Federal Legal Developments: Summer 2026 Update

While much of the first half of the year was focused on busy state legislative sessions, the federal courts and federal agencies continued working. We have rounded up this year’s most important cases and executive branch actions to date, as we head into an election-filled fall.

Key Federal Court Decisions

Avery v. TEKsystems, Inc., 165 F.4th 1219 (9th Cir. 2026)

Federal Courts Continue to Grapple with How and Even Whether Arbitration Agreements Will Be Enforced in the Employment Context

TEKsystems (TEK), a staffing agency, was sued in January 2022 by recruiters alleging they were misclassified as exempt and denied overtime and meal and rest breaks under California law. Following removal, the parties litigated for more than a year, and class certification briefing closed on December 14, 2023.

Five days later, TEK rolled out a new mandatory arbitration agreement, containing a class and collective action waiver, to all internal employees, including the putative class. A first email framed arbitration as a condition of continued employment and characterized class actions as “wasteful, inefficient,” and tending “to enrich only attorneys.” A second email, sent to putative class members, informed them of the lawsuit and offered a limited opt-out; for many, it was their first notice of the case. That opportunity came with contradictory opt-out deadlines (January 9, 2023, versus January 9, 2024), an instruction not to share the emails, and no clear disclosure that class counsel could advise recipients at no cost. Of the 164 class members who received the second email, 41 opted out and 123 remained bound.

At the February 1, 2024 class certification hearing, TEK did not raise arbitration, and the district court certified the class on February 13, 2024. During the class-notice process, TEK twice informed the court that it intended to move to compel arbitration under the Agreement after the notice period closed, and the court directed TEK to begin drafting that motion immediately. The class notice issued on April 16, 2024, with a June 15, 2024, opt-out deadline, and on June 10, 2024, five days before the notice period closed, TEK moved to compel arbitration against the class members bound by the Agreement.

The district court denied the motion under Rule 23(d), finding the communications misleading and destructive of the fairness of the litigation because they converted the Rule 23 opt-out class into an opt-in one; in the alternative, it found that TEK had waived arbitration through this wait-and-see conduct. TEK filed an interlocutory appeal, and the Ninth Circuit affirmed.

The Ninth Circuit’s Holdings and Reasoning

• FRCP 23(d) authorizes district courts to refuse to enforce arbitration agreements. That power flows from a district court’s broad authority to control class actions and the conduct of the parties, and it would mean little if it lapsed the moment a party’s misleading communications produced an agreement.
• The district court correctly applied FRCP 23(d) in denying the motion to compel arbitration. Reviewing the question de novo, the Ninth Circuit agreed that TEK’s communications were misleading and threatened the fairness of the class action proceedings: TEK disparaged class actions, gave contradictory and erroneous opt-out deadlines, instructed employees not to share the emails, omitted that class counsel could advise them at no cost, and timed the rollout to the holidays, just as the Fourth, Sixth, and Eleventh Circuits had refused to enforce similar agreements. Because the otherwise-valid agreement was procured through those communications, a corrective notice could not cure the harm; only refusing to enforce it restored the default opt-out process.
• A delegation clause did not require deferral to the arbitrator. Although the arbitration agreement included a delegation clause, allowing JAMS to determine issues of arbitrability, a court must decide a challenge to the validity of the agreement to arbitrate. Therefore, the district court had authority to decide on enforceability of the agreement.

Takeaways for Employers

Avery confirms that even a valid arbitration agreement will not be enforced when an employer obtains it from class members through misleading, unfair communications, aligning the Ninth Circuit with the Fourth, Sixth, and Eleventh Circuits. Several practical lessons follow.

• Arbitration agreements adopted during active litigation are subject to close judicial scrutiny, particularly when directed to putative class members.
• Both the agreement and the surrounding communications should be clear, accurate, neutral, and free of statements that discourage employees from participating in or remaining part of a class action.
• Employers should build a careful rollout process before seeking new arbitration agreements from putative class members, including reviewing the timing, opt-out mechanics, and employee-facing instructions to ensure the rollout does not undermine the Rule 23 notice process.

EEOC v. A&A Appliance, Inc.

Colorado Federal Court Judge Finds EEOC Claims “Frivolous, Unreasonable, and Without Foundation” and Awards Attorney Fees Against EEOC

In EEOC v. A&A Appliance, Inc., 2025 WL 3546290 (D. Colo. 9/3/2025, unreported), a Colorado federal court judge granted summary judgment in favor of the employer A&A Appliance, finding that the EEOC failed to meet its burden of presenting evidence to support a prima facie case against A&A Appliance on a former employee’s ADA accommodations claims. The facts of the case were mainly undisputed. The employee, Ms. Karima Javanzad, requested FMLA leave in April 2020 based on different events, including caring for her son with COVID or pneumonia on March 17, 2020, contracting COVID-19 herself, or perhaps her own gastrointestinal disorder. Javanzad was granted retroactive FMLA leave for COVID-19 for a total of twelve weeks, from March to June 7, 2020. Although she was released to return to work without restriction in April 2020, Javanzad stated she could not return due to childcare needs and/or gastrointestinal problems, and simultaneously filed for unemployment benefits (requiring her to state she had no disability and was able to work). During her leave, Javanzad and A&A Appliance exchanged communications on when her leave would expire and the details and various reasons for her leave. After her 12 weeks of FMLA leave was exhausted, Javanzad failed to return to work, and failed to respond to A&A Appliance’s request that she call to discuss her options. On June 10, 2020, A&A Appliance sent Javanzad a letter informing her of her termination from employment, and also stating that her leave could be extended if her medical provider determined it was necessary due to her qualifying event of COVID-19 (but not her gastrointestinal disorder). Six months later, Javanzad filed a complaint for disability discrimination and retaliation for requesting an ADA accommodation with the EEOC.

The ADA states: “An employer violates the ADA by failing to make reasonable accommodations to the known physical or mental disabilities of an otherwise qualified individual with a disability, unless such accommodations would pose an undue hardship on the employer.” 42 U.S.C. § 12112(b)(5)(A) (emphasis added). The judge found that, given the unclear grounds for Javanzad’s leave, and her inconsistent statements regarding her ability to return to work, that A&A Appliance “cannot be found to have been on notice of a disability that requires accommodation under the ADA.” In so holding, the judge cited to prior case law holding “when an individual’s disability is not obvious, the individual must inform its employer of the disability before the employer can be held liable under the ADA for failing to provide a reasonable accommodation.” The judge further held that the employee must make an adequate, clear request for a disability accommodation, citing prior case law holding “[t]he request for accommodation must be sufficiently direct and specific, giving notice that [the employee] needs a special accommodation.” Importantly, the judge held that the employer’s knowledge of an employee’s general health problems, “‘it is not the employer’s responsibility to anticipate the employee’s needs and affirmatively offer an accommodation if an employee does not make a disability known and request assistance” or accommodation.

Subsequently, the same Colorado judge ruled on June 1, 2026, that not only had the EEOC failed to present sufficient evidence to support a prima facie case against the employer, but also that its claims were “frivolous, unreasonable, and without foundation.” Based on this finding, the judge made the highly unusual decision to award attorney fees against the EEOC.

The EEOC is appealing both decisions at the Tenth Circuit Court of Appeals currently, which is itself surprising given the current administration. The appeal may signal that the EEOC is still pursuing disability discrimination cases heavily, or at least may signal that the EEOC is upset about the Colorado judge’s rulings against it.

Takeaways for Employers

1. Although this case is not in the Ninth Circuit, it does reaffirm the basic legal concept that the employee must make a clear request for disability accommodations. Employers are not required to guess or speculate whether an employee has a qualifying disability or may need or want disability accommodations. It is still true, though, that obvious disabilities will trigger an employer’s obligations under the ADA, such as an employee in a wheelchair or walking with a cane, or wearing a cochlear implant device.
2. This case provides a roadmap of sorts for employers regarding ADA accommodations involving leaves of absence. Here the employee’s FMLA leave expired, and the employee did not return to work and also did not indicate that ADA disability accommodations including an extended leave of absence were needed or requested. The employer was not required to simply “assume” that the employee was requesting, qualified for, and needed additional leave that was required to be granted under the ADA.
3. This case also reaffirms the general concept, at least in EEOC’s eyes, that extended leaves of absence may be a reasonable accommodation request under the ADA, even after an employee has used twelve weeks of other job-protected leave.

Federal Agency Action Spotlights

EEOC’s National Enforcement Plan Reaffirms Trump Administration’s Priorities

On June 4, 2026, the Equal Employment Opportunity Commission (EEOC) issued a National Enforcement Plan (NEP) that garnered a lot of media attention, but came with no real surprises. The NEP replaced the Biden administration’s Strategic Enforcement Plan, which had significantly different enforcement priorities than the Trump administration.

Relying on prior Executive Order 14281, the NEP eliminates “disparate impact” theories from the EEOC’s enforcement priorities, instead focusing efforts on disparate treatment claims. Disparate impact theories rely heavily on statistics as proof of discrimination and focus on unequal outcomes for certain legally protected groups, rather than the more direct disparate treatment claims requiring at least circumstantial evidence of discriminatory intent. This NEP change was followed shortly thereafter by a U.S. Department of Justice (DOJ) legal opinion, issued June 9, 2026, finding that disparate impact liability is unconstitutional as previously enforced by the EEOC. The DOJ’s legal opinion determined that the EEOC’s prior handling of disparate impact cases became a de facto race-proportionality in outcome mandate, which this DOJ determines is unconstitutional. For example, this DOJ will allow reliance on background checks by employers even if a disparate impact on certain legally protected classes, such as gender, may result from the practice.

Additionally, the NEP makes diversity, equity, and inclusion (DEI) programs a primary target for enforcement, considering many DEI programs to constitute intentional discrimination. This is consistent with the Trump administration’s executive orders issued shortly after his inauguration last year (see our previous blog post: President Trump’s First-Day Orders Impacting Employers). DEI programs were already a focus of the Trump administration, and inclusion in this NEP is no surprise. The EEOC is expected to continue targeting race- or gender-based quotas, requirements for affirmation of diversity goals or policies, and DEI programs that exclude persons based on race or gender. Enforcement focus is expected to remain on large corporations, universities, law firms, and other similarly high-profile institutions.

The NEP also highlights the Trump administration’s position that sex is binary, removes sexual orientation and trans-gender from enforcement priorities. Single-sex intimate spaces such as bathrooms and locker rooms are expected to be a particular area for enforcement.

While minimizing and eliminating some Biden era enforcement priorities, this administration is also expanding other areas, such as religious accommodations. Religious organizations with employees already received direction from the Supreme Court in Groff v. DeJoy (see our previous blog post: Supreme Court Decision “Clarifying” Religious Accommodation Obligation Is Anything but De Minimis). The EEOC is expected to build on this Supreme Court holding that employers show a “substantial burden” before denying an employee’s religious accommodation request. EEOC enforcement on religious accommodation denials is also generally expected to increase.

Takeaways for Employers

1. The Trump administration’s EEOC will not be pursuing cases, and may be dismissing current cases, that rely on a “disparate impact” theory. This does not mean states will not take up disparate impact cases, and in fact the issuance of this NEP may spur several states to increase their pursuit of disparate impact cases as a response to the NEP.
2. If not done already, employers should review current DEI policies and practices to ensure no quotas or exclusions based on race or gender exist.
3. Employers and other institutions should bear in mind that bathrooms and locker rooms will be considered by the EEOC to be binary. This may contradict state law in some states, and employers are advised to tread cautiously on this matter.
4. Employers receiving religious accommodations requests should continue to keep in mind the requirement that a “substantial burden” is required for denial.

I-9 Compliance Updates Allow ICE More Options for Enforcement

On March 16, 2026, the U.S. Immigration and Customs Enforcement Agency (ICE) issued an updated Form I-9 Inspection Fact Sheet. While the lack of an administrative rule-making process for this update may be litigated, ICE is expected to proceed with action on the Fact Sheet until a court instructs otherwise. The new Fact Sheet removes the ability of employers to correct certain “technical” violations within ten days, as was previously allowed. Instead, the following errors will be considered “substantive” and subject to fines ranging from $288 to $2,867 per form: missing employee date of birth, missing USCIS/alien number, missing date next to employee’s signature, use of a Spanish language form outside Puerto Rico, missing first day of employment, missing name/title of employer representative, and lack of certain e-signatures. Improper use of E-Verify or failure to register for E-Verify then using E-Verify tools is also a substantive violation.

ICE also revised what are considered to be “technical” violations that must be corrected within ten days, to now include among other errors: failure to use current I-9 form, failure to include employee’s other last names used, and failure to ensure the employee’s SSN is correct using E-Verify.

Takeaways for Employers

1. Employers who have not already performed an internal I-9 forms audit, or at least a spot check, should do so immediately, and obtain corrected I-9 forms as needed.
2. Employers not enrolled in E-Verify but using some E-Verify tools or procedures, such as e-signatures or remote confirmation, should consider completing E-Verify enrollment to ensure compliance.
3. Employers using HRIS systems or outsourced HR service providers should ensure that these systems or providers are conducting I-9 forms audits and maintain fully compliant I-9 practices. Employers will be held liable for violations even if an HRIS system or HR service provider is not fully I-9 compliant.

Trump Administration Issues New Executive Order 14398 Further Targeting DEI Practices in Construction

On March 26, 2026, the administration issued another executive order focusing on DEI practices, this one in the federal construction contractor context (see our previous blog post EO 14398 and MBE Mandates: Compliance Risks for Contractors). Executive Order 14398 directs federal contracting agencies to ensure that contracts for goods and services, including contractors’ subcontracts and subcontractors’ lower-tier subcontracts, agree that they will:

• not engage in any racially discriminatory DEI activities such as hiring or contracting based on race or ethnicity;

• allow access to books and records to ensure compliance with this requirement;

• canceling, terminating, or suspending contracts with contractors that fail to comply and may be declared ineligible for future contracts;

• report any subcontractors known to be in violation by using racially discriminatory DEI activities;

• face enforcement under the False Claims Act for violations.

The Federal Acquisition Regulatory Council (FARC) is also directed to carry out these requirements.

Issuance of this executive order refocuses the Trump administration’s efforts to remove DEI from the federal contracting processes, expanding on prior executive orders issued shortly after President Trump’s inauguration.

Takeaways for Employers

Employers who contract or subcontract with the federal government in any way should ensure that they are compliant with the federal government’s positions on DEI programs and practices. However, employers should also keep in mind that state requirements may differ or directly contradict the federal government on this point.

U.S. Department of Labor Proposed Unified “Joint Employer” Standard for Joint Employer Liability

On April 23, 2026, the U.S. Department of Labor proposed a rule on joint employer liability, recognizing that when an individual works for two or more companies simultaneously, this proposed rule determines which employer is responsible for complying with federal labor laws for minimum wage and overtime as well as FMLA and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA). The National Labor Relations Act (NLRA) definition will remain different and separate.

The proposed rule introduces a somewhat complex decisional analysis based on whether the potential joint employers are “vertical” or “horizontal” in nature.

For “vertical” joint employers, meaning there is an employer that uses another employer who hires the employees, the factors will include: the power to hire or fire the employee, supervision and control of the employee’s work schedule, determining rate of pay and method of payment, and maintenance of the employee’s personnel records. Reservation of the right to these powers, such as in a contract, will also be considered, and no one factor is determinative. Importantly, franchising will not automatically give rise to joint employer liability.

For “horizontal” joint employers, meaning two separate employers who have some kind of relationship (such as joint ownership) and both employ the employee, the factors will include: the arrangement between the two employers allowing sharing of the employee, whether one employer acts in the interest of the other employer, and whether there is shared control of the employee (e.g. relating to work schedule).

Public comments on the rule were due by June 22, 2026, and the rule is in the final stages of potential final adoption.

Takeaways for Employers

1. Employers, especially in agriculture or with migrant workforces, should keep abreast of adoption of this rule and ensure any arrangements involving shared employees or sub-employers do not create “joint employer” liability.
2. Joint employer rules are frequently changing, and vary by federal law, so employers should be aware that lack of “joint employer” status for some purposes is not universal.

Looking Ahead

The federal employment-law landscape remains in motion, and employers should expect continued developments through the remainder of 2026. As federal priorities shift, state requirements may move in a different direction, creating new compliance challenges—particularly for multistate employers. Employers should continue to monitor both federal developments and state-law responses and consider reviewing their policies, agreements, and compliance practices. If your organization has questions about how these developments may affect your workplace, the Miller Nash employment team is available to help you assess the potential impact and prepare for what comes next.

The legal issues impacting this topic are and will continue to be ever-changing (Employment Law in Motion!), and since publication of this blog post, new or additional information not referenced in this blog post may be available.

This article is provided for informational purposes only—it does not constitute legal advice and does not create an attorney-client relationship between the firm and the reader. Readers should consult legal counsel before taking action relating to the subject matter of this article.