Year in Review – Employment Law
As we enter 2026, Sullivan & Cromwell's Employment Law Group is pleased to offer a review of issues of importance we covered during the past year.
We continue to monitor and report on the changing landscape of laws and regulations affecting the workplace to keep clients informed. We hope you find this review helpful and welcome any questions you may have on our practice and developments in areas of significance to employers.
Diversity, Equity & Inclusion in an Evolving Legal Landscape
Against a backdrop of heightened scrutiny, employers continue to reassess diversity, equity, and inclusion initiatives within an evolving regulatory environment. We are closely tracking judicial, legislative, and enforcement activity relevant to workplace DEI policies, with an emphasis on practical implications for organizations seeking to navigate uncertainty and mitigate risk. For information about a live program discussing recent developments in this area, please contact us at correamaynarda@sullcrom.com.
Federal Policy Changes Affecting DEI Enforcement
Department of Justice Eliminates Title VI Disparate Impact Regulations
The Department of Justice issued a final rule (“Final Rule”) that rescinds the Department’s existing disparate impact liability regulations under Title VI of the Civil Rights Act of 1964. The change follows the President’s Executive Order to “Eliminate the use of disparate-impact liability in all contexts to the maximum degree possible.” Memo Link
DOJ Expands Views on Unlawful DEI
The Department of Justice issued guidance on the application of federal civil rights laws to entities receiving federal funds. Memo Link
EEOC Opens EEO-1 Data Collection and Cautions Employers There Is No “Diversity Exception” to Title VII
The Civil Rights Division announced it had terminated a 1981 court-ordered consent degree in Luevano v. Ezell stating that the decree “limited the hiring practices of the federal government based on flawed and outdated theories of diversity, equity, and inclusion.”
Blog Post Link
DOJ Announces Establishment of a Civil Rights Fraud Initiative That Will Aggressively Use the False Claims Act to Address Anti-Semitism and “Divisive” DEI Policies
The Department of Justice released a memorandum announcing the establishment of a Civil Rights Fraud Initiative that will “vigorous[ly]” enforce the False Claims Act (“FCA”) against federal fund recipients that knowingly violate the civil rights laws by allowing antisemitism or promoting “divisive DEI policies.” The memorandum also strongly encourages whistleblowers to file claims under the FCA against federal contractors that are believed to have engaged in civil rights violations, or to report that information to federal authorities. Blog Post Link
Recent Developments in False Claims Act Cases
In this episode of S&C’s Critical Insights, Annie Ostrager and Kamil Shields, discuss recent developments in False Claims Act (FCA) cases. The discussion includes recent court actions and the administration’s emphasis on investigating and penalizing illegal DEI practices in the private sector. Listen Here
Federal District Court Enjoins DOL Implementation of Federal Contractor DEI Certification Requirement
The U.S. District Court for the Northern District of Illinois issued a preliminary injunction enjoining the U.S. Department of Labor (“DOL”) from implementing certain provisions of President Trump’s January 20 and January 21 Executive Orders related to diversity, equity, inclusion, and accessibility (“DEI” or “DEIA”) on First Amendment and separation of powers grounds.
Blog Post Link
Justice Department Intervenes in a Lawsuit that Takes Aim at Illinois Law Requiring Nonprofits to Disclose Director and Officer Demographic Information
Attorney General Pam Bondi moved to intervene in a lawsuit that challenges an Illinois law requiring nonprofits to disclose their officers’ and directors’ demographic information. In March 2025, the district court granted the Justice Department’s motion. Blog Post Link
EEOC and DOJ Issue Technical Assistance Documents on DEI-Related Discrimination in the Workplace
The Equal Employment Opportunity Commission and Department of Justice recently issued two technical assistance documents addressing the agencies’ views as to what DEI practices in the workplace may be illegal. Memo Link
Department of Education Announces Investigations at Over 50 Universities For Alleged Use of Racial Preferences
The U.S. Department of Education announced 52 investigations into universities for the alleged use of racial preferences and stereotypes in potential violation of Title VI of the Civil Rights Act of 1964. Blog Post Link
America First Legal Requests Federal Investigations Into DEI Practices
America First Legal sent a letter to the U.S. Department of Labor and the U.S. Office of Federal Contract Compliance Programs (“OFCCP”) requesting that they conduct “investigations of open and notorious prohibited discrimination” at more than eight named federal contractors.
Blog Post Link
Federal Government Drops Consideration of DEI Policies in Federal Contract Awards
The U.S. General Services Administration (“GSA”) announced that it had issued two deviations to the Federal Acquisition Regulations (“FAR”) and procurement practices. With these deviations, federal agencies will no longer consider companies’ diversity, equity and inclusion (“DEI”) practices when awarding federal contracts for goods and services.
Blog Post Link
Federal Agencies Begin to Implement and Expand on DEI Executive Orders
The Department of Justice and U.S. Office of Personnel Management (“OPM”) issued internal memoranda that began to implement President Trump’s January 2025 Executive Orders related to diversity, equity, inclusion, and accessibility (“DEI” or “DEIA”) programs.
Memo Link
President Trump Acts to Roll Back DEI Initiatives
President Trump has taken swift and significant actions to roll back DEI programs and initiatives through executive orders. Memo Link
New York City Bill 982-A and Bill 984-A
New York City To Require Large Employers To Disclose Race and Gender Pay Data
On December 4, 2025, the New York City Council overrode Mayor Adams’s vetoes of two new laws—Bill 982-A and Bill 984-A—which require employers with 200 or more employees to report pay data by race and gender. Employers must submit this information to a designated City agency once a standardized reporting form is developed, and certify the accuracy of the data, with penalties for non-compliance ranging from $1,000 to $5,000.
The City will use the collected data to identify pay disparities and occupational segregation trends, and issue recommendations for employer action plans to address any gaps. Data will be published in aggregate form, protecting individual employer and employee identities. Employers are advised to review internal reporting systems and consider conducting any pay equity analyses to prepare for the upcoming requirements. Blog Post Link
Adapting to Changes in Trade Secret and Non-Compete Rules and Regulations
In 2025, restrictive covenants shifted as federal action slowed, while state-level regulations and opportunities evolved rapidly, creating a complex environment for employers.
FTC Moves to Dismiss Its Appeal of Non-Compete Rule, but Makes Clear Its Intent to Address Illegal Non-Competes in Enforcement Actions
The Federal Trade Commission (“FTC”) moved to dismiss its appeal of a Texas federal court decision holding that the FTC’s 2024 final rule banning most non-compete agreements was unlawful and exceeded the FTC’s rulemaking authority. Blog Post Link
Employer’s Failure to Require Confidentiality Agreements Leads to Dismissal of Trade Secret Claims
The U.S. District Court for the Eastern District of New York dismissed an employer’s trade secret and fraud claims, finding that the employer and related entities had not sufficiently pleaded facts sufficient to show that they took reasonable efforts to protect their alleged trade secrets.
Blog Post Link
Non-Compete Uncertainty Means Employers May Consider Alternatives
Annie Ostrager and associate Will Wolfe co-authored an article for Bloomberg Law on the evolving non-compete landscape at the national and state levels in the U.S.
Article Link
Employer Best Practices for Handling Confidential Information in the Context of Employee Departures
It is more important than ever for employers to handle employee departures with care. Employers can take steps to protect confidential information and trade secrets post-employment. Blog Post Link
Proposed Florida Law Would Allow Expansive Non-Compete and Garden Leave Clauses
The Florida legislature passed non-compete legislation that will permit, among other things, non-compete and garden leave clauses of up to four years in duration. Blog Post Link
NDAs May Provide Notice to Employees that Covered Information Is a Trade Secret
The U.S. District Court for the District of Colorado granted a motion for a preliminary injunction, clarifying that, in Colorado, the inclusion of a confidentiality provision in an employment agreement provides notice to an employee that the covered information is a trade secret.
Blog Post Link
Trade Secrets: A Five-Part Podcast Series on Legal Issues and Strategy
In this five-part S&C Critical Insights series, Annie Ostrager, Alex Gross and associate Sabrina Solow discuss a range of trade secret issues and strategies. Listen Here
Senate Bill S4641
New York Senate Passes Bill that Would Prohibit Most Non-Compete Agreements
On June 9, 2025, the New York Senate passed Senate Bill S4641, which, if enacted, would amend New York labor law to prospectively prohibit most non-compete agreements. Having passed the Senate, the Bill is now with the Assembly Labor Committee. If it is approved by the Labor Committee, it will go to the full Assembly for a vote. Blog Post Link
The Future of Whistleblower Policies
As regulatory attention to employment-related whistleblower protections continues to intensify, employers are closely evaluating workplace agreements, policies, and compliance practices. S&C continues to monitor enforcement activity, investigations and industry trends that affect whistleblower protections.
A Five-Part Podcast Series on Whistleblowing Developments
In this five-part S&C Critical Insight podcast series, Annie Ostrager, Kamil Shields and associate Sabrina Solow are joined by S&C partners to discuss a range of whistleblowing developments. S&C partners Kyle Mach, Nic Bourtin and Mehdi Ansari participated in this series as guest speakers. Listen Here
Second Circuit Confirms Whistleblower Activity Must Have Causal Relationship With Termination Decision For Sarbanes-Oxley Retaliation Claims
The U.S. Court of Appeals for the Second Circuit issued a decision in Murray v. UBS Securities, LLC finding that, for Sarbanes-Oxley whistleblower retaliation claims, a whistleblower’s activity must “actually cause or help cause the termination decision.” Blog Post Link
Supreme Court Activity
In 2025, the Supreme Court issued a number of decisions that will reshape workplace policies for years to come. S&C has kept employers and HR professionals up to date on the scale of these decisions and their impact through our blog posts and client memos.
Supreme Court to Clarify Which Workers Can Avoid Arbitration
On October 20, 2025, the Supreme Court granted certiorari in Flowers Foods, Inc. v. Brock to decide whether local “last-mile” delivery drivers who never cross state lines themselves, but who deliver products that have traveled in interstate commerce, are covered by the Federal Arbitration Act’s (“FAA”) exemption for transportation workers. Blog Post Link
Supreme Court Upholds Tennessee Law Restricting Gender-Affirming Care for Minors and Concludes Its Ruling Does Not Bear on Employment-Related Precedent
On June 18, 2025, the Supreme Court affirmed the Sixth Circuit in United States v. Skrmetti, finding that a Tennessee law prohibiting certain medical treatments for transgender minors did not violate the Equal Protection Clause of the Fourteenth Amendment. The Court’s ruling marks a significant development in the ongoing legal and political battles over transgender rights and state healthcare regulation. Blog Post Link
Supreme Court Lowers Bar for ERISA Prohibited-Transactions Claims
On April 17, 2025, the Supreme Court decided in Cunningham v. Cornell University, unanimously holding that an ERISA plaintiff may pursue a prohibited-transaction claim without addressing at the pleading stage the statutory exemptions that would defeat its claim because those exemptions are affirmative defenses that defendants bear the burden of pleading and proving. Memo Link
Supreme Court Appears Poised to Lower Bar for “Reverse Discrimination” Claims
On February 26, 2025, the Supreme Court heard oral argument in Ames v. Ohio Department of Youth Services, to address the question of whether a majority-group plaintiff must show additional “background circumstances” to support a discrimination claim under Title VII, beyond what a minority-group plaintiff must show. Blog Post Link
The Changing Employment Landscape: EEOC, NLRB, DOL, Title VII and ERISA Updates
- EEOC and NLRB:
- DOL:
- Title VII:
- ERISA:
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Events and Resources
Navigating the Future of Employment Law
On August 12, 2025, S&C’s Employment Law Group co-heads Julia Jordan, Tracy Richelle High, Diane McGimsey and Annie Ostrager examined key developments impacting employers, including the DEI landscape; non-compete agreements; Equal Employment Opportunity Commission developments; whistleblower protections; and independent contractor classification.
CLE Credit: California MCLE General 1.00, England & Wales CPD 1.00, New York CLE PP/PM 1.00.
A recording of this program is available. To receive CLE credit for watching it, please note all announced codes during the presentation and complete our on-demand CLE form.
Additional CLE Resources
Keeping your team up to date on the latest developments that matter to your business is of chief importance to S&C. In addition to the programs noted above, we would be happy to provide trainings on topics or issues that may be of interest, at no cost. For information about a tailored program discussing recent employment-related developments, please contact us at correamaynarda@sullcrom.com
2025 Rankings & Recognitions
Sullivan & Cromwell’s Employment Law Group was recognized for its excellence in 2025 by leading industry publications.
S&C was ranked Band 1 by Chambers USA in its “New York – Labor & Employment: Highly Regarded” table, Tier 1 by U.S. News & World Report in its “Best Lawyers Best Law Firms” category for the Nationwide Litigation: Labor & Employment section and the New York City Litigation: Labor & Employment section, Tier 2 by Benchmark Litigation in its Labor & Employment – Nationwide table and Labor & Employment National Firm table.
Julie Jordan is ranked in Chambers USA: District of Columbia Labor & Employment, and was recognized as a Litigation Star and Top 50 Labor & Employment Litigator (National) by Benchmark Litigation.
Tracy Richelle High is ranked in Chambers USA: New York Labor & Employment, and was recognized as a Litigation Star by Benchmark Litigation.
Diane McGimsey was recognized as a Litigation Star by Benchmark Litigation.
Annie Ostrager is ranked in Chambers USA: New York Labor & Employment, and was recognized as a Future Star and Top 50 Labor & Employment Litigator by Benchmark Litigation.
We are grateful to our clients for their continued partnership and look forward to another year of collaboration and shared success in 2026.
Julia M. Jordan
Tracy Richelle High
Diane L. McGimsey
Ann-Elizabeth Ostrager
Co-Heads of Sullivan & Cromwell's Employment Law Group