Second, after termination, employers must withdraw the Labor Condition Application (“LCA”) that was filed with the DOL and notify U.S. Citizenship & Immigration Services (“USCIS”) to withdraw the H-1B petition. Until the petition is withdrawn from the USCIS, the DOL does not consider a bona fide termination to have taken place.

In an H-1B layoff, there should be a clear termination date. The offered wage must be paid up until the termination date. Furthermore, the DOL considers there to be a continuing wage liability until the USCIS is notified to withdraw the petition, thereby creating a “bona fide termination.”

The LCA must be withdrawn on-line from the DOL after the termination date.

2. Return Airfare Obligation

Employers must offer to pay the one-way return airfare to any H-1B worker that is terminated before the petition expiration date. This would be for the reasonable airfare to their home country. There is no obligation to pay for H-4 family members.

An employer should document that it offered the return airfare reimbursement in writing to the foreign national at the time of termination.

The government regulations do not provide any specifics on return airfare. The DOL regulations merely state that the return airfare is a USCIS requirement. The USCIS regulations merely state the general rule and do not provide any additional guidance.

Some employers advise the H-1B worker that if they purchase an airline ticket for a departure within 60 days of termination they will reimburse the former employee at that time.

However, if an employer does not want to worry about any misunderstandings, employers could pay the one-way return airfare at the time of termination to resolve this issue. This is the lowest risk option.

3. Continuing Wage Liability

The DOL takes the unusual position that the employer has continuing wage liability until the LCA and H-1B petition are formally withdrawn, even if the foreign national has been terminated and is off the payroll. Proper steps to effectuate a bona fide termination would include:

1. The employee is notified in writing of the termination so that no allegation of benching can be made.

2. The employer offers the H-1B employee in writing to pay the return airfare back to their home county.

3. The employer notifies the USCIS in writing of the termination including the employee’s name, I-129 receipt number, etc.

4. The LCA is withdrawn with the DOL. The attorney who filed the H-1B can withdraw it, or the company can e-mail and notify the DOL directly.

5. Maintain the Public Access Folder (“PAF”) for one year beyond termination, and notate in the Public Access Folder that the individual left the company on x date.

4. Severance Paid After Termination With Extended Paystubs

Some employers want to help the foreign national with severance paid out over one to two months after termination, with the severance being less than the offered wage on the LCA. Unfortunately there is still some risk to the employer, albeit low.

Grace Period: If the individual finds a new employer to sponsor them for an H-1B and they file a new I-129 H-1B Petition within 60 days of termination, the USCIS will likely issue them a new I-94 as long as they have 60 days or more left on their current H-1B validity/I-94. If not, they will make the individual leave the U.S. and re-enter with a new visa stamp. Since they already have an H-1B, they are not subject to the quota, assuming they have time left on the 6-year H-1B clock.

Extended Paystubs and Garden Leave: In some cases, as a courtesy, an employer will provide severance through several extended paystubs to allow the individual more time to find a new H-1B employer and not have to return home to pick up a new visa. With a more recent paystub, they can show the USCIS that their termination was within 60 days of filing their new I-129 H-1B filing. But severance should be for time after termination so that the employee is paid the offered wage on the visa petition up until termination. However, until the USCIS is notified of the withdrawal, the employer can be on the hook by the DOL for full wages.

While the risk of the employee filing a complaint with the DOL is minimal since they want the severance to create extended paystubs over a period of time so they have more time to look for new work, the employer should know that there is still some risk that if the former employee complains to the DOL, the employer could be asked by the DOL to pay full wages up until the point that the USCIS is notified of the withdrawal (also known as the point of Bona fide termination).

I-539 Change of Status to B-2 Visitor: In some cases the USCIS will approve an I-539 change of status application to B-2 visitor for the purpose of winding up one’s affairs etc. It is discretionary by the USCIS and whether to file an I-539 should be reviewed on a case-by-case basis.

Overstay: Under no circumstances should an H-1B who is terminated remain in the U.S. 180 days or more without status as if they subsequently depart the U.S. they would be subject to a 3 year bar from returning to the U.S., and if they were 365 days or more out of status, then they will be subject to a 10 year bar. Staying for 60 days after termination to wind up one’s affairs is reasonable and is within the USCIS recognized grace period. An employer is not responsible if a former employee overstays their authorized stay.

Green Card Sponsorship Issues: If the employer has already sponsored the employee for a green card through PERM labor certification and an I-140 Immigrant Petition has been filed by the company and approved by the USCIS, then the priority date of the labor certification can be used by a future employer with a labor certification.

However, if no I-140 Immigrant Petition was approved, then the employee cannot recapture the old priority date. The priority date is the place in the queue vis-à-vis the government’s annual quotas for green cards. As a courtesy, most employers leave the I-140 alone and do not withdraw it, thereby allowing the individual to obtain new H-1B employment in 3 year increments. If there is a pending 9089 PERM application at the DOL, that cannot be used for a future immigration benefit unless it is certified and an I-140 petition is filed.

AC-21 I-140 Portability: If the employee already has an I-485 green card pending for 180 days or more, he or she can port to another company or be self-employed in a same or similar position.

Compelling Circumstances EAD: The beneficiary of an approved I-140 who is not eligible to file for an immigrant visa based on their priority date not being current may be eligible for an EAD if they are facing compelling circumstances, like losing their job in a lay-off and substantial harm will affect them or their dependents. The USCIS has stated that if a compelling circumstances EAD application is filed during the 60-day grace period after being laid off, the foreign national will not accrue unlawful presence while the application is pending. The EAD would be issued for one year.

5. Conclusion

Terminating an H-1B worker requires the employer to follow certain protocols with the DOL and the USCIS. Counsel should be notified prior to termination to review all checklist items with Human Resources and General Counsel. Other visa categories have post termination requirements as well.

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About The Authors

Christine L. Doyle is Special Counsel in the Labor and Employment Practice Group with Sheppard, Mullin, Richter & Hampton LLP in the firm’s Orange County office. Christine has experience in a broad range of immigration law, with a focus on employment-based immigrant and nonimmigrant visa petitions. She has numerous years of experience counseling employers and their employees on U.S. immigration, global immigration, and I-9 compliance matters.

Christine is a regular contributor to the California Labor and Employment ALERT Newsletter and Sheppard Mullin’s Labor & Employment Law, French Desk Law, and Latin American Law blogs. She received her J.D. from Pepperdine University and her B.A. from Boston College. She also served as an extern at the Los Angeles Immigration Court and Department of Justice.

DOL’S 2024 WHITE COLLAR EXEMPTION RULES INVALIDATED

The Fair Labor Standards Act of 1938 (“FLSA”) requires covered employers to pay employees at least the federal minimum wage. It also requires that overtime be paid to employees who work over 40 hours in a week. However, Congress created several exemptions to these requirements, including an exemption for executive, administrative, and professional employees (aka “EAP employees”). The so-called EAP exemption provides that the FLSA’s minimum wage and overtime requirements do not apply to “any employee employed in a bona fide executive, administrative, or professional capacity,” as those terms are “defined and delimited” by regulations of the U.S. Department of Labor (“DOL”).

In 2024, the DOL adopted a new rule that materially changed the minimum salary level EAP employees must be paid to qualify as exempt under the FLSA. It represents the second increase in the salary level test within five years and is the first time in 85 years that the salary level was increased when there has been no change in the federal minimum wage. In doing so, the DOL caused more than a million employees to lose their exempt status under the FLSA and established future increases that would cause millions of others to lose their exempt status over several years, consistent with the goals of the Biden Administration. (As explained in Chapter 10 of the 2024 edition of the Wage and Hour Manual for California Employers by Attorney Richard J. Simmons, the FLSA standards are less rigid than California’s standards for the white collar exemptions.)

1. The Federal Challenges To The DOL’s 2024 Rule

The DOL’s 2024 rule was challenged in federal district court by the State of Texas and a coalition of trade associations and employers referred to in the case as “Business Organizations,” in two consolidated cases State of Texas v. U.S. Department of Labor and Plano Chamber of Commerce, et al. v. U.S. Department of Labor (E.D.Tex Nov. 15, 2024). In a decision released on November 15, 2024, the court concluded the DOL’s 2024 rule was unlawful based on the FLSA.

In examining the statute, the court determined that the FLSA text does not specify any minimum salary for an employee to qualify for the EAP exemption, nor does it include any language concerning compensation level associated with the exemption. However, since the FLSA’s enactment in 1938, the DOL has promulgated various regulations defining and limiting the EAP exemption. Those regulations have always included a minimum salary level for EAP employees.

2. The DOL’s 2024 Rule

In State of Texas v. U.S. Department of Labor, the Federal District Court for the Eastern District of Texas was asked to consider a rule recently issued by the DOL that raises the minimum salary at which EAP employees can be exempt from minimum wage and overtime pay under the FLSA, thereby changing the exemption status of millions of employees. The rule was codified at 29 C.F.R. Sections 541.0 – 541.710 and implements changes to the exemption in three stages.

First, the 2024 rule raised the minimum salary level from $684 per week to $844 per week starting on July 1, 2024. According to the DOL, this change rendered about 1 million employees non-exempt who were previously exempt, with no change in their duties. Second, the rule raises the salary level from $844 per week to $1,128 per week starting on January 1, 2025. The DOL estimates that this change will render about 3 million additional employees non-exempt who were previously exempt, with no change in their duties. Third, the rule implements a mechanism to automatically increase the salary level triennially based on contemporary earnings data. The DOL estimates that these automatic updates will result in millions more employees becoming non-exempt. Because millions of employees whose duties did not change and remained exempt would lose their exempt status under the new salary conditions, the rule was challenged as a change to the exemption to elevate the salary level requirement over the duties test in the FLSA.

3. The Basis Of The Challenge

The State of Texas and a coalition of trade associations and employers contended that the changes to the salary level exceeded the DOL’s authority under the FLSA. They argued that the increased minimum salary for the exemption essentially made an employee’s duties, functions, or tasks irrelevant if the employee’s salary fell below the new minimum salary level, and unlawfully made salary rather than an employee’s duties the determinative factor for the exemption.

The court agreed. It cited the Fifth Circuit’s decision in Mayfield v. DOL, 117 F.4th 611, 619 (5th Cir. 2024), which stated the DOL had authority, within limits, to impose a salary level test. It then concluded that the motions for summary judgment filed by the Business Organizations and the State of Texas should be granted. It also concluded that the cross- motion filed by the DOL should be denied.

4. The Rule Was Vacated

The district court determined that the 2024 rule plainly exceeds the DOL’s authority under the FLSA. Although the July 1, 2024 change to the exemption has gone into effect, the centerpiece of the 2024 rule is not scheduled to go into effect until January 2025, and the automatic indexing mechanism will not directly impact employees and employers until 2027. In sum, the court determined that courts should generally nullify and revoke illegal agency action and such relief was appropriate in the case before it. The 2024 rule impacts millions of employees in every facet of the economy, as well as state and local governments, and will impose billions in costs on employers. And considering the volume and variety of the trade organization members who are entitled to relief, it would be impractical, if not impossible, to fashion party-tailored relief. Therefore, the court found the proper remedy is vacatur of the 2024 rule and remand to the DOL for further consideration.

The court therefore granted the Business Organizations’ and Texas’ motions for summary judgment and set aside and vacated the DOL’s 2024 rule. The court found that the rule it invalidated effectively eliminated consideration of whether an employee performs bona fide executive, administrative, or professional duties in favor of what instead amounts to a salary-only test.

The DOL is reportedly evaluating next steps. This could be impacted by the election of President-Elect Trump and changes in Administrations. It is important to note that California’s exemption standards and salary requirements are more rigid than the federal rules and are not impacted by this case. Employers covered by the California rules must continue to adhere to their standards regardless of the State of Texas decision. Employers should consult with their counsel regarding the ramifications of the federal district court decision in the states where they conduct business.

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PROP 32’S MINIMUM WAGE INCREASE DEFEATED AT BALLOT BOX

California has exhibited an ongoing willingness for many years to increase the state minimum wage despite the obvious ripple effects and economic impact on goods, services and job opportunities. In fact, Governor Newson has backed numerous minimum wage increases, including special industry-wide increases in the restaurant and health care industries that assuredly would lead to increased costs for consumers and, in many cases, layoffs and business closures. Numerous cities and counties have also bowed to the political goals of organized labor representatives and some segments of the population to increase the minimum wage rates through local measures adopted by cities and counties.

The appetite for minimum wage hikes and their consequences appears to have run into some logical limitations. Finally, California voters pushed back in November by narrowly defeating the proposed state minimum wage increase contained in Proposition 32, a ballot measure that would have increased the state minimum wage from $16 to $17 an hour immediately and to $18 an hour as of January 1, 2025. California already has one of the highest minimum wages in the country at $16 an hour. That is more than twice the federal minimum wage of $7.25 an hour. Opponents of the proposition raised concerns that businesses would pass on the extra wage costs to customers by raising prices and would also reduce employees’ hours, seek to eliminate jobs through automation, and layoff employees. For the first time in years, California voters appeared to have gotten the message at a time when inflation, costs of living, and the economy are in plain view for all to observe.

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OSHA ANNOUNCES PROPOSED NATIONAL HEAT INJURY AND ILLNESS PREVENTION STANDARD

The July 2024 edition of the ALERT covered California’s new “Heat Illness Prevention in Indoor Places of Employment” standard, the first indoor heat regulation in the country. However, other states may soon be joining California, following the federal Occupational Safety and Health Administration’s (“OSHA”) announcement of a proposed rule requiring certain employers to prepare and implement a written heat injury and illness prevention plan for indoor and outdoor workplaces.

1. Background

In April 2022, OSHA issued its National Emphasis Program titled Outdoor and Indoor Heat Related Hazards. In July 2023, OSHA announced a three-year National Emphasis Program to address heat-related workplace hazards in warehouses, processing facilities, distribution centers, and high-risk retail establishments. On July 2, 2024, OSHA announced its proposed rule and published its Notice of Proposed Rulemaking for “Heat Injury and Illness Prevention in Outdoor and Indoor Work Settings” on August 30, 2024. The public has until December 30, 2024 to submit comments on the proposed rule.

2. Overview Of The Proposed Rule And HIPP

The proposed rule is broad and covers employers with employees who work indoors or outdoors where the heat index reaches 80°F or higher for more than fifteen minutes in any sixty-minute period. Covered employers must evaluate heat risks, create and implement a written heat injury and illness prevention plan (“HIIPP”), and implement various measures to prevent and minimize the risk of heat illness. The HIIPP must include a comprehensive list detailing the types of work activities covered and include necessary policies and procedures to comply with the proposed rule. It must also include the heat metric used for monitoring heat conditions. Employers must regularly review and update the HIPP. Furthermore, employers are obligated to assess and update the HIIPP’s effectiveness whenever a heat-related illness requiring medical attention results in an absence from work.

The proposed rule also calls for the development of acclimatization plans for new or returning workers unfamiliar with working in high-heat conditions. Employers must provide training on the HIIPP, establish procedures for responding to signs and symptoms of heat-related illnesses, and take immediate measures to assist workers in heat emergencies. Additionally, employers must designate “heat safety coordinators” and provide employees with emergency contact numbers and clear instructions on what to do if someone shows symptoms of a heat-related illness.

3. Monitoring Heat Exposure

The proposed rule requires employers to evaluate and monitor heat exposure levels. For outdoor work areas, employers have the option to use local heat index forecasts or conduct on-site measurements to determine when the initial and high heat triggers are met. For indoor workplaces, employers must identify potential high-heat exposure areas and develop a comprehensive monitoring plan to ensure timely activation of protective measures. Employers must monitor and document their chosen metric–heat index in their HIIPP.

Under the proposed rule, there are two separate triggers for initiating certain protective protocols: an “initial heat trigger” and a “high heat trigger.” The initial heat trigger occurs when the heat index reaches 80°F, while the high heat trigger requires a heat index of 90°F. The proposed rule outlines an employer’s requirements under both heat triggers. Employers may skip the monitoring requirement if they assume that heat exposure exceeds both triggers and act accordingly.

4. Specific Requirements For Initial Heat Trigger

Employers must comply with the following requirements when the initial heat trigger (80°F heat index) occurs:

• Hydration: Employers must provide drinking water to employees as close as possible to their working area. Employers must supply at least one quart of water per employee per hour at no cost to employees. The water must be kept at a reasonably cool temperature. Employers may use water coolers, food-grade jugs, or bottled water.

• Rest Breaks: Employers must allow and encourage employees to take paid rest breaks in designated shaded or air-conditioned break areas. At indoor worksites, the proposed rules require break areas to be air-conditioned or equipped with a combination of increased air movement and, where necessary, dehumidification. At outdoor worksites, employers must ensure conveniently located break areas that are easily accessible and equipped with either shade or enclosed air-conditioned spaces. Shade can be either natural or artificially created and employers should consider the movement of shade throughout the day. In contrast, air-conditioned break areas must be sufficiently spacious and accessible.

• Acclimatization: The proposed rule requires employers to implement an acclimatization protocol for new employees and employees absent for more than 14 days. The proposed rule offers two options to ensure workers adjust safely to heat exposure. Option A requires adherence to high heat trigger measures like 15-minute breaks (discussed below) every two hours, monitoring for heat-related illness symptoms, and providing hazard alerts, regardless of gradual exposure. Option B allows for a gradual introduction to heat, starting with 20 percent exposure on the first day and increasing daily. Exceptions to these requirements exist if employers can demonstrate that an employee has worked in similar or hotter conditions recently and is already acclimated.

• Observation: Employers must train all employees on recognizing the signs and symptoms of heat-related illnesses and emergencies, emphasizing the importance of immediate action in such cases. The proposed rule outlines three methods for employers to monitor employees for signs and symptoms of heat-related illness, including a buddy system, observation by a supervisor or heat safety coordinator, and a communication protocol for employees working alone. Under the buddy system, employees work in pairs within the same area, using visual and verbal cues to monitor each other for heat stress symptoms. Alternatively, a supervisor or heat safety coordinator can observe no more than twenty employees, ensuring they are in close enough proximity to effectively monitor and communicate with the employees under their watch. For lone workers, employers are required to maintain effective two-way communication, checking in at least every two hours to ensure their safety.

• Communication: The proposed rule emphasizes the necessity for effective, two-way communication between employers and employees once the initial heat trigger is reached. Employers must maintain regular, effective communication, which could involve direct voice communication, hand signals, or electronic means such as handheld transceivers or phones, ensuring timely responses to any reported issues. This includes a requirement for a method of communication for workers who operate alone.

• Personal Protective Equipment: Employers are not required to supply cooling personal protective equipment to employees. However, if they choose to do so, they must ensure its cooling properties are consistently maintained during use.

5. Specific Requirements For High Heat Trigger

In addition to complying with the above, employers must comply with the following requirements when the high heat trigger (90°F heat index) occurs:

• Rest Breaks: Once a high heat trigger is met, employers must provide a fifteen-minute paid rest breaks for every two hours of work. These breaks are in addition to other requirements, such as allowing additional rest if needed to prevent overheating and must be taken in designated break areas.

• Hazard Alert: Employers must notify employees about key safety measures against heat hazards, including the necessity of hydration, the right and requirement to take rest breaks, how to respond in heat emergencies, and the location of break areas and water for mobile work sites. A hazard alert must be issued before the work shift begins if high heat conditions are expected from the start, or as soon as such conditions are recognized during the workday. Employers have the flexibility to use various communication methods to issue these alerts, including electronic means, verbal communication, or posting signs, ensuring the information is accessible and understandable to all employees. The proposed rule also requires employers to install warning signs at indoor work areas where ambient temperatures frequently surpass 120°F.

6. Recordkeeping

For indoor work areas where employees might be exposed to heat at or above the initial trigger level, employers must create and maintain written or electronic records of on-site temperature measurements. These records must be kept for a minimum of six months.

7. Training

Employers must provide comprehensive initial training for all employees exposed to heat hazards before they undertake any work that could expose high heat. This training should cover the prevention of heat-related illnesses and injuries, ranging from understanding heat stress hazards, recognizing the signs and symptoms of heat-related illnesses, the importance of hydration and rest breaks, and the proper use of personal protective equipment. Training must be conducted in a language that is understandable by employees.

The proposed rule also requires supplemental training in several instances, such as when employees are assigned new tasks that change their exposure to heat. An annual refresher training is also mandated to ensure that all employees, including supervisors and heat safety coordinators, remain informed about heat hazards, especially before the start of a high heat season.

8. Takeaways

Employers who wish to submit comments on the proposed rule have until December 30, 2024 to do so. Although the proposed rule will not take effect until 2025 at the earliest, employers should proactively consider what heat triggers are associated with their workplace(s) and whether they will need to comply with the new rules. Additionally, certain protocols in particular, like providing water and a cool-down area, may require substantial time and effort to set up. Employers with any questions about compliance should consult with experienced employment law counsel.

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