Category: Administrative & Regulatory

IRS Announces 2025 Retirement Plan Limits

The Internal Revenue Service (“IRS”) has announced the following dollar limits applicable to tax-qualified plans for 2025:

  • The limit on the maximum amount of elective contributions that a person may make to a 401(k) plan, a 403(b) tax-sheltered annuity, or a 457(b) eligible deferred compensation plan increased from $23,000 to $23,500.
  • The limit on “catch-up contributions” to a 401(k) plan, a 403(b) tax-sheltered annuity, or a 457(b) eligible deferred compensation plan for persons age 50 and older is unchanged for 2025 at $7,500.
  • As a result of change made by SECURE 2.0, for 2025, employees aged 60, 61, 62, and 63 who participate in a 401(k) plan, a 403(b) tax-sheltered annuity, or a 457(b) eligible deferred compensation have a higher catch-up contribution limit, which for 2025 is $11,250 instead of $7,500.
  • The dollar limit on the maximum permissible allocation under 401(k) and other defined contribution plans is increased from $69,000 to $70,000.
  • The maximum annual benefit under a defined benefit plan is increased from $275,000 to $280,000.
  • The maximum amount of annual compensation that may be taken into account on behalf of any participant under a qualified plan will go from $345,000 to $350,000.
  • The dollar amount used to identify “highly compensated employees” is increased from $155,000 to $160,000.

Additional information regarding benefit plan dollar limits can be obtained in Notice 2024-80, 2025 Amounts Relating to Retirement Plans and IRAs, as Adjusted for Changes in Cost-of-Living.

© 2024 Blank Rome LLP
For more on the IRS, visit the NLR Tax section

Office Politics: The Basics for Private Employers

In case you haven’t noticed the yard signs popping up like mushrooms, the constant barrage of television and radio advertisements, or the unsolicited text messages from unknown numbers, we are in the homestretch of election season. For those employers with questions on how to handle political speech in the workplace, especially during the last few days before (and hopefully not much beyond) Election Day, here is a refresher on the basics for private employers.

The First Amendment to the U.S. Constitution prevents the government from enacting laws to prohibit the free exercise of speech and assembly, among other liberties. It does not apply to private employers. Where there is no state action involved, there is no unfettered right to free speech in a private place of employment. Quite simply, a private employer can enact rules to keep political expression from its workplace. Some employers prohibit political speech in the workplace to avoid potential disruptions to business operations, customer relations, or employee morale.

If an employer adopts a policy concerning political expression and messaging, it must do so fairly and consistently, and it should be inclusive and consistent to avoid the perception of favoritism or discrimination. In other words, if an employer requires Meghan to remove her Kamala button, it should also direct Dennis not to wear his Trump t-shirt. Remote workers are still “in the workplace” when they participate in virtual meetings, so there are no separate rules for them.

When enacting rules about political expression and messaging in the workplace, private employers should of course remain aware of the National Labor Relations Act (NLRA), which applies to both union and non-union settings, and among other things protects employees’ ability to engage in concerted activity or to discuss the terms and conditions of their employment. Therefore, private employers must be mindful of a potential nexus or overlap between employees’ political speech and discussion of working conditions. Under the NLRA, for instance, employees may distribute information during non-working time about a candidate’s stance on a particular issue that may also constitute a complaint about the employees’ working conditions.

© Copyright Babst, Calland, Clements and Zomnir, P.C.
For more on Political Speech, visit the NLR Constitutional Law section.

Lawsuit Challenges CFPB’s ‘Buy Now, Pay Later’ Rule

On Oct. 18, 2024, fintech trade group Financial Technology Association (FTA) filed a lawsuit challenging the Consumer Financial Protection Bureau’s (CFPB) final interpretative rule on “Buy Now, Pay Later” (BNPL) products. Released in May 2024, the CFPB’s interpretative rule classifies BNPL products as “credit cards” and their providers as “card issuers” and “creditors” for purposes of the Truth in Lending Act (TILA) and Regulation Z.

The FTA filed its lawsuit challenging the CFPB’s interpretative rule in the U.S. District Court for the District of Columbia. The FTA alleges that the CFPB violated the Administrative Procedure Act’s (APA) notice-and-comment requirements by imposing new obligations on BNPL providers under the label of an “interpretive rule.” The FTA also alleges that the CFPB violated the APA’s requirement that agencies act within their statutory authority by ignoring TILA’s effective-date requirement for new disclosure requirements and imposing obligations beyond those permitted by TILA. The FTA also contends that the CFPB’s interpretive rule is arbitrary and capricious because it is “a poor fit for BNPL products,” grants “insufficient time for BNPL providers to come into compliance with the new obligations” imposed by the rule, and neglects “the serious reliance interests that [the CFPB’s] prior policy on BNPL products engendered.”

In a press release announcing its lawsuit, the FTA said the BNPL industry would welcome regulations that fit the unique characteristics of BNPL products, but that the CFPB’s interpretive rule is a poor fit that risks creating confusion for consumers. “Unfortunately, the CFPB’s rushed interpretive rule falls short on multiple counts, oversteps legal bounds, and risks creating confusion for consumers,” FTA President and CEO Penny Lee said. “The CFPB is seeking to fundamentally change the regulatory treatment of pay-in-four BNPL products without adhering to required rulemaking procedures, in excess of its statutory authority, and in an unreasonable manner.”

The FTA’s pending lawsuit notwithstanding, BNPL providers may wish to consult with legal counsel regarding compliance with the CFPB’s interpretive rule. Retailers marketing BNPL products should also consider working with legal counsel to implement third-party vendor oversight policies to enhance BNPL-partner compliance with the rule.

©2024 Greenberg Traurig, LLP. All rights reserved.
For more on the CFPB, visit the NLR Financial Institutions Banking section.

2025 Inflation-Adjusted Plan Limits

On Nov. 1, 2024, the IRS published its annual cost of living adjustments for various retirement plan limits. These increases are more modest than recent years, a reflection that inflation is slowing. The updated key retirement plan limits include the following items:

2025 Limit 2024 Limit
Annual Compensation Limit $350,000 $345,000
Elective Deferral Limit $23,500 $23,000
Standard Age 50 Catch-Up Contribution Limit $7,500 $7,500
Age 60-63 Special Catch-Up Contribution Limit* $11,250 N/A
DC Maximum Contribution Limit $70,000 $69,000
DB Maximum Benefit Limit $280,000 $275,000
HCE Threshold $160,000 $155,000

*Note, this is a new provision under the SECURE 2.0 Act.

The IRS previously released the updated 2025 limits applicable to certain health and welfare plans, including the following key limits:

2025 Limit 2024 Limit
Health FSA – Maximum contributions $3,300 $3,200
Health FSA – Maximum carryover of unused amounts (optional plan provision) $660 $640
HSA – maximum contributions $4,300 (self-only)

$8,550 (family)

 $4,150 (self-only)

$8,300 (family)
HDHP – Minimum Deductible $1,650 (self-only)

$3,300 (family)

 $1,600 (self-only)

$3,200 (family)
HDHP – Maximum Out of Pocket $8,300 (self-only)

$16,600 (family)

 $8,050 (self-only)

$16,100 (family)
© 2024 Miller, Canfield, Paddock and Stone PLC
For more on Plan Limits, visit the NLR Estates Trusts section.

We Had an Agreement as to Value, But Ignored It. Now What?

Quite often a shareholders’ agreement or operating agreement will contain a provision establishing the company’s value in the event of a buyout of one of the owners.  Sometimes the agreement requires a valuation to be performed at the end of every year – possibly by the company accountant – and may even set forth a formula that is to be followed annually, or at least utilized as a guideline. Many small companies, of course, are run in such a way that it is  not surprising in the slightest that this yearly valuation is often not done. In fact, I can count on one hand the number of companies that I have seen actually follow this mandate to value itself yearly.

So, what happens when there is now conflict among the owners? One of them wants to leave, and the other owners would rather let him go than get involved in costly business divorce litigation. Sometimes the only dispute in such a case comes down to the dollars, not whether there will be a departure. Likewise, the majority owners may want a minority owner to leave who also doesn’t have the stomach for a fight. The shareholder’s agreement may have a formula set forth – from 20 years ago – as to how to value the company. But the called-for annual valuation was never done. Or, it was done for 3 years, and then it stopped. How does the company get valued now?

There is no single right answer to this question, unfortunately. What a court might do is likely going to be very fact dependent. If all the owners were aware of the obligation to value the company annually and they all ignored it, a judge may deem the requirement to have been effectively “written out” of the agreement. But what if you were a minority owner who had no ability to control whether the valuation was done and you complained in the early years about this provision being ignored? You certainly have a better argument, but you still failed to do anything formal to assert your right to be governed by such a valuation.

It also depends on the circumstances of the current buyout. If the departure is voluntary, then of course the parties are free to agree to have the valuation done now that was supposed to have occurred for the past 20 years. But if shareholder dispute litigation is in play, as a voluntary buyout seems not a viable option, then one can argue that the formula should not apply at all. If one is arguing for a buyout under the shareholder oppression statute, one may argue that “fair value” – the value set forth in the New Jersey statute that governs business divorce litigation – should apply. This is an especially powerful argument if the agreement contains a formula that does not yield a value as high as fair value. Why should majority shareholders be permitted to act improperly toward the minority and then be rewarded with a discounted value?

But, as with many things, there is no clear-cut answer that applies in all circumstances.  At least one judge in the past has determined that the parties’ agreement set forth the parties’ reasonable expectation as to value and applied it in an oppression setting. So, while there is no iron-clad answer, be sure you are represented by an experienced shareholder dispute attorney who understands the issues and can make the best argument for value possible for you.

©2024 Norris McLaughlin P.A., All Rights Reserved
For more on Business Agreements, visit the NLR Corporate Business Organizations section.

Affordable Care Act Proposed Rule Would Broaden Access to Over-the-Counter Contraception Without Cost Sharing

Employer-sponsored health plans would be required to cover over-the-counter contraception, including condoms and emergency contraception, without a prescription and without cost sharing under newly proposed Affordable Care Act (ACA) regulations

Quick Hits

  • Proposed rules issued by the DOL, HHS, and Treasury are designed to increase coverage for over-the-counter contraceptives, such as condoms, spermicides, and emergency contraception, without a prescription.
  • If finalized, the proposed rules would be the first time that male contraceptives will be covered under the ACA preventive care requirements.
  • The public has until December 27, 2024, to submit comments on the proposed rules.

Fully insured and self-insured health plans would have to cover every Food and Drug Administration (FDA)-approved contraceptive drug or drug-led combination product without cost sharing, unless the plan or insurer covers a therapeutic equivalent without cost sharing, under rules proposed by the U.S. Departments of Health and Human Services, Labor, and Treasury.

Employer-sponsored health plans and insurers also would have to tell participants that over-the-counter contraception without a prescription is covered at no cost, under the proposed rules published October 28, 2024, in the Federal Register.

The ACA requires most group health plans to cover preventive care at no cost to patients. Preventive care under the ACA includes FDA-approved contraceptives for women, such as birth control pills, injectable contraceptives, contraceptive patches, implantable rods, intrauterine devices, diaphragms, sponges, vaginal rings, emergency contraception medication, and sterilization procedures for women. In 2022, the Health Resources and Services Administration (HRSA) issued updated guidelines that define which healthcare services are considered preventive for women.

Without a prescription, over-the-counter products were not included in the ACA’s coverage requirement. The proposed rule would change that.

In guidance issued earlier this year, the departments noted that they are still identifying plans that are out of compliance with the contraceptive care requirements. Employers that violate the ACA mandate can be fined $100 for each day in the noncompliance period for each affected employee. At first, the ACA granted exemptions to churches and other religious organizations that hold instilling religious values as their purpose and primarily employ people who share their religious beliefs. The criteria to qualify for an exemption were broadened later. Without an exemption, nongovernmental employers can use a self-certification form to instruct their health insurer to exclude contraceptive coverage from the group health plan and provide payments to patients for contraceptive services separate from the health plan.

In July 2020, the Supreme Court of the United States ruled that private employers with religious or moral objections can be exempt from the contraceptive mandate.

Seven states—California, Colorado, Maryland, New Jersey, New Mexico, New York, and Washington—already have laws requiring state-regulated health insurance policies to cover certain over-the-counter contraceptives without a prescription and without cost sharing.

Next Steps

Employers may want to review the coverage of contraceptives under their medical plans both to ensure that no improper restrictions are put on them currently and also to clarify how their coverage would need to expand if these proposed rules became final in a substantially similar form.

This article was co-authored by Leah J. Shepherd, who is a writer in Ogletree Deakins’ Washington, D.C., office.

© 2024, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.
For more news on ACA OTC Contraception Regulations, visit the NLR Health Law & Managed Care section.

Federal Contractors Beware – More Data Disclosures Coming!

On October 29, 2024, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) published a Freedom of Information Act (FOIA) notice, inviting federal contractors to respond to FOIA requests that the OFCCP received related to federal contractors’ 2021 Type 2 EEO-1 Consolidated Reports. These reports, required of federal contractors and subcontractors with at least 50 employees, contain data critical to the government’s diversity efforts consistent with anti-discrimination mandates under Title VII and Executive Order 11246. Contractors have previously relied on FOIA Exemption 4 to protect against disclosing sensitive commercial information that could impact competitive positioning, but in late December 2023 as previously reported here, a federal court ruling concluded that certain demographic data did not qualify as confidential under FOIA Exemption 4. That court decision may spur an increase in FOIA requests for EEO-1 reporting information.

Contractors who wish to object to the disclosure of their EEO-1 reporting information must do so via OFCCP’s online portal, email, or mail on or before December 9, 2024. Per the OFCCP’s notice, contractors can object to releasing their 2021 EEO-1 Type 2 data by providing evidence showing the data satisfies FOIA Exemption 4. To do this, contractors should:

  • Specifically identify the objectionable data;
  • Explain why this data is commercial or competitive to render it confidential;
  • Outline the processes the contractor has in place to safeguard the data;
  • Identify any prior assurances or expectations that the data would remain confidential; and
  • Detail the damage that would occur if the data were disclosed by conducting assessments to see how disclosure would impact business operations.

In addition to raising timely objections to disclosure of data, contractors should also implement clear policies to maintain a consistent approach to data confidentiality. Specifically, contractors should be thoughtful and consistent as to how they define confidential information and the protection measures they take related to such information.

FOIA requests and court decisions in this space will likely continue to make striking a balance between government transparency and protecting contractors’ confidential business information more difficult. To navigate these changes, federal contractors should remain vigilant by staying informed, preparing objections to FOIA requests, and consulting with legal counsel to ensure compliance with this evolving area of law.

Copyright © 2024, Hunton Andrews Kurth LLP. All Rights Reserved.
For more on Federal Contractors, visit the NLR Government Contracts Maritime Military section.

Social Media’s Legal Dilemma: Curated Harmful Content

Walking the Line Between Immunity and Liability: How Social Media Platforms May Be Liable for Harmful Content Specifically Curated for Users

As proliferation of harmful content online has increasingly become easier and more accessible through social media, review websites and other online public forums, businesses and politicians have pushed to reform and limit the sweeping protections afforded by Section 230 of the Communications Decency Act, which is said to have created the Internet. Congress enacted Section 230 of the Communications Decency Act of 1996 “for two basic policy reasons: to promote the free exchange of information and ideas over the Internet and to encourage voluntary monitoring for offensive or obscene material.” Congress intended for internet to flourish and the goal of Section 230 was to promote the unhindered development of internet businesses, services, and platforms.

To that end Section 230 immunizes online services providers and interactive computer services from liability for posting, re-publishing, or allowing public access to offensive, damaging, or defamatory information or statements created by a third party. Specifically, Section 230(c)(1) provides,

No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.

[47 U.S.C. § 230(c)(1)]

Section 230 has been widely interpreted to protect online platforms from being held liable for user-generated content, thereby promoting the free exchange of information and ideas over the Internet. See, e.g., Hassell v. Bird, 5 Cal. 5th 522 (2018) (Yelp not liable for defamatory reviews posted on its platform and cannot be forced to remove them); Doe II v. MySpace Inc., 175 Cal. App.4th 561, 567–575 (2009) (§ 230 immunity applies to tort claims against a social networking website, brought by minors who claimed that they had been assaulted by adults they met on that website]; Delfino v. Agilent Technologies, Inc., 145 Cal. App.4th 790, 804–808 (2006) (§ 230 immunity applies to tort claims against an employer that operated an internal computer network used by an employee to allegedly communicate threats against the plaintiff]; Gentry v. eBay, Inc., 99 Cal. App. 4th 816, 826-36 (Cal. Ct. App. 2002) (§ 230 immunity applies to tort and statutory claims against an auction website, brought by plaintiffs who allegedly purchased forgeries from third party sellers on the website).

Thus, under § 230, lawsuits seeking to hold a service provider liable for its exercise of a publisher’s traditional editorial functions—such as deciding whether to publish, withdraw, postpone or alter content—are barred. Under the statutory scheme, an “interactive computer service” qualifies for immunity so long as it does not also function as an “information content provider” for the portion of the statement or publication at issue. Even users or platforms that “re-post” or “publish” allegedly defamatory or damaging content created by a third-party are exempted from liability. See Barrett v. Rosenthal, 40 Cal. 4th 33, 62 (2006). Additionally, merely compiling false and/or misleading content created by others or otherwise providing a structured forum for dissemination and use of that information is not enough to confer liability. See, e.g. eBay, Inc. 99 Cal. App. 4th 816 (the critical issue is whether eBay acted as an information content provider with respect to the information claimed to be false or misleading); Carafano v. Metrosplash.com, Inc., 339 F.3d 1119, 1122-1124 (9th Cir. 2003) (Matchmaker.com not liable for fake dating profile of celebrity who started receiving sexual and threatening emails and voicemails).

Recently, however, the Third Circuit appellate court found that Section 230 did not immunize and protect popular social media platform TikTok from suit arising from a ten-year old’s death following her attempting a “Blackout Challenge” based on videos she watched on her TikTok “For You Page.” See Anderson v. TikTok, Inc., 116 F.4th 180 (3rd Cir. 2024). TikTok is a social media platform where users can create, post, and view videos. Users can search for specific content or watch videos recommended by TikTok’s algorithm on their “For You Page” (FYP). This algorithm customizes video suggestions based on a range of factors, including a user’s age, demographics, interactions, and other metadata—not solely on direct user inputs. Some videos on TikTok’s FYP are “challenges” that encourage users to replicate the actions shown. One such video, the “Blackout Challenge,” urged users to choke themselves until passing out. TikTok’s algorithm recommended this video to a ten-year old girl who attempted it and tragically died from asphyxiation.

The deciding question was whether TikTok’s algorithm, and the inclusion of the “Blackout Challenge” video on a user’s FYP, crosses the threshold between an immune publisher and a liable creator. Plaintiff argued that TikTok’s algorithm “amalgamat[es] [] third-party videos,” which results in “an expressive product” that “communicates to users . . . that the curated stream of videos will be interesting to them.” The Third Circuit agreed finding that a platform’s algorithm reflecting “editorial judgments” about “compiling the third-party speech it wants in the way it wants” is the platform’s own “expressive product,” and therefore, TikTok’s algorithm, which recommended the Blackout Challenge on decedent’s FYP, was TikTok’s own “expressive activity.” As such, Section 230 did not bar claims against TikTok arising from TikTok’s recommendations via its FYP algorithm because Section 230 immunizes only information “provided by another,” and here, the claims concerned TikTok’s own expressive activity.

The Court was careful to note its conclusion was reached specifically due to TikTok’s promotion of the Blackout Challenge video on decedent’s FYP was not contingent on any specific user input, i.e. decedent did not search for and view the Blackout Video through TikTok’s search function. TikTok has certainly taken issue with the Court’s ruling contending that if websites lose § 230 protection whenever they exercise “editorial judgment” over the third-party content on their services, then the exception would swallow the rule. Perhaps websites seeking to avoid liability will refuse to sort, filter, categorize, curate, or take down any content, which may result in unfiltered and randomly placed objectionable material on the Internet. On the other hand, some websites may err on the side of removing any potentially harmful third-party speech, which would chill the proliferation of free expression on the web.

The aftermath of the ruling remains to be seen but for now social media platforms and interactive websites should take note and re-evaluate the purpose, scope, and mechanics of their user-engagement algorithms.

COPYRIGHT © 2024, STARK & STARK
For more on Social Media, visit the NLR Communications Media Internet section.

FDA Partners With Purdue University to Study Salmonella Risks

  • FDA has partnered with Purdue University and Indiana produce industry stakeholders to launch an environmental microbiology study to better understand the ecology of human pathogens, focusing on assessing risks related to Salmonella in the environment. The study is intended to develop a better understanding of the source of pathogens, their persistence, and how they transfer through the growing environment to ultimately help inform food safety practices.
  • The study is in response to outbreaks of Salmonella linked to cantaloupe grown in the Southwest Indiana agricultural region where a specific source or route of contamination was not found. The identification of other Salmonella varieties that were genetically similar to other isolates collected in the region over the last decade suggests that Salmonella is a reoccurring issue and that multiple reservoirs for Salmonella spp. may exist. According to FDA, “[t]he outbreak investigations have shown that there are complex environmental survival, proliferation, and dispersal mechanisms of pathogens in this region that need to be better understood.”
  • Researchers will sample air, soil, water, and animal scat, as well as collect weather data, to better understand what environmental conditions may encourage the survival, growth, and spread of pathogens. The study will occur at a farm in central Indiana, four Purdue-operated farms in northwest Indiana, and the Southwest Purdue Ag Center.
  • Indiana ranks sixth in U.S. cantaloupe production, according to USDA data from 2018 when Indiana growers planted 1,800 acres of cantaloupe worth $8.6 million. Growers “want to participate in this study because of their commitment to do everything they can to keep their produce as safe as possible.”
© 2024 Keller and Heckman LLP
For more on the FDA, visit the NLR Biotech Food Drug section.

It’s Election Time: Time Off to Vote, Political Activities, and Political Speech in the Workplace

With Election Day quickly approaching, it is the right time for employers to refresh themselves on the various protections that may exist for their employees when it comes to voting and other political activities. Below is an overview of employees’ rights related to voting and other political activities leave, as well as protections for political speech and activity both in and outside the workplace.

Voting Leave Laws

Approximately thirty states require that employers provide their employees with some form of time off to vote. Twenty-one of these states require that the leave be paid. The exact contours of these laws – such as the amount of leave, notice requirements, and whether there is an exception when the employee has sufficient time outside of working hours to vote – vary by state. For example:

  • In New York, employers must provide leave to employees who do not have sufficient time outside of working hours to vote. An employee is deemed to have sufficient time to vote if the polls are open for four consecutive hours before or after the employee’s shift. Employees who do not have such a four-hour window are eligible to take the amount of leave that will – when added to their voting time outside working hours – enable them to vote, up to two hours of which must be without loss of pay. Employees may take time off for voting only at the beginning or end of their shift, as designated by the employer, unless otherwise mutually agreed to between the employee and employer. Employees are required to notify their employer that working time off to vote is needed between two and ten working days before the election.
  • Similarly, in California, employees are entitled to sufficient time off to vote, up to two hours of which must be paid. Unless the employer and employee agree otherwise, the employee must take the leave at the beginning or end of the employee’s shift, whichever allows the most time to vote and the least time off from work. Employees are required to provide notice that time off to vote is needed at least two working days before the election.
  • In the Washington, D.C., employees are entitled to up to two hours of paid leave to vote in either an election held in D.C. if the employee is eligible to vote in D.C., or in an election held in the jurisdiction in which the employee is eligible to vote. Employees must submit requests for leave a reasonable time in advance of the election date. Employers may specify the hours during which employees may take leave to vote, including requiring employees to vote during the early voting period or vote at the beginning or end of their shift during early voting or election day.
  • In Illinois, employers must provide two hours of paid voting leave to employees whose shifts begin less than two hours after the opening of the polls and end less than two hours before the closing of the polls. Employees must provide notice of the need for leave before the day of the election.
  • In Maryland, employees are entitled to up to two hours of paid voting leave, unless the employee has at least two non-working hours to vote while the polls are open. Employees must furnish proof to their employers that they either voted or attempted to vote, which can be in the form of a receipt issued by the State Board of Elections.

Certain states, includingNew York, California, and Washington, D.C., require that employers post a notice of an employee’s right to take leave in a conspicuous location before the election. Sample notices have been published by the New York State Board of Elections, the California Secretary of State, and D.C. Board of Elections.

Other Political Leave Laws

Some states require that employers provide leave for political-related reasons beyond just voting. For example:

  • Alabama, Delaware, Illinois, Kentucky, Nebraska, Ohio, Virginia, and Wisconsin require that certain employers provide unpaid leave for employees to serve as election judges or officials on Election Day. In Minnesota, employees are entitled to paid leave for this reason; however, employers may reduce an employee’s salary or wages by the amount the employee receives as compensation for their service as an election judge.
  • Minnesota and Texas require that certain employers provide employees with unpaid leave to attend party conventions and/or party committee meetings.
  • Connecticut, Iowa, Maine, Nevada, Oregon, South Dakota, and Vermont require that certain employers provide employees with an unpaid leave of absence to serve as elected members of state government. In Iowa, employees are also entitled to leave to serve in a municipal, county, or federal office.
  • In Vermont, employees may take unpaid leave to vote in annual town hall meetings.

Some of these laws only apply to larger employers. For example, in Nevada, employers with at least fifty employees are required to provide leave for employees to serve as members of the state legislature. State laws also vary with respect to the amount of notice that employees must provide to their employers in order to be eligible for leave.

Political Speech in the Workplace

In our current political climate, many employers are concerned with what steps they can take regarding political speech and activity in the workplace. When these discussions or activities occur during working hours, they have the potential to negatively impact performance, productivity, or even possibly cross the line into bullying or unlawful harassment.

When employees publicly attend political rallies or support causes on social media, they may also (intentionally or not) create an actual, or perceived, conflict of interest with their employer. The complicated question of what exactly employers can do around employee political speech and activity is governed by various sources of law, some of which is discussed below.

Additionally, for employers with designated tax statuses, certain political speech can give pose risk to an organization’s tax-exempt status. Many tax exempt-organizations are subject to significant restrictions on lobbying and political activities. For example, 501I(3) organizations risk losing their tax-exempt status if they engage in political campaign activities or if a substantial part of its activities involves lobbying. Speech by an employee that constitutes political campaign or lobbying activity risks being attributed to an organization if an employee’s speech is seen as representative of the organization and being ratified by the organization. For example, if an employee urges their social media followers to contact their state representative about proposed legislation, this risks carrying the inference that the employee was speaking on behalf of the organization.

Employee “Free Speech”

There is no general right to “free speech” in a private sector workplace. Because the U.S. Constitution is primarily concerned with state actors, the First Amendment does not prevent private employers from prohibiting or restricting political speech in the workplace. Therefore, subject to certain exceptions discussed below, private sector employers are generally able to enact prohibitions around discussing politics at work and discipline employees for violating such policies.

However, as noted, an employer’s ability to restrain political speech in the workplace comes with some restrictions. At the federal level, Section 7 of the National Labor Relations Act (“NLRA”), which applies to both unionized and non-union employees, protects certain “concerted activities” of employees for the purposes of “mutual aid or protection.” Political speech or activity that is unrelated to employment, such as an employee distributing pamphlets generally encouraging co-workers to vote for a candidate or support a political party, would not likely be covered or protected by the NLRA. The NLRA therefore does not universally prevent employers from prohibiting political discussions or activities in the workplace.

However, political speech may be protected by the NLRA when it relates to the terms or conditions of employment, such as communicating about wages, hours, workplace safety, company culture, leaves, and working conditions. Therefore, an employee encouraging co-workers to vote for a candidate because the candidate supports an increase in the minimum wage might claim to come under the protection of the NLRA.

State laws may also place certain limitations on employer attempts to restrict employee political speech. For example, Connecticut law prohibits employers from taking adverse action against employees for exercising their First Amendment rights, provided that such activity does not interfere with the employee’s job performance or the employment relationship.

Lawful Outside Activity/Off-Duty Conduct

Many states have laws that prohibit adverse action against employees based on lawful activities outside the workplace, which may include political activities. For example:

  • In approximately a dozen states, employers are prohibited from preventing employees from participating in politics or becoming candidates for public office. New York Labor Law § 201-d prohibits employers from discharging or otherwise discriminating against employees because of their “political activities outside of working hours, off of the employer’s premises and without use of the employer’s equipment or other property, if such activities are legal.” Political activities include (1) running for public office, (2) campaigning for a candidate for public office, or (3) participating in fund-raising activities for the benefit of a candidate, political party, or political advocacy group. Similar laws exist in California, Louisiana, and Minnesota, among other states.
  • Other states – including Delaware, Florida, Massachusetts, and New Jersey– prohibit employers from attempting to influence an employee’s vote in an election. In Florida, “[i]t is unlawful for any person … to discharge or threaten to discharge any employee … for voting or not voting in any election, state, county, or municipal, for any candidate or measure submitted to a vote of the people.” A dozen or so states approach this issue in a more limited fashion by prohibiting employers from attaching political messages to pay envelopes.
  • At least two states, Illinois and Michigan, prohibit employers from keeping a record of employee’s associations, political activities, publications, or communications without written consent.
  • Washington, D.C. prohibits discrimination in employment on the basis of political affiliation. Despite its seemingly broad scope, this statute has been interpreted to only protect political party membership and not (1) membership in a political group, or (2) other political activities, such as signing a petition.

These laws vary considerably from state to state, so it is important for employers to consult the laws when considering policies or rules around employee political activity.

* * *

As the election approaches and early voting takes place, employers should review the applicable laws for each jurisdiction in which they operate and ensure that their policies and practices are compliant. Employers should also ensure that managers are well versed in the employer’s policies around voting and political speech and activities so that they can properly respond as situations arise.

© 2024 Proskauer Rose LLP.
For more on Workplace Speech, visit the NLR Labor Employment section.