March 2025 Newsletter

Released March 31, 2025

Newsletter Highlights

President Trump issued Executive Order 14173, revoking a decades-old executive order requiring affirmative action and non-discrimination by federal contractors, and calling upon all employers to end practices that constitute illegal discrimination and preferences that may have occurred in an effort to promote DEI, such as hiring quotas or “workplace balancing.”
Effective February 1, 2025, Oregon issued a final rule defining the “appropriate corrective action” employers must take in response to workplace harassment, requiring immediate intervention, investigation, proportional discipline, protections against retaliation, and preventive steps.
Iowa amended the Iowa Civil Rights Act to remove gender identity as a protected class in employment, education, housing, credit, and public accommodations. The law takes effect July 1, 2025.
The U.S. EEOC warns employers that using wearable technology in the workplace may raise compliance issues under the ADA, GINA, and Title VII. Employers must carefully assess how wearable data is collected, stored, and used in employment decisions.
A U.S. federal court vacated the U.S. Department of Labor’s 2024 overtime exemption rule, which had raised the salary threshold for “white collar” exemptions under the FLSA. The rule is no longer in effect nationwide.
New Jersey has issued new guidance addressing the risks of algorithmic discrimination in hiring and employment decisions, launching a statewide initiative focused on civil rights and technology. Meanwhile, New York Governor Kathy Hochul has proposed reforms to the state WARN Act that would require employers to disclose whether layoffs are related to AI use.

Full Stories: Legislative, Regulatory and Compliance News

President Trump Issues Executive Order Aimed at Affirmative Action, Non-Discrimination, and DEI

President Trump issued an executive order aimed at reshaping prior federal policy regarding non-discrimination, DEI, and affirmative action by private-sector employers. The Executive Order is titled “Ending Illegal Discrimination And Restoring Merit-Based Opportunity” (EO 14173) and is currently the subject of litigation in court.

Federal contractor implications:

The order terminates many prior federal contractor-related programs and contracting requirements viewed as discriminatory. This includes the revoking of Executive Order 11246, a decades-old order that had required affirmative action and non-discrimination by federal contractors.
Federal contractors and grant recipients must now certify they do “not operate any programs promoting DEI that violate any applicable Federal antidiscrimination laws.”

Implications for all private-sector organizations:

The Executive Order also states that the U.S. Attorney General and federal agency heads must submit a report that includes, among other elements:
- “A plan of specific steps or measures to deter DEI programs or principles (whether specifically denominated “DEI” or otherwise) that constitute illegal discrimination or preferences.”
- “Other strategies to encourage the private sector to end illegal DEI discrimination and preferences and comply with all Federal civil-rights laws.”
As noted by legal experts, Executive Order 14173 “does not categorically declare that all DEI and DEIA programs are inherently unlawful.” In contrast, the Executive Order appears to primarily focus on “illegal discrimination and preferences” in employment that “prioritized how people were born instead of what they were capable of doing.” Although not expressly defined in the Executive Order, legal experts have opined that hiring or promotion preferences, quotas, or conferring work benefits or advantages to someone based on their protected characteristics may be of particular concern to the government under the Executive Order, while general workplace programs aimed at fostering an environment of inclusion and belonging at work are less likely to constitute “illegal discrimination and preferences.”

Legal challenges to the Executive Order are ongoing, including Nat’l Ass’n of Diversity Officers in Higher Educ. v. Trump, where a Fourth Circuit panel recently stayed a nationwide injunction, allowing enforcement of the Executive Order to proceed pending appeal.

Oregon Clarifies Employer Obligations to Address Harassment

On February 1, 2025, Oregon’s Permanent Administrative Order BLI 1-2025 took effect, amending the state’s discrimination laws to clarify what constitutes “appropriate corrective action” and “promptly correcting harassing behavior” under Oregon law. Employers are now expressly required to intervene immediately, conduct prompt and adequate investigations, apply discipline proportionate to the seriousness of the conduct, avoid penalizing the reporting employee, and implement steps to prevent retaliation and recurrence.

The rule confirms that an employer may still be liable for harassment even if the harassment stops; success in halting misconduct is now a relevant, but not determinative, factor in evaluating whether the employer met its legal obligations. Given this, the rule reinforces the importance of preventing incidents of harassment from occurring in the first place to minimize legal risk, rather than relying on taking appropriate steps after harassment has already occurred. Leading employers will therefore implement harassment prevention training and initiatives, as well as review and update their investigation and discipline protocols, to minimize risk and ensure compliance with the clarified standards.

Iowa Removes Gender Identity as a Protected Class Under State Civil Rights Law

On February 28, 2025, Iowa Governor Kim Reynolds signed Senate File 418 into law, amending the Iowa Civil Rights Act to remove “gender identity” as a protected characteristic. The change, effective July 1, 2025, eliminates state-level protections against discrimination based on gender identity in employment, housing, education, credit, and public accommodations. The law also codifies binary definitions of “male” and “female” based on sex assigned at birth and permits sex-based distinctions in facilities such as restrooms and locker rooms.

Despite this change in Iowa law, employers with 15 or more employees remain subject to federal law (Title VII of the Civil Rights Act of 1964) which, under the U.S. Supreme Court’s decision in Bostock v. Clayton County, prohibits employment discrimination based on gender identity. Some Iowa municipalities also continue to protect gender identity under local ordinances. Many employers will be reviewing workplace policies to ensure compliance with all applicable laws.

U.S. EEOC Issues Guidance on Wearables and Employment Discrimination Risk

The U.S. Equal Employment Opportunity Commission (EEOC) has issued a new fact sheet containing guidance cautioning employers about legal risks tied to the use of wearable technology in the workplace. Devices that track biometrics or health data—such as fitness trackers, smartwatches, or VR/AR headsets—can trigger obligations under the Americans with Disabilities Act (ADA), the Genetic Information Nondiscrimination Act (GINA), and Title VII. Inappropriate use of this data, including relying on biometric or location information in employment decisions, may lead to claims of discrimination, failure to accommodate, or unlawful inquiries.

In the fact sheet, the EEOC urges employers to evaluate the accuracy and relevance of wearable-generated data across different protected groups, ensure secure storage of any health-related information, and develop clear policies for how such data is used. As the law and technology in this area continue to evolve, many employers will conduct internal audits, revise policies, and train managers to avoid discriminatory impacts and stay compliant.

Note: Since the fact sheet was issued and posted on the EEOC’s AI-related resources webpage, that page has since been removed, although the fact sheet document remains available.

U.S. Federal Court Strikes Down DOL’s 2024 Overtime Rule

On November 15, 2024, the U.S. District Court for the Eastern District of Texas vacated the U.S. Department of Labor’s 2024 final rule increasing the salary threshold for the Fair Labor Standards Act’s (FLSA) so-called “white collar exemptions.” The court concluded that the rule— which took effect July 1, 2024, and included a further scheduled increase on January 1, 2025— exceeded the DOL’s statutory authority under the FLSA and was arbitrary and capricious under the Administrative Procedure Act.

The decision sets aside the rule nationwide, reinstating the prior minimum salary threshold of $35,568 for exempt executive, administrative, and professional employees, and $107,432 for highly compensated employees. The court also invalidated the rule’s automatic escalation provision. While the DOL may appeal, it is not expected to do so under the new administration. Employers in states with higher thresholds (e.g., California, New York) remain subject to state law requirements.

New Jersey, New York Respond to Growing AI Risks in Employment Practices

As artificial intelligence (AI) continues to transform the workplace, state regulators are stepping in to address the potential for discriminatory impacts in hiring and employment decisions. On January 9, 2025, the New Jersey Office of the Attorney General and the Division on Civil Rights (DCR) launched a new Civil Rights and Technology Initiative. As part of the initiative, the DCR issued Guidance on Algorithmic Discrimination and the New Jersey Law Against Discrimination, which clarifies that algorithmic discrimination—discriminatory outcomes stemming from the use of automated decision-making tools—is prohibited under the NJLAD. The guidance outlines how bias may occur during design, training, or deployment of such tools and identifies liability for disparate treatment, disparate impact, and failure to accommodate. Importantly, employers may be liable for third-party tools, even if they do not understand the tool’s internal mechanisms.

In parallel, New York Governor Kathy Hochul’s 2025 State of the State address included a proposal to modernize the state’s WARN Act by requiring businesses to disclose whether layoffs are related to their use of AI. The proposal is part of broader workforce reforms aimed at tracking and addressing technology-related job displacement and ensuring retraining opportunities for affected workers.

Disclaimer: This information is not intended as legal advice. Please consult with legal counsel to ensure your organization’s compliance with applicable legal requirements.

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