Employment law update

Recent federal and state employment law developments address affirmative action, healthcare noncompetes, artificial intelligence (AI)-enabled employment decisions, and severance agreements. Below, we summarize these updates and considerations for employers.

US federal: EEOC withdraws affirmative action guidance under Title VII

At a glance

• The United States Equal Employment Opportunity Commission (EEOC) has withdrawn two affirmative action guidance documents, stating that they are inconsistent with Title VII of the Civil Rights Act of 1964 (Title VII) and recent Supreme Court decisions
  
  
• The rescinded guidance outlined when employers could adopt voluntary affirmative action measures and rely on a “good faith” defense to address discrimination or workforce imbalances
  
  
• The EEOC stated that the guidance conflicts with the Supreme Court’s recent decision in Ames v. Ohio Department of Youth Services, which addressed Title VII’s application to all individuals, regardless of group status
  
  
• Existing Supreme Court precedent remains in force and recognizes limited circumstances in which affirmative action may be permitted
  
  
• The development follows recent agency statements focused on race- and sex-based employment practices and intentional discrimination claims

The EEOC has withdrawn affirmative action guidance addressing diversity, equity, and inclusion (DEI) policies and race- or sex-conscious employment decisions.

According to the EEOC, the guidance was no longer consistent with Title VII or subsequent Supreme Court case law. The agency cited the Supreme Court’s recent decision in Ames v. Ohio Department of Youth Services, stating that Title VII provides the same protections to all individuals and does not apply different standards based on membership in a particular group.

One withdrawn document outlined when employers could voluntarily implement affirmative action measures. It also formed the basis of a “good faith” defense that employers could assert in connection with affirmative action programs designed to address past or present discrimination or workforce imbalances. Under the guidance, those measures were expected to be temporary, narrowly tailored, and structured to minimize effects on other employees.

The EEOC also rescinded a related compliance manual, stating that it had become outdated following the withdrawal of the underlying guidance and was inconsistent with more recent judicial developments.

Some organizations have suggested that the removal of the guidance may discourage employers from taking lawful steps to promote workplace inclusion and equal opportunity. The withdrawal does not overturn existing Supreme Court precedent recognizing that certain affirmative action measures may, in limited circumstances, be permissible under Title VII.

The withdrawal follows recent EEOC statements addressing race- and sex-based hiring practices, quotas, and claims involving intentional discrimination. Recent statements by the US Department of Justice have also addressed disparate-impact enforcement.

Employers may wish to review DEI-related initiatives and affirmative action measures, particularly where employment decisions expressly take protected characteristics into account.

Legal uncertainty remains regarding how courts may apply existing precedent to affirmative action and DEI-related employment practices.

Maine: New restrictions apply to noncompete agreements for healthcare practitioners

At a glance

• Maine’s new legislation, effective July 13, 2026, limits the use and enforcement of noncompete agreements for healthcare practitioners unless they have an ownership interest in the employing organization
  
  
• The definition of “healthcare practitioner” covers individuals licensed or qualified under Maine law to provide healthcare services, including nurses, therapists, physician assistants, and other clinical professionals
  
  
• Employers may continue to use noncompete agreements with practitioner-owners, but any such restrictions must preserve patients’ right to choose their healthcare provider
  
  
• The amendments expand an existing exemption from Maine’s delayed-effectiveness rules for noncompete agreements from physicians to healthcare practitioners generally
  
  
• Employers may wish to review existing restrictive covenant arrangements, assess ownership status among affected workers, and consider alternative protections, such as confidentiality and non-solicitation provisions

Maine has enacted new restrictions on noncompete agreements for healthcare practitioners, effective July 13, 2026. Signed into law in April 2026, the legislation limits the use and enforcement of such agreements.

The amendments modify Maine’s existing noncompete framework, which generally permits such restrictions only when they are reasonable and no broader than necessary to protect legitimate business interests, such as confidential information, trade secrets, or goodwill. Existing notice, advance disclosure, wage threshold, and penalty requirements remain in place.

Under the new law, noncompete agreements entered into or renewed on or after July 13, 2026 will generally be unenforceable against healthcare practitioners unless the individual holds an ownership interest in the employing organization. The legislation defines “healthcare practitioner” to include individuals who are licensed or otherwise qualified under Maine law to provide healthcare services.

Even where a practitioner has an ownership interest and a noncompete agreement remains permissible, the agreement must preserve a patient’s ability to choose their own healthcare provider.

The amendments also modify an existing exception to Maine’s rules governing the effective date of noncompete agreements. Previously, certain timing requirements did not apply to allopathic and osteopathic physicians. The new legislation extends that exception to healthcare practitioners more generally. Qualifying noncompete agreements involving covered practitioners will not be subject to the statutory requirement that restrictions take effect only after the later of one year of employment or six months following execution of the agreement.

Employers that engage healthcare practitioners in Maine may wish to review existing restrictive covenant arrangements and identify which, if any, practitioners have ownership interests. Employers may also wish to consider the effects of renewing, amending, or replacing existing agreements, as post-effective-date renewals could cause previously enforceable restrictions to become subject to the new rules.

Given the limitations on noncompete protections for covered practitioners, employers may wish to consider alternative safeguards, including confidentiality provisions and non-solicitation clauses, while recognizing that patients retain the right to choose their healthcare provider. Organizations may also wish to consider updating template agreements and internal processes to support compliance with the new statutory requirements.

Connecticut: New AI law creates employment-related obligations

At a glance

• Connecticut has enacted the Connecticut Artificial Intelligence Responsibility and Transparency Act (CART Act), which establishes AI-related compliance requirements that take effect in phases between October 2026 and January 2028
  
  
• Beginning October 1, 2027, employers using automated employment-related decision technology (AEDT) in hiring or other employment decisions must provide detailed notices to affected applicants and employees
  
  
• The legislation provides that employers may not avoid liability for unlawful discrimination by attributing an employment decision to an AI system, even where a third party provides the technology
  
  
• The law also establishes new rules involving AI companions, frontier AI models, synthetic media, AI-based subscriptions, and online platforms used by minors
  
  
• Many provisions are enforceable by the Connecticut Attorney General, and the legislation does not generally create new private rights of action

Connecticut has enacted the CART Act, which regulates several specific uses of AI, including AEDT, AI companions, frontier AI models, synthetic media, and AI-based subscriptions, and also addresses minors’ use of recommendation-based digital platforms. Signed into law on June 2, 2026, the CART Act introduces a phased implementation timeline, with various provisions taking effect between October 2026 and January 2028.

From October 1, 2027, employers that use AI systems to make or materially influence employment-related decisions must provide applicants and employees with written notice that the technology is being used. The notice must describe the purpose of the system, identify the technology used, outline the categories and sources of personal data being analyzed, and provide contact details for the organization deploying the technology. Employers must also disclose when an individual is interacting directly with an AEDT, unless readily apparent.

The legislation also provides that employers cannot avoid liability for unlawful discrimination by attributing a decision to an AI system. Regulators and courts may consider evidence of bias testing and other proactive measures when assessing claims involving AI-assisted employment decisions.

The legislation also prohibits developers of frontier AI models from retaliating against employees who raise concerns about “catastrophic AI risks,” while larger developers will be required to maintain anonymous reporting channels and provide updates regarding reported concerns.

Please see DLA Piper’s client alert, Unpacking SB5: Connecticut’s new AI law, for details on other provisions of the law.

The CART Act reflects continued state-level activity around specific AI use cases. Employers using AI in recruitment, workforce management, or other employment processes may wish to review existing practices, assess whether any technologies may fall within the definition of AEDT, and prepare for the October 2027 disclosure obligations.

New York: Proposed protections for employees offered severance agreements

At a glance

• New York legislators have passed the No Severance Ultimatums Act, which, if signed, would introduce mandatory notice, review, and revocation rights for employees offered severance agreements
  
  
• Employers would be required to inform employees of their right to consult legal counsel, provide at least 21 days to consider the agreement, and allow a seven-day revocation period after signing
  
  
• If enacted, any severance agreement that fails to comply with the new requirements would be deemed void and unenforceable
  
  
• The proposed law would apply to severance agreements containing waivers of legal claims, extending beyond discrimination, harassment, and retaliation claims already subject to similar protections under New York law
  
  
• Employers may wish to review separation agreements, update internal procedures, and provide guidance to human resources (HR) personnel to help avoid conduct that could be perceived as pressuring employees to sign early

New York legislators have passed Senate Bill S372A, known as the No Severance Ultimatums Act. If signed by Governor Kathy Hochul, the bill would amend the New York Labor Law to establish minimum procedural requirements for severance agreements containing waivers of legal claims. If signed into law, the bill would take effect immediately.

The proposed legislation would require employers to provide individuals with time and information to evaluate severance agreements before deciding whether to sign them. It would apply to agreements offered in connection with an employee’s separation from employment where the individual is asked to release claims that can legally be waived.

Under the bill, employers would be required to notify employees and former employees of their right to consult an attorney before signing the agreement. Employers would also need to provide at least 21 calendar days for the individual to consider the terms and a seven-day revocation period after signature. The agreement would not become effective until the revocation period has expired without the employee withdrawing their consent.

The legislation would not require employees to use the full 21-day review period. An employee could choose to sign earlier, provided that the decision is made knowingly and voluntarily and is not influenced by pressure, misrepresentation, or incentives designed to encourage execution before the review period expires.

The proposed legislation contains consideration and revocation requirements similar to those applicable to certain waivers of age discrimination claims under federal law. However, the scope of the New York legislation would extend beyond those circumstances. While existing New York requirements relating to confidentiality and non-disparagement provisions in discrimination, harassment, and retaliation settlements already incorporate similar consideration and revocation periods, the proposed law would extend these protections to a wider range of severance agreements that contain waivers of legal claims.

The bill also includes an exception for severance agreements negotiated pursuant to a collective bargaining agreement, provided that the agreement expressly acknowledges the relevant statutory provisions.

If enacted, employers may wish to review and update severance agreement templates to incorporate the required notices and timelines. Organizations may also wish to assess their separation procedures and provide guidance to HR professionals and managers regarding communications during the review process.

Employers may wish to review communications that could be interpreted as pressuring an employee to sign before the end of the consideration period, including by threatening to withdraw, reduce, or alter severance benefits if an employee takes advantage of the full consideration period.

Employers operating in New York may wish to monitor the bill’s progress and evaluate whether updates to severance practices would be warranted if the legislation is enacted.