• States Lead on Workplace AI: With federal regulators slowing new rules, individual states are setting their own requirements for employers that use artificial intelligence (AI), creating a patchwork for multistate workforces.
• California’s Executive Order: Governor Gavin Newsom issued an executive order (EO) targeting AI-driven labor market disruption and directing state agencies to recommend updates to California’s Worker Adjustment and Retraining Notification (WARN) Act for AI-related mass layoffs.
• Connecticut’s New AI Law: Beginning October 1, 2027, employers must give written notice to applicants and employees when AI substantially influences a hiring, promotion, discipline, or termination decision.

In this episode of Employment Law This Week®, Epstein Becker Green attorneys Courtney McFate and Elizabeth S. Torkelsen break down two state actions shaping AI in the workplace: California Governor Newsom’s EO on labor protections in the age of AI, and Connecticut’s new transparency and nondiscrimination requirements for employers.

• Artificial Intelligence (AI) Conversations Are Not Privileged: In United States v. Heppner, a federal judge found that conversations with an AI tool are not privileged due to the tool's terms of service and privacy policy—a stark reminder that employers should not discuss active cases or employment matters with public AI tools.
• IT Company Fined for AI-Generated Job Postings: The U.S. Department of Justice imposed a nearly $10,000 fine on an IT company for posting AI-generated job advertisements that unlawfully excluded U.S. citizens—highlighting the need for employers to keep a human in the loop when using AI in hiring.
• Washington Bars Mandatory Employee Microchipping: Starting in mid-June 2026, Washington State will prohibit mandatory employee microchip implants, joining more than a dozen states that have banned the practice.
• Colorado Works to Repeal 2024 AI Law: A working group has proposed repealing and replacing Colorado's comprehensive AI law before its June 30, 2026, effective date, which would remove onerous compliance and reporting obligations on employers, including small businesses.

Employers face a rapidly evolving legal landscape in 2026. In this episode of Employment Law This Week®, Epstein Becker Green attorneys share their insights on the key challenges and opportunities businesses should prepare for in the year ahead.

Discover more predictions and practical guidance—watch the full episode now.

The General Court’s judgment in case T-553/23, Philippe Latombe v European Commission, confirms that “the United States ensured an adequate level of protection for personal data transferred from the European Union to organisations in that country,” the Court’s press release states. The General Court and the Court of Justice make up the Court of Justice of the European Union (CJEU).

This decision means that entities that have self-certified compliance with the DPF may, for now, continue to rely on that mechanism for personal data transfers to the United States from the European Union (EU). The self-certification process includes, for example, a description of an organization’s activities with regard to all personal data received from the European Union in reliance on the EU-U.S. DPF, the organization’s policies covering such data, the types of data processed and, if applicable, the type of third parties to which it discloses such personal information.

EO 14281 poses significant challenges for employers because it seeks to limit disparate impact liability but clashes with established state and local regulations and laws, such as New York City’s law regarding the use of automated employment decision tools. This tension underscores the increasing complexity of managing artificial intelligence (AI)-driven decision-making in the workplace amid shifting legal standards.

Dates to Begin Contributions and Use Leave Benefits

As we previously discussed, FAMLI will be funded through contributions from employees and employers with 15 or more employees. Although the Amendment does not alter FAMLI’s funding model, the required payroll deductions, previously scheduled to start on July 1, 2025, will now begin on January 1, 2027, and employers will remit the first payment to the state’s FAMLI trust fund in April 2027. The Maryland Secretary of Labor also now has until May 1, 2026, to set the contribution rates for 2027, and then until November 1st to designate the contribution rate for each subsequent calendar year.

We, along with several of our colleagues, already explained this EO, but this shift in federal policy—barely noticed by most people amidst myriad controversies, memes, and crypto schemes, as well as a number of other executive orders—is important enough to warrant further consideration by anyone who manages workplaces and those of us who advise employers about civil rights laws. As a cover story in the Sunday, May 11, 2025 issue of the New York Times observed, the EO’s directive to curtail the use of disparate impact liability is part of a larger effort to “purge the consideration of diversity, equity and inclusion, or D.E.I., from the federal government and every facet of American life. . . .” and focuses on “the nation’s bedrock civil rights law.”

The stated goal of the Memos is to promote a “forward-leaning, pro-innovation, and pro-competition mindset rather than pursuing the risk-adverse approach of the previous administration.” They aim to lift “unnecessary bureaucratic restrictions” while rendering agencies “more agile, cost-effective, and efficient.” Further, they will, presumably, “deliver improvements to the lives of the American public while enhancing America’s global dominance in AI innovation.” The Memos rescind and replace the corresponding M-24-10 and M-24-18 memos on use and procurement from the Biden era.

Although these Memos relate exclusively to the activities of U.S. federal agencies with regard to AI, they contain information and guidance with respect to the acquisition and utilization of AI systems that is transferable to entities other than agencies and their AI contractors and subcontractors with respect to developing and deploying AI assets. In this connection, the Memos underscore the importance of responsible AI governance and management and, interestingly, in large measure mirror protocols and prohibitions found in current state AI legislation that governs use in AI by private companies.

The Case

The case, Chicago Women in Trades v. Trump et. al., was brought by a Chicago-based association, Chicago Women in Trades (CWIT), that advocates for women with careers in construction industry trades.  Federal funding has constituted forty percent of CWIT’s budget. After the issuance of the J20 and J21 EOs, CWIT received an email from the U.S. Department of Labor’s (DOL) Women’s Bureau stating that recipients of financial assistance were “directed to cease all activities related to ‘diversity, equity and inclusion’ (DEI) or ‘diversity, equity, inclusion and accessibility’ (DEIA).” Similarly, one of its subcontractors emailed CWIT to immediately pause all activities directly tied to its federally funded work related to DEI or DEIA. CWIT brought the action against President Trump, the DOL, and other agencies alleging, among other things, that its Constitutional rights were violated by various provisions in both EOs. For example, CWIT argued that the J20 EO targeted “DEI,” “DEIA,” “environmental justice,” “equity,” and “equity action plans” without defining any such terms. This lack of definition, according to CWIT, makes it difficult to understand what conduct is permissible and what is not.

Specific Requirements Under Consideration

Under the terms of S372, any severance agreement offered to an employee or former employee will need to:

• contain a notice advising the employee of their right to consult an attorney regarding the agreement;
• provide at least 21 business days for review of the agreement; and,
• acknowledge a seven-day period within which the employee may revoke the agreement.

The Fourth Circuit panel issued its decision shortly after a District Court hearing on an emergency motion filed by the plaintiffs, who requested a status conference to review the  U.S. Department of Justice’s alleged refusal to comply with the preliminary injunction. Four days earlier, on March 10, 2025, the District Court had issued a Clarified Preliminary Injunction along with a Memorandum Opinion, explaining that the February 21st ruling did not apply to the President, but applied to all federal executive branch agencies, departments, and commissions, and their heads, officers, agents, and subdivisions.

• Names of the employee and employer;
• Employee’s address;
• Employee’s total gross wages during the pay period;
• Employee’s total net wages during the pay period;
• Amount and purpose of each addition or deduction to wages; and
• Dates of the pay period.

For hourly employees, the following three additional items are required:

• Total hours worked;
• Hourly rate; and
• Hours worked in excess of 40 hours in one workweek.

Below are a few key areas where evolving social policies intersect with employee considerations.

• Environmental, Social, and Governance (ESG) Policies: Regulations around diversity, equity, and inclusion; sustainability; the environment; and financial investments can differ across federal, state, and local jurisdictions, and certain rules apply only to government contractors. Aside from legal concerns, employers may face public and private questions about their actions or policies from employees. As such, employers should make sure that their ESG policies are current, thoughtful, and well communicated, especially in light of changing public sentiment, regulations, and legislation.

These sweeping changes initiated by President Trump at the EEOC should be seen as a critical element of an ever-expanding goal of government-wide elimination, not just of DEI, but of all forms of affirmative action.  This remaking of the EEOC should be viewed in parallel with Trump’s firing of two Democratic Members and the General Counsel at the National Labor Relations Board, revocation of Executive Order 11246, which contractually required covered federal government contractors and subcontractors to meet certain affirmative action obligations, and the possible elimination of the Office of Federal Contract Compliance Programs (“OFCCP”).

New York      

New York’s proposed legislation, which if passed would become effective January 1, 2027, provides guardrails to New York employers implementing AI to assist in hiring, promoting, or making other decisions pertaining to employment opportunities.  Unlike New York City Local Law 144, which covers only certain employment decisions, the New York Artificial Intelligence Consumer Protection Act (“NY AICPA”), A 768, takes a risk-based approach to AI regulation, much like that of Colorado’s SB 24-205.  The NY AICPA would specifically regulate all “consequential decisions” made by AI, including those having a “material legal or similarly significant effect” on any “employment or employment opportunity.” The bill imposes compliance obligations on “developers” and “deployers” of high-risk AI decision systems. 

Yesterday, the Equal Employment Opportunity Commission (“EEOC”) published a fact sheet addressing potential concerns and pitfalls employers may run into when gathering and making employment related decisions based on health-related information.

Understanding Workplace Wearables

Wearable technologies, or “wearables,” are digital devices worn on the body that can track movement, collect biometric data, and monitor location. Employers have implemented these tools for a multitude of reasons, including tracking and predicting how long certain tasks take employees to promote efficiency. Wearables may also be programmed to recognize signs of fatigue, like head or body slumps, and notice improper form when lifting, which can be critical for workplace health and safety.