March 2026 Newsletter

Newsletter Highlights:

Disparate impact discrimination has emerged as an issue of contention in employment and civil rights enforcement, with U.S. federal agencies retreating from aggressive use of the doctrine while governments in New York, New Jersey, and Pittsburgh, PA moved to codify and expand liability based on outcomes rather than intent under their own laws. Although U.S. Supreme Court precedent recognizing disparate impact remains unchanged, the result of the divergent enforcement is a fragmented compliance landscape for employers.
The U.S. Equal Employment Opportunity Commission (EEOC) issued new guidance emphasizing Title VII prohibits anti-American national origin discrimination, while simultaneously voting to rescind its 2024 workplace harassment guidance that had addressed certain protections for employees based on gender identity and transgender status. Together, the actions signal a recalibration of the EEOC’s enforcement priorities: sharpening its focus on alleged anti-American bias and DEI-related employment practices, while retreating from broader interpretive guidance on gender identity in the workplace.
Illinois advanced a coordinated expansion of worker, privacy, and immigration-related protections through HB 1312 and SB 2339, creating new civil remedies for unconstitutional immigration enforcement, restricting disclosure of immigration status by public institutions, and safeguarding court access, and simultaneously amending the Right to Privacy in the Workplace Act to bar adverse employment action based on immigration-related discrepancy notices, imposing strict fivebusiness-day employee notification requirements, and authorizing robust private enforcement and penalties against noncompliant employers.
New York enacted two major employment reforms tightening employer use of financial leverage over workers: restricting credit history inquiries to narrow exceptions and banning most “stay-or-pay” repayment agreements tied to early departure. Together, the laws significantly limit these types of screening and retention practices and signal an expanded enforcement posture favoring worker mobility and privacy.
Philadelphia and Pennsylvania expanded workplace anti-discrimination protections by targeting gaps in federal law and traditional employment standards. Philadelphia amended its Fair Practices Ordinance to prohibit discrimination and require reasonable accommodations related to menstruation, perimenopause, and menopause, while Pennsylvania enacted the CROWN Act to bar discrimination based on hair texture and protective hairstyles historically associated with race. Together, the measures reflect broadening protections at work for both health-related needs and characteristics associated with racial or cultural identity.

Disparate Impact at a Crossroads: Federal Retreat and State-Level Expansion Redefine Enforcement Risk

Disparate impact discrimination has reemerged as an area of divergence in U.S. civil rights and employment law, with federal agencies retreating from enforcement of outcome-based claims while states and local governments such as New York, New Jersey, and Pittsburgh, PA move to preserve and expand disparate impact liability under their own laws. Against unchanged U.S. Supreme Court precedent, this divergence has created a fragmented compliance landscape in which employer risk increasingly turns on geography rather than federal policy.

In December 2025, the U.S. Department of Justice rescinded its Title VI disparate impact regulations, confirming it will pursue only intentional discrimination claims and aligning with broader federal efforts to curtail disparate impact enforcement. The change, echoed by a more restrained posture at the EEOC, shifts federal enforcement priorities. Notably, however, private disparate impact claims under federal Title VII law have not been eliminated and U.S. Supreme Court precedent allowing these claims remains unaltered.

Moreover, in December 2025, New Jersey finalized regulations expressly codifying disparate impact liability under the Law Against Discrimination, adopting a burden-shifting framework that requires employers to justify neutral policies with disproportionate effects. The rules apply broadly and emphasize scrutiny of automated decision-making, signaling that algorithmic neutrality will not shield employers from outcome-based liability.

Also, in December 2025, New York amended the State Human Rights Law to expressly authorize disparate impact employment claims without proof of intent, covering policies that “actually or predictably” produce disparate outcomes. The change shifts the burden to employers to demonstrate evidence-based business necessity and expands exposure, particularly for data-driven and AI-assisted employment practices.

In November 2025, Pittsburgh, Pennsylvania amended its anti-discrimination ordinance to prohibit disparate impact discrimination and discrimination based on perceived protected characteristics, covering facially neutral policies with adverse group effects. The move reflects a broader municipal trend toward expanding civil rights protections amid reduced federal enforcement.

U.S. EEOC Issues Guidance Regarding Anti-American National Origin Discrimination and Rescinds 2024 Harassment Policy

On November 19, 2025, the U.S. Equal Employment Opportunity Commission (EEOC) issued new guidance emphasizing that Title VII’s national origin protections apply fully to “anti-American national origin discrimination,” highlighting enforcement against employment practices that favor foreign workers or visa holders over U.S. nationals. The agency identified potentially unlawful conduct such as visa-targeted job postings, disproportionate terminations of American employees, and pay disparities, while underscoring that cost savings or client preference do not justify national origin discrimination.

In a separate action, the EEOC voted 2–1 to rescind its 2024 workplace harassment enforcement guidance that set forth certain harassment protections based on gender identity, including those related to name, pronoun, and bathroom use, citing court rulings and limits on the agency’s authority to issue substantive interpretive guidance. While the rescission reflects a shift in EEOC enforcement posture, it does not change Title VII itself, existing U.S. Supreme Court precedent (Bostock v. Clayton County (2020), or state and local laws that continue to prohibit harassment and discrimination based on sexual orientation and gender identity.

Illinois Expands Immigration and Workplace Protections Through Dual Legislative Reforms

Through the enactment of HB 1312, Illinois significantly broadened protections against civil immigration enforcement overreach by creating the Illinois Bivens Act, which authorizes civil actions for constitutional violations arising from immigration enforcement activities. The legislation restricts schools, hospitals, and day care centers from disclosing immigration status without consent, establishes detailed protocols for responding to law enforcement requests, protects individuals from civil arrest while attending court proceedings, and prohibits retaliation against employees who report immigration-related violations.

Separately, effective December 12, 2025, Illinois SB 2339 amended the Right to Privacy in the Workplace Act to impose new employer compliance obligations tied to immigration-related discrepancy notices. The law prohibits adverse employment action based solely on such notices, requires employers to provide written notice to employees and their authorized representatives within five business days, and replaces prior E-Verify-specific provisions with broader requirements applicable to notifications from federal agencies or third-party vendors. The new law also expands investigatory authority and private rights of action, and escalates civil penalties, thus substantially heightening enforcement risk for employers operating in Illinois.

New York Limits Employer Use of Credit History in Employment and Bans “Stay-or-Pay” Agreements

On December 19, 2025, New York enacted Senate Bill 3072, effective April 28, 2026, sharply restricting the use of credit history in employment decisions. The law broadly prohibits employers from requesting or relying on credit information (defined to include creditworthiness, payment history, bankruptcies, judgments, and liens) absent narrow statutory exceptions, and limits when consumer reporting agencies may furnish credit reports, reinforcing New York’s already tringent credit anti-discrimination framework.

Separately, New York joined California in banning most “stay-or-pay” employment arrangements through the Trapped at Work Act, effective December 19, 2025. The law prohibits employment promissory notes requiring repayment upon early departure, making such obligations unenforceable and subject to civil penalties. The law does preserve limited exceptions for non-training-related advances and certain agreements. Although amendments are pending, the Act significantly constrains traditional repayment-based retention strategies.

Philadelphia and Pennsylvania Expand Workplace Protections to Address Health Needs and Hair Texture/Styles Associated with Race

Philadelphia, PA enacted a first-of-its-kind local ordinance amending the Fair Practices Ordinance to prohibit discrimination and require reasonable accommodations based on needs related to menstruation, perimenopause, and menopause. Effective January 1, 2027, the law extends protections beyond federal standards by covering these conditions regardless of any connection to pregnancy or childbirth, obligating employers to engage in the interactive process when symptoms substantially interfere with job performance and to update accommodation, anti-discrimination, and nonretaliation policies accordingly.

Separately, Pennsylvania enacted the CROWN Act, amending the Pennsylvania Human Relations Act to expand the definition of race to include hair texture and protective hairstyles historically associated with race. The law prohibits employment discrimination based on natural hairstyles such as locs, braids, twists, and afros while allowing neutral health and safety rules, positioning Pennsylvania among a growing number of states that have moved to eliminate appearance-based racial bias in employment.

Disclaimer: this information is not intended as legal advice. Please consult with legal counsel to ensure your organization’s compliance with applicable legal requirements.