Speakers: Kathleen C. Slaught, Brad Perkins, and Ryan Tikker

About the Program: While the ERISA legal landscape changes constantly, one thing is certain – California remains a harbinger of litigation trends soon to spread nationwide. From the statutes and laws under which ERISA cases are brought to novel venue shopping tactics, employers across the US watch California as a proving ground for new litigation strategies. 

So what does that mean for California employers, and employers across the country keeping an eye on California? Join our experienced attorneys as they navigate these trends in the ERISA Litigation landscape, including:

  • Provider litigation developments such as preemption cases and the rise of Knox-Keene Act cases, 
  • Welfare and pension issues, including use of forfeiture, 
  • Discovery issues at trial, and 
  • Lessons learned from removal and questions of venue. 

Cost  –  There is no cost to attend, however registration is required.

Tuesday, October 8, 2024
3:00 p.m. to 4:00 p.m. Eastern
2:00 p.m. to 3:00 p.m. Central
1:00 p.m. to 2:00 p.m. Mountain
12:00 p.m. to 1:00 p.m. Pacific

REGISTER HERE

Learn more about our ERISA Litigation practice.

If you have any questions, please contact Kate Stacey at kstacey@seyfarth.com and reference this event.

To comply with State CLE Requirements, CLE forms requesting credit in IL or CA must be received before the end of the month in which the program took place. Credit will not be issued for forms received after such date. For all other jurisdictions forms must be submitted within 10 business days of the program taking place or we will not be able to process the request.

Our live programming is accredited for CLE in CA, IL, and NY (for both newly admitted and experienced).  Credit will be applied as requested, but cannot be guaranteed for TX, NJ, GA, NC and WA. The following jurisdictions may accept reciprocal credit with our accredited states, and individuals can use the certificate they receive to gain CLE credit therein: AZ, AR, CT, HI and ME. For all other jurisdictions, a general certificate of attendance and the necessary materials will be issued that can be used for self-application. CLE decisions are made by each local board, and can take up to 12 weeks to process. If you have questions about jurisdictions, please email CLE@seyfarth.com.

Please note that programming under 60 minutes of CLE content is not eligible for credit in GA. programs that are not open to the public are not eligible for credit in NC.

By Kristina M. Launey

Seyfarth Synopsis: With the Governor’s September 30 deadline to sign bills behind us, we review the employment bills that made the cut to become laws, as well as those that didn’t survive the season. The most notable new laws read intersectionality into FEHA protected categories, recast victims’ time off provisions, adjust paid family leave, and impact protections for freelance workers and whistleblowers.

We previously detailed the cornucopia of key bills California legislators introduced in 2024. Below is our summary of the labor and employment bills the Governor signed into law and key measures that were vetoed. All new laws are effective January 1, 2025, unless otherwise stated.

Soon-to-be-New Laws

SB 1137– Protected Characteristics: Intersectionality

SB 1137 makes California the first jurisdiction to explicitly adopt the concept of intersectionality and clarifies how courts should assess overlapping claims under the state’s anti-discrimination laws. As stated in the law, intersectionality “captures the unique, interlocking forms of discrimination and harassment experienced by individuals in the workplace and throughout society, particularly Black women, as compared to Black men and White women.” Under this new law, the Fair Employment and Housing Act (“FEHA”) will expressly protect the intersection, or any combination of the currently-enumerated protected characteristics from discrimination. 

The bill amends Sections 12920 and 12926 of the Government Code (also amends the Unruh Act and Education Code).

AB 1815 – Race Discrimination – Hairstyles

AB 1815 expands the definition of “race” under the FEHA by removing the term “historically” and including traits associated with race beyond hair texture and protective hairstyles. The new law will also add definitions for “race” and “protective hairstyle” to the Unruh Act.

The bill amends Section 51 of the Civil Code, Section 212.1 of the Education Code, and Section 12926 of the Government Code.

SB 1340 – Discrimination: Local Enforcement

AB 1340 specifies that nothing in the FEHA limits or restricts efforts by any city, county or other political subdivision of the state to enforce local anti-discrimination laws if certain requirements are met. Local laws can be enforced when an employment complaint has been filed with the CRD after the CRD has issued a right to sue notice (but before the expiration of the time to file a civil action in the notice) and the local law at issue is at least as protective as the FEHA. The law requires the CRD to promulgate regulations governing local enforcement pursuant to these provisions.

The bill amends Section 12993 of the Government Code.

AB 2499 – “Victims” Time Off

AB 2499 expands and recasts jury, court, and victim time off provisions as unlawful practices under the FEHA (previously addressed in the Labor Code), placing them under the CRD’s enforcement authority. Specifically, the law prohibits the discrimination/retaliation/discharge of an employee who: takes time off for jury service; takes time off to appear in court as a witness under court order; is a victim and takes time off to obtain relief for their/their child’s health, safety, welfare; and (for employers with 25 or more employees) is a victim/has a family member who takes time off to assist the family member for various reasons related to a qualifying act of violence (instead of crime/crime or abuse). 

Additionally, the new law expands eligibility for reasonable accommodations to include an employee who is a victim/has a family member who is a victim of a qualifying act of violence. Employees will be able to use vacation, personal, and paid sick leave for leaves granted as reasonable accommodations under this provision. Such leave will run concurrently with CFRA/FMLA (if the employee would have been eligible), and be subject to time use limitations. Employers will be required to inform employees of their rights in writing at hire and upon request.

The bill amends Section 214 of the Code of Civil Procedure, Section 48205 of the Education Code; add Section 12945.8 to the Government Code, and amends Section 246.5 of, and repeals Sections 230 and 230.1 of the Labor Code (among other things).

SB 1100 – Discrimination: Driver’s License

SB 1100 prohibits statements in employment materials (such as a job advertisement, posting, or application) that an applicant must have a driver’s license. The only exceptions are if the employer reasonably expects the position’s duties to require driving and reasonably believes that an alternative form of transportation would not be comparable in travel time or cost to the employer. Alternative forms of transportation may include a ride hailing service, taxi, carpooling, bicycling, or walking.

The bill amends Section 12940 of the Government Code.

SB 399 – Captive Meetings Ban

SB 399 prohibits an employer from subjecting or threatening discrimination or adverse action against any employee who declines to attend or participate in, receive, or listen to an employer-sponsored meeting or communications regarding the employer’s opinion about religious or political matters. The new law requires employers to continue paying employees who refuse to attend such meetings, and imposes a civil penalty of $500 per employee for each violation. We may well see challenges to this new law, as opponents of the bill were vocal that it is preempted by the NLRA.

The bill adds Chapter 9 (commencing with Section 1137) to Part 3 of Division 2 of the Labor Code.

AB 2123 – Paid Family Leave  

Under AB 2123, employers can no longer require employees to take up to two weeks of earned and unused vacation before the employee’s initial receipt of paid family leave benefits during any 12-month period in which employees are eligible for these benefits.

The bill amends Section 3303.1 of the Unemployment Insurance Code.

AB 1888 – DOJ Labor Trafficking Unit

Governor Newsom approved AB 1888 to establish a Labor Trafficking Unit within the DOJ that will “increase leadership and coordination among state agencies to combat labor trafficking in California.” The Governor signed three other non-employment-related human trafficking bills the same day: AB 2020, SB 963, and SB 1414.

The bill adds and repeals Section 12530.5 to the Government Code.

AB 3234 – Social Compliance Audit

AB 3234 requires an employer that has voluntarily subjected itself to a “social compliance audit” relating to labor laws (regardless of whether the audit is to determine if the employer uses child labor) to post a report detailing the findings of its compliance with child labor laws on its website. The new law defines a “social compliance audit” as a voluntary, nongovernmental inspection or assessment of an employer’s operations or practices to evaluate whether the operations or practices are in compliance with state and federal labor laws, including wage and hour and health and safety regulations, including those regarding child labor.

The bill adds Chapter 1.5 (commencing with Section 1250) to Part 4 of Division 2 of the Labor Code.

AB 2738 – Labor Code Enforcement and OSHA Training

In an effort to address worker injuries and fatalities at concert festivals, this law requires contracts with entertainment events vendors to provide in writing that upon hire for a live event, the vendor will furnish to the contracting entity certain information about the federal and Cal/OSHA trainings its own employees and subcontractors’ employees have completed.

This new law also authorizes public prosecutors enforcing Labor Code violations to recover all remedies available under the Labor Code, which would go first to workers for unpaid wages, damages, or penalties, and the remainder to the General Fund. It also authorizes recovery of fees and costs to the prevailing plaintiff in such an action.

The bill amends Sections 181, 9251, and 9252 of, and adds Section 9252.1 to the Labor Code.

AB 1034– PAGA exemption: Construction Industry Employees

AB 1034 extends the current January 1, 2028 expiration date of the PAGA exemption for employees in the construction industry applicable to work performed under a valid collective bargaining agreement in effect any time before January 1, 2025, to 2038.

The bill amends Section 2699.6 of the Labor Code.

SB 988 – “Freelance Worker Protection Action Act”

SB 988 requires a “hiring party” (not limited to an employer) to pay an Independent Contractor (“IC”) on the date specified by the contract, or if unspecified, no later than 30 days after completion of the freelance worker’s services. This new law prohibits requiring the freelance worker to accept less compensation than what is specified by the contract, to provide more goods or services, or to grant additional intellectual property rights as a condition of timely payment. The hiring party and IC will need to enter into a written contract that the hiring party must retain for no fewer than four years. Hiring parties are also prohibited from discriminating  against an IC for asserting rights under these provisions, and the law creates a private right of action with injunctive relief, damages, fees, and costs available.

The bill adds Part 5 (Section 18100 et seq) to Division 7 of the Business and Professions Code.

AB 224 – Newspaper Distributors and Carriers AB 5 Exemption Extension

AB 224 extends the exemption from the application of Dynamex to newspaper distributors working under contracts with publisher/carriers until January 1, 2030, and extends the corresponding mandatory LWDA payroll and wage reporting requirements.

The bill amends Section 2783 of the Labor Code.

AB 2754 – Port Drayage Motor Carriers Contracts – Liability

AB 2754 extends existing Labor Code provisions to port drayage motor carriers. These provisions prohibit a person or entity from entering into contracts for labor or services with certain types of contractors if they know or should have known that the contract does not include sufficient funds to allow the contractor to comply with all applicable employment laws. The law also imposes joint and several liability for customers of port drayage motor carriers where the motor carriers misclassify drivers as independent contractors.

The bill amends Sections 2810 and 2810.4 of the Labor Code.

AB 2364 – Property Service Worker (Janitorial) Protections

AB 2364 increases the payment provided to qualified organizations that provide mandatory sexual violence and harassment prevention training to janitors. The rates will jump from $65 per participant to $200 per participant for training sessions having fewer than 10 participants, and $80 per participant for training sessions with 10 or more participants, except as specified. These enumerated rate hikes will be in effect until January 1, 2026, and then increase each year thereafter. The new law also requires the DIR to contract with the UCLA Labor Center to study opportunities to improve janitorial industry worker safety and rights.

The bill amends Sections 1420 and 1429.5 of, and adds and repeals Section 1429.6 of, the Labor Code.

Bills Already Signed Into Law

Some laws were ahead of the curve, and were signed into law much earlier in the legislative session.

AB 2299 – Whistleblower Protections Posting

AB 2299, signed into law July 15, 2024, requires the Labor Commissioner to develop, and an employer to post, a model list of employees’ rights and responsibilities under the State’s whistleblower laws. An employer is considered compliant with the posting requirement set forth in Labor Code section 1102.8 if the employer posts the model list.

The bill amends Section 1102.8 and adds Section 98.11 to the Labor Code.

AB 2288 and SB 92 – PAGA Compromise

We previously detailed the sweeping PAGA reforms effectuated by AB 2288 and SB 92, which were signed into law on June 21, 2024 and are retroactively effective as of June 19, 2024.

The bills amend Sections 2699 and 2699.5 of the Labor Code, and amend, repeals and add Section 2699.3 of the Labor Code.

AB 2049 – Summary Judgment Filing Deadlines

AB 2049, signed into law on July 15, 2024, changes the deadline for a party to file a motion for summary judgment or summary adjudication from the current 75 days to at least 81 days before the hearing on the motion. The deadlines for filing an opposition are likewise extended from 14 days to at least 20 days before the hearing, and for filing a reply from 5 days to at least 11 days before the hearing. The new law prohibits a party from filing more than one motion for summary judgment against an adverse party (multiple motions for summary adjudication are excluded from this prohibition) without leave of court, and expressly prohibits the introduction of new facts in a reply to an opposition to a motion for summary judgment. 

This bill amends Section 437c of the Code of Civil Procedure.

Bills That Did Not Make the Cut

SB 1022 – CRD Group/Class Civil Action Filing Extension: This bill would have made a variety of changes to FEHA administrative timelines, including changes to tolling rules and extending the deadline for the Civil Rights Department (CRD) Director to file a group or class complaint to seven years from the date of the alleged violation. This would have tacked years onto the CRD’s current time limits to bring systemic complaints, and was the very reason why the Governor vetoed the bill.  Despite the veto, the Governor encouraged the Legislature to try again next year with a more reasonable period for CRD to initiate a group or class complaint.

AB 1832 – CRD Human Trafficking Task Force: This bill would have established a Labor Trafficking Task Force within the CRD, “tasked” with taking various actions and working with various state agencies, to combat labor trafficking. Governor Newsom vetoed the bill as redundant of AB 1888.

SB 1116 – Benefits for Striking Workers: Under this bill, after two weeks of an employee’s absence due to a trade dispute or strike, the employee would have been eligible for unemployment benefits under the Unemployment Insurance Code.

AB 2494 – Employer Notification: This bill would have required all employers, public and private, to provide employees with a written notice of coverage under COBRA, in-person and via email, following termination or reduction in hours.

AB 2930 – AI & Automated Decision Systems: This bill would have regulated the use of automated decision tools in employment pay, promotion, hiring, termination, or task allocation for purposes of determining employment terms or conditions. Expect more action on this topic in years to come, as the Governor’s veto message on AB 1047 previewed.

Workplace Solutions

Sign up for our October 2, 2024 webinar regarding these new laws and the new compliance obligations they create for employers. Visit us at Cal Peculiarities for regular updates on the oddities of California employment law, and check out our Policy Matters podcast and newsletter for regular check-ins on California (and national) policy and legislative updates.

Edited by Cathy Feldman and Elizabeth Levy

By Dawn Mertineit, Marcus Mintz, Jesse M. Coleman, Michael Wexler, Katherine Perrelli, and Robyn Marsh 

Seyfarth Synopsis: Just over a month ago, employers throughout the United States breathed a sigh of relief after Judge Ada Brown in the Northern District of Texas issued a summary judgment ruling in the Ryan v. FTC litigation setting aside the FTC’s rule banning the vast majority of non-competes (the “Rule”). In that decision, Judge Brown reasoned—just as she had in her order on the plaintiffs’ motion to stay and enjoin the Rule—that the FTC violated the APA because it “exceeded its statutory authority in implementing the Rule,” and the Rule is “arbitrary and capricious.”

While Judge Brown’s reasoning on summary judgment mirrored her earlier decision, there was one significant distinction: unlike the injunction, which only applied to the specific plaintiffs in the Ryan litigation, Judge Brown’s summary judgment decision had “nationwide effect” that is not “party restricted” and thus “affects persons in all judicial districts equally,” pursuant to Fifth Circuit precedent. As a result, employers were not required to comply with the Rule’s September 4 deadline to advise employees that their non-competes were unlawful and unenforceable.

Many wondered whether the FTC would appeal Judge Brown’s decision to the Fifth Circuit. Perhaps unsurprisingly, given the Fifth Circuit’s notorious antagonism towards agency action such as the FTC’s, no appeal has been filed (although the deadline to do so is not until October 21). But today, the FTC appealed a separate court decision: the Middle District of Florida’s August 15 decision granting a stay and enjoining the FTC’s enforcement of the Rule against the plaintiff in that case, Properties of the Villages (“POV”), which used slightly different reasoning to reach essentially the same result as the Ryan court’s decision to preliminarily enjoin the Rule. Presumably, the FTC sees the Eleventh Circuit as at least marginally more favorable to its cause than the Fifth Circuit, but it is unclear how this appeal will impact the Ryan court’s summary judgment ruling, which as noted above, is effective nationwide. Arguably, this appeal does not impact that decision at all, and one could argue that if the FTC had wanted to avoid the “nationwide effect” of Judge Brown’s ruling, it should have appealed that decision first and foremost, even if it faced a challenging audience in the Fifth Circuit.

Meanwhile, to complicate matters further, in the Eastern District of Pennsylvania, Judge Kelley Brisbon Hodge had, weeks prior to the Ryan summary judgment decision, come to the opposite conclusion—i.e. that the FTC had the authority to implement the Rule—when she denied plaintiff ATS Tree Services’ motion to stay and enjoin the Rule. That case remains pending, with summary judgment briefing due in the coming months. On September 6, 2024, ATS Tree Services sought to stay the litigation in light of the Ryan court ruling setting aside the Rule. The FTC has opposed a stay, noting its disagreement with the scope of the Ryan court ruling (in addition to its reasoning, of course). It is not clear when those motions will be decided, or whether the FTC’s latest move in appealing the POV litigation will impact Judge Hodge’s decision on the motion to stay. Nor is it clear why ATS Tree Services did not simply dismiss its case following the Ryan court’s summary judgment decision, as it could have relied upon the nationwide effect of that decision.

Regardless, the legality of the Rule will be appealed in one forum or another (if not in multiple fora), and it will remain important as always to comply with relevant state law while this issue works its way through the courts.

Speakers: Kathleen C. Slaught, Brad Perkins, and Ryan Tikker

About the Program: While the ERISA legal landscape changes constantly, one thing is certain – California remains a harbinger of litigation trends soon to spread nationwide. From the statutes and laws under which ERISA cases are brought to novel venue shopping tactics, employers across the US watch California as a proving ground for new litigation strategies. 

So what does that mean for California employers, and employers across the country keeping an eye on California? Join our experienced attorneys as they navigate these trends in the ERISA Litigation landscape, including:

  • Provider litigation developments such as preemption cases and the rise of Knox-Keene Act cases, 
  • Welfare and pension issues, including use of forfeiture, 
  • Discovery issues at trial, and 

Lessons learned from removal and questions of venue. 

Cost – There is no cost to attend, however registration is required. 

REGISTER HERE

Tuesday, October 8, 2024
3:00 p.m. to 4:00 p.m. Eastern
2:00 p.m. to 3:00 p.m. Central
1:00 p.m. to 2:00 p.m. Mountain
12:00 p.m. to 1:00 p.m. Pacific

Learn more about our ERISA Litigation practice.

If you have any questions, please contact Kate Stacey at kstacey@seyfarth.com and reference this event.

To comply with State CLE Requirements, CLE forms requesting credit in IL or CA must be received before the end of the month in which the program took place. Credit will not be issued for forms received after such date. For all other jurisdictions forms must be submitted within 10 business days of the program taking place or we will not be able to process the request.

Our live programming is accredited for CLE in CA, IL, and NY (for both newly admitted and experienced).  Credit will be applied as requested, but cannot be guaranteed for TX, NJ, GA, NC and WA. The following jurisdictions may accept reciprocal credit with our accredited states, and individuals can use the certificate they receive to gain CLE credit therein: AZ, AR, CT, HI and ME. For all other jurisdictions, a general certificate of attendance and the necessary materials will be issued that can be used for self-application. CLE decisions are made by each local board, and can take up to 12 weeks to process. If you have questions about jurisdictions, please email CLE@seyfarth.com.

Please note that programming under 60 minutes of CLE content is not eligible for credit in GA. programs that are not open to the public are not eligible for credit in NC.

Authors: Christopher J. DeGroff, Andrew L. Scroggins, Samantha Brooks, James P. Nasiri and Ridhima Bhalla

Seyfarth Synopsis: Following a handful of sluggish years in terms of EEOC litigation activity, the Commission returned to form by filing 144 merit lawsuits in Fiscal Year 2023. Given that the EEOC finally secured its Democratic majority and had a notably active FY 2023, many expected the Commission to continue this momentum into FY 2024. However, the exact opposite happened—at the time of publication, the EEOC filed only 96 merit lawsuits. This represents not only a filing decline of about 35% compared to FY 2023, but also one of the lowest numbers of EEOC-initiated merit lawsuits in nearly three decades. While the EEOC had a surprisingly quiet year on the litigation front, a close analysis of its FY 2024 filings can help employers understand the Commission’s priority areas and understand what to expect going forward.

In the years following the start of the COVID-19 pandemic, the EEOC scaled down its litigation efforts by filing far fewer lawsuits than it had in years past. For example, our prior EEOC year-end reports documented 94 merit filings in FY 2020, 111 filings in FY 2021, and 94 filing in FY 2022 (the EEOC’s fiscal year runs from October 1 to September 30).These numbers stood in stark contrast to the EEOC’s litigation activity under the Obama Administration, where the Commission filed as many as 300 merit lawsuits in certain years.

As the EEOC transitioned into FY 2023, the Commission appeared to have the necessary leadership and resources in place to increase its litigation activity to these Obama-era levels. The EEOC’s national leadership structure of five Commissioners no longer had a Republican majority, and the Republican General Counsel had been fired. The EEOC also received a sizable budget increase. This situation predictably led to more litigation activity, as the EEOC filed 144 merit lawsuits in FY 2023, which represented a five-year high for the Commission. In addition, in the final month of FY 2023, the U.S. Senate confirmed President Biden’s appointee for EEOC Commissioner (Kalpana Kotagal), giving Democratic appointees majority control of the Commission for the first time in many years. Then just weeks later the Senate confirmed a new General Counsel (Karla Gilbride) to lead litigation efforts.

With this momentum, many expected the EEOC to continue its trajectory into FY 2024 and further increase its filing activity. But the litigation surge appears to have weakened significantly. The EEOC filed just 96 merit lawsuits in FY 2024—back to pandemic levels and among the very lowest number observed in the past three decades. To put this number in context, last year in FY 2023, the EEOC filed 71 lawsuits in September alone. The bottom line is that the Commission exhibited a staggering drop in litigation activity in FY 2024.

Begging the question: why did the EEOC’s litigation activity take such a dramatic downturn in FY 2024? With a Democratic majority and Democratic General Counsel in place at the EEOC, it does not appear that partisan politics obstructed any of the Commission’s litigation goals. One potential factor could relate to the EEOC’s resources. The Commission requested a budget increase of more than $26 million in FY 2024, but ultimately, Congress only approved the same amount of funding the EEOC received in FY 2023. A 5.2% pay raise for employees combined with increased operational costs at the Commission cut into that amount, and just last month, the EEOC was faced with a potential one-day furlough to address its limited funding. The EEOC was able to avoid this furlough, but budget concerns are surely top-of-mind for EEOC leadership. Added to the mix: this year’s EEOC was saddled with a cumbersome inventory from the previous year’s filing surge, and aging cases from years before that. Ultimately, the EEOC approached FY 2024 with more cases but the same resources.  

FY 2024 Cases Filed By Month

At the end of every EEOC Fiscal Year, our team at Seyfarth analyzes each EEOC filing in order to identify key trends and provide our one-of-a-kind analysis. Beginning with the timing of the EEOC’s filings, the line graph below displays the number of EEOC lawsuits filed per-month from FY 2021 through FY 2024. As is typical, the EEOC started out FY 2024 at a slow pace, filing only five lawsuits between October 2023 and January 2024. However, unlike prior years, the Commission’s filing activity did not increase as the year progressed. The EEOC filed just three lawsuits in each of March and June, which represents a four-year low in each respective month. The Commission’s litigation activity typically sees a dramatic spike in September, but this FY, the EEOC filed only 56 lawsuits in September (compared to 71 September filings in FY 2023, 46 September filings in FY 2022, and 59 September filings in FY 2021). Additionally, while the Commission did hit a four-year high in terms of its 19 filings in May, almost all of these cases (14 of 19) concerned the enforcement of EEO-1 Report requirements (see below for a more detailed discussion of these cases).

FY 2024 Cases Analyzed By EEOC District Office

With the EEOC experiencing such a significant dip in overall lawsuit filings in FY 2024, the expectation may be that all EEOC District Offices saw a decline in filings as well. Surprisingly, a few EEOC Districts actually increased their number of filings in FY 2024 despite overall EEOC filings decreasing by about 35%. The Indianapolis District Office filed 10 lawsuits in FY 2024 (compared to 9 last year), the Atlanta District Office filed 11 lawsuits this year (compared to 7 last year), and the Phoenix District Office also filed 9 lawsuits this year (compared to 8 last year). Conversely, Districts that have traditionally led the pack in filings—such as Chicago, Los Angeles, and New York—saw extreme declines in filings this year, as these Offices filed only 7, 3, and 8 lawsuits, respectively. The West Coast in particular was notably quiet this year, as the Los Angeles and San Francisco combined for just 7 merit filings in FY 2024. The Philadelphia District Office, which led the way last year, saw the largest decline from 22 filings in FY 2023 to just 14 filings in FY 2024.

Analysis of the Types of Lawsuits Filed in FY 2023

In addition to tracking the timing and location of EEOC lawsuit filings, we also analyze the underlying claims asserted in all EEOC-initiated cases. At a high level, despite the drastic dip in overall filings, the EEOC’s FY 2024 filing numbers generally align with prior years. Once again, the vast majority of its lawsuits were filed under Title VII and the Americans with Disabilities Act (“ADA”). While the Age Discrimination in Employment Act (“ADEA”) is typically the third-most common statute cited in EEOC cases, the Commission lodged only seven ADEA filings in FY 2024.

Equal Pay Act (“EPA”) claims are typically not a common basis for EEOC lawsuits, and that trend continued this year as just two were filed. On the other hand, the Commission opted to file its first case in several years alleging violations of the Genetic Information Nondiscrimination Act (“GINA”), which prohibits discrimination based on genetic information in employment and medical coverage. The EEOC also filed a handful of lawsuits this year alleging pregnancy-based claims. Most notably, the EEOC filed its first three lawsuits under the Pregnant Workers Fairness Act (“PWFA”). The PWFA went into effect June 27, 2023, and on April 15, 2024, the EEOC issued its final regulations concerning enforcement of the Act.

Taking a closer look at these numbers, the ADA remained a focus for the EEOC. The Commission filed 42 disability-related lawsuits in FY 2024, which is more than it filed in FY 2022, despite overall filings in FY 2022 outpacing overall filings this year. While the EEOC’s filings concerned a broad range of disabilities, the Commission built on a trend from the end of the previous year and continued to prioritize hearing-related disabilities. In January 2023, the EEOC published guidance regarding hearing disabilities in the workplace. Since that point, the Commission has filed a total of 16 ADA cases on behalf of hearing impaired employees (nine in FY 2023 and seven in FY 2024).

Another consistent litigation priority for the EEOC is curbing workplace harassment. To that end, in April 2024, the EEOC released its updated Workplace Guidance to Prevent Harassment. This guidance expanded upon prior EEOC materials by addressing harassment in virtual work environments. Additionally, in June 2024, the Commission released anti-harassment guidance specifically targeting employers in the construction industry. The EEOC’s emphasis on halting workplace harassment was reflected by the Commission filing double-digit hostile work environment lawsuits for at least the third straight year.

The EEOC accused several employers of running afoul of anti-harassment laws in non-office work environments. For example, in FY 2024 the EEOC sued:

  • An Arizona manufacturer of human and pet health supplements alleging sex discrimination, sexual harassment, and retaliation (EEOC v. Good Health Manufacturing, Inc., No. 2:24-cv-1679, D. Ariz.);
  • An Illinois trucking company alleging discrimination and harassment on the basis of an employee’s sex and gender identity (EEOC v. Sis-Bro, Inc., No. 3:24-cv-968, S.D. Ill.);
  • A Massachusetts tire dealer alleging a pattern of discrimination and harassment against Hispanic employees (EEOC v. Bob’s Tire Co., Inc., No. 1:24-cv-10077, D. Mass); and
  • Two car dealers—one in Texas and the other in Indiana—alleging sexual harassment against female employees (EEOC v. NICPA Central Auto Group, LLC & Central Austin Motorcars, No. 1:23-cv-01541, W.D. Tex.; EEOC v. Chesterfield Valley Investors, LLC, No. 1:24-cv-00721, S.D. Ind.).

Another interesting takeaway from the EEOC’s FY 2024 filing numbers is that, for the first time in many years, the EEOC used its litigation capabilities to enforce the submission of EEO-1 Reports. By way of background, the EEOC requests annual workforce data from employers with more than 100 employees, with the most common type of report being an EEO-1 Employer Information Report. As the EEOC notes on its website, “[e]mployers meeting the reporting thresholds have a legal obligation to provide the data; it is not voluntary.” In an effort to enforce this requirement, the EEOC filed a whopping 16 lawsuits alleging Title VII violations against covered employers who failed to file adequate EEO-1 Reports. The Commission posted a press release in May touting these EEO-1 Report filings, and emphasizing that “data collection is an important tool” and that Congress authorized the EEOC not only to collective EEO-1 Report data, but also to enforce data reporting compliance in the courtroom. The vast majority of these cases (14 of the 16) were filed in May, and nearly every EEOC District Office filed a lawsuit concerning EEO-1 Reports. The only District Offices that did not file such a case in FY 2024 were Chicago, Memphis, San Francisco, and Washington, DC (which did not file any lawsuits this year).

As a final point regarding the type of claims asserted by the EEOC in FY 2024, the Commission filed only four religion-based cases. This is particularly interesting because, as we noted in our July 2023 post analyzing EEOC charge numbers, EEOC charges alleging religious discrimination increased nearly seven-fold between FY 2021 (2,111 religion-based charges) and FY 2022 (13,814 religion-based charges). The EEOC filed 11 religious discrimination cases last year, including multiple lawsuits brought on behalf of employees terminated for refusing to comply with vaccine mandates on religious grounds. Despite this massive spike in religious discrimination charges, the EEOC filed only four religion-based lawsuits in FY 2024, with just one of these cases involving COVID-19 vaccination. Given that it has been several years since this batch of EEOC charge filings, it seems that the apparent wave of EEOC religion-based, COVID-19 litigation will be left largely to the private plaintiffs’ bar.

Implications For Employers

While the overall takeaway from the EEOC’s FY 2024 is that the Commission saw a substantial decrease in litigation activity, employers should not drop their guard. One of the EEOC’s two Republican Commissioners (Keith Sonderling) left the EEOC last month, thereby solidifying a Democratic majority for the near future. The Commission also requested a budget increase of over $33 million for FY 2025, which if approved would allow the EEOC to enhance its litigation resources, and likely result in increased case filings. Moreover, the EEOC’s activity in FY 2024 demonstrates that employers—particularly those within the Atlanta and Indianapolis regions—should stay tuned to EEOC trends, with a special emphasis on harassment and disability-related filings. Covered employers should also be sure to submit their EEO-1 Reports in a timely fashion, as the Commission has shown that it will resort to litigation to obtain these reports.

We will continue to monitor these changes closely and keep readers apprised of developments. And, as always, we will keep up-to-date on EEOC data amid the ever-changing political climate and a surprisingly quiet year at the Commission.

For more information on the EEOC or how the Commission’s filing activity may affect your business, contact the authors—Christopher DeGroff, Andrew Scroggins, Samantha Brooks, and James Nasiri—or a member of Seyfarth Shaw’s Complex Discrimination Litigation Group.

By Jason Priebe and Danny Riley

Seyfarth Synopsis: Corporations face unprecedented challenges in safeguarding sensitive data and mitigating privacy risks in an era marked by the rapid proliferation of Internet of Things, or IoT, devices.

Recent developments, including federal and state regulators’ heightened focus on privacy enforcement, highlight the importance of proactive risk management, compliance and data governance. As IoT and smart devices continue to hit the marketplace, heightened scrutiny for businesses’ data governance practices follows.

The Federal Trade Commission’s recent technology blog, “Cars & Consumer Data: On Unlawful Collection & Use”[1] underscores the agency’s commitment to enforcing consumer protection laws. Despite their blog’s focus on the car industry, the FTC’s message extends to all businesses, emphasizing its vigilance against illegal — or “unfair and deceptive” — collection, use and disclosure of personal data.

Recent enforcement actions are a stark reminder of the FTC’s proactive stance in safeguarding consumer privacy.

Geolocation data is a prime example of sensitive information subject to enhanced protections under the Federal Trade Commission Act. Much like mobile phones, cars can reveal consumers’ persistent, precise locations, making them susceptible to privacy infringements.

In landmark cases against major car manufacturers and digital marketing companies, the FTC has demonstrated that collecting, using and disclosing location data can constitute unfair practices.

For instance, in the case of a car manufacturer collecting geolocation data — FTC v. Kochava Inc., filed in the U.S. District Court for the District of Idaho in 2022 — the FTC alleged that location data could track people’s visits to sensitive places like medical facilities or domestic abuse shelters, leading to restrictions on the sale of such sensitive information.

Similarly, the FTC has challenged numerous marketers and large organizations for the internal use of sensitive data for targeted advertising, resulting in corrective measures to protect consumer privacy.

The surreptitious disclosure of sensitive information is another area of concern addressed by the FTC. Companies with legitimate access to consumers’ data must ensure its use aligns with the intended purposes for collection.

Recent cases involving health tech companies underscore the risks associated with unauthorized data sharing.

For instance, in the FTC’s enforcement proceeding against online provider BetterHelp, In re: Betterhelp Inc. in July 2023, BetterHelp’s disclosure of consumers’ email addresses and health questionnaire information for advertising led to significant FTC action, including monetary settlements and bans on unauthorized data usage.[2]

Furthermore, the FTC’s scrutiny extends to using sensitive data for automated decisions. Companies leveraging consumer data in algorithms must uphold accountability for the outcomes of automated processes.

The FTC’s enforcement action against Rite Aid also exemplifies this, with allegations of improper enrollment in a facial recognition program leading to false-positive match alerts.[3]

The March stipulated order concluding the case of FTC v. Rite Aid, which was filed in
the U.S. District Court for the Eastern District of Pennsylvania, detailed Rite Aid’s failure to mitigate the risk of erroneous identifications and resulted in FTC-imposed sanctions, including a ban on facial recognition technology.

These enforcement actions signal the FTC’s unwavering commitment to protecting consumer privacy in an increasingly digitized world. As businesses navigate the complex data collection and usage landscape, adherence to FTC guidelines is paramount to mitigate regulatory risks and uphold consumer trust.

In addition to the threat of FTC regulations, corporations must navigate a complex web of state and federal privacy laws, including emerging legislation such as omnibus privacy laws and sector-specific regulations.

For instance, Illinois’ Biometric Information Privacy Act and California’s Invasion of Privacy Act, both of which boast statutory penalties, have resulted in significant fines, settlements and judgments in litigation for companies violating consumer privacy rights. By staying abreast of evolving legal requirements and implementing robust privacy compliance programs, corporations can enhance their resilience to regulatory challenges.

Corporations should conduct thorough risk assessments to identify potential vulnerabilities and privacy risks associated with IoT devices and connected technologies. For example, a multinational corporation recently discovered vulnerabilities in its IoT-enabled smart factory equipment, which exposed sensitive production data to unauthorized access.

By analyzing data transmission practices and local network protocols, corporations can mitigate the risk of data breaches and unauthorized access to sensitive information.

Practical measures, such as implementing encryption protocols and conducting regular security audits, can help corporations proactively address privacy concerns and safeguard consumer data.

All organizations must prioritize having their “house” in order concerning data governance. Establishing robust data governance practices is essential for preempting disasters. This involves synchronizing data governance, privacy, security and recordkeeping across the organization. Achieving this alignment requires extensive stakeholder synchronization and organizational buy-in.

Organizations can follow these top six data governance best practices to facilitate this process:

Know your data.

Thoroughly understand the types of data your organization collects, processes and stores. This includes personal data, financial information, intellectual property and other sensitive information. Deploy required notices at the point of collection, policy disclosures and consent processes where legally required.

Define data ownership.

Clearly define who within the organization is responsible for the different types of data and who has the authority to make decisions regarding its use and protection.

Implement access controls.

Restrict access to sensitive data to only those employees who require it to perform their job functions. Regularly review and update access permissions to ensure they align with business needs.

Establish data retention policies.

Create clear guidelines for how long different types of data should be retained and when it should be securely disposed of. Not only is this best practice, but privacy laws such as
the California Consumer Privacy Act and General Data Protection Regulation require it.

Conduct regular audits.

Regularly audit data usage, storage and access to ensure compliance with internal policies and external regulations.

Provide employee training.

Educate employees on the importance of data governance, privacy best practices, and their role in protecting sensitive information.

Deploy appropriate vendor management and controls.

Initiate a program to document and track where and why personal information for employees, applicants, customers and marketing contacts are shared with third-party service providers, and verify appropriate contractual protections are in place to address potential privacy compliance and data security issues.

Conclusion

By implementing these best practices, corporations can establish a solid foundation for effective data governance, ultimately enhancing their ability to navigate the evolving landscape of privacy regulations.

[1] https://www.ftc.gov/policy/advocacy-research/tech-at-ftc/2024/05/cars-consumer-data-unlawful-collection-use

[2] In the Matter of Betterhelp Inc et al., FTC (July 2023), https://www.ftc.gov/news-events/news/press-releases/2023/03/ftc-ban-betterhelp-revealing-consumers-data-including-sensitive-mental-health-information-facebook

[3] FTC v. Rite Aid Hdqtrs. Corp., E.D. Pa. (stipulated order entered March 8, 2024), https://www.ftc.gov/system/files/ftc_gov/pdf/2023190_riteaid_complaint_filed.pdf.

By Rebecca Lim

Seyfarth Synopsis: Since the COVID-19 pandemic hit and brought about much uncertainty, employers across the globe have had to grapple with the concept of flexible working. The implementation of flexible working differs from organization to organization – some view flexible working as an exceptional accommodation, yet others embrace and encourage it.

Introduction

To help employers in Singapore navigate the world of flexible working, the Ministry of Manpower and the Tripartite Alliance for Fair and Progressive Employment Practices have introduced the Tripartite Guidelines on Flexible Work Arrangement Requests (“Tripartite Guidelines”), which will come into effect on 1 December 2024.

As Ms. Yeo Wan Ling, co-chair of the Tripartite Workgroup, states:
“Access to Flexible Work Arrangements is often the main consideration for caregivers, women workers and senior workers when it comes to deciding to stay or return to the workforce. The Tripartite Guidelines on Flexible Work Arrangement Requests is a milestone enhancement to the normalisation of FWAs in the workplace, as it puts into place formalised and clear processes for workers to request for flexible work arrangements. At the heart of successful FWA implementations is the building of a trust culture in the workplace.”

Scope of flexible working – what does flexible working mean?

The Tripartite Guidelines provide for three categories of Flexible Work Arrangements (“FWAs”):

  1. Flexi-Place: Employees may request to work flexibly from different locations aside from their usual office location (e.g., working from home);
  2. Flexi-Time: Employees may request to work flexibly at different working hours to their contractual work hours with no changes to their total working hours or workload;
  3. Flexi-Load: Employees may request to work flexibly with different workloads with commensurate remuneration (i.e., switch from a full-time position to a part-time position with pay prorated accordingly).

The above categories are broadly similar to the types of FWAs commonly seen in other jurisdictions, such as the United Kingdom and Australia, where FWAs often involve flexibility around employees’ work hours, schedules, or work location.

Making a request for flexible working – who can make a request?

The Tripartite Guidelines provide that employees in Singapore who have completed their probationary period (if any) can make a formal request for flexible working. As regards tp employees who are still on probation, employers may consider flexible working requests from such employees but are not required to allow them to make such a request.

This may be contrasted with the position in the United Kingdom where employees now have a statutory right to request flexible working from their first day of employment. However, in Australia, employees are required to work for the same employer for at least 12 months (in addition to satisfying other conditions) before they are able to request flexible working.

Process for making a request for flexible working – how should a request be made?

The Tripartite Guidelines provide that employers should implement a process for employees to make their requests. As a matter of good practice, it is recommended that this process includes a form for employees to record the details of their request (including the date of the request, type of FWA requested, expected frequency, duration and reason(s) for the request, and the start and end dates of the FWA), details of whom the request should be submitted to, a timeline for the employer to respond to the employee’s request, and the mode in which the employer would communicate its decision to the employee.

In the absence of an employer-implemented process, employees may nonetheless make a formal FWA request in writing with the above-mentioned details.

Employers’ considerations in assessing a flexible working request

In assessing whether an FWA request should be granted, the Tripartite Guidelines provide that employers should consider the impact of FWAs on the employee’s workload and performance, as well as the impact on the requesting employee’s team and clients (where relevant). Insofar as it is reasonably practicable, employers should consider the feasibility of re-assigning work across team members/reviewing their work processes when assessing FWA requests.

Employers should evaluate each FWA request on a case-by-case basis and may refuse a request so long as the reasons for rejection are linked to legitimate business considerations and can be justified. Examples of legitimate business considerations include if the FWA is impractical due to the nature of an employee’s job role, if granting the FWA request leads to significance costs for the employer, or if granting the FWA is detrimental to productivity or output.

To assist employers in evaluating whether an employee’s FWA request should be granted or otherwise, the Tripartite Guidelines also provide examples of unreasonable grounds for rejecting a request. These grounds include a supervisor’s preference for physical presence over performance-based evaluation, a general lack of trust in FWAs, or reasons based solely on organizational customs and practices, without a clear business justification. In this regard, employers in Singapore may draw upon the experience of other jurisdictions with established frameworks to obtain further guidance. For example, the grounds on which employers may reject an FWA request in the UK include the burden of additional costs (in practice, this is likely to be justified if an employer is required to hire and train additional headcount in order to enable their business operations to function effectively), the inability to reorganize work among existing staff, the inability to recruit additional staff, that there will be a detrimental impact on quality of work, a detrimental effect on the ability to meet customer demand, a detrimental impact on performance, insufficient work available during the periods the employee proposes to work, or planned structural changes to the employer’s business.

Procedures in handling FWA requests

Employers are required to provide a written decision on an FWA request within a specified timeframe and are encouraged to engage with employees to explore modifications to the original request, or other suitable FWA options that may be mutually beneficial. The Tripartite Guidelines provide that employers should provide their written decision within two months of receiving the request and should include the reason for rejecting the request in the return decision should the request be rejected.

Employers are encouraged to discuss FWA requests in an open and constructive manner, and to explore alternative arrangements if the employees’ original request cannot be granted. However, there is no mandatory requirement for employers to implement any appeal mechanism unless the employer’s grievance policies so provide.

Conclusion

The introduction of the Tripartite Guidelines in Singapore represents a progressive endorsement of flexible working as being an important part of the future of work for the nation. Employers are encouraged to implement clear and fair processes to consider employees’ requests for flexible working and to work towards building a culture of trust to promote higher job satisfaction and accountability amongst employees.

If you need any assistance with drafting your FWA policy, creating template documents, and/or conducting training on the Tripartite Guidelines, please contact your usual Seyfarth attorney.

By Alyson D. Dieckman and Molly Gabel

Seyfarth Synopsis: Washington is one of eight states[1] with a law prohibiting employers from holding mandatory meetings addressing their position on religion, politics, and union organizing. 

The new statute makes it illegal for any employer to require employees to:

  • Attend or participate in an employer-sponsored meeting with the employer or its agent, representative, or designee, the primary purpose of which is to communicate the employer’s opinion concerning religious or political matters; or
  • Listen to speech or view communications, including electronic communications, the primary purpose of which is to communicate the employer’s opinion concerning religious or political matters.

The statute defines “religious matters” as “matters relating to religious affiliation and practice, and the decision to join or support any religious organization or association.”  Its definition of “political matters” includes “matters relating to elections for political office, political parties, proposals to change legislation, proposals to change regulations, and the decision to join or support any political party or political, civic, community, fraternal, or labor association or organization.”

The statute also contains a notice posting requirement.

Employees whose employers violate the statute may seek to enforce their rights in civil court within 90 days of the alleged violation.  The remedies in civil court include reinstatement, backpay and benefits, injunctive relief, and other relief considered necessary by the court.

To date, no Washington court has considered a case involving the Employee Free Choice Act.

Importantly, it remains to be seen whether the new law will survive preemption challenges, as the National Labor Relations Act (NLRA) allows for employer-organized mandatory meetings during working hours with the purpose of expressing views about unionization.  Such meetings have been widely considered lawful since 1947 under Section 8(c) of the National Labor Relations Act.  Section 8(c) provides:

The expressing of any views, argument, or opinion, or the dissemination thereof, whether in written, printed, graphic, or visual form, shall not constitute or be evidence of a [violation of] any of the provisions of this Act . . . if such expression contains no threat of reprisal or force or promise of benefit.

Notably, the General Counsel of the NLRB likewise has signaled her intent to outlaw such meetings in a public Memorandum.  Specifically, she explained that “[f]orcing employees to listen to such employer speech under threat of discipline – directly leveraging the employees’ dependence on their jobs – plainly chills employees’ protected right to refrain from listening to this speech in violation of [the Act].”  Mandatory meetings about union organizing remain lawful under the NLRA to date, but the NLRB is presently reviewing several cases, any one of which may reverse more than 75 years of precedent.

Washington employers should carefully consider their legal risk if they fail to comply with the statute while the legality of this law and similar state laws is in flux. Employers that do not make any such meetings (or portions of such meetings) addressing potential religious, political, or union-related matters voluntary, and that do not ensure employees know these meetings are voluntary, face significant legal risk in Washington’s federal and state courts right now.  Notably, even under the new law, employers may continue to require attendance at meetings necessary for employees to perform their job duties. 

Washington employers with questions about Washington’s Employee Free Choice Act or whether a potential meeting is covered by it should contact a labor and employment lawyer.  Seyfarth’s Seattle office can assist employers with these and any other labor and employment law needs.

[1] Connecticut, Maine, Minnesota, New York, Oregon, and Vermont also have comparable statutes in effect.  Illinois’ equivalent statute becomes effective on January 1, 2025.

By Alex Simon and Kyle Petersen

Seyfarth Synopsis: In a welcome turn of events, the Seventh Circuit has taken up the question of what is the appropriate standard for court-authorized notice in collective actions.

When this Blog wrote two weeks ago, “Swales, Clark, and Laverenz pave the way for additional district and appellate courts to depart from Lusardi,” we did not expect the Seventh Circuit to take up the issue so quickly.

But just eight days after Judge Griesbach’s blistering opinion came down in Laverenz, criticizing the still-predominant “modest factual showing standard” for being contrary to the FLSA’s text—the Seventh Circuit has authorized an interlocutory appeal to answer a question raised by an appellant-employer about when a court overseeing a collective action may authorize notice to “similarly situated” potential plaintiffs.

More specifically, in a pending collective action brought under the Age Discrimination in Employment Act (“ADEA”)—which explicitly incorporates the FLSA’s collective action procedure—the Seventh Circuit Court of Appeals will weigh in for the first time on whether a district court may order this notice upon a “modest showing” of similarity without regard to the evidence submitted by the defendant.

After ordering nationwide notice to a collective based on the lax Lusardi framework, the district court certified the matter for interlocutory review and stayed issuance of notice pending that review. Initially, the Seventh Circuit denied the petition for permission to appeal. While the  Court admitted that “certifying a collective action under the Fair Labor Standards Act is a recurring issue for district courts,” it concluded that it would be “better” to review that process on a more complete record (i.e. after the second step of the two-step process).

In response, the employer filed a petition for rehearing and petition for rehearing enbac—respectfully pushing back on the notion that review after the second step of the two-step process would be “better.” Specifically, the employer explained that a review at that time would be “impossible,” and completely defeat the purpose of their interlocutory appeal. After all, the very issue to be reviewed on appeal concerns the harms that district courts can cause when they authorize the distribution of notice to a collective on an undeveloped factual record—harms such as “soliciting baseless claims, imposing unfair settlement pressure, and subjecting defendants to costly merits discovery for ‘collectives’ that could never hold up.”

Fortunately, this persuaded the Court of Appeals to take up the cause. This means that it will now decide whether district courts in the Seventh Circuit will be required to determine whether plaintiffs have made a meaningful showing, under all of the evidence, that employees in a collective action are “similarly situated” before notice can be sent.

The lower court’s decision to authorize notice upon a mere “modest” factual showing highlights the harmful and unfair nature of that standard. The plaintiff successfully convinced the court that she should be able to send notice to all of the employer’s 40+ year old employees who had been denied promotions in the last three years, even though she had just four supporting affidavits, and the employer produced substantial evidence that the plaintiff was not similarly situated to anyone. While not every district court that uses the “modest” factual showing standard sets the bar so low, there are some that certainly do. New guidance from the Seventh Circuit clarifying what courts must consider and find before authorizing notice is certainly welcome.

Should the Seventh Circuit decide to follow the Fifth and Sixth Circuits in setting a higher evidentiary bar for plaintiffs to clear before sending notice to “similarly situated” employees—it would send a very clear signal across the country that the Lusardi framework must be discarded. Indeed, the very fact that the Seventh Circuit has taken on this appeal sends a message to district courts throughout the country that just because the “modest factual showing” standard may have been “endorsed” in the past, does not mean that it will hold up on appeal going forward.

In the end, the Seventh Circuit’s willingness to consider this very important issue at this stage of the litigation is a welcome development. We will continue to monitor the case for updates. In the meantime, if you are facing a collective action in the Seventh Circuit, it may be in your interest to seek a stay of the pre-notice proceedings pending a decision about the appropriate standard for notice moving forward. Courts in the Sixth Circuit were, by and large, willing to do this pending the decision on Clark.

By Giovanna A. Ferrari, Ameena Y. Majid, and Sarah Fedner

Seyfarth Synopsis: As discussed in our prior legal update available here, in 2023, California enacted two laws that mandate certain climate-related emissions disclosures and financial risk reporting for thousands of public and private companies “doing business” within the state. See Senate Bill 253, the Climate Corporate Data Accountability Act (“SB 253”); Senate Bill 261, the Greenhouse gases: climate-related financial risk (“SB 261”). Together, the legislation is referred to as the Climate Accountability Package.  

California took the lead – among states and the federal government – to require emissions disclosures without regard to materiality of what is known as Scope 3 disclosures.[1] 

While SB 253 and 261 are currently being challenged in court, implementation of the laws have not been stayed.  As such, companies subject to either or both SB 253 and SB 261 have had to take the necessary steps to ready themselves for compliance with the laws absent regulatory guidance from the California Air Resources Board (“CARB”), the regulatory body charged with rulemaking related to, among, other things, healthful air quality.  While CARB received funding this summer, the California Chamber of Commerce, on behalf of a number of organizations, and the California Bankers Association expressed concerns regarding compliance and infeasible timelines.  They also offered ways to narrow the requirements, including, striking Scope 3 emissions disclosures to align with the SEC’s final climate disclosure rules or adding a materiality qualifier as an alternative; limiting Scope 1 and 2 emissions to in-state emissions; permitting reliance on a parent company’s emissions reporting; and a delay in rulemaking and implementation timelines.

On August 31, 2024, after much back and forth about whether to delay the implementation of the Climate Accountability Package the California legislature, through Senate Bill 219 (“SB 219”), approved of the package going forward without extending the original 2026 and 2027 reporting deadlines and providing one concession on emissions reporting. It also gave CARB an additional 6 months to issue regulations under SB 253.  Governor Newsom has yet to officially sign SB 219 into law and has until September 30 to do so, or to veto the bill.[2] This alert assumes that SB 219 will go into effect as law and discusses the key points covered entities should know for immediate compliance.

Key Takeaway 1: Reporting Deadlines

SB 253 (Greenhouse Gas Emissions), 2026 & 2027 Deadlines: Starting in 2026, any public or private company “doing business” in California with total annual revenue of at least $1 billion must begin its annual disclosures for Scope 1 and 2 greenhouse gas emissions. In other words, companies are expected to start tracking and reporting on their 2025 emissions.  No later than July 1, 2025, CARB is to determine the exact deadline for the first round of reporting in 2026. Scope 3 annual disclosures under SB 253 will begin in 2027 “on a schedule to a schedule specified by the state board.” Previously, Scope 3 emissions disclosures were due no later than 180 days after public disclosure of Scope 1 and 2 emissions.  SB 253 disclosures must be filed with an “emissions reporting organization” contracted by California and also made publicly available.

SB 261 (Climate Risks), January 1, 2026 Deadline: Pursuant to SB 261, by January 1, 2026, any public or private company “doing business” in California with the total annual revenue of at least $500 million must disclose its climate-related risks and measures adopted to reduce these risks. These disclosures must be filed with CARB and also made publicly available on the entity’s website. Covered entity’s must refile this SB 261 disclosure every two years thereafter.

Key Takeaway 2: Parent Company Consolidated Reporting

SB 261 already permitted covered entities to rely upon consolidated parent company level reporting of climate related risks. SB 219 will now also allow covered entities to rely on parent company reporting for SB 253 greenhouse gas emission disclosures, eliminating the need for covered subsidiaries to file separate and distinct SB 253 disclosures. This should be welcome relief given the original mismatch between SB 253 and 261. 

If you have questions, please reach out to the authors and the Seyfarth Impact & Sustainability team for assistance.

[1] The SEC’s proposed climate-related disclosures rules contained a materiality requirement for disclosure of Scope 3 emissions.  In the SEC’s final rules, the SEC eliminated the requirement to disclose Scope 3 emissions.  See our Legal Update for more information.

[2] While Governor Gavin Newsom proposed to delay the implementation deadlines for both SB 253 and SB 261 by two years through a budget trailer bill, the legislature did not vote on it prior to the end of the legislative session, effectively eliminating the trailer bill.  Governor Newsom’s previously proposed delay may influence his ultimate decision on SB 2019.