1. Retroactivity of BIPA Amendment
On April 1, 2026, the U.S. Court of Appeals for the Seventh Circuit issued a unanimous decision in Clay v. Union Pacific Railroad Co., No. 25-2185, holding that the 2024 amendment to the Illinois Biometric Information Privacy Act (“BIPA”) applies retroactively to all lawsuits pending at the time the amendment took effect.
- In 2023, the Illinois Supreme Court held in Cothron v. White Castle System, Inc. that a separate BIPA violation — and therefore a separate potential damages award — accrued every time an employer collected or disclosed an individual’s biometric information without complying with BIPA’ s notice and consent requirements. In response, the Illinois legislature passed, and Governor Pritzker signed an amendment to BIPA in August 2024. The amendment provides that when a private entity collects or discloses the same biometric identifier from the same person using the same method, that conduct constitutes only one violation of the law, entitling the individual to at most one recovery of statutory damages, as opposed to the “per-scan” damages model. However, the amendment did not address whether the law would apply to lawsuits pending at the time of its enactment.
- The 7th Circuit held that the 2024 amendment is a procedural, remedial change to the statute — not a substantive one — and therefore applies retroactively to all cases pending at the time of enactment.
- Thus, employers defending BIPA lawsuits filed before August 2, 2024 — the effective date of the amendment — can now invoke the per-person damages cap, as opposed to the “per-scan” cap, significantly reducing damages exposure.
- The Seventh Circuit specifically noted that district courts may need to reevaluate federal subject-matter jurisdiction in pending cases, as the reduced damages may no longer satisfy the $75,000 amount-in-controversy threshold required for diversity jurisdiction. This could result in cases being dismissed or remanded to state court.
- Note that Illinois state courts have not yet addressed the issue. Moreover, the decision does not impact employer duties under BIPA, such as requirements for notice, written consent, and data retention and destruction policies.
2. Illinois Supreme Court Addresses Pre- and Post-Shift Tasks
On March 19, 2026, the Illinois Supreme Court ruled, in Johnson v. Amazon.Com Services, Case No. 2026 IL 132016, that there is no Illinois Minimum Wage Law (“IMWL”) exclusion from compensable time for required preliminary and postliminary activities.
In Johnson, Amazon was sued under the Fair Labor Standards Act and IMWL for failing to compensate employees for time spent undergoing required medical screenings prior to clocking in for their shift during the COVID-19 pandemic. Amazon successfully argued at the district court level that the claims should be dismissed because Johnson’s claims were barred by the federal Portal-to-Portal Act (“PPA”), which amended the FLSA to exclude certain pre-shift activities from compensable time. Amazon, further, successfully argued that the PPA’s exclusion for pre-shift activities applied to the pending IMWL claims. The question of whether the PPA’s exclusion applies to the IMWL ultimately was appealed to the Illinois Supreme Court.
On appeal, the Illinois Supreme Court reviewed the text of the Illinois Minimum Wage Law and its related regulations. It was determined that there is no language in the IMWL or its regulations that creates an exclusion similar to the exclusion found in the PPA. As such, the Court reasoned that by its terms, the IMWL mandates that employees receive compensation for all “hours worked,” which is defined as “all the time an employee is required to be on duty, or on the employer’s premises, or at other prescribed places of work, and any additional time the employee is required or permitted to work for the employer.”
Thus, Illinois employers can no longer rely on the PPA to avoid compensating employees for preliminary or postliminary activities, such as donning and doffing required protective equipment or undergoing required safety checks. To avoid potential exposure, Illinois employers should re-evaluate their current preliminary and/or postliminary required activities to ensure employees are properly compensated for all hours worked.
3. DOL Proposed Joint Employer Rule
On April 22, 2026, the U.S. Department of Labor (“DOL”) unveiled a proposed rule for determining “joint employer” status under the Fair Labor Standards Act (“FLSA”), the Family and Medical Leave Act (“FMLA”), and the Migrant and Seasonal Agricultural Worker Protection Act (“MSPA”). This is a significant development, as on July 29, 2021, the Biden DOL had rescinded the joint employer rule that was in effect from Trump’s first term, but never replaced it. As a result, employers have been navigating an extensive, at times confusing, patchwork of agencies’ and courts’ “joint employer” tests for the past five years.
The proposed DOL rule addresses two distinct types of joint employment, either of which can independently give rise to joint employer liability. “Vertical” joint employment arises when a worker has a direct employment relationship with one employer (such as a staffing agency or subcontractor), but another entity also benefits from the work—the question is whether that other entity is the worker’s employer. For that, the proposed rule uses a 4-factor test that evaluates the two entities’ (1) hiring/firing authority, (2) supervision and control over schedules and working conditions, (3) determination of rate and method of payment, and (4) employment record maintenance. “Horizontal” joint employment, by contrast, would involve an employee who works separate hours for two or more related entities in the same workweek; if those entities are “sufficiently associated” with respect to the employee, joint employment may be found. Overall, the proposed rule focuses on the “actual exercise of control” over the employment relationship by the potential joint employer, and expressly identifies several business practices—such as operating as a franchise, requiring compliance with health and safety standards, adopting quality control and brand reputation standards, and basic business practices like providing sample employee handbooks or jointly participating in apprenticeship programs—that are treated as “neutral” and, standing alone, as insufficient to establish joint employer status.
If the proposed rule is finalized in substantially its current proposed form, companies and organizations that structure their third-party business relationships, such as staffing, vendor, and contractor relationships, carefully keeping day-to-day control in the hands of the intended employer, should find themselves better positioned to defend against “joint employer” allegations under the anticipated new DOL framework. The public comment period for the DOL’s proposed joint employer rule will close on June 22, 2026. As this proposed rule is the first major undertaking of Keith Sonderling, a veteran of the first Trump administration who took over as Deputy Secretary of Labor after the resignation of Lori Chavez, employers should expect that the DOL may move quickly to finalize and issue the new joint employer rule after the comment period closes.
4. Non-Compete Agreement Developments
Employers can utilize non-compete agreements and other restrictive covenants (e.g., customer and employee nonsolicitation covenants, confidentiality agreements, etc.) to protect their key assets and guard against unfair competition. After the Federal Courts blocked a Federal Trade Commission Rule that would have imposed a nationwide ban on most non-competes in 2024, policymaking on the issue has largely been left to state legislatures. As a result, there are disparate, state-specific requirements and/or prohibitions governing non-competes and other covenants.
For example, California has long prohibited such employee contracts, except in very limited circumstances usually tied to the sale of a business. Washington lawmakers joined California this year, voting to ban employee non-competes effective June 30, 2027. Illinois adopted a statutory framework several years ago, providing for tiers of permissible restrictions based on the employee’s exact level of compensation. Virginia likewise prohibits non-competes for certain workers based on compensation level and added new restrictions this year requiring payment of severance to certain employees before a non-compete can be enforced. After New York’s Governor vetoed an outright ban on non-competes in 2023, the state’s legislature is now attempting to pass legislation this year that would limit the use of non-competes to highly compensated employees earning $500,000 or more annually.
These are but a few examples of the existing and proposed restrictions at the state level. The bottom line: restrictive covenants remain a valuable tool for employers to protect their assets and workforce, and care should be given to implement covenant agreements that navigate the patchwork of those state-specific laws impacting the company’s business.
5. The NLRB Will Soon Have a Republican Majority
On April 13th, President Trump nominated James Macy, a management-side labor lawyer, to a vacancy on the NLRB. President Trump also nominated current Board member, David Prouty, a former union attorney, to a second term. Once confirmed by the Senate, these nominations will give Republicans a 3-member majority on the Board, which creates the possibility, over time, of the overturning of key decisions previously issued by prior Board members appointed by President Biden. The decisions most likely to be reconsidered include those affecting union organizing and elections, allowable employer speech, captive-audience meetings, workplace rules in handbooks and policies, non-compete and severance agreements. Given the slow pace at which Board cases proceed, the timing of decisions affecting these areas is likely to be months, if not longer. Nevertheless, it is not too early for employers to consider how their existing policies may be affected by significant future changes in the law.
If you have any questions about navigating the latest developments in the labor and employment landscape, please contact Alex Dominguez, Gerald Golden, Alissa Griffin, Kristin Michaels, Sonya Rosenberg, Bill Tarnow, or your Neal Gerber Eisenberg attorney.
This alert is a monthly labor and employment legal update from Neal Gerber & Eisenberg’s Labor & Employment team. Our practice group partners with employers of all sizes to help anticipate, manage, and develop practical solutions to labor and employment issues at both the national and local levels.
The content above is based on information current at the time of its publication and may not reflect the most recent developments or guidance. Neal, Gerber & Eisenberg LLP provides this content for general informational purposes only. It does not constitute legal advice, and does not create an attorney-client relationship. You should seek advice from professional advisers with respect to your particular circumstances.
