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** UPDATE ** On March 3, 2025, the federal judge in the Maryland lawsuit denied the Trump administration’s request to stay the preliminary injunction discussed below.
The judge ruled that the administration failed to demonstrate a likelihood of success on the merits and that the injunction was necessary to prevent potential violations of free speech and due process rights.
Stay tuned for further updates as this case progresses through the courts and read on for more information about the injunction at issue.

On February 21, 2025, a federal district court in Maryland issued a preliminary nationwide injunction temporarily blocking significant provisions from two of President Trump’s executive orders targeting DEI programs. In a 63-page opinion, the judge concluded that the plaintiffs were likely to prevail in their challenges to these provisions on First and Fifth Amendment grounds.

While the district court’s order provides some temporary relief, it does not prevent the Trump administration from pursuing individual enforcement actions against companies that it believes operate “illegal” DEI programs (including enforcement actions by the DOJ and the Equal Employment Opportunity Commission), among other things.

On February 24, defendants in the case filed a notice of appeal with the Court of Appeals for the Fourth Circuit. While it remains to be seen how the appeal plays out, in the meantime, it’s important for employers to understand what the injunction did and did not do.

Background

The city of Baltimore and several academic and restaurant workers’ groups challenged one provision in EO 14151 (Ending Radical and Wasteful Government DEI Programs and Preferencing) and two provisions in EO 14173 (Ending Illegal Discrimination and Restoring Merit-Based Opportunity) on constitutional grounds.

Plaintiffs sued Trump and these agencies: (1) the Department of Health and Human Services; (2) the Department of Education; (3) the Department of Labor; (4) the Department of the Interior; (5) the Department of Commerce; (6) the Department of Agriculture; (7) the Department of Energy; (8) the Department of Transportation; (9) the Department of Justice; (10) the National Science Foundation; and (11) the Office of Management and Budget. The EEOC is not a defendant.

By way of reminder, and as explained in our blog A Roadmap to Trump’s DEI Executive Orders for US Employers, executive orders are a powerful tool through which the President issues formal directions to the executive branch, agencies and officials on how to carry out the work of the federal government. Challenges to — and subsequent judicial review of — EOs are commonplace.

The NADOHE v. Trump decision and defendants’ appeal

This chart outlines the challenged provisions in the EOs, and the district court’s response:

Challenged Executive OrderChallenged ProvisionDistrict Court’s Ruling
EO 14151 (Ending Radical and Wasteful Government DEI Programs and Preferencing)The “Termination Provision” directing all executive agencies to terminate “equity-related” grants or contracts.The court enjoined the government defendants from freezing or terminating existing “equity-related” contracts and grants (under EO 14151).

The court held that the plaintiffs had shown a likelihood of success on their claim that the Termination Provision is unconstitutionally vague because it fails to provide clear guidance on what constitutes “equity-related” grants or contracts, which could lead to arbitrary and discriminatory enforcement.
EO 14173 (Ending Illegal Discrimination and Restoring Merit-Based Opportunity)The “Certification Provision” requiring federal contractors and grantees include in every contract or grant award a certification, enforceable through the False Claims Act, that it “does not operate any programs promoting DEI that violate any applicable federal anti-discrimination laws.”The court enjoined the government defendants from:
– Requiring federal contractors and grant recipients to certify that they do not “operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws;”  
– Requiring federal contractors and grant recipients “to agree that [their] compliance in all respects with all applicable Federal anti-discrimination laws is material” for purposes of the False Claims Act; and
– Bringing any enforcement action targeting “DEI programs or principles.”

The court held that the plaintiffs had shown a likelihood of success on their claim that the Certification Provision violates the First Amendment.
EO 14173 (Ending Illegal Discrimination and Restoring Merit-Based Opportunity)The “Enforcement Provision” directing the Attorney General to take measures to encourage the private sector to end illegal DEI, and to identify potential civil compliance investigations.The court enjoined the federal agency defendants from “bring[ing] any False Claims Act enforcement action, or other enforcement action, pursuant to the Enforcement Threat Provision, including but not limited to any False Claims Act enforcement action premised on any certification made pursuant to the Certification Provision.” 

The court held that the plaintiffs had shown a likelihood of success on their claims that the Enforcement Threat Provision violates the First Amendment and the Due Process Clause of the Fifth Amendment because there is no guidance regarding the DEI programs or practices that the administration considers illegal.

It did not “enjoin the Attorney General from … engaging in investigation” of DEI programs or to prohibit the Attorney General from preparing a report identifying investigation targets.

On Monday, February 24, defendants filed a Notice of Appeal with the Court of Appeals for the Fourth Circuit. We are closely monitoring what follows.

What didn’t the Maryland district court do?

  • The preliminary injunction does not change the requirement that federal contractors cease Affirmative Action Plans (other than for veterans and the disabled) by April 21, 2025.
  • The preliminary injunction does not prevent the Attorney General from preparing reports or pursuing investigations related to the DEI orders.
  • The preliminary injunction does not directly apply to the EEOC.

What’s next?

As expected, the Trump administration is appealing this decision to the Fourth Circuit.

A separate challenge to EO 14151 and EO 14173, as well as EO 14168 (“Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government”), is pending in the United States District Court for the District of Columbia (National Urban League et al. v. Trump).

Further challenges are likely, and it’s entirely plausible that the fate of the DEI Orders ultimately goes before the US Supreme Court.

Recommendations for employers

The Trump administration (and activists who are pressuring companies on the basis of their DEI initiatives with social media campaigns and the threat of legal action) likely will try to further their policy goals with respect to DEI in the private sector through any available means (e.g. the EEOC or other agencies not named in the lawsuit). As such the increased risk profile for certain DEI programs persists, and a DEI Health Check conducted under legal privilege remains a prudent and recommended action.

Our DEI EO Task Force is closely tracking challenges to Trump’s Executive Orders, industry shifts regarding DEI and related litigation activity. Contact your Baker McKenzie employment lawyer for more.

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Trump’s immigration Executive Orders address “enhanced vetting” of visa applicants, birthright citizenship and border security, among other things. Likely increasing ICE enforcement actions, including employer site visits and raids at workplaces, one of the EOs establishes a new “Homeland Security Task Force” enabling federal, state and local law cooperation in removing undocumented individuals.

As part of our Looking Ahead series, this special edition of the Mobility Minute features our attorneys with deep knowledge in immigration and mobility and government enforcement discussing: 

  • Immigration raids and worksite enforcement,
  • What immigration worksite enforcement entails,
  • Trends we are observing from Trump’s DHS regarding raids and other enforcement actions, and
  • How employers can prepare for a potential increase in worksite enforcement, including steps to take when government agents arrive at the door. 

Click here to listen to the Mobility Minute.

*Captions are automatically generated. We apologize for any typos or errors.

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Shortly after taking office, President Trump rescinded Biden’s Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence. Biden’s Executive Order sought to regulate the development, deployment, and governance of artificial intelligence within the US, identifying security, privacy and discrimination as particular areas of concern. Trump signed his own executive order titled “Removing Barriers to American Leadership in Artificial Intelligence,” directing his advisers to coordinate with the heads of federal agencies and departments, among others, to develop an “action plan” to “sustain and enhance America’s global AI dominance” within 180 days.

While we wait to see if and how the federal government intends to combat potential algorithmic discrimination and bias in artificial intelligence platforms and systems, a patchwork of state and local laws is emerging. Colorado’s AI Act will soon require developers and deployers of high-risk AI systems to protect against algorithmic discrimination. Similarly, New York City’s Local Law 144 imposes strict requirements on employers that use automated employment decision tools, and Illinois’ H.B. 3773 prohibits employers from using AI to engage in unlawful discrimination in recruitment and other employment decisions and requires employers to notify applicants and employees of the use of AI in employment decisions. While well-intentioned, these regulations come with substantial new, and sometimes vague, obligations for covered employers.

California is likely to add to the patchwork of AI regulation in 2025 in two significant ways. First, California Assemblymember Rebecca Bauer-Kahan, Chair of the Assembly Privacy and Consumer Protection Committee, plans to reintroduce a bill to protect against algorithmic discrimination by imposing extensive risk mitigation measures on covered entities. Second, the California Privacy Protection Agency’s ongoing rulemaking under the California Consumer Privacy Act will likely result in regulations restricting the use of automated decision-making technology by imposing requirements to mitigate algorithmic discrimination.

Continue Reading Passage of Reintroduced California AI Bill Would Result In Onerous New Compliance Obligations For Covered Employers
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This Baker Mckenzie Handbook covers key data and cyber laws in over 50 jurisdictions, and provides valuable insights into:

  • Key laws and regulations, including recent changes and expected developments over the next year
  • Foundational data privacy obligations including information and notification requirements, data subject rights, accountability and governance measures, and responsibilities of data controllers and processors
  • Data privacy requirements in the digital space, including the implications of artificial intelligence, profiling, and automated decision-making, and regulations on cookies, online tracking, and direct marketing
  • Cross-border data issues including international data transfer rules and data localization requirements
  • Data privacy requirements in key practical scenarios: data processing in the employment context, and the importance of data and cyber in transactional contexts
  • The rapidly evolving cyber regulatory landscape, including breach notification requirements
  • The roles of regulators, their enforcement priorities, and the penalties for non-compliance with laws and regulations.

In response to emerging trends, we have expanded the scope of the 2025 Handbook to include new content relating to AI, non-personal data, and trends in regulatory investigations and enforcement, ensuring that you are well-equipped to handle the evolving challenges in data and cybersecurity.

Click here to access the handbook.

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President Trump has taken quick action to ramp up immigration enforcement in his first days in office. While Trump’s early focus on deportations and border security is not new, the swift and aggressive enforcement approach represents a significant change as compared to prior administrations. These actions have led to arrests and heightened concerns among employers and employees alike.


What do employers need to know?

Since Trump’s inauguration, there has been a significant increase in targeted enforcement measures against individuals present in the United States who are not U.S. citizens who have a criminal record, and also recent arrivals to the United States who do not hold lawful immigration status. The vast majority of immigration enforcement since January 20 has occurred in private residences and public spaces, though there have been immigration enforcement actions at worksites. There have not been reports of wide-scale worksite raids yet, though the focus may shift to worksite inspections in the next wave of enforcement activities.

Worksite enforcement inspections can take a variety of shapes. In particular, employers should be prepared for the following:

  • Fraud audits in relation to employer-sponsored visa holders;
  • Administrative I-9 audits;
  • Arrests of targeted individuals; or
  • Raids based on suspicion of undocumented workers at worksite facility.
Continue Reading The Post-Inauguration Playbook: Spotlight on Immigration Enforcement and Raids
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In the first two days of his presidency, President Trump signed a series of executive orders aimed at dismantling diversity programs across the federal government, revoking longstanding DEI and affirmative action requirements for federal contractors, and directing public and private entities to end policies that constitute “illegal DEI discrimination.”

Suffice it to say the orders have left federal contractors, corporations, nonprofits, and other employers in the private sector grappling with what to do next. While the EOs reverberations will be felt for some time and the DEI journey for federal agencies and the private sector is likely to be a circuitous one as challenges are raised in the courts, before Congress and in the court of public opinion, employers do need to gain some traction and start the trip. In this article, we present a roadmap to consider as employers work through the impacts of the EOs on their organizations.

At the starting line: what the EOs do and don’t do

Executive orders are a powerful tool through which the President issues formal directions to the executive branch, agencies and officials on how to carry out the work of the federal government. Historically, EOs mostly addressed administrative matters, but some sought to drive substantial policy changes. While congressional approval is not required for an EO to be effective, judicial review is commonplace and also, EOs can be reversed by later administrations.

President Trump’s EOs addressing DEI do not change existing discrimination statutes, such as the bedrock prohibitions on discrimination in employment in Title VII of the Civil Rights Act of 1964. The orders do not ban or prohibit any or all private employer DEI programs. Rather, the orders direct federal agencies and deputized private citizens to root out (through investigations, enforcement actions, or False Claims Act litigation) “illegal discrimination and preferences” and, for government agencies, to take particular actions.

Similar to the situation following the US Supreme Court SFFA decision in June 2023, if your DEI programs were lawful before Trump’s inauguration – they still are. What is “illegal” under federal law today is the same as it was before Trump’s presidency. But what’s clearly different is the ferocity of the federal government’s intent and resources dedicated to scrutinizing alleged race- or sex-based preferences in the workplace, and the resulting level of scrutiny applied to DEI programs.

Continue Reading A Roadmap to Trump’s DEI Executive Orders for US Employers
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From the groundbreaking mandate for paid prenatal leave to the upcoming requirement that employers disclose AI-related layoffs, 2025 is set to be a transformative year for New York employers. As you navigate the latest employment laws, keep this checklist close at hand. While it doesn’t cover every new regulation, it highlights the key changes our clients need to know to stay ahead of the curve this year.

 Key New York ChangeEmployer To-Dos
(1)Paid Prenatal Leave Now Required | Effective Jan. 1, 2025, private New York employers must provide employees with 20 hours of paid prenatal personal leave (PPPL) during any 52‑week calendar period in addition to paid sick and safe leave (PSSL). New York is the first state in the US to require employers to provide such leave.

PPPL is leave taken for health care services received by an employee during their pregnancy or related to such pregnancy, including physical examinations, medical procedures, monitoring and testing, and discussions with a health care provider related to the pregnancy.
Importantly, eligible employees can take all 20 hours of PPPL they are entitled to for the 52-week period starting the effective date of the new law–without waiting for PPPL to accrue.

For more details on the law’s requirements, see our previous blog here.		Update policies and practices to comply with the new requirements.

Modify handbooks as necessary, and train HR and managers / supervisors on the law’s requirements.

Review the New York State Department of Labor’s (NYSDOL) guidance on the law, including the FAQs and Employer Fact Sheet.  
(2)Minimum Wage Hike | Effective Jan. 1, 2025, the hourly minimum wage for workers (with the exception of tipped hospitality service workers and food service workers) increased to $16.50 in New York City, Westchester County and on Long Island (up from $16.00), and in the rest of the state the minimum wage increased to $15.50 (up from $15.00).

The minimum wage will increase again on Jan. 1, 2026 to $17.00 for New York City, Long Island and Westchester, and $16.00 for the rest of the state.

Beginning Jan. 1, 2027, minimum wage increases will be tied to the three-year average of the regional consumer price index–meaning economic conditions could prevent a minimum wage rate increase for a particular year. If the NYSDOL determines a rate increase is appropriate, it will post the adjusted rate no later than Oct. 1 of the year prior to the planned increase to allow employers adequate time to prepare.		Confirm with HR, payroll, and accounting that all wage rates comply with the law.

Post the required updated Minimum Wage Poster (available on the NYSDOL website here) in a visible location for employees.
(3)Increase in Overtime Exempt Salary Thresholds | The minimum salary threshold increased for the executive and administrative exemptions from overtime pay.

Effective Jan. 1, 2025, the salary threshold is $1,237.50/week ($64,350 annually) in New York City, Westchester County and on Long Island, and
$1,161.65/week ($60,405.80 annually) in the rest of the state.

The salary threshold will increase again on Jan. 1, 2026 to $1,275.00/week ($66,300 annually) for New York City, Westchester County and Long Island, and $1,199.10/week ($62,353.20 annually) for the rest of the state.

New York does not impose a higher salary threshold than federal law for employees employed in a “bona fide professional capacity.” Therefore, salary threshold for the professional exemption under New York law remains aligned with the federal professional exemption salary threshold, which is currently set at $684.00 per week ($35,568.00 annually).		Conduct a review to determine if the new higher exempt salary thresholds will affect the exempt status of employees. Determine whether to reclassify exempt employees as non-exempt, or to adjust the base compensation of affected exempt employees to ensure they continue to meet the applicable exemption criteria. Consult with counsel before making changes to consider all possible implications.  
(4)Workers’ Compensation Now Covers “Mental Injury”| Under S6635 (effective Jan. 1, 2025), the state workers’ compensation law allows all workers to file claims for mental injury premised upon extraordinary work-related stress.

Prior to the amendment, only a small subset of first responders could obtain workers’ compensation benefits for mental injury.        		Update workers’ compensation policy coverage to include coverage for all employees alleging mental injury claims based on work-related stress.

Monitor developments on what “extraordinary work-related stress” means. It is not defined in the law.

Consult with counsel if faced with an employee claim of employment-related emotional distress outside of workers’ compensation, to determine whether workers’ compensation may be the exclusive remedy.
(5)Employers Must Include Notice Regarding Reproductive Health Care Choices in Handbooks | On Jan. 2, 2025 in CompassCare v. Hochul, the US Court of Appeals for the Second Circuit vacated a permanent injunction that had halted a requirement under N.Y. Labor Law § 203-e that employers include a notice in employee handbooks regarding the prohibition of discrimination for an employee’s or dependent’s reproductive health care choices.

As a result of the court’s decision, New York state employers are once again required to include the notice in their handbooks.		Review employee handbooks and update as necessary to include the notice of employee rights and remedies required under N.Y. Lab. Law § 203-e.    
(6)Warehouse Employers Required to Take Steps to Reduce Injury Risk by June | The Warehouse Worker Injury Reduction Program (S5081C) takes effect Jun. 1, 2025, and will require covered employers to take steps to reduce the risk of musculoskeletal injuries and disorders among workers involved in manual materials handling jobs –including implementing an injury reduction program to minimize risks of injuries.

Covered employers
Employers who employ over 100 employees at a single warehouse distribution center, or more than 1,000 employees across multiple warehouse distribution centers within New York, are covered by the law.

Injury reduction program
The law requires employers to implement an injury reduction program, which must include a worksite evaluation; control of exposures (including the pace of work) which have caused or have the potential to cause musculoskeletal injuries and disorders; employee training and involvement; and on-site medical and first aid practices.  

Worksite evaluation
Employers must ensure that each job or process covered by the law has a written work site evaluation by a qualified ergonomist for risk factors causing musculoskeletal injuries. Employers must also determine if employees exposed to these risks face adverse actions due to quotas. Employers must collect recommendations from workers on possible risk factors and possible changes to mitigate the risk factors. The required initial evaluation must take place by Nov. 28, 2025, and must be reviewed and updated at least annually, with new analyses within 30 days of any job changes.  

Correction of risk factors
Employers must promptly correct any identified risk factors causing or likely to cause musculoskeletal injuries. If corrections take more than 30 days, employers must provide a schedule for the proposed corrections. Employers must minimize exposure as much as feasible if elimination of risk factors is not possible.  

Injury reduction training
Employers must provide injury reduction training to all employees involved in manual materials handling jobs and supervisors–including training on early symptoms of musculoskeletal injuries, methods to reduce risks, and employees’ rights to report concerns. The training must be conducted at the warehouse during normal work hours, without loss of pay for employees. The training must take place on or before Jul. 31, 2025.  

On-site medical office / first aid station
Any on-site medical office or first aid station treating workers with musculoskeletal injuries must be staffed with qualified medical professionals–and employers must consult with a licensed medical consultant for evaluations and recommendations. Employers must comply with these requirements by Jul. 31, 2025.  		Covered employers should prepare to meet the law’s requirements in advance of the compliance dates, including preparing an injury reduction program and the required training, obtaining a worksite evaluation, and developing a protocol for obtaining the required recommendations from workers on risk factors and possible mitigation.  

Employers should train HR and supervisors/managers on the law’s requirements.  
(7)Violence Prevention Required by Retail Employers by March | Under S8358C, by Mar. 3, 2025, each retail employer in New York with at least 10 employees working at a retail store (not primarily engaged in the sale of food for consumption on its premises) must:

(i) Adopt and implement a written workplace violence prevention policy, which must be provided to all employees upon hire and annually;
(ii) Provide workplace violence prevention training for employees (upon hire and annually) that includes information on de-escalation tactics, active shooter drills, and emergency procedures among other topics; and
(iii) Provide their retail employees with written notice of the workplace violence prevention policy and training program in English and the employee’s primary language.

By Jan. 1, 2027, retailers with more than 500 retail employees must also create a panic button system employees can use to trigger an alert if they believe they or a colleague is in an unsafe situation.

A proposed amendment to the Act is pending in the New York State Assembly (A1678). Among other requirements, the amendment would require employers with fewer than 50 retail employees to provide workplace violence training upon hiring and every two years thereafter (instead of annually); require that employers with 500 or more retail employees statewide provide to employees “silent response buttons” (identified as “panic buttons” in the current law) which must request immediate assistance from a security officer, manager or supervisor; and change the Mar. 3, 2025 effective date to Jun. 2, 2025 (though the “silent response button” requirement would still take effect January 1, 2027).		The NYSDOL is tasked with developing both a model written policy (which the NYSDOL will monitor every four years and update as needed) and model training. Covered employers should keep watch for the NYSDOL’s model policy and training, and either adopt them or implement a policy and training that at least meets the model’s standards by Mar. 3, 2025.  

In addition, the Labor Commissioner is required to adopt rules and regulations for the implementation of the law. Retail employers should monitor for this guidance as well.    

In advance of the effective date, train HR and managers / supervisors on the law’s requirements.  

Monitor Assembly Bill A1678 and other proposed legislation for amendments to the Retail Worker Safety Act.
(8)COVID-19 Sick Leave Sunsets in July | New York’s COVID-19 Paid Sick Leave Law will sunset on Jul. 31, 2025. The law entitles employees to paid COVID-19 leave when subject to a mandatory or precautionary order of quarantine or isolation due to COVID-19. After Jul. 31, employees will still be able to use other qualifying paid leave, including New York Paid Sick Leave, for COVID-19 related reasons. For more details, see our previous blog here.Update employment policies and practices in time to comply with the new laws and modify employee handbooks as necessary.

Train HR and managers / supervisors on the likely increase of employees using other types of paid sick leave for COVID-19 after Jul. 31.
(9)Starting in May, NYC Employers Must Provide Paid Lactation Breaks |New York City adopted Int 0892-2024, amending New York City’s existing lactation law in line with recently amended state law. Effective May 8, 2025, New York City’s existing lactation law–which requires that employers provide a lactation room, “reasonable” time to express breast milk, and a written lactation policy when employees begin employment, among other things–also mandates that employers:

(i) Provide 30 minutes of paid break time to express breast milk, and permit employees to use existing paid break time or meal time for time in excess of 30 minutes to express breast milk. Prior to the amendment, an employer was only required to provide “reasonable” break time for an employee under existing law, and the break time was not required to be paid.
(ii) Conspicuously post the company’s written policy regarding a lactation room at the employer’s place of business in an area accessible to employees–and electronically on the employer’s intranet, if one exists. This is in addition to the existing requirement to provide the policy to employees when they begin employment.

As a reminder, effective Jun. 19, 2024, New York State requires employers (for up to three years following the birth of a child) to:

(i) Provide paid break time of 30 minutes to allow an employee to express breast milk for the employee’s nursing child each time the employee reasonably needs to express breast milk;
(ii) Allow an employee to use existing paid break time or meal time in excess of 30 minutes to nurse; and
(iii) Inform employees about the right to take paid lactation breaks when they are hired, on an annual basis, and when the employee returns to work after the birth of a child.

For more details on the New York State law’s requirements, see our previous blog here.		Before May 8, update policies and practices to comply with the new law, and modify handbooks to include the changes.

Train HR and managers / supervisors on the new requirements, making sure they are aware that 30 minutes of break time will be paid and that employees may use existing paid break or meal time for additional time to express breast milk.

Monitor the New York City Commission on Human Rights lactation accommodations webpage for an updated model policy.      
(10)What We’re Watching:  Employers Will Be Required to Disclose AI-Related Layoffs | According to Governor Hochul’s Jan. 14, 2025 State of the State address and policy book, New York will be the first state to require employers to disclose AI-related job cuts.

At the Governor’s direction, the NYSDOL will require businesses submitting notices of worker layoffs to its Worker Adjustment and Retraining Notification (WARN) system to convey whether a layoff is related to a businesses’ use of AI. The NY WARN Act requires employers with 50 or more full time employees to provide at least 90 days’ notice if an employer plans to implement certain facilities closings, relocations, reductions in work, or layoffs.		Employers should monitor for developments and details. It is expected that Governor Hochul will issue an Executive Order in the coming days to implement this change.

For advice and counsel on implementing changes to comply with any of your new New York obligations, please contact your Baker McKenzie employment lawyer.

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The Supreme Court of the United States recently settled a circuit split on the standard of proof required to classify employees as exempt from the Fair Labor Standards Act’s (FLSA) minimum wage and overtime pay provisions. In a unanimous opinion, SCOTUS held in EMD Sales, Inc. v. Carrera that the “preponderance of the evidence” standard–and not the more stringent “clear and convincing” standard–applies.  

Background

The FLSA mandates federal minimum wage and overtime pay for all employees except those employed in a bona fide executive, administrative, professional, computer or outside sales capacity. “Outside sales” employees have the primary job duties of making sales or obtaining orders or contracts for services or the use of facilities in exchange for consideration paid by a client, and they also primarily work away from their employer’s place of business.

EMD, a distributor of food products in the Washington, DC area, employed sales representatives who managed inventory and took orders at grocery stores. Several sales representatives sued EMD, alleging that the company violated the FLSA by not paying them overtime. EMD argued that the sales representatives were outside sales employees and thus exempt from the FLSA’s overtime pay requirement.

Fourth Circuit: “Clear and convincing”

The US District Court for the District of Maryland ruled that EMD did not prove by “clear and convincing” evidence that its sales representatives met the FLSA exemption standard for outside sales employees, finding that the employees primarily executed the terms of sales already made instead of making new sales themselves. The court held EMD liable for overtime pay. EMD appealed, arguing that the court should have used the less stringent “preponderance of the evidence” standard in deciding whether the sales representatives satisfied the test for the outside sales exemption. The US Court of Appeals for the Fourth Circuit affirmed, adhering to Fourth Circuit precedent that required proof of FLSA exemptions by clear and convincing evidence.

SCOTUS: “Preponderance of the evidence” applies

SCOTUS granted certiorari to resolve a conflict among the circuits regarding the applicable standard of proof for FLSA exemptions–noting that the Fourth Circuit was the only circuit to have addressed the issue and require proof of FLSA exemptions by clear and convincing evidence. SCOTUS reversed and remanded for further proceedings, holding that the lower preponderance of the evidence standard is appropriate for determining FLSA exemptions.

This is the second time[1] that SCOTUS has found that there is no reason to deviate from statutory language or resort to a heightened standard of proof in employment cases, noting:

  • The preponderance of the evidence standard is the default in US civil litigation and typically applies unless a statute (or the Constitution) requires a heightened standard. The FLSA is silent on the standard of proof for exemptions, and when a civil statute is silent, courts typically apply the preponderance standard.
  • There are only three main circumstances in which the Court has deviated from the default standard in civil litigation: when mandated by a statute, when mandated by the Constitution, or in cases involving coercive government action (such as taking away a person’s citizenship). None of those was present here.  
  • The employees argued that a heightened standard should apply based on public interest and the non-waivable nature of FLSA rights, but the Court found these arguments unconvincing. Other workplace protections with important public interests–including Title VII–also use the preponderance of the evidence standard.

Employer takeaways

  • Even with clarification that a lower standard of proof applies to FLSA exemptions, employers should be diligent in ensuring that employees who are classified as exempt meet any applicable job duties and salary threshold tests. Misclassification claims often lead to class action lawsuits, and can be expensive to litigate. Employers should work with counsel to conduct an internal classification audit to ensure that actual job duties and salaries align with the FLSA’s requirements for exemption.
  • Employers should also check state law for state exemption tests. Some states, including California, have exemption tests which may include higher minimum salaries or more rigorous duties tests than those required by the FLSA. Both the state and federal tests must be applied, and if an employee satisfies the federal tests for exemption but not the state tests, the employee is entitled to overtime in all circumstances covered by the state’s law.
  • Employers should keep watch of how the Trump administration handles the US Department of Labor’s (DOL) April 23 Final Rule raising the federal overtime salary threshold (see our prior blog on the rule here).  The DOL has appealed a November 15, 2024 order by a Texas federal judge vacating the rule nationwide, but the Trump administration is expected to make several changes in the near future, including doing away with the rule. This is just one of many areas employers should monitor as the new administration proceeds with expected changes impacting employers. Stay tuned.

[1] In Muldrow v. City of St. Louis, 601 U.S. 346 (2024), the Court used similar reasoning to find that employees in Title VII discrimination cases need only show some harm, rather than substantial harm.  While some circuit courts had read a substantial harm requirement into Title VII claims, SCOTUS noted that there was no such requirement for a heightened showing in the statutory language of Title VII.

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On January 20, 2025, the first day of his second term, President Trump revoked Executive Order 14110 on Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence (the “Biden Order”), signed by President Biden in October 2023. In doing so, President Trump fulfilled a campaign pledge to roll back the Biden Order, which the 2024 Republican platform described as a “dangerous” measure. Then on January 23, 2025, President Trump issued his own Executive Order on AI, entitled Removing Barriers to American Leadership in Artificial Intelligence (the “Trump Order”). Here, we examine some of the practical implications of the repeal and replacement of executive orders by Trump and what it means for businesses.

Overview of the Executive Orders

Building on the White House’s 2022 Blueprint for an AI Bill of Rights, the Biden Order outlined a sweeping vision for the future of AI within the federal government, including seven high-level objectives: (1) Ensuring the Safety and Security of AI Technology; (2) Promoting Innovation and Competition; (3) Supporting Workers; (4) Advancing Equity and Civil Rights.; (4) Protecting Consumers, Patients, Passengers, and Students; (5) Protecting Privacy; (6) Advancing Federal Government Use of AI; and (7) Strengthening American Leadership Abroad.

The Biden Order directed various measures across the federal apparatus –imposing 150 distinct requirements on more than 50 federal agencies and other government entities, representing a genuinely whole-of-government response.

Although the bulk of the Biden Order is addressed to federal agencies, some of its provisions had potentially significant impacts on private sector entities. For example, the Biden Order directed the Commerce Department to require developers to report on the development of higher risk AI systems.  Similarly, the Biden order directed the Commerce Department to establish requirements for domestic Infrastructure as a Service (IaaS) providers to report to the government whenever they contract with foreign parties for the training of large AI models. The Biden Order also open-endedly instructed federal agencies to use existing consumer protection laws to enforce against fraud, unintended bias, discrimination, infringements on privacy, and other harms from AI—a directive various federal regulators actioned under the Biden administration.

Other than the definition of AI, the Trump Order and Biden Order share no similarities (both Orders point to the AI definition from 15 U.S.C. 9401(3), namely: “a machine-based system that can, for a given set of human-defined objectives, make predictions, recommendations or decisions influencing real or virtual environments”). The Trump Order does not contain specific directives (such as those in the Biden Order), but instead articulates the national AI policy to “sustain and enhance America’s global AI dominance in order to promote human flourishing, economic competitiveness, and national security.” The Trump Order directs a few specific roles within the administration to develop an Artificial Intelligence Action Plan within 180 days (i.e., by July 22, 2025) to achieve the policy objective articulated in the Trump Order. The Trump Order directs these same roles within the administration to review the policies, directives, regulations, orders, and other actions taken pursuant to the Biden Order and to suspend, revise, or rescind any such actions that are inconsistent with the Trump Order’s stated policy. In cases where suspension, revision, or rescission of the prior action cannot be finalized immediately, the heads of agencies are instructed to “to provide all available exemptions” in the interim.

Practical Impacts

The practical effect of the revocation of the Biden Order—and the options available under the Trump Order—will vary depending on the measure. Although there are widespread impacts from the revocation of the Biden Order’s mandates across multiple initiatives and institutions, below are those that are expected to have a significant impact on private sector entities engaged in the development or use or AI.

Reporting requirement for powerful AI models: As noted, the Biden Order directed the Department of Commerce to establish a requirement for developers to provide reports on “dual-use foundation models” (broadly, models that exhibit high levels performance at tasks that pose a serious risk to security, national economic security, national public health or safety). Pursuant to the Biden Order, the Bureau of Industry and Security’s (BIS), a Commerce Department agency, published a proposed rule to establish reporting requirements on the development of advanced AI models and computing clusters under its Defense Production Act authority, but had not issued a final rule prior to the revocation of the Biden Order. It is likely that the new administration will closely scrutinize this reporting requirement and may take action to block the adoption of the final rule if it is found to be inconsistent with the policy statement in the Trump order.

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