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By Heather Frisch & Brenda Radmacher

Contractors and subcontractors bidding on California’s largest public works projects will soon face a new labor-cost risk: the wage rates they are required to pay may change after they submit their bids. California’s prevailing wage rules generally set the minimum pay for workers on public works projects based on the type of work and the project’s location. Under Assembly Bill 1198 (“AB 1198”), updated prevailing wage rates may apply during construction to public works contracts awarded or advertised for bid after July 1, 2027 if the awarded value of the prime contract is $35 million or more. On those projects, the wage rates that applied when the project was first advertised may not remain the same throughout the work.

For contractors pursuing infrastructure projects that take several years to complete, this is not just a payroll issue. A change in required wage rates can affect the cost of work already priced in a bid. Contractors will need to consider that possibility when estimating labor costs, setting aside funds for unexpected costs, obtaining subcontractor prices, and negotiating contract terms that address price increases or changes to the work. Those terms can determine whether the contractor or the public agency awarding the contract bears the additional cost. Contractors will also need processes in place to track wage changes and their effect on project costs.

A Quick Refresher: California’s Current Prevailing Wage Rule

California generally requires workers employed on public works projects to receive at least the prevailing wage determined by the Director of the Department of Industrial Relations (“DIR”) for the applicable type of work and project locality.

Under current Labor Code section 1773.6, if the DIR identifies a prevailing wage change during a quarter, it must make the updated rate available to the awarding body. The updated rate, under current law, does not apply to contracts already advertised for bids.

This gives contractors greater pricing certainty: the wage determination in place when the project is advertised generally governs the contract, subject to its terms and any scheduled wage increases.

AB 1198 changes that rule for certain large public works contracts.

What Changes Under AB 1198?

AB 1198 was approved and chaptered on September 27, 2026, as Chapter 513 of the Statutes of 2026. The legislation amends and replaces Labor Code section 1773.6 and adds section 1773.65.

The new provisions take effect on July 1, 2027.

If the DIR identifies a local prevailing wage change during a six-month period, the updated rate will apply on its effective date to public works contracts awarded or advertised for bids after July 1, 2027, if the awarded value of the prime contract is $35 million or more.

On these projects, contractors cannot assume that the prevailing wage rates used to price their bids will remain unchanged throughout construction.

The $35 Million Threshold Applies to the Prime Contract, Not Individual Subcontracts

An important detail for both prime contractors and subcontractors is that AB 1198 measures the $35 million threshold based on the “awarded value of the prime contract.” The statute does not establish a separate $35 million threshold for individual subcontracts or purchase orders. The legislative analysis likewise describes the new requirement as applying when the awarded value of the prime contract is $35 million or greater.

That distinction matters to subcontractors. A subcontractor does not fall outside AB 1198 merely because its own subcontract is worth substantially less than $35 million. If, for example, a specialty contractor performs a $2 million subcontract on a covered $100 million prime contract, the relevant statutory threshold is the value of the prime contract, not the $2 million subcontract.

Accordingly, subcontractors bidding comparatively small portions of large infrastructure projects should determine whether the overarching prime contract is subject to AB 1198 and consider the possibility of prevailing wage changes when pricing their work.

For prime contractors, this reinforces the need to address post-award prevailing wage changes when negotiating and administering subcontracts and other downstream agreements. For subcontractors, it makes the value and status of the overall prime contract an important diligence point when bidding work, particularly on long-duration projects where their work may not begin until years after the prime contract is awarded.

AB 1198 also contains an exception for certain affordable-housing developments in which 100 percent of the units, excluding managers’ units, are subject to the affordability restrictions or subsidies specified in the statute. For those qualifying projects, new Labor Code section 1773.65 generally preserves the existing treatment of subsequent determinations.

One Open Question: What if Change Orders Push the Contract Above $35 Million?

AB 1198 leaves an important question unanswered for projects that begin below the statutory threshold but grow during construction.

Consider a prime contract initially awarded for $33 million that later increases to $38 million through change orders or other contract modifications. Is it now a $35 million-or-more contract for purposes of AB 1198?

The statute does not expressly address that situation.

Notably, AB 1198 uses the phrase “awarded value of the prime contract.” The Legislature’s use of “awarded value” provides a reasonable textual basis to argue that the $35 million threshold is measured by the value of the prime contract at the time of award, rather than its adjusted value following subsequent change orders. The Senate analysis uses the same “awarded value” formulation but does not specifically address a contract that crosses the threshold during construction.

Keeping this in mind, contractors should be cautious about treating either interpretation as settled. Further DIR guidance, legislative clarification, administrative interpretation, or judicial decisions may ultimately be needed to resolve how the threshold applies when post-award modifications cause the contract amount to exceed $35 million.

Until that question is clarified, contractors with contracts initially awarded below but near the $35 million threshold should consider documenting the original awarded value, tracking cumulative changes, and evaluating significant modifications that cause the contract amount to cross the statutory threshold.

The Bigger Issue May Be at Bid Time

The most significant effect of AB 1198 may arise before the project is ever awarded.

On a large, multi-year public works project, labor for some crafts may be performed years after bid day. Contractors will therefore need to evaluate the possibility that the prevailing wage rates used to develop their estimate will not necessarily remain applicable throughout performance.  Ultimately, this may involve some amount of analysis of past changes to the DIR’s prevailing wage determinations or even a little bit of guessing by the estimators assembling the bid.

The practical exposure will depend on the project’s duration, anticipated labor sequencing, geographic location, and the point in the schedule at which particular crafts and classifications are expected to work. A rate change affecting a trade scheduled to complete its work during the first six months presents a different pricing risk from a change affecting labor-intensive work scheduled three or four years into construction.

Before bidding a covered project, contractors should consider:

  • When particular crafts will perform their work. Exposure may be different for early civil or demolition work than for a labor-intensive trade scheduled several years into construction.
  • Wage-escalation assumptions. Consider how the possibility of future prevailing wage changes should be reflected in labor forecasts, contingencies, or other pricing assumptions.
  • Prime-contract risk allocation. Review whether the contract addresses post-award wage increases, changes in law, price escalation, change orders, notice requirements, or potential equitable adjustments.
  • Subcontractor pricing. Consider whether subcontract bids are fixed for the duration of the work or contain escalation assumptions, exclusions, qualifications, or limited bid-validity periods.
  • Prime and subcontract alignment. Contractors should understand whether the downstream allocation of prevailing-wage risk matches the risk the prime contractor has accepted upstream.
  • Projects near $35 million. Contractors bidding projects below but close to the statutory threshold should consider the unresolved question regarding later change orders that cause the contract amount to exceed $35 million.
  • Schedule changes and delay. Contractors should evaluate the potential labor-cost consequences of work occurring later than contemplated in the bid schedule.
  • Project controls. Before construction starts, identify who will monitor new DIR determinations and how applicable changes will be communicated to payroll, project management, subcontract administration, and project controls.

AB 1198 thus gives sophisticated contractors another reason to bring estimating, contracting, payroll, project controls, and legal/compliance personnel together before the bid is submitted, rather than treating prevailing wage compliance as something that begins after award.

Practical Takeaway for Subcontractors: Look Upstream Before You Price the Work

AB 1198 presents an equally important bidding issue for specialty contractors.

Subcontractors should not assume that AB 1198 is irrelevant simply because their subcontract or purchase order is less than $35 million. Again, the statutory threshold is based on the awarded value of the prime contract.

Before pricing work on a large, multi-year public works project, subcontractors should consider:

  • Confirming the awarded value of the prime contract and whether the project is subject to AB 1198;
  • Identifying when their work is expected to occur and evaluating the possibility that an applicable prevailing wage determination could change before or during performance;
  • Reviewing bid assumptions and subcontract language concerning responsibility for post-award prevailing wage increases;
  • Reviewing applicable notice, change, escalation, and claim provisions affecting increased labor costs;
  • Monitoring applicable DIR determinations during performance rather than relying solely on the prevailing wage information available when the subcontract was priced; and
  • Coordinating promptly with the prime contractor when a new determination potentially affects the subcontractor’s work.

For a subcontractor whose scope will not begin until two or three years into a major infrastructure project, these issues can be particularly important. A fixed-price subcontract based entirely on prevailing wage rates known when the subcontract was bid may present very different cost risks if applicable rates subsequently increase and the subcontract does not address who bears that additional cost.

For both prime and specialty contractors, then, AB 1198 is not merely a payroll issue. It is a bid and contract-risk issue.

Don’t Miss the 20-Day Petition Deadline

AB 1198 also creates a procedure for reviewing a changed rate applicable to a particular contract.

A contractor, awarding body, or representative of an affected craft, classification, or type of work affected by a rate change on a particular contract may challenge the new determination by filing a verified petition with the DIR within 20 days after publication.  The petition must assert that the rate was not determined in accordance with Labor Code section 1773. A copy must also be filed with the awarding body within two days after the petition is filed.

That distinction is important. The petition process is not simply an opportunity to challenge a new rate determination simply because it increases the contractor’s costs or was not anticipated in the bid. The focus of a petition is on the determination process and whether the rate was determined in accordance with section 1773.

The DIR must then investigate or hold a hearing, and generally issue a final determination, within 20 days after the petition is filed, unless the DIR, the awarding body, and all interested parties agree to a longer period. A determination issued by the DIR becomes effective 10 days after issuance and remains effective until modified, rescinded, or superseded.

Because the statutory petition period runs from publication of the new determination, rather than when a contractor happens to discover it, contractors on covered projects should establish a reliable monitoring and escalation process.

AB 1198: Contractor Compliance Checklist

Before Bid

  • Determine whether the project will potentially fall within AB 1198.
  • Identify the anticipated crafts, classifications, and applicable prevailing wage determinations.
  • Document the wage assumptions incorporated into the estimate.
  • Consider potential rate changes when developing labor forecasts and contingencies for multi-year work.
  • Review how the proposed contract allocates the risk of post-award wage increases.
  • For projects near $35 million, document assumptions concerning the statutory threshold and possible contract growth.

Before Contract Execution and Subcontract Buyout

  • Review prime-contract provisions addressing escalation, changes in law, notice, changes, and potential adjustments.
  • Determine which party bears the financial risk of a post-award prevailing-wage increase.
  • Address changed prevailing wage determinations in subcontract and applicable purchase-order terms.
  • Ensure subcontractors understand when the underlying prime contract is subject to AB 1198.
  • Establish responsibility for monitoring DIR determinations.

During Project Performance

  • Monitor DIR’s published determinations for applicable classifications and localities.
  • Record publication, issue, and effective dates for potentially applicable determinations.
  • Immediately route potentially applicable changes to payroll, project management, project controls, subcontract administration, and legal/compliance personnel.
  • Monitor contracts initially awarded below but near $35 million if subsequent changes cause the contract amount to cross the statutory threshold.
  • Preserve any separate contractual notice and claim rights relating to increased costs.

When a Potentially Applicable New Determination is Published

  • Immediately calendar the 20-day petition deadline.
  • Preserve the determination and evidence of its publication date.
  • Confirm whether the changed rate applies to the contract and affected craft or classification.
  • Determine promptly whether there is a factual and legal basis for review under Labor Code section 1773.
  • If review is warranted, prepare and file the verified petition within 20 days.
  • Provide the awarding body with the required copy within two days after filing.
  • Track DIR’s resulting determination and effective date.
  • Separately preserve any applicable contractual notices, claims, or requests for adjustment.

The Bottom Line for Large Public Works Contractors

AB 1198 is relatively narrow in scope, but the projects it affects are not. For large public works contractors, the statute changes an important premise underlying bid preparation:  the prevailing wage determination used to price the project may not remain the operative determination throughout construction of the project.

For prime contractors, that risk should be considered when estimating the work, negotiating the prime contract, buying out subcontracts, and administering the project.

For subcontractors, the key is to look upstream. A $2 million subcontract can still be performed on a prime contract subject to AB 1198, making the value of the overall prime contract and the allocation of future wage-cost risk important considerations before fixing the subcontract price. The new provisions become operative July 1, 2027, giving contractors time to revisit their bid assumptions, subcontract forms, escalation provisions, project controls, and procedures for monitoring DIR determinations before the new procedure begins.

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By: Emily Barsamian

Employers know the drill – 2027 is right around the corner, and the new year comes a fresh batch of state and local laws that make this year’s handbook out of date. Before you throw in the towel trying to interpret the nuances of the plethora of statutory changes, join the Seyfarth team this Thursday, October 29, from 1:00 to 2:00 p.m. ET for our annual Handbook Season Kickoff: New Year, New Laws, New Handbook webinar. Chelsea Hoffman, Jean Wilson, Catherine Feldman, and Renate Walker will go over the biggest policy updates for 2027, what’s coming down the pike, and how to update your get state-specific addenda. Please register here. We’ll see you there!

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Workplace privacy becomes significantly more complex when an organization’s workforce spans multiple countries. In this episode, Karla Grossenbacher, who specializes in US workplace privacy, and Yana Komsitsky, who specializes in international workplace privacy, discuss the differences in the legal frameworks between the US and jurisdictions outside the US. They also explore practical approaches for how multinational employers can apply global privacy principles to employee and candidate data, including when, unlike the US,  consent may not provide the protection employers expect.

This conversation examines today’s most pressing workplace privacy challenges, including meeting recordings and AI note-taking tools, electronic and video monitoring, automated employment decisions, biometrics, and cross-border data transfers.

Read the full transcript here.

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Episode 06: From Voir Dire to Verdict: Jury Consultants in Flashpoints Cases

Hosted by Sam Schwartz-Fenwick with special guest Lynn Kappelman

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What happens when a trial involves issues that jurors may view through the lens of personal values, lived experience or strong opinions about corporate accountability? In this episode of the Cultural Flashpoints Vidcast, Sam Schwartz-Fenwick and Lynn Kappelman discuss how jury consultants can help legal teams better understand those perspectives before they enter the courtroom.

From testing reactions to workplace videos to developing more effective voir dire, the episode highlights practical tools for understanding how jurors may interpret a case. The discussion demonstrates why an independent perspective can be invaluable in refining the trial narrative, anticipating juror concerns and keeping the outcome focused on the evidence.

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By: Scott Prange and Lo Nelson

Seyfarth Synopsis: A recent federal court decision highlights the risks of disciplining an employee whose apparent policy violations may also constitute protected safety reporting. Employers should stress-test potentially conflicting policies and document the information, context, and reasoning supporting disciplinary decisions.

What happens when an employee is told to report safety concerns, but doing so may require breaking another rule? Buckle up. 

Welcome to Stein v. Transdev, a case involving an autonomous vehicle roadside assistance employee, a late-night Los Angeles street takeover, donuts in the intersection, fireworks, police activity, and a workplace investigation that eventually landed in federal court. In other words, a compliance training scenario written like an action sequel. 

The employee found himself in the middle of the chaos. He took photos, texted his supervisor, and reported what he believed was a safety hazard. The employer concluded those same actions violated rules against mobile-device use and leaving a vehicle on an active roadway, and it terminated him. The court held that a jury could see the conduct as both a safety violation and protected safety reporting.

Lesson #1: Employees Don’t Talk Like Lawyers

The employee never filed a formal safety complaint. He sent texts, photos, and updates from the middle of a developing situation. The court concluded a jury could view those communications as workplace safety reporting.

Pit-Stop Takeaway: Train managers to recognize complaints in the wild. Employees rarely begin a text message with, “Pursuant to my protected whistleblower rights…”

Lesson #2: Avoid a Policy Pileup

The employer required employees to report unsafe conditions. It also restricted mobile-device use. The trouble started when following one rule appeared to break another. 

Pit-Stop Takeaway: Review policies as a team, not as cars racing in separate lanes. If employees need a flowchart to decide which rule wins, a jury may need one too.

Lesson #3: The Investigation Can Take the Wheel

The court focused heavily on the investigation and whether the decisionmaker considered the full record before recommending termination. She testified that she did not recall reviewing key communications and was unaware of important details. But the paper trail suggested she may have had the puzzle pieces in the passenger seat all along: she had access to documents containing those communications and spoke with people involved in the incident. 

Pit-Stop Takeaway: An investigation is not just fact-finding. It may become Exhibit A.

A defensible investigation should leave a clean road map showing:

  • What information was reviewed;
  • Which documents, messages, and records were considered;
  • Who was interviewed;
  • What competing factual narratives were evaluated;
  • How credibility assessments were made; and
  • Why the final decision was reached.

Lesson #4: Context Is Not Optional Equipment

The employer saw policy violations. The employee saw actions necessary to document and report a dangerous situation. The court concluded a jury could find either explanation persuasive. 

Takeaway: Decisionmakers should understand not only what happened, but why the employee says it happened. Do not hit the termination accelerator before checking the full dashboard.

Lesson #5: Check the Comparator in the Rearview Mirror

The employer also had a comparator problem. The plaintiff said he asked a co-worker involved in the same incident to report it, but the co-worker declined or dragged his feet. One employee was fired. The other was not. 

The court held that a jury could reasonably ask: why?

Employer takeaway: When employees play different roles in the same workplace drama, document why their outcomes differ. Otherwise, “why him and not me?” may become the case’s closing lap.

The Finish Line

Stein is a reminder that litigation risk often appears when reasonable policies collide with unreasonable real-world events. Employers can reduce that risk by stress-testing policies for conflicting obligations and making sure investigations capture the complete story before discipline is imposed. 

Before hitting “terminate,” check the mirrors, review the dashboard, and make sure the investigation is not running on fumes. 

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Seyfarth Synopsis: The Ninth Circuit held that an employee who initially pursued claims in arbitration could later elect to proceed in court after discovery revealed a claim covered by the Ending Forced Arbitration Act (“EFAA”). The court also concluded that the employee had not waived that right and could litigate her entire case, including otherwise arbitrable claims, in court.

The EFAA creates an exception to the Federal Arbitration Act (“FAA’) by allowing a person alleging conduct constituting workplace sexual harassment or sexual assault to invalidate arbitration agreements and to pursue his or her claims in court. 9 U.S.C. §§ 401–02.

The Ninth Circuit’s decision in Ding v. Structure Therapeutics, Inc., — F.4th —, 2026 WL 2420555 (9th Cir. Aug. 19, 2026) addresses two important questions. May an employee who initiated and substantially participated in arbitration later proceed in court after discovering facts supporting an EFAA claim? And may conduct that is not overtly sexual support a covered claim? The court answered both questions in the affirmative.

The Dispute Begins in Arbitration

Structure Therapeutics hired Dr. Ding Ding as its CFO in December 2021, requiring arbitration of any employment disputes. After the company terminated her employment in March 2022, Ding filed an arbitration demand asserting discrimination, retaliation, and harassment based on national origin and her status as a victim of domestic violence.

During discovery, Ding obtained information that, in her view, showed the conduct was also motivated by gender. She alleged that the CEO preferred a man for her position, sidelined her, reduced her responsibilities, and relied on gendered criticism that she was “too aggressive.”

Ding withdrew from arbitration after one year and filed suit in California Superior Court, adding sex discrimination and sex-based hostile-work-environment claims. The company removed the case to federal court and moved to compel arbitration. The district court denied the motion because Ding had plausibly alleged a sexual-harassment dispute covered by the EFAA.

Earlier Arbitration Did Not Eliminate the Right to Proceed Under the EFAA

On appeal, the company argued that Ding could not invoke the EFAA after choosing arbitration and litigating there for a year. The Ninth Circuit rejected a categorical rule that commencing arbitration forecloses a later EFAA election.

The majority focused on the statutory text. The EFAA does not impose a deadline for alleging a covered claim or prohibit an election after other claims have entered arbitration. Filing an arbitration demand involving noncovered claims does not automatically extinguish a later-discovered right to proceed in court.

The court emphasized that Ding had not alleged an EFAA-covered claim when she initiated arbitration. Based on the district court’s factual findings, she did not understand the alleged conduct’s gender-based character until discovery revealed additional evidence. Because she lacked the information necessary to assert the covered theory when she filed her demand, she had not yet made an EFAA election.

Forcing an employee to remain in arbitration before discovering a covered claim, the majority reasoned, would undermine the EFAA’s promise of meaningful choice.

Waiver Remains a Meaningful Limitation

The court did not hold that an employee may abandon arbitration whenever a covered claim is later asserted. EFAA rights remain subject to ordinary waiver principles, which generally require the intentional relinquishment of a known right.

Waiver may occur when a claimant knows the facts supporting a covered claim but intentionally delays asserting it or affirmatively chooses to arbitrate that claim. Here, however, the district court found no evidence that Ding knew she possessed a plausible covered claim when she initiated arbitration. Her participation alone did not establish waiver because she did not yet know of the right she allegedly relinquished.

The inquiry is not simply whether the employee participated in arbitration. Courts may consider what the employee knew, when she learned it, whether the facts supported a covered claim, and what she did next.

A Plausible Covered Claim Brings the Entire Case to Court

The Ninth Circuit next considered whether Ding plausibly alleged a claim falling within the EFAA. Accepting the complaint’s allegations as true and drawing reasonable inferences in her favor, the court concluded that she plausibly alleged a sex-based hostile work environment under California law.

The majority confirmed that workplace conduct need not be overtly sexual to constitute harassment. Citing Lyle v. Warner Bros. Television Prods., 38 Cal. 4th 264, 280 (2006), the court explained that conduct may qualify when it targets an individual because of sex and is sufficiently severe or pervasive to create an objectively and subjectively offensive workplace. Sexual advances, lewd acts, or similar conduct are not required.

That conclusion carried case-wide consequences. The EFAA renders a predispute arbitration agreement unenforceable “with respect to a case” relating to a covered dispute, not merely the covered claim. Ding could therefore pursue her entire case in court, including otherwise arbitrable claims involving national origin and domestic-violence-victim status.

The Dissent Warns Against Midstream Forum Changes

The dissent concluded that Ding made her election by initiating and substantially litigating the arbitration. It interpreted “election” as a single, mutually exclusive choice between arbitration and court and emphasized that Ding initially withdrew based on allegedly late arbitration-fee payments, not the EFAA.

Drawing on decisions finding waiver when a party substantially litigates in court before seeking arbitration, the dissent saw no reason to treat the reverse situation differently. It warned that the majority’s approach could disrupt ongoing arbitrations and permit forum changes after the parties have expended considerable resources.

The opinions expose a recurring tension: meaningful statutory choice versus finality and the costs of changing forums.

Takeaways for Employers

Evaluate EFAA potential at the outset. Employers should not assume that a broadly drafted, otherwise enforceable arbitration agreement settles the forum question. Counsel should assess whether the employee’s factual allegations could support a covered claim, even if the arbitration demand does not expressly identify one.

Recognize that discovery may change the forum analysis. Documents, testimony, and other evidence produced in arbitration may provide the basis for a newly asserted covered claim. Discovery may therefore affect both the merits and the enforceability of the arbitration agreement.

Preserve the record concerning knowledge and timing. Waiver may depend on when the claimant learns the facts supporting a covered claim and what the claimant did afterward. Employers should maintain a clear chronology because it may become central to a motion to compel or an appeal.

Recognize the possible case-wide consequence. If an employee plausibly alleges a covered claim, the entire case may proceed in court, including claims that otherwise appear arbitrable. Employers should consider that possibility when evaluating exposure, discovery strategy, and settlement posture.

Comply strictly with arbitration deadlines. Ding initially withdrew based on the company’s alleged late payment of arbitration fees. Employers should carefully calendar payment deadlines and monitor invoices from the arbitration administrator.

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By: Mecole Tate and Chelsea Hoffman

Seyfarth Synopsis: San Francisco just delivered a bundle of joy for new parents. The city reduced the employment tenure requirement under its Paid Parental Leave Ordinance from 180 days to 90 days, meaning eligible employees can start accessing employer-paid supplemental compensation benefits faster. Covered employers may want to start baby-proofing their policies now, ahead of phased-in compliance beginning January 1, 2027.

New parents in San Francisco have a reason to celebrate. On August 7, 2026, the mayor signed Ordinance 162-26, reducing the amount of time an employee must be on the job before qualifying for supplemental compensation benefits under the city’s Paid Parental Leave Ordinance (“SF PPLO”). Instead of waiting 180 days, employees can qualify after 90 days, bringing the ordinance in line with the city’s Paid Sick Leave Ordinance.

As a quick refresher, the SF PPLO requires employers with 20 or more employees (located anywhere) to “top up” an eligible employee’s California Paid Family Leave (“CA PFL”) benefits during new child bonding leave. In other words, the ordinance helps bridge the gap between what the State pays and an employee’s regular wages (up to a maximum cap), ensuring parents can focus less on finances and more on midnight feedings, diaper changes, and everything else that comes with welcoming a new family member. For 2026, the combined maximum weekly benefit amount from CA PFL benefits and employer-paid supplemental compensation is $2,522.

This amendment may be taking its first steps, but it is not changing much else. Employees still must work at least eight hours per week in San Francisco, perform at least 40% of their total weekly hours in the city, and otherwise qualify for CA PFL benefits for new child bonding leave. Like many toddlers, the ordinance’s rollout will happen in stages rather than all at once. Employers with 100 or more employees must comply with the new 90-day eligibility threshold beginning January 1, 2027. Employers with 20 to 99 employees get a little more time to crawl before they walk, with compliance delayed until January 1, 2028. Employers with fewer than 20 employees remain exempt.

Covered employers should not sleep on this update, even if new parents might not be getting much sleep themselves. Now is the time to revisit paid parental leave policies, update eligibility procedures, and monitor the SF PPLO webpage for updated guidance, posters, and forms. With the shortened waiting period, more employees will be eligible for benefits sooner. Employers should make sure their policies are ready before this amendment leaves the crib and starts walking.

Also, please consider this your friendly reminder that handbook season is just around the corner. Whether your handbook needs a quick checkup or a full nursery-to-college makeover, Seyfarth’s Handbook Team is ready to help. Additionally, be on the lookout for details about Seyfarth’s Employee Handbook Update Webinar, where we’ll cover the latest developments. After all, when it comes to workplace policies, it’s always better to baby-proof now than scramble later!

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Episode 05: Utilizing Coaching to Prevent Workplace Flashpoints Conflict

Hosted by Dawn Solowey with special guest Chelsea Hoffman

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In this episode of the Cultural Flashpoints Vidcast, Dawn Solowey sits down with Chelsea Hoffman to explore how one-on-one coaching can serve as an effective tool for addressing workplace cultural flashpoints, including polarizing political, social, and global issues that create tension among employees. The discussion examines situations where coaching may be a better alternative to formal discipline, helping employers address problematic conduct, reinforce workplace expectations, and assess whether an employee is open to learning and growth.

Chelsea also shares practical insights on building trust with employees, tailoring coaching to individual circumstances, evaluating outcomes, and delivering meaningful feedback to employers. Together, Dawn and Chelsea explain why coaching can help organizations de-escalate workplace conflicts, strengthen professional conduct, and create opportunities for course correction before issues become larger workplace liabilities.

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By: Yana Komsitsky, Paul Whinder, and Georgia Hill Smith

Artificial intelligence enabled tools are rapidly taking over recruiting, hiring, workforce planning, performance management, and employee monitoring tools. In a recent Westlaw Today article, Yana Komsitsky, Paul Whinder, and Georgia Hill Smith discuss which types of workplace applications are likely to be classified as high-risk under the EU AI Act and what employers should be doing now to prepare. Their practical roadmap addresses governance, vendor oversight, workforce impacts, and global compliance strategies for organizations navigating an increasingly complex AI/automated decision-making regulatory environment.

Why This Matters

  • Some AI tools that influence employment-related decisions may face more heightened regulatory scrutiny than others, but the assessment may vary under different frameworks.
  • Employers should plan to distinguish compliance for administrative tools and technologies that rank, score, recommend, or otherwise influence workplace decisions.
  • HR, legal, compliance, and technology teams should work together to evaluate and govern workplace AI initiatives.

The full article is available here.

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By: Alison Silveira, Lilah Wylde, and Natalie Costero

The House settlement was expected to bring long-awaited structure to college athletics. Instead, it has marked the beginning of a new phase of litigation, regulatory disputes, and legislative activity  that will shape how Universities implement revenue sharing, manage NIL programs, and interact with third-party partners.

For Universities now one year into the effectiveness of House, the challenge is no longer simply preparing for House: it is preparing for what comes next. New lawsuits are testing the limits of the settlement, Congress continues to debate federal legislation, and unresolved employment-law questions remain. 

The Latest House Settlement Disputes

Two recent developments around enforcement of House should be on every university’s radar.

First, in May 2026, the College Sports Commission (“CSC”), charged with overseeing University and athlete compliance with House, rejected more than $7.5 million in NIL agreements between the University of Nebraska’s student-athletes and the University’s exclusive multimedia rights (“MMR”) partner. Following the arbitrator’s ruling the athlete’s counsel asked the court to clarify whether MMRs and third-party sponsors fall within the settlement’s definition of “Associated Entities or Individuals.” They argued that MMRs and commercial sponsors function as independent business partners rather than school-affiliated entities and therefore should not be subject to CSC oversight.

Last week, the Magistrate Judge denied Plaintiff’s motion. The Court concluded that MMRs and third-party sponsors are not categorially excluded from the definition of “Associated Entities or Individuals.” Instead, whether an entity is subject to CSC oversight depends on the nature of its relationship with the university and whether it functions in a manner consistent with the settlement’s purpose of preventing school-affiliated entities from using NIL agreements to influence recruiting or roster retention.

Why this matters: Universities that work with MMRs, sponsors, or other third-party partners should not assume those relationships fall outside the CSC’s jurisdiction. Instead, institutions should evaluate how these relationships are structured and remain prepared for increased scrutiny of arrangements that could be viewed as advancing a university’s recruiting or roster-retention efforts.

Second, a new class action—Ili et al. v. National Collegiate Athletic Association et al.—was filed in June 2026 in the U.S. District Court for the Northern District of California.

The lawsuit, brought by USC linebacker Talanoa Ili and Stanford quarterback Charlie Mirer, alleges that the NCAA, the Power Four conferences, together with the CSC, unlawfully implemented nationwide NIL restrictions in California and sixteen other states whose laws prohibit athletic associations from restricting student-athletes’ ability to earn NIL compensation.

Importantly, the plaintiffs do not challenge the House settlement itself. Instead, they argue the defendants exceeded the settlement’s authority by implementing its NIL framework in a manner that conflicts with state law. According to the complaint, the NCAA and the Power Four conferences agreed to impose nationwide restrictions on both direct revenue-sharing payments and certain third-party NIL compensation, despite knowing that those restrictions conflicted with state NIL laws. Plaintiffs content that this coordinated implementation constitutes an unlawful agreement to suppress athlete compensation—amounting to price-fixing and a group boycott in violation of the Sherman Act—as well as violations of California law.

Why this matters: While this litigation is in its early stages, it is one universities should closely monitor, particularly if they operate in states with expansive NIL statutes. If plaintiffs prevail, universities may need to revisit NIL compliance protocols, athlete agreements, and internal policies to account for state law limitations on the NCAA and CSC’s enforcement authority.

Congress Continues Its Search For a National Solution

Following Trump’s Executive Order, discussed in our recent blog, Congress has continued considering whether federal legislation can provide the uniformity that the House settlement has not yet achieved. After earlier proposals stalled, a bipartisan group of senators introduced the Protect College Sports Act of 2026, which would create national standards governing NIL compensation, revenue sharing, athlete protections, eligibility, transfers, and media rights.

For universities, the bill’s most significant feature may be its effort to replace the current landscape of varying state NIL laws with a single federal framework. The legislation would largely preserve the House settlement’s revenue-sharing and third-party NIL structure, provide limited antitrust protection for rules governing athlete compensation and eligibility, and require athletes to report NIL agreements exceeding $600. Institutions would also face new obligations involving NIL data reporting, agent oversight, scholarships, medical coverage, academic protections, and athlete health and safety.  As such,  many universities and conferences are publicly opposing the Act. The SEC and Big Ten released a joint statement against the Act, stating they have not had the opportunity to voice their concerns about the impact of the Act.

Operationally, the bill would require coordination well beyond the athletics compliance office. Universities may need to revise athlete agreements and NIL policies, develop new reporting and data-management systems, review agent-certification procedures, budget for expanded medical and scholarship protections, and assign responsibility for whistleblower complaints and potential private litigation. Institutions participating in any collective media-rights arrangement could also face new requirements concerning revenue distribution and the preservation of women’s and Olympic sports.   

The bill is currently being prepped for floor consideration by Senate leadership, and public reports suggest that lawmakers are aiming to hold a vote before the Senate’s month-long August recess.

Why this matters: Because the bill remains subject to amendment and senate voting, schools should focus on building flexible compliance systems that can accommodate federal requirements without losing sight of continuing state-law and employment-law obligations. However, universities should not wait for final legislation before assessing their readiness for a federal framework. Institutions should identify which NIL, revenue-sharing, medical, scholarship, and reporting practices would require revision; determine which offices would own those responsibilities; and evaluate the financial and administrative resources necessary to implement them.

The Looming Issue of Employment Status

While litigation progresses and legislation is proposed, one major question remains: whether student-athletes may be classified as employees. Notably, the Protect College Sports Act does not address the issue. Unlike prior legislative proposals that would have expressly prohibited employee status, the current bill remains neutral, leaving courts, administrative agencies, and lawmakers to continue shaping the issue.

The uncertainty carries practical implications beyond athlete compensation. As universities implement revenue-sharing programs and continue facilitating NIL opportunities, institutions should keep in mind whether their compensation structures, the level of institutional involvement in athlete activities, the degree of control exercised over student-athletes could be cited in future employment-related litigation.

While revenue sharing and NIL agreements largely provide language explicitly stating student athletes are not employees, these agreements and payments alone do not determine employee status. These agreements could become part of a factual record courts evaluate when considering wage and hour, collective bargaining, workers’ compensation, and other employment-law claims.

Why it matters: Compliance with House may not resolve employment-law concerns. Universities should continue evaluating compensation models with employment counsel, documenting business rationale for compensation decisions, and reviewing existing policies to minimize wage-and-hour exposure. .

Action Items for Universities

While the legal framework governing college athletics will likely continue evolving through litigation, regulatory guidance, and potential federal legislation, universities need not wait for final answers before taking proactive steps to reduce risk. Universities can and should:

  1. Evaluate institutional governance: ensure clear process for making decisions regarding athlete compensation and identify which departments are responsible for reviewing, approving, and implementing compensation-related decisions.
  2. Review relationships with third–party partners: Assess agreements and operating practices with MMRs, corporate sponsors, and collectives to assess whether existing agreements remain appropriate as CSC guidance and litigation continue to evolve.
  3. Assess compliance infrastructure: Assess whether current policies, reporting procedures, and internal controls are sufficiently flexible to adapt to future regulatory changes and whether the school will be able to afford possible implications.
  4. Incorporate employment–law considerations into compensation planning: involve employment counsel when developing new compensation models and periodically assess whether evolving practices create additional wage-and-hour, employee-classification, or labor-law considerations.