Human Resources Archives - Lake Effect HR & Law

DOL Proposes New FLSA Independent Contractor Analysis

admin — Wed, 11 Mar 2026 02:37:16 +0000

On February 26, 2026, the U.S. Department of Labor (DOL) issued a proposed rule that would make it easier for employers to classify certain workers as independent contractors rather than employees for purposes of federal wage and hour laws (FLSA) and the Family and Medical Leave Act (FMLA). In a change from the current approach, the proposed rule emphasizes an “economic realities” test focusing on whether the worker is operating their own business or is dependent on the employer for work. The DOL frames the change as a chance to streamline the analysis, focusing first on two “core factors” to help determine if a worker is economically dependent on an employer for work or is in business for themself: (a) the nature and degree of control over the work; and (b) the worker’s opportunity for profit or loss based on initiative and/or investment.

If the core factors are not definitive, the analysis would then consider “other factors,” including the amount of skill required for the work, degree of permanence of the working relationship, and whether the work is part of an integrated unit of production in the employer’s business. The proposed rule emphasizes that the parties’ actual practice is more relevant than what may be contractually or theoretically possible. The proposed rule also includes eight fact-specific examples to help parties understand how the analysis could work.

The distinction between an independent contractor and an employee is key for purposes of applying a number of federal laws. The FLSA generally requires employers to pay employees a minimum hourly wage for their compensable work hours, and to pay nonexempt employees one-and-one-half times their regular hourly rate for hours worked over 40 in a week. Independent contractors are not covered by the FLSA. The federal FMLA requires covered employers to provide eligible employees with up to 12 weeks of protected, unpaid leave from work for qualifying reasons, and prohibits employers from interfering with employees’ exercise of their rights under the law. Employers have no duty to provide independent contractors with any FMLA leave.

The DOL is soliciting comments on the proposed rule from interested parties within 60 days of publication. Comments are due by 11:58 p.m. EDT on April 28, 2026. After this, the DOL will review the comments, and then publish a final rule which takes effect and is enforceable 30 days thereafter; until then, the 2024 standard remains in effect. We will continue to keep you apprised of its status.

Employers should keep in mind that state laws also apply on this issue and should ensure compliance with state law, as well.

The attorneys and HR professionals at Lake Effect can provide guidance on employment-related agency and legislative actions, employment laws, regulations, and agency guidelines. We continue to monitor important legal and HR developments, as well as other information that could impact the workplace. Please watch our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.

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EEOC Rescinds Harassment Guidance

admin — Wed, 28 Jan 2026 14:47:24 +0000

On January 22, 2026, the Equal Employment Opportunity Commission (EEOC) voted 2-1 to rescind its “Enforcement Guidance on Harassment in the Workplace” (Harassment Guidance), a 190-page document which had been approved in 2024.

Although the Harassment Guidance did not have the force of law, it aimed to help employers identify and prevent activities that could constitute unlawful harassment based upon race, color, religion, sex, national origin, age, disability, and genetic information. It specifically included guidance relating to gender identity discrimination and harassment of LGBTQ+ individuals.

The withdrawal of the Harassment Guidance is consistent with the Trump Administration’s prior Executive Order directing executive agencies to enforce federal laws based upon a recognition of two sexes, male and female, specifically excluding any concept of gender identify. It signals the EEOC’s intent to investigate and litigate a much narrower scope of sex discrimination claims.

The rescission of the Harassment Guidance does not alter Title VII or any other federal anti-discrimination statute. Employers should continue to comply with those statutes as written and as previously interpreted by courts. Employers are also bound by applicable state laws prohibiting discrimination and harassment, and they should take careful note of how those terms are defined under each state’s law. This also does not alter an employer’s responsibility to educate their employees on their organization’s respectful workplace policy through periodic training.

The attorneys and HR professionals at Lake Effect can provide guidance on agency guidelines, employment laws, and regulations. We continue to monitor important legal and HR developments, as well as other information that could impact the workplace. Please watch our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.

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Benefits Limits for 2026

admin — Wed, 19 Nov 2025 02:28:07 +0000

Each year, the IRS sets new limits for ACA high deductible plans, employee benefits plans, flex plans, QSEHRAs, and retirement plans. Below is Lake Effect’s ready reference chart showing the Benefits Limits for the 2026 tax year.

	2025	2026
Flexible Spending Accounts (FSAs)
Healthcare FSA max election (per year) (incl. LTD FSA)	$3,300	$3,400
Healthcare FSA max rollover	$660	$680
Dependent Care FSA max election (per year) (Single or Married Filing Jointly)	$5,000	$7,500
Dependent Care FSA max election (per year) (Married Filing Separately)	$2,500	$3,750

Transportation Benefits
Parking Account	$325/mo	$340/mo
Transit Account	$325/mo	$340/mo

High Deductible Health Plan Requirements to Contribute to an HSA
HDHP min annual deductible – Self-only	$1,650	$1,700
HDHP min annual deductible – Family	$3,300	$3,400
HDHP out-of-pocket max – Self-only	$8,300	$8,500
HDHP out-of-pocket max – Family	$16,600	$17,000
HSA max contribution limit – Self-only	$4,300	$4,400
HSA max contribution limit – Family	$8,550	$8,750
HSA catch up contribution limit (age 55+)	$1,000	$1,000
HRA max employer contribution limit	$2,150	$2,200

ACA Plan Limits
Maximum Out-of-Pocket (Self-only or Individual in a Family)	$9,200	$10,600
Maximum Out-of-Pocket (Family)	$18,400	$21,200

QSEHRA (Qualified Small Employer Health Reimbursement Arrangement) – Max Employer contribution
To Individual	$6,350	$6,450
To Family	$12,800	$13,100

Salary Thresholds for Non-discrimination Testing
Highly compensated employees	$160,000	$160,000
Key employees	$230,000	$235,000

Retirement Plans (401(k), 403(b))
Max employee elective contributions for those 49 and younger	$23,500	$24,500
Max employer + employee contributions for those 49 and younger	$70,000	$72,000
Max employee catch-up contributions for those 50+	$7,500	$8,000
Max employee elective contribution plus catch-up for those 50+	$30,500	$32,500
Max employer + employee contributions for those 50+	$76,500	$80,000
Max employee catch-up contributions for those 60-63	$11,250	$11,250

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SCOTUS Clarifies Standard in “Reverse Discrimination” Lawsuits

admin — Tue, 08 Jul 2025 15:06:44 +0000

On June 5, 2025, the U.S. Supreme Court unanimously affirmed the legal burden of proof required to establish a “reverse discrimination” claim. In “reverse discrimination” cases, a member of a majority group alleges they were discriminated against based on their membership in that majority group. The question before the Court was whether majority-group plaintiffs claiming discrimination had to meet a higher burden of proof than minority-group plaintiffs. Specifically, whether they had to demonstrate “background circumstances” to support that the defendant was an “unusual” employer that discriminated against the majority, as some lower courts had ruled. The Supreme Court unanimously responded, “No” and confirmed that the burden of proof is the same for every plaintiff who alleges discrimination, regardless of their majority or minority group status. Ames v. Ohio Dep’t of Youth Servs., No. 23-1039 (U.S. June 5, 2025).

In Ames, a heterosexual woman claimed she was discriminated against when she was passed up for promotion in favor of a lesbian woman and later demoted in favor of a gay man. Her case was initially dismissed because she did not offer evidence of “background circumstances” showing the defendant was a rare employer that discriminated against majority employees. The U.S. Supreme Court, however, reversed the lower court’s ruling, reasoning that the text of Title VII, which bars discrimination “against any individual…because of such individual’s race, color, religion, sex, or national origin,” focuses on individuals rather than groups. Therefore, courts should not apply special evidentiary burdens to majority-group plaintiffs. The Court clarified that “this additional ‘background circumstances’ requirement is not consistent with Title VII’s text or our case law construing the statute.” This decision reinforces the notion that Title VII protects all employees from discrimination, regardless of whether the individual is part of a minority or majority group.

The attorneys and HR professionals at Lake Effect can provide guidance on employment-related executive actions, employment laws, regulations, and agency guidelines. We continue to monitor important legal and HR developments, as well as other information that could impact the workplace. Please watch our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.

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Trump Executive Order Vows to Eliminate Disparate Impact Liability

admin — Mon, 23 Jun 2025 14:18:03 +0000

The Trump Administration has directed a sweeping change to employment discrimination liability under Title VII in its recent executive order titled, “Restoring Equality of Opportunity and Meritocracy.” The EO announces a new policy to “eliminate the use of disparate-impact liability in all contexts to the maximum degree possible to avoid violating the Constitution, Federal civil rights laws, and basic American ideals.”

Under current law, established by the Supreme Court in 1971 and codified by Congress through a 1991 amendment to Title VII, plaintiffs can pursue employment discrimination claims under one of two theories: (1) disparate treatment, by claiming that an employer intentionally treats an individual differently based on membership in a protected class; or (2) disparate impact, by claiming that an employer has a facially neutral policy or practice that nevertheless has a disproportionately negative impact on individuals in a protected class. In the latter case, a plaintiff need not present evidence that the employer intended to adversely affect the plaintiff or the protected group. Disparate impact theory has historically been used to challenge such policies as minimum height requirements, education or degree requirements not closely tied to job-related skills, and aptitude/personality tests.

The Trump executive order announces that disparate impact liability “is wholly inconsistent with the Constitution and threatens the commitment to merit and equality of opportunity that forms the foundation of the American Dream.” The EO therefore directs that:

Federal departments and agencies deprioritize enforcement of all statutes and regulations to the extent that they include disparate impact liability.
The Attorney General (AG) and EEOC assess pending investigations and suits that rely on disparate impact theory and take action consistent with the EO.
Federal agencies review any consent judgments or permanent injunctions that rely on the disparate impact theory and take appropriate action;
The AG assess whether the new federal policy preempts state laws or regulations that impose disparate impact liability;
The AG and EEOC jointly issue new guidance or technical assistance to employers on appropriate methods to promote equal access to employment.

The practical implications of the executive order remain to be seen. The EO is not law, and it cannot override Supreme Court precedent or existing statutory regulations. While private plaintiffs may continue to pursue disparate impact discrimination claims, employers can assume that the EEOC will not investigate or pursue disparate impact claims moving forward. We may also see challenges to state and local laws that permit disparate impact claims on the basis that those laws are preempted by new federal policy. For now, employers should act consistent with current applicable federal and state laws, carefully reviewing neutral employment policies and practices to ensure that they do not have a disproportionately negative impact on members of any protected group.

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USCIS Releases Revised Form I-9

admin — Tue, 08 Apr 2025 13:35:16 +0000

USCIS issued a revised Form I-9 on April 2, 2025 with an edition date of 01/20/25 and an expiration date of 05/31/2027. Minor revisions were made to align with statutory language and update the Department of Homeland Security (DHS) Privacy Notice. Key updates include:

Renaming the fourth checkbox in Section 1 “A noncitizen authorized to work” to “An alien authorized to work”
Revising the descriptions of two List B documents in the Lists of Acceptable Documents (changing “gender” to “sex” in the description of List B documents)
Adding appropriate statutory language and a revised DHS Privacy Notice to the instruction

E-Verify and E-Verify+ has updated the Citizen Status selection during case creation as of April 3, 2025, to reflect these changes. Employers should note, if an employee attests on earlier editions of the Form I-9 as “a noncitizen authorized to work,” the employer must select “an alien authorized to work” in E-Verify.

Although revisions are minor, it is important to use the approved and unexpired versions of the Form I-9. Lake Effect HR & Law recommends using the latest 01/20/25 edition of the Form I-9 found on the USCIS website. However, employers may continue to use the following two previous editions until the expiration date listed on the top-right corner of the form:

Form I-9 (08/01/23 edition) that is valid until 05/31/2027
Form I-9 (08/02/23 edition) that is valid until 07/31/2026

If you would like assistance or guidance in completing new Form I-9s, complying with the Form I-9 identification or retention requirements, or conducting internal I-9 audits, please contact Lake Effect at info@le-hrlaw.com or 1-844-333-5253.

Lake Effect is here to answer all your questions about employment laws, regulations, and new agency guidelines. We continue to monitor important legal and HR developments, as well as other information that could impact the workplace. Please watch our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.

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EEOC and DOJ Warn Against Unlawful DEI-Related Discrimination

admin — Mon, 31 Mar 2025 06:00:27 +0000

On March 16, the EEOC and the Department of Justice (DOJ) warned against DEI-related discrimination in the workplace in a technical assistance document entitled “What To Do If You Experience Discrimination Related to DEI at Work.” The EEOC simultaneously published “What You Should Know About DEI-Related Discrimination at Work,” a longer FAQ style guide. The documents (“guidance”) are consistent with the directives in President Trump’s January 20, 2025, Executive Order 14151 and Executive Order 14173, summarized in a previous Lake Effect blog.

The guidance summarizes the process for filing a discrimination charge with the EEOC. It states that Title VII applies to employees, potential and actual applicants, interns, and training program participants, and that “Title VII’s protections apply equally to all racial, ethnic, and national origin groups, as well as both sexes.”

In addition, the guidance identifies DEI-related initiatives, policies, programs, or practices that may constitute unlawful discrimination to the extent that any action is motivated (in whole or in part) by an individual’s race, sex, or other protected characteristic. Examples of prohibited actions include:

Disparate treatment in the terms and conditions of employment, which may include access to or exclusion from training (including leadership development programs), mentoring, sponsorship, networking, internship, or fellowship programs, as well as selection for interviews (including placement in or exclusion from a candidate slate or pool).
Limiting, segregating, and classifying employees, which may include “limiting membership in workplace groups such as Employee Resource Groups (ERG) or other employee affinity groups, to certain protected groups,” and “separating employees into groups based on race, sex, or another protected characteristic when administering DEI or other trainings, or other privileges of employment, even if the separate groups receive the same programming content or amount of employer resources.”
Harassment, which may occur when someone is subjected to unwelcome remarks or conduct based on race, sex, or other protected characteristics. “Depending on the facts, DEI training may give rise to a colorable hostile work environment claim.”
Retaliation against an individual who has engaged in a protected activity, which may include reasonable opposition to DEI training “if the employee provides a fact-specific basis for his or her belief that the training violates Title VII.”

The EEOC’s FAQ document specifies that an employer cannot justify taking an employment action based on race, sex, or another protected characteristic because the employer has a general business necessity or interest in “diversity,” including preferences or requests by the employer’s clients or customers.

Although the guidance does not have the force of law or alter Title VII in any way, it does suggest that the current EEOC will closely scrutinize DEI-related activities in the workplace. Given this dramatic shift from the approach of the prior administration, Employers should carefully review any DEI-related activities to minimize exposure to unlawful discrimination claims. Your partners at Lake Effect can help you assess your policies and practices for compliance.

The attorneys and HR professionals at Lake Effect can provide guidance on employment-related Executive actions, employment laws, regulations, and agency guidelines. We continue to monitor important legal and HR developments, as well as other information that could impact the workplace. Please watch our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.

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Presidential Executive Orders Reject Gender Ideology and Illegal DEI Programs

admin — Fri, 14 Feb 2025 14:16:56 +0000

On January 20, 2025, President Trump issued Executive Order 4168: Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government. The Order announces the policy of the United States to recognize two sexes, male and female. It specifies that “‘[s]ex’’ is not a synonym for and does not include the concept of ‘gender identity.’” The Order further states that federal funds shall not be used to promote gender ideology, and “[e]ach agency shall assess grant conditions and grantee preferences and ensure grant funds do not promote gender ideology.”

On January 20, 2025, President Trump also issued Executive Order 14151: Ending Radical and Wasteful Government DEI Programs and Preferencing, which calls for the termination of illegal Diversity, Equity, Inclusion (“DEI”) mandates, policies, programs, preferences and activities in the federal government, under whatever name they appear. Among other things, the Order directs federal agency, commission, and department heads to identify federal contractors who have provided DEI training to federal employees and grantees who received federal funding to advance DEI programs, services, or activities since January 20, 2021. On January 21, 2025, President Trump issued Executive Order 14173: Ending Illegal Discrimination and Restoring Merit-Based Opportunity, which orders all federal agencies to enforce federal civil rights laws and combat illegal private sector DEI preferences, mandates, policies, programs, and activities. In addition to other measures, the Order directs the head of each federal agency to include in every contract or grant award a term requiring the recipient to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws. Agencies are further directed to identify publicly traded corporations, large non-profits, foundations, or associations for potential civil compliance investigations relating to illegal DEI discrimination or preferences.

We expect federal agencies to issue additional, more detailed guidance interpreting and implementing these Executive Orders. The Orders may also face legal challenges. In the meantime, federal contractors, federal grant and/or funding recipients, and private sector organizations should consider how their current employment policies and practices, including the contents of employee handbooks and trainings, may be impacted by these Executive Orders. Organizations are well-advised to begin reviewing their policies and practices in consultation with experienced employment law counsel and human resources advisors. Employer responses to these Orders should be tailored based on corporate and regulatory status, funding sources, and industry. Your partners at Lake Effect are here to answer your questions and discuss potential implications of these recent Orders.

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DOL Final Rule Blocked: No Salary Level Increase for January 1, 2025

admin — Mon, 18 Nov 2024 15:30:42 +0000

Late last week, a federal court in Texas struck down the U.S. Department of Labor’s Final Rule which was set to require a second increase in the salary level on January 1, 2025. Please see Lake Effect’s June 27, 2024, June 2, 2024, and April 24, 2024 blogs on the Final Rule which had already mandated an initial salary level increase effective July 1, 2024.

With this decision, the federal court rendered all elements of the Final Rule null and void: the July 1, 2024 salary level increase, the January 1, 2025 salary level increase, and planned future increases for both. In explaining the decision, the court noted that the DOL exceeded its authority by “effectively displac[ing] the FLSA’s [exemption] duties test with a predominate – if not exclusive – salary-level test.”

What does this mean for employers?

Employers no longer need to increase exempt employees’ salary levels to meet the second threshold increase to $1,128 per week ($58,656 per year) effective January 1, 2025. This decision is well-timed, as many organizations are finalizing their 2025 budgets right now. Of note, this also means that the July 1, 2024 increases were not required.

Lake Effect is here to answer questions you may have regarding this decision and its impact on your compensation structure and budget.

The attorneys and HR professionals at Lake Effect can provide guidance on all employment laws, regulations, and agency guidelines. We continue to monitor important legal and HR developments, as well as other information that could impact the workplace. Please watch our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.

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NLRB Targets Non-Compete and “Stay-or-Pay” Provisions

admin — Mon, 11 Nov 2024 14:30:05 +0000

Employers should take a fresh look at noncompete agreements and provisions requiring non-supervisory employees to repay funds upon termination (such as training or educational repayment contracts and sign-on bonuses) in light of recent NLRB memoranda on these issues. Although the FTC’s attempted nationwide ban on noncompetes was blocked by a Texas federal judge in August 2024, that decision has no impact on the NLRB enforcement of employee rights under the NLRA.

On October 7, 2024, NLRB General Counsel Jennifer Abruzzo issued Memorandum GC 25-01. In that Memorandum, Abruzzo reiterates that typical employee noncompete agreements violate the National Labor Relations Act (NLRA), regardless of whether employers attempt to enforce them (See Lake Effect's prior blog for a complete discussion of the NLRB’s approach to this issue). GC Abruzzo’s Memorandum GC 25-01 also announces that if the NLRB finds that an employer maintained an unlawful noncompete, simply rescinding the agreement will not be enough. Rather, the NLRB will impose expansive remedies to compensate the affected worker. Such remedies may include economic damages for lost or foregone job opportunities, costs related to retraining efforts, and expenses incurred in moving outside of a restricted geographic area.

In addition, GC Abruzzo’s Memorandum GC 25-01 asserts a new NLRB position that “stay-or-pay” provisions, such as training repayment contracts, quit fees, sign-on bonuses, and other types of cash payments tied to a mandatory stay period for non-supervisory employees are presumed to violate Section 7 of the NLRA. The presumption applies to any contract under which an employee must pay their employer if they separate from employment, whether voluntarily or involuntarily, within a certain time frame. An employer can only rebut this presumption of unlawfulness by proving that the provision (1) was voluntarily entered into in exchange for a benefit; (2) has a reasonable and specific repayment amount; (3) has a reasonable “stay” period; and (4) does not require repayment if the employee is terminated without cause. NLRB-ordered remedies for unlawful “stay-or-pay” provisions will vary based upon the facts, but they may include rescission of the unlawful provision, erasure of employee debt, repayment to the employee of payments already made to the employer, and compensation for other job opportunities that an employee passed up because of the unlawful stay provision.

Finally, Memorandum GC 25-01 confirms that the NLRB will prosecute preexisting stay-or-pay arrangements that fail to meet the above requirements. However, employers have a 60-day window starting on October 7, 2024, to cure preexisting provisions that advance legitimate business interests.
For advice on noncompete agreements and pay-back provisions, reach out to your partners at Lake Effect before the cure period ends on December 6, 2024. We can help ensure compliance with applicable NLRB guidance and other applicable laws relating to a broad range of employment agreements.

Lake Effect is here to answer all your questions about employment laws, regulations, and agency guidelines. We continue to monitor important legal and HR developments, as well as other information that could impact the workplace. Please watch our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.

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