McNees Summer Associate Wyatt Beddow contributed to this blog post.

On May 28th, the Department of Labor’s Wage and Hour Division (WHD) issued several new Opinion Letters, addressing questions about regular rate calculations, overtime exemptions, and determining hours worked.  If the details of wage and hour law aren’t your idea of light summer reading, we’ve provided a highlight summary of three of WHD’s letters below.

It’s important to keep in mind that the WHD’s Opinion Letters constitute sub-regulatory guidance, but they are not binding authority under the FLSA.  And, in many cases, the result under Pennsylvania Minimum Wage Act might be different.

FLSA2026-5: Exempt Employees Performing Non-exempt Work

In this Opinion Letter, WHD addresses a nonprofit hospital employing non-exempt “Staff Nurses” and exempt “Specialists.”  The exempt Specialists often took Staff Nurse shifts when they became available.  This raised the question of whether employees classified as exempt under an executive, administrative, or professional exemption “can perform additional work in a secondary, non-exempt role at an hourly rate.”

The letter concludes that an employee’s exempt status under the FLSA is not impacted by the performance of additional non-exempt work in the same workweek, so long as the employee’s primary duty continues to be exempt work and the applicable salary requirements are maintained.

As a reminder, an employee’s primary duty is “the principal, main, major or most important duty the employee performs.”

FLSA2026-6: Bonus Programs and the Regular Rate

FLSA2026-6 examines the compliance of a company’s bonus program with the requirements of overtime pay under the FLSA. Specifically, it explains how an employer’s quarterly bonus program can comply with the FLSA’s overtime requirements for non-exempt employees—and whether such bonus requires recalculating the regular rate (and resulting overtime pay) for workweeks in which the bonus was earned.

The letter addresses an employer who pays a quarterly non-discretionary bonus to employees from a “bonus pool based on its sales revenue during the quarter.” Questions arose about the calculations used to divide the bonuses among employees. The employer “determine[d] each employee’s share of the bonus pool by ‘calculating the percentage that the employee’s total gross compensation (straight time plus overtime) represents of all the gross compensation paid to all eligible employees for the quarter.’”  The employer then multiplied that percentage by the total bonus pool amount to arrive at each employee’s bonus amount.

WHD certified this practice as acceptable as a “percentage of total earnings” bonus, which did not require recalculating the regular rate, as long as the bonus includes an employee’s total earnings (including overtime premiums) and excludes amounts not included in the rate of pay when determining overtime.

FLSA2026-7: Questions about Compensation for Meal Breaks

FLSA2026-7 addresses questions regarding employee meal breaks by responding to an employee that works in a large corporate campus which is secured with designated entrances and exits. The employee stated that it takes employees considerable time to get from the office to the exit of the campus because of a long walk to the parking lot and having to navigate security gates. Due to this, the employee questioned whether an employer is required to factor the time employees voluntarily spend traveling off-site for a meal when determining if the meal period is compensable under the FLSA.

In response, WHD stated that “’bona fide meal periods are not worktime,’ and to be bona fide the employee must be relieved from duty for the purposes of eating regular meals.” Put simply, if employees are not required to work and are freed from all duties during the meal break, it is bona fide, and the employer need not compensate employees for the time.

WHD found that the employee’s meal breaks were bona fide because the employee was completely relieved of their duties. The letter further clarified that employers are not required to compensate employees for the time they voluntarily spend traveling off-site for a meal.

If you have any questions, please contact any member of the McNees Labor & Employment group.

As you know, President Trump and his administration have been working to reach their goal of reducing the number of individuals who are in the country illegally.  That work also extends to reducing the number of individuals who are working without authorization.  On March 16th, 2026, Immigration and Customs Enforcement (ICE) issued an updated Form I-9 Inspection Fact Sheet.  ICE did not post a notice in the Federal Register.  It did not issue a public notice, nor did it issue a notice of Proposed Rule Making.  While this method of creating a change may be unlawful, it has yet to be litigated in the courts.  There is also a lack of clarity as to whether the old standard applies to forms created prior to the publishing of the updated inspection fact sheet.

The current fine structure runs from $288 to $2867 per form.  The new standard also reclassifies a number of violations that were previously considered technical, allowing employers to cure them within 10 days, to substantive, allowing for immediate application of fines.  The following violations are now considered substantive:

  • Missing employee date of birth in Section 1
  • Missing USCIS/Alien Number
  • Missing date next to employee’s signature
  • Missing expiration date in Section 1. Box 4
  • Spanish language form used other than in Puerto Rico
  • Missing name/title of employer or representative
  • Incomplete list A, B, or C data in Section 2 (missing expiration, document title, number, or issuing authority.)
  • First day of employment missing
  • Incomplete preparer or translator
  • When remote verification is used, failing to check alternative procedure or not enrolled in E-Verify.
  • Deficiencies in I-9 audit trail, E-Signature or security documentation.

Some deficiencies still remain technical and can be corrected by the employer within 10 days if caught in an inspection.  They include:

  • Failure to record the employee’s SSN in Section 1 if the employer is still enrolled in E-Verify
  • Failure to record the employee’s complete name at the top of Page 2
  • Failing to provide other names used by the employee
  • Failing to record new name in Supplement B if applicable
  • Failure to use current form I-9 when completing info
  • Failing to provide employee address in Section 1
  • Failing to provide business address in Section 2

Many employers use an HRIS system that allows for completion of the form I-9.  Deficiencies in your electronic I-9 systems are now substantive violations.  Make sure any HRIS system has been vetted.  We’ve come across several employers whose system was simply noncompliant.

We encourage employers to do periodic self-audits of Form I-9.  If you do audits, make corrections.  Making corrections where applicable will at a very minimum stop the continuing nature of each violation and start the 5 year limitations clock running.  Doing periodic audits is not a get out of jail free card.  But it does show your good faith intentions.  Always have the handbook for employers, M274, on hand when completing Form I9 or conducting self-audits.

Many employers are beginning to introduce technologies that enhance workplace security and employee monitoring. For example, employers may require employees to clock in and out using fingerprints to streamline timekeeping procedures, use facial recognition or retina scans for entry into certain buildings, or review facial geometry from dash-cam video recordings to ensure safe driving practices. While these measures can greatly enhance and streamline workplace safety, employers must be aware of the legal obligations that may arise from collecting, storing, and using this data.

What is Biometric Data?

Although many states have differing definitions of what biometric data or identifiers are, it generally includes, but is not limited to the following:

  • Retina or iris scans;
  • Fingerprints;
  • Voiceprints or voice recordings;
  • Scan of hands;
  • Facial geometry;
  • Vein patterns; and
  • Other unique biological characteristics or patterns used to identify an individual.

Biometric Privacy Laws

Currently, only three states have enacted laws specifically governing an employer’s collection, storage, and use of biometric data – Illinois, Texas, and Washington. While each of these state laws has different requirements, at a minimum, these laws generally:

  • require notice to the employee regarding the collection of biometric data and how such information will be used;
  • require clear consent (usually written) from the employee regarding the collection and use of the biometric data;
  • restrict an employer’s ability to sell, use, or disclose the biometric data; and
  • Provide specific requirements for confidentiality, retention, and data disposal when the biometric data is no longer needed.

Illinois’ Biometric Information Privacy Act (BIPA) remains the most comprehensive biometric data law in the United States. In addition to broad notice and consent requirements, the BIPA also has specific policy requirements, including a retention schedule and guidelines for the destruction of biometric data. The BIPA also provides a private right of action to any person aggrieved by a violation of the law, resulting in significant litigation against employers and third-party vendors (including class action litigation). As a result, employers conducting business in Illinois must take careful steps to ensure compliance with BIPA requirements— including the notice and consent requirements—to avoid potential litigation.

In addition to biometric data laws, many states have also enacted broad consumer privacy laws to safeguard individuals’ personal information, including biometric data. While most of these consumer privacy laws do not extend to the employment context, a few do, including those in California and Colorado.

Employer Best Practices Related to Biometric Data

The collection and use of biometric data can improve workplace efficiency and safety, but employers must consider the legal implications that accompany these benefits. To ensure compliance, employers should:

  • Evaluate internal technologies to determine whether they collect biometric data (e.g., fingerprint‑based timekeeping systems, workplace video or audio recordings capturing voiceprints or facial geometry, or dash‑cams capturing retina data or facial features).
  • Determine which state laws may apply. For example, BIPA does not require an employer to be located in Illinois; an out-of-state employer may still be subject to BIPA if biometric data was collected or if business activity occurred in Illinois (e.g., a dash-cam collecting biometric data while operating in Illinois).
  • Implement appropriate policies, including notice and consent procedures. If subject to state biometric privacy laws, ensure your policies comply with all applicable laws and include the required notice and consent forms. Additionally, if you are collecting audio and video recordings (e.g., via dash-cam technology), you will want to ensure you comply with all federal and state wiretapping laws, which have specific notice and consent requirements.
  • Ensure that any third-party vendors involved in the collection, storage, or use of your employees’ biometric data also comply with all applicable laws.

Compliance with biometric laws can be complex and daunting. If you currently collect and use biometric data—or plan to do so—and need assistance with compliance or developing appropriate policies and notice/consent forms, please contact an attorney in our Labor & Employment Group.

On February 26, 2026, the Department of Labor, Wage and Hour Division issued a “Notice of Proposed Rulemaking,” revealing its intention to revoke the Biden-era definition of “independent contractor” and reinstate a 2021 rule, with a few modifications.

The Proposed Rule would modify the current standard used for identifying which workers are covered as “employees” (or, on the other hand, those not covered as independent contractors) under the FLSA, FMLA, and other federal law.

Presently, the DOL examines a worker’s whole activity and evaluates their status based on six “economic reality” factors.  DOL believes the current standard sets the bar too high and deters businesses from using independent contractors for fear that they will be deemed misclassified.  Accordingly, the Proposed Rule serves two purposes – first, to provide a new standard for evaluating “employee” status and second, to rescind the 2024 rule.

The Proposed Rule identifies two “core” factors that DOL believes are most telling of whether a worker is an independent contractor or an employee.  These are (i) the nature and degree of control over the work; and (ii) the individual’s opportunity for profit or loss.  Although no factor is alone dispositive, DOL believes these factors are the best indicators of whether a worker is “economically dependent” on an employer.

Then the Proposed Rule lists “other factors” to consider: the amount of skill required for the work; the degree of permanence of the working relationship; whether the work is part of an integrated unit of production; and a catch-all “additional factors” (i.e., other factors that might be relevant to the inquiry, but only if they somehow indicate whether the individual is in business for him- or herself, as opposed to being economically dependent upon the potential “employer” for work).

The issuance of the Proposed Rule begins a comment period, during which industry groups and others will weigh in on the proposal.  We can likely expect a Final Rule sometime later this year.  Stay tuned.

Employers often run background checks as a regular part of the hiring process to evaluate candidates. However, in Pennsylvania, employers must consider their legal obligations under the Criminal History Record Information Act (“CHRIA”) when using an applicant’s criminal history in its hiring decisions. A recent court decision, Phath v. Central Transport LLC, made it clear that CHRIA obligations will apply whenever an employer gets criminal history information—no matter how they obtain it.

What is CHRIA?

Under CHRIA, employers can consider felony or misdemeanor convictions only to the extent that they relate to an applicant’s suitability for the job. For example, if an applicant is applying for an accounting job, a conviction for embezzlement may be relevant, whereas a DUI conviction may not be. If an employer does not hire an applicant based “in whole or in part on criminal history record information,” it must provide written notice to the applicant which explains its reasoning.

The Impact of Phath v. Central Transport, LLC

In Phath v. Central Transport, Mr. Phath applied for a truck driving position with Central Transport. When Central Transport informed him that they would conduct a criminal background check, Mr. Phath voluntarily disclosed that he had been convicted of armed robbery and spent time in prison. Central Transport immediately informed Mr. Phath that he would not be hired due to his conviction.

Mr. Phath filed suit against Central Transport alleging its violation of CHRIA by (1) disqualifying him based on his robbery conviction and (2) failing to provide written notice. Central Transport argued that CHRIA does not apply if criminal background information is obtained directly from the applicant. The Third Circuit Court of Appeals disagreed with Central Transport and found that the criminal history disclosed was clearly part of Mr. Prath’s criminal history file which would have been later uncovered. Therefore, the manner in which Central Transport obtained the information did not matter—CHRIA still applied.

What This Means for CHRIA and Employers

The Phath decision reinforces that Pennsylvania employers cannot abandon their obligations simply because an applicant chose to disclose their own criminal history. Often, applicants will reveal this information knowing it will later be discoverable through their criminal background check. If criminal history information is considered during the hiring process, regardless of how it is obtained, employers must comply with CHRIA. Here are some key steps for employers to follow uniformly—regardless of the source—in order to comply with CHRIA (as well as other federal and local laws):

  1. Analyze criminal history. Only consider convictions that are meaningfully related to the job duties in question. Consider adopting clear criteria for analyzing criminal history information (i.e., nature and severity, time passed, relevance, and any mitigating factors).
  2. Document the decision and notify the applicant. If an employer declines to hire an applicant, in whole or in part, based on their criminal history background, the applicant must be provided with written notice explaining that reasoning.
  3. Comply with federal and state law when using a third-party background screening provider.
    • Fair Credit Reporting Act (FCRA). If criminal history information is learned from a consumer report, this will trigger obligations under the FCRA.
    • Local Ban-the-Box or Fair Chance Laws. Employers should evaluate whether they are subject to any local laws (e.g., Philadelphia’s ban-the-box law) that may restrict employers from inquiring into criminal history during the hiring process.

In case you missed it, at the end of 2025, Governor Shapiro signed House Bill 274 into law. This new legislation—now Act 55 of 2025—is a significant update to Pennsylvania’s Unemployment Compensation Law (“Law”).  Among other things, Act 55 expands unemployment compensation benefit eligibility for claimants affected by domestic violence.

Specifically, Act 55 adds a new provision to the Law by providing that a claimant shall not be deemed ineligible for voluntarily leaving employment  (Section 402(b) of the Law) or for failing to attend work (Section 402(e) of the Law) if, due to a domestic violence situation, the claimant’s continued employment would jeopardize the safety of the claimant or a member of the claimant’s family or household.

Act 55 provides that a domestic violence situation can be verified through any of the following sources:

(1) an active or recently issued protective order (or other order), court records, or police, medical, social service, or child protective services records;

(2) a statement from a qualified individual from whom the individual has sought assistance, such as a counselor, attorney, healthcare worker, member of the clergy, or shelter worker, or similar statement from a friend or relative;

(3) a self-affirming statement from the claimant that continued employment would jeopardize the safety of the claimant or a member of the claimant’s family or household due to the domestic violence situation; and

(4) any other type of evidence that reasonably proves domestic violence.

But that’s not all.

Any verifying documentation submitted to the Pennsylvania Department of Labor and Industry (“Department”) must remain confidential, and the Department may not disclose the existence of a claimant’s domestic violence situation in any notice provided to an employer regarding the claim for unemployment compensation.

Okay, but what is the “Express Lane”?

Once the claimant provides verifying documentation to the Department, and is otherwise eligible under Section 401 of the Law, the claimant is deemed eligible, and the Department is required to expedite a determination of eligibility. This is the central aim of these new provisions: to create an “express lane” for claimants who are affected by domestic violence and to reduce delays in such claimants accessing unemployment benefits when they may need them the most.

Is there anything else employers should know about?

Yes—there is.

There is relief for employers under the domestic violence provisions of Act 55.

Base year employers will automatically receive relief from UC contribution charges with respect to claims determined eligible under these domestic violence provisions. This means that employers’ tax rates will not increase as a result of the Department finding claimants eligible under these provisions.

This employer relief is provided automatically and does not require a request from the employer. The Department may notify the employer of the relief granted via the eligibility determination (or other relevant claim documentation) that is provided to the employer.

Act 55 appears to strike a balance between providing eligibility protection for claimants affected by domestic violence, while offering relief to employers.

These new domestic violence provisions will take time to play out.  If you have any questions about these provisions—or about any of the other updates to the Law under Act 55—our Labor & Employment team is here to help.

Until next time!

With 2025 winding down and the holiday season upon us, many organizations are planning to celebrate another year in the books, boost employee morale, and foster workplace camaraderie. While holiday parties may feel like a break from work, it’s important to remember that company policies, including those against harassment and discrimination, still apply during these festivities. So, let’s make this holiday season merry and bright without any unnecessary legal headaches!

Alcohol and liability: proceed with caution

During holiday celebrations, beer, wine, or your favorite holiday cocktail may help lighten the mood and help colleagues take a load off after a long year. However, with that lightened mood, there’s also potential liability. Remember, a company-sponsored event is still considered a workplace setting, so if a party gets too rowdy, or if a flirtation turns into an inappropriate advance, employers could face serious consequences, including sexual harassment claims, workers’ compensation issues, or even third-party liability if an intoxicated employee causes harm after leaving the workplace event.

These incidents can lead to legal risks and put a serious damper on morale and company culture. Employers should take proactive steps to reduce these risks and prioritize employee safety by:

  • Offering lower-alcohol options and serving food. Choose beer, wine, and hard seltzers instead of hard liquor. Pairing drinks with food can slow alcohol absorption and help maintain a balanced atmosphere.
  • Using professional bartenders. Hiring trained staff can help monitor consumption, recognize signs of intoxication, and enforce drink limits discreetly.
  • Providing safe transportation options. Arrange rideshare vouchers, shuttle services, or designated drivers to ensure employees can get home safely.
  • Setting clear expectations. Remind employees that company policies, including those related to harassment and conduct, apply to all company-sponsored events.
  • Considering alternatives. Offer activities like games, raffles, or recognition awards to shift the focus away from drinking and keep the event engaging for everyone.

Remember to include everyone in the festivities

This is a good time of year to remember that not all employees celebrate the same holidays. Diversity is a great strength of the workplace, and your celebration should reflect that reality.  Beyond the legal protections provided by laws like Title VII of the Civil Rights Act of 1964, which protects against discrimination based on religion, holiday parties should foster an atmosphere of inclusion where all employees feel welcome, regardless of their cultural or religious backgrounds.

To ensure that your holiday party remains inclusive, consider the following:

  • Use neutral terminology. Instead of labeling the event as a “Christmas party” or tying it to a single tradition, use neutral terms like “holiday party” or “end-of-year celebration.” This approach makes it clear that the event is for everyone, regardless of their cultural or religious background.
  • Make attendance optional. Participation should always be voluntary, especially if the event is held outside normal work hours. Allowing employees to opt out prevents any discomfort or the perception that attendance is tied to workplace performance.
  • Avoid exclusive symbols and rituals. Steer clear of religious symbols, music, or practices that may alienate those who do not share those beliefs. The aim is to create a celebration that is welcoming to all employees.
  • Take concerns seriously. If an employee raises a concern related to culture or religion, take it seriously.
  • Consider accommodations. Be mindful of dietary restrictions and accommodations for individuals with disabilities when planning the event.

Inclusivity is not just about maintaining compliance; it’s about cultivating an environment where every employee feels valued and comfortable participating. When done thoughtfully, your holiday celebration can strengthen team connections while ensuring no one feels left out. You may also consider additional festivities to allow all employees to participate equally, even those who may be remote.

Encourage wellness and mental health

The holidays can be a time of joy, but they can also lead to stress and pressure. Employers can support employee well-being by offering flexible scheduling during the peak holiday weeks and reminding employees of available mental health resources, such as Employee Assistance Programs. It’s important to avoid creating an expectation that attendance is mandatory. Encouraging voluntary participation helps reduce anxiety and respects personal boundaries. Simple gestures, such as recognizing achievements and expressing gratitude, can significantly boost morale and foster a positive workplace culture during this busy season.

Holiday party final checklist

Before the party, ensure that you clearly communicate the company’s conduct policies. It’s essential that employees understand that attendance is optional and that transportation plans are in place for those who may require them.

During the event, monitor behavior discreetly and ensure that employees feel included through interactive activities or recognition. These small steps can make a big difference in reducing risk and promoting inclusivity.

The holidays should be a time of celebration for everyone. By planning thoughtfully and staying mindful of legal and cultural considerations, employers can keep festivities merry, bright, and stress-free.

To the extent holiday festivities are hosted during regularly scheduled business hours or have mandatory attendance, employers should be aware of their wage and hour obligations.

For questions or legal guidance, contact a member of the McNees Labor & Employment Group. We wish you a happy and healthy holiday season!

Philadelphia’s Fair Criminal Record Screening Standards ordinance (also known as the “fair chance” or “Ban the Box” ordinance), which applies to most private employers and agencies in the City of Philadelphia, was recently amended to make it more difficult for employers to consider criminal history in employment decisions. The amendments to the ordinance will take effect on January 6, 2026. A summary of the key changes to the ordinance is provided below.

Shortened lookback period for misdemeanor convictions

While employers can still consider felony convictions that occurred within the last seven years, only misdemeanor convictions that occurred in the last four years can be considered. Employers are prohibited from considering summary offenses.

No consideration of expunged or sealed records

Employers cannot consider conviction records that have been expunged or sealed. If such a record appears in a criminal background or driver record check, employers must provide the applicant or employee with the opportunity to present evidence of expungement or sealing.

Expanded notice for background checks

If an employer provides notice of the intention to conduct a background check, including in a job advertisement, the notice must state that any evaluation of a criminal record will be subject to an individualized assessment that considers multiple factors, including the specific record and the duties and requirements of the particular role.

Notification of adverse employment action

An employer who intends to reject an applicant or employee, based in whole or in part on a criminal record, must provide written notice of its decision, identify the specific convictions considered, and provide the applicant or employee with a copy of the specific criminal record. An employer must also provide:

  • A summary of the applicant’s or employee’s rights under the ordinance
  • A statement that the employer will consider evidence of any error in the criminal history records and evidence of rehabilitation and mitigation
  • Instructions on how the applicant or employee can exercise their right to provide evidence directly to the employer
  • At least 10 business days for the applicant or employee to provide evidence of any inaccuracies or explanation of any record before making a final adverse employment decision

Anti-retaliation

The amendments include an anti-retaliation provision that creates a rebuttable presumption of retaliation when an employer takes an adverse employment action within 90 days of any protected activity. To overcome the presumption, employers must show that they acted in good faith and took the adverse action for legitimate reasons.

Employers should review their existing hiring processes and procedures and make any necessary policy changes to ensure compliance with these amendments. If you have any questions on the recent amendments to the ordinance or need assistance in reviewing or updating your existing policies, please contact an attorney in our Labor & Employment Group.

Pennsylvania will soon implement the CROWN Act, a law that prohibits discrimination based on hairstyles, textures, and types, as well as religious head-coverings. Signed by Governor Josh Shapiro on November 19, 2025, the Act amends the Pennsylvania Human Relations Act (PHRA) and takes effect January 24, 2026. Employers across the state should begin preparing now to ensure compliance with these new protections.

The CROWN Act, which stands for “Creating a Respectful and Open World for Natural Hair,” amends the definition of “race” and “religious creed” under the PHRA to prohibit discrimination based on hair, as well as head-coverings associated with certain religions. For example, the Act specifically identifies certain hairstyles and types, such as braids, locs, twists, coils, Bantu knots, and afros, that will now be protected in Pennsylvania.

The Act’s co-sponsors, Representatives La’Tasha Mayes and Joanna McClinton, noted in their co-sponsorship memo that employers (as well as schools and other public spaces) historically denied opportunities and access to Black Americans for hairstyles deemed inappropriate, unacceptable, or unprofessional. The CROWN Act provides protections to Black Americans with natural hair or primarily black hairstyles, as well as head-coverings and hairstyles historically associated with religion.

Notably, the CROWN Act does not prohibit employers from enacting hairstyle or head-covering restrictions when such restrictions are for valid workplace health or safety reasons or as part of a bona fide occupational qualification. Employers who maintain such restrictive policies must demonstrate all of the following:

  • Without the adoption of the rule or policy, the health or safety of an employee or other materially connected person may be impaired.
  • The rule or policy is adopted for nondiscriminatory reasons.
  • The rule or policy is specifically tailored to the applicable position and activity.
  • The rule or policy is applied equally to individuals whose positions fall under the applicable position and activity.

With the passage of the CROWN Act, Pennsylvania joins several neighboring states (Delaware, New Jersey, and New York, for example) as well as the cities of Philadelphia and Pittsburgh, which previously enacted CROWN Act laws. Because the Pennsylvania CROWN Act amends the PHRA, it will apply to employers, labor organizations, and employment agencies with four or more employees in Pennsylvania.

This means employers should review their grooming, dress code, and appearance policies to ensure compliance with the updated law. Policies that restrict certain hairstyles or head coverings could expose organizations to discrimination claims unless they meet the Act’s narrow exceptions for health, safety, or bona fide occupational qualifications. Now is the time to audit existing rules and train managers on these new protections.

If you have questions about your current policies regarding hairstyles or head coverings, please contact any member of the McNees Labor and Employment Group.

Under the Biden Administration, the National Labor Relations Board (“NLRB”) was aggressive in expanding remedies available to those allegedly impacted by unfair labor practice charges. On October 31, 2025, the Fifth Circuit Court of Appeals held that certain damages ordered by the NLRB exceeded the scope of the NLRB’s statutory authority. The NLRB had ordered an employer to compensate workers for “direct or foreseeable pecuniary harms” stemming from a National Labor Relations Act (“NLRA”) violation. The NLRB has taken the position that it has the power to redress harms related to various “costs simply to make ends meet” such as interest and late fees on credit cards, penalties for early withdrawals from retirement accounts, loan or mortgage payments, and transportation or childcare costs. The court held that such damages constitute “compensatory” or “legal” damages, whereas the NLRA provides only “equitable remedies” such as back pay or reinstatement.

The Fifth Circuit decision aligns with recent rulings by the Third and Tenth Circuits that the NLRB cannot not award this type of remedy. The Ninth Circuit has taken the opposite position. It remains to be seen whether the United States Supreme Court will resolve the circuit split, as well as whether the new presidential administration will continue to seek compensatory damages. Based on this uncertainty, employers face a difficult task in evaluating the potential liability stemming from an unfair labor practice charge.